Republic of the Philippines

SUPREME COURT
Manila

EN BANC

G.R. No. 204528               February 19, 2013

SECRETARY LEILA M. DE LIMA, DIRECTOR NONNATUS R. ROJAS and DEPUTY DIRECTOR REYNALDO 0.
ESMERALDA, Petitioners, 
vs.
MAGTANGGOL B. GATDULA, Respondent.

RESOLUTION

LEONEN, J.:

Submitted for our resolution is a prayer for the issuance of a temporary restraining order and/or writ of preliminary
injunction to enjoin "the Regional Trial Court, Branch 26, in Manila from implementing its Decision x x x in Civil Case
No. 12-127405 granting respondent's application for the issuance of inspection and production orders x x x." 1 This is
raised through a Petition for Review on Certiorari under Rule 45 from the "Decision" rendered by the Regional Trial
Court dated 20 March 2012.

From the records, it appears that on 27 February 2012, respondent Magtanggol B. Gatdula filed a Petition for the
Issuance of a Writ of Amparo in the Regional Trial Court of Manila. 2 This case was docketed as In the Matter of the
Petition for Issuance of Writ of Amparo of Atty. Magtanggol B. Gatdula, SP No. 12-127405. It was raffled to the sala
of Judge Silvino T. Pampilo, Jr. on the same day.

The Amparo was directed against petitioners Justice Secretary Leila M. De Lima, Director Nonnatus R. Rojas and
Deputy Director Reynaldo O. Esmeralda of the National Bureau of Investigation (DE LIMA, ET AL. for brevity).
Gatdula wanted De Lima, et al. "to cease and desist from framing up Petitioner [Gatdula] for the fake ambush
incident by filing bogus charges of Frustrated Murder against Petitioner [Gatdula] in relation to the alleged ambush
incident."3

Instead of deciding on whether to issue a Writ of Amparo, the judge issued summons and ordered De Lima, et al. to
file an Answer.4 He also set the case for hearing on 1 March 2012. The hearing was held allegedly for determining
whether a temporary protection order may be issued. During that hearing, counsel for De Lima, et al. manifested
that a Return, not an Answer, is appropriate for Amparo cases.5

In an Order dated 2 March 2012,6 Judge Pampilo insisted that "[s]ince no writ has been issued, return is not the
required pleading but answer".7 The judge noted that the Rules of Court apply suppletorily in Amparo cases.8 He
opined that the Revised Rules of Summary Procedure applied and thus required an Answer. 9

Judge Pampilo proceeded to conduct a hearing on the main case on 7 March 2012. 10 Even without a Return nor an
Answer, he ordered the parties to file their respective memoranda within five (5) working days after that hearing.
Since the period to file an Answer had not yet lapsed by then, the judge also decided that the memorandum of De
Lima, et al. would be filed in lieu of their Answer.11

On 20 March 2012, the RTC rendered a "Decision" granting the issuance of the Writ of Amparo. The RTC also
granted the interim reliefs prayed for, namely: temporary protection, production and inspection orders. The
production and inspection orders were in relation to the evidence and reports involving an on-going investigation of
the attempted assassination of Deputy Director Esmeralda. It is not clear from the records how these pieces of
evidence may be related to the alleged threat to the life, liberty or security of the respondent Gatdula.

In an Order dated 8 October 2012, the RTC denied the Motion for Reconsideration dated 23 March 2012 filed by De
Lima, et al.

Petitioners Sec. De Lima, et al. thus came to this Court assailing the RTC "Decision" dated 20 March 2012 through
a Petition for Review on Certiorari (With Very Urgent Application for the Issuance of a Temporary Restraining
Order/Writ of Preliminary Injunction) via Rule 45, as enunciated in Section 19 of the Rule on the Writ
of Amparo (A.M. No. 07-9- 12-SC, 25 September 2007), viz:

SEC. 19. Appeal. – Any party may appeal from the final judgment or order to the Supreme Court under Rule 45.
The appeal may raise questions of fact or law or both. x x x (Emphasis supplied).

1
It is the Court’s view that the "Decision" dated 20 March 2012 granting the writ of Amparo is not the judgment or
final order contemplated under this rule. Hence, a Petition for Review under Rule 45 may not yet be the proper
remedy at this time.

The RTC and the Parties must understand the nature of the remedy of Amparo to put its procedures in the proper
context.

The remedy of the Writ of Amparo is an equitable and extraordinary remedy to safeguard the right of the people to
life, liberty12 and security13 as enshrined in the 1987 Constitution.14 The Rule on the Writ of Amparo was issued as an
exercise of the Supreme Court's power to promulgate rules concerning the protection and enforcement of
constitutional rights.15 It aims to address concerns such as, among others, extrajudicial killings and enforced
disappearances.16

Due to the delicate and urgent nature of these controversies, the procedure was devised to afford swift but decisive
relief.17 It is initiated through a petition18 to be filed in a Regional Trial Court, Sandiganbayan, the Court of Appeals,
or the Supreme Court.19 The judge or justice then makes an "immediate" evaluation20 of the facts as alleged in the
petition and the affidavits submitted "with the attendant circumstances detailed". 21 After evaluation, the judge has the
option to issue the Writ of Amparo22 or immediately dismiss the case. Dismissal is proper if the petition and the
supporting affidavits do not show that the petitioner's right to life, liberty or security is under threat or the acts
complained of are not unlawful. On the other hand, the issuance of the writ itself sets in motion presumptive judicial
protection for the petitioner. The court compels the respondents to appear before a court of law to show whether the
grounds for more permanent protection and interim reliefs are necessary.

The respondents are required to file a Return23 after the issuance of the writ through the clerk of court. The Return
serves as the responsive pleading to the petition. 24 Unlike an Answer, the Return has other purposes aside from
identifying the issues in the case. Respondents are also required to detail the actions they had taken to determine
the fate or whereabouts of the aggrieved party.

If the respondents are public officials or employees, they are also required to state the actions they had taken to: (i)
verify the identity of the aggrieved party; (ii) recover and preserve evidence related to the death or disappearance of
the person identified in the petition; (iii) identify witnesses and obtain statements concerning the death or
disappearance; (iv) determine the cause, manner, location, and time of death or disappearance as well as any
pattern or practice that may have brought about the death or disappearance; and (vi) bring the suspected offenders
before a competent court.25 Clearly these matters are important to the judge so that s/he can calibrate the means
and methods that will be required to further the protections, if any, that will be due to the petitioner.

There will be a summary hearing26 only after the Return is filed to determine the merits of the petition and whether
interim reliefs are warranted. If the Return is not filed, the hearing will be done ex parte.27 After the hearing, the court
will render the judgment within ten (10) days from the time the petition is submitted for decision. 28

If the allegations are proven with substantial evidence, the court shall grant the privilege of the writ and such reliefs
as may be proper and appropriate. 29 The judgment should contain measures which the judge views as essential for
the continued protection of the petitioner in the Amparo case. These measures must be detailed enough so that the
judge may be able to verify and monitor the actions taken by the respondents. It is this judgment that could be
subject to appeal to the Supreme Court via Rule 45.30 After the measures have served their purpose, the judgment
will be satisfied. In Amparo cases, this is when the threats to the petitioner’s life, liberty and security cease to exist
as evaluated by the court that renders the judgment. Parenthetically, the case may also be terminated through
consolidation should a subsequent case be filed – either criminal or civil. 31 Until the full satisfaction of the judgment,
the extraordinary remedy of Amparo allows vigilant judicial monitoring to ensure the protection of constitutional
rights.

The "Decision" dated 20 March 2012 assailed by the petitioners could not be the judgment or final order that is
appealable under Section 19 of the Rule on the Writ of Amparo. This is clear from the tenor of the dispositive portion
of the "Decision", to wit:

The Branch Clerk of Court of Court [sic] is hereby DIRECTED to issue the Writ of Amparo.

Likewise, the Branch Clerk of Court is hereby DIRECTED to effect the service of the Writ of Amparo in an
expeditious manner upon all concerned, and for this purpose may call upon the assistance of any military or civilian
agency of the government.

This "Decision" pertained to the issuance of the writ under Section 6 of the Rule on the Writ of Amparo, not
the judgment under Section 18. The "Decision" is thus an interlocutory order, as suggested by the fact that
temporary protection, production and inspection orders were given together with the decision. The temporary
protection, production and inspection orders are interim reliefs that may be granted by the court upon filing of the
petition but before final judgment is rendered.32

2
The confusion of the parties arose due to the procedural irregularities in the RTC.

First, the insistence on filing of an Answer was inappropriate. It is the Return that serves as the responsive pleading
for petitions for the issuance of Writs of Amparo. The requirement to file an Answer is contrary to the intention of the
Court to provide a speedy remedy to those whose right to life, liberty and security are violated or are threatened to
be violated. In utter disregard of the Rule on the Writ of Amparo, Judge Pampilo insisted on issuing summons and
requiring an Answer.

Judge Pampilo’s basis for requiring an Answer was mentioned in his Order dated 2 March 2012:

Under Section 25 of the same rule [on the Writ of Amparo], the Rules of Court shall apply suppletorily insofar as it is
not inconsistent with the said rule.

Considering the summary nature of the petition, Section 5 of the Revised Rules of Summary Procedure shall apply.

Section 5. Answer – Within ten (10) days from service of summons, the defendant shall file his Answer to the
complaint and serve a copy thereof on the plaintiff. x x x

WHEREFORE, based on the foregoing, the respondents are required to file their Answer ten (days) from receipt of
this Order.33

The 1991 Revised Rules of Summary Procedure is a special rule that the Court has devised for the following
circumstances:

SECTION 1. Scope. – This rule shall govern the summary procedure in the Metropolitan Trial Courts, the Municipal
Trial Courts in Cities, the Municipal Trial Courts, and the Municipal Circuit Trial Courts in the following cases falling
within their jurisdiction:

A. Civil Cases:

(1) All cases of forcible entry and unlawful detainer, x x x.

(2) All other cases, except probate proceedings, where the total amount of the plaintiff’s claim does
not exceed x x x.

B. Criminal Cases:

(1) Violations of traffic laws, rules and regulations;

(2) Violations of the rental law;

(3) Violations of municipal or city ordinances;

(4) All other criminal cases where the penalty prescribed by law for the offense charged is
imprisonment not exceeding six months, or a fine not exceeding one thousand pesos (P1,000.00), or
both, x x x.

xxxx

It is clear from this rule that this type of summary procedure only applies to MTC/MTCC/MCTCs. It is mind-boggling
how this rule could possibly apply to proceedings in an RTC. Aside from that, this Court limited the application of
summary procedure to certain civil and criminal cases. A writ of Amparo is a special proceeding. It is a remedy
by which a party seeks to establish a status, a right or particular fact. 34 It is not a civil nor a criminal action, hence,
the application of the Revised Rule on Summary Procedure is seriously misplaced.

The second irregularity was the holding of a hearing on the main case prior to the issuance of the writ and the filing
of a Return. Without a Return, the issues could not have been properly joined.

Worse, is the trial court’s third irregularity: it required a memorandum in lieu of a responsive pleading (Answer) of De
Lima, et al.

The Return in Amparo cases allows the respondents to frame the issues subject to a hearing. Hence, it should be
done prior to the hearing, not after. A memorandum, on the other hand, is a synthesis of the claims of the party
litigants and is a final pleading usually required before the case is submitted for decision. One cannot substitute for
the other since these submissions have different functions in facilitating the suit.

3
More importantly, a memorandum is a prohibited pleading under the Rule on the Writ of Amparo.35

The fourth irregularity was in the "Decision" dated 20 March 2012 itself. In the body of its decision, the RTC stated:

"Accordingly this court GRANTS the privilege of the writ and the interim reliefs prayed for by the petitioner."
(Emphasis supplied).

This gives the impression that the decision was the judgment since the phraseology is similar to Section 18 of the
Rule on the Writ of Amparo:

"SEC. 18. Judgment. — The court shall render judgment within ten (10) days from the time the petition is submitted
for decision. If the allegations in the petition are proven by substantial evidence, the court shall grant the privilege
of the writ and such reliefs as may be proper and appropriate; otherwise, the privilege shall be denied."
(Emphasis supplied).

The privilege of the Writ of Amparo should be distinguished from the actual order called the Writ of Amparo. The
privilege includes availment of the entire procedure outlined in A.M. No. 07-9-12-SC, the Rule on the Writ
of Amparo. After examining the petition and its attached affidavits, the Return and the evidence presented in the
summary hearing, the judgment should detail the required acts from the respondents that will mitigate, if not totally
eradicate, the violation of or the threat to the petitioner's life, liberty or security.

A judgment which simply grants "the privilege of the writ" cannot be executed.  It is tantamount to a failure of the
1âwphi1

judge to intervene and grant judicial succor to the petitioner. Petitions filed to avail of the privilege of the Writ
of Amparo arise out of very real and concrete circumstances. Judicial responses cannot be as tragically symbolic or
ritualistic as "granting the privilege of the Writ of Amparo."

The procedural irregularities in the RTC affected the mode of appeal that petitioners used in elevating the matter to
this Court.

It is the responsibility of counsels for the parties to raise issues using the proper procedure at the right time.
Procedural rules are meant to assist the parties and courts efficiently deal with the substantive issues pertaining to a
case. When it is the judge himself who disregards the rules of procedure, delay and confusion result.

The Petition for Review is not the proper remedy to assail the interlocutory order denominated as "Decision" dated
20 March 2012. A Petition for Certiorari, on the other hand, is prohibited. 36 Simply dismissing the present petition,
however, will cause grave injustice to the parties involved. It undermines the salutary purposes for which the Rule
on the Writ of Amparo were promulgated.

In many instances, the Court adopted a policy of liberally construing its rules in order to promote a just, speedy and
inexpensive disposition of every action and proceeding. 37 The rules can be suspended on the following grounds: (1)
matters of life, liberty, honor or property, (2) the existence of special or compelling circumstances, (3) the merits of
the case, (4) a cause not entirely attributable to the fault or negligence of the party favored by the suspension of the
rules, (5) a lack of any showing that the review sought is merely frivolous and dilatory, and (6) the other party will not
be unjustly prejudiced thereby.38

WHEREFORE, in the interest of justice, as a prophylactic to the irregularities committed by the trial court judge, and
by virtue of its powers under Article VIII, Section 5 (5) of the Constitution, the Court RESOLVES to:

(1) NULLIFY all orders that are subject of this Resolution issued by Judge Silvino T. Pampilo, Jr. after
respondent Gatdula filed the Petition for the Issuance of a Writ of Amparo;

(2) DIRECT Judge Pampilo to determine within forty-eight (48) hours from his receipt of
this Resolution whether the issuance of the Writ of Amparo is proper on the basis of the petition and its
attached affidavits.

The Clerk of Court is DIRECTED to cause the personal service of this Resolution on Judge Silvino T. Pampilo, Jr. of
Branch 26 of the Regional Trial Court of Manila for his proper guidance together with a WARNING that further
deviation or improvisation from the procedure set in A.M. No. 07-9-12-SC shall be meted with severe
consequences.

SO ORDERED.

4
 Republic of the Philippines
SUPREME COURT
Manila

EN BANC

G.R. No. 204123               March 19, 2013

MARIA LOURDES B. LOCSIN, Petitioner, 

vs.
HOUSE OF REPRESENTATIVES ELECTORAL TRIBUNAL and MONIQUE YAZMIN MARIA Q.
LAGDAMEO,Respondents.

DECISION

LEONEN, J.:

The Constitution provides that public respondent House of Representatives Electoral Tribunal (HRET) is the sole
judge of all contests relating to the election, returns, and qualifications of their members. 1 This Court’s jurisdiction to
review HRET’s decisions and orders is exercised only upon showing that HRET acted with grave abuse of discretion
amounting to lack or excess of jurisdiction. Otherwise, this Court will not interfere with an electoral tribunal’s
exercise of its discretion or jurisdiction.2

This is a Petition for Certiorari and Prohibition under Rule 65 of the Rules of Court filed by petitioner Locsin praying:

i. for the WRIT OF CERTIORARI declaring the assailed Decision promulgated on 17 September 2012 and
HRET Resolution No. 12-209 dated 15 October 2012 as NULL AND VOID and/or to REVERSE OR SET
ASIDE the issuances for having been issued with grave abuse of discretion amounting to lack of or in
excess of jurisdiction;

ii. for the WRIT OF PROHIBITION to enjoin and prohibit the Public Respondent HRET from implementing
the assailed Decision promulgated on 17 September 2012 and HRET Resolution No. 12-209 dated 15
October 2012;

iii. to NULLIFY the proclamation of private respondent Lagdameo;

iv. to DECLARE and PROCLAIM petitioner Locsin as the duly elected Representative of the First District of
Makati City having received the HIGHEST NUMBER OF VALID VOTES during the May 10, 2010 elections. 3

Petitioner Locsin and private respondent Lagdameo, along with three other candidates, vied for the position to
represent the First Legislative District of Makati in the 2010 national elections. Respondent Lagdameo was
proclaimed winner by the City Board of Canvassers on 11 May 2010 garnering 42,102 votes. Petitioner came in
second with 41,860 votes or a losing margin of 242 votes.4

On 21 May 2010, petitioner Locsin instituted an election protest before the HRET impugning the election results in
all 233 clustered precincts in Makati’s First District.5 Petitioner alleged that the results were tainted by election fraud,
anomalies, and irregularities. On 2 July 2010, Lagdameo filed her Answer with Counter-Protest questioning the
results in 123 clustered precincts.

During the preliminary conference, Locsin designated 59 clustered precincts as the pilot precincts for her protest
while Lagdameo designated 31 clustered precincts as the pilot precincts for her counter-protest. The
revision/recount proceedings for 59 clustered precincts covering 25% of the pilot protested precincts were
conducted from 14 April 2011 to 19 April 2011. Thereafter, petitioner presented her documentary evidence. By
Resolution No. 11-268, the HRET admitted in evidence all documentary exhibits offered by petitioner subject to the
Comment/Objections of private respondent.

Lagdameo's winning margin increased from 242 to 265 votes after the revision and appreciation of ballots in 25% of
the pilot protested precincts.6 Nevertheless, HRET through the 1December 2011 Resolution continued the revision
proceedings to clear all doubts surrounding the victory of private respondent. Revision proceedings covered the
remaining 174 clustered precincts from 18 January 2012 to 31 January 2012.

Petitioner Locsin continued her presentation of additional documentary exhibits. By Resolution No. 12-061 dated 8
March 2012, the HRET admitted the exhibits subject to private respondent's Comment/Opposition filed on 27
February 2012.

5
Private respondent Lagdameo presented her evidence for the counter-protested precincts. By Order dated 27 April
2012, the HRET admitted all exhibits subject to the Comment/Opposition filed by petitioner on 24 April 2012.

After the parties filed their respective memoranda, the HRET promulgated on 17 September 2012 the assailed
Decision7 dismissing petitioner's election protest, the dispositive portion of which reads:

WHEREFORE, for failure to show a reasonable recovery of votes, this election protest is DISMISSED and the
proclamation of protestee Monique Yazmin Maria Q. Lagdameo as the duly elected Representative of the First
Legislative District of Makati City in the May 10, 2010 Automated National and Local Elections is AFFIRMED. 8

The HRET discussed in detail the results of the recount and its appreciation of the contested ballots. 9 The results
showed that Lagdameo's proclamation margin of 242 votes increased to 265 votes after revision proceedings in the
25% pilot protested clustered precincts. The margin rose to 335 votes after the revision and appreciation of ballots
in the remaining precincts.10 On the allegations of fraud and election irregularities, respondent tribunal found no
compelling evidence that may cast doubt on the credibility of the results generated by the Precinct Count Optical
Scan (PCOS) electronic system.11

The HRET also denied with finality petitioner's motion for reconsideration by Resolution No. 12-209 dated 15
October 2012.12

On 16 November 2012, Locsin filed the present petition on the ground that public respondent HRET committed
grave abuse of discretion amounting to lack or excess of jurisdiction when:

1. it promulgated the assailed Decision on 17 September 2012 dismissing the election protest filed by the
petitioner on the basis of the erroneous appreciation of the petitioner’s contested and claimed ballots.

2. it issued the assailed Resolution No. 12-209 dated 15 October 2012 denying with finality the motion for
reconsideration filed by the petitioner despite the presence of substantial grounds for the reconsideration of
the assailed 17 September 2012 Decision.

3. it resolved to admit the 2,455 ballots of the private respondent despite the valid, legitimate and substantial
objections of the petitioner.

4. it resolved to deny the 471 claimed ballots of the petitioner despite the existence of bona fide and
compelling grounds for their admission. 13

Locsin alleged that the HRET committed grave abuse of discretion when it ignored the presence of 2,457 invalid,
irregular, and rejectible ballots for Lagdameo and 663 bona fide claimed ballots for petitioner. 14 Specifically, only two
of the 2,457 contested ballots were rejected by the HRET, and only 192 of the 663 ballots claimed by petitioner
were admitted by the HRET.15 Petitioner argued that a re-examination of the private respondent's ballots would show
that markings were placed intentionally for identification, and the ballots should have been rejected. Those which
contained shadings below the 50% threshold should have been rejected also.

In its Comment, public respondent argued that under the Constitution, the HRET alone shall have the authority to
determine the form, manner, and conduct by which an election controversy is settled and decided with no further
appeal.

For its part, private respondent Lagdameo argued that the HRET's rulings on the recount, revision and appreciation
of objected and claimed ballots are in accord with law and evidence. 16

The sole issue in the present petition is whether the HRET committed grave abuse of discretion in dismissing
petitioner’s election protest.

Article VI, Section 17 of the Constitution provides that the HRET shall be the "sole judge of all contests relating to
the election, returns, and qualifications of their respective members." 17 As this Court held in Lazatin v. House of
Representatives Electoral Tribunal 18:

The use of the word "sole" emphasizes the exclusive character of the jurisdiction conferred. The exercise of the
power by the Electoral Commission under the 1935 Constitution has been described as "intended to be as complete
and unimpaired as if it had remained originally in the legislature." Earlier, this grant of power to the legislature was
characterized by Justice Malcolm "as full, clear and complete." Under the amended 1935 Constitution, the power
was unqualifiedly reposed upon the Electoral Tribunal and it remained as full, clear and complete as that previously
granted the legislature and the Electoral Commission. The same may be said with regard to the jurisdiction of the
Electoral Tribunals under the 1987 Constitution. 19

6
Thus, this Court's jurisdiction to review HRET’s decisions and orders is exercised only upon showing that the HRET
acted with grave abuse of discretion amounting to lack or excess of jurisdiction. 20 Otherwise, this Court shall not
interfere with the HRET’s exercise of its discretion or jurisdiction. 21 "Grave abuse of discretion" has been defined as
the capricious and whimsical exercise of judgment, the exercise of power in an arbitrary manner, where the abuse is
so patent and gross as to amount to an evasion of positive duty. 22

Time and again, this Court has held that mere abuse of discretion is not enough. 23 It must be grave abuse of
discretion as when the power is exercised in an arbitrary or despotic manner by reason of passion or personal
hostility, and must be so patent and so gross as to amount to an evasion of a positive duty or to a virtual refusal to
perform the duty enjoined or to act at all in contemplation of law. 24

In the present case, we find no grave abuse of discretion on the part of public respondent HRET when it dismissed
petitioner's election protest.

Public respondent HRET conducted a revision and appreciation of all the ballots from all the precincts. This was
done despite the fact that results of initial revision proceedings in 25% of the precincts increased the winning margin
of private respondent from 242 to 265 votes. Out of due diligence and to remove all doubts on the victory of private
respondent, the HRET directed continuation of revision proceedings. This was done despite the dissent of three of
its members, representatives Franklin P. Bautista, Rufus B. Rodriguez, and Joselito Andrew R. Mendoza. The three
voted "for the dismissal of the instant election protest without further proceedings for lack of reasonable recovery of
votes in the pilot protested clustered precincts."25

Thus, in reaching the assailed decision, the HRET took pains in reviewing the validity or invalidity of each contested
ballot with prudence. This is evident from the decision's ballot enumeration specifying with concrete basis and clarity
the reason for its denial or admittance. 26 The results, as well as the objections, claims, admissions, and rejections of
ballots were explained sufficiently and addressed by the HRET in its Decision.

In essence, this petition under Rule 65 seeks a re-examination by this Court of the contested ballots.

An inquiry as to the correctness of the evaluation of evidence is not within the ambit of the extraordinary remedy of
certiorari.27 "Where the court has jurisdiction over the subject matter, its orders upon all questions pertaining to the
cause are orders within its jurisdiction, and however erroneous they may be, they cannot be corrected by
certiorari."28 This rule applies to decisions by the HRET whose independence as a constitutional body has
consistently been upheld by this Court.29

Well settled also is the rule that the Supreme Court is not a trier of facts, and factual issues are beyond its authority
to review.30

In the absence of any showing of grave abuse of discretion by the HRET, there is no reason for this Court to annul
respondent tribunal's decision or to substitute it with its own. As held by this Court in Garcia vs. House of
Representatives Electoral Tribunal: 31

The Court has ruled that the power of the Electoral Commission ‘is beyond judicial interference except, in any event,
upon a clear showing of arbitrary and improvident use of power as will constitute a denial of due process.’ The Court
does not, to paraphrase it in Co vs. HRET,32 venture into the perilous area of correcting perceived errors of
independent branches of the Government; it comes in only when it has to vindicate a denial of due process or
correct an abuse of discretion so grave or glaring that no less than the Constitution itself calls for remedial action. 33

Petitioner's bare assertions of grave abuse of discretion by public respondent were not substantiated. Neither was
there arbitrariness or use of power as to constitute denial of due process. In fact, petitioner was given several
opportunities to present its evidence and raise its arguments. These were considered by public respondent that
discussed meticulously its factual and legal bases in reaching its decision. 34

But still, to erase all lingering doubts, this Court looked into the contested ballots as summarized by Locsin in the
petition.

I. Objected Ballots

Petitioner alleges that the HRET acted with grave abuse of discretion in rejecting only two (2) out of the 2,457
Lagdameo-identified ballots which were contested timely by petitioner during the judicial recount and revision
proceedings. Petitioner claims that these ballots were marked ballots (MB), spurious ballots (SB), and
miscellaneous/stray ballots (MISC/STRAY) which should have been rejected. The petition included tables
enumerating the contested ballots, ground for their rejection and findings, and organized by barangay and clustered
precinct number.35 Petitioner’s findings are consolidated and summarized as follows:

7
No. of Ballots Findings Grounds

446 No BEI signature SB

30 - No BEI signature SB
- Signature affixed on lower
left portion of the ballot MB
deliberately done to mark
the ballot

13 No signature on the BEI SB

Chairman’s signature box /
No BEI Chairman’s
Signature

3 The signature on the BEI SB

Chairman’s signature box is
different from the signature
on the other election
documents.

1 Two different signatures MB

written inside rectangle
intended for BEI Chairman
slot

575 Different BEI signature SB

1 -Different BEI signature SB

- With distinctive "C" MB
voting mark beside oval
shape on candidate number
"128" partylist deliberately done to mark the ballot

2 The signatures of these SB

ballots are different from
the rest of the ballots and
from the signatures on the
election documents.

5 Different BEI signature MB

affixed on the upper right
portion of the ballot

1 BEI signature affixed on MB

president slot portion of
ballot deliberately done to
mark the ballot

49 With distinctive voting MB

marks written... deliberately
done to mark the ballot

1 Thumb print on the slot for MB

8
 sangguniang panglungsod 
no. 27 which serves no
purpose other than to mark
the ballot for identification.

4 "X" mark drawn over the MB

oval shape beside the pre-printed name "(different
candidate)," which serves
no purpose other than to
mark the ballot for
identification.

5 Voter’s signature affixed ... MB

deliberately done to mark
the ballot.

17 Oval shape beside pre-printed name MISC/STRAY

"LAGDAMEO" are only
shaded below 50%
threshold required by the
rules, hence, it should be
stray.

10 Oval shape beside pre-printed name "(different MISC/STRAY

candidate)," (different position], is only shaded
below 50% threshold
required by the rules, hence,
it should be stray.

1 Oval shape beside MISC/STRAY

"(different candidate),"
(different position), was
slashed, hence, it should be
stray.

Petitioner argues that in election law, irrelevant expressions, impertinent figures, words or phrases, and
unnecessary and identifying expressions nullify ballots. Petitioner cites Section 195 of the Omnibus Election Code
which states that it shall be unlawful to apply "any distinguishing mark" or "make use of any other means to identify
the vote of the voter."36 Petitioner also cites Alfelor v. Fuentebella,37 which states that it is illegitimate practice to
include in the ballot unnecessary writings that detract from the solemnity of the exercise of suffrage. The 1935 case
of

Cecilio v. Tomacruz38 and the 1958 case of Amurao v. Calangi39 were also cited saying that ballots containing
impertinent, irrelevant, unnecessary words or expressions are null ballots with these markings serving no other
purpose than to identify the ballot. Finally, petitioner cites the 1962 case of Tajanlangit v. Cazenas 40 indicating that
ballots containing the signature of voters shall be invalidated. 41

The cardinal objective in ballot appreciation is to discover and give effect to, rather than frustrate, the intention of the
voter.42 Extreme caution is observed before any ballot is invalidated and doubts are resolved in favor of the ballot’s
validity.43 Public respondent HRET was guided by this principle and the existing rules and rulings in its appreciation
of the contested ballots.44

Ballots with an Ambiguous Vote have a mark that is allegedly neither a definite vote nor a non-vote. This may
happen if the mark is too light or the voter inadvertently made a small mark inside the oval or other similar cases.
The tribunal determined whether the voter clearly intended to draw the mark or if this was made inadvertently. On
this ground, the HRET admitted all 250 ballots objected by petitioner in favor of Lagdameo. On the other hand, the
HRET admitted all 439 ballots objected by Lagdameo and containing a definite vote for petitioner.

9
Marked Ballots contain a mark intentionally written or placed by the voter for the purpose of identifying the ballot or
the voter. In Cailles v. Gomez,45

The distinguishing mark which the law forbids to be placed in the ballots is that which the elector may have placed
with the intention of facilitating the means of identifying said ballot, for the purpose of defeating the secrecy of the
suffrage which the law establishes. As this is a question of fact, it should be resolved with the ballot itself in view. 46

Marks made by the voter unintentionally do not invalidate the ballot. 47 Neither do marks made by some person other
than the voter.48

Moreover, the Omnibus Election Code provides explicitly that every ballot shall be presumed valid unless there is
clear and good reason to justify its rejection.49 Unless it should clearly appear that they have been deliberately put by
the voter to serve as identification marks, commas, dots, lines, or hyphens between the first name and surname of a
candidate, or in other parts of the ballot, traces of the letter "T", "J", and other similar ones, the first letters or
syllables of names which the voter does not continue, the use of two or more kinds of writing and unintentional or
accidental flourishes, strokes, or strains, shall not invalidate the ballot. 50

On the premise that the alleged markings in the ballots, i.e, "/" ")" and other similar marks do not qualify to identify
the ballot, the HRET admitted as not marked the 381 ballots objected by petitioner in favor of Lagdameo. On the
other hand, the HRET admitted as not marked 4,562 ballots objected by Lagdameo in favor of petitioner. Only one
(1) ballot for petitioner was rejected while only two (2) ballots for Lagdameo were rejected for being marked.

Petitioner objected to most of the ballots on the ground that these were Spurious or Substituted ballots. These are
ballots that allegedly do not contain the signature of the Chairperson of the Board of Election Inspectors (BEI) at the
designated space or the signature is allegedly different from the BEI Chairperson’s signature appearing on other
election documents.

In Punzalan v. Comelec,51 this Court held that "it is a well-settled rule that the failure of the BEI chairman or any of
the members of the board to comply with their mandated administrative responsibility, i.e., signing, authenticating
and thumbmarking of ballots, should not penalize the voter with disenfranchisement, thereby frustrating the will of
the people."52 The consistent rule is that a ballot is considered valid and genuine when it bears any one of the
following authenticating marks: (a) the COMELEC watermark or (b) the signature or initials or thumbprint of the
Chairman of the BEI; and (c) in those cases where the COMELEC watermarks are blurred or not readily apparent to
the naked eye, the presence of red and blue fibers in the ballots. 53

In this case, ultra-violet (UV) lamps were used to confirm the presence of the UV code or seal placed as security
markings at the upper center of the automated ballots. 54 This UV code or seal was inserted to identify ballots that
were cast and fed to the PCOS machines. The HRET found these ballots authentic and admitted as valid the 1,808
ballots objected by petitioner and favoring Lagdameo. On the other hand, the HRET admitted 1,905 ballots objected
by Lagdameo and favoring Locsin.

Ballots with an Over-Voting count occur when a voter shaded more than two or more ovals pertaining to two or more
candidates for representative. The HRET admitted 10 ballots in favor of Lagdameo owing to the untenability of the
objections raised. On the other hand, all 597 ballots in favor of petitioner Locsin were admitted.

Lastly, the HRET found without merit objections made on miscellaneous grounds and admitted one (1) ballot for
petitioner and four (4) ballots for Lagdameo. 55

This Court finds no grave abuse of discretion by the HRET in its findings after HRET’s careful review of the objected
ballots and guided by existing principles, rules and rulings on its appreciation.

II. Claimed Ballots

Petitioner also alleged that the HRET acted with grave abuse of discretion in admitting only 192 out of the 663 stray,
common or PCOS-rejected ballots claimed timely and duly by the petitioner during the judicial recount and revision
proceedings. The petition included tables enumerating the contested ballots, ground for their rejection and findings,
organized by barangay and clustered precinct number. 56 Petitioner’s findings are consolidated and summarized as
follows:

Number of Findings
Ballots

1 The names of LAGDAMEO and LOCSIN are both shaded

but the shading for LAGDAMEO is more prominent.

10
 3 Oval shape beside pre-printed name "LOCSIN, LAGDAMEO" was shaded, the
voter’s intention is to vote for "LOCSIN" as Congressman.

17 The shaded oval beside the name "LOCSIN MARIA LOURDES" is clear and
more pertinent as compared to the other candidate. The intention of the voter is
clear to vote for "LOCSIN" for representative.

427 Oval shape beside pre-printed name "LOCSIN…" was shaded, the intention of
the voter is to vote for LOCSIN as Congressman.

15 Oval shape beside pre-printed name "LOCSIN" was shaded, the intention of the
voter is to vote for "LOUIE LOCSIN" as Congressman.

2 Oval shape beside pre-printed name "BARBERS, IBAY, LOCSIN" was shaded,
the intention of the voter is to vote for "LOCSIN" for Congressman.

1 Oval shape beside pre-printed name "BARBERS, LOCSIN" was shaded, the
intention of the voter is to vote for "LOCSIN" as Congressman.

4 Oval shape beside pre-printed name "BARBERS, IBAY, CARBONFIL,

LAGDAMEO, LOCSIN" was shaded, the intention of the voter is to vote for
"LOCSIN" as Congressman.

1 Oval shape beside pre-printed name "LOCSIN, MARIA LOURDES B. "LOUIE"

was shaded 60% by semi-illiterate voter, other entries shaded on the ballot done
by another person, the intention of voter to vote for "LOCSIN".

2 Ballot is clean and no reported incident in the MOV. Therefore, the voter’s
intention to vote for "LOCSIN MARIA LOURDES" for representative of the 1st
district of Makati should not be disenfranchised.

1 Oval shape beside pre-printed name "LOCSIN" was shaded, the voter’s
intention is to vote for LOCSIN as Congressman. ("One and more ambiguous
mark" was written on the ballot.)

2 Oval shape beside pre-printed name "LOCSIN" was shaded, the intent of voter
is to vote for LOCSIN as Congressman. (The ballots were marked "Rejected"
signed by the BEI Chairman.)

The HRET discussed in the assailed decision that under the 2010 automated election system, parties’ claims are
now limited to the applicability of the intent rule. This requires compliance with the following conditions: (a) only the
oval beside the name of the claimant is shaded or marked; (b) the ballot belongs to the clustered precinct
concerned; (c) the ballot is not marked; and (d) the ballot is authentic. 57

The HRET applied this rule on its appreciation of the claimed ballots. For Stray ballots, the tribunal admitted two (2)
ballots out of the 451 stray ballots claimed by petitioner and in fact admitted only one (1) out of the 606 stray ballots
claimed by Lagdameo. For PCOS Machine-Rejected ballots, these may still be admissible for the claimant provided
that upon physical examination, the four requisites for the applicability of the intent rule are present. The HRET
admitted 190 claimed ballots in favor of petitioner and 191 in favor of Lagdameo.

The final results of the appreciation of contested ballots were summarized by respondent tribunal as follows: 58

Objected Ballots

11
 OBJECTION LOCSIN LAGDAMEO
BASIS
Admitted Rejected Admitted Rejected

Ballots with an 439 0 250 0

Ambiguous
Vote

Ballots Shaded
by More than 1,118 0 0 0
One Person

Ballots
Objected as 4,562 (1) 381 (2)
Marked

Ballots with
10,625 0 0 0
Pattern Voting

Spurious /
Substituted 1,905 0 1,808 0
Ballots

Ballots with an
Over-Voting 597 0 10 0
Count

Combination of
0 0 2 0
Grounds

Miscellaneous
1 (1) 4 0
Grounds

No Stated
1 0 0 0
Objection

TOTAL 19,248 (2) 2,455 (2)

Claimed Ballots

CLAIM LOCSIN LAGDAMEO

BASIS
Admitted Denied Admitted Denied

Stray Ballots 2 (449) 1 (605)

PCOS 190 (22) 191 (11)

Machine-

12
 Rejected
Ballots

TOTAL 192 (471) 192 (616)

The HRET did not act with grave abuse of discretion when it in fact applied meticulously the existing rules and
rulings on the ballot appreciation for the objected and claimed ballots made by both parties.

Clearly, Lagdameo received 42,484 votes. Locsin, on the other hand, received 42,149 votes.

WHEREFORE, the instant petition is DISMISSED for lack of merit. The Decision promulgated on 17 September
2012 and HRET Resolution No. 12-209 dated 15 October 2012 are AFFIRMED.

SO ORDERED.

Republic of the Philippines

SUPREME COURT
Baguio City
13
 EN BANC

A.M. No. P-04-1785               April 2, 2013

(Formerly A.M. No. 03-11-671-RTC)

THE OFFICE OF THE COURT ADMINISTRATOR, Petitioner, 

vs.
DEVELYN GESULTURA, Respondent.

*PERLAS-BERNABE

RESOLUTION

LEONEN, J.:

This . case concerns the administrative liability of Develyn A. Gesultura, Cashier II, Office of the Clerk of Court,
Regional Trial Court Pasig City, for an anomaly involving the Judiciary Development Fund and the General Fund.

The Facts

On June 17, 2003, Paz M. Facun, an officer of the Land Bank of the Philippines (LBP), informed the Chief of Office
of the Supreme Court Fiscal Management and Budget Office (FMBO), Corazon M. Ordoñez, that an investigation
conducted by the LBP Internal Audit Group showed discrepancies between LBP records and FMBO records on the
Judiciary Development Fund (JDF) deposit account of the Regional Trial Court of Pasig City (the account). 1 On July
29, 2003, Ordoñez obtained permission from Chief Justice Hilario G. Davide, Jr. to examine the deposits made by
the Office of the Clerk of Court of RTC-Pasig City (OCC RTC-Pasig City) on the account. 2

On August 11, 2003, FMBO accountant Rogelio M. Valdezco, Jr. submitted a Reconciliation Report stating that the
account was missing Three Million Seven Hundred Seven Thousand Four Hundred Seventy One Pesos and
Seventy Six Centavos (₱3,707,471.76) for the period of January 2001 to June 2003. 3

On August 26, 2003, Chief Justice Davide directed Deputy Court Administrator Christopher O. Lock to determine the
officer accountable for the missing amount. 4

In a November 10, 2003 memorandum5 titled "Anomaly in the Deposit of Judiciary Development Fund in the OCC,
RTC, Pasig City" and addressed to DCA Lock, CMO Judicial Staff Head Nicandro A. Cruz observed that while the
January 2001 to June 2003 records of the OCC RTC-Pasig City indicated its total JDF collection and deposit to be
Eight Million Nine Hundred Two Thousand One Hundred Eighty Seven Pesos and Ninety Five Centavos
(₱8,902,187.95), the amount actually deposited in the account was Five Million One Hundred Ninety Four Thousand
Seven Hundred Sixteen Pesos and Twenty One Centavos (₱5,194,716.21). Cruz identified Develyn A. Gesultura
(Gesultura) as the person responsible for the discrepancy:

The person responsible for the loss was the head of the Cashier's section at the OCC, Ms. DEVELYN A.
GESULTURA. Ms. Gesultura had earlier confessed her transgression to RTC Executive Judge JOSE R.
HERNANDEZ and Clerk of Court GRACE S. BELVIS. She executed an affidavit to that effect (Annex "L") and has
been relieved of her duties as cashier.

The undersigned together with the team of the Fiscal Monitoring Division of the OCA interviewed Ms. Gesultura and
the latter admitted taking money from the JDF collection. She also described how she was able to balance her
books and escape detection inspite of the audit conducted by the COA last October 2001. Lately, Ms. Gesultura has
not reported for work since 15 September 2003.

Ms. Gesultura, Cashier II, was in charge of depositing the JDF daily collections with the Land Bank of the
Philippines, Capitol Branch, Pasig City and she alone signs the deposit slips. She stated during the interview above
mentioned that she deposits with the LBP a smaller amount than that collected in a particular day and pockets the
difference. In order to avoid detection, she accomplishes another deposit slip that states the correct amount and
dispose[s] of the deposit slip she actually presented to the bank. This way, her JDF book would tally with the total
amount stated in all the deposit slips.

She runs the "fake" deposit slips into a computer printer to make it appear that they were validated by the LBP. The
font of the validating machine of the LBP is actually different from the font used by Ms. Gesultura. The font Ms.
Gesultura used was slightly bigger and the spacing wider than the letters and numbers the LBP uses; but the "fake"
deposit slips could pass detection from anybody merely glancing to check whether there was a validation print in the
deposit slips

To complete her scheme, she had a rubber stamp made that reads:
14
"DUPLICATE COPY"

"LAND BANK OF THE PHILIPPINES"

"PASIG CAPITOL BR. FX DEPT."

"TELLER NO. 2"

She then stamped this to the "fake" deposit slips to make it appear that those were the true duplicate copies of the
deposit slips as stamped by the bank.6

Attached to Cruz's memorandum was Gesultura's Affidavit dated August 29, 2003, 7 which was subscribed to before
Executive Judge Jose R. Fernandez. In the affidavit Gesultura declares as follows:

"5. That I am executing this Affidavit to honestly accept and declare that I am solely liable and answerable to
whatever shortages or undeposited collections that may happen or occur during the duration of my term as
Ca[s]hier II at the Cash Section, Office of the Clerk of Court, Regional Trial Court, Pasig City and amenable to any
punishment rendered against me."

With the approval of Court Administrator Presbitero J. Velasco, Jr., DCA Lock transmitted Cruz's memorandum to
Chief Justice Davide together with his recommendations. 8 On February 2, 2004, the Third Division adopted DCA
Lock's recommendations and resolved:

(a) to RE-DOCKET the report of the Office of the Court Administrator as well as that of Mr. Rogelio Valdezco, Jr. as
an administrative complaint against Ms. Develyn A. Gesultura, Cashier II, Office of the Clerk of Court，RTC， Pasig
City;

(b) to PLACE Ms. Develyn A. Gesultura under SUSPENSION pending resolution of this Administrative Matter;

(c) to DIRECT Ms. Develyn A. Gesultura to RESTITUTE the partial amount of Three Million Seven Hundred Seven
Thousand Four Hundred Seventy One Pesos and Seventy Four Centavos (₱3,707,471.74) subject to the final
outcome of the audit by the Fiscal Monitoring Division;

(d) to AUTHORIZE Atty. Grace Belvis, Clerk of Court, Office of the Clerk of Court, Regional Trial Court, Pasig City to
FILE the proper criminal complaint against Ms. Gesultura and to DIRECT her to take the necessary steps to recover
the amount malversed;

(e) to AUTHORIZE the Office of the Court Administrator to ISSUE a Circular directing Executive Judges and the
Clerks of Courts of the Offices of the Clerk of Court to demand from their LBP depository branch copies of bank
confirmation of all General Fund and JDF deposits made therein, to reconcile this bank record with their own record,
and to ATTACH said bank confirmation to their monthly report of collections and deposits submitted to the Fiscal
Monitoring Division, Court Management Office, Office of the Court Administrator, Supreme Court; and

(f) to ISSUE a Hold Departure Order against Ms. Gesultura to prevent her from leaving the country. 9

On June 15, 2004, a Financial Audit Team 10 at the Court Management Office submitted its final report 11 assessing
the total undeposited collections of the OCC RTC-Pasig City for the period December 1996 to December 2003 to be
in the amount of Five Million Four Hundred Sixty Three Thousand Nine Hundred Thirty One Pesos and Thirty
Centavos (₱5,463,931.30). The audit team recommended that Gesultura be directed to restitute this amount to the
Judiciary Development Fund.12

On July 18, 2007, in view of the compulsory retirement of Atty. Grace Belvis, the Court authorized the Assistant
Clerk of Court of the OCC RTC-Pasig City, Atty. Minerva I. Velasco, to file the proper criminal complaint against
Gesultura.13

In a November 26, 2007 memorandum addressed to Chief Justice Reynato S. Puno, 14 Court Administrator Zenaida
N. Elepaño reported that the total computed shortages in the Judiciary Development Fund and General Fund
collections of the OCC RTC-Pasig City from December 1999 to October 2006 are as follows: 15

    JDF GF

Tampered Official Receipts P 184,000.00 159,000.00

Undeposited Collections   5,463,931.30  

15
 TOTAL P 5,647,931.30 159,000.00

Citing In Re: Financial Audit Conducted in the Books of Accounts of Clerk of Court Laura D. Delantar, MTC, Leyte,
Leyte, the Court Administrator found that Gesultura had committed acts of dishonesty and misappropriated the
collections of judiciary funds. OCA Elepaño's memorandum ended in this wise:

Premises considered, it is respectfully recommended for the Honorable Court's consideration the following
recommendations:

1. Ms. DEVELYN A. GESULTURA, Cashier II, Office of the Clerk of Court, Regional Trial Court, Pasig City:

1.1. be DISMISSED from the service for gross dishonesty with forfeiture of all her benefits and with prejudice to
reemployment in any government agency, including government-owned or controlled corporations;

1.2. be DIRECTED to RESTITUTE the computed shortages on Judiciary Development Fund and General Fund (sic)
amounting to Five Million six Hundred Forty Seven Thousand Nine Hundred Thirty One and 30/100 (₱5,647,931.30)
and One Hundred Fifty Nine Thousand

(₱159,000.00), respectively.

2. Atty. MINERVA I. VELASCO, Assistant Clerk of Court, Office of the Clerk of Court, Regional Trial Court, Pasig
City, be DIRECTED to REPORT to the Office of the Court Administrator her compliance with the Court's resolution
dated July 17, 2007.

Respectfully submitted.16

The Court noted the memorandum in the Resolution of February 11, 2008. 17

In a November 28, 2008 Memorandum addressed to Chief Justice Puno, the Office of the Court Administrator
reaffirmed Court Administrator Elepaño's recommendations in the November 26, 2007 memorandum in toto. 18

On March 26, 2010, pursuant to the Court's July 18, 2007 Resolution, Atty. Velasco filed a complaint for
malversation of public funds and falsification of official or public documents against Gesultura before the Office of
the Ombudsman. The complaint was sworn to before 1st Vice Executive Judge Isagani A. Geronimo. 19

We are in accord with the OCA insofar as it recommended Gesultura's dismissal from the service.

Public office is a public trust. Public officers and employees must at all times be accountable to the people, serve
them with utmost responsibility, integrity, loyalty and efficiency, act with patriotism and justice, and lead modest
lives. Those charged with the dispensation of justice, from justices and judges to the lowliest clerks, should be
circumscribed with the heavy burden of responsibility. Not only must their conduct at all times be characterized by
propriety and decorum but, above all else, it must be beyond suspicion. 20

No position demands greater moral righteousness and uprightness from the occupant than does the judicial office.
The safekeeping of funds and collections is essential to the goal of an orderly administration of justice. 21 The act of
misappropriating judiciary funds constitutes dishonesty and grave misconduct which are grave offenses punishable
by dismissal upon the commission of even the first offense. 22 Time and again, we have reminded court personnel
tasked with collections of court funds, such as Clerks of Courts and cash clerks, to deposit immediately with
authorized government depositories the various funds they have collected, because they are not authorized to keep
funds in their custody.23 In Re: Deceitful Conduct of Ignacio S. Del Rosario, Cash Clerk III, Records and
Miscellaneous Matter Section, Checks Disbursement Division, FMO-OCA,24 the Court dismised from the service
cash clerk Ignacio S. Del Rosario who had admitted to misappropriating money entrusted to him by one Noel G.
Primo. In In Re: Report of Regional Coordinator Felipe Kalalo on Alleged Anomalies Involving JDF Collections in
MTCC, Angeles City and MCTC, Minalin, Pampanga, 25 the Court found sufficient evidence for the guilt of Records
Officer and officer-in-charge of JDF Collections Josephine Calaguas for the misappropriation of ₱92,737.00 worth of
JDF collections; Calaguas had admitted to using the JDF collections for the medical treatment of her father. She
was accordingly dismissed from the service on the ground of dishonesty.

We accept the findings of the Fiscal Management and Budget Office, the Court Management Office, and the Office
of the Court Administrator that Gesultura is liable for misappropriating collections for the Judiciary Development
Fund. We are convinced that she has committed dishonesty in the service.

16
After a conscientious review of the record, however, we do not accept the OCA's recommendation with respect to
the amount that Gesultura must restitute. It remains uncontroverted that Gesultura stopped reporting for work on
September 15, 2003; it is also noteworthy that the Court placed her under suspension by order of the February 2,
2004 Resolution. Hence, we adopt the recommendation of the Court Management Office Financial Audit Team that
Gesultura must restitute the undeposited collections of the OCC RTC-Pasig City for the period December 1996 to
December 2003, which is Five Million Four Hundred Sixty Three Thousand Nine Hundred Thirty One Pesos and
Thirty Centavos (₱5,463,931.30). Incidentally, this amount is consistent with Atty. Velasco's complaint against
Gesultura for malversation and falsification of official or public documents filed before the Office of the Ombudsman.

WHEREFORE, above premises considered, respondent DEVELYN A. GESULTURA, Cashier II at the Office of the
Clerk of Court, Regional Trial Court, Pasig City, is found GUILTY of grave misconduct and dishonesty and is
ordered DISMISSED from the service effectively immediately. All her retirement benefits, excluding accrued leave
credits, are ordered FORFEITED in favor of the government with prejudice to reemployment in any government
office, including government-owned or controlled corporations.

She is further ordered to restitute the amount of Five Million Four Hundred Sixty Three Thousand Nine Hundred
Thirty One Pesos and Thirty Centavos (₱5,463,931.30).

SO ORDERED.

Republic of the Philippines

SUPREME COURT
Baguio City
17
 THIRD DIVISION

G.R. No. 204700               April 10, 2013

EAGLERIDGE DEVELOPMENT CORPORATION, MARCELO N. NAVAL and CRISPIN I. OBEN, Petitioners, 

vs.
CAMERON GRANVILLE 3 ASSET MANAGEMENT, INC. Respondent.

DECISION

LEONEN, J.:

All documents mentioned in a Deed of Assignment transferring the credit of the plaintiff in a pending litigation should
be accessible to the defendant through a Motion for Production or Inspection of Documents under Rule 27 o(the
Rules of Court. Litigation is not a game of skills and stratagems. It is a social process that should allow both parties
to fully and fairly access the truth of the matters in litigation.

Before this Court is a Petition under Rule 45, seeking to review the August 29, 2012 1 and November 27,
20122Resolutions of the Third Division of the Court of Appeals. The Resolutions dismissed petitioners' Rule 65
Petition and affirmed the Resolutions dated March 28, 2012 3 and May 28, 20124 of the Regional Trial Court, Branch
60, Makati City denying petitioners' motion for production/inspection.

The pertinent facts are as follows:5

Petitioners Eagleridge Development Corporation (EDC), and sureties Marcelo N. Naval (Naval) and Crispin I. Oben
(Oben) are the defendants in a collection suit initiated by Export and Industry Bank (EIB) through a Complaint 6dated
February 9, 2005, and currently pending proceedings before the Regional Trial Court (RTC), Branch 60, Makati
City7.

By virtue of a Deed of Assignment 8 dated August 9, 2006, EIB transferred EDC's outstanding loan obligations of
₱10,232,998.00 to respondent Cameron Granville 3 Asset Management, Inc. (Cameron), a special purpose vehicle,
thus:

For value received and pursuant to the (a) Loan Sale and Purchase Agreement dated as of 7 April 2006 (the
"LSPA"), made and executed by Export and Industry Bank, as Seller ("Seller"), and by Cameron Granville Asset
Management (SPV-AMC), Inc. (the "Purchaser"), and (b) the Deed of Absolute Sale dated 9 August 2006 (the
"Deed") made and executed by and between Seller and Purchaser, Seller hereby absolutely sells, assigns and
conveys to Purchaser, on a "without recourse" basis, all of its rights, title and interests in the following Loan:

EAGLERIDGE DEVELOPMENT CORPORATION with an outstanding loan obligation of Php 10,232,998.00 covered
by an unregistered Deed of Assignment of Receivables.

xxx xxx xxx

Defined terms used but not otherwise defined herein have the meaning given to them in the LSPA. 9

Thereafter, Cameron filed its Motion to Substitute/Join EIB dated November 24, 2006, which was granted by the trial
court.

On February 22, 2012, petitioners filed a Motion for Production/Inspection 10 of the Loan Sale and Purchase
Agreement (LSPA) dated April 7, 2006 referred to in the Deed of Assignment.

Respondent Cameron filed its Comment11 dated March 14, 2012 alleging that petitioners have not shown "good
cause" for the production of the LSPA and that the same is allegedly irrelevant to the case a quo.

In response, petitioners filed on March 26, 2012 their Reply.12 Petitioners explained that the production of the LSPA
was for "good cause". They pointed out that the claim of Cameron is based on an obligation purchased after
litigation had already been instituted in relation to it. They claimed that pursuant to Article 1634 of the New Civil
Code13 on assignment of credit, the obligation subject of the case a quo is a credit in litigation, which may be
extinguished by reimbursing the assignee of the price paid therefor, the judicial costs incurred and the interest of the
price from the day on which the same was paid. Article 1634 provides:

When a credit or other incorporeal right in litigation is sold, the debtor shall have a right to extinguish it by
reimbursing the assignee for the price the latter paid therefor, the judicial costs incurred by him, and the interest on
the price from the day on which the same was paid.

18
As petitioners' alleged loan obligations may be reimbursed up to the extent of the amount paid by Cameron in the
acquisition thereof, it becomes necessary to verify the amount of the consideration from the LSPA, considering that
the Deed of Assignment was silent on this matter.

In its Resolution14 dated March 28, 2012, the trial court denied petitioners' motion for production for being utterly
devoid of merit. It ruled that there was failure to show "good cause" for the production of the LSPA and failure to
show that the LSPA is material or contains evidence relevant to an issue involved in the action.

Aggrieved, petitioners filed on April 25, 2012, their Motion for Reconsideration. 15 They argued that the application of
Article 1634 of the Civil Code is sanctioned by Section 12, Article III of Republic Act No. 9182, otherwise known as
the Special Purpose Vehicle Law (SPV Law). Section 12 provides:

SECTION 12. Notice and Manner of Transfer of Assets. – (a) No transfer of NPLs to an SPV shall take effect unless
the FI concerned shall give prior notice, pursuant to the Rules of Court, thereof to the borrowers of the NPLs and all
persons holding prior encumbrances upon the assets mortgaged or pledged. Such notice shall be in writing to the
borrower by registered mail at their last known address on file with the FI. The borrower and the FI shall be given a
period of at most ninety (90) days upon receipt of notice, pursuant to the Rules of Court, to restructure or
renegotiate the loan under such terms and conditions as may be agreed upon by the borrower and the FIs
concerned.

(b) The transfer of NPAs from an FI to an SPV shall be subject to prior certification of eligibility as NPA by the
appropriate regulatory authority having jurisdiction over its operations which shall issue its ruling within forty-five (45)
days from the date of application by the FI for eligibility.

(c) After the sale or transfer of the NPLs, the transferring FI shall inform the borrower in writing at the last known
address of the fact of the sale or transfer of the NPLs.

They alleged that the production of the LSPA – which would inform them of the consideration for the assignment of
their loan obligation – is relevant to the disposition of the case.

Respondent Cameron filed its Comment/Opposition 16 dated April 30, 2012 reiterating that the production of the
LSPA was immaterial, to which, petitioners filed, on May 14, 2012, their Reply. 17 Petitioners insisted the materiality
of inquiring about the contents of the LSPA, as the consideration for any transfer of the loan obligation of petitioner
EDC should be the basis for the claim against them.

The trial court denied petitioners' motion for reconsideration in its Resolution dated May 28, 2012.

On July 27, 2012, petitioners filed their Petition for Certiorari with the Court of Appeals (CA), to nullify and/or set
aside the RTC's Resolutions dated March 28, 2012 and May 28, 2012.

In its Resolution dated August 29, 2012, the CA (Third Division) dismissed the petition for lack of petitioner Oben's
verification and certification against forum shopping and failure to attach a copy of the complaint.

Petitioners' subsequent motion for reconsideration18 dated September 20, 2012, was likewise denied in the CA's
November 27, 2012 Resolution.

Hence this instant petition.

The resolution of this case revolves around the following issues: (1) whether the CA erred in dismissing the petition
on technicality, i.e. on a defective verification and certification against forum shopping and the attachment to the
petition of a mere machine copy of the complaint; and (2) whether the RTC gravely abused its discretion in denying
the production and/or inspection of the LSPA.

We agree with petitioner, that the appellate court erred in ruling that Oben's Verification and Certification was
defective for lack of a Board Resolution authorizing Oben to sign on behalf of petitioner EDC. Oben executed and
signed the Verification and Certification in his personal capacity as an impleaded party in the case, and not as a
representative of EDC. We note that an earlier Verification and Certification signed by Naval, for himself and as a
representative of EDC, and a Secretary Certificate containing his authority to sign on behalf of EDC, were already
filed with the appellate court together with the petition for certiorari. 19 As such, what was only lacking was Oben's
Verification and Certification as pointed out in the August 29, 2012 Resolution of the CA.

On the other hand, contrary to petitioners' assertion, a reading of the CA Resolution dated November 27, 2012
shows that the appellate court merely noted the belated attachment of a machine copy, not a certified true copy, of
the complaint to petitioners' motion for reconsideration. Although not expressly stated, the machine copy of the
complaint is in fact acceptable, as Rule 65 provides that one may attach to the petition mere machine copies of
other relevant documents and pleadings.20 More importantly, the CA's dismissal of the petition for certiorari was

19
anchored on its finding that there was no grave abuse of discretion on the part of the RTC in denying the production
of the LSPA, that the errors committed by Judge Ruiz were, if at all, mere errors of judgment correctible not by the
extraordinary writ of certiorari and an ordinary appeal would still be available in the action below for sum of money. 21

An appeal would not have adequately remedied the situation because, in that case, the court would have rendered
its decision without giving the petitioners the opportunity to make use of the information that the LSPA would have
supplied as a result of the court allowing the production of the LSPA. If, on appeal, public respondent reversed its
decision, the reversal would result in the case being retried in the lower court, which would unnecessarily delay the
resolution of the case and burden the parties with additional litigation expense.

Having resolved the issue on the supposed technical defects, we go on to discuss the second issue.

Section 1, Rule 27 of the 1997 Rules of Court, states:

Section 1. Motion for production or inspection; order. – Upon motion of any party showing good cause therefor, the
court in which an action is pending may a) order any party to produce and permit the inspection and copying or
photographing, by or on behalf of the moving party, of any designated documents, papers, books, accounts, letters,
photographs, objects or tangible things, not privileged, which constitute or contain evidence material to any matter
involved in the action and which are in his possession, custody or control; xxx

The provision on production and inspection of documents is one of the modes of discovery sanctioned by the Rules
of Court in order to enable not only the parties, but also the court to discover all the relevant and material facts in
connection with the case pending before it.22

Generally, the scope of discovery is to be liberally construed so as to provide the litigants with information essential
to the fair and amicable settlement or expeditious trial of the case.23 All the parties are required to lay their cards on
the table so that justice can be rendered on the merits of the case. 24

Although the grant of a motion for production of document is admittedly discretionary on the part of the trial court
judge, nevertheless, it cannot be arbitrarily or unreasonably denied because to do so would bar access to relevant
evidence that may be used by a party-litigant and hence, impair his fundamental right to due process. 25

The test to be applied by the trial judge in determining the relevancy of documents and the sufficiency of their
description is one of reasonableness and practicability. 26

According to the trial court, there is no need for the production of the LSPA in order to apprise the petitioners of the
amount of consideration paid by respondent in favor of EIB and that it is enough that the Deed of Assignment has
been produced by Cameron showing that it has acquired the account of the petitioners pursuant to the SPV Law. 27

We find the Petition impressed with merit.

The question was whether respondent had acquired a valid title to the credit, i.e., EDC’s outstanding loan obligation,
and whether it had a right to claim from petitioners. In fact, petitioners had maintained in their motions before the
trial court the nullity or non-existence of the assignment of credit purportedly made between respondent and EIB
(the original creditor).

As respondent Cameron’s claim against the petitioners relies entirely on the validity of the Deed of Assignment, it is
incumbent upon respondent Cameron to allow petitioners to inspect all documents relevant to the Deed, especially
those documents which, by express terms, were referred to and identified in the Deed itself. The LSPA, which
pertains to the same subject matter – the transfer of the credit to respondent is manifestly useful to petitioners’
defense.

Furthermore, under Section 17, Rule 132 of the 1997 Rules of Court, when part of a writing or record is given in
evidence by one party, the whole of the same subject may be inquired into by the other, and when a detached
writing or record is given in evidence, any other writing or record necessary to its understanding may also be given
in evidence. Since the Deed of Assignment was produced in court by respondent and marked as one of its
documentary exhibits, the LSPA which was made a part thereof by explicit reference and which is necessary for its
understanding may also be inevitably inquired into by petitioners.

In this light, the relevance of the LSPA sought by petitioners is readily apparent. Fair play demands that petitioners
must be given the chance to examine the LSPA. Besides, we find no great practical difficulty, and respondent did
not allege any, in presenting the document for inspection and copying of the petitioners.

Incidentally, the legal incidents of the case a quo necessitates the production of said LSPA.

20
Section 13 of the SPV Law clearly provides that "in the transfer of the Non-Performing Loans (NPLs), the provisions
on subrogation and assignment of credits under the New Civil Code shall apply." The law does not exclude the
application of Article 1634 of the New Civil Code to transfers of NPLs by a financial institution to a special purpose
vehicle. Settled is the rule in statutory construction that "when the law is clear, the function of the courts is simple
application." Besides, it is within the power of an SPV to restructure, condone, and enter into other forms of debt
settlement involving NPLs.

Also, Section 19 of the SPV Law expressly states that redemption periods allowed to borrowers under the banking
law, the rules of court and/or other laws are applicable. Hence, the equitable right of redemption allowed to a debtor
under Article 1634 of the Civil Code is applicable.

Therefore, as petitioners correctly pointed out, they have the right of legal redemption by paying Cameron the
transfer price plus the cost of money up to the time of redemption and the judicial costs.

Certainly, it is necessary for the petitioners to be informed of the actual consideration paid by the SPV in its
acquisition of the loan, because it would be the starting point for them to negotiate for the extinguishment of their
obligation. As pointed out by the petitioners, since the Deed of

Assignment merely states "For value received", the appropriate information may be supplied by the LSPA. It is self-
evident that in order to be able to intelligently match the price paid by respondent for the acquisition of the loan,
petitioner must be provided with the necessary information to enable it to make a reasonably informed proposal.
Because of the virtual refusal and denial of the production of the LSPA, petitioners were never accorded the chance
to reimburse respondent of the consideration the latter has paid.

Consequently, this Court finds and so holds that the denial of the Motion for Production despite the existence of
"good cause," relevancy and materiality for the production of the LSPA was unreasonable and arbitrary constituting
grave abuse of discretion on the part of the trial court. Hence, certiorari properly lies as a remedy in the present
case.

Discretionary acts will be reviewed where the lower court or tribunal has acted without or in excess of its jurisdiction,
where an interlocutory order does not conform to the essential requirements of law and may reasonably cause
material injury throughout subsequent proceedings for which the remedy of appeal will be inadequate, or where
there is a clear or serious abuse of discretion.28 The exercise of discretion pertaining to discovery will be set aside
where there is abuse, or the trial court’s disposition of matters of discovery was improvident and affected adversely
the substantial rights of a party.29 After all, the discretion conferred upon trial courts is a sound discretion which
should be exercised with due regard to the rights of the parties and the demands of equity and justice. 30

Indeed, the insistent refusal of respondent to produce the LSPA is perplexing and unacceptable to this Court.
Respondent even asserts that if petitioner EDC thinks that the LSPA will bolster its defense, then it should secure a
copy of the document from the Bangko Sentral ng Pilipinas and not from respondent, because allegedly the
document was not marked by respondent as one of its exhibits. 31

In light of the general philosophy of full discovery of relevant facts, the unreceptive and negative attitude by the
respondent is abominable. The rules on discovery are accorded broad and liberal interpretation precisely to enable
the parties to obtain the fullest possible knowledge of the issues and facts, including those known only to their
adversaries, in order that trials may not be carried on in the dark. 32

Undoubtedly, the trial court had effectively placed petitioners at a great disadvantage inasmuch as respondent
effectively suppressed relevant documents related to the transaction involved in the case a quo. Furthermore, the
remedies of discovery encouraged and provided for under the Rules of Court to be able to compel the production of
relevant documents had been put to naught by the arbitrary act of the trial court.

It must be remembered that "litigation is essentially an abiding quest for truth undertaken not by the judge alone, but
jointly with the parties. Litigants, therefore, must welcome every opportunity to achieve this goal; they must act in
good faith to reveal documents, papers and other pieces of evidence material to the controversy." 33 Courts, as
arbiters and guardians of truth and justice, must not countenance any technical ploy to the detriment of an
expeditious settlement of the case or to a fair, full and complete determination on its merits.

WHEREFORE, the instant petition is GRANTED. The August 29, 2012 and November 27, 2012 resolutions of the
Court of Appeals are REVERSED and SET ASIDE, and respondents are ORDERED to produce the Loan Sale and
Purchase Agreement dated April 7, 2006, including its annexes and/or attachments, if any, in order that petitioners
may inspect and/or photocopy the same.

SO ORDERED.

21
 Republic of the Philippines
SUPREME COURT
Baguio City

THIRD DIVISION

G.R. No. 183137               April 10, 2013

22
PELIZLOY REALTY CORPORATION, represented herein by its President, GREGORY K. LOY, Petitioner, 
vs.
THE PROVINCE OF BENGUET, Respondent.

DECISION

LEONEN, J.:

The principal issue in this case is the scope of authority of a province to impose an amusement tax.

This is a Petition for Review on Certiorari under Rule 45 of the Rules of Court praying that the December 10, 2007
decision of the Regional Trial Court,- Branch 62, La Trinidad, Benguet in Civil Case No. 06-CV-2232 be reversed
and set aside and a new one issued in which: ( 1) respondent Province of Benguet is declared as having no
authority to levy amusement taxes on admission fees for resorts, swimming pools, bath houses, hot springs, tourist
spots, and other places for recreation; (2) Section 59, Article X of the Benguet Provincial Revenue Code of 2005 is
declared null and void; and (3) the respondent Province of Benguet is permanently enjoined from enforcing Section
59, Article X of the Benguet Provincial Revenue Code of 2005.

Petitioner Pelizloy Realty Corporation ("Pelizloy") owns Palm Grove Resort, which is designed for recreation and
which has facilities like swimming pools, a spa and function halls. It is located at Asin, Angalisan, Municipality of
Tuba, Province of Benguet.

On December 8, 2005, the Provincial Board of the Province of Benguet approved Provincial Tax Ordinance No. 05-
107, otherwise known as the Benguet Revenue Code of 2005 ("Tax Ordinance"). Section 59, Article X of the Tax
Ordinance levied a ten percent (10%) amusement tax on gross receipts from admissions to "resorts, swimming
pools, bath houses, hot springs and tourist spots." Specifically, it provides the following:

Article Ten: Amusement Tax on Admission

Section 59. Imposition of Tax. There is hereby levied a tax to be collected from the proprietors, lessees, or operators
of theaters, cinemas, concert halls, circuses, cockpits, dancing halls, dancing schools, night or day clubs, and other
places of amusement at the rate of thirty percent (30%) of the gross receipts from admission fees; and

A tax of ten percent (10%) of gross receipts from admission fees for boxing, resorts, swimming pools, bath houses,
hot springs, and tourist spots is likewise levied. [Emphasis and underscoring supplied]

Section 162 of the Tax Ordinance provided that the Tax Ordinance shall take effect on January 1, 2006.

It was Pelizloy's position that the Tax Ordinance's imposition of a 10% amusement tax on gross receipts from
admission fees for resorts, swimming pools, bath houses, hot springs, and tourist spots is an ultra vires act on the
part of the Province of Benguet. Thus, it filed an appeal/petition before the Secretary of Justice on January 27,
2006.

The appeal/petition was filed within the thirty (30)-day period from the effectivity of a tax ordinance allowed by
Section 187 of Republic Act No. 7160, otherwise known as the Local Government Code (LGC). 1 The appeal/petition
was docketed as MSO-OSJ Case No. 03-2006.

Under Section 187 of the LGC, the Secretary of Justice has sixty (60) days from receipt of the appeal to render a
decision. After the lapse of which, the aggrieved party may file appropriate proceedings with a court of competent
jurisdiction.

Treating the Secretary of Justice's failure to decide on its appeal/petition within the sixty (60) days provided by
Section 187 of the LGC as an implied denial of such appeal/petition, Pelizloy filed a Petition for Declaratory Relief
and Injunction before the Regional Trial Court, Branch 62, La Trinidad, Benguet. The petition was docketed as Civil
Case No. 06-CV-2232.

Pelizloy argued that Section 59, Article X of the Tax Ordinance imposed a percentage tax in violation of the
limitation on the taxing powers of local government units (LGUs) under Section 133 (i) of the LGC. Thus, it was null
and void ab initio. Section 133 (i) of the LGC provides:

Section 133. Common Limitations on the Taxing Powers of Local Government Units. - Unless otherwise provided
herein, the exercise of the taxing powers of provinces, cities, municipalities, and barangays shall not extend to the
levy of the following:

xxx

23
(i) Percentage or value-added tax (VAT) on sales, barters or exchanges or similar transactions on goods or services
except as otherwise provided herein

The Province of Benguet assailed the Petition for Declaratory Relief and Injunction as an improper remedy. It
alleged that once a tax liability has attached, the only remedy of a taxpayer is to pay the tax and to sue for recovery
after exhausting administrative remedies.2

On substantive grounds, the Province of Benguet argued that the phrase ‘other places of amusement’ in Section
140 (a) of the LGC3 encompasses resorts, swimming pools, bath houses, hot springs, and tourist spots since "Article
220 (b) (sic)" of the LGC defines "amusement" as "pleasurable diversion and entertainment x x x synonymous to
relaxation, avocation, pastime, or fun."4 However, the Province of Benguet erroneously cited Section 220 (b) of the
LGC. Section 220 of the LGC refers to valuation of real property for real estate tax purposes. Section 131 (b) of the
LGC, the provision which actually defines "amusement", states:

Section 131. Definition of Terms. - When used in this Title, the term:

xxx

(b) "Amusement" is a pleasurable diversion and entertainment. It is synonymous to relaxation, avocation, pastime,
or fun On December 10, 2007, the RTC rendered the assailed Decision dismissing the Petition for Declaratory Relief
and Injunction for lack of merit.

Procedurally, the RTC ruled that Declaratory Relief was a proper remedy. On the validity of Section 59, Article X of
the Tax Ordinance, the RTC noted that, while Section 59, Article X imposes a percentage tax, Section 133 (i) of the
LGC itself allowed for exceptions. It noted that what the LGC prohibits is not the imposition by LGUs of percentage
taxes in general but the "imposition and levy of percentage tax on sales, barters, etc., on goods and services
only."5It further gave credence to the Province of Benguet's assertion that resorts, swimming pools, bath houses, hot
springs, and tourist spots are encompassed by the phrase ‘other places of amusement’ in Section 140 of the LGC.

On May 21, 2008, the RTC denied Pelizloy’s Motion for Reconsideration.

Aggrieved, Pelizloy filed the present petition on June 10, 2008 on pure questions of law. It assailed the legality of
Section 59, Article X of the Tax Ordinance as being a (supposedly) prohibited percentage tax per Section 133 (i) of
the LGC.

In its Comment, the Province of Benguet, erroneously citing Section 40 of the LGC, argued that Section 59, Article X
of the Tax Ordinance does not levy a percentage tax "because the imposition is not based on the total gross
receipts of services of the petitioner but solely and actually limited on the gross receipts of the admission fees
collected."6 In addition, it argued that provinces can validly impose amusement taxes on resorts, swimming pools,
bath houses, hot springs, and tourist spots, these being ‘amusement places’.

For resolution in this petition are the following issues:

1. Whether or not Section 59, Article X of Provincial Tax Ordinance No. 05-107, otherwise known as the
Benguet Revenue Code of 2005, levies a percentage tax.

2. Whether or not provinces are authorized to impose amusement taxes on admission fees to resorts,
swimming pools, bath houses, hot springs, and tourist spots for being "amusement places" under the Local
Government Code.

The power to tax "is an attribute of sovereignty," 7 and as such, inheres in the State. Such, however, is not true for
provinces, cities, municipalities and barangays as they are not the sovereign; 8 rather, they are mere "territorial and
political subdivisions of the Republic of the Philippines". 9

The rule governing the taxing power of provinces, cities, muncipalities and barangays is summarized in Icard v. City
Council of Baguio:10

It is settled that a municipal corporation unlike a sovereign state is clothed with no inherent power of taxation. The
charter or statute must plainly show an intent to confer that power or the municipality, cannot assume it. And the
power when granted is to be construed in strictissimi juris. Any doubt or ambiguity arising out of the term used in
granting that power must be resolved against the municipality. Inferences, implications, deductions – all these –
have no place in the interpretation of the taxing power of a municipal corporation. 11 [Underscoring supplied]

Therefore, the power of a province to tax is limited to the extent that such power is delegated to it either by the
Constitution or by statute. Section 5, Article X of the 1987 Constitution is clear on this point:

24
Section 5. Each local government unit shall have the power to create its own sources of revenues and to levy taxes,
fees and charges subject to such guidelines and limitations as the Congress may provide, consistent with the basic
policy of local autonomy. Such taxes, fees, and charges shall accrue exclusively to the local governments.
[Underscoring supplied]

Per Section 5, Article X of the 1987 Constitution, "the power to tax is no longer vested exclusively on Congress;
local legislative bodies are now given direct authority to levy taxes, fees and other charges." 12 Nevertheless, such
authority is "subject to such guidelines and limitations as the Congress may provide". 13

In conformity with Section 3, Article X of the 1987 Constitution, 14 Congress enacted Republic Act No. 7160,
otherwise known as the Local Government Code of 1991. Book II of the LGC governs local taxation and fiscal
matters.

Relevant provisions of Book II of the LGC establish the parameters of the taxing powers of LGUS found below.

First, Section 130 provides for the following fundamental principles governing the taxing powers of LGUs:

1. Taxation shall be uniform in each LGU.

2. Taxes, fees, charges and other impositions shall:

a. be equitable and based as far as practicable on the taxpayer's ability to pay;

b. be levied and collected only for public purposes;

c. not be unjust, excessive, oppressive, or confiscatory;

d. not be contrary to law, public policy, national economic policy, or in the restraint of trade.

3. The collection of local taxes, fees, charges and other impositions shall in no case be let to any private
person.

4. The revenue collected pursuant to the provisions of the LGC shall inure solely to the benefit of, and be
subject to the disposition by, the LGU levying the tax, fee, charge or other imposition unless otherwise
specifically provided by the LGC.

5. Each LGU shall, as far as practicable, evolve a progressive system of taxation.

Second, Section 133 provides for the common limitations on the taxing powers of LGUs. Specifically, Section 133 (i)
prohibits the levy by LGUs of percentage or value-added tax (VAT) on sales, barters or exchanges or similar
transactions on goods or services except as otherwise provided by the LGC.

As it is Pelizloy’s contention that Section 59, Article X of the Tax Ordinance levies a prohibited percentage tax, it is
crucial to understand first the concept of a percentage tax.

In Commissioner of Internal Revenue v. Citytrust Investment Phils. Inc.,15 the Supreme Court defined percentage tax
as a "tax measured by a certain percentage of the gross selling price or gross value in money of goods sold,
bartered or imported; or of the gross receipts or earnings derived by any person engaged in the sale of services."
Also, Republic Act No. 8424, otherwise known as the National Internal Revenue Code (NIRC), in Section 125, Title
V,16 lists amusement taxes as among the (other) percentage taxes which are levied regardless of whether or not a
taxpayer is already liable to pay value-added tax (VAT).

Amusement taxes are fixed at a certain percentage of the gross receipts incurred by certain specified
establishments.

Thus, applying the definition in CIR v. Citytrust and drawing from the treatment of amusement taxes by the NIRC,
amusement taxes are percentage taxes as correctly argued by Pelizloy.

However, provinces are not barred from levying amusement taxes even if amusement taxes are a form of
percentage taxes. Section 133 (i) of the LGC prohibits the levy of percentage taxes "except as otherwise provided"
by the LGC.

Section 140 of the LGC provides:

25
SECTION 140. Amusement Tax - (a) The province may levy an amusement tax to be collected from the proprietors,
lessees, or operators of theaters, cinemas, concert halls, circuses, boxing stadia, and other places of amusement at
a rate of not more than thirty percent (30%) of the gross receipts from admission fees.

(b) In the case of theaters of cinemas, the tax shall first be deducted and withheld by their proprietors,
lessees, or operators and paid to the provincial treasurer before the gross receipts are divided between said
proprietors, lessees, or operators and the distributors of the cinematographic films.

(c) The holding of operas, concerts, dramas, recitals, painting and art exhibitions, flower shows, musical
programs, literary and oratorical presentations, except pop, rock, or similar concerts shall be exempt from
the payment of the tax herein imposed.

(d) The Sangguniang Panlalawigan may prescribe the time, manner, terms and conditions for the payment
of tax. In case of fraud or failure to pay the tax, the Sangguniang Panlalawigan may impose such
surcharges, interests and penalties.

(e) The proceeds from the amusement tax shall be shared equally by the province and the municipality
where such amusement places are located. [Underscoring supplied]

Evidently, Section 140 of the LGC carves a clear exception to the general rule in Section 133 (i). Section 140
expressly allows for the imposition by provinces of amusement taxes on "the proprietors, lessees, or operators of
theaters, cinemas, concert halls, circuses, boxing stadia, and other places of amusement."

However, resorts, swimming pools, bath houses, hot springs, and tourist spots are not among those places
expressly mentioned by Section 140 of the LGC as being subject to amusement taxes. Thus, the determination of
whether amusement taxes may be levied on admissions to resorts, swimming pools, bath houses, hot springs, and
tourist spots hinges on whether the phrase ‘other places of amusement’ encompasses resorts, swimming pools,
bath houses, hot springs, and tourist spots.

Under the principle of ejusdem generis, "where a general word or phrase follows an enumeration of particular and
specific words of the same class or where the latter follow the former, the general word or phrase is to be construed
to include, or to be restricted to persons, things or cases akin to, resembling, or of the same kind or class as those
specifically mentioned."17

The purpose and rationale of the principle was explained by the Court in National Power Corporation v. Angas 18 as
follows:

The purpose of the rule on ejusdem generis is to give effect to both the particular and general words, by treating the
particular words as indicating the class and the general words as including all that is embraced in said class,
although not specifically named by the particular words. This is justified on the ground that if the lawmaking body
intended the general terms to be used in their unrestricted sense, it would have not made an enumeration of
particular subjects but would have used only general terms. [2 Sutherland, Statutory Construction, 3rd ed., pp. 395-
400].19

In Philippine Basketball Association v. Court of Appeals, 20 the Supreme Court had an opportunity to interpret a
starkly similar provision or the counterpart provision of Section 140 of the LGC in the Local Tax Code then in effect.
Petitioner Philippine Basketball Association (PBA) contended that it was subject to the imposition by LGUs of
amusement taxes (as opposed to amusement taxes imposed by the national government).  In support of its
1âwphi1

contentions, it cited Section 13 of Presidential Decree No. 231, otherwise known as the Local Tax Code of 1973,
(which is analogous to Section 140 of the LGC) providing the following:

Section 13. Amusement tax on admission. - The province shall impose a tax on admission to be collected from the
proprietors, lessees, or operators of theaters, cinematographs, concert halls, circuses and other places of
amusement xxx.

Applying the principle of ejusdem generis, the Supreme Court rejected PBA's assertions and noted that:

In determining the meaning of the phrase 'other places of amusement', one must refer to the prior enumeration of
theaters, cinematographs, concert halls and circuses with artistic expression as their common characteristic.
Professional basketball games do not fall under the same category as theaters, cinematographs, concert halls and
circuses as the latter basically belong to artistic forms of entertainment while the former caters to sports and
gaming.21 [Underscoring supplied]

However, even as the phrase ‘other places of amusement’ was already clarified in Philippine Basketball Association,
Section 140 of the LGC adds to the enumeration of 'places of amusement' which may properly be subject to
amusement tax. Section 140 specifically mentions 'boxing stadia' in addition to "theaters, cinematographs, concert

26
halls and circuses" which were already mentioned in PD No. 231. Also, 'artistic expression' as a characteristic does
not pertain to 'boxing stadia'.

In the present case, the Court need not embark on a laborious effort at statutory construction. Section 131 (c) of the
LGC already provides a clear definition of ‘amusement places’:

Section 131. Definition of Terms. - When used in this Title, the term:

xxx

(c) "Amusement Places" include theaters, cinemas, concert halls, circuses and other places of amusement where
one seeks admission to entertain oneself by seeing or viewing the show or performances [Underscoring supplied]

Indeed, theaters, cinemas, concert halls, circuses, and boxing stadia are bound by a common typifying
characteristic in that they are all venues primarily for the staging of spectacles or the holding of public shows,
exhibitions, performances, and other events meant to be viewed by an audience. Accordingly, ‘other places of
amusement’ must be interpreted in light of the typifying characteristic of being venues "where one seeks admission
to entertain oneself by seeing or viewing the show or performances" or being venues primarily used to stage
spectacles or hold public shows, exhibitions, performances, and other events meant to be viewed by an audience.

As defined in The New Oxford American Dictionary,22 ‘show’ means "a spectacle or display of something, typically
an impressive one";23 while ‘performance’ means "an act of staging or presenting a play, a concert, or other form of
entertainment."24 As such, the ordinary definitions of the words ‘show’ and ‘performance’ denote not only visual
engagement (i.e., the seeing or viewing of things) but also active doing (e.g., displaying, staging or presenting) such
that actions are manifested to, and (correspondingly) perceived by an audience.

Considering these, it is clear that resorts, swimming pools, bath houses, hot springs and tourist spots cannot be
considered venues primarily "where one seeks admission to entertain oneself by seeing or viewing the show or
performances". While it is true that they may be venues where people are visually engaged, they are not primarily
venues for their proprietors or operators to actively display, stage or present shows and/or performances.

Thus, resorts, swimming pools, bath houses, hot springs and tourist spots do not belong to the same category or
class as theaters, cinemas, concert halls, circuses, and boxing stadia. It follows that they cannot be considered as
among the ‘other places of amusement’ contemplated by Section 140 of the LGC and which may properly be
subject to amusement taxes.

At this juncture, it is helpful to recall this Court’s pronouncements in Icard:

The power to tax when granted to a province is to be construed in strictissimi juris. Any doubt or ambiguity arising
out of the term used in granting that power must be resolved against the province. Inferences, implications,
deductions – all these – have no place in the interpretation of the taxing power of a province. 25

In this case, the definition of' amusement places' in Section 131 (c) of the LGC is a clear basis for determining what
constitutes the 'other places of amusement' which may properly be subject to amusement tax impositions by
provinces. There is no reason for going beyond such basis. To do otherwise would be to countenance an arbitrary
interpretation/application of a tax law and to inflict an injustice on unassuming taxpayers.

The previous pronouncements notwithstanding, it will be noted that it is only the second paragraph of Section 59,
Article X of the Tax Ordinance which imposes amusement taxes on "resorts, swimming pools, bath houses, hot
springs, and tourist spots". The first paragraph of Section 59, Article X of the Tax Ordinance refers to "theaters,
cinemas, concert halls, circuses, cockpits, dancing halls, dancing schools, night or day clubs, and other places of
amusement".  In any case, the issues raised by Pelizloy are pertinent only with respect to the second paragraph of
1âwphi1

Section 59, Article X of the Tax Ordinance. Thus, there is no reason to invalidate the first paragraph of Section 59,
Article X of the Tax Ordinance. Any declaration as to the Province of Benguet's lack of authority to levy amusement
taxes must be limited to admission fees to resorts, swimming pools, bath houses, hot springs and tourist spots.

Moreover, the second paragraph of Section 59, Article X of the Tax Ordinance is not limited to resorts, swimming
pools, bath houses, hot springs, and tourist spots but also covers admission fees for boxing. As Section 140 of the
LGC allows for the imposition of amusement taxes on gross receipts from admission fees to boxing stadia, Section
59, Article X of the Tax Ordinance must be sustained with respect to admission fees from boxing stadia.

WHEREFORE, the petition for review on certiorari is GRANTED. The second paragraph of Section 59, Article X of
the Benguet Provincial Revenue Code of 2005, in so far as it imposes amusement taxes on admission fees to
resorts, swimming pools, bath houses, hot springs and tourist spots, is declared null and void. Respondent Province
of Benguet is permanently enjoined from enforcing the second paragraph of Section 59, Article X of the Benguet

27
Provincial Revenue Code of 2005 with respect to resorts, swimming pools, bath houses, hot springs and tourist
spots.

SO ORDERED.

Republic of the Philippines

SUPREME COURT
Baguio City

EN BANC
28
A.M. No. P-08-2531               April 11, 2013
(Formerly A.M. No. 08-7-220-MTCC)

CIVIL SERVICE COMMISSION, Complainant, 

vs.
MERLE RAMONEDA-PITA, Clerk III, Municipal Trial Court in Cities, Danao City. Respondent.

DECISION

PER CURIAM:

This administrative case arose from a letter1dated June 23, 2006 by Director David E. Cabanag, Jr. of the Civil
Service Commission (CSC) Regional Office No. VII calling the attention of the Office of the Court Administrator
(OCA) to the continued employment of Merle Ramoneda-Pita (Ramoneda-Pita) as Clerk III of the Municipal Trial
Court in Cities (MTCC), Danao City. It informed the OCA that in CSC Resolution No. 010263 2 dated January 26,
2001, Ramoneda-Pita was found guilty of dishonesty and dismissed from the service. As accessory penalties, she
was perpetually barred from joining government service and her civil service eligibility was revoked. However,
Ramoneda-Pita did not declare her ineligibility when she stated in her Personnel Data Sheet (PDS) 3 dated June 14,
2005 that she had never been involved in any administrative case and that she was civil service eligible.

The antecedent facts follow.

On March 23, 1998, an anonymous letter4 informed the CSC of an alleged irregularity in the civil service eligibility of
Ramoneda-Pita. The letter stated that the irregularity concerned Ramoneda-Pita’s taking of the Career Service Sub-
Professional Examination held in Cebu City on July 26, 1987.

The CSC retrieved the records for the July 26, 1987 examinations and compared the pictures and signatures of
Ramoneda-Pita as they appeared in the Picture Seat Plan (PSP) for the exam and her PDS dated October 17,
1990. As the pictures and signatures did not match, the CSC required Ramoneda-Pita to explain why it seemed that
another person took the civil service examination on her behalf.

Ramoneda-Pita denied that someone else took the civil service examinations in her stead. She averred that she
took the civil service examinations on July 30, 1986 and not July 26, 1987. She explained that there were
dissimilarities in the pictures in the PSP and the PDS because these were not taken on the same year and might
have deteriorated in quality over the years. On the other hand, she accounted for the difference in her signatures to
her low educational attainment leading to her non-development and non-maintenance of a usual signature. 5

In its Investigation Report6 dated May 3, 1999, the CSC made the following observations and recommendation:

The person who actually took the Career Service Subprofessional Examination on July 26, 1987 in Cebu City, was
the "Merle C. Ramoneda" whose picture and signature were affixed in the Admission Slip/Notice of Admission and
in the Picture Seat Plan, is NOT the "Merle C. Ramoneda" whose picture and signature appear in the Personal Data
Sheet dated October 17, 1990 of the real Merle C. Ramoneda.

In view of the foregoing, considering that the evidence presented is substantial, it is recommended that respondent
Merle C. Ramoneda be adjudged guilty of the charges and meted the penalty of dismissal with all its accessories. 7

Thus, the CSC issued Resolution No. 010263 dated January 26, 2001 finding Ramoneda-Pita guilty of dishonesty,
the dispositive portion of which reads as follows:

WHEREFORE, the Commission hereby finds Merle C. Ramoneda guilty of the offense of Dishonesty. Accordingly,
the penalty of dismissal from the service with all its accessory penalties is imposed.

Since the respondent is not in the government service, the penalty of dismissal is deemed implemented. She is also
perpetually barred from entering the government service and from taking any civil service examination in the future.
Her Civil Service Sub-Professional Eligibility is likewise revoked.

Let a copy of this Resolution be furnished the Office of the Ombudsman-Visayas for whatever legal action it may
take under the premises.8

Ramoneda-Pita moved for reconsideration but the CSC denied it in Resolution No. 010880 9 dated May 3, 2001.

Ramoneda-Pita appealed CSC Resolution Nos. 010263 and 010880 to the Court of Appeals and, subsequently, to
this Court. In both instances, her appeal was denied. 10

29
On January 14, 2005, Ramoneda-Pita wrote to then President Gloria Macapagal-Arroyo appealing for clemency
stating that she accepted her fate and turned a new leaf with a solemn commitment to do good for the rest of her
life. The Office of the President referred the matter to Director David Cabanag, Jr. of the CSC Regional Office No.
VII for validation, verification and investigation.11

While the appeal for clemency was pending and in the course of the CSC’s investigation, the CSC discovered that,
again, Ramoneda-Pita had been declaring in her PDS, particularly the PDS dated June 14, 2005 submitted to the
Supreme Court, that she had not been found guilty in any administrative case and that she was civil service
eligible.12

Thus, on May 11, 2006, the CSC, in its Investigation Report 13 pursuant to the Office of the President’s referral, found
that Ramoneda-Pita had not sufficiently established moral reformation which is crucial in the grant of executive
clemency. It recommended that the plea for executive clemency be denied.

On June 23, 2006, Director Cabanag, Jr. wrote a letter to the OCA informing it of the continued employment of
Ramoneda-Pita as Clerk III of the MTCC, Danao City despite the finality of CSC Resolution No. 010263.

On August 18, 2006, the OCA required Ramoneda-Pita to submit her comment within fifteen (15) days.

In her Comment dated September 7, 2006, Ramoneda-Pita asserted that she never concealed that she had been
previously found guilty of dishonesty. She claimed that her immediate supervisor, Judge Manuel D. Patalinghug,
was furnished a copy of CSC Resolution No. 010263. She admitted having filed request for executive clemency with
the Office of the President. In connection to this, she said that the CSC directed her to submit some documents
needed for its processing. She explained that she made the entries in her June 14, 2005 PDS because she wanted
to be consistent in her statements in her previous PDS and, considering her low education, she just copied the data
entries contained in her earlier PDS. She said that it was never her intention to falsify the PDS and she did not
understand the legal implications. She prayed for the Court’s understanding and cited her good record during her
years of service.

In its Report14 dated July 4, 2008, the OCA recommended, among others, that the case be docketed as a regular
administrative matter and that this Court conduct its own investigation on the matter.

This Court noted and adopted the recommendation of the OCA in a Resolution 15 dated August 6, 2008 where it
directed the OCA to conduct its own investigation on the matter and submit a report and recommendation thereon.

Thus, this administrative case.

In its Memorandum16 dated February 19, 2009, the OCA recommended Ramoneda-Pita’s dismissal from the service.
It found that Ramoneda-Pita fully participated in the proceedings before the CSC never once questioning its
jurisdiction. It stated:

In the instant case, respondent Ramoneda-Pita, who never even questioned the jurisdiction of the CSC, fully
participated in the proceedings before the CSC. Although she was not yet a Supreme Court employee when the
CSC instituted the case against her, she had already become a member of the judiciary when Resolution No. 01-
0263 dated January 26, 2001 finding her guilty and meting her the penalty of dismissal was issued - having been
appointed by the Court to her present position on July 24, 2000. Her motion for reconsideration of the CSC
Resolution was denied. The respondent then filed a petition for review before the Court of Appeals which affirmed
the same Resolution. A petition for review on certiorari under Rule 45 was filed with the Supreme Court which in its
Resolution dated August 24, 2004 found no reversible error in the challenged decision of the Court of Appeals to
warrant the exercise by the Court of its discretionary appellate jurisdiction in the case. Taking into consideration the
pronouncement in the Ampong case, we believe that with all the more reason the doctrine of estoppel should thus
be considered applicable in the instant case as the respondent went all the way to the Supreme Court to question
the CSC Resolution. In addition, the Court itself has even ruled on the case, effectively upholding CSC Resolution
No. 01-0263 when it explicitly stated that in any event, the petition would still be denied for failure thereof to
sufficiently show that the public respondent committed any reversible error in the challenged decision as to warrant
the exercise by this Court of its discretionary appellate jurisdiction in this case.

xxxx

There lies the question as to how should respondent then be proceeded against with respect to her employment in
the Judiciary. We deem that we cannot just implement CSC Resolution No. 01-0263 and dismiss the respondent
outright. The Court still maintains its administrative jurisdiction over the respondent and should therefore have the
final determination of her administrative liability.

Considering, however, that the CSC had already conducted both fact-finding and formal investigations, we find no
reason why the Court should replicate what the CSC had done more ably. 17

30
In support of its conclusion, the OCA cited Ampong v. Civil Service Commission, CSC-Regional Office No.
1118among others. Said the OCA:

The standard procedure is for the CSC to bring its complaint against a judicial employee before the Supreme Court
through the OCA as shown in several cases. The Court, however, has made exceptions in certain cases. In the very
recent case of Ampong, the Court, although it declared that it had administrative jurisdiction over the petitioner,
nevertheless upheld the ruling of the CSC based on the principle of estoppel. In the said case, petitioner Ampong, a
court interpreter at the time the CSC instituted administrative proceedings against her, questioned the jurisdiction of
the CSC after it found her guilty of dishonesty in surreptitiously taking the CSC-supervised Professional Board
Examination for Teachers (PBET) in 1991 in place of another person and dismissed her from the service. The Court
denied the petition on the ground that the previous actions of petitioner estopped her from attacking the jurisdiction
of the CSC which had accorded her due process.19 (Citations omitted.)

The OCA then proceeded to discuss the merits of Ramoneda-Pita’s contention. It noted Ramoneda-Pita’s claim that
her physical appearance changed over the intervening years since she took the Civil Service Sub-Professional
Examinations. She also posed the possibility that the picture quality had deteriorated over time. In addition, she also
claims that the examiner must have interchanged her picture with someone else as he was the one who pasted the
pictures to the seat plan.

However, the OCA seriously doubted the validity of Ramoneda-Pita’s claim saying:

We do not think that a mere three-year gap would bring about drastic changes in a person’s appearance. Besides,
the respondent failed to substantiate her claims. She could have easily submitted additional evidence, such as
pictures to show the gradual change in her appearance through the three-year period. 20

On the confusion with respect to the pictures, the OCA said that it was not "likely due to the strict procedure followed
during civil service examinations x x x."21 Moreover, the OCA stated:

The presentation of various explanations and conjectures show the inconsistent stands taken by the respondent.
She insists that the picture in the seat plan was her and that her physical appearance has changed over the years,
yet in the same breath argues that the examiner must have interchanged her picture with the pictures of other
examinees.

The same inconsistency is manifest in all her records. Upon the Court’s resolution of her petition for review on
certiorari, the respondent states in her letter dated January 14, 2005 addressed to President Arroyo that she fought
hard to prove her innocence but had accepted her fate and mistake, with the solemn commitment that she would
never commit the same or similar mistake for the rest of her life. x x x.

xxxx

The respondent has a string of dishonest acts which started when she had somebody impersonate her in taking the
Civil Service Subprofessional examination. Upon the discovery of her deception, she embarked on a series of
prevarications to cover it up, the most notable of which is the Personal Data Sheet dated April 5, 2000 she
submitted to the Court as one of the supporting documents for her appointment to the judiciary. In the Personal Data
Sheet, item no. 25 asks "Do you have any pending administrative case?" while item no. 27 queries "Have you ever
been convicted of any administrative offense?" The respondent answered "no" to both questions. It must be
remembered that at the time she filled out the Personal Data Sheet, she already had a pending administrative case,
the CSC having already filed its formal charge on September 7, 1998. Her fraudulent answers had been
instrumental in the unquestioned approval of her appointment because had she answered truthfully the Court would
have been alerted to her pending administrative case with the CSC and would have surely withheld, if not denied,
her appointment.

Taking judicial notice of the fact-finding and formal investigations conducted by the CSC relative to the
impersonation case of the respondent and given the observations on her subsequent actuations which were
predisposed to deceive, we find that the respondent, is indeed, guilty of dishonesty and falsification of document. 22

The OCA thus recommended:

In view of the foregoing, we respectfully submit for the consideration of the Honorable Court the recommendation
that respondent Merle Ramoneda-Pita, Clerk III, Municipal Trial Court in Cities, Danao City, be found GUILTY of
Dishonesty and Falsification of Official Document and be DISMISSED from the service with forfeiture of all her
retirement benefits, except the value of her accrued leaves, if any, and with prejudice to re-employment in the
government or any of its subdivisions, instrumentalities or agencies including government-owned or controlled
corporations.23

We note and adopt the recommendation of the OCA.

31
As a preliminary matter, we address the matter of propriety of the proceedings against Ramoneda-Pita in the CSC.

We have always maintained that it is only the Supreme Court that can oversee the judges’ and court personnel’s
administrative compliance with all laws, rules and regulations. No other branch of government may intrude into this
power, without running afoul of the doctrine of separation of powers. 24 However, as aptly pointed out by the OCA,
Ramoneda-Pita was afforded the full protection of the law, that is, afforded due process. She was able to file several
affidavits and pleadings before the CSC with counsel. It may also be noted that the case had been elevated to the
Court of Appeals and this Court, where the Resolution of the CSC was upheld in both instances.

The OCA’s reliance in Ampong v. Civil Service Commission is well taken. As we have stated in Civil Service
Commission v. Andal25:

In Ampong, petitioner in that case admitted her guilt. She voluntarily went to the CSC regional office, admitted to the
charges leveled against her and waived her right to the assistance of counsel. She was given ample opportunity to
present her side and adduce evidence in her defense before the CSC. She filed her answer to the charges against
her and even moved for a reconsideration of the adverse ruling of the CSC. In short, Ampong did not question the
authority of the CSC and, in fact, actively participated in the proceedings before it.

In the present case, while respondent may have filed his Answer to the formal charge of dishonesty after having
been directed to do so, he denied having taken the civil service examination and did not even appear at the formal
investigation conducted by the CSC-NCR. He appealed to the CSC after the adverse decision of the CSC-NCR was
rendered but raised the issue of lack of jurisdiction over his person. He argued that as an employee in the Judiciary,
"the jurisdiction to hear disciplinary action against him vests with the Sandiganbayan or the Supreme Court." It
cannot therefore be said that he was estopped from assailing the jurisdiction of the CSC.

This notwithstanding, we reiterate that we will not and cannot tolerate dishonesty for the judiciary expects the
highest standard of integrity from all its employees. The conduct and behavior of everyone connected with an office
charged with the dispensation of justice is circumscribed with a heavy burden or responsibility. The Court will not
hesitate to rid its ranks of undesirables. (Citations omitted; emphases ours.)

In any event, the OCA had asked Ramoneda-Pita to comment on the matter. She was therefore given due notice
and fair hearing. It is noteworthy that she only rehashed the arguments that she raised before the CSC proceedings.

We now proceed to the substantive aspect of the case.

This Court has defined dishonesty in Civil Service Commission v. Perocho, Jr. 26 as:

Intentionally making a false statement in any material fact, or practicing or attempting to practice any deception or
fraud in securing his examination, registration, appointment or promotion. Thus, dishonesty, like bad faith, is not
simply bad judgment or negligence. Dishonesty is a question of intention. In ascertaining the intention of a person
accused of dishonesty, consideration must be taken not only of the facts and circumstances which gave rise to the
act committed by the respondent, but also of his state of mind at the time the offense was committed, the time he
might have had at his disposal for the purpose of meditating on the consequences of his act, and the degree of
reasoning he could have had at that moment. (Citations omitted.)

We have previously dealt with cases with a marked resemblance to the present case.

In Civil Service Commission v. Sta. Ana,27 we found sufficient basis to dismiss a court stenographer for
misrepresenting herself to have passed the Career Service Professional Examination Computer Assisted Test
(CAT) when she had somebody else take the exam for her. The CSC undertook to compare the respondent’s PDS
with the CAT application and the Picture Seat Plan of the examinations and found them to be different.

In Civil Service Commission v. Dasco,28 we found Ms. Caridad S. Dasco guilty of dishonesty and consequently
dismissed her from the service for having someone else take the requisite Civil Service Examinations in her stead. It
was found that her picture in the CSC’s PSP had a marked difference from her PDS.

In Office of the Court Administrator v. Bermejo,29 we dismissed Ms. Lourdes Bermejo for having another person
impersonate her at the Civil Service Examinations.

A careful review of the documents submitted before the CSC and a perusal of its investigation reports in the present
case, convince us that Ramoneda-Pita was not the one who took the Civil Service Sub-Professional Examinations
conducted on July 26, 1987. Specimen signatures in the various PDS she had submitted over the years to the Court
do not resemble the signature which appeared in the seat plan of the CSC. Moreover, no substantive evidence was
presented by Ramoneda-Pita to bolster her defense that she was not able to develop a settled signature. Nor did
she substantiate her claim that the difference between the pictures in the PSP and the PDS is due to the aging
process.

32
This Court cannot stress enough that its employees should hold the highest standard of integrity for they are a
reflection of this esteemed institution which they serve. It certainly cannot countenance any form of dishonesty
perpetrated by its employees. As we have stated in the Code of Conduct for Court Personnel 30:

WHEREAS, court personnel, from the lowliest employee to the clerk of court or any position lower than that of a
judge or justice, are involved in the dispensation of justice, and parties seeking redress from the courts for
grievances look upon court personnel as part of the Judiciary.

WHEREAS, in performing their duties and responsibilities, court personnel serve as sentinels of justice and any act
of impropriety on their part immeasurably affects the honor and dignity of the Judiciary and the people’s confidence
in it. (Emphases supplied.)

In this case, Ramoneda-Pita’s length of service in the judiciary is inconsequential. The CSC’s discovery of the
perfidy in her acquisition of her civil service eligibility and her insistence in stating that she is civil service eligible in
her PDS when she had been already found guilty of an administrative charge even after the finality of the CSC
Resolution and even after her seeking clemency tell this Court that Ramoneda-Pita has not and does not live up to
the high standards demanded of a court employee. As the Court has previously stated it will not hesitate to rid the
ranks of undesirables.31

WHEREFORE, Merle C. Ramoneda-Pita is hereby found GUILTY of dishonesty. She is DISMISSED from the
service with forfeiture of all her retirement benefits, except the value of her accrued leave credits, if any, and with
prejudice to re-employment in the government or any of its subdivisions, instrumentalities or agencies including
government-owned and controlled corporations. Let a copy of this Decision be attached to her records with this
Court.

SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila

EN BANC

A.C. No. 8384               April 11, 2013

33
EFIGENIA M. TENOSO Complainant, 
vs.
ATTY. ANSELMO S. ECHANEZ, Respondent.

RESOLUTION

LEONEN, J.:

Etigenia M. Tenoso (complainant) tiled a complaint against Atty. Anselmo S. Echanez (respondent) alleging that
respondent was engaged in practice as a notary public in Cordon, lsabela, without having been properly
commissioned by the Regional Trial Court (RTC) of Santiago City, Isabela. This is the RTC exercising jurisdiction
over the Municipality of Cordon.

This alleged act violates Rule III of the 2004 Rules on Notarial Practice (A.M. No. 02-8-13-SC). To support her
allegations, complainant attached the following documents to her pleadings:

a. Two (2) documents signed and issued by RTC Santiago City Executive Judge Efren M. Cacatian bearing
the names of commissioned notaries public within the territorial jurisdiction of the RTC of Santiago City for
the years 2006 to 2007 and 2007 to 2008. 1 Respondent's name does not appear on either list;

b. Copies of ten (10) documents that appear to have been notarized by respondent in the years 2006, 2007,
and 2008; and

c. A copy of a certification issued by Judge Cacatian stating that a joint-affidavit notarized by respondent in
2008 could not be "authenticated as to respondent's seal and signature as NO Notarial Commission was
issued upon him at the time of the document's notarization." 2

In his two-page Answer, respondent denied the allegations saying, "I have never been notarizing any document or
pleadings"3 and added that he has "never committed any malpractice, nor deceit nor have violated thelawyers (sic)
oath".4 He dismissed such allegations as being "preposterous, full of lies, politically motivated and x x x meant to
harass or intimidate him".5

Also, he surmised that the documents annexed to the Affidavit-Complaint were "tampered and adulterated," or that
"somebody might have forged his signature."6 He failed to attend the mandatory conference and likewise failed to
file his Position Paper.

In his Report and Recommendation dated 29 September 2008, Investigating Commissioner Atty. Salvador B.
Hababag recommended that respondent be suspended from the practice of law for six (6) months and disqualified
from being commissioned as a notary public for two (2) years for violating Rules 1.01 and 10.01 of the Code of
Professional Responsibility.7

In a Resolution dated 11 December 2008, the IBP Board of Governors affirmed the findings of the Investigating
Commissioner but increased the penalty of suspension from six (6) months to one (1) year. Respondent did not file
a Motion for Reconsideration or any other subsequent pleading.

On 12 August 2009, the IBP Board of Governors transmitted its Resolution to the Supreme Court for its action
following Rule 139-B of the Rules of Court.8

The Court modifies the IBP Board of Governors' Resolution.

Complainant presented evidence supporting her allegation that respondent had notarized various documents in
Cordon, Isabela from 2006 to 2008 and that respondent's name does not appear on the list of notaries public
commissioned by the RTC of Santiago City, Isabela for the years 2006 to 2007 and 2007 to 2008.

Respondent failed to present evidence to rebut complainant's allegations.  Per Section 1, Rule 131 of the Rules of
1âwphi1

Court,9 the burden of proof is vested upon the party who alleges the truth of his claim or defense or any fact in issue.
Thus, in Leave Division, Office of Administrative Services, Office of the Court Administrator v. Gutierrez, 10where a
party resorts to bare denials and allegations and fails to submit evidence in support of his defense, the
determination that he committed the violation is sustained. Respondent merely posited that the notarized documents
presented by complainant were "tampered and adulterated" or were results of forgery, but he failed to present any
proof.11 Respondent also resorted to a sweeping and unsupported statement that he never notarized any document.
Accordingly, the reasonable conclusion is that respondent repeatedly notarized documents without the requisite
notarial commission.

Time and again, this Court emphasizes that the practice of law is imbued with public interest and that "a lawyer
owes substantial duties not only to his client, but also to his brethren in the profession, to the courts, and to the
34
nation, and takes part in one of the most important functions of the State - the administration of justice - as an officer
of the court."12 Accordingly, '"lawyers are bound to maintain not only a high standard of legal proficiency, but also of
morality, honesty, integrity and fair dealing."13

Similarly, the duties of notaries public are dictated by public policy and impressed with public interest. 14"Notarization
is not a routinary, meaningless act, for notarization converts a private document to a public instrument, making it
admissible in evidence without the necessity of preliminary proof of its authenticity and due execution." 15

In misrepresenting himself as a notary public, respondent exposed party-litigants, courts, other lawyers and the
general public to the perils of ordinary documents posing as public instruments. As noted by the Investigating
Commissioner, respondent committed acts of deceit and falsehood in open violation of the explicit pronouncements
of the Code of Professional Responsibility. Evidently, respondent's conduct falls miserably short of the high
standards of morality, honesty, integrity and fair dealing required from lawyers. It is proper that he be sanctioned.

WHEREFORE, We find Atty. Anselmo S. Echanez guilty of engaging in notarial practice without a notarial
commission, and accordingly, We SUSPEND him from the practice of law for two (2) years and DISQUALIFY him
from being commissioned as a notary public for two (2) years. He is warned that a repetition of the same or similar
act in the future shall merit a more severe sanction.

SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila

EN BANC

A.M. No. P-10-2741               June 4, 2013

35
JUDGE ANTONIO C. REYES, Complainant, 
vs.
EDWIN FANGONIL, Process Server, Regional Trial Court, Branch 61 of Baguio City, Respondent.

RESOLUTION

PER CURIAM:

This is a case of Gross Misconduct and Graft and Corruption committed by a court officer. The complainant, Judge
Antonio C. Reyes, discovered inadvertently that his court's process server, Edwin Fangonil, had been soliciting
money from litigants in exchange for favorable results.

These are the facts based on the investigation:

Agnes Sungduan was charged for violation of the Comprehensive Dangerous Drugs Act of 2002. Pending her
case’s trial at the Regional Trial Court (RTC), Branch 61 of Baguio City, she was detained at the Baguio City Jail.
She befriended a fellow inmate, Malou Hernandez, who referred Sungduan to Edwin Fangonil (Fangonil).
Hernandez was acquitted eventually, and she told Sungduan the acquittal happened with Fangonil's assistance. 1

Thus, Sungduan sought the help of her uncle, Donato Tamingo, to negotiate with Fangonil for a favorable verdict.
She gave Tamingo a sealed envelope containing twenty thousand pesos (₱20,000) in cash. Tamingo went to the
RTC Branch 61 of Baguio City, met with the court’s process server, Fangonil, and told him he was there in behalf of
Sungduan. Fangonil invited him to a restaurant along Session Road. After ordering two bottles of soft drinks,
Tamingo handed the very envelope containing twenty thousand pesos (₱20,000) to Fangonil. 2

Two weeks later, Sungduan handed Tamingo another envelope, this time containing thirty thousand pesos
(₱30,000) in cash. Tamingo proceeded to RTC to meet with Fangonil. The turnover of the money occurred at the
third-floor canteen of the Hall of Justice in Baguio City.3

On January 29, 2007, Judge Antonio C. Reyes (Judge Reyes) promulgated a decision convicting Sungduan for
violation of the Comprehensive Dangerous Drugs Act of 2002. After the promulgation of the decision, rumors
reached Judge Reyes that Sungduan had paid someone from RTC Branch 61 in exchange for an acquittal. He
learned that she became hysterical after her conviction, but the judge ignored the rumors initially because these
were unverified.4

On February 4, 2007, Judge Reyes received a letter at his residence. 5 The letter was from Sungduan requesting the
judge to grant the Motion for Reconsideration filed by her counsels. 6

This portion of the letter particularly disturbed the judge:

Your honor, my family will be more than willing to give you an additional amount to add to the ₱50,000 they gave to
Edwin if you consider my motion for reconsideration.7 (Emphasis provided).

As a result, Judge Reyes asked two of his court employees to verify if the letter was indeed from Sungduan. 8 She
sent a second letter dated February 5, 2007 that admitted the veracity of her first letter under oath. 9

An administrative complaint against Fangonil was filed by Judge Reyes through the Office of the Court Administrator
(OCA) on February 6, 2007.10

In a Resolution dated July 9, 2007, the Court assigned the case to Executive Judge Edilberto Claravall for
investigation, report, and recommendation.11 However, Judge Claravall inhibited himself since he is a relative of
Judge Reyes. The Court then reassigned the case to Vice Executive Judge Iluminada P. Cabato for investigation,
report, and recommendation, in a Resolution dated July 23, 2007. 12

Judge Cabato submitted her Report on July 30, 2008. 13 This Court, however, returned the case to the investigating
judge to obtain additional testimonies.14 Judge Cabato complied with the directives and filed an Additional Report on
July 16, 2009.15 Both of Judge Cabato’s reports found the respondent Fangonil guilty of gross misconduct and
violation of Republic Act No. 6713. A penalty of one (1) year suspension from service was recommended by Judge
Cabato as penalty against Fangonil.

In a Resolution dated September 14, 2009, the Court referred the case to OCA for additional report, findings, and
recommendations. In a Memorandum dated October 21, 2009 submitted by former Court Administrator Jose P.
Perez who is now a member of this Court, it was recommended that "respondent Fangonil be FOUND guilty for
gross misconduct and be DISMISSED from the service with forfeiture of all benefits, except accrued leave credits,
and disqualification from reinstatement or appointment to any public office including government owned or
controlled corporation."16
36
We affirm the findings of OCA and Judge Iluminada P. Cabato.

In this case, the respondent is a process server whose duty is vital to the administration of justice, and one’s primary
task is to serve court notices. A process server is not authorized to collect or receive any amount of money from any
party-litigant, or in this case, the accused.17

The fact that Fangonil accepted money from a litigant is evident in this case. Sungduan’s letters and Tamingo’s
testimony showed Fangonil’s corrupt practice in soliciting money in exchange for a favorable verdict. She had the
impression that Fangonil was acting as an agent of the judge handling her case. This explained why she wrote
directly to the judge after her conviction instead of addressing Fangonil. Moreover, the judge was shocked to hear
from a litigant whom he had just convicted. The mention of Edwin Fangonil’s name initiated the investigation of the
anomalies occurring in Judge Reyes' court.

As such, the pieces of evidence from the investigation were substantial, 18 the quantum of evidence required in
administrative cases.  A reasonable mind will conclude that Fangonil accepted cash from accused individuals and
1âwphi1

got away with the act for every acquittal from the judge. Unfortunately, his last victim, Agnes Sungduan, was
convicted, and that exposed his illicit acts.

The act of collecting or receiving money from a litigant constitutes grave misconduct in office.  Thus, this kind of
1âwphi1

gross misconduct by those charged with administering and rendering justice erodes the respect for law and the
courts.19

The OCA correctly cites the violations of Fangonil:

Respondent's act of receiving ₱50,000 from a party in a criminal case pending before the sala of the court where he
is a Process Server constitutes gross misconduct x x x. Under Section 23, Rule XIV of the Omnibus Rules
Implementing Book V of Executive Order 292, Grave Misconduct, being in the nature of grave offenses, carries the
extreme penalty of dismissal from the service with forfeiture of retirement benefits except accrued leave credits, and
perpetual disqualification from re-employment in government service.

Respondent likewise violated Canon 1, Section 2 of the Code of Conduct of Court Personnel which provides that
court personnel shall not solicit or accept any gifts, favor or benefit of any explicit or implicit understanding that such
gift shall influence their official actions.20

WHEREFORE, premises considered, this Court finds Edwin Fangonil, process server of Regional Trial Court,
Branch 61, Baguio City, GUILTY for grave misconduct and is DISMISSED from the service with forfeiture of all
benefits, except accrued leave credits, and disqualification from reinstatement or appointment to any public office
including government-owned or controlled corporation.

SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila

EN BANC

A.M. No. P-13-3115               June 4, 2013

[Formerly A.M. No. 13-3-41-RTC]

37
RE: DROPPING FROM THE ROLLS OF JOYLYN R. DUPAYA, Court Stenographer III, Regional Trial Court,
Branch 10, Aparri, Cagayan.

RESOLUTION

PER CURIAM:

Judge Pablo M. Agustin (Judge Agustin), Presiding Judge of Branch 10, Regional Trial Court, Aparri, Cagayan,
referred to the Office of the Court Administrator (DCA) the case of Ms. Joylyn R. Dupaya (Dupaya), Court
Stenographer III, whose performance was rated as "unsatisfactory" for two consecutive periods, from January to
June 2011and from July to December 2011.

In his Memorandum, dated May 8, 2012, 1 Judge Agustin directed Dupaya to explain her continuous absence despite
written and verbal warnings and her failure to transcribe the stenographic notes in numerous instances, thus,
causing delay in the preparation of decisions. Judge Agustin mentioned that Dupaya received two (2) consecutive
"unsatisfactory" performance ratings, and that despite the poor rating given to her for the period, January to June
2011, she did not show any initiative to improve her performance.

Despite the notice, however, Dupaya failed not only to submit a written explanation, but also to show improvement
in her work in the subsequent semester.

Thus, in a letter dated October 25, 2012 2 to the OCA, Judge Agustin recommended that Dupaya be dropped from
the rolls for obtaining "unsatisfactory" performance ratings for two (2) consecutive rating periods.

In its Memorandum, dated January 29, 2013,3 the OCA agreed with the report of Judge Agustin on Dupaya's
unsatisfactory ratings and recommended that she be dropped from the rolls and her position be declared vacant.

The Court agrees.

Section 2, Rule XII of the Omnibus Rules on Appointments and other Personnel Actions provides that: 4

2.2 Unsatisfactory or Poor Performance

a. An official or employee who is given two (2) consecutive unsatisfactory ratings may be dropped from the rolls
after due notice. Notice shall mean that the officer or employee concerned is informed in writing of his unsatisfactory
performance for a semester and is sufficiently warned that a succeeding unsatisfactory performance shall warrant
his separation from the service. Such notice shall be given not later than 30 days from the end of the semester and
shall contain sufficient information which shall enable the employee to prepare an explanation. x x x

In this case, records show that there was proper compliance with the requirements stated in the rule.  The
1âwphi1

Memorandum, dated May 8, 2012, issued by Judge Agustin contained sufficient warning and information that her
frequent absences and poor performance would warrant an unsatisfactory performance rating. Dupaya, however,
failed to proffer an explanation or to improve her performance.

It is worthy to note that in its Resolution, dated July 30, 2007, in A.M. No. 07-0-327-RTC, 5 the Court had the
occasion to direct Dupaya to explain why no administrative sanction should be imposed on her for her failure to
transcribe the stenographic notes in Criminal Case No. 9184 within the prescribed period. On March 17, 2008, she
was admonished and warned by the Court6 that a repetition of the same offense would be dealt with accordingly.
Again, on July 26, 20107 the Court issued a reprimand against Dupaya for violation of Section 2 of Administrative
Circular No. 2-99,8 and for her failure to comply with the rules on her application for sick leave, with a stern warning
that a repetition of the same or similar infraction would be dealt with more severely.

Public accountability essentially includes discharging one's duties as a public officer with utmost responsibility,
integrity, competence, loyalty, and efficiency. Incompetence and inefficiency have no place in public service,
especially in the dispensation of justice.9

Accordingly, the Court RESOLVES to:

1) ADOPT and APPROVE the findings of facts, conclusions of law and recommendation of the Office of the
Court Administrator relative to the unsatisfactory ratings of Joylyn R. Dupaya;

2) DROP the name of Joylyn R. Dupaya, Court Stenographer III, Regional Trial Court, Branch 10, Aparri,
Cagayan from the rolls for obtaining "Unsatisfactory" performance ratings for the periods from January to
June 2011 and from July to December 2011. She is, however, still qualified to receive the benefits .she may
be entitled to under existing laws, and may still be reemployed in the government; and

38
 3) DECLARE her position VACANT.

SO ORDERED

Republic of the Philippines

SUPREME COURT
Manila

THIRD DIVISION

G.R. No. 179492               June 5, 2013

39
REPUBLIC OF THE PHILIPPINES, represented by ABUSAMA M. ALID, Officer-in-Charge, DEPARTMENT OF
AGRICULTURE - REGIONAL FIELD UNIT XII (DA-RFU XII), Petitioner, 
vs.
ABDULWAHAB A. BAYAO, OSMEÑA I. MONTAÑER, RAKMA B. BUISAN, HELEN M. ALVAREZ, NEILA P.
LIMBA, ELIZABETH B. PUSTA, ANNA MAE A. SIDENO, UDTOG B. TABONG, JOHN S. KAMENZA, DELIA R.
SUBALDO, DAYANG W. MACMOD, FLORENCE S. TAYUAN, in their own behalf and in behalf of the other
officials and employees of DA-RFU XII, Respondents.

DECISION

LEONEN, J.:

Before us is a Petition for Review on Certiorari filed under Rule 45. This Petition prays for the reversal and setting
aside of the Court of Appeals’ (1) Resolution dated March 21, 2007 that dismissed the Petition for Certiorari under
Rule 65 filed by petitioner for failure to resort to a Motion for Reconsideration of the assailed trial court Order dated
October 9, 2006 and (2) Resolution dated August 16, 2007 denying petitioner’s Motion for Reconsideration.

Petitioner Department of Agriculture–Regional Field Unit XII (DARFU XII) is a government office mandated to
implement the laws, policies, plans, programs, rules, and regulations of the Department of Agriculture in its regional
area, while respondents are officials and employees of DA-RFU XII. 1

On March 30, 2004, Executive Order (E.O.) No. 304 was passed designating Koronadal City as the regional center
and seat of SOCCSKSARGEN Region. 2 It provides that all departments, bureaus, and offices of the national
government in the SOCCSKSARGEN Region shall transfer their regional seat of operations to Koronadal City. 3

In an April 1, 2005 Memorandum, the Department of Agriculture (DA) Undersecretary for Operations Edmund J.
Sana directed Officer-inCharge (OIC) and Regional Executive Director of DA-RFU XII Abusama M. Alid as follows:

In compliance with Executive Order No. 304 of which Section 2 states "Transfer of Regional Offices. All
departments, bureaus and offices of the National Government on the SOCCSKSARGEN Region shall transfer their
regional seat of operations to Koronadal City," you are hereby directed to immediately effect the transfer of the
administrative, finance and operations base of RFU XII from Cotabato City to Koronadal City. On the interim, part of
the staff can temporarily hold office at either or both the ATI building in Tantangan and Tupi Seed Farm, but the
main office shall be within Koronadal City.

The action plan for transfer should be submitted to my office not later than 6 April 2005 so that appropriate funding
can be processed soonest. Further, execution of the plan should commence by 16 April 2005 or earlier so that
concerned personnel can benefit from the summer break to make personal arrangements for the transfer of their
work base.

For strict compliance.4

In a Memorandum dated April 22, 2005 addressed to DA Secretary Arthur Yap, private respondents opposed the
implementation of the April 1, 2005 Memorandum. 5

They alleged that in 2004, former President Gloria Macapagal-Arroyo made a pronouncement during one of her
visits in Cotabato City that the regional seat of Region 12 shall remain in Cotabato City. 6 Only three departments
were not covered by the suspension of E.O. No. 304, namely, the Department of Trade and Industry (DTI),
Department of Tourism (DOT), and Department of Labor and Employment (DOLE). 7

Respondents alleged further in their Memorandum to the DA Secretary that on March 7, 2005, they appealed to the
Secretary of Agriculture that the implementation of E.O. No. 304 be held in abeyance. A copy of the Petition was
attached to the Memorandum. It cited reasons such as the huge costs the physical transfer will entail and the plight
of employees who have already settled and established their homes in Cotabato City. 8

On March 8, 2005, their Petition was endorsed by Department of Agriculture Employees Association-12 (DAEAS-
12) President Osmeña I. Motañer to then President Macapagal-Arroyo, and on April 12, 2005, this was referred to
DA Secretary Yap for his information and appropriate action. 9 Respondents justified their appeal saying that a
building was constructed in Cotabato City that can accommodate the whole staff of DARFU XII. On the other hand,
there is no building yet in Koronadal City where rent is very expensive. 10 Moreover, if the regional office remains in
Cotabato City, the government need not spend over ₱7,200,000.00 as dislocation pay as well as other expenses for
equipment hauling and construction. 11 Finally, respondents alleged that the proposed third floor of the ATI Building in
Tantangan has a sub-standard foundation and will not be issued a certificate of occupancy by the City Engineering
Office of Koronadal City as per information from an auditor. 12

40
On May 17, 2005, OIC Abusama M. Alid held a meeting and ordered the transfer of the regional office to ATI
Building in Tantangan and Tupi Seed Farm in Tupi, both located in South Cotabato and Uptown, Koronadal City, to
be carried out on May 21, 2005.13

This prompted respondents to file on May 18, 2005 a Complaint for Injunction with Prayer for Issuance of Writ of
Preliminary Injunction and/or Temporary Restraining Order with the Regional Trial Court, Branch 14 of Cotabato
City.14

By Order dated October 9, 2006, the trial court granted respondents' Prayer for a Writ of Preliminary Injunction. 15

In a petition dated December 17, 2006,16 petitioner went to the Court of Appeals via Rule 65 on the ground that the
assailed Order of the trial court is contrary to the pronouncement of this Court in DENR v. DENR Region 12
Employees.

Through the March 21, 2007 Resolution, the Court of Appeals dismissed the Petition for Certiorari for failure of
petitioner to resort to a Motion for Reconsideration of the assailed trial court Order. 17

Hence, the present Petition under Rule 45.

Petitioner argues that (1) this case falls under the exceptions for filing a Motion for Reconsideration prior to filing a
Petition under Rule 65; (2) the trial court Order enjoining the transfer is contrary to DENR v. DENR Region 12
Employees18 that upheld the separation of powers between the executive and judiciary on the wisdom of transfer of
regional offices; (3) the trial court interfered into this wisdom of the executive in the management of its affairs; and
(4) the trial court disregarded basic rules on amendment and revocation of administrative issuances and the
propriety of injunction as a remedy.19

In their Comment, respondents counter that a Petition via Rule 45 is not the proper remedy to assail the disputed
Resolutions.20 They allege that the assailed Court of Appeals Resolution dismissing the Petition for Certiorari for
failure of the petitioners to file a Motion for Reconsideration is not a "final order or resolution" contemplated by Rule
45.21 It is not an adjudication on the merits.22 In fact, the Court of Appeals did not even attempt to resolve the
propriety of the issuance of the assailed trial court Order. 23 In any case, respondents argue that petitioner’s failure to
file a Motion for Reconsideration is fatal. They contend that this is a condition sine qua non for a Petition under Rule
65, and none of the exceptions are present in this case. 24

Based on both parties’ contentions, the issues involved in this case may be summarized as follows:

I. Whether a Petition via Rule 45 is the proper remedy to assail the disputed Resolutions

II. Whether the present case falls within the exceptions on the requisite for filing a Motion for
Reconsideration prior to filing a Petition for Certiorari under Rule 65

III. Whether petitioner can raise other issues not addressed in the assailed Resolutions

IV. Whether the issuance by the RTC of a preliminary injunction against the transfer of the DA Regional
Office to Koronadal City violates the separation of powers between the executive department and the
judiciary as to the wisdom behind the transfer

First, we discuss the procedural issues.

Respondents contend that a Petition via Rule 45 is not the proper remedy to assail the disputed Resolutions. 25 They
allege that the assailedCourt of Appeals Resolution dismissing the Petition for Certiorari for failure of the petitioners
to file a Motion for Reconsideration is not a "final order or resolution" contemplated by Rule 45. 26

On the other hand, petitioner argues that if the assailed Resolutions are not elevated via Rule 45, they would attain
finality and consequently, the trial court Order dated October 9, 2006 would become unassailable as well. 27

A dismissal by the Court of Appeals of a Petition via Rule 65 for failure to file a Motion for Reconsideration may be
assailed via Rule 45.

Unlike a Petition via Rule 45 that is a continuation of the appellate process over the original case, a special civil
action for certiorari under Rule 65 is an original or independent action. 28 Consequently, the March 21, 2007
Resolution of the Court of Appeals dismissing the Petition via Rule 65 as well as its August 16, 2007 Resolution
denying reconsideration are the final Resolutions contemplated under Rule 45. As correctly pointed out by
petitioner, these Resolutions would attain finality if these are not elevated on appeal via Rule 45. As a result, the trial
court Order dated October 9, 2006 would also become unassailable. 29 1âwphi1

41
Respondents also argue that petitioner’s failure to file a Motion for Reconsideration of the assailed Regional Trial
Court Order dated October 9, 2006 is fatal. 30 They contend that the reasons raised by petitioner do not justify
dispensing with the prerequisite of filing a Motion for Reconsideration. 31

For its part, petitioner argues that its Petition for Certiorari filed before the Court of Appeals falls under the
exceptions to the necessity of filing a Motion for Reconsideration. 32 In its Petition with the Court of Appeals,
petitioners explained its reasons for no longer filing a Motion for Reconsideration of the assailed order in that (a) the
questions to be raised in the motion have already been duly raised and passed upon by the lower court 33 and (b)
there is urgent necessity for the resolution of the questions or issues raised. 34 Petitioners allege that the trial court
presiding judge was not acting on the disposition of the case with dispatch and that any further delay would unduly
prejudice the interests of the government in pursuing its economic development strategies in the region. 35

The settled rule is that a Motion for Reconsideration is a condition sine qua non for the filing of a Petition for
Certiorari.36 Its purpose is to grant an opportunity for the court to correct any actual or perceived error attributed to it
by re-examination of the legal and factual circumstances of the case. 37

This rule admits well-defined exceptions as follows:

Concededly, the settled rule is that a motion for reconsideration is a condition sine qua non for the filing of a petition
for certiorari.

Its purpose is to grant an opportunity for the court to correct any actual or perceived error attributed to it by the re-
examination of the legal and factual circumstances of the case. The rule is, however, circumscribed by well-defined
exceptions, such as (a) where the order is a patent nullity, as where the court a quo has no jurisdiction; (b) where
the questions raised in the certiorari proceedings have been duly raised and passed upon by the lower court, or are
the same as those raised and passed upon in the lower court; (c) where there is an urgent necessity for the
resolution of the question and any further delay would prejudice the interests of the Government or of the petitioner
or the subject matter of the action is perishable; (d) where, under the circumstances, a motion for reconsideration
would be useless; (e) where petitioner was deprived of due process and there is extreme urgency for relief; (f)
where, in a criminal case, relief from an order of arrest is urgent and the granting of such relief by the trial court is
improbable; (g) where the proceedings in the lower court are a nullity for lack of due process; (h) where the
proceeding were ex parte or in which the petitioner had no opportunity to object; and (i) where the issue raised is
one purely of law or where public interest is involved. 38 (Emphasis provided)

The second exception is present in this case.

In Siok Ping Tang v. Subic Bay Distribution, Inc.,39 this Court found that the non-filing of a Motion for
Reconsideration in the case was not fatal since the questions raised in the certiorari proceedings have already been
duly raised and passed upon by the lower court, viz:

Respondent explained their omission of filing a motion for reconsideration before resorting to a petition for certiorari
based on exceptions (b), (c) and (i). The CA brushed aside the filing of the motion for reconsideration based on the
ground that the questions raised in the certiorari proceedings have been duly raised and passed upon by the lower
court, or are the same as those raised and passed upon in the lower court. We agree.

Respondent had filed its position paper in the RTC stating the reasons why the injunction prayed for by petitioner
should not be granted. However, the RTC granted the injunction. Respondent filed a petition for certiorari with the
CA and presented the same arguments which were already passed upon by the RTC. The RTC already had the
opportunity to consider and rule on the question of the propriety or impropriety of the issuance of the injunction. We
found no reversible error committed by the CA for relaxing the rule since respondent's case falls within the
exceptions.40

Similarly, the various issues raised in the Petition with the Court of Appeals have already been raised by petitioner
on several occasions through its pleadings with the trial court. The lower court, therefore, passed upon them prior to
its issuance of its Order dated October 9, 2006. Specifically, the table below summarizes the issues and arguments
raised by petitioner before the trial court vis a vis those raised in the Petition for Certiorari filed with the Court of
Appeals:

COURT OF
TRIAL COURT
APPEALS

Motion to Dismiss41 Memorandum42 Manifestation and Petition for Certiorari44

Reply43
dated June 27, 2005 dated September 1, dated December 17,
2006 dated September 5, 2006 2006

42
The Honorable The instant complaint To reiterate, the Respondent judge
Supreme Court had filed by plaintiffs for Supreme Court has held committed grave abuse
already ruled that the injunction is an indirect in the applicable case of of discretion to lack or
propriety or wisdom of way of preventing the DENR v. DENR Region excess of jurisdiction
the transfer of transfer of the regional 12 Employees (409 when he enjoined
government agencies seat of DARFU XII SCRA 359 [2003]) that petitioner from
or offices from which has been upheld respondent DENR transferring DA-RFU XII
Cotabato City to by the Supreme Court in employees "cannot, by from Cotabato City to
Koronadal, South DENR v. DENR Region means of an injunction, South Cotabato and
Cotabato is beyond 12 Employees (409 force the DENR XII Koronadal City. The
judicial inquiry.45 SCRA 359 [2003]). If Regional Offices to assailed order of the
this Honorable Court remain in Cotabato City, lower court enjoining
cannot countermand the as the exercise of the petitioner from
Supreme Court’s ruling authority to transfer the transferring the seat of
directly, it cannot do so same is executive in the DA-RFU XII office to
indirectly.46       nature." The Supreme Koronadal City in South
Court further stated in Cotabato is contrary to
said case that "the the pronouncement of
judiciary cannot inquire the Supreme Court in
into the wisdom or DENR v. DENR Region
expediency of the acts of 12 Employees (409
the executive or the SCRA 359 [2003]).48
legislative department."47
  Corollary to the above,    
the Order dated May 31,
2005 of this Honorable
Court enjoining
defendants from
transferring the seat of
the DA-RFU XII office to
Koronadal City in South
Cotabato is contrary to
the above
pronouncement of the
Supreme Court.
Perforce, the Order
must be set aside
accordingly.49
The allegation under Executive orders are   Respondent judge acted
Paragraph 4 of the amended, modified or arbitrarily, whimsically
Complaint that her revoked by subsequent and in a very biased
Excellency, President ones. The alleged public manner when he
Gloria Macapagal- pronouncement of the concluded that the
Arroyo only made a President suspending President of the
public pronouncement the implementation of Republic has suspended
that the effect of E.O. Executive Order No. the implementation of
No. 304 is suspended 304 is contrary to the Executive Order No.
is hearsay and ordinance power of the 304.52
contrary to the President as provided
procedure on the under the Administrative
repeal, amendment or Code of 1987.51
modification of rules
and regulations.50
By the nature of their     Respondent judge
appointment as committed grave abuse
Regional Officials and of discretion when he
Employees, plaintiffs concluded that the
can be reassigned transfer of DA-RFU XII
anywhere within to Koronadal City will
Region XII in the affect seriously the
exigency of the studies of respondents’
service.53 children and that there
will be no buildings to
house respondents.54
  The allegation of If the plight and  

43
 possible injury to conditions of the families
plaintiffs and their of the DENR employees
families as a are worth considering,
consequence of the like the dislocation of
planned transfer of the schooling of their
regional seat of DA-RFU children, which without
XII to Koronadal City doubt has more adverse
had been ruled upon by impact than the
the Supreme Court in supposed absence of
DENR v. DENR Region allowances for the
12 Employees (409 transfer, the Supreme
SCRA 359 [2003]) to be Court should have
beyond judicial inquiry granted the injunction
because it involves prayed for by said DENR
concerns that are more employees. Apparently,
on the propriety or the Supreme Court did
wisdom of the transfer not find it compelling to
rather than on its grant the injunction over
legality.55 and above the wisdom of
the transfer.56
  The families of the    
employees can still stay
in Cotabato City in as
much as they have
established residences
in the area. It must be
emphasized that the
employees derive
salaries and benefits
from their government
work, from which they
support their families.
The movement of
employees thus would
not cause much
financial dislocation as
long as the employees
received their salaries
and benefits.57
    The Honorable Court Respondent judge
must further realize that committed grave abuse
the employees are being of discretion when he
paid their salaries. In the concluded that the
given order of things, transfer of DA-RFU XII
such salaries are enough would stretch out the
to provide for their basic meager salaries of
necessities. The respondents and that it
Regional Office can would cause them
simply provide for economic strangulation.59
transportation to
effectuate the minimum
required for the transfer
to Koronadal City and
expect the employees to
live on their salaries. Any
allowances due and
owing the employees
connected with the
transfer can be given to
them later as back
payments. This is not to
forget that the Regional
Office has provided
temporary housing for
said employees to
alleviate any

44
 inconvenience that they
may suffer.58
There is absolutely no The issues on the   Respondent judge
technical malversation alleged illegal committed grave abuse
in the realignment of realignment of funds, of discretion when he
budgetary allocation unauthorized ssuance ordered the issuance of
for the intended of memorandum and a writ of preliminary
transfer of DA-RFU XII the alleged unjust injunction based on the
to Koronadal City.60 transfer of employees of absence of appropriation
DA-RFU XII are acts for the transfer to
that are executive in Koronadal City in the
nature x x x.61 amount of
₱9,250,000.00.62
  x x x the funds needed    
for the transfer can be
sourced and met by the
DA from sources such
as the discretionary
administrative fund of
the Office of the
Secretary.
Respondent’s
computation of the
amount required for the
transfer in the amount of
₱9,222,000.00 is
bloated or
exaggerated.63
  Respondents who are   Respondent judge
accountable officers committed grave abuse
cannot be coerced to of discretion when he
transfer funds that are concluded that
deemed illegal or respondents would
improper. Hence, no suffer irreparable
personal liability or damage if the transfer of
irreparable injury would DARFU XII from
be caused upon them. Cotabato City to
On the other hand, the Koronadal City is not
rest of respondents who enjoined.65
are ordinary employees
would not suffer any
irreparable injury.  This
1âwphi1

is due to the fact that

they have no privity to
the alleged illegal
transfer of funds.64

Thus, the present case falls under the second exception in that a Motion for Reconsideration need not be filed
where questions raised in the certiorari proceedings are the same as those raised and passed upon in the lower
court.

In any case, this Court disregards the presence of procedural flaws when there is necessity to address the issues
because of the demands of public interest, including the need for stability in the public service and the serious
implications the case may cause on the effective administration of the executive department. 66

The instant Petition involves the effective administration of the executive department and would similarly warrant
relaxation of procedural rules if need be. Specifically, the fourth clause of E.O. No. 304 states as follows:
"WHEREAS, the political and socio-economic conditions in SOCCSKSARGEN Region point to the need for
designating the regional center and seat of the region to improve government operations and services." 67

Respondents’ final contention is that the disputed Resolutions issued by the Court of Appeals dwell solely on the
indispensability of the filing of a Motion for Reconsideration with the trial court before filing a Petition via Rule 65;
thus, the other grounds in the present Petition need not be addressed. 68

45
Considering that the Petition has overcome the procedural issues as discussed above, we can now proceed to
discuss the substantive issues raised by petitioner.

Petitioner argues that the assailed Order of the trial court enjoining it from transferring the seat of the DA-RFU XII
Regional Office to Koronadal City is contrary to this Court’s pronouncement in DENR v. DENR Region 12
Employees upholding the separation of powers of the executive department and the judiciary when it comes to the
wisdom of transfer of regional offices.69

This Court has held that while the power to merge administrative regions is not provided for expressly in the
Constitution, it is a power which has traditionally been lodged with the President to facilitate the exercise of the
power of general supervision over local governments. 70 This power of supervision is found in the Constitution 71 as
well as in the Local Government Code of 1991, as follows:

Section 25 – National Supervision over Local Government Units –

(a) Consistent with the basic policy on local autonomy, the President shall exercise general supervision over local
government units to ensure that their acts are within the scope of their prescribed powers and functions.

The President shall exercise supervisory authority directly over provinces, highly urbanized cities, and independent
component cities; through the province with respect to component cities and municipalities; and through the city and
municipality with respect to barangays.72

In Chiongbian v. Orbos, we held further that the power of the President to reorganize administrative regions carries
with it the power to determine the regional center. 73

The case of DENR v. DENR Region 12 Employees is in point. This Court held that the DENR Secretary can
reorganize validly the DENR by ordering the transfer of the DENR XII Regional Offices from Cotabato City to
Koronadal, South Cotabato. We also found as follows: 74

It may be true that the transfer of the offices may not be timely considering that: (1) there are no buildings yet to
house the regional offices in Koronadal, (2) the transfer falls on the month of Ramadan, (3) the children of the
affected employees are already enrolled in schools in Cotabato City, (4) the Regional Development Council was not
consulted, and (5) the Sangguniang Panglungsod, through a resolution, requested the DENR Secretary to
reconsider the orders. However, these concern issues addressed to the wisdom of the transfer rather than to its
legality. It is basic in our form of government that the judiciary cannot inquire into the wisdom or expediency of the
acts of the executive or the legislative department, for each department is supreme and independent of the others,
and each is devoid of authority not only to encroach upon the powers or field of action assigned to any of the other
department, but also to inquire into or pass upon the advisability or wisdom of the acts performed, measures taken
or decisions made by the other departments. 75 (Emphasis provided)

The transfer of the regional center of the SOCCSKSARGEN region to Koronadal City is an executive function.

Similar to DENR v. DENR Region 12 Employees, the issues in the present case are addressed to the wisdom of the
transfer rather than to its legality. Some of these concerns are the lack of a proper and suitable building in
Koronadal to house the DA regional office, the inconvenience of the transfer considering that the children of
respondent-employees are already enrolled in Cotabato City schools, and other similar reasons.

The judiciary cannot inquire into the wisdom or expediency of the acts of the executive. 76 When the trial court issued
its October 9, 2006 Order granting preliminary injunction on the transfer of the regional center to Koronadal City
when such transfer was mandated by E.O. No. 304, the lower court did precisely that.

The principle of separation of powers ordains that each of the three great government branches has exclusive
cognizance of and is supreme in concerns falling within its own constitutionally allocated sphere. 77 The judiciary as
Justice Laurel emphatically asserted "will neither direct nor restrain executive or legislative action x x x. " 78

Finally, a verbal pronouncement to the effect that E.O. No. 304 is suspended should not have been given weight. An
executive order is valid when it is not contrary to the law or Constitution. 79

WHEREFORE, the Petition is GRANTED. The Resolutions of the Court of Appeals dated March 21, 2007 and
August 16, 2007 in CA-G.R. SP No. 0 1457-MIN, as well as the Decision dated October 9, 2006 of the Regional
Trial Court, Branch 14 of Cotabato City are REVERSED and SET ASIDE.

SO ORDERED.

46
 Republic of the Philippines
SUPREME COURT
Manila

EN BANC

A.M. No. P-06-2223               June 10, 2013

(Formerly A.M. No. 06-7-226-MTC)
47
OFFICE OF THE COURT ADMINISTRATOR, Complainant, 
vs.
LORENZA M. MARTINEZ, Clerk of Court, Municipal Trial Court, Candelaria, Quezon. Respondent.

DECISION

PER CURIAM: J.:

This administrative case arose from the financial audit conducted by the Court Management Office (CMO), Office of
the Court Administrator (OCA), in the Municipal Trial Court of Candelaria, Quezon (MTC). The audit covered the
accountabilities of Lorenza M. Martinez (Martinez), Clerk of Court, from March 1985 to November 2005.

In September 2004, the salaries of Martinez were withheld. Beginning December 2005, she was excluded from the
payroll because of her failure to submit the monthly reports of collections and deposits as required by SC Circular
No. 32-93.

The audit disclosed that Martinez incurred cash shortages in the Judicial Development Fund (JDF) in the amount of
₱12,273.33 and in the Fiduciary Fund (FF) in the amount of ₱882,250.00. The breakdown of Martinez’ cash
accountabilities were as follows:

Judiciary Development Fund

Total Collections P 917,847.69

Less: Total Remittances 905,574,36

Balance of Accountabilities P 12,273.33

Fiduciary Fund

Total Collections P 4,288,212.50

Less: Total Withdrawals 3,020,712.50

Unwithdrawn Fiduciary Fund as of November 30,

2005 P 1,267,500.00

Less: Bank Balance per LBP SA No. 2611-0011-02

net of unwithdrawn Interest of ₱816.98, as of
November 30, 2005 385,250.00

Balance of Accountabilities P 882,250.001

The audit team discovered that the shortages were due to the following manipulation of Martinez:

1. There were collections without the date of collection appearing on the face of either the duplicate or triplicate
official receipt and were found undeposited, viz:

OR No. Case No. Amount

11445587 01-214 ₱75,000.00

11445589 01-218 6,000.00

11445590 01-257 2,000.00

48
 11445592 01-245 2,000.00

11445593 01-306 5,000.00

11445594 01-306 5,000.00

11445595 01-306 5,000.00

11445596 01-305 2,000.00

11445597 01-284 10,000.00

11445598 02-16 6,000.00

11445599 02-17 2,000.00

Total   ₱120,000.00

There were also collections with different dates appearing on the face of the original and triplicate copies of
OR2(Annexes 1.1 to 1.5), as follows:

OR No. Date of Date of Date of Case No. Amount

Original Triplicate Deposit
OR OR

11445553 12-21-00 1-5-01 1-5-01 00-267 ₱5,000.00

11445554 12-21-00 1-29-01 1-30-01 00-268 5,000.00

9972352 6-7-99 7-1-99 7-1-99 99-107 12,000.00

9972357 9-21-99 10-11-99 10-14-99 99-228 10,000.00

27420 &
9972388 5-10-00 5-20-00 5-25-00 4,000.00
27421

Total ₱36,000.00

In all cases, the duplicate and triplicate copies of OR will be carbon reproductions in all respects of whatever may
have been written on the original. However, this was not observed by Ms. Martinez, instead she issued official
receipts for collections received with the date of actual receipt posted on the original OR, while the duplicate and
triplicate copies were left undated. She first used the money received as collections and when she regained it, the
same was deposited, and that was the time when she posted a date on the duplicate and triplicate OR which is
different from the date of the original OR. This was to cover her practice of delaying the remittance of collections.
There were also times that the collections were not remitted at all, and the duplicate and triplicate ORs were
remained undated up to date, as what had happened to the above undeposited collections of ₱120,000.00.

49
2. Ms. Martinez used a single OR for both JDF and FF collections, the original OR was used for FF and its
corresponding duplicate and triplicate copies were used for JDF (Annexes 2.1 to 2.11), viz:

OR No. JDF FF

Date of Date of
Amount Case No. Amount
Collection Collection

9972099 12-10-98 ₱10.00 6-6-95 4470 ₱6,000.00

14392168 10-17-01 10.00 10-18-01 01-234 5,000.00

99-103
11445533 11-9-00 10.00 5-21-99 30,000.00
to 106

9972266 5-7-99 10.00 2-23-99 99-50 30,000.00

9972267 5-7-99 10.00 2-24-99 99-50 30,000.00

9972789 4-18-00 10.00 11-20-99 99-235 40,000.00

9972410 7-9-99 10.00 5-15-99 99-97 15,000.00

9972265 5-7-99 10.00 1-20-98 5561 10,000.00

9972838 5-24-00 10.00 11-12-96 5098 2,000.00

11445534 11-9-00 10.00 10-7-98 5619 10,000.00

14392156 10-12-01 10.00 6-27-01 01-128 10,000.00

15381554 7-10-02 10.00 6-7-02 02-135 12,000.00

15381257 2-4-02 10.00 2-1-02 01-28 30,000.00

Total   130.00     ₱230,000.00

Verification revealed that the ₱130.00 collections for JDF were reported and deposited. On the other hand, the
₱230,000.00 collections for FF were unreported and undeposited. This practice was a clear violation of the following
provisions of Circular No. 22-94 dated April 8, 1994:

3. A total of ₱90,000.00 were accounted as bonds that were withdrawn twice. Details are as follows:

OR No. Case No. Date of 1st Date of 2nd Amount

Withdrawal Withdrawal

50
 4491458 4320 4-21-95 9-19-02 ₱12,000.00

4491470 4290 & 4295 4-28-95 7-16-97 6,000.00

5129970 4557 8-10-00 12-15-00 3,000.00

6419483 5089 6-9-00 2-28-02 12,000.00

9972398 00-88 8-16-00 2-8-01 10,000.00

7557979 5090 8-10-00 9-26-02 12,000.00

7557997 99-97 7-9-99 12-7-99 15,000.00

9972356 99-227 5-25-00 3-14-01 10,000.00

9972357 99-228 5-25-00 3-14-01 10,000.00

Total ₱90,000.00

The above double withdrawals were made possible because only Ms. Martinez signed the withdrawal slips, in
violation of Circular No. 50-95 dated October 11, 1995 which requires both the signatures of the Executive
Judge/Presiding Judge and the Clerk of Court in making withdrawals of FF. Hon. Felix A. Caraos, Presiding Judge,
when informed on this matter, immediately wrote a letter to the manager of LBP, Candelaria Branch (Annex 3),
notifying the same that he will be jointly allowed to withdraw from the FF account of the court with Mr. Apolonio M.
Sugay, designated Officer-in-Charge on December 6, 2005.

4. The bonds posted in Case Nos. 5528 and 5529 entitled "PP. vs. Amelita Ramilo for Violation of BP 22" amounting
to ₱26,000.00 each were reported as withdrawn on November 1999. However, records revealed that there were no
court orders that were issued to support the withdrawals. Therefore, the withdrawals made were unauthorized. The
signatures of Ms. Ramilo on the herein attached acknowledgement receipt (Annex 4) were clearly forged as these
were totally different to her signatures that were retrieved on the casefolders of the above cases (Annex 5.1 to 5.2).

5. The bond posted in Case No. 00-88 under OR No. 9972398 in the amount of ₱10,000.00 was withdrawn on
August 16, 2000. However, through a fictitious court order (Annex 6), the same was again withdrawn on February 8,
2001. Said fictitious court order was accomplished by altering the Case No. from 5662 to 00-88. All the entries in the
herein attached court order of Case No. 5662 (Annex 7) were the same with the entries in the fictitious court order
except that of the case number. Also, the signature in the acknowledgment receipt of Ms. Lerma M. Mediavillo
(Annex 8), the accused of Case No. 00-88 and not Ms. Nila Carreon as appearing in the fictitious court order, was
forged because this was entirely unlike her signature that was retrieved on the casefolder of Case No. 00-88 (Annex
9).3

Acting on the report and recommendation 4 of the OCA, the Court, in its Resolution,5 dated August 2, 2006, directed
Martinez to (1) explain her failure 1.a] to collect fees accruing to the General Fund and Mediation Fund, 1.b] to
present the JDF official receipts and monthly reports covering the period from March 1985 to December 1995, and
1.3] to deposit her collections on time; (2) explain the discrepancies of the entries in the original and triplicate copies
of the official receipts of the FF collections; (3) explain why she used the original OR for the FF collection and its
corresponding duplicate or triplicate copies for the JDF collections; (4) explain the double withdrawal of the bonds
and their withdrawal without the necessary court orders; and (5) restitute her shortages. The Court also ordered her
suspension pending resolution of the case and issued a hold departure order against her to prevent her from leaving
the country.

In a letter,6 dated September 4, 2006, Martinez averred that the shortage only amounted to ₱540,273.33 and denied
responsibility for the shortage in the JDF as it was the court’s Clerk II who did the transactions. Martinez asked for a
reconsideration of her suspension citing her 28 years of service as basis and begged for the release of her withheld
salary.
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On August 22, 2006, the Bureau of Immigration issued an order directing the issuance of the hold departure order
against Martinez.7

As of January 30, 2012, Martinez had failed to explain and restitute her shortages as required in the Court’s August
2, 2006 Resolution.8 Consequently, the Court issued a resolution 9 requiring her to show cause why she should not
be disciplinarily dealt with or held in contempt for such failure.

In a letter,10 dated May 8, 2012, Martinez explained that her failure to restitute the shortages was due to her lack of
means to do so because she had been suspended from the service since August 2004. She manifested that if the
Court would permit her to resign effective May 8, 2012, she would apply her benefits or separation pay to her
shortages and would settle the remaining balance in staggered payments.

The said letter was referred to the OCA for evaluation, report and recommendation.

In a Memorandum,11 the OCA recommended that:

1) Ms. Lorenza M. Martinez, Clerk of Court, MTC, Candelaria, Quezon, be DISMISSED from the service for
gross dishonesty resulting in malversation of judiciary funds, with forfeiture of all retirement benefits,
excluding accrued leave credits, with prejudice to re-employment in any government office, including
government- owned and controlled corporations;

2) the Office of the Administrative Services (OAS), Office of the Court Administrator (OCA), be DIRECTED
to COMPUTE the balance of earned leave credits of Ms. Lorenza M. Martinez, and forward the same,
together with her Official Service of Records and Notice of Salary Adjustments (NOSA), to the Financial
Management Office (FMO), OCA, for the processing of her terminal leave pay;

3) the Financial Management Office, OCA, upon receipt of the records and documents from the OAS, OCA,
be DIRECTED to COMPUTE and APPLY the withheld salaries and the monetary value of the earned leave
credits of Ms. Lorenza M. Martinez to the cash shortages incurred in the Fiduciary Fund;

4) Mr. Apolonio M. Sugay, Officer-in-charge, MTC, Candelaria, Quezon be DIRECTED to DEPOSIT the
check representing the total amount of the withheld salaries and monetary value of the earned leave credits
of Ms. Lorenza M. Martinez to the Fiduciary Fund account, as partial payment of the cash shortages
incurred, within five (5) days from receipt of the check from the Checks Disbursement Division, FMO, OCA,
and FURNISH immediately the Fiscal Monitoring Division, Court Management Office, OCA, with a machine
validated copy of the deposit slip;

5) Hon. Judge Felix A. Caraos, MTC, Candelaria, Quezon, be DIRECTED to STRICTLY MONITOR Mr.
Apolonio M. Sugay, Officer-in-Charge, MTC, Candelaria, Quezon, to ensure strict compliance with the
circulars and issuances of the Court, particularly in the handling of judiciary funds, otherwise, he shall be
held equally liable for the infractions committed by the employee/s under his command/supervision; and

6) the Legal Office, OCA, be DIRECTED to proceed with the filing of the appropriate criminal case against
Ms. Lorenza M. Martinez.

The Court substantially agrees with the recommendation of the OCA.

Doubtless, Martinez violated OCA Circular No. 26-97, which directs judges and clerks of court to strictly comply with
the provisions of the Auditing and Accounting Manual, particularly Article VI, Sections 61 and 113 thereof, which
require collecting officers to promptly issue official receipts for all money received by them. She likewise violated
OCA Circular No. 50-95 which mandates all clerks of court to deposit, within 24 hours from receipt, all collections
from bailbonds, rental deposits and other fiduciary collections.

These directives are mandatory and designed to promote full accountability for government funds. 12 Clerks of Court,
as custodians of the court funds and revenues, are obliged to immediately deposit with the Land Bank of the
Philippines (LBP) or with any authorized government depository, their collections on various funds because they are
not authorized to keep funds in their custody.13

In this case, Martinez failed to present a satisfactory explanation regarding her cash shortages, her improper use of
official receipts and the withdrawal of cash bonds. Her contention that it was the cash clerk who was responsible for
the JDF fund is untenable. As Clerk of Court, she was the court’s accountable officer. It was not the cash clerk. It
was her duty to supervise and monitor her subordinate to ensure that the proper procedures were followed in the
collection of the court’s funds. Being the custodian of the court’s funds, revenues, records, properties, and premises,
she was liable for any loss, shortage, destruction or impairment of such funds and property. 14

52
Time and again, the Court reminds that "those charged with the dispensation of justice, from the justices and judges
to the lowliest clerks, should be circumscribed with the heavy burden of responsibility. A public servant is expected
to exhibit, at all times, the highest degree of honesty and integrity, and should be made accountable to all those
whom he serves. There is no place in the Judiciary for those who cannot meet the exacting standards of judicial
conduct and integrity. The Court condemns and would never countenance any conduct, act or omission on the part
of all those involved in the administration of justice which would violate the norm of public accountability and would
diminish, or even just tend to diminish, the faith of the people in the Judiciary." 15

In one case, Re: Financial Audit on the Books of Account of Ms. Laura D. Delantar, Clerk of Court, MTC, Leyte,
Leyte,16 the Court dismissed the clerk of court for misappropriating the court’s collection, for tampering the official
receipts and cash book, and for failing to record and remit collections and to submit the necessary monthly reports.

Also, in the case of Office of the Court Administrator v. Nacuray, 17 the clerk of court falsified the official receipts and
the monthly report of collections and withdrawals. The Court found her guilty of gross dishonesty and grave
misconduct and imposed upon her the penalty of dismissal. In OCA v. Santos, 18 a clerk of court suffered a similar
fate for the same reasons.

WHEREFORE, finding respondent Lorenza M. Martinez, Clerk of Court of the Municipal Trial Court of Candelaria,
Quezon, GUILTY of Gross Neglect of Duty, Dishonesty, and Grave Misconduct, the Court hereby orders her
DISMISSAL from the service, with forfeiture of all her benefits and perpetual disqualification from re-employment in
the government service.

Martinez is ORDERED to immediately RESTITUTE the shortages in the Judiciary Development Fund in the total
amount of ₱12,273.33 and in the Fiduciary Fund in the total amount of ₱882,250.00.

The Office of Administrative Services, Office of the Court Administrator, is ORDERED to compute the balance of the
earned leave credits of Martinez and to forward it to the Finance Division, Financial Management Office, Office of
the Court Administrator, including the certified true copies of her computerized service records and notices of salary
adjustment.

The Financial Management Office, Office of the Court Administrator, is DIRECTED to compute and process the
monetary value of leave credits and other benefits due to Martinez, including her withheld salaries and allowances,
and apply the same to her accountabilities. 1âwphi1

Lorenza M. Martinez is also DIRECTED to deposit, within a non-extendible period of one (1) month from receipt of
notice, any remaining balance of the indicated shortages to the corresponding fund accounts, after the total money
value of her leave credits and withheld salaries and allowances (net of deductions) have been applied to her
accountabilities, and to furnish the Chief, FMD, CMO-OCA, copies of the corresponding machine-validated deposit
slips.
1âwphi1

The Legal Office, Office of the Court Administrator, is DIRECTED to immediately file appropriate criminal and civil
proceedings against Martinez upon receipt of the Report from the FMD, CMO-OCA, that she failed to restitute the
portion of their shortages not covered by the money value of their leave credits and the withheld salaries and
allowances (net of deductions).

Mr. Apolonio M. Sugay, Officer-in-Charge, Municipal Trial Court, Candelaria, Quezon, is DIRECTED to deposit to
the respective fund accounts (as instructed by the FMD, CMO-OCA), the checks to be sent to him by the FMO-
OCA, to settle the accountabilities of Martinez and furnish the latter and the Chief, FMD, CMO-OCA, copies of the
machine-validated deposit slips.

Judge Felix A. Caraos, Municipal Trial Court, Candelaria, Quezon, is DIRECTED to closely monitor the financial
transactions of the court, otherwise, he shall be held equally liable for the infractions committed by the employees
under his supervision, and to study and implement procedures that will strengthen the internal control over financial
transactions.

SO ORDERED.

53
 Republic of the Philippines
SUPREME COURT
Manila

EN BANC

A.C. No. 4191               June 10, 2013

ANITA C. PENA, Complainant, 
vs.
ATTY. CHRISTINA C. PATERNO, Respondent.

DECISION

PER CURIAM:

This is an administrative case filed against respondent Atty. Christina C. Paterno for acts violative of the Code of
Professional Responsibility and the Notarial Law.

On February 14, 1994, complainant Anita C. Peña, former head of the Records Department of the Government
Service Insurance System (GSIS), filed an Affidavit-Complaint 1 against respondent Atty. Christina C. Paterno.
Complainant alleged that she was the owner of a parcel of land known as Lot 7-C, Psd-74200, located in

54
Bayanbayanan, Parang, Marikina, Metro Manila, covered by Transfer Certificate of Title (TCT) No. N-
61244,2Register of Deeds of Marikina, with an eight-door apartment constructed thereon. She personally knew
respondent Atty. Christina C. Paterno, as respondent was her lawyer in a legal separation case, which she filed
against her husband in 1974, and the aforementioned property was her share in their property settlement.
Complainant stated that she also knew personally one Estrella D. Kraus, as she was respondent's trusted employee
who did secretarial work for respondent. Estrella Kraus was always there whenever she visited respondent in
connection with her cases.

Moreover, complainant stated that, sometime in 1986, respondent suggested that she (complainant) apply for a loan
from a bank to construct townhouses on her property for sale to interested buyers, and that her property be offered
as collateral. Respondent assured complainant that she would work out the speedy processing and release of the
loan. Complainant agreed, but since she had a balance on her loan with the GSIS, respondent lent her the sum of
₱27,000.00, without any interest, to pay the said loan. When her title was released by the GSIS, complainant
entrusted it to respondent who would handle the preparation of documents for the loan and follow-up the same, and
complainant gave respondent the authority for this purpose. From time to time, complainant inquired about the
application for the loan, but respondent always assured her that she was still preparing the documents required by
the bank. Because of her assurances, complainant did not bother to check on her property, relying on respondent's
words that she would handle speedily the preparation of her application.

Further, complainant narrated that when she visited her property, she discovered that her apartment was already
demolished, and in its place, four residential houses were constructed on her property, which she later learned was
already owned by one Ernesto D. Lampa, who bought her property from Estrella D. Kraus. Complainant immediately
confronted respondent about what she discovered, but respondent just brushed her aside and ignored her. After
verification, complainant learned that her property was sold on November 11, 1986 to Krisbuilt Traders Company,
Ltd., and respondent was the Notary Public before whom the sale was acknowledged. 3 Krisbuilt Traders Company,
Ltd., through its Managing Partner, Estrella D. Kraus, sold the same to one Ernesto D. Lampa on April 13, 1989. 4

Complainant stated in her Complaint that she did not sell her property to Krisbuilt Traders Company, Ltd., and that
she neither signed any deed of sale in its favor nor appeared before respondent to acknowledge the sale. She
alleged that respondent manipulated the sale of her property to Krisbuilt Traders Company, Ltd. using her trusted
employee, Estrella D. Kraus, as the instrument in the sale, and that her signature was forged, as she did not sign
any deed selling her property to anyone.

In her Answer,5 respondent alleged that Estrella D. Kraus never worked in any capacity in her law office, and that
Estrella and her husband, Karl Kraus (Spouses Kraus), were her clients. Respondent denied that she suggested
that complainant should apply for a loan from a bank to construct townhouses. She said that it was the complainant,
on the contrary, who requested her (respondent) to look for somebody who could help her raise the money she
needed to complete the amortization of her property, which was mortgaged with the GSIS and was about to be
foreclosed. Respondent stated that she was the one who introduced complainant to the Spouses Kraus when they
were both in her office. In the course of their conversation, complainant offered the property, subject matter of this
case, to the Spouses Kraus. The Spouses Kraus were interested, and got the telephone number of complainant.
Thereafter, complainant told respondent that she accompanied the Spouses Kraus to the site of her property and
the Office of the Register of Deeds. After about three weeks, the Spouses Kraus called up respondent to tell her that
they had reached an agreement with complainant, and they requested respondent to prepare the deed of sale in
favor of their company, Krisbuilt Traders Company, Ltd. Thereafter, complainant and the Spouses Kraus went to
respondent's office where complainant signed the Deed of Sale after she received Sixty-Seven Thousand Pesos
(₱67,000.00) from the Spouses Kraus. Respondent alleged that complainant took hold of the Deed of Sale, as the
understanding was that the complainant would, in the meantime, work for the release of the mortgage, and,
thereafter, she would deliver her certificate of title, together with the Deed of Sale, to the Spouses Kraus who would
then pay complainant the balance of the agreed price. Complainant allegedly told respondent that she would inform
respondent when the transaction was completed so that the Deed of Sale could be recorded in the Notarial Book.
Thereafter, respondent claimed that she had no knowledge of what transpired between complainant and the
Spouses Kraus. Respondent stated that she was never entrusted with complainant's certificate of title to her
property in Marikina (TCT No. N-61244). Moreover, it was only complainant who negotiated the sale of her property
in favor of Krisbuilt Traders Company, Ltd. According to respondent, complainant's inaction for eight years to verify
what happened to her property only meant that she had actually sold the same, and that she concocted her story
when she saw the prospect of her property had she held on to it. Respondent prayed for the dismissal of the case.

On February 28, 1995, complainant filed a Reply,6 belying respondent's allegations and affirming the veracity of her
complaint.

On March 20, 1995, this case was referred to the Integrated Bar of the Philippines (IBP) for investigation and
recommendation.7 On April 18, 1996, complainant moved that hearings be scheduled by the Commission on Bar
Discipline. On November 8, 1999, the case was set for its initial hearing, and hearings were conducted from March
21, 2000 to July 19, 2000.

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On August 3, 2000, complainant filed her Formal Offer of Evidence. Thereafter, hearings for the reception of
respondent's evidence were set, but supervening events caused their postponement.

On July 4, 2001, respondent filed a Demurrer to Evidence, 8 which was opposed by complainant. The Investigating
Commissioner denied respondent's prayer for the outright dismissal of the complaint, and directed respondent to
present her evidence on October 24, 2001.9

The Register of Deeds of Marikina City was subpoenaed to testify and bring the Deed of Absolute Sale dated
November 11, 1986, which caused the cancellation of TCT No. 61244 in the name of complainant and the issuance
of a new title to Krisbuilt Traders Company, Ltd. However, the Register of Deeds failed to appear on March 1, 2002.
During the hearing held on July 29, 2003, respondent's counsel presented a certification 10 from Records Officer Ma.
Corazon Gaspar of the Register of Deeds of Marikina City, which certification stated that a copy of the Deed of Sale
executed by Anita C. Peña in favor of Krisbuilt Traders Company, Ltd., covering a parcel of land in Marikina, could
not be located from the general file of the registry and that the same may be considered lost. Hearings continued
until 2005. On February 17, 2005, respondent was directed by the Investigating Commissioner to formally offer her
evidence and to submit her memorandum.

Before the resolution of the case by the IBP, respondent filed a Motion to Dismiss before the IBP on the ground that
the criminal case of estafa filed against her before the RTC of Manila, Branch 36, which estafa case was anchored
on the same facts as the administrative case, had been dismissed in a Decision 11 dated August 20, 2007 in Criminal
Case No. 94-138567. The RTC held that the case for estafa could not prosper against the accused Atty. Christina C.
Paterno, respondent herein, for insufficiency of evidence to secure conviction beyond reasonable doubt, considering
the absence of the Deed of Sale and/or any competent proof that would show that Anita Peña's signature therein
was forged and the transfer of the land was made through fraudulent documents.

The issue resolved by the Investigating Commissioner was whether or not there was clear and preponderant
evidence showing that respondent violated the Canons of Professional Responsibility by (a) deceiving complainant
Anita C. Peña; (b) conspiring with Estrella Kraus and Engr. Ernesto Lampa to enable the latter to register the subject
property in his name; and (c) knowingly notarizing a falsified contract of sale.

On January 6, 2009, Atty. Albert R. Sordan, the Investigating Commissioner of the IBP, submitted his Report and
Recommendation finding that respondent betrayed the trust reposed upon her by complainant by executing a bogus
deed of sale while she was entrusted with complainant's certificate of title, and that respondent also notarized the
spurious deed of sale. Commissioner Sordan stated that there was no evidence showing that respondent actively
conspired with any party or actively participated in the forgery of the signature of complainant. Nevertheless,
Commissioner Sordan stated that complainant's evidence supports the conclusion that her signature on the said
Deed of Sale dated November 11, 1986 was forged.

Although no copy of the said Deed of Sale could be produced notwithstanding diligent search in the National
Archives and the Notarial Section of the Regional Trial Court (RTC) of Manila, Commissioner Sordan stated that the
interlocking testimonies of the complainant and her witness, Maura Orosco, proved that the original copy of the
owner's duplicate certificate of title was delivered to respondent. 12 Commissioner Sordan did not give credence to
respondent's denial that complainant handed to her the owner's duplicate of TCT No. N-61244 in November 1986 at
the GSIS, as Maura Orosco, respondent's former client who worked as Records Processor at the GSIS, testified
that she saw complainant give the said title to respondent.

Commissioner Sordan gave credence to the testimony of complainant that she gave respondent her owner's
duplicate copy of TCT No. 61244 to enable respondent to use the same as collateral in constructing a townhouse,
and that the title was in the safekeeping of respondent for seven years. 13 Despite repeated demands by
complainant, respondent refused to return it.14 Yet, respondent assured complainant that she was still the
owner.15Later, complainant discovered that a new building was erected on her property in January 1994, eight years
after she gave the title to respondent. Respondent argued that it was unfathomable that after eight years,
complainant never took any step to verify the status of her loan application nor visited her property, if it is untrue that
she sold the said property. Complainant explained that respondent kept on assuring her that the bank required the
submission of her title in order to process her loan application. 16

Commissioner Sordan stated that respondent enabled Estrella B. Kraus to sell complainant's land to Krisbuilt
Traders Company, Ltd.17 This was evidenced by Entry No. 150322 in TCT No. 61244 with respect to the sale of the
property described therein to Krisbuilt Traders Company, Ltd. for ₱200,000.00. 18 Respondent alleged that
complainant signed the Deed of Sale in her presence inside her office. 19 However, respondent would neither directly
confirm nor deny if, indeed, she notarized the instrument in her direct examination, 20 but on cross-examination, she
stated that she was not denying that she was the one who notarized the Deed of Sale. 21 Estrella Kraus'
affidavit22supported respondent's defense.

Respondent presented her former employee Basilio T. Depaudhon to prove the alleged signing by complainant of
the purported Deed of Absolute Sale, and the notarization by respondent of the said Deed. However, Commissioner

56
Sordan doubted the credibility of Depaudhon, as he affirmed that his participation in the alleged Deed of Absolute
Sale was mere recording, but he later affirmed that he saw the parties sign the Deed of Absolute Sale. 23

Commissioner Sordan stated that the unbroken chain of circumstances, like respondent's testimony that she saw
complainant sign the Deed of Sale before her is proof of respondent's deception. Respondent's notarization of the
disputed deed of sale showed her active role to perpetuate a fraud to prejudice a party. Commissioner Sordan
declared that respondent failed to exercise the required diligence and fealty to her office by attesting that the alleged
party, Anita Peña, appeared before her and signed the deed when in truth and in fact the said person did not
participate in the execution thereof. Moreover, respondent should be faulted for having failed to make the necessary
entries pertaining to the deed of sale in her notarial register.

According to Commissioner Sordan, these gross violations of the law made respondent liable for violation of her
oath as a lawyer and constituted transgressions of Section 20 (a), 24 Rule 138 of the Rules of Court and Canon
125and Rule 1.01 of the Code of Professional Responsibility.

Commissioner Sordan recommended that respondent be disbarred from the practice of law and her name stricken-
off the Roll of Attorneys, effective immediately, and recommended that the notarial commission of respondent, if still
existing, be revoked, and that respondent be perpetually disqualified from reappointment as a notary public.

On August 28, 2010, the Board of Governors of the IBP passed Resolution No. XIX-20-464, adopting and approving
the Report and Recommendation of the Investigating Commissioner, thus:

RESOLVED to ADOPT and APPROVE, as it is hereby unanimously ADOPTED and APPROVED the Report and
Recommendation of the Investigating Commissioner of the above-entitled case, herein made part of this Resolution
as Annex "A", and, finding the recommendation fully supported by the evidence on record and the applicable laws
and rules, and finding Respondent guilty of her oath as a lawyer, Section 20 (a), Rule 138 of the Rules of Court and
Canon 1, Rule 1.01 of the Code of Professional Responsibility, Atty. Christina C. Paterno is hereby DISBARRED
from the practice of law and her name stricken off from the Roll of Attorneys. Furthermore, respondent's notarial
commission if still existing is Revoked with Perpetual Disqualification from reappointment as a Notary Public.

The Court adopts the findings of the Board of Governors of the IBP insofar as respondent has violated the Code of
Professional Responsibility and the Notarial Law, and agrees with the sanction imposed.

The criminal case of estafa from which respondent was acquitted, as her guilt was not proven beyond reasonable
doubt, is different from this administrative case, and each must be disposed of according to the facts and the law
applicable to each case.26 Section 5,27 in relation to Sections 128 and 2,29 Rule 133, Rules of Court states that in
administrative cases, only substantial evidence is required, not proof beyond reasonable doubt as in criminal cases,
or preponderance of evidence as in civil cases. Substantial evidence is that amount of relevant evidence which a
reasonable mind might accept as adequate to justify a conclusion. 30

Freeman v. Reyes31 held that the dismissal of a criminal case does not preclude the continuance of a separate and
independent action for administrative liability, as the weight of evidence necessary to establish the culpability is
merely substantial evidence. An administrative case can proceed independently, even if there was a full-blown trial
wherein, based on both prosecution and defense evidence, the trial court eventually rendered a judgment of
acquittal, on the ground either that the prosecution failed to prove the respondent's guilt beyond reasonable doubt,
or that no crime was committed.32

The purpose of disbarment is to protect the courts and the public from the misconduct of the officers of the court and
to ensure the administration of justice by requiring that those who exercise this important function shall be
competent, honorable and trustworthy men in whom courts and clients may repose confidence. 33 The burden of
proof rests upon the complainant, and the Court will exercise its disciplinary power only if she establishes her case
by clear, convincing and satisfactory evidence.34

In this case, Investigating Commissioner Sordan gave credence to complainant's testimony that she gave
respondent her owner's copy of the certificate of title to her property as respondent would apply for a bank loan in
complainant's behalf, using the subject property as collateral.

Complainant's testimony was corroborated by Maura Orosco, a former records processor in complainant's office at
the GSIS and also a client of respondent, who stated that she saw complainant give her title to
respondent.35Respondent admitted in her Answer36 that she executed the Deed of Sale per the request of the
Spouses Kraus. The said Deed of Sale was notarized by respondent as evidenced by Entry No. 150322 37 in
complainant's title, TCT No. N-61244. As the Deed of Sale could not be presented in evidence, through no fault of
the complainant, nonetheless, the consequence thereof is failure of complainant to prove her allegation that her
signature therein was forged and that respondent defrauded complainant by facilitating the sale of the property to
Krisbuilt Traders Company, Ltd. without complainant's approval. However, complainant proved that respondent did
not submit to the Clerk of Court of the RTC of Manila, National Capital Region her Notarial Report for the month of
November 1986, when the Deed of Sale was executed.
57
The pertinent provisions of the applicable Notarial Law found in Chapter 12, Book V, Volume I of the Revised
Administrative Code of 1917, as amended, states that every notary public shall keep a notarial register, 38 and he
shall enter in such register, in chronological order, the nature of each instrument executed, among others, and,
when the instrument is a contract, he shall keep a correct copy thereof as part of his records, and he shall likewise
enter in said records a brief description of the substance thereof. 39

A ground for revocation of a notary public's commission is failure of the notary to send the copy of the entries to the
proper clerk of the Court of First Instance (RTC) within the first ten days of the month next following or the failure of
the notary to forward his notarial register, when filled, to the proper clerk of court. 40

In this case, the Clerk of Court of the RTC of Manila issued a Certification, 41 dated February 22, 1994, stating that
respondent was duly appointed as a Notary Public for the City of Manila for the year 1986, and that respondent has
not yet forwarded to the Clerk of Court's Office her Notarial Report for the month of November 1986, when the Deed
of Sale was executed and notarized by her. Hence, a copy of the Notarial Report/Record and the said Deed of Sale
could not also be found in the National Archives per the certification 42 of the Archives Division Chief Teresita R.
Ignacio for Director Edgardo J. Celis. The failure of respondent to fulfill her duty as notary public to submit her
notarial register for the month of November 1986 and a copy of the said Deed of Sale that was notarized by her on
the same month is cause for revocation of her commission under Section 249 of the Notarial Law. 43 Lawyers
commissioned as notaries public are mandated to discharge with fidelity the duties of their offices, such duties being
dictated by public policy and impressed with public interest. 44

Pursuant to Section 27, Rule 138 of the Rules of Court, a lawyer may be removed or suspended for any deceit or
dishonest act, thus:

Sec. 27. Attorneys removed or suspended by Supreme Court on what grounds. – A member of the bar may be
removed or suspended from his office as attorney by the Supreme Court for any deceit, malpractice, or other gross
misconduct in such office, grossly immoral conduct, or by reason of his conviction of a crime involving moral
turpitude, or for any violation of the oath which he is required to take before admission to practice, or for a wilfull
disobedience of any lawful order of a superior court, or for corruptly or wilfully appearing as an attorney for a party to
a case without authority to do so. The practice of soliciting cases at law for the purpose of gain, either personally or
through paid agents or brokers, constitutes malpractice.

Given the facts of this case, wherein respondent was in possession of complainant's copy of the certificate of title
(TCT No. N-61244) to the property in Marikina, and it was respondent who admittedly prepared the Deed of Sale,
which complainant denied having executed or signed, the important evidence of the alleged forgery of complainant's
signature on the Deed of Sale and the validity of the sale is the Deed of Sale itself. However, a copy of the Deed of
Sale could not be produced by the Register of Deeds of Marikina City, as it could not be located in the general files
of the registry, and a certification was issued stating that the Deed of Sale may be considered lost. 45 Moreover,
respondent did not submit to the Clerk of Court of the RTC of Manila her Notarial Report for the month of November
1986,46 including the said Deed of Sale, which was executed on November 11, 1986. Hence, Investigating
Commissioner Sordan opined that it appears that efforts were exerted to get rid of the copies of the said Deed of
Sale to prevent complainant from getting hold of the document for the purpose of handwriting verification from an
expert to prove that her alleged signature on the Deed of Sale was forged. The failure of respondent to submit to the
proper RTC Clerk of Court her Notarial Register/Report for the month of November 1986 and a copy of the Deed of
Sale, which was notarized by her within that month, has far-reaching implications and grave consequences, as it in
effect suppressed evidence on the veracity of the said Deed of Sale and showed the deceitful conduct of
respondent to withhold the truth about its authenticity. During her testimony, it was observed by the Investigating
Commissioner and reflected in the transcript of records that respondent would neither directly confirm nor deny that
she notarized the said Deed of Sale.

For the aforementioned deceitful conduct, respondent is disbarred from the practice of law. As a member of the bar,
respondent failed to live up to the standards embodied in the Code of Professional Responsibility, particularly the
following Canons:

CANON 1 - A lawyer shall uphold the constitution, obey the laws of the land and promote respect for law and for
legal processes.

Rule 1.01 - A lawyer shall not engage in unlawful, dishonest, immoral or deceitful conduct.

Rule 1.02 - A lawyer shall not counsel or abet activities aimed at defiance of the law or at lessening confidence in
the legal system.

CANON 7 - A lawyer shall at all times uphold the integrity and dignity of the legal profession, and support the
activities of the Integrated Bar.

Rule 7.03 - A lawyer shall not engage in conduct that adversely reflects on his fitness to practice law, nor should he,
whether in public or private life, behave in a scandalous manner to the discredit of the legal profession. 1âwphi1

58
WHEREFORE, respondent Atty. Christina C. Paterno is DISBARRED from the practice of law, pursuant to Section
27, Rule 138 of the Rules of Court, as well as for violation of the Code of Professional Responsibility; and the
notarial commission of Atty. Christina C. Paterno, if still existing, is perpetually REVOKED.

Let copies of this Decision be furnished the Office of the Bar Confidant to be appended to respondent's personal
record. Likewise, copies shall be furnished to the Integrated Bar of the Philippines and all courts in the country for
their information and guidance.

The Bar Confidant is hereby DIRECTED to strike out the name of Christina C. Paterno from the Roll of Attorneys.

SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila

EN BANC

G.R. No. 179267               June 25, 2013

JESUS C. GARCIA, Petitioner, 
vs.
THE HONORABLE RAY ALAN T. DRILON, Presiding Judge, Regional Trial Court-Branch 41, Bacolod City,
and ROSALIE JAYPE-GARCIA, for herself and in behalf of minor children, namely: JO-ANN, JOSEPH
EDUARD, JESSE ANTHONE, all surnamed GARCIA, Respondents.

CONCURRING OPINION

LEONEN, J.:

59
I join the ponencia in denying the challenge to the constitutionality of Republic Act No. 9262 otherwise known as the
"Anti-Violence against Women and their Children Act of 2004" at least for this case. I write separately to clarify the
basis of my agreement.

The petitioner is not the victim in this case. He does not have legal standing to raise the constitutional issue.

He appears to have inflicted violence against private respondents. Petitioner admitted having an affair with a bank
manager. He callously boasted about their sexual relations to the household help. His infidelity emotionally wounded
private respondent. Their quarrels left her with bruises and hematoma. Petitioner also unconscionably beat up their
daughter, Jo-ann, whom he blamed for squealing on him.

All these drove respondent to despair causing her to attempt suicide on December 17, 2005 by slitting her wrist.
Instead of taking her to the hospital, petitioner left the house. He never visited her when she was confined for seven
(7) days. He even told his mother-in-law that respondent should just accept his extramarital affair since he is not
cohabiting with his paramour and has not sired a child with her.

The private respondent was determined to separate from petitioner. But she was afraid he would take away their
children and deprive her of financial support. He warned her that if she pursued legal battle, she would not get a
single centavo from him. After she confronted him of his affair, he forbade her to hold office at JBTC Building. This
deprived her of access to full information about their businesses.

Thus, the Regional Trial Court found reasonable ground to believe there was imminent danger of violence against
respondent and her children and issued a series of Temporary Protection Orders (TPO) ordering petitioner, among
other things, to surrender all his firearms including a .9MM caliber firearm and a Walther PPK.

This is the quintessential case where the full effects of Republic Act No. 9262 or the "VAWC" should take effect.

Seen in this light, petitioner’s belated challenge to the law is nothing but a cheap attempt to raise cherished
fundamental constitutional principles to escape legal responsibility for causing indignities in another human being.
There is enough in our legal order to prevent the abuse of legal principles to condone immoral acts.

For us to proceed to rule on Constitutional issues, we have required that: (1) there must be an actual case or
controversy calling for the exercise of judicial power; (2) the person challenging the act must have "standing" to
challenge; he must have a personal and substantial interest in the case, such that he has sustained or will sustain,
direct injury as a result of its enforcement; (3) the question of constitutionality must be raised at the earliest possible
opportunity; and (4) the issue of constitutionality must be the very lis mota of the case. 1

Legal standing in cases that raise constitutional issues is essential. Locus standi is defined as "a right of
appearance in a court of justice on a given question." 2 The fundamental question is "whether a party alleges such
personal stake in the outcome of the controversy as to assure that concrete adverseness which sharpens the
presentation of issues upon which the court depends for illumination of difficult constitutional questions. 3

In private suits, standing is governed by the "real-parties-in-interest" rule under Section 2, Rule 3 of the 1997 Rules
of Civil Procedure in that "every action must be prosecuted or defended in the name of the real party-in-
interest."4"Interest" means material interest or an interest in issue to be affected by the judgment of the case, as
distinguished from mere curiosity about the question involved. 5

Thus, there must be a present substantial interest as distinguished from a mere inchoate expectancy or a future,
contingent, subordinate, or consequential interest. 6 Standing is based on one’s own right to the relief sought.

The doctrine of locus standi in cases raising constitutional issues frames the power of judicial review that we wield.
This is the power "to settle actual controversies involving rights which are legally demandable and enforceable" as
well as "to determine whether or not there has been a grave abuse of discretion amounting to lack or excess
jurisdiction on the part of any branch or instrumentality of the Government." 7

The presence of an "actual case" prevents this Court from providing advisory opinions or using its immense power
of judicial review absent the presence of a party with real and substantial interests to clarify the issues based upon
his/her experience and standpoint. It prevents this Court from speculating and rendering rulings on the basis of pure
theory. Our doctrines on justiciability are self-imposed applications of a fundamental view that we accord a
presumption of constitutionality to acts done by the other constitutional organs and departments of government.
Generally, we do not strike down acts done by co-equal departments until their repugnancy to the Constitution can
be shown clearly and materially.

I am aware of our precedents where this Court has waived questions relating to the justiciability of the constitutional
issues raised when they have "transcendental importance" to the public. 8 In my view, this accommodates our power
to promulgate guidance "concerning the protection and enforcement of constitutional rights". 9 We choose to rule

60
squarely on the constitutional issues in a petition wanting all or some of the technical requisites to meet our general
doctrines on justiciability but raising clear conditions showing imminent threat to fundamental rights. The imminence
and clarity of the threat to fundamental constitutional rights outweigh the necessity for prudence. In a sense, our
exceptional doctrine relating to constitutional issues of "transcendental importance" prevents courts from the
paralysis of procedural niceties when clearly faced with the need for substantial protection.

That necessity is wanting in this case.

The extraordinary discretion to move beyond the well established doctrines on justiciability must be carefully
exercised in cases involving social legislation that seeks to rectify historical and cultural injustices present in our
communities and societies. As carefully pointed out in the erudite ponencia of Justice Perlas-Bernabe, Republic Act
No. 9262 was borne out of the struggles of countless women who suffered indignities. It cannot be undone by a
petition filed by someone who cannot, by any stretch of the most fertile imagination, be considered the victim.

Nevertheless, in a future case more deserving of our attention, we should be open to realities which may challenge
the dominant conception that violence in intimate relationships only happens to women and children. This may be
predominantly true, but even those in marginal cases deserve fundamental constitutional and statutory protection.
We should be careful that in correcting historical and cultural injustices, we may typecast all women as victims,
stereotype all men as tormentors or make invisible the possibility that in some intimate relationships, men may also
want to seek succor against acts defined in Section 5 of Republic Act No. 9262 10 in an Husband abuse may be an
underreported form of family violence.11 According to a Quezon City Police District Crime Laboratory chief, in his 10
years as medico-legal officer, he had only received three cases of men complaining of spousal abuse. 12

Another recent study found the same underreporting but explored the experiences of abuse in intimate relationships
of six Filipino husbands.13 Their experiences were described as follows:

All the participants acknowledged that they experienced abuse, but the forms differed from one husband to another.
Four out of the six participants admitted that their spouses’ abusive behavior would initially start with verbal attacks
and put-downs then would shift to physical abuse as their verbal tussle intensified. Most of the abuses cited by the
participants happened in the confines of their home, but could also happen in public places.

The constant threats, in the long term, affected the emotional and psychological well being of the participants. Four
of the husbands felt that their spouses were capable of carrying out their threats. The frequent and long fights could
be emotionally draining. Throughout the duration of marriage, EC suffered emotionally from the "weird" marital set-
up. For TG, emotional abuse was associated with shattered trust.

The physical abuse for some participants became life-threatening to the extent that the injury incurred needed
medical attention. Their spouses could use weapons against them. Four participants described the incidents that led
to their injuries. Coming home one night, RE saw "this mono block chair flying…hit me…right on the nose." DL
narrated "…pumunta ako ng doctor on my own para ipalinis yung sugat ko." According to HM, his wound from a
knife attack was wide and deep and needed "…some stiches." JL had to contend with the long scratches in his
chest and back. RE almost lost an eye when he was hit with a straight punch of the spouse. JL, RE, and DL would
lie to colleagues to avoid being laughed at. DL had to be absent from his work after being hit by a flying de lata
(canned good) thrown at him during a fight.

Emotional abuse co-existed with verbal and/or physical abuse. The participants who were recipients of physical
abuse were also emotionally abused when they became susceptible to stress and threats of the abuser. JL felt
guilty when the spouse carried out her threat of killing herself by intentionally taking an overdose of pills in the
middle of an intense disagreement.

Emotional abuse could occur without physical abuse and yet its effects were still devastating. For instance, EC and
TG were devastated by the lies and deceit of their spouses. The spouse’s threats of suicide (JL), abandonment
(RE), or taking their children away after a fight (DL) were as distressing as the other forms of abuse experienced by
the participants.14

Social and cultural expectations on masculinity and male dominance urge men to keep quiet about being a victim,
adding to the unique experience of male victims of domestic abuse. 15 This leads to latent depression among boys
and men.16 In a sense, patriarchy while privileging men also victimizes them.

It is true that numerous literature relate violence against women with the historically unequal power relations
between men and women, leading to domination over and discrimination against the latter. 17 Sociologists cite the
18th-century English legal tradition on the "rule of thumb" giving husbands the right to beat their wives with a stick
no thicker than a thumb.18 In America, women were regarded as property until the latter half of the 19th century with
marital violence considered a husband's privilege and men, as of right, exercised physical domination over women. 19

61
The perspective portraying women as victims with a heritage of Victimization 20 results in the unintended
consequence of permanently perceiving all women as weak. This has not always been accepted by many other
strands in the Feminist Movement.

As early as the 70s, the nationalist movement raised questions on the wisdom of a women’s movement and its
possible divisive effects, as "class problems deserve unified and concentrated attention while the women question is
vague, abstract, and does not have material base."21

In the early 80s, self-identifying feminist groups were formed. 22 The "emancipation theory" posits that female crime
has increased and has become more masculine in character as a result of the women's liberation movement. 23

Feminism also has its variants among Muslims. In 2009, Musawah ("equality" in Arabic) was launched as a global
movement for equity and justice in the Muslim family. It brought together activists, scholars, legal practitioners,
policy makers, and grassroots women and men from all over the world. 24 Their belief is that there cannot be justice
without equality, and its holistic framework integrates Islamic teachings, universal human rights, national
constitutional guarantees of equality, and the lived realities of women and men. 25

There is now more space to believe that portraying only women as victims will not always promote gender equality
before the law. It sometimes aggravates the gap by conceding that women have always been dominated by men. In
doing so, it renders empowered women invisible; or, in some cases, that men as human beings can also become
victims.

In this light, it may be said that violence in the context of intimate relationships should not be seen and encrusted as
a gender issue; rather, it is a power issue.26 Thus, when laws are not gender-neutral, male victims of domestic
violence may also suffer from double victimization first by their abusers and second by the judicial
system.27Incidentally, focusing on women as the victims entrenches some level of heteronormativity. 28 It is blind to
the possibility that, whatever moral positions are taken by those who are dominant, in reality intimate relationships
can also happen between men.29

I accept that for purposes of advocacy and for a given historical period, it may be important to highlight abuse of
women qua women.30 This strategy was useful in the passing of Republic Act No. 9262. It was a strategy that
assured that the problem of battered women and children in the context of various intimate relationships becomes
publicly visible. However, unlike advocacy, laws have the tendency to be resilient and permanent. Its existence may
transcend historical periods that dictate effective advocacy. Laws also have a constitutive function - the tendency to
create false consciousness when the labels and categories it mandates succeed in reducing past evils but turn a
blind eye to other issues.

For instance, one of the first cases that laid down the requisites for determining whether there was a violation of the
equal protection of the law clause of the Constitution was the 1939 case of People v. Cayat. 31 It laid down the
requirements of reasonable classification which requires that it (a) must rest on substantial distinctions, (b) must be
germane to the purposes of the law, (c) must not be limited to existing conditions only, and (d) must apply equally to
all members of the same class.32 Even as early as 1919, the Court in Rubi v. Provincial Board of
Mindoro33recognized the concept of reasonable classification holding that "the pledge that no person shall be denied
the equal protection of the laws is not infringed by a statute which is applicable to all of a class. The classification
must have a reasonable basis and cannot be purely arbitrary in nature." 34

Yet, it is in these two cases that the Court concluded the following:

As authority of a judicial nature is the decision of the Supreme Court in the case of United States vs. Tubban
[Kalinga] ([1915], 29, Phil., 434). The question here arose as to the effect of a tribal marriage in connection with
article 423 of the Penal Code concerning the husband who surprises his wife in the act of adultery. In discussing the
point, the court makes use of the following language:

x x x we are not advised of any provision of law which recognizes as legal a tribal marriage of so-called non-
Christians or members of uncivilized tribes, celebrated within that province without compliance with the requisites
prescribed by General Orders No. 68 x x x. We hold also that the fact that the accused is shown to be a member of
an uncivilized tribe, of a low order of intelligence, uncultured and uneducated, should be taken into consideration as
a second marked extenuating circumstance... 35 (Emphasis supplied)

The description of the label and the stereotype of "non-Christian tribe" would later on be corrected by the
Constitution,36 law,37 and jurisprudence.38

The description of the label and the stereotype that only women can be considered victims may also evolve in the
same way.  We should hope that the situation of patriarchy will not be permanent. Better cultural structures more
1âwphi1

affirming of human dignity should evolve.39

62
In a future case, the fact that there may be battered men should not cause the nullification of protections given to
women and children.

The Constitution states that: "the State values the dignity of every human person and guarantees full respect for
human rights."40 The guarantee of full respect should not mean that protections already given to those who suffer
historical or cultural prejudices should be automatically rescinded if only the scope of the law is found wanting.

Our Constitution also mandates that the State "shall ensure the fundamental equality before the law of women and
men."41 This is similar to the Convention on the Elimination of All Forms of Discrimination Against Women
(CEDAW)42 which requires that the Philippines as state party take all appropriate measures "to modify the social and
cultural patterns of conduct of men and women, with a view to achieving the elimination of prejudices and customary
and all other practices which are based on the idea of the inferiority or the superiority of either of the sexes or on
stereotyped roles for men and women." 43 The use of affirmative language should imply that in the proper suit, a
declaration of unconstitutionality on the ground of the equal protection should not automatically mean that the entire
social legislation that provides effective and efficient protection of women be set aside.

We have declared that "an unconstitutional act is not a law; it confers no rights; it imposes no duties; it affords no
protection; it creates no office; it is x x x as inoperative as though it had never been passed." 44 However, the
seemingly all-inclusive statement of absolute retroactive invalidity may not always be justified. 45 One established
exception is the doctrine of operative fact.

The doctrine of operative fact, as an exception to the general rule, only applies as a matter of equity and fair play. It
nullifies the effects of an unconstitutional law by recognizing that the existence of a statute prior to a determination
of unconstitutionality is an operative fact and may have consequences which cannot always be ignored. The past
cannot always be erased by a new judicial declaration.

The doctrine is applicable when a declaration of unconstitutionality will impose an undue burden on those who have
relied on the invalid law.46

The possibility that the constitutionality of Republic Act No. 9262 may be challenged by male victims of abuse in
intimate relationships ventures to carve another exception if this court is to ensure the guarantee of fundamental
equality before the law of women and men 47 as well as value the dignity of every human person. 48 Applying the
general rule or the existing doctrine of operative facts would mean removing the protection afforded to women. It will
thus contradict the very reason it is being assailed and result to an even worse state of laws where none is
protected from intimate violence.

But again, it is not in this case that we consider these possibilities.

By concurring with these statements I express a hope: that the normative constitutional requirements of human
dignity and fundamental equality can become descriptive reality. The socially constructed distinctions between
women and men that have afflicted us and spawned discrimination and violence should be eradicated sooner.
Power and intimacy should not co-exist.

The intimate spaces created by our human relationships are our safe havens from the helter skelter of this world. It
is in that space where we grow in the safety of the special other who we hope will be there for our entire lifetime. If
that is not possible, then for such time as will be sufficient to create cherished memories enough to last for eternity.

I concur in the ponencia. Against abominable acts, let this law take its full course.

Republic of the Philippines

SUPREME COURT
Manila

EN BANC

A.M. No. RTJ-09-2181               June 25, 2013

(Formerly A.M. No. 09-4-174-RTJ)

OFFICE OF THE COURT ADMINISTRATOR, Complainant, 

vs.
RETIRED JUDGE GUILLERMO R. ANDAYA, Respondent.

RESOLUTION

LEONEN, J.:

63
Before the Court is an administrative case for gross incompetence, inefficiency, negligence, and dereliction of duty
against Judge Guillermo R. Andaya, of the Regional Trial Court, Branch 53, Lucena City, Quezon, who retired on
March 27, 2009.

On January 19, 20, and 21, 2009, a judicial audit docketed as A.M. No. 09-4-174-RTC was conducted on the
Regional Trial Court, Branch 53, Lucena City, Quezon, then presided by the respondent Judge Guillermo R.
Andaya. In a Memorandum  and now Hon. Associate Justice Jose P. Perez recommended that a fine be imposed on
1

respondent Judge in the amount of Eighty Thousand Pesos (P80,000.00). The fine, which was to be deducted from
his retirement or terminal leave benefits was recommended based on the findings that respondent Judge:

i) Failed to take action on the following Civil Cases from the time of their filing: 94-122, SP-00-87, 01-47, 99-
122, SP No. 03-54, 05-96, SCA 05-19, 07-45, 07-161, 08-93;

ii) Failed to take appropriate action on Criminal Cases Nos. 01-294, 96-343, 96-344, 96-345, 96-346, 02-
998, 03-1378, 02-673, 03-1235, 99-1097, 02-365, 05-232 and 07-01-A and Civil Cases Nos. 89-38, 96-78,
94-180, SP 01-40, 99-135, 01-96, MC-0196, MC 03-107, 05-41, SCA-06-31, 04-82, SP 07-43 and 06-201;

iii) Failed to resolve the pending motions in Criminal Cases Nos. 08-1031, 01-503, 02-837, 02-838, 93-336,
98-92, 04-154, 04-1206, 95-327, 04-1068, 03-654, 06-342, 05-296, 05-1129, 05-1130, 05-797, 07-460, 05-
270 and in Civil Cases Nos. 94-04, 98-177, 99-158, 93-145, 99-13, 02-13, 97-86, 93-41, 01-11, 02-149, 03-
97, 02-05, 03-1, 03-143,03-156, 04-40, 03-89, 04-73, 04-108, MC 02-77, 04-131, 03-19, 02-41, 05-72, 03-
148, 98-149, 06-39, 96-60, 94-144, 92-81, 03-115, SCA 06-34, SCA 06-36, 05-28, SCA 06-32, 07-03, 07-08,
08-05, 00-84, 07-62, 08-34, 89-79, 90-124, MC 06-192, 07-68, 7677, 06-80, 06-102, 08-54, 96-159 and 89-
02; and

iv) Failed to decide Criminal Cases Nos. 99-1058, 97-284, 97-285, 98-734, 01-897, 02-1250, 93-982, 02-
730, 02-555, 04-296, 04-297, 03-1225, 02-987, 03-418, 01-775, 02-330, 03-602, 04-1114, 03-404, 05-322,
04-483, 01-578, 01-579, 05-181, 02-382, 04-612, 05-894, 01-6 and 01-659 and Civil Cases Nos. 90-76, 91-
141, 95-09, 98-122, 91-48, 93-103, 0537-M, 01-8, 00-171, 94-107, SP 02-14, 01-3, MC 02-126, MC 02-127,
01-138, 91-132, 99-122, 01-136, 00-13, 04-131, 04-08, LRC-01-1, 04-20, 05-176, 06-09, 04-84, SCA 06-21,
00-84, MC 06-144, 98-167, MC-07-85, MC 08-26, SCA-08-09-A, SCA 08-02-A and MC8-157.

In a Resolution  dated April 29, 2009, the Second Division of this Court resolved to docket the judicial audit report as
2

an administrative complaint against respondent for gross incompetence, inefficiency, negligence, and dereliction of
duty. Respondent Judge was required to manifest his willingness to submit the matter for resolution on the basis of
the pleadings filed. Respondent Judge sent a letter  dated June 24, 2009 manifesting his willingness to do so, and
3

sought the compassion of the Court in the resolution of his administrative case. He asked the Court to consider his
deteriorating health condition which included a heart problem and cataracts in both eyes. The latter adversely
affected his work efficiency despite an operation on his right eye. Respondent also asked the Court to consider his
thirty-four (34) years of government service, twenty-two (22) of which were in the judiciary.

Meanwhile, another administrative case, docketed as A.M. No. 09-11-477-RTC, arose in relation to the Certificate of
Clearance that the respondent Judge filed in relation to his application for Compulsory Retirement Benefits. In a
Memorandum  dated November 9, 2009, then Court Administrator and now Hon. Associate Justice Jose P. Perez
4

commended the imposition of a fine, to be deducted from his retirement/gratuity benefits, in the amount of Fifty
Thousand Pesos (P50,000.00). The recommendation was made upon the finding that the respondent Judge had
failed to decide forty-five (45) cases submitted for decision beyond the reglementary period of three (3) months as
per the March 2009 Monthly Report of Cases. 5

In a Resolution  dated NOvember 24, 2009, the Court resolved to redocket A.M. No. 09-11-477-RTC as A.M. No.
6

RTJ-09-2208 and impose a fine of Fifty Thousand Pesos (P50,000.00) on the respondent Judge for his failure to
decide forty-five (45) cases submitted for decision, with the amount to be deducted from his retirement/gratuity
benefits. A subsequent Resolution  dated January 26, 2010 was issued by the Court, directing Acting Presiding
7

Judge Rodolfo D. Obnamia, Jr. to decide with dispatch the forty-five (45) cases.

The respondent Judge sent a letter  dated March 4, 2010 addressed to then Chief Justice Reynato S. Puno ,
8

manifesting that: (a) both A.M. No. RTJ-09-2208 and A.M. No. RTJ-09-2181 involves the charge of gross
inefficiency; and (b) that "the Court had not been given the opportunity to appreciate his explanation regarding his
health conditions"  since he did not know about A.M. No. RTJ-09-2208 until he received a copy of the Resolution of
9

this Court dated November 24, 2009. Respondent prayed for the Court to take cognizance of: (a) his health
problems; (b) the fact that he had already been fined Fifty Thousand Pesos (P50,000.00) for gross inefficiency in
A.M. No. RTJ-09-2208; (c) that he has not received any benefit since he retired on March 27, 2009; and (d) that he
had served the government for thirty-four (34) years, twenty-two (22) of which were in the judiciary.

In a letter  dated March 27, 2010 addressed to Court Administrator Jose Midas P. Marquez, respondent Judge
10

claimed that he should not be penalized for gross inefficiency in A.M. No. RTJ-09-2181 because it would be akin to

64
splitting the complaints against him. Attached to the letter was the March 4, 2010 letter addressed to then Chief
Justice Puno.

On April 27, 2010, a Resolution11 was issued by the Court in A.M. No. RTJ-09-2208 noting the Certification12 of the
SC Chief Judicial Staff Officer Cleofe R. Norberte that respondent Judge had paid the amount of Fifty Thousand
Pesos (P50,000.00) as court fine, which was deducted from his terminal leave benefits, and duly receipted under
O.R. No. 6066167.

In a Memorandum  dated June 11, 2010 signed by Court Administrator Marquez, the Office of the Court
13

Administrator ("OCA" for brevity) noted that the respondent Judge paid the Fifty Thousand Pesos (P50,000.00) fine
in the other complaint on April 14, 2010. The OCA also noted that twenty-three (23) criminal cases and nine (9) civil
cases included in the March 2009 Monthly Report of Cases  in A.M. No. RTJ-09-2208 were included in the present
14

complaint. The OCA then reiterated its recommendation that respondent Judge be fined, but that the amount be
reduced from Eighty Thousand Pesos (P80,000.00) to Fifty Thousand Pesos (P50,000.00).

Respondent then sent a letter  dated August 17, 2010 reiterating his manifestations in the letter dated March 4,
15

2010. Respondent prayed for the dismissal of the present case for the sake of justice tempered by leniency on the
following grounds: (a) his serious health problems that affected his work efficiency in the last months of his service;
(b) the penalty in A.M. No. RTJ-09-2208 was imposed without him being given a chance to explain; and (c) he has
served twelve (12) years as an assistant city prosecutor, three (3) years as a Municipal Trial Court judge, and
nineteen (19) years as a Regional Trial Court judge.

In subsequent letter  pointed out an apparent overlap between A.M. No. RTJ-09-2208 and the present complaint
16

and prayed that the two not be considered as separate complaints because to do so would be akin to splitting the
causes of a complaint. Respondent also prayed for the early resolution of the present case.

In response to the letter, the OCA sent a Memorandum  dated February 16, 2011, bringing to the attention of the
17

Court what respondent claimed as a similarity in the offenses involved in A.M. No.RTJ-09-2208 and A.M. No. RTJ-
09-2181 and the possibility that he may be penalized twice for the same offense. The OCA noted that it was not
accurate for respondent Judge to conclude that he stands to be penalized twice for the same lapses since the
judicial audit in the present complaint was more comprehensive in scope than the Monthly Report of Cases
submitted in A.M. No. RTJ-09-2208. They further noted that the Monthly Report of Cases only covered forty-five (45)
cases for the month of March, and despite the overlap of the cases, there were still numerous decisions and
motions left unresolved that respondent Judge should be held accountable for. Nevertheless, the OCA reiterated its
recommendation that the penalty imposed be reduced from Eighty Thousand Pesos (P80,000.00) to Fifty Thousand
Pesos (P50,000.00) in view of the previous penalty imposed on him.

In a Resolution  dated January 17, 2012, the Court resolved to approve the release of respondent's retirement
18

benefits subject to the retention of Fifty Thousand Pesos (P50,000.00) and pending the resolution of the present
case. On January 24, 2012, the Court issued a Resolution  in A.M. No. RTJ-09-2208 considering the case as closed
19

and terminated.

The Court takes note of the findings of the OCA.

Section 15(1), Article VIII of the Constitution mandates lower courts to decide or resolve cases or matters for
decision or resolution within three (3) months from date of submission. Section 5 of Canon 6 of the New Code of
Judicial Conduct provides that judges should perform all judicial duties efficiently, fairly and with reasonable
promptness. The same principle is embodied in Canon 3, Rule 3.05 of the Code of Judicial Conduct which states
that a judge should dispose of the court's business promptly and decide cases within the required periods. Judges
are to be held at a higher standard in the performance of their duties, and the failure to fulfill this duty would not only
violate every litigant's constitutional right to the speedy disposition of cases, but will also hold the erring judge
administratively liable for the offense. Under Section 9(1), Rule 140 of the Revised Rules of Court, undue delay in
rendering a decision or order is a less serious charge punishable by either suspension from office without salary or
benefits, or a fine.

After an extensive judicial audit conducted by the OCA on Branch 53 of the Regional Trial Court in Lucena City,
Quezon, it was found that while respondent Judge exerted efforts to take appropriate action on the cases subject to
the audit, he still:

i) failed to take action on ten (10) civil cases from the time of filing;

ii) failed to take appropriate action on thirteen (13) criminal cases and thirteen (13) civil cases for a
considerable length of time;

iii) failed to resolve pending motions in eighteen (18) criminal cases and fifty-one (51) civil cases; and

65
 iv) failed to decide twenty-nine (29) criminal cases and thirty-five (35) civil cases.

A comparison of the cases involved in the March 2009 Monthly Report of Cases, which was used as the basis for
the findings in A.M. No. No. RTJ-09-2208, and the cases involved in the judicial audit report of the present complaint
yields the finding that, indeed, twenty-three (23) criminal cases and nine (9) civil cases are included in both
reports.  However, it must be noted that the March 2009 Monthly Report of Cases only covered forty-five (45)
20

cases, while there were forty-three (43) criminal cases and forty-six (46) civil cases that were the subject of the
judicial audit report of the present complaint. This means that despite the overlap, there are still twenty (20)
unresolved criminal cases and thirty-seven (37) unresolved civil cases for which the respondent Judge might be
held accountable for. The other complaint also does not include the unresolved motions in twenty-nine (29) criminal
cases and fifty-three (53) civil cases,  which are included in the judicial audit report in the present complaint.
21

Be that as it may, the respondent Judge could no longer be made liable for these infractions.

A review of the records shows that the judicial audit was conducted on January 19, 20, and 21, 2009 during the
respondent Judge's incumbency. However, the administrative complaint was docketed only on April 29, 2009 after
his compulsory retirement on March 27, 2009.

In the case of Re: Missing Exhibits and Court Properties in Regional Trial Court, Branch 4, Panabo City, Davao del
Norte,  a Memorandum recommending that court's presiding Judge, Jesus L. Grageda, who compulsorily retired on
22

November 25, 2009, be held liable for not ordering a prompt investigation as to missing court exhibits and properties
and be made to pay a fine of Twenty Thousand Pesos (P20,000.00) was submitted by the OCA to the Court on July
10, 2012, or more than two (2) years after he retired. In dismissing the complaint against him, We ruled that:

In order for the Court to acquire jurisdiction over an administrative case, the complaint must be filed during the
incumbency of the respondent. Once jurisdiction is acquired, it is not lost by reason of respondent's cessation
from office. In Office of the Court Administrator v. Judge Hamoy, the Court held that:

Respondent's cessation from office x x x does not warrant the dismissal of the administrative complaint filed against
him while he was still in the service nor does it render said administrative case moot and academic. The Court's
jurisdiction at the time of the filing of the administrative complaint is not lost by the mere fact that the respondent had
ceased in office during the pendency of the case.

In the present case, Judge Grageda's compulsory retirement divested the OCA of its right to institute a new
administrative case against him after his compulsory retirement. The Court can no longer acquire administrative
jurisdiction over Judge Grageda by filing a new administrative case against him after he has ceased to be a public
official. The remedy, if necessary, is to file the appropriate civil or criminal case against Judge Grageda for the
alleged transgression. (emphasis provided)

Similarly, in the case of Office of the Court Administrator v. Jesus L. Grageda,  the Court dismissed another pending
23

administrative case against him, thus:

Records show that Judge Grageda compulsorily retired on November 25, 2009 while the judicial audit was
conducted at RTC, Br. 4, Panabo City from November 17 to November 26, 2009. The OCA then submitted its report
only on March 24, 2010, which was re-docketed as a regular administrative matter on April 28, 2010, or months after
Judge Grageda retired from the judiciary. Consequently, his retirement effectively barred the Court from pursuing
the instant administrative proceeding that was instituted after his tenure in office, and divested the Court, much less
the OCA, of any jurisdiction to still subject him to the rules and regulations of the judiciary and/or to penalize him for
the infractions committed while he was still in the service. As held in the case of OCA v. Judge Celso L. Mantua
[A.M. No. RTJ-11-2291, February 8, 2012]:

This Court cone<="" p="">

In light of these pronouncements, the Court has lost jurisdiction to find him liable for the cases and motions left
unresolved prior to his retirement.

WHEREFORE, above premises considered, the complaint against respondent Judge GUILLERMO R.

ANDAYA,formerly of the Regional Trial Court, Branch 53, Lucena City, Quezon, is DISMISSED. The Financial
Management Office of the Office of the Court Administrator is DIRECTED to release the Fifty Thousand Pesos
(P50,000.00) retained from his retirement pay unless withheld for some other lawful cause.

SO ORDERED.

66
 Republic of the Philippines
SUPREME COURT
Manila

THIRD DIVISION

G.R. No. 179334               July 1, 2013

SECRETARY OF THE DEPARTMENT OF PUBLIC WORKS AND HIGHWAYS and DISTRICT ENGINEER
CELESTINO R. CONTRERAS, Petitioners, 
vs.
SPOUSES HERACLEO and RAMONA TECSON, Respondents.

SEPARATE OPINION

LEONEN, J.:
67
I agree with the ponencia of Justice Peralta in so far as the fair market value o( a property subjected to expropriation
must be the value of the property at the time of the actual taking by the government, at the moment that the owner is
unable to have beneficial use (see Republic v. Vda. de Castellvi). 1

However, I also agree with Justice Velasco that gross injustice will result if the amount that will be awarded today
will be based simply on the value of the property at the time of the actual taking. Should the value of the property
been awarded to the owners at the time of the taking, they would have used it for other profitable uses. Hence, the
failure of the State to have paid at the proper time deprives the owners of the true value of the property that they
had.

I am of the opinion that the proper way to resolve this would be to use the economic concept of present value. 2 This
concept is usually summarized this way: Money received today is more valuable than the same amount of money
received tomorrow.3 By applying this concept, we are able to capture just compensation in a more holistic manner.
We take into consideration the potential of money to increase (or decrease) in value across time.

If the parties in an expropriation case would have perfect foresight, they would have known the amount of "fair
market value at the time of taking." If this amount of money was deposited in a bank pending expropriation
proceedings, by the time proceedings are over, the property owner would be able to withdraw the principal (fair
market value at the time of taking) and the interest earnings it has accumulated over the time of the proceedings.
Economists have devised a simple method to compute for the value of money in consideration of this future interest
earnings.

For purposes of explaining this method, consider property owner AA who owns a piece of land.  The government
1âwphi1

took his property at Year 0. Let us assume that his property had a fair market value of ₱100 at the time of taking. In
our ideal situation, the government should have paid him ₱100 at Year 0. By then, AA could have put the money in
the bank so it could earn interest. Let us peg the interest rate at 5% per annum (or in decimal form, 0.05). 4

If the expropriation proceedings took just one year (again, another ideal situation), AA could only be paid after that
year. The value of the ₱100 would have appreciated already. We have to take into consideration the fact that in
Year 1, AA could have earned an additional ₱5 in interest if he had been paid in Year 0.

In order to compute the present value of ₱100, we have to consider this formula:

Present Value in Year 1 = Value at the Time of Taking + (Interest Earned of the Value at the Time of Taking)

In formula5 terms, it will look like this:

PV1 = V + (V*r)

PV1 = V*(1+r)

PV1 = present value in Year 1

V = value at the time of taking

r = interest rate

So in the event that AA gets paid in Year 1, then:

PV1 = V*(1+r)

PV1 = ₱100 (1 + 0.05)

PV1 = ₱105

So if AA were to be paid in Year 1 instead of in Year 0, it is only just that he be paid ₱105 to take into account the
interest earnings he has foregone due to the expropriation proceedings. If he were to be paid in Year 2, we should
take into consideration not only the interest earned of the principal, but the fact that the interest earned in Year 1 will
also be subject to interest earnings in Year 2. This concept is referred to as compounding interest rates. So our
formula becomes:

Present Value in Year 2 = [Present Value in Year 1] + [Interest Earned of Present Value in Year 1]

Recall that in formula terms, Present Value in Year 1 was expressed as:

68
 PV1 = [V*(1+r)]

Hence, in Year 2, the formula will be:

PV2 = PV1*(1+r) or

PV2 = [V*(1+r)]*(1+r)

Seeing that the term (1+r) is repeated, it can be further simplified as:

PV2 = V*(1+r)2

PV2 = ₱100 * (1+0.05)2

PV2 = ₱100 * 1.1025

PV2 = ₱110.25

This is the same as if we multiply the present value in Year 1 of ₱105 by 1.05 (our multiplier with the interest rate).

If proceedings go on until Year 3, then the formula would be:

PV3 = PV2*(1+r)

PV3 = {[V*(1+r)]*(1+r)}*(1+r)

Again, (1+r) is repeated three times, the same number as the number of years; hence, simplifying the formula would
yield:

PV3 = V*(1+r)3

Due to compounding interests, the formula for present value at any given year becomes:

PVt = V*(1+r)t

PV stands for the present value of the property. In order to calculate the present value of the property, the
corresponding formula is used. V stands for the value of the property at the time of the taking, taking in all the
considerations that the court may use in order to arrive at the fair market value in accordance with law.

This is multiplied to (1 + r) where r equals the implied rate of return (average year-to-year interest rate) and raised to
the exponent t. The exponent t refers to the time period or the number of years for which the value of the money
would have changed. It is treated as an exponent because it is the number of times you have to multiply (1+r) to
capture the effect of compounding interest rates.

So if AA were to be paid seventy-three (73) years from the time of taking, the present value of the amount he should
have been paid at the time of taking would be:

PVt = V*(1+r)t

PV73 = ₱100 * (1+0.05)73

PV73 = ₱100 * (35.2224)

PV73 = ₱3,522.24

As applied in this case, the property which is the subject of the current controversy is worth ₱0.70/sq.m. in 1940, but
it is actually worth more than ₱0.70/sq. m. by 2013. There is a period of 73 years between the actual taking and the
time payment is to be made. The value of the cash to be paid to the owner at this time is definitely more because of
changes in the interest rate.

Computing for present value would only reflect the cost of the property today. It should be separate from the six
percent (6%) per annum computed on a compounded basis awarded as actual or compensatory damages.

Thus, applying the formula, assuming the average interest rate is at:

69
 4%, the property will be worth P 12.26 per sq. m.;

5%, the property will be worth P 24.66 per sq. m.;

6%, the property will be worth P 49.25 per sq. m.

Using the established concept of present value incorporates the discipline of economics into our jurisprudence on
takings. Valuation is indeed an inexact science and economics also has its own assumptions. However, in my
reckoning, this is infinitely better than leaving it up to the trial court judge.

I submit that this proposal is a happy middle ground. It meets the need for doctrinal precision urged by Justice
Peralta and the thirst for substantial justice in Justice Velasco's separate opinion. After all, I am sure that we all
share in each other's goals.

I vote to GRANT the petition and to REMAND the case to the court of origin for proper valuation according to the
formula discussed.

Republic of the Philippines

SUPREME COURT
Manila

EN BANC

A.M. No. P-09-2690               July 9, 2013

(Formerly A.M. OCA IPI No. 08-2889-P)

OFFICE OF THE COURT ADMINISTRATOR, COMPLAINANT, 

vs.
NOEL R. ONG, DEPUTY SHERIFF, BRANCH 49, AND ALVIN A. BUENCAMINO, DEPUTY SHERIFF, BRANCH
53 OF THE METROPOLITAN TRIAL COURT, CALOOCAN CITY, RESPONDENTS.

RESOLUTION

70
PER CURIAM:

Judge Glenda K. Cabello-Marin (referred here as Judge Marin) of Branch 49, Metropolitan Trial Court, Caloocan
City (referred here as MeTC) referred1 to the Office of the Court Administrator (referred here as OCA) the
investigation of Deputy Sheriffs Noel R. Ong of Branch 49 (referred here as respondent Ong) and Alvin A.
Buencamino of Branch 53 (referred here as respondent Buencamino), both of the Metropolitan Trial Court,
Caloocan City, on their possible liability for the loss of a levied Isuzu Fuego.

On October 20, 2008, Judge Belen B. Ortiz (referred here as Judge Ortiz), then presiding judge of MeTC Branch 49,
issued the Decision in Civil Case No. 27211 for unlawful detainer entitled Virginia C. Bustamante v. Jinky C.
Bustamante and Regina C. Bustamante.2 The court ordered the defendants to vacate the case’s subject property
and to pay the plaintiff arrears in rentals.3

During the case’s execution stage, the court ordered respondent Ong as branch sheriff to levy upon defendants’
personal property for public sale whose proceeds would be applied to the rental arrears. 4 Sheriff Ong levied upon a
1999 Isuzu Fuego (referred here as the Isuzu Fuego) with plate number WGN-949 registered under defendant
Regina Bustamante.5

On October 15, 2004, respondent Ong filed a Request for Inhibition praying that he be allowed to inhibit himself
from further implementing the writ of execution.6 The trial court granted7 respondent Ong's request and appointed
respondent Buencamino as implementing sheriff, subject to the conformity of Judge Edwin Ramizo (referred here as
Judge Ramizo), presiding judge of MeTC Branch 53 where respondent Buencamino is branch sheriff.

Meanwhile, the parties to the unlawful detainer case agreed to compromise and settle the case amicably. 8 Plaintiff
Virginia Bustamante agreed to waive her claim on the levied Isuzu Fuego. 9 Consequently, the defendants filed a
Motion10 for the immediate release of the Isuzu Fuego to defendants.

On June 1, 2005, Judge Ortiz ordered11 respondent Buencamino to submit his Report on the implementation of the
writ of execution. In his Letter12 dated June 3, 2005, respondent Buencamino explained that he did not implement
the writ of execution considering that Judge Ramizo’s conformity with his appointment as special sheriff had not
been secured pursuant to Administrative Circular No. 12, series of 1985. He emphasized that respondent Ong, as
branch sheriff, had custody over the levied Isuzu Fuego.

Respondent Ong also disclaimed custody over the Isuzu Fuego. In his Letter 13 dated June 22, 2005, he alleged that
he had immediately turned over to respondent Buencamino the keys to the Isuzu Fuego pursuant to the Order dated
October 15, 2004. Since then, respondent Buencamino had access to the Isuzu Fuego and utilized the levied
vehicle for personal use as evidenced by several entries in the log book of security guards guarding the court
parking lot.14 He also disclosed that as early as January 29, 2005, the Isuzu Fuego had been reported
carnapped.15 Respondent Ong pointed out that it was respondent Buencamino who reported the alleged carnapping
of the Isuzu Fuego to the Caloocan City Police Station Anti-Carnapping Unit. 16

The OCA referred17 the matter to Executive Judge Mariam G. Bien (referred here as Judge Bien) of the MeTC
Caloocan City. Before Judge Bien was able to conduct her investigation, however, respondent Buencamino died on
August 31, 2008.18

Judge Bien conducted a clarificatory hearing on November 14, 2008.  In her Report19 dated January 13, 2009,
1âwphi1

Judge Bien found no effective designation or appointment of respondent Buencamino as special sheriff for the
unlawful detainer case considering that Judge Ramizo’s conformity had not been secured. Also, there was no
proper turnover of the levied Isuzu Fuego to respondent Buencamino. However, what she found "revealing and
disturbing" was the following: Respondent Ong had allowed respondent Buencamino to use the Isuzu Fuego for
personal errands. The log book of security guards assigned at the court parking lot will reveal that respondent
Buencamino had used the levied vehicle around six (6) times before the vehicle was reported lost in January 2005.
Judge Bien likewise noted the belated manifestation of respondent Buencamino as to the alleged defect in his
designation as special sheriff.

Judge Bien found that respondent Ong had used the subject vehicle for personal errands and that both sheriffs had
custody over the subject vehicle they had both utilized the levied vehicle for their personal use. Thus, it cannot be
ultimately determined who had actual or constructive custody over the vehicle when its disappearance was reported.

Judge Bien recommended that the two sheriffs be reprimanded and ordered them to restore the value of the
allegedly carnapped Isuzu Fuego.

In its Report20 dated July 31, 2009, the OCA recommended the re-docketing of the case as a regular administrative
matter. The OCA agreed with the findings of fact of Judge Bien but noted that her recommended sanctions were too
lenient. Thus, the OCA recommended that the sheriffs be found guilty of dishonesty, grave misconduct, and gross
neglect of duty. As for respondent Ong, the OCA recommended his dismissal from the service with forfeiture of all
retirement benefits, except accrued leave credits, and with perpetual disqualification from re-employment in any
71
government agency, including government-owned or controlled corporations. As for deceased respondent
Buencamino, the OCA recommended the forfeiture of all his retirement benefits, except accrued leave credits.

The OCA explained that respondents were remiss in their obligation to safekeep the vehicle. Judge Bien found that
respondents utilized the levied vehicle for their personal use. The Deputy Sheriffs' conduct "should not be
countenanced."21 The OCA emphasized that respondents’ misappropriation of the vehicle does not only deserve
administrative sanctions but also criminal accountability.

The OCA maintained that the death of respondent Buencamino does not warrant the case dismissal against him as
this Court has ruled in Cabañero v. Judge Cañon that "[d]eath of the respondent in an administrative case is not in
itself a ground for the dismissal of the complaint." 22

The Court agrees.

Misconduct is "a transgression of some established and definite rule of action, a forbidden act, a dereliction from
duty, unlawful behavior, wilful in character, improper or wrong behavior." 23 A misconduct is "grave" or gross" if it is
"out of all measure; beyond allowance; flagrant; shameful" or "such conduct as is not to be excused." 24

Respondent Ong’s and Buencamino’s acts constitute grave misconduct and gross neglect of duty. These are
flagrant and shameful acts and should not be countenanced.

Records show that both respondents used the levied Isuzu Fuego several times for their personal errands. Worse,
the levied vehicle disappeared while under the respondents’ safekeeping. They grossly neglected their duty to
safely keep the levied property under their custody.25

Respondents’ acts warrant the penalty of dismissal as provided in Rule 10, Section 46 of the Revised Rules on
Administrative Cases in the Civil Service.26

As for respondent Buencamino, his death is not a ground for the dismissal of the Complaint against him.
Respondent Buencamino’s acts take away the public’s faith in the judiciary, and these acts should be sanctioned
despite his death.27

Sheriffs are reminded that they are "repositories of public trust and are under obligation to perform the duties of their
office honestly, faithfully, and to the best of their abilities." 28 Being "frontline officials of the justice system," sheriffs
and deputy sheriffs "must always strive to maintain public trust in the performance of their duties." 29

WHEREFORE, respondent Noel R. Ong, Deputy Sheriff, Branch 49, and Alvin A. Buencamino, Deputy Sheriff,
Branch 53, Metropolitan Trial Court of Caloocan City, are hereby found GUILTY of grave misconduct and gross
neglect of duty. Respondent Noel R. Ong is ordered DISMISSED from the service, with forfeiture of all retirement
benefits and privileges, except accrued leave credits, and with perpetual disqualification from re-employment in any
government agency, including government-owned and -controlled corporations. On the other hand, respondent
Alvin A. Buencamino is ordered to have FORFEITED all his retirement benefits, except his accrued leave credits.

SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila

EN BANC

A.C. No. 6490               July 9, 2013

(Formerly CBD Case No. 03-1054)

LILIA TABANG AND CONCEPCION TABANG, Complainants, 

vs.
ATTY. GLENN C. GACOTT, Respondent.

RESOLUTION

PER CURIAM:

72
This case involves a complaint for disbarment directly filed with the Integrated Bar of the Philippines (IBP) charging
respondent Atty. Glenn Gacott of engaging in unlawful, dishonest, immoral or deceitful conduct in violation of Rule
1.01 of the Code of Professional Responsibility (CPR).1

Complainants alleged that sometime in 1984 and 1985, complainant Lilia Tabang sought the advice of Judge
Eustaquio Gacott, respondent Atty. Glenn Gacott’s father. Lilia Tabang intended to purchase a total of thirty (30)
hectares of agricultural land located in Barangay Bacungan, Puerto Princesa, Palawan, which consisted of several
parcels belonging to different owners. Judge Gacott noted that under the government’s agrarian reform program,
Tabang was prohibited from acquiring vast tracts of agricultural land as she already owned other parcels. Thus,
Judge Gacott advised her to put the titles of the parcels under the names of fictitious persons. 2

Eventually, Lilia Tabang was able to purchase seven parcels and obtained the corresponding Transfer Certificates
of Title (TCT) under the names of fictitious persons, as follows:

1. TCT No. 12475 – Amelia Andes;

2. TCT No. 12476 – Wilfredo Ondoy;

3. TCT No. 12790 – Agnes Camilla;

4. TCT No. 12791 – Leonor Petronio;

5. TCT No. 12792 – Wilfredo Gomez;

6. TCT No. 12793 – Elizabeth Dungan; and

7. TCT No. 12794 – Andes Estoy.3

Later, complainants Lilia and Concepcion Tabang decided to sell the seven parcels as they were in need of funds
for their medication and other expenses. Claiming that he would help complainants by offering the parcels to
prospective buyers, respondent Glenn Gacott borrowed from Lilia Tabang the TCTs covering the parcels. 4

About a year after respondent borrowed the titles and after he failed to negotiate any sale, complainants confronted
respondent. Respondent then told the complainants that he had lost all seven titles. 5

On the pretext of offering a remedy to complainants, respondent advised them to file petitions in court for re-
issuance of titles. Pretending to be the "authorized agent-representative" of the fictitious owners of the seven
parcels, Lilia Tabang filed petitions for re-issuance of titles. 6

In the course of the proceedings, the public prosecutor noticed similarities in the signatures of the supposed owners
that were affixed on the Special Powers of Attorney (SPA) purportedly executed in favor of Lilia Tabang. The public
prosecutor, acting on his observation, asked the court to have the supposed owners summoned. 7

Seeking to avoid embarrassment, Lilia Tabang had the petitions voluntarily dismissed without prejudice to their
being re-filed.8

Subsequently, Lilia Tabang filed a new set of petitions. This time, she changed the fictitious owners’ signatures in
the hope of making them look more varied.9

Upon learning that Lilia Tabang had filed a new set of petitions, respondent executed several documents that
included revocations of SPAs and various affidavits of recovery purportedly signed by the parcels’ (fictitious)
owners. Respondent then caused the annotation of these documents on the TCTs of the seven parcels. 10

Also, respondent caused the publication of notices where he represented himself as the owner of the parcels and
announced that these were for sale.11 Later, respondent succeeded in selling the seven parcels. He received a total
of ?3,773,675.00 from the proceeds of the sales. 12

Alleging that respondent committed gross misconduct, dishonesty, and deceit, complainants filed their complaint
directly with the Integrated Bar of the Philippines on February 3, 2003. The case was docketed as Commission on
Bar Discipline (CBD) Case No. 03-1054.

In his defense, respondent alleged that the owners of the seven parcels were not fictitious and that they had
voluntarily sold the seven parcels. He added that Lilia Tabang had been merely the broker for the seven parcels and
that she had unsuccessfully demanded a "balato" of twenty percent (20%) from the proceeds of the sale of the

73
seven parcels. He alleged that after she had been refused to be given a "balato," Lilia Tabang had threatened to
defame him and seek his disbarment. 13

In her Report and Recommendation dated March 4, 2004, 14 IBP Investigating Commissioner Lydia A. Navarro found
respondent guilty of gross misconduct for violating Rule 1.01 of the Code of Professional Responsibility. She
recommended that respondent be suspended from the practice of law for six (6) months.

In a Resolution dated April 16, 2004,15 the IBP Board of Governors adopted the report of Commissioner Navarro.
However, the IBP Board of Governors increased the penalty to disbarment. Thereafter, the case was referred to the
Supreme Court pursuant to Rule 139-B of the Rules of Court.

In a Resolution dated September 29, 2004, 16 the Supreme Court remanded the case to the IBP. The Court noted
that majority of the pieces of evidence presented by complainants were mere photocopies and affidavits and that
the persons who supposedly executed such documents were neither presented nor subpoenaed. Thus, there could
not have been adequate basis for sustaining the imposition of a penalty as grave as disbarment.

The case was then assigned to Investigating Commissioner Dennis B. Funa. Hearings were conducted on March
22, 2005; October 7, 2005; July 18, 2006; August 29, 2006; November 7, 2006; February 23, 2007; and July 25,
2007.17

The complainants presented several witnesses. One was Dieter Heinze, President of the Swiss American Lending
Corporation.18 Heinze testified that in April 2001, a friend introduced him to respondent who, in turn, introduced
himself as the owner of seven (7) parcels in Puerto Princesa City, Palawan. They agreed on the purchase of a lot
priced at ₱900,000.00. His company, however, paid only ₱668,000.00. Heinze noted that his company withheld
payment upon his realization that Lilia Tabang had caused the annotation of an adverse claim and upon
respondent’s failure to produce Leonor Petronio, the alleged lot owner.

Another of complainants’ witnesses was Atty. Agerico Paras.19 He testified that Heinze introduced him to respondent
who, in turn, introduced himself as the owner of seven (7) parcels in Puerto Princesa City, Palawan. They agreed on
the purchase of a lot priced at ₱2,300,000.00. He paid for the said parcel in two (2) installments. Upon learning that
Lilia Tabang had caused the annotation of an adverse claim, he wrote to respondent asking him to either work on
the cancellation of the claim or to reimburse him. He added that respondent was unable to produce Amelia Andes,
the ostensible owner of the parcel he had purchased.

Teodoro Gallinero, another buyer of one of the seven parcels, also testified for complainants. 20 He testified that in
February 2001, he was introduced to respondent who claimed that several parcels with a total area of thirty (30)
hectares were owned by his mother. Gallinero agreed to purchase a parcel for the price of ₱2,000,000.00 which he
paid in cash and in kind (L-300 van).

Complainant Lilia Tabang also testified on the matters stated in the Complaint. 21

On July 25, 2007, Commissioner Funa required the complainants to submit their Position Paper. Respondent filed
his Motion for Reconsideration and the Inhibition of Commissioner Funa who, respondent claimed, deprived him of
the chance to cross-examine complainants’ witnesses, and was "bent on prejudicing" 22 him.

Commissioner Funa then inhibited himself. Following this, the case was reassigned to Investigating Commissioner
Rico A. Limpingco.

In the meantime, with the Supreme Court En Banc’s approval of the IBP-CBD’s Rules of Procedure, it was deemed
proper for an Investigating Commissioner to submit his/her Report and Recommendation based on matters
discussed during the mandatory conferences, on the parties’ Position Papers (and supporting documents), and on
the results of clarificatory questioning (if such questioning was found to be necessary). As such, respondent’s
Motion for Reconsideration was denied, and he was required to file his Position Paper. 23

On July 30, 2009, respondent filed his Position Paper. 24 Subsequently, the case was deemed submitted for
Commissioner Limpingco’s Report and Recommendation.

In his Position Paper, respondent noted that he filed criminal complaints against Lilia Tabang on account of
Tabang’s statement that she had fabricated the identities of the owners of the seven (7) parcels. He claimed that
since 1996, he had relied on the Torrens Titles of the seven (7) owners who were introduced to him by Lilia Tabang.
He asserted that Lilia Tabang could not have been the owner of the seven (7) parcels since the SPAs executed by
the parcels’ owners clearly made her a mere agent and him a sub-agent. He also assailed the authenticity of the
public announcements (where he supposedly offered the seven 7 parcels for sale) and Memorandum of Agreement.
He surmised that the signatures on such documents appearing above the name "Glenn C. Gacott" had been mere
forgeries and crude duplications of his own signature.

74
In his Report and Recommendation dated August 23, 2010, 25 Commissioner Limpingco found respondent liable for
gross violation of Rule 1.01 of the CPR. He likewise noted that respondent was absent in most of the hearings
without justifiable reason, in violation of Rule 12.04 of the CPR.26 He recommended that respondent be disbarred
and his name, stricken from the Roll of Attorneys.

On October 8, 2010, the IBP Board of Governors issued a Resolution 27 adopting the Report of Investigating
Commissioner Limpingco.

On June 26, 2011, the IBP Board of Governors denied respondent’s Motion for Reconsideration. 28

Respondent then filed his Notice of Appeal with the IBP on August 8, 2011.

On August 17, 2011, respondent filed before the Supreme Court his Urgent Motion for Extension of Time (to file
Petition for Review/Appeal). On September 20, 2011, the Court granted respondent’s Motion and gave him an
extension of thirty (30) days to file his Appeal. The Supreme Court warned respondent that no further extension will
be given. Despite this, respondent filed two (2) more Motions for Extension – the first on September 29, 2011 and
the second on November 3, 2011 – both of which were denied by the Court.

Despite the Court’s denials of his Motions for Extension, respondent filed on December 14, 2011 a Motion to Admit
Petition for Review/Appeal (with attached Petition/Appeal). This Motion was denied by the Court on April 17, 2012.

For resolution is the issue of whether or not respondent engaged in unlawful, dishonest, immoral or deceitful
conduct violating Rule 1.01 of the Code of Professional Responsibility, thus warranting his disbarment.

After a careful examination of the records, the Court concurs with and adopts the findings and recommendation of
Commissioner Limpingco and the IBP Board of Governors. It is clear that respondent committed gross misconduct,
dishonesty, and deceit in violation of Rule 1.01 of the CPR when he executed the revocations of SPAs and affidavits
of recovery and in arrogating for himself the ownership of the seven (7) subject parcels.

While it may be true that complainant Lilia Tabang herself engaged in illicit activities, the complainant’s own
complicity does not negate, or even mitigate, the repugnancy of respondent’s offense. Quite the contrary, his
offense is made even graver. He is a lawyer who is held to the highest standards of morality, honesty, integrity, and
fair dealing. Perverting what is expected of him, he deliberately and cunningly took advantage of his knowledge and
skill of the law to prejudice and torment other individuals. Not only did he countenance illicit action, he instigated it.
Not only did he acquiesce to injustice, he orchestrated it. Thus, We impose upon respondent the supreme penalty of
disbarment.

Under Rule 138, Section 27 of the Rules of Court (Rules), a lawyer may be disbarred for any of the following
grounds:

deceit;

malpractice;

gross misconduct in office;

grossly immoral conduct;

conviction of a crime involving moral turpitude;

violation of the lawyer's oath;

willful disobedience of any lawful order of a superior court; and

willfully appearing as an attorney for a party without authority to do so.

It is established in Jurisprudence that disbarment is proper when lawyers commit gross misconduct, dishonesty, and
deceit in usurping the property rights of other persons. By way of examples:

In Brennisen v. Contawi:29 Respondent Atty. Ramon U. Contawi was disbarred for having used a spurious SPA to
mortgage and sell property entrusted to him for administration.

In Sabayle v. Tandayag:30 One of the respondents, Atty. Carmelito B. Gabor, was disbarred for having
acknowledged a Deed of Sale in the absence of the purported vendors and for taking advantage of his position as

75
Assistant Clerk of Court by purchasing one-half (1/2) of the land covered by said Deed of Sale knowing that the
deed was fictitious.

In Daroy v. Legaspi:31 The Court disbarred respondent Atty. Ramon Legaspi for having converted to his personal
use the funds that he received for his clients.

Nevertheless, recourse to disbarment must be done with utmost caution. As this Court noted in Moran v. Moron: 32

Disbarment should never be imposed unless it is evidently clear that the lawyer, by his serious misconduct, should
no longer remain a member of the bar. Disbarment is the most severe form of disciplinary sanction, and, as such,
the power to disbar must always be exercised with great caution, only for the most imperative reasons and in clear
cases of misconduct affecting the standing and moral character of the lawyer as an officer of the court and member
of the bar. Accordingly, disbarment should not be decreed where any punishment less severe – such as a
reprimand, suspension, or fine – would accomplish the end desired. 33

Moreover, considering the gravity of disbarment, it has been established that clearly preponderant evidence is
necessary to justify its imposition. 34

As explained in Aba v. De Guzman,35 "[p]reponderance of evidence means that the evidence adduced by one side
is, as a whole, superior to or has greater weight than that of the other. It means evidence which is more convincing
to the court as worthy of belief than that which is offered in opposition thereto." 36

Per Rule 133, Section 1 of the Rules, a court may consider the following in determining preponderance of evidence:

All the facts and circumstances of the case;

The witnesses’ manner of testifying, their intelligence, their means and opportunity of knowing the facts to which
they are testifying, the nature of the facts to which they testify, the probability or improbability of their testimony;

The witnesses’ interest or want of interest and also their personal credibility so far as the same may ultimately
appear in the trial; and

The number of witnesses, although it does not mean that preponderance is necessarily with the greater number.

In this case, complainants have shown by a preponderance of evidence that respondent committed gross
misconduct, dishonesty, and deceit in violation of Rule 1.01 of the CPR.

Specifically, complainants have shown not only through Lilia Tabang’s testimony but more so through the
testimonies of Dieter Heinze, Atty. Agerico Paras, and Teodoro Gallinero that:

respondent misrepresented himself as the owner of or having the right to dispose of the subject parcels;

respondent actively sought to sell or otherwise dispose of the subject parcels;

respondent perfected the sales and received the proceeds of the sales – whether in cash or in kind – of the subject
parcels;

such sales were without the consent or authorization of complainants; and

respondent never remitted the proceeds of the sales to complainants.

More importantly, complainants’ witnesses showed that when respondent had been confronted with Lilia Tabang’s
adverse claims and asked to substantiate the identities of the supposed owners of the subject parcels, he had failed
to produce such persons or even show an iota of proof of their existence. In this regard, the testimonies of Dieter
Heinze, Atty. Agerico Paras, and Teodoro Gallinero are particularly significant in so far as they have been made
despite the fact that their interest as buyers is contrary to that of complainants’ interest as adverse claimants.

In contrast, respondent failed to present evidence to rebut complainant's allegations.

Respondent’s defense centered on his insistence that the owners of the seven parcels were not fictitious and that
they had voluntarily sold the seven parcels. Respondent also evaded the allegations against him by flinging counter-
allegations. For instance, he alleged that Lilia Tabang had unsuccessfully demanded a "balato" from the proceeds of
the sale of the subject parcels and that after she had been refused, she threatened to defame respondent and seek
his disbarment. In support of this allegation, he pointed out that he had filed criminal complaints against Lilia

76
Tabang. He also surmised that the signatures on the subject documents appearing above the name "Glenn C.
Gacott" were mere forgeries and crude duplications of his signature.

Per Rule 131, Section 1 of the Rules of Court,37 the burden of proof is vested upon the party who alleges the truth of
his claim or defense or any fact in issue. Thus, in Leave Division, Office of Administrative Services, Office of the
Court Administrator v. Gutierrez38 where a party resorts to bare denials and allegations and fails to submit evidence
in support of his defense, the determination that he committed the violation is sustained.

It was incumbent upon respondent to prove his allegation that the supposed owners of the seven parcels are real
persons. Quite the contrary, he failed to produce the slightest proof of their identities and existence, much less
produce their actual persons. As to his allegations regarding Lilia Tabang’s supposed extortion and threat and the
forgery or crude duplication of his signature, they remain just that – allegations. Respondent failed to aver facts and
circumstances which support these claims.

At best, respondent merely draws conclusions from the documents which form the very basis of complainants’ own
allegations and which are actually being assailed by complainants as inaccurate, unreliable, and fraudulent.
Respondent makes much of how Lilia Tabang could not have been the owner of the seven (7) parcels since her
name does not appear on the parcels’ TCTs39 and how he merely respected the title and ownership of the ostensible
owners.40 Similarly, he makes much of how Lilia Tabang was named as a mere agent in the SPAs. 41However,
respondent loses sight of the fact that it is precisely the accuracy of what the TCTs and SPAs indicate and the
deception they engender that are the crux of the present controversy. In urging this Court to sustain him, respondent
would have us rely on the very documents assailed as fraudulent.

Apart from these, all that respondent can come up with are generic, sweeping, and self-serving allegations of (1)
how he could not have obtained the TCTs from Tabang as "it is a standing policy of his law office not to accept
Torrens title [sic] unless it is related to a court case" 42 and because "[he] does not borrow any Torrens title from
anybody and for whatever purpose;"43 (2) how complainants could not have confronted him to demand the return of
the TCTs and how he could not have told them that he lost the TCTs because "[a]s a lawyer, [he] always respects
and recognizes the right of an owner to keep in his custody or possession any of his properties of value;" 44 and (3)
how he could not have met and talked with Lilia Tabang for the engagement of his services only to refuse Lilia
Tabang because legal practice constituted his livelihood, and there was no reason for him to refuse an occasion to
earn income.45

Rather than responding squarely to complainants’ allegations, respondent merely embarks on conjectures and
ascribes motives to complainants. He accuses Lilia Tabang of demanding a "balato" of twenty percent (20%) from
the proceeds of the sale of the seven parcels, and of threatening to defame him and to seek his disbarment after
she had been refused.  This evasive posturing notwithstanding, what is clear is that respondent failed to adduce
1âwphi1

even the slightest proof to substantiate these claims. From all indications, Lilia Tabang had sufficient basis to file the
present Complaint and seek sanctions against respondent.

Given the glaring disparity between the evidence adduced by complainants and the sheer lack of evidence adduced
by respondent, this Court is led to no other reasonable conclusion than that respondent committed the acts of which
he is accused and that he acted in a manner that is unlawful, dishonest, immoral, and deceitful in violation of Rule
1.01 of the Code of Professional Responsibility.

This Court has repeatedly emphasized that the practice of law is imbued with public interest and that "a lawyer owes
substantial duties not only to his client, but also to his brethren in the profession, to the courts, and to the nation,
and takes part in one of the most important functions of the State – the administration of justice – as an officer of the
court."46 Accordingly, "[l]awyers are bound to maintain not only a high standard of legal proficiency, but also of
morality, honesty, integrity and fair dealing."47

Respondent has fallen dismally and disturbingly short of the high standard of morality, honesty, integrity, and fair
dealing required of him. Quite the contrary, he employed his knowledge and skill of the law as well as took
advantage of the credulity of petitioners to secure undue gains for himself and to inflict serious damage on others.
He did so over the course of several years in a sustained and unrelenting fashion and outdid his previous
wrongdoing with even greater, more detestable offenses. He has hardly shown any remorse. From how he has
conducted himself in these proceedings, he is all but averse to rectifying his ways and assuaging complainants’
plight. Respondent even foisted upon the IBP and this Court his duplicity by repeatedly absenting himself from the
IBP’s hearings without justifiable reasons. He also vexed this Court to admit his Appeal despite his own failure to
comply with the much extended period given to him, thus inviting the Court to be a party in delaying complainants’
cause. For all his perversity, respondent deserves none of this Court’s clemency.

WHEREFORE, respondent ATTY. GLENN C. GACOTT, having clearly violated the Canons of Professional
Responsibility through his unlawful, dishonest, and deceitful conduct, is DISBARRED and his name ordered
STRICKEN from the Roll of Attorneys.

77
Let copies of this Decision be served on the Office of the Bar Confidant, the Integrated Bar of the Philippines, and all
courts in the country for their information and guidance. Let a copy of this Decision be attached to respondent's
personal record as attorney.

SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila

THIRD DIVISION

G.R. No. 179786               July 24, 2013

78
JOSIELENE LARA CHAN, Petitioner, 
vs.
JOHNNY T. CHAN, Respondent.

CONCURRlNG OPINION

LEONEN, J.:

I concur but add the following points:

I agree that the hospital records of respondent Johnny Chan may not be produced in court without his/her consent.
Issuance of a subpoena duces tecum for its production will violate the physician-patient privilege rule under Rule
130, Sec. 24(c)1 of the Rules of Civil Procedure.

However, this privilege is not absolute. The request of petitioner for a copy of the medical records has not been
properly laid.

Instead of a request for the issuance of a subpoena duces tecum, Josielene Lara Chan should avail of the mode of
discovery under Rule 28 of the Rules of Civil Procedure.

Rule 28 pertains to the physical or mental examination of persons. This may be ordered by the court, in its
discretion,2 upon motion and showing of good cause3 by the requesting party, in cases when the mental and/or
physical condition of a party is in controversy.4 Aside from showing good cause, the requesting party needs only to
notify the party to be examined (and all other parties) and specify the time, place, manner, conditions, and scope of
the examination, including the name of the physician who will conduct the examination. 5

The examined party may obtain a copy of the examining physician's report concerning his/her mental or physical
examination.6 The requesting party shall deliver this report to him/her. 7 After such delivery, however, the requesting
party becomes entitled to any past or future medical report involving the same mental or physical condition. 8 Upon
motion and notice, the court may order the examined party to deliver those medical reports to the requesting party if
the examined party refuses to do so.9

Moreover, if the examined party requests a copy of the examining physician's report or if he/she takes the
examining physician's deposition, the request waives the examined party's privileges when the testimony of any
person who examined or will examine his/her mental of physical status is taken in the action or in any action
involving the same controversy.10

Discovery procedures provide a balance between the need of the plaintiff or claimant to fully and fairly establish her
case and the policy to protect - to a certain extent - communications made between a patient and his doctor. Hence,
the physician-patient privilege does not cover information discovered under Rule 28. This procedure is availed with
the intention of making the results public during trial.  Along with other modes of discovery, this would prevent the
1âwphi1

trial from being carried on in the dark.11

In view of the foregoing; I vote to DENY the petition.

Republic of the Philippines

SUPREME COURT
Manila

EN BANC

G.R. No. 179987               September 3, 2013

79
HEIRS OF MARIO MALABANAN, (Represented by Sally A. Malabanan), Petitioners, 
vs.
REPUBLIC OF THE PHILIPPINES, Respondent.

CONCURRING AND DISSENTING OPINION

LEONEN, J.:

I concur with the denial of the Motions for Reconsideration.

I concur with the original Decision penned by Justice Dante Tinga promulgated on April 29, 2009. I also concur with
the Resolution of Justice Lucas Bersamin with respect to the Motions for Reconsideration, but disagree with the
statements made implying the alleged overarching legal principle called the "regalian doctrine."

Mario Malabanan filed an application for registration of a parcel of land designated as Lot 9864-A in Silang, Cavite
based on a claim that he purchased the land from Eduardo Velazco. He also claimed that Eduardo Velazco and his
predecessors-in-interest had been in open, notorious, and continuous adverse and peaceful possession of the land
for more than thirty (30) years.1

The application was raffled to the Regional Trial Court of Cavite-Tagaytay City, Branch 18. 2 Malabanan's witness,
Aristedes Velazco, testified that Lot 9864-A was originally part of a 22-hectare property owned by his great-
grandfather.3 His uncle, Eduardo Velazco., who was Malabanan's predecessor-in-interest, inherited the lot. 4

Malabanan also presented a document issued by the Community Environment and Natural Resources Office of the
Department of Natural Resources (CENRO-DENR) on June 11, 2001. The document certified that the subject land
had already been classified as alienable and disposable since March 15, 1982. 5

The Solicitor General, through Assistant Provincial Prosecutor Jose Velazco, Jr., affirmed the truth of Aristedes
Velazco’s testimony.6 Malabanan’s application was not challenged. 7

The RTC granted Malabanan’s application on December 2, 2002.

The Republic appealed the Decision to the Court of Appeals. It argued that Malabanan failed to prove that the
subject land had already been classified as alienable and disposable. The Republic insisted that Malabanan did not
meet the required manner and length of possession for confirmation of imperfect title under the law. 8

The Court of Appeals reversed the Decision of the RTC. The CA held that under Section 14(1) of Presidential
Decree No. 1529 or the Property Registration Decree, possession before the classification of land as alienable and
disposable should be excluded from the computation of the period of possession. 9 Therefore, possession before
March 15, 1982 should not be considered in the computation of the period of possession. This is also in accordance
with the ruling in Republic v. Herbieto.10

Malabanan’s heirs (petitioners) appealed the Decision of the CA.11 Relying on Republic v. Naguit,12 petitioners
argued that the period of possession required for perfecting titles may be reckoned prior to the declaration that the
land was alienable and disposable.13 Open, continuous, exclusive, and notorious possession of an alienable land of
public domain for more than 30 years ipso jure converts it into private property. 14 Previous classification is immaterial
so long as the property had already been converted to private property at the time of the application. 15

We dismissed the Petition because there was no clear evidence to establish petitioners’ or their predecessors-in-
interest’s possession since June 12, 1945. 16 Moreover, while there was evidence that the land had already been
declared alienable and disposable since 1982, there was no evidence that the subject land had been declared as no
longer intended for public use or service.17

Both petitioners and respondent ask for the reconsideration of Our Decision on April 29, 2009.

I agree that Malabanan was not able to prove that he or his predecessors-in-interest were in open, continuous,
exclusive, and notorious possession of the subject land since June 12, 1945. We already noted in the original
Decision that Malabanan offered no deed of sale covering the subject lot, executed by any of the alleged
predecessors-in-interest in his favor.18 He only marked a photocopy of a deed of sale executed by Virgilio Velazco in
favor of Leila Benitez and Benjamin Reyes.19

On that note alone, no title can be issued in favor of Malabanan or petitioners.

However, I do not agree that all lands not appearing to be clearly within private ownership are presumed to belong
to the State20 or that lands remain part of the public domain if the State does not reclassify or alienate it to a private
person.21 These presumptions are expressions of the Regalian Doctrine.
80
Our present Constitution does not contain the term, "regalian doctrine." What we have is Article XII, Section 2, which
provides:

Section 2. All lands of the public domain, waters, minerals, coal, petroleum, and other mineral oils, all forces of
potential energy, fisheries, forests or timber, wildlife, flora and fauna, and other natural resources are owned by the
State. With the exception of agricultural lands, all other natural resources shall not be alienated x x x.

There is no suggestion in this section that the presumption in absolutely all cases is that all lands are public. Clearly,
the provision mentions only that "all lands of the public domain" are "owned by the state."

This is not the only provision that should be considered in determining whether the presumption would be that the
land is part of the "public domain" or "not of the public domain."

Article III, Section 1 of the Constitution provides:

Section 1. No person shall be deprived of life, liberty or property without due process of law, nor shall any person be
denied equal protection of the laws.

This section protects all types of property. It does not limit its provisions to property that is already covered by a form
of paper title. Verily, there could be land, considered as property, where ownership has vested as a result of either
possession or prescription, but still, as yet, undocumented. The original majority’s opinion in this case presents
some examples.

In my view, We have properly stated the interpretation of Section 48 (b) of Commonwealth Act No. 141 or the Public
Land Act as amended22 in relation to Section 14(1) and 14(2) of Presidential Decree No. 1529 or the Property
Registration Decree. Our ratio decidendi, therefore, should only be limited to the facts as presented in this case. We
also properly implied that the titling procedures under Property Registration Decree do not vest or create title. The
Property Registration Decree simply recognizes and documents ownership and provides for the consequences of
issuing paper titles.

We have also recognized that "time immemorial possession of land in the concept of ownership either through
themselves or through their predecessors in interest" suffices to create a presumption that such lands "have been
held in the same way from before the Spanish conquest, and never to have been public land." 23 This is an
interpretation in Cariño v. Insular Government24 of the earlier version of Article III, Section 1 in the McKinley’s
Instructions.25 The case clarified that the Spanish sovereign’s concept of the "regalian doctrine" did not extend to the
American colonial period and to the various Organic Acts extended to the Philippines.

Thus, in Cariño:

It is true that Spain, in its earlier decrees, embodied the universal feudal theory that all lands were held from the
Crown… It is true also that, in legal theory, sovereignty is absolute, and that, as against foreign nations, the United
States may assert, as Spain asserted, absolute power. But it does not follow that, as against the inhabitants of the
Philippines, the United States asserts that Spain had such power. When theory is left on one side, sovereignty is a
question of strength, and may vary in degree. How far a new sovereign shall insist upon the theoretical relation of
the subjects to the head in the past, and how far it shall recognize actual facts, are matters for it to decide.

Whatever may have been the technical position of Spain, it does not follow that, in view of the United States,
[plaintiff who held the land as owner] had lost all rights and was a mere trespasser when the present government
seized the land. The argument to that effect seems to amount to a denial of native titles throughout an important
part of Luzon, at least, for the want of ceremonies which the Spaniards would not have permitted and had not the
power to enforce.

No one, we suppose, would deny that, so far as consistent with paramount necessities, our first object in the internal
administration of the islands is to do justice to the natives, not to exploit their country for private gain. By the Organic
Act of July 1, 1902, c. 1369, § 12, 32 Stat. 691, all the property and rights acquired there by the United States are to
be administered "for the benefit of the inhabitants thereof." 26 (Emphasis supplied)

And with respect to time immemorial possession, Cariño mentions:

The Organic Act of July 1, 1902 made a bill of rights, embodying the safeguards of the Constitution, and, like the
Constitution, extends those safeguards to all. It provides that ‘no law shall be enacted in said islands which shall
deprive any person of life, liberty, or property without due process of law, or deny to any person therein the equal
protection of the laws.’

81
§ 5. In the light of the declaration that we have quoted from § 12, it is hard to believe that the United States was
ready to declare in the next breath that x x x it meant by "property" only that which had become such by ceremonies
of which presumably a large part of the inhabitants never

had heard, and that it proposed to treat as public land what they, by native custom and by long association-- one of
the profoundest factors in human thought -- regarded as their own.

xxx

It might, perhaps, be proper and sufficient to say that when, as far back as testimony or memory goes, the land has
been held by individuals under a claim of private ownership, it will be presumed to have been held in the same way
from before the Spanish conquest, and never to have been public land. 27

Cariño is often misinterpreted to cover only lands for those considered today as part of indigenous cultural
communities. However, nothing in its provisions limits it to that kind of application. We could also easily see that the
progression of various provisions on completion of imperfect titles in earlier laws were efforts to assist in the
recognition of these rights. In my view, these statutory attempts should never be interpreted as efforts to limit what
has already been substantially recognized through constitutional interpretation.

There are also other provisions in our Constitution which protect the unique rights of indigenous peoples. 28 This is in
addition to our pronouncements interpreting "property" in the due process clause through Cariño.

It is time that we put our invocations of the "regalian doctrine'' in its proper perspective. This will later on, in the
proper case, translate into practical consequences that do justice to our people and our history.

Thus, I vote to deny the Motions for Reconsideration.

Republic of the Philippines

SUPREME COURT
Manila

EN BANC

82
A.M. No. P-04-1903               September 10, 2013
(Formerly A.M. No. 04-10-597-RTC)

OFFICE OF THE COURT ADMINISTRATOR, Complainant, 

vs.
DONABEL M. SAVADERA, MA. EVELYN M. LANDICHO and CONCEPCION G. SAYAS, all of the RTC, OCC,
Lipa City, Batangas, ATTY. CELSO M. APUSEN and ATTY. SHEILA ANGELA P. SARMIENTO, Respondents.

DECISION

PER CURIAM:

This administrative matter originated from the financial audit conducted from March 8 to 26, 2004

of the Court Management Office of the Office of the Court Administrator (CMO-OCA) on the books of accounts of
the Office of the Clerk of Court (OCC), Regional Trial Court of Lipa City (RTC Lipa City). The audit covered the
transactions of Atty. Celso M. Apusen, former Clerk of Court VI, for the period June 1, 1987 to September 1, 2002,
and that of his successor, Atty. Sheila Angela Palo-Sarmiento, Officer-in-Charge (OIC), Clerk of Court V, RTC Lipa
City, Branch 85, for the period of September 2, 2002 up to the audit dates. Atty. Sarmiento was appointed OIC after
Atty. Apusen’s leave of absence from September 2,2002 and eventual optional retirement effective January 2, 2003.
On September 10, 2002, the appointment of Atty. Sarmiento was confirmed byt he OCA. 1

It appears that as Atty. Sarmiento was preoccupied with her duties as Branch Clerk, she delegated the collections of
all legal fees to respondent Donabel M. Savadera (Savadera), Cash Clerk II. Savadera collected and deposited
various collections of the court and recorded the same in their respective cash books. She also signed on behalf of
Atty. Sarmiento the monthly report of collections and deposits prepared by respondent Ma. Evelyn M. Landicho
(Landicho), Clerk III. If Savadera was absent, Landicho and respondent Concepcion G. Sayas (Sayas), Social
Worker, received the court collections. 2

The audit team discovered that there were cash shortages and that some official receipts (ORs) were missing or
tampered with. It also found some tampered deposit slips. The findings of the audit team are summarized as follows:

As of March 8, 2004, the RTC Lipa City had outstanding collections amounting to ₱661,684.26. Of said amount,
however, Savadera was able to present only ₱94,560.75 in cash, thereby having a cash shortage in the amount of
₱567,123.51. When Savadera was directed to produce the shortage, she told the audit team that aside from the
cash on hand presented to them, she also had check collections in her locked table drawer. She, however, could
not show them the said check collections at that time as she forgot to bring her key. Savadera assured them that all
her outstanding collections will be deposited within the day.3

Based on the duplicate/triplicate copies of ORs presented to the audit team, Savadera’s shortage may be reduced
to ₱85,505.03 as she has check collections in the total amount of ₱481,618.48, to wit:

OR No. Check No. Date of Check Amount

19287261 LBP 09087 11-20-03 P 2,300.00

19287263 LBP 06954 09-19-03 2,900.00

19287266 Prudential 0248795 10-23-03 9,075.00

19287267 Prudential 0249474 11-12-03 24,380.00

19287286 LBP 070960 11-28-03 2,000.00

19287287 UCPB 5858158 09-09-03 45,020.00

19287288 UCPB 5190789 11-14-03 18,286.78

19287297 Keppel Bank 17833 11-27-03 377,656.70

Total     ₱481,618.484

83
Savadera and Atty. Sarmiento were then reminded of their accountabilities for the missing funds. Savadera was also
advised to deposit the cash on hand immediately as well as the checks allegedly locked inside her drawer. 5

On the fourth day of the audit, Landicho presented to the audit team several deposit slips given to her by Savadera
supposedly representing full restitution of the cash shortages. A careful perusal of the deposit slips, however,
revealed that except for the Keppel Bank check amounting to₱377,656.70, all other checks that were supposed to
be outstanding at the time of the audit were not the ones deposited. Instead, the checks deposited totaling
₱87,507.16, turned out to be the succeeding collections of the court and the checks allegedly in the accountable
officer’s possession at the time of the audit had already been deposited beforehand to the Judiciary Development
Fund (JDF)/General Fund account but yet to be recorded in the cashbook and to be reported to the Accounting
Division of the OCA.6

The audit team also found that the dates in the ORIGINAL copies of the receipts are different from those in the
DUPLICATE/TRIPLICATE copies. Savadera, Landicho and Sayas did not indicate the date of collection on the
duplicate and triplicate copies of the receipt whenever a collection was made. As the space for the date is located in
the upper portion of the receipt, they deliberately pulled down the carbon paper in the set of ORs so that what was
written in the original will not be reflected in the duplicate and triplicate copies. The collecting officer would then put
a later date in the duplicate and triplicate copies of the receipt by using a dater when they are about to submit a
monthly report of collections and deposits to this Court. The audit team concluded that this practice was resorted to
in order to conceal the accountable officers’ misappropriations. Based on the monthly reports of collections
submitted to the Court, what was reported were the equivalent collections of only what they had deposited on a
certain period.7

Landicho also presented to the audit team six booklets of issued Ors coming from the table drawer of Savadera.
Several used ORs were also found in the booklets of unissued receipts. Said receipts represent collections from the
period December 2003 to March 8, 2004 which were neither recorded in the cashbook nor reported to the
Accounting Division of the OCA. The audit team found that although some of them had already been deposited, the
deposits were made to cover up the cash collections previously misappropriated. Thus, on March 22, 2004, the
audit team demanded from Savadera, Landicho and Sayas the immediate restitution of an initial cash shortage
totaling to ₱1,212,086.33 comprising the six booklets and the several ORs mentioned above. The three collecting
officers were also required to submit a written explanation within 72 hours on why a cash shortage occurred. Upon
discovery of the shortage, Executive Judge Jane Aurora C. Lantion likewise immediately relieved Savadera,
Landicho and Sayas of their functions and detailed them to the other offices of the court and designated as cash
clerks her three regular branch clerks on March 11, 2004. 8

In their explanations, Savadera, Landicho and Sayas did not deny the existence of a cash shortage.  Landicho even
1âwphi1

admitted having taken ₱80,000from her collections. She and Savadera however accused each other for thein curred
shortage. Savadera acknowledged having received all of Sayas’ collections so the latter’s liability will be limited only
to her connivance with Savadera and Landicho to defraud the court of its revenues since she allowed herself to be a
party to the issuance of undated receipts and her failure to report the cash shortage despite her awareness of its
existence as early as February 2001.9

On March 16, 2004, the three collecting officers executed a Joint Affidavit 10 absolving Atty. Sarmiento of any
financial accountability during her term as OIC. Because of this, the audit team decided not to demand from her the
restitution of the shortage, but believed that she cannot escape administrative liability for not closely supervising the
personnel of the OCC during her term as OIC.11

The audit team likewise discovered two deposit slips that have been tampered with to cover up a shortage in the
amount of ₱336,765.64 which was discovered in January 2001 when the Commission on Audit (COA), Batangas
City conducted an examination of the books of accounts of the OCC. The said shortage was settled per deposit slip
dated February 13, 2001. It was however discovered that the ₱200,000 used to settle part of the shortage came
from the succeeding collections of the court from a Bank of the Philippine Islands (BPI)check amounting to
₱193,202.63 which Landicho was able to re-discount into cash and deposit to her own account. Landicho
apparently drew her personal check to settle part of the shortage. 12 To conceal the fact that the succeeding
collections were used to cover the shortage, they made it appear that the BPI check previously rediscounted into
cash, as well as the other collections, were deposited by them by tampering two deposit slips as follows:

Date of Deposit Amount as Correct Difference

Presented Amount

February 15, 2001 P 193,202.63 ₱3,202.63 ₱190,000.00

March 30, 2001 56,664.33 6,664.33 50,000.00

TOTAL P 249,866.96 ₱9,866.96 ₱240,000.0013

84
The audit team also found that as of the examination date, the net interest income of ₱551,692.50 on fiduciary
deposits from the time of Atty. Apusen up to the time of Atty. Sarmiento remained intact in the court’s Fiduciary Fund
account instead of being withdrawn and deposited to the account of the JDF in violation of OCA Circular No. 50-
9514 which states that "all collections from bailbonds, rental deposits and other fiduciary collections shall be
deposited within 24 hours by the Clerk of Court concerned, upon receipt thereof, with the Landbank of the
Philippines."

The audit of the JDF account also disclosed numerous irregularities committed by the collecting officers which
contributed to the accumulation of a cash shortage of ₱2,422,687.94 covering the period 1987-2004. The audit team
discovered irregularities for the JDF such as tampering of Ors and deposit slips, late recording/reporting of judiciary
collections, and juggling of collection.15

Aside from the ₱240,000 accountability arising from the tampered deposit slips, Savadera and Landicho also have
unaccounted/unrecorded JDF collections for the period December 1, 2003 to March 8, 2004 totaling₱1,229,158.73.
There is also an under deposit of ₱144,024.71 that was uncovered based on the deposits extracted from the bank
statements provided by Land Bank. Thus, Savadera and Landicho have a combined accountability of
₱1,613,183.44 and Atty. Apusen should be held accountable only for the unaccounted collections during his term
amounting to ₱809,504.50.16

An examination of the General Fund account also revealed a cash shortage of ₱34,333.76 covering the period
1987-2003. Of this amount, Atty. Apusen is accountable for ₱22,789.27 while Savadera and Landicho are liable for
₱11,544.49.17

There is also a shortage of ₱73,734.45 for the Special Allowance for the Judiciary (SAJ) Fund which includes the
shortages in the SAJ collections of Savadera and Landicho in the amount of ₱65,594.35 which are
unaccounted/unrecorded as of examination date.18

As to the court’s fiduciary fund, the audit revealed a cash shortage amounting to ₱1,251,650.32 which was incurred
during the term of Atty. Apusen as some of his collections were not deposited. 19

Twenty-nine booklets and 127 pieces of ORs requisitioned from the Property Division, Supreme Court were also
unaccounted for.20

Below is the summary of the respective cash accountabilities of Savadera, Landicho, Sayas and Apusen as of
March 8, 2004:

Collecting JDF General SAJ Fiduciary TOTAL

Officer Fund Fund

Ms. Savadera 1,613,183.44 11,544.49 73,734.45 - ₱1,698,462.38

And Ms.
Landicho

Ms. Sayas - - - - -

Atty. Apusen 809,504.50 22,789.27 - 1,251,650.32 2,083,944.09

Grand Total 2,422,687.94 34,333.76 73,734.45 1,251,650.32 ₱3,782,406.4721

Thus, the audit team recommended that

1. The audit report be DOCKETED as a regular administrative matter against Ms. Donabel M. Savadera,
Ms. Evelyn M. Landicho and Ms. Concepcion G. Sayas.

2. Ms. Donabel M. Savadera and Ms. Evelyn M. Landicho , Cash Clerk II and Clerk III, respectively be
DIRECTED to:

85
 a. RESTITUTE the shortages incurred in Judiciary Development Fund, General Fund and Special
Allowance for the Judiciary Fund amounting to ₱1,613,183.44, ₱11,544.49, and ₱73,734.45,
respectively, or a total of ₱1,698,462.38; and

b. ACCOUNT for the missing Official Receipts with Serial Nos.11594552, 15436651-15436662 and
15436665-15436700.

3. Ms. Donabel M. Savadera and Ms. Evelyn M. Landicho be SUSPENDED from Office pending resolution
of this administrative matter.

4. Former Clerk of Court VI, Atty. Celso M. Apusen be DIRECTED to:

a. RESTITUTE the shortages incurred in the Judiciary Development Fund, General Fund and
Fiduciary Fund amounting to ₱809,504.50, ₱22,789.27 and ₱1,251,650.32,respectively, or a total of
₱2,083,944.09; and

b. ACCOUNT for the missing Official Receipts with Serial Nos.1778751-1778950; 2240551-
2240600; 2241601-2241634;2241851-2241950; 2614851-2615000; 3277351-3277500;3321401-
3321450; 3321501-3321600; 3941501-3941650;3941701-3941734; 3943001-3943050; 4448601-
4448750;6027851-6027950; 6869901-6869950; 11620951-11620960;11594401-11594450 and
11594551-11594600.

5. Atty. Sheila Angela P. Sarmiento, incumbent Officer-in-Charge be DIRECTED to:

a. EXPLAIN in writing within a period of ten (10) days from notice why no administrative sanction
shall be imposed upon her for her failure to exercise close supervision over Ms. Donabel M.
Savadera, Ms. Evelyn M. Landicho and Ms. Concepcion G. Sayas which resulted in the
misappropriation of judiciary funds amounting to ₱1,698,462.38 during her period as Officer-in-
Charge;

b. WITHDRAW the interest earned from fiduciary fund deposits for the period June 30, 1994 to
December 31, 2003 amounting to ₱551,[6]92.50 and deposit the same to the JDF account; and

c. FURNISH the Fiscal Monitoring Division, CMO, OCA of the machine validated copy of deposit slip
of the transfer of ₱551,692.50 to JDF account as proof of remittance thereof.

6. Hon. Executive Judge Jane Aurora C. Lantion be DIRECTED to properly monitor the incumbent OIC to
ensure strict adherence to circulars and other issuances of the Court to avoid commission of similar
irregularities in the future.

7. Hold Departure Order be ISSUED against Ms. Donabel M. Savadera, Ms. Evelyn M. Landicho and Atty.
Celso M. Apusen to prevent them from leaving the country without settling the shortages found.

8. The LEGAL OFFICE be DIRECTED to file appropriate criminal charges against Ms. Donabel M.
Savadera, Ms. Evelyn M. Landicho, Atty. Celso M. Apusen and Ms. Concepcion G. Sayas. 22

Said recommendation was approved by then Court Administrator (now Supreme Court Justice) Presbitero J.
Velasco, Jr. and was duly endorsed by Memorandum dated September 22, 2004 for approval of the Court. 23

By Resolution24 dated October 19, 2004, the Court resolved to adopt the recommendation of the OCA. On even
date, a Hold Departure Order25 was issued against Savadera, Landicho and Atty. Apusen.

Savadera, in a letter26 filed with the OCA on November 18, 2004,acknowledged receipt of the October 19, 2004
Resolution and requested that she be allowed to determine how the ₱1,698,462.38 was arrived at and be given the
chance to comment on the result of the audit report. She averred that she submitted an answer to the head of the
audit team but did not admit that the cash shortages were due to her fault. She also requested that she be given ten
days from receipt of the requested documents to comment on the October 19, 2004 Resolution.

Landicho, in her letter27 dated November 22, 2004, stated that it would be unfair to direct her to restitute the amount
of ₱1,698,462.38 when she only admitted responsibility for the amount of ₱80,000. She also alleged that there was
no evidence to hold her responsible for the amount in excess of ₱80,000. As to the missing ORs that she was
directed to account for, she claimed that she never received any of them; is not their custodian; and is not an
accountable officer. She prayed that she be allowed to restitute₱80,000 only; be spared from accounting for any of
the missing ORs; and that her suspension from office be lifted.

86
Sayas, in her Motion for Reconsideration 28 dated November 24, 2004,alleged that she was merely constrained to
receive payments and issue ORs in the absence of Savadera. She averred that the money was immediately
remitted to Savadera to be deposited in Land Bank, Lipa City Branch. She claimed that she has no knowledge on
how financial transactions are being undertaken. Sayas also added that the conduct of financial audit by the COA in
February 2001 revealed a shortage in the JDF collection amounting to₱200,000. Said shortage was paid using a
rediscounted personal check which was later on paid using the collections under the JDF. Sayas contended that
she was not an accountable officer and was clueless that such act was in violation of the accounting rules.

In Atty. Sarmiento’s letter-explanation 29 dated November 2, 2004, she stated that concurrent with her position as
Branch Clerk of Court, she was also appointed administrative officer. She had an agreement with then Executive
Judge Jane Aurora C. Lantion that she would not be involved in the fiscal activities for the reason that there was no
audit yet and the accountabilities of Atty. Apusen were yet to be determined. To the best of her abilities, she,
together with Judge Lantion, monitored daily the transactions of the OCC, all of which appeared to be regular. She
stated that the schemes of the three court personnel involved were evidently premeditated to ensure that the
irregularities will not be discovered. She also noted that the familiarity of the three court personnel with the ins and
outs of the transactions enabled them to make them appear regular and an outsider could easily be convinced that
everything was in order. She likewise claimed that during her incumbency, she acted on all pending matters which
needed action promptly and it was never her intention to be remiss in her duties as OIC but she can only do so
much under the circumstances.

In a Resolution30 dated January 25, 2005, the Court granted Savadera’s request to inspect the pertinent documents
in the determination of the shortages and submit her comment within 10 days from receipt thereof.

In a letter31 dated March 30, 2005, Landicho made a request similar to Savadera’s. The same was granted by the
Court by a Resolution32 dated May 10, 2005.

By letter33 dated July 13, 2005, Savadera made another request this time that she be furnished copies of the audit
report and other relevant documents. This was again granted by the Court in a Resolution 34 dated August 9, 2005.

In another letter35 dated October 5, 2005, Landicho requested that she be given 30 more days to file a comment as
she received an eviction notice from the Government Service Insurance System. This request was again granted by
the Court in a Resolution36 dated November 8, 2005.

By letter37 dated September 25, 2007, Sayas inquired about the status of the case and requested a copy of a
resolution, if any. She reiterated said request in her letter 38 dated October 4, 2007.

On October 16, 2007, this Court resolved to

(a) DENY WITH FINALITY the Letter (by way of motion for reconsideration of the resolution of October 19,
2004) dated November 22,2004 filed by Evelyn M. Landicho, Clerk III, RTC-OCC, Lipa City, and
REITERATE the directive to file the required comment;

(b) NOTE the Letter dated September 25, 2007 filed by Concepcion Galotia-Sayas inquiring about the status
of her case, and GRANT her request for a copy of a resolution in the above case, if any; and

(c) GRANT the Motion for Reconsideration of the resolution of October 19, 2004 filed by Concepcion
Galotia-Sayas praying that the filing of the administrative and criminal cases against her be reconsidered. 39

For failure of Landicho to submit her comment despite the extensions granted to her, the Court resolved to require
her to show cause why she should not be disciplinarily dealt with. 40 Instead of complying, however, she wrote
another letter requesting another 30 days extension. This request was denied by the Court, but the Court gave her a
non-extendible period of five days within which to submit her comment. 41

On September 16, 2008, Landicho finally submitted her comment. 42 She alleged that the controversy stemmed from
the audit conducted by the Provincial Audit Group of Batangas City in 2001 when a shortage amounting to
₱230,000 was discovered. After the audit, since Savadera did not report for work, she was constrained to receive
collections on Savadera’s behalf. Her collections for the JDF amounted to ₱193,202.63 in check and ₱30,000 in
cash. Landicho claimed that she immediately turned over the collections to Savadera when the latter went back to
work.

Landicho also narrated that in a previous letter dated March 23, 2004to the head of the audit team, John Ferrera,
she admitted that she convinced someone to convert the ₱193,202.63 check to cash upon the request of Sayasand
Savadera. She likewise admitted that she deposited the proceeds of the converted check and her other collections
totaling ₱200,000 to her newly opened account in the Development Bank of the Philippines, Lipa City branch.
Thereafter, she immediately issued a check payable to cash which was properly endorsed by Savadera with the
understanding that such amount will cover the cash shortage of their office. Subsequently, the audit team from the

87
CMO-OCA conducted an examination in March 2004 and to her biggest surprise the audit uncovered a shortage
amounting to ₱1,212,086.33.

Landicho admitted having borrowed ₱80,000 from the cash collection but this was with Savadera’s consent. She
further pointed out that it has been the practice of people in their office to borrow from the collections and Savadera
even kept a list of all the loans, among which was that of Sayas who obtained a loan of around ₱200,000 for the
construction of her house.

As to the missing ORs, Landicho denied any knowledge of their whereabouts or the circumstances leading to their
loss.

In a Resolution43 dated September 30, 2008, this Court recalled paragraph (c) of the October 16, 2007 Resolution
granting Sayas’ motion to reconsider the directive to the Legal Office, OCA to file the appropriate criminal charges
against her. We also required Savadera to submit a comment. To date however, no comment from Savadera has
been filed as the notice to her was returned and the Court is yet to receive a report regarding her current address.

In its Memorandum44 dated July 13, 2012, the OCA recommended that:

1. Atty. Celso M. Apusen, former Clerk of Court VI, Office of the Clerk of Court, Regional Trial Court, Lipa
City, Batangas, be found GUILTY of Dishonesty and Grave Misconduct and all his retirement benefits be
ordered forfeited in favor of the government;

2. Atty. Celso M. Apusen be directed to RESTITUTE the amount of ₱1,823,725.91 45 for the shortages
incurred in the Fiduciary Fund, Judiciary Development Fund, and the General Fund. Further, the Financial
Management Office, Office of the Court Administrator, be DIRECTED to apply the monetary value of the
total earned leave credits of Atty. Apusen, dispensing with the documentary requirements, to the incurred
shortage in the Fiduciary Fund in the Office of the Clerk of Court, Regional Trial Court, Lipa City, Batangas;

3. Ms. Donabel M. Savadera, Cash Clerk II, Office of the Clerk of Court, Regional Trial Court, Lipa City,
Batangas be held administratively liable and be DISMISSED from the service effective immediately for
Dishonesty and Grave Misconduct and that all her monetary benefits be ordered forfeited in favor of the
Judiciary Development Fund, with prejudice to reemployment in any government office, including
government-owned and controlled corporations;

4. Ms. Ma. Evelyn M. Landicho, Clerk III, Office of the Clerk of Court, Regional Trial Court, Lipa City,
Batangas be held administratively liable and be DISMISSED from the service effective immediately for
Dishonesty and Grave Misconduct and that all her monetary benefits be ordered forfeited in favor of the
Judiciary Development Fund with prejudice to reemployment in any government office, including
government-owned and controlled corporations;

5. Ms. Concepcion G. Sayas (now Concepcion Dumangeng Galotia),Social Worker, Office of the Clerk of
Court, Regional Trial Court, Lipa City be held administratively liable and be DISMISSED from the service
effective immediately for Dishonesty and Grave Misconduct and her retirement benefits be ordered forfeited
in favor of the Judiciary Development Fund, with prejudice to reemployment in any government office,
including government-owned and controlled corporations;

6. Mesdames Donabel M. Savadera, Ma. Evelyn M. Landicho and Concepcion G. Sayas (now Concepcion
Dumangeng Galotia) be directed to RESTITUTE the amount of ₱1,365,475.12 46 representing the shortages
in the Judiciary Development Fund, Special Allowance for the Judiciary Fund and the General Fund.
Further, the Financial Management Office, Office of the Court Administrator be DIRECTED to apply the
monetary value of the total earned leave credits of Donabel M. Savadera, Ma. Evelyn M. Landicho and
Concepcion G. Sayas (now Concepcion Dumangeng Galotia),dispensing with the documentary
requirements, to the incurred shortage in the Judiciary Development Fund; and

7. The Legal Office, Office of the Court Administrator be DIRECTED to proceed with the filing of the
appropriate criminal cases against Atty. Celso M. Apusen, Donabel M. Savadera, Ma. Evelyn M. Landicho
and Concepcion G. Sayas (now Concepcion Dumangeng Galotia). 47

As regards respondent Sarmiento, the OCA noted that records show that the Fiscal Monitoring Division, OCA
previously cleared respondent Sarmiento of any financial accountability when she transferred to the Department of
Justice on October 4, 2005 on account of the Joint Affidavit executed by Savadera, Sayas and Landicho on March
16, 2004 which absolved respondent Sarmiento from any financial accountability. Thus the OCA recommended that
she be cleared of any liability in connection with the present administrative matter.

We agree with the recommendations of the OCA.

88
As to Atty. Apusen, we agree with the OCA that he failed to exercise his duties as clerk of court. As clerk of court, he
is primarily accountable for all funds collected for the court, whether personally received by him or by a duly
appointed cashier who is under his supervision and control. As custodian of court funds, revenues, records,
properties and premises, he is liable for any loss, shortage, destruction or impairment of said funds and properties. 48

Despite a directive from the Court for him to restitute the shortages and account for the missing ORs discovered for
the period over which he was accountable, he did not bother to file a comment to dispute the same. The natural
instinct of man impels him to resist an unfounded claim or imputation and defend himself. It is totally against our
human nature to just remain reticent and say nothing in the face of false accusations. Hence, silence in such cases
is almost always construed as implied admission of the truth thereof. 49 We can only interpret Atty. Apusen’s
continued silence as an acknowledgment of the truthfulness of the charges against him. Moreover, his failure to
remit these collections upon demand by the Court constitutes prima facie evidence that he has put such missing
funds to personal use.50 Atty. Apusen’s failure to comply with the order of restitution constitutes gross
dishonesty51which this Court cannot countenance.

We likewise agree with the OCA’s finding on Savadera’s liability. Being a cash clerk, Savadera is an accountable
officer entrusted with the great responsibility of collecting money belonging to the funds of the court. 52 Clearly, she
miserably failed in such responsibility upon the occurrence of the shortages. Moreover, like Atty. Apusen, after a
mere denial of her liability on the incurred shortages after she received a copy of the October 19, 2004 Resolution,
she did not anymore file a comment despite the fact that the Court granted her request to inspect the audit
documents before she will file her comment. Worse, records show that she has already left her last known address
and the Court is yet to receive a update as to her current address. We can only interpret this as Savadera’s way of
evading her liability. Her flight is a clear indication of her guilt. 53

As to Landicho, though it was not among her official duties to receive court collections, this cannot exempt her from
liability. Having handled court funds, she is deemed an accountable officer who should answer for the shortages
that occurred.54 Moreover, she admitted to having taken ₱80,000from her collections, a clear case of malversation.

As to respondent Sayas, she cannot escape liability by simply claiming that she is a mere social worker who has no
knowledge of accounting rules. While she shifts liability to Savadera and Landicho, she admitted that she was aware
as early as February 2001 that there was a shortage. However, Sayas kept mum about the discovered shortage and
did not report it to the court.

Time and again, we have held that no position demands greater moral righteousness and uprightness from its
holder than a judicial office. Those connected with the dispensation of justice, from the highest official to the lowliest
clerk, carry a heavy burden of responsibility. As front liners in the administration of justice, they should live up to the
strictest standards of honesty and integrity. They must bear in mind that the image of a court of justice is necessarily
mirrored in the conduct, official or otherwise, of the men and women who work there. 55

Respondents Apusen, Savadera, Landicho, and Sayas failed to offer a valid explanation as to how or why the
shortages occurred or where the missing ORs are. Either they kept silent or just pointed fingers at each other. The
long delay in the remittance of the court’s funds, as well as the unexplained shortages that remained unaccounted
for, raises grave doubts regarding their trustworthiness and integrity. Their failure to remit the funds in due time
constitutes gross dishonesty and gross misconduct. It diminishes the faith of the people in the
Judiciary.  Dishonesty, being in the nature of a grave offense, carries the extreme penalty of dismissal from the
1âwphi1

service even if committed for the first time.56 As provided under the Uniform Rules on Administrative Cases in the
Civil Service, forfeiture of retirement benefits was likewise properly recommended by the OCA.

WHEREFORE, respondent Atty. Celso M. Apusen, former Clerk of Court VI, Office of the Clerk of Court, Regional
Trial Court, Lipa City, Batangas is found liable for gross dishonesty and grave misconduct. In view of his retirement
from the service, a fine of ₱20,000 is imposed on him. All his retirement benefits are FORFEITED in favor of the
government, with prejudice to his reemployment in any branch or instrumentality of the government, including
government-owned and -controlled corporations. He is further ordered to RESTITUTE the amount of ₱1,823,725.91
for the shortages incurred in the Fiduciary Fund, Judiciary Development Fund, and the General Fund. Further, the
Financial Management Office, Office of the Court Administrator, is DIRECTED to apply the monetary value of the
total earned leave credits of Atty. Apusen, dispensing with the documentary requirements, to the incurred shortage
in the Fiduciary Fund in the Office of the Clerk of Court, Regional Trial Court, Lipa City.

Respondents Donabel M. Savadera, Cash Clerk II, Ma. Evelyn M. Landicho, Clerk III, and Concepcion G. Sayas
(now Concepcion Dumangeng Galotia, Social Worker, all of the Office of the Clerk of Court, Regional Trial Court,
Lipa City, Batangas, are found liable for gross dishonesty and grave misconduct and are DISMISSED from the
service effective immediately. All their monetary benefits are FORFEITED in favor of the government and their
dismissal is held to be with prejudice to reemployment in any government office, including government-owned and –
controlled corporations. They are further ordered to RESTITUTE the amount of Pl,365,475.12 representing the
shortages in the Judiciary Development Fund, Special Allowance for the Judiciary Fund and the General Fund.
Further, the Financial Management Office, Office of the Court Administrator, is DIRECTED to apply the monetary
value of the total earned leave credits of respondents Donabel M. Savadera, Ma. Evelyn M. Landicho and

89
Concepcion G. Sayas (now Concepcion Dumangeng Galotia),dispensing with the documentary requirements, to the
incurred shortage in the Judiciary Development Fund in the Office of the Clerk of Court, Regional Trial Court, Lipa
City, Batangas. If the monetary value of their leave credits is insufficient, Savadera, Landicho and Sayas are
DIRECTED to pay, jointly and severally, in cash the resulting deficiency.

The Legal Office, Office of the Court Administrator, is likewise DIRECTED to proceed with the filing of the
appropriate criminal cases against Atty. Celso M. Apusen, Donabel M. Savadera, Ma. Evelyn M. Landicho and
Concepcion G. Sayas (now Concepcion Dumangeng Galotia).Atty. Sheila Angela P. Sarmiento is hereby CLEARED
of any liability for the shortages incurred by Savadera, Landicho and Sayas in judiciary funds during her period as
Officer-in-Charge, Office of the Clerk of Court, Regional Trial Court, Lipa City, Batangas. This Decision is
immediately EXECUTORY.

SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila

SECOND DIVISION

90
G.R. No. 197522               September 11, 2013

ELISEO V. AGUILAR, Petitioner, 
vs.
DEPARTMENT OF JUSTICE, PO1 LEO T. DANGUPON, 1ST LT. PHILIP FORTUNO, CPL. EDILBERTO
ABORDO, SPO3 GREGARDRO A. VILLAR, SPO1 RAMON M. LARA, SPO1 ALEX L. ACAYLAR, and PO1
JOVANNIE C. BALICOL, Respondents.

DECISION

PER CURIAM:

Assailed in this petition for review on certiorari 1 is the Decision2 dated June 30, 2011 of the Court of Appeals (CA) in
CA-G.R. SP No. 110110 which affirmed the Resolution 3 dated November 27, 2008 of the Department of Justice
(DOJ) in I.S. No. 2002-414, upholding the provincial prosecutor’s dismissal of the criminal complaint for murder filed
by petitioner Eliseo V. Aguilar against respondents.

The Facts

Petitioner is the father of one Francisco M. Aguilar, alias Tetet (Tetet). On April 10, 2002, he filed a criminal
complaint4 for murder against the members of a joint team of police and military personnel who purportedly arrested
Tetet and later inflicted injuries upon him, resulting to his death. The persons charged to be responsible for Tetet’s
killing were members of the Sablayan Occidental Mindoro Police Force, identified as respondents SPO3 Gregardro
A. Villar (Villar), SPO1 Ramon M. Lara (Lara), SPO1 Alex L. Acaylar (Acaylar), PO1 Leo T. Dangupon (Dangupon),
and PO1 Jovannie C. Balicol (Balicol), and members of the Philippine Army, namely, respondents 1st Lt. Philip
Fortuno5 (Fortuno) and Cpl. Edilberto Abordo (Abordo).6

In the petitioner’s complaint, he averred that on February 1, 2002, between 9:00 and 10:00 in the morning, at Sitio
Talipapa, Brgy. Pag-asa, Sablayan, Occidental Mindoro (Sitio Talipapa), Tetet was arrested by respondents for
alleged acts of extortion and on the suspicion that he was a member of the Communist Party of the
Philippines/National People’s Army Revolutionary Movement. Despite his peaceful surrender, he was maltreated by
respondents. In particular, Tetet was hit on different parts of the body with the butts of their rifles, and his hands
were tied behind his back with a black electric wire. He was then boarded on a military jeep and brought to the Viga
River where he was gunned down by respondents. 7 Petitioner’s complaint was corroborated by witnesses Adelaida
Samillano and Rolando Corcotchea who stated, among others, that they saw Tetet raise his hands asa sign of
surrender but was still mauled by armed persons.8 A certain Dr. Neil Bryan V. Gamilla (Dr. Gamilla) of the San
Sebastian District Hospital issued a medical certificate dated February 1, 2002, 9 indicating that Tetet was found to
have sustained two lacerated wounds at the frontal area, a linear abrasion in the anterior chest and five gunshot
wounds in different parts of his body.10

In defense, respondents posited that on February 1, 2002, they were engaged in an operation – headed by Chief of
Police Marcos Barte (Barte)and Fortuno – organized to entrap a suspected extortionist (later identified as Tetet) who
was allegedly demanding money from a businesswoman named Estelita Macaraig (Macaraig). For this purpose,
they devised a plan to apprehend Tetet at Sitio Talipapa which was the place designated in his extortion letters to
Macaraig. At about 11:00 in the morning of that same day, Tetet was collared by Sgt. Ferdinand S. Hermoso
(Hermoso) while in the act of receiving money from Macaraig’s driver, Arnold Magalong. Afterwards, shouts were
heard from onlookers that two persons, who were supposed to be Tetet’s companions, ran towards the mountains.
Some members of the team chased them but they were left uncaught. Meanwhile, Tetet was handcuffed and
boarded on a military jeep. Accompanying the latter were Dangupon, Fortuno, Abordo, Barte, and some other
members of the Philippine Army (first group). On the other hand, Villar, Lara, Acaylar, and Balicol were left behind at
Sitio Talipapa with the instruction to pursue Tetet’s two companions. As the first group was passing along the Viga
River, Tetet blurted out to the operatives that he would point out to the police where his companions were hiding.
Barte stopped the jeep and ordered his men to return to Sitio Talipapa but, while the driver was steering the jeep
back, Tetet pulled a hand grenade clutched at the bandolier of Abordo, jumped out of the jeep and, from the ground,
turned on his captors by moving to pull the safety pin off of the grenade. Sensing that they were in danger,
Dangupon fired upon Tetet, hitting him four times in the body. The first group brought Tetet to the San Sebastian
District Hospital for treatment but he was pronounced dead on arrival. 11

Among others, the Commission on Human Rights investigated Tetet’s death and thereafter issued a Final
Investigation Report12 dated October 3, 2002 and Resolution13 dated October 8, 2002, recommending that the case,
i.e., CHR CASE NR. IV-02-0289, "be closed for lack of sufficient evidence." It found that Tetet’s shooter, Dangupon,
only shot him in self-defense and added that "Dangupon enjoys the presumption of innocence and regularity in the
performance of his official duties, which were not sufficiently rebutted in the instant case." 14

Likewise, the Office of the Provincial Director of the Occidental Mindoro Police Provincial Command conducted its
independent inquiry on the matter and, in a Report dated September 21, 2002, similarly recommended the dismissal

91
of the charges against respondents. Based on its investigation, it concluded that respondents conducted a
legitimate entrapment operation and that the killing of Tetet was made in self-defense and/or defense of a stranger. 15

The Provincial Prosecutor’s Ruling

In a Resolution16 dated March 10, 2003, 1st Asst. Provincial Prosecutor and Officer-in-Charge Levitico B. Salcedo of
the Office of the Provincial Prosecutor of Occidental Mindoro (Provincial Prosecutor) dismissed petitioner’s
complaint against all respondents for lack of probable cause. To note, Barte was dropped from the charge, having
died in an ambush pending the investigation of the case. 17

The Provincial Prosecutor held that the evidence on record shows that the shooting of Tetet by Dangupon "was
done either in an act of self-defense, defense of a stranger, and in the performance of a lawful duty or exercise of a
right of office."18 He further observed that petitioner failed to submit any evidence to rebut Dangupon’s claim
regarding the circumstances surrounding Tetet’s killing. 19

In the same vein, the Provincial Prosecutor ruled that Villar, Acaylar,Lara, and Balicol could not be faulted for Tetet’s
death as they were left behind in Sitio Talipapa unaware of what transpired at the Viga River. As to the alleged
maltreatment of Tetet after his arrest, the Provincial Prosecutor found that these respondents were not specifically
pointed out as the same persons who mauled the former. He added that Hermoso was, in fact, the one who
grabbed/collared Tetet during his apprehension. The Provincial Prosecutor similarly absolved Fortuno and Abordo
since they were found to have only been in passive stance. 20 Aggrieved, petitioner elevated the matter via a petition
for review21 to the DOJ.

The DOJ Ruling

In a Resolution22 dated November 27, 2008, the DOJ dismissed petitioner’s appeal and thereby, affirmed the
Provincial Prosecutor’s ruling. It ruled that petitioner failed to show that respondents conspired to kill/murder Tetet.
In particular, it was not established that Villar, Lara, Acaylar, and Balicol were with Tetet at the time he was gunned
down and, as such, they could not have had any knowledge, much more any responsibility, for what transpired at
the Viga River.23 Neither were Barte, Fortuno, and Abordo found to have conspired with Dangupon to kill Tetet since
their presence at the time Tetet was shot does not support a conclusion that they had a common design or purpose
in killing him.24 With respect to Dangupon, the DOJ held that no criminal responsibility may be attached to him since
his act was made in the fulfillment of a duty or in the lawful exercise of an office under Article 11(5) of the Revised
Penal Code25 (RPC).26 Lastly, the DOJ stated that petitioner’s suppositions and conjectures that respondents
salvaged his son are insufficient to overturn the presumption of innocence in respondents’ favor. 27

Unperturbed, petitioner filed a petition for certiorari28 with the CA.

The CA Ruling

In a Decision29 dated June 30, 2011, the CA dismissed petitioner’s certiorari petition, finding no grave abuse of
discretion on the part of the DOJ in sustaining the Provincial Prosecutor’s ruling. It found no evidence to show that
Tetet was deliberately executed by respondents. Also, it echoed the DOJ’s observations on respondents’
presumption of innocence.30

Hence, this petition.

The Issue Before the Court

Petitioner builds up a case of extralegal killing and seeks that the Court resolve the issue as to whether or not the
CA erred in finding that the DOJ did not gravely abuse its discretion in upholding the dismissal of petitioner’s
complaint against respondents.

The Court’s Ruling

The petition is partly granted.

At the outset, it is observed that the Provincial Prosecutor’s ruling, as affirmed on appeal by the DOJ and, in turn,
upheld on certiorari by the CA, may be dissected into three separate disquisitions: first , the lack of probable cause
on the part of Dangupon, who despite having admitted killing the victim, was exculpated of the murder charge
against him on account of his interposition of the justifying circumstances of self-defense/defense of a stranger and
fulfillment of a duty or lawful exercise of a right of an office under Article 11(5) of the RPC; second , the lack of
probable cause on the part of Fortuno and Abordo who, despite their presence during the killing of Tetet, were found
to have no direct participation or have not acted in conspiracy with Dangupon in Tetet’s killing; and third , the lack of
probable cause on the part of Villar, Lara, Acaylar, and Balicol in view of their absence during the said incident. For
better elucidation, the Court deems it apt to first lay down the general principles which go into its review process of a

92
public prosecutor’s probable cause finding, and thereafter apply these principles to each of the above-mentioned
incidents in seriatim.

A. General principles; judicial

review of a prosecutor’s
probable cause determination.

A public prosecutor’s determination of probable cause – that is, one made for the purpose of filing an information in
court – is essentially an executive function and, therefore, generally lies beyond the pale of judicial scrutiny. The
exception to this rule is when such determination is tainted with grave abuse of discretion and perforce becomes
correctible through the extraordinary writ of certiorari . It is fundamental that the concept of grave abuse of discretion
transcends mere judgmental error as it properly pertains to a jurisdictional aberration. While defying precise
definition, grave abuse of discretion generally refers to a "capricious or whimsical exercise of judgment as is
equivalent to lack of jurisdiction." Corollary, the abuse of discretion must be patent and gross so 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.31 To note, the underlying principle behind the courts’ power to review a public prosecutor’s determination of
probable cause is to ensure that the latter acts within the permissible bounds of his authority or does not gravely
abuse the same. This manner of judicial review is a constitutionally-enshrined form of check and balance which
underpins the very core of our system of government. As aptly edified in the recent case of Alberto v. CA: 32

It is well-settled that courts of law are precluded from disturbing the findings of public prosecutors and the DOJ on
the existence or non-existence of probable cause for the purpose of filing criminal informations, unless such findings
are tainted with grave abuse of discretion, amounting to lack or excess of jurisdiction. The rationale behind the
general rule rests on the principle of separation of powers, dictating that the determination of probable cause for the
purpose of indicting a suspect is properly an executive function; while the exception hinges on the limiting principle
of checks and balances, whereby the judiciary, through a special civil action of certiorari , has been tasked by the
present Constitution " to determine whether or not there has been a grave abuse of discretion amounting to lack or
excess of jurisdiction on the part of any branch or instrumentality of the Government." (Emphasis supplied; citations
omitted)

In the foregoing context, the Court observes that grave abuse of discretion taints a public prosecutor’s resolution if
he arbitrarily disregards the jurisprudential parameters of probable cause. In particular, case law states that
probable cause, for the purpose of filing a criminal information, exists when the facts are sufficient to engender a
well-founded belief that a crime has been committed and that the respondent is probably guilty thereof. It does not
mean "actual and positive cause" nor does it import absolute certainty. Rather, it is merely based on opinion and
reasonable belief and, as such, does not require an inquiry into whether there is sufficient evidence to procure a
conviction; it is enough that it is believed that the act or omission complained of constitutes the offense charged. 33 As
pronounced in Reyes v. Pearl bank Securities, Inc.:34

A finding of probable cause needs only to rest on evidence showing that more likely than not a crime has been
committed by the suspects. It need not be based on clear and convincing evidence of guilt, not on evidence
establishing guilt beyond reasonable doubt, and definitely not on evidence establishing absolute certainty of guilt. In
determining probable cause, the average man weighs facts and circumstances without resorting to the calibrations
of the rules of evidence of which he has no technical knowledge. He relies on common sense. What is determined is
whether there is sufficient ground to engender a well-founded belief that a crime has been committed , and that the
accused is probably guilty thereof and should be held for trial. It does not require an inquiry as to whether there is
sufficient evidence to secure a conviction.35 (Emphasis supplied)

Apropos thereto, for the public prosecutor to determine if there exists a well-founded belief that a crime has been
committed, and that the suspect is probably guilty of the same, the elements of the crime charged should, in all
reasonable likelihood, be present. This is based on the principle that every crime is defined by its elements, without
which there should be, at the most, no criminal offense. 36

With these precepts in mind, the Court proceeds to assess the specific incidents in this case.

B. Existence of probable cause on

the part of Dangupon.

Records bear out that Dangupon admitted that he was the one who shot Tetet which eventually caused the latter’s
death. The Provincial Prosecutor, however, relieved him from indictment based mainly on the finding that the
aforesaid act was done either in self-defense, defense of a stranger or in the performance of a lawful duty or
exercise of a right of office, respectively pursuant to paragraphs 1, 2, and 5, Article 11 37 of the RPC. The DOJ
affirmed the Provincial Prosecutor’s finding, adding further that Dangupon, as well as the other respondents, enjoys
the constitutional presumption of innocence.

These findings are patently and grossly erroneous.

93
Records bear out facts and circumstances which show that the elements of murder – namely: (a) that a person was
killed; (b) that the accused killed him; (c) that the killing was attended by any of the qualifying circumstances
mentioned in Article 24838 of the RPC; and (d) that the killing is not parricide or infanticide 39 – are, in all reasonable
likelihood, present in Dangupon’s case. As to the first and second elements, Dangupon himself admitted that he
shot and killed Tetet.  Anent the third element, there lies sufficient basis to suppose that the qualifying circumstance
1âwphi1

of treachery attended Tetet’s killing in view of the undisputed fact that he was restrained by respondents and
thereby, rendered defenseless.40 Finally, with respect to the fourth element, Tetet’s killing can neither be considered
as parricide nor infanticide as the evidence is bereft of any indication that Tetet is related to Dangupon.

At this juncture, it must be noted that Dangupon’s theories of self-defense/defense of a stranger and performance of
an official duty are not clear and convincing enough to exculpate him at this stage of the proceedings considering
the following circumstances: (a) petitioner’s version of the facts was corroborated by witnesses Adelaida Samillano
and Rolando Corcotchea who stated, among others, that they saw Tetet raise his hands as a sign of surrender but
was still mauled by armed persons41 (hence, the presence of unlawful aggression on the part of Tetet and the lack of
any sufficient provocation on the part of Dangupon, 42 the actual motive of Tetet’s companions,43 and the lawfulness
of the act44 are put into question);(b) it was determined that Tetet was handcuffed 45 when he was boarded on the
military jeep (hence, the supposition that Tetet was actually restrained of his movement begs the questions as to
how he could have, in this state, possibly stole the grenade from Abordo); and (c) petitioner’s evidence show that
Tetet suffered from lacerations and multiple gunshot wounds, 46 the shots causing which having been fired at a close
distance47 (hence, the reasonable necessity of the means employed to prevent or repel 48Tetet’s supposed unlawful
aggression, and whether the injury committed be the necessary consequence of the due performance of such duty
or the lawful exercise of such right49 are, among others, also put into question). Given the foregoing, Dangupon’s
defenses are better off scrutinized within the confines of a criminal trial.

To add, neither can the dismissal of the murder charge against Dangupon be sustained in view of his presumption
of innocence. Jurisprudence holds that when the accused admits killing the victim, but invokes a justifying
circumstance, the constitutional presumption of innocence is effectively waived and the burden of proving the
existence of such circumstance shifts to the accused. 50 The rule regarding an accused’s admission of the victim’s
killing has been articulated in Ortega v. Sandiganbayan, to wit: 51

Well settled is the rule that where the accused had admitted that he is the author of the death of the victim and his
defense anchored on self-defense, it is incumbent upon him to prove this justifying circumstance to the satisfaction
of the court. To do so, he must rely on the strength of his own evidence and not on the weakness of the prosecution,
for the accused himself had admitted the killing. The burden is upon the accused to prove clearly and sufficiently the
elements of self-defense, being an affirmative allegation, otherwise the conviction of the accused is
inescapable.52(Emphasis and underscoring supplied) Therefore, due to the ostensible presence of the crime
charged and considering that Dangupon’s theories of self-defense/defense of a stranger and lawful performance of
one’s duty and the argument on presumption of innocence are, under the circumstances, not compelling enough to
over come a finding of probable cause, the Court finds that the DOJ gravely abused its discretion in dismissing the
case against Dangupon. Consequently, the reversal of the CA ruling with respect to the latter is in order.

C. Existence of probable cause on

the part of Fortuno and
Abordo.

In similar regard, the Court also finds that grave abuse of discretion tainted the dismissal of the charges of murder
against Fortuno and Abordo.

To elucidate, while petitioner has failed to detail the exact participation of Fortuno and Abordo in the death of Tetet,
it must be noted that the peculiar nature of an extralegal killing negates the former an opportunity to proffer the
same. It is of judicial notice that extralegal killings are ordinarily executed in a clandestine manner, and, as such, its
commission is largely concealed from the public view of any witnesses. Notably, unlike in rape cases wherein the
victim – albeit ravaged in the dark – may choose to testify, and whose testimony is, in turn, given great weight and
credence sufficient enough for a conviction,53 the victim of an extralegal killing is silenced by death and therefore, the
actual participation of his assailants is hardly disclosed. As these legal realities generally mire extralegal killing
cases, the Court observes that such cases should be resolved with a more circumspect analysis of the incidental
factors surrounding the same, take for instance the actual or likely presence of the persons charged at the place
and time when the killing was committed, the manner in which the victim was executed (of which the location of the
place and the time in which the killing was done may be taken into consideration), or the possibility that the victim
would have been easily overpowered by his assailants (of which the superior number of the persons detaining the
victim and their ability to wield weapons may be taken into consideration).

In the present case, the existence of probable cause against Fortuno and Abordo is justified by the circumstances
on record which, if threaded together, would lead a reasonably discreet and prudent man to believe that they were
also probably guilty of the crime charged. These circumstances are as follows: (a) Fortuno and Abordo were with
Dangupon during the time the latter killed Tetet 54 in an undisclosed place along the Viga River; (b)Tetet was
apprehended, taken into custody and boarded on a military jeep by the group of armed elements of which Fortuno

94
and Abordo belonged to;55 (c) as earlier mentioned, Tetet was handcuffed 56 when he was boarded on the military
jeep and, in effect, restrained of his movement when he supposedly stole the grenade from Abordo; and (d) also, as
previously mentioned, Tetet suffered from lacerations and multiple gunshot wounds, 57 and that the shots causing the
same were fired at a close distance. 58 Evidently, the confluence of the above-stated circumstances and legal
realities point out to the presence of probable cause for the crime of murder against Fortuno and Abordo. Hence,
the dismissal of the charges against them was – similar to Dangupon – improper. As such, the CA’s ruling must also
be reversed with respect to Fortuno and Abordo.

D. Lack of probable cause on the

part of Villar, Lara, Acaylar,
and Balicol.

The Court, however, maintains a contrary view with respect to the determination of lack of probable cause on the
part of Villar, Lara, Acaylar and Balicol.

Records are bereft of any showing that the aforementioned respondents – as opposed to Dangupon, Fortuno, and
Abordo – directly participated in the killing of Tetet at the Viga River. As observed by the DOJ, Villar, Lara, Acaylar,
and Balicol were not with Tetet at the time he was shot; thus, they could not have been responsible for his killing.
Neither could they be said to have acted in conspiracy with the other respondents since it was not demonstrated
how they concurred in or, in any way, participated towards the unified purpose of consummating the same act. It is
well-settled that conspiracy exists when one concurs with the criminal design of another, indicated by the
performance of an overt act leading to the crime committed. 59 Therefore, finding no direct participation or conspiracy
on the part of Villar, Lara, Acaylar, and Balicol, the Court holds that the DOJ did not gravely abuse its discretion in
affirming the Provincial Prosecutor’s dismissal of the charges against them. In this respect, the CA’s Decision must
stand.

As a final word, the Court can only bewail the loss of a family member through the unfortunate course of an
extralegal killing. The historical prevalence of this deplorable practice has even led to the inception and eventual
adoption of the Rules on Amparo60 to better protect the sacrosanct right of every person to his life and liberty and not
to be deprived of such without due process of law. Despite the poignancy natural to every case advanced as an
extralegal killing, the Court, as in all courts of law, is mandated to operate on institutional impartiality – that is, its
every ruling, notwithstanding the sensitivity of the issue involved, must be borne only out of the facts of the case and
scrutinized under the lens of the law. It is pursuant to this overarching principle that the Court has dealt with the
killing of Tetet and partly grants the present petition. In fine, the case against Dangupon, Fortuno, and Abordo must
proceed and stand the muster of a criminal trial. On the other hand, the dismissal of the charges against Villar,Lara,
Acaylar, and Balicol is sustained.

WHEREFORE , the petition is PARTLY GRANTED. The Decision dated June 30, 2011 of the Court of Appeals in
CA-G.R. SP No. 110110 is REVERSED and SET ASIDE . The Resolution dated March 10, 2003 of the Provincial
Prosecutor and the Resolution dated November 27, 2008 of the Department of Justice in I.S. No. 2002-414 are
NULLIFIED insofar as respondents PO1 Leo T. Dangupon, 1st Lt. Philip Fortuno, and Cpl. Edilberto Aborado are
concerned. Accordingly, the Department of Justice is DIRECTED to issue the proper resolution in order to charge
the above-mentioned respondents in accordance with this Decision.

SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila

95
 EN BANC

B.M. No. 2540               September 24, 2013

IN RE: PETITION TO SIGN IN THE ROLL OF ATTORNEYS

MICHAEL A. MEDADO, Petitioner.

RESOLUTION

SERENO, CJ.:

We resolve the instant Petition to Sign in the Roll of Attorneys filed by petitioner Michael A. Medado (Medado).

Medado graduated from the University of the Philippines with the degree of Bachelor of Laws in 1979 1 and passed
the same year's bar examinations with a general weighted average of 82.7. 2

On 7 May 1980, he took the Attorney’s Oath at the Philippine International Convention Center (PICC) together with
the successful bar examinees.3 He was scheduled to sign in the Roll of Attorneys on 13 May 1980, 4 but he failed to
do so on his scheduled date, allegedly because he had misplaced the Notice to Sign the Roll of Attorneys 5 given by
the Bar Office when he went home to his province for a vacation. 6

Several years later, while rummaging through his old college files, Medado found the Notice to Sign the Roll of
Attorneys. It was then that he realized that he had not signed in the roll, and that what he had signed at the entrance
of the PICC was probably just an attendance record. 7

By the time Medado found the notice, he was already working. He stated that he was mainly doing corporate and
taxation work, and that he was not actively involved in litigation practice. Thus, he operated "under the mistaken
belief that since he had already taken the oath, the signing of the Roll of Attorneys was not as urgent, nor as crucial
to his status as a lawyer";8 and "the matter of signing in the Roll of Attorneys lost its urgency and compulsion, and
was subsequently forgotten."9

In 2005, when Medado attended Mandatory Continuing Legal Education (MCLE) seminars, he was required to
provide his roll number in order for his MCLE compliances to be credited. 10

Not having signed in the Roll of Attorneys, he was unable to provide his roll number.

About seven years later, or on 6 February 2012, Medado filed the instant Petition, praying that he be allowed to sign
in the Roll of Attorneys.11

The Office of the Bar Confidant (OBC) conducted a clarificatory conference on the matter on 21 September
201212and submitted a Report and Recommendation to this Court on 4 February 2013. 13 The OBC recommended
that the instant petition be denied for petitioner’s gross negligence, gross misconduct and utter lack of merit. 14 It
explained that, based on his answers during the clarificatory conference, petitioner could offer no valid justification
for his negligence in signing in the Roll of Attorneys.15

After a judicious review of the records, we grant Medado’s prayer in the instant petition, subject to the payment of a
fine and the imposition of a penalty equivalent to suspension from the practice of law.

At the outset, we note that not allowing Medado to sign in the Roll of Attorneys would be akin to imposing upon him
the ultimate penalty of disbarment, a penalty that we have reserved for the most serious ethical transgressions of
members of the Bar.

In this case, the records do not show that this action is warranted.

For one, petitioner demonstrated good faith and good moral character when he finally filed the instant Petition to
Sign in the Roll of Attorneys. We note that it was not a third party who called this Court’s attention to petitioner’s
omission; rather, it was Medado himself who acknowledged his own lapse, albeit after the passage of more than 30
years. When asked by the Bar Confidant why it took him this long to file the instant petition, Medado very candidly
replied:

Mahirap hong i-explain yan pero, yun bang at the time, what can you say? Takot ka kung anong mangyayari sa ‘yo,
you don’t know what’s gonna happen. At the same time, it’s a combination of apprehension and anxiety of what’s
gonna happen. And, finally it’s the right thing to do. I have to come here … sign the roll and take the oath as
necessary.16

96
For another, petitioner has not been subject to any action for disqualification from the practice of law, 17 which is more
than what we can say of other individuals who were successfully admitted as members of the Philippine Bar. For
this Court, this fact demonstrates that petitioner strove to adhere to the strict requirements of the ethics of the
profession, and that he has prima facie shown that he possesses the character required to be a member of the
Philippine Bar.

Finally, Medado appears to have been a competent and able legal practitioner, having held various positions at the
Laurel Law Office,18 Petron, Petrophil Corporation, the Philippine National Oil Company, and the Energy
Development Corporation.19

All these demonstrate Medado’s worth to become a full-fledged member of the Philippine Bar.  While the practice of
1âwphi1

law is not a right but a privilege,20 this Court will not unwarrantedly withhold this privilege from individuals who have
shown mental fitness and moral fiber to withstand the rigors of the profession.

That said, however, we cannot fully exculpate petitioner Medado from all liability for his years of inaction.

Petitioner has been engaged in the practice of law since 1980, a period spanning more than 30 years, without
having signed in the Roll of Attorneys.21 He justifies this behavior by characterizing his acts as "neither willful nor
intentional but based on a mistaken belief and an honest error of judgment." 22

We disagree.

While an honest mistake of fact could be used to excuse a person from the legal consequences of his acts 23 as it
negates malice or evil motive,24 a mistake of law cannot be utilized as a lawful justification, because everyone is
presumed to know the law and its consequences. 25 Ignorantia factiexcusat; ignorantia legis neminem excusat.

Applying these principles to the case at bar, Medado may have at first operated under an honest mistake of fact
when he thought that what he had signed at the PICC entrance before the oath-taking was already the Roll of
Attorneys. However, the moment he realized that what he had signed was merely an attendance record, he could
no longer claim an honest mistake of fact as a valid justification. At that point, Medado should have known that he
was not a full-fledged member of the Philippine Bar because of his failure to sign in the Roll of Attorneys, as it was
the act of signing therein that would have made him so.26 When, in spite of this knowledge, he chose to continue
practicing law without taking the necessary steps to complete all the requirements for admission to the Bar, he
willfully engaged in the unauthorized practice of law.

Under the Rules of Court, the unauthorized practice of law by one’s assuming to be an attorney or officer of the
court, and acting as such without authority, may constitute indirect contempt of court, 27 which is punishable by fine or
imprisonment or both.28 Such a finding, however, is in the nature of criminal contempt 29 and must be reached after
the filing of charges and the conduct of hearings. 30 In this case, while it appears quite clearly that petitioner
committed indirect contempt of court by knowingly engaging in unauthorized practice of law, we refrain from making
any finding of liability for indirect contempt, as no formal charge pertaining thereto has been filed against him.

Knowingly engaging in unauthorized practice of law likewise transgresses Canon 9 of 'the Code of Professional
Responsibility, which provides:

CANON 9 -A lawyer shall not, directly or indirectly, assist in the unauthorized practice of law.

While a reading of Canon 9 appears to merely prohibit lawyers from assisting in the unauthorized practice of law,
the unauthorized practice of law by the lawyer himself is subsumed under this provision, because at the heart of
Canon 9 is the lawyer's duty to prevent the unauthorized practice of law. This duty likewise applies to law students
and Bar candidates. As aspiring members of the Bar, they are bound to comport themselves in accordance with the
ethical standards of the legal profession.

Turning now to the applicable penalty, previous violations of Canon 9have warranted the penalty of suspension from
the practice of law.31 As Medado is not yet a full-fledged lawyer, we cannot suspend him from the practice of law.
However, we see it fit to impose upon him a penalty akin to suspension by allowing him to sign in the Roll of
Attorneys one (1) year after receipt of this Resolution. For his transgression of the prohibition against the
unauthorized practice of law, we likewise see it fit to fine him in the amount of ₱32,000. During the one year period,
petitioner is warned that he is not allowed to engage in the practice of law, and is sternly warned that doing any act
that constitutes practice of law before he has signed in the Roll of Attorneys will be dealt with severely by this Court.

WHEREFORE, the instant Petition to Sign in the Roll of Attorneys is hereby GRANTED. Petitioner Michael A.
Medado is ALLOWED to sign in the Roll of Attorneys ONE (1) YEAR after receipt of this Resolution. Petitioner is
likewise ORDERED to pay a FINE of ₱32,000 for his unauthorized practice of law. During the one year period,
petitioner is NOT ALLOWED to practice law, and is STERNLY WARNED that doing any act that constitutes practice
of law before he has signed in the Roll of Attorneys will be dealt will be severely by this Court.

97
Let a copy of this Resolution be furnished the Office of the Bar Confidant, the Integrated Bar

of the Philippines, and the Office of the Court Administrator for circulation to all courts in the country.

SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila

SECOND DIVISION

98
G.R. No. 197813               September 25, 2013

PEOPLE OF THE PHILIPPINES, Plaintiff-Appellee, 

vs.
EDWIN IBANEZ y ALBANTE and ALFREDO (FREDDIE) NULLA y IBANEZ, Accused-appellants.

CONCURRING and DISSENTING OPINION

LEONEN, J.:

I concur with the ponencia in its discussion affirming the lower courts in finding accused-appellants guilty beyond
reasonable doubt for the crime of murder, sentencing them to suffer imprisonment of reclusion perpetua and to
indemnify the heirs of Wilfredo D. Atendido.

I express my dissent, however, in so far as the deletion of the award for loss of earning capacity in the amount
of₱1,946,180.00. This award was taken back for having no anchor but the bare assertions of Wilfredo's wife that her
husband earned ₱400.00 to ₱500.00 daily as a doormat vendor.

Section 2206 of the Civil Code provides the basis of damages for loss of earning capacity as follows:

Article 2206. The amount of damages for death caused by a crime or quasi-delict shall be at least three thousand
pesos, even though there may have been mitigating circumstances. In addition:

(1) The defendant shall be liable for the loss of the earning capacity of the deceased, and the indemnity shall be
paid to the heirs of the latter; such indemnity shall in every case be assessed and awarded by the court, unless the
deceased on account of permanent physical disability not caused by the defendant, had no earning capacity at the
time of his death.

As a general rule, this Court holds that "documentary evidence should be presented to substantiate a claim for loss
of earning capacity but by way of exception, this may be awarded despite the absence of documentary evidence
when (1) the deceased is self-employed and earning less than the minimum wage under current labor laws, in which
case, judicial notice may be taken of the fact that in the deceased’s line of work, no documentary evidence is
available; or (2) the deceased is employed as a daily wage worker earning less than the minimum wage under
current labor laws."1

There have been occasions when We denied an award for unearned income unsupported by evidence except for
the sole testimony by the spouse of the deceased. The recent ones include Victory Liner v. Gammad. 2 In this case,
no other evidence was presented except respondent’s testimony that the deceased was Section Chief of the Bureau
of Internal Revenue in Tuguegarao with an annual salary of ₱83,088.00. 3 In People v. Oco,4 the wife’s bare
testimony that the deceased earned ₱8,000.00 monthly as a legal researcher of a private corporation was
considered insufficient to justify the award.5 Similarly, We denied the award in People v. Caraig6 finding that Agustin
received ₱5,000.00 monthly as a Social System employee, Raagas was compensated ₱30,000.00 monthly as
president of a family-owned corporation, while Castro earned ₱7,500.00 monthly as a taxi driver. 7

In all these cases, this Court found that none of the exceptions were present. The deceased were neither self-
employed earning less than the minimum wage nor employed as daily wage workers earning less than the minimum
wage. They were, in fact, capable of producing competent evidence such as income tax returns or receipts but failed
to do so.

Wilfredo was a doormat vendor. His source of income was irregular and largely dependent on how many doormats
he could sell in a day, if any. These doormats were peddled. They were not highly priced. It is most likely that
Wilfredo did not file income tax returns nor issue official receipts. In any case, minimum wage earners are exempt
from the payment of income tax.8 Thus, they do not need to file an income tax return.

The ponencia recognized that Wilfredo’s occupation may fall under the first exception; that is, the deceased is self-
employed and earning than the minimum wage, and judicial notice may be taken of the fact that in his line of work,
no documentary evidence is available. However, according to the ponencia, Rowena’s claim of ₱400.00 to ₱500.00
daily income is above the minimum wage for Region III whose minimum wage is below ₱400.00. 9

In the 2000 case of People v. Ereño,10 the victim was a self-employed fish vendor who died in 1995. This Court
denied the claim for unearned income based solely on his mother’s handwritten estimate that the deceased earned
₱600.00 daily during the last eight years prior to his death. 11 Even compared with today’s minimum wage, this claim
still exceeds the rate by a relevant margin. In the 2011 case of Tan v. OMC Carriers, 12 the deceased was a self-
employed tailor who also died in 1995. This Court found that the claim of ₱13,000.00 as monthly income greatly
exceeded the prevailing minimum wage in 1995 of ₱145.00 per day or ₱3,770.00 a month. 13

99
The amount claimed by Wilfredo’s wife does not vary too far from the minimum wage in Bulacan, Region III.  In fact,
1âwphi1

it would pass for minimum wage in the National Capital Region. 14 I am of the view that evidence presented, if seen
as credible by the trial court judge, should stand in the absence of clear basis to refute it. 15 The accused should have
presented evidence to refute the evidence in chief presented.

In any event, this Court has, in the past, awarded temperate damages in lieu of an award for unearned income
"where earning capacity is plainly established but no evidence was presented to support the allegation of the injured
party’s actual income.16 ₱200,000.00 was awarded in the 2001 case of People v. Singh, 17 ₱500,000.00 in the 2004
case of Victory Liner v. Gammad, 18 and ₱300,000.00 in the 2011 case of Tan v. OMC Carriers. 19

The income-earning capacity of Wilfredo was never disputed. It would seem that ₱25,000.00 as temperate damages
is too meager an amount for the loss suffered by Wilfredo’s heirs as a result of his untimely death in 2004.

Thus, I concur in affirming the lower courts in finding accused-appellants guilty beyond reasonable doubt for the
crime of murder, but I dissent in so far as the deletion of the award for loss of earning capacity in favor of the heirs of
Wilfredo D. Atendido.

Republic of the Philippines

SUPREME COURT
Manila

EN BANC

100
A.C. No. 7922               October 1, 2013

MARY ANN T.MATTUS, Complainant, 

vs.
ATTY. ALBERT T. VILLASECA, Respondent.

DECISION

PER CURIAM:

Before us is a complaint for disbarment filed by complainant Mary Ann T. Mattus against Atty. Albert T. Villaseca for
gross and inexcusable negligence in handling Criminal Case No. 10309-02.

Background Facts

The complainant, German Bernardo D. Mattus and Dexter Aligan were the accused in Criminal Case No. 10309-02
– a case for estafa thru falsification of public document filed in the Regional Trial Court (RTC), Branch 20, Imus,
Cavite. The complainant and her husband, German, engaged the services of Atty. Villaseca to represent them in the
proceedings. The complainant maintained that she and German were convicted due to Atty. Villaseca’s gross and
inexcusable negligence in performing his duties as their counsel.

In her complaint-affidavit,1 the complainant alleged, among others, that Atty. Villaseca: (1) was often absent during
court hearings but still collected appearance fees; (2) frequently sought the postponement of trial when he was
present; (3) failed to ask the RTC to direct a National Bureau of Investigation expert to examine the signatures of the
spouses Leslie and Zuraida Porter2 in the special power of attorney (SPA); (4) failed to file a demurrer to evidence
despite having been granted sufficient time by the RTC to submit one; (5) failed to present evidence on behalf of the
defense, and only filed a memorandum; (6) did not inform her and German of the dates of the presentation of
defense evidence and the promulgation of judgment; and (7) erroneously indicated the wrong case number in the
notice of appeal. According to the complainant, Atty. Villaseca’s negligence in handling the case resulted in her own
and her husband’s conviction.

In the Court’s Resolution3 of July 16, 2008, we required Atty. Villaseca to comment on the complaint.

On September 10, 2008, Atty. Villaseca filed his comment, 4 refuting the allegations against him. Atty. Villaseca
explained that he made known to the complainant that the testimony of a handwriting expert was necessary only if
the prosecution would be able to produce the original copy of the SPA. Atty. Villaseca also claimed that his
absences during the hearings, as well as his numerous motions for postponement, were justified and were never
intended for delay. He denied having collected appearance fees when he did not attend the scheduled hearings,
and maintained that the fees he received were intended to compensate him for his services in the other cases filed
by the complainant. Atty. Villaseca further claimed that he immediately corrected the case number in the notice of
appeal when he discovered this error.

In a Resolution5dated October 15, 2008, we referred the case to the Integrated Bar of the Philippines (IBP) for
investigation, report and recommendation.

The IBPs’ Report and Recommendation

In his Report and Recommendation6 dated September 16, 2009,Investigating Commissioner Salvador B. Hababag
recommended that Atty. Villaseca be suspended for six (6) months from the practice of law.

Commissioner Hababag ruled that Atty. Villaseca’s reckless and gross negligence deprived his clients of due
process; his actuations in the criminal case showed utter disregard for his clients’ life and liberty. Commissioner
Hababag explained that Atty. Villaseca failed to file a demurrer to evidence despite the sufficient length of time that
had been given to him by the RTC to submit this pleading, and waived his right to present evidence for the defense,
opting instead to file a memorandum only. Commissioner Hababag concluded that Atty. Villaseca’s failure to
properly attend to the interests of his clients led to their conviction.

In Resolution No. XIX-2011-2517 dated May 14, 2011, the IBP Board of Governors adopted and approved the
findings of the Investigating Commissioner, but increased Atty. Villaseca’s period of suspension from the practice of
law from six (6) months to one (1) year.

Our Ruling

After a careful review of the records, the Court finds the evidence on record sufficient to support the IBP’s findings.
We, however, increase Atty. Villaseca’s period of suspension from the practice of law from one (1) year to five (5)
years.
101
We stress at the outset that a lawyer "is expected to exert his best efforts and ability to preserve his client's cause,
for the unwavering loyalty displayed to his client likewise serves the ends of justice." 8 Once a lawyer agrees to take
up the cause of a client, the lawyer owes fidelity to such cause and must always be mindful of the trust and
confidence reposed in him. He owes entire devotion to the interest of the client, warm zeal in maintenance and
defense of his client’s rights, and the exertion of his utmost learning and ability to the end that nothing be taken or
withheld from his client, save by the rules of law, legally applied. A lawyer who performs his duty with diligence and
candor not only protects the interest of his client; he also serves the ends of justice, does honor to the bar, and
helps maintain the respect of the community to the legal profession. 9

The records of the present case show that Atty. Villaseca had been grossly remiss in handling Criminal Case No.
10309-02. To recall, Atty. Villaseca requested for time to file demurrer to evidence after the prosecution had rested
its case. In its order 10 of July 1, 2004, the RTC gave him 20 days from receipt of the transcript of stenographic notes
within which to file a demurrer to evidence. Atty. Villaseca, however, did not file a demurrer to evidence, without
offering any explanation why he failed to do so. As a result, the RTC issued an order 11 stating that Atty. Villaseca "is
deemed to have waived his right to file the said pleading."

To our mind, Atty. Villaseca’s failure to submit a demurrer to evidence to explain such omission constitutes
inexcusable negligence; it showed his lack of devotion and zeal in preserving his clients’ cause. We point out that
nine months had lapsed from the time the RTC granted Atty. Villaseca 20 days to file the demurrer to the time it
ruled that he was deemed to have waived his right to file this pleading. Clearly, Atty. Villaseca’s actuations violated
Rule 12.03 of the Code of Professional Responsibility which states that "a lawyer shall not, after obtaining
extensions of time to file pleadings, memoranda or briefs, let the period lapse without submitting the same or
offering an explanation for his failure to do so."

The records further disclosed that after Atty. Villaseca’s failure to file a demurrer to evidence, the RTC set the initial
presentation of defense evidence on May 9, 2005. However, this hearing was postponed thrice: the May 9, 2005
hearing was reset to August 8, 2005 due to Atty. Villaseca’s failure to appear; 12 the August 8, 2005 hearing was
reset to November 17, 2005 upon Atty. Villaseca’s motion; 13 and the November 17, 2005 hearing was reset to March
1, 2006 because of Atty. Villaseca’s manifestation that his intended first witness was unavailable. 14 During the March
1, 2006hearing, the respondent manifested that the defense would no longer present any evidence, and moved that
he be given time to file a memorandum.15

We point out that the prosecution rested its case on July 1, 2004; yet Atty. Villaseca waited until March 1, 2006 only
to manifest that he would no longer present any evidence. We are at a loss why Atty. Villaseca chose not to present
any evidence for the defense, considering that the accused wanted and were ready to take the witness stand. As a
result, the testimony of the lone prosecution witness remained uncontroverted. To make matters worse, Atty.
Villaseca directed German to attend the hearing on June 6, 2007without informing him that it was already the date
of the promulgation of judgment. 1âwphi1

The Code of Professional Responsibility states that "a lawyer owes fidelity to the cause of his client and he shall be
mindful of the trust and confidence reposed in him."16 It further mandates that "a lawyer shall serve his client with
competence and diligence."17 It also states that "a lawyer shall not neglect a legal matter entrusted to him, and his
negligence in connection therewith shall render him liable." 18

Atty. Villaseca’s failure to present any testimonial, object or documentary evidence for the defense reveals his lack
of diligence in performing his duties as an officer of the Court; it showed his indifference towards the cause of his
clients. Considering that the liberty and livelihood of his clients were at stake, Atty. Villaseca should have exerted
efforts tore but the presented prosecution evidence. He could have presented the complainant and/or her husband
to the witness stand, instead of just opting to file a memorandum. Or, at the very least, the reason for this move
should have been fully explained to the clients, and later to the IBP and to this Court. But no such explanation ever
came. We are thus left with the stark reality that Atty. Villaseca failed to file, despite the promise made to the lower
court, a demurrer to evidence. After failing in this first line of defense for his clients, it should have been incumbent
upon Atty. Villaseca to present evidence for the defense, but again, he unexplainably failed to do this, leaving the
lower court with no evidence to appreciate except that of the prosecution, to the detriment of his clients’ cause.

We emphasize that while a lawyer has complete discretion on what legal strategy to employ in a case entrusted to
him, he must present every remedy or defense within the authority of the law to support his client’s cause. A
memorandum, no matter how lengthy, should not be made a substitute for testimonial, object or documentary
evidence, more so in a criminal case where a conviction could lead to dire consequences. In saying so, we are not
insinuating that the RTC decision would have tilted in favor of the defense had Atty. Villaseca presented evidence;
we simply stress that utmost fidelity and attention are demanded once counsel agrees to take the cudgels for his
client's cause.

We again remind members of the bar to live up to the standards and norms expected of the legal profession by
upholding the ideals and principles embodied in the Code of Professional Responsibility. A lawyer engaged to
represent a client bears the responsibility of protecting the latter's interest with utmost diligence. It is his duty to
serve his client with competence and diligence, and he should exert his best efforts to protect, within the bounds of

102
the law, the interests of his client.19 A lawyer’s diligence and vigilance is more imperative in criminal cases, where
the life and liberty of an accused is at stake. Verily, the entrusted privilege to practice law carries with it the
corresponding duties, not only to the client, but also to the court, to the bar and to the public. As we explained in
Spouses Bautista v. Atty. Arturo Cefra:20

The practice of law is a privilege bestowed by the State on those who show that they possess the legal qualifications
for it. Lawyers are expected to maintain at all times a high standard of legal proficiency and morality, including
honesty, integrity and fair dealing. They must perform their fourfold duty to society, the legal profession, the courts
and their clients, in accordance with the values and norms of the legal profession as embodied in the Code of
Professional Responsibility.

"The appropriate penalty on an errant lawyer depends on the exercise of sound judicial discretion based on the
surrounding facts."21 Under the circumstances, we find that the IBP’s recommended penalty of one year’s
suspension from the practice of law is not commensurate to Atty. Villaseca’s transgressions. His incompetence and
appalling indifference to his duty to his client, the courts and society indicate a high degree of irresponsibility that
casts dishonor on the legal profession.

The present case finds a close forerunner in Santeco v. Atty. Avance, 22 where we suspended Atty. Luna B. Avance
from the practice of law for five(5) years for being grossly remiss in the performance of her duties as counsel. In this
cited case, the civil case entrusted to Atty. Avance was dismissed for failure to prosecute. During the pendency of
her motion for reconsideration (which she had filed way beyond the reglementary period), she told her client that
she would file a petition for certiorari before the CA to assail the dismissal of the civil case. She did not file this
petition, but failed to inform her client of this omission. Moreover, Atty. Avance stopped appearing as counsel for her
client without notifying the latter.

Atty. Villaseca’s negligence in the present case had much graver implications, as the legal matter entrusted to him
involved not merely money or property, but the very liberty and livelihood of his clients. We stress that the moment
Atty. Villaseca agreed to handle the complainant’s criminal case, he became duty-bound to serve his clients with
competence and diligence, and to champion their cause with whole-hearted fidelity. By failing to afford his clients
every remedy and defense that is authorized by the law, Atty. Villaseca fell short of what is expected of him as an
officer of the Court. We cannot overstress the duty of a lawyer to uphold the integrity and dignity of the legal
profession by faithfully performing his duties to society, to the bar, to the courts and to his clients.

All told, Atty. Villaseca showed a wanton and utter disregard to his clients’ cause; his failure to exercise due
diligence in attending to their interest in the criminal case caused them grave prejudice. Under the circumstances,
we find a five-year suspension from the practice of law to be a sufficient and appropriate sanction against him. The
increased penalty serves the purpose of protecting the interest of the Court, the legal profession and the public.

WHEREFORE premises considered, we find Atty. Albert T. Villaseca guilty of negligence, in violation of Rules 12.03
and 18.03 and Canon 17 of the Code of Professional Responsibility. He is hereby SUSPENDED from the practice of
law for five (5) years, effective upon his receipt of this Decision, and STERNLY WARNED that a repetition of the
same or similar offense will be dealt with more severely.

Let a copy of this Decision be furnished to the Office of the Bar Confidant, the Integrated Bar of the Philippines, and
the Office of the Court Administrator for circulation to all the courts.

SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila

EN BANC

103
A.M. No. P-12-3047               October 1, 2013

OFFICE OF THE COURT ADMINISTRATOR, Petitioner, 

vs.
NANCY R. LEAL, Clerk of Court II, Municipal Circuit Trial Court MCTC) -Sta. lgnacia-Mayantoc-San
Clemente- San Jose, Tarlac, Respondent.

DECISION

PER CURIAM:

This administrative case arose from a financial audit conducted in the Municipal Circuit Trial Court MCTC), Sta.
lgnacia-Mayantoc-Clemente-San Jose, Tarlac pursuant to Travel Order Number 021-2011 1 dated January 24, 2011.

The financial audit, conducted from February 28 to March 19, 2011, was prompted by the request of the Accounting
Division, Financial Management Office, Office of the Court Administrator (OCA) due to the non-submission of the
monthly financial reports by Ms. Nancy R. Leal (Leal), Clerk of Court II of said MCTC. Her salaries from September
15, 2004 to May 15, 2005 were withheld due to her failure to submit the Monthly Report of Collections and
Deposits.2

Leal has been an Accountable Officer since January 1, 1992 to October 25, 2005, and from January 1, 2009 to the
present. On October 26, 2005, Leal was relieved from her duties as Accountable Officer by Judge Domingo R.
Joaquin, former Acting Judge of MCTC, Sta. Ignacia- Mayantoc-San Clemente-San Jose, Tarlac. In her stead, Mr.
Rodelio A. Pedroche, Court Interpreter I of the same court was designated as the Officer-in-Charge until it was
ordered revoked on February 27, 2009 by Judge Stela Marie Q. Gandia-Asuncion (Judge Gandia-Asuncion), the
incumbent Presiding Judge. Leal was reinstated as Accountable Officer of the same court. 3

Among other findings, and respecting matters solely attributable to Leal, the audit revealed the following, to wit: a)
there were undocumented withdrawals of cash bond deposits amounting to ₱220,000.00; 4 b) there were unreported
and undeposited collections amounting to ₱1,047,400.00 which resulted in a total shortage amounting to
₱567,757.71;5 c) delayed remittances that deprived the government of bank interest that should have been earned
amounting to ₱296,809.47;6 d) there was a shortage in the Judiciary Development Fund (JDF) amounting to
₱928.50;7 e) certain documents were withheld and retained in Leal’s possession while the audit team was
conducting its examination;8 and f) among the Official Receipts that were issued to said court, there were four (4)
booklets and four (4) pieces missing which correspond to the following series of numbers: 18843701 to 18843750,
2574101 to 2574150, 2574151 to 2574200, 2574201 to 2574250, and 4063301 to 4063304. 9

Based on the Financial Report10 of the audit team, the OCA submitted a memorandum to the Office of the Chief
Justice where it was recommended that:

1. This report be DOCKETED as a regular administrative matter against Ms. NANCY R. LEAL , Clerk of
Court II of the Municipal Circuit Trial Court, Sta. Ignacia-Mayantoc-San Clemente-San Jose, Tarlac;

2. Ms. NANCY R. LEAL , Clerk of Court II of the Municipal Circuit Trial Court, Sta. Ignacia-Mayantoc-San
Clemente-San Jose, Tarlac be DIRECTED within ten (10) days from notice to: 2.a) SUBMIT to the Fiscal
Monitoring Division, Court Management Office all necessary documents stated below to authorize the refund
of the cash bonds amounting to ₱220,000.00 , to wit:
1âwphi1

CASE NO. BONDS MAN RECEIPT COURT WITHDRAWAL AMOUNT CO AR

NO. ORDER

DATE

Crim Case no. Shirita Gabriel 4063367 7/21/97 08/08/97 3,000.00   X

995-Sc (96)

Crim no. Maria Bagay 4063374   11/26/97 3,000.00 X  

27878 –
27881

Crim no. Danilo F. dela 4063373 6/5698 06/08/98 2,000.00   X

1103-M Cruz

104
 Crim no. Alberto Rana 4063383   10/26/98 2,000.00 X X
1204-SI

98-2109 MTC Florentina B. 4063387   10/26/98 6,000.00 X  

SAN Navarro
FERNANDO
PAM

1491-M Ignacio Casco 9903959   12/04/01 6,000.00 X  

04-2001 George 9903980   03/25/02 5,000.00 X  

Paniqui Cawigan

Crim. 1423-M Rodney Espejo 9903955   11/18/03 6,000.00 X  

Crim. 1423-M Isagani Pablo 9903956   11/18/03 6,000.00 X  

2347-SI Fiden I. Torre 13612736   04/06/04 100,000.00 X  

2307-SI Cristina 13612733   01/11/05 6,000.00 X  

Bergonio/
Junedel
Rafanan

1847-SC Gregorio 9903985   02/24/05 2,000.00 X  

Mangoba

2529-SI Noel Ubaldo 13612747   02/24/05 6,000.00 X  

2398-SI Rey Ferrer 13612741   05/05/05 6,000.00 X  

2337-SI Hector Agustin 13612740   05/05/05 20,000.00 X  

2519-SI Simeon Tipay 13612748   07/01/05 6,000.00 X  

Opena

2468 SI(04) Rosalino 2468   10/26/05 18,000.00 X  

Andres

2348-SI Fiden I. Torre 13612739 8/11/06 08/11/06 12,000.00   X

2935-SI Regino 3469203 8/10/10 08/13/10 5,000.00   X

Esteban

Total 220,000.00

Legend: AR - Acknowledgement Receipt; CO - Court Order

2.b) RESTITUTE the total shortages incurred amounting to ₱865,495.68, including the
undocumented withdrawals referred to in No. 2.a above in case of failure to comply, broken down as
follows:

Fund Balance of
Period Covered
Accountability

Fiduciary Fund (FF) 07/01/96 to 567,757.71

105
 Judiciary Development Fund 02/28/11
(JDF)  
01/01/92 to 928.50
10/25/08

UNEARNED Interest due to 07/25/03 to 296,809.47

delayed remittances (JDF) 11/09/05
TOTAL ACCOUNTABILITY  
865,495.68

2. c) EXPLAIN the following findings (a) unreported and undeposited collections amounting to
₱1,047,400.00; (b) issuing temporary receipts; (c) cancelled official receipts but with court orders
that proved otherwise; (d) delayed remittances that deprived the government of the interest that
should have been earned amounting to ₱296,809.47; (e) gross neglect of duty, for failure to perform
her functions and duties as an accountable officer; and (f) documents withheld and retained in her
possession while the audit team was conducting their examination; and

2. d) ACCOUNT for the missing official receipts issued by the Court to the Municipal Circuit Trial
Court, Sta. Ignacia-Mayantoc-San Clemente-San Jose, Tarlac, with series nos.

● 18843701 to 18843750;

● 2574101 to 2574150;

● 2574151 to 2574200;

● 2574201 to 2574250; and

● 4063301 to 4063304 (4 pieces)

3. Ms. NANCY R. LEAL be placed under preventive SUSPENSION EFFECTIVE IMMEDIATELY WITHOUT
salary and other benefits;

4. Ms. GENELYN C. GRAGASIN, Court Stenographer I be designated as Accountable Officer of the

Municipal Circuit Trial Court, Sta. Ignacia-Mayantoc-San Clemente-San Jose, Tarlac;

5. Ms. GENELYN C. GRAGASIN be DIRECTED to:

5. a) VERIFY and ACCOUNT the remaining fiduciary fund accounts deposited with the Municipal
Treasurer’s Office (MTO), and render a report thereon; and

5. b) STRICTLY ADHERE with the guidelines and Circulars issued by the Honorable Court with regards [sic]
to the proper handling of judiciary funds;

6. Hon. STELA MARIE Q. GANDIA-ASUNCION, Presiding Judge, Municipal Circuit Trial Court, Sta. Ignacia-
Mayantoc-San Clemente-San Jose, Tarlac be DIRECTED to strictly MONITOR the financial transactions of
the court and be REMINDED that a repetition of the same infractions of the employees under her
supervision shall be held her equally liable for the same. 11

Forthwith, the Court issued a Resolution12 on February 27, 2012 adopting the aforesaid memorandum and
recommendations of the OCA.

Leal then filed a letter13 on April 12, 2012 asking for an extension of sixty (60) days within which to comply with the
Court’s Resolution and/or submit her answer considering that the ten (10) days given to her was too short.

On May 21, 2012, Ms. Genelyn C. Gragasin submitted the Statement of Unwithdrawn Fiduciary Fund 14 in
compliance with the Court Resolution.

On June 5, 2012, Leal filed another letter 15 requesting an additional extension of sixty (60) days within which to file
her answer. However, on June 22, 2012, Judge Gandia-Asuncion reported that from the time Leal received a copy
of the Court’s Resolution dated February 27, 2012 on April 3, 2012, she ceased to report for work. 16

106
Per Resolution17 dated July 30, 2012, the Court noted, among others, Leal’s letters and granted her a non-
extendible period of one hundred twenty (120) days from April 2, 2012 within which to file her answer.

On August 1, 2012, Leal filed her Answer/Letter-Compliance 18 dated July 30, 2012 with the following assertions:

1) She denies that she incurred unauthorized refund of cash bonds. To support her claim, she submitted the
affidavits of the respective bondsmen acknowledging receipt of withdrawn cash bond in Criminal Case Nos.
995-SC (96), 1103-M and 1204-SI. In addition, she also attached the affidavit 19 of the Barangay Chairman of
Poblacion East, Sta. Ignacia, Tarlac, Mr. Ricky T. Silverio (Silverio) to buttress her declaration that although
the withdrawn cash bond in Criminal Case No. 2348-SI for then accused Fiden Torre was duly received by
said accused’s surviving spouse, it has now become an impossibility to secure the affidavit of the latter since
she already migrated to the United States of America;

2) She cannot produce the court orders which authorized the withdrawals of the concerned cash bonds
because she cannot avail of the records in their office. Nevertheless, she was allegedly told that some
records were destroyed during typhoon Quiel, while others were destroyed by termites. She further
reasoned that if the said court orders did not exist, she could not have withdrawn the subject cash bonds
since "she cannot just withdraw those cash bonds without said court orders to be submitted to the
depository bank";

3) She has already reported said withdrawal in her monthly report, but unfortunately, she cannot produce
any proof because her files are missing. According to her, the loss may also be due to the reason that their
office was not well-secured. In addition, they had to transfer office to the Police Station while the records
were brought to the old Municipal Health Center, to give way to the construction of a new municipal building.
The old office and even the old municipal health center where the records were transferred were infested
with termites. These missing receipts were not issued or used; hence, she should not be liable;

4) She allegedly failed to deposit the collections on time because the passbook and even the receipts were
lost. She added that said receipts "were only given/brought out after the audit and all were submitted to the
team when she went to the Supreme Court";

5) She failed to submit her answer on time due to health reasons. In fact, up to the present, she is still
suffering poor vision in spite of the series of eye operations she underwent; and

6) She begs for the Court’s indulgence and prays that her suspension be recalled.

After evaluation, the OCA found Leal’s explanation unsatisfactory to absolve her from any accountability and/or
recall her suspension and recommended that: a) Leal be dismissed from the service with forfeiture of all retirement
benefits, except earned leave credits, and with prejudice to re- employment in the government, including
government-owned and controlled corporations; and b) the monetary value of Leal’s accrued leave credits be
applied to her monetary accountability amounting to ₱865,495.68.

The evaluation and recommendations of the OCA are well-taken.

The Answer/Letter-Compliance dated July 30, 2012 of Leal did little to help her case. The fact still remains that a
cash shortage amounting to ₱865,495.68 was incurred during her period of accountability and it still remains unpaid.
Further, Leal did not even offer any explanation why there are unreported and undeposited collections; the fact that
said unreported and undeposited collections reached the amount of ₱1,047,400.00 is simply appalling.

Similarly, Leal did not offer any explanation for the following as well, to wit: a) issuance of temporary receipts; b)
cancelled official receipts but with court orders that proved otherwise; c) delayed remittances that deprived the
government of the bank interest that should have been earned amounting to ₱296,809.47; d) gross neglect of duty,
for failure to perform her functions and duties as an accountable officer; and e) withholding of documents and
retaining the same in her possession while the audit team was conducting its examination.

In A.M. No. MTJ-06-1620,20 we gave credence to the OCA’s evaluation that a Clerk of Court "must be held liable for
the missing official receipts, unaccounted official receipts, original copies of cancelled official receipts, the passbook
of LBP Savings Account x x x and Supporting Documents of Fiduciary Fund Withdrawals and for the shortage
incurred.

It is incumbent upon him to ensure that all the files and documents are properly filed.

x x x In fact it even underscored the fact that he was unable to meet the demands of his office.

His claims of good faith, his forgetfulness and lack of secured storage area for their files during their transfer of
office could only indicate his attempt to evade punishment for his neglect of duty." 21

107
As correctly maintained by the OCA, Leal’s failure to perform her duties and responsibilities as Clerk of Court has
caused tremendous losses both in financial and judicial aspects. As an Accountable Officer, she is primarily tasked
to remit the court funds without further delay and to manage court records efficiently. Since Leal failed to offer any
explanation on the foregoing audit findings, we shall consider the audit team’s report as conclusive and adjudge her
liability on the sole basis thereof.

Leal’s failure to restitute the cash shortage amounting to ₱865,495.68 and "to adequately explain and present
evidence thereon constitute gross dishonesty, grave misconduct, and even malversation of public funds." 22 In that
same vein, Leal’s acts of: a) issuance of temporary receipts; b) in making it appear that certain official receipts are
cancelled but with court orders that proved otherwise; and c) withholding documents and retaining the same in her
possession while the audit team was conducting its examination, constitute dishonesty and grave misconduct.
"Dishonesty refers to a person’s ‘disposition to lie, cheat, deceive, or defraud; untrustworthiness; lack of integrity;
lack of honesty, probity or integrity in principle; lack of fairness and straightforwardness; disposition to defraud,
deceive or betray’"23; while "in grave misconduct as distinguished from simple misconduct, the elements of
corruption, clear intent to violate the law or flagrant disregard of established rule, must be manifest." 24

On the other hand, "failure to deposit on time her cash collections and her shortages in the remittances of
collections amount to gross neglect of duty and dishonesty." 25

Under Section 52 of the Revised Uniform Rules on Administrative Cases in the Civil Service, dishonesty, grave
misconduct and gross neglect of duty are classified as grave offenses, and merit dismissal even on their first
commission.

In A.M. No. MTJ-06-1620,26 the Court held that:

Safekeeping of public and trust funds is essential to an orderly administration of justice.

No protestation of good faith can override the mandatory nature of the circulars designed to promote full
accountability of government funds. The Court has not hesitated to impose the ultimate penalty on those who have
fallen short of their accountabilities. Any conduct that would violate the norms of public accountability and diminish,
or even merely tend to diminish, the faith of the people in the justice system has never been tolerated or condoned
by the Court. This ought to be so, as no less than the 1987 Constitution dictates:

"Public office is a public trust. Public officers and employees must at all times be accountable to the people, serve
them with utmost responsibility, integrity, loyalty, and efficiency, act with patriotism and justice, and lead modest
lives." (Emphasis supplied)

Clerks of court are the chief administrative officers of their respective courts.  As such, they are duty-bound to use
1âwphi1

skill and diligence in the performance of their officially designated functions. In

Office of the Court Administrator v. Paredes, this Court spelled out anew the nature of the function of clerks of court:

"Clerks of court perform a delicate function as designated custodians of the court’s funds, revenues, records,
properties and premises. As such, they are generally regarded as treasurer, accountant, guard and physical plant
manager thereof. Thus, they are liable for any loss, shortage, destruction or impairment of such funds and property."

By respondent’s assumption of the position of clerk of court, it is understood that he was ready and competent to do
his job with utmost devotion and efficiency.27 (Citations omitted)

For her failure to live up to the high ethical standards expected of her as a court employee, and an Accountable
Officer at that, Leal’s dismissal is indeed in order.

WHEREFORE, the Court resolved to:

1. DISMISS respondent Nancy R. Leal from the service with forfeiture of all retirement benefits, excluding
accrued leave credits, with prejudice to re-employment in any government office, including government-
owned and controlled corporations;

2. DIRECT the Leave Division, Office of the Administrative Services, Office of the Court Administrator to
compute the accrued leave credits of Nancy R. Leal and forward them to the Financial Management Office,
Office of, the Court Administrator;

3. DIRECT the Financial Management Office, Office of the Court Administrator to apply the monetary value
of the accrued leave credits of Nancy R. Leal, including the salaries withheld from her, to the cash shortages
incurred, to wit:

108
 Fiduciary Fund (FF) 07/01/96 to 02/28111 567,757.71

Judiciary Development

Fund (JDF) 01101/92 to 10/25/08 928.50

UNEARNED Interest due to

delayed remittances

(JDF) 07/25/03 to 11109/05 296,809.47

TOTAL ACCOUNTABILITY 865 495.68

4. After application of the monetary value of her accrued leave credits and withheld salaries, Nancy R. Leal
is ORDERED to restitute the balance of the said shortages;

5. DIRECT Judge Stela Marie Q. Gandia-Asuncion, Presiding Judge, Municipal Circuit Trial Court, Sta.
Ignacia-Mayantoc-San Clemente-San Jose, Tarlac to submit an inventory of the court records which were
allegedly destroyed by typhoon Quiel or eaten by termites;

6. DIRECT the Office of the Court Administrator to file the appropriate criminal charges against Nancy R.
Leal; and

7. DIRECT the Office of the Court Administrator to conduct another financial and judicial audit in the
Municipal Circuit Trial Court, Sta. Ignacia-Mayantoc-San Clemente-San Jose, Tarlac from the finality of this
Decision.

SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila

THIRD DIVISION

G.R. No. 169588               October 7, 2013

JADEWELL PARKING SYSTEMS CORPORATION represented by its manager and authorized representative
Norma Tan, Petitioner, 
vs.

109
HON. JUDGE NELSON F. LIDUA SR., Presiding Judge of The Municipal Trial Court Branch 3, Baguio City,
BENEDICTO BALAJADIA, EDWIN ANG, "JOHN DOES" and "PETER DOES" Respondents.

DECISION

LEONEN, J.:

We are asked to rule on this Petition for Review on Certiorari under Rule 45 of the Rules of Court, praying that the
assailed Decision of Branch 7 of the Regional Trial Court of Baguio City and Order dated August 15, 2005 be
reversed and that Criminal Case Nos. 112934 and 112935 be ordered reinstated and prosecuted before the
Municipal Trial Court of Baguio City.

Petitioner Jadewell Parking Systems Corporation is a private parking operator duly authorized to operate and
manage the parking spaces in Baguio City pursuant to City Ordinance 003-2000. It is also authorized under Section
13 of the City Ordinance to render any motor vehicle immobile by placing its wheels in a clamp if the vehicle is
illegally parked.1

According to the Resolution of the Office of the Provincial Prosecutor, San Fernando City, La Union, the facts
leading to the filing of the Informations are the following:

Jadewell Parking Systems Corporation (Jadewell), thru [sic] its General Manager Norma Tan and Jadewell
personnel Januario S. Ulpindo and Renato B. Dulay alleged in their affidavit-complaint that on May 17, 2003, the
respondents in I.S No. 2003-1996 Edwin Ang, Benedicto Balajadia and John Doe dismantled, took and carried away
the clamp attached to the left front wheel of a Mitsubishi Adventure with Plate No. WRK 624 owned by Edwin Ang.
Accordingly, the car was then illegally parked and left unattended at a Loading and Unloading Zone. The value of
the clamp belonging to Jadewell which was allegedly forcibly removed with a piece of metal is ₱26,250.00. The fines
of ₱500.00 for illegal parking and the declamping fee of ₱500.00 were also not paid by the respondents herein.

In I.S. No., 2003-1997, Jadewell thru [sic] its General Manager Norina C. Tan, Renato B. Dulay and Ringo Sacliwan
alleged in their affidavit-complaint that on May 7, 2003, along Upper Mabini Street, Baguio City, herein respondents
Benedicto Balajadia, Jeffrey Walan and two (2) John Does forcibly removed the clamp on the wheel of a Nissan
Cefiro car with Plate No. UTD 933, belonging to Jeffrey Walan which was then considered illegally parked for failure
to pay the prescribed parking fee. Such car was earlier rendered immobile by such clamp by Jadewell personnel.
After forcibly removing the clamp, respondents took and carried it away depriving its owner, Jadewell, its use and
value which is ₱26,250.00. According to complainants, the fine of ₱500.00 and the declamping fee of ₱500.00 were
not paid by the respondents.2

The incident resulted in two cases filed by petitioner and respondents against each other. Petitioner Jadewell filed
two cases against respondents: Robbery under I.S. Nos. 2003-1996 and 2003-1997. Petitioner filed an Affidavit-
Complaint against respondents Benedicto Balajadia, Jeffrey Walan, and three (3) John Does, one of whom was
eventually identified as respondent Ramon Ang. The Affidavit-Complaint was filed with the Office of the City
Prosecutor of Baguio City on May 23, 2003. 3 A preliminary investigation took place on May 28, 2003. Respondent
Benedicto Balajadia likewise filed a case charging Jadewell president, Rogelio Tan, and four (4) of Jadewell's
employees with Usurpation of Authority/Grave Coercion in I.S. No. 2003-1935.

In his Counter-affidavit for the two cases he filed for himself and on behalf of his co-respondents, respondent
Benedicto Balajadia denied that his car was parked illegally. He admitted that he removed the clamp restricting the
wheel of his car since he alleged that the placing of a clamp on the wheel of the vehicle was an illegal act. He
alleged further that he removed the clamp not to steal it but to remove the vehicle from its clamp so that he and his
family could continue using the car. He also confirmed that he had the clamp with him, and he intended to use it as
a piece of evidence to support the Complaint he filed against Jadewell. 4

In the Resolution5 of the Office of the Provincial Prosecutor of San Fernando City, La Union, Acting City Prosecutor
Mario Anacleto Banez found probable cause to file a case of Usurpation of Authority against the petitioner.
Regarding the case of Robbery against respondents, Prosecutor Banez stated that:

We find no probable cause to charge respondents in these two (2) cases for the felony of Robbery. The elements of
Robbery, specifically the intent to gain and force upon things are absent in the instant cases, thereby negating the
existence of the crime.

xxxx

We, however, respectfully submit that the acts of respondents in removing the wheel clamps on the wheels of the
cars involved in these cases and their failure to pay the prescribed fees were in violation of Sec. 21 of Baguio City
Ordinance No. 003-2000 which prescribes fines and penalties for violations of the provisions of such ordinance.
Certainly, they should not have put the law into their own hands. (Emphasis supplied)

110
WHEREFORE, premises considered, there is probable cause against all the respondents, except Jeffrey Walan or
Joseph Walan (who has been dragged into this controversy only by virtue of the fact that he was still the registered
owner of the Nissan Cefiro car) for violation of Section 21 of City Ord. No. 003-2000 in both cases and we hereby
file the corresponding informations against them in Court. 6

Prosecutor Banez issued this Resolution on July 25, 2003.

On October 2, 2003, two criminal Informations were filed with the Municipal Trial Court of Baguio City dated July 25,
2003, stating:

That on May 17, 2003 at Baguio City and within the jurisdiction of this Honorable Court, the above-named accused
with unity of action and concerted design, did then and there, with unity of action and concerted design, willfully,
unlawfully and feloniously forcibly dismantled [sic] and took [sic] an immobilizing clamp then attached to the left front
wheel of a Mitsubishi Adventure vehicle with Plate No. WRK 624 belonging to Edwin Ang which was earlier
rendered immobilized by such clamp by Jadewell Personnel's for violation of the Baguio City ordinance No. 003-
2600 to the damage and prejudice of private complainant Jadewell Parking System Corporation (Jadewell) which
owns such clamp worth ₱26,250.00 and other consequential damages.

CONTRARY TO LAW,

San Fernando City, La Union for Baguio City, this 25th day of July 2003. 7

The cases were docketed as Criminal Case Nos. 112934 and 112935 with the Municipal Trial Court of Baguio City,
Branch 3. Respondent Benedicto Balajadia and the other accused through their counsel Paterno Aquino filed a
January 20, 2004 Motion to Quash and/or Manifestation 8 on February 2, 2004. The Motion to Quash and/or
Manifestation sought the quashal of the two Informations on the following grounds: extinguishment of criminal action
or liability due to prescription; failure of the Information to state facts that charged an offense; and the imposition of
charges on respondents with more than one offense.

In their Motion to Quash, respondents argued that:

1. The accused in this case are charged with violation of Baguio City Ordinance No. 003-2000.

2. Article 89 of the Revised Penal [sic] provides that criminal liability is totally extinguished by prescription of
the crime.

3. Act No. 3326, as amended by Act No. 3763, provides: "Section 1. x x x Violations penalized by municipal
ordinances shall prescribed [sic] after two months."

4. As alleged in the Information, the offense charged in this case was committed on May 7, 2003. 5. As can
be seen from the right hand corner of the Information, the latter was filed with this Honorable Court on
October 2, 2003, almost five (5) months after the alleged commission of the offense charged. Hence,
criminal liability of the accused in this case, if any, was already extinguished by prescription when the
Information was filed.9

In an Order10 dated February 10, 2004, respondent Judge Nelson F. Lidua, Sr., Presiding Judge of the Municipal
Trial Court of Baguio City, Branch 3, granted the accused's Motion to Quash and dismissed the cases.

Petitioner filed a Motion for Reconsideration on February 27, 2004 responding to the February 10, 2004 Order 11 to
argue among other points that:

6.b. For another, the offenses charged have not yet prescribed. Under the law, the period of prescription of offenses
shall be interrupted by the filing of the complaint or information. While it may be true that the Informations in these
cases have been filed only on October 2, 2003, the private complainant has, however, filed its criminal complaint on
May 23, 2003, well within the prescribed period. 12

Respondents filed their Opposition 13 on March 24, 2004, and petitioner filed a Reply 14 on April 1, 2004.

The respondent judge released a Resolution15 dated April 16, 2004 upholding the Order granting respondents'
Motion to Quash. The Resolution held that:

For the guidance of the parties, the Court will make an extended resolution on one of the ground [sic] for the motion
to quash, which is that the criminal action has been extinguished on grounds of prescription.

These offenses are covered by the Rules on Summary Procedure being alleged violations of City Ordinances.

111
Under Section 9 of the Rule [sic] on Summary Procedure, the running of the prescriptive period shall be halted on
the date the case is filed in Court and not on any date before that (Zaldivia vs. Reyes, Jr. G.R. No. 102342, July 3,
1992, En Banc).

In case of conflict, the Rule on Summary Procedure as the special law prevails over Sec. 1 of Rule 110 of the Rules
on Criminal Procedure and also Rule 110 of the Rules of Criminal Procedure must yield to Act No. 3326 or "AN ACT
TO ESTABLISH PERIODS OF PRESCRIPTION FOR VIOLATIONS PENALIZED BY SPECIAL ACTS AND
MUNICIPAL ORDINANCES AND TO PROVIDE WHEN PRESCRIPTION SHALL BEGIN TO RUN" (Ibid).

Petitioner then filed a Petition16 for Certiorari under Rule 65 with the Regional Trial Court of Baguio City. The case
was raffled to Branch 7 of the Regional Trial Court of Baguio City. Petitioners contended that the respondent judge
committed grave abuse of discretion amounting to lack or excess of jurisdiction in dismissing Criminal Case Nos.
112934 and 112935 on the ground of prescription. Petitioners argued that the respondent judge ruled erroneously
saying that the prescriptive period for the offenses charged against the private respondents was halted by the filing
of the Complaint/Information in court and not when the Affidavit-Complaints were filed with the Office of the City
Prosecutor of Baguio City. Petitioner cited Section 1 of Rule 110 of the Rules on Criminal Procedure:

x x x "criminal actions shall be instituted x x x in x x x other chartered cities, the complaint shall be filed with the
office of the prosecutor unless otherwise provided in their charter" and the last paragraph thereof states that "the
institution of the criminal action shall interrupt the running of the period of prescription of the offense charged unless
otherwise provided in special laws."17

Petitioner contended further that:

the filing of the criminal complaint with the Office of the City Prosecutor of Baguio City, not the filing of the criminal
information before this Honorable Court, is the reckoning point in determining whether or not the criminal action in
these cases had prescribed.

xxxx

The offenses charged in Criminal Case Nos. 112934 and 112935 are covered by the Revised Rules on Summary
Procedure, not by the old Rules on Summary Procedure. Considering that the offenses charged are for violations of
a City Ordinance, the criminal cases can only be commenced by informations. Thus, it was only legally and
procedurally proper for the petitioner to file its complaint with the Office of the City Prosecutor of Baguio City as
required by Section 11 of the new Rules on Summary Procedure, these criminal cases "shall be commenced only
by information." These criminal cases cannot be commenced in any other way.

Moreover, the ruling of the Supreme Court in Zaldivia vs. Reyes cited in the assailed Resolution does not apply in
this case. The offense charged in Zaldivia is a violation of municipal ordinance in which case, the complaint should
have been filed directly in court as required by Section 9 of the old Rules on Summary Procedure. On the other
hand, Criminal Case Nos. 112934 and 112935 are for violations of a city ordinance and as aforestated, "shall be
commenced only by information."18

Thus, petitioner contended that the filing of the criminal complaint with the Office of the City Prosecutor stopped the
running of the two-month prescriptive period. Hence, the offenses charged have not prescribed.

In their Comment,19 respondents maintained that the respondent judge did not gravely abuse his discretion. They
held that Section 2 of Act No. 3326, as amended, provides that:

Sec. 2. Prescription shall begin to run from the day of the commission of the violation of the law, and if the same be
not known at the time, from the discovery thereof and the institution of judicial proceeding for its investigation and
punishment.

The prescription shall be interrupted when proceedings are instituted against the guilty person, and shall begin to
run again if the proceedings are dismissed for reasons not constituting jeopardy. 20 (Emphasis supplied)

Respondents argued that Zaldivia v. Reyes21 held that the proceedings mentioned in Section 2 of Act No. 3326, as
amended, refer to judicial proceedings . Thus, this Court, in Zaldivia, held that the filing of the Complaint with the
Office of the Provincial Prosecutor was not a judicial proceeding. The prescriptive period commenced from the
alleged date of the commission of the crime on May 7, 2003 and ended two months after on July 7, 2003. Since the
Informations were filed with the Municipal Trial Court on October 2, 2003, the respondent judge did not abuse its
discretion in dismissing Criminal Case Nos. 112934 and 112935.

In a Decision dated April 20, 2005, the Regional Trial Court of Baguio City Branch 7, through Judge Clarence F.
Villanueva, dismissed the Petition for Certiorari. The Regional Trial Court held that, since cases of city ordinance
violations may only be commenced by the filing of an Information, then the two-month prescription period may only

112
be interrupted by the filing of Informations (for violation of City Ordinance 003-2000) against the respondents in
court. The Regional Trial Court of Baguio City, Branch 7, ruled in favor of the respondents and upheld the
respondent judge’s Order dated February 10, 2004 and the Resolution dated April 16, 2004.

Petitioners then filed a May 17, 2005 Motion for Reconsideration which was denied by the Regional Trial Court in an
August 15, 2005 Order.

Hence, this Petition.

The principal question in this case is whether the filing of the Complaint with the Office of the City Prosecutor on
May 23, 2003 tolled the prescription period of the commission of the offense charged against respondents
Balajadia, Ang, "John Does," and "Peter Does."

Petitioner contends that the prescription period of the offense in Act No. 3326, as amended by Act No. 3763, does
not apply because respondents were charged with the violation of a city ordinance and not a municipal ordinance. In
any case, assuming arguendo that the prescriptive period is indeed two months, filing a Complaint with the Office of
the City Prosecutor tolled the prescription period of two months. This is because Rule 110 of the Rules of Court
provides that, in Manila and in other chartered cities, the Complaint shall be filed with the Office of the Prosecutor
unless otherwise provided in their charters.

In their Comment,22 respondents maintain that respondent Judge Lidua did not err in dismissing the cases based on
prescription. Also, respondents raise that the other grounds for dismissal they raised in their Motion to Quash,
namely, that the facts charged constituted no offense and that respondents were charged with more than one
offense, were sustained by the Metropolitan Trial Court. Also, respondents argue that petitioner had no legal
personality to assail the Orders, since Jadewell was not assailing the civil liability of the case but the assailed Order
and Resolution. This was contrary to the ruling in People v. Judge Santiago 23 which held that the private complainant
may only appeal the civil aspect of the criminal offense and not the crime itself.

In the Reply,24 petitioner argues that the respondent judge only dismissed the case on the ground of prescription,
since the Resolution dated April 16, 2004 only cited that ground. The Order dated February 10, 2004 merely stated
but did not specify the grounds on which the cases were dismissed. Petitioner also maintains that the proceedings
contemplated in Section 2 of Act No. 3326 must include the preliminary investigation proceedings before the
National Prosecution Service in light of the Rules on Criminal Procedure 25 and Revised Rules on Summary
Procedure.

Lastly, petitioner maintains that it did have legal personality, since in a Petition for Certiorari, "persons aggrieved x x
x may file a verified petition"26 before the court.

The Petition is denied.

The resolution of this case requires an examination of both the substantive law and the procedural rules governing
the prosecution of the offense. With regard to the prescription period, Act No. 3326, as amended, is the only statute
that provides for any prescriptive period for the violation of special laws and municipal ordinances. No other special
law provides any other prescriptive period, and the law does not provide any other distinction. Petitioner may not
argue that Act No. 3326 as amended does not apply.

In Romualdez v. Hon. Marcelo,27 this Court defined the parameters of prescription:

In resolving the issue of prescription of the offense charged, the following should be considered: (1) the period of
prescription for the offense charged; (2) the time the period of prescription starts to run; and (3) the time the
prescriptive period was interrupted. 28 (Citation omitted)

With regard to the period of prescription, it is now without question that it is two months for the offense charged
under City Ordinance 003-2000.

The commencement of the prescription period is also governed by statute. Article 91 of the Revised Penal Code
reads:

Art. 91. Computation of prescription of offenses. — The period of prescription shall commence to run from the day
on which the crime is discovered by the offended party, the authorities, or their agents, and shall be interrupted by
the filing of the complaint or information, and shall commence to run again when such proceedings terminate
without the accused being convicted or acquitted, or are unjustifiably stopped for any reason not imputable to him.

The offense was committed on May 7, 2003 and was discovered by the attendants of the petitioner on the same
day. These actions effectively commenced the running of the prescription period.

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The procedural rules that govern this case are the 1991 Revised Rules on Summary Procedure.

SECTION 1. Scope – This rule shall govern the summary procedure in the Metropolitan Trial Courts, the Municipal
Trial Courts in Cities, the Municipal Trial Courts, and the Municipal Circuit Trial Courts in the following cases falling
within their jurisdiction:

xxxx

B. Criminal Cases:

(1) Violations of traffic laws, rules and regulations;

(2) Violations of the rental law;

(3) Violations of municipal or city ordinances (Emphasis supplied)

Section 11 of the Rules provides that:

Sec. 11. How commenced. — The filing of criminal cases falling within the scope of this Rule shall be either by
complaint or by information: Provided, however, that in Metropolitan Manila and in Chartered Cities, such cases
shall be commenced only by information, except when the offense cannot be prosecuted de officio.

The Local Government Code provides for the classification of cities. Section 451 reads:

SEC. 451. Cities, Classified. – A city may either be component or highly urbanized: Provided, however, that the
criteria established in this Code shall not affect the classification and corporate status of existing cities. Independent
component cities are those component cities whose charters prohibit their voters from voting for provincial elective
officials. Independent component cities shall be independent of the province.

Cities in the Philippines that were created by law can either be highly urbanized cities or component cities. An
independent component city has a charter that proscribes its voters from voting for provincial elective officials. It
stands that all cities as defined by Congress are chartered cities. In cases as early as United States v. Pascual
Pacis,29 this Court recognized the validity of the Baguio Incorporation Act or Act No. 1963 of 1909, otherwise known
as the charter of Baguio City.

As provided in the Revised Rules on Summary Procedure, only the filing of an Information tolls the prescriptive
period where the crime charged is involved in an ordinance. The respondent judge was correct when he applied the
rule in Zaldivia v. Reyes.

In Zaldivia v. Reyes, the violation of a municipal ordinance in Rodriguez, Rizal also featured similar facts and issues
with the present case. In that case, the offense was committed on May 11, 1990. The Complaint was received on
May 30, 1990, and the Information was filed with the Metropolitan Trial Court of Rodriguez on October 2, 1990. This
Court ruled that:

As it is clearly provided in the Rule on Summary Procedure that among the offenses it covers are violations of
municipal or city ordinances, it should follow that the charge against the petitioner, which is for violation of a
municipal ordinance of Rodriguez, is governed by that rule and not Section 1 of Rule 110.

Where paragraph (b) of the section does speak of "offenses falling under the jurisdiction of the Municipal Trial
Courts and Municipal Circuit Trial Courts," the obvious reference is to Section 32(2) of B.P. No. 129, vesting in such
courts:

(2) Exclusive original jurisdiction over all offenses punishable with imprisonment of not exceeding four years and two
months, or a fine of not more than four thousand pesos, or both such fine and imprisonment, regardless of other
imposable accessory or other penalties, including the civil liability arising from such offenses or predicated thereon,
irrespective of kind, nature, value, or amount thereof; Provided, however, That in offenses involving damage to
property through criminal negligence they shall have exclusive original jurisdiction where the imposable fine does
not exceed twenty thousand pesos.

These offenses are not covered by the Rules on Summary Procedure.

Under Section 9 of the Rules on Summary Procedure, "the complaint or information shall be filed directly in court
without need of a prior preliminary examination or preliminary investigation." Both parties agree that this provision
does not prevent the prosecutor from conducting a preliminary investigation if he wants to. However, the case shall
be deemed commenced only when it is filed in court, whether or not the prosecution decides to conduct a

114
preliminary investigation. This means that the running of the prescriptive period shall be halted on the date the case
is actually filed in court and not on any date before that.

This interpretation is in consonance with the afore-quoted Act No. 3326 which says that the period of prescription
shall be suspended "when proceedings are instituted against the guilty party." The proceedings referred to in
Section 2 thereof are "judicial proceedings," contrary to the submission of the Solicitor General that they include
administrative proceedings. His contention is that we must not distinguish as the law does not distinguish. As a
matter of fact, it does.

At any rate, the Court feels that if there be a conflict between the Rule on Summary Procedure and Section 1 of
Rule 110 of the Rules on Criminal Procedure, the former should prevail as the special law. And if there be a conflict
between Act No. 3326 and Rule 110 of the Rules on Criminal Procedure, the latter must again yield because this
Court, in the exercise of its rule-making power, is not allowed to "diminish, increase or modify substantive rights"
under Article VIII, Section 5(5) of the Constitution. Prescription in criminal cases is a substantive right. 30

Jurisprudence exists showing that when the Complaint is filed with the Office of the Prosecutor who then files the
Information in court, this already has the effect of tolling the prescription period. The recent People v.
Pangilinan31categorically stated that Zaldivia v. Reyes is not controlling as far as special laws are concerned.
Pangilinan referred to other cases that upheld this principle as well. However, the doctrine of Pangilinan pertains to
violations of special laws but not to ordinances.

There is no distinction between the filing of the Information contemplated in the Rules of Criminal Procedure and in
the Rules of Summary Procedure. When the representatives of the petitioner filed the Complaint before the
Provincial Prosecutor of Baguio, the prescription period was running. It continued to run until the filing of the
Information. They had two months to file the Information and institute the judicial proceedings by filing the
Information with the Municipal Trial Court. The conduct of the preliminary investigation, the original charge of
Robbery, and the subsequent finding of the violation of the ordinance did not alter the period within which to file the
Information. Respondents were correct in arguing that the petitioner only had two months from the discovery and
commission of the offense before it prescribed within which to file the Information with the Municipal Trial Court.

Unfortunately, when the Office of the Prosecutor filed the Informations on October 5, 2003, the period had already
prescribed. Thus, respondent Judge Nestor Lidua, Sr. did not err when he ordered the dismissal of the case against
respondents. According to the Department of Justice – National Prosecutors Service Manual for Prosecutors, an
Information is defined under Part I, Section 5 as:

SEC. 5. Information. - An information is the accusation in writing charging a person with an offense, subscribed by
the prosecutor, and filed with the court. The information need not be placed under oath by the prosecutor signing
the same.

The prosecutor must, however, certify under oath that –

a) he has examined the complainant and his witnesses;

b) there is reasonable ground to believe that a crime has been committed and that the accused is probably
guilty thereof;

c) the accused was informed of the complaint and of the evidence submitted against him; and

d) the accused was given an opportunity to submit controverting evidence.

As for the place of the filing of the Information, the Manual also provides that:

SEC. 12. Place of the commission of offense. - The complaint or information is sufficient if it states that the crime
charged was committed or some of the ingredients thereof occurred at some place within the jurisdiction of the
court, unless the particular place in which the crime was committed is an essential element of the crime, e.g. in a
prosecution for violation of the provision of the Election Code which punishes the carrying of a deadly weapon in a
"polling place," or if it is necessary to identify the offense charged, e.g., the domicile in the offense of "violation of
domicile."

Finally, as for the prescription period, the Manual provides that:

SEC. 20. How Period of Prescription Computed and Interrupted. - For an offense penalized under the Revised
Penal Code, the period of prescription commences to run from the day on which the crime is discovered by the
offended party, the authorities, or their agents, and shall be interrupted:

115
 a) by the filing of the complaint with the Office of the City/Provincial Prosecutor; or with the Office of the
Ombudsman; or

b) by the filing of the complaint or information with the court even if it is merely for purposes of preliminary
examination or investigation, or even if the court where the complaint or information is filed cannot try the
case on its merits.

However, for an offense covered by the Rules on Summary Procedure, the period of prescription is interrupted only
by the filing of the complaint or information in court.

xxxx

For violation of a special law or ordinance, the period of prescription shall commence to run from the day of the
commission of the violation, and if the same is not known at the time, from the discovery and the institution of
judicial proceedings for its investigation and punishment. The prescription shall be interrupted only by the filing of
the complaint or information in court and shall begin to run again if the proceedings are dismissed for reasons not
constituting double jeopardy. (Emphasis supplied). 1âwphi1

Presidential Decree No. 127532 reorganized the Department of Justice’s Prosecution Staff and established Regional
State Prosecution Offices. These Regional State Prosecution Offices were assigned centers for particular regions
where the Informations will be filed. Section 6 provides that the area of responsibility of the Region 1 Center located
in San Fernando, La Union includes Abra, Benguet, Ilocos Norte, Ilocos Sur, La Union, Mt. Province, Pangasinan,
and the cities of Baguio, Dagupan, Laoag, and San Carlos.

The Regional Prosecutor for Region 1 or his/her duly assigned prosecutor was designated to file the Information
within the two-month period provided for in Act No. 3326, as amended. 1âwphi1

The failure of the prosecutor to seasonably file the Information is unfortunate as it resulted in the dismissal of the
case against the private respondents. It stands that the doctrine of Zaldivia is applicable to ordinances and their
prescription period. It also upholds the necessity of filing the Information in court in order to toll the period. Zaldivia
also has this to say concerning the effects of its ruling:

The Court realizes that under the above interpretation, a crime may prescribe even if the complaint is filed
seasonably with the prosecutor's office if, intentionally or not, he delays the institution of the necessary judicial
proceedings until it is too late. However, that possibility should not justify a misreading of the applicable rules
beyond their obvious intent as reasonably deduced from their plain language.

The remedy is not a distortion of the meaning of the rules but a rewording thereof to prevent the problem here
sought to be corrected.33

WHEREFORE the Petition is DENIED.

SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila

EN BANC

A.M. No. 2013-08-SC               October 8, 2013

116
Re: ADMINISTRATIVECHARGE OF MISCONDUCT RELATIVE TO THE ALLEGED USE OF PROHIBITED DRUG
("Shabu") OF REYNARD B. CASTOR, Electrician II, Maintenance Division, Office of Administrative Services.

DECISION

PER CURIAM:

For resolution is the Memorandum, dated August 27, 2013, of Atty. Eden T. Candelaria, Deputy Clerk of Court and
Chief Administrative Officer of the Office of Administrative Services (OAS), recommending that Reynard B. Castor
(Castor), Electrician II, Maintenance Division, OAS, be held liable for simple misconduct and conduct prejudicial to
the best interest of the service.

This administrative matter stemmed from a series of sick leave application of Castor without any medical certificate.
Castor incurred absences on the following dates: January 10-11, 14-18, 21-25, 28-31, 2013;February 1, 4-8, 11-13,
16, 2013; and March 6-7, 12, 15, 19-22, 2013. Due to his frequent absences, he was referred to the SC Clinic for
medical evaluation to determine his physical fitness to continue with his duties and responsibilities.

In the medical evaluation report on Castor, dated June 27, 2013, Dr. Prudencio R. Banzon, Jr. (Dr. Banzon), SC
Senior Staff Officer, Medical and Dental Services, reported that sometime in March, 2013, Castor sought
consultation due an to on-and-off dizziness. A chest x-ray was conducted and he was advised to seek pulmonary
consultation. A medical certificate was then issued by a pulmonologist declaring him fit for work. According to Dr.
Banzon, when Castor reported to him at the SC clinic on April 25,2013, he was compelled to undergo a random
drug test. The drug test, done at the NBI laboratory, yielded positive for methamphetamine (shabu), a prohibited
drug. Dr. Banzon remarked that Castor’s absences could be attributed to financial distress due to vice rather than
illness.

On the basis of the result of the random drug test, the OAS issued its Memorandum, dated July 2, 2013, directing
Castor to submit his comment/explanation why he should not be administratively charged with misconduct for the
use of prohibited drugs.

In his letter, dated July 9, 2013, Castor explained that during the early months of this year, he was confronted with
emotional and financial problems regarding his family. Because of these heavy problems, he incurred repeated
absences from office. According to him, he was so depressed that he even thought of committing suicide. He
admitted that it was during those times that he took prohibited drugs unintentionally. He further claimed that the
drugs affected his health and well-being as well as his performance at work. He was nonetheless apologetic and
asked that he be given another chance. He also promised that this would not happen again.

OAS Evaluation and Recommendation

OAS noted that Castor never questioned the authenticity of the NBI drug test results. Thus, it was of the view that
the finding that he was positive for use of shabu was unrebutted. It found his claim of unintentional taking of the
illegal drug hard to believe. By indulging in shabu, he incurred prolonged unauthorized absences from office which
greatly affected his efficiency in the performance of his functions.

OAS cited OCA v. Reyes1 where it was written: "The Court is a temple of justice. Its basic duty and responsibility is
the dispensation of justice. As dispensers of justice, all members and employees of the Judiciary are expected to
adhere strictly to the laws of the land, one of which is Republic Act (R.A.) 9165, which prohibits the use of
dangerous drugs. "Section 36, paragraph (d) of the said law provides:

(d) Officers and employees of public and private offices. –Officers and employees of public and private offices,
whether domestic or overseas, shall be subjected to undergo a random drug test as contained in the company's
work rules and regulations, which shall be borne by the employer, for purposes of reducing the risk in the workplace.
Any officer or employee found positive for use of dangerous drugs shall be dealt with administratively which shall be
a ground for suspension or termination, subject to the provisions of Article 282 of the Labor Code and pertinent
provisions of the Civil Service Law.

Pursuant thereto, the Court issued Memorandum Order No. 18-2005,dated April 26, 2005, establishing a program to
deter the use of dangerous drugs and authorizing the conduct of random drug testing on the personnel of the
Judiciary. In A.M. No. 06-1-01-SC, dated January 17, 2006, the Court adopted guidelines for its drug prevention
program for the purpose of eliminating the hazards of drug abuse in the Judiciary.

OAS believed that by using prohibited drugs, Castor put at risk the very institution which he was serving. His
actuation diminished the respect of the public for the men and women in the Judiciary that could not be tolerated.
The OAS considered the misconduct as simple as Castor was just coaxed by relatives to sniff shabu wrapped in foil
when he went to his cousin’s wake. Thus, it was recommended that Castor be held liable for simple misconduct and
conduct prejudicial to the best interest of the service for his use of prohibited drugs, and that he be suspended from

117
office for six (6) months, without pay, with a stern warning that a repetition of the same or similar acts would be dealt
with more severely.

The Court’s Ruling

There is no doubt that by using prohibited drugs Castor committed misconduct. The Court, however, cannot give its
imprimatur to the conclusion of the OAS that the misconduct should only be categorized as simple.

Misconduct is defined as a transgression of some established and definite rule of action, a forbidden act, a
dereliction of duty, unlawful behavior, willful in character, improper or wrong behavior 2 The misconduct is grave if it
involves any of the additional elements of corruption, willful intent to violate the law, or to disregard established
rules, which must be established by substantial evidence. As distinguished from simple misconduct, the elements of
corruption, clear intent to violate the law, or flagrant disregard of established rule, must be manifest in a charge of
grave misconduct.3

In this case, substantial evidence obtained through a random drug test established that Castor was indeed positive
for use of shabu. This is a flagrant violation of the law which is considered as grave misconduct. Under Section
46(A)(3), Rule 10 of the Revised Rules on Administrative Cases in the Civil Service (RRACCS), grave misconduct is
a grave offense punishable by dismissal even for the first offense.

Further, it is provided that under Civil Service Memorandum Circular No. 13, series of 2010, 4 any official or
employee found positive for use of dangerous drugs shall be subjected to disciplinary/administrative proceedings
with a penalty of dismissal from the service at first offense pursuant to Section 46(19) of Book V of Executive Order
292 and Section22(c) of its Omnibus Rules.

Undoubtedly, the use of prohibited drugs by Castor violated the norms of conduct for public service.  By indulging in
1âwphi1

the use of illegal drugs, he committed conduct unbecoming of court personnel, which tarnished the very image and
integrity of the Judiciary.

No less than the Constitution mandates that a public office is a public trust and public officers and employees must
at all times be accountable to the people, serve them with utmost responsibility, integrity, loyalty and efficiency, act
with patriotism and justice, and lead modest lives.

The image of a court of justice is mirrored in the conduct, official and otherwise, of the personnel who work thereat.
The conduct of a person serving the Judiciary must, at all times, be characterized by propriety and decorum and
above all else, be above suspicion so as to earn and keep the respect of the public for the Judiciary. The Court
would never countenance any conduct, act or omission on the part of all those in the administration of justice, which
will violate the norm of public accountability and diminish or even just tend to diminish the faith of the people in the
Judiciary.5

WHEREFORE, finding Reynard B. Castor, Electrician II, Maintenance Division, Office of Administrative Services,
liable for grave misconduct due to his use of a prohibited drug, the Court orders his DISMISSAL from the service
with FORFEITURE of all benefits, except accrued leave credits, and with prejudice to reemployment in any branch
or instrumentality of the government including government-owned or controlled corporations. This decision is
immediately executory.

SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila

EN BANC

A.C. No. 4945               October 8, 2013

118
MA. JENNIFER TRIA-SAMONTE, Complainant, 
vs.
EPIFANIA "FANNY" OBIAS, Respondent.

RESOLUTION

PER CURIAM:

For the Court's resolution is an administrative Complaint-affidavit 1 filed by Ma. Jennifer Tria-Samonte (complainant)
against Epifania "Fanny"Obias (respondent) charging her for grave misconduct and/or gross malpractice.

The facts

In 1997, spouses Prudencio and Loreta Jeremias (Sps. Jeremias),through respondent, offered for sale a parcel of
agricultural land covered by Transfer Certificate of Title No. 597 (subject property) to the late Nestor Tria (Nestor)
and Pura S. Tria (Sps. Tria), for a consideration of ₱2,800,000.00 and payable in installments. 2 Respondent, who
was to receive the payment from Sps. Tria and transmit the same to Sps. Jeremias, undertook to deliver the deed of
sale and owner’s copy of the title to her clients (Sps. Tria) upon full payment of the purchase price. 3 She further
undertook to cause the conversion of the subject property from agricultural to residential, and the transfer of the title
to the names of Sps. Tria as part of the package agreement. 4 Respondent received all the installment payments
made by Sps. Tria and issued receipts therefor. 5 After full payment of the purchase price on July 11, 1997, 6 and after
giving an additional ₱115,000.00for capital gains tax and other expenses, 7 Sps. Tria requested from respondent the
delivery of the deed of sale and the owner’s copy of the title to them but respondent failed to comply explaining that
the Department of Agrarian Reform clearance for conversion of the subject property from agricultural to residential
was taking time.8 Despite several subsequent demands, respondent still failed to fulfill her undertakings under the
package agreement.9

On May 22, 1998, Nestor was fatally shot and died. 10 Thereafter, complainant, daughter of Sps. Tria, again
demanded from respondent and Sps. Jeremias the delivery of the deed of sale and the certificate of title of the
subject property to them, but to no avail. For their part, Sps. Jeremias informed complainant that they had received
the consideration of ₱2,200,000.00 and they had executed and turned-over the sale documents to respondent. 11

Complainant later discovered that a deed of sale over the subject property was executed by Sps. Jeremias and
notarized by respondent favor of someone else, a certain Dennis Tan, on May 26, 1998 for a consideration of
₱200,000.00.12

In defense, respondent, in her Comment,13 claimed that Nestor instructed her in November 1997 not to proceed with
the processing of the deed of sale and, instead, to just look for another buyer. 14 She further averred that Nestor also
demanded from her the return of the purchase price, and that she complied with the said demand and returned the
₱2,800,000.00 in cash to Nestor sometime during the latter part of January 1998. 15 However, she did not ask for a
written receipt therefor. In fact, Nestor told her not to return the ₱115,000.00 intended for capital gains taxes and
other expenses, and to just apply the said sum as attorney’s fees for the other legal services that she rendered for
him.16

In the Court’s Resolution17 dated August 30, 1999, the case was referred to the Integrated Bar of the Philippines
(IBP) for investigation, report, and recommendation. After numerous postponements, mostly at the instance of
respondent,18 only the complainant and her witnesses testified before the IBP. Eventually, respondent’s right to
present evidence was considered waived.19

The IBP’s Report and Recommendation

On September 25, 2007, the IBP Investigating Commissioner, Wilfredo E.J.E. Reyes (Investigating Commissioner),
issued his Report and Recommendation, 20 finding respondent to have violated her oath as a lawyer due to her
participation in the second sale of the subject property despite the lack of any lawful termination of the prior sale of
the same property to Sps.Tria. The Investigating Commissioner observed that respondent received, and admitted to
have received, from Sps. Tria the ₱2,800,000.00 purchase price and the amount of ₱115,000.00 for expenses. He
further found the second sale of the same property to Dennis Tan as a clear indication that respondent: (a)
employed serious deceit or fraud against Sps. Tria and their family; (b) violated their proprietary rights; and (c)
violated the trust and confidence reposed in her. 21 On the other hand, the Investigating Commissioner did not give
credence to respondent’s defense that she returned the ₱2,800,000.00 purchase price given by Sps. Tria and that
the latter caused the cancellation of the sale of the subject property in their favor, absent any receipt or
documentation to prove the same.22 As counsel for Sps. Tria, respondent failed in her obligation to observe honesty
and diligence in their transaction and, as such, she was found guilty of grave misconduct and gross malpractice in
violation of Canons 17 and 18 of the Code of Professional Responsibility (Code). 23 Accordingly, the Investigating
Commissioner recommended that respondent be suspended from the practice of law for a period of five years. 24

119
Finding the recommendation to be fully supported by the evidence on record and the applicable laws and rules, and
considering respondent’s violation of Canons 17 and 18 of the Code, the IBP Board of Governors adopted and
approved the Investigating Commissioner’s Report and Recommendation in Resolution No. XVIII-2007-185 25 dated
October 19,2007 but reduced the suspension of respondent from the practice of law from five years to one year.

Both complainant and respondent filed their respective motions for reconsideration 26 which were, however, denied in
the IBP Board of Governors’ Resolution No. XX-2012-109 dated March 10, 2012. 27

The Issue Before the Court

The essential issue in this case is whether or not respondent should beheld administratively liable for violating
Canons 17 and 18 of the Code.

The Court’s Ruling

The Court finds no cogent reason to disturb the findings of the IBP. Indeed, respondent, in her Comment, already
admitted that she rendered legal services to Sps. Tria, 28 which necessarily gave rise to a lawyer-client relationship
between them. The complete turnaround made by respondent in her motion for reconsideration from the IBP Board
of Governors’ Resolution No. XX-2012-109, where she contended that there was no lawyer-client relationship
between her and Sps. Tria,29 cannot thus be given any credence.

Since respondent publicly held herself out as lawyer, the mere fact that she also donned the hat of a real estate
broker did not divest her of the responsibilities attendant to the legal profession. In this regard, the legal advice
and/or legal documentation that she offered and/or rendered regarding the real estate transaction subject of this
case should not be deemed removed from the category of legal services. 30 Case law instructs that if a person, in
respect to business affairs or troubles of any kind, consults a lawyer with a view to obtaining professional advice or
assistance, and the attorney voluntarily permits or acquiesces with the consultation, then the professional
employment is established.31 Thus, in view of the fact that Sps. Tria knew respondent to be, and transacted with her
as, a lawyer, her belated and unilateral classification of her own acts as being limited to those of a real estate broker
cannot be upheld. In any case, the lawyer-client relationship between Sps. Tria and respondent was confirmed by
the latter’s admission that she rendered legal services to the former. With this relationship having been established,
the Court proceeds to apply the ethical principles pertinent to this case.

It is a core ethical principle that lawyers owe fidelity to their clients’ cause and must always be mindful of the trust
and confidence reposed in them.32 They are duty-bound to observe candor, fairness, and loyalty in all their dealings
and transactions with their clients.33 Irrefragably, the legal profession demands of attorneys an absolute abdication of
every personal advantage conflicting in any way, directly or indirectly, with the interests of their clients. 34 As
enshrined in Canons 17 and 18 of the Code:

Canon 17 - A lawyer owes fidelity to the cause of his client and he shall be mindful of the trust and confidence
reposed in him.

Canon 18 - A lawyer shall serve his client with competence and diligence. 1âwphi1

In the present case, respondent clearly transgressed the above-mentioned rules as her actions were evidently
prejudicial to her clients’ interests. Records disclose that instead of delivering the deed of sale covering the subject
property to her clients, she willfully notarized a deed of sale over the same property in favor of another person.
Accordingly, far removed from protecting the interest of her clients, Sps. Tria, who had, in fact, already fully paid the
purchase price of the subject property, respondent participated and was even instrumental in bringing about the
defeat of their rights over the said property. Hence, respondent grossly violated the trust and confidence reposed in
her by her clients, in contravention of Canons 17and 18 of the Code. To add, by turning against her own clients,
respondent also violated Rule 1.01, Canon 1 of the Code which provides that a lawyer shall not engage in unlawful,
dishonest and immoral or deceitful conduct. Lest it be forgotten, lawyers are bound to maintain not only a high
standard of legal proficiency, but also of morality, honesty, integrity, and fair dealing. 35 These unyielding standards
respondent evidently failed to adhere to.

Anent the proper penalty to be imposed, records bear out that the penalty of suspension from the practice of law
recommended by the Investigating Commissioner was decreased from a period of five years to just one year by the
IBP Board of Governors in Resolution No. XVIII-2007-185. However, the Court observes that the said resolution is
bereft of any explanation showing the bases for such modification in contravention of Section 12(a), Rule 139-B of
the Rules of Court which mandates that "the decision of the Board upon such review shall be in writing and shall
clearly and distinctly state the facts and the reasons on which it is based." Verily, the Court frowns on the
unexplained change made by the IBP Board of Governors in the recommended penalty. Be that as it may, the Court
proceeds to correct the same.

Jurisprudence reveals that in similar cases where lawyers abused the trust and confidence reposed in them by their
clients as well as committed unlawful, dishonest, and immoral or deceitful conduct, as in this case, the Court found
120
them guilty of gross misconduct and disbarred them. In Chuav. Mesina, Jr.,36 the Court disbarred the lawyer who,
upon his misrepresentations, breached his promise to his clients to transfer to them the property subject of that
case, but instead, offered the same for sale to the public. Also, in Tabang v. Gacott, 37 the penalty of disbarment was
meted out against the lawyer who, among others, actively sought to sell the properties subject of that case contrary
to the interests of his own clients. As the infractions in the foregoing cases are akin to those committed by
respondent in the case at bar, the Court deems that the same penalty of disbarment be imposed against her.
Clearly, as herein discussed, respondent committed deliberate violations of the Code as she dishonestly dealt with
her own clients and advanced the interests of another against them resulting to their loss. For such violations,
respondent deserves the ultimate punishment of disbarment consistent with existing jurisprudence.

As a final point, it bears to note that the foregoing resolution does not-as it should not -include an order for the return
of the ₱2,800,000.00 purchase price and the amount of ₱115,000.00 for expenses allegedly received by
respondent, albeit the Investigating Commissioner's findings on the same. In Roa v. Moreno, 38 it has been held that
disciplinary proceedings against lawyers are only confined to the issue of whether or not the respondent-lawyer is
still fit to be allowed to continue as a member of the Bar and that the only concern is his administrative
liability.39Thus, the Court's findings during administrative-disciplinary proceedings have no bearing on the liabilities of
the parties involved which are purely civil in nature -meaning, those liabilities which have no intrinsic link to the
lawyer's professional engagement40 – as the same should be threshed out in a proper proceeding of such nature.

WHEREFORE, respondent Epifania "Fanny" Obias is found guilty of gross misconduct and is accordingly
DISBARRED.

Let a copy of this Resolution be furnished the Office of the Bar Confidant, the Integrated Bar of the Philippines, and
the Office of the Court Administrator for circulation to all the courts.

SO ORDERED

Republic of the Philippines

SUPREME COURT
Manila

EN BANC

G.R. No. 187485               October 8, 2013

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COMMISSIONER OF INTERNAL REVENUE, Petitioner, 
vs.
SAN ROQUE POWER CORPORATION, Respondent.

x-----------------------x

G.R. No. 196113

TAGANITO MINING CORPORATION, Petitioner, 

vs.
COMMISSIONER OF INTERNAL REVENUE, Respondent.

x-----------------------x

G.R. No. 197156

PHILEX MINING CORPORATION, Petitioner, 

vs.
COMMISSIONER OF INTERNAL REVENUE, Respondent.

RESOLUTION

CARPIO, J.:

This Resolution resolves the Motion for Reconsideration and the Supplemental Motion for Reconsideration filed by
San Roque Power Corporation (San Roque) in G.R. No. 187485, the Comment to the Motion for Reconsideration
filed by the Commissioner of Internal Revenue (CIR) in G.R. No. 187485, the Motion for Reconsideration filed by the
CIR in G.R.No. 196113, and the Comment to the Motion for Reconsideration filed by Taganito Mining Corporation
(Taganito) in G.R. No. 196113.

San Roque prays that the rule established in our 12 February 2013 Decision be given only a prospective effect,
arguing that "the manner by which the Bureau of Internal Revenue (BIR) and the Court of Tax Appeals(CTA)
actually treated the 120 + 30 day periods constitutes an operative fact the effects and consequences of which
cannot be erased or undone." 1

The CIR, on the other hand, asserts that Taganito Mining Corporation's (Taganito) judicial claim for tax credit or
refund was prematurely filed before the CTA and should be disallowed because BIR Ruling No. DA-489-03 was
issued by a Deputy Commissioner, not by the Commissioner of Internal Revenue.

We deny both motions.

The Doctrine of Operative Fact

The general rule is that a void law or administrative act cannot be the source of legal rights or duties. Article 7 of the
Civil Code enunciates this general rule, as well as its exception: "Laws are repealed only by subsequent ones, and
their violation or non-observance shall not be excused by disuse, or custom or practice to the contrary. When the
courts declared a law to be inconsistent with the Constitution, the former shall be void and the latter shall govern.
Administrative or executive acts, orders and regulations shall be valid only when they are not contrary to the laws or
the Constitution."

The doctrine of operative fact is an exception to the general rule, such that a judicial declaration of invalidity may not
necessarily obliterate all the effects and consequences of a void act prior to such declaration. 2 In Serrano de
Agbayani v. Philippine National Bank,3 the application of the doctrine of operative fact was discussed as follows:

The decision now on appeal reflects the orthodox view that an unconstitutional act, for that matter an executive
order or a municipal ordinance likewise suffering from that infirmity, cannot be the source of any legal rights or
duties. Nor can it justify any official act taken under it. Its repugnancy to the fundamental law once judicially declared
results in its being to all intents and purposes a mere scrap of paper. As the new Civil Code puts it: "When the
courts declare a law to be inconsistent with the Constitution, the former shall be void and the latter shall govern.
Administrative or executive acts, orders and regulations shall be valid only when they are not contrary to the laws of
the Constitution." It is understandable why it should be so, the Constitution being supreme and paramount. Any
legislative or executive act contrary to its terms cannot survive.

Such a view has support in logic and possesses the merit of simplicity. It may not however be sufficiently realistic. It
does not admit of doubt that prior to the declaration of nullity such challenged legislative or executive act must have
been in force and had to be complied with. This is so as until after the judiciary, in an appropriate case, declares its
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invalidity, it is entitled to obedience and respect. Parties may have acted under it and may have changed their
positions. What could be more fitting than that in a subsequent litigation regard be had to what has been done while
such legislative or executive act was in operation and presumed to be valid in all respects. It is now accepted as a
doctrine that prior to its being nullified, its existence as a fact must be reckoned with. This is merely to reflect
awareness that precisely because the judiciary is the governmental organ which has the final say on whether or not
a legislative or executive measure is valid, a period of time may have elapsed before it can exercise the power of
judicial review that may lead to a declaration of nullity. It would be to deprive the law of its quality of fairness and
justice then, if there be no recognition of what had transpired prior to such adjudication.

In the language of an American Supreme Court decision: "The actual existence of a statute, prior to such a
determination of unconstitutionality, is an operative fact and may have consequences which cannot justly be
ignored. The past cannot always be erased by a new judicial declaration. The effect of the subsequent ruling as to
invalidity may have to be considered in various aspects, with respect to particular relations, individual and corporate,
and particular conduct, private and official." This language has been quoted with approval in a resolution in Araneta
v. Hill and the decision in Manila Motor Co., Inc. v. Flores. An even more recent instance is the opinion of Justice
Zaldivar speaking for the Court in Fernandez v. Cuerva and Co. (Boldfacing and italicization supplied)

Clearly, for the operative fact doctrine to apply, there must be a "legislative or executive measure," meaning a law or
executive issuance, that is invalidated by the court. From the passage of such law or promulgation of such executive
issuance until its invalidation by the court, the effects of the law or executive issuance, when relied upon by the
public in good faith, may have to be recognized as valid. In the present case, however, there is no such law or
executive issuance that has been invalidated by the Court except BIR Ruling No. DA-489-03.

To justify the application of the doctrine of operative fact as an exemption, San Roque asserts that "the BIR and the
CTA in actual practice did not observe and did not require refund seekers to comply with the120+30 day
periods."4This is glaring error because an administrative practice is neither a law nor an executive issuance.
Moreover, in the present case, there is even no such administrative practice by the BIR as claimed by San Roque.

In BIR Ruling No. DA-489-03 dated 10 December 2003, the Department of Finance’s One-Stop Shop Inter-Agency
Tax Credit and Duty Drawback Center (DOF-OSS) asked the BIR to rule on the propriety of the actions taken by
Lazi Bay Resources Development, Inc. (LBRDI). LBRDI filed an administrative claim for refund for alleged input VAT
for the four quarters of 1998. Before the lapse of 120 days from the filing of its administrative claim, LBRDI also filed
a judicial claim with the CTA on 28March 2000 as well as a supplemental judicial claim on 29 September 2000.In its
Memorandum dated 13 August 2002 before the BIR, the DOF-OSS pointed out that LBRDI is "not yet on the right
forum in violation of the provision of Section 112(D) of the NIRC" when it sought judicial relief before the CTA.
Section 112(D) provides for the 120+30 day periods for claiming tax refunds.

The DOF-OSS itself alerted the BIR that LBRDI did not follow the120+30 day periods. In BIR Ruling No. DA-489-03,
Deputy Commissioner Jose Mario C. Buñag ruled that "a taxpayer-claimant need not wait for the lapse of the 120-
day period before it could seek judicial relief with the CTA by way of Petition for Review." Deputy Commissioner
Buñag, citing the 7February 2002 decision of the Court of Appeals (CA) in Commissioner of Internal Revenue v.
Hitachi Computer Products (Asia) Corporation 5 (Hitachi), stated that the claim for refund with the Commissioner
could be pending simultaneously with a suit for refund filed before the CTA.

Before the issuance of BIR Ruling No. DA-489-03 on 10 December 2003, there was no administrative practice by
the BIR that supported simultaneous filing of claims. Prior to BIR Ruling No. DA-489-03, the BIR considered the
120+30 day periods mandatory and jurisdictional.

Thus, prior to BIR Ruling No. DA-489-03, the BIR’s actual administrative practice was to contest simultaneous filing
of claims at the administrative and judicial levels, until the CA declared in Hitachi that the BIR’s position was wrong.
The CA’s Hitachi decision is the basis of BIR Ruling No. DA-489-03 dated 10 December 2003 allowing simultaneous
filing. From then on taxpayers could rely in good faith on BIR Ruling No. DA-489-03 even though it was erroneous
as this Court subsequently decided in Aichi that the 120+30 day periods were mandatory and jurisdictional.

We reiterate our pronouncements in our Decision as follows:

At the time San Roque filed its petition for review with the CTA, the 120+30 day mandatory periods were already in
the law. Section112(C) expressly grants the Commissioner 120 days within which to decide the taxpayer’s claim.
The law is clear, plain, and unequivocal: "x x x the Commissioner shall grant a refund or issue the tax credit
certificate for creditable input taxes within one hundred twenty (120) days from the date of submission of complete
documents." Following the verbalegis doctrine, this law must be applied exactly as worded since it is clear, plain,
and unequivocal. The taxpayer cannot simply file a petition with the CTA without waiting for the Commissioner’s
decision within the 120-daymandatory and jurisdictional period. The CTA will have no jurisdiction because there will
be no "decision" or "deemed a denial" decision of the Commissioner for the CTA to review. In San Roque’s case, it
filed its petition with the CTA a mere 13 days after it filed its administrative claim with the Commissioner.
Indisputably, San Roque knowingly violated the mandatory 120-day period, and it cannot blame anyone but itself.

123
Section 112(C) also expressly grants the taxpayer a 30-day period to appeal to the CTA the decision or inaction of
the Commissioner x x x.

xxxx

To repeat, a claim for tax refund or credit, like a claim for tax exemption, is construed strictly against the
taxpayer. One of the conditions for a judicial claim of refund or credit under the VAT System is compliance with the
1âwphi1

120+30 day mandatory and jurisdictional periods. Thus, strict compliance with the 120+30 day periods is necessary
for such a claim to prosper, whether before, during, or after the effectivity of the Atlas doctrine, except for the period
from the issuance of BIR Ruling No. DA-489-03 on 10 December 2003 to 6 October 2010 when the Aichi doctrine
was adopted, which again reinstated the 120+30 day periods as mandatory and jurisdictional. 6

San Roque’s argument must, therefore, fail. The doctrine of operative fact is an argument for the application of
equity and fair play. In the present case, we applied the doctrine of operative fact when we recognized simultaneous
filing during the period between 10 December 2003, when BIR Ruling No. DA-489-03 was issued, and 6 October
2010, when this Court promulgated Aichi declaring the 120+30 day periods mandatory and jurisdictional, thus
reversing BIR Ruling No. DA-489-03.

The doctrine of operative fact is in fact incorporated in Section 246 of the Tax Code, which provides:

SEC. 246. Non-Retroactivity of Rulings. - Any revocation, modification or reversal of any of the rules and regulations
promulgated in accordance with the preceding Sections or any of the rulings or circulars promulgated by the
Commissioner shall not be given retroactive application if the revocation, modification or reversal will be prejudicial
to the taxpayers, except in the following cases:

(a) Where the taxpayer deliberately misstates or omits material facts from his return or any document
required of him by the Bureau of Internal Revenue;

(b) Where the facts subsequently gathered by the Bureau of Internal Revenue are materially different from
the facts on which the ruling is based; or

(c) Where the taxpayer acted in bad faith. (Emphasis supplied)

Under Section 246, taxpayers may rely upon a rule or ruling issued by the Commissioner from the time the rule or
ruling is issued up to its reversal by the Commissioner or this Court. The reversal is not given retroactive effect.
This, in essence, is the doctrine of operative fact. There must, however, be a rule or ruling issued by the
Commissioner that is relied upon by the taxpayer in good faith. A mere administrative practice, not formalized into a
rule or ruling, will not suffice because such a mere administrative practice may not be uniformly and consistently
applied. An administrative practice, if not formalized as a rule or ruling, will not be known to the general public and
can be availed of only by those within formal contacts with the government agency.

Since the law has already prescribed in Section 246 of the Tax Code how the doctrine of operative fact should be
applied, there can be no invocation of the doctrine of operative fact other than what the law has specifically provided
in Section 246. In the present case, the rule or ruling subject of the operative fact doctrine is BIR Ruling No. DA-489-
03 dated 10 December 2003. Prior to this date, there is no such rule or ruling calling for the application of the
operative fact doctrine in Section 246. Section246, being an exemption to statutory taxation, must be applied strictly
against the taxpayer claiming such exemption.

San Roque insists that this Court should not decide the present case in violation of the rulings of the CTA;
otherwise, there will be adverse effects on the national economy. In effect, San Roque’s doomsday scenario is a
protest against this Court’s power of appellate review. San Roque cites cases decided by the CTA to underscore
that the CTA did not treat the 120+30 day periods as mandatory and jurisdictional. However, CTA or CA rulings are
not the executive issuances covered by Section 246 of the Tax Code, which adopts the operative fact doctrine. CTA
or CA decisions are specific rulings applicable only to the parties to the case and not to the general public. CTA or
CA decisions, unlike those of this Court, do not form part of the law of the land. Decisions of lower courts do not
have any value as precedents. Obviously, decisions of lower courts are not binding on this Court. To hold that CTA
or CA decisions, even if reversed by this Court, should still prevail is to turn upside down our legal system and
hierarchy of courts, with adverse effects far worse than the dubious doomsday scenario San Roque has conjured.

San Roque cited cases7 in its Supplemental Motion for Reconsideration to support its position that retroactive
application of the doctrine in the present case will violate San Roque’s right to equal protection of the law. However,
San Roque itself admits that the cited cases never mentioned the issue of premature or simultaneous filing, nor of
compliance with the 120+30 day period requirement. We reiterate that "any issue, whether raised or not by the
parties, but not passed upon by the Court, does not have any value as precedent." 8 Therefore, the cases cited by
San Roque to bolster its claim against the application of the 120+30 day period requirement do not have any value
as precedents in the present case.

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Authority of the Commissioner
to Delegate Power

In asking this Court to disallow Taganito’s claim for tax refund or credit, the CIR repudiates the validity of the
issuance of its own BIR Ruling No. DA-489-03. "Taganito cannot rely on the pronouncements in BIR Ruling No. DA-
489-03, being a mere issuance of a Deputy Commissioner." 9

Although Section 4 of the 1997 Tax Code provides that the "power to interpret the provisions of this Code and other
tax laws shall be under the exclusive and original jurisdiction of the Commissioner, subject to review by the
Secretary of Finance," Section 7 of the same Code does not prohibit the delegation of such power. Thus, "the
Commissioner may delegate the powers vested in him under the pertinent provisions of this Code to any or such
subordinate officials with the rank equivalent to a division chief or higher, subject to such limitations and restrictions
as may be imposed under rules and regulations to be promulgated by the Secretary of Finance, upon
recommendation of the Commissioner."

WHEREFORE, we DENY with FINALITY the Motions for Reconsideration filed by San Roque Power Corporation in
G.R. No. 187485,and the Commissioner of Internal Revenue in G.R. No. 196113.

SO ORDERED.

CONCURRING AND DISSENTING OPINION

LEONEN, J.:

We undermine the operative value of the rule of law whenever were ward clearly erroneous administrative
interpretation of statutes. We open the legal order to undeserved inconsistencies, and worse, we make the
Commissioner of Internal Revenue vulnerable to pressure.

Inconsistency in the administrative implementation of clear statutory provisions and vulnerability of our revenue
officials to rent-seeking behavior drive investors away from our markets.

Properly denying an irregular application for a tax refund would mean more funds that can be used for the social
good. The beneficiaries of a social good may be too atomized that they may not have the resources to compel our
tax officials to deny an improper application of refund of taxes made. In my view, this is the compelling rationale
behind the principle that tax statutes are strictly construed against the taxpayer. Our legal order equalizes
opportunities through its general principles.

I reiterate my concurrence with the interpretation of Section 112 (C) of the. National Internal Revenue Code of
19971(referred here as the 1997Tax Code) that the 120+ 30 day period is mandatory and jurisdictional. It has been
that way since 1997, and doubts as to what it clearly said only arose due to inconsistent issuances of the Bureau of
Internal Revenue.

I, however, reiterate my dissent with respect to the application of this doctrinal interpretation as We resolved the
Motions for Reconsideration of the February 12, 2013 Decision of this Court filed by San Roque Power Corporation
in G.R. No. 187485, and the Commissioner of Internal Revenue in G.R. No. 196113.

In my view, the text of Section 112 (C) is clear. It puts all taxpayers on notice. The interpretations made through
Revenue Regulation or by Opinion by a Deputy Commissioner of the Bureau of Internal Revenue contrary to the
provisions of the law are clearly ultra vires and should not be countenanced. If We sanction these acts, it
undermines the operative value of the statute as written. It rewards erroneous interpretation and unduly grants
discretion to the Commissioner of Internal Revenue, which may be abused given the pressure from million-peso
claims for tax refunds.

Section 112 (C) of the 1997 Tax Code provides:

(C) Period within which Refund or Tax Credit of Input Taxes shall be Made. – In proper cases, the Commissioner
shall grant a refund or issue the tax credit certificate for creditable input taxes within one hundred twenty (120) days
from the date of submission of complete documents in support of the application filed in accordance with Subsection
(A) thereof.

In case of full or partial denial of the claim for tax refund or tax credit, or the failure on the part of the Commissioner
to act on the application within the period prescribed above, the taxpayers affected may, within thirty (30) days from
the receipt of the decision denying the claim or after the expiration of the one hundred twenty-day period, appeal the
decision or the unacted claim with the Court of Tax Appeals. (Emphasis provided)

125
There is no room for any other interpretation of the text except that resort to an appeal with the Court of Tax Appeals
is made (a) only after the120-day period from the date of submission of complete documents to support the refund
or tax credit certificate with the Commissioner of Internal Revenue or (b) within the 120-day period from the time the
claim has been denied or only partially granted.

In the Decision, the majority considered the issuance by the Bureau of Internal Revenue of Ruling No. DA-489-03
dated December 10, 2003 in Re: Lazi Bay Resources Development, Inc. This opinion, rendered by a Deputy
Commissioner, stated that the taxpayer need not wait for the lapse of the120-day period before seeking judicial
relief. The majority deemed it equitable to except, from the strict compliance with the 120+30-daymandatory and
jurisdictional periods, judicial claims filed within the period from December 10, 2003, when Bureau of Internal
Revenue Ruling No. DA-489-03 was issued, to October 6, 2010, when the doctrine in Commissioner of Internal
Revenue v. Aichi Forging Company of Asia, Inc.2 was adopted. The main ponencia still maintains that the taxpayers
cannot be faulted for relying on the Bureau’s declaration.

In its Motion for Reconsideration, San Roque argues that by the ‘operative fact’ principle, due recognition should be
given to the fact that even prior to the issuance of Bureau of Internal Revenue Ruling No. DA-489-03, including the
time when its administrative and judicial claims for refund were filed on March 28, 2003 and April 10, 2003,
respectively, the Bureau and the Court of Tax Appeals in actual practice neither observed nor demanded
compliance with the 120+30-day period. Thus, in the spirit of justice, fairness and equity, San Roque insists that the
rule on the mandatory and jurisdictional nature of the 120+30-day period should only be applied prospectively.

On the other hand, the Commissioner of Internal Revenue argues that the Bureau of Internal Revenue Ruling No.
DA-489-03 is not a valid issuance authorized under Section 4 of the 1997 Tax Code because a deputy
commissioner issued it.

I maintain my position that the Aichi doctrine3 as confirmed in San Roque should be applied to all undecided Value
Added Tax or VAT refund cases, regardless of the period when the claim for refund was made.

When this Court interprets law, it declares what a particular provision has always meant. We do not create new legal
obligations. We do not have the power to legislate. Interpretations of law made by courts necessarily always have a
"retroactive" effect.

Once We determine that a previous interpretation of the law is erroneous, We cannot, at the same time, continue to
give effect to erroneous interpretation because Ours is the duty to uphold the true meaning of the law.

A construction placed upon the law by the Commissioner, even if it has been followed for years, if found to be
contrary to law, must be abandoned. To say that such interpretation established by the administrative agency has
effect would be to say that this Court has the power to control or suspend the effectivity of laws. We cannot hold
ourselves hostage to an erroneous interpretation. To say that equity should be considered because it has been
relied upon by taxpayers would mean to underestimate or, worse, make the ordinary beneficiaries of the use of our
taxes invisible. We cannot use equity only to favor large taxpayers.

We cannot justify such course of action.

Settled is the principle that an "erroneous application and enforcement of the law by public officers do not preclude a
subsequent correct application of the statute, and the Government is never estopped by mistake or error on the part
of its agents."4 Similar with Our duty of upholding the Constitution when it is in conflict with a statute, 5 it is Our duty to
uphold a statute when it is in conflict with an executive issuance. We ensure that clear provisions of law are not
undermined by the Commissioner of Internal Revenue. 6

Concededly, Section 4 of the Tax Code expressly grants to the Commissioner of Internal Revenue the power to
interpret tax laws, thus:

Sec. 4. Power of the Commissioner to Interpret Tax Laws and to Decide Tax Cases. — The power to interpret the
provisions of this Code and other tax laws shall be under the exclusive and original jurisdiction of the Commissioner,
subject to review by the Secretary of Finance.

xxxx

However, the Commissioner of Internal Revenue cannot legislate guidelines contrary to the law it is tasked to
implement. Hence, its interpretation is not conclusive and will be ignored if judicially found to be erroneous.

The doctrine of operative fact cannot be an excuse for Us to renege on this constitutional duty. This doctrine only
refers to rights that have already been vested due to reliance on a statute or executive act that was eventually
declared unconstitutional or invalid. 7

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In Benguet Consolidated Mining Co. v. Pineda, 8 vested right is defined as follows:

Vested right is "some right or interest in the property which has become fixed and established, and is no longer
open to doubt or controversy."

xxxx

"Rights are vested when the right to enjoyment, present or prospective, has become the property of some particular
person or persons as a present interest. The right must be absolute, complete, and unconditional, independent of a
contingency, and a mere expectancy of future benefit, or a contingent interest in property founded on anticipated
continuance of existing laws, does not constitute a vested right. So, inchoate rights which have not be enacted on
are not vested."9

There are no vested rights in procedure. Taxpayers do not have vested rights over tax refunds. Refunds need to be
proven and its application raised in the right manner as required by statute. Only after a final determination of the
right to refund and its amount does it become a vested right for the taxpayer.

San Roque further anchors its argument on the "actual practice" by the Bureau and the Court of Tax Appeals in
treating the 120+30-day period as permissive rather than directory. This contention is specious. I agree with Justice
Carpio that an administrative practice is not subject to the doctrine of operative fact. "Practice, without more, no
matter how long continued, cannot give rise to any vested right if it is contrary to law." 10

I regret that I cannot agree with Justice Carpio that Section 246 of the Tax Code apply in these cases. This
provides:

Section 246. Non-Retroactivity of Rulings. – Any revocation, modification or reversal of any of the rules and
regulations promulgated in accordance with the preceding Sections or any of the rulings or circulars promulgated by
the Commissioner shall not be given retroactive application if the revocation, modification, or reversal shall be
prejudicial to the taxpayer, except in the following cases:

(a) Where the taxpayer deliberately misstates or omits material facts from his return or any document
required of him by the Bureau of Internal Revenue;

(b) Where the facts subsequently gathered by the Bureau of Internal Revenue are materially different from
the facts on which the ruling is based; or

(c) Where the taxpayer acted in bad faith.

This provision should only apply when there is a valid interpretation made by the Commissioner of Internal Revenue.
In the present case, the Bureau of Internal Revenue Ruling No. DA-489-03 is ultra vires and was not validly issued
since it was promulgated by a Deputy Commissioner.

In Aichi, this Court squarely addressed the particular issue on prematurity of a judicial claim based on its reasonable
interpretation of the language of the 1997 Tax Code. In that case, this Court did not defer application of the rule laid
down. This Court ordered the Court of Tax Appeals to dismiss Aichi’s appeal due to the premature filing of its claim
for refund/credit of input value added tax. In Aichi, the administrative and judicial claims were simultaneously filed on
September 30, 2004.

The Bureau of Internal Revenue Ruling is ultra vires and invalid not only because it contravenes the law but also
because it was issued beyond the scope of the authority of the deputy commissioner. In this, I agree with Justice
Velasco.

Under Section 411 of the 1997 Tax Code, the power to interpret the provisions of the Code and other tax laws is
under the exclusive and original jurisdiction of the Commissioner of Internal Revenue, subject to review by the
Secretary of Finance. Pursuant to Section 712 of the Tax Code, the Commissioner of Internal Revenue may delegate
his or her powers to a subordinate official except, among others, the power to issue rulings of first impression 13 or to
reverse, revoke or modify any existing ruling of the Bureau of Internal Revenue. The Bureau of Internal Revenue
Ruling No.DA-489-03 is a ruling of first impression, declaring for the first time in written form the permissive nature
of the 120-day period stated in Section112 (C).

I, however, disagree with my esteemed colleague, Justice Velasco, in his view that the Bureau of Internal Revenue
Ruling is an application of a rule already laid down and specified in Revenue Regulation No. 07-95, 14 which
considered the 120-day (then 60-day) period as non-obligatory and discretionary. Nowhere in the Revenue
Regulation is it expressed or implied that the 120-day (then 60-day) period is permissive. Section 4.106-2 of
Revenue Regulation 07-95 provides:

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Section 4.106-2. Procedures for claiming refunds or tax credits of input tax. — (a) x x x.

xxxx

(c) Period within which refund or tax credit of input taxes shall be made. — In proper cases, the Commissioner shall
grant a tax credit/refund for creditable input taxes within sixty (60) days from the date of submission of complete
documents in support of the application filed in accordance with subparagraphs (a) and (b) above.

In case of full or partial denial of the claim for tax credit/refund as decided by the Commissioner of Internal Revenue,
the taxpayer may appeal to the Court of Tax Appeals within thirty (30) days from the receipt of said denial, otherwise
the decision will become final. However, if no action on the claim for tax credit/refund has been taken by the
Commissioner of Internal Revenue after the sixty (60) day period from the date of submission of the application but
before the lapse of the two (2) year period from the date of filing of the VAT return for the taxable quarter, the
taxpayer may appeal to the Court of Tax Appeals.

xxxx

On the contrary, it is clear from the provision cited above that the appeal to the Court of Tax Appeals may be made
only after the lapse of the60-day (now 120-day) period without action by the Commissioner of Internal Revenue on
the administrative claim. A rule or regulation cannot go beyond the terms and provisions of the basic law. 15Revenue
Regulation No.07-95, therefore, cannot go beyond the provisions of the Tax Code.

Even assuming, without conceding, that Justice Velasco’s interpretation of the Revenue Regulation is correct, it will
still be ultra vires in the light of the clear provisions of the law.

San Roque further argues that strict adherence to procedural rules is exacted at the expense of substantive justice
considering its clear entitlement to a refund. Such contention is misguided. Again, a value added tax refund is not a
refund of an excessively, illegally or erroneously collected tax. A value added tax refund claim may be made
because it is specifically allowed provided for by law, i.e., Section 110 (B) 16 and Section 112 (A)17 of the National
Internal Revenue Code, as amended. Similar in nature to a tax exemption, it must be construed strictly against the
taxpayer. Hence, strict compliance with both substantive and procedural requirements is required for a value added
tax refund claim to prosper.

The 120+30-day period is not a mere procedural technicality that can simply be disregarded if the claim is otherwise
meritorious, but a mandatory and jurisdictional condition imposed by law. "Failure to comply with these requisites is
fatal because it has been repeatedly held that no action for the recovery of a tax paid can be maintained without
strictly complying with each and every one of the conditions required by the law to that effect." 18

Even handed justice requires that the new rule be applied retroactively to all who are similarly situated, including the
claims of San Roque and Taganito, which are subject of the present case. Reiterating Our view expressed in the
separate Opinion in the Decision: "the provisions that We have just reviewed already put the private parties within a
reasonable range of interpretation that would serve them notice as to the remedies that are available to them. That
is, that resort to judicial action can only be done after a denial by the Commissioner or after the lapse of 120 days
from the date of submission of complete documents in support of the administrative claim for refund."

Finally, San Roque’s argument that the retroactive application of subject Decision would have detrimental effects to
the flow of investments, especially foreign, into our country and hampering the growth and development of our
national economy, is inaccurate.

Investment is the process of exchanging income for goods that are expected to produce earnings at a later
time.19Investments are not only composed of private investments (local or foreign). There are also public
investments. Public investments include building infrastructure such as roads, ports, power, water, and
telecommunication facilities.20 These kinds of investments are as important to private investors as it is to the general
population. National investment is an aggregate of both public and private investments in reality.

Prospective application of the new doctrine may lead to some private savings for refund-seekers. However, not all
private savings may not be reinvested immediately for the public to experience some form of welfare gain. 21 Hence,
private savings might not be enough to offset the government’s deficit in its revenues caused in the reduction of the
collected tax.22 Since the government deficit is greater than private savings, national savings (or its economic
equivalent of national investments) is actually reduced. 23

On the other hand, public savings (from government revenue) translate to investments in public goods that benefit
the majority of the population,24 such as major infrastructure projects like roads and bridges, education, police and
fire protection, to name a few.

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For many foreign investors eyeing developing countries as a potential investment ground, infrastructure is also a
critical issue.25 According to Dwight Perkins, et al., "Countries with poor infrastructure often cannot attract
investment."26 Since the Philippines is stricter compared to other countries in the region in terms of labor standards
and wages, we will be in serious trouble if our government does not have enough revenue to sustain infrastructure
projects. These projects also benefit private investment in the form of reduced transaction costs.

To reiterate, tax is only one aspect of the costs of doing business. Good infrastructure translates to reduced costs in
more business-related aspects, such as transportation, communication, and other utilities.

Investors also are concerned with macroeconomic and political stability, and the quality of institutions and
governance,27 such as the judiciary's performance. When investors have the impression that court systems are
unpredictable, they tend to move their investments elsewhere. 28 Systems can become unpredictable if unbridled
discretion is rewarded among those that are tasked to implement the law. On the other hand, investor confidence is
gained through a consistent application of the rule of Iaw. 29

Understandably, petitioners marshall arguments in support of their needs. Justice requires that We consider them
carefully but weigh this in relation to the public interest. In doing so, We should always abide by Our understanding
of the concept of the rule of law and always appropriately take the longer view. All these We can do so elegantly in
this case with a plain, straightforward reading of what the law has always been providing since 1997.

WHEREFORE, I vote to:

1. DENY the Motion for Reconsideration of San Roque Power Corporation in G.R. No. 187485; and

2. GRANT the Motion for Reconsideration of the Commissioner of Internal Revenue in G.R. No. 196113.

Republic of the Philippines

SUPREME COURT
Manila
129
 THIRD DIVISION

G.R. No. 162802               October 9, 2013

EDS MANUFACTURING, INC., Petitioner, 

vs.
HEALTHCHECK INTERNATIONAL INC., Respondent.

DECISION

PERALTA, J.:

This is a Petition for Review on Certiorari under Rule 45 of the Rules of Court seeking the reversal of the
Decision1dated November 28, 2003 and Resolution 2 dated March 16, 2004 of the Court of Appeals (CA) in CA-G.R.
CV No. 69420.

The facts, as found by the CA, are as follows:

The plaintiff Healthcheck Inc. is a 1-lcalth Maintenance Organization HMO) that provides prepaid health and medical
insurance coverage to its clients. To under gird its program, it maintains a network of accredited hospitals and
medical clinics, one of which is the De La Salle University Medical Center located at Dasmariñas. Cavite. Being
within the access of this medical facility, the defendant Eds Manufacturing Inc. with about 5,000 employees at Imus,
Cavite saw fit in April 1998 to obtain insurance coverage from it. They entered into a one-year contract from May 1,
1998 to April 30, 1999 in which HCI was to provide the 4,191 employees of EMI and their 4,592 dependents as host
of medical services and benefits. Attached to the Agreement was a Service Program which listed the services that
HCI would provide and the responsibilities that EMI would undertake in order to avail of the services. Putting the
Agreement into effect, EMI paid the full premium for the coverage in the staggering amount of ₱8,826,307.50.

Only two months into the program, problems began to loom in the horizon. On July 17, HCI notified EMI that its
accreditation with DLSUMC was suspended and advised it to avail of the services of nearby accredited institutions.
A more detailed communication to subscribers came out days later informing them of the problems of the HMO
industry in the wake of the Asian regional financial crisis and proposing interim measures for the unexpired service
contracts. In a quickly convened meeting, EMI and HCI hammered out this handwritten 5-point agreement:

"1) Healthcheck to furnish EMI with list of procedural enhancements by 7/24 (FRI)-hospitals & professional
fees payment.

2) Healthcheck to reduce no. of accredited hospitals to improve monitoring of bills for payment & other
problems.

3) EMI to study the possibility of adding ‘LIABILITY CLAUSE’ to existing contract; to furnish HC copy for its
review.

4) No renewal of contract w/ HC should there be another suspension of services in any hospitals to be

chosen (w/ regard to item #2.) w/in the present contract period.

5) HC decision on APE provided by 7/24(FRI)."

Although HCI had yet to settle its accounts with it, DLSUMC resumed services on July 24. In another meeting with
EMI on August 3, HCI undertook to settle all its accounts with DLSUMC in order to maintain its accreditation.
Despite this commitment, HCI failed to preserve its credit standing with DLSUMC prompting the latter to suspend its
accreditation for a second time from August 15 to 20. A third suspension was still to follow on September 9 and
remained in force until the end of the contract period.

Until the difficulties between HCI and its client came to a head in September 1998, complaints from EMI employees
and workers were pouring in that their HMO cards were not being honored by the DLSUMC and other hospitals and
physicians. On September 3, EMI formally notified HCI that it was rescinding their April 1998 Agreement on account
of HCI’s serious and repeated breach of its undertaking including but not limited to the unjustified non-availability of
services. It demanded a return of premium for the unused period after September 3, giving a ballpark figure of ₱6
million.

What went in the way of the rescission of the contract, the fly in the ointment so to speak, was the failure of EMI to
collect all the HMO cards of the employees and surrender them to HCI as stipulated in the Agreement. HCI had to
tell EMI on October 12, 1998 that its employees were still utilizing the cards even beyond the pretermination date set
by EMI. It asked for the surrender of the cards so that it could process the pretermination of the contract and finalize

130
the reconciliation of accounts. Until we have received the IDs, HCI said, we will consider your account with us
ongoing and existing, thus subject for inclusion to present billing and payment.

Without responding to this reminder, EMI sent HCI two letters in January 1999 demanding for the payment of
₱5,884,205 as the 2/3 portion of the premium that remained unutilized after the Agreement was rescinded in the
previous September. The computation was made on the basis of these observations:

- that EMI paid premium of ₱8,826,307.50

- Healthcheck’s accreditation with DLSUMC was suspended on July 17, August 15 and Sept. 9, 1998 by
reason of Healthcheck’s unjustified failure to pay its benefits to the hospital.

- That Healthcheck’s accreditation with other hospitals and individual physicians was also suspended on
various dates for the same reason.

- That, in effect Healthcheck managed to comply with its obligation only for the first 4 months of the year-
long contract, or 1/3 thereof.

HCI pre-empted EMI’s threat of legal action by instituting the present case before the Regional Trial Court of Pasig.
The cause of action it presented was the unlawful pretermination of the contract and failure of EMI to submit to a
joint reconciliation of accounts and deliver such assets as properly belonged to HCI. EMI responded with an answer
alleging that HCI reneged on its duty to provide adequate medical coverage after EMI paid the premium in full.
Having rescinded the contract, it claimed that it was entitled to the unutilized portion of the premium, and that the
accounting required by HCI could not be undertaken until it submitted the monthly utilization reports mentioned in
the Agreement. EMI asked for the dismissal of the complaint and interposed a counterclaim for damages and
unutilized premium of ₱5,884,205.

In September 2000, after trial, the court ruled in favor of HCI. It found that EMI’s rescission of the Agreement on
September 3, 1998 was not done through court action or by a notarial act and was based on casual or slight
breaches of the contract. Moreover, despite the announced rescission, the employees of EMI continued to avail of
HCI’s services until March 1999. The services rendered by HCI from May 1998 to March 1999 purportedly came to
a total of ₱10,149,821.13. The court deducted from this figure the premium paid by EMI, leaving a net payable to
HCI of ₱1,323,513.63, in addition to moral damages and attorney’s fees. EMI’s counterclaims, on the other hand,
were dismissed for lack of merit.3

On appeal, the CA reversed the decision of the Regional Trial Court (RTC) of Pasig City and ruled that although
Healthcheck International, (HCI) substantially breached their agreement, it also appears that Eds Manufacturing,
Inc. (EMI) did not validly rescind the contract between them. Thus, the CA dismissed the complaint filed by HCI,
while at the same time dismissing the counterclaim filed by EMI.

Undeterred, EMI filed a Motion for Partial Reconsideration against said decision. However, the same was denied in
a Resolution dated March 16, 2004.

Hence, EMI filed the present petition raising the following issues for our resolution:

THE COURT OF APPEALS, WHILE CORRECTLY OVERTURNING THE RTC’S DECISION BY

DISMISSING THE COMPLAINT, COMMITTED A REVERSIBLE AND GROSS ERROR WHEN IT
LIKEWISE DISMISSED THE COUNTERCLAIM ON THE GROUND THAT PETITIONER EMI DID NOT
ACTUALLY RESCIND THE CONTRACT WHICH RULING BY THE APPELLATE COURT ALREADY WENT
BEYOND THE AGREED/SUBMITTED ISSUES FOR ADJUDICATION.

THE COURT OF APPEALS COMMITTED SERIOUS ERROR OF LAW IN ADMITTING THE UTILIZATION
REPORTS AS COMPETENT EVIDENCE OF THE PURPORTED NON-RESCISSION, WHEN SUCH
EVIDENCE IS DOUBLE HEARSAY INASMUCH AS THE PERSON WHO PREPARED THE SAME DID
NOT TESTIFY IN COURT AND HIS UNAVAILABILITY WAS UNEXPLAINED.

THE COURT OF APPEALS MADE A GRAVE ERROR WHEN IT DECLARED THAT PETITIONER, BY
SUPPOSEDLY ALLOWING THE UTILIZATIONS AFTER THE RESCISSION, NEGATED ITS CLAIMED
PRE-TERMINATION OF THE CONTRACT AND THEREFORE FORFEITED ITS ₱5.8M CLAIMS FOR
UNUTILIZED PREMIUMS.4
131
Simply, the issue is whether or not there was a valid rescission of the Agreement between the parties.

We rule in the negative.

First, Article 1191 of the Civil Code states:

The power to rescind obligations is implied in reciprocal ones, in case one of the obligors should not comply with
what is incumbent upon him.

The injured party may choose between the fulfillment and the rescission of the obligation, with the payment of
damages in either case. He may also seek rescission, even after he has chosen fulfillment, if the latter should
become impossible.

The court shall decree the rescission claimed, unless there be just cause authorizing the fixing of a period.

This is understood to be without prejudice to the rights of third persons who have acquired the thing, in accordance
with Articles 1385 and 1388 and the Mortgage Law. 5

The general rule is that rescission (more appropriately, resolution ) of a contract will not be permitted for a slight or
casual breach, but only for such substantial and fundamental violations as would defeat the very object of the
parties in making the agreement. 6

In his concurring opinion in Universal Food Corporation v. Court of Appeals, 7 Justice J.B.L. Reyes clarifies:

It is probable that the petitioner’s confusion arose from the defective technique of the new Code that terms both
instances as "rescission" without distinction between them; unlike the previous Spanish Code of 1889 that
differentiated between "resolution" for breach of stipulations from "rescission" by reason of lesion or damage. But
the terminological vagueness does not justify confusing one case with the other, considering the patent difference in
causes and results of either action.8

Reiterating the aforementioned pronouncement, this Court in Pryce Corporation v. Philippine Amusement Gaming
Corporation9 held that:

Relevantly, it has been pointed out that resolution was originally used in Article 1124 of the old Civil Code, and that
the term became the basis for rescission under Article 1191 (and conformably, also Article 1659). 10

Thus, the rescission referred to in Article 1191, more appropriately referred to as resolution, is on the breach of faith
by one of the parties which is violative of the reciprocity between them. 11

In the present case, it is apparent that HCI violated its contract with EMI to provide medical service to its employees
in a substantial way. As aptly found by the CA, the various reports made by the EMI employees from July to August
1998 are living testaments to the gross denial of services to them at a time when the delivery was crucial to their
health and lives.

However, although a ground exists to validly rescind the contract between the parties, it appears that EMI failed to
judicially rescind the same. In Iringan v. Court of Appeals, 12 this Court reiterated the rule that in the absence of a
stipulation, a party cannot unilaterally and extrajudicially rescind a contract. A judicial or notarial act is necessary
before a valid rescission (or resolution) can take place. Thus –

Clearly, a judicial or notarial act is necessary before a valid rescission can take place, whether or not automatic
rescission has been stipulated. It is to be noted that the law uses the phrase "even though" emphasizing that when
no stipulation is found on automatic rescission, the judicial or notarial requirement still applies.

xxxx

But in our view, even if Article 1191 were applicable, petitioner would still not be entitled to automatic rescission. In
Escueta v. Pando, we ruled that under Article 1124 (now Article 1191) of the Civil Code, the right to resolve
reciprocal obligations, is deemed implied in case one of the obligors shall fail to comply with what is incumbent upon
him. But that right must be invoked judicially. The same article also provides: "The Court shall decree the resolution
demanded, unless there should be grounds which justify the allowance of a term for the performance of the
obligation."

This requirement has been retained in the third paragraph of Article 1191, which states that "the court shall decree
the rescission claimed, unless there be just cause authorizing the fixing of a period."

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Consequently, even if the right to rescind is made available to the injured party, the obligation is not ipso facto
erased by the failure of the other party to comply with what is incumbent upon him.

The party entitled to rescind should apply to the court for a decree of rescission.  The right cannot be exercised
1âwphi1

solely on a party’s own judgment that the other committed a breach of the obligation. The operative act which
produces the resolution of the contract is the decree of the court and not the mere act of the vendor. Since a judicial
or notarial act is required by law for a valid rescission to take place, the letter written by respondent declaring his
intention to rescind did not operate to validly rescind the contract.13

What is more, it is evident that EMI had not rescinded the contract at all. As observed by the CA, despite EMI s
pronouncement, it failed to surrender the HMO cards of its employees although this was required by the Agreement,
and allowed them to continue using them beyond the date of the rescission. The in-patient and the out-patient
utilization reports submitted by 1 ICI shows entries as late as March 1999, signifying that EMI employees 1 were
availing of the services until the contract period were almost over. The continued use by them of their privileges
under the contract, with the apparent consent of EMI, belies any intention to cancel or rescind it, even as they felt
that they ought to have received more than what they got.

WHEREFORE premises considered, the Decision dated November 28, 2003 and Resolution dated March 16, 2004
of the Court of Appeals, in CA-G.R. CV No. 69420, arc hereby AFFIRMED SO ORDERED.

CONCURRING OPINION

LEONEN, J.:

I agree that Healthcheck International, Inc. s violation of its contract with Eels Manufacturing, Inc. is substantial. Its
violation is enough ground for Eels Manufacturing, Inc. to resolve (or rescind) the contract in accordance with Article
1191 of the Civil Code.

Our jurisprudence, however, is replete with rulings clarifying when the resolving party needs to obtain a judicial
decree of resolution.

Indeed, We have held that the right to resolve under Article 1191 or the Civil Code must be invoked judicially. 1 Even
if there is a stipulation in the contract that makes available to the parties the right to resolve, the resolving party must
still apply to the court for a judicial decree of resolution. 2 The court decree is the operative act that produces the 1
resolution, not the unilateral act of the resolving party. 3 It cannot be, exercised solely on a party s own judgment that
the other has committed a breach of the obligation."4

However, We have also held that failure to judicially resolve the contract docs not invalidate the resolution and that
the right to resolve need not be invoked judicially. This is based on Article 1191 which makes the power to resolve
an implication of reciprocal obligations. This means that the power emanates from the quality of the obligation - not
from a stipulation or judicial decree.

Thus interpreted, a party’s failure to comply with what is incumbent upon him or her triggers the other party’s right to
consider the contract resolved even without instituting court action. If the party who failed to comply does not contest
the resolution, then the contract is deemed resolved; the resolution produces legal effects. 5

The courts step into the picture only when the party who allegedly violated the contract disputes the other party’s
unilateral resolution.6 In that case, the court determines whether there is indeed substantial breach of the contract to
justify the party’s unilateral resolution of the contract.

We held in University of the Philippines v. De Los Angeles: 7

In other words, the party who deems the contract violated may consider it resolved or rescinded, and act
accordingly, without previous court action, but it proceeds at its own risk. For it is only the final judgment of the
corresponding court that will conclusively and finally settle whether the action taken was or was not correct in law.
But the law definitely does not require that the contracting party who believes itself injured must first file suit and wait
for a judgment before taking extrajudicial steps to protect its interest. Otherwise, the party injured by the other’s
breach will have to passively sit and watch its damages accumulate during the pendency of the suit until the final
judgment of rescission is rendered when the law itself requires that he should exercise due diligence to minimize its
own damages (Civil Code, Article 2203).

We see no conflict between this ruling and the previous jurisprudence of this Court invoked by respondent declaring
that judicial action is necessary for the resolution of a reciprocal obligation, since in every case where the
extrajudicial resolution is contested only the final award of the court of competent jurisdiction can conclusively settle
whether the resolution was proper or not. It is in this sense that judicial action will be necessary, as without it, the

133
extrajudicial resolution will remain contestable and subject to judicial invalidation, unless attack thereon should
become barred by acquiescence, estoppel or prescription. 8

There is, therefore, support in saying that a judicial decree is not necessary to constitute a valid resolution.  It is only
1âwphi1

necessary when the ground for the resolution is in dispute. A judgment on the validity of the resolution settles
whether the unilateral resolution is proper.

In other words, while resolution may be valid even without a judicia( decree, the other party may question in court
the act of resolution in case of abuse by the resolving party. The party who unilaterally resolves a contract runs the
risk of having his or her action corrected by the court by declaring it as invalid if he or she abuses or erroneously
uses his or her power to resolve.

The application of power to resolve without judicial action is not limited to contracts that contain a stipulation to that
effect. We have clarified that x x x even without express provision conferring the power of cancellation upon one
contracting party, the Supreme Court of Spain, in construing the effect of Article 1124 of the Spanish Civil Code (of
which Article 1191 of our own Civil Code is practically a reproduction), has repeatedly held that a resolution of
reciprocal or synallagmatic contracts may be made extrajudicially unless successfully impugned in court.'' 9 "x x x
Absent any provision providing for a right to rescind, the parties may nevertheless rescind the contract should the
other obligor fail to comply its obligations."10

The invalidity of Eels Manufacturing Inc.'s resolution of its contract with Healthcheck International, Inc. based on its
failure to institute a judicial action for resolution 1s, therefore, disputable. Nevertheless, Eels Manufacturing Inc.'s
resolution is invalid because of its employees' continued use or Healthcheck International, Inc.'s services even after
the contract period. This contradicts the alleged intention to resolve the contract.

WHEREFORE, I vote to AFFIRM the Court of Appeals Decision dated November 28, 2003 and Resolution dated
March 16, 2004.

134
 Republic of the Philippines
SUPREME COURT
Manila

EN BANC

G.R. No. 206952               October 22, 2013

ABANG LINGKOD PARTY-LIST ABANG LINGKOD, Petitioner, 

vs.
COMMISSION ON ELECTIONS, Respondent.

DECISION

REYES, J.:

This is a petition for certiorari under Rule 64 in relation to Rule 65 of the Rules of Court filed by (Abang Lingkod
Party-List ABANG LINGKOD) assailing the Resolution 1 dated May 10, 2013 issued by the Commission on Elections
COMELEC) En Bane in SPP No. 12-238 PLM}, which, alia, affirmed the cancellation of ABANG LINGKOD's
registration as a party-list group.

The Facts

ABANG LINGKOD is a sectoral organization that represents the interests of peasant fanners and fisherfolks, and
was registered under the party-list system on December 22, 2009. It participated in the May 2010 elections, but
failed to obtain the number of votes needed for a seat in the House of Representatives.

On May 31, 2012, ABANG LINGKOD manifested before the COMELEC its intent to participate in the May 2013
elections. On August 2, 2012, the COMELEC issued Resolution No. 9513, 2 which, inter alia required previously
registered party-list groups that have filed their respective Manifestations of Intent to undergo summary evidentiary
hearing for purposes of determining their continuing compliance with the requirements under Republic Act (R.A.)
No. 79413 and the guidelines set forth in Ang Bagong Bayani-OFW Labor Party v. COMELEC. 4

Accordingly, on August 9 2012, the COMELEC issued a Resolution, which set the summary evidentiary hearing of
previously registered party-list groups. The COMELEC scheduled three (3) dates -August 17, 31 and September 3,
2012 -for the summary hearing of ABANG LINGKOD's Manifestation of Intent to enable it to show proof of its
continuing qualification under the party-list system.

On August 16, 2012, ABANG LINGKOD, in compliance with the COMELEC's August 9, 2012 Resolution, filed with
the COMELEC pertinent documents to prove its continuing compliance with the requirements under R.A. No. 7941.

After due proceedings, the COMELEC En Bane in a Resolution dated November 7 2012, cancelled ABANG
LINGKOD's registration as a partylist group. The COMELEC En Bane pointed out that ABANG LINGKOD failed to
establish its track record in uplifting the cause of the marginalized and underrepresented; that it merely offered
photographs of some alleged activities it conducted after the May 2010 elections. The COMELEC En Bane further
opined that ABANG LINGKOD failed to show that its nominees are themselves marginalized and underrepresented
or that they have been involved in activities aimed at improving the plight of the marginalized and underrepresented
sectors it claims to represent.

ABANG LINGKOD then filed with this Court a petition 5 for certiorari alleging that the COMELEC gravely abused its
discretion in cancelling its registration under the party-list system. The said petition was consolidated with the
separate petitions filed by fifty-one (51) other party-list groups whose registration were cancelled or who were
denied registration under the party-list system. The said party-list groups, including ABANG LINGKOD, were able to
obtain status quo ante orders from this Court.

On April 2, 2013, the Court, in Atong Paglaum Inc. v. Commission on Elections, 6 laid down new parameters to be
observed by the COMELEC in screening parties, organizations or associations seeking registration and/or
accreditation under the party-list system, viz:

1. Three different groups may participate in the party-list system: (1) national parties or organizations, (2)
regional parties or organizations, and (3) sectoral parties or organizations.

2. National parties or organizations and regional parties or organizations do not need to organize along
sectoral lines and do not need to represent any marginalized and underrepresented sector. 3. Political
parties can participate in party-list elections provided they register under the party-list system and do not
field candidates in legislative district elections. A political party, whether major or not, that fields candidates
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 in legislative district elections can participate in party-list elections only through its sectoral wing that can
separately register under the party-list system. The sectoral wing is by itself an independent sectoral party,
and is linked to a political party through a coalition.

4. Sectoral parties or organizations may either be "marginalized and underrepresented or lacking in "well-
defined political constituencies." It is enough that their principal advocacy pertains to the special interests
and concerns of their sector. The sectors that are marginalized and underrepresented include labor,
peasant, fisherfolk, urban poor, indigenous cultural communities, handicapped, veterans, and overseas
workers. The sectors that lack "well-defined political constituencies" include professionals, the elderly,
women, and the youth.

5. A majority of the members of the sectoral parties or organizations that represent the ''marginalized and
underrepresented must belong to the marginalized and underrepresented sector they represent. Similarly, a
majority of the members of sectoral parties or organizations that lack "well-defined political constituencies"
must belong to the sector they represent. The nominees of sectoral parties or organizations that represent
the "marginalized and underrepresented" or that represent those who lack "well-defined political
constituencies," either must belong to their respective sectors, or must have a track record or advocacy for
their respective sectors. The nominees of national and regional parties or organizations must be bona-fide
members of such parties or organizations.

6. National, regional, and sectoral parties or organizations shall not be disqualified if some of their nominees
are disqualified, provided that they have at least one nominee who remains qualified.

Thus, the Court remanded to the COMELEC the cases of previously registered party-list groups, including that of
ABANG LINGKOD, to determine whether they are qualified under the party-list system pursuant to the new
parameters laid down by the Court and, in the affirmative, be allowed to participate in the May 2013 party-list
elections.

On May 10, 2013, the COMELEC issued the herein assailed Resolution, 7 which, inter alia affirmed the cancellation
of ABANG LINGKOD's registration under the party-list system. The COMELEC issued the Resolution dated May 10,
2013 sans any summary evidentiary hearing, citing the proximity of the May 13 2013 elections as the reason
therefor.

In maintaining the cancellation of ABANG LINGKOD's registration, the COMELEC held that:

The Commission maintains its position in the previous en bane ruling cancelling the registration of ABANG
LINGKOD. To reiterate, it is not enough that the party-list organization claim representation of the marginalized and
underrepresented because representation is easy to claim and to feign. It is but reasonable to require from groups
and organizations consistent participation and advocacy in the sector it seeks to represent, and not just seasonal
and sporadic programs which are unrelated to its sector.

ABANG LINGKOD submitted pictures showing a seminar held on 10 July 2010, Medical Mission on 11 November
2010, Disaster Management Training on 21 October 2011, Book-giving on 28 June 2011, and Medical Mission on 1
December 2011.

And as if to insult the Commission, the photographs submitted appear to have been edited to show in the banners
that ABANG LINGKOD participated in the activities. ABANG LINGKOD's name and logo was superimposed on
some banners to feign participation in the activities (Joint Medical Mission, Book-giving).

Under the party-list System Act, a group s registration may be cancelled for declaring unlawful statements in its
petition. Photoshopping images to establish a fact that did not occur is tantamount to declaring unlawful statements.
It is on this ground that the Commission cancels ABANG LINGKOD s registration. 8

On May 12, 2013, ABANG LINGKOD sought a reconsideration of the COMELEC s Resolution dated May 10, 2013.
However, on May 15, 2013, ABANG LINGKOD withdrew the motion for reconsideration it filed with the COMELEC
and, instead, instituted the instant petition 9 with this Court, alleging that there may not be enough time for the
COMELEC to pass upon the merits of its motion for reconsideration considering that the election returns were
already being canvassed and consolidated by the COMELEC.

In support of the instant petition, ABANG LINGKOD claims that the COMELEC gravely abused its discretion when it
affirmed the cancellation of its registration sans a summary evidentiary hearing for that purpose, asserting that the
COMELEC should have allowed it to present evidence to prove its qualification as a party-list group pursuant to
Atong Paglaum. It claims that there was no valid justification for the COMELEC to cancel its registration considering
that it complied with the six-point parameters m screening party-list groups laid down in Atong Paglaum.

136
On the other hand, the COMELEC avers that the instant petition should be dismissed for utter lack of merit. It
asserts that ABANG LINGKOD was not denied due process when the COMELEC affirmed the cancellation of its
registration since it was given every reasonable opportunity to be heard. The COMELEC further claims that it did not
abuse its discretion when it cancelled ABANG LINGKOD’s registration on the ground that it failed to establish a
track record in representing the marginalized and underrepresented. Further, the COMELEC alleges that its finding
of facts may not be passed upon by this Court as the same is supported by substantial evidence.

The Issues

In sum, the issues presented for the Court s resolution are the following: first whether ABANG LINGKOD was
denied due process when the COMELEC affirmed the cancellation of its registration under the patiy-list system sans
any summary evidentiary hearing; and second whether the COMELEC gravely abused its discretion in cancelling
ABANG LINGKOD’s registration under the party-list system.

The Court's Ruling

The petition is meritorious.

First Issue: Due Process

The essence of due process is simply an opportunity to be heard or as applied to administrative or quasi-judicial
proceedings, an opportunity to explain one s side or an opportunity to seek reconsideration of the action or ruling
complained of. A formal or trial type hearing is not at all times and in all instances essential. The requirements are
satisfied when the parties are afforded fair and reasonable opportunity to explain their side of the controversy at
hand. What is frowned upon is the absolute lack of notice or hearing. 10

In the instant case, while the petitioner laments that it was denied due process, the Court finds that the COMELEC
had afforded ABANG LINGKOD sufficient opportunity to present evidence establishing its qualification as a party-list
group. It was notified through Resolution No. 9513 that its registration was to be reviewed by the COMELEC. That
ABANG LINGKOD was able to file its Manifestation of Intent and other pertinent documents to prove its continuing
compliance with the requirements under R.A. No. 7941, which the COMELEC set for summary hearing on three
separate dates, belies its claim that it was denied due process.

There was no necessity for the COMELEC to conduct further summary evidentiary hearing to assess the
qualification of ABANG LINGKOD pursuant to Atong Paglaum. ABANG LINGKOD’s Manifestation of Intent and all
the evidence adduced by it to establish its qualification as a party-list group are already in the possession of the
COMELEC. Thus, conducting further summary evidentiary hearing for the sole purpose of determining ABANG
LINGKOD s qualification under the party-list system pursuant to Atong Paglaum would just be a superfluity.

Contrary to ABANG LINGKOD’s claim, the Court, in Atong Paglaum, did not categorically require the COMELEC to
conduct a summary evidentiary hearing for the purpose of determining the qualifications of the petitioners therein
pursuant to the new parameters for screening party-list groups. The dispositive portion of Atong Paglaum reads:

WHEREFORE, all the present 54 petitions are GRANTED. The 13 petitions, which have been granted Status Quo
Ante Orders but without mandatory injunction to include the names of the petitioners in the printing of ballots, are
remanded to the Commission on Elections only for determination whether petitioners are qualified to register under
the party-list system under the parameters prescribed in this Decision but they shall not participate in the 13 May
2013 party-list elections. The 41 petitions, which have been granted mandatory injunctions to include the names of
petitioners in the printing of ballots, are remanded to the Commission on Elections for determination whether
petitioners are qualified to register under the party-list system and to participate in the 13 May 2013 party-list
elections under the parameters prescribed in this Decision. The Commission on Elections may conduct summary
evidentiary hearings for this purpose. This Decision is immediately executory.

SO ORDERED.11 (Emphasis ours)

Thus, the cases of previously registered party-list groups, including ABANG LINGKOD, were remanded to the
COMELEC so that it may reassess, based on the evidence already submitted by the former, whether they are
qualified to participate in the party-list system pursuant to the new parameters laid down in Atong Paglaum. The
Court did not require the COMELEC to conduct a hearing de novo in reassessing the qualifications of said party-list
groups. Nevertheless, the Court gave the COMELEC the option to conduct further summary evidentiary hearing
should it deem appropriate to do so.

The records also disclose that ABANG LINGKOD was able to file with the COMELEC a motion for reconsideration
of the Resolution dated May 10, 2013, negating its claim that it was denied due process. As it has been held,
deprivation of due process cannot be successfully invoked where a party was given a chance to be heard on his
motion for reconsideration.12

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Second Issue: Cancellation of

ABANG LINGKOD’s Registration

However, after a careful perusal of the factual antecedents of this case, pinned against the new parameters in
screening party-list groups laid down in Atong Paglaum the Court finds that the COMELEC gravely abused its
discretion in cancelling the registration of ABANG LINGKOD under the party-list system.

The COMELEC affirmed the cancellation of ABANG LINGKOD's registration on the ground that it declared untruthful
statement in its bid for accreditation as a party-list group in the May 2013 elections, pointing out that it deliberately
submitted digitally altered photographs of activities to make it appear that it had a track record in representing the
marginalized and underrepresented. Essentially, ABANG LINGKOD's registration was cancelled on the ground that
it failed to adduce evidence showing its track record in representing the marginalized and underrepresented.

The flaw in the COMELEC's disposition lies in the fact that it insists on requiring party-list groups to present
evidence showing that they have a track record in representing the marginalized and underrepresented.

Track record is a record of past performance often taken as an indicator of likely future performance. 13 As a
requirement imposed by Ang Bagong Bayani for groups intending to participate in the party-list elections, track
record pertains to the actual activities undertaken by groups to uplift the cause of the sector/s, which they represent.

Section 5 of R.A. No. 7941 however provides:

Sec. 5 Registration. Any organized group of persons may register as a party, organization or coalition for purposes
of the party-list system by filing with the COMELEC not later than ninety (90) days before the election a petition
verified by its president or secretary stating its desire to participate in the party-list system as a national, regional or
sectoral party or organization or a coalition of such parties or organizations, attaching thereto its constitution, by-
laws, platform or program of government list of officers, coalition agreement and other relevant information as the
COMELEC may require: Provided, That the sectors shall include labor, peasant, fisherfolk, urban poor, indigenous
cultural communities, elderly, handicapped, women, youth, veterans, overseas workers, and professionals.
(Emphasis ours)

R.A. No. 7941 did not require groups intending to register under the party-list system to submit proof of their track
record as a group. The track record requirement was only imposed in Ang Bagong Bayani where the Court held that
national, regional, and sectoral parties or organizations seeking registration under the party-list system must prove
through their, inter alia track record that they truly represent the marginalized and underrepresented, thus:

xxx

In this light, the Court finds it appropriate to lay down the following guidelines, culled from the law and the
Constitution, to assist the Comelec in its work.

First, the political pat1y, sector, organization or coalition must represent the marginalized and underrepresented
groups identified in Secdon 5 of RA 7941. In other words, it must show -- through its constitution, articles of
incorporation, bylaws, history, platform of government and track record -- that it represents and seeks to uplift
marginalized and underrepresented sectors. Verily, majority of its membership should belong to the marginalized
and underrepresented. And it must demonstrate that in a conflict of interests, it has chosen or is likely to choose the
interest of such sectors. (Emphasis ours)

Track record is not the same as the submission or presentation of "constitution, by-laws, platform of government, list
of officers, coalition agreement, and other relevant information as may be required by the COMELEC," which are but
mere pieces of documentary evidence intended to establish that the group exists and is a going concern. The said
documentary evidence presents an abstract of the ideals that national, regional, and sectoral parties or
organizations seek to achieve.

This is not merely a matter of semantics; the delineation of what constitutes a track record has certain
consequences in a group's bid for registration under the party-list system. Under Section 5 of R.A. No. 7941, groups
intending to register under the party-list system are not required to submit evidence of their track record; they are
merely required to attach to their verified petitions their "constitution, by-laws, platform of government, list of officers,
coalition agreement, and other relevant information as may be required by the COMELEC."

In Atong Paglaum the Court has modified to a great extent the jurisprudential doctrines on who may register under
the party-list system and the representation of the marginalized and underrepresented. For purposes of registration
under the party-list system, national or regional parties or organizations need not represent any marginalized and
underrepresented sector; that representation of the marginalized and underrepresented is only required of sectoral

138
organizations that represent the sectors stated under Section 5 of R.A. No. 7941 that are, by their nature,
economically marginalized and underrepresented.

There was no mention that sectoral organizations intending to participate in the party-list elections are still required
to present a track record, viz:

x x x In determining who may participate in the coming 13 May 2013 and subsequent party-list elections, the
COMELEC shall adhere to the following parameters:

xxxx

4. Sectoral parties or organizations may either be marginalized and underrepresented or lacking in well-defined
political constituencies. It is enough that their principal advocacy pertains to the special interests and concerns of
their sector. The sectors that are marginalized and underrepresented include labor, peasant, fisherfolk, urban poor,
indigenous cultural communities, handicapped, veterans, and overseas workers. The sectors that lack well-defined
political constituencies'' include professionals, the elderly, women, and the youth. (Emphasis ours)

Contrary to the COMELEC's claim, sectoral parties or organizations, such as ABANG LINGKOD, are no longer
required to adduce evidence showing their track record, i.e. proof of activities that they have undertaken to further
the cause of the sector they represent. Indeed, it is enough that their principal advocacy pertains to the special
interest and concerns of their sector. Otherwise stated, it is sufficient that the ideals represented by the sectoral
organizations are geared towards the cause of the sector/s, which they represent.

If at all, evidence showing a track record in representing the marginalized and underrepresented sectors is only
required from nominees of sectoral parties or organizations that represent the marginalized and underrepresented
who do not factually belong to the sector represented by their party or organization.

Dissenting, my esteemed colleague, Mr. Justice Leonen, however, maintains that parties or organizations intending
to register under the party-list system are still required to present a track record notwithstanding the Court's
pronouncement in Atong Paglaum that the track record that would have to be presented would only differ as to the
nature of their group/organization. He opines that sectoral organizations must prove their links with the marginalized
and underrepresented while national or regional parties or organizations must show that they have been existing as
a bona fide organization.

To submit to the dissent's insistence on varying track records, which are required of those intending to register
under the party-list system, depending on the nature of their group, would result into an absurd and unjust situation.
Under the varying track record requirement, sectoral organizations must present evidence showing their track record
in representing the marginalized and underrepresented, i.e. actual activities conducted by them to further uplift the
cause of the sector/s they represent. On the other hand, national and regional parties or organizations need only
prove that they exist as bona fide organizations which, as the dissent suggests, may be done through the
submission of their constitution, by-laws, platform of government, list of officers, coalition agreement, and other
relevant information required by the COMELEC.

However, submission of a group's constitution, by-laws, platform of government, list of officers, coalition agreement,
and other relevant information required by the COMELEC, as explained earlier, is not synonymous with the track
record requirement. In such case, only sectoral organizations would be required to present a track record (actual
activities conducted by them to further the cause of the marginalized and underrepresented); while national and
regional organizations need not present their track record as they are only required to submit documentary evidence
showing that they are bona fide organizations.

There is no logic in treating sectoral organizations differently from national and regional parties or organizations as
regards their bid for registration under the party-list system. The varying track record requirement suggested by the
dissent would unnecessarily put a premium on groups intending to register as national and regional parties or
organizations as against those intending to register as sectoral organizations The imposition of an additional burden
on sectoral organizations, i.e. submission of their track record, would be plainly unjust as it effectively deters the
marginalized and underrepresented sectors from organizing themselves under the party-list system.

Likewise, that there was no explicit reversal of the guidelines in ng Bagong Bayani in tong Paglaum does not mean
that groups intending to register under the party-list system are still required to submit a track record. The track
record of groups intending to register under the party-list system was required under the first guideline of Ang
Bagong Bayani for a very specific purpose to show that the national, regional, and sectoral parties or organizations
that would be allowed to participate in the party-list elections are truly representative of the marginalized and
underrepresented sectors It was necessary-then to require groups seeking registration under the party-list system
since representation of the marginalized and underrepresented, as understood in the context of Ang Bagong Bayani
is easy to claim and feign.

139
There exists no reason to further require groups seeking registration under the party-list system to submit evidence
showing their track record. Pursuant to Atong Paglaum not all groups are required to represent the marginalized and
underrepresented sectors and, accordingly, there is no longer any incentive in merely feigning representation of the
marginalized and underrepresented sectors.

In the case of sectoral organizations, although they are still required to represent the marginalized and
underrepresented, they are likewise not required to show a track record since there would be no reason for them to
feign representation of the marginalized and underrepresented as they can just register as a national or regional
party or organization. Thus, the Court, in Atong Paglaum stated that, for purposes of registration under the party-list
system, it is enough that the principal advocacy of sectoral organizations pertains to the sector/s they represent.

There is thus no basis in law and established jurisprudence to insist that groups seeking registration under the
party-list system still comply with the track record requirement. Indeed, nowhere in R.A. No. 7941 is it mandated that
groups seeking registration thereunder must submit evidence to show their track record as a group.

The dissent likewise suggests that the deceit committed by ABANG LINGKOD goes into its qualification as a party-
list group since it seriously puts in question the existence of ABANG LINGKOD as a group per se and the
genuineness of its representation of the farmers and fisherfolk.

It must be stressed that the COMELEC cancelled ABANG LINGKOD s registration solely on the ground of the lack
of its track record -that it falsely represented, by submitting digitally altered photographs of its supposed activities,
that it had a track record in representing the marginalized and underrepresented. The existence of ABANG
LINGKOD as a party-list group per se and the genuineness of its representation of the farmers and fisherfolks were
never raised in the proceedings before the COMELEC. It would thus be the height of injustice in the Court, in this
certiorari action, would scrutinize the legitimacy of ABANG LINGKOD as a party-list group and the genuineness of
its representation of the farmers and fisherfolk, and affirm the cancellation of its registration, when the issue is
limited only to the track record of ABANG LINGKOD.

Moreover, ABANG LINGKOD had been previously registered as a party-list group, as in fact it participated in the
May 2010 party-list elections, and it was able to obtain a sufficient number of votes in the May 2013 party-list
elections to obtain a seat in the House of Representatives. These are circumstances, which clearly indicate that
ABANG LINGKOD is indeed a legitimate party-list group.

ABANG LINGKOD, notwithstanding the cancellation of its registration three days prior to the May 13, 2013
elections, was able to obtain a total of 260 215 votes out of the 26 722 131 votes that were cast for the party-
list,14thus entitling it to a seat in the House of Representatives. This is indicative of the fact that a considerable
portion of the electorate considers ABANG LINGKOD as truly representative of peasant farmers and fisherfolk.

Anent the photographs submitted by ABANG LINGKOD, these only show book-giving and medical missions, which
are activities it conducted. Suffice it to state, however, that said activities do not specifically or directly pertain to the
interest or advocacy espoused by ABANG LINGKOD. As such, the misrepresentation committed by ABANG
LINGKOD with regard to said activities would not necessarily militate against its representation of the farmers and
fisherfolk.

Lest it be misunderstood, the Court does not condone the deceit perpetrated by ABANG LINGKOD in connection
with its bid for continued registration under the party-list system. That ABANG LINGKOD, to establish its track
record, submitted photographs that were edited to make it appear that it conducted activities aimed at ameliorating
the plight of the sectors it represents is a factual finding by the COMELEC, which the Court, considering that it is
supported by substantial evidence, will not disturb. The Court does not tolerate ABANG LINGKOD s resort to
chicanery and its shabby treatment of the requirements for registration under the party-list system.

Nevertheless, considering that track record is no longer a requirement, a group’s misrepresentation as to its track
record cannot be used as a ground to deny or cancel its registration -it is no longer material to its qualification under
the party-list system. In this case, ABANG LINGKOD s submission of digitally altered photographs cannot be
considered material to its qualification as a party-list group. Section 6 of R.A. No. 7941, in part, reads:

Sec. 6 Refusal and/or Cancellation o Registration The COMELEC may, motu propio or upon verified complaint of
any interested party, refuse or cancel, after due notice and hearing, the registration of any national, regional or
sectoral party, organization or coalition on any of the following grounds:

xxxx

(6) It declares untruthful statements in its petition;

Declaration of an untruthful statement in a petition for registration, or in any other document pertinent to the
registration and/or accreditation under the party-list system, as a ground for the refusal or cancellation of registration

140
under Section 6(6) of R.A. No. 7941, is akin to material misrepresentation in the certificate of candidacy filed by an
individual candidate under Section 78 of the Omnibus Election Code. Both provisions disallow prospective
candidates from participating in an election for declaring false statements in their eligibility requirements. Section 78
of the Omnibus Election Code reads:

Sec. 78. A verified petition seeking to deny due course to or cancel a certificate of candidacy may be filed by any
person exclusively on the ground that any material misrepresentation contained therein as required under Section
74 hereof is false. The petition may be filed at any time not later than twenty-five days from the time of the filing of
the certificate of candidacy and shall be decided, after due notice and hearing, not later than fifteen days before the
election.

Elucidating on what constitutes material misrepresentation in a certificate of candidacy under Section 78 of the
Omnibus Election Code, the Court, in Lluz v. Commission on Elections, 15 explained that:

From these two cases several conclusions follow. First a misrepresentation in a certificate of candidacy is material
when it refers to a qualification for elective office and affects the candidate s eligibility. x x x Third a
misrepresentation of a non-material fact, or a non-material misrepresentation, is not a ground to deny due course to
or cancel a certificate of candidacy under Section 78. In other words, for a candidate s certificate of candidacy to be
denied due course or canceled by the COMELEC, the fact misrepresented must pertain to a qualification for the
office sought by the candidate. 16 (Emphasis ours)

In Velasco v. Commission on Elections,17 the Court further clarified that a false representation under Section 78 of
the Omnibus Election Code, in order to be a ground to deny due course or cancel a certificate of candidacy, must
consist of a deliberate attempt to mislead, misinform, or hide a fact which would otherwise render a candidate
ineligible. Thus:

The false representation that [Sections 74 and 78 of the Omnibus Election Code] mention must necessarily pertain
to a material fact, not to a mere innocuous mistake. This is emphasized by the consequences of any material falsity:
a candidate who falsifies a material fact cannot run; if he runs and is elected, cannot serve; in both cases, he or she
can be prosecuted for violation of the election laws. Obviously, these facts are those that refer to a candidate s
qualification for elective office, such as his or her citizenship and residence. The candidate's status as a registered
voter similarly falls under this classification as it is a requirement that, by law (the Local Government Code), must be
reflected in the COC. The reason for this is obvious: the candidate, if he or she wins, will work for and represent the
local government under which he is running.

Separately from the requirement of materiality, a false representation under Section 78 must consist of a deliberate
attempt to mislead, misinform, or hide a fact which would otherwise render a candidate ineligible." In other words, it
must be made with the intention to deceive the electorate as to the would-be candidate's qualifications for public
office.18 (Citation omitted and emphasis ours)

Similarly, a declaration of an untruthful statement in a petition for registration under Section 6(6) of R.A. No. 7941, in
order to be a ground for the refusal and/or cancellation of registration under the party-list system, must pertain to the
qualification of the party, organization or coalition under the party-list system. In order to justify the cancellation or
refusal of registration of a group, there must be a deliberate attempt to mislead, misinform, or hide a fact, which
would otherwise render the group disqualified from participating in the party-list elections.

The digitally altered photographs of activities submitted by ABANG LINGKOD to prove its continuing qualification
under R.A. No. 7941 only pertain to its track record, which, as already discussed, is no longer a requirement under
the new parameters laid down in Atong Paglaum Simply put, they do not affect the qualification of ABANG
LINGKOD as a party-list group and, hence, could not be used as a ground to cancel its registration under the party-
list system. Further, the Court notes that the COMELEC, in its Resolution dated November 7 2012, asserted that
ABANG LINGKOD failed to adduce evidence that would show the track record of its five nominees, composed of a
non-government organization worker, an employee and three farmers, in uplifting the cause of the sector that the
group represents.  The COMELEC opined that the failure of ABANG LINGKOD to present a track record of its
1âwphi1

nominees justified the cancellation of its registration as a party-list group.

The Court does not agree. Assuming arguendo that the nominees of ABANG LINGKOD, as opined by the
COMELEC, indeed do not have track records showing their participation in activities aimed at improving the
conditions of the sector that the group represents, the same would not affect the registration of ABANG LINGKOD
as a party-list group.

To stress, in Atong Paglaum the Court pointed out that [t]he nominees of sectoral parties or organizations that
represent the 'marginalized and underrepresented,' or that represent those who lack 'well-defined political
constituencies,' either must belong to their respective sectors or must have a track record o advocacy for their
respective sectors. Stated otherwise, the nominee of a party-list groups may either be: first one who actually
belongs to the sector which the party-list group represents, in which case the track record requirement does not
apply; or second one who does not actually belong to the sector which the party-list group represents but has a
141
track record showing the nominee's active participation in activities aimed at uplifting the cause of the sector which
the group represents."

In the case under consideration, three of the five nominees of ABANG LINGKOD are farmers and, thus, are not
required to present a track record showing their active participation in activities aimed to promote the sector which
ABANG LINGKOD represents, i.e. peasant farmers and fisherfolk. That two of ABANG LINGKOD's nominees do not
actually belong to the sector it represents is immaterial and would not result in the cancellation of ABANG
LINGKOD's registration as a party-list group. This is clear from the sixth parameter laid down by the Court in tong
Paglaum which states that "national, regional and sectoral organizations shall not be disqualified if some of their
nominees are disqualified, provided that they have at least one nominee who remains qualified." At the very least,
ABANG LINGKOD has three (3) qualified nominees, being farmers by occupation.

Indeed, the disqualification of one or some of the nominees of a party-list group should not automatically result in
the disqualification of the group.  Otherwise it would accord the nominees the same significance, which the law
1avvphi1

holds for the party-list groups; it is still the fact that the party-list group satisfied the qualifications of the law that is
material to consider. The disqualification of the nominees must simply be regarded as failure to qualify for an office
or position. It should not, in any way, blemish the qualifications of the party-list group itself with defect. The party-list
group must be treated as separate and distinct from its nominees such that qualifications of the latter must not be
considered part and parcel of the qualifications of the former.

In sum, that ABANG LINGKOD's registration must be cancelled due to its misrepresentation is a conclusion derived
from a simplistic reading of the provisions of R.A. No. 7941 and the import of the Court's disposition in tong
Paglaum. Not every misrepresentation committed by national, regional, and sectoral groups or organizations would
merit the denial or cancellation of their registration under the party-list system. The misrepresentation must relate to
their qualification as a party-list group. In this regard, the COMELEC gravely abused its discretion when it insisted
on requiring ABANG LINGKOD to prove its track record notwithstanding that a group s track record is no longer
required pursuant to the Court s pronouncement in Atong Paglaum

Likewise, upholding the cancellation of ABANG LINGKOD s registration, notwithstanding that it was able to obtain
sufficient number of votes for a legislative seat, would serve no purpose other than to subvert the will of the
electorate who voted to give ABANG LINGKOD the privilege to represent them in the House of Representatives.

WHEREFORE in light of the foregoing disquisitions, the instant petition is hereby GRANTED. The Resolution dated
May 10, 2013 issued by the Commission on Elections in SPP Case No. 12-238 (PLM), insofar as it affirmed the
cancellation of ABANG LINGKOD s registration and disallowed it to participate in the May 13, 2013 elections is
REVERSED and SET ASIDE.

The Commission on Elections is hereby ORDERED to PROCLAIM ABANG LINGKOD as one of the winning party-
list groups during the May 13, 2013 elections with the number of seats it may be entitled to based on the total
number of votes it garnered during the said elections.

SO ORDERED.

DISSENTING OPINION

LEONEN, J.:

I dissent. This Petition should be denied.

The Commission on Elections did not gravely abuse its discretion so as to give due course to this Petition.
Reversing the Commission on Elections in this case makes us party to the mockery of the electoral process done by
the petitioner.

Atong Paglaum v Commission on Elections 1 did not remove the legal requirement that party-list groups must have
proof of their existence and genuineness as provided by law. t did not remove the Commission on Elections
discretion to determine whether the party-list group that intends to be sectoral – as opposed to national or regional –
is genuine, has bona fi e existence, and truly represents its sector.

The petitioner submitted clearly falsified evidence to support its Manifestation before the Commission on Elections.
This is a statutory ground for the cancellation of a party-list group s registration with the Commission on Elections.
Allowing a party-list organization that willfully presents false credentials betrays the public trust, and We should not
be party to its countenance. The Procedural Antecedents

In this Petition for Certiorari,2 Abang Lingkod Party List (ABANG LINGKOD) challenged the May 10, 2013 Resolution
issued by the Commission on Elections En Bane in SPP No. 12-238 (PLM). Resolution affirmed the cancellation of
the party-list’s registration with the Commission on Elections.

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Petitioner ABANG LINGKOD filed its Petition for Registration and Accreditation as a sectoral party on December 19,
2000.3 The Commission on Elections granted the Petition on December 22, 2009. 4 The petitioner participated in the
2010 party-list elections but failed to obtain the required 2% of the votes cast, and it was not able to get a seat in the
House of Representatives.5

On May 31, 2012, ABANG LINGKOD filed its Manifestation of Intent to Participate in the Party-list System of
Representation in the May 2013 elections.6

In a Resolution dated August 9, 2012, the Commission on Elections set the summary evidentiary hearing for all
registered party-list groups. It required them to submit relevant documents to prove continuing compliance with the
provisions of Republic Act No. 7941 or the Party-List System Act, including the names of the witnesses it would
present to testify to their continuing compliance, and the judicial affidavits of these witnesses.

According to the respondent, it set three (3) hearing dates (August 17, August 31, and September 3, 2012) for
petitioner to present its witness and prove continuing compliance with the requirements under Republic Act No.
7941. Petitioner failed to present its witness on these hearing dates. 7

On November 7, 2012, respondent promulgated a Resolution cancelling petitioner’s Certificate of

Registration/Accreditation for the then upcoming May 13, 2013 elections. The respondent stated in its Resolution
that:

x x x it is not enough that the party-list organization claim representation of the marginalized and underrepresented
because representation is easy to claim and feign . A careful perusal of the records of the case would show that
ABANG LINGKOD failed to establish its track record. The track record is very important to prove that the party-list
organization continuously represents the marginalized and underrepresented. x x x.

xxxx

ABANG LINGKOD merely offered pictures of some alleged activities they conducted after the elections in 2010.
However, there is nothing in the said records that would show that the party-list organization is indeed composed of
organizations of farmers, fisherfolk and peasants or that they really conducted activities in line with its platform of
government.

xxxx

The importance of this examination of existing party-list organizations as to their continuing compliance with the
requirements of the law must be greatly emphasized. It is the duty of the Commission to ensure that only those
legitimate party-list organizations will have a chance to vie for a seat in the Congress. Even those party-list
organizations which are previously accredited must pass the scrutiny of the Commission. Hence, the party-list
organizations must provide pieces of evidence showing that it is indeed working for the upliftment of the lives of the
x x x sector it represents even after the elections in 2010. x x x.8

On November 22, 2012, the petitioner and more than fifty (50) other party-list groups filed a Petition for Certiorari
with Prayer for Immediate Issuance of a Writ of Preliminary Injunction and Temporary Restraining Order and/or
Status Quo Ante Order assailing the November 7, 2012 Resolution of the Commission on Elections En Banc.

In Atong Paglaum v. Commission on Elections 9 promulgated on April 2, 2013, this Court resolved the Petitions of the
party-list groups affected by the November 7, 2012 Resolution of the Commission on Elections. This Court also
remanded the Petitions to determine if these party-list groups were qualified for registration under the parameters
laid down in the Decision.

On May 10, 2013, the Commission on Elections issued the assailed Resolution, affirming the cancellation of ABANG
LINGKOD’s registration under the party-list system. The Commission on Elections issued the Resolution without any
summary evidentiary hearing and explained its Decision, to wit:

ABANG LINGKOD’s registration was cancelled as it failed to establish a track record of continuously representing
the peasant and farmers sector, and that its nominees are not marginalized and underrepresented, without any
participation in its programs and advocacies. The Commission maintains its petition in the previous en banc ruling
cancelling the registration of ABANG LINGKOD. To reiterate, it is not enough that the party-list organization claim
representation of the marginalized and underrepresented because representation is easy to claim and to feign. It is
but reasonable to require from groups and organizations consistent participation and advocacy in the sector it seeks
to represent, and not just seasonal and "sporadic" programs which are unrelated to its sector.

ABANG LINGKOD submitted pictures showing a seminar held on 10 July 2010, Medical Mission on 11 November
2010, Disaster Management Training on 21 October 2011, Book-giving on 28 June 2011, and Medical Mission on 1
December 2011.

143
And as if to insult the Commission, the photographs submitted appear to have been edited to show in the banners
that ABANG LINGKOD participated in the activities. ABANG LINGKOD’s name and logo was superimposed on
some banners to feign participation in the activities (Joint Medical-Dental Mission, Book-giving).

Under The Party-List System Act, a group’s registration may be cancelled for declaring unlawful statements in its
petition. Photoshopping images to establish a fact that did not occur is tantamount to declaring unlawful statements.
It is on this ground that the Commission cancels ABANG LINGKOD’s registration. 10

On May 12, 2013, petitioner ABANG LINGKOD filed an Extremely Urgent Motion for Reconsideration before the
Commission on Elections En Banc . However, because of the exigencies of the case, the petitioner filed on May 15,
2013 a Manifestation with Motion to Withdraw its Extremely Urgent Motion for Reconsideration since the results of
the May 13, 2013 elections were then being canvassed, and the public respondent Commission on Elections may
not have the time to pass upon the merits of the case.

The petitioner then filed the current Petition for Certiorari (With Prayer for Immediate Issuance of a Writ of
Preliminary Injunction and Temporary Restraining Order and/or Status Quo Ante Order).

The material issues in this case are the following:

I. Whether national, regional, and sectoral parties and organizations are required under the law to show their
genuineness and bona fide existence in determining if they are eligible for registration with the Commission
on Elections; and

II. Whether the Commission on Elections gravely abused its discretion in cancelling ABANG LINGKOD’s
registration under the party-list system.

The petitioner submitted that the Commission on Elections En Banc committed grave abuse of discretion amounting
to lack or excess of jurisdiction in affirming the cancellation of ABANG LINGKOD’s Certificate of
Registration/Accreditation under the party-list system of representation. It claimed that ABANG LINGKOD was not
given the opportunity to show that it meets the six-point parameters set by this Honorable Court in Atong Paglaum v.
Commission on Elections.11 It also claimed that, since it had previously been registered with the Commission on
Elections, it is, therefore, qualified to participate in the May 13, 2013 elections. Thus, it concluded that the
Commission on Elections violated ABANG LINGKOD’s constitutional right to due process.

The petitioner also submitted that the Commission on Elections En Banc committed grave abuse of discretion
amounting to lack or excess of jurisdiction in affirming the cancellation of ABANG LINGKOD’s Certificate of
Registration/Accreditation on the sole basis that it supposedly "photoshopped" or digitally manipulated images
through Adobe Photoshop — an act tantamount to declaring unlawful statements. It claimed that the fact sought to
be proven by these pieces of evidence is not part of the six- point criteria set by this Honorable Court in the Atong
Paglaum case and that it was not given its day in court to refute these findings.

Respondent, on the other hand, asserted that proof of track record and the proscription against declaring untruthful
statements in a party-list organization’s Petition are requirements of the law reiterated in the cases of Ang Bagong
Bayani and Atong Paglaum .

It added that the petitioner does not have a vested right in its registration and accreditation as a party-list
organization.

Finally, the respondent Commission on Elections reiterated that its findings of facts are supported by substantial
evidence. Hence, the Commission on Elections’ determination that the pieces of evidence submitted by the
petitioner were falsified is now final and non-reviewable.

We should deny the Petition for the reason that the Commission on Elections did not commit grave abuse of
discretion in denying the registration of petitioner ABANG LINGKOD.

Certiorari exercised only when grave abuse of discretion is sufficiently shown

The jurisdiction of this Court in cases involving certiorari and the decisions, orders or rulings of the Commission on
Elections must be discussed first.

Section 7 of Article IX-A of the 1987 Constitution provides that:

Section 7. Each Commission shall decide by a majority vote of all its Members, any case or matter brought before it
within sixty days from the date of its submission for decision or resolution. A case or matter is deemed submitted for
decision or resolution upon the filing of the last pleading, brief, or memorandum required by the rules of the
Commission or by the Commission itself. Unless otherwise provided by this Constitution or by law, any decision,
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order, or ruling of each Commission may be brought to the Supreme Court on certiorari by the aggrieved party
within thirty days from receipt of a copy thereof. (Emphasis provided)

This constitutional provision serves as the basis for this Court’s review of the Commission on Elections’ rulings
under the standards of Rule 65 through Rule 64 of the Rules of Court. 12 Such power of review of this Court must be
exercised under the standard of grave abuse of discretion . In Ocate v. Commission on Elections, 13 this Court laid
down the rule in resolving petitions for certiorari under Rule 64, to wit:

The purpose of a petition for certiorari is to determine whether the challenged tribunal has acted without or in excess
of its jurisdiction or with grave abuse of discretion amounting to lack or excess of jurisdiction . Thus, any resort to a
petition for certiorari under Rule 64 in relation to Rule 65 of the 1997 Rules of Civil Procedure is limited to the
resolution of jurisdictional issues.14 (Emphasis provided)

Thus, in Typoco v. Commission on Elections, 15 We said that:

In a special civil action for certiorari , the burden rests on petitioner to prove not merely reversible error, but grave
abuse of discretion amounting to lack or excess of jurisdiction on the part of public respondent issuing the impugned
order, decision or resolution. "Grave abuse of discretion" is such capricious and whimsical exercise of judgment
equivalent to lack of jurisdiction or excess thereof. It must be patent and gross as to amount to an evasion of
positive duty or a virtual refusal to perform a duty enjoined by law, or to act at all in contemplation of law as where
the power is exercised in an arbitrary and despotic manner by reason of passion and hostility. "Grave abuse of
discretion" arises when a court or tribunal violates the Constitution, the law or existing jurisprudence. 16 (Emphasis
provided)

The rule on limited jurisdiction on certiorari should be applied in this case. It is only when the petitioner has
sufficiently shown that the Commission on Elections may have committed grave abuse of discretion amounting to
lack or excess of jurisdiction that this Court should take cognizance of the Petition filed under Rule 64.

Requirement of genuineness and bona fide existence

Proof that national, regional, and sectoral parties and organizations exist and are genuine is required by the law to
determine whether a party-list group is eligible for registration with the Commission on Elections and may participate
in the national elections. The kind of record that is required by law is not the same as that which was formerly
required in Ang Bagong Bayani. This requirement is evident from an analysis of the provisions of Republic Act No.
7941 and the interpretations of this Court.

The Declaration of Principles or Section 2 of Republic Act No. 7941 provides that:

x x x the State shall develop and guarantee a full, free and open party system in order to attain the broadest
possible representation of party, sectoral or group interests in the House of Representatives by enhancing their
chances to compete for and win seats in the legislature, and shall provide the simplest scheme possible.

A party, by law, is either "a political party or a sectoral party or a coalition of parties." 17 A political party is defined as:

x x x an organized group of citizens advocating an ideology or platform, principles and policies for the general
conduct of government and which, as the most immediate means of securing their adoption, regularly nominates
and supports certain of its leaders and members as candidates for public office. 18 (Emphasis provided)

A party is a national party "when its constituency is spread over the geographical territory of at least a majority of the
regions. It is a regional party when its constituency is spread over the geographical territory of at least a majority of
the cities and provinces comprising the region." 19

On the other hand, a sectoral party:

x x x refers to an organized group of citizens belonging to any of the sectors enumerated in Section 5 hereof whose
principal advocacy pertains to the special interest and concerns of their sector. 20 (Emphasis provided)

The use of ideology, platform, principles, policies, advocacy of special interests and concerns of the sector, and the
existence of constituencies in defining parties all pertain to evidence of a duly existing and genuine party-list group.
All these are what the law, Republic Act No. 7941, requires from parties that aspire to participate in the party-list
elections.

With regard to this Court’s interpretation of the provisions of the law, We recently redefined party-list groups and set
new parameters in determining who may participate in the party-list elections, to wit:

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 1. Three different groups may participate in the party-list system: (1) national parties or organizations, (2)
regional parties or organizations, and (3) sectoral parties or organizations.

2. National parties or organizations and regional parties or organizations do not need to organize along
sectoral lines and do not need to represent any "marginalized and underrepresented" sector.

3. Political parties can participate in party-list elections provided they register under the party-list system and
do not field candidates in legislative district elections. A political party, whether major or not, that fields
candidates in legislative district elections can participate in party list elections only through its sectoral wing
that can separately register under the party-list system. The sectoral wing is by itself an independent
sectoral party, and is linked to a political party through a coalition.

4. Sectoral parties or organizations may either be "marginalized and underrepresented" or lacking in "well-
defined political constituencies." It is enough that their principal advocacy pertains to the special interest and
concerns of their sector. The sectors that are "marginalized and underrepresented" include labor, peasant,
fisherfolk, urban poor, indigenous cultural communities, handicapped, veterans, and overseas workers. The
sectors that lack "well-defined political constituencies" include professionals, the elderly, women, and the
youth.

5. A majority of the members of sectoral parties or organizations that represent the "marginalized and
underrepresented" must belong to the "marginalized and underrepresented" sector they represent. Similarly,
a majority of the members of sectoral parties or organizations that lack "well-defined political constituencies"
must belong to the sector they represent. The nominees of sectoral parties or organizations that represent
the "marginalized and underrepresented," or that represent those who lack "well-defined political
constituencies," either must belong to their respective sectors, or must have a track record of advocacy for
their respective sectors. The nominees of national and regional parties or organizations must be bona fide
members of such parties or organizations.

6. National, regional, and sectoral parties or organizations shall not be disqualified if some of their nominees
are disqualified, provided that they have at least one nominee who remains qualified. 21

This redefinition was based on a plain reading of Article VI, Section 5(1) of the 1987 Constitution. In Atong Paglaum,
We said that:

Section 5(1), Article VI of the Constitution is crystal-clear that there shall be "a party-list system of registered
national, regional, and sectoral parties or organizations." The commas after the words "national," and "regional,"
separate national and regional parties from sectoral parties. Had the framers of the 1987 Constitution intended
national and regional parties to be at the same time sectoral, they would have stated "national and regional sectoral
parties." They did not, precisely because it was never their intention to make the party-list system exclusively
sectoral.

xxxx

Moreover, Section 5(2), Article VI of the 1987 Constitution mandates that, during the first three consecutive terms of
Congress after the ratification of the 1987 Constitution, "one-half of the seats allocated to party-list representatives
shall be filled, as provided by law, by selection or election from the labor, peasant, urban poor, indigenous cultural
communities, women, youth, and such other sectors as may be provided by law, except the religious sector." This
provision clearly shows again that the party-list system is not exclusively for sectoral parties for two obvious
reasons.

First, the other one-half of the seats allocated to party-list representatives would naturally be open to non-sectoral
party-list representatives, clearly negating the idea that the party-list system is exclusively for sectoral parties
representing the "marginalized and underrepresented." Second, the reservation of one-half of the party-list seats to
sectoral parties applies only for the first "three consecutive terms after the ratification of this Constitution," clearly
making the party-list system fully open after the end of the first three congressional terms. This means that, after this
period, there will be no seats reserved for any class or type of party that qualifies under the three groups constituting
the party-list system.

Hence, the clear intent, express wording, and party-list structure ordained in Section 5(1) and (2), Article VI of the
1987 Constitution cannot be disputed: the party-list system is not for sectoral parties only, but also for non-sectoral
parties.

xxxx

Section 3(a) of R.A. No. 7941 defines a "party" as " either a political party or a sectoral party or a coalition of
parties." Clearly, a political party is different from a sectoral party. Section 3(c) of R.A. No. 7941 further provides that

146
a " political party refers to an organized group of citizens advocating an ideology or platform , principles and policies
for the general conduct of government ." On the other hand, Section 3(d) of R.A. No. 7941 provides that a " sectoral
party refers to an organized group of citizens belonging to any of the sectors enumerated in Section 5 hereof whose
principal advocacy pertains to the special interest and concerns of their sector." R.A. No. 7941 provides different
definitions for a political and a sectoral party. Obviously, they are separate and distinct from each other.

R.A. No. 7941 does not require national and regional parties or organizations to represent the "marginalized and
underrepresented" sectors. To require all national and regional parties under the party-list system to represent the
"marginalized and underrepresented" is to deprive and exclude, by judicial fiat, ideology-based and cause-oriented
parties from the party-list system. x x x.22

To reiterate and as I have explained in my Concurring and Dissenting Opinion 23 in Atong Paglaum, the Constitution
acknowledges that there are different kinds of party-list groups aside from sectoral groups. "To require that all the
seats for party-list representatives continue to be sectoral is clearly and patently unconstitutional." 24 "Article VI,
Sections 5 (1) and (2) already imply a complete Constitutional framework for the party-list system." 25 Congress
should not legislate if it adds requirements laid down in the Constitution such that even national and regional parties
or organizations may be considered sectoral.26

The ponencia in this case supposes that when the majority in Atong Paglaum declared as part of the fifth (5th)
parameter that the "nominees of the sectoral party either must belong to the sector, or must have a track record of
advocacy for the sector represented," it meant that the track record requirement will only apply to the sectoral
groups. I take a contrary view, especially since this Court in several cases already deemed track record as one of
the factors considered in allowing groups to participate in party-list elections, although discussed in the previous
definition or framework of party-list groups.27

The redefinition of the parameters for party-list registration to include national and regional parties or organizations
did not remove the requirement of showing that these groups existed prior to the elections they wish to participate in
and that they indeed operate as genuine organizations. I maintain that the record of a party or an organization’s
genuineness and bona fide existence is necessary for all parties and organizations, whether national, regional or
sectoral . This will show whether the party-list group is genuine and not an expediently created formation that does
not have any advocacy. This is evident from the law, particularly from Section 5 of Republic Act No. 7941, to wit:

Section 5. Registration. Any organized group of persons may register as a party, organization or coalition for
purposes of the party-list system by filing with the COMELEC not later than ninety (90) days before the election a
petition verified by its president or secretary stating its desire to participate in the party-list system as a national,
regional or sectoral party or organization or a coalition of such parties or organizations, attaching thereto its
constitution, by-laws, platform or program of government, list of officers, coalition agreement and other relevant
information as the COMELEC may require : Provided, That the sectors shall include labor, peasant, fisherfolk, urban
poor, indigenous cultural communities, elderly, handicapped, women, youth, veterans, overseas workers, and
professionals. (Emphasis provided)

Atong Paglaum declared that there may be national or regional parties or organizations apart from sectoral groups.
Thus, the requirements for each of these groups have been modified. All national, regional or sectoral parties or
organizations should show that they have been existing as bona fide organizations. Sectoral organizations should,
therefore, prove links with the sector that they represent. Reading the text of Republic Act No. 7941 and previous
rulings of this Court, this record may be established by presenting an organization’s constitution, by-laws, platform
or program of government, list of officers, coalition agreement, and other relevant information as may be required by
the Commission on Elections.

It is important for the groups to show that they are capable of participating in the elections and that they will not
make a mockery of the electoral system, specifically the party-list system.

It is the parties or organizations, and not only the nominees, that must have a concrete and verifiable record of
political participation that shows how their political platforms have been translated into action. It must be noted that
when the Commission on Elections cancelled ABANG LINGKOD’s registration, it reasoned that:

ABANG LINGKOD merely offered pictures of some alleged activities they conducted after the elections in 2010.
However, there is nothing in the said records that would show that the party-list organization is indeed composed of
organizations of farmers, fisherfolk and peasants or that they really conducted activities in line with its platform of
government.28 (Emphasis provided) When the Commission on Elections made this statement, it was clearly
reviewing the qualifications of the party and not just its nominees.

Atong Paglaum did not in any way remove the genuineness and bona fide existence requirements for registration
with the Commission on Elections, contrary to the stand taken by the ponencia . It only qualified that the nominees
of sectoral parties or organizations need not prove both membership in their sector and record of advocacy for their
respective sectors. Atong Paglaum did not categorically state that party-list groups are not required to show records
of its genuineness and bona fide existence.
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Petitioner is a sectoral party-list group that purports to represent the peasant farmers. 29 However, it did not even
comply with the bare requirement that sectoral party-list groups representing a sector should show that their
principal advocacy pertains to the special interest and concerns of their sector. 30 As correctly argued by the public
respondent,31 petitioner will not, therefore, qualify even under the new parameters set forth in Atong Paglaum.

Untruthful statements

The Commission on Elections did not commit grave abuse of discretion in cancelling ABANG LINGKOD’s
registration under the party-list system when the party-list group made an "untruthful statement" in its Petition,
thereby violating Section 6 of Republic Act No. 7941. Section 6 provides:

Section 6. Refusal and/or Cancellation of Registration. The COMELEC may, motu propio or upon verified complaint
of any interested party, refuse or cancel, after due notice and hearing, the registration of any national, regional or
sectoral party, organization or coalition on any of the following grounds:

xxxx

(4) It is receiving support from any foreign government, foreign political party, foundation, organization,
whether directly or through any of its officers or members or indirectly through third parties for partisan
election purposes;

(5) It violates or fails to comply with laws, rules or regulations relating to elections;

(6) It declares untruthful statements in its petition;

(7) It has ceased to exist for at least one (1) year; or

(8) It fails to participate in the last two (2) preceding elections or fails to obtain at least two per centum (2%)
of the votes cast under the party- list system in the two (2) preceding elections for the constituency in which
it has registered. (Emphasis provided)

In the Commission on Elections Resolution No. 9366, 32 the Commission laid down the rules applicable to party-list
groups expecting to participate in the May 13, 2013 national elections:

RULE 1
FILING OF PETITIONS FOR REGISTRATION

Section 7. Documents to support petition for registration. The following documents shall support petitions for
registration:

a. Constitution and by-laws as an organization seeking registration under the party-list system of
representation;

b. Platform or program of government;

xxxx

f. Track record summary showing that it represents and seeks to uplift the marginalized and
underrepresented sector/s it seeks to represent;

g. Coalition agreement, if any, and the detailed list of affiliates comprising the coalition, including the signed
coalition agreement;

h. Sworn proof/s of existence in the areas where the organization is claiming representation; and i. Other
information required by the Commission.

xxxx

RULE 2
OPPOSITION TO A PETITION FOR REGISTRATION

Section 2. Grounds for opposition to a petition for registration. The Commission may deny due course to the petition
motu proprio or upon verified opposition of any interested party, after due notice and hearing, on any of the following
grounds:

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 xxxx

f. It violates or fails to comply with laws, rules or regulations relating to elections;

g. It has made untruthful statements in its Petition;

h. It has ceased to exist for a period of at least one (1) year;

i. It fails to participate in the last two (2) preceding elections or fails to obtain at least two per centum (2%) of
the votes cast under the party-list system in the two (2) preceding elections for the constituency in which it
has registered; or

j. The petition has been filed to put the election process in mockery or disrepute, or to cause confusion
among the voters by the similarity of names or registered parties, or by other circumstances or acts which
clearly demonstrate that the petitioner has no bona fide intention to represent the sector for which the
petition has been filed and thus prevent a faithful determination of the true will of the electorate.

Section 3. Removal and/or cancellation of registration; Grounds. The Commission may motu proprio or upon a
verified complaint of any interested party, remove or cancel, after due notice and hearing, the registration of any
party-list group organization or coalition on any of the grounds mentioned in Section 2 of this Rule . Any party whose
registration has been removed or cancelled shall not be allowed to participate in the party-list system, or from being
proclaimed if the evidence is strong. (Emphasis provided)

All these clearly state that the declaration of untruthful statements is a ground for cancelling the registration of a
party-list group. However, the ponencia states that:

x x x a declaration of an untruthful statement in a petition for registration under Section 6(6) of R.A. No. 7941, in
order to be a ground for the refusal and/or cancellation of registration under the party-list system, must pertain to the
qualification of the party, organization or coalition under the party-list system. x x x

The digitally altered photographs of activities submitted by ABANG LINGKOD to prove its continuing qualification
under R.A. No. 7941 only pertains to its track record, which, as already discussed, is no longer a requirement under
the new parameters laid down in Atong Paglaum. Simply put, it does not affect the qualification of ABANG
LINGKOD as a party-list group and, hence, could not be used as a ground to cancel its registration under the party-
list system.33

I do not question the point that the disqualification of one or some of the nominees of party-list groups will not
automatically result to disqualification. I agree that a party-list group must be treated separately and distinctly from
its nominees, such that the qualifications of the nominees are not considered part and parcel of the qualifications of
the party-list itself. However, in this case, when the digitally manipulated pictures were submitted by ABANG
LINGKOD, it was done to prove the continuous qualifications of the party-list group for registration with the
Commission on Elections.34 The "photoshopped" or altered pictures indicating the name of the party-list group were
intended to deceive people into thinking that the group was engaging in joint medical and dental mission and book-
giving activities.

The reliance of the ponencia on Lluz v. Commission on Elections 35 in relating the act of declaring an untruthful
statement to the concept of material misrepresentation is not precise. The circumstances and provisions of law
involved in Lluz do not square with the present case. In Lluz, this Court determined whether the respondent
committed material misrepresentation when he declared his profession as "Certified Public Accountant" in his
Certificate of Candidacy.  As We said in that case, "Profession or occupation not being a qualification for elective
1âwphi1

office, misrepresentation of such does not constitute a material misrepresentation." 36 In the present case, what is at
issue is the genuineness and existence of the party-list group. This includes the question as to whether they truly
represent the sector. The claim of representation can be supported by proof of their activities in relation to their
sector. As established above, this record of genuineness and existence is a continuing requirement of the law and
goes into the qualifications of the party-list.

The brazen use of falsified documents of ABANG LINGKOD in its compliance for registration is deplorable and
appalling because of the obvious intent to deceive the Commission on Elections and the electorate. It cannot be
tolerated. It denigrates the right to suffrage. Submitting falsified documents is tantamount to making declarations of
untruthful statements. It is a ground for cancellation of the registration/accreditation of the party-list group under
Section 6 of Republic Act No. 7941.

In V.C. Cadangen v. Commission on Elections,37 this Court denied the Alliance of Civil Servants, Inc.’s (or Civil
Servants’) Petition for failing to comply with the law and for declaring an untruthful statement in its Memorandum, as
found by the Commission on Elections. As proof of a nationwide constituency, Civil Servants presented a picture of
its website where members allegedly discussed different issues confronting government employees and where it

149
was asserted that its membership was divided into different working committees to address several issues of its
sectors. Upon verification, the Commission on Elections’ election officers reported that Civil Servants existed only in
Parañaque City’s First and Second Districts and in Quezon City’s Fourth District. This finding was contrary to the
petitioner’s claim of national constituency in its Memorandum. In holding that the Commission on Elections did not
commit grave abuse of discretion in issuing the assailed Resolutions, 38 this Court said:

The COMELEC, after evaluating the documents submitted by petitioner, denied the latter’s plea for registration as a
sectoral party, not on the basis of its failure to prove its nationwide presence, but for its failure to show that it
represents and seeks to uplift marginalized and underrepresented sectors. Further, the COMELEC found that
petitioner made an untruthful statement in the pleadings and documents it submitted.

x x x The findings of fact made by the COMELEC, or by any other administrative agency exercising expertise in its
particular field of competence, are binding on the Court." 39

The actions of the group amounted to declaring untruthful statements, which the Commission on Elections correctly
considered as a ground for the cancellation of the petitioner’s Certificate of Registration under Section 6 of Republic
Act No. 7941. Again, to constitute grave abuse of discretion, the abuse of discretion must be such "capricious and
whimsical exercise of judgment as is equivalent to lack of jurisdiction, or in other words, where the power is
exercised in an arbitrary or despotic manner by reason of passion or personal hostility." 40 It "must be so patent and
gross to amount to an evasion of positive duty or to a virtual refusal to perform the duty enjoined or to act in
contemplation of law.41 The Commission on Elections, therefore, did not commit grave abuse of discretion in
promulgating the assailed Resolution.

WHEREFORE I vote to DENY the Petition. The Resolution dated May 10, 2013 issued by the Commission on
Elections in SPP Case No. 12-238 (PLM) should be AFFIRMED.

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 Republic of the Philippines
SUPREME COURT
Manila

EN BANC

G.R. No. 207264               October 22, 2013

REGINA ONGSIAKO REYES, Petitioner, 

vs.
COMMISSION ON ELECTIONS and JOSEPH SOCORRO B. TAN, Respondents.

RESOLUTION

PEREZ, J.:

This is a Motion for Reconsideration of the En Bane Resolution of 25 June 2013 which stated that: IN VIEW OF THE
FOREGOING, the instant petition is DISMISSED, finding no grave abuse of discretion on the part of the
Commission on Elections. The 14 May 2013 Resolution of the COMELEC En Banc affirming the 27 March 2013
Resolution of the COMELEC First Division is upheld."

In her Motion for Reconsideration, petitioner summarizes her submission, thus:

"81. Stated differently, the Petitioner x x x is not asking the Honorable Court to make a determination as regards her
qualifications, she is merely asking the Honorable Court to affirm the jurisdiction of the HRET to solely and
exclusively pass upon such qualifications and to set aside the COMELEC Resolutions for having denied Petitioner
her right to due process and for unconstitutionally adding a qualification not otherwise required by the
constitution."1(as originally underscored)

The first part of the summary refers to the issue raised in the petition, which is:

"31. Whether or not Respondent Comelec is without jurisdiction over Petitioner who is duly proclaimed winner and
who has already taken her oath of office for the position of Member of the House of Representatives for the lone
congressional district of Marinduque."2

Tied up and neatened the propositions on the COMELEC-or-HRET jurisdiction go thus: petitioner is a duly
proclaimed winner and having taken her oath of office as member of the House of Representatives, all questions
regarding her qualifications are outside the jurisdiction of the COMELEC and are within the HRET exclusive
jurisdiction.

The averred proclamation is the critical pointer to the correctness of petitioner's submission. The crucial question is
whether or not petitioner could be proclaimed on 18 May 2013. Differently stated, was there basis for the
proclamation of petitioner on 18 May 2013?

Dates and events indicate that there was no basis for the proclamation of petitioner on 18 May 2013. Without the
proclamation, the petitioner's oath of office is likewise baseless, and without a precedent oath of office, there can be
no valid and effective assumption of office.

We have clearly stated in our Resolution of 5 June 2013 that:

"More importantly, we cannot disregard a fact basic in this controversy – that before the proclamation of petitioner
on 18 May 2013, the COMELEC En Banc had already finally disposed of the issue of petitioner's lack of Filipino
citizenship and residency via its Resolution dated 14 May 2013. After 14 May 2013, there was, before the
COMELEC, no longer any pending case on petitioner's qualifications to run for the position of Member of the House
of Representatives. x x x As the point has obviously been missed by the petitioner who continues to argue on the
basis of her due proclamation, the instant motion gives us the opportunity to highlight the undeniable fact we here
repeat that the proclamation which petitioner secured on 18 May 2013 was WITHOUT ANY BASIS.

1. Four (4) days BEFORE the 18 May 2013 proclamation, or on 14 May 2013, the COMELEC En Banc has
already denied for lack o merit the petitioner's motion to reconsider the decision o the COMELEC First
Division that CANCELLED petitioner's certificate of candidacy.

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 2. On 18 May 2013, there was already a standing and unquestioned cancellation of petitioner's certificate o
candidacy which cancellation is a definite bar to her proclamation. On 18 May 2003, that bar has not been
removed, there was not even any attempt to remove it.

3. The COMELEC Rules indicate the manner by which the impediment to proclamation may be removed.
Rule 18, Section 13 (b) provides:

"(b) In Special Actions and Special Cases a decision or resolution of the Commission En Bane shall become
final and executory after five (5) days from its promulgation unless restrained by the Supreme Court."

Within that five (5 days, petitioner had the opportunity to go to the Supreme Court for a restraining order that
will remove the immediate effect of the En Banc cancellation of her certificate of candidacy. Within the five
(5) days the Supreme Court may remove the barrier to, and thus allow, the proclamation of petitioner. That
did not happen. Petitioner did not move to have it happen.

It is error to argue that the five days should pass before the petitioner is barred from being proclaimed.
Petitioner lost in the COMELEC as of respondent. Her certificate of candidacy has been ordered cancelled.
She could not be proclaimed because there was a final finding against her by the COMELEC. 3 She needed
a restraining order from the Supreme Court to avoid the final finding. After the five days when the decision
adverse to her became executory, the need for Supreme Court intervention became even more imperative.
She would have to base her recourse on the position that the COMELEC committed grave abuse of
discretion in cancelling her certificate of candidacy and that a restraining order, which would allow her
proclamation, will have to be based on irreparable injury and demonstrated possibility of grave abuse of
discretion on the part of the COMELEC. In this case, before and after the 18 May 2013 proclamation, there
was not even an attempt at the legal remedy, clearly available to her, to permit her proclamation. What
petitioner did was to "take the law into her hands" and secure a proclamation in complete disregard of the
COMELEC En Bane decision that was final on 14 May 2013 and final and executory five days thereafter.

4. There is a reason why no mention about notice was made in Section 13(b) of Rule 18 in the provision that
the COMELEC En Bane or decision "SHALL become FINAL AND EXECUTORY after five days from its
promulgation unless restrained by the Supreme Court." On its own the COMELEC En Bane decision,
unrestrained, moves from promulgation into becoming final and executory. This is so because in Section 5
of Rule 18 it is stated:

Section 5. Promulgation. -The promulgation of a decision or resolutions of the Commission or a division shall be
made on a date previously fixed, of which notice shall be served in advance upon the parties or their attorneys
personally or by registered mail or by telegram.

5. Apart from the presumed notice of the COMELEC En Bane decision on the very date of its promulgation
on 14 May 2013, petitioner admitted in her petition before us that she in fact received a copy of the decision
on 16 May 20 13.4 On that date, she had absolutely no reason why she would disregard the available legal
way to remove the restraint on her proclamation, and, more than that, to in fact secure a proclamation two
days thereafter. The utter disregard of a final COMELEC En Bane decision and of the Rule stating that her
proclamation at that point MUST be on permission by the Supreme Court is even indicative of bad faith on
the part of the petitioner.

6. The indicant is magnified by the fact that petitioner would use her tainted proclamation as the very reason
to support her argument that she could no longer be reached by the jurisdiction of the COMELEC; and that it
is the HRET that has exclusive jurisdiction over the issue of her qualifications for office.

7. The suggestions of bad faith aside, petitioner is in error in the conclusion at which she directs, as well as
in her objective quite obvious from such conclusion. It is with her procured proclamation that petitioner
nullifies the COMELEC's decision, by Division and then En Banc and pre-empts any Supreme Court action
on the COMELEC decision. In other words, petitioner repudiates by her proclamation all administrative and
judicial actions thereon, past and present. And by her proclamation, she claims as acquired the
congressional seat that she sought to be a candidate for. As already shown, the reasons that lead to the
impermissibility of the objective are clear. She cannot sit as Member of the House of Representatives by
virtue of a baseless proclamation knowingly taken, with knowledge of the existing legal impediment.

8. Petitioner, therefore, is in error when she posits that at present it is the HRET which has exclusive
jurisdiction over her qualifications as a Member of the House of Representatives. That the HRET is the sole
judge of all contests relating to the election, returns and qualifications of the Members of the House of
Representatives is a written constitutional provision. It is, however unavailable to petitioner because she is
NOT a Member of the House at present. The COMELEC never ordered her proclamation as the rightful
winner in the election for such membership. 5 Indeed, the action for cancellation of petitioner's certificate of
candidacy, the decision in which is the indispensable determinant of the right of petitioner to proclamation,
was correctly lodged in the COMELEC, was completely and fully litigated in the COMELEC and was finally
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 decided by the COMELEC. On and after 14 May 2013, there was nothing left for the COMELEC to do to
decide the case. The decision sealed the proceedings in the COMELEC regarding petitioner's ineligibility as
a candidate for Representative of Marinduque. The decision erected the bar to petitioner's proclamation.
The bar remained when no restraining order was obtained by petitioner from the Supreme Court within five
days from 14 May 2013.

9. When petitioner finally went to the Supreme Court on 10 June 2013 questioning the COMELEC First
Division ruling and the 14 May 2013 COMELEC En Bane decision, her baseless proclamation on 18 May
2013 did not by that fact of promulgation alone become valid and legal. A decision favorable to her by the
Supreme Court regarding the decision of the COMELEC En Bane on her certificate of candidacy was
indispensably needed, not to legalize her proclamation on 18 May 2013 but to authorize a proclamation with
the Supreme Court decision as basis.

10. The recourse taken on 25 June 2013 in the form of an original and special civil action for a writ of
Certiorari through Rule 64 of the Rules of Court is circumscribed by set rules and principles.

a) The special action before the COMELEC which was a Petition to Cancel Certificate of Candidacy
was a SUMMARY PROCEEDING or one heard summarily. The nature of the proceedings is best
indicated by the COMELEC Rule on Special Actions, Rule 23, Section 4 of which states that the
Commission may designate any of its officials who are members of the Philippine Bar to hear the
case and to receive evidence. COMELEC Rule 17 further provides in Section 3 that when the
proceedings are authorized to be summary, in lieu of oral testimonies, the parties may, after due
notice, be required to submit their position paper together with affidavits, counter-affidavits and other
documentary evidence; x x x and that this provision shall likewise apply to cases where the hearing
and reception of evidence are delegated by the Commission or the Division to any of its officials x x
x.

b) The special and civil action of Certiorari is defined in the Rules of Court thus:

When any tribunal, board or officer exercising judicial or quasi-judicial functions has acted without or in excess of its
or his jurisdiction, or with grave abuse of discretion amounting to lack or excess of jurisdiction, and there is no
appeal, or any plain, speedy, and adequate remedy in the ordinary course of law, a person aggrieved thereby may
file a verified petition in the proper court, alleging the facts with certainty and praying that judgment be rendered
annulling or modifying the proceedings of such tribunal, board or officer, and granting such incidental reliefs as law
and justice may require.

The accepted definition of grave abuse of discretion is: a capricious and whimsical exercise of judgment 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, as
where the power is exercised in an arbitrary and despotic manner because of passion or hostility. 6

It is the category of the special action below providing the procedural leeway in the exercise of the COMELEC
summary jurisdiction over the case, in conjunction with the limits of the Supreme Court's authority over the FINAL
COMELEC ruling that is brought before it, that defines the way petitioner's submission before the Court should be
adjudicated. Thus further explained, the disposition of 25 June 2013 is here repeated for affirmation:

Petitioner alleges that the COMELEC gravely abused its discretion when it took cognizance of "newly-discovered
evidence" without the same having been testified on and offered and admitted in evidence. She assails the
admission of the blog article of Eli Obligacion as hearsay and the photocopy of the Certification from the Bureau of
Immigration. She likewise contends that there was a violation of her right to due process of law because she was
not given the opportunity to question and present controverting evidence.

Her contentions are incorrect.

It must be emphasized that the COMELEC is not bound to strictly adhere to the technical rules of procedure in the
presentation of evidence. Under Section 2 of Rule I the COMELEC Rules of Procedure shall be liberally construed
in order x x x to achieve just, expeditious and inexpensive determination and disposition of every action and
proceeding brought before the Commission. In view of the fact that the proceedings in a petition to deny due course
or to cancel certificate of candidacy are summary in nature, then the newly discovered evidence was properly
admitted by respondent COMELEC.

Furthermore, there was no denial of due process in the case at bar as petitioner was given every opportunity to
argue her case before the COMELEC. From 10 October 2012 when Tan's petition was filed up to 27 March 2013
when the First Division rendered its resolution, petitioner had a period of five (5) months to adduce evidence.
Unfortunately, she did not avail herself of the opportunity given her.

Also, in administrative proceedings, procedural due process only requires that the party be given the opportunity or
right to be heard. As held in the case of Sahali v. COMELEC:
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The petitioners should be reminded that due process does not necessarily mean or require a hearing, but simply an
opportunity or right to be heard. One may be heard, not solely by verbal presentation but also, and perhaps many
times more creditably and predictable than oral argument, through pleadings. In administrative proceedings
moreover, technical rules of procedure and evidence are not strictly applied; administrative process cannot be fully
equated with due process in its strict judicial sense. Indeed, deprivation of due process cannot be successfully
invoked where a party was given the chance to be he rd on his motion for reconsideration. (Emphasis supplied)

As to the ruling that petitioner s ineligible to run for office on the ground of citizenship, the COMELEC First Division,
discoursed as follows:

"x x x for respondent to reacquire her Filipino citizenship and become eligible for public office the law requires that
she must have accomplished the following acts: (1) take the oath of allegiance to the Republic of the Philippines
before the Consul-General of the Philippine Consulate in the USA; and (2) make a personal and sworn renunciation
of her American citizenship before any public officer authorized to administer an oath.

In the case at bar, there s no showing that respondent complied with the aforesaid requirements. Early on in the
proceeding, respondent hammered on petitioner's lack of proof regarding her American citizenship, contending that
it is petitioner's burden to present a case. She, however, specifically denied that she has become either a
permanent resident or naturalized citizen of the USA.

Due to petitioner's submission of newly-discovered evidence thru a Manifestation dated February 7, 2013, however,
establishing the fact that respondent is a holder of an American passport which she continues to use until June 30
2012 petitioner was able to substantiate his allegations. The burden now shifts to respondent to present substantial
evidence to prove otherwise. This, the respondent utterly failed to do, leading to the conclusion inevitable that
respondent falsely misrepresented in her COC that she is a natural-born Filipino citizen. Unless and until she can
establish that she had availed of the privileges of RA 9225 by becoming a dual Filipino-American citizen, and
thereafter, made a valid sworn renunciation of her American citizenship, she remains to be an American citizen and
is, therefore, ineligible to run for and hold any elective public office in the Philippines." (Emphasis in the original.)

Let us look into the events that led to this petition: In moving for the cancellation of petitioner's COC, respondent
submitted records of the Bureau of Immigration showing that petitioner is a holder of a US passport, and that her
status is that of a balikbayan. At this point, the burden of proof shifted to petitioner, imposing upon her the duty to
prove that she is a natural-born Filipino citizen and has not lost the same, or that she has re-acquired such status in
accordance with the provisions of R.A. No. 9225. Aside from the bare allegation that she is a natural-born citizen,
however, petitioner submitted no proof to support such contention. Neither did she submit any proof as to the
inapplicability of R.A. No. 9225 to her.

Notably, in her Motion for Reconsideration before the COMELEC En Bane, petitioner admitted that she is a holder of
a US passport, but she averred that she is only a dual Filipino-American citizen, thus the requirements of R.A. No.
9225 do not apply to her. Still, attached to the said motion is an Affidavit of Renunciation of Foreign Citizenship
dated 24 September 2012. Petitioner explains that she attached said Affidavit if only to show her desire and zeal to
serve the people and to comply with rules, even as a superfluity. We cannot, however, subscribe to petitioner's
explanation. If petitioner executed said Affidavit if only to comply with the rules, then it is an admission that R.A. No.
9225 applies to her. Petitioner cannot claim that she executed it to address the observations by the COMELEC as
the assailed Resolutions were promulgated only in 2013, while the Affidavit was executed in September 2012. 1âwphi1

Moreover, in the present petition, petitioner added a footnote to her oath of office as Provincial Administrator, to this
effect: This does not mean that Petitioner did not, prior to her taking her oath of office as Provincial Administrator,
take her oath of allegiance for purposes of re-acquisition of natural-born Filipino status, which she reserves to
present in the proper proceeding. The reference to the taking of oath of office is in order to make reference to what
is already part of the records and evidence in the present case and to avoid injecting into the records evidence on
matters of fact that was not previously passed upon by Respondent COMELEC. This statement raises a lot of
questions -Did petitioner execute an oath of allegiance for re-acquisition of natural-born Filipino status? If she did,
why did she not present it at the earliest opportunity before the COMELEC? And is this an admission that she has
indeed lost her natural-born Filipino status?

To cover-up her apparent lack of an oath of allegiance as required by R.A. No. 9225, petitioner contends that, since
she took her oath of allegiance in connection with her appointment as Provincial Administrator of Marinduque, she is
deemed to have reacquired her status as a natural-born Filipino citizen.

This contention is misplaced. For one, this issue is being presented for the first time before this Court, as it was
never raised before the COMELEC. For another, said oath of allegiance cannot be considered compliance with Sec.
3 of R.A. No. 9225 as certain requirements have to be met as prescribed by Memorandum Circular No. AFF-04-01,
otherwise known as the Rules Governing Philippine Citizenship under R.A. No. 9225 and Memorandum Circular No.
AFF-05-002 (Revised Rules) and Administrative Order No. 91, Series of 2004 issued by the Bureau of Immigration.
Thus, petitioner s oath of office as Provincial Administrator cannot be considered as the oath of allegiance in
compliance with R.A. No. 9225.

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These circumstances, taken together, show that a doubt was clearly cast on petitioner s citizenship. Petitioner,
however, failed to clear such doubt.7

11. It may need pointing out that there is no conflict between the COMELEC and the HRET insofar as the
petitioner s being a Representative of Marinduque is concerned. The COMELEC covers the matter of
petitioner s certificate of candidacy, and its due course or its cancellation, which are the pivotal conclusions
that determines who can be legally proclaimed. The matter can go to the Supreme Court but not as a
continuation of the proceedings in the COMELEC, which has in fact ended, but on an original action before
the Court grounded on more than mere error of judgment but on error of jurisdiction for grave abuse of
discretion. At and after the COMELEC En Bane decision, there is no longer any certificate cancellation
matter than can go to the HRET. In that sense, the HRET s constitutional authority opens, over the
qualification of its MEMBER, who becomes so only upon a duly and legally based proclamation, the first and
unavoidable step towards such membership. The HRET jurisdiction over the qualification of the Member of
the House of Representatives is original and exclusive, and as such, proceeds de novo unhampered by the
proceedings in the COMELEC which, as just stated has been terminated. The HRET proceedings is a
regular, not summary, proceeding. It will determine who should be the Member of the House. It must be
made clear though, at the risk of repetitiveness, that no hiatus occurs in the representation of Marinduque in
the House because there is such a representative who shall sit as the HRET proceedings are had till
termination. Such representative is the duly proclaimed winner resulting from the terminated case of
cancellation of certificate of candidacy of petitioner. The petitioner is not, cannot, be that representative. And
this, all in all, is the crux of the dispute between the parties: who shall sit in the House in representation of
Marinduque, while there is yet no HRET decision on the qualifications of the Member.

12. As finale, and as explained in the discussion just done, no unwarranted haste can be attributed, as the
dissent does so, to the resolution of this petition promulgated on 25 June 2013. It was not done to prevent
the exercise by the HRET of its constitutional duty. Quite the contrary, the speedy resolution of the petition
was done to pave the way for the unimpeded performance by the HRET of its constitutional role. The
petitioner can very well invoke the authority of the HRET, but not as a sitting member of the House of
Representatives.8

The inhibition of this ponente was moved for. The reason for the denial of the motion was contained in a letter to the
members of the Court on the understanding that the matter was internal to the Court. The ponente now seeks the
Courts approval to have the explanation published as it is now appended to this Resolution.

The motion to withdraw petition filed AFTER the Court has acted thereon, is noted. It may well be in order to remind
petitioner that jurisdiction, once acquired, is not lost upon the instance of the parties, but continues until the case is
terminated.9 When petitioner filed her Petition for Certiorari jurisdiction vested in the Court and, in fact, the Court
exercised such jurisdiction when it acted on the petition. Such jurisdiction cannot be lost by the unilateral withdrawal
of the petition by petitioner.

More importantly, the Resolution dated 25 June 2013, being a valid court issuance, undoubtedly has legal
consequences. Petitioner cannot, by the mere expediency of withdrawing the petition, negative and nullify the
Court's Resolution and its legal effects. At this point, we counsel petitioner against trifling with court processes.
Having sought the jurisdiction of the Supreme Court, petitioner cannot withdraw her petition to erase the ruling
adverse to her interests. Obviously, she cannot, as she designed below, subject to her predilections the supremacy
of the law.

WHEREFORE, The Motion for Reconsideration is DENIED. The dismissal of the petition is affirmed. Entry of
Judgment is ordered.

SO ORDERED.

DISSENTING OPINION

LEONEN, J.:

I join Justices Carpio and Brion in their Dissent, but I wish to clarify my reasons further.

In case of doubt, there are fundamental reasons for this Court to be cautious in exercising its jurisdiction to
determine who the members are of the House of Representatives. We should maintain our consistent doctrine that
proclamation is the operative act that removes jurisdiction from this Court or the Commission on Elections and vests
it on the House of Representatives Electoral Tribunal (HRET).

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The first reason is that the Constitution unequivocably grants this discretion to another constitutional body called the
House of Representatives Electoral Tribunal. This is a separate organ from the Judiciary.

As early as the Act of Congress of August 29, 1916 known as the Jones Law, the Senate and the House of
Representatives were granted the power to "be the sole judges of the elections, returns, and qualifications of their
respective elective members."1 Section 18 of this organic act provides:

Section 18 -That the Senate and House of Representatives, respectively, shall be the sole judges of the elections,
returns, and qualifications of their elective members, and each House may determine the rules of its proceedings,
punish its members for disorderly behavior, and, with the concurrence of two-thirds, expel an elective member. x x x

The 1935 Constitution transferred the same power to an Electoral Commission which altered the composition of the
electoral tribunal but still continued a membership that predominantly originated from the Legislature.

Thus, Section 4 of Article VI of the 1935 Constitution provided:

Section 4 -There shall be an Electoral Commission composed of three Justices of the Supreme Court designated by
the Chief Justice, and of six Members chosen by the National Assembly, three of whom shall be nominated by the
party having the largest number of votes, and three by the party having the second largest number of votes therein.
The senior Justice in the Commission shall be its Chairman. The Electoral Commission shall be the sole judge of all
contests relating to the election, returns, and qualifications of the Members of the National Assembly.

In Anga.ra v Electoral Commission,2 this Court noted the change in the composition of the electoral tribunal in the
1935 Constitution.3 Nevertheless, the authority of the electoral tribunal remained the same as the sole judge of all
contests relating to the election, returns, and qualifications of their members. The electoral tribunal in the 1935
Constitution was characterized as an independent tribunal, separate from the Legislative Department. However, "the
grant of power to the Electoral Commission to judge all contests relating to the election, returns and qualifications of
members of the National Assembly, is intended to be as complete and unimpaired as if it had remained originally in
the legislature."4

The 1973 Constitution briefly transferred the authority of an electoral tribunal to the Commission on Elections. 5 The
1987 Constitution reverted this authority back to electoral tribunals. The present Section 17 of Article VI provides:

Section 1 7 -The Senate and the House of Representatives shall each have an Electoral Tribunal, which shall be the
sole judge of all contests relating to the election, returns, and qualifications of their respective Members. Each
Electoral Tribunal shall be composed of nine Members, three of whom shall be Justices of the Supreme Court to be
designated by the Chief Justice, and the remaining six shall be Members of the Senate or the House of
Representatives, as the case may be, who shall be chosen on the basis of proportional representation from the
political parties and the parties or organizations registered under the party-list system represented therein. The
senior Justice in the Electoral Tribunal shall be its Chairman.

The authority of electoral tribunals as the sole judge of all contests relating to the election, returns, and qualifications
of their members was described in Races v. House of Representatives Electoral Tribunal: 6

The HRET is the sole judge of all contests relating to the election, returns, and qualifications of the members of the
House of Representatives and has the power to promulgate procedural rules to govern proceedings brought before
it. This exclusive jurisdiction includes the power to determine whether it has the authority to hear and determine the
controversy presented, and the right to decide whether that state of facts exists which confers jurisdiction, as well as
all other matters which arise in the case legitimately before it. Accordingly, it has the power to hear and determine or
inquire into, the question of its own jurisdiction both as to parties and as to subject matter, and to decide all
questions, whether of law or fact, the decision of which is necessary to determine the question of jurisdiction. One of
the three essential elements of jurisdiction is that proper parties must be present. Consequently, the HRET merely
exercised its exclusive jurisdiction when it ruled that Mrs. Ang Ping was a proper party to contest the election of
Roces.7 (Citations omitted)

Initially, our organic act envisioned both the House of Representatives and the Senate to determine their members
by creating tribunals that would decide on contests relating to the election, returns and qualifications of its members.
This was to maintain the integrity of the Legislature as a separate branch of government. The House of
Representatives and the Senate act collectively, and the numbers that determine the outcome of their respective
actions are sensitive to the composition of their memberships.

The 1935 Constitution enhanced this ability by altering the composition of the electoral tribunals. Introducing
members from the Judiciary to participate in the tribunal provided the necessary objectivity from the partisan politics
of each chamber. Both the 1935 and the 1987 Constitution, however, did not intend the Judiciary to take over the
function of deciding contests of the election, returns, and qualification of a member of either the House of
Representatives or the Senate.

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The earliest moment when there can be members of the House of representatives or the Senate is upon their
proclamation as winners of an election. Necessarily, this proclamation happens even before they can actually
assume their office as the elections happen in May, and their terms start "at noon on the thirtieth day of June next
following their election."8 Contests of elected representatives or senators can happen as soon as they are
proclaimed. We should remain faithful to the intention of the Constitution. It is at the time of their proclamation that
we should declare ourselves as without jurisdiction.

This s clear doctrine and there are no reasons to modify it in the present case.

II

The jurisdiction of electoral tribunals as against other constitutional bodies has been put in issue in many cases.

In Angara v. Electoral Commission,9 this Court held that the authority of the Electoral Commission as the "sole
judge of all contests relating to the election, returns, and qualifications of the members of the National Assembly"
begins from the certification by the proper provincial board of canvassers of the member-elect: 10

From another angle, Resolution No. 8 of the National Assembly confirming the election of members against whom
no protests had been filed at the time of its passage on December 3, 1935, cannot be construed as a limitation.
upon the time for the initiation of election contests. While there might have been good reason for the legislative
practice of confirmation of the election of members of the legislature at the time when the power to decide election
contests was still lodged in the legislature, confirmation alone by the legislature cannot be construed as depriving
the Electoral Commission of the authority incidental to its constitutional power to be the sole judge of all contest
relating to the election, returns, and qualifications of the members of the National Assembly , to fix the time for the
filing of said election protests. Confirmation by the National Assembly of the returns of its members against whose
election no protests have been filed is, to all legal purposes, unnecessary. As contended by the Electoral
Commission in its resolution of January 23, 1936, overruling the motion of the herein petitioner to dismiss the protest
filed by the respondent Pedro Ynsua, confirmation of the election of any member is not required by the. Constitution
before he can discharge his duties as such member. As a matter of fact, certification by the proper provincial board
of canvassers is sufficient to entitle a member-elect to a seat in the national Assembly and to render him eligible to
any office in said body (No. 1 par. 1 Rules of the National Assembly, adopted December 6, 1935). 11 (Emphasis
supplied)

Since then, more Petitions, including this one, have been filed in this Court invoking the jurisdiction of the electoral
tribunals against the Commission on Elections. Time and again, this Court has been asked to resolve the issue
when jurisdiction over election contests vests on electoral tribunals. In all these cases, this Court has consistently
held that it is the proclamation of a candidate in the congressional elections that vests jurisdiction on the electoral
tribunals of any election contest, even though the candidate has not yet assumed his or her office or the protest was
filed before June 30.12 Once the winning candidate vying for a position in Congress is proclaimed, election contests
must be lodged with the electoral tribunals and not with the Commission on Elections. To repeat, certification by the
proper x x x board of canvassers is sufficient to entitle a member-elect to a seat in Congress and to render him
eligible to any office in the said body."13

Conversely, if a candidate for Congress was elected but was not proclaimed due to a suspension order issued by
the Commission on Elections, the latter retains jurisdiction over protests concerning the candidate's
qualifications.14Thus, we stated:

The rule then is that candidates who are disqualified by final judgment before the election shall not be voted for and
the votes cast for them shall not be counted. But those against whom no final judgment of disqualification had been
rendered may be voted for and proclaimed, unless, on motion of the complainant, the COMELEC suspends their
proclamation because the grounds for their disqualification or cancellation of their certificates of candidacy are
strong. Meanwhile, the proceedings for disqualification of candidates or for the cancellation or denial of certificates
of candidacy, which have been begun before the elections, should continue even after such elections and
proclamation of the winners.15

In this case, the Commission on Elections En Banc Resolution ordering the cancellation of the petitioner's Certificate
of Candidacy was issued only after the elections. The Resolution did not yet attain finality when the petitioner was
proclaimed, and no Order was issued by the Commission on Elections to suspend the proclamation of the petitioner
after the votes had been counted. Thus, the Provincial Board of Canvassers was well within its right and duty to
proclaim the petitioner as the winning candidate. 16

III

It is my opinion that this Court did not, in any of the cases cited in the main ponencia change the time-honored rule
that "where a candidate has already been proclaimed winner in the congressional elections, the remedy of the
petitioner is to file an electoral protest for a petition or quo warranto with the House of Representatives Electoral
Tribunal."17 The main ponencia cites several cases to support its ratio decidendi that three requisites must concur
157
before a winning candidate is considered a "member" of the House of Representatives to vest jurisdiction on the
electoral tribunal. These cases appear to have originated from Guerrero v. Commission on Elections. 18

In Guerrero, this Court held that "x x x once a winning candidate has been proclaimed taken his oath and assumed
office as a member of the House of Representatives, the COMELEC's jurisdiction over election contests relating to
his election, returns, and qualifications ends, and the HRET's own jurisdiction begins." 19 The case cited Aquino v.
Commission on Elections20 and Romualdez-Marcos v. Commission on Elections 21 to support the statement.

A closer reading of Aquino and Romualdez-Marcos will reveal that this Court did not rule that three requisites must
concur so that one may be considered a "member" of the House of Representatives subject to the jurisdiction of the
electoral tribunal. On the contrary, this Court held in Aquino that:

Petitioner conveniently confuses the distinction between an unproclaimed candidate to the House of
Representatives and a member of the same. Obtaining the highest number of votes in an election does not
automatically vest the position in the winning candidate.

xxxx

Under the above-stated provision, the electoral tribunal clearly assumes jurisdiction over all contests relative to the
election, returns and qualifications of candidates for either the Senate or the House only when the latter become
members of either the senate or the House of Representatives. A candidate who has not been proclaimed and who
has not taken his oath of office cannot be said to be a member of the House of Representatives subject to Section
17 of Article VI of the Constitution. While the proclamation of the winning candidate in an election is ministerial, B.P.
881 in conjunction with Sec. 6 of R.A. 6646 allows suspension of proclamation under circumstances mentioned
therein. x x x.22 (Citations omitted)

In Romualdez-Marcos, this Court held that:

As to the House of Representatives Electoral Tribunal's supposed assumption of jurisdiction over the issue of
petitioner's qualifications after the May 8, 1995 elections, suffice it to say that HRET's jurisdiction as the sole judge
of all contests relating to the elections, returns, and qualifications of members of Congress begins only after a
candidate has become a member of the House of Representatives Petitioner not being a member of the House of
Representatives, it is obvious that the HRET at this point has no jurisdiction over the question. 23 (Citations omitted)

To be sure, the petitioners who were the winning candidates in Aquino and Romualdez-Marcos invoked the
jurisdiction of the House of Representatives Electoral Tribunal though they had not yet been proclaimed. Thus, this
Court held that the Commission on Elections still had jurisdiction over the disqualification cases. 24

This Court did not create a new doctrine in Aquino as seen in the Concurring and Dissenting Opinion of Justice
Francisco where he said:

The operative acts necessary for an electoral candidate's rightful assumption of the office for which he ran are his
proclamation and his taking an oath of office. Petitioner cannot in anyway be considere9 as a member of the House
of Representatives for the purpose of divesting the Commission on Elections of jurisdiction to declare his
disqualification and invoking instead HRET s jurisdiction, it indubitably appearing that he has yet to be proclaimed,
much less has he taken an oath of office. Clearly, petitioner's reliance on the aforecited cases which when perused
involved Congressional members, is totally misplaced, if not wholly inapplicable. That the jurisdiction conferred upon
HRET extends only to Congressional members is further established by judicial notice of HRET Rules of Procedure,
and HRET decisions consistently holding that the proclamation of a winner in the contested election is the essential
requisite vesting jurisdiction on the HRET.25

In fact, the Separate Opinion of Justice Mendoza in Romualdez-Marcos will tell us that he espoused a more radical
approach to the jurisdiction of the electoral tribunals. Justice Mendoza is of the opinion that "the eligibility of a
candidate for the office in the House of Representatives may only be inquired into by the House of Representatives
Electoral Tribunal,"26 even if the candidate in Romualdez-Marcos was not yet proclaimed. Justice Mendoza
explained, thus:

Three reasons may be cited to explain the absence of an authorized proceeding for determining before election the
qualifications of a candidate.

xxxx

Third is the policy underlying the prohibition against pre-proclamation cases in elections for President, Vice
President, Senators and members of the House of Representatives. (R.A. No. 7166, Section 15) The purpose is to
preserve the prerogatives of the House of Representatives Electoral Tribunal and the other Tribunals as "sole

158
judges" under the Constitution of the election returns and qualifications of members of Congress of the President
and Vice President, as the case may be.27

Thus, the pronouncement in Guerrero that is used in the main ponencia as the basis for its ruling is not supported
by prior Decisions of this Court. More importantly, it cannot be considered to have changed the doctrine in Angara v.
Electoral Commission. Instead, it was only made in the context of the facts in Guerrero where the Decision of the
Commission on Elections En Banc was issued only after the proclamation and the assumption of office of the
winning candidate. In other words, the contention that there must be proclamation, taking of the oath, and
assumption of office before the House of Representatives Electoral Tribunal takes over is not ratio decidendi. The
other rulings cited in the main ponencia support our view.

In Vinzons-Chato v. Commission on Elections,28 this Court ruled that:

x x x once a winning candidate has been proclaimed, taken his oath, and assumed office as a Member of the House
of Representatives, the COMELEC's jurisdiction over election contests relating to his election, returns, and
qualifications ends, and the HRET's own jurisdiction begins. Stated in another manner, where the candidate has
already been proclaimed winner in the congressional elections, the remedy of the petitioner is to file an electoral
protest with the HRET.29 (Emphasis supplied)

In Limkaichong v. Commission on Elections,30 this Court held that:

x x x once a winning candidate has been proclaimed, taken his oath, and assumed office as a Member of the House
of Representatives, the COMELEC's jurisdiction over election contests relating to his election, returns, and
qualifications ends, and the H.RET's own jurisdiction begins.

It follows then that the proclamation of a winning candidate divests the COMELEC of its jurisdiction over matters
pending before it at the time of the proclamation. 31 (Emphasis supplied)

In Gonzalez v. Commission on Elections32 the paragraph that contains the statement cited in the main ponencia is
as follows:

In any case, the point raised by the COMELEC is irrelevant in resolving the present controversy. It has long been
settled that pursuant to Section 6 of R.A. No. 6646, a final judgment before the election is required for the votes of a
disqualified candidate to be considered stray. In the absence of any final judgment of disqualification against
Gonzalez, the votes cast in his favor cannot be considered "stray." After proclamation, taking of oath and
assumption of office by Gonzalez, jurisdiction over the matter of his qualifications, as well as questions regarding the
conduct of election and contested returns -were transferred to the HRET as the constitutional body created to pass
upon the same. The Court thus does not concur with the COMELEC's flawed assertion of jurisdiction premised on
its power to suspend the effects of proclamation in cases involving disqualification of candidates based on
commission of prohibited acts and election offenses. As we held in Limkaichong any allegations as to the invalidity
of the proclamation will not prevent the HRET from assuming jurisdiction over all matters essential to a member's
qualification to sit in the House of Representatives. 33 (Emphasis supplied)

The above discussion, including the statement cited in the main ponencia is obiter because this Court already found
that "the petition for disqualification and cancellation of the Certificate of Candidacy x x x was filed out of time. The
Commission on Elections therefore erred in giving due course to the petition.'' 34 Further, the context of the statement
cited in the main ponencia emphasized the doctrine that the votes for a candidate who is not yet disqualified qy final
judgement cannot be considered stray votes. In Gonzalez this Court did not require the assumption of office of the
candidate-elect before the electoral tribunal was vested with jurisdiction over electoral protests.

To reiterate, there is only one rule that this Court has consistently applied: It is the proclamation of the winning
candidate vying for a seat in Congress that divests the Commission on Elections of jurisdiction over any electoral
protest. This rule is consistent with the Constitution, the 2011 Rules of the House of Representatives Electoral
Tribunal, the Omnibus Election Code, and jurisprudence.

An electoral protest that also assails the validity of the proclamation will not cause the Commission on Elections to
regain jurisdiction over the protest. 35 Issues regarding the validity or invalidity of the proclamation may be threshed
out before the electoral tribunals. As held in Caruncho Ill v. Commission on Elections, 36 the electoral tribunal has
jurisdiction over a proclamation controversy involving a member of the House of Representatives:

A crucial issue in this petition is what body has jurisdiction over a proclamation controversy involving a member of
the House of Representatives. The 1987 Constitution cannot be more explicit in this regard. Article VI thereof
states:.

Sec. 17. The Senate and the House of Representatives shall each have an Electoral Tribunal which shall be the
sole judge of all contests relating to the election: returns, and qualifications of their respective Members. x x x.

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The foregoing constitutional provision is reiterated in Rule 14 of the 1991 Revised Rules of the Electoral Tribunal of
the House of Representatives, to wit:

Rule 14. Jurisdiction. – The Tribunal shall be the sole judge of all contests relating to the election, returns, and
qualifications of the Members of the House of Representatives.

xxxx

In the same vein, considering that petitioner questions the proclamation of Henry Lanot as the winner in the
congressional race for the sole district of Pasig City, his remedy should have been to file an electoral protest with
the House of Representatives Electoral Tribunal (HRET).37 (Citations omitted)

This Court may obtain jurisdiction over questions regarding the validity of the proclamation of a candidate vying for a
seat in Congress without encroaching upon the jurisdiction of a constitutional body, the electoral tribunal. "The
remedies of certiorari and prohibition will not lie in this case to annul the proclamation of a candidate considering
that there is an available and adequate remedy in the ordinary course of law; that is, the filing of an electoral protest
before the electoral tribunals."38 These remedies, however, may lie only after a ruling by the House of
Representatives Electoral Tribunal or the Senate Electoral Tribunal.

We have said that "the proclamation of the petitioners enjoys the presumption of regularity and validity." 39 Unless it is
annulled by the House of Representatives Electoral Tribunal after giving petitioner Reyes' due notice and
hearing,40 her proclamation as a member-elect in the House of Representatives must stand.

IV

The second fundamental reason for us to exercise caution in determining the composition of the House of
Representatives is that this is required for a better administration of justice. Matters relating to factual findings on
election, returns, and qualifications must first be vetted in the appropriate electoral tribunal before these are raised
in the Supreme Court.

I express some discomfort in terms of our procedural actions in this case.

Giving due course to a Petition for Certiorari is indeed discretionary before this Court. We do have the option to
dismiss outright on the basis o the allegations in the Petition. In many cases we have done so through Minute
Resolutions. In other cases this Court released Resolutions to state more fully its reasons why it dismissed the
Petitions.

We have varied reasons for dismissing. Petitions even without requiring a Comment from the respondent. We may
find that the recital of facts and the procedure that was followed do not warrant a review of the interpretation and
application of the relevant law. In other words we may find that the allegations are insufficient to find grave abuse of
discretion on the part of the respondents.

In appropriate cases we dismiss without the need for a Comment from the respondent when we find that the Petition
shows that a procedural prerequisite was not followed. We may also dismiss without Comment when we find that we
do not have jurisdiction over the subject matter of the Petition or the remedy invoked.

The relief we grant for outright dismissals of Petitions without Comment ends with the dismissal of the Petition. It
leaves the parties to where they were prior to the filing of the Petition. We grant no affirmative relief to the
respondent simply because the basis for doing so has neither been pleaded nor argued with due process.

This case seems to have received a different treatment.

The main ponencia went beyond dismissal of the Petition. The initial resolution of this case supported by the
majority attempted to declare new doctrine. It should just have simply dismissed the Petition and allowed the parties
to litigate at the House o Representatives Electoral Tribunal. The better part of prudence should have been to
require the respondent to file a Comment41 assuming without agreeing that there may have been a need to revisit
doctrine because of the unique facts of this case. In my view the personalities in this case may have been different.
However the facts and circumstances were not unique to unsettle existing rational doctrine.

A Comment is required so that there may be a fuller exposition of the issues from the point of view of the
respondent. It is also required to prevent any suspicion that judges and justices litigate, not decide. This Court has
expressed its disfavor of some judges, thus:

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We cannot close this opinion without expressing our disapproval of the action taken by Judge Tomas V. Tadeo in
filing his own motion for reconsideration of the decision of the respondent court. He should be admonished for his
disregard of a well-known doctrine imposing upon the judge the duty of detachment in case where his decision is
elevated to a higher court for its review. The judge is not an active combatant in such proceeding and must leave it
to the parties themselves to argue their respective positions and for the appellate court to rule on the matter without
his participation. The more circumspect policy is to recognize one s role in the scheme of things, remembering
always that the task of a judge is to decide and not to litigate. 42 (Emphasis supplied)

The majority persisted in declaring that the petitioner's proclamation was "without any basis" despite the absence of
a responsive pleading. This may not be cured by the Comment on the Motion for Reconsideration. In my view, the
validity of the proclamation of petitioner Reyes was never raised as an issue. No responsive pleading exists to have
sufficiently tendered it as an issue.

VI

Good faith must be presumed in the conduct of the petitioner unless evidence to the contrary is submitted to this
Court. We have already ruled that:

When a litigant exhausts all the remedies which the rules allow, in order to seek an impartial adjudication of his
case, the dignity of the judge is not thereby assailed or affected in the least; otherwise, all remedies allowed
litigants, such as appeals from judgments, petitions for reconsideration thereof or for the disqualification of judges,
or motions questioning the jurisdiction of courts, would be deemed derogatory to the respect due a judge. These
remedies may be availed of by any litigant freely, without being considered guilty of an act of disrespect to the court
or the judge.43

Similarly, the same presumption of good faith must be accorded to all Members of this Court. We may not be on all
fours in our opinions, but we must believe in the courage of each Member: of the Court to vote with the objectivity
his or her office demands, guided only by his or her conscience, and our collective hope for a better future.

Our disagreement with the course taken by the majority neither endows us with the competence nor the entitlement
to impute ill motives. However, motives notwithstanding, our people do have to live with the practical consequences
of our words. That, definitely, is a formidable measure of what it is that we have done.

For these reasons, I vote to GRANT the petitioner s Motion for Reconsideration. The Petition should be dismissed.
The House of Representatives Electoral Tribunal has jurisdiction after petitioner s proclamation.

161
 Republic of the Philippines
SUPREME COURT
Manila

EN BANC

A.M. No. RTJ-11-2259               October 22, 2013

(Formerly OCA IPI No. 10-3441-RTJ)

MA. REGINA S. PERALTA, Complainant, 

vs.
JUDGE GEORGE E. OMELIO, Respondent.

x-----------------------x

A.M. No. RTJ-11-2264               

(Formerly OCA IPI No. 10-3368-RTJ)

ROMUALDO G. MENDOZA, Complainant, 
vs.
JUDGE GEORGE E. OMELIO, Respondent.

x-----------------------x

A.M. No. RTJ-11-2273               

(Formerly OCA IPI No. 10-3381-RTJ)

ATTY. ASTERIA E. CRUZABRA, Complainant, 

vs.
JUDGE GEORGE E. OMELIO, Respondent.

DECISION

PER CURIAM:

Before the Court are three consolidated administrative complaints against respondent George E. Omelio, presiding
Judge of the Regional Trial Court (RTC) of Davao City, Branch 14, for gross ignorance of the law, grave misconduct,
oppression, bias and partiality.

The Facts

A.M. No. RTJ-11-2259

Complainant Ma. Regina S. Peralta is one of the plaintiffs in Civil Case No. 32,302-08 entitled "Bentley House
Furniture Company, et al. vs. Jonathon Bentley Stevens, et al." for Declaration of Nullity of Deed of Assignment,
pending before the RTC of Davao City, Branch 11. 1

On March 19, 2010, Jonathon Bentley Stevens, on behalf of the same company, and "Bentley House International
Corp." represented by its Attorney-in-Fact Atty. Michael Castaños, instituted Civil Case No. 33,291-10 against Land
Bank of the Philippines (LBP) for Easement of Right of Way with application for temporary restraining order (TRO),
writ of preliminary injunction, damages and attorney’s fees. The case was raffled off to respondent who immediately
issued a TRO effective for 20 days enjoining LBP from blocking the road leading to the company-owned factory. On
the strength of this TRO, Stevens accompanied by his counsels and Sheriff Hipolito Belangal of RTC Branch 13,
allegedly went to the said premises taking corporate properties along with those of Peralta and her family’s
belongings.2

Contending that the TRO was in direct contravention of orders issued by RTC Branch 11 in Civil Case No. 32,302-
08, Peralta filed an administrative complaint against respondent. She argued that respondent’s ex parte issuance of
the TRO violates the basic procedure laid down in Section 4 (b), (c) and (d), Rule 58 of the Rules of Court. Had
respondent conducted the requisite hearing, he would have been apprised of the following: (a) The complaint filed
by Stevens and Atty. Castaños was previously the subject of an "Urgent Motion to Issue Order for Road Right of

162
Way and/or Status Quo Pending Final Resolution" dated January 27, 2010, asking for the same relief, filed with the
Court of Appeals (CA) in CA-G.R. CV No. 0115-MIN; (b) "Bentley House International Inc." mentioned in the TRO
does not exist and has no premises in the area where the right of way was sought; (c) LBP has in its favor a writ of
possession on the property as early as March 2, 2000, which was reaffirmed by Judge Emmanuel C. Carpio in his
Order dated December 3, 2004 in Civil Case No. 28,630-2001; and (d) LBP has not prevented Stevens or his
agents from gaining access to the property, but sees them daily as they walk past the LBP guardhouse to the
factory.3

Peralta averred that the undue haste in the ex parte issuance of the TRO caused her great emotional and mental
anguish as she had to deal with Stevens’ attempt to dispose and remove from company premises personal and
corporate properties, thus preventing her from spending time with her family during the Holy Week. She further
alleged incurring additional expenses in employing 24-hour security personnel to watch over the factory. 4

A.M. No. RTJ-11-2264

Complainant Romualdo G. Mendoza is one of the defendants in Civil Case No. 32,245-08 entitled "Neighborhood
Assn. of Sto. Rosario Old Airport Sasa, Inc. vs. Hon. Jose Emmanuel M. Castillo, MTCC Branch 1, 11th Judicial
Region, Davao City, Romualdo G. Mendoza and Elaine Matas," for Annulment of Judgment with prayer for
preliminary injunction, TRO and attorney’s fees, initially assigned to the RTC of Davao City, Branch 11 presided by
Judge Virginia Hofileña-Europa. On November 7, 2008, Judge Europa denied the plaintiff’s association’s application
for a writ of preliminary injunction to restrain the execution of the decision rendered by Judge Castillo in Civil Case
No. 20,001-A-07 of the Municipal Trial Court in Cities (MTCC), Branch 1 for unlawful detainer filed by Mendoza
against the association. The latter’s motion for reconsideration was likewise denied under Judge Europa’s Order
dated June 22, 2009 and the case was set for pre-trial conference on July 16, 2009. However, on July 16, 2009, the
association filed a motion for voluntary inhibition of Judge Europa who thereupon issued an Order dated July 16,
2009 cancelling the scheduled pre-trial conference and setting the motion for hearing on July 24, 2009. After Judge
Europa inhibited herself, the case was re-raffled off and later assigned to RTC Branch 14 presided by respondent. 5

Seven months later, the association filed another motion to reconsider and set aside the July 16, 2009 Order of
Judge Europa. After due hearing, respondent issued an Order dated February 2, 2010 setting aside the July 16,
2009 Order of Judge Europa and granting the association’s application for a writ of preliminary injunction. The writ of
preliminary injunction was accordingly issued in favor of the association. 6

Mendoza filed an administrative complaint against respondent charging him with gross ignorance of the law and
procedure, gross inefficiency and negligence, and violations of the New Code of Judicial Conduct, considering that:
(1) The Motion for Reconsideration dated January 29, 2010 filed by the association was a second motion for
reconsideration prohibited under Section 2, Rule 52 of the Rules of Court, and was filed seven months and five days
after the denial of the association’s motion for reconsideration by Judge Europa on June 22, 2009; (2) The
application for preliminary injunction was not accompanied by an affidavit of merit; (3) Respondent had not even
read the records of the case when he issued the writ of preliminary injunction as he fondly called the association’s
counsel, Atty. Mahipus (Davao City Councilor who was running for Congress) as "Congressman Mahipus" thus
allowing his friendship with opposing counsel to inflict an injustice by being ignorant of what he was setting aside, at
one time even arguing in said counsel’s behalf as if respondent was actually lawyering for plaintiff association; and
(4) Respondent did not even indicate in his order granting the writ the reasons for setting aside the previous denial
of Judge Europa.7

A.M. No. RTJ-11-2273

Complainant Atty. Asteria E. Cruzabra is the Acting Registrar of Deeds of Davao City who had testified during the
proceedings in Sp. Proc. No. 7527-2004 entitled "In Re: Petition for Judicial Reconstitution of Original and Owner’s
Duplicate of Original Certificate of Title of the Registry of Deeds for Davao City and the Inscription of the Technical
Descriptions Thereto" of the RTC of Davao City, Branch 14. 8

Helen P. Denila, petitioner in Sp. Proc. No. 7527-2004, sought the reconstitution of Original Certificate of Title (OCT)
Nos. 67, 164, 219, 220, 301, 337 and 514 registered in the names of deceased spouses Constancio S. Guzman
and Isabel Luna. Denila claimed to have authority, under a special power of attorney (SPA), from Bellie S. Artigas,
the alleged "Administrator of Emilio Alvarez Guzman Estate, sole Heir of Constancio Guzman and Isabel Luna" who
was granted 40% share in the estate of Don Constancio Guzman by virtue of an Agreement with Emilio Alvarez
Guzman, which interest she had already sold to Denila. 9

The Republic of the Philippines through the Office of the Solicitor General (OSG) filed its Opposition 10 arguing that
the documents attached to the amended petition are not sufficient sources for reconstitution of original certificates of
title under Republic Act (R.A.) No. 26. At the trial, Cruzabra was called to testify on the certification she issued
stating that the original titles in their custody are "mutilated and/or destroyed," and was also presented as a witness
for the State on the latter’s exhibits showing that the OCTs sought to be reconstituted contained
markings/typewritten words indicating that said titles were already cancelled. 11

163
On March 4, 2008, respondent rendered his Decision12 in favor of Denila, the dispositive portion of which reads:

WHEREFORE, finding the instant petition well founded, the same is hereby granted.

The Registrar Register of Deeds of Davao City is hereby ordered to reconstitute the owners Original Duplicate copy
of Original Certificate of Titles No.

OCT No. 164, OCT No. 219, OCT No. 220, OCT No. 301, OCT No. 337, OCT No. 514 and OCT No. 67 with the
approved Technical Description of said parcels of land attached with this petition be respectively inscribed thereto
and that the titles to the said mentioned parcels of land be duly registered in the name of the original owner
Constancio Guzman, and considering that the latter through his attorney-in-fact Bellie S. Artigas sold the same to
herein petitioner (Exhs. "G" to "M"), the Register of Deeds, Davao City is further ordered to correspondingly issue
Transfer Certificate of Titles over the subject parcels of land in the name of herein petitioner.

Cost against the petitioner.

SO ORDERED.13

Cruzabra elevated the matter to the Land Registration Authority (LRA) by way of consulta pursuant to Section 117 of
Presidential Decree No. 1529. Meanwhile, on May 26, 2008, the OSG filed a petition for relief from judgment with
prayer for injunction assailing the validity of the March 4, 2008 Decision on the ground that reconstitution of OCT
Nos. 219, 337, 67 and 164 was previously denied by this Court while OCT Nos. 514, 220 and 301 were cancelled
on account of various conveyances and hence could not likewise be reconstituted. The OSG thus prayed that the
March 4, 2008 Decision be set aside, the case be reopened and the Republic be allowed to present its evidence,
and thereafter another decision be rendered by the court dismissing Denila’s petition for reconstitution. 14

On September 3, 2008, respondent voluntarily inhibited himself from the reconstitution case (Sp. Proc. No. 7527-
2004), apparently in reaction to insinuations that he was impelled by improper considerations in rendering the March
4, 2008 Decision with "lightning speed" despite having just assumed office at Branch 14 after the former presiding
judge returned to her permanent station. In his Order, 15 respondent admitted he just copied the draft already written
by the former presiding judge and signed the same, and thereupon stated:

As there is already a doubt cast by these concerned sectors against the sense of impartiality and independence of
the undersigned Presiding Judge he is therefore, voluntarily INHIBITING himself from further sitting in this case.

Let the record of this case be transmitted to the Office of the Executive Judge of this Court for re-raffling with the
exception of Branch 14. SO ORDERED.

The case was re-raffled off to Branch 15, but the presiding judge thereof, after setting the OSG’s petition for relief
from judgment for hearing and directing Denila to file her answer, eventually inhibited himself upon motion filed by
Denila. The case was thus sent back to Branch 14.

On June 10, 2008, Denila filed a verified petition to declare Cruzabra in contempt of court (Civil Case No. 32,387-08
for Indirect Contempt) which was raffled off to Branch 14. Cruzabra had refused to comply with the writ of execution
served upon her to implement the March 4, 2008 Decision in the reconstitution case. Cruzabra moved to suspend
the indirect contempt proceedings, citing the pendency of the OSG’s petition for relief from judgment. 16

Meanwhile, on June 29, 2009, LRA Administrator Benedicto B. Ulep issued a Resolution in

Consulta No. 4581 holding that based on the records, the certificates of title sought to be reconstituted in Sp. Proc.
No. 7527-2004 are previously cancelled titles. The LRA thus opined that the March 4, 2008 decision is not
registrable and hence the Registrar of Deeds may not be compelled to register the same despite its finality. 17

On September 3, 2009, respondent issued an order denying the petition for relief stating that: (1) Neither the OSG
nor the City Prosecutor who received a copy of the decision on March 10, 2008 filed an appeal or a motion for
reconsideration; (2) Cruzabra made a wrong interpretation of the Rules by filing a consulta with the LRA; (3) Such
gross negligence on their part resulted in the expiration of the period to appeal and the consequent issuance of a
writ of execution. Prosecutor Samuel T. Atencia filed a motion for reconsideration on behalf of the Republic but
respondent denied it in his Order dated October 1, 2009, on the ground that the notice of hearing was addressed to
the Clerk of Court and not to the parties. In the Order dated December 8, 2009, Cruzabra was declared in contempt
of court and ordered imprisoned until she complies with the March 4, 2008 Decision. On October 22, 2009, the OSG
filed in the CA a petition for certiorari with urgent prayer for TRO and writ of preliminary injunction. On December 9,
2009, respondent issued a warrant of arrest against Cruzabra. 18

Cruzabra filed a motion for reconsideration of the December 8, 2009 Order but on December 17, 2009, respondent
inhibited himself from further sitting on Civil Case No. 32,387-08 (Indirect Contempt) stating in his order that he was

164
shown a pleading he had signed almost 30 years ago involving a big tract of land, a portion of which was involved in
the reconstitution case.19

Civil Case No. 32,387-08 (Indirect Contempt) was eventually re-raffled off to Branch 16 presided by Judge
Emmanuel C. Carpio. After due hearing, Judge Carpio issued an Order 20 dated February 11, 2010 holding that
Cruzabra’s refusal to comply with the March 4, 2008 decision was not contumacious, thus:

GIVEN THE REASONS, the Court finds merit on the Motion For Reconsideration filed by respondent Cruzabra.
CONSEQUENTLY:

1. THE Motion For Reconsideration is GRANTED;

2. Court Order dated December 8, 2009 is SET ASIDE;

3. The warrant for her arrest is RECALLED;

4. The instant petition is DISMISSED.

SO ORDERED.21

On February 17, 2010, the LRA denied the motion for reconsideration of the Resolution dated June 29, 2009 filed by
Denila. Subsequently, she filed in Sp. Proc. No. 7527-2004 (reconstitution case) a motion to declare Cruzabra,
Acting Registrar of Deeds Jorlyn B. Paralisan and LRA Administrator Ulep in contempt of court "for NOT performing
and openly defying their ministerial functions" to implement the March 4, 2008 decision. On February 25, 2010, she
also filed a motion for reconsideration of the February 11, 2010 Order of Judge Carpio dismissing Civil Case No.
32,387-08 (Indirect Contempt). 22

At the hearing of the motion for contempt, Prosecutor Atencia opposed the conduct of the hearing, pointing out that
pursuant to Section 4, Rule 71 of the 1997 Rules of Civil Procedure, as amended, there must be an independent
petition or action for indirect contempt which must be filed and docketed apart from the main case. In his Order
dated March 4, 2010, respondent rejected the prosecutor’s stance, stating that there is no more interest left to be
represented by the State as the main case had long been decided and had become final and executory two years
ago. Respondent also disagreed with the contention that since the petition for indirect contempt was dismissed by
Branch 16, Denila’s motion for contempt in the reconstitution case should likewise be dismissed, holding that res
judicata does not obtain in the two cases, and further faulted the Register of Deeds for issuing the derivative titles
despite the existence of the subject OCTs in the files of the LRA. Thus, respondent cited Cruzabra and Paralisan in
contempt of court, while the motion for contempt with respect to Administrator Ulep for issuing a resolution tending
to obstruct the administration of justice, will be dealt with in due time. A warrant of arrest was thereupon issued by
respondent against Cruzabra and Paralisan.23

On March 17, 2010, the Twenty-Second Division of CA-Mindanao Station granted in CA-G.R. SP No. 03270-MIN
the Republic’s prayer for a TRO which was issued effective for 60 days. On the other hand, Judge Carpio in his
Order dated March 18, 2010 denied the motion for reconsideration of Denila from the order dismissing her petition
for indirect contempt (Civil Case No. 32,387-08). On May 17, 2010, the appellate court also granted the Republic’s
application for a writ of preliminary injunction and the writ was issued "specifically enjoining the public respondent
Judge George E. Omelio, his agents or deputies and all other persons acting for and in his behalf and under his
authority, to forthwith CEASE and DESIST from enforcing, implementing, and executing the Decision of March 4,
2008, the Order of September 3, 2009, and the Order of October 1, 2009, as well as the Order of March 4, 2010 -
during the pendency of this case and until final determination and judgment shall have been rendered x x x." 24

On May 25, 2010, respondent granted Denila’s motion to require the City Engineer’s Office of Davao City to issue a
fencing permit over the properties covered by OCT Nos. 164, 219, 220, 301, 337, 514 and 67. 25 Under Resolution
dated October 5, 2010, the CA-MIN upon motion for clarification filed by Denila, assented to the said order for
issuance of a fencing permit as well as a writ of demolition. Subsequently, motions to intervene with attached joint
petitions for intervention were filed by third parties (Lolita P. Tano, et al. and Alejandro Alonzo, et al.) claiming to be
possessors and actual occupants of lots previously covered by the OCTs sought to be reconstituted. They
contended that Denila had speciously asked for the issuance of a fencing permit without disclosing that there were
actual occupants and possessors of the subject properties. The City of Davao later joined the intervenors. On April
28, 2011, the CA-MIN (1) granted the motions to intervene filed by Tano, et al., Alonzo, et al. and the City of Davao
and direct movants Tano, et al. and Alonzo, et al. to pay the required docket fees, and (2) recalled its October 5,
2010 Resolution insofar as the CA’s assent to the issuance of a fencing permit. 26

Cruzabra charges respondent with ignorance of law and procedure, misconduct, bias, partiality and oppression in
granting Denila’s petition for reconstitution despite the previous ruling of this Court in Heirs of Don Constancio
Guzman, Inc. v. Hon. Judge Emmanuel Carpio 27 against the reconstitution of OCT Nos. 219, 337, 67 and 164, and
the failure of Denila to comply with the jurisdictional requirements under R.A. No. 26 (indicating (1) the nature and

165
description of the buildings and improvements not belonging to the owner of the land; and (2) the names and
addresses of occupants or persons in possession of the property). 28

Cruzabra likewise assails respondent for revoking his previous inhibition and denying the Republic’s petition for
relief from judgment without conducting a hearing as required by Section 6, Rule 38 of the Rules of Court. The
reason for similar denial of the motion for reconsideration filed by the OSG was also flimsy: the notice of hearing
was addressed only to the Clerk of Court, even as the parties were all furnished with copies of the motion. 29

As to Civil Case No. 32,387-08 (Indirect Contempt), Cruzabra stresses that she was cited in contempt and ordered
arrested by the respondent without any hearing. Respondent simply ignored the various motions filed by Cruzabra
but did not require Denila to present evidence. And after respondent inhibited himself from the case, it was re-raffled
off to Judge Carpio who eventually dismissed Denila’s petition and revoked the warrant of arrest earlier issued by
respondent against Cruzabra. But despite Judge Carpio’s ruling that Cruzabra’s failure to obey the March 4, 2008
decision was not contumacious, respondent revoked his previous inhibition and proceeded to give due course to
Denila’s motion to cite Cruzabra in contempt of court in the reconstitution case. Thus, not only did respondent fail to
adhere to the requirement that contempt proceedings be initiated through a verified petition, his act of taking
cognizance of a mere motion to cite Cruzabra in contempt of court and ordering her incarceration in jail until she
complies with the March 4, 2008 Decision, had the effect of placing Cruzabra in double jeopardy. Additionally,
Cruzabra cites the petition for certiorari filed in the CA by the OSG describing respondent’s acts which denied due
process to the Republic as indicative of bias and partiality on his part. 30

Lastly, Cruzabra contends that respondent’s precipitous issuance of a warrant of arrest was oppressive.
Respondent was overzealous in putting her to jail knowing that she cannot comply with the directive to reconstitute
the owner’s original duplicate copies of OCT Nos. 164, 219, 220, 301, 337, 514 and 67 because the LRA ruled
against their registrability. And after learning of the dismissal by Judge Carpio of the indirect contempt case,
respondent immediately revoked his previous inhibition in Sp. Proc. No. 7527-2004 (reconstitution case) and took
cognizance of Denila’s motion to cite in contempt Cruzabra along with Paralisan and Administrator Ulep. 31

Respondent’s Answer

In A.M. No. RTJ-11-2259, respondent claims it was filed by Peralta merely to harass him so that he would dismiss a
criminal case for estafa filed against Peralta involving the sum of ₱4 million now pending before Branch 14 (Crim.
Case No. 65,463-2009), as in fact Peralta filed a motion for his recusal in the said case. 32

As to the TRO he had issued in favor of Stevens, respondent contends that the Chambers conference held at 9:00
in the morning substantially complies with the requirement of summary hearing under the Rules. Moreover, Peralta
failed to exhaust her administrative remedies against the TRO before filing the present administrative complaint,
such as a motion for reconsideration and petition for certiorari with the CA. Peralta also could have intervened in
Civil Case No. 33,291-2010 (Easement of Road Right-of-Way). Respondent further points out that Peralta herself
admitted it was LBP which allowed Stevens to freely access the subject property and hence she had no reason to
complain on the TRO issued.33

In A.M. No. RTJ-11-2264, respondent asserts that Mendoza had no moral standing to file this administrative
complaint considering that he had been indicted for Falsification under Article 172 of the Revised Penal Code, as
amended, by the City Prosecutor’s Office of Davao City. He alleges that Mendoza was selling properties no longer
owned by him, including the property subject of the unlawful detainer case (Civil Case No. 20,001-A-2007). In its
entirety, the administrative complaint narrates errors allegedly committed by respondent, for which the appropriate
remedy is the filing of a motion for reconsideration. The administrative complaint was therefore prematurely filed,
aside from being a mere harassment suit.34

In A.M. No. RTJ-11-2273, respondent vehemently denies the accusations of bias, partiality, misconduct and
ignorance of the law and procedure. Cruzabra’s reliance on the LRA ruling is misplaced because the LRA had no
authority and jurisdiction by mere consulta to interfere with, review, revoke and/or override a decision of the RTC
which had already become final and executory. As to the previous ruling of this Court in Heirs of Don Constancio
Guzman, Inc. v. Hon. Judge Emmanuel Carpio, 35 what petitioners therein failed to prove, petitioner Denila in Sp.
Proc. No. 7527-2004 "overwhelmingly introduced evidence and proved her petition by complying with the mandate
of the provisions of Section 2, R.A. 26 x x x."36

Respondent contends that Cruzabra defiantly and deliberately refuses to perform her ministerial duty of complying
with the March 4, 2008 decision, which resulted to her being cited in contempt of court. As for the denial of the
OSG’s petition for relief from judgment, respondent faults Cruzabra for "wrongly elevating" the March 4, 2008
Decision to the LRA Administrator - by way of consulta, instead of appealing the same to the CA or filing a petition
for certiorari in the Supreme Court - thereby allowing the said decision to become final and executory. 37

On the alleged denial of due process in the indirect contempt case, respondent vigorously denies it for being false
and concocted, insisting that Cruzabra was formally charged but she did not bother to attend several hearings set
by respondent. Contrary to the claims of Cruzabra, it is she, Paralisan and Administrator Ulep who connived and
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conspired with one another in "making a mockery of justice by avoiding the execution of the final decision" of
respondent. Respondent believes that the present administrative complaint was filed to destroy his good name and
reputation after deciding the reconstitution case in good faith, based on the proof and evidence presented during the
trial.38

Report of the Investigating Justice

Of the Court of Appeals

On March 28, 2012, Justice Zenaida T. Galapate-Laguilles of the Court of Appeals Mindanao Station submitted her
Report.39 She found the complaints in A.M. Nos. RTJ-11-2259 and RTJ-11-2264 lacking in factual and legal bases.
However, she recommended that in A.M. No. RTJ-11-2273, respondent be suspended for three months and
ordered to pay a fine of ₱30,000.00 for gross ignorance of the law, with a warning that any similar transgression in
the future shall be dealt with more severely.

Justice Galapate-Laguilles found that respondent repeatedly disregarded and failed to take judicial notice of the
Resolution issued by this Court in G.R. No. 159579 and rendered orders denying the OSG’s petition for relief from
judgment and motion for reconsideration thereof. She opined that respondent’s refusal to heed or simply take note
of the parallelism of facts in the decided case and the one before his court bespeaks of his cavalier treatment of
legal precedents. Such display of defiance of the established guidelines, aside from being impermissible, is
unbecoming a magistrate.40

Recommendation of the OCA

On the matter of ex parte issuance of TRO by respondent preceded by a conference with the parties’ respective
counsels at his chamber, the gist of Peralta’s complaint (RTJ-11-2259), the OCA found no violation of the provisions
of Rule 58, Rules of Court, which expressly allows the ex parte granting of a TRO. Peralta simply failed to prove that
respondent acted in bad faith, fraud, dishonesty or corruption that would overturn the presumption of regularity of an
official act.41

The OCA likewise found no merit in the complaint of Mendoza (RTJ-11-2264). Respondent’s grant of the
association’s second motion for reconsideration is not proscribed under the Rules because the order sought to be
reconsidered is an interlocutory, not a final order. There is likewise no abuse of discretion committed by the
respondent in issuing the TRO and writ of preliminary injunction. The OCA noted that Mendoza did not indicate in
his complaint nor in his Comment on respondent’s position paper that he challenged the Order and the Writ of
Preliminary Injunction before the CA or this Court. Instead of exhausting the judicial remedies available to him,
Mendoza, preferred to file the present administrative complaint against respondent. 42

However, with respect to Cruzabra’s complaint (RTJ-11-2273) pertaining to the failure of respondent to take judicial
notice of this Court’s previous ruling against the reconstitution of OCTs sought to be reconstituted in Sp. Proc. No.
7527-2004, the OCA found respondent guilty of gross ignorance of the law. The OCA said that the finding of the
Investigating Justice that the attitude of respondent reflected injudiciousness is substantially supported with
applicable legal principles and jurisprudence. 43

The OCA recommended, thus –

RECOMMENDATION:

PREMISES CONSIDERED, it is respectfully recommended for the consideration of the Court that:

1. A.M. No. RTJ-11-2264 [Formerly A.M. OCA IPI No. 10-3368-RTJ] (Romualdo G. Mendoza vs. Judge
George E. Omelio, Regional Trial Court, Branch 14, Davao City) and A.M. No. RTJ-11-2259 [Formerly A.M.
OCA IPI No. 10-3441-RTJ] (Ma. Regina S. Peralta vs. Judge George E. Omelio, Regional Trial Court,
Branch 14, Davao City) be DISMISSED for lack of merit; and

2. in A.M. No. RTJ-11-2273 [Formerly A.M. OCA IPI No. 10-3381-RTJ] (Atty. Asteria E. Cruzabra vs. Judge
George E. Omelio, Regional Trial Court, Branch 14, Davao City), respondent Judge George E. Omelio be
held guilty of gross ignorance of the law and be DISMISSED from the service with forfeiture of all his
benefits, except accrued leave credits, with prejudice to his reemployment in any branch or service of the
government including government-owned or controlled corporations. 44

The Court’s Ruling

We agree with the findings and recommended penalty of the OCA.

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In A.M. No. RTJ-11-2259, upon receiving the complaint on March 26, 2010, respondent granted the prayer for TRO
after holding at his chambers a conference with the parties’ respective counsels who conformed to the issuance of a
TRO. Peralta and her counsel thus had notice and the requirement of a summary hearing was substantially
complied with. In any case, under Section 5,45 Rule 58 of the Rules of Court, respondent was allowed to issue ex
parte a TRO of limited effectivity and, in that time, conduct a hearing to determine the propriety of extending the
TRO or issuing a writ of preliminary injunction.

Even assuming that respondent committed errors in issuing the TRO, Peralta could have pursued the appropriate
remedy to challenge its validity. But nowhere in her complaint was it mentioned that she filed a motion for
reconsideration or a petition for certiorari in the CA assailing the TRO. We have previously held that where sufficient
judicial remedies exist, the filing of an administrative complaint is not the proper recourse to correct a judge’s
allegedly erroneous act.46

Indeed, as a matter of public policy, not every error or mistake committed by judges in the performance of their
official duties renders them administratively liable. 47 Only errors that are tainted with fraud, corruption or malice may
be the subject of disciplinary actions. For administrative liability to attach, respondent must be shown to have been
moved by bad faith, dishonesty, hatred or some other similar motive. 48 Peralta failed to allege and prove any
improper motive or bad faith on the part of respondent. She merely averred having suffered "undue emotional and
financial hardships" because of respondent’s act. For this reason, her complaint against the respondent must be
dismissed.

As to the charges of gross ignorance of the law, partiality and prejudgment in A.M. No. RTJ-11-2264, the complaint
focuses on respondent’s Order dated February 2, 2010 in Civil Case No. 32,245-2008 (for "Annulment of
Judgment") which granted the association’s (defendant in the unlawful detainer case decided by the MCTC) motion
for reconsideration of the July 16, 2009 Order issued by Judge Europa to whom the case was initially assigned.
Aside from the fact that said motion was filed after the lapse of 7 months and 5 days from June 22, 2009 when
Judge Europa denied the association’s motion for reconsideration of the November 7, 2008 Order denying the
association’s application for a writ of preliminary injunction, the Order sought to be reconsidered – the July 16, 2009
Order – was, in fact, irrelevant because it merely cancelled the scheduled pre-trial conference as Judge Europa,
upon motion filed by the association, inhibited herself from further handling the case. Mendoza stresses that the
February 2, 2010 Order issued by respondent granted the association’s application for a writ of preliminary
injunction, which was already denied under Judge Europa’s November 7, 2008 Order. He thus accuses respondent
of committing patently erroneous acts in abuse of his authority when he entertained the association’s Motion for
Reconsideration dated January 29, 2010 despite being a second motion for reconsideration proscribed by the Rules
of Court which was filed only months after the application for a writ of preliminary injunction was denied by Judge
Europa, and notwithstanding that the July 16, 2009 Order refers to the cancellation of the pre-trial hearing and not
the denial of the application for a writ of preliminary injunction. These acts, coupled with respondent’s "arguing in
behalf" of the association’s counsel whom he even called "Congressman Mahipus," strongly indicate respondent’s
partiality to the association.

We agree with the OCA that while the association’s motion dated January 29, 2010 was a second motion for
reconsideration, said motion did not violate the rule prohibiting the filing of a second motion for reconsideration.

As Section 5, Rule 37 of the Rules of Court clearly provides, the proscription against a second motion for
reconsideration is directed against "a judgment or final order." 49 Thus, we held in Philgreen Trading Construction
Corporation v. Court of Appeals50:

The rule that a second motion for reconsideration is prohibited by the Rules applies to final judgments and orders,
not interlocutory orders. This is clear from the Interim or Transitional Rules Relative to the Implementation of B.P.
129. Section 4 of the Interim Rules provides that "[n]o party shall be allowed a second motion for reconsideration of
a final order or judgment." A second motion for reconsideration attacking an interlocutory order can be denied on the
ground that it is a "rehash" or mere reiteration of grounds and arguments already passed upon and resolved by the
court; it, however, cannot be rejected on the ground that a second motion for reconsideration of an interlocutory
order is forbidden by law.51

An order granting or denying an application for preliminary injunction is interlocutory in nature. 52 The November 7,
2008 order denying the application for a writ of preliminary injunction is not a final order, and hence the association’s
filing of a second motion for reconsideration of the said order, is not prohibited. Being an interlocutory order which is
not appealable,53 respondent’s subsequent order granting the application for preliminary injunction may be
challenged in a petition for certiorari before the CA. Mendoza, however, opted to file this administrative complaint
which contained no allegation that he had availed of the aforesaid remedy to set aside the writ issued by
respondent.

We reiterate the rule that the filing of an administrative complaint is not the proper remedy for correcting the actions
of a judge perceived to have gone beyond the norms of propriety, where a sufficient remedy exists. 54 The actions
against judges should not be considered as complementary or suppletory to, or substitute for, the judicial remedies
which can be availed of by a party in a case.55 Moreover, the grant or denial of a writ of preliminary injunction in a

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pending case rests on the sound discretion of the court taking cognizance of the case, since the assessment and
evaluation of evidence towards that end involves findings of fact left to the said court for its conclusive
determination. Hence, the exercise of judicial discretion by a court in injunctive matters must not be interfered with,
except when there is grave abuse of discretion.56

In view of the foregoing reasons, Mendoza’s administrative complaint against respondent must be dismissed for lack
of merit.

However, we find respondent administratively liable in A.M. No. RTJ-11-2273 for gross ignorance of the law in (a)
refusing to adhere to a prior ruling of this Court against the reconstitution of certain OCTs; (b) reversing his previous
inhibition in Sp. Proc. No. 7527-2004; and (c) taking cognizance of Denila’s motion for indirect contempt.

Gross ignorance of the law is the disregard of basic rules and settled jurisprudence. A judge may also be
administratively liable if shown to have been motivated by bad faith, fraud, dishonesty or corruption in ignoring,
contradicting or failing to apply settled law and jurisprudence. 57 Though not every judicial error bespeaks ignorance
of the law and that, if committed in good faith, does not warrant administrative sanction, the same applies only in
cases within the parameters of tolerable misjudgment. Where the law is straightforward and the facts so evident, not
to know it or to act as if one does not know it constitutes gross ignorance of the law. 58

In granting Denila’s petition for reconstitution of original and owner’s duplicate copies of OCTs registered in the
name of Constancio S. Guzman and Isabel Luna, respondent failed to take judicial notice of this Court’s previous
ruling rendered in Heirs of Don Constancio Guzman, Inc. v. Hon. Judge Emmanuel Carpio 59 which involved the
same OCT Nos. 219, 337, 67 and 164. The Resolution rendered by this Court’s Third Division is herein reproduced:

Before this Court is a petition for review on certiorari seeking the reversal of the order dated May 12, 2003 of the
Regional Trial Court, Branch 16, of Davao City and another order dated July 11, 2003 which denied petitioner’s
motion for reconsideration in Special Proceedings Nos. 5913-01 to 5916-01.

The generative facts of this case follow.

On June 8, 2001, petitioner filed in the trial court four separate petitions for reconstitution of lost and/or destroyed
original certificates of title (OCT) nos. 219, 337, 67 and 164.

Petitioner alleges that Constancio Guzman was the owner of several parcels of land located in Davao City.
Constancio was beheaded by the Japanese soldiers on December 21, 1941. Thereafter, his common-law wife,
Isabel Luna, also passed away. Constancio died without any direct heir and was survived by petitioner, a
corporation whose stakeholders were sons, daughters and grandchildren of his only brother, the late Manuel
Guzman.

In compliance with the court’s order, petitioner caused the publication of each petition in the Official Gazette for two
consecutive weeks as well as the posting of copies of the four petitions at the City Hall and Hall of Justice of Davao
City.

During the initial hearing on May 16, 2002, the trial court issued an order requiring the Register of Deeds of Davao
City to submit a report on the status of the aforementioned certificates of title.

On July 25, 2002, the Acting Registrar of Deeds of Davao City, Atty. Florenda Patriarca, submitted a report showing
that: (1) OCT No. 337 in the name of spouses Constancio Guzman and Isabel Luna had already been cancelled
and was the subject of several transfers, the latest being to the Republic of the Philippines; (2) OCT No. 219 in the
name of spouses Constancio Guzman and Isabel Luna had likewise been cancelled and, was the subject of several
transfers, the latest being in favor of Antonio Arroyo; (3) OCT No. 164 in the name of spouses Constancio Guzman
and Isabel Luna was the subject of several transfers and was now registered in the name of Antonio Arroyo; (4)
OCT No. 67 in the name of Constancio Guzman alone had also been cancelled and transferred several times, the
latest being in the name of Madeline Marfori.

On November 25, 2002, Madeline Marfori and Beatriz Gutierrez opposed the petitions for reconstitution and filed a
motion to dismiss on the ground that the petitions failed to satisfy the jurisdictional requirements of RA 26.

On May 12, 2003, the trial court issued an order dismissing all the petitions for reconstitution as it was clear from the
report of the Register of Deeds that OCT Nos. 337, 219, 164 and 67 were neither mutilated, destroyed nor lost but
were in fact cancelled as a result of voluntary and involuntary transfers.

Hence, this petition.

At the outset, it should be stated that there is here a blatant disregard of the hierarchy of courts and no exceptional
or compelling circumstance has been cited by petitioner why direct recourse to this Court should be allowed. In

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Tano v. Socrates, this Court declared that the propensity of litigants and lawyers to disregard the hierarchy of courts
must be stopped in its tracks, not only because it wastes the precious time of this Court but also because it delays
the adjudication of a case which has to be remanded or referred to the proper forum.

Moreover, even if we were to decide the instant case on the merits, the petition would still fail. Reconstitution of
certificates of title, within the meaning of RA 26, means the restoration of the instrument which is supposed to have
been lost or destroyed in its original form and condition. Petitioner failed to prove that the certificates of title intended
to be reconstituted were in fact lost or destroyed. On the contrary, the evidence on record reveals that the
certificates of title were cancelled on account of various conveyances. In fact, the parcels of land involved were duly
registered in the names of the present owners whose acquisition of title can be clearly traced through a series of
valid and fully documented transactions.60 (Italics in the original; emphasis supplied; citations omitted.)

Under Resolution61 dated February 16, 2004, this Court issued a final denial of the motion for reconsideration filed
by the petitioners in the above-cited case. In its petition for relief from judgment, the OSG brought to the attention of
respondent the foregoing ruling as the Republic’s good and valid defense against Denila’s claim. While respondent
inhibited himself from the case he eventually resumed handling the case after the presiding judge of Branch 15
inhibited himself upon motion filed by Denila. Instead of giving serious consideration to the meritorious defense
raised by the Republic, respondent denied the petition for relief, finding both the City Prosecutor and Cruzabra at
fault, the former in not filing a motion for reconsideration and the latter in her "wrong interpretation of the Rules"
when she filed instead a consulta before the LRA. The City Prosecutor moved to reconsider the denial of the
Republic’s petition for relief from judgment, but respondent denied it on the flimsy reason that the notice of hearing
was addressed to the Clerk of Court.

In Republic v. Tuastumban,62 the Court enumerated what needs to be shown before the issuance of an order for
reconstitution: (a) that the certificate of title had been lost or destroyed; (b) that the documents presented by
petitioner are sufficient and proper to warrant reconstitution of the lost or destroyed certificate of title; (c) that the
petitioner is the registered owner of the property or has an interest therein; (d) that the certificate of title was in force
at the time it was lost or destroyed; and (e) that the description, area and boundaries of the property are
substantially the same as those contained in the lost or destroyed certificate of title. 63 That OCT Nos. 164, 219, 337
and 67 are already cancelled titles was definitively settled by this Court. Respondent’s stubborn disregard of our
pronouncement that the said titles can no longer be reconstituted is a violation of his mandate to apply the relevant
statutes and jurisprudence in deciding cases.

In Peltan Development, Inc. v. Court of Appeals, 64 we emphatically declared:

x x x In resolving a motion to dismiss, every court must take cognizance of decisions this Court has rendered
because they are proper subjects of mandatory judicial notice as provided by Section 1 of Rule 129 of the Rules of
Court, to wit:

"SECTION 1. Judicial notice, when mandatory. – A court shall take judicial notice, without the introduction of
evidence, of the existence and territorial extent of states, their political history, forms of government and symbols of
nationality, the law of nations, the admiralty and maritime courts of the world and their seals, the political constitution
and history of the Philippines, the official acts of the legislative, executive and judicial departments of the
Philippines, laws of nature, the measure of time, and the geographical divisions." (Italics supplied.)

The said decisions, more importantly, "form part of the legal system," and failure of any court to apply them shall
constitute an abdication of its duty to resolve a dispute in accordance with law, and shall be a ground for
administrative action against an inferior court magistrate.

In resolving the present complaint, therefore, the Court is well aware that a decision in Margolles vs. CA, rendered
on 14 February 1994, upheld the validity of OCT No. 4216 (and the certificates of title derived therefrom), the same
OCT that the present complaint seeks to nullify for being "fictitious and spurious." Respondent CA, in its assailed
Decision dated 29 June 1994, failed to consider Margolles vs. CA. This we cannot countenance. 65 (Emphasis
supplied; citations omitted.)

With respect to OCT Nos. 220, 301 and 514, the LRA urged the RTC to re-examine the correctness of its order to
reconstitute the said titles in the hearing of the Republic’s petition for relief from judgment since said titles were
found to have been cancelled on account of various transactions. The LRA resolution on Consulta No. 4581 was
presented by Cruzabra as her defense to the motion for contempt filed by Denila in the reconstitution case after the
petition for indirect contempt (Civil Case No. 32,387-08) was dismissed by Judge Carpio.

In his March 4, 2010 Order declaring Cruzabra and Paralisan in contempt of court, respondent brushed aside the
LRA’s findings on the subject OCTs. Respondent instead faulted the Register of Deeds for issuing the derivative
titles "despite existence of the subject original certificates of titles in the files of the Land Registration
Authority."66This stance of respondent is perplexing considering that in the March 4, 2008 Decision, respondent
narrated that Denila’s witness, Myrna Fernandez, Chief of the LRA’s Document Section Docket Division, who
presented in court certified true copies of the original copies in their file of the subject OCTs, "further testified that as
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record custodian they only keep a record of the said titles and as to the cancellation thereof, it is the Register of
Deeds of the said place that makes the cancellation without need of any communication or information on their
end."67 It is thus clear that the present condition of the titles is to be verified not from the LRA but with the local
Registry of Deeds where instruments of conveyance and other transactions are recorded. Indeed, the records
reveal that respondent persistently ignored these findings on the status of the subject OCTs, including the previous
ruling of this Court, as he even blamed the OSG for raising the matter only in their petition for relief from judgment.

But more important, respondent granted the petition for reconstitution in Sp. Proc. 7527-2004 despite non-
compliance with the requirements under R.A. No. 26.

The applicable provisions are Sections 2, 12 and 13 which state:

SECTION 2. Original certificates of title shall be reconstituted from such of the sources hereunder enumerated as
may be available, in the following order:

(a) The owner’s duplicate of the certificate of title;

(b) The co-owner’s, mortgagee’s, or lessee’s duplicate of the certificate of title;

(c) A certified copy of the certificate of title, previously issued by the register of deeds or by a legal custodian
thereof;

(d) An authenticated copy of the decree of registration or patent, as the case may be, pursuant to which the
original certificate of title was issued;

(e) A document, on file in the registry of deeds, by which the property, the description of which is given in
said document, is mortgaged, leased or encumbered, or an authenticated copy of said document showing
that its original had been registered; and

(f) Any other document which, in the judgment of the court, is sufficient and proper basis for reconstituting
the lost or destroyed certificate of title.

xxxx

SEC. 12. Petitions for reconstitution from sources enumerated in Sections 2(c), 2(d), 2(e), 2(f), 3(c), 3(d), 3(e) and/or
3(f) of this Act, shall be filed with the proper Court of First Instance, by the registered owner, his assigns, or any
person having an interest in the property. The petition shall state or contain, among other things, the following: (a)
that the owner's duplicate of the certificate of title had been lost or destroyed; (b) that no co-owner's mortgagee's or
lessee's duplicate had been issued, or, if any had been issued, the same had been lost or destroyed; (c) the
location, area and boundaries of the property; (d) the nature and description of the buildings or improvements, if
any, which do not belong to the owner of the land, and the names and addresses of the owners of such buildings or
improvements; (e) the names and addresses of the occupants or persons in possession of the property, of the
owners of the adjoining properties and all persons who may have any interest in the property; (f) a detailed
description of the encumbrances, if any, affecting the property; and (g) a statement that no deeds or other
instruments affecting the property have been presented for registration, or, if there be any, the registration thereof
has not been accomplished, as yet. All the documents, or authenticated copies thereof, to be introduced in evidence
in support of the petition for reconstitution shall be attached thereto and filed with the same: Provided, That in case
the reconstitution is to be made exclusively from sources enumerated in Section 2(f) or 3(f) of this Act, the petition
shall be further be accompanied with a plan and technical description of the property duly approved by the Chief of
the General Land Registration Office, or with a certified copy of the description taken from a prior certificate of title
covering the same property.

SEC. 13. The court shall cause a notice of the petition , filed under the preceding section, to be published, at the
expense of the petitioner, twice in successive issues of the Official Gazette , and to be posted on the main entrance
of the provincial building and of the municipal building of the municipality or city in which the land is situated, at least
thirty days prior to the date of hearing. The court shall likewise cause a copy of the notice to be sent, by registered
mail or otherwise, at the expense of the petitioner, to every person named therein whose address is known, at least
thirty days prior to the date of hearing . Said notice shall state, among other things, the number of the lost or
destroyed certificate of title, if known, the name of the registered owner, the names of the occupants or persons in
possession of the property, the owners of the adjoining properties and all other interested parties, the location, area
and boundaries of the property, and the date on which all persons having any interest therein must appear and file
their claim or objections to the petition. The petitioner shall, at the hearing, submit proof of the publication, posting
and service of the notice as directed by the court. (Emphasis supplied.)

In this case, the petition for reconstitution of the subject OCTs is based on Section 2 (c), that is, on certified true
copies of the said titles issued by a legal custodian from the LRA. However, the amended petition and the notice of

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hearing failed to state the names and addresses of the occupants or persons in possession of the property and all
persons who may have any interest in the property as required by Section 12. There is also no compliance with the
required service of notice to the said occupants, possessors and all persons who may have any interest in the
property.

Records reveal that Denila indeed failed to disclose in her amended petition for reconstitution that there are
occupants and possessors in the properties covered by the subject OCTs. Third parties, including the City
Government of Davao filed motions for intervention in CA-G.R. SP 03270-MIN and manifested before the CA
Cagayan de Oro City that several structures and buildings, including a barangay hall, a police station and a major
public highway would be affected by the order for the issuance of a fencing permit and writ of demolition issued by
respondent. These occupants and possessors have not been notified of the reconstitution proceedings. The March
4, 2008 decision itself shows that no notice was sent to any occupant, possessor or person who may have an
interest in the properties.

The requirements prescribed by Sections 12 and 13 of R.A. No. 26 are mandatory and compliance with such
requirements is jurisdictional. 68 Notice of hearing of the petition for reconstitution of title must be served on the actual
possessors of the property. Notice thereof by publication is insufficient. Jurisprudence is to the effect settled that in
petitions for reconstitution of titles, actual owners and possessors of the land involved must be duly served with
actual and personal notice of the petition.69 Compliance with the actual notice requirement is necessary for the trial
court to acquire jurisdiction over the petition for reconstitution. 70 If no notice of the date of hearing of a reconstitution
case is served on a possessor or one having interest in the property involved, he is deprived of his day in court and
the order of reconstitution is null and void.71

In Subido v. Republic of the Philippines,72 this Court ruled:

As may be noted, Section 13 of R.A. No. 26 specifically enumerates the manner of notifying interested parties of the
petition for reconstitution, namely: (a) publication in the Official Gazette; (b) posting on the main entrance of the
provincial capitol building and of the municipal building of the municipality or city in which the land is situated; and
(c) by registered mail or otherwise, to every person named in the notice. The notification process being mandatory,
non-compliance with publication and posting requirements would be fatal to the jurisdiction of the reconstituting trial
court and invalidates the whole reconstitution proceedings. So would failure to notify, in the manner specifically
prescribed in said Section 13, interested persons of the initial hearing date. Contextually, Section 13 particularly
requires that the notice of the hearing be sent to the property occupant or other persons interested, by registered
mail or otherwise. The term "otherwise" could only contemplate a notifying mode other than publication, posting, or
thru the mail. That other mode could only refer to service of notice by hand or other similar mode of delivery.

It cannot be over-emphasized that R.A. No. 26 specifically provides the special requirements and procedures that
must be followed before the court can properly act, assume and acquire jurisdiction over the petition and grant the
reconstitution prayed for. These requirements, as the Court has repeatedly declared, are mandatory. Publication of
notice in the Official Gazette and the posting thereof in provincial capitol and city/municipal buildings would not be
sufficient. The service of the notice of hearing to parties affected by the petition for reconstitution, notably actual
occupant/s of the land, either by registered mail or hand delivery must also be made. In the case at bar, the "posting
of the notice at the place where TCT No. 95585 is situated" is not, as urged by petitioner, tantamount to compliance
with the mandatory requirement that notice by registered mail or otherwise be sent to the person named in the
notice.

In view of what amounts to a failure to properly notify parties affected by the petition for reconstitution of the date of
the initial hearing thereof, the appellate court correctly held that the trial court indeed lacked jurisdiction to take
cognizance of such petition. And needless to stress, barring the application in appropriate cases of the estoppel
principle, a judgment rendered by a court without jurisdiction to take cognizance of the case is void, ergo, without
binding legal effect for any purpose.73 (Emphasis supplied; citations omitted.)

In Ortigas & Co. Ltd. Partnership v. Velasco,74 we have held Judge Tirso Velasco’s acts of proceeding with the
reconstitution despite awareness of lack of compliance with the prerequisites for the acquisition of jurisdiction under
R.A. No. 26, and disregarding adverse findings or evidence of high officials of LRA that militates against the
reconstitution of titles, to be of serious character warranting his dismissal from the service. We also charged Judge
Velasco with knowledge of this Court’s pronouncement in Alabang Development Corporation v. Valenzuela 75 and
other precedents admonishing courts to exercise the "greatest caution" in entertaining petitions for reconstitution of
allegedly lost certificates of title and taking judicial notice of innumerable litigations and controversies that have been
spawned by the reckless and hasty grant of such reconstitution of allegedly lost or destroyed titles as well as of the
numerous purchasers who have been victimized by forged or fake titles or whose areas simply expanded through
table surveys with the cooperation of unscrupulous officials. 76

Here, respondent’s bad faith in disregarding the jurisdictional requirements in reconstitution proceedings is evident
in his order for the issuance of a fencing permit and writ of demolition in favor of Denila. Respondent should have
been alerted by the presence of actual occupants and possessors when, after the finality of the March 4, 2008
Decision which ordered the reconstitution of the subject OCTs, Denila moved for the issuance of a writ of demolition

172
for such belied her allegation in the amended petition that "There are no buildings or other structures of strong
materials on the above-mentioned pieces of land, which do not belong to the herein petitioner" 77 and the absence of
any name and address of any occupant, possessor or person who may have an interest in the properties.

With the failure to serve actual notice on these occupants and possessors, Branch 14 had not acquired jurisdiction
over Sp. Proc. No. 7527-2004, and therefore the March 4, 2008 Decision rendered by respondent is null and void. A
decision of the court without jurisdiction is null and void; hence, it can never logically become final and executory.
Such a judgment may be attacked directly or collaterally. 78

But respondent’s bad faith is most evident in his reversal of his inhibition in Sp. Proc. No. 7527-2004 to act upon the
petition for relief from judgment. Respondent voluntarily inhibited himself after rendition of the decision, only to
resume handling the case and immediately denied the said petition for relief despite the previous order of Judge
Tanjili setting the petition for hearing, and completely ignoring the jurisdictional defects of the decision raised by the
OSG and Cruzabra.

It must be borne in mind that the inhibition of judges is rooted in the Constitution 79 which recognizes the right to due
process of every person. Due process necessarily requires that a hearing be conducted before an impartial and
disinterested tribunal because unquestionably, every litigant is entitled to nothing less than the cold neutrality of an
impartial judge. All the other elements of due process, like notice and hearing, would be meaningless if the ultimate
decision would come from a partial and biased judge. 80

The rule on disqualification of judges is laid down in Rule 137, Section 1 of the Rules of Court, which reads:

SECTION 1. Disqualification of judges. — No judge or judicial officer shall sit in any case in which he, or his wife or
child, is pecuniarily interested as heir, legatee, creditor or otherwise, or in which he is related to either party within
the sixth degree of consanguinity or affinity, or to counsel within the fourth degree, computed according to the rules
of the civil law, or in which he has been executor, administrator, guardian, trustee or counsel, or in which he has
presided in any inferior court when his ruling or decision is the subject of review, without the written consent of all
parties in interest, signed by them and entered upon the record.

A judge may, in the exercise of his sound discretion, disqualify himself from sitting in a case, for just or valid reasons
other than those mentioned above.

The second paragraph governs voluntary inhibition. Based on this provision, judges have been given the exclusive
prerogative to recuse themselves from hearing cases for reasons other than those pertaining to their pecuniary
interest, relation, previous connection, or previous rulings or decisions. The issue of voluntary inhibition in this
instance becomes primarily a matter of conscience and sound discretion on the part of the judge. 81

In his September 3, 2008 Order, respondent after accepting the criticism of concerned sectors particularly on his
speedy rendition of judgment in Sp. Proc. No. 7527-2004 even if he had just taken over Branch 14, and
acknowledging that he merely copied the draft decision of the former presiding judge, voluntarily inhibited himself
from further acting on the case for the reason that "there is already a doubt cast" on his sense of impartiality and
independence. Notwithstanding this perceived bias and partiality on his part, respondent readily reassumed
jurisdiction over the case when Judge Tanjili, to whom the case was re-raffled off, inhibited himself upon motion filed
by Denila, and subsequently denied the petition for relief.

In Garcia v. Burgos,82 we found respondent judge’s reversal of his previous inhibition as improper and the supposed
bare allegation of prejudgment by a party litigant as insufficient and flimsy reason for revoking his voluntary
inhibition. Thus:

However, respondent judge reversed his voluntary inhibition, meekly stating in his Order dated March 12, 1996 that
"the allegation of prejudgment and partiality is so bare and empty as movant Osmeña failed to present sufficient
ground or proof for the Presiding Judge to disqualify himself. The Judge realized the mistake in granting the motion
for inhibition when defendant Osmeña misled the Court in asserting that on the same day February 26, 1996, he
would be filing an administrative case against the Judge for violation of PD 1818 and Supreme Court Circulars
issued in relation to said decree x x x. In that eventuality, Osmeña said, the Judge would be biased and partial to
him because he was the complainant in the pending administrative case." We find merit in petitioners’ contention.
Judge Burgos inhibited himself on the basis of Petitioner Osmeña’s allegation of prejudgment. In reversing his
voluntary inhibition, respondent judge nebulously branded Osmeña’s allegations as "so bare and empty." Judge
Burgos’ claim that he was misled by Osmeña’s threat of an administrative case is obviously a mere afterthought that
does not inspire belief. Although inhibition is truly discretionary on the part of the judge, the flimsy reasons proffered
above are insufficient to justify reversal of his previous voluntary inhibition. As aptly pointed out by petitioners in their
Memorandum,

"’x x x a judge may not rescind his action and reassume jurisdiction where good cause exists for the disqualification.
Furthermore, because a presumption arises, by reason of the judge’s prior order of disqualification, of the existence
of the factual reason for such disqualification, where the regular judge who has been disqualified revokes the order
173
of disqualification, and objection is made to such revocation, it is not sufficient for the judge to enter an order merely
saying that he or she is not disqualified; the record should clearly reveal the facts upon which the revocation is
made.’ (46 Am Jur 2d § 234, p. 321)"

We deem it important to point out that a judge must preserve the trust and faith reposed in him by the parties as an
impartial and objective administrator of justice. When he exhibits actions that give rise, fairly or unfairly, to
perceptions of bias, such faith and confidence are eroded, and he has no choice but to inhibit himself voluntarily. It
is basic that "[a] judge may not be legally prohibited from sitting in a litigation, but when circumstances appear that
will induce doubt [on] his honest actuations and probity in favor of either party, or incite such state of mind, he
should conduct a careful self-examination. He should exercise his discretion in a way that the people’s faith in the
courts of justice is not impaired. The better course for the judge is to disqualify himself." 83 (Emphasis supplied;
citations omitted.)

Respondent gave no reason at all for revoking his previous inhibition save for the fact that it was re-raffled off back
to Branch 14 when Judge Tanjili likewise inhibited himself. Thenceforth, he continued handling the case and issued
various orders for the immediate implementation of his March 4, 2008 Decision. Having acknowledged that there
were already doubts cast on his impartiality, respondent should not have resumed handling the case when it was re-
raffled off to him following Judge Tanjili’s voluntary inhibition. Respondent by his acts transgressed Canon 3 of the
New Code of Judicial Conduct on the judge’s duty to perform his official duties with impartiality. Thus, we
underscored in one case that:

x x x a presiding judge must maintain and preserve the trust and faith of the parties-litigants. He must hold himself
above reproach and suspicion.

At the very first sign of lack of faith and trust in his actions, whether well-grounded or not, the judge has no other
alternative but to inhibit himself from the case. The better course for the judge under such circumstances is to
disqualify himself. That way, he avoids being misunderstood; his reputation for probity and objectivity is preserved.
What is more important, the ideal of impartial administration of justice is lived up to. x x x 84 (Emphasis supplied.)

Further reinforcing his perceived lack of impartiality are respondent’s actuations in the indirect contempt
proceedings lodged by Denila against Cruzabra who persistently refused to implement the said decision. Section 4,
Rule 71, of the 1997 Rules of Civil Procedure, as amended, provides:

Sec. 4. How proceedings commenced. — Proceedings for indirect contempt may be initiated motu proprio by the
court against which the contempt was committed by an order or any other formal charge requiring the respondent to
show cause why he should not be punished for contempt. 1âwphi1

In all other cases, charges for indirect contempt shall be commenced by a verified petition with supporting
particulars and certified true copies of documents or papers involved therein, and upon full compliance with the
requirements for filing initiatory pleadings for civil actions in the court concerned. If the contempt charges arose out
of or are related to a principal action pending in the court, the petition for contempt shall allege that fact but said
petition shall be docketed, heard and decided separately, unless the court in its discretion orders the consolidation
of the contempt charge and the principal action for joint hearing and decision. (Emphasis supplied).

Thus, a person may be charged with indirect contempt only by either of two alternative ways, namely: (1) by a
verified petition, if initiated by a party; or (2) by an order or any other formal charge requiring the respondent to show
cause why he should not be punished for contempt, if made by a court against which the contempt is committed. In
short, a charge of indirect contempt must be initiated through a verified petition, unless the charge is directly made
by the court against which the contemptuous act is committed. 85

While the first contempt proceeding against Cruzabra was initiated by Denila in a verified motion and was separately
docketed and heard (Civil Case No. 32,387-08), a second charge of contempt was later filed by Denila in the
reconstitution case (Sp. Proc. No. 7527-2004) by way of a motion. Respondent after declaring Cruzabra in contempt
of court in Civil Case No. 32,387-08 and ordering her arrest, inhibited himself upon the ground that he was apprised
of a previous pleading he had signed relating to one of the properties involved in the reconstitution case. But when
Civil Case No. 32,387-08 was dismissed by Judge Carpio, to whom the case was re-raffled off and who heard
Cruzabra’s motion for reconsideration, Denila filed a motion to declare Cruzabra, Paralisan and Administrator Ulep
in contempt of court in the reconstitution case. This time, unmindful of his previous inhibition in Civil Case No.
32,387-08 (December 17, 2009 Order), respondent took cognizance of the motion for contempt. After hearing,
respondent declared Cruzabra and Paralisan in contempt of court and immediately issued warrants of arrest against
them (the previous warrant of arrest against Cruzabra was recalled by Judge Carpio).

Respondent once again displayed an utter disregard of the duty to apply settled laws and rules of procedure when
he entertained the second contempt charge under a mere motion, which is not permitted by the Rules. Worse, it was
done notwithstanding respondent’s earlier voluntary inhibition in the indirect contempt case (Civil Case No. 32,387-
08), which only raised suspicion of respondent’s unusual interest in the immediate execution of the March 4, 2008
Decision despite its jurisdictional defects. The two cases being so closely related, it did not matter that respondent’s
174
previous inhibition on the matter of contempt was in the separate case (Civil Case No. 32,387-08) and not in Sp.
Proc. No. 7527-2004. Notably, respondent inhibited himself from the indirect contempt case only after adjudging
Cruzabra in contempt of court and issuing a warrant of arrest against her and, the motion for contempt in the
reconstitution case involved the very same act of Cruzabra’s refusal to comply with the March 4, 2008 Decision and
was filed only after Judge Carpio had dismissed the indirect contempt case and ruled that Cruzabra’s refusal to
comply with the March 4, 2008 Decision was not contumacious.

All the foregoing considered, we find respondent guilty of gross ignorance of law and procedure and violation of
Canon 3 of the New Code of Judicial Conduct, which merit administrative sanction.

Section 8 of Rule 140 on the Discipline of Judges and Justices, as amended by A.M. No. 01-8-10-SC, 86 classifies
gross ignorance of the law and gross misconduct constituting violations of the Code of Judicial Conduct as serious
charges, with the following imposable penalties:

SEC. 11. Sanctions. – A. If the respondent is guilty of a serious charge, any of the following sanctions may be
imposed:

1. Dismissal from the service, forfeiture of all or part of the benefits as the Court may determine, and
disqualification from reinstatement or appointment to any public office, including government-owned or
controlled corporations. Provided, however, That the forfeiture of benefits shall in no case include accrued
leave credits;

2. Suspension from office without salary and other benefits for more than three (3) but not exceeding six (6)
months; or

3. A fine of more than ₱20,000.00 but not exceeding ₱40,000.00

As pointed out by the OCA, this is not the first time respondent was found administratively liable. In A.M. No. MTJ-
08-1701 (OCA IPI No. 08-1964-MTJ) entitled "Milagros Villa Abrille versus Judge George Omelio, Municipal Trial
Court in Cities, Branch 4, Davao City and Deputy Sheriff Philip N. Betil, Branch 3, Same Court," respondent was
found administratively liable for violation of a Supreme Court Circular for which he was fined with the amount of
₱10,000.00.87 And in A.M. No. RT J-12-232188 decided just last year, respondent was found guilty of four counts of
gross ignorance of the law for the following acts: (a) refusal to recognize spouses Crisologo as indispensable
parties; (b) granting a contentious motion in violation of the three-day notice rule; (c) non-compliance with the rules
on summons; and (d) rendering a decision in an indirect contempt case that cancels an annotation of a Sheriffs
Certificate of Sale on two titles without notifying the buyers, in violation of the latter s right to due process. For the
said infractions, respondent was penalized with fine of ₱40,000.00.

Respondent was sternly warned in both cases that repetition of the same or similar acts shall be dealt with more
severely. Yet, from the facts on record, it is clear that respondent continued transgressing the norms of judicial
conduct. All his past and present violations raise a serious question on his competence and integrity in the
performance of his functions as a magistrate. With these in mind, we therefore adopt the recommendation of the
OCA that the supreme penalty of dismissal is the proper penalty to be imposed on respondent in this case being the
third time he is found administratively liable. Indeed, the Court can no longer afford to be lenient in this case, lest it
give the public the impression that incompetence and repeated offenders are tolerated in the judiciary. 89

WHEREFORE, premises considered, Judge George E. Omelio, Presiding Judge of the Regional Trial Court, Branch
14 Davao City is found GUILTY of Gross Ignorance of the Law and violation of Canon 3 of the New Code of Judicial
Conduct and is hereby DISMISSED FROM THE SERVICE, with forfeiture of all his retirement benefits, except his
accrued leave credits, and with perpetual disqualification for re-employment in any branch, agency or instrumentality
of the government, including government-owned or controlled corporations.

This Decision is immediately EXECUTORY.

SO ORDERED.

175
 Republic of the Philippines
SUPREME COURT
Manila

EN BANC

A.M. OCA IPI No. 09-3138-P               October 22, 2013

(Formerly A.M. No. 09-1-19-MTCC)

REPORT ON THE FINANCIAL AUDIT CONDUCTED IN THE MUNICIPAL TRIAL COURT IN CITIES, TAGUM
CITY, DAVAO DEL NORTE.

x-----------------------x

A.M. No. MTJ-05-1618               

(Formerly A.M. No. 05-10-282-MTCC)

OFFICE OF THE COURT ADMINISTRATOR, Complainant, 

vs.
JUDGE ISMAEL L. SALUBRE, MR. NERIO L. EDIG and MS. BELLA LUNA C. ABELLA, MS. DELIA R. P
ALERO and MR. MACARIO HERMOGILDO S A VENTURADO, all of MUNICIPAL TRIAL COURT IN CITIES,
TAGUM CITY, DA V AO DEL NORTE, Respondents.

DECISION

PER CURIAM:

These consolidated administrative matters resulted from the two financial audits conducted on the books of
accounts of the Municipal Trial Court in Cities (MTCC) of Tagum City, Davao del Norte. The first financial audit
conducted in said court in 2005 covered the period January 1, 1993 to January 31, 2005. The court was then
presided by Judge Ismael L. Salubre. The audit was prompted by a report of the Commission on Audit (COA)
regarding the violation of Nerio L. Edig, Clerk of Court IV, of Section 21 of the New Manual on the New Government
Accounting System, which requires all collecting officers to deposit intact all their collections with the authorized
government bank daily or not later than the next banking day, and Edig’s non-submission of monthly reports. Edig
failed to submit monthly reports for the Judiciary Development Fund (JDF) for the period February 2003 to
December 31, 2004, the Clerk of Court General Fund (COCGF) for the period February 2003 to November 2003,
the Special Allowance for the Judiciary Fund (SAJF) for the period December 2003 to December 31, 2004 and the
Fiduciary Fund for the period April to December 31, 2004. 1 The second audit, done in 2008, covered the period
February 1, 2005 to July 31, 2008 and was prompted by the successive changes in accountable officers in the
court.2

During the 2005 audit, Edig informed the audit team that Bella Luna C. Abella was his cashier from the time he
assumed office as Clerk of Court on February 16, 1978. Abella was later replaced by Delia R. Palero from January
1, 1996 until January 30, 2002 and then by Macario H.S. Aventurado from January 31, 2002 up to the time of the
audit in 2005. Abella also acted as Officer-in-Charge from April 1, 2002 until October 6, 2002 while Edig was on
study leave.3

Per Report4 of the audit team dated September 2, 2005, the financial accountabilities of Edig, Salubre, Abella,
Palero and Aventurado are as follows:

Judge
PARTICULARS Edig Abella Palero Aventurado
Salube

Received cash ₱436,800.00        

which was
supposedly due
to Government
and the
bondsman

JDF   ₱11,340.50 ₱36,928.00    

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 General Fund   6,703.40 2,900.00    

Fiduciary Fund   11,496.00 5,000.00    

Deposit slips w/o        

machine  
validation  
(JDF/GF) 97,535.60

Unauthorized    
Withdrawals      
(Fiduciary Fund) 5,684,875.00 ₱3,147,285.00 ₱2,537,590.00

Unauthorized        
Withdrawals  
(Fiduciary Fund) 206,500.00

Uncollected   2,480,656.16      
Fines

Unaccounted        
confiscated Bet  
Money 51,921.00

Unremitted     ₱39,000.00
forfeited Cash    
bonds 149,800.00 110,800.00

Uncollected        
forfeited surety  
bonds 105,400.00

Dismissed Cash      
bonds applied to    
FINES 21,000.00 21,000.005

The audit team likewise reported that "by stroke of luck, the team was able to discover documents showing that
Judge Salubre received on many occasions cash bonds of dismissed cases and forfeited cash bonds in the total
amount of ₱436,800.00. This discovery would confirm the allegations of both Ms. Palero and Mr. Aventurado that
the Judge has something to do with the unaccounted amount incurred by them. They further alleged that Mr. Edig
knew about what was happening inside the court but can not do anything. All of them were pressured." 6 The team
also found several withdrawal slips with acknowledgments at the back signed by Judge Salubre evidencing receipts
of cash bonds of dismissed cases. They also discovered conflicting orders of Judge Salubre in two criminal cases.

Other irregularities such as the keeping of court collections outside court premises by Aventurado and the failure of
Sheriff Carlito B. Benemile to serve the writ of execution in two criminal cases were likewise found.

In its Memorandum7 dated September 2, 2005 to then Chief Justice Hilario G. Davide, Jr., the Office of the Court
Administrator (OCA) recommended that:

1. MR. NERIO L. EDIG, Clerk of Court, MTCC, Tagum City be DIRECTED to:

a. PAY the following amount in the manner herein indicated (see table below) within fifteen (15) days
from receipt hereof:

PARTICULARS   AMOUNT Manner of Payment

Judiciary P 11, By depositing the said amount to LBP SA#0591-0116-34.

177
Development Fund 340.50 There must be an indication in the deposit slip that said
amount is for the payment of the shortage incurred per
audit dated January 31, 2005.
Clerk of Court   6,703.40 Through PMO, payable to the National Treasury and send
General Fund to the OCA-Chief Accountant and the latter to remit it to
the National Treasury.
Fiduciary Fund   11,496.00 Direct deposit to LBP SA#0341-0727-19. To be indicated
in the deposit slip as payment of the shortage incurred per
audit dated January 31, 2005.
Total   29,539.90  

Thereafter, to immediately FURNISH the Court, thru the Office of the Court Administrator (OCA)
machine validated deposit slips as proof of deposit in the JDF and Fiduciary Fund Account.

The remittance amounting to ₱97,535.60 (Schedule 1) which was considered not to have been
deposited for failure of the accountable officer to present, upon demand, machine validated deposit
slips as proof of its remittance shall be held in abeyance. However, if the accountable officer fails to
submit certification from the Land Bank that the said amount has been received and properly
entered to the account maintained by the court for the General Fund, it shall be considered as final
shortage after the lapse of fifteen (15) days from notice hereof.

b. EXPLAIN within fifteen (15) days from receipt hereof why no administrative charge shall be taken
against him for the following:

1) For the undeposited collections in the Judiciary Development Fund, Clerk of Court
General Fund and Fiduciary Fund amounting to ₱11,340.50, ₱6,703.40 and ₱11,496.00,
respectively, excluding temporary shortages brought about by the absence of supporting
documents such as ₱97,535.60, representing deposit slips without machine validation;
₱5,684,875.00, representing unauthorized withdrawals; and ₱206,500.00, representing
unidentified withdrawals;

2) Failure to monitor the status of cases, thereby resulting [in] two writ[s] of execution
becoming stale or not being served for several years (Annex D) and several cases were not
reported (Annex K);

3) For allowing his cash clerk, Mr. Aventurado to bring court collections outside the court
premises;

4) For allowing Judge Salubre to receive the cash bonds intended for the concerned
bondsmen without informing the court of such fact (Annex H);

5) For his failure to report cases (Schedule 14) as mentioned herein; and

6) For questionable supporting documents presented to this team (Annex F).

c. SHOW cause within fifteen (15) days from receipt hereof why the following shall not be charged
against him:

1) The amount of ₱2,480,656.16 (Schedule 8) which represents uncollected fines;

2) The amount of ₱51,921.00 (Schedule 9.2) representing unreported confiscated bet

money;

3) The amount of ₱105,400.00 (Schedule 12) representing uncollected personal bonds

guaranteed by sureties which were forfeited due to non[-]production of the body of the
accused. 4) The amount of ₱21,000.00 (Schedule 13) representing forfeited cash bonds
applied to fine; and

5) The amount of ₱149,800.00 (Schedule 10) representing unremitted forfeited cash bonds;

d. USE the standard docket book where the status of the case, official receipts (where the amount,
date and nature of payment are indicated) and the corresponding fees collected are entered; and

178
 e. SUBMIT the list of official receipts issued corresponding to the following withdrawn interest,
otherwise said interest shall be considered as unremitted and will form part of his accountability: 1.
₱17,937.70 – withdrawn on January 21, 1998;

2. 23,317.79 – withdrawn on March 5, 2002;

3. 8,946.72 – withdrawn on April 10, 2003; and

4. 4,719.52 – withdrawn on January 21, 2004

2. MS. BELLA LUNA C. ABELLA, Court Legal Researcher and former Officer-in-Charge, MTCC, Tagum City
from April 1 to October 7, 2005 be DIRECTED to:

a. PAY the following amount in the manner herein indicated (see table below) within fifteen (15) days
from receipt hereof:

FUND   AMOUNT Manner of Payment

Judiciary Development Fund P 36,928.00 By depositing the said amount to LBP

SA#0591-0116-34. Indicate in the
deposit slip that such was the payment
of the shortage incurred in JDF per
audit dated January 31, 2005.
Clerk of Court General Fund   2,900.00 Through PMO payable to the National
Treasury and send to the OCA-Chief
Accountant and the latter to remit it to
the National Treasury.
Fiduciary Fund   5,000.00 Direct deposit to LBP SA#0341-0727-
19. Indicate in the deposit slip that said
amount is for payment of the shortage
incurred in Fiduciary Fund per audit
dated January 31, 2005.
Total P 44,828.00  

Thereafter, to immediately FURNISH the Court, thru the Office of the Court Administrator (OCA)
machine validated deposit slips as proof of deposit in the JDF and Fiduciary Fund Accounts.

b. EXPLAIN within fifteen (15) days from receipt hereof why no administrative charge shall be taken
against her for the following:

1) For misappropriating the court collections amounting to ₱44,828.00 (₱2,900.00, COCGF

incurred shortage; ₱36,928.00, JDF incurred shortage; and ₱5,000, FF shortage);

2) For issuing temporary receipts instead of the court issued official receipts in her JDF
collections without the authority of the High Court from August 6, 1993 to August 31, 1994;
and

3) For the cancellation of Official Receipt No. 5866705 which was issued for the forfeited
exhibit money amounting to ₱4,537.50 in Criminal Case No. 16591-96.

c. SUBMIT within fifteen (15) days from receipt hereof the (1) temporary receipts issued from August
6, 1993 to August 31, 1994 and (2) missing triplicate Official Receipt No. 4390228.

d. REFRAIN from issuing official receipts, receiving court collections and doing tasks having
connections with financial transactions.

3. MS. DELIA R. PALERO, Court Interpreter, MTCC, Tagum City, be DIRECTED to:

a. SHOW cause within fifteen (15) days from receipt hereof why she should not be held accountable
for the following:

179
 1) Withdrawals made without authority as shown by her failure to produce the supporting
documents upon demand in the amount of ₱3,147,285.00 (this amount was part of the
₱5,684,875.00 unauthorized withdrawals), Schedule 15;

2) Cash Bonds of dismissed cases ordered to be applied to fines but nothing in the records
show that it was indeed applied to fines. The amount was ₱21,000.00 (Schedule 13);

3) Forfeited cash bonds already withdrawn but were not deposited either to JDF, COCGF or
SAJF in the amount of ₱110,800.00 (Schedule 16);

b. EXPLAIN within the same period why no administrative charge shall be filed against her for the
delay incurred in the remittance of collections in addition to the above infractions (Schedule 5, 6 and
7).

4. MR. MACARIO H. S. AVENTURADO, Cash Clerk III, MTCC, Tagum City, be DIRECTED to:

a. SHOW cause within fifteen (15) days from receipt hereof why he should not be held accountable
for the following:

1) Withdrawals made without authority as shown by his failure to produce the supporting
documents upon demand in the amount of ₱2,537,590.00 (this amount was part of the
₱5,684,875.00 unauthorized withdrawals), Schedule 17; and

2) Forfeited cash bonds already withdrawn but were not deposited either to JDF, COCGF or
SAJF in the amount of ₱39,000.00 (Schedule 18).

b. EXPLAIN within the same period why no administrative charge shall be filed against him for the
delay incurred in the remittance of collections in addition to the above infractions (see Schedule 5, 6
and 7).

c. SUBMIT within fifteen (15) days from receipt of notice JDF, COCGF, SAJF cash books; for
currently used cash books, photo copy thereof will suffice.

5. MR. CARLITO B. BENEMILE , Sheriff of MTCC, Tagum City be DIRECTED to EXPLAIN within fifteen
(15) days from receipt hereof why no administrative charge shall be filed against him for his failure to serve
the writ of execution in connection with the cases of People vs. Molde, Criminal Case Nos. 16486 to 16488-
96 and People v. Elena Salipot, Criminal Case No. 26075-00 despite notice to him.

6. HON. ISMAEL L. SALUBRE , Presiding Judge, MTCC, Tagum City be DIRECTED to show cause within
fifteen (15) days from receipt hereof why he should not be administratively charged for his act of taking cash
bonds intended for the bondsmen and for the government in the amount of ₱436,800.00 as well as for
issuing two conflicting orders in connection with the cases of People vs. Danilo Gomez, supra and People
vs. Romar Ebol, supra.

7. This report be docketed as a regular administrative matter against MR. NERIO L. EDIG, MS. BELLA
LUNA C. ABELLA, MS. DELIA R. PALERO, MR. MACARIO H. S. AVENTURADO and HON. ISMAEL L.
SALUBRE and the same be referred to the Executive Judge of Regional Trial Court (RTC), Tagum City for
Investigation, Report and Recommendation within sixty (60) days from receipt of records.

8. For the Honorable Court to allow the withdrawal of ₱13,000.00 from the Judiciary Development Fund
Account and the same be deposited to the Fiduciary Fund Account (LBP SA#0341-0727-19) of the
Municipal Trial Court in Cities, Tagum City.8

Acting upon the recommendations of the OCA, the Court, on November 23, 2005, issued a Resolution 9 adopting the
same.

On December 10, 2005, Abella succumbed to cancer. 10

In a letter dated January 5, 2006, then Deputy Court Administrator Christopher O. Lock issued a letter-directive to
Executive Judge Oscar G. Tirol of the Regional Trial Court of Tagum City to conduct an investigation and submit a
report/recommendation within 60 days from receipt of the endorsement. 11

On January 11, 2006, Judge Salubre, Edig, Palero, Aventurado and Benemile received their copies of the
November 23, 2005 Resolution.12

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On February 13, 2006, Judge Tirol issued an Order 13 directing Judge Salubre, Edig, Abella, Palero, Aventurado and
Benemile to submit their answers/comments to the charges outlined in the November 23, 2005 Resolution. Palero,
Aventurado and Benemile received their copies of said order on the same day while Judge Salubre received his the
following day or on February 14, 2006. Edig, on the other hand, received a copy on February 15, 2006. 14

On March 1, 2006, Judge Salubre died of diabetic complications. 15

As for Edig, his lawyer, Atty. Ruwel Peter S. Gonzaga, initially asked for a 30-day extension to file an answer citing
the former’s serious ailments.16 But Antonieta Edig, Edig’s wife, in a letter17 dated March 17, 2006, informed the
investigating judge that her husband was incapable of filing an answer and that she wanted to insulate him from
stress that may affect his gradual recovery.

In Palero’s Answer18 dated March 20, 2006, she explained that the unaccounted withdrawals totaling ₱3,147,285
were authorized. She contended that the withdrawal slips were signed by either Judge Salubre or Clerk of Court
Edig. Part of the amount was received by Judge Salubre who even signed the acknowledgment receipts. As to the
₱21,000 pertaining to the cash bonds of dismissed cases that were supposed to be applied to fines but were not,
Palero claimed that Judge Salubre also took it without signing an acknowledgment receipt though she noted it for
reference. As to the ₱110,800 forfeited cash bonds, Palero submitted acknowledgment receipts showing that
₱21,000 was received by Evelyn Molde, wife of an accused in three criminal cases; ₱14,000 was withdrawn and
received by Ms. Ruth Ibaos; and ₱63,800 was taken by Judge Salubre.

Palero also admitted that the remittances were delayed but she was not even aware that they were "technically"
delayed already. She claimed that it has been the practice of the court to just make the remittance on the month
following the month when the collections were actually made and that she was just doing the manual task of going
to the bank to make the deposits. She likewise knew for a fact that the clerk of court would still wait for Judge
Salubre to pay for his debt/advances in the collections, but the clerk of court would just use his own money in
replenishing the collections when Judge Salubre throws invectives at them when they demand payment.

In Aventurado’s Answer19 dated March 21, 2006, he contended that he never benefited from the unaccounted
amount he was made to explain. He claimed to be the newest and youngest employee in the court and only sought
advice from his fellow employees. He alleged that Clerk of Court Edig, Legal Researcher Abella and Court
Interpreter Palero advised him to let the bondsman sign at the back of the receipts but even if he did as told, there
were instances when the bondsmen would leave immediately after receiving the money. He also claimed that he
can no longer give a detailed explanation on the withdrawals and non-receipt of amounts by bondsmen because
they were instructed to send all the pertinent records to the Supreme Court. As to the ₱39,000 unaccounted
forfeited cash bonds, Aventurado submitted some receipts.

Aventurado likewise admitted to the delays in the remittance of collections but attributed said delays to Judge
Salubre. He claimed that there were instances when the judge would call him to his chambers to ask about the cash
on hand and thereafter order him to hand over some of the collections with a promise that he would return them
after a day or two. As the judge was his superior, he would comply and as advised by his fellow employees, ask the
judge to sign an acknowledgment receipt. He, however, alleged that there were times when the judge would get
angry and refuse to sign the receipt. He further added that he had to wait for the incoming collections for the month
to be able to deposit because there were instances when the judge would not pay what he got from the court
collections.

In his letter20 dated February 14, 2006, Benemile explained that records would show that he did not receive a writ of
execution for People v. Molde21 and that he only knew of the fact that the same was decided and gained finality
when he received the administrative order. As to

People v. Salipot,22 he clarified that the writ of execution in said case was duly implemented but admitted that no
return was made because the parties agreed that the losing party will pay in installment basis.

In his report23 dated April 22, 2006, the investigating judge evaluated the liabilities of Palero, Aventurado and
Benemile. He left to this Court’s discretion the liabilities of Judge Salubre, Abella and Edig.

The investigating judge found Palero’s explanation as inadequate and unsatisfactory because Palero failed to
produce the acknowledgment receipts required except for 36 cases wherein she was able to present court orders
directing the release of the bonds and the signatures of the persons who received them. Still, the investigating judge
opined that in said 36 cases, Palero had been too lax and liberal, releasing to persons equipped with no authority to
receive the money for cancelled cash bonds and failing in most instances to note down the names of the recipients.
Palero, also by her explanation, betrayed her unreliability as custodian of funds if indeed it was true that Judge
Salubre took the ₱1,630,439.70 and that Judge Salubre should be blamed for her failure to account for the ₱21,000
cash bonds that should be applied to fines, since she allowed it to happen.

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The investigating judge also found unacceptable the reason posed by both Palero and Aventurado for the delay in
the remittance of collections – that they had to wait for Judge Salubre to return the borrowed funds – as the duty to
remit collections on time cannot be compromised.

As to Aventurado, while he was able to show that deposits of some of the forfeited cash bonds were duly effected
and reported, he was not able to present proof of acknowledgments of bondsmen for withdrawn cash bonds in
several cases.

The investigating judge ruled that there was no clear indication of dishonesty that can be imputed to Palero and
Aventurado and held that it was perhaps out of inexperience in the job of cash clerk that made them grossly
ineffective and incompetent resulting in so much loss.

As to Benemile, the investigating judge found that he cannot be held accountable for his failure to implement a writ
which was never brought to his attention in People v. Molde, but he should be made to answer for failure to make a
return on the writ of execution in People v. Salipot.

Based on the above observations, the investigating judge made the following recommendations:

1. that respondents DELIA [R.] PALERO and MACARIO H.S. AVENTURADO be each suspended for a
period of Six (6) Months without salary, and restitute whatever sums may be found owing from them as
shortages in remittance/collections;

2. that Sheriff CARLITO B. BENEMILE be fined in the amount of One Thousand Pesos (₱1,000.00) for
admittedly failing to make his return of the writ of execution issued in Criminal Case No. 26075-00. 24

In its October 16, 2006 Memorandum25 for then Associate Justice Reynato S. Puno, the OCA recommended, after
considering the report of the investigating judge,

1. That the administrative complaint against the late Judge Ismael L. Salubre and Ms. Bella Luna C. Abella
be DISMISSED;

2. That Respondent Nerio L. Edig be DIRECTED to file his Answer to the charges against him within fifteen
(15) days from receipt hereof otherwise, his liability shall be determined based on the record of this case;

3. Respondent Delia R. Palero be DISMISSED from the service for gross neglect of duty, dishonesty and
grave misconduct. All her retirement benefits, excluding earned leave credits, are ordered forfeited in favor
of the government with prejudice to re-employment in any government office, including government-owned
and -controlled corporations and that she be directed to pay the amount of ₱3,147,285.00 representing the
shortage in the Fiduciary Fund, ₱21,000.00 and ₱74,800.00 representing the shortage in the Judiciary
Development Fund;

4. Respondent Macario H.S. Aventurado be DISMISSED from the service for gross neglect of duty,
dishonesty and grave misconduct. All his retirement benefits, excluding earned leave credits, are ordered
forfeited in favor of the government with prejudice to re[-]employment in any government office, including
government[-]owned and [-]controlled corporations and that he be directed to restitute the amount of
₱2,537,590.00 representing the shortage in the Fiduciary Fund and the amount of ₱39,000.00 representing
the shortage in the Judiciary Development Fund; and 5. Respondent Carlito Benemile be FINED in the
amount of ₱1,000.00 for admittedly failing to make his return of the writ of execution issued in Criminal Case
No. 26075-00.26

On December 11, 2006, the Court issued a Resolution27 (1) dismissing the administrative complaint against Judge
Salubre and Abella in view of their death; (2) directing Edig to file his answer to the charges against him within 15
days from receipt, otherwise his liability shall be determined based on the records of the case; and (3) requiring
Palero, Aventurado and Benemile to manifest to the Court whether they are submitting this matter for decision on
the basis of the pleadings filed.

On March 6, 2007, this Court received separate Manifestations 28 from Palero, Aventurado and Benemile indicating
that they are submitting the matter for decision on the basis of the pleadings they have filed. On even date, the
Court also received a Manifestation29 from Antonieta Edig indicating that her husband was still suffering from the
effects of the stroke he suffered two years ago and that every time he was confronted with problems, he undergoes
seizures. She likewise informed the Court that she did not and will not allow anyone to discuss with him his
problems related to his employment and that her husband was not physically and mentally capable to fully explain
or submit an answer to the charges against him due to his sensitive condition.

On July 16, 2007, this Court directed Edig anew to file his answer to the charges against him within a non-extendible
period of 15 days from notice, otherwise his liability shall be determined based on the records of the case. 30

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Meanwhile, on September 10, 2007, in A.M. No. 12749-Ret. (Re: Application for Retirement/Gratuity Benefits under
R.A. 910, as amended by R.A. 5095 and PD 1438, filed by Ms. Susana C. Salubre, surviving spouse of the late
Judge Ismael L. Salubre, MTCC Tagum City), the Court issued a Resolution 31 approving the application for
retirement/gratuity benefits of the late Judge Salubre subject to the usual clearance requirements.

In an Explanation32 dated October 5, 2007, Edig, through his wife, answered the charges hurled against him. In a
Memorandum33 dated October 23, 2007 to then Chief Justice Reynato S. Puno, the OCA recommended the
reconsideration of the Court’s Resolution dismissing the administrative case against Judge Salubre and Abella and
the reinstatement of the same. The OCA further recommended that the September 10, 2007 Resolution in A.M. No.
12749-Ret. be set aside and that the processing of the clearances of the two be held in abeyance pending
resolution of the administrative case. The OCA’s recommendations were based on two grounds: (1) the rudiments of
due process were complied with; and (2) the death of the respondent is not in itself a ground for the dismissal of the
administrative case.

On April 6, 2008, Edig passed away. In a Manifestation34 dated April 21, 2008, his counsel prayed that Edig be
dropped from the case and that his family be allowed to process and receive, if any, whatever is due them.

On June 2, 2008, this Court issued a Resolution35 adopting the recommendations of the OCA in its October 23, 2007
Memorandum.

In the meantime, the second financial audit was conducted on the books of accounts of the MTCC of Tagum City
covering the period February 1, 2005 to July 31, 2008. Following are the detailed periods of accountability 36 of each
accountable officer, together with their respective Cash Clerks:

Clerk of Cash Clerk Period of Accountability

Court*/Officer-in-
Charge**

Nerio L. Edig* Delia R. Palero February 1, 2005 - February 28, 2005

Delia R. Palero** Macario H. March 1, 2005 - May 31, 2007

Aventurado

Runero S. Delia R. Palero June 1, 2007 - January 31, 2008

Gonzaga**

Edgar C. Perez* Delia R. Palero February 1, 2008 - present

The audit team found shortages during the period of accountability of Palero. Below is the summary 37 of her
remaining total accountability exclusive of the prior audit’s findings:

Special Allowance for the Judiciary Fund (SAJF) P 43,124.70

Judiciary Development Fund (JDF)   322,625.30

Mediation Fund   9,500.00

Fiduciary Fund (FF) – undeposited collections   7,000.00

Fudiciary Fund (FF) – unauthorized withdrawals (no  

acknowledgment receipts) 607,290.00

Total Accountability P 982,540.00

Thus, the audit team recommended:

1. This report be treated as an administrative complaint against Ms. Delia R. Palero and Mr. Macario
Hermogildo S. Aventurado and consolidated with A.M. No. MTJ-05-1618 [formerly OCA IPI No. 05-10-282-
MTCC] entitled "Office of the Court Administrator v. Hon. Ismael L. Salubre, Mr. Nerio L. Edig, Ms. Bella
183
Luna C. Abella, Ms. Delia R. Palero and Mr. Macario Hermogildo S. Aventurado, all of MTCC, Tagum City,
Davao del Norte."

2. Ms. DELIA R. PALERO, Court Interpreter II and former Acting Clerk of Court IV, together with

Mr. MACARIO HERMOGILDO S. AVENTURADO, Cash Clerk III, both from MTCC Tagum City, Davao del
Norte, be DIRECTED, within fifteen (15) days from notice to:

a. SUBMIT machine validated deposit slips or LBP certification supporting the remittances of the
computed shortages on the following funds, otherwise RESTITUTE the same, to wit:

Special allowance for the Judiciary Fund (SAJF) (Schedule 1) P 43,124.70

Judiciary Development Fund (JDF) (Schedule 2) 322,625.30

Mediation Fund (MF) (Schedule 3) 9,500.00Fiduciary Fund (FF) – undeposited collections

(Schedule 4) 7,000.00

Total Accountability ₱382,250.00

b. SUBMIT valid acknowledgment receipts to support the withdrawals of the attached list of
unauthorized withdrawals amounting to ₱607,290.00 (Schedule 5), otherwise RESTITUTE the
same.

c. EXPLAIN the occurrence of the above computed shortages and delay incurred in the remittance
of the Mediation Fund collections.

d. REITERATE the full compliance with the directives in the Resolution of the Court dated November
23, 2005 (Court Resolution Attached).

3. Mr. Carlito Benemile, Sheriff III, Mr. Ramonito Catubag, Clerk III, Mr. Alvin Obero, Clerk II, Mr. Joseph
Casimura, Process Server, Mr. Renato Ilagan, Process Server, all from MTCC, Tagum City, Davao del
Norte, be DIRECTED within fifteen (15) days from notice to liquidate their respective cash advances (see
attached statement of accounts) from the Sheriff’s Trust Fund, to wit:

Payee Position   Amount

Alvin Obero Clerk II P 41,641.00

Ramonito Catubag Clerk III   37,042.00

Joseph Casimura Process Server   28,579.00

Carlito Benemile Sheriff III   11,800.00

Renato Ilagan Process Server   1,300.00

TOTAL   P 120,362.00

4. MR. EDGAR C. PEREZ, Clerk of Court IV, MTCC, Tagum City, Davao del Norte, be DIRECTED to:

a. TRACE and IDENTIFY the employee who received the cash advances from the Sheriff’s Trust
Fund amounting to ₱2,000.00 each on June 14, 2007 and July 14, 2007 and DIRECT to liquidate the
same; and

b. STRICTLY ADHERE to the provisions of Amended Administrative Circular No. 35-2004, Sec. 10,
with regards to the proper handling of the Sheriff’s Trust Fund and all Circulars issued by the
Honorable Court.

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 5. Hon. ARLENE LIRAG-PALABRICA, Presiding Judge, MTCC, Tagum City, Davao del Norte, be
DIRECTED to MONITOR the financial transactions of the court to avoid the occurrence of irregularity in the
collection, deposit and withdrawal of court funds.

6. That the terminal leave benefits payable to the heirs of the late Judge Ismael L. Salubre, Ms. Bella Luna
C. Abella and Mr. Nerio L. Edig be FORFEITED in favor of the Supreme Court to answer for the computed
shortages found by the Financial Audit Team on the financial audit conducted on January 31, 2005.

7. The Office of the Administrative Services and Financial Management Office be DIRECTED to PROCESS
and COMPUTE the terminal leave pay of the respondents Judge Salubre, Ms. Abella and Mr. Edig,
dispensing with the usual documentary requirements and to APPLY the same to the computed shortages on
the financial audit conducted on January 31, 2005. 38

The recommendations of the audit team were approved and adopted by then Court Administrator Jose P. Perez
(now Supreme Court Justice) in his Memorandum 39 dated January 19, 2009 to then Chief Justice Reynato S. Puno.
The Court, in its Resolution40 dated February 18, 2009 in turn adopted the recommendations of the OCA.

On July 22, 2009, the OCA received the compliance41 of Obero, Catubag, Camisura, Benemile and Iligan with the
February 18, 2009 Resolution particularly the directives in paragraphs 3 and 4(a).

Through a Memorandum42 dated July 20, 2010 to then Chief Justice Renato C. Corona, the OCA submitted its
evaluation and recommendations on the liabilities of Judge Salubre, Edig and Abella.

As to Judge Salubre and Edig, the OCA opined that while they died before the investigating judge was able to finish
and submit his report, records show that they were duly notified of the proceedings and were directed to file their
answers but their spouses chose not to because of their failing health. Having complied with the rudiments of due
process, the OCA is of the opinion that the Court can proceed in determining the administrative liability of Judge
Salubre and Edig. The OCA found that the evidence gathered during the audit, such as the acknowledgments
signed by Judge Salubre evidencing receipt of dismissed and forfeited cash bonds and the statements of Palero
and Aventurado, established his culpability. It ruled that Judge Salubre’s act of receiving and appropriating for
himself the cash bonds of dismissed cases and forfeited cash bonds which were due to the government and to the
bondsmen constitute grave misconduct.

As to Edig, the OCA ruled that the evidence gathered by the audit team clearly establish the unauthorized
withdrawals from the Fiduciary Fund amounting to ₱5,684,875. Being the clerk of court and custodian of the court’s
funds, Edig is primarily accountable for the unauthorized withdrawals from the Fiduciary Fund. It held that Edig’s
failure to fulfill the responsibility of closely supervising the proper handling of collections and deposits to avoid any
mishandling of government funds deserves administrative sanction and not even the full payment of the shortages
shall exempt him from liability.

As to Abella, the OCA found that while she died on December 10, 2005, after the issuance of the November 23,
2005 Resolution of the Court directing her to pay the shortages and to explain the charges against her, the directive
was only received on January 11, 2006. Thus, there was no actual service of notice to Abella since she was already
dead at that time. Because of lack of due process, the OCA opined that the administrative complaint against Abella
should be dismissed. Given the above findings, the OCA recommended that:

A) Judge ISMAEL L. SALUBRE be found GUILTY of grave misconduct. Considering that the Court can no
longer dismiss respondent Judge SALUBRE in view of his death, a penalty of FINE equivalent to his salary
for six (6) months may be imposed to be deducted from his retirement gratuity benefits;

B) The Financial Management Office (FMO), OCA, be DIRECTED to:

(B.1) PROCESS the money value of the terminal leave benefits of respondent Judge ISMAEL L.
SALUBRE subject to the submission of the documentary requirements and APPLY the same to the
computed shortage in the Fiduciary Fund account in the amount of Four Hundred Thirty Six
Thousand Eight Hundred Pesos (Php436,800.00) and the remaining balance of the shortage shall
be DEDUCTED from the retirement gratuity benefits due to Judge ISMAEL L. SALUBRE to be
remitted to the Fiduciary Fund account of the Municipal Trial Court in Cities, Tagum City. The FMO,
OCA is further DIRECTED to coordinate with the Fiscal Monitoring Division (FMD), Court
Management Office (CMO), OCA, before the release of the check issued in favor of the MTCC,
Tagum City, Davao del Norte for the preparation of the necessary communication with the
incumbent Clerk of Court of MTCC, Tagum City, Davao del Norte;

(B.2) The balance of the retirement gratuity benefits of the late Judge ISMAEL L. SALUBRE after
deducting the abovementioned shortages be RELEASED to his legal heirs, unless he is charged in
some other administrative complaint or the same is otherwise withheld for some lawful cause,
subject to the usual required clearances and accounting and auditing procedures;
185
 C) Clerk of Court NERIO L. EDIG be found GUILTY of grave misconduct and dishonesty. Considering,
however, that the dismissal from the service can no longer be imposed in view of the respondent’s demise, a
penalty of FINE equivalent to his salary for six (6) months may be imposed to be deducted from his
retirement benefits;

D) The Financial Management Office, OCA, be DIRECTED to PROCESS the money value of [the] terminal
leave benefits of the late respondent NERIO L. EDIG dispensing with the usual documentary requirements
and APPLY the same to the computed shortage in the Fiduciary Fund account in the amount of Eight Million
Eight Hundred Twenty-Seven Thousand Two Hundred Twenty-Seven Pesos and 66/100 (Php8,827,227.66).
The FMO, OCA is further DIRECTED to coordinate with the Fiscal Monitoring Division (FMD), Court
Management Office (CMO), OCA, before the release of the check issued in favor of the MTCC, Tagum City,
Davao del Norte, for the preparation of the necessary communication with the incumbent Clerk of Court of
MTCC, Tagum City, Davao del Norte;

E) The administrative case against the late respondent BELLA LUNA C. ABELLA be DISMISSED; and the
Financial Management Office, OCA, be DIRECTED to:

(E.1) PROCESS the money value of the terminal leave benefits of the late respondent BELLA LUNA
C. ABELLA subject to the submission of the documentary requirements and APPLY the same to the
computed shortage in the Fiduciary Fund account in the amount of Forty-Four Thousand Eight
Hundred Twenty-Eight Pesos (Php44,828.00). The FMO, OCA is further DIRECTED to coordinate
with the Fiscal Monitoring Division (FMD), Court Management Office (CMO), OCA, before the
release of the check issued in favor of the MTCC, Tagum City, Davao del Norte, for the preparation
of the necessary communication with the incumbent Clerk of Court of MTCC, Tagum City; and

(E.2) The balance of the money value of the terminal leave benefits of the late respondent BELLA
LUNA C. ABELLA after deducting the shortage incurred on her books of accounts be RELEASED to
his legal heirs, unless she is charged in some other administrative complaint or the same is
otherwise withheld for some lawful cause, subject to the usual required clearances and accounting
and auditing procedures. 1âwphi1

F) Presiding Judge ARLENE L. PALABRICA, MTCC, Tagum City, Davao del Norte, be DIRECTED to
CLOSELY MONITOR the financial transactions of the Court, and to STUDY and IMPLEMENT procedures
that shall strengthen the internal control over financial transactions otherwise she shall be held equally liable
for the infractions committed by the employees under her command/supervision. 43

Starting March 2012 up to the present, the OCA has been receiving several Manifestations 44 from Palero and
Aventurado as partial compliance with this Court’s directive in its February 18, 2009 Resolution for them to submit
valid acknowledgment receipts to support the unauthorized withdrawals amounting to ₱607,290 of the same
resolution.

We note that it has been eight years since the first audit and no one yet has been held administratively liable for the
shortages found. To avoid further delay and to prevent any occurrence of shortages in the court’s funds, this Court
will proceed with the resolution of the consolidated cases without prejudice to the evaluation of the OCA of the
compliances to directives in the February 18, 2009 Resolution pertaining to the second audit submitted by Palero,
Aventurado, Benemile, Catubag, Obero, Camisura and Iligan.

The Court is confronted with two main issues in the instant cases: (1) Is the death of the respondent in an
administrative case a ground for the dismissal of the case against him? (2) Should respondents be held
administratively liable for the shortages in the court’s funds found by the audit team?

The death of the respondent in an

administrative case does not
automatically divest this Court of
jurisdiction over the case.
Jurisprudence is settled that the death of a respondent does not preclude a finding of administrative liability subject
to certain exceptions. In the case of Gonzales v. Escalona, 45 this Court expounded on this doctrine:

While his death intervened after the completion of the investigation, it has been settled that the Court is not ousted
of its jurisdiction over an administrative matter by the mere fact that the respondent public official ceases to hold
office during the pendency of the respondent’s case; jurisdiction once acquired, continues to exist until the final
resolution of the case. In Layao, Jr. v. Caube, we held that the death of the respondent in an administrative case
does not preclude a finding of administrative liability:

"This jurisdiction that was ours at the time of the filing of the administrative complainant was not lost by the mere
fact that the respondent public official had ceased in office during the pendency of his case. The Court retains its
jurisdiction either to pronounce the respondent public official innocent of the charges or declared him guilty thereof.
186
A contrary rule would be fraught with injustice and pregnant with dreadful and dangerous implications ... If innocent,
respondent public official merits vindication of his name and integrity as he leaves the government which he has
served well and faithfully; if guilty, he deserves to receive the corresponding censure and a penalty proper and
imposable under the situation."

The above rule is not without exceptions, as we explained in the case of Limliman v. Judge Ulat-Marrero, where we
said that death of the respondent necessitates the dismissal of the administrative case upon a consideration of any
of the following factors: first, the observance of respondent’s right to due process; second, the presence of
exceptional circumstances in the case on the grounds of equitable and humanitarian reasons; and third, it may also
depend on the kind of penalty imposed. None of these exceptional considerations are present in the case.

The dismissal of an administrative case against a deceased respondent on the ground of lack of due process is
proper under the circumstances of a given case when, because of his death, the respondent can no longer defend
himself. Conversely, the resolution of the case may continue to its due resolution notwithstanding the death of the
respondent if the latter has been given the opportunity to be heard, as in this case, or in instances where the
continuance thereof will be more advantageous and beneficial to the respondent’s heirs.

In Judicial Audit Report, Branches 21, 32 and 36, we recognized the dismissal of an administrative case by reason
of the respondent’s death for equitable and humanitarian considerations; the liability was incurred by reason of the
respondent’s poor health. We had occasion, too, to take into account the imposable administrative penalty in
determining whether an administrative case should be continued. We observed in several cases that the penalty of
fine could still be imposed notwithstanding the death of the respondent, enforceable against his or her
estate.46(Citations omitted.)

As in Gonzales, none of the exceptions exist in the cases of Judge Salubre and Edig. As correctly found by the
OCA, both were served copies of this Court’s Resolution dated November 23, 2005 as well as the directive of the
investigating judge for them to answer the charges against them. Thus, there was no violation of their right to due
process as they were given the opportunity to be heard. Humanitarian considerations can neither be a ground for
dismissal since there was no allegation or proof that the liabilities were incurred due to poor health. Also, if the
imposable penalty is to be considered to determine if the instant cases against them should still continue, a fine may
still be imposed or even a forfeiture of their retirement benefits if deemed proper.

On the other hand, Abella’s case is different. She died before a copy of the November 23, 2005 Resolution was
served on her. As no actual service was made, Abella did not have the chance to defend herself against the
charges hurled against her. Hence, the dismissal of the administrative case against her is in order.

We now go to the administrative liabilities of Judge Salubre, Edig, Palero, Aventurado and Benemile.

Re: Judge Ismael Salubre

A vital administrative function of a judge is effective management of his court, and this includes control of the
conduct of the court’s ministerial officers.47 He has the responsibility to see to it that his clerk of court performs his
duties and observes the circulars issued by the Supreme Court 48 and that includes the safekeeping and on-time
remittance of the legal fees collected. Clearly, Judge Salubre miserably failed to fulfill this duty. Worse, he even
borrowed money from the court funds. The audit team discovered several withdrawal slips containing
acknowledgments by Judge Salubre evidencing that he received the cash bonds of dismissed cases and forfeited
cash bonds. Based on the statements of Palero and Aventurado, this was one of the primary reasons why there
were delays in the remittances– because the clerk of court or the cash clerk had to wait for Judge Salubre to return
the amounts he borrowed before they can deposit them. The shortages attributed to Judge Salubre totaling to
₱436,800, on the other hand, pertain to the amounts he borrowed but failed to return. Having remained
uncontroverted, all these pieces of evidence undoubtedly establish the culpability of Judge Salubre for gross
misconduct.

Re: Nerio L. Edig

As can be gathered from the documentary evidence collected by the audit team, it was established that there were
unauthorized withdrawals from the Fiduciary Fund amounting to ₱5,684,875 while Edig was Clerk of Court. As Clerk
of Court, he is primarily accountable for all funds that are collected for the court, whether personally received by him
or by a duly appointed cashier who is under his supervision and control. Being the custodian of the court’s funds,
revenues, and records, Edig is likewise liable for any loss, shortage, destruction, or impairment of said funds and
property.49 Moreover, it was likewise found that there were delays in the remittances of the court funds during his
tenure. Clerks of Court have always been reminded of their duty to immediately deposit the various funds received
by them to the authorized government depositories for they are not supposed to keep funds in their custody. 50 The
non-remittance of said amounts deprived the Court of the interest that may be earned if the amounts were deposited
in a bank, as prudently required. Shortages in the amounts to be remitted and the years of delay in the actual
remittance constitute gross neglect of duty for which Edig should be held administratively liable. 51

187
Re: Delia R. Palero and Macario H.S. Aventurado

We agree with the OCA that both Palero and Aventurado were remiss in their duties as cash clerks. They tried to
exculpate themselves from liability by blaming others for the shortages discovered and delay in the remittances. In
several decisions, the Court has ruled that the failure of a public officer to remit funds upon demand by an
authorized officer constitutes prima facie evidence that the public officer has put such missing funds or property to
personal use.52 Thus, they are not only guilty of gross neglect of duty in the performance of their duty for their failure
to timely turn over the cash deposited with them but also gross dishonesty.

Re: Sheriff Carlito B. Benemile

As found by the OCA, Benemile should be made to answer for his failure to file a return in one criminal case.
Section 14, Rule 39 of the 1997 Rules of Civil Procedure, as amended, provides that it is mandatory for sheriffs to
execute and make a return on the writ of execution within 30 days from receipt of the writ and every 30 days
thereafter until it is satisfied in full or its effectivity expires. Even if the writs are unsatisfied or only partially satisfied,
sheriffs must still file the reports so that the court, as well as the litigants, may be informed of the proceedings
undertaken to implement the writ.53For said omission, Benemile is guilty of simple neglect of duty.

The penalties

Grave misconduct, gross neglect of duty and gross dishonesty of which Judge Salubre, Edig, Palero and
Aventurado are found guilty, even if committed for the first time, are punishable by dismissal and carries with it the
forfeiture of retirement benefits, except accrued leave benefits, and the perpetual disqualification for reemployment
in the government service.

As to Judge Salubre and Edig, however, in view of their deaths, the supreme penalty of dismissal cannot be
imposed on them anymore. We however do not agree with the OCA’s recommendation that they will only be fined
but their heirs will still be entitled to their retirement benefits. It is only the penalty of dismissal that is rendered futile
by their passing since they are not in the service anymore, but it is still within the Court’s power to forfeit their
retirement benefits as in the recent case of Office of the Court Administrator v. Noel R. Ong, Deputy Sheriff, Branch
49, and Alvin A. Buencamino, Deputy Sheriff, Branch 53 of the Metropolitan Trial Court, Caloocan City. 54 In said
case, the Court ordered the forfeiture of the retirement benefits, except accrued leave credits, of Buencamino, who
was found guilty of grave misconduct and gross neglect of duty, but died during the pendency of the case.

As to Benemile, instead of the ₱1,000 fine recommended by the OCA, a suspension of one month and one day is
meted on him for being found guilty of simple neglect of duty, a less grave offense, pursuant to Section 52.B (1),
Rule IV of the Uniform Rules in Administrative Cases in the Civil Service.

The restitution of shortages

In this Court’s February 18, 2009 Resolution, the terminal leave benefits of Judge Salubre, Edig and Abella were
ordered forfeited to answer for the computed shortages found by the audit team. Upon computations of the Office of
Administrative Services (OAS) and the Financial Management Office (FMO) of the OCA, the equivalent monetary
value of their earned leave credits as against the total computed shortages for which they are accountable are as
follows:

PARTICULARS Judge SALUBRE Mr. EDIG Ms. ABELLA

Total Earned Leave

(days) 95.584 107.957 28.067

Highest Emoluments
Recevied P 57,615.27 P 21,035.00 P 11,446.00

Constant Factor 0.0478087 0.0478087 0.0478087

Total Money Value P 263,287.19 P 108,567.60 P 15,358.7855

Total Computed
Shortage P 436,800.00 P 8,827,227.66 P 44,828.00

Unsettled Balance P 173,512.81 P 8,718,660.0656 P 29,469.2257

188
The OCA recommended that the unsettled balance of the shortages shall be deducted from the retirement benefits
of the three. This recommendation, however, is now only possible for Abella since the retirement benefits of Judge
Salubre and Edig are ordered forfeited in favor of the Court.

As for Palero and Aventurado, on top of the shortages for which they are individually accountable, they are deemed
secondarily liable for the ₱5,684,875 of the computed shortages attributed to Edig: Palero for ₱3,147,285 and
Aventurado for ₱2,537,590. Said amounts should be taken from the total monetary value of their earned leave
credits. The remaining balance, if any, should in the meantime be withheld pending the evaluation of their
compliances to the directives of the Court in its February 18, 2009 Resolution pertaining to the second audit. 1âwphi1

WHEREFORE, judgment is hereby rendered finding:

1. Judge Ismael L. Salubre LIABLE for grave misconduct. All his retirement benefits, except his accrued
leave credits, are ordered FORFEITED in favor of the government. The Financial Management Office (FMO)
of the Office of the Court Administrator (OCA) is directed to PROCESS the monetary value of his accrued
leave credits subject to the submission of the documentary requirements and APPLY the same to the
computed shortage in the Fiduciary Fund account in the amount of ₱436,800 to be remitted to the Fiduciary
Fund account of the Municipal Trial Court in Cities, Tagum City. The FMO, OCA is further DIRECTED to
coordinate with the Fiscal Monitoring Division (FMD), Court Management Office (CMO), OCA, before the
release of the check issued in favor of MTCC, Tagum City, Davao del Norte for preparation of the necessary
communication with the incumbent Clerk of Court of MTCC, Tagum City, Davao del Norte;

2. Nerio L. Edig LIABLE for gross neglect of duty. All his retirement benefits, except his accrued leave
credits, are ordered FORFEITED in favor of the government. The FMO, OCA is directed to PROCESS the
monetary value of his accrued leave credits subject to the submission of the documentary requirements and
APPLY the same to the computed shortage in the Fiduciary Fund account in the amount of ₱8,827,227.66.
The FMO, OCA is further DIRECTED to coordinate with the FMD, CMO, OCA, before the release of the
check in favor of the MTCC, Tagum City, Davao del Norte, for the preparation of the necessary
communication with the incumbent Clerk of Court of MTCC, Tagum City, Davao del Norte;

3. Delia R. Palero LIABLE for gross neglect of duty. She is ordered DISMISSED from the service with
forfeiture of all retirement benefits, except accrued leave credits, and with perpetual disqualification from re-
employment in any government agency, including government-owned and -controlled corporations. She is
further directed to PAY the amount of ₱3,147,285 representing the shortage in the Fiduciary Fund, ₱21,000
and ₱74,800 representing the shortage in the Judiciary Development Fund. The FMO, OCA is directed to
WITHHOLD the release of the monetary value of her accrued leave credits to answer for any unsettled
balance in the shortages she was directed to pay and pending the evaluation of the OCA of her compliances
to the directives of this Court in its February 18, 2009 Resolution.

4. Macario H.S. Aventurado LIABLE for gross neglect of duty. He is ordered DISMISSED from the service
with forfeiture of all retirement benefits, except accrued leave credits, and with perpetual disqualification
from re-employment in any government agency, including government-owned and -controlled corporations.
He is further directed to PAY the amount of ₱2,537,590 representing the shortage in the Fiduciary Fund and
the amount of ₱39,000.00 representing the shortage in the Judiciary Development Fund. The FMO, OCA is
directed to WITHHOLD the release of the monetary value of his accrued leave credits to answer for any
unsettled balance in the shortages he was directed to pay and pending the evaluation o the OCA of her
compliances to the directives of this Court in its February 18, 2009 Resolution.

5. Carlito B. Benemile LIABLE for simple neglect of duty. He is hereby SUSPENDED for a period one (1)
month and one (1) day with a STERN WARNING that a repetition of the same or similar acts shall be dealt
with more severely.

On the other hand, the administrative case against Bella Luna C. Abella is ordered DISMISSED The FMO, OCA is
DIRECTED to process the monetary value of her accrued leave credits subject to the submission of the
documentary requirements and apply the same to the computed shortage in the Fiduciary Fund account in the
amount of ₱44,828. The FMO, OCA is further DIRECTED to coordinate with the FMD, CMO, OCA, before the
release of the check in favor of the MTCC, Tagum City, Davao del Norte, for the preparation of the necessary
communication with the incumbent Clerk of Court of MTCC, Tagum City, Davao del Norte. The balance of the
money value of her terminal leave benefits after deducting the shortage incurred on her books of accounts shall be
RELEASED to her legal heirs, unless she is charged in some other administrative complaint or the same is
otherwise withheld for some lawful cause, subject to the usual required clearances and accounting and auditing
procedures.

The compliances submitted by Delia R Palero, Macario H.S. Aventurado, Carlito P Benemile, Ramonito Catubag,
Joseph Casimura, Alvin Obrero and Renato Hagan to this Court’s Resolution dated February 18, 2009 is hereby
REFERRED to the OCA for evaluation, report and recommendation to be submitted within 30 days from receipt of
the records.

189
Presiding Judge Arlene L. Palabrica, MTCC, Tagum City, Davao del Norte, is DIRECTED to closely monitor the
financial transactions o the Court, and to study and implement procedures that shall strengthen the internal control
over financial transactions otherwise she shall be held equally liable for the infractions committed by the employees
under her command/supervision. This Decision is immediately EXECUTORY

SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila

EN BANC

A.M. No. P-12-3063               November 26, 2013

(Formerly A.M. OCA IPI No. 09-3082-P)

ELEANOR P. OLIVAN, Complainant, 
vs.
ARNEL JOSE A. RUBIO, Deputy Sheriff IV, Office of the Clerk of Court Regional Trial Court, Naga
City,Respondent.

190
 DECISION

PER CURIAM:

Before us is a sworn administrative complaint  dated February 11, 2009, filed by complainant Eleanor  P. Olivan
1 2

against respondent Amel Jose A. Rubio, Deputy Sheriff IV, Office of the Clerk of Court (OCC), Regional Trial Court
(RTC), Naga City, for malversation.

Complainant is the daughter-in-law and representative of the applicants in a land registration case, docketed as
Land Registration Case No. N-594, GLRC Record No. N-8109 entitled, "Domingo P. Olivan and Venancia R. Olivan,
Applicants v. Municipality of Pasacao, Camarines Sur, Oppositor." She averred that the case was decided in their
favor by the Court of Appeals whose decision became final and executory. Hence, a writ of execution  was issued in
3

favor of the applicants. Subsequently, an Alias Writ of Execution  (Alias Writ) was issued on September 29, 2005
4

and respondent was tasked to enforce the same.

On April 27, 2006, respondent received ₱20,000 from complainant as partial payment for the sheriff’s incidental
expenses for the implementation of the Alias Writ, as evidenced by a handwritten receipt  signed by respondent. The
5

facts, as culled from the records, follow:

On May 10, 2006, respondent filed a Manifestation  pursuant to Rule 141 of the Rules of Court, detailing the
6

Sheriff’s Expenses in the amount of ₱150,000 as incidental expenses and ₱3,000 as the court’s commission fee, or
a total of ₱153,000 for the implementation of said writ. The Manifestation was with the conformity of complainant,
the recommending approval of Atty. Egmedio C. Blacer, Clerk of Court VI and Ex Officio Sheriff of the RTC, and was
approved by Judge Pablo M. Paqueo, Jr., then Executive Judge of the RTC. On the same day, complainant
deposited ₱153,000 with the OCC of the RTC as evidenced by Official Receipt No. 3453158.  Also on the same day,
7

respondent withdrew the full amount of ₱153,000. 8

Complainant averred that to her damage and prejudice, respondent failed to execute the decision despite receipt of
a total sum of ₱173,000. She also averred that respondent failed to return to the OCC or to her the remaining cash
of ₱22,866 as indicated in his Liquidation of Sheriff’s Expenses  dated December 20, 2008. Said report showed that
9

the total amount spent was only ₱150,134, thereby leaving a balance of ₱22,866.

In his Comment  dated April 7, 2009, respondent stated that implementing the Alias Writ required the delivery of the
10

material possession of the subject property to the applicants and the service of the said writ to more than 40
residents in the area. He informed complainant of the expenses that will be needed to implement the writ
considering the number of residents affected and their opposition thereto, the location of the subject property and
the need for additional assistance from other court sheriffs. Thus, on April 27, 2006, complainant gave him the
aforementioned amount of ₱20,000.

He adds that on April 24, 2006 Atty. Fiel V. Bagalacsa-Abad, Clerk of Court V of the OCC issued a Travel Order  to
11

him and other assisting sheriffs namely, Pelagio Papa, Jr., Edgar Surtida II  and the late Donn Valenciano. Together
12

with said other sheriffs, he went to the subject property several times to serve the writ.

On May 10, 2006, he filed the aforementioned Manifestation and submitted a Partial Return of Alias Writ of
Execution  on May 11, 2006 reporting the actions he had undertaken in the implementation of the writ. He also
13

requested that a precision survey be conducted for the purpose of identifying the actual occupants of the subject
property so that they may be duly served in person with the notice to vacate and the alias writ. He also requested
that the survey be conducted with the assistance of the members of the Philippine Army or the Philippine National
Police (PNP) to maintain peace and security. In an Order  dated May 16, 2006, the RTC duly took note of the said
14

Partial Return and ordered the conduct of the precision survey. The RTC also directed the PNP Provincial
Commander of Camarines Sur to provide respondent at least ten PNP personnel to maintain peace and order
during the said survey.

Subsequently, Travel Orders were issued in his favor and in favor of his companions for the periods May 18 to 19,
2006;  May 23 to 24, 2006;  and June 20 to 23, 2006.
15 16 17

On June 26, 2006, he submitted a Sheriff’s Report  stating the actions he pursued and the events that transpired
18

during the service of the RTC’s Order dated May 16, 2006. Respondent alleged therein that the occupants resisted
and refused to obey the Alias Writ and that respondent and his companions were met with threats and violence.
Thus, respondent opined that a precision survey and a writ of demolition were proper under the circumstances.
Respondent claimed that complainant’s counsel filed a motion for issuance of a writ of demolition but the court had
not yet resolved the motion. Respondent also claimed that complainant would oftentimes visit him, insisting that he
demolish the houses erected on the subject property but he refused as there was no writ of demolition yet.

On November 30, 2008, he received a letter  from complainant, copy furnished Judge Jaime E. Contreras (Judge
19

Contreras), Executive Judge of the RTC, asking for an accounting of the expenses he incurred in the
implementation of the Alias Writ. Judge Contreras treated the letter as an administrative complaint and met the
191
parties for a conference. As a result, he was ordered to return the full amount or make a full and detailed liquidation,
which he did on January 13, 2009, through the aforementioned Liquidation of Sheriff’s Expenses. However,
complainant manifested to Judge Contreras that she was not satisfied with the accounting rendered. Complainant
was then informed by Judge Contreras that the matter was properly within the jurisdiction of the Office of the Court
Administrator (OCA). 20

In her Opposition to Respondent’s Comment,  complainant maintained that respondent’s liquidation report
21

contained bloated expenses. She submitted that respondent malversed a portion of the total amount he received. In
his Reply,  respondent countered that the expenses he incurred were all legitimate.
22

Considering the conflicting allegations of the parties and the gravity of the charges which required a full-blown
investigation, the OCA referred the matter to Judge Contreras for investigation, report and recommendation. 23

In his Report and Recommendation  dated December 5, 2010, Judge Contreras concluded that respondent incurred
24

unnecessary and/or unsubstantiated expenses. He found that respondent’s claim for expenses regarding police
assistance was refuted by the Certifications issued by Police Superintendent Marlon Celetaria Tejada of the PNP
Camarines Sur Provincial Office  and Police Senior Inspector Venerando Flor Ramirez of the Pasacao Municipal
25

Police Station  stating that their respective offices based on record did not deploy any PNP personnel to assist
26

respondent in implementing the alias writ covering the period of April 28 to June 22, 2006. Said police officers
confirmed the veracity of these Certifications in their respective testimonies made before Judge Contreras.  Judge
27

Contreras further noted that respondent submitted his liquidation of expenses only after almost two years. Thus,
Judge Contreras made the following conclusion and recommendation:

CONCLUSION AND RECOMMENDATION

In view of all the foregoing, the undersigned Investigating Judge respectfully recommends to hold respondent Sheriff
Jose Arnel Rubio liable for Serious Misconduct for having committed the following acts, to wit:

1. For having received from the complainant Php 20,000.00 out of his demand for Php 100,000.00 in
consideration of his services which allegedly entailed risk;

2. For having directly received from complainant a sum of money as sheriff’s expense, without following the
appropriate procedure;

3. For having knowingly or unknowingly failed to exercise proper prudence thereby incurring unnecessary
expenses or financial losses, under the guise of implementing the writ, to the prejudice of the complainant;

4. For having presented questionable and falsified receipts to justify his bloated expenses; and

5. For having enlisted the assistance of several sheriffs, and in the process involved them in complicity in
implementing the writ.

Likewise, it is respectfully recommended that he be suspended for six (6) months without pay. 28

As a related matter, in the course of the investigation, Judge Contreras found that other employees of the RTC,
namely, Patricia De Leon, Sheriff Edgar Hufancia, Sheriff Edgar Surtida II and Sheriff Pelagio Papa, Jr. were
likewise involved in anomalous or shady transactions which enabled them to collect certain sums of money from
complainant under the guise of helping her in her case. Thus, Judge Contreras recommended that a case for
Conduct Prejudicial to the Best Interest of the Service be filed against said employees. His recommendation was
approved by this Court in its Resolution  dated June 13, 2012 and the matter is now separately docketed as A.M.
29

OCA IPI No. 12-3896-P. 30

In its Memorandum  dated March 14, 2012, the OCA found that the conclusions of fact of Judge Contreras are duly
31

supported by evidence on record. The OCA agreed with said findings except for the recommended penalty. Invoking
our ruling in Anico v. Pilipiña,  the OCA opined that respondent’s act of soliciting money from complainant
32

constituted serious misconduct. The OCA added that such was further aggravated by respondent’s act of receiving
the amount of ₱20,000 and his failure to turn over said amount to the OCC, which is an act of misappropriation of
funds amounting to dishonesty. Thus, the OCA recommended, among others, that respondent be found guilty of
Serious Misconduct and Dishonesty and be ordered dismissed from the service with forfeiture of all retirement
benefits and privileges, except accrued leave credits, if any, with prejudice to re-employment in any branch or
instrumentality of the government, including government-owned or controlled corporations.

The Court adopts in full the factual findings and the recommendation of the OCA.

The deposit and payment of expenses incurred in enforcing writs are governed by Section 10, Rule 141 of the Rules
of Court, as revised by A.M. No. 04-2-04-SC,  viz: 33

192
SEC. 10. Sheriffs, PROCESS SERVERS and other persons serving processes. –

xxxx

With regard to sheriff’s expenses in executing writs issued pursuant to court orders or decisions or safeguarding the
property levied upon, attached or seized, including kilometrage for each kilometer of travel, guards’ fees,
warehousing and similar charges, the interested party shall pay said expenses in an amount estimated by the
sheriff, subject to the approval of the court. Upon approval of said estimated expenses, the interested party shall
deposit such amount with the clerk of court and ex officio sheriff, who shall disburse the same to the deputy sheriff
assigned to effect the process, subject to liquidation within the same period for rendering a return on the process.
THE LIQUIDATION SHALL BE APPROVED BY THE COURT. Any unspent amount shall be refunded to the party
making the deposit. A full report shall be submitted by the deputy sheriff assigned with his return, and the sheriff's
expenses shall be taxed as costs against the judgment debtor. (Emphasis supplied.)

The rule clearly requires that the sheriff executing a writ shall provide an estimate of the expenses to be incurred,
and such estimated amount must be approved by the court. Upon approval, the interested party shall then deposit
the amount with the clerk of court and ex officio sheriff. The expenses shall be disbursed to the assigned deputy
sheriff to execute the writ, subject to liquidation upon the return of the writ. Any amount unspent shall be returned to
the interested party.34

In this case, respondent failed to comply with the prescribed procedure. His admitted act of receiving ₱20,000 for
expenses to be incurred in the execution of the writ on April 27, 2006  as evidenced by a mere handwritten receipt,
35

without having made an estimate and without securing prior approval of the court, is a violation of the above rules.
Respondent’s explanation that he merely received the ₱20,000 because complainant was very insistent to
implement the Alias Writ, is not acceptable. The rules are clear. Respondent should not have received any money
from complainant without first providing an estimate of the expenses to be incurred and submitting the same for
approval of the court.  He did not even advise complainant that he was not authorized to receive any amount from
36

her and that the money for expenses should be deposited with the OCC.  Neither does it appear that he deposited
37

the amount with the Clerk of Court and Ex officio Sheriff. In fact, the money which respondent had demanded and
received from complainant was not among those prescribed and authorized by the Rules of Court as it was not even
accounted for earlier in his Manifestation. He merely reported his receipt of the ₱20,000 in his liquidation of
expenses only after complainant demanded an accounting and in compliance to Judge Contreras’ directive. This
Court has ruled that any amount received by the sheriff in excess of the lawful fees allowed by the Rules of Court is
an unlawful exaction and renders him liable for grave misconduct and gross dishonesty. 38

Dishonesty is defined as the concealment or distortion of truth in a matter of fact relevant to one’s office or
connected with the performance of one’s duty. It implies a disposition to lie, cheat, deceive, or defraud;
untrustworthiness; lack of integrity; lack of honesty, probity, or integrity in principle; and lack of fairness and
straightforwardness.  On the other hand, misconduct is defined as any unlawful conduct on the part of a person
39

concerned in the administration of justice prejudicial to the rights of parties or to the right determination of the cause.
The term "grave" means "very serious; involving or resulting in serious consequences: likely to produce real harm or
damage." 40

We concur with Judge Contreras’ findings that respondent indeed incurred unnecessary and/or unsubstantiated
expenses. It is evident from the aforementioned certifications and the police officers’ testimonies that respondent
was not assisted by PNP personnel in the implementation of the writ contrary to his claim, as contained in his
liquidation of expenses where for May 18, 2006 alone, respondent reported expenses for PNP/Military assistance in
the substantial amount of ₱36,000.  Judge Contreras thus stated:
41

Furthermore, Sheriff Rubio and his assisting sheriffs kept on proceeding to the place subject of the writ since 28
April until 9 May 2006 which entailed the total expense of Php 35,900.00 even if he had not yet filed his
Manifestation of Estimated Sheriff’s Expense and no money was deposited yet by the prevailing party to the court
except the Php 20,000.00 he demanded from complainant on account of the risk involved in implementing the
writ….42

It bears stressing that respondent’s issuance of a handwritten receipt  dated April 27, 2006 also constitutes a
43

violation of Section 113, Article III, Chapter V of the National Accounting and Auditing Manual which provides "that
no payment of any nature shall be received by a collecting officer without immediately issuing an official receipt in
acknowledgment thereof." 44

Time and again we have ruled that high standards are expected of sheriffs who play an important role in the
administration of justice.  We have constantly reminded our sheriffs and deputy sheriffs  of our admonition in Vda.
1âwphi1
45

de Abellera v. Dalisay,  to wit:

46

At the grassroots of our judicial machinery, sheriffs and deputy sheriffs are indispensably in close contact with the
litigants, hence, their conduct should be geared towards maintaining the prestige and integrity of the court, for the
image of a court of justice is necessarily mirrored in the conduct, official or otherwise, of the men and women who
193
work thereat, from the judge to the least and lowest of its personnel; hence, it becomes the imperative sacred duty
of each and everyone in the court to maintain its good name and standing as a temple of justice.

As to the appropriate penalty, grave misconduct and dishonesty are grave offenses each punishable by dismissal
even on the first offense under Section 52,  Rule IV of the Uniform Rules on Administrative Cases in the Civil
47

Service.  The penalty of dismissal further carries with it the accessory penalties of cancellation of eligibility, forfeiture
48

of retirement benefits [except leave credits pursuant to Rule 140, Section 11 (1) of the Rules of Court] and
disqualification from reemployment in the government service.  However, inasmuch as Section 53, Rule IV of the
49

Uniform Rules allows the disciplining authority the discretion to consider mitigating circumstances in the imposition
of the appropriate penalty, it is likewise imperative that aggravating and alternative circumstances attendant to the
commission of the offense be considered. 50

Verily, this Court in many instances has mitigated the imposable penalty for humanitarian reasons; considered
length of service in the judiciary; and viewed the family circumstances, among others, in determining the proper
penalty.  In Francisco v. Bolivar,  this Court enumerated cases wherein respondent sheriffs therein being first-time
51 52

offenders — De Guzman, Jr. v. Mendoza  for grave misconduct and dishonesty; Adoma v. Gatcheco  for grave
53 54

misconduct, dishonesty and conduct prejudicial to the best interest of the service; Apuyan, Jr. v. Sta. Isabel  for 55

grave misconduct, dishonesty and conduct grossly prejudicial to the best interest of the service; and Albello v.
Galvez  for dishonesty — were meted the penalty of one year suspension instead of dismissal.
56

However, we note that this is not the first time that respondent has been administratively sanctioned.  In Manaog v.
1âwphi1

Rubio,  respondent was found guilty of simple misconduct for which he was suspended from the service for one
57

month and one day without pay. The Court held therein that respondent together with his co-respondent had shown
lack of decorum, propriety, and respect in their dealings with other people. Subsequently, in Sales v. Rubio,  the 58

Court also found respondent, then Sheriff of the Municipal Circuit Trial Court of Magarao-Canaman, Camarines Sur,
guilty of violation of Section 10, Rule 141 of the Rules of Court and of Discourtesy, and was again suspended for six
months without pay. In both instances, this Court sternly warned respondent that a repetition of the same or similar
offense or offenses shall be dealt with more severely.

This Court doubts if respondent indeed took to heart and heeded seriously these previous warnings. His conduct in
this case and his prior infractions are grossly prejudicial to the best interest of the service. Leniency is of no moment
for doing so would give the public the impression that incompetence and repeat offenders are tolerated in the
judiciary.  The frequency of respondent’s offenses only demonstrates his propensity to violate the Rules of Court
59

and the Code of Conduct for Court Personnel. With two cases decided against him, and taking the substantive
merits of this case, respondent has clearly demonstrated his incorrigibility and unfitness to be in the
service. Consequently, the imposition of the ultimate administrative penalty of dismissal from service is warranted.
60

WHEREFORE, respondent Arnel Jose A. Rubio, Deputy Sheriff IV, Office of the Clerk of Court, Regional Trial Court
of Naga City, is found GUILTY of Dishonesty and Grave Misconduct and is ordered DISMISSED from the service
with forfeiture of all retirement benefits and privileges, except accrued leave credits, if any, with prejudice to re-
employment in any branch or instrumentality of the government, including government-owned or controlled
corporations.

This Decision is IMMEDIATELY EXECUTORY.

Republic of the Philippines

SUPREME COURT
Manila

EN BANC

A.M. No. 14155-Ret.               November 19, 2013

RE: APPLICATION FOR SURVIVORSHIP PENSION BENEFITS UNDER REPUBLIC ACT NO. 9946 OF MRS.
PACITA A. GRUBA, SURVIVING SPOUSE OF THE LATE MANUEL K. GRUBA, FORMER CTA ASSOCIATE
JUDGE.

RESOLUTION

194
LEONEN, J.:

We stand in awe of death s inevitability and tragic immutability, but we can temper the effects of the law on those it
leaves behind.

This case involves a judge of the Court of Tax Appeals  who died while in service. He died at the age of 55 years,
1

two (2) months, and six (6) days. He died prior to the enactment of Republic Act No. 9946, which substantially
amended the benefits provided in Republic Act No. 910.

We are asked to decide whether the death gratuity benefits and the survivorship pension benefits under Republic
Act No. 9946 apply to this case.

We rule to grant death gratuity benefits.

Manuel K. Gruba (Judge Gruba) was born on April 19, 1941. He began his government service on December 3,
1979 as Senior Revenue Executive Assistant I at the Bureau of Internal Revenue. He rose from the ranks at the
Bureau of Internal Revenue until he was appointed as an Associate Judge of the Court of Tax Appeals on
September 17, 1992.

On June 25, 1996, Judge Gruba passed away. The cause of his death was natural and was reported as brain
stem/midbrain stroke, basilar artery thrombosis, embolic event.  He was 55 years old when he died. He was in
2

government service for a total of 16 years, six (6) months, and 21 days. In those years, he rendered service for
three (3) years, nine (9) months, and eight (8) days in the Judiciary.

The surviving spouse of Judge Gruba, Mrs. Pacita A. Gruba (Mrs. Gruba), applied for retirement/gratuity benefits
under Republic Act No. 910. 3

In a Resolution dated September 24, 1996, this Court approved the application filed by Mrs. Gruba. Per certification
dated October 25, 2012 by the Court of Tax Appeals’ Office of Administrative and Finance Services, the five-year
lump sum retirement benefit under Republic Act No. 910 was remitted to the Government Service Insurance System
effective June 26, 1996. A total of ₱1,486,500.00, representing the five-year lump sum gratuity due to Judge Gruba,
was paid to his heirs.4

On January 13, 2010, Congress amended Republic Act No. 910 and passed Republic Act No. 9946. Republic Act
No. 9946 provided for more benefits, including survivorship pension benefits, among others. The law also provides a
retroactivity provision which states:

SEC. 3-B. The benefits under this Act shall be granted to all those who have retired prior to the effectivity of this Act:
Provided, That the benefits shall be applicable only to the members of the Judiciary: Provided, further, That the
benefits to be granted shall be prospective.

On January 11, 2012, Mrs. Gruba applied for survivorship pension benefits under Republic Act No. 9946.  In a 5

Resolution dated January 17, 2012, this Court approved the application of Mrs. Gruba. She received ₱1,026,748.00
for survivorship pension benefits from January 1, 2011 to April 2012. 6

In a Resolution dated November 27, 2012, this Court revoked the Resolution dated January 17, 2012 and directed
the Court of Tax Appeals to discontinue the payment of the survivorship pension benefits to Mrs. Gruba. However,
this Court stated that Mrs. Gruba was not required to refund the survivorship pension benefits received pursuant to
the Resolution dated January 17, 2012. 7

This Court required the Office of the Chief Attorney to report on the matter. In a Comment dated May 14, 2013, the
Office of the Chief Attorney recommended that the heirs of Judge Gruba be entitled to the 10-year lump sum death
benefit under Section 2 of Republic Act No. 910, as amended by Republic Act No. 9946.

This Resolution adopts in part the recommendation of the Office of the Chief Attorney.

The issues for our resolution are the following: (1) whether Republic Act No. 9946 applies to Judge Gruba; (2)
whether the heirs of Judge Gruba are entitled to the 10-year lump sum gratuity benefits under Republic Act No.
9946; and (3) whether Mrs. Gruba is entitled to survivorship pension benefits under the same law.

We decide the first two issues in favor of the heirs of Judge Gruba. However, we deny the application for
survivorship pension benefits of Mrs. Gruba.

The rationale for retirement benefits

195
Retirement laws are social legislation. In general, retirement laws provide security to the elderly who have given
their prime years in employment whether in the private sector or in government. These laws ensure the welfare of
individuals who are approaching their twilight years and have limited opportunities for productive employment that
give them a steady income stream. In the private sector, retirement packages are usually crafted as "forced savings"
on the part of the employee.

In government, lucrative retirement benefits are used as an incentive mechanism to encourage competent
individuals to have careers in government. This Court often states:

[R]etirement benefits receivable by public employees are valuable parts of the consideration for entrance into and
continuation in public office or employment. They serve a public purpose and a primary objective in establishing
them is to induce competent persons to enter and remain in public employment and render faithful and efficient
service while so employed.  (Emphasis supplied)
8

Due to this extraordinary purpose, the Constitution provides guidelines on periodically increasing retirement
benefits.  On several occasions, this Court has liberally interpreted retirement laws in keeping with its purpose. In
9

Government Service Insurance System v. De Leon: 10

Retirement laws, in particular, are liberally construed in favor of the retiree because their objective is to provide for
the retiree’s sustenance and, hopefully, even comfort, when he no longer has the capability to earn a livelihood. The
liberal approach aims to achieve the humanitarian purposes of the law in order that efficiency, security, and well-
being of government employees may be enhanced. Indeed, retirement laws are liberally construed and
administered in favor of the persons intended to be benefited, and all doubts are resolved in favor of the retiree to
achieve their humanitarian purpose. 11

This general principle for retirement benefits applies to members of the Judiciary. However, Congress made a
special law specifically for retiring justices and judges. This law on "retirement pensions of Justices arise from the
package of protections given by the Constitution to guarantee and preserve the independence of the
Judiciary." Aside from guaranteeing judicial independence, a separate retirement law for justices and judges is
12

designed to attract intelligent members of the Bar to join the Judiciary. It compensates for the opportunity cost of
having profitable private practices.

The rationale for death benefits

Aside from considering old age retirement benefits, the law also protects the welfare of the heirs and surviving
spouses of employees who die before or after retirement. "The law extends survivorship benefits to the surviving
and qualified beneficiaries of the deceased member or pensioner to cushion the beneficiaries against the adverse
economic effects resulting from the death of the wage earner or pensioner." 13

The law usually takes into account the nature of the employment and the vulnerability of the individual to risks that
might lead to an early demise. Therefore, military personnel, by virtue of Republic Acts No. 3056, 5976, and 541,
and justices and judges, by virtue of Republic Act No. 910 as amended by Republic Act No. 9946, are given
generous death benefits. The law recognizes the threats these kinds of government employees face because of
their positions. In order to minimize the adverse effects of unexpected deaths while in service, the law extends
benefits to the deceased employee’s loved ones. It is also the law’s way of sympathizing with the loss of these
families. Death benefits remind the heirs that despite their loss, their departed love one had valuable contributions to
society, and the State is grateful for these contributions. These benefits also provide more incentive for the
independence of those who serve in the Judiciary. They allow peace of mind since members of the Judiciary know
that they could provide for their spouse and their children even beyond their death.

Retirement, disability retirement, and death as modes of terminating employment

Retirement benefits are usually conditioned on compliance with certain requirements.  Common requirements
1âwphi1

include age and years in service. Upon reaching a certain age and compliance with the years of service, an
employee becomes entitled to benefits by operation of law.

An exception to compliance with age and service requirements is disability retirement. It is still considered a form of
retirement, but the condition for compliance is not usually age or years in service. Disability retirement is conditioned
on the incapacity of the employee to continue his or her employment due to involuntary causes such as illness or
accident. The social justice principle behind retirement benefits also applies to those who are forced to cease from
service due to disabilities beyond their control.

In line with the doctrine of liberal interpretation of retirement laws, this Court has often construed death as disability
retirement. "[T]here is no more permanent or total physical disability than death."  The term "retirement," when used
14

in a strict legal sense, refers to mandatory or optional retirement. However, when used in a more general sense,
"retire" may encompass the concepts of both disability retirement and death. All of these concepts involve events
that happen to an employee beyond his or her control. In case of mandatory or optional retirement, reaching a
196
certain age due to mere passage of time is beyond the control of the individual. In the case of disability retirement
and death, acquiring an illness or accident is beyond the control of the individual.

In Re: Resolution Granting Automatic Permanent Total Disability Benefits to Heirs of Justices and Judges,  this15

Court rejected the Department of Budget and Management’s insistence that "death while in actual service" and
"retirement due to permanent physical disability" are distinct and separate circumstances. In this case, the
Department of Budget and Management refused to release additional gratuity benefits to judges on account that
they died while in actual service without being able to apply for permanent physical disability benefits. Since this
case occurred prior to the issuance of Republic Act No. 9946, there were gaps in the law. Gratuity payments due to
permanent physical disability were twice as much as gratuity payments caused by death while in active service. This
Court, in order to maximize the benefits given to the heirs, treated death as retirement due to permanent physical
disability. Hence, we stated:

In Re: Retirement Benefits of the late City Judge Alejandro Galang, Jr., this Court has had the occasion to construe
Republic Act No. 910, particularly the phrase "permanent physical disability" found in Section 2 thereof. There, this
Court considered death "while in actual service" to be encompassed by the phrase "permanent physical disability."
For, as aptly pointed out by then Associate Justice Claudio Teehankee in his concurring opinion in that case, "there
is no more permanent or total physical disability than death."

When the law has gaps which tend to get in the way of achieving its purpose, thus resulting in injustice, this Court is
allowed to fill the open spaces therein.16

Retiring due to physical disabilities is not far removed from the situation involving death of a judge or justice. This
explains why retirement laws necessarily include death benefits. The gaps in the old law prompted Congress to
improve death benefits given to the heirs of deceased judges and justices.

Republic Act No. 9946 applies retroactively to those who died or were killed while they were in government service

Republic Act No. 910 was enacted in 1954 to provide for retirement benefits of justices of the Supreme Court and
the Court of Appeals. Through various amendments, the coverage of Republic Act No. 910 now includes justices of
the Sandiganbayan and the Court of Tax Appeals, as well as judges of the Regional Trial Court, Metropolitan Trial
Court, Municipal Trial Court, Municipal Circuit Trial Court, Shari’a District Court, Shari’a Circuit Court, and any other
court hereafter established.17

Republic Act No. 910 provides for two basic benefits: retirement and death benefits.

The retirement benefits under Republic Act No. 910 may be availed in two ways. One way is through compulsory
retirement of a judge or justice by attaining the age of 70 years old and complying with the service requirement of 20
years in the Judiciary or any other government branch. The other way is through optional retirement of a judge or
justice by attaining the age of 57 years old and complying with the service requirement of 20 years in government,
the last 10 of which must be continuously rendered in the Judiciary. 18

The optional retirement requirements were modified in Republic Act No. 5095. To qualify for optional retirement
under that law, a judge or justice must serve at least 20 years in government, and the last five (5) years of service
must be continuously rendered in the Judiciary. 19

The death benefits under Republic Act No. 910 entitle the heirs of a deceased justice or judge to a five-year lump
sum of the salary the justice or judge was receiving during the period of death. The five-year lump sum is
conditioned on the compliance with the service requirement of 20 years. Noncompliance with the service
requirement entitles the heirs only to a two-year lump sum.

In 2010, Congress enacted Republic Act No. 9946, otherwise known as An Act Granting Additional Retirement,
Survivorship, and Other Benefits to Members of the Judiciary, Amending for the Purpose Republic Act No. 910.
Republic Act No. 9946 introduced major innovations for retirement of the members of the Judiciary. The first change
made was the inclusion of additional allowances in the computation for monthly pensions and gratuity
payments. Second, the service requirement for compulsory and optional retirement was modified. Under Republic
20

Act No. 9946, only 15 years in the Judiciary and any other branch of government are required. For optional
retirement, the last three (3) years must be rendered continuously in the Judiciary.  The third major innovation of the
21

law is that non-compliance with the service requirement will entitle the retiree to a monthly pension pro-rated to the
number of years rendered in government.  The fourth major innovation is the benefits given to justices or judges
22

who contracted permanent disability or partial permanent disability during incumbency. 23

The last two innovations of Republic Act No. 9946 are more relevant to this case at bar. The fifth major innovation of
Republic Act No. 9946 is the expansion of death benefits given to the heirs of a deceased justice or judge.  Finally,
24

the law specifies that pension benefits given under this law will be received by the surviving spouse of the retired
justice or judge upon the justice’s or judge’s demise.  This last innovation is the most important and the reason why
25

the law was amended in the first place.

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Republic Act No. 9946 provides for a retroactivity clause in Section 4, adding Section 3-B to Republic Act No. 910:

SEC. 3-B. The benefits under this Act shall be granted to all those who have retired prior to the effectivity of this Act:
Provided, That the benefits shall be applicable only to the members of the Judiciary: Provided, further, That the
benefits to be granted shall be prospective. (Emphasis supplied)

An initial look at the law might suggest that the retroactivity of Republic Act No. 9946 is limited to those who retired
prior to the effectivity of the law.  However, a holistic treatment of the law will show that the set of amendments
26

provided by Republic Act No. 9946 is not limited to justices or judges who retired after reaching a certain age and a
certain number of years in service. The changes in the law also refer to justices or judges who "retired" due to
permanent disability or partial permanent disability as well as justices or judges who died while in active service. In
light of these innovations provided in the law, the word "retired" in Section 3-B should be construed to include not
only those who already retired under Republic Act No. 910 but also those who retired due to permanent disability. It
also includes judges and justices who died or were killed while in service.

Providing retroactivity to judges and justices who died while in service conforms with the doctrine that retirement
laws should be liberally construed and administered in favor of persons intended to be benefited.  "[T]he liberal
27

approach aims to achieve the humanitarian purposes of the law in order that the efficiency, security, and well-being
of government employees may be enhanced."  Ensuring the welfare of families dependent on government
28

employees is achieved in the changes made in Republic Act No. 9946. It will be consistent with the humanitarian
purposes of the law if the law is made retroactive to benefit the heirs of judges and justices who passed away prior
to the effectivity of Republic Act No. 9946.

Judge Gruba who passed away prior to the effectivity of Republic Act No. 9946 is still covered by the law by virtue of
Section 3-B. "Retired" here is not construed in the strict dictionary definition but in its more rational sense of
discontinuance of service due to causes beyond one’s control. It should include the cessation of work due to natural
causes such as death. Therefore, the death of Judge Gruba produces effects under Republic Act No. 9946 for his
family.

In the past, this Court has liberally granted benefits to surviving heirs of deceased members of the Judiciary despite
incomplete compliance with the requisites of Republic Act No. 910.  Since there was a gap in the law, this Court’s
29

Resolution dated September 30, 2003 in Re: Resolution Granting Permanent Total Disability Benefits to Heirs of
Justices and Judges Who Die In Actual Service provided for benefits of judges and justices who died in actual
service but were not able to comply with the age and service requirements stated in Republic Act No. 910.  This30

Resolution was incorporated in Republic Act No. 9946.

This Court also applied the survivorship pension benefits to surviving spouses of justices and judges who died prior
to the enactment of Republic Act No. 9946 in 2010. For example, Chief Justice Enrique M. Fernando passed away
in 2004, but his widow, Mrs. Emma Q. Fernando, was given survivorship pension benefits  despite the fact that
31

Chief Justice Fernando’s death occurred prior to the enactment of Republic Act No. 9946.

Congress has been liberal in according retirement and death benefits to justices and judges. These benefits are
incentives for talented individuals to join the Judiciary. For current members, these benefits assure them that the
government will continue to ensure their welfare even in their twilight years. These benefits allow the best and the
brightest lawyers to remain in the Judiciary despite its risks because they know that their family’s welfare will be
addressed even in their passing.

The first proviso of Section 3-B ("Provided, That the benefits shall be applicable only to the members of the
Judiciary") should be interpreted to mean individuals who were members of the Judiciary immediately prior to
retirement, disability retirement or death. This proviso is meant to exclude individuals who were former members of
the Judiciary but accepted positions in other branches of government. In other words, former judges or justices who
retire from non-judicial positions are excluded.  If this proviso is interpreted to exclude benefits provided by the law
32

to heirs and surviving members, it will be contrary to the purpose of the law.

Representative Fredenil H. Castro, one of the sponsors of House Bill No. 1238, the precursor of Republic Act No.
9946, "explained that the bill was aimed to assure justices and judges ‘that their surviving spouses are given
adequate and substantial benefits through survivorship pension.’"  In addition, it will also be contrary to
33

jurisprudence stating "retirement laws should be liberally construed and administered in favor of the persons
intended to be benefited and all doubts as to the intent of the law should be resolved in favor of the retiree to
achieve its humanitarian purposes."  Note that this Court referred to "persons intended to be benefited" and not
34

merely "retirees." There is recognition that the retired or deceased judge is not the only beneficiary of retirement and
death benefit laws but also his or her family.

The last proviso of Section 3-B ("Provided, further, That the benefits to be granted shall be prospective) might
likewise cause some confusion. To clarify, when the law states "benefits to be granted shall be prospective," it refers
to pensions given to justices or judges or survivorship pension benefits given to the surviving spouses. It means that
those who have been continuously receiving pension benefits before Republic Act No. 9946 may not demand the
198
differential of the previously paid pension benefits. This "prospectivity" provision does not apply to lump sum
payments or one-time gratuity benefits given by reasons of death.

The heirs of Judge Gruba are entitled to death gratuity benefits under Republic Act No. 9946, Section 2

Under Republic Act No. 9946, Section 2 provides for death benefits under varying circumstances:

SEC. 2. In case a Justice of the x x x Court of Tax Appeals, x x x dies while in actual service, regardless of his/her
age and length of service as required in Section 1 hereof, his/her heirs shall receive a lump sum of five (5) years’
gratuity computed on the basis of the highest monthly salary plus the highest monthly aggregate of transportation,
representation and other allowances such as personal economic relief allowance (PERA) and additional
compensation allowance received by him/her as such Justice or Judge: Provided, however, That where the
deceased Justice or Judge has rendered at least fifteen (15) years either in the Judiciary or any other branch of
Government, or both, his/her heirs shall instead be entitled to a lump sum of ten (10) years gratuity computed on the
same basis as indicated in this provision: Provided, further, That the lump sum of ten (10) years gratuity shall be
received by the heirs of the Justice or the Judge who was killed because of his/her work as such: Provided, That the
Justice or Judge has served in Government for at least five (5) years regardless of age at the time of death. When a
Justice or Judge is killed intentionally while in service, the presumption is that the death is work-related. (Emphasis
supplied)

This provision provides death benefits to justices or judges who died while in service as well as those who suffered
work-related deaths. The presumption is that if a justice or judge was killed intentionally, the death is considered
work-related.

The provision contemplates three scenarios. First, if a justice or judge dies while in service, regardless of his or her
age and length of service, his or her heirs are entitled to a five (5)-year lump sum of gratuity. Second, if a justice or
judge dies of natural causes while in service, regardless of his or her age, but has rendered at least 15 years in
government service, his or her heirs are entitled to a 10-year lump sum of gratuity. Finally, if a justice or judge is
killed intentionally and the death is considered work-related, regardless of his or her age, but has rendered at least
five (5) years in government service, his or her heirs are entitled to a 10-year lump sum of gratuity.

In all these scenarios, the law dispenses with the requirement of the judge’s or justice’s retirement for the surviving
heirs to receive benefits upon the judge’s or justice’s demise. This is an improvement from the benefits given under
Republic Act No. 910. The law became more attuned to the reality that death can occur anytime during the tenure of
a judge or justice. It recognized the risks judges and justices face in dispensing their duties and responsibilities,
risks similar to those experienced by members of law enforcement or the military. The law provides for
contingencies for judges and justices who unexpectedly left their loved ones who depended on them for support and
sustenance.

Judge Gruba’s death follows the second scenario under Section 2 of Republic Act No. 9946. He died due to natural
causes while serving the Judiciary. He rendered 16 years, six (6) months, and 21 days in government service,
thereby complying with the 15-year service requirement under the law. His heirs became entitled to a lump sum of
10 years gratuity computed on the basis of the highest monthly salary, plus the highest monthly aggregate of
transportation, representation, and other allowances such as personal economic relief allowance (PERA) and
additional compensation allowance.

The fact that the heirs of Judge Gruba received death benefits under Republic Act No. 910 prior to amendments in
Republic Act No. 9946 does not preclude the heirs from receiving the 10-year lump sum in full. This is the effect of
the retroactivity mentioned in Section 3-B of Republic Act No. 9946. This is also in keeping with a policy declaration
under Article XVI, Section 8 of the Constitution stating that "the State shall, from time to time, review to upgrade the
pensions and other benefits due to retirees of both the government and the private sectors."

However, Mrs. Gruba is not qualified for survivorship pension benefits under Section 3 of Republic Act No. 9946

When Mrs. Gruba applied for benefits under Republic Act No. 9946, she was not claiming additional gratuity
benefits. She was invoking the second paragraph of Section 3 of Republic Act No. 910 as amended by Republic Act
No. 9946, thus:

Upon the death of a Justice or Judge of any court in the Judiciary, if such Justice or Judge has retired, or was
eligible to retire optionally at the time of death, the surviving legitimate spouse shall be entitled to receive all the
retirement benefits that the deceased Justice or Judge would have received had the Justice or Judge not died. The
surviving spouse shall continue to receive such retirement benefits until the surviving spouse’s death or remarriage.

According to Section 3 of Republic Act No. 9946, survivorship pension benefits are given to surviving spouses of
retired judges or justices or surviving spouses of judges or justices who are eligible to retire optionally. This means
that for the spouse to qualify for survivorship pension, the deceased judge or justice must (1) be at least 60 years

199
old, (2) have rendered at least fifteen years in the Judiciary or in any other branch of government, and in the case of
eligibility for optional retirement, (3) have served the last three years continuously in the Judiciary.

When the judge or justice is neither retired nor eligible to retire, his or her surviving spouse is not entitled to those
benefits. This was the reason behind our Resolution dated November 27, 2012, wherein we revoked the approval of
Mrs. Gruba’s application for survivorship pension benefits. The Resolution discontinued the payment of Mrs.
Gruba’s survivorship pension benefits. We no longer required Mrs. Gruba to reimburse survivorship pension benefits
received by virtue of the earlier Resolution dated January 17, 2012 considering that she received those payments in
good faith.

Mrs. Gruba could have been entitled to survivorship pension benefits if her late husband were eligible to optionally
retire at the time of his death. However, we are faced with a situation where the justice complied only with two of
three requirements for optional retirement. He served government for a total of 16 years, six (6) months, and 21
days. In those years, he rendered service for three (3) years, nine (9) months, and eight (8) days in the Judiciary.
Judge Gruba neither retired compulsorily prior to his death nor was he eligible for optional retirement at the time of
his death. He would have qualified for the government service requirements. However, his age at the time of his
death did not make him qualified for optional retirement. He was only 55 years old, and the law required the age of
60 for eligibility for optional retirement.

It was unfortunate that Judge Gruba died five years short of the optional retirement age. However, survivorship
benefits are an offshoot of retirement benefits. Administrative Circular 81-2010 qualified that "the legitimate surviving
spouse of a Justice or Judge who (1) has retired or was eligible to retire optionally at the time of death; and (2) was
receiving or would have been entitled to receive a monthly pension" is the individual qualified to receive survivorship
benefits. This suggests that survivorship pension benefits are extensions of retirement benefits given to judges and
justices, and retirement benefits in government service are governed by law.  Noncompliance with the clear text of
35

the law means that the benefit cannot be granted.

We note, however, that if Judge Gruba were eligible to optionally retire under Republic Act No. 9946 at the time of
his death and despite the fact that he passed away prior to the amendatory law’s passage, his widow would have
been entitled to the survivorship pension. The law was passed on January 13, 2010, and any surviving spouse of a
judge or justice who died prior to this date but was retired or eligible to retire optionally should be covered by
Republic Act No. 9946 by virtue of its retroactivity clause.

Republic Act No. 9946 has recognized the risks and contingencies of being involved in public service in the
Judiciary.  Death gratuity benefits have been improved to take into account the various circumstances that might
1âwphi1

surround a judge’s or justice’s death. However, the application of the law is not without limits. The law
accommodates the heirs of Judge Gruba by entitling them to receive the improved gratuity benefits under Republic
Act No. 9946, but it is clear that Mrs. Gruba is not entitled to the survivorship pension benefits.

Despite the fact that Mrs. Gruba is not entitled to receive survivorship pension, she no longer needs to return the
survivorship pension benefits she received from January 2011 to April 2012 amounting to ₱1,026,748.00. This
Court, in the past, have decided pro hac vice that a surviving spouse who received survivorship pension benefits in
good faith no longer needs to refund such pensions. In Re: Application for Survivorship Pension Benefits of Hon.
Juanito C. Ranjo, Former Deputy Court Administrator (DCA),  we initially resolved to award survivorship pension
36

benefits to DCA Ranjo’s surviving spouse, Mrs. Ranjo. In a latter Resolution, we ruled that DCA Ranjo was not
entitled to receive benefits under Republic Act No. 9946; hence, it was erroneous to award survivorship pension
benefits to his widow. However, this Court ruled that the application of the resolution revoking survivorship pension
benefits "appl[ies] prospectively, not retroactively and adversely to [Mrs. Ranjo]."  This Court found that Mrs. Ranjo
37

accepted this amount in good faith, and the same could be said about Mrs. Gruba.

This Court has made similar pronouncements on other benefits erroneously received by government
employees. This Court agreed that employees who have erroneously received rice allowances,  productivity
1âwphi1
38

incentive bonuses,  representation and transportation allowances (RATA),  anniversary bonuses,  year-end
39 40 41

bonuses,  and cash gifts  no longer need to refund the same. The reasoning was that:
42 43

Considering, however, that all the parties here acted in good faith, we cannot countenance the refund of x x x
benefits x x x, which amounts the petitioners have already received. Indeed, no indicia of bad faith can be detected
under the attendant facts and circumstances. The officials and chiefs of offices concerned disbursed such incentive
benefits in the honest belief that the amounts given were due to the recipients and the latter accepted the same with
gratitude, confident that they richly deserve such benefits.44

Analogously, when Mrs. Gruba received the survivorship pension benefits, she accepted them in good faith,
knowing that this Court positively pronounced that she was entitled to them in the Resolution dated January 17,
2012. When we revoked this Resolution, such revocation should only apply prospectively in the interest of equity
and fairness. 45

200
IN VIEW OF THE FOREGOING, WE RESOLVE TO GRANT a lump sum of 10 years gratuity benefits under Section
2 of Republic Act No. 9946 to the heirs of Judge Gruba, subject to the availability of funds, and DENY the prayer of
Mrs. Gruba to receive survivorship pension benefits.

SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila

EN BANC

A.M. Nos. P-13-3116 & P-13-3112               November 12, 2013

OFFICE OF THE COURT ADMINISTRATOR, Complainant, 

vs.
MS. ROSA A. ACAMPADO, CLERK OF COURT II, MUNICIPAL TRIAL COURT, TAFT, EASTERN
SAMAR,Respondent.

RESOLUTION

PER CURIAM:

201
"Those charged with the dispensation of justice, from the justices and judges to the lowliest clerks, should be
circumscribed with the heavy burden of responsibility."  Court personnel are expected to act in a manner free from
1

reproach. Medical treatment of a sick husband does not excuse the actions of the respondent who repeatedly
deceived this Court by misusing court funds, falsifying public documents, and failing to comply with orders.

For resolution are two consolidated administrative cases where the respondent is charged with failing to submit the
documents required by the Fiscal Monitoring Division of this Court; failing to remit her collections on time; and
submitting falsified bank deposit slips. A.M. No. P-13-3116 (Formerly A.M. No. 07-11-299-MTC) pertains to the
Report on the Non-compliance of respondent Rosa A. Acampado, Clerk II, Municipal Trial Court, Taft, Eastern
Samar, to submit additional documents for financial audit. A.M. No. P-13-3112 (Formerly A.M. OCA IPI No. 09-
3164-P) pertains to the Report on the Financial Audit conducted on the books of account of Rosa A. Acampado and
Jean Gladys N. Lobina of the Municipal Trial Court, Taft, Eastern Samar.

Then Senior Deputy Court Administrator Zenaida N. Elepaño in her Memorandum  informed this Court that Rosa A.
2

Acampado, Clerk II, failed to submit to the Fiscal Monitoring Division, Court Management Office, Office of the Court
Administrator, the additional documents required to finalize the audit examination of her books of
accounts. Respondent Acampado failed to comply despite several warnings and follow-up communications sent by
3

the Office of the Court Administrator.  Senior Deputy Court Administrator Elepaño then requested that the salaries,
4

allowances, and other monetary benefits of respondent Acampado be withheld until compliance is made. 5

Consequently, in a Resolution dated December 12, 2007, this Court withheld respondent Acampado’s salaries,
allowances, and other monetary benefits until compliance was duly effected as an exception to Administrative
Circular No. 2-2000  to avoid misuse of government funds and to protect this Court’s interest. This Court also noted
6

the Memorandum dated October 31, 2007 of the Office of the Court Administrator. 7

In a Memorandum dated February 19, 2009, the Financial Audit Team headed by Ms. Cielo D. Calonia submitted a
report to then Court Administrator and now Associate Justice of this Court, Jose P. Perez.  The audit team found
8

that Clerk of Court II, Ms. Rosa Acampado, who was then in charge of the collections of the court, incurred cash
shortages in her books of accounts and falsified or tampered bank deposit slips. The team found shortages
amounting to One Hundred Thousand Four Hundred Seventy-eight Pesos and Thirty-Three Centavos
(₱100,478.33).  According to the audit team:
9

It is clear that she committed gross neglect of duty and gross dishonesty and even malversation of public funds
when she failed to turn over on time her collections (JDF, SAJF, MF, Fiduciary fund) and altered/tampered deposit
slips and official receipts to cover-up collections. x x x.

xxxx

There is no question that Ms. Rosa A. Acampado committed the act of dishonesty in unreported collections of cash
bond under Official Receipt Numbers 5581801 to 5581823 totalling to Sixty-Five Thousand Five Hundred Sixty
Pesos (₱65,560.00) and altering deposit slips and official receipts during her accountability period. 10

In a Resolution dated April 15, 2009, this Court treated the Memorandum dated February 19, 2009 of the Office of
the Court Administrator as an administrative charge for gross neglect of duty and dishonesty.  This Court also
11

consolidated A.M. No. 09-3-41-MTC (Report on the Financial Audit Conducted on the Books of Account of Ms. Rosa
A. Acampado and Ms. Jean Gladys N. Lobina of the Municipal Trial Court, Taft, Eastern Samar) with A.M. No. 07-
11-299-MTC ( Report on the Non-Compliance of Ms. Rosa A. Acampado, Clerk of Court II, Municipal Trial Court
[MTC], Taft, Eastern Samar to Submit Additional Documents for Financial Audit).  In the same Resolution, Hon.
12

Chita A. Umil, Presiding Judge of the Municipal Trial Court, Taft, Eastern Samar, was directed to: (1) investigate the
extent of respondent Acampado’s responsibilities in relation to the tampered deposit slips and falsification of official
receipts for Fiduciary Fund and submit her report and recommendation within thirty (30) days from receipt of notice;
and (2) monitor and advise the Officer-in-Charge to strictly follow the Supreme Court Circulars on the proper
handling of Judiciary funds.13

Respondent Acampado’s salaries and allowances were withheld from February 2008 to April 15, 2009 but were
subsequently released by this Court for humanitarian considerations.  The release was subject to the condition that
14

Fifty Thousand Pesos (₱50,000.00) would be "retained/set aside" to answer for whatever penalty this Court may
impose upon her. 15

In a Letter dated June 10, 2009, Judge Umil asked that she be relieved from the task of investigating respondent
Acampado to maintain the harmonious atmosphere in her office and to maintain neutrality.  After granting Judge
16

Umil’s request to inhibit herself, this Court referred the matter to Judge Renato Noel C. Echague, Metropolitan Trial
Court, Can-avid, Eastern Samar, for investigation, report, and recommendation. Judge Echague then submitted his
Findings and Recommendations dated July 15, 2010 to the Office of the Court Administrator. 17

The Office of the Court Administrator submitted its evaluation, report, and recommendation on Judge Echague’s
findings on February 9, 2011.
202
In an Indorsement dated September 3, 2012, the Deputy Ombudsman for the Visayas resolved to refer for
appropriate action the case against respondent Acampado for Malversation of Public Funds  and deemed the case
18

closed and terminated in so far as the Office of the Ombudsman was concerned.

The issues for resolution in this case are:

I. Whether respondent Acampado is guilty of gross misconduct and gross neglect of duty;

II. Whether respondent Acampado should be dismissed from service; and

III. Whether mitigating circumstances should be considered in this case.

Findings and Recommendations of the Investigating Judge

Judge Echague found that respondent Acampado incurred the following cash shortages in her collections: (1)
₱23,712.53 for the Judiciary Development Fund; (2) ₱58,285.80 for the Special Allowance for the Judiciary Fund;
and (3) ₱5,000.00 for the Mediation Fund, amounting to a total of Eighty-six Thousand Nine Hundred Ninety-eight
Pesos and Thirty-three Centavos (₱86,998.33). 19

After hearing respondent Acampado’s admission that she under-remitted Judiciary funds and falsified bank deposit
slips, Judge Echague found her guilty of gross misconduct and gross neglect of duty punishable by dismissal from
service for failing to turn over cash on time. She is also guilty of dishonesty and falsification of public documents for
falsifying bank deposit slips. For failing to submit the additional documents, she is guilty of simple neglect of duty.

However, in view of mitigating circumstances, such as respondent Acampado’s admission, remorse, length of
service, and the fact that this is her first administrative case, Judge Echague recommended that she be given the
following penalties:

1. In A.M. No. 07-11-299-MTC (Failure of Ms. Acampado to submit additional documents needed for
financial audit), she is guilty of simple neglect of duty. Accordingly, it is recommended that she be fined Five
Thousand Pesos (₱5,000.00).

2. In A.M. No. OCA I.P.I. No. 09-3164-P (Report on the Financial Audit on the books of account of MTC,
Taft, Eastern Samar), Ms. Acampado is guilty of gross misconduct and gross neglect of duty for her failure
to remit on time her collections. Ms. Acampado is likewise guilty of dishonesty and falsification of public
documents for falsifying bank deposit slips. Accordingly, it is respectfully recommended that for these two
infractions, she be fined an amount equivalent to six (6) months of her salary to be deducted from her
retirement benefits. 20

Respondent’s Arguments

In the hearing which she requested  and in lieu of her Comment, respondent Acampado asked this Court for
21

forgiveness. She explained that the shortages were due to under-remittance. She was tempted to use the money for
the medical check-ups and medication of her husband who was insulin-dependent due to diabetes and who had
been undergoing dialysis treatment. 22

She also admitted that she falsified 19 Land Bank of the Philippines deposit slips as well as additional 20 bank
deposit slips.  She prepared the bank deposit slips but failed to go to the bank. She was rattled by the presence of
23

the audit team, and she just surrendered the falsified slips to the team. Respondent Acampado also stated that she
already fully restituted the cash shortages in the amount of Eighty-six Thousand Nine Hundred Ninety-eight Pesos
and Thirty-three Centavos (₱86,998.33). On her non-compliance to submit additional records needed to finalize the
audit, she explained that these records were damaged by water used to put out a fire that had gutted a portion of
the municipal hall.24

This Court referred the Findings and Recommendations dated July 15, 2010 of Judge Echague to the Office of the
Court Administrator for evaluation, report, and recommendation.

Office of the Court Administrator’s Report and Recommendations

The Office of the Court Administrator adopted the findings of the investigating judge with modification. According to
the Office of the Court Administrator, a clerk of court’s failure to make a timely turnover of cash deposited with him
or her constitutes not only gross negligence in the performance of duty but also gross dishonesty, if not
malversation. The Office of the Court Administrator said that misappropriation of Judiciary funds amounts to a
25

serious misconduct. It is "a grave offense punishable by dismissal."  Restitution of the total cash shortages will not
26

erase his or her liability.

27

203
The Office of the Court Administrator also said that "falsification of bank deposit slips is patent
dishonesty." Dishonesty, as a grave offense, "carries the extreme penalty of dismissal from the service with
28

forfeiture of retirement benefits, except accrued leave credits, and with perpetual disqualification from re-
employment in government service."  However, the Office of the Court Administrator considered certain mitigating
29

circumstances in this case. The Office of the Court Administrator noted how respondent Acampado readily
acknowledged the offenses and offered her sincerest apologies. This is also the first time that she was charged with
an administrative case. Lastly, the length of service of respondent Acampado, which was more than thirty years
(30), was also considered.

The Office of the Court Administrator recommended that:

xxxx

2. respondent Rosa A. Acampado be found GUILTY of simple neglect of duty in A.M. No. 07-11-299-MTC
(failure of Ms. Acampado to submit additional documents needed for financial audit) and be FINED in the
amount of Five Thousand Pesos ( ₱ 5,000.00); and likewise be found GUILTY of: (a) gross misconduct and
gross neglect of duty for her failure to remit on time her collections; and (b) dishonesty and falsification of
public documents for falsifying bank deposit slips in A.M. OCA IPI No. 09-3164-P (Report on the Financial
Audit on the books of account of MTC, Taft, Eastern Samar); that she be FINED in the amount equivalent to
one (1) year of her salary to be deducted from her retirement benefits; and

3. the Presiding Judge of Municipal Trial Court, Taft, Eastern Samar, be DIRECTED to MONITOR all
financial transactions of the court in strict adherence to the issuances of the Court on the proper finding of all
judiciary funds, otherwise, he/she shall be equally liable for the infractions committed by the employees
under his/her command and supervision. 30

We agree with the recommendations of the Office of the Court Administrator regarding respondent Acampado’s
liabilities. However, we disagree with the recommended penalty to be imposed on her.

This is not the first time that this Court has disciplined an erring and dishonest court employee for misappropriating
Judiciary funds and falsifying public documents under his or her control. In Rojas, Jr. v. Mina,  we found the
31

respondent guilty of gross misconduct and dishonesty for stealing and encashing Special Allowance for Judges and
Justices checks payable to several trial court judges without their consent. In Office of the Court Administrator v.
Elumbaring,  we held that the respondent was guilty of dishonesty for failing to remit the Judiciary Development
32

Fund and Special Allowance for the Judiciary Fund collections in full and on time. Similarly, in Court Administrator v.
Abdullahi,  we said that falsification of Daily Time Records amounts to dishonesty, and dismissal from service is
33

proper even if the offense was committed for the first time.

The Code of Conduct for Court Personnel  prescribes the norms of conduct which are specific to personnel
34

employed in the Judiciary.  The specificity of these norms is due to "the special nature of court personnel’s duties
35

and responsibilities."
36

Respondent Acampado violated the following provisions of the Code:

CANON I
FIDELITY OF DUTY

xxxx

SECTION 5. Court personnel shall use the resources, property and funds under their official custody in a judicious
manner and solely in accordance with the prescribed statutory and regulatory guidelines or procedures.

CANON IV
PERFORMANCE OF DUTIES

SECTION 1. Court personnel shall at all times perform official duties properly and with diligence. They shall commit
themselves exclusively to the business and responsibilities of their office during working hours.

xxxx

SECTION 3. Court personnel shall not alter, falsify, destroy or mutilate any record within their control.

This provision does not prohibit amendment, correction or expungement of records or documents pursuant to a
court order.

xxxx
204
In A.M. No. P-13-3116,  respondent Acampado continued to disregard the Orders of this Court to submit additional
37

documents required to complete the financial audit of her books of accounts. Her non-compliance even resulted in
the withholding of her salaries, allowances, and other monetary benefits. 38

Simple neglect of duty is defined as the "failure to give proper attention to a required task. It signifies disregard of
duty due to carelessness or indifference."  Respondent Acampado disregarded the directives sent to her on several
39

occasions by this Court through the Court Management Office of the Office of the Court of the Administrator. She
merely alleged that she could not produce on time the booklet of official receipts required from her since the booklet
was among the documents damaged by water when a portion of the court had been gutted by fire.  We said before
40

that the failure of a respondent to comply with the Office of the Court Administrator’s directives manifests his or her
"indifference to the lawful directives"  of this Court.
41

For respondent Acampado’s failure to submit the additional documents required for completion of the financial audit,
the Office of the Court Administrator correctly recommended that she be found guilty of simple neglect of duty and
should, therefore, be fined the amount of Five Thousand Pesos (₱5,000.00). Under Rule 10, Section 46 (D) (1) of
the Revised Rules on Administrative Cases in the Civil Service, simple neglect of duty is a less grave offense
punishable by suspension of one (1) month and one (1) day to six (6) months for the first offense and dismissal from
the service for the second offense. Section 49 (b) of the same Rule provides that the minimum of the penalty shall
be imposed when no mitigating and aggravating circumstances are present. Submission of the required documents
belatedly neither exculpates nor mitigates respondent Acampado’s liability. 42

However, the payment of a fine in lieu of suspension is available in grave, less grave, and light offenses when the
penalty imposed is suspension for six (6) months or less.  This Court has deemed it proper to impose the fine of
43

Five Thousand Pesos (₱5,000.00) on erring court employees who committed simple neglect of duty.  We impose44

the same penalty on respondent Acampado for disregarding her duty to turn over the required documents due to
indifference in the face of several court directives.

In A.M. No. P-13-3112,  respondent Acampado already admitted the acts charged by the Office of the Court
45

Administrator which included the misappropriation of Judiciary funds and the falsification of bank deposit slips.  For
46

these, the Office of the Court Administrator found respondent Acampado guilty of gross dishonesty and serious
misconduct punishable by dismissal:

x x x Misappropriation of judiciary funds is a serious misconduct, a grave offense punishable by dismissal. Although,
respondent Rosa A. Acampado was able to fully restitute the shortages, such act will not in any way erase her
culpability.

xxxx

Falsification of bank deposit slips is patent dishonesty. x x x Dishonesty, being a grave offense, carries the extreme
penalty of dismissal from the service with forfeiture of retirement benefits except accrued leave credits, and with
perpetual disqualification from re-employment in government service. Indeed, dishonesty is a malevolent act that
has no place in the Judiciary. 47

Despite the pronouncements made by the Office of the Court Administrator regarding respondent Acampado’s
actions and her failure to meet the high ethical standards expected of court employees, the Office of the Court
Administrator still considered certain allegedly mitigating circumstances. According to the Office of the Court
Administrator, respondent Acampado’s ready acknowledgment of her actions, her sincerest apologies, her length of
service in the Judiciary, and the fact that this is the first time she committed the offenses may be considered as
extenuating circumstances.  Consequently, the Office of the Court Administrator reduced its recommended penalty
48

from dismissal to a fine in the amount equivalent to one (1) year of her salary to be deducted from her retirement
benefits.

We disagree with the Office of the Court Administrator’s recommendation to mitigate the respondent’s liability and
lower the penalty to be imposed.

Under the Revised Rules on Administrative Cases in the Civil Service, the acts of under-remitting funds of the
Judiciary, remitting cash beyond the reglementary period, and falsifying bank deposits are grave offenses that merit
the most severe penalty of dismissal from service. 49

Gross Neglect of Duty and Grave Misconduct

Clerks of Court are the custodians of the courts’ "funds and revenues, records, properties, and premises."  They are
50

"liable for any loss, shortage, destruction or impairment"  of those entrusted to them. Any shortages in the amounts
51

to be remitted and the delay in the actual remittance "constitute gross neglect of duty for which the clerk of court
shall be held administratively liable."52

205
Respondent Acampado committed gross neglect of duty and grave misconduct when she failed to turn over the
funds of the Judiciary that were placed in her custody within the period required by law. We said in Office of the
Court Administrator v. Fueconcillo that undue delay by itself in remitting collections, keeping the amounts, and
spending it for the respondent’s "family consumption, and fraudulently withdrawing amounts from the judiciary funds,
collectively constitute gross misconduct and gross neglect of duty."  Such behavior should not be tolerated as it
53

denigrates this Court’s image and integrity.

Serious Dishonesty

Dishonesty is defined as the:

disposition to lie, cheat, deceive, or defraud; untrustworthiness; lack of integrity; lack of honesty, probity or integrity
in principle; lack of fairness and straightforwardness; disposition to defraud, deceive or betray. 54

Under the Revised Rules on Administrative Cases in the Civil Service, serious dishonesty is a grave offense
punishable by dismissal from service even if the offense was committed for the first time. 55

Respondent Acampado’s actions of misappropriating Judiciary funds and incurring cash shortages in the amounts
of 1) Twenty-three Thousand Seven Hundred Twelve Pesos and Fifty–three Centavos (₱23,712.53) for the Judiciary
Development Fund; 2) Fifty-eight Thousand Two Hundred Eighty-five Pesos and Eighty Centavos (₱58,285.80) for
the Special Allowance for the Judiciary; and 3) Five Thousand Pesos (₱5,000.00) for the Mediation Fund (MF),
totaling to Eighty-six Thousand Nine Hundred Ninety-eight Pesos and Thirty-three Centavos (₱86,998.33) are
serious acts of dishonesty that betrayed the institution tasked to uphold justice and integrity for all. Moreover,
respondent Acampado’s act of repeatedly falsifying bank deposit slips is patent dishonesty that should not be
tolerated by this Court. Restitution of the missing amounts will not relieve respondent Acampado of her liability. 56

Those in the Judiciary "serve as sentinels of justice, and any act of impropriety on their part immeasurably affects
the honor and dignity of the Judiciary and the people’s confidence in it."  The institution demands "the best possible
57

individuals in the service."  "This Court will not hesitate to rid its ranks of undesirables who undermine its efforts
58

toward an effective and efficient administration of justice, thus tainting its image in the eyes of the public." 59

We said in Office of the Court Administrator v. Bernardino  that:

60

We have not hesitated to impose the ultimate penalty. This Court had never and will never tolerate nor condone any
conduct which would violate the norms of public accountability, and diminish, or even tend to diminish, the faith of
the people in the justice system. 61

Again, this Court does not agree with the Office of the Court Administrator’s recommendations of imposing the
penalty of a fine equivalent to one (1) year’s salary to be deducted from her retirement benefits, instead of dismissal
from service as the law requires. Dismissal from service is the proper penalty to be imposed on respondent
Acampado. Under Rule 10, Section 52 of the Revised Rules on Administrative Cases in the Civil Service, "the
penalty of dismissal shall carry with it cancellation of eligibility, forfeiture of retirement benefits, perpetual
disqualification from holding public office, and bar from taking civil service examinations." In addition, Section 49 of
Rule 10 in the Revised Rules on Administrative Cases in the Civil Service provides that:

if the respondent is guilty of two 2) or more charges or counts, the penalty to be imposed should be that
corresponding to the most serious charge and the rest shall be considered as aggravating circumstances.

In this case, respondent Acampado is found guilty of more than two charges, which are gross neglect of duty and
grave misconduct, and serious dishonesty. All offenses are grave offenses that merit dismissal from service.

WHEREFORE, respondent Rosa A. Acampado is found GUILTY of the following:

i. SIMPLE NEGLECT OF DUTY in A.M. No. P-13-3116 for failing to submit the additional documents
required for financial audit and is FINED the amount of Five Thousand Pesos (₱5,000.00);

ii. GRAVE MISCONDUCT and GROSS NEGLECT OF DUTY in A.M. No. P-13-3112 for failing to remit on
time her collections and SERIOUS DISHONESTY for misappropriating funds of the Judiciary and falsifying
bank deposit slips. She is DISMISSED FROM THE SERVICE with forfeiture of retirement benefits, perpetual
disqualification from holding public office in any branch or instrumentality of the government, including
government-owned or controlled corporations.

The Presiding Judge of Municipal Trial Court, Taft, Eastern Samar, is DIRECTED to MONITOR all financial
transactions of the court in strict adherence to the issuances of this Court on the proper handling of all Judiciary
funds. He or she shall be equally liable for the infractions committed by the employees under his or her command
and supervision.

206
SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila

EN BANC

A.M. No. P-12-3100               November 12, 2013

EXECUTIVE JUDGE HENEDINO P. EDUARTE, Regional Trial Court Branch 20, Cauayan Isabela, Complainant,
vs.
ELIZABETH T. IBAY, Clerk II Municipal Trial Court in Cities, Cauayan Isabela,  Respondent.
1

DECISION

PER CURIAM:

For our resolution is this administrative case, which arose from the complaint of Geraldine V. De Ocampo De
Ocampo), Court Interpreter of the Municipal Trial Court, Cordon, Isabela MTC-Cordon).

In her complaint-inquiry, De Ocampo alleged that she did not receive her check for 113,000.00 representing her
clothing allowance. Upon verification, the Office of the Court Administrator (OCA) found that her check, specifically

207
Land Bank Check No. 890956, was mailed to the now Municipal Trial Court in Cities, Cauayan, Isabela (MTCC-
Cauayan), on 2 September 1999, under Registry Receipt No. 864.

In his letter dated 1 October 1999, Fortunato C. Villanueva (Villanueva), Clerk of Court of the MTCC-Cauayan,
denied receiving De Ocampo’s check. Thus, the OCA requested the Land Bank of the Philippines (LBP) to stop the
payment of the check. LBP, however, reported that the check had already been negotiated and deposited with
United Coconut Planters Bank, Cauayan Branch (UCPB-Cauayan), on 9 September 1999. Significantly, the OCA
observed that the signature of De Ocampo appearing in her complaint-inquiry is very different from her alleged
endorsement at the dorsal portion of the check.

Accordingly, the OCA, through then Court Administrator Alfredo L. Benipayo, directed Executive Judge Henedino P.
Eduarte (Judge Eduarte), Regional Trial Court, Cauayan, Isabela, to investigate the matter.

In his Report dated 6 March 2000, Judge Eduarte stated that he investigated the following persons: (1) De Ocampo;
(2) Villanueva; (3) Elizabeth T. Ibay (Ibay), Clerk II, MTCC-Cauayan; (4) Anselma Meris (Meris), Stenographer,
MTCC-Cauayan; (5) Juan R. Bigornia, Jr., employee of UCPB-Cauayan; (6) Catherine Semana (Semana), an
owner of a store inside a commercial complex in Cauayan, Isabela; and (7) Gaudioso Talavera.

The investigation conducted by Judge Eduarte established the following facts:

Ibay, as the receiver of mails addressed to MTCC-Cauayan, took the envelope containing the checks for clothing
allowance from the post office of Cauayan, Isabela. Ibay alleged that upon her arrival in the stenographers’ room in
MTCC-Cauayan, she gave the unopened envelope to Meris who allegedly opened the envelope by tearing its side.
Seven checks were found inside the envelope. These checks were for Villanueva, Ibay, Meris, Judge Sergio Plan,
Melchor Meris, Aida Magpantay (Magpantay), and Marivic Villanueva (Marivic). After getting her check, Ibay left the
other checks with Meris.

Meris confirmed that Ibay took the envelope from the post office of Cauayan, Isabela. Meris narrated that she and
Marivic were typing inside the stenographers’ room when Ibay arrived. While holding the envelope, Ibay announced,
"Oh, dumating na ang clothing allowance."

Ibay, then, gave the envelope and the paycheck to Meris. Meris observed that the envelope was already opened but
she did not see Ibay open the envelope.

After comparing Ibay’s handwriting in a five-page Inventory of Cases, wholly written by her, with the endorsement on
the check, the following were found to have striking similarities, to wit:

(1)The letter "G" in Geraldine to the letter "G" in "Goderei Gasmen," page 2, Inventory; "Godofredo Garcia,"
page 4, Inventory; "Grave Oral Def.," "Grave Threat," page 5, Inventory;

(2)Letter "d" in Geraldine and de Ocampo to the letter "d" in "do," pages 1, 2, 4, Inventory; in "Rolando,"
page 2, Inventory; in "Flordeliza," page 5, Inventory;

(3)"O" in Ocampo to the "O" in "Grave oral Def.," page 5, Inventory;

(4)"G" in Geraldine written in script to the "G" in "Galindo," page 4, Inventory;

(5)"T" in Turayong to the "T" in "Trespass," "Theft," page 1, Inventory; "Tecson," "Truyen," page 5, Inventory;

(6)"C" in Cauayan to the "C" in "Christine," page 2, Inventory; "Campos," page 4, Inventory;

(7) "S" in Isa to the "S" in "Sia," "Santiago," and "Sebastian," page 1, Inventory. 2

Semana admitted that she is in the business of changing government checks with cash at a discount, and that she
discounts Ibay’s paychecks. However, Semana claimed that she could not remember De Ocampo’s check.

Finally, De Ocampo’s check was deposited with UCPB-Cauayan, and cleared by LBP.

In its 1st Indorsement dated 5 September 2001, the OCA required Ibay to comment on the report of Judge Eduarte.

In her letter-comment dated 28 September 2001, Ibay admitted that she took the envelope containing the checks,
even though she does not receive the mails to their office all the time. Ibay further admitted that in the inventory,
there were similarities between her handwriting and the indorsement in the check.  However, she added that anyone
3

could imitate her handwriting and that it would be unfair if only her specimen signature would be taken into
consideration.  Ibay also claimed that she would usually ask Magpantay to accompany her whenever she needed to
4

208
encash her check since she is a resident of San Pablo, Isabela and unfamiliar with Cauayan, Isabela. Finally, Ibay
vehemently denied the allegations of Meris and Semana.

In its Resolution dated 14 August 2002,  the Court, upon recommendation of the OCA, referred this case to the
5

National Bureau of Investigation (NBI) for further investigation and examination of the questioned document by
handwriting experts to determine who committed the forgery. The Court likewise directed the NBI to submit a report
within 30 days from receipt of the records of this case.

In its Resolution dated 13 April 2011, the Court noted, among others, that: (a) the NBI, despite receipt of the records
on 23 September 2002 by Efren B. Flores of the Questioned Documents Division, failed to submit the required
report; (b) in his letter-compliance dated 31 August 2010, NBI Director Magtanggol B. Gatdula (Director Gatdula)
informed the Court that they could not proceed with the desired examination due to the absence of the original copy
of the check; (c) per records, Atty. Virginia A. Soriano (Soriano), then First Division Clerk of Court, already
transmitted the original copy of the check with other documents to the NBI, as evidenced by the stamped "received"
by the NBI Questioned Documents Division indicating the date "1/14/03"; (d) further verification with the OCA’s
Financial Management Office revealed that the check was no longer in its custody; (e) although the result of the
laboratory examination of the original copy of the check would significantly help in determining the person who may
have forged the signature of De Ocampo, under the present circumstances such laboratory examination may no
longer be possible due to the apparent loss of the check in question; and (f) nevertheless, any administrative liability
of Ibay in this case may still be determined on the basis of Judge Eduarte’s report and Ibay’s comment thereon, as
well as the other documents on hand.

Accordingly, the Court, upon recommendation of the OCA, resolved on 13 April 2011 to dispense with the NBI
Investigation Report as required in the 14 August 2002 Resolution and reiterated in two subsequent resolutions
dated 20 June 2005 and 21 July 2010. The Court also required Director Gatdula to cause the return of the records
of this case and the 14 January 2003 transmittal of Soriano including the original copy of the check.

In a separate Resolution also dated 13 April 2011, the Court granted the OCA a period of 30 days from receipt of
the records from the NBI to submit its report and recommendation.

In his letter-compliance dated 6 June 2011, Director Gatdula informed the Court that the original copy of the check
was found. He suggested that seven or more sample signatures of De Ocampo appearing in public/official
documents executed on dates contemporaneous with the date of the check be submitted to the NBI for comparative
examination.

In its Resolution dated 27 June 2011, the Court noted Director Gatdula’s letter, and directed him to fully comply with
the 13 April 2011 Resolution. Accordingly, Director Gatdula returned the records of this case to the Court.

In its Memorandum dated 28 August 2012, the OCA found that the circumstances prior to the discovery of the loss
of De Ocampo’s check, together with the findings of Judge Eduarte, point to Ibay as the one fully responsible for the
check’s loss. Thus, the OCA recommended that:

(1) this case be TREATED as a regular administrative matter;

(2) respondent Elizabeth T. Ibay, Clerk II, Municipal Trial Court in Cities, Cauayan City, Isabela, be
ADJUDGED GUILTY of dishonesty and be DISMISSED from the service with forfeiture of all retirement
benefits, except accrued leave credits, and disqualification from reinstatement or appointment to any public
office, including government-owned and controlled corporations; and

(3) Ms. Ibay be REQUIRED to pay Ms. Geraldine V. De Ocampo, Court Interpreter, Municipal Trial Court,
Cordon, Isabela, the amount of Three Thousand Pesos (Php3,000.00) within fifteen (15) days from notice,
with legal interest from September 1999 until the same shall have been fully paid. 6

The recommendations of the OCA are well-taken.

In administrative proceedings, the quantum of proof necessary for a finding of guilt is substantial evidence or such
relevant evidence as a reasonable mind may accept as adequate to support a conclusion.  Well-entrenched is the
7

rule that substantial evidence, and not clear and convincing evidence or proof beyond reasonable doubt, is sufficient
as basis for the imposition of any disciplinary action upon the erring employee.  The standard of substantial
8

evidence is satisfied where the employer, in this case the Court, has reasonable ground to believe that the
employee is responsible for the misconduct and his participation therein renders him unworthy of the trust and
confidence demanded by his position. 9

While there is no direct evidence to suggest that Ibay actually took the check, forged De Ocampo’s signature and
encashed the check, the surrounding circumstances point towards her administrative liability. The circumstances, as
pointed out by the OCA, consist of the following:

209
First, per verification from the records of the Financial Management Office, OCA, the check in question in the name
of x x x De Ocampo x x x was inadvertently mailed to the [MTCC-Cauayan], together with the checks intended for
the Judge and personnel of the latter court, on September 2, 1999 under Registry Receipt No. 864. Second, while
Mr. Villanueva, the Clerk of Court of the latter court, denied having received the check in question, based on the
investigation of former Executive Judge Eduarte, it was respondent Ibay who took the envelope containing the
check in question from the Post Office of Cauayan, Isabela, which she confirmed in her letter-comment dated
September 28, 2001. Third, instead of handing over the said envelope to Mr. Villanueva, who is her immediate
supervisor, respondent Ibay gave the same to Court Stenographer Meris, who insisted that the envelope was
already open when respondent Ibay presented it to her. Fourth, the check in question was deposited with UCPB,
Cauayan, Isabela Branch on September 9, 1999, or shortly after it was mailed to and received by the [MTCC-
Cauayan] through respondent Ibay. Fifth, Ms. Semana, who owns a store inside a commercial complex in Cauayan,
Isabela and who is into the business of rediscounting government checks, claimed that respondent Ibay "had been
discounting her paychecks." Finally, as established by former Executive Judge Eduarte, there are "striking
similarities" between the handwriting of respondent Ibay in the five-page Inventory of Cases of the [MTCC-Cauayan]
and the handwritten name and signature of x x x De Ocampo, as well as the handwritten words "Turayong Cauayan,
Isa." appearing at the dorsal portion of the check in question.10

Ibay admitted that she took the envelope from the post office and she gave the envelope containing only seven
checks, without De Ocampo’s check, to Meris. Ibay did not explain the whereabouts of De Ocampo’s check, which
the OCA found to have been inadvertently included in the envelope Ibay received from the post office. Ibay merely
denied the charges against her. It is settled that denial is inherently a weak defense. To be believed, it must be
buttressed by a strong evidence of non-culpability; otherwise, such denial is purely self-serving and without
evidentiary value.11

In the absence of substantial defense to refute the charges against her, we hold Ibay liable for the loss of the check
and the forgery of De Ocampo’s signature, leading to the check’s encashment. The case against Ibay is bolstered
by the fact that Judge Eduarte found striking similarities between her handwriting in the inventory of cases and the
forged endorsement in the check. Ibay even confirmed the same in her comment, where she admitted that her
handwriting in the inventory bears similarities to that of the endorser of the check.

In fine, we find that there is substantial evidence to support Ibay’s dismissal on the ground of dishonesty. In Filoteo
v. Calago,  we held that stealing a check and en cashing it is considered gross dishonesty. We defined dishonesty
12

as the disposition to lie, cheat, deceive or defraud; untrustworthiness; lack of integrity; lack of honesty, probity or
integrity in principle; and lack of fairness and straightforwardness.
13

Section 52(A) (1) of the Revised Uniform Rules on Administrative Cases in the Civil Service provides that
dishonesty is a grave offense punishable by dismissal from the service even when committed for the first time. In
Office of he Court Administrator v. Ibay,  we found Ibay guilty of dishonesty for stealing and encashing a check of
14

Magpantay. We suspended her for seven months without benefits, considering that she admitted the offense and
she was not administratively charged in the past. Since this is no longer Ibay's first offense and we already warned
her before that a similar act would warrant a more severe penalty, we now find it imperative to impose upon her the
extreme penalty of dismissal from the service.

Time and again, we held that persons involved in the dispensation of justice, from the highest official to the lowest
clerk, must live up to the strictest standards of integrity, probity, uprightness, honesty and diligence in the public
service.  This Court will not tolerate dishonesty, for the judiciary deserves the best from all its employees.
15 16

WHEREFORE, the Court finds respondent Elizabeth T. Ibay, Clerk II, Municipal Trial Court in Cities, Cauayan,
Isabela, GUILTY of dishonesty. She is DISMISSED from the service with forfeiture of all retirement benefits, except
accrued leave credits, with prejudice to reemployment in any branch or instrumentality of the government, including
government-owned and controlled corporations. She is further directed to pay Geraldine V. De Ocampo the amount
of Three Thousand (₱3,000.00) Pesos representing the face value of one (1) check she en cashed plus 6 interest
from September 1999 until the finality of this Decision.

SO ORDERED.

210
 Republic of the Philippines
SUPREME COURT
Manila

THIRD DIVISION

G.R. No. 171428               November 11, 2013

ALEJANDRO V. TANKEH, Petitioner, 
vs.
DEVELOPMENT BANK OF THE PHILIPPINES, STERLING SHIPPING LINES, INC., RUPERTO V. TANKEH,
VICENTE ARENAS, and ASSET PRIVATIZATION TRUST, Respondents.

DECISION

LEONEN, J.:

211
This is a Petition for Review on Certiorari praying that the assailed October 25, 2005 Decision and the February 9,
2006 Resolution of the Court of Appeals  be reversed, and that the January 4, 1996 Decision of the Regional Trial
1

Court of Manila Branch 32 be affirmed. Petitioner prays that this Court grant his claims for moral damages and
attorney’s fees, as proven by the evidence.

Respondent Ruperto V. Tankeh is the president of Sterling Shipping Lines, Inc. It was incorporated on April 23,
1979 to operate ocean-going vessels engaged primarily in foreign trade.  Ruperto V. Tankeh applied for a $3.5
2

million loan from public respondent Development Bank of the Philippines for the partial financing of an ocean-going
vessel named the M/V Golden Lilac. To authorize the loan, Development Bank of the Philippines required that the
following conditions be met:

1) A first mortgage must be obtained over the vessel, which by then had been renamed the M/V Sterling Ace;

2) Ruperto V. Tankeh, petitioner Dr. Alejandro V. Tankeh, Jose Marie Vargas, as well as respondents Sterling
Shipping Lines, Inc. and Vicente Arenas should become liable jointly and severally for the amount of the loan;

3) The future earnings of the mortgaged vessel, including proceeds of Charter and Shipping Contracts, should be
assigned to Development Bank of the Philippines; and

4) Development Bank of the Philippines should be assigned no less than 67% of the total subscribed and
outstanding voting shares of the company. The percentage of shares assigned should be maintained at all times,
and the assignment was to subsist as long as the assignee, Development Bank of the Philippines, deemed it
necessary during the existence of the loan. 3

According to petitioner Dr. Alejandro V. Tankeh, Ruperto V. Tankeh approached him sometime in 1980.  Ruperto4

informed petitioner that he was operating a new shipping line business. Petitioner claimed that respondent, who is
also petitioner’s younger brother, had told him that petitioner would be given one thousand (1,000) shares to be a
director of the business. The shares were worth ₱1,000,000.00. 5

On May 12, 1981, petitioner signed the Assignment of Shares of Stock with Voting Rights.  Petitioner then signed
6

the May 12, 1981 promissory note in December 1981. He was the last to sign this note as far as the other
signatories were concerned.  The loan was approved by respondent Development Bank of the Philippines on March
7

18, 1981. The vessel was acquired on September 29, 1981 for $5.3 million.  On December 3, 1981, respondent
8

corporation Sterling Shipping Lines, Inc. through respondent Ruperto V. Tankeh executed a Deed of Assignment in
favor of Development Bank of the Philippines. The deed stated that the assignor, Sterling Shipping Lines, Inc.:

x x x does hereby transfer and assign in favor of the ASSIGNEE (DBP), its successors and assigns, future earnings
of the mortgaged M/V "Sterling Ace," including proceeds of charter and shipping contracts, it being understood that
this assignment shall continue to subsist for as long as the ASSIGNOR’S obligation with the herein ASSIGNEE
remains unpaid. 9

On June 16, 1983, petitioner wrote a letter to respondent Ruperto V. Tankeh saying that he was severing all ties
and terminating his involvement with Sterling Shipping Lines, Inc.  He required that its board of directors pass a
10

resolution releasing him from all liabilities, particularly the loan contract with Development Bank of the Philippines. In
addition, petitioner asked that the private respondents notify Development Bank of the Philippines that he had
severed his ties with Sterling Shipping Lines, Inc.11

The accounts of respondent Sterling Shipping Lines, Inc. in the Development Bank of the Philippines were
transferred to public respondent Asset Privatization Trust on June 30, 1986. 12

Presently, respondent Asset Privatization Trust is known as the Privatization and Management Office. Asset
Privatization Trust was a government agency created through Presidential Proclamation No. 50, issued in 1986.
Through Administrative Order No. 14, issued by former President Corazon Aquino dated February 3, 1987, assets
including loans in favor of Development Bank of the Philippines were ordered to be transferred to the national
government. In turn, the management and facilitation of these assets were delegated to Asset Privatization Trust,
pursuant to Presidential Proclamation No. 50. In 1999, Republic Act No. 8758 was signed into law, and it provided
that the corporate term of Asset Privatization Trust would end on December 31, 2000. The same law empowered
the President of the Philippines to determine which office would facilitate the management of assets held by Asset
Privatization Trust. Thus, on December 6, 2000, former President Joseph E. Estrada signed Executive Order No.
323, creating the Privatization Management Office. Its present function is to identify disposable assets, monitor the
progress of privatization activities, and approve the sale or divestment of assets with respect to price and buyer. 13

On January 29, 1987, the M/V Sterling Ace was sold in Singapore for $350,000.00 by Development Bank of the
Philippines’ legal counsel Atty. Prospero N. Nograles. When petitioner came to know of the sale, he wrote
respondent Development Bank of the Philippines to express that the final price was inadequate, and therefore, the
transaction was irregular. At this time, petitioner was still bound as a debtor because of the promissory note dated
May 12, 1981, which petitioner signed in December of 1981. The promissory note subsisted despite Sterling
212
Shipping Lines, Inc.’s assignment of all future earnings of the mortgaged M/V Sterling Ace to Development Bank of
the Philippines. The loan also continued to bind petitioner despite Sterling Shipping Lines, Inc.’s cash equity
contribution of ₱13,663,200.00 which was used to cover part of the acquisition cost of the vessel, pre-operating
expenses, and initial working capital. 14

Petitioner filed several Complaints  against respondents, praying that the promissory note be declared null and void
15

and that he be absolved from any liability from the mortgage of the vessel and the note in question.

In the Complaints, petitioner alleged that respondent Ruperto V. Tankeh, together with Vicente L. Arenas, Jr. and
Jose Maria Vargas, had exercised deceit and fraud in causing petitioner to bind himself jointly and severally to pay
respondent Development Bank of the Philippines the amount of the mortgage loan.  Although he had been made a
16

stockholder and director of the respondent corporation Sterling Shipping Lines, Inc., petitioner alleged that he had
never invested any amount in the corporation and that he had never been an actual member of the board of
directors.  He alleged that all the money he had supposedly invested was provided by respondent Ruperto V.
17

Tankeh.  He claimed that he only attended one meeting of the board. In that meeting, he was introduced to two
18

directors representing Development Bank of the Philippines, namely, Mr. Jesus Macalinag and Mr. Gil Corpus.
Other than that, he had never been notified of another meeting of the board of directors.

Petitioner further claimed that he had been excluded deliberately from participating in the affairs of the corporation
and had never been compensated by Sterling Shipping Lines, Inc. as a director and stockholder.  According to 19

petitioner, when Sterling Shipping Lines, Inc. was organized, respondent Ruperto V. Tankeh had promised him that
he would become part of the administration staff and oversee company operations. Respondent Ruperto V. Tankeh
had also promised petitioner that the latter’s son would be given a position in the company.  However, after being
20

designated as vice president, petitioner had not been made an officer and had been alienated from taking part in the
respondent corporation. 21

Petitioner also alleged that respondent Development Bank of the Philippines had been inexcusably negligent in the
performance of its duties.  He alleged that Development Bank of the Philippines must have been fully aware of
22

Sterling Shipping Lines, Inc.’s financial situation. Petitioner claimed that Sterling Shipping Lines, Inc. was controlled
by the Development Bank of the Philippines because 67% of voting shares had been assigned to the
latter. Furthermore, the mortgage contracts had mandated that Sterling Shipping Lines, Inc. "shall furnish the DBP
23

with copies of the minutes of each meeting of the Board of Directors within one week after the meeting. Sterling
Shipping Lines Inc. shall likewise furnish DBP its annual audited financial statements and other information or data
that may be needed by DBP as its accommodations [sic] with DBP are outstanding."  Petitioner further alleged that
24

the Development Bank of the Philippines had allowed "highly questionable acts"  to take place, including the gross
25

undervaluing of the M/V Sterling Aces.  Petitioner alleged that one day after Development Bank of the Philippines’
26

Atty. Nograles sold the vessel, the ship was re-sold by its buyer for double the amount that the ship had been
bought. 27

As for respondent Vicente L. Arenas, Jr., petitioner alleged that since Arenas had been the treasurer of Sterling
Shipping Lines, Inc. and later on had served as its vice president, he was also responsible for the financial situation
of Sterling Shipping Lines, Inc.

Lastly, in the Amended Complaint dated April 16, 1991, petitioner impleaded respondent Asset Privatization Trust
for being the agent and assignee of the M/V Sterling Ace.

In their Answers  to the Complaints, respondents raised the following defenses against petitioner: Respondent
28

Development Bank of the Philippines categorically denied receiving any amount from Sterling Shipping Lines, Inc.’s
future earnings and from the proceeds of the shipping contracts. It maintained that equity contributions could not be
deducted from the outstanding loan obligation that stood at ₱245.86 million as of December 31, 1986. Development
Bank of the Philippines also maintained that it is immaterial to the case whether the petitioner is a "real stockholder"
or merely a "pseudo-stockholder" of the corporation.  By affixing his signature to the loan agreement, he was liable
29

for the obligation. According to Development Bank of the Philippines, he was in pari delicto and could not be
discharged from his obligation. Furthermore, petitioner had no cause of action against Development Bank of the
Philippines since this was a case between family members, and earnest efforts toward compromise should have
been complied with in accordance with Article 222 of the Civil Code of the Philippines. 30

Respondent Ruperto V. Tankeh stated that petitioner had voluntarily signed the promissory note in favor of
Development Bank of the Philippines and with full knowledge of the consequences. Respondent Tankeh also
alleged that he did not employ any fraud or deceit to secure petitioner’s involvement in the company, and petitioner
had been fully aware of company operations. Also, all that petitioner had to do to avoid liability had been to sell his
shareholdings in the company. 31

Respondent Asset Privatization Trust raised that petitioner had no cause of action against them since Asset
Privatization Trust had been mandated under Proclamation No. 50 to take title to and provisionally manage and
dispose the assets identified for privatization or deposition within the shortest possible period. Development Bank of
the Philippines had transferred and conveyed all its rights, titles, and interests in favor of the national government in

213
accordance with Administrative Order No. 14. In line with that, Asset Privatization Trust was constituted as trustee of
the assets transferred to the national government to effect privatization of these assets, including respondent
Sterling Shipping Lines, Inc.  Respondent Asset Privatization Trust also filed a compulsory counterclaim against
32

petitioner and its co-respondents Sterling Shipping Lines, Inc., Ruperto V. Tankeh, and Vicente L. Arenas, Jr. for the
amount of ₱264,386,713.84.

Respondent Arenas did not file an Answer to any of the Complaints of petitioner but filed a Motion to Dismiss that
the Regional Trial Court denied. Respondent Asset Privatization Trust filed a Cross Claim against Arenas. In his
Answer  to Asset Privatization Trust’s Cross Claim, Arenas claimed that he had been released from any further
33

obligation to Development Bank of the Philippines and its successor Asset Privatization Trust because an extension
had been granted by the Development Bank of the Philippines to the debtors of Sterling Shipping Lines, Inc. and/or
Ruperto V. Tankeh, which had been secured without Arenas’ consent.

The trial proceeded with the petitioner serving as a sole witness for his case. In a January 4, 1996 Decision,  the
34

Regional Trial Court ruled:

Here, we find –

1. Plaintiff being promised by his younger brother, Ruperto V. Tankeh, 1,000 shares with par value of ₱1
Million with all the perks and privileges of being stockholder and director of SSLI, a new international
shipping line;

2. That plaintiff will be part of the administration and operation of the business, so with his son who is with
the law firm Romulo Ozaeta Law Offices;

3. But this was merely the come-on or appetizer for the Real McCoy or the primordial end of congregating
the incorporators proposed - - that he sign the promissory note (Exhibit "C"), the mortgage contract (Exhibit
"A"), and deed of assignment so SSLI could get the US $3.5 M loan from DBP to partially finance the
importation of vessel M.V. "Golden Lilac" renamed M.V. "Sterling ACE";

4. True it is, plaintiff was made a stockholder and director and Vice-President in 1979 but he was never
notified of any meeting of the Board except only once, and only to be introduced to the two (2) directors
representing no less than 67% of the total subscribed and outstanding voting shares of the company.
Thereafter, he was excluded from any board meeting, shorn of his powers and duties as director or Vice-
President, and was altogether deliberately demeaned as an outsider.

5. What kind of a company is SSLI who treated one of their incorporators, one of their Directors and their
paper Vice-President in 1979 by preventing him access to corporate books, to corporate earnings, or losses,
and to any compensation or remuneration whatsoever? Whose President and Treasurer did not submit the
required SEC yearly report? Who did not remit to DBP the proceeds on charter mortgage contracts on M/V
Sterling Ace?

6. The M/V Sterling Ace was already in the Davao Port when it was then diverted to Singapore to be
disposed on negotiated sale, and not by public bidding contrary to COA Circular No. 86-264 and without
COA’s approval. Sterling Ace was seaworthy but was sold as scrap in Singapore. No foreclosure with public
bidding was made in contravention of the Promissory Note to recover any deficiency should DBP seeks [sic]
to recover it on the outstanding mortgage loan. Moreover the sale was done after the account and asset
(nay, now only a liability) were transferred to APT. No approval of SSLI Board of Directors to the negotiated
sale was given.

7. Plaintiff’s letter to his brother President, Ruperto V. Tankeh, dated June 15, 1983 (Exhibit "D") his letter
thru his lawyer to DBP (Exhibit "J") and another letter to it (Exhibit "K") show no estoppel on his part as he
consistently and continuously assailed the several injurious acts of defendants while assailing the
Promissory Note itself x x x (Citations omitted) applying the maxim: Rencintiatio non praesumitur. By this Dr.
Tankeh never waived the right to question the Promissory Note contract terms. He did not ratify, by
concurring acts, express or tacit, after the reasons had surfaced entitling him to render the contract voidable,
defendants’ acts in implementing or not the conditions of the mortgage, the promissory note, the deed of
assignment, the lack of audit and accounting, and the negotiated sale of MV Sterling Ace. He did not ratify
defendants [sic] defective acts (Art. 1396, New Civil Code (NCC).

The foregoing and the following essays, supported by evidence, the fraud committed by plaintiff’s brother before the
several documents were signed (SEC documents, Promissory Note, Mortgage (MC) Contract, assignment (DA)),
namely:

1. Ruperto V. Tankeh approaches his brother Alejandro to tell the latter of his new shipping business. The
project was good business proposal [sic].

214
 2. Ruperto tells Alejandro he’s giving him shares worth ₱1 Million and he’s going to be a Director.

3. He tells his brother that he will be part of the company’s Administration and Operations and his eldest son
will be in it, too.

4. Ruperto tells his brother they need a ship, they need to buy one for the business, and they therefore need
a loan, and they could secure a loan from DBP with the vessel brought to have a first mortgage with DBP
but anyway the other two directors and comptroller will be from DBP with a 67% SSLI shares voting rights.

Without these insidious, devastating and alluring words, without the machinations used by defendant Ruperto V.
Tankeh upon the doctor, without the inducement and promise of ownership of shares and the exercise of
administrative and operating functions, and the partial financing by one of the best financial institutions, the DBP,
plaintiff would not have agreed to join his brother; and the safeguarding of the Bank’s interest by its nominated two
(2) directors in the Board added to his agreeing to the new shipping business. His consent was vitiated by the fraud
before the several contracts were consummated.

This alone convenes [sic] this Court to annul the Promissory Note as it relates to plaintiff himself.

Plaintiff also pleads annulment on ground of equity. Article 19, NCC, provides him the way as it requires every
person, in the exercise of his rights and performance of his duties, to act with justice, give everyone his due, and
observe honesty and good faith (Velayo vs. Shell Co. of the Phils., G.R. L-7817, October 31, 1956). Not to release
him from the clutch of the Promissory Note when he was never made a part of the operation of the SSLI, when he
was not notified of the Board Meetings, when the corporation nary remitted earnings of M/V Sterling Ace from
charter or shipping contracts to DBP, when the SSLI did not comply with the deed of assignment and mortgage
contract, and when the vessel was sold in Singapore (he, learning of the sale only from the newspapers) in
contravention of the Promissory Note, and which he questioned, will be an injustice, inequitable, and even iniquitous
to plaintiff. SSLI and the private defendants did not observe honesty and good faith to one of their incorporators and
directors. As to DBP, the Court cannot put demerits on what plaintiff’s memorandum has pointed out:

While defendant DBP did not exercise the caution and prudence in the discharge of their functions to protect its
interest as expected of them and worst, allowed the perpetuation of the illegal acts committed in contrast to the
virtues they publicly profess, namely: "palabra de honor, delicadeza, katapatan, kaayusan, pagkamasinop at
kagalingan" Where is the vision banking they have for our country?

Had DBP listened to a cry in the wilderness – that of the voice of the doctor – the doctor would not have allowed the
officers and board members to defraud DBP and he would demand of them to hew and align themselves to the
deed of assignment.

Prescinding from the above, plaintiff’s consent to be with SSLI was vitiated by fraud. The fact that defendant
Ruperto Tankeh has not questioned his liability to DBP or that Jose Maria Vargas has been declared in default do
not detract from the fact that there was attendant fraud and that there was continuing fraud insofar as plaintiff is
concerned.

Ipinaglaban lang ni Doctor ang karapatan niya. Kung wala siyang sense of righteous indignation and fairness,
tatahimik na lang siya, sira naman ang pinangangalagaan niyang pangalan, honor and family prestige [sic]
(Emphasis provided). 35

xxxx

All of the defendants’ counterclaims and cross-claims x x x including plaintiff’s and the other defendants’ prayer for
damages are not, for the moment, sourced and proven by substantial evidence, and must perforce be denied and
dismissed.

WHEREFORE, this Court, finding and declaring the Promissory Note (Exhibit "C") and the Mortgage Contract
(Exhibit "A") null and void insofar as plaintiff DR. ALEJANDRO V. TANKEH is concerned, hereby ANNULS and
VOIDS those documents as to plaintiff, and it is hereby further ordered that he be released from any obligation or
liability arising therefrom.

All the defendants’ counterclaims and cross-claims and plaintiff’s and defendants’ prayer for damages are hereby
denied and dismissed, without prejudice.

SO ORDERED. 36

Respondents Ruperto V. Tankeh, Asset Privatization Trust, and Arenas immediately filed their respective Notices of
Appeal with the Regional Trial Court. The petitioner filed a Motion for Reconsideration with regard to the denial of
his prayer for damages. After this Motion had been denied, he then filed his own Notice of Appeal.

215
In a Decision  promulgated on October 25, 2005, the Third Division of the Court of Appeals reversed the trial court’s
37

findings. The Court of Appeals held that petitioner had no cause of action against public respondent Asset
Privatization Trust. This was based on the Court of Appeals’ assessment of the case records and its findings that
Asset Privatization Trust did not commit any act violative of the right of petitioner or constituting a breach of Asset
Privatization Trust’s obligations to petitioner. The Court of Appeals found that petitioner’s claim for damages against
Asset Privatization Trust was based merely on his own self-serving allegations. 38

As to the finding of fraud, the Court of Appeals held that:

xxxx

In all the complaints from the original through the first, second and third amendments, the plaintiff imputes fraud only
to defendant Ruperto, to wit:

4. That on May 12, 1981, due to the deceit and fraud exercised by Ruperto V. Tankeh, plaintiff, together with
Vicente L. Arenas, Jr. and Jose Maria Vargas signed a promissory note in favor of the defendant, DBP, wherein
plaintiff bound himself to jointly and severally pay the DBP the amount of the mortgage loan. This document insofar
as plaintiff is concerned is a simulated document considering that plaintiff was never a real stockholder of Sterling
Shipping Lines, Inc. (Emphasis provided)

More allegations of deceit were added in the Second Amended Complaint, but they are also attributed against
Ruperto:

6. That THE DECEIT OF DEFENDANT RUPERTO V. TANKEH IS SHOWN BY THE FACT THAT when the Sterling
Shipping Lines, Inc. was organized in 1980, Ruperto V. Tankeh promised plaintiff that he would be a part of the
administration staff so that he could oversee the operation of the company. He was also promised that his son, a
lawyer, would be given a position in the company. None of these promsies [sic] was complied with. In fact he was
not even allowed to find out the data about the income and expenses of the company.

7. THAT THE DECEIT OF RUPERTO V. TANKEH IS ALSO SHOWN BY THE FACT THAT PLAINTIFF WAS
INVITED TO ATTEND THE BOARD MEETING OF THE STERLING SHIPPING LINES INC. ONLY ONCE, WHICH
WAS FOR THE SOLE PURPOSE OF INTRODUCING HIM TO THE TWO DIRECTORS OF THE DBP IN THE
BOARD OF THE STERLING SHIPPING LINES, INC., NAMELY, MR. JESUS MACALINAG AND MR. GIL
CORPUS. THEREAFTER HE WAS NEVER INVITED AGAIN. PLAINTIFF WAS NEVER COMPENSATED BY THE
STERLING SHIPPING LINES, INC. FOR HIS BEING A SO-CALLED DIRECTOR AND STOCKHOLDER.

xxxx

8-A THAT A WEEK AFTER SENDING THE ABOVE LETTER PLAINTIFF MADE EARNEST EFFORTS TOWARDS
A COMPROMISE BETWEEN HIM AND HIS BROTHER RUPERTO V. TANKEH, WHICH EFFORTS WERE
SPURNED BY RUPERTO V. TANKEH, AND ALSO AFTER THE NEWS OF THE SALE OF THE ‘STERLING ACE’
WAS PUBLISHED AT THE NEWSPAPER, PLAINTIFF TRIED ALL EFFORTS TO CONTACT RUPERTO V.
TANKEH FOR THE PURPOSE OF ARRIVING AT SOME COMPROMISE, BUT DEFENDANT RUPERTO V.
TANKEH AVOIDED ALL CONTACTS WITH THE PLAINTIFF UNTIL HE WAS FORCED TO SEEK LEGAL
ASSISTANCE FROM HIS LAWYER.

In the absence of any allegations of fraud and/or deceit against the other defendants, namely, the DBP, Vicente
Arenas, Sterling Shipping Lines, Inc., and the Asset Privatization Trust, the plaintiff’s evidence thereon should only
be against Ruperto, since a plaintiff is bound to prove only the allegations of his complaint. In any case, no evidence
of fraud or deceit was ever presented against defendants DBP, Arenas, SSLI and APT.

As to the evidence against Ruperto, the same consists only of the testimony of the plaintiff. None of his
documentary evidence would prove that Ruperto was guilty of fraud or deceit in causing him to sign the subject
promissory note. 39

xxxx

Analyzing closely the foregoing statements, we find no evidence of fraud or deceit. The mention of a new shipping
lines business and the promise of a free 1,000-share and directorship in the corporation do not amount to insidious
words or machinations. In any case, the shipping business was indeed established, with the plaintiff himself as one
of the incorporators and stockholders with a share of 4,000, worth ₱4,000,000.00 of which ₱1,000,000.00 was
reportedly paid up. As such, he signed the Articles of Incorporation and the corporation’s By-Laws which were
registered with the Securities and Exchange Commission in April 1979. It was not until May 12, 1981 that he signed
the questioned promissory note. From his own declaration at the witness stand, the plaintiff signed the promissory
note voluntarily. No pressure, force or intimidation was made to bear upon him. In fact, according to him, only a
messenger brought the paper to him for signature. The promised shares of stock were given and recorded in the

216
plaintiff’s name. He was made a director and Vice-President of SSLI. Apparently, only the promise that his son
would be given a position in the company remained unfulfilled. However, the same should have been threshed out
between the plaintiff and his brother, defendant Ruperto, and its non-fulfillment did not amount to fraud or deceit, but
was only an unfulfilled promise.

It should be pointed out that the plaintiff is a doctor of medicine and a seasoned businessman. It cannot be said that
he did not understand the import of the documents he signed. Certainly he knew what he was signing. He should
have known that being an officer of SSLI, his signing of the promissory note together with the other officers of the
corporation was expected, as the other officers also did. It cannot therefore be said that the promissory note was
simulated. The same is a contract validly entered into, which the parties are obliged to comply with.  (Citations
40

omitted)

The Court of Appeals ruled that in the absence of any competent proof, Ruperto V. Tankeh did not commit any
fraud. Petitioner Alejandro V. Tankeh was unable to prove by a preponderance of evidence that fraud or deceit had
been employed by Ruperto to make him sign the promissory note. The Court of Appeals reasoned that:

Fraud is never presumed but must be proved by clear and convincing evidence, mere preponderance of evidence
not even being adequate. Contentions must be proved by competent evidence and reliance must be had on the
strength of the party’s evidence and not upon the weakness of the opponent’s defense. The plaintiff clearly failed to
discharge such burden.  (Citations omitted)
41

With that, the Court of Appeals reversed and set aside the judgment and ordered that plaintiff’s Complaint be
dismissed. Petitioner filed a Motion for Reconsideration dated October 25, 2005 that was denied in a
Resolution promulgated on February 9, 2006.
42

Hence, this Petition was filed.

In this Petition, Alejandro V. Tankeh stated that the Court of Appeals seriously erred and gravely abused its
discretion in acting and deciding as if the evidence stated in the Decision of the Regional Trial Court did not exist.
He averred that the ruling of lack of cause of action had no leg to stand on, and the Court of Appeals had
unreasonably, whimsically, and capriciously ignored the ample evidence on record proving the fraud and deceit
perpetrated on the petitioner by the respondent. He stated that the appellate court failed to appreciate the findings of
fact of the lower court, which are generally binding on appellate courts. He also maintained that he is entitled to
damages and attorney's fees due to the deceit and machinations committed by the respondent.

In his Memorandum, respondent Ruperto V. Tankeh averred that petitioner had chosen the wrong remedy. He
ought to have filed a special civil action of certiorari and not a Petition for Review. Petitioner raised questions of fact,
and not questions of law, and this required the review or evaluation of evidence. However, this is not the function of
this Court, as it is not a trier of facts. He also contended that petitioner had voluntarily entered into the loan
agreement and the position with Sterling Shipping Lines, Inc. and that he did not fraudulently induce the petitioner to
enter into the contract.

Respondents Development Bank of the Philippines and Asset Privatization Trust also contended that petitioner's
mode of appeal had been wrong, and he had actually sought a special civil action of certiorari. This alone merited its
dismissal.

The main issue in this case is whether the Court of Appeals erred in finding that respondent Rupert V. Tankeh did
not commit fraud against the petitioner.

The Petition is partly granted.

Before disposing of the main issue in this case, this Court needs to address a procedural issue raised by
respondents. Collectively, respondents argue that the Petition is actually one of certiorari under Rule 65 of the Rules
of Court  and not a Petition for Review on Certiorari under Rule 45.  Thus, petitioner’s failure to show that there was
43 44

neither appeal nor any other plain, speedy or adequate remedy merited the dismissal of the Complaint.

Contrary to respondent’s imputation, the remedy contemplated by petitioner is clearly that of a Rule 45 Petition for
Review. In Tagle v. Equitable PCI Bank,  this Court made the distinction between a Rule 45 Petition for Review on
45

Certiorari and a Rule 65 Petition for Certiorari:

Certiorari is a remedy designed for the correction of errors of jurisdiction, not errors of judgment.  In Pure Foods
1âwphi1

Corporation v. NLRC, we explained the simple reason for the rule in this light: When a court exercises its
jurisdiction, an error committed while so engaged does not deprive it of the jurisdiction being exercised when the
error is committed x x x. Consequently, an error of judgment that the court may commit in the exercise of its
jurisdiction is not correctable through the original civil action of certiorari.

217
 xxxx

Even if the findings of the court are incorrect, as long as it has jurisdiction over the case, such correction is normally
beyond the province of certiorari. Where the error is not one of jurisdiction, but of an error of law or fact a mistake of
judgment, appeal is the remedy.

In this case, what petitioner seeks to rectify may be construed as errors of judgment of the Court of Appeals. These
errors pertain to the petitioner’s allegation that the appellate court failed to uphold the findings of facts of the lower
court. He does not impute any error with respect to the Court of Appeals’ exercise of jurisdiction. As such, this
Petition is simply a continuation of the appellate process where a case is elevated from the trial court of origin, to the
Court of Appeals, and to this Court via Rule 45.

Contrary to respondents’ arguments, the allegations of petitioner that the Court of Appeals "committed grave abuse
of discretion"  did not ipso facto render the intended remedy that of certiorari under Rule 65 of the Rules of Court.
46 47

In any case, even if the Petition is one for the special civil action of certiorari, this Court has the discretion to treat a
Rule 65 Petition for Certiorari as a Rule 45 Petition for Review on Certiorari. This is allowed if (1) the Petition is filed
within the reglementary period for filing a Petition for review; (2) when errors of judgment are averred; and (3) when
there is sufficient reason to justify the relaxation of the rules.  When this Court exercises this discretion, there is no
48

need to comply with the requirements provided for in Rule 65.

In this case, petitioner filed his Petition within the reglementary period of filing a Petition for Review.  His Petition
49

assigns errors of judgment and appreciation of facts and law on the part of the Court of Appeals. Thus, even if the
Petition was designated as one that sought the remedy of certiorari, this Court may exercise its discretion to treat it
as a Petition for Review in the interest of substantial justice.

We now proceed to the substantive issue, that of petitioner’s imputation of fraud on the part of respondents. We are
required by the circumstances of this case to review our doctrines of fraud that are alleged to be present in
contractual relations.

Types of Fraud in Contracts

Fraud is defined in Article 1338 of the Civil Code as:

x x x fraud when, through insidious words or machinations of one of the contracting parties, the other is induced to
enter into a contract which, without them, he would not have agreed to.

This is followed by the articles which provide legal examples and illustrations of fraud.

Art. 1339. Failure to disclose facts, when there is a duty to reveal them, as when the parties are bound by
confidential relations, constitutes fraud. (n)

Art. 1340. The usual exaggerations in trade, when the other party had an opportunity to know the facts, are not in
themselves fraudulent. (n)

Art. 1341. A mere expression of an opinion does not signify fraud, unless made by an expert and the other party has
relied on the former's special knowledge. (n)

Art. 1342. Misrepresentation by a third person does not vitiate consent, unless such misrepresentation has created
substantial mistake and the same is mutual. (n)

Art. 1343. Misrepresentation made in good faith is not fraudulent but may constitute error. (n)

The distinction between fraud as a ground for rendering a contract voidable or as basis for an award of damages is
provided in Article 1344:

In order that fraud may make a contract voidable, it should be serious and should not have been employed by both
contracting parties.

Incidental fraud only obliges the person employing it to pay damages. (1270)

There are two types of fraud contemplated in the performance of contracts: dolo incidente or incidental fraud and
dolo causante or fraud serious enough to render a contract voidable.

In Geraldez v. Court of Appeals,  this Court held that:

50

218
This fraud or dolo which is present or employed at the time of birth or perfection of a contract may either be dolo
causante or dolo incidente. The first, or causal fraud referred to in Article 1338, are those deceptions or
misrepresentations of a serious character employed by one party and without which the other party would not have
entered into the contract. Dolo incidente, or incidental fraud which is referred to in Article 1344, are those which are
not serious in character and without which the other party would still have entered into the contract. Dolo causante
determines or is the essential cause of the consent, while dolo incidente refers only to some particular or accident of
the obligation. The effects of dolo causante are the nullity of the contract and the indemnification of damages, and
dolo incidente also obliges the person employing it to pay damages. 51

In Solidbank Corporation v. Mindanao Ferroalloy Corporation, et al.,  this Court elaborated on the distinction
52

between dolo causante and dolo incidente:

Fraud refers to all kinds of deception -- whether through insidious machination, manipulation, concealment or
misrepresentation -- that would lead an ordinarily prudent person into error after taking the circumstances into
account. In contracts, a fraud known as dolo causante or causal fraud is basically a deception used by one party
prior to or simultaneous with the contract, in order to secure the consent of the other. Needless to say, the deceit
employed must be serious. In contradistinction, only some particular or accident of the obligation is referred to by
incidental fraud or dolo incidente, or that which is not serious in character and without which the other party would
have entered into the contract anyway. 53

Under Article 1344, the fraud must be serious to annul or avoid a contract and render it voidable. This fraud or
deception must be so material that had it not been present, the defrauded party would not have entered into the
contract. In the recent case of Spouses Carmen S. Tongson and Jose C. Tongson, et al., v. Emergency Pawnshop
Bula, Inc.,  this Court provided some examples of what constituted dolo causante or causal fraud:
54

Some of the instances where this Court found the existence of causal fraud include: (1) when the seller, who had no
intention to part with her property, was "tricked into believing" that what she signed were papers pertinent to her
application for the reconstitution of her burned certificate of title, not a deed of sale; (2) when the signature of the
authorized corporate officer was forged; or (3) when the seller was seriously ill, and died a week after signing the
deed of sale raising doubts on whether the seller could have read, or fully understood, the contents of the
documents he signed or of the consequences of his act.  (Citations omitted)
55

However, Article 1344 also provides that if fraud is incidental, it follows that this type of fraud is not serious enough
so as to render the original contract voidable.

A classic example of dolo incidente is Woodhouse v. Halili.  In this case, the plaintiff Charles Woodhouse entered
56

into a written agreement with the defendant Fortunato Halili to organize a partnership for the bottling and distribution
of soft drinks. However, the partnership did not come into fruition, and the plaintiff filed a Complaint in order to
execute the partnership. The defendant filed a Counterclaim, alleging that the plaintiff had defrauded him because
the latter was not actually the owner of the franchise of a soft drink bottling operation. Thus, defendant sought the
nullification of the contract to enter into the partnership. This Court concluded that:

x x x from all the foregoing x x x plaintiff did actually represent to defendant that he was the holder of the exclusive
franchise. The defendant was made to believe, and he actually believed, that plaintiff had the exclusive franchise. x
x x The record abounds with circumstances indicative that the fact that the principal consideration, the main cause
that induced defendant to enter into the partnership agreement with plaintiff, was the ability of plaintiff to get the
exclusive franchise to bottle and distribute for the defendant or for the partnership. x x x The defendant was,
therefore, led to the belief that plaintiff had the exclusive franchise, but that the same was to be secured for or
transferred to the partnership. The plaintiff no longer had the exclusive franchise, or the option thereto, at the time
the contract was perfected. But while he had already lost his option thereto (when the contract was entered into),
the principal obligation that he assumed or undertook was to secure said franchise for the partnership, as the bottler
and distributor for the Mission Dry Corporation. We declare, therefore, that if he was guilty of a false representation,
this was not the causal consideration, or the principal inducement, that led plaintiff to enter into the partnership
agreement.

But, on the other hand, this supposed ownership of an exclusive franchise was actually the consideration or price
plaintiff gave in exchange for the share of 30 percent granted him in the net profits of the partnership business.
Defendant agreed to give plaintiff 30 per cent share in the net profits because he was transferring his exclusive
franchise to the partnership. x x x.

Plaintiff had never been a bottler or a chemist; he never had experience in the production or distribution of
beverages. As a matter of fact, when the bottling plant being built, all that he suggested was about the toilet facilities
for the laborers.

We conclude from the above that while the representation that plaintiff had the exclusive franchise did not vitiate
defendant's consent to the contract, it was used by plaintiff to get from defendant a share of 30 per cent of the net
profits; in other words, by pretending that he had the exclusive franchise and promising to transfer it to defendant,
219
he obtained the consent of the latter to give him (plaintiff) a big slice in the net profits. This is the dolo incidente
defined in article 1270 of the Spanish Civil Code, because it was used to get the other party's consent to a big share
in the profits, an incidental matter in the agreement.
57

Thus, this Court held that the original agreement may not be declared null and void. This Court also said that the
plaintiff had been entitled to damages because of the refusal of the defendant to enter into the partnership.
However, the plaintiff was also held liable for damages to the defendant for the misrepresentation that the former
had the exclusive franchise to soft drink bottling operations.

To summarize, if there is fraud in the performance of the contract, then this fraud will give rise to damages. If the
fraud did not compel the imputing party to give his or her consent, it may not serve as the basis to annul the
contract, which exhibits dolo causante. However, the party alleging the existence of fraud may prove the existence
of dolo incidente.

This may make the party against whom fraud is alleged liable for damages.

Quantum of Evidence to Prove the Existence of Fraud and the Liability of the Parties

The Civil Code, however, does not mandate the quantum of evidence required to prove actionable fraud, either for
purposes of annulling a contract (dolo causante) or rendering a party liable for damages (dolo incidente). The
definition of fraud is different from the quantum of evidence needed to prove the existence of fraud. Article 1338
provides the legal definition of fraud. Articles 1339 to 1343 constitute the behavior and actions that, when in
conformity with the legal provision, may constitute fraud.

Jurisprudence has shown that in order to constitute fraud that provides basis to annul contracts, it must fulfill two
conditions. First, the fraud must be dolo causante or it must be fraud in obtaining the consent of the party. Second,
this fraud must be proven by clear and convincing evidence. In Viloria v. Continental Airlines,  this Court held that:
58

Under Article 1338 of the Civil Code, there is fraud when, through insidious words or machinations of one of the
contracting parties, the other is induced to enter into a contract which, without them, he would not have agreed to. In
order that fraud may vitiate consent, it must be the causal (dolo causante), not merely the incidental (dolo incidente),
inducement to the making of the contract. In Samson v. Court of Appeals, causal fraud was defined as "a deception
employed by one party prior to or simultaneous to the contract in order to secure the consent of the other." Also,
fraud must be serious and its existence must be established by clear and convincing evidence. (Citations omitted) 59

In Viloria, this Court cited Sierra v. Court of Appeals  stating that mere preponderance of evidence will not suffice in
60

proving fraud.

Fraud must also be discounted, for according to the Civil Code:

Art. 1338. There is fraud when, through insidious words or machinations of one of the contracting parties, the other
is induced to enter into a contract which without them, he would not have agreed to.

Art. 1344. In order that fraud may make a contract voidable, it should be serious and should not have been
employed by both contracting parties.

To quote Tolentino again, the "misrepresentation constituting the fraud must be established by full, clear, and
convincing evidence, and not merely by a preponderance thereof. The deceit must be serious. The fraud is serious
when it is sufficient to impress, or to lead an ordinarily prudent person into error; that which cannot deceive a
prudent person cannot be a ground for nullity. The circumstances of each case should be considered, taking into
account the personal conditions of the victim."61

Thus, to annul a contract on the basis of dolo causante, the following must happen: First, the deceit must be serious
or sufficient to impress and lead an ordinarily prudent person to error. If the allegedly fraudulent actions do not
deceive a prudent person, given the circumstances, the deceit here cannot be considered sufficient basis to nullify
the contract. In order for the deceit to be considered serious, it is necessary and essential to obtain the consent of
the party imputing fraud. To determine whether a person may be sufficiently deceived, the personal conditions and
other factual circumstances need to be considered.

Second, the standard of proof required is clear and convincing evidence. This standard of proof is derived from
American common law. It is less than proof beyond reasonable doubt (for criminal cases) but greater than
preponderance of evidence (for civil cases). The degree of believability is higher than that of an ordinary civil case.
Civil cases only require a preponderance of evidence to meet the required burden of proof. However, when fraud is
alleged in an ordinary civil case involving contractual relations, an entirely different standard of proof needs to be
satisfied. The imputation of fraud in a civil case requires the presentation of clear and convincing evidence. Mere

220
allegations will not suffice to sustain the existence of fraud. The burden of evidence rests on the part of the plaintiff
or the party alleging fraud. The quantum of evidence is such that fraud must be clearly and convincingly shown.

The Determination of the Existence of Fraud in the Present Case

We now determine the application of these doctrines regarding fraud to ascertain the liability, if any, of the
respondents.

Neither law nor jurisprudence distinguishes whether it is dolo incidente or dolo causante that must be proven by
clear and convincing evidence. It stands to reason that both dolo incidente and dolo causante must be proven by
clear and convincing evidence. The only question is whether this fraud, when proven, may be the basis for making a
contract voidable (dolo causante), or for awarding damages (dolo incidente), or both.

Hence, there is a need to examine all the circumstances thoroughly and to assess the personal circumstances of
the party alleging fraud. This may require a review of the case facts and the evidence on record.

In general, this Court is not a trier of facts. It makes its rulings based on applicable law and on standing
jurisprudence. The findings of the Court of Appeals are generally binding on this Court provided that these are
supported by the evidence on record. In the recent case of Medina v. Court of Appeals,  this Court held that:
62

It is axiomatic that a question of fact is not appropriate for a petition for review on certiorari under Rule 45. This rule
provides that the parties may raise only questions of law, because the Supreme Court is not a trier of facts.
Generally, we are not duty-bound to analyze again and weigh the evidence introduced in and considered by the
tribunals below. When supported by substantial evidence, the findings of fact of the Court of Appeals are conclusive
and binding on the parties and are not reviewable by this Court, unless the case falls under any of the following
recognized exceptions: (1) When the conclusion is a finding grounded entirely on speculation, surmises and
conjectures; (2) When the inference made is manifestly mistaken, absurd or impossible; (3) Where there is a grave
abuse of discretion; (4) When the judgment is based on a misapprehension of facts; (5) When the findings of fact
are conflicting; (6) When the Court of Appeals, in making its findings, went beyond the issues of the case and the
same is contrary to the admissions of both appellant and appellee; (7) When the findings are contrary to those of the
trial court; (8) When the findings of fact are conclusions without citation of specific evidence on which they are
based; (9) When the facts set forth in the petition as well as in the petitioner’s main and reply briefs are not disputed
by the respondents; and (10) When the findings of fact of the Court of Appeals are premised on the supposed
absence of evidence and contradicted by the evidence on record. (Emphasis provided) 63

The trial court and the Court of Appeals had appreciated the facts of this case differently.

The Court of Appeals was not correct in saying that petitioner could only raise fraud as a ground to annul his
participation in the contract as against respondent Rupert V. Tankeh, since the petitioner did not make any
categorical allegation that respondents Development Bank of the Philippines, Sterling Shipping Lines, Inc., and
Asset Privatization Trust had acted fraudulently. Admittedly, it was only in the Petition before this Court that the
petitioner had made the allegation of a "well-orchestrated fraud"  by the respondents. However, Rule 10, Section 5
64

of the Rules of Civil Procedure provides that:

Amendment to conform to or authorize presentation of evidence. — When issues not raised by the pleadings are
tried with the express or implied consent of the parties they shall be treated in all respects as if they had been raised
in the pleadings. Such amendment of the pleadings as may be necessary to cause them to conform to the evidence
and to raise these issues may be made upon motion of any party at any time, even after judgment; but failure to
amend does not effect the result of the trial of these issues. If evidence is objected to at the trial on the ground that it
is not within the issues made by the pleadings, the court may allow the pleadings to be amended and shall do so
with liberality if the presentation of the merits of the action and the ends of substantial justice will be subserved
thereby. The court may grant a continuance to enable the amendment to be made. (5a)

In this case, the commission of fraud was an issue that had been tried with the implied consent of the respondents,
particularly Sterling Shipping Lines, Inc., Asset Privatization Trust, Development Bank of the Philippines, and
Arenas. Hence, although there is a lack of a categorical allegation in the pleading, the courts may still be allowed to
ascertain fraud.

The records will show why and how the petitioner agreed to enter into the contract with respondent Ruperto V.
Tankeh:

ATTY. VELAYO: How did you get involved in the business of the Sterling Shipping Lines, Incorporated" [sic]

DR. TANKEH: Sometime in the year 1980, I was approached by Ruperto Tankeh mentioning to me that he is
operating a new shipping lines business and he is giving me free one thousand shares (1,000) to be a director of
this new business which is worth one million pesos (₱1,000,000.00.),

221
ATTY. VELAYO: Are you related to Ruperto V. Tankeh?

DR. TANKEH: Yes, sir. He is my younger brother.

ATTY. VELAYO: Did you accept the offer?

DR. TANKEH: I accepted the offer based on his promise to me that I will be made a part of the administration staff
so that I can oversee the operation of the business plus my son, the eldest one who is already a graduate lawyer
with a couple of years of experience in the law firm of Romulo Ozaeta Law Offices (TSN, April 28, 1988, pp. 10-
11.).
65

The Second Amended Complaint of petitioner is substantially reproduced below to ascertain the claim:

xxxx

2. That on May 12, 1981, due to the deceit and fraud exercised by Ruperto V. Tankeh, plaintiff, together with
Vicente L. Arenas, Jr. and Jose Maria Vargas, signed a promissory note in favor of the defendant DBP,
wherein plaintiff bound himself to jointly and severally pay the DBP the amount of the mortgage loan. This
document insofar as plaintiff is concerned is a simulated document considering that plaintiff was never a real
stockholder of the Sterling Shipping Lines, Inc.

3. That although plaintiff’s name appears in the records of Sterling Shipping Lines, Inc. as one of its
incorporators, the truth is that he had never invested any amount in said corporation and that he had never
been an actual member of said corporation. All the money supposedly invested by him were put by
defendant Ruperto V. Tankeh. Thus, all the shares of stock under his name in fact belongs to Ruperto V.
Tankeh. Plaintiff was invited to attend the board meeting of the Sterling Shipping Lines, Inc. only once,
which was for the sole purpose of introducing him to the two directors of the DBP, namely, Mr. Jesus
Macalinag and Mr. Gil Corpus. Thereafter he was never invited again. Plaintiff was never compensated by
the Sterling Shipping Lines, Inc. for his being a so-called director and stockholder. It is clear therefore that
the DBP knew all along that plaintiff was not a true stockholder of the company.

4. That THE DECEIT OF DEFENDANT RUPERTO V. TANKEH IS SHOWN BY THE FACT THAT when the
Sterling Shipping Lines, Inc. was organized in 1980, Ruperto V. Tankeh promised plaintiff that he would be a
part of the administration staff so that he could oversee the operation of the company. He was also promised
that his son, a lawyer, would be given a position in the company. None of these promises was complied
with. In fact, he was not even allowed to find out the data about the income and expenses of the company.

5. THAT THE DECEIT OF RUPERTO V. TANKEH IS ALSO SHOWN BY THE FACT THAT PLAINTIFF
WAS INVITED TO ATTEND THE BOARD MEETING OF THE STERLING SHIPPING LINES, INC. ONLY
ONCE, WHICH WAS FOR THE SOLE PUPOSE OF INTRODUCING HIM TO THE TWO DIRECTORS OF
THE DBP IN THE BOARD OF THE STERLING SHIPPING LINES, INC., NAMELY, MR. JESUS
MACALINAG AND MR. GIL CORPUS. THEREAFTER HE WAS NEVER INVITED AGAIN. PLAINTIFF WAS
NEVER COMPENSATED BY THE STERLING SHIPPING LINES, INC. FOR HIS BEING A SO-CALLED
DIRECTOR AND STOCKHOLDER.

6. That in 1983, upon realizing that he was only being made a tool to realize the purposes of Ruperto V.
Tankeh, plaintiff officially informed the company by means of a letter dated June 15, 1983 addressed to the
company that he has severed his connection with the company, and demanded among others, that the
company board of directors pass a resolution releasing him from any liabilities especially with reference to
the loan mortgage contract with the DBP and to notify the DBP of his severance from the Sterling Shipping
Lines, Inc.

8-A. THAT A WEEK AFTER SENDING THE ABOVE LETTER, PLAINTIFF MADE EARNEST EFFORTS
TOWARDS A COMPROMISE BETWEEN HIM AND HIS BROTHER RUPERTO V. TANKEH, WHICH
EFFORTS WERE SPURNED BY RUPERTO V. TANKEH, AND ALSO AFTER THE NEWS OF THE SALE
OF THE "STERLING ACE" WAS PUBLISHED AT THE NEWSPAPER [sic], PLAINTIFF TRIED ALL
EFFORTS TO CONTACT RUPERTO V. TANKEH FOR THE PURPOSE OF ARRIVING AT SOME
COMPROMISE, BUT DEFENDANT RUPERTO V. TANKEH AVOIDED ALL CONTACTS [sic] WITH THE
PLAINTIFF UNTIL HE WAS FORCED TO SEEK LEGAL ASSISTANCE FROM HIS LAWYER. 66

In his Answer, respondent Ruperto V. Tankeh stated that:

COMES NOW defendant RUPERTO V. TANKEH, through the undersigned counsel, and to the Honorable Court,
most respectfully alleges:

xxxx

222
 3. That paragraph 4 is admitted that herein answering defendant together with the plaintiff signed the
promissory note in favor of DBP but specifically denied that the same was done through deceit and fraud of
herein answering defendant the truth being that plaintiff signed said promissory note voluntarily and with full
knowledge of the consequences thereof; it is further denied that said document is a simulated document as
plaintiff was never a real stockholder of the company, the truth being those alleged in the special and
affirmative defenses;

4. That paragraphs 5,6,7,8 and 8-A are specifically denied specially the imputation of deceit and fraud
against herein answering defendant, the truth being those alleged in the special and affirmative defenses;

xxxx

SPECIAL AND AFFIRMATIVE DEFENSES x x x

8. The complaint states no cause of action as against herein answering defendant;

9. The Sterling Shipping Lines, Inc. was a legitimate company organized in accordance with the laws of the
Republic of the Philippines with the plaintiff as one of the incorporators;

10. Plaintiff as one of the incorporators and directors of the board was fully aware of the by-laws of the
company and if he attended the board meeting only once as alleged, the reason thereof was known only to
him;

11. The Sterling Shipping Lines, Inc. being a corporation acting through its board of directors, herein
answering defendant could not have promised plaintiff that he would be a part of the administration staff;

12. As member of the board, plaintiff had all the access to the data and records of the company; further, as
alleged in the complaint, plaintiff has a son who is a lawyer who could have advised him;

13. Assuming plaintiff wrote a letter to the company to sever his connection with the company, he should
have been aware that all he had to do was sell all his holdings in the company;

14. Herein answering defendant came to know only of plaintiff’s alleged predicament when he received the
summons and copy of the complaint; x x x. 67

An assessment of the allegations in the pleadings and the findings of fact of both the trial court and appellate court
based on the evidence on record led to the conclusion that there had been no dolo causante committed against the
petitioner by Ruperto V. Tankeh.

The petitioner had given his consent to become a shareholder of the company without contributing a single peso to
pay for the shares of stock given to him by Ruperto V. Tankeh. This fact was admitted by both petitioner and
respondent in their respective pleadings submitted to the lower court.

In his Amended Complaint,  the petitioner admitted that "he had never invested any amount in said corporation and
68

that he had never been an actual member of said corporation. All the money supposedly invested by him were put
up by defendant Ruperto V. Tankeh."  This fact alone should have already alerted petitioner to the gravity of the
69

obligation that he would be undertaking as a member of the board of directors and the attendant circumstances that
this undertaking would entail. It also does not add any evidentiary weight to strengthen petitioner’s claim of fraud. If
anything, it only strengthens the position that petitioner’s consent was not obtained through insidious words or
deceitful machinations.

Article 1340 of the Civil Code recognizes the reality of some exaggerations in trade which negates fraud. It reads:

Art. 1340. The usual exaggerations in trade, when the other party had an opportunity to know the facts, are not in
themselves fraudulent.

Given the standing and stature of the petitioner, he was in a position to ascertain more information about the
contract.

Songco v. Sellner  serves as one of the key guidelines in ascertaining whether a party is guilty of fraud in obtaining
70

the consent of the party claiming that fraud existed. The plaintiff Lamberto Songco sought to recover earnings from
a promissory note that defendant George Sellner had made out to him for payment of Songco’s sugar cane
production. Sellner claimed that he had refused to pay because Songco had promised that the crop would yield
3,000 piculs of sugar, when in fact, only 2,017 piculs of sugar had been produced. This Court held that Sellner
would still be liable to pay the promissory note, as follows:

223
Notwithstanding the fact that Songco's statement as to the probable output of his crop was disingenuous and
uncandid, we nevertheless think that Sellner was bound and that he must pay the price stipulated. The
representation in question can only be considered matter of opinion as the cane was still standing in the field, and
the quantity of the sugar it would produce could not be known with certainty until it should be harvested and milled.
Undoubtedly Songco had better experience and better information on which to form an opinion on this question than
Sellner. Nevertheless the latter could judge with his own eyes as to the character of the cane, and it is shown that
he measured the fields and ascertained that they contained 96 1/2 hectares.

xxxx

The law allows considerable latitude to seller's statements, or dealer's talk; and experience teaches that it is
exceedingly risky to accept it at its face value. The refusal of the seller to warrant his estimate should have
admonished the purchaser that that estimate was put forth as a mere opinion; and we will not now hold the seller to
a liability equal to that which would have been created by a warranty, if one had been given.

xxxx

It is not every false representation relating to the subject matter of a contract which will render it void. It must be as
to matters of fact substantially affecting the buyer's interest, not as to matters of opinion, judgment, probability, or
expectation. (Long vs. Woodman, 58 Me., 52; Hazard vs. Irwin, 18 Pick. [Mass.], 95; Gordon vs. Parmelee, 2 Allen
[Mass.], 212; Williamson vs. McFadden, 23 Fla., 143, 11 Am. St. Rep., 345.) When the purchaser undertakes to
make an investigation of his own, and the seller does nothing to prevent this investigation from being as full as he
chooses to make it, the purchaser cannot afterwards allege that the seller made misrepresentations. (National Cash
Register Co. vs. Townsend, 137 N. C., 652, 70 L. R. A., 349; Williamson vs. Holt, 147 N. C., 515.)

We are aware that where one party to a contract, having special or expert knowledge, takes advantage of the
ignorance of another to impose upon him, the false representation may afford ground for relief, though otherwise the
injured party would be bound. But we do not think that the fact that Songco was an experienced farmer, while
Sellner was, as he claims, a mere novice in the business, brings this case within that exception. 71

The following facts show that petitioner was fully aware of the magnitude of his undertaking:

First, petitioner was fully aware of the financial reverses that Sterling Shipping Lines, Inc. had been undergoing, and
he took great pains to release himself from the obligation.

Second, his background as a doctor, as a bank organizer, and as a businessman with experience in the textile
business and real estate should have apprised him of the irregularity in the contract that he would be undertaking.
This meant that at the time petitioner gave his consent to become a part of the corporation, he had been fully aware
of the circumstances and the risks of his participation. Intent is determined by the acts.

Finally, the records showed that petitioner had been fully aware of the effect of his signing the promissory note. The
bare assertion that he was not privy to the records cannot counteract the fact that petitioner himself had admitted
that after he had severed ties with his brother, he had written a letter seeking to reach an amicable settlement with
respondent Rupert V. Tankeh. Petitioner’s actions defied his claim of a complete lack of awareness regarding the
circumstances and the contract he had been entering.

The required standard of proof – clear and convincing evidence – was not met. There was no dolo causante or fraud
used to obtain the petitioner’s consent to enter into the contract. Petitioner had the opportunity to become aware of
the facts that attended the signing of the promissory note. He even admitted that he has a lawyer-son who the
petitioner had hoped would assist him in the administration of Sterling Shipping Lines, Inc. The totality of the facts
on record belies petitioner’s claim that fraud was used to obtain his consent to the contract given his personal
circumstances and the applicable law.

However, in refusing to allow petitioner to participate in the management of the business, respondent Ruperto V.
Tankeh was liable for the commission of incidental fraud. In Geraldez, this Court defined incidental fraud as "those
which are not serious in character and without which the other party would still have entered into the contract." 72

Although there was no fraud that had been undertaken to obtain petitioner’s consent, there was fraud in the
performance of the contract. The records showed that petitioner had been unjustly excluded from participating in the
management of the affairs of the corporation. This exclusion from the management in the affairs of Sterling Shipping
Lines, Inc. constituted fraud incidental to the performance of the obligation.

This can be concluded from the following circumstances.

First, respondent raised in his Answer that petitioner "could not have promised plaintiff that he would be a part of the
administration staff"  since petitioner had been fully aware that, as a corporation, Sterling Shipping Lines, Inc. acted
73

224
through its board of directors. Respondent admitted that petitioner had been "an incorporator and member of the
board of directors"  and that petitioner "was fully aware of the by-laws of the company."  It was incumbent upon
74 75

respondent to act in good faith and to ensure that petitioner would not be excluded from the affairs of Sterling
Shipping Lines, Inc. After all, respondent asserted that petitioner had entered into the contract voluntarily and with
full consent.

Second, respondent claimed that if petitioner was intent on severing his connection with the company, all that
petitioner had to do was to sell all his holdings in the company. Clearly, the respondent did not consider the fact that
the sale of the shares of stock alone did not free petitioner from his liability to Development Bank of the Philippines
or Asset Privatization Trust, since the latter had signed the promissory and had still been liable for the loan. A sale
of petitioners’ shares of stock would not have negated the petitioner’s responsibility to pay for the loan.

Third, respondent Ruperto V. Tankeh did not rebuff petitioner’s claim that the latter only received news about the
sale of the vessel M/V Sterling Ace through the media and not as one of the board members or directors of Sterling
Shipping Lines, Inc.

All in all, respondent Ruperto V. Tankeh’s bare assertion that petitioner had access to the records cannot discredit
the fact that the petitioner had been effectively deprived of the opportunity to actually engage in the operations of
Sterling Shipping Lines, Inc. Petitioner had a reasonable expectation that the same level of engagement would be
present for the duration of their working relationship. This would include an undertaking in good faith by respondent
Ruperto V. Tankeh to be transparent with his brother that he would not automatically be made part of the company’s
administration.

However, this Court finds there is nothing to support the assertion that Sterling Shipping Lines, Inc. and Arenas
committed incidental fraud and must be held liable. Sterling Shipping Lines, Inc. acted through its board of directors,
and the liability of respondent Tankeh cannot be imposed on Sterling Shipping Lines, Inc. The shipping line has a
separate and distinct personality from its officers, and petitioner’s assertion that the corporation conspired with the
respondent Ruperto V. Tankeh to defraud him is not supported by the evidence and the records of the case.

As for Arenas, in Lim Tanhu v. Remolete,  this Court held that:

76

In all instances where a common cause of action is alleged against several defendants, some of whom answer and
the others do not, the latter or those in default acquire a vested right not only to own the defense interposed in the
answer of their co-defendant or co-defendants not in default but also to expect a result of the litigation totally
common with them in kind and in amount whether favorable or unfavorable. The substantive unity of the plaintiffs’
cause against all the defendants is carried through to its adjective phase as ineluctably demanded by the
homogeneity and indivisibility of justice itself.
77

As such, despite Arenas’ failure to submit his Answer to the Complaint or his declaration of default, his liability or
lack thereof is concomitant with the liability attributed to his co-defendants or co-respondents. However, unlike
respondent Ruperto V. Tankeh’s liability, there is no action or series of actions that may be attributed to Arenas that
may lead to an inference that he was liable for incidental fraud. In so far as the required evidence for both Sterling
Shipping Lines, Inc. and Arenas is concerned, there is no basis to justify the claim of incidental fraud.

In addition, respondents Development Bank of the Philippines and Asset Privatization Trust or Privatization and
Management Office cannot be held liable for fraud. Incidental fraud cannot be attributed to the execution of their
actions, which were undertaken pursuant to their mandated functions under the law. "Absent convincing evidence to
the contrary, the presumption of regularity in the performance of official functions has to be upheld."78

The Obligation to Pay Damages

As such, respondent Ruperto V. Tankeh is liable to his older brother, petitioner Alejandro, for damages. The
obligation to pay damages to petitioner is based on several provisions of the Civil Code.

Article 1157 enumerates the sources of obligations.

Article 1157. Obligations arise from:

(1) Law;

(2) Contracts;

(3) Quasi-contracts;

(4) Acts or omissions punished by law; and

225
 (5) Quasi-delicts. (1089a)

This enumeration does not preclude the possibility that a single action may serve as the source of several
obligations to pay damages in accordance with the Civil Code. Thus, the liability of respondent Ruperto V. Tankeh is
based on the law, under Article 1344, which provides that the commission of incidental fraud obliges the person
employing it to pay damages.

In addition to this obligation as the result of the contract between petitioner and respondents, there was also a
patent abuse of right on the part of respondent Tankeh. This abuse of right is included in Articles 19 and 21 of the
Civil Code which provide that:

Article 19. Every person must, in the exercise of his rights and in the performance of his duties, act with justice, give
everyone his due, and observe honesty and good faith.

Article 21. Any person who willfully causes loss or injury to another in manner that is contrary to morals, good
customs or public policy shall compensate the latter for the damage.

Respondent Ruperto V. Tankeh abused his right to pursue undertakings in the interest of his business operations.
This is because of his failure to at least act in good faith and be transparent with petitioner regarding Sterling
Shipping Lines, Inc.’s daily operations.

In National Power Corporation v. Heirs of Macabangkit Sangkay,  this Court held that:
79

When a right is exercised in a manner not conformable with the norms enshrined in Article 19 and like provisions on
human relations in the Civil Code, and the exercise results to [sic] the damage of [sic] another, a legal wrong is
committed and the wrongdoer is held responsible. 80

The damage, loss, and injury done to petitioner are shown by the following circumstances.

First, petitioner was informed by Development Bank of the Philippines that it would still pursue his liability for the
payment of the promissory note. This would not have happened if petitioner had allowed himself to be fully apprised
of Sterling Shipping Lines, Inc.’s financial straits and if he felt that he could still participate in the company’s
operations. There is no evidence that respondent Ruperto V. Tankeh showed an earnest effort to at least allow the
possibility of making petitioner part of the administration a reality. The respondent was the brother of the petitioner
and was also the primary party that compelled petitioner Alejandro Tankeh to be solidarily bound to the promissory
note. Ruperto V. Tankeh should have done his best to ensure that he had exerted the diligence to comply with the
obligations attendant to the participation of petitioner.

Second, respondent Ruperto V. Tankeh’s refusal to enter into an agreement or settlement with petitioner after the
latter’s discovery of the sale of the M/V Sterling Ace was an action that constituted bad faith. Due to Ruperto’s
refusal, his brother, petitioner Alejandro, became solidarily liable for an obligation that the latter could have avoided
if he had been given an opportunity to participate in the operations of Sterling Shipping Lines, Inc. The simple sale
of all of petitioner’s shares would not have solved petitioner’s problems, as it would not have negated his liability
under the terms of the promissory note.

Finally, petitioner is still bound to the creditors of Sterling Shipping Lines, Inc., namely, public respondents
Development Bank of the Philippines and Asset Privatization Trust. This is an additional financial burden for
petitioner. Nothing in the records suggested the possibility that Development Bank of the Philippines or Asset
Privatization Trust through the Privatization Management Office will not pursue or is precluded from pursuing its
claim against the petitioner. Although petitioner Alejandro voluntarily signed the promissory note and became a
stockholder and board member, respondent should have treated him with fairness, transparency, and consideration
to minimize the risk of incurring grave financial reverses.

In Francisco v. Ferrer,  this Court ruled that moral damages may be awarded on the following bases:
81

To recover moral damages in an action for breach of contract, the breach must be palpably wanton, reckless,
malicious, in bad faith, oppressive or abusive.

Under the provisions of this law, in culpa contractual or breach of contract, moral damages may be recovered when
the defendant acted in bad faith or was guilty of gross negligence (amounting to bad faith) or in wanton disregard of
his contractual obligation and, exceptionally, when the act of breach of contract itself is constitutive of tort resulting
in physical injuries.

Moral damages may be awarded in breaches of contracts where the defendant acted fraudulently or in bad faith.

226
Bad faith does not simply connote bad judgment or negligence, it imports a dishonest purpose or some moral
obliquity and conscious doing of a wrong, a breach of known duty through some motive or interest or ill will that
partakes of the nature of fraud.

xxxx

The person claiming moral damages must prove the existence of bad faith by clear and convincing evidence for the
law always presumes good faith. It is not enough that one merely suffered sleepless nights, mental anguish, serious
anxiety as the result of the actuations of the other party. Invariably such action must be shown to have been willfully
done in bad faith or will ill motive. Mere allegations of besmirched reputation, embarrassment and sleepless nights
are insufficient to warrant an award for moral damages. It must be shown that the proximate cause thereof was the
unlawful act or omission of the [private respondent] petitioners.

An award of moral damages would require certain conditions to be met, to wit: (1) first, there must be an injury,
whether physical, mental or psychological, clearly sustained by the claimant; (2) second, there must be culpable act
or omission factually established; (3) third, the wrongful act or omission of the defendant is the proximate cause of
the injury sustained by the claimant; and (4) fourth, the award of damages is predicated on any of the cases stated
in Article 2219 of the Civil Code. (Citations omitted) 82

In this case, the four elements cited in Francisco are present. First, petitioner suffered an injury due to the mental
duress of being bound to such an onerous debt to Development Bank of the Philippines and Asset Privatization
Trust. Second, the wrongful acts of undue exclusion done by respondent Ruperto V. Tankeh clearly fulfilled the
same requirement. Third, the proximate cause of his injury was the failure of respondent Ruperto V. Tankeh to
comply with his obligation to allow petitioner to either participate in the business or to fulfill his fiduciary
responsibilities with candor and good faith. Finally, Article 2219  of the Civil Code provides that moral damages may
83

be awarded in case of acts and actions referred to in Article 21, which, as stated, had been found to be attributed to
respondent Ruperto V. Tankeh.

In the Appellant’s Brief,  petitioner asked the Court of Appeals to demand from respondents, except from
84

respondent Asset Privatization Trust, the amount of five million pesos (₱5,000,000.00). This Court finds that the
amount of five hundred thousand pesos (₱500,000.00) is a sufficient amount of moral damages.

In addition to moral damages, this Court may also impose the payment of exemplary damages.  Exemplary
1âwphi1

damages are discussed in Article 2229 of the Civil Code, as follows:

ART. 2229. Exemplary or corrective damages are imposed, by way of example or correction of the public good, in
addition to moral, temperate, liquidated or compensatory damages.

Exemplary damages are further discussed in Articles 2233 and 2234, particularly regarding the pre-requisites of
ascertaining moral damages and the fact that it is discretionary upon this Court to award them or not:

ART. 2233. Exemplary damages cannot be recovered as a matter of right; the court will decide whether or not they
should be adjudicated.

ART. 2234. While the amount of the exemplary damages need not be proven, the plaintiff must show that he is
entitled to moral, temperate or compensatory damages before the court may consider the question of whether or not
exemplary damages should be awarded x x x

The purpose of exemplary damages is to serve as a deterrent to future and subsequent parties from the commission
of a similar offense. The case of People v. Rante  citing People v. Dalisay  held that:
85 86

Also known as ‘punitive’ or ‘vindictive’ damages, exemplary or corrective damages are intended to serve as a
deterrent to serious wrong doings, and as a vindication of undue sufferings and wanton invasion of the rights of an
injured or a punishment for those guilty of outrageous conduct. These terms are generally, but not always, used
interchangeably. In common law, there is preference in the use of exemplary damages when the award is to
account for injury to feelings and for the sense of indignity and humiliation suffered by a person as a result of an
injury that has been maliciously and wantonly inflicted, the theory being that there should be compensation for the
hurt caused by the highly reprehensible conduct of the defendant—associated with such circumstances as
willfulness, wantonness, malice, gross negligence or recklessness, oppression, insult or fraud or gross fraud—that
intensifies the injury. The terms punitive or vindictive damages are often used to refer to those species of damages
that may be awarded against a person to punish him for his outrageous conduct. In either case, these damages are
intended in good measure to deter the wrongdoer and others like him from similar conduct in the future. 87

To justify an award for exemplary damages, the wrongful act must be accompanied by bad faith, and an award of
damages would be allowed only if the guilty party acted in a wanton, fraudulent, reckless or malevolent manner.  In 88

227
this case, this Court finds that respondent Ruperto V. Tankeh acted in a fraudulent manner through the finding of
dolo incidente due to his failure to act in a manner consistent with propriety, good morals, and prudence.

Since exemplary damages ensure that future litigants or parties are enjoined from acting in a similarly malevolent
manner, it is incumbent upon this Court to impose the damages in such a way that will serve as a categorical
warning and will show that wanton actions will be dealt with in a similar manner. This Court finds that the amount of
two hundred thousand pesos (₱200,000.00) is sufficient for this purpose.

In sum, this Court must act in the best interests of all future litigants by establishing and applying clearly defined
standards and guidelines to ascertain the existence of fraud.

WHEREFORE, this Petition is PARTIALLY GRANTED. The Decision of the Court of Appeals as to the assailed
Decision in so far as the finding of fraud is SUSTAINED with the MODIFICATION that respondent RUPERTO V.
TANKEH be ordered to pay moral damages in the amount of FIVE HUNDRED THOUSAND PESOS (₱500,000.00)
and the amount of TWO HUNDRED THOUSAND PESOS (₱200,000.00) by way of exemplary damages.

SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila

THIRD DIVISION

G.R. No. 181276               November 11, 2013

THE COMMISSIONER OF INTERNAL REVENUE, Petitioner, 

vs.
VISAYAS GEOTHERMAL POWER COMPANY, INC., Respondent.

DECISION

MENDOZA, J.:

Before the Court is a Petition for Review on Certiorari under Rule 45 or the 1907 Revised Rules of Civil Procedure
assailing the November 20, 2007 Decision  and the January 9, 2008 Resolution  of the Court of Tax Appeals (CTA)
1 2

En Banc in C.T.A. EB No. 282 (C.T.A. Case Nos. 6790 and 6838) entitled "Commissioner of Infernal Revenue vs.
Visayas Geothermal Power Company, Inc."

THE FACTS

228
Respondent Visayas Geothermal Power Company, Inc. (VGPCI), a corporation authorized by the Department of
Energy to own and operate a power plant facility in Malibog, Leyte, is engaged in the business of generation and
sale of electricity. In the course of its business operations, VGPCI incurred input value added tax of ₱20,213,044.50
on its domestic purchase of goods and services and importation of goods used in its business for the third and
fourth quarter of 2001 and for the entire year of 2002.  Due to the enactment of Republic Act (R.A.) No. 9136, which
3 4

became effective on June 26, 2001, VGPCI’s sales of generated power became zero-rated and were no longer
subject to VAT at 10%. 5

On June 26, 2003, VGPCI filed before the Bureau of Internal Revenue (BIR) Revenue District No. 89 of Ormoc City
a claim for refund of unutilized input VAT payment in the amount of ₱1,142,666.32 for the third quarter of 2001. On
December 18, 2003, another claim was filed in the amount of ₱19,070,378.18 for the last quarter of 2001 and the
four quarters of 2002. For failure of the BIR to act upon said claims, VGPCI filed separate petitions for review before
the CTA on September 30, 2003 and December 19, 2003, praying for a refund on the issuance of a tax credit
certificate in the amount of ₱1,142,666.32 covering the period from July to September 2001 and ₱19,070,378.18 for
the period from October 2001 to December 2002, CTA Case Nos. 6790 and 6838, respectively. 6

In its Decision  dated January 18, 2007, the First Division of the CTA partially granted the consolidated petitions for
7

review and ordered petitioner Commissioner of Internal Revenue (CIR) to refund or to issue a tax credit certificate to
VGPCI in the amount of ₱16,355,749.74 representing unutilized input VAT incurred from September 1, 2001 to
December 31, 2002. 8

Aggrieved, the CIR elevated the case to the CTA En Banc alleging that the First Division erred in ruling in favor of
VGPCI because: (1) VGPCI did not submit evidence of its compliance with the VAT registration requirements; (2) its
purchases of goods and services were not undertaken in the course of its trade or business and were not duly
substantiated by VAT invoices or receipts; (3) it failed to file an application for a VAT tax credit or refund before the
Revenue District Office of the city or municipality where the principal place of business was located; (4) it did not file
its administrative claim for refund prior to the filing of its petition before the CTA; and (5) it was unable to prove that
its claimed input VAT payments were directly attributable to its zero-rated sales. 9

On November 20, 2007, the CTA En Banc promulgated its Decision dismissing the petition and affirming the
decision of the CTA First Division, the dispositive portion of which reads:

WHEREFORE, premises considered, the Petition is hereby DISMISSED for lack of merit. The assailed Decision
dated January 18, 2007 and the Resolution dated May 17, 2007 are AFFIRMED.

SO ORDERED. 10

The tax court ruled that: (1) the law does not require the submission by a taxpayer of its VAT registration documents
in order to be able to claim for a refund of unutilized input VAT; (2) VGCPI was able to show, by submitting its VAT
invoices and official receipts, that its purchases of goods and services were incurred in the course of its trade and
business; (3) VGCPI sufficiently proved that its claimed input VAT was directly attributable to its zero-rated sales or
sales of power generation services to PNOC-EDC; and (4) the petition was timely filed before the CTA because the
taxpayer was not bound by the 120-day audit period but by the two-year prescriptive period. As explained by the tax
court, when the two-year period is about to lapse, the taxpayer may, without awaiting the verdict of the CIR, file its
claim for refund before the CTA.

The CIR subsequently filed its Motion for Reconsideration but the same was denied by the CTA En Banc in its
Resolution dated January 9, 2008. 11

Hence, this petition.

THE ISSUES

The CIR raises only one ground for the allowance of the petition:

The Court of Tax Appeals erred in assuming jurisdiction and giving due course to VGPCI’s petition despite the
latter’s failure to file an application for refund in due course before the BIR and observe the proper prescriptive
period provided by law before filing an appeal before the CTA. 12

The pivotal question in this case then is whether VGPCI failed to observe the proper prescriptive period required by
law for the filing of an appeal before the CTA because it filed its petition before the end of the 120-day period
granted to the CIR to decide its claim for refund under Section 112(D) of the National Internal Revenue Code
(NIRC).

THE COURT’S RULING

229
The CIR insists that VGPCI should have waited for the decision of the CIR or the lapse of the 120-day period from
the date of submission of complete documents in support of the application for refund as provided in Section 112(D)
of the NIRC.  The filing by VGPCI of its petition for review before the CTA almost immediately after filing its
13

administrative claim for refund is premature.

On the other hand, VGPCI, in its Memorandum  defends the decision of the CTA En Banc and puts forth the
14

following arguments: (1) Section 112(D) of the NIRC is not a limitation imposed on the taxpayer; rather, it is a
mandate addressed to the CIR, requiring it to decide claims for refund within 120 days from submission by the
taxpayer of complete documents in support thereof;  (2) Section 229 of the NIRC is the more specific provision with
15

respect to the prescriptive period for the filing of an appeal because it expressly requires that no suit in court can be
maintained for the recovery of taxes after two years from the date of payment of the taxes, while Section 112(D)
deals only with VAT and the periods within which the CIR shall grant a refund or a tax credit and does not discuss
the period within which a taxpayer can go to court;  (3) pursuant to the cases of Gibbs v. Collector of Internal
16

Revenue  and College of Oral & Dental Surgery v. Court of Tax Appeals,  when the two-year prescriptive period is
17 18

about to expire, the taxpayer need not wait for the decision of the BIR before filing a petition for review with the CTA
because the filing of a judicial claim beyond the two-year period bars the recovery of the tax paid, and (4) the CIR
has not been denied due process in evaluating VGPCI’s claim for refund because the filing of the judicial claim does
not preclude the CIR from continuing the processing of VGPCI administrative claim. The latter insists that it is
imperative and jurisdictional that both the administrative and the judicial claims for refund be filed within the two-year
prescriptive period, regardless of the length of time during which the administrative claim has been pending with the
CIR. It concludes that had it waited for the end of the 120-day period, it would have lost its right to file a petition for
review with the CTA. 19

The petition is partly meritorious.

Section 229 is not applicable

VGPCI’s reliance on Gibbs and College of Oral & Dental Surgery is misplaced. Of note is the fact that at the time of
the promulgation by this Court of the said cases, there was no provision yet in the NIRC in force (Commonwealth
Act No. 466,  as amended) similar to Section 112. Therefore, the said cases hold no sway over the case at bench.
20

VGPCI is also mistaken to argue that Section 229 is the more relevant provision of law. A simple reading of Section
229 reveals that it only pertains to taxes erroneously or illegally collected:

SEC. 229. Recovery of Tax Erroneously or Illegally Collected. - No suit or proceeding shall be maintained in any
court for the recovery of any national internal revenue tax hereafter alleged to have been erroneously or illegally
assessed or collected or of any penalty claimed to have been collected without authority, or of any sum alleged to
have been excessively or in any manner wrongfully collected, until a claim for refund or credit has been duly filed
with the Commissioner; but such suit or proceeding may be maintained, whether or not such tax, penalty, or sum
has been paid under protest or duress.

In any case, no such suit or proceeding shall be filed after the expiration of two (2) years from the date of payment
of the tax or penalty regardless of any supervening cause that may arise after payment: Provided, however, That the
Commissioner may, even without a written claim therefor, refund or credit any tax, where on the face of the return
upon which payment was made, such payment appears clearly to have been erroneously paid. [Emphases
supplied]

The applicable provision of the NIRC is undoubtedly Section 112, which deals specifically with creditable input tax:

SEC. 112. Refunds or Tax Credits of Input Tax.

(A) Zero-rated or Effectively Zero-rated Sales. – any VAT-registered person, whose sales are zero-rated or
effectively zero-rated may, within two (2) years after the close of the taxable quarter when the sales were made,
apply for the issuance of a tax credit certificate or refund of creditable input tax due or paid attributable to such
sales, except transitional input tax, to the extent that such input tax has not been applied against output tax:
Provided, however, That in the case of zero-rated sales under Section 106(A)(2)(a)(1), (2) and (B) and Section 108
(B)(1) and (2), the acceptable foreign currency exchange proceeds thereof had been duly accounted for in
accordance with the rules and regulations of the Bangko Sentral ng Pilipinas (BSP): Provided, further, That where
the taxpayer is engaged in zero-rated or effectively zero-rated sale and also in taxable or exempt sale of goods or
properties or services, and the amount of creditable input tax due or paid cannot be directly and entirely attributed to
any one of the transactions, it shall be allocated proportionately on the basis of the volume of sales.

xxxx

(D) Period Within Which Refund or Tax Credit of Input Taxes Shall be Made. - In proper cases, the Commissioner
shall grant a refund or issue the tax credit certificate for creditable input taxes within one hundred twenty (120) days

230
from the date of submission of complete documents in support of the application filed in accordance with
Subsections (A) and (B) hereof.

In case of full or partial denial of the claim for tax refund or tax credit, or the failure on the part of the Commissioner
to act on the application within the period prescribed above, the taxpayer affected may, within thirty (30) days from
the receipt of the decision denying the claim or after the expiration of the one hundred twenty day-period, appeal the
decision or the unacted claim with the Court of Tax Appeals. [Emphases supplied]

The Court, in earlier cases, had the opportunity to decide which provision of the NIRC was applicable to claims for
refund or tax credit for creditable input VAT. In the case of

Commissioner of Internal Revenue v. Mirant Pagbilao Corporation (formerly Southern Energy Quezon, Inc.),  it was 21

held that Section 229 of the NIRC, which provides for a two-year period, reckoned from the date of payment of the
tax or penalty, for the filing of a claim of refund or tax credit, is only pertinent to the recovery of taxes erroneously or
illegally assessed or collected; and that the relevant provision of the NIRC for claiming a refund or a tax credit for the
unutilized creditable input VAT is Section 112(A):

To be sure, MPC cannot avail itself of the provisions of either Sec. 204(C) or 229 of the NIRC which, for the purpose
of refund, prescribes a different starting point for the two-year prescriptive limit for the filing of a claim therefor. Secs.
204(C) and 229 respectively provide:

xxxx

Notably, the above provisions also set a two-year prescriptive period, reckoned from date of payment of the tax or
penalty, for the filing of a claim of refund or tax credit. Notably too, both provisions apply only to instances of
erroneous payment or illegal collection of internal revenue taxes

xxxx

Considering the foregoing discussion, it is clear that Sec. 112(A) of the NIRC, providing a two-year prescriptive
period reckoned from the close of the taxable quarter when the relevant sales or transactions were made pertaining
to the creditable input VAT, applies to the instant case, and not to the other actions which refer to erroneous
payment of taxes. 22

This ruling was later reiterated in Commissioner of Internal Revenue v. Aichi Forging Company of Asia, Inc.,  where 23

this Court upheld the ruling in Mirant that the appropriate provision for determining the prescriptive period for
claiming a refund or a tax credit for unutilized input VAT is Section 112(A), and not Section 229, of the NIRC. 24

Finally, the recent pronouncement of the Court En Banc should put an end to any question as to whether Section
229 may apply to claims for refund of unutilized input VAT. In the case of

Commissioner of Internal Revenue v. San Roque Power Corporation,  this Court categorically stated that the "input
25

VAT is not ‘excessively’ collected as understood under Section 229 because at the time the input VAT is collected
the amount paid is correct and proper." 26

As such, it is now clear and indisputable that it is Section 112, and not 229, of the Tax Code which is applicable to
all cases involving an application for the issuance of a tax credit certificate or refund of unutilized input VAT.

Judicial claim was prematurely filed;

120+30 day period is mandatory and jurisdictional

The Court in Aichi further made a significant pronouncement on the importance of the 120-day period granted to the
CIR to act on applications for tax refunds or tax credits under Section 112(D):

Section 112(D) of the NIRC clearly provides that the CIR has "120 days, from the date of the submission of the
complete documents in support of the application [for tax refund/credit]," within which to grant or deny the claim. In
case of full or partial denial by the CIR, the taxpayer’s recourse is to file an appeal before the CTA within 30 days
from receipt of the decision of the CIR. However, if after the 120-day period the CIR fails to act on the application for
tax refund/credit, the remedy of the taxpayer is to appeal the inaction of the CIR to CTA within 30 days.

In this case, the administrative and the judicial claims were simultaneously filed on September 30, 2004. Obviously,
respondent did not wait for the decision of the CIR or the lapse of the 120-day period. For this reason, we find the
filing of the judicial claim with the CTA premature. Respondent’s assertion that the non-observance of the 120-day
period is not fatal to the filing of a judicial claim as long as both the administrative and the judicial claims are filed
within the two- year prescriptive period has no legal basis.
231
There is nothing in Section 112 of the NIRC to support respondent’s view. Subsection (A) of the said provision
states that "any VAT-registered person, whose sales are zero-rated or effectively zero-rated may, within two years
after the close of the taxable quarter when the sales were made, apply for the issuance of a tax credit certificate or
refund of creditable input tax due or paid attributable to such sales." The phrase "within two (2) years x x x apply for
the issuance of a tax credit certificate or refund" refers to applications for refund/credit filed with the CIR and not to
appeals made to the CTA. This is apparent in the first paragraph of subsection (D) of the same provision, which
states that the CIR has "120 days from the submission of complete documents in support of the application filed in
accordance with Subsections (A) and (B)" within which to decide on the claim.

In fact, applying the two-year period to judicial claims would render nugatory Section 112(D) of the NIRC, which
already provides for a specific period within which a taxpayer should appeal the decision or inaction of the CIR. The
second paragraph of Section 112(D) of the NIRC envisions two scenarios: (1) when a decision is issued by the CIR
before the lapse of the 120-day period; and (2) when no decision is made after the 120-day period. In both
instances, the taxpayer has 30 days within which to file an appeal with the CTA. As we see it then, the 120-day
period is crucial in filing an appeal with the CTA.  [Emphases supplied]
27

Moreover, it is imperative that the Court take a look at the jurisdiction of the CTA as a guide in the resolution of this
case. Section 7 of R.A. No. 1125,  as amended by R.A. No. 9282,  states that:
28 29

Sec. 7. Jurisdiction. - The CTA shall exercise:

a. Exclusive appellate jurisdiction to review by appeal, as herein provided:

1. Decisions of the Commissioner of Internal Revenue in cases involving disputed assessments, refunds of
internal revenue taxes, fees or other charges, penalties in relation thereto, or other matters arising under the
National Internal Revenue or other laws administered by the Bureau of Internal Revenue;

2. Inaction by the Commissioner of Internal Revenue in cases involving disputed assessments, refunds of
internal revenue taxes, fees or other charges, penalties in relations thereto, or other matters arising under
the National Internal Revenue Code or other laws administered by the Bureau of Internal Revenue, where
the National Internal Revenue Code provides a specific period of action, in which case the inaction shall be
deemed a denial; (emphases supplied)

xxxx

It cannot be stressed enough that the jurisdiction of the CTA over the decisions or inaction of the CIR is only
appellate in nature. Thus, it necessarily requires the prior filing of an administrative case before the CIR. The CTA
can only validly acquire jurisdiction over a case after the CIR has rendered its decision or, should the CIR fail to act,
after the lapse of the period of action provided in the Tax Code, in which case the inaction of the CIR is considered
a denial.

The application of the 30-day period from receipt of the decision of the CIR or from the lapse of the 120-day period
(the "120+30 day period") given to the taxpayer within which to file a petition for review with the CTA, as provided for
in Section 112(D) of the Tax Code, was further explained in San Roque,  which affirmed the Aichi doctrine and
30

explicitly ruled that "the 120-day waiting period is mandatory and jurisdictional."

However, the court also took into account the issuance by the BIR of Ruling No. DA-489-03 dated December 10,
2003 which allowed for the filing of a judicial claim without waiting for the end of the 120-day period granted to the
CIR to decide on the application for refund:

BIR Ruling No. DA-489-03 does provide a valid claim for equitable estoppel under Section 246 of the Tax Code. BIR
Ruling No. DA-489-03 expressly states that the "taxpayer-claimant need not wait for the lapse of the 120-day period
before it could seek judicial relief with the CTA by way of Petition for Review." Prior to this ruling, the BIR held, as
shown by its position in the Court of Appeals, that the expiration of the 120-day period is mandatory and
jurisdictional before a judicial claim can be filed.

xxxx

Clearly, BIR Ruling No. DA-489-03 is a general interpretative rule. Thus, all taxpayers can rely on BIR Ruling No.
DA-489-03 from the time of its issuance on 10 December 2003 up to its reversal by this Court in Aichi on 6 October
2010, where this Court held that the 120+30 day periods are mandatory and jurisdictional. 31

Therefore, although the 120+30 day period in Section 112(D) is mandatory and jurisdictional and must be applied
from the effectivity of the 1997 Tax Code on January 1, 1998, an exception shall be made for judicial claims filed
from the issuance of BIR Ruling No. DA 489-03 on December 10, 2003 until the promulgation of Aichi on October 6,

232
2010. During the said period, a judicial claim for refund may be filed with the CTA even before the lapse of the 120-
day period given to the BIR to decide on the administrative case.

In sum, based on the foregoing discussion, the rules for the filing of a claim for refund or tax credit of unutilized input
credit VAT are as follows:

1. The taxpayer has two (2) years after the close of the taxable quarter when the relevant sales were made
within which to file an administrative claim before the CIR for a refund of the creditable input tax or the
issuance of a tax credit certificate, regardless of when the input VAT was paid, according to Section 112(A)
of the NIRC and Mirant.

2. The CIR is given 120 days, from the date of the submission of the complete documents in support of the
application for tax refund or tax credit, to act on the said application.

3. If the CIR fully or partially denies the application or fails to act on the same within the required 120-day
period, the taxpayer is allowed to appeal the decision or inaction of the CIR to the CTA. For this reason, the
taxpayer has 30 days from his receipt of the decision of the CIR or from the lapse of the 120-day period,
within which to file a petition for review with the CTA. In no case shall a petition for review be filed with the
CTA before the expiration of the 120-day period. The judicial claim need not be filed within the two-year
prescriptive period referred to in Section 112(A), which only pertains to administrative claims.

4. The two-year period referred to in Section 229 of the NLRC does not apply to appeals filed before the
CTA, in relation to claims for refund or issuance of tax credits made pursuant to Section 112. Consequently,
an appeal may be maintained with the CTA for so long as it observes the abovementioned period for filing
the appeal.

5. Following San Roque, the 120+30 day period is mandatory and jurisdictional from January 1, 1998 (the
effectivity of the 1997 Tax Code). However, from December 10, 2003 (the date BIR Ruling No. DA 489-03
was issued) until October 6, 2010 (the promulgation of Aichi), judicial claims need not follow the 120+30 day
period. Thereafter, Aichi shall be the controlling rule for all claims filed with the CTA and the 120+30 day
period must be observed.

Applying the abovementioned rules to the case at bench, the judicial claim filed on September 30, 2003 (CTA Case
No. 6790) was prematurely filed and cannot be taken cognizance of because respondent failed to wait for the
requisite 120 days after the filing of its claim for refund with the BIR before elevating the case to the CTA. However,
the judicial claim filed on December 19, 2003 (CTA Case No. 6838), which was made after the issuance of BIR
Ruling DA-480-03, can be considered by the CTA despite its hasty filing only one day after the application for refund
was first lodged with the BIR.

WHEREFORE, the petition is partly GRANTED. The November 20, 2007 Decision and the January 9, 2008
Resolution of the Court of Tax Appeals En Banc are hereby REVERSED and SET ASIDE and the claim for refund
with respect to CTA Case No. 6790 is DENIED. However, the claim pertaining to CTA Case No. 6838 is remanded
to the CTA for the proper determination of the refundable amount due respondent.

SO ORDERED.

DISSENTING OPINION

LEONEN, J.:

I dissent with respect to the claim pertaining to CTA Case No. 6838.  Consistent with my dissent in Commissioner of
1

Internal Revenue v. San Roque Power Corporation  and its consolidated cases, am of the view that; the Court of
2

Tax Appeals CT A) cannot acquire jurisdiction without waiting lor the lapse of the 120-day period or the denial by the
Commissioner of Internal Revenue within that period. The 120+ 30-day periods are mandatory and
jurisdictional. Section l12 D) of the National Internal Revenue Code NIRC)  was always clear.
3 4

Similar to the main opinion in San Roque, the ponencia allows for an exception for judicial claims tiled between
December 10, 2003 and October 6, 2010, relying on Section 246 of the National Internal Revenue Code."  The 5

period provided corresponds with the issuance of BIR Ruling No. DA 489-03, which allows the filing of a judicial
claim without waiting for the lapse of the 120-day period and the promulgation of the case of Aichi,  which
6

categorically ruled on the mandatory and jurisdictional nature or the waiting period. In San Roque, this Court said
that:

Clearly, BIR Ruling No. DA-489-03 is a general interpretative rule. Thus, all taxpayers can rely on BIR Ruling No.
DA-489-03 from the time of its issuance on 10 December 2003 up to its reversal by this Court in Aichi on 6 October
2010, where this Court held that the 120+30-day periods are mandatory and jurisdictional. 7

233
This continues to allow private parties to rely on an erroneous interpretation of the text despite the clear language of
the law.

As I have discussed in my dissent in San Roque, there can be no reliance in good faith by taxpayers on
administrative interpretations of the law, which clearly contravene its text. No rights arc vested by a wrong
construction of the law by administrative officials, and such docs not put the government in estoppel to correct the
mistake.  To reiterate:
8

BIR Ruling DA-489-03 x x x constitutes a clear disregard of the express and categorical provision or Section 112(D)
or the NIRC.  Thus, the Commissioner's erroneous application or the law is not binding and conclusive upon this
1âwphi1

Court in a1iy way. 9

Lastly, I underscore that the allowances we have given to the clearly erroneous reliance by lawyers of taxpayers on
opinions of the Commissioner of Internal Revenue that contravene the text of the law cause damage to the
government and its ability to do social justice. The costs or error arc better internalized by private parties rather than
the public in general. After all, as observed in my dissent in CIR v. San Roque, government had no agency the
choice of premature filing by the private parties.

In view of the discussion above, I vote to grant the Petition and to nullify the order of the Court of Tax Appeals to
refund or to issue a tax credit to respondent in CTA Case No. 6838.

Republic of the Philippines

SUPREME COURT
Manila

EN BANC

G.R. No. 208566               November 19, 2013

GRECO ANTONIOUS BEDA B. BELGICA JOSE M. VILLEGAS JR. JOSE L. GONZALEZ REUBEN M. ABANTE
and QUINTIN PAREDES SAN DIEGO, Petitioners, 
vs.
HONORABLE EXECUTIVE SECRETARY PAQUITO N. OCHOA JR. SECRETARY OF BUDGET AND
MANAGEMENT FLORENCIO B. ABAD, NATIONAL TREASURER ROSALIA V. DE LEON SENATE OF THE
PHILIPPINES represented by FRANKLIN M. DRILON m his capacity as SENATE PRESIDENT and HOUSE OF
REPRESENTATIVES represented by FELICIANO S. BELMONTE, JR. in his capacity as SPEAKER OF THE
HOUSE, Respondents.

x-----------------------x

G.R. No. 208493

234
SOCIAL JUSTICE SOCIETY (SJS) PRESIDENT SAMSON S. ALCANTARA, Petitioner, 
vs.
HONORABLE FRANKLIN M. DRILON in his capacity as SENATE PRESIDENT and HONORABLE FELICIANO
S. BELMONTE, JR., in his capacity as SPEAKER OF THE HOUSE OF REPRESENTATIVES, Respondents.

x-----------------------x

G.R. No. 209251

PEDRITO M. NEPOMUCENO, Former Mayor-Boac, Marinduque Former Provincial Board Member -Province
of Marinduque, Petitioner, 
vs.
PRESIDENT BENIGNO SIMEON C. AQUINO III* and SECRETARY FLORENCIO BUTCH ABAD, DEPARTMENT
OF BUDGET AND MANAGEMENT, Respondents.

DECISION

PERLAS-BERNABE, J.:

"Experience is the oracle of truth." 1

-James Madison

Before the Court are consolidated petitions  taken under Rule 65 of the Rules of Court, all of which assail the
2

constitutionality of the Pork Barrel System. Due to the complexity of the subject matter, the Court shall heretofore
discuss the system‘s conceptual underpinnings before detailing the particulars of the constitutional challenge.

The Facts

I. Pork Barrel: General Concept.

"Pork Barrel" is political parlance of American -English origin.  Historically, its usage may be traced to the
3

degrading ritual of rolling out a barrel stuffed with pork to a multitude of black slaves who would cast their
famished bodies into the porcine feast to assuage their hunger with morsels coming from the generosity of
their well-fed master.  This practice was later compared to the actions of American legislators in trying to
4

direct federal budgets in favor of their districts.  While the advent of refrigeration has made the actual pork
5

barrel obsolete, it persists in reference to political bills that "bring home the bacon" to a legislator‘s district
and constituents.  In a more technical sense, "Pork Barrel" refers to an appropriation of government
6

spending meant for localized projects and secured solely or primarily to bring money to a representative's
district. Some scholars on the subject further use it to refer to legislative control of local appropriations.
7 8

In the Philippines, "Pork Barrel" has been commonly referred to as lump-sum, discretionary funds of
Members of the Legislature,  although, as will be later discussed, its usage would evolve in reference to
9

certain funds of the Executive.

II. History of Congressional Pork Barrel in the Philippines.

A. Pre-Martial Law Era (1922-1972).

Act 3044,  or the Public Works Act of 1922, is considered  as the earliest form of "Congressional Pork
10 11

Barrel" in the Philippines since the utilization of the funds appropriated therein were subjected to post-
enactment legislator approval. Particularly, in the area of fund release, Section 3  provides that the sums
12

appropriated for certain public works projects  "shall be distributed x x x subject to the approval of a joint
13

committee elected by the Senate and the House of Representatives. "The committee from each House may
also authorize one of its members to approve the distribution made by the Secretary of Commerce and
Communications."  Also, in the area of fund realignment, the same section provides that the said secretary,
14

"with the approval of said joint committee, or of the authorized members thereof, may, for the purposes of
said distribution, transfer unexpended portions of any item of appropriation under this Act to any other item
hereunder."

In 1950, it has been documented  that post-enactment legislator participation broadened from the areas of
15

fund release and realignment to the area of project identification. During that year, the mechanics of the
public works act was modified to the extent that the discretion of choosing projects was transferred from the
Secretary of Commerce and Communications to legislators. "For the first time, the law carried a list of
projects selected by Members of Congress, they ‘being the representatives of the people, either on their own
account or by consultation with local officials or civil leaders.‘"  During this period, the pork barrel process
16

235
 commenced with local government councils, civil groups, and individuals appealing to Congressmen or
Senators for projects. Petitions that were accommodated formed part of a legislator‘s allocation, and the
amount each legislator would eventually get is determined in a caucus convened by the majority. The
amount was then integrated into the administration bill prepared by the Department of Public Works and
Communications. Thereafter, the Senate and the House of Representatives added their own provisions to
the bill until it was signed into law by the President – the Public Works Act.  In the 1960‘s, however, pork
17

barrel legislation reportedly ceased in view of the stalemate between the House of Representatives and the
Senate. 18

B. Martial Law Era (1972-1986).

While the previous" Congressional Pork Barrel" was apparently discontinued in 1972 after Martial Law was
declared, an era when "one man controlled the legislature,"  the reprieve was only temporary. By 1982, the
19

Batasang Pambansa had already introduced a new item in the General Appropriations Act (GAA) called the"
Support for Local Development Projects" (SLDP) under the article on "National Aid to Local Government
Units". Based on reports,  it was under the SLDP that the practice of giving lump-sum allocations to
20

individual legislators began, with each assemblyman receiving ₱500,000.00. Thereafter, assemblymen
would communicate their project preferences to the Ministry of Budget and Management for approval. Then,
the said ministry would release the allocation papers to the Ministry of Local Governments, which would, in
turn, issue the checks to the city or municipal treasurers in the assemblyman‘s locality. It has been further
reported that "Congressional Pork Barrel" projects under the SLDP also began to cover not only public
works projects, or so- called "hard projects", but also "soft projects",  or non-public works projects such as
21

those which would fall under the categories of, among others, education, health and livelihood. 22

C. Post-Martial Law Era:

Corazon Cojuangco Aquino Administration (1986-1992).

After the EDSA People Power Revolution in 1986 and the restoration of Philippine democracy,
"Congressional Pork Barrel" was revived in the form of the "Mindanao Development Fund" and the "Visayas
Development Fund" which were created with lump-sum appropriations of ₱480 Million and ₱240 Million,
respectively, for the funding of development projects in the Mindanao and Visayas areas in 1989. It has
been documented  that the clamor raised by the Senators and the Luzon legislators for a similar funding,
23

prompted the creation of the "Countrywide Development Fund" (CDF) which was integrated into the 1990
GAA  with an initial funding of ₱2.3 Billion to cover "small local infrastructure and other priority community
24

projects."

Under the GAAs for the years 1991 and 1992,  CDF funds were, with the approval of the President, to be
25

released directly to the implementing agencies but "subject to the submission of the required list of projects
and activities."Although the GAAs from 1990 to 1992 were silent as to the amounts of allocations of the
individual legislators, as well as their participation in the identification of projects, it has been reported  that
26

by 1992, Representatives were receiving ₱12.5 Million each in CDF funds, while Senators were receiving
₱18 Million each, without any limitation or qualification, and that they could identify any kind of project, from
hard or infrastructure projects such as roads, bridges, and buildings to "soft projects" such as textbooks,
medicines, and scholarships. 27

D. Fidel Valdez Ramos (Ramos) Administration (1992-1998).

The following year, or in 1993,  the GAA explicitly stated that the release of CDF funds was to be made
28

upon the submission of the list of projects and activities identified by, among others, individual legislators.
For the first time, the 1993 CDF Article included an allocation for the Vice-President.  As such,
29

Representatives were allocated ₱12.5 Million each in CDF funds, Senators, ₱18 Million each, and the Vice-
President, ₱20 Million.

In 1994,  1995,  and 1996,  the GAAs contained the same provisions on project identification and fund
30 31 32

release as found in the 1993 CDF Article. In addition, however, the Department of Budget and Management
(DBM) was directed to submit reports to the Senate Committee on Finance and the House Committee on
Appropriations on the releases made from the funds. 33

Under the 1997  CDF Article, Members of Congress and the Vice-President, in consultation with the
34

implementing agency concerned, were directed to submit to the DBM the list of 50% of projects to be funded
from their respective CDF allocations which shall be duly endorsed by (a) the Senate President and the
Chairman of the Committee on Finance, in the case of the Senate, and (b) the Speaker of the House of
Representatives and the Chairman of the Committee on Appropriations, in the case of the House of
Representatives; while the list for the remaining 50% was to be submitted within six (6) months thereafter.
The same article also stated that the project list, which would be published by the DBM,  "shall be the basis
35

236
 for the release of funds" and that "no funds appropriated herein shall be disbursed for projects not included
in the list herein required."

The following year, or in 1998,  the foregoing provisions regarding the required lists and endorsements were
36

reproduced, except that the publication of the project list was no longer required as the list itself sufficed for
the release of CDF Funds.

The CDF was not, however, the lone form of "Congressional Pork Barrel" at that time. Other forms of
"Congressional Pork Barrel" were reportedly fashioned and inserted into the GAA (called "Congressional
Insertions" or "CIs") in order to perpetuate the ad ministration‘s political agenda.  It has been articulated that
37

since CIs "formed part and parcel of the budgets of executive departments, they were not easily identifiable
and were thus harder to monitor." Nonetheless, the lawmakers themselves as well as the finance and
budget officials of the implementing agencies, as well as the DBM, purportedly knew about the
insertions.  Examples of these CIs are the Department of Education (DepEd) School Building Fund, the
38

Congressional Initiative Allocations, the Public Works Fund, the El Niño Fund, and the Poverty Alleviation
Fund.  The allocations for the School Building Fund, particularly, ―shall be made upon prior consultation
39

with the representative of the legislative district concerned.”  Similarly, the legislators had the power to direct
40

how, where and when these appropriations were to be spent. 41

E. Joseph Ejercito Estrada (Estrada) Administration (1998-2001).

In 1999,  the CDF was removed in the GAA and replaced by three (3) separate forms of CIs, namely, the
42

"Food Security Program Fund,"  the "Lingap Para Sa Mahihirap Program Fund," and the "Rural/Urban
43 44

Development Infrastructure Program Fund,"  all of which contained a special provision requiring "prior
45

consultation" with the Member s of Congress for the release of the funds.

It was in the year 2000  that the "Priority Development Assistance Fund" (PDAF) appeared in the GAA. The
46

requirement of "prior consultation with the respective Representative of the District" before PDAF funds were
directly released to the implementing agency concerned was explicitly stated in the 2000 PDAF Article.
Moreover, realignment of funds to any expense category was expressly allowed, with the sole condition that
no amount shall be used to fund personal services and other personnel benefits.  The succeeding PDAF
47

provisions remained the same in view of the re-enactment  of the 2000 GAA for the year 2001.
48

F. Gloria Macapagal-Arroyo (Arroyo) Administration (2001-2010).

The 2002  PDAF Article was brief and straightforward as it merely contained a single special provision
49

ordering the release of the funds directly to the implementing agency or local government unit concerned,
without further qualifications. The following year, 2003,  the same single provision was present, with simply
50

an expansion of purpose and express authority to realign. Nevertheless, the provisions in the 2003 budgets
of the Department of Public Works and Highways  (DPWH) and the DepEd  required prior consultation with
51 52

Members of Congress on the aspects of implementation delegation and project list submission, respectively.
In 2004, the 2003 GAA was re-enacted. 53

In 2005,  the PDAF Article provided that the PDAF shall be used "to fund priority programs and projects
54

under the ten point agenda of the national government and shall be released directly to the implementing
agencies." It also introduced the program menu concept,  which is essentially a list of general programs and
55

implementing agencies from which a particular PDAF project may be subsequently chosen by the identifying
authority. The 2005 GAA was re-enacted  in 2006 and hence, operated on the same bases. In similar
56

regard, the program menu concept was consistently integrated into the 2007,  2008,  2009,  and
57 58 59

2010  GAAs.
60

Textually, the PDAF Articles from 2002 to 2010 were silent with respect to the specific amounts allocated for
the individual legislators, as well as their participation in the proposal and identification of PDAF projects to
be funded. In contrast to the PDAF Articles, however, the provisions under the DepEd School Building
Program and the DPWH budget, similar to its predecessors, explicitly required prior consultation with the
concerned Member of Congress anent certain aspects of project implementation.
61

Significantly, it was during this era that provisions which allowed formal participation of non-governmental
organizations (NGO) in the implementation of government projects were introduced. In the Supplemental
Budget for 2006, with respect to the appropriation for school buildings, NGOs were, by law, encouraged to
participate. For such purpose, the law stated that "the amount of at least ₱250 Million of the ₱500 Million
allotted for the construction and completion of school buildings shall be made available to NGOs including
the Federation of Filipino-Chinese Chambers of Commerce and Industry, Inc. for its "Operation Barrio
School" program, with capability and proven track records in the construction of public school buildings x x
x."  The same allocation was made available to NGOs in the 2007 and 2009 GAAs under the DepEd
62

Budget.  Also, it was in 2007 that the Government Procurement Policy Board  (GPPB) issued Resolution
63 64

No. 12-2007 dated June 29, 2007 (GPPB Resolution 12-2007), amending the implementing rules and
237
 regulations  of RA 9184,  the Government Procurement Reform Act, to include, as a form of negotiated
65 66

procurement,  the procedure whereby the Procuring Entity (the implementing agency) may enter into a
67 68

memorandum of agreement with an NGO, provided that "an appropriation law or ordinance earmarks an
amount to be specifically contracted out to NGOs." 69

G. Present Administration (2010-Present).

Differing from previous PDAF Articles but similar to the CDF Articles, the 2011  PDAF Article included an
70

express statement on lump-sum amounts allocated for individual legislators and the Vice-President:
Representatives were given ₱70 Million each, broken down into ₱40 Million for "hard projects" and ₱30
Million for "soft projects"; while ₱200 Million was given to each Senator as well as the Vice-President, with a
₱100 Million allocation each for "hard" and "soft projects." Likewise, a provision on realignment of funds was
included, but with the qualification that it may be allowed only once. The same provision also allowed the
Secretaries of Education, Health, Social Welfare and Development, Interior and Local Government,
Environment and Natural Resources, Energy, and Public Works and Highways to realign PDAF Funds, with
the further conditions that: (a) realignment is within the same implementing unit and same project category
as the original project, for infrastructure projects; (b) allotment released has not yet been obligated for the
original scope of work, and (c) the request for realignment is with the concurrence of the legislator
concerned. 71

In the 2012  and 2013  PDAF Articles, it is stated that the "identification of projects and/or designation of
72 73

beneficiaries shall conform to the priority list, standard or design prepared by each implementing agency
(priority list requirement) x x x." However, as practiced, it would still be the individual legislator who would
choose and identify the project from the said priority list. 74

Provisions on legislator allocations  as well as fund realignment  were included in the 2012 and 2013 PDAF
75 76

Articles; but the allocation for the Vice-President, which was pegged at ₱200 Million in the 2011 GAA, had
been deleted. In addition, the 2013 PDAF Article now allowed LGUs to be identified as implementing
agencies if they have the technical capability to implement the projects.  Legislators were also allowed to
77

identify programs/projects, except for assistance to indigent patients and scholarships, outside of his
legislative district provided that he secures the written concurrence of the legislator of the intended outside-
district, endorsed by the Speaker of the House.  Finally, any realignment of PDAF funds, modification and
78

revision of project identification, as well as requests for release of funds, were all required to be favorably
endorsed by the House Committee on Appropriations and the Senate Committee on Finance, as the case
may be. 79

III. History of Presidential Pork Barrel in the Philippines.

While the term "Pork Barrel" has been typically associated with lump-sum, discretionary funds of Members
of Congress, the present cases and the recent controversies on the matter have, however, shown that the
term‘s usage has expanded to include certain funds of the President such as the Malampaya Funds and the
Presidential Social Fund.

On the one hand, the Malampaya Funds was created as a special fund under Section 8  of Presidential 80

Decree No. (PD) 910,  issued by then President Ferdinand E. Marcos (Marcos) on March 22, 1976. In
81

enacting the said law, Marcos recognized the need to set up a special fund to help intensify, strengthen, and
consolidate government efforts relating to the exploration, exploitation, and development of indigenous
energy resources vital to economic growth.  Due to the energy-related activities of the government in the
82

Malampaya natural gas field in Palawan, or the "Malampaya Deep Water Gas-to-Power Project",  the 83

special fund created under PD 910 has been currently labeled as Malampaya Funds.

On the other hand the Presidential Social Fund was created under Section 12, Title IV  of PD 1869,  or the
84 85

Charter of the Philippine Amusement and Gaming Corporation (PAGCOR). PD 1869 was similarly issued by
Marcos on July 11, 1983. More than two (2) years after, he amended PD 1869 and accordingly issued PD
1993 on October 31, 1985,  amending Section 12  of the former law. As it stands, the Presidential Social
86 87

Fund has been described as a special funding facility managed and administered by the Presidential
Management Staff through which the President provides direct assistance to priority programs and projects
not funded under the regular budget. It is sourced from the share of the government in the aggregate gross
earnings of PAGCOR. 88

IV. Controversies in the Philippines.

Over the decades, "pork" funds in the Philippines have increased tremendously,  owing in no small part to
89

previous Presidents who reportedly used the "Pork Barrel" in order to gain congressional support.  It was in 90

1996 when the first controversy surrounding the "Pork Barrel" erupted. Former Marikina City Representative
Romeo Candazo (Candazo), then an anonymous source, "blew the lid on the huge sums of government
money that regularly went into the pockets of legislators in the form of kickbacks."  He said that "the
91

238
kickbacks were ‘SOP‘ (standard operating procedure) among legislators and ranged from a low 19 percent
to a high 52 percent of the cost of each project, which could be anything from dredging, rip rapping,
sphalting, concreting, and construction of school buildings."  "Other sources of kickbacks that Candazo
92

identified were public funds intended for medicines and textbooks. A few days later, the tale of the money
trail became the banner story of the Philippine Daily Inquirer issue of August 13, 1996, accompanied by an
illustration of a roasted pig."  "The publication of the stories, including those about congressional initiative
93

allocations of certain lawmakers, including ₱3.6 Billion for a Congressman, sparked public outrage." 94

Thereafter, or in 2004, several concerned citizens sought the nullification of the PDAF as enacted in the
2004 GAA for being unconstitutional. Unfortunately, for lack of "any pertinent evidentiary support that illegal
misuse of PDAF in the form of kickbacks has become a common exercise of unscrupulous Members of
Congress," the petition was dismissed. 95

Recently, or in July of the present year, the National Bureau of Investigation (NBI) began its probe into
allegations that "the government has been defrauded of some ₱10 Billion over the past 10 years by a
syndicate using funds from the pork barrel of lawmakers and various government agencies for scores of
ghost projects."  The investigation was spawned by sworn affidavits of six (6) whistle-blowers who declared
96

that JLN Corporation – "JLN" standing for Janet Lim Napoles (Napoles) – had swindled billions of pesos
from the public coffers for "ghost projects" using no fewer than 20 dummy NGOs for an entire decade. While
the NGOs were supposedly the ultimate recipients of PDAF funds, the whistle-blowers declared that the
money was diverted into Napoles‘ private accounts.  Thus, after its investigation on the Napoles
97

controversy, criminal complaints were filed before the Office of the Ombudsman, charging five (5)
lawmakers for Plunder, and three (3) other lawmakers for Malversation, Direct Bribery, and Violation of the
Anti-Graft and Corrupt Practices Act. Also recommended to be charged in the complaints are some of the
lawmakers‘ chiefs -of-staff or representatives, the heads and other officials of three (3) implementing
agencies, and the several presidents of the NGOs set up by Napoles. 98

On August 16, 2013, the Commission on Audit (CoA) released the results of a three-year audit
investigation covering the use of legislators' PDAF from 2007 to 2009, or during the last three (3) years of
99

the Arroyo administration. The purpose of the audit was to determine the propriety of releases of funds
under PDAF and the Various Infrastructures including Local Projects (VILP)  by the DBM, the application of
100

these funds and the implementation of projects by the appropriate implementing agencies and several
government-owned-and-controlled corporations (GOCCs).  The total releases covered by the audit
101

amounted to ₱8.374 Billion in PDAF and ₱32.664 Billion in VILP, representing 58% and 32%, respectively,
of the total PDAF and VILP releases that were found to have been made nationwide during the audit
period.  Accordingly, the Co A‘s findings contained in its Report No. 2012-03 (CoA Report), entitled "Priority
102

Development Assistance Fund (PDAF) and Various Infrastructures including Local Projects (VILP)," were
made public, the highlights of which are as follows: 103

● Amounts released for projects identified by a considerable number of legislators significantly

exceeded their respective allocations.

● Amounts were released for projects outside of legislative districts of sponsoring members of the
Lower House.

● Total VILP releases for the period exceeded the total amount appropriated under the 2007 to 2009
GAAs.

● Infrastructure projects were constructed on private lots without these having been turned over to
the government.

● Significant amounts were released to implementing agencies without the latter‘s endorsement and
without considering their mandated functions, administrative and technical capabilities to implement
projects.

● Implementation of most livelihood projects was not undertaken by the implementing agencies
themselves but by NGOs endorsed by the proponent legislators to which the Funds were
transferred.

● The funds were transferred to the NGOs in spite of the absence of any appropriation law or
ordinance.

● Selection of the NGOs were not compliant with law and regulations.

● Eighty-Two (82) NGOs entrusted with implementation of seven hundred seventy two (772) projects
amount to ₱6.156 Billion were either found questionable, or submitted questionable/spurious
documents, or failed to liquidate in whole or in part their utilization of the Funds.
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 ● Procurement by the NGOs, as well as some implementing agencies, of goods and services
reportedly used in the projects were not compliant with law.

As for the "Presidential Pork Barrel", whistle-blowers alleged that" at least ₱900 Million from royalties in the
operation of the Malampaya gas project off Palawan province intended for agrarian reform beneficiaries has
gone into a dummy NGO."  According to incumbent CoA Chairperson Maria Gracia Pulido Tan (CoA
104

Chairperson), the CoA is, as of this writing, in the process of preparing "one consolidated report" on the
Malampaya Funds. 105

V. The Procedural Antecedents.

Spurred in large part by the findings contained in the CoA Report and the Napoles controversy, several
petitions were lodged before the Court similarly seeking that the "Pork Barrel System" be declared
unconstitutional. To recount, the relevant procedural antecedents in these cases are as follows:

On August 28, 2013, petitioner Samson S. Alcantara (Alcantara), President of the Social Justice Society, filed a
Petition for Prohibition of even date under Rule 65 of the Rules of Court (Alcantara Petition), seeking that the "Pork
Barrel System" be declared unconstitutional, and a writ of prohibition be issued permanently restraining respondents
Franklin M. Drilon and Feliciano S. Belmonte, Jr., in their respective capacities as the incumbent Senate President
and Speaker of the House of Representatives, from further taking any steps to enact legislation appropriating funds
for the "Pork Barrel System," in whatever form and by whatever name it may be called, and from approving further
releases pursuant thereto.  The Alcantara Petition was docketed as G.R. No. 208493.
106

On September 3, 2013, petitioners Greco Antonious Beda B. Belgica, Jose L. Gonzalez, Reuben M. Abante, Quintin
Paredes San Diego (Belgica, et al.), and Jose M. Villegas, Jr. (Villegas) filed an Urgent Petition For Certiorari and
Prohibition With Prayer For The Immediate Issuance of Temporary Restraining Order (TRO) and/or Writ of
Preliminary Injunction dated August 27, 2013 under Rule 65 of the Rules of Court (Belgica Petition), seeking that the
annual "Pork Barrel System," presently embodied in the provisions of the GAA of 2013 which provided for the 2013
PDAF, and the Executive‘s lump-sum, discretionary funds, such as the Malampaya Funds and the Presidential
Social Fund,  be declared unconstitutional and null and void for being acts constituting grave abuse of discretion.
107

Also, they pray that the Court issue a TRO against respondents Paquito N. Ochoa, Jr., Florencio B. Abad (Secretary
Abad) and Rosalia V. De Leon, in their respective capacities as the incumbent Executive Secretary, Secretary of the
Department of Budget and Management (DBM), and National Treasurer, or their agents, for them to immediately
cease any expenditure under the aforesaid funds. Further, they pray that the Court order the foregoing respondents
to release to the CoA and to the public: (a) "the complete schedule/list of legislators who have availed of their PDAF
and VILP from the years 2003 to 2013, specifying the use of the funds, the project or activity and the recipient
entities or individuals, and all pertinent data thereto"; and (b) "the use of the Executive‘s lump-sum, discretionary
funds, including the proceeds from the x x x Malampaya Funds and remittances from the PAGCOR x x x from 2003
to 2013, specifying the x x x project or activity and the recipient entities or individuals, and all pertinent data
thereto."  Also, they pray for the "inclusion in budgetary deliberations with the Congress of all presently off-budget,
108

lump-sum, discretionary funds including, but not limited to, proceeds from the Malampaya Funds and remittances
from the PAGCOR."  The Belgica Petition was docketed as G.R. No. 208566.
109 110

Lastly, on September 5, 2013, petitioner Pedrito M. Nepomuceno (Nepomuceno), filed a Petition dated August 23,
2012 (Nepomuceno Petition), seeking that the PDAF be declared unconstitutional, and a cease and desist order be
issued restraining President Benigno Simeon S. Aquino III (President Aquino) and Secretary Abad from releasing
such funds to Members of Congress and, instead, allow their release to fund priority projects identified and
approved by the Local Development Councils in consultation with the executive departments, such as the DPWH,
the Department of Tourism, the Department of Health, the Department of Transportation, and Communication and
the National Economic Development Authority.  The Nepomuceno Petition was docketed as UDK-14951.
111 112

On September 10, 2013, the Court issued a Resolution of even date (a) consolidating all cases; (b) requiring public
respondents to comment on the consolidated petitions; (c) issuing a TRO (September 10, 2013 TRO) enjoining the
DBM, National Treasurer, the Executive Secretary, or any of the persons acting under their authority from releasing
(1) the remaining PDAF allocated to Members of Congress under the GAA of 2013, and (2) Malampaya Funds
under the phrase "for such other purposes as may be hereafter directed by the President" pursuant to Section 8 of
PD 910 but not for the purpose of "financing energy resource development and exploitation programs and projects
of the government‖ under the same provision; and (d) setting the consolidated cases for Oral Arguments on October
8, 2013.

On September 23, 2013, the Office of the Solicitor General (OSG) filed a Consolidated Comment (Comment) of
even date before the Court, seeking the lifting, or in the alternative, the partial lifting with respect to educational and
medical assistance purposes, of the Court‘s September 10, 2013 TRO, and that the consolidated petitions be
dismissed for lack of merit. 113

On September 24, 2013, the Court issued a Resolution of even date directing petitioners to reply to the Comment.

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Petitioners, with the exception of Nepomuceno, filed their respective replies to the Comment: (a) on September 30,
2013, Villegas filed a separate Reply dated September 27, 2013 (Villegas Reply); (b) on October 1, 2013, Belgica,
et al. filed a Reply dated September 30, 2013 (Belgica Reply); and (c) on October 2, 2013, Alcantara filed a Reply
dated October 1, 2013.

On October 1, 2013, the Court issued an Advisory providing for the guidelines to be observed by the parties for the
Oral Arguments scheduled on October 8, 2013. In view of the technicality of the issues material to the present
cases, incumbent Solicitor General Francis H. Jardeleza (Solicitor General) was directed to bring with him during the
Oral Arguments representative/s from the DBM and Congress who would be able to competently and completely
answer questions related to, among others, the budgeting process and its implementation. Further, the CoA
Chairperson was appointed as amicus curiae and thereby requested to appear before the Court during the Oral
Arguments.

On October 8 and 10, 2013, the Oral Arguments were conducted. Thereafter, the Court directed the parties to
submit their respective memoranda within a period of seven (7) days, or until October 17, 2013, which the parties
subsequently did.

The Issues Before the Court

Based on the pleadings, and as refined during the Oral Arguments, the following are the main issues for the Court‘s
resolution:

I. Procedural Issues.

Whether or not (a) the issues raised in the consolidated petitions involve an actual and justiciable controversy; (b)
the issues raised in the consolidated petitions are matters of policy not subject to judicial review; (c) petitioners have
legal standing to sue; and (d) the Court‘s Decision dated August 19, 1994 in G.R. Nos. 113105, 113174, 113766,
and 113888, entitled "Philippine Constitution Association v. Enriquez"  (Philconsa) and Decision dated April 24,
114

2012 in G.R. No. 164987, entitled "Lawyers Against Monopoly and Poverty v. Secretary of Budget and
Management"  (LAMP) bar the re-litigatio n of the issue of constitutionality of the "Pork Barrel System" under the
115

principles of res judicata and stare decisis.

II. Substantive Issues on the "Congressional Pork Barrel."

Whether or not the 2013 PDAF Article and all other Congressional Pork Barrel Laws similar thereto are
unconstitutional considering that they violate the principles of/constitutional provisions on (a) separation of powers;
(b) non-delegability of legislative power; (c) checks and balances; (d) accountability; (e) political dynasties; and (f)
local autonomy.

III. Substantive Issues on the "Presidential Pork Barrel."

Whether or not the phrases (a) "and for such other purposes as may be hereafter directed by the President" under
Section 8 of PD 910,  relating to the Malampaya Funds, and (b) "to finance the priority infrastructure development
116

projects and to finance the restoration of damaged or destroyed facilities due to calamities, as may be directed and
authorized by the Office of the President of the Philippines" under Section 12 of PD 1869, as amended by PD 1993,
relating to the Presidential Social Fund, are unconstitutional insofar as they constitute undue delegations of
legislative power.

These main issues shall be resolved in the order that they have been stated. In addition, the Court shall also tackle
certain ancillary issues as prompted by the present cases.

The Court’s Ruling

The petitions are partly granted.

I. Procedural Issues.

The prevailing rule in constitutional litigation is that no question involving the constitutionality or validity of a law or
governmental act may be heard and decided by the Court unless there is compliance with the legal requisites for
judicial inquiry,  namely: (a) there must be an actual case or controversy calling for the exercise of judicial power;
117

(b) the person challenging the act must have the standing to question the validity of the subject act or issuance; (c)
the question of constitutionality must be raised at the earliest opportunity ; and (d) the issue of constitutionality must
be the very lis mota of the case.  Of these requisites, case law states that the first two are the most important and,
118 119

therefore, shall be discussed forthwith.

A. Existence of an Actual Case or Controversy.

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By constitutional fiat, judicial power operates only when there is an actual case or controversy.  This is embodied in
120

Section 1, Article VIII of the 1987 Constitution which pertinently states that "judicial power includes the duty of the
courts of justice to settle actual controversies involving rights which are legally demandable and enforceable x x x."
Jurisprudence provides that an actual case or controversy is one which "involves a conflict of legal rights, an
assertion of opposite legal claims, susceptible of judicial resolution as distinguished from a hypothetical or abstract
difference or dispute.  In other words, "there must be a contrariety of legal rights that can be interpreted and
121

enforced on the basis of existing law and jurisprudence."  Related to the requirement of an actual case or
122

controversy is the requirement of "ripeness," meaning that the questions raised for constitutional scrutiny are
already ripe for adjudication. "A question is ripe for adjudication when the act being challenged has had a direct
adverse effect on the individual challenging it. It is a prerequisite that something had then been accomplished or
performed by either branch before a court may come into the picture, and the petitioner must allege the existence of
an immediate or threatened injury to itself as a result of the challenged action."  "Withal, courts will decline to pass
123

upon constitutional issues through advisory opinions, bereft as they are of authority to resolve hypothetical or moot
questions."124

Based on these principles, the Court finds that there exists an actual and justiciable controversy in these cases.

The requirement of contrariety of legal rights is clearly satisfied by the antagonistic positions of the parties on the
constitutionality of the "Pork Barrel System." Also, the questions in these consolidated cases are ripe for
adjudication since the challenged funds and the provisions allowing for their utilization – such as the 2013 GAA for
the PDAF, PD 910 for the Malampaya Funds and PD 1869, as amended by PD 1993, for the Presidential Social
Fund – are currently existing and operational; hence, there exists an immediate or threatened injury to petitioners as
a result of the unconstitutional use of these public funds.

As for the PDAF, the Court must dispel the notion that the issues related thereto had been rendered moot and
academic by the reforms undertaken by respondents. A case becomes moot when there is no more actual
controversy between the parties or no useful purpose can be served in passing upon the merits.  Differing from this
125

description, the Court observes that respondents‘ proposed line-item budgeting scheme would not terminate the
controversy nor diminish the useful purpose for its resolution since said reform is geared towards the 2014 budget,
and not the 2013 PDAF Article which, being a distinct subject matter, remains legally effective and existing. Neither
will the President‘s declaration that he had already "abolished the PDAF" render the issues on PDAF moot precisely
because the Executive branch of government has no constitutional authority to nullify or annul its legal existence. By
constitutional design, the annulment or nullification of a law may be done either by Congress, through the passage
of a repealing law, or by the Court, through a declaration of unconstitutionality. Instructive on this point is the
following exchange between Associate Justice Antonio T. Carpio (Justice Carpio) and the Solicitor General during
the Oral Arguments: 126

Justice Carpio: The President has taken an oath to faithfully execute the law,  correct? Solicitor General Jardeleza:
127

Yes, Your Honor.

Justice Carpio: And so the President cannot refuse to implement the General Appropriations Act, correct?

Solicitor General Jardeleza: Well, that is our answer, Your Honor. In the case, for example of the PDAF, the
President has a duty to execute the laws but in the face of the outrage over PDAF, the President was saying, "I am
not sure that I will continue the release of the soft projects," and that started, Your Honor. Now, whether or not that
… (interrupted)

Justice Carpio: Yeah. I will grant the President if there are anomalies in the project, he has the power to stop the
releases in the meantime, to investigate, and that is Section 38 of Chapter 5 of Book 6 of the Revised Administrative
Code  x x x. So at most the President can suspend, now if the President believes that the PDAF is unconstitutional,
128

can he just refuse to implement it?

Solicitor General Jardeleza: No, Your Honor, as we were trying to say in the specific case of the PDAF because of
the CoA Report, because of the reported irregularities and this Court can take judicial notice, even outside, outside
of the COA Report, you have the report of the whistle-blowers, the President was just exercising precisely the duty
….

xxxx

Justice Carpio: Yes, and that is correct. You‘ve seen the CoA Report, there are anomalies, you stop and investigate,
and prosecute, he has done that. But, does that mean that PDAF has been repealed?

Solicitor General Jardeleza: No, Your Honor x x x.

xxxx

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Justice Carpio: So that PDAF can be legally abolished only in two (2) cases. Congress passes a law to repeal it, or
this Court declares it unconstitutional, correct?

Solictor General Jardeleza: Yes, Your Honor.

Justice Carpio: The President has no power to legally abolish PDAF. (Emphases supplied)

Even on the assumption of mootness, jurisprudence, nevertheless, dictates that "the moot and academic‘ principle
is not a magical formula that can automatically dissuade the Court in resolving a case." The Court will decide cases,
otherwise moot, if: first, there is a grave violation of the Constitution; second, the exceptional character of the
situation and the paramount public interest is involved; third, when the constitutional issue raised requires
formulation of controlling principles to guide the bench, the bar, and the public; and fourth, the case is capable of
repetition yet evading review. 129

The applicability of the first exception is clear from the fundamental posture of petitioners – they essentially allege
grave violations of the Constitution with respect to, inter alia, the principles of separation of powers, non-delegability
of legislative power, checks and balances, accountability and local autonomy.

The applicability of the second exception is also apparent from the nature of the interests involved

– the constitutionality of the very system within which significant amounts of public funds have been and continue to
be utilized and expended undoubtedly presents a situation of exceptional character as well as a matter of
paramount public interest. The present petitions, in fact, have been lodged at a time when the system‘s flaws have
never before been magnified. To the Court‘s mind, the coalescence of the CoA Report, the accounts of numerous
whistle-blowers, and the government‘s own recognition that reforms are needed "to address the reported abuses of
the PDAF"  demonstrates a prima facie pattern of abuse which only underscores the importance of the matter. It is
130

also by this finding that the Court finds petitioners‘ claims as not merely theorized, speculative or hypothetical. Of
note is the weight accorded by the Court to the findings made by the CoA which is the constitutionally-mandated
audit arm of the government. In Delos Santos v. CoA,  a recent case wherein the Court upheld the CoA‘s
131

disallowance of irregularly disbursed PDAF funds, it was emphasized that:

The COA is endowed with enough latitude to determine, prevent, and disallow irregular, unnecessary, excessive,
extravagant or unconscionable expenditures of government funds. It is tasked to be vigilant and conscientious in
safeguarding the proper use of the government's, and ultimately the people's, property. The exercise of its general
audit power is among the constitutional mechanisms that gives life to the check and balance system inherent in our
form of government.

It is the general policy of the Court to sustain the decisions of administrative authorities, especially one which is
constitutionally-created, such as the CoA, not only on the basis of the doctrine of separation of powers but also for
their presumed expertise in the laws they are entrusted to enforce. Findings of administrative agencies are accorded
not only respect but also finality when the decision and order are not tainted with unfairness or arbitrariness that
would amount to grave abuse of discretion. It is only when the CoA has acted without or in excess of jurisdiction, or
with grave abuse of discretion amounting to lack or excess of jurisdiction, that this Court entertains a petition
questioning its rulings. x x x. (Emphases supplied)

Thus, if only for the purpose of validating the existence of an actual and justiciable controversy in these cases, the
Court deems the findings under the CoA Report to be sufficient.

The Court also finds the third exception to be applicable largely due to the practical need for a definitive ruling on
the system‘s constitutionality. As disclosed during the Oral Arguments, the CoA Chairperson estimates that
thousands of notices of disallowances will be issued by her office in connection with the findings made in the CoA
Report. In this relation, Associate Justice Marvic Mario Victor F. Leonen (Justice Leonen) pointed out that all of
these would eventually find their way to the courts.  Accordingly, there is a compelling need to formulate controlling
132

principles relative to the issues raised herein in order to guide the bench, the bar, and the public, not just for the
expeditious resolution of the anticipated disallowance cases, but more importantly, so that the government may be
guided on how public funds should be utilized in accordance with constitutional principles.

Finally, the application of the fourth exception is called for by the recognition that the preparation and passage of the
national budget is, by constitutional imprimatur, an affair of annual occurrence.  The relevance of the issues before
133

the Court does not cease with the passage of a "PDAF -free budget for 2014."  The evolution of the "Pork Barrel
134

System," by its multifarious iterations throughout the course of history, lends a semblance of truth to petitioners‘
claim that "the same dog will just resurface wearing a different collar."  In Sanlakas v. Executive Secretary,  the
135 136

government had already backtracked on a previous course of action yet the Court used the "capable of repetition
but evading review" exception in order "to prevent similar questions from re- emerging."  The situation similarly
137

holds true to these cases. Indeed, the myriad of issues underlying the manner in which certain public funds are
spent, if not resolved at this most opportune time, are capable of repetition and hence, must not evade judicial
review.
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B. Matters of Policy: the Political Question Doctrine.

The "limitation on the power of judicial review to actual cases and controversies‖ carries the assurance that "the
courts will not intrude into areas committed to the other branches of government."  Essentially, the foregoing
138

limitation is a restatement of the political question doctrine which, under the classic formulation of Baker v.
Carr, applies when there is found, among others, "a textually demonstrable constitutional commitment of the issue
139

to a coordinate political department," "a lack of judicially discoverable and manageable standards for resolving it" or
"the impossibility of deciding without an initial policy determination of a kind clearly for non- judicial discretion." Cast
against this light, respondents submit that the "the political branches are in the best position not only to perform
budget-related reforms but also to do them in response to the specific demands of their constituents" and, as such,
"urge the Court not to impose a solution at this stage." 140

The Court must deny respondents‘ submission.

Suffice it to state that the issues raised before the Court do not present political but legal questions which are within
its province to resolve. A political question refers to "those questions which, under the Constitution, are to be
decided by the people in their sovereign capacity, or in regard to which full discretionary authority has been
delegated to the Legislature or executive branch of the Government. It is concerned with issues dependent upon the
wisdom, not legality, of a particular measure."  The intrinsic constitutionality of the "Pork Barrel System" is not an
141

issue dependent upon the wisdom of the political branches of government but rather a legal one which the
Constitution itself has commanded the Court to act upon. Scrutinizing the contours of the system along
constitutional lines is a task that the political branches of government are incapable of rendering precisely because it
is an exercise of judicial power. More importantly, the present Constitution has not only vested the Judiciary the right
to exercise judicial power but essentially makes it a duty to proceed therewith. Section 1, Article VIII of the 1987
Constitution cannot be any clearer: "The judicial power shall be vested in one Supreme Court and in such lower
courts as may be established by law. It includes the duty of the courts of justice to settle actual controversies
involving rights which are legally demandable and enforceable, and to determine whether or not there has been a
grave abuse of discretion amounting to lack or excess of jurisdiction on the part of any branch or instrumentality of
the Government." In Estrada v. Desierto,  the expanded concept of judicial power under the 1987 Constitution and
142

its effect on the political question doctrine was explained as follows: 143

To a great degree, the 1987 Constitution has narrowed the reach of the political question doctrine when it expanded
the power of judicial review of this court not only to settle actual controversies involving rights which are legally
demandable and enforceable but also to determine whether or not there has been a grave abuse of discretion
amounting to lack or excess of jurisdiction on the part of any branch or instrumentality of government. Heretofore,
the judiciary has focused on the "thou shalt not's" of the Constitution directed against the exercise of its jurisdiction.
With the new provision, however, courts are given a greater prerogative to determine what it can do to prevent grave
abuse of discretion amounting to lack or excess of jurisdiction on the part of any branch or instrumentality of
government. Clearly, the new provision did not just grant the Court power of doing nothing. x x x (Emphases
supplied)

It must also be borne in mind that ― when the judiciary mediates to allocate constitutional boundaries, it does not
assert any superiority over the other departments; does not in reality nullify or invalidate an act of the legislature or
the executive, but only asserts the solemn and sacred obligation assigned to it by the Constitution."  To a great
144

extent, the Court is laudably cognizant of the reforms undertaken by its co-equal branches of government. But it is
by constitutional force that the Court must faithfully perform its duty. Ultimately, it is the Court‘s avowed intention that
a resolution of these cases would not arrest or in any manner impede the endeavors of the two other branches but,
in fact, help ensure that the pillars of change are erected on firm constitutional grounds. After all, it is in the best
interest of the people that each great branch of government, within its own sphere, contributes its share towards
achieving a holistic and genuine solution to the problems of society. For all these reasons, the Court cannot heed
respondents‘ plea for judicial restraint.

C. Locus Standi.

"The gist of the question of standing is whether a party alleges such personal stake in the outcome of the
controversy as to assure that concrete adverseness which sharpens the presentation of issues upon which the court
depends for illumination of difficult constitutional questions. Unless a person is injuriously affected in any of his
constitutional rights by the operation of statute or ordinance, he has no standing." 145

Petitioners have come before the Court in their respective capacities as citizen-taxpayers and accordingly, assert
that they "dutifully contribute to the coffers of the National Treasury."  Clearly, as taxpayers, they possess the
146

requisite standing to question the validity of the existing "Pork Barrel System" under which the taxes they pay have
been and continue to be utilized. It is undeniable that petitioners, as taxpayers, are bound to suffer from the
unconstitutional usage of public funds, if the Court so rules. Invariably, taxpayers have been allowed to sue where
there is a claim that public funds are illegally disbursed or that public money is being deflected to any improper
purpose, or that public funds are wasted through the enforcement of an invalid or unconstitutional law,  as in these
147

cases.

244
Moreover, as citizens, petitioners have equally fulfilled the standing requirement given that the issues they have
raised may be classified as matters "of transcendental importance, of overreaching significance to society, or of
paramount public interest."  The CoA Chairperson‘s statement during the Oral Arguments that the present
148

controversy involves "not merely a systems failure" but a "complete breakdown of controls"  amplifies, in addition to
149

the matters above-discussed, the seriousness of the issues involved herein. Indeed, of greater import than the
damage caused by the illegal expenditure of public funds is the mortal wound inflicted upon the fundamental law by
the enforcement of an invalid statute.  All told, petitioners have sufficient locus standi to file the instant cases.
150

D. Res Judicata and Stare Decisis.

Res judicata (which means a "matter adjudged") and stare decisis non quieta et movere (or simply, stare decisis
which means "follow past precedents and do not disturb what has been settled") are general procedural law
principles which both deal with the effects of previous but factually similar dispositions to subsequent cases. For the
cases at bar, the Court examines the applicability of these principles in relation to its prior rulings in Philconsa and
LAMP.

The focal point of res judicata is the judgment. The principle states that a judgment on the merits in a previous case
rendered by a court of competent jurisdiction would bind a subsequent case if, between the first and second actions,
there exists an identity of parties, of subject matter, and of causes of action.  This required identity is not, however,
151

attendant hereto since Philconsa and LAMP, respectively involved constitutional challenges against the 1994 CDF
Article and 2004 PDAF Article, whereas the cases at bar call for a broader constitutional scrutiny of the entire "Pork
Barrel System." Also, the ruling in LAMP is essentially a dismissal based on a procedural technicality – and, thus,
hardly a judgment on the merits – in that petitioners therein failed to present any "convincing proof x x x showing
that, indeed, there were direct releases of funds to the Members of Congress, who actually spend them according to
their sole discretion" or "pertinent evidentiary support to demonstrate the illegal misuse of PDAF in the form of
kickbacks and has become a common exercise of unscrupulous Members of Congress." As such, the Court up held,
in view of the presumption of constitutionality accorded to every law, the 2004 PDAF Article, and saw "no need to
review or reverse the standing pronouncements in the said case." Hence, for the foregoing reasons, the res judicata
principle, insofar as the Philconsa and LAMP cases are concerned, cannot apply.

On the other hand, the focal point of stare decisis is the doctrine created. The principle, entrenched under Article
8  of the Civil Code, evokes the general rule that, for the sake of certainty, a conclusion reached in one case should
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be doctrinally applied to those that follow if the facts are substantially the same, even though the parties may be
different. It proceeds from the first principle of justice that, absent any powerful countervailing considerations, like
cases ought to be decided alike. Thus, where the same questions relating to the same event have been put forward
by the parties similarly situated as in a previous case litigated and decided by a competent court, the rule of stare
decisis is a bar to any attempt to re-litigate the same issue.
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Philconsa was the first case where a constitutional challenge against a Pork Barrel provision, i.e., the 1994 CDF
Article, was resolved by the Court. To properly understand its context, petitioners‘ posturing was that "the power
given to the Members of Congress to propose and identify projects and activities to be funded by the CDF is an
encroachment by the legislature on executive power, since said power in an appropriation act is in implementation
of the law" and that "the proposal and identification of the projects do not involve the making of laws or the repeal
and amendment thereof, the only function given to the Congress by the Constitution."  In deference to the foregoing
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submissions, the Court reached the following main conclusions: one, under the Constitution, the power of
appropriation, or the "power of the purse," belongs to Congress; two, the power of appropriation carries with it the
power to specify the project or activity to be funded under the appropriation law and it can be detailed and as broad
as Congress wants it to be; and, three, the proposals and identifications made by Members of Congress are merely
recommendatory. At once, it is apparent that the Philconsa resolution was a limited response to a separation of
powers problem, specifically on the propriety of conferring post-enactment identification authority to Members of
Congress. On the contrary, the present cases call for a more holistic examination of (a) the inter-relation between
the CDF and PDAF Articles with each other, formative as they are of the entire "Pork Barrel System" as well as (b)
the intra-relation of post-enactment measures contained within a particular CDF or PDAF Article, including not only
those related to the area of project identification but also to the areas of fund release and realignment. The
complexity of the issues and the broader legal analyses herein warranted may be, therefore, considered as a
powerful countervailing reason against a wholesale application of the stare decisis principle.

In addition, the Court observes that the Philconsa ruling was actually riddled with inherent constitutional
inconsistencies which similarly countervail against a full resort to stare decisis. As may be deduced from the main
conclusions of the case, Philconsa‘s fundamental premise in allowing Members of Congress to propose and identify
of projects would be that the said identification authority is but an aspect of the power of appropriation which has
been constitutionally lodged in Congress. From this premise, the contradictions may be easily seen. If the authority
to identify projects is an aspect of appropriation and the power of appropriation is a form of legislative power thereby
lodged in Congress, then it follows that: (a) it is Congress which should exercise such authority, and not its
individual Members; (b) such authority must be exercised within the prescribed procedure of law passage and,
hence, should not be exercised after the GAA has already been passed; and (c) such authority, as embodied in the
GAA, has the force of law and, hence, cannot be merely recommendatory. Justice Vitug‘s Concurring Opinion in the
same case sums up the Philconsa quandary in this wise: "Neither would it be objectionable for Congress, by law, to
245
appropriate funds for such specific projects as it may be minded; to give that authority, however, to the individual
members of Congress in whatever guise, I am afraid, would be constitutionally impermissible." As the Court now
largely benefits from hindsight and current findings on the matter, among others, the CoA Report, the Court must
partially abandon its previous ruling in Philconsa insofar as it validated the post-enactment identification authority of
Members of Congress on the guise that the same was merely recommendatory. This postulate raises serious
constitutional inconsistencies which cannot be simply excused on the ground that such mechanism is "imaginative
as it is innovative." Moreover, it must be pointed out that the recent case of Abakada Guro Party List v.
Purisima (Abakada) has effectively overturned Philconsa‘s allowance of post-enactment legislator participation in
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view of the separation of powers principle. These constitutional inconsistencies and the Abakada rule will be
discussed in greater detail in the ensuing section of this Decision.

As for LAMP, suffice it to restate that the said case was dismissed on a procedural technicality and, hence, has not
set any controlling doctrine susceptible of current application to the substantive issues in these cases. In fine, stare
decisis would not apply.

II. Substantive Issues.

A. Definition of Terms.

Before the Court proceeds to resolve the substantive issues of these cases, it must first define the terms "Pork
Barrel System," "Congressional Pork Barrel," and "Presidential Pork Barrel" as they are essential to the ensuing
discourse.

Petitioners define the term "Pork Barrel System" as the "collusion between the Legislative and Executive branches
of government to accumulate lump-sum public funds in their offices with unchecked discretionary powers to
determine its distribution as political largesse."  They assert that the following elements make up the Pork Barrel
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System: (a) lump-sum funds are allocated through the appropriations process to an individual officer; (b) the officer
is given sole and broad discretion in determining how the funds will be used or expended; (c) the guidelines on how
to spend or use the funds in the appropriation are either vague, overbroad or inexistent; and (d) projects funded are
intended to benefit a definite constituency in a particular part of the country and to help the political careers of the
disbursing official by yielding rich patronage benefits.  They further state that the Pork Barrel System is comprised
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of two (2) kinds of discretionary public funds: first, the Congressional (or Legislative) Pork Barrel, currently known as
the PDAF;  and, second, the Presidential (or Executive) Pork Barrel, specifically, the Malampaya Funds under PD
158

910 and the Presidential Social Fund under PD 1869, as amended by PD 1993. 159

Considering petitioners‘ submission and in reference to its local concept and legal history, the Court defines the
Pork Barrel System as the collective body of rules and practices that govern the manner by which lump-sum,
discretionary funds, primarily intended for local projects, are utilized through the respective participations of the
Legislative and Executive branches of government, including its members. The Pork Barrel System involves two (2)
kinds of lump-sum discretionary funds:

First, there is the Congressional Pork Barrel which is herein defined as a kind of lump-sum, discretionary fund
wherein legislators, either individually or collectively organized into committees, are able to effectively control certain
aspects of the fund’s utilization through various post-enactment measures and/or practices. In particular, petitioners
consider the PDAF, as it appears under the 2013 GAA, as Congressional Pork Barrel since it is, inter alia, a post-
enactment measure that allows individual legislators to wield a collective power;  and
160

Second, there is the Presidential Pork Barrel which is herein defined as a kind of lump-sum, discretionary fund
which allows the President to determine the manner of its utilization. For reasons earlier stated,  the Court shall
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delimit the use of such term to refer only to the Malampaya Funds and the Presidential Social Fund.

With these definitions in mind, the Court shall now proceed to discuss the substantive issues of these cases.

B. Substantive Issues on the Congressional Pork Barrel.

1. Separation of Powers.

a. Statement of Principle.

The principle of separation of powers refers to the constitutional demarcation of the three fundamental powers of
government. In the celebrated words of Justice Laurel in Angara v. Electoral Commission,  it means that the
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"Constitution has blocked out with deft strokes and in bold lines, allotment of power to the executive, the legislative
and the judicial departments of the government."  To the legislative branch of government, through
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Congress, belongs the power to make laws; to the executive branch of government, through the
164

President,  belongs the power to enforce laws; and to the judicial branch of government, through the
165

Court,  belongs the power to interpret laws. Because the three great powers have been, by constitutional design,
166

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ordained in this respect, "each department of the government has exclusive cognizance of matters within its
jurisdiction, and is supreme within its own sphere."  Thus, "the legislature has no authority to execute or construe
167

the law, the executive has no authority to make or construe the law, and the judiciary has no power to make or
execute the law."  The principle of separation of powers and its concepts of autonomy and independence stem from
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the notion that the powers of government must be divided to avoid concentration of these powers in any one branch;
the division, it is hoped, would avoid any single branch from lording its power over the other branches or the
citizenry.  To achieve this purpose, the divided power must be wielded by co-equal branches of government that
169

are equally capable of independent action in exercising their respective mandates. Lack of independence would
result in the inability of one branch of government to check the arbitrary or self-interest assertions of another or
others. 170

Broadly speaking, there is a violation of the separation of powers principle when one branch of government unduly
encroaches on the domain of another. US Supreme Court decisions instruct that the principle of separation of
powers may be violated in two (2) ways: firstly, "one branch may interfere impermissibly with the other’s
performance of its constitutionally assigned function";  and "alternatively, the doctrine may be violated when one
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branch assumes a function that more properly is entrusted to another."  In other words, there is a violation of the
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principle when there is impermissible (a) interference with and/or (b) assumption of another department‘s functions.

The enforcement of the national budget, as primarily contained in the GAA, is indisputably a function both
constitutionally assigned and properly entrusted to the Executive branch of government. In Guingona, Jr. v. Hon.
Carague  (Guingona, Jr.), the Court explained that the phase of budget execution "covers the various operational
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aspects of budgeting" and accordingly includes "the evaluation of work and financial plans for individual activities,"
the "regulation and release of funds" as well as all "other related activities" that comprise the budget execution
cycle.  This is rooted in the principle that the allocation of power in the three principal branches of government is a
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grant of all powers inherent in them.  Thus, unless the Constitution provides otherwise, the Executive department
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should exclusively exercise all roles and prerogatives which go into the implementation of the national budget as
provided under the GAA as well as any other appropriation law.

In view of the foregoing, the Legislative branch of government, much more any of its members, should not cross
over the field of implementing the national budget since, as earlier stated, the same is properly the domain of the
Executive. Again, in Guingona, Jr., the Court stated that "Congress enters the picture when it deliberates or acts on
the budget proposals of the President. Thereafter, Congress, "in the exercise of its own judgment and wisdom,
formulates an appropriation act precisely following the process established by the Constitution, which specifies that
no money may be paid from the Treasury except in accordance with an appropriation made by law." Upon approval
and passage of the GAA, Congress‘ law -making role necessarily comes to an end and from there the Executive‘s
role of implementing the national budget begins. So as not to blur the constitutional boundaries between them,
Congress must "not concern it self with details for implementation by the Executive." 176

The foregoing cardinal postulates were definitively enunciated in Abakada where the Court held that "from the
moment the law becomes effective, any provision of law that empowers Congress or any of its members to play any
role in the implementation or enforcement of the law violates the principle of separation of powers and is thus
unconstitutional."  It must be clarified, however, that since the restriction only pertains to "any role in the
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implementation or enforcement of the law," Congress may still exercise its oversight function which is a mechanism
of checks and balances that the Constitution itself allows. But it must be made clear that Congress‘ role must be
confined to mere oversight. Any post-enactment-measure allowing legislator participation beyond oversight is bereft
of any constitutional basis and hence, tantamount to impermissible interference and/or assumption of executive
functions. As the Court ruled in Abakada: 178

Any post-enactment congressional measure x x x should be limited to scrutiny and investigation.  In particular,
1âwphi1

congressional oversight must be confined to the following:

(1) scrutiny based primarily on Congress‘ power of appropriation and the budget hearings conducted in
connection with it, its power to ask heads of departments to appear before and be heard by either of its
Houses on any matter pertaining to their departments and its power of confirmation; and

(2) investigation and monitoring of the implementation of laws pursuant to the power of Congress to conduct
inquiries in aid of legislation.

Any action or step beyond that will undermine the separation of powers guaranteed by the Constitution. (Emphases
supplied)

b. Application.

In these cases, petitioners submit that the Congressional Pork Barrel – among others, the 2013 PDAF Article –
"wrecks the assignment of responsibilities between the political branches" as it is designed to allow individual
legislators to interfere "way past the time it should have ceased" or, particularly, "after the GAA is passed."  They
179

state that the findings and recommendations in the CoA Report provide "an illustration of how absolute and
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definitive the power of legislators wield over project implementation in complete violation of the constitutional
principle of separation of powers."  Further, they point out that the Court in the Philconsa case only allowed the
180

CDF to exist on the condition that individual legislators limited their role to recommending projects and not if they
actually dictate their implementation. 181

For their part, respondents counter that the separations of powers principle has not been violated since the
President maintains "ultimate authority to control the execution of the GAA‖ and that he "retains the final discretion
to reject" the legislators‘ proposals.  They maintain that the Court, in Philconsa, "upheld the constitutionality of the
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power of members of Congress to propose and identify projects so long as such proposal and identification are
recommendatory."  As such, they claim that "everything in the Special Provisions [of the 2013 PDAF Article follows
183

the Philconsa framework, and hence, remains constitutional." 184

The Court rules in favor of petitioners.

As may be observed from its legal history, the defining feature of all forms of Congressional Pork Barrel would be
the authority of legislators to participate in the post-enactment phases of project implementation.

At its core, legislators – may it be through project lists,  prior consultations  or program menus  – have been
185 186 187

consistently accorded post-enactment authority to identify the projects they desire to be funded through various
Congressional Pork Barrel allocations. Under the 2013 PDAF Article, the statutory authority of legislators to identify
projects post-GAA may be construed from the import of Special Provisions 1 to 3 as well as the second paragraph
of Special Provision 4. To elucidate, Special Provision 1 embodies the program menu feature which, as evinced
from past PDAF Articles, allows individual legislators to identify PDAF projects for as long as the identified project
falls under a general program listed in the said menu. Relatedly, Special Provision 2 provides that the implementing
agencies shall, within 90 days from the GAA is passed, submit to Congress a more detailed priority list, standard or
design prepared and submitted by implementing agencies from which the legislator may make his choice. The same
provision further authorizes legislators to identify PDAF projects outside his district for as long as the representative
of the district concerned concurs in writing. Meanwhile, Special Provision 3 clarifies that PDAF projects refer to
"projects to be identified by legislators"  and thereunder provides the allocation limit for the total amount of projects
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identified by each legislator. Finally, paragraph 2 of Special Provision 4 requires that any modification and revision
of the project identification "shall be submitted to the House Committee on Appropriations and the Senate
Committee on Finance for favorable endorsement to the DBM or the implementing agency, as the case may be."
From the foregoing special provisions, it cannot be seriously doubted that legislators have been accorded post-
enactment authority to identify PDAF projects.

Aside from the area of project identification, legislators have also been accorded post-enactment authority in the
areas of fund release and realignment. Under the 2013 PDAF Article, the statutory authority of legislators to
participate in the area of fund release through congressional committees is contained in Special Provision 5 which
explicitly states that "all request for release of funds shall be supported by the documents prescribed under Special
Provision No. 1 and favorably endorsed by House Committee on Appropriations and the Senate Committee on
Finance, as the case may be"; while their statutory authority to participate in the area of fund realignment is
contained in: first , paragraph 2, Special Provision 4  which explicitly state s, among others, that "any realignment of
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funds shall be submitted to the House Committee on Appropriations and the Senate Committee on Finance for
favorable endorsement to the DBM or the implementing agency, as the case may be‖ ; and, second , paragraph 1,
also of Special Provision 4 which authorizes the "Secretaries of Agriculture, Education, Energy, Interior and Local
Government, Labor and Employment, Public Works and Highways, Social Welfare and Development and Trade and
Industry  x x x to approve realignment from one project/scope to another within the allotment received from this
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Fund, subject to among others (iii) the request is with the concurrence of the legislator concerned."

Clearly, these post-enactment measures which govern the areas of project identification, fund release and fund
realignment are not related to functions of congressional oversight and, hence, allow legislators to intervene and/or
assume duties that properly belong to the sphere of budget execution. Indeed, by virtue of the foregoing, legislators
have been, in one form or another, authorized to participate in – as Guingona, Jr. puts it – "the various operational
aspects of budgeting," including "the evaluation of work and financial plans for individual activities" and the
"regulation and release of funds" in violation of the separation of powers principle. The fundamental rule, as
categorically articulated in Abakada, cannot be overstated – from the moment the law becomes effective, any
provision of law that empowers Congress or any of its members to play any role in the implementation or
enforcement of the law violates the principle of separation of powers and is thus unconstitutional.  That the said
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authority is treated as merely recommendatory in nature does not alter its unconstitutional tenor since the
prohibition, to repeat, covers any role in the implementation or enforcement of the law. Towards this end, the Court
must therefore abandon its ruling in Philconsa which sanctioned the conduct of legislator identification on the guise
that the same is merely recommendatory and, as such, respondents‘ reliance on the same falters altogether.

Besides, it must be pointed out that respondents have nonetheless failed to substantiate their position that the
identification authority of legislators is only of recommendatory import. Quite the contrary, respondents – through the
statements of the Solicitor General during the Oral Arguments – have admitted that the identification of the legislator

248
constitutes a mandatory requirement before his PDAF can be tapped as a funding source, thereby highlighting the
indispensability of the said act to the entire budget execution process:192

Justice Bernabe: Now, without the individual legislator’s identification of the project, can the PDAF of the legislator
be utilized?

Solicitor General Jardeleza: No, Your Honor.

Justice Bernabe: It cannot?

Solicitor General Jardeleza: It cannot… (interrupted)

Justice Bernabe: So meaning you should have the identification of the project by the individual legislator?

Solicitor General Jardeleza: Yes, Your Honor.

xxxx

Justice Bernabe: In short, the act of identification is mandatory?

Solictor General Jardeleza: Yes, Your Honor. In the sense that if it is not done and then there is no identification.

xxxx

Justice Bernabe: Now, would you know of specific instances when a project was implemented without the
identification by the individual legislator?

Solicitor General Jardeleza: I do not know, Your Honor; I do not think so but I have no specific examples. I would
doubt very much, Your Honor, because to implement, there is a need for a SARO and the NCA. And the SARO and
the NCA are triggered by an identification from the legislator.

xxxx

Solictor General Jardeleza: What we mean by mandatory, Your Honor, is we were replying to a question, "How can
a legislator make sure that he is able to get PDAF Funds?" It is mandatory in the sense that he must identify, in that
sense, Your Honor. Otherwise, if he does not identify, he cannot avail of the PDAF Funds and his district would not
be able to have PDAF Funds, only in that sense, Your Honor. (Emphases supplied)

Thus, for all the foregoing reasons, the Court hereby declares the 2013 PDAF Article as well as all other provisions
of law which similarly allow legislators to wield any form of post-enactment authority in the implementation or
enforcement of the budget, unrelated to congressional oversight, as violative of the separation of powers principle
and thus unconstitutional. Corollary thereto, informal practices, through which legislators have effectively intruded
into the proper phases of budget execution, must be deemed as acts of grave abuse of discretion amounting to lack
or excess of jurisdiction and, hence, accorded the same unconstitutional treatment. That such informal practices do
exist and have, in fact, been constantly observed throughout the years has not been substantially disputed here. As
pointed out by Chief Justice Maria Lourdes P.A. Sereno (Chief Justice Sereno) during the Oral Arguments of these
cases:193

Chief Justice Sereno:

Now, from the responses of the representative of both, the DBM and two (2) Houses of Congress, if we enforces the
initial thought that I have, after I had seen the extent of this research made by my staff, that neither the Executive
nor Congress frontally faced the question of constitutional compatibility of how they were engineering the budget
process. In fact, the words you have been using, as the three lawyers of the DBM, and both Houses of Congress
has also been using is surprise; surprised that all of these things are now surfacing. In fact, I thought that what the
2013 PDAF provisions did was to codify in one section all the past practice that had been done since 1991. In a
certain sense, we should be thankful that they are all now in the PDAF Special Provisions. x x x (Emphasis and
underscoring supplied)

Ultimately, legislators cannot exercise powers which they do not have, whether through formal measures written into
the law or informal practices institutionalized in government agencies, else the Executive department be deprived of
what the Constitution has vested as its own.

2. Non-delegability of Legislative Power.

a. Statement of Principle.

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As an adjunct to the separation of powers principle,  legislative power shall be exclusively exercised by the body to
194

which the Constitution has conferred the same. In particular, Section 1, Article VI of the 1987 Constitution states that
such power shall be vested in the Congress of the Philippines which shall consist of a Senate and a House of
Representatives, except to the extent reserved to the people by the provision on initiative and referendum.  Based
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on this provision, it is clear that only Congress, acting as a bicameral body, and the people, through the process of
initiative and referendum, may constitutionally wield legislative power and no other. This premise embodies the
principle of non-delegability of legislative power, and the only recognized exceptions thereto would be: (a) delegated
legislative power to local governments which, by immemorial practice, are allowed to legislate on purely local
matters;  and (b) constitutionally-grafted exceptions such as the authority of the President to, by law, exercise
196

powers necessary and proper to carry out a declared national policy in times of war or other national emergency, or 197

fix within specified limits, and subject to such limitations and restrictions as Congress may impose, tariff rates,
import and export quotas, tonnage and wharfage dues, and other duties or imposts within the framework of the
national development program of the Government. 198

Notably, the principle of non-delegability should not be confused as a restriction to delegate rule-making authority to
implementing agencies for the limited purpose of either filling up the details of the law for its enforcement
(supplementary rule-making) or ascertaining facts to bring the law into actual operation (contingent rule-
making). The conceptual treatment and limitations of delegated rule-making were explained in the case of People
199

v. Maceren  as follows:

200

The grant of the rule-making power to administrative agencies is a relaxation of the principle of separation of powers
and is an exception to the nondelegation of legislative powers. Administrative regulations or "subordinate legislation"
calculated to promote the public interest are necessary because of "the growing complexity of modern life, the
multiplication of the subjects of governmental regulations, and the increased difficulty of administering the law."

xxxx

Nevertheless, it must be emphasized that the rule-making power must be confined to details for regulating the mode
or proceeding to carry into effect the law as it has been enacted. The power cannot be extended to amending or
expanding the statutory requirements or to embrace matters not covered by the statute. Rules that subvert the
statute cannot be sanctioned. (Emphases supplied)

b. Application.

In the cases at bar, the Court observes that the 2013 PDAF Article, insofar as it confers post-enactment
identification authority to individual legislators, violates the principle of non-delegability since said legislators are
effectively allowed to individually exercise the power of appropriation, which – as settled in Philconsa – is lodged in
Congress.  That the power to appropriate must be exercised only through legislation is clear from Section 29(1),
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Article VI of the 1987 Constitution which states that: "No money shall be paid out of the Treasury except in
pursuance of an appropriation made by law." To understand what constitutes an act of appropriation, the Court, in
Bengzon v. Secretary of Justice and Insular Auditor  (Bengzon), held that the power of appropriation involves (a)
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the setting apart by law of a certain sum from the public revenue for (b) a specified purpose. Essentially, under the
2013 PDAF Article, individual legislators are given a personal lump-sum fund from which they are able to dictate (a)
how much from such fund would go to (b) a specific project or beneficiary that they themselves also determine. As
these two (2) acts comprise the exercise of the power of appropriation as described in Bengzon, and given that the
2013 PDAF Article authorizes individual legislators to perform the same, undoubtedly, said legislators have been
conferred the power to legislate which the Constitution does not, however, allow. Thus, keeping with the principle of
non-delegability of legislative power, the Court hereby declares the 2013 PDAF Article, as well as all other forms of
Congressional Pork Barrel which contain the similar legislative identification feature as herein discussed, as
unconstitutional.

3. Checks and Balances.

a. Statement of Principle; Item-Veto Power.

The fact that the three great powers of government are intended to be kept separate and distinct does not mean that
they are absolutely unrestrained and independent of each other. The Constitution has also provided for an elaborate
system of checks and balances to secure coordination in the workings of the various departments of the
government. 203

A prime example of a constitutional check and balance would be the President’s power to veto an item written into
an appropriation, revenue or tariff bill submitted to him by Congress for approval through a process known as "bill
presentment." The President‘s item-veto power is found in Section 27(2), Article VI of the 1987 Constitution which
reads as follows:

Sec. 27. x x x.

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 xxxx

(2) The President shall have the power to veto any particular item or items in an appropriation, revenue, or tariff bill,
but the veto shall not affect the item or items to which he does not object.

The presentment of appropriation, revenue or tariff bills to the President, wherein he may exercise his power of item-
veto, forms part of the "single, finely wrought and exhaustively considered, procedures" for law-passage as specified
under the Constitution.  As stated in Abakada, the final step in the law-making process is the "submission of the bill
204

to the President for approval. Once approved, it takes effect as law after the required publication." 205

Elaborating on the President‘s item-veto power and its relevance as a check on the legislature, the Court, in
Bengzon, explained that: 206

The former Organic Act and the present Constitution of the Philippines make the Chief Executive an integral part of
the law-making power. His disapproval of a bill, commonly known as a veto, is essentially a legislative act. The
questions presented to the mind of the Chief Executive are precisely the same as those the legislature must
determine in passing a bill, except that his will be a broader point of view.

The Constitution is a limitation upon the power of the legislative department of the government, but in this respect it
is a grant of power to the executive department. The Legislature has the affirmative power to enact laws; the Chief
Executive has the negative power by the constitutional exercise of which he may defeat the will of the Legislature. It
follows that the Chief Executive must find his authority in the Constitution. But in exercising that authority he may not
be confined to rules of strict construction or hampered by the unwise interference of the judiciary. The courts will
indulge every intendment in favor of the constitutionality of a veto in the same manner as they will presume the
constitutionality of an act as originally passed by the Legislature. (Emphases supplied)

The justification for the President‘s item-veto power rests on a variety of policy goals such as to prevent log-rolling
legislation,  impose fiscal restrictions on the legislature, as well as to fortify the executive branch‘s role in the
207

budgetary process.  In Immigration and Naturalization Service v. Chadha, the US Supreme Court characterized the
208

President‘s item-power as "a salutary check upon the legislative body, calculated to guard the community against
the effects of factions, precipitancy, or of any impulse unfriendly to the public good, which may happen to influence
a majority of that body"; phrased differently, it is meant to "increase the chances in favor of the community against
the passing of bad laws, through haste, inadvertence, or design." 209

For the President to exercise his item-veto power, it necessarily follows that there exists a proper "item" which may
be the object of the veto. An item, as defined in the field of appropriations, pertains to "the particulars, the details,
the distinct and severable parts of the appropriation or of the bill." In the case of Bengzon v. Secretary of Justice of
the Philippine Islands,  the US Supreme Court characterized an item of appropriation as follows:
210

An item of an appropriation bill obviously means an item which, in itself, is a specific appropriation of money, not
some general provision of law which happens to be put into an appropriation bill. (Emphases supplied)

On this premise, it may be concluded that an appropriation bill, to ensure that the President may be able to exercise
his power of item veto, must contain "specific appropriations of money" and not only "general provisions" which
provide for parameters of appropriation.

Further, it is significant to point out that an item of appropriation must be an item characterized by singular
correspondence – meaning an allocation of a specified singular amount for a specified singular purpose, otherwise
known as a "line-item."  This treatment not only allows the item to be consistent with its definition as a "specific
211

appropriation of money" but also ensures that the President may discernibly veto the same. Based on the foregoing
formulation, the existing Calamity Fund, Contingent Fund and the Intelligence Fund, being appropriations which
state a specified amount for a specific purpose, would then be considered as "line- item" appropriations which are
rightfully subject to item veto. Likewise, it must be observed that an appropriation may be validly apportioned into
component percentages or values; however, it is crucial that each percentage or value must be allocated for its own
corresponding purpose for such component to be considered as a proper line-item. Moreover, as Justice Carpio
correctly pointed out, a valid appropriation may even have several related purposes that are by accounting and
budgeting practice considered as one purpose, e.g., MOOE (maintenance and other operating expenses), in which
case the related purposes shall be deemed sufficiently specific for the exercise of the President‘s item veto power.
Finally, special purpose funds and discretionary funds would equally square with the constitutional mechanism of
item-veto for as long as they follow the rule on singular correspondence as herein discussed. Anent special purpose
funds, it must be added that Section 25(4), Article VI of the 1987 Constitution requires that the "special
appropriations bill shall specify the purpose for which it is intended, and shall be supported by funds actually
available as certified by the National Treasurer, or t o be raised by a corresponding revenue proposal therein."
Meanwhile, with respect to discretionary funds, Section 2 5(6), Article VI of the 1987 Constitution requires that said
funds "shall be disbursed only for public purposes to be supported by appropriate vouchers and subject to such
guidelines as may be prescribed by law."

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In contrast, what beckons constitutional infirmity are appropriations which merely provide for a singular lump-sum
amount to be tapped as a source of funding for multiple purposes. Since such appropriation type necessitates the
further determination of both the actual amount to be expended and the actual purpose of the appropriation which
must still be chosen from the multiple purposes stated in the law, it cannot be said that the appropriation law already
indicates a "specific appropriation of money‖ and hence, without a proper line-item which the President may veto.
As a practical result, the President would then be faced with the predicament of either vetoing the entire
appropriation if he finds some of its purposes wasteful or undesirable, or approving the entire appropriation so as
not to hinder some of its legitimate purposes. Finally, it may not be amiss to state that such arrangement also raises
non-delegability issues considering that the implementing authority would still have to determine, again, both the
actual amount to be expended and the actual purpose of the appropriation. Since the foregoing determinations
constitute the integral aspects of the power to appropriate, the implementing authority would, in effect, be exercising
legislative prerogatives in violation of the principle of non-delegability.

b. Application.

In these cases, petitioners claim that "in the current x x x system where the PDAF is a lump-sum appropriation, the
legislator‘s identification of the projects after the passage of the GAA denies the President the chance to veto that
item later on."  Accordingly, they submit that the "item veto power of the President mandates that appropriations
212

bills adopt line-item budgeting" and that "Congress cannot choose a mode of budgeting which effectively renders
the constitutionally-given power of the President useless." 213

On the other hand, respondents maintain that the text of the Constitution envisions a process which is intended to
meet the demands of a modernizing economy and, as such, lump-sum appropriations are essential to financially
address situations which are barely foreseen when a GAA is enacted. They argue that the decision of the Congress
to create some lump-sum appropriations is constitutionally allowed and textually-grounded. 214

The Court agrees with petitioners.

Under the 2013 PDAF Article, the amount of ₱24.79 Billion only appears as a collective allocation limit since the
said amount would be further divided among individual legislators who would then receive personal lump-sum
allocations and could, after the GAA is passed, effectively appropriate PDAF funds based on their own discretion.
As these intermediate appropriations are made by legislators only after the GAA is passed and hence, outside of the
law, it necessarily means that the actual items of PDAF appropriation would not have been written into the General
Appropriations Bill and thus effectuated without veto consideration. This kind of lump-sum/post-enactment legislative
identification budgeting system fosters the creation of a budget within a budget" which subverts the prescribed
procedure of presentment and consequently impairs the President‘s power of item veto. As petitioners aptly point
out, the above-described system forces the President to decide between (a) accepting the entire ₱24.79 Billion
PDAF allocation without knowing the specific projects of the legislators, which may or may not be consistent with his
national agenda and (b) rejecting the whole PDAF to the detriment of all other legislators with legitimate projects. 215

Moreover, even without its post-enactment legislative identification feature, the 2013 PDAF Article would remain
constitutionally flawed since it would then operate as a prohibited form of lump-sum appropriation above-
characterized. In particular, the lump-sum amount of ₱24.79 Billion would be treated as a mere funding source
allotted for multiple purposes of spending, i.e., scholarships, medical missions, assistance to indigents, preservation
of historical materials, construction of roads, flood control, etc. This setup connotes that the appropriation law leaves
the actual amounts and purposes of the appropriation for further determination and, therefore, does not readily
indicate a discernible item which may be subject to the President‘s power of item veto.

In fact, on the accountability side, the same lump-sum budgeting scheme has, as the CoA Chairperson relays,
"limited state auditors from obtaining relevant data and information that would aid in more stringently auditing the
utilization of said Funds."  Accordingly, she recommends the adoption of a "line by line budget or amount per
216

proposed program, activity or project, and per implementing agency." 217

Hence, in view of the reasons above-stated, the Court finds the 2013 PDAF Article, as well as all Congressional
Pork Barrel Laws of similar operation, to be unconstitutional. That such budgeting system provides for a greater
degree of flexibility to account for future contingencies cannot be an excuse to defeat what the Constitution requires.
Clearly, the first and essential truth of the matter is that unconstitutional means do not justify even commendable
ends.218

c. Accountability.

Petitioners further relate that the system under which various forms of Congressional Pork Barrel operate defies
public accountability as it renders Congress incapable of checking itself or its Members. In particular, they point out
that the Congressional Pork Barrel "gives each legislator a direct, financial interest in the smooth, speedy passing of
the yearly budget" which turns them "from fiscalizers" into "financially-interested partners."  They also claim that the
219

system has an effect on re- election as "the PDAF excels in self-perpetuation of elective officials." Finally, they add

252
that the "PDAF impairs the power of impeachment" as such "funds are indeed quite useful, ‘to well, accelerate the
decisions of senators.‘" 220

The Court agrees in part.

The aphorism forged under Section 1, Article XI of the 1987 Constitution, which states that "public office is a public
trust," is an overarching reminder that every instrumentality of government should exercise their official functions
only in accordance with the principles of the Constitution which embodies the parameters of the people‘s trust. The
notion of a public trust connotes accountability,  hence, the various mechanisms in the Constitution which are
221

designed to exact accountability from public officers.

Among others, an accountability mechanism with which the proper expenditure of public funds may be checked is
the power of congressional oversight. As mentioned in Abakada,  congressional oversight may be performed either
222

through: (a) scrutiny based primarily on Congress‘ power of appropriation and the budget hearings conducted in
connection with it, its power to ask heads of departments to appear before and be heard by either of its Houses on
any matter pertaining to their departments and its power of confirmation;  or (b) investigation and monitoring of the
223

implementation of laws pursuant to the power of Congress to conduct inquiries in aid of legislation. 224

The Court agrees with petitioners that certain features embedded in some forms of Congressional Pork Barrel,
among others the 2013 PDAF Article, has an effect on congressional oversight. The fact that individual legislators
are given post-enactment roles in the implementation of the budget makes it difficult for them to become
disinterested "observers" when scrutinizing, investigating or monitoring the implementation of the appropriation law.
To a certain extent, the conduct of oversight would be tainted as said legislators, who are vested with post-
enactment authority, would, in effect, be checking on activities in which they themselves participate. Also, it must be
pointed out that this very same concept of post-enactment authorization runs afoul of Section 14, Article VI of the
1987 Constitution which provides that:

Sec. 14. No Senator or Member of the House of Representatives may personally appear as counsel before any
court of justice or before the Electoral Tribunals, or quasi-judicial and other administrative bodies. Neither shall he,
directly or indirectly, be interested financially in any contract with, or in any franchise or special privilege granted by
the Government, or any subdivision, agency, or instrumentality thereof, including any government-owned or
controlled corporation, or its subsidiary, during his term of office. He shall not intervene in any matter before any
office of the Government for his pecuniary benefit or where he may be called upon to act on account of his office.
(Emphasis supplied)

Clearly, allowing legislators to intervene in the various phases of project implementation – a matter before another
office of government – renders them susceptible to taking undue advantage of their own office.

The Court, however, cannot completely agree that the same post-enactment authority and/or the individual
legislator‘s control of his PDAF per se would allow him to perpetuate himself in office. Indeed, while the
Congressional Pork Barrel and a legislator‘s use thereof may be linked to this area of interest, the use of his PDAF
for re-election purposes is a matter which must be analyzed based on particular facts and on a case-to-case basis.

Finally, while the Court accounts for the possibility that the close operational proximity between legislators and the
Executive department, through the former‘s post-enactment participation, may affect the process of impeachment,
this matter largely borders on the domain of politics and does not strictly concern the Pork Barrel System‘s intrinsic
constitutionality. As such, it is an improper subject of judicial assessment.

In sum, insofar as its post-enactment features dilute congressional oversight and violate Section 14, Article VI of the
1987 Constitution, thus impairing public accountability, the 2013 PDAF Article and other forms of Congressional
Pork Barrel of similar nature are deemed as unconstitutional.

4. Political Dynasties.

One of the petitioners submits that the Pork Barrel System enables politicians who are members of political
dynasties to accumulate funds to perpetuate themselves in power, in contravention of Section 26, Article II of the
1987 Constitution  which states that:
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Sec. 26. The State shall guarantee equal access to opportunities for public service, and prohibit political dynasties
as may be defined by law. (Emphasis and underscoring supplied)

At the outset, suffice it to state that the foregoing provision is considered as not self-executing due to the qualifying
phrase "as may be defined by law." In this respect, said provision does not, by and of itself, provide a judicially
enforceable constitutional right but merely specifies guideline for legislative or executive action.  Therefore, since
226

there appears to be no standing law which crystallizes the policy on political dynasties for enforcement, the Court
must defer from ruling on this issue.

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In any event, the Court finds the above-stated argument on this score to be largely speculative since it has not been
properly demonstrated how the Pork Barrel System would be able to propagate political dynasties.

5. Local Autonomy.

The State‘s policy on local autonomy is principally stated in Section 25, Article II and Sections 2 and 3, Article X of
the 1987 Constitution which read as follows:

ARTICLE II

Sec. 25. The State shall ensure the autonomy of local governments.

ARTICLE X

Sec. 2. The territorial and political subdivisions shall enjoy local autonomy.

Sec. 3. The Congress shall enact a local government code which shall provide for a more responsive and
accountable local government structure instituted through a system of decentralization with effective mechanisms of
recall, initiative, and referendum, allocate among the different local government units their powers, responsibilities,
and resources, and provide for the qualifications, election, appointment and removal, term, salaries, powers and
functions and duties of local officials, and all other matters relating to the organization and operation of the local
units.

Pursuant thereto, Congress enacted RA 7160,  otherwise known as the "Local Government Code of 1991" (LGC),
227

wherein the policy on local autonomy had been more specifically explicated as follows:

Sec. 2. Declaration of Policy. – (a) It is hereby declared the policy of the State that the territorial and political
subdivisions of the State shall enjoy genuine and meaningful local autonomy to enable them to attain their fullest
development as self-reliant communities and make them more effective partners in the attainment of national goals.
Toward this end, the State shall provide for a more responsive and accountable local government structure
instituted through a system of decentralization whereby local government units shall be given more powers,
authority, responsibilities, and resources. The process of decentralization shall proceed from the National
Government to the local government units.

xxxx

(c) It is likewise the policy of the State to require all national agencies and offices to conduct periodic consultations
with appropriate local government units, nongovernmental and people‘s organizations, and other concerned sectors
of the community before any project or program is implemented in their respective jurisdictions. (Emphases and
underscoring supplied)

The above-quoted provisions of the Constitution and the LGC reveal the policy of the State to empower local
government units (LGUs) to develop and ultimately, become self-sustaining and effective contributors to the national
economy. As explained by the Court in Philippine Gamefowl Commission v. Intermediate Appellate Court: 228

This is as good an occasion as any to stress the commitment of the Constitution to the policy of local autonomy
which is intended to provide the needed impetus and encouragement to the development of our local political
subdivisions as "self - reliant communities." In the words of Jefferson, "Municipal corporations are the small
republics from which the great one derives its strength." The vitalization of local governments will enable their
inhabitants to fully exploit their resources and more important, imbue them with a deepened sense of involvement in
public affairs as members of the body politic. This objective could be blunted by undue interference by the national
government in purely local affairs which are best resolved by the officials and inhabitants of such political units. The
decision we reach today conforms not only to the letter of the pertinent laws but also to the spirit of the
Constitution.  (Emphases and underscoring supplied)
229

In the cases at bar, petitioners contend that the Congressional Pork Barrel goes against the constitutional principles
on local autonomy since it allows district representatives, who are national officers, to substitute their judgments in
utilizing public funds for local development.  The Court agrees with petitioners.
230

Philconsa described the 1994 CDF as an attempt "to make equal the unequal" and that "it is also a recognition that
individual members of Congress, far more than the President and their congressional colleagues, are likely to be
knowledgeable about the needs of their respective constituents and the priority to be given each project."  Drawing
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strength from this pronouncement, previous legislators justified its existence by stating that "the relatively small
projects implemented under the Congressional Pork Barrel complement and link the national development goals to
the countryside and grassroots as well as to depressed areas which are overlooked by central agencies which are
preoccupied with mega-projects.  Similarly, in his August 23, 2013 speech on the "abolition" of PDAF and
232

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budgetary reforms, President Aquino mentioned that the Congressional Pork Barrel was originally established for a
worthy goal, which is to enable the representatives to identify projects for communities that the LGU concerned
cannot afford. 233

Notwithstanding these declarations, the Court, however, finds an inherent defect in the system which actually belies
the avowed intention of "making equal the unequal." In particular, the Court observes that the gauge of PDAF and
CDF allocation/division is based solely on the fact of office, without taking into account the specific interests and
peculiarities of the district the legislator represents. In this regard, the allocation/division limits are clearly not based
on genuine parameters of equality, wherein economic or geographic indicators have been taken into consideration.
As a result, a district representative of a highly-urbanized metropolis gets the same amount of funding as a district
representative of a far-flung rural province which would be relatively "underdeveloped" compared to the former. To
add, what rouses graver scrutiny is that even Senators and Party-List Representatives – and in some years, even
the Vice-President – who do not represent any locality, receive funding from the Congressional Pork Barrel as well.
These certainly are anathema to the Congressional Pork Barrel‘s original intent which is "to make equal the
unequal." Ultimately, the PDAF and CDF had become personal funds under the effective control of each legislator
and given unto them on the sole account of their office.

The Court also observes that this concept of legislator control underlying the CDF and PDAF conflicts with the
functions of the various Local Development Councils (LDCs) which are already legally mandated to "assist the
corresponding sanggunian in setting the direction of economic and social development, and coordinating
development efforts within its territorial jurisdiction."  Considering that LDCs are instrumentalities whose functions
234

are essentially geared towards managing local affairs,  their programs, policies and resolutions should not be
235

overridden nor duplicated by individual legislators, who are national officers that have no law-making authority
except only when acting as a body. The undermining effect on local autonomy caused by the post-enactment
authority conferred to the latter was succinctly put by petitioners in the following wise: 236

With PDAF, a Congressman can simply bypass the local development council and initiate projects on his own, and
even take sole credit for its execution. Indeed, this type of personality-driven project identification has not only
contributed little to the overall development of the district, but has even contributed to "further weakening
infrastructure planning and coordination efforts of the government."

Thus, insofar as individual legislators are authorized to intervene in purely local matters and thereby subvert
genuine local autonomy, the 2013 PDAF Article as well as all other similar forms of Congressional Pork Barrel is
deemed unconstitutional.

With this final issue on the Congressional Pork Barrel resolved, the Court now turns to the substantive issues
involving the Presidential Pork Barrel.

C. Substantive Issues on the Presidential Pork Barrel.

1. Validity of Appropriation.

Petitioners preliminarily assail Section 8 of PD 910 and Section 12 of PD1869 (now, amended by PD 1993), which
respectively provide for the Malampaya Funds and the Presidential Social Fund, as invalid appropriations laws since
they do not have the "primary and specific" purpose of authorizing the release of public funds from the National
Treasury. Petitioners submit that Section 8 of PD 910 is not an appropriation law since the "primary and specific‖
purpose of PD 910 is the creation of an Energy Development Board and Section 8 thereof only created a Special
Fund incidental thereto.  In similar regard, petitioners argue that Section 12 of PD 1869 is neither a valid
237

appropriations law since the allocation of the Presidential Social Fund is merely incidental to the "primary and
specific" purpose of PD 1869 which is the amendment of the Franchise and Powers of PAGCOR.  In view of the
238

foregoing, petitioners suppose that such funds are being used without any valid law allowing for their proper
appropriation in violation of Section 29(1), Article VI of the 1987 Constitution which states that: "No money shall be
paid out of the Treasury except in pursuance of an appropriation made by law." 239

The Court disagrees.

"An appropriation made by law‖ under the contemplation of Section 29(1), Article VI of the 1987 Constitution exists
when a provision of law (a) sets apart a determinate or determinable  amount of money and (b) allocates the same
240

for a particular public purpose. These two minimum designations of amount and purpose stem from the very
definition of the word "appropriation," which means "to allot, assign, set apart or apply to a particular use or
purpose," and hence, if written into the law, demonstrate that the legislative intent to appropriate exists. As the
Constitution "does not provide or prescribe any particular form of words or religious recitals in which an authorization
or appropriation by Congress shall be made, except that it be ‘made by law,‘" an appropriation law may – according
to Philconsa – be "detailed and as broad as Congress wants it to be" for as long as the intent to appropriate may be
gleaned from the same. As held in the case of Guingona, Jr.: 241

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There is no provision in our Constitution that provides or prescribes any particular form of words or religious recitals
in which an authorization or appropriation by Congress shall be made, except that it be "made by law," such as
precisely the authorization or appropriation under the questioned presidential decrees. In other words, in terms of
time horizons, an appropriation may be made impliedly (as by past but subsisting legislations) as well as expressly
for the current fiscal year (as by enactment of laws by the present Congress), just as said appropriation may be
made in general as well as in specific terms. The Congressional authorization may be embodied in annual laws,
such as a general appropriations act or in special provisions of laws of general or special application which
appropriate public funds for specific public purposes, such as the questioned decrees. An appropriation measure is
sufficient if the legislative intention clearly and certainly appears from the language employed (In re Continuing
Appropriations, 32 P. 272), whether in the past or in the present. (Emphases and underscoring supplied)

Likewise, as ruled by the US Supreme Court in State of Nevada v. La Grave: 242

To constitute an appropriation there must be money placed in a fund applicable to the designated purpose. The
word appropriate means to allot, assign, set apart or apply to a particular use or purpose. An appropriation in the
sense of the constitution means the setting apart a portion of the public funds for a public purpose. No particular
form of words is necessary for the purpose, if the intention to appropriate is plainly manifested. (Emphases supplied)

Thus, based on the foregoing, the Court cannot sustain the argument that the appropriation must be the "primary
and specific" purpose of the law in order for a valid appropriation law to exist. To reiterate, if a legal provision
designates a determinate or determinable amount of money and allocates the same for a particular public purpose,
then the legislative intent to appropriate becomes apparent and, hence, already sufficient to satisfy the requirement
of an "appropriation made by law" under contemplation of the Constitution.

Section 8 of PD 910 pertinently provides:

Section 8. Appropriations. x x x

All fees, revenues and receipts of the Board from any and all sources including receipts from service contracts and
agreements such as application and processing fees, signature bonus, discovery bonus, production bonus; all
money collected from concessionaires, representing unspent work obligations, fines and penalties under the
Petroleum Act of 1949; as well as the government share representing royalties, rentals, production share on service
contracts and similar payments on the exploration, development and exploitation of energy resources, shall form
part of a Special Fund to be used to finance energy resource development and exploitation programs and projects
of the government and for such other purposes as may be hereafter directed by the President. (Emphases supplied)

Whereas Section 12 of PD 1869, as amended by PD 1993, reads:

Sec. 12. Special Condition of Franchise. — After deducting five (5%) percent as Franchise Tax, the Fifty (50%)
percent share of the Government in the aggregate gross earnings of the Corporation from this Franchise, or 60% if
the aggregate gross earnings be less than ₱150,000,000.00 shall be set aside and shall accrue to the General Fund
to finance the priority infrastructure development projects and to finance the restoration of damaged or destroyed
facilities due to calamities, as may be directed and authorized by the Office of the President of the Philippines.
(Emphases supplied)

Analyzing the legal text vis-à-vis the above-mentioned principles, it may then be concluded that (a) Section 8 of PD
910, which creates a Special Fund comprised of "all fees, revenues, and receipts of the Energy Development Board
from any and all sources" (a determinable amount) "to be used to finance energy resource development and
exploitation programs and projects of the government and for such other purposes as may be hereafter directed by
the President" (a specified public purpose), and (b) Section 12 of PD 1869, as amended by PD 1993, which similarly
sets aside, "after deducting five (5%) percent as Franchise Tax, the Fifty (50%) percent share of the Government in
the aggregate gross earnings of PAGCOR, or 60%, if the aggregate gross earnings be less than ₱150,000,000.00"
(also a determinable amount) "to finance the priority infrastructure development projects and x x x the restoration of
damaged or destroyed facilities due to calamities, as may be directed and authorized by the Office of the President
of the Philippines" (also a specified public purpose), are legal appropriations under Section 29(1), Article VI of the
1987 Constitution.

In this relation, it is apropos to note that the 2013 PDAF Article cannot be properly deemed as a legal appropriation
under the said constitutional provision precisely because, as earlier stated, it contains post-enactment measures
which effectively create a system of intermediate appropriations. These intermediate appropriations are the actual
appropriations meant for enforcement and since they are made by individual legislators after the GAA is passed,
they occur outside the law. As such, the Court observes that the real appropriation made under the 2013 PDAF
Article is not the ₱24.79 Billion allocated for the entire PDAF, but rather the post-enactment determinations made by
the individual legislators which are, to repeat, occurrences outside of the law. Irrefragably, the 2013 PDAF Article
does not constitute an "appropriation made by law" since it, in its truest sense, only authorizes individual legislators
to appropriate in violation of the non-delegability principle as afore-discussed.

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2. Undue Delegation.

On a related matter, petitioners contend that Section 8 of PD 910 constitutes an undue delegation of legislative
power since the phrase "and for such other purposes as may be hereafter directed by the President" gives the
President "unbridled discretion to determine for what purpose the funds will be used."  Respondents, on the other
243

hand, urged the Court to apply the principle of ejusdem generis to the same section and thus, construe the phrase
"and for such other purposes as may be hereafter directed by the President" to refer only to other purposes related
"to energy resource development and exploitation programs and projects of the government." 244

The Court agrees with petitioners‘ submissions.

While the designation of a determinate or determinable amount for a particular public purpose is sufficient for a legal
appropriation to exist, the appropriation law must contain adequate legislative guidelines if the same law delegates
rule-making authority to the Executive  either for the purpose of (a) filling up the details of the law for its
245

enforcement, known as supplementary rule-making, or (b) ascertaining facts to bring the law into actual operation,
referred to as contingent rule-making.  There are two (2) fundamental tests to ensure that the legislative guidelines
246

for delegated rule-making are indeed adequate. The first test is called the "completeness test." Case law states that
a law is complete when it sets forth therein the policy to be executed, carried out, or implemented by the delegate.
On the other hand, the second test is called the "sufficient standard test." Jurisprudence holds that a law lays down
a sufficient standard when it provides adequate guidelines or limitations in the law to map out the boundaries of the
delegate‘s authority and prevent the delegation from running riot.  To be sufficient, the standard must specify the
247

limits of the delegate‘s authority, announce the legislative policy, and identify the conditions under which it is to be
implemented. 248

In view of the foregoing, the Court agrees with petitioners that the phrase "and for such other purposes as may be
hereafter directed by the President" under Section 8 of PD 910 constitutes an undue delegation of legislative power
insofar as it does not lay down a sufficient standard to adequately determine the limits of the President‘s authority
with respect to the purpose for which the Malampaya Funds may be used. As it reads, the said phrase gives the
President wide latitude to use the Malampaya Funds for any other purpose he may direct and, in effect, allows him
to unilaterally appropriate public funds beyond the purview of the law. That the subject phrase may be confined only
to "energy resource development and exploitation programs and projects of the government" under the principle of
ejusdem generis, meaning that the general word or phrase is to be construed to include – or be restricted to – things
akin to, resembling, or of the same kind or class as those specifically mentioned,  is belied by three (3) reasons:
249

first, the phrase "energy resource development and exploitation programs and projects of the government" states a
singular and general class and hence, cannot be treated as a statutory reference of specific things from which the
general phrase "for such other purposes" may be limited; second, the said phrase also exhausts the class it
represents, namely energy development programs of the government;  and, third, the Executive department has, in
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fact, used the Malampaya Funds for non-energy related purposes under the subject phrase, thereby contradicting
respondents‘ own position that it is limited only to "energy resource development and exploitation programs and
projects of the government."  Thus, while Section 8 of PD 910 may have passed the completeness test since the
251

policy of energy development is clearly deducible from its text, the phrase "and for such other purposes as may be
hereafter directed by the President" under the same provision of law should nonetheless be stricken down as
unconstitutional as it lies independently unfettered by any sufficient standard of the delegating law. This
notwithstanding, it must be underscored that the rest of Section 8, insofar as it allows for the use of the Malampaya
Funds "to finance energy resource development and exploitation programs and projects of the government,"
remains legally effective and subsisting. Truth be told, the declared unconstitutionality of the aforementioned phrase
is but an assurance that the Malampaya Funds would be used – as it should be used – only in accordance with the
avowed purpose and intention of PD 910.

As for the Presidential Social Fund, the Court takes judicial notice of the fact that Section 12 of PD 1869 has already
been amended by PD 1993 which thus moots the parties‘ submissions on the same.  Nevertheless, since the
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amendatory provision may be readily examined under the current parameters of discussion, the Court proceeds to
resolve its constitutionality.

Primarily, Section 12 of PD 1869, as amended by PD 1993, indicates that the Presidential Social Fund may be used
"to first, finance the priority infrastructure development projects and second, to finance the restoration of damaged
or destroyed facilities due to calamities, as may be directed and authorized by the Office of the President of the
Philippines." The Court finds that while the second indicated purpose adequately curtails the authority of the
President to spend the Presidential Social Fund only for restoration purposes which arise from calamities, the first
indicated purpose, however, gives him carte blanche authority to use the same fund for any infrastructure project he
may so determine as a "priority". Verily, the law does not supply a definition of "priority in frastructure development
projects" and hence, leaves the President without any guideline to construe the same. To note, the delimitation of a
project as one of "infrastructure" is too broad of a classification since the said term could pertain to any kind of
facility. This may be deduced from its lexicographic definition as follows: "the underlying framework of a system,
especially public services and facilities (such as highways, schools, bridges, sewers, and water-systems) needed to
support commerce as well as economic and residential development."  In fine, the phrase "to finance the priority
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infrastructure development projects" must be stricken down as unconstitutional since – similar to the above-assailed
provision under Section 8 of PD 910 – it lies independently unfettered by any sufficient standard of the delegating
257
law. As they are severable, all other provisions of Section 12 of PD 1869, as amended by PD 1993, remains legally
effective and subsisting.

D. Ancillary Prayers. 1.

Petitioners’ Prayer to be Furnished Lists and Detailed Reports.

Aside from seeking the Court to declare the Pork Barrel System unconstitutional – as the Court did so in the context
of its pronouncements made in this Decision – petitioners equally pray that the Executive Secretary and/or the DBM
be ordered to release to the CoA and to the public: (a) "the complete schedule/list of legislators who have availed of
their PDAF and VILP from the years 2003 to 2013, specifying the use of the funds, the project or activity and the
recipient entities or individuals, and all pertinent data thereto" (PDAF Use Schedule/List);  and (b) "the use of the
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Executive‘s lump-sum, discretionary funds, including the proceeds from the x x x Malampaya Funds and remittances
from the PAGCOR x x x from 2003 to 2013, specifying the x x x project or activity and the recipient entities or
individuals, and all pertinent data thereto"  (Presidential Pork Use Report). Petitioners‘ prayer is grounded on
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Section 28, Article II and Section 7, Article III of the 1987 Constitution which read as follows:

ARTICLE II

Sec. 28. Subject to reasonable conditions prescribed by law, the State adopts and implements a policy of full public
disclosure of all its transactions involving public interest.

ARTICLE III Sec. 7.

The right of the people to information on matters of public concern shall be recognized. Access to official records,
and to documents and papers pertaining to official acts, transactions, or decisions, as well as to government
research data used as basis for policy development, shall be afforded the citizen, subject to such limitations as may
be provided by law.

The Court denies petitioners‘ submission.

Case law instructs that the proper remedy to invoke the right to information is to file a petition for mandamus. As
explained in the case of Legaspi v. Civil Service Commission: 256

While the manner of examining public records may be subject to reasonable regulation by the government agency
in custody thereof, the duty to disclose the information of public concern, and to afford access to public records
cannot be discretionary on the part of said agencies. Certainly, its performance cannot be made contingent upon the
discretion of such agencies. Otherwise, the enjoyment of the constitutional right may be rendered nugatory by any
whimsical exercise of agency discretion. The constitutional duty, not being discretionary, its performance may be
compelled by a writ of mandamus in a proper case.

But what is a proper case for Mandamus to issue? In the case before Us, the public right to be enforced and the
concomitant duty of the State are unequivocably set forth in the Constitution.

The decisive question on the propriety of the issuance of the writ of mandamus in this case is, whether the
information sought by the petitioner is within the ambit of the constitutional guarantee. (Emphases supplied)

Corollarily, in the case of Valmonte v. Belmonte Jr.  (Valmonte), it has been clarified that the right to information
257

does not include the right to compel the preparation of "lists, abstracts, summaries and the like." In the same case, it
was stressed that it is essential that the "applicant has a well -defined, clear and certain legal right to the thing
demanded and that it is the imperative duty of defendant to perform the act required." Hence, without the foregoing
substantiations, the Court cannot grant a particular request for information. The pertinent portions of Valmonte are
hereunder quoted: 258

Although citizens are afforded the right to information and, pursuant thereto, are entitled to "access to official
records," the Constitution does not accord them a right to compel custodians of official records to prepare lists,
abstracts, summaries and the like in their desire to acquire information on matters of public concern.

It must be stressed that it is essential for a writ of mandamus to issue that the applicant has a well-defined, clear
and certain legal right to the thing demanded and that it is the imperative duty of defendant to perform the act
required. The corresponding duty of the respondent to perform the required act must be clear and specific Lemi v.
Valencia, G.R. No. L-20768, November 29,1968,126 SCRA 203; Ocampo v. Subido, G.R. No. L-28344, August 27,
1976, 72 SCRA 443.

The request of the petitioners fails to meet this standard, there being no duty on the part of respondent to prepare
the list requested. (Emphases supplied)
258
In these cases, aside from the fact that none of the petitions are in the nature of mandamus actions, the Court finds
that petitioners have failed to establish a "a well-defined, clear and certain legal right" to be furnished by the
Executive Secretary and/or the DBM of their requested PDAF Use Schedule/List and Presidential Pork Use Report.
Neither did petitioners assert any law or administrative issuance which would form the bases of the latter‘s duty to
furnish them with the documents requested. While petitioners pray that said information be equally released to the
CoA, it must be pointed out that the CoA has not been impleaded as a party to these cases nor has it filed any
petition before the Court to be allowed access to or to compel the release of any official document relevant to the
conduct of its audit investigations. While the Court recognizes that the information requested is a matter of
significant public concern, however, if only to ensure that the parameters of disclosure are properly foisted and so as
not to unduly hamper the equally important interests of the government, it is constrained to deny petitioners‘ prayer
on this score, without prejudice to a proper mandamus case which they, or even the CoA, may choose to pursue
through a separate petition.

It bears clarification that the Court‘s denial herein should only cover petitioners‘ plea to be furnished with such
schedule/list and report and not in any way deny them, or the general public, access to official documents which are
already existing and of public record. Subject to reasonable regulation and absent any valid statutory prohibition,
access to these documents should not be proscribed. Thus, in Valmonte, while the Court denied the application for
mandamus towards the preparation of the list requested by petitioners therein, it nonetheless allowed access to the
documents sought for by the latter, subject, however, to the custodian‘s reasonable regulations,viz.: 259

In fine, petitioners are entitled to access to the documents evidencing loans granted by the GSIS, subject to
reasonable regulations that the latter may promulgate relating to the manner and hours of examination, to the end
that damage to or loss of the records may be avoided, that undue interference with the duties of the custodian of the
records may be prevented and that the right of other persons entitled to inspect the records may be insured Legaspi
v. Civil Service Commission, supra at p. 538, quoting Subido v. Ozaeta, 80 Phil. 383, 387. The petition, as to the
second and third alternative acts sought to be done by petitioners, is meritorious.

However, the same cannot be said with regard to the first act sought by petitioners, i.e.,

"to furnish petitioners the list of the names of the Batasang Pambansa members belonging to the UNIDO and PDP-
Laban who were able to secure clean loans immediately before the February 7 election thru the
intercession/marginal note of the then First Lady Imelda Marcos."

The Court, therefore, applies the same treatment here.

2. Petitioners’ Prayer to Include Matters in Congressional Deliberations.

Petitioners further seek that the Court "order the inclusion in budgetary deliberations with the Congress of all
presently, off-budget, lump sum, discretionary funds including but not limited to, proceeds from the x x x Malampaya
Fund, remittances from the PAGCOR and the PCSO or the Executive‘s Social Funds." 260

Suffice it to state that the above-stated relief sought by petitioners covers a matter which is generally left to the
prerogative of the political branches of government. Hence, lest the Court itself overreach, it must equally deny their
prayer on this score.

3. Respondents’ Prayer to Lift TRO; Consequential Effects of Decision.

The final issue to be resolved stems from the interpretation accorded by the DBM to the concept of released funds.
In response to the Court‘s September 10, 2013 TRO that enjoined the release of the remaining PDAF allocated for
the year 2013, the DBM issued Circular Letter No. 2013-8 dated September 27, 2013 (DBM Circular 2013-8) which
pertinently reads as follows:

3.0 Nonetheless, PDAF projects funded under the FY 2013 GAA, where a Special Allotment Release Order (SARO)
has been issued by the DBM and such SARO has been obligated by the implementing agencies prior to the
issuance of the TRO, may continually be implemented and disbursements thereto effected by the agencies
concerned.

Based on the text of the foregoing, the DBM authorized the continued implementation and disbursement of PDAF
funds as long as they are: first, covered by a SARO; and, second, that said SARO had been obligated by the
implementing agency concerned prior to the issuance of the Court‘s September 10, 2013 TRO.

Petitioners take issue with the foregoing circular, arguing that "the issuance of the SARO does not yet involve the
release of funds under the PDAF, as release is only triggered by the issuance of a Notice of Cash Allocation
[(NCA)]."  As such, PDAF disbursements, even if covered by an obligated SARO, should remain enjoined.
261

259
For their part, respondents espouse that the subject TRO only covers "unreleased and unobligated allotments."
They explain that once a SARO has been issued and obligated by the implementing agency concerned, the PDAF
funds covered by the same are already "beyond the reach of the TRO because they cannot be considered as
‘remaining PDAF.‘" They conclude that this is a reasonable interpretation of the TRO by the DBM. 262

The Court agrees with petitioners in part.

At the outset, it must be observed that the issue of whether or not the Court‘s September 10, 2013 TRO should be
lifted is a matter rendered moot by the present Decision. The unconstitutionality of the 2013 PDAF Article as
declared herein has the consequential effect of converting the temporary injunction into a permanent one. Hence,
from the promulgation of this Decision, the release of the remaining PDAF funds for 2013, among others, is now
permanently enjoined.

The propriety of the DBM‘s interpretation of the concept of "release" must, nevertheless, be resolved as it has a
practical impact on the execution of the current Decision. In particular, the Court must resolve the issue of whether
or not PDAF funds covered by obligated SAROs, at the time this Decision is promulgated, may still be disbursed
following the DBM‘s interpretation in DBM Circular 2013-8.

On this score, the Court agrees with petitioners‘ posturing for the fundamental reason that funds covered by an
obligated SARO are yet to be "released" under legal contemplation. A SARO, as defined by the DBM itself in its
website, is "aspecific authority issued to identified agencies to incur obligations not exceeding a given amount
during a specified period for the purpose indicated. It shall cover expenditures the release of which is subject to
compliance with specific laws or regulations, or is subject to separate approval or clearance by competent
authority."
263

Based on this definition, it may be gleaned that a SARO only evinces the existence of an obligation and not the
directive to pay. Practically speaking, the SARO does not have the direct and immediate effect of placing public
funds beyond the control of the disbursing authority. In fact, a SARO may even be withdrawn under certain
circumstances which will prevent the actual release of funds. On the other hand, the actual release of funds is
brought about by the issuance of the NCA,  which is subsequent to the issuance of a SARO. As may be determined
264

from the statements of the DBM representative during the Oral Arguments: 265

Justice Bernabe: Is the notice of allocation issued simultaneously with the SARO?

xxxx

Atty. Ruiz: It comes after. The SARO, Your Honor, is only the go signal for the agencies to obligate or to enter into
commitments. The NCA, Your Honor, is already the go signal to the treasury for us to be able to pay or to liquidate
the amounts obligated in the SARO; so it comes after. x x x The NCA, Your Honor, is the go signal for the MDS for
the authorized government-disbursing banks to, therefore, pay the payees depending on the projects or projects
covered by the SARO and the NCA.

Justice Bernabe: Are there instances that SAROs are cancelled or revoked?

Atty. Ruiz: Your Honor, I would like to instead submit that there are instances that the SAROs issued are withdrawn
by the DBM.

Justice Bernabe: They are withdrawn?

Atty. Ruiz: Yes, Your Honor x x x. (Emphases and underscoring supplied)

Thus, unless an NCA has been issued, public funds should not be treated as funds which have been "released." In
this respect, therefore, the disbursement of 2013 PDAF funds which are only covered by obligated SAROs, and
without any corresponding NCAs issued, must, at the time of this Decision’s promulgation, be enjoined and
consequently reverted to the unappropriated surplus of the general fund. Verily, in view of the declared
unconstitutionality of the 2013 PDAF Article, the funds appropriated pursuant thereto cannot be disbursed even
though already obligated, else the Court sanctions the dealing of funds coming from an unconstitutional source.

This same pronouncement must be equally applied to (a) the Malampaya Funds which have been obligated but not
released – meaning, those merely covered by a SARO – under the phrase "and for such other purposes as may be
hereafter directed by the President" pursuant to Section 8 of PD 910; and (b) funds sourced from the Presidential
Social Fund under the phrase "to finance the priority infrastructure development projects" pursuant to Section 12 of
PD 1869, as amended by PD 1993, which were altogether declared by the Court as unconstitutional. However,
these funds should not be reverted to the general fund as afore-stated but instead, respectively remain under the
Malampaya Funds and the Presidential Social Fund to be utilized for their corresponding special purposes not
otherwise declared as unconstitutional.

260
E. Consequential Effects of Decision.

As a final point, it must be stressed that the Court‘s pronouncement anent the unconstitutionality of (a) the 2013
PDAF Article and its Special Provisions, (b) all other Congressional Pork Barrel provisions similar thereto, and (c)
the phrases (1) "and for such other purposes as may be hereafter directed by the President" under Section 8 of PD
910, and (2) "to finance the priority infrastructure development projects" under Section 12 of PD 1869, as amended
by PD 1993, must only be treated as prospective in effect in view of the operative fact doctrine.

To explain, the operative fact doctrine exhorts the recognition that until the judiciary, in an appropriate case,
declares the invalidity of a certain legislative or executive act, such act is presumed constitutional and thus, entitled
to obedience and respect and should be properly enforced and complied with. As explained in the recent case of
Commissioner of Internal Revenue v. San Roque Power Corporation,  the doctrine merely "reflects awareness that
266

precisely because the judiciary is the governmental organ which has the final say on whether or not a legislative or
executive measure is valid, a period of time may have elapsed before it can exercise the power of judicial review
that may lead to a declaration of nullity. It would be to deprive the law of its quality of fairness and justice then, if
there be no recognition of what had transpired prior to such adjudication."  "In the language of an American
267

Supreme Court decision: ‘The actual existence of a statute, prior to such a determination of unconstitutionality, is an
operative fact and may have consequences which cannot justly be ignored.‘" 268

For these reasons, this Decision should be heretofore applied prospectively.

Conclusion

The Court renders this Decision to rectify an error which has persisted in the chronicles of our history. In the final
analysis, the Court must strike down the Pork Barrel System as unconstitutional in view of the inherent defects in the
rules within which it operates. To recount, insofar as it has allowed legislators to wield, in varying gradations, non-
oversight, post-enactment authority in vital areas of budget execution, the system has violated the principle of
separation of powers; insofar as it has conferred unto legislators the power of appropriation by giving them personal,
discretionary funds from which they are able to fund specific projects which they themselves determine, it has
similarly violated the principle of non-delegability of legislative power ; insofar as it has created a system of
budgeting wherein items are not textualized into the appropriations bill, it has flouted the prescribed procedure of
presentment and, in the process, denied the President the power to veto items ; insofar as it has diluted the
effectiveness of congressional oversight by giving legislators a stake in the affairs of budget execution, an aspect of
governance which they may be called to monitor and scrutinize, the system has equally impaired public
accountability ; insofar as it has authorized legislators, who are national officers, to intervene in affairs of purely local
nature, despite the existence of capable local institutions, it has likewise subverted genuine local autonomy ; and
again, insofar as it has conferred to the President the power to appropriate funds intended by law for energy-related
purposes only to other purposes he may deem fit as well as other public funds under the broad classification of
"priority infrastructure development projects," it has once more transgressed the principle of non-delegability.

For as long as this nation adheres to the rule of law, any of the multifarious unconstitutional methods and
mechanisms the Court has herein pointed out should never again be adopted in any system of governance, by any
name or form, by any semblance or similarity, by any influence or effect. Disconcerting as it is to think that a system
so constitutionally unsound has monumentally endured, the Court urges the people and its co-stewards in
government to look forward with the optimism of change and the awareness of the past. At a time of great civic
unrest and vociferous public debate, the Court fervently hopes that its Decision today, while it may not purge all the
wrongs of society nor bring back what has been lost, guides this nation to the path forged by the Constitution so that
no one may heretofore detract from its cause nor stray from its course. After all, this is the Court‘s bounden duty and
no other‘s.

WHEREFORE, the petitions are PARTLY GRANTED. In view of the constitutional violations discussed in this
Decision, the Court hereby declares as UNCONSTITUTIONAL: (a) the entire 2013 PDAF Article; (b) all legal
provisions of past and present Congressional Pork Barrel Laws, such as the previous PDAF and CDF Articles and
the various Congressional Insertions, which authorize/d legislators – whether individually or collectively organized
into committees – to intervene, assume or participate in any of the various post-enactment stages of the budget
execution, such as but not limited to the areas of project identification, modification and revision of project
identification, fund release and/or fund realignment, unrelated to the power of congressional oversight; (c) all legal
provisions of past and present Congressional Pork Barrel Laws, such as the previous PDAF and CDF Articles and
the various Congressional Insertions, which confer/red personal, lump-sum allocations to legislators from which they
are able to fund specific projects which they themselves determine; (d) all informal practices of similar import and
effect, which the Court similarly deems to be acts of grave abuse of discretion amounting to lack or excess of
jurisdiction; and (e) the phrases (1) "and for such other purposes as may be hereafter directed by the President"
under Section 8 of Presidential Decree No. 910 and (2) "to finance the priority infrastructure development projects"
under Section 12 of Presidential Decree No. 1869, as amended by Presidential Decree No. 1993, for both failing the
sufficient standard test in violation of the principle of non-delegability of legislative power.

261
Accordingly, the Court‘s temporary injunction dated September 10, 2013 is hereby declared to be PERMANENT.
Thus, the disbursement/release of the remaining PDAF funds allocated for the year 2013, as well as for all previous
years, and the funds sourced from (1) the Malampaya Funds under the phrase "and for such other purposes as may
be hereafter directed by the President" pursuant to Section 8 of Presidential Decree No. 910, and (2) the
Presidential Social Fund under the phrase "to finance the priority infrastructure development projects" pursuant to
Section 12 of Presidential Decree No. 1869, as amended by Presidential Decree No. 1993, which are, at the time
this Decision is promulgated, not covered by Notice of Cash Allocations (NCAs) but only by Special Allotment
Release Orders (SAROs), whether obligated or not, are hereby ENJOINED. The remaining PDAF funds covered by
this permanent injunction shall not be disbursed/released but instead reverted to the unappropriated surplus of the
general fund, while the funds under the Malampaya Funds and the Presidential Social Fund shall remain therein to
be utilized for their respective special purposes not otherwise declared as unconstitutional.

On the other hand, due to improper recourse and lack of proper substantiation, the Court hereby DENIES
petitioners‘ prayer seeking that the Executive Secretary and/or the Department of Budget and Management be
ordered to provide the public and the Commission on Audit complete lists/schedules or detailed reports related to
the availments and utilization of the funds subject of these cases. Petitioners‘ access to official documents already
available and of public record which are related to these funds must, however, not be prohibited but merely
subjected to the custodian‘s reasonable regulations or any valid statutory prohibition on the same. This denial is
without prejudice to a proper mandamus case which they or the Commission on Audit may choose to pursue
through a separate petition.

The Court also DENIES petitioners prayer to order the inclusion of the funds subject of these cases in the budgetary
deliberations of Congress as the same is a matter left to the prerogative of the political branches of government.

Finally, the Court hereby DIRECTS all prosecutorial organs of the government to, within the bounds of reasonable
dispatch, investigate and accordingly prosecute all government officials and/or private individuals for possible
criminal offenses related to the irregular, improper and/or unlawful disbursement/utilization of all funds under the
Pork Barrel System.

This Decision is immediately executory but prospective in effect.

SO ORDERED.

CONCURRING OPINION

LEONEN, J.:

We do not just move on from a calamity caused by greed and abuse of power. We become better. We set things
right.

We recover the public s trust.

We are again called to exercise our constitutional duty to ensure that every morsel of power of any incumbent in
public office should only be exercised .in stewardship. Privileges are not permanent; they are not to be abused.
Rank is bestowed to enable public servants to accomplish their duties; it is not to aggrandize. Public 8ffice is for the
public good; it is not a title that is passed on like a family heirloom.

It is solemn respect for the public’s trust that ensures that government is effective and efficient. Public service
suffers when greed fuels the ambitions of those who wield power. Our coffers are drained needlessly. Those who
should pay their taxes will not properly pay their taxes. Some of the incumbents expand their experience in graft and
corruption rather than in the knowledge and skills demanded by their office. Poverty, calamities, and other strife
inordinately become monsters that a weakened government is unable to slay.

Greed, thus, undermines the ability of elected representatives to be real agents of their constituents.  It substitutes
1âwphi1

the people's interest for the narrow parochial interest of the few. It serves the foundation of public betrayal while it
tries to do everything to mask its illegitimacy.

The abuse of public office to enrich the incumbent at the expense of the many is sheer moral callousness. It is evil
that is not easy to discover. However, the evil that men do cannot be hidden forever.

In time, courage, skill or serendipity reveals.

The time has come for what is loosely referred to as the "pork barrel system." We will allow no more evasion.

262
I am honored to be able to join with the ponencia of Justice Perlas-Bernabe and in part the Concurring Opinions of
Chief Justice Sereno, Senior Associate Justice Carpio and Justice Arturo Brion. To their studied words and the
strident voices of the millions who still have hope in an effective government with integrity, I add mine.

Title XLIV known as the Priority Development Assistance Fund (PDAF) in the 2013 General Appropriations Act
(Republic Act No. 10352) is unconstitutional. We, thus, overturn the holdings of various cases starting with
Philippine Constitution Association v. Enriquez  and Sarmiento v. The Treasurer of the Philippines.  Presidential
1 2

Decree No. 910 does not sanction the unmitigated and unaccountable use of income derived from energy
resources. The purpose of the Presidential Social Fund in Title IV, Section 12 of Presidential Decree No. 1869, as
amended, "to finance the priority infrastructure development projects" is also unconstitutional.

What is involved in this case is the fundamental right of our peoples to have a truly representative government that
upholds its stewardship and the public trust. It is none but their right to have a government worthy of their
sovereignty.

Specifically, glossing over some of the lapses in the Petitions before us and specify that what is at issue in these
cases is the constitutionality of the following:

(a) Title XLIV of the 2013 General Appropriations Act (GAA) or Republic Act No. 10352;

(b) The item referred to as the Various Infrastructure including Local Projects, Nationwide (VILP) located in
Title XVIII (DPWH) in the same 2013 General Appropriations Act;

(c) The proviso in Presidential Decree No. 910, Section 8, which allows the use of the Malampaya Special
Fund "for such other purposes as may be hereafter directed by the President;" and

(d) The Presidential Social Fund as described in Title IV, Section 12 of Presidential Decree No. 1869, as
amended by Presidential Decree No. 1993.

II

Several procedural points contained in some of the pleadings filed in this case need to be clarified so that we are
not deemed to have acquiesced.

II. A

The Solicitor General argues that the President cannot be made a respondent in this case. The President cannot be
sued while he is in office.

I agree with the Solicitor General. 3

The doctrine of the non-suability of the President is well settled.  This includes any civil or criminal cases. It is part of
4

the Constitution by implication. Any suit will degrade the dignity necessary for the operations of the Office of the
President. It will additionally provide either a hindrance or distraction from the performance of his official duties and
functions. Also, any contrary doctrine will allow harassment and petty suits which can impair judgment. This does
not mean, however, that the President cannot be made accountable. He may be impeached and removed. Likewise, 5

he can be made criminally and civilly liable in the proper case after his tenure as President. 6

The Petition  that names the President as respondent should, thus, be either dismissed or deemed amended
7

accordingly.

II. B

Also, we cannot declare a "system" as unconstitutional. The Judiciary is not the institution that can overrule ideas
and concepts qua ideas and concepts. Petitioners should endeavor to specify the act complained of and the laws or
provisions of laws that have been invoked. It is their burden to show to this Court how these acts or provisions of law
violate any constitutional provision or principle embedded in its provisions.

An ambiguous petition culled only from sources in the mainstream or social media without any other particularity
may be dismissed outright. Courts of law cannot be tempted to render advisory opinions.

Generally, we are limited to an examination of the legal consequences of law as applied. This presupposes that
there is a specific act which violates a demonstrable duty on the part of the respondents. This demonstrable duty

263
can only be discerned when its textual anchor in the law is clear. In cases of constitutional challenges, we should be
able to compare the statutory provisions or the text of any executive issuance providing the putative basis of the
questioned act vis-à-vis a clear constitutional provision. Petitioners carry the burden of filtering events and
identifying the textual basis of the acts they wish to question before the court. This enables the respondents to
tender a proper traverse on the alleged factual background and the legal issues that should be resolved.

Petitions filed with this Court are not political manifestos. They are pleadings that raise important legal and
constitutional issues.

Anything short of this empowers this Court beyond the limitations defined in the Constitution. It invites us to use our
judgment to choose which law or legal provision to tackle. We become one of the party's advisers defeating the
necessary character of neutrality and objectivity that are some of the many characteristics of this Court’s legitimacy.

One of the petitioners has asked in its Petition to suspend the rules.  Another has questioned the general political
8

and historical concept known as the "pork barrel system."

As stated in their pleadings filed before this Court:

x x x. Contrary to the position taken by the political branches, petitioners respectfully submit that the "Pork Barrel
System" is repugnant to several constitutional provisions. 9

Petitioners emphasize that what is being assailed in the instant Petition dated 27 August 2013 is not just the
individual constitutionality of Legislative Pork Barrel and Presidential Pork Barrel. The interplay and dynamics of
these two components form the Pork Barrel System, which is likewise being questioned as unconstitutional insofar
as it undermines the principle of separation of powers and the corollary doctrine of checks and balances. 10

None of the original Petitions point to the provisions of law that they wish this Court to strike down. Petitioners used
the Priority Development Assistance Fund in the General Appropriations Act of 2013 merely as a concrete example
of the "legislative pork barrel" which is assailed by the petitioners as unconstitutional. Thus,

This is a Petition for Certiorari and Prohibition with Prayer for the Issuance of a Temporary Restraining Order and/or
Writ of Preliminary Injunction (the "instant Petition") filed under Rule 65 of the Rules of Court, seeking to annul and
set aside the Pork Barrel System presently embodied in the provisions of the General Appropriations Act ("GAA") of
2013 providing for the Legislature's Priority Development Assistance Fund or any replacement thereto, and the
Executive's various lump sum, discretionary funds colloquially referred to as the Special Purpose
Funds. (Underscoring supplied)
11

Petitioners consider the PDAF as it appears in the 2013 GAA as legislative pork barrel, considering that:

a. It is a post-enactment measure and it allows individual legislators to wield a collective power; b. The
PDAF gives lump-sum funds to Congressmen (Ph₱70 Million) and Senators (Ph₱200 Million);

c. Despite the existence of a menu of projects, legislators have discretionary power to propose and identify
the projects or beneficiaries that will be funded by their respective PDAF allocations; d. The legislative
guidelines for the PDAF in the 2013 GAA are vague and overbroad insofar as the purpose for which the
funds are to be used; and e. Legislators, specifically Congressmen, are generally directed to channel their
PDAF to projects located in their respective districts, but are permitted to fund projects outside of his or her
district, with permission of the local district representative concerned.
12

For purposes of this litigation, we should focus on Title XVIV of the 2013 General Appropriations Act which now
contains the Priority Development Assistance Fund (PDAF) item. The ponencia ably chronicles the history of this
aspect of "pork barrel" and notes that the specific features of the present Priority Development Assistance Fund is
different from its predecessors. To the extent that our pronouncements today affect the common features of all
these forms of "pork barrel" is the extent to which we affect the "system."

II. C

Basic in litigation raising constitutional issues is the requirement that there must be an actual case or controversy.
This Court cannot render an advisory opinion. We assume that the Constitution binds all other constitutional
departments, instrumentalities, and organs. We are aware that in the exercise of their various powers, they do
interpret the text of the Constitution in the light of contemporary needs that they should address. A policy that
reduces this Court to an adviser for official acts by the other departments that have not yet been done would
unnecessarily tax our resources. It is inconsistent with our role as final arbiter and adjudicator and weakens the
entire system of the Rule of Law. Our power of judicial review is a duty to make a final and binding construction of
law. This power should generally be reserved when the departments have exhausted any and all acts that would
remedy any perceived violation of right. The rationale that defines the extent of our doctrines laying down

264
exceptions to our rules on justiciability are clear: Not only should the pleadings show a convincing violation of a
right, but the impact should be shown to be so grave, imminent, and irreparable that any delayed exercise of judicial
review or deference would undermine fundamental principles that should be enjoyed by the party complaining or the
constituents that they legitimately represent.

The requirement of an "actual case," thus, means that the case before this Court "involves a conflict of legal rights,
an assertion of opposite legal claims susceptible of judicial resolution; the case must not be moot or academic
based on extra-legal or other similar considerations not cognizable by a court of justice."  Furthermore, "the
13

controversy needs to be definite and concrete, bearing upon the legal relations of parties who are pitted against
each other due to their adverse legal interests."  Thus, the adverse position of the parties must be sufficient enough
14

for the case to be pleaded and for this Court to be able to provide the parties the proper relief/s prayed for.

The requirement of an ‘actual case’ will ensure that this Court will not issue advisory opinions. It prevents us from
using the immense power of judicial review absent a party that can sufficiently argue from a standpoint with real and
substantial interests. 15

To support the factual backdrop of their case, petitioners rely primarily on the Commission on Audit's Special Audits
Office Report No. 2012-03, entitled Priority Development Assistance Fund (PDAF) and Various Infrastructures
including Local Projects (VILP) "x x x as definitive documentary proof that Congress has breached the limits of the
power given it by the Constitution on budgetary matters, and together with the Executive, has been engaged in acts
of grave abuse of discretion." 16

However, the facts that the petitioners present may still be disputable. These may be true, but those named are still
entitled to legal process.

The Commission on Audit (COA) Report used as the basis by petitioners to impute illegal acts by the members of
Congress is a finding that may show, prima facie, the factual basis that gives rise to concerns of grave irregularities.
It is based upon the Commission on Audit’s procedures on audit investigation as may be provided by law and their
rules.  It may suggest the culpability of some public officers. Those named, however, still await notices of
17

disallowance/charge, which are considered audit decisions, to be issued on the basis of the COA Report. 18

This is provided in the procedures of the Commission on Audit, thus:

Audit Disallowances/Charges/Suspensions. - In the course of the audit, whenever there are differences arising from
the settlement of accounts by reason of disallowances or charges, the audit shall issue Notices of
Disallowance/Charge (ND/NC) which shall be considered as audit decisions. Such ND/NC shall be adequately
established by evidence and the conclusions, recommendations, or dispositions shall be supported by applicable
laws, regulations, jurisprudence and the generally accepted accounting and auditing principles. The Auditor may
issue Notices of Suspension (NS) for transactions of doubtful legality/validity/propriety to obtain further explanation
or documentation. 19

Notices of Disallowance that will be issued will furthermore still be litigated.

However, prior to the filing of these Petitions, this Court promulgated Delos Santos v. Commission on Audit. In that
case, we dealt with the patent irregularity of the disbursement of the Priority Development Assistance Fund of then
Congressman Antonio V. Cuenco. 20

We have basis, therefore, for making the exception to an actual case. Taking together Delos Santos and the prima
facie findings of fact in the COA Report, which must be initially respected by this Court sans finding of grave abuse
of discretion,  there appears to be some indication that there may be widespread and pervasive wastage of funds by
21

the members of the Congress who are tasked to check the President’s spending. It appears that these leakages are
not only imminent but ongoing.

We note that our findings on the constitutionality of this item in the General Appropriations Act is without prejudice to
finding culpability for violation of other laws. None of the due process rights of those named in the report will, thus,
be imperiled.

III

The Solicitor General, on behalf of respondents, argue that "reforms are already underway" 22

and that "[t]he political branches are already in the process of dismantling the PDAF system and reforming the
budgetary process x x x."  Thus, the Solicitor General urges this Court "not to impose a judicial solution at this
23

stage, when a progressive political solution is already taking shape." 24

265
He further alleges that Congress is on the verge of deleting the provisions of the Priority Development Assistance
Fund. In his Memorandum, he avers that:

15. The present petitions should be viewed in relation to the backward- and forward-looking progressive, remedial,
and responsive actions currently being undertaken by the political branches of government. We invite the Honorable
Court to take judicial notice of the backward-looking responses of the government: the initial complaints for plunder
that were recently filed by the Department of Justice before the Ombudsman. We also invite the Honorable Court to
take judicial notice of the forward-looking responses of the government: the declared program of the political
branches to eliminate the PDAF in the 2014 budget and the reforms of the budgetary process to respond to the
problem of abuse of discretion in the use of so-called pork barrel funds. Given the wider space of the political
departments in providing solutions to the current controversy, this Court should exercise its judicial review powers
cautiously lest it interrupts an ongoing reform-oriented political environment.

xxxx

17. Reforms are underway. The President has officially declared his intent to abolish the PDAF and has specified
his plan to replace the PDAF. Before the TRO was issued by this Honorable Court on 10 September 2013, the
President had already withheld the release of the remaining PDAF under the 2013 GAA and outlined reforms to the
budget.

18. The leadership of the Senate and of the House of Representatives have also officially declared their support for
the intent to abolish the PDAF and replace it with a more transparent, accountable, and responsive system. The
House of Representatives has already passed a PDAF-free budget on second reading and moved amounts from
the current PDAF into the budget for line-item projects.

19. Congress is in the process of adopting more stringent qualifications for line-item projects in the 2014 budget.
This means that projects will have to be approved within the budget process, and included as line-items in the
appropriations of implementing agencies. x x x. 25

III. A

The political question doctrine emerged as a corollary to the nature of judicial review. In the landmark case of
Angara v. Electoral Commission,  the essence of the duty of judicial review was explained, thus:
26

But in the main, the Constitution has blocked out with deft strokes and in bold lines, allotment of power to the
executive, the legislative and the judicial departments of the government. The overlapping and interlacing of
functions and duties between the several departments, however, sometimes makes it hard to say just where one
leaves off and the other begins. In times of social disquietude or political excitement, the great landmarks of the
Constitution are apt to be forgotten or marred, if not entirely obliterated. In cases of conflict, the judicial department
is the only constitutional organ which can be called upon to determine the proper allocation of powers between the
several departments and among the integral or constituent units thereof.

xxxx

The Constitution is a definition of the powers of government. Who is to determine the nature, scope and extent of
such powers? The Constitution itself has provided for the instrumentality of the judiciary as the rational way. And
when the judiciary mediates to allocate constitutional boundaries, it does not assert any superiority over the other
departments; it does not in reality nullify or invalidate an act of the legislature, but only asserts the solemn and
sacred obligation assigned to it by the Constitution to determine conflicting claims of authority under the Constitution
and to establish for the parties in an actual controversy the rights which that instrument secures and guarantees to
them. This is in truth all that is involved in what is termed "judicial supremacy" which properly is the power of judicial
review under the Constitution.  (Emphasis provided)
27

This Court in Angara, however, expressed caution and a policy of hesitance in the exercise of judicial review. This
Court was quick to point out that this power cannot be used to cause interference in the political processes by
limiting the power of review in its refusal to pass upon "questions of wisdom, justice or expediency of
legislation," thus:
28

x x x Even then, this power of judicial review is limited to actual cases and controversies to be exercised after full
opportunity of argument by the parties, and limited further to the constitutional question raised or the very lis mota
presented. Any attempt at abstraction could only lead to dialectics and barren legal questions and to sterile
conclusions unrelated to actualities. Narrowed as its function is in this manner, the judiciary does not pass upon
questions of wisdom, justice or expediency of legislation. More than that, courts accord the presumption of
constitutionality to legislative enactments, not only because the legislature is presumed to abide by the Constitution
but also because the judiciary in the determination of actual cases and controversies must reflect the wisdom and
justice of the people as expressed through their representatives in the executive and legislative departments of the
government. 29

266
What were questions of wisdom and questions of legality that would be within the purview of the courts were earlier
explained in Tañada v. Cuenco: 30

As already adverted to, the objection to our jurisdiction hinges on the question whether the issue before us is
political or not. In this connection, Willoughby lucidly states:

Elsewhere in this treatise the well-known and well-established principle is considered that it is not within the
province of the courts to pass judgment upon the policy of legislative or executive action. Where, therefore,
discretionary powers are granted by the Constitution or by statute, the manner in which those powers are exercised
is not subject to judicial review. The courts, therefore, concern themselves only with the question as to the existence
and extent of these discretionary powers.

As distinguished from the judicial, the legislative and executive departments are spoken of as the political
departments of government because in very many cases their action is necessarily dictated by considerations of
public or political policy. These considerations of public or political policy of course will not permit the legislature to
violate constitutional provisions, or the executive to exercise authority not granted him by the Constitution or by
statute, but, within these limits, they do permit the departments, separately or together, to recognize that a certain
set of facts exists or that a given status exists, and these determinations, together with the consequences that flow
therefrom, may not be traversed in the courts." (Willoughby on the Constitution of the United States, Vol. 3, p. 1326;
Emphasis supplied)

xxxx

It is not easy, however, to define the phrase 'political question,' nor to determine what matters fall within its scope. It
is frequently used to designate all questions that lie outside the scope of the judicial questions, which under the
Constitution, are to be decided by the people in their sovereign capacity, or in regard to which full discretionary
authority has been delegated to the legislative or executive branch of the government. (16 C.J.S., 413; See also
Geauga Lake Improvement Ass'n. vs . Lozier, 182 N. E. 491, 125 Ohio St. 565; Sevilla vs. Elizalde, 112 F. 2d 29, 72
App. D. C., 108; Emphasis supplied)

xxxx

x x x What is generally meant, when it is said that a question is political, and not judicial, is that it is a matter which is
to be exercised by the people in their primary political capacity, or that it has been specifically delegated to some
other department or particular officer of the government, with discretionary power to act. See State vs. Cunningham,
81 Wis. 497, 51 L. R. A. 561; In Re Gunn, 50 Kan. 155; 32 Pac. 470, 948, 19 L. R. A. 519; Green vs. Mills, 69 Fed.
852, 16, C. C. A. 516, 30 L. R. A. 90; Fletcher vs. Tuttle, 151 Ill. 41, 37 N. E. 683, 25 L. R. A. 143, 42 Am. St. Rep.
220. x x x.

In short, the phrase "political question" connotes, in legal parlance, what it means in ordinary parlance, namely, a
question of policy. In other words, in the language of Corpus Juris Secundum (supra), it refers to "those questions
which, under the Constitution, are to be decided by the people in their sovereign capacity, or in regard to which full
discretionary authority has been delegated to the Legislature or executive branch of the Government." It is
concerned with issues dependent upon the wisdom, not legality, of a particular measure. 31

In Casibang v. Judge Aquino,  the definition of a political question was discussed, citing Baker v. Carr:
32

x x x The term "political question" connotes what it means in ordinary parlance, namely, a question of policy. It refers
to those questions which under the Constitution, are to be decided by the people in their sovereign capacity; or in
regard to which full discretionary authority has been delegated to the legislative or executive branch of the
government. It is concerned with issues dependent upon the wisdom, not legality, of a particular measure" (Tañada
vs. Cuenco, L-1052, Feb. 28, 1957). A broader definition was advanced by U.S. Supreme Court Justice Brennan in

Baker vs. Carr (369 U.S. 186 [1962]): " Prominent on the surface of any case held to involve a political question is
found a textually demonstrable constitutional commitment of the issue to a coordinate political department; or a lack
of judicially discoverable and manageable standards for resolving it; or the impossibility of deciding without an initial
policy determination of a kind clearly for non- judicial discretion; or the impossibility of a court's undertaking
independent resolution without expressing lack of respect due coordinate branches of the government; or an
unusual need for unquestioning adherence to a political decision already made; or the potentiality of embarrassment
from multifarious pronouncements by various departments on one question" (p. 217). And Chief Justice Enrique M.
Fernando, then an Associate Justice of this Court, fixed the limits of the term, thus: "The term has been made
applicable to controversies clearly non-judicial and therefore beyond its jurisdiction or to an issue involved in a case
appropriately subject to its cognizance, as to which there has been a prior legislative or executive determination to
which deference must be paid (Cf. Vera vs. Avelino, 77 Phil. 192 [1946]; Lopez vs. Roxas , L-25716, July 28, 1966,
17 SCRA 756; Gonzales vs. Commission on Elections , L-28196, Nov. 9, 1967, 21 SCRA 774). It has likewise been
employed loosely to characterize a suit where the party proceeded against is the President or Congress, or any
branch thereof (Cf. Planas vs. Gil , 67 Phil. 62 [1937]; Vera vs. Avelino , 77 Phil. 192 [1946]). If to be delimited with
267
accuracy; 'political questions’ should refer to such as would under the Constitution be decided by the people in their
sovereign capacity or in regard to which full discretionary authority is vested either in the President or Congress. It is
thus beyond the competence of the judiciary to pass upon. x x x." ( Lansang vs. Garcia , 42 SCRA 448, 504-505
[1971]).  (Emphasis provided)
33

III. B

With this background and from our experience during Martial Law, the members of the Constitutional Commission
clarified the power of judicial review through the second paragraph of Section 1 of Article VIII of the Constitution.
This provides:

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

This addendum was borne out of the fear that the political question doctrine would continue to be used by courts to
avoid resolving controversies involving acts of the Executive and Legislative branches of government.  Hence,
34

judicial power was expanded to include the review of any act of grave abuse of discretion on any branch or
instrumentality of the government.

The Constitutional Commissioners were working with their then recent experiences in a regime of Martial Law. The
examples that they had during the deliberations on the floor of the Constitutional Commission were naturally based
on those experiences. It appears that they did not want a Court that had veto on any and all actions of the other
departments of government. Certainly, the Constitutional Commissioners did not intend that this Court’s discretion
substitutes for the political wisdom exercised within constitutional parameters. However, they wanted the power of
judicial review to find its equilibrium further than unthinking deference to political acts. Judicial review extends to
review political discretion that clearly breaches fundamental values and principles congealed in provisions of the
Constitution.

III. C

Grave abuse of discretion, in the context of the second paragraph of Section 1 of Article VIII of the Constitution, has
been described in various cases.

In Tañada v. Angara,  the issue before this Court was whether the Senate committed grave abuse of discretion
35

when it ratified the Agreement establishing the World Trade Organization. Although the ratification of treaties was
undoubtedly a political act on the part of Congress, this Court treated it as a justiciable issue. This Court held that
"where an action of the legislative branch is seriously alleged to have infringed the Constitution, it becomes not only
the right but in fact the duty of the judiciary to settle the dispute."  In defining grave abuse of discretion as "x x x
36

such capricious and whimsical exercise of judgment as is equivalent to lack of jurisdiction" and "must be so patent
and so gross as to amount to an evasion of a positive duty or to a virtual refusal to perform the duty enjoined or to
act at all in contemplation of law,"  this Court found that the Senate, in the absence of proof to the contrary, did not
37

commit grave abuse of discretion in the exercise of its power of concurrence granted to it by the Constitution.

In Villarosa v. House of Representatives Electoral Tribunal,  this Court's jurisdiction was invoked where petitioners
38

assailed the acts of the House of Representatives Electoral Tribunal. Petitioners alleged that the House of
Representatives Electoral Tribunal committed grave abuse of discretion when it treated the "JTV" votes as stray or
invalid.

This Court, through Chief Justice Davide, defined grave abuse of discretion as "x x x such capricious and whimsical
exercise of judgment as is equivalent to lack of jurisdiction; or, in other words, where the power is exercised in an
arbitrary manner by reason of passion or personal hostility. It must be so patent and gross as to amount to an
evasion of positive duty or to a virtual refusal to perform the duly enjoined or to act at all in contemplation of
law." After a review of the facts established in the case and application of the relevant provisions of law, it then held
39

that the House of Representatives did not commit grave abuse of discretion. 40

In Sen. Defensor Santiago v. Sen. Guingona, Jr.,  this Court was tasked to review the act of the Senate President.
41

The assailed act was the Senate President's recognition of respondent as the minority leader despite the minority
failing to arrive at a clear consensus during the caucus. This Court, while conceding that the Constitution does not
provide for rules governing the election of majority and minority leaders in Congress, nevertheless ruled that the
acts of its members are still subject to judicial review when done in grave abuse of discretion:

While no provision of the Constitution or the laws or the rules and even the practice of the Senate was violated, and
while the judiciary is without power to decide matters over which full discretionary authority has been lodged in the
legislative department, this Court may still inquire whether an act of Congress or its officials has been made with
grave abuse of discretion. This is the plain implication of Section 1, Article VIII of the Constitution, which expressly
268
confers upon the judiciary the power and the duty not only "to settle actual controversies involving rights which are
legally demandable and enforceable," but likewise "to determine whether or not there has been a grave abuse of
discretion amounting to lack or excess of jurisdiction on the part of any branch or instrumentality of the
Government."  (Emphasis provided)
42

III. D

Post-EDSA, this Court has even on occasion found exceptional circumstances when the political question doctrine
would not apply.

Thus, in SANLAKAS v. Executive Secretary Reyes,  this Court ruled that while the case has become moot,
43

"nevertheless, courts will decide a question, otherwise moot, if it is" capable of repetition yet evading review." 44

In SANLAKAS, Petitions were filed to assail the issuance of Proclamation No. 427 declaring a state of rebellion
during the so-called Oakwood occupation in 2003. While this Court conceded that the case was mooted by the
issuance of Proclamation No. 435, which declared that the state of rebellion ceased to exist, it still decided the case.
This Court pointed out that the issue has yet to be decided definitively, as evidenced by the dismissal of this Court of
previous cases involving the same issue due to mootness:

Once before, the President on May 1, 2001 declared a state of rebellion and called upon the AFP and the PNP to
suppress the rebellion through Proclamation No. 38 and General Order No. 1. On that occasion, "‘an angry and
violent mob armed with explosives, firearms, bladed weapons, clubs, stones and other deadly weapons’ assaulted
and attempted to break into Malacañang." Petitions were filed before this Court assailing the validity of the
President’s declaration. Five days after such declaration, however, the President lifted the same. The mootness of
the petitions in Lacson v. Perez and accompanying cases precluded this Court from addressing the constitutionality
of the declaration.

To prevent similar questions from reemerging, we seize this opportunity to finally lay to rest the validity of the
declaration of a state of rebellion in the exercise of the President’s calling out power, the mootness of the petitions
notwithstanding.  (Emphasis provided, citations omitted)
45

In Funa v. Villar,  a Petition was filed contesting the appointment of Reynaldo A. Villar as Chairman of the
46

Commission on Audit. During the pendency of the case, Villar sent a letter to the President signifying his intention to
step down from office upon the appointment of his replacement. Upon the appointment of the current Chairman, Ma.
Gracia Pulido-Tan, the case became moot and academic. This Court, guided by the principles stated in David v.
Arroyo, still gave due course to the Petition:

Although deemed moot due to the intervening appointment of Chairman Tan and the resignation of Villar, We
consider the instant case as falling within the requirements for review of a moot and academic case, since it asserts
at least four exceptions to the mootness rule discussed in David, namely: there is a grave violation of the
Constitution; the case involves a situation of exceptional character and is of paramount public interest; the
constitutional issue raised requires the formulation of controlling principles to guide the bench, the bar and the
public; and the case is capable of repetition yet evading review. The situation presently obtaining is definitely of
such exceptional nature as to necessarily call for the promulgation of principles that will henceforth "guide the
bench, the bar and the public" should like circumstance arise. Confusion in similar future situations would be
smoothed out if the contentious issues advanced in the instant case are resolved straightaway and settled definitely.
There are times when although the dispute has disappeared, as in this case, it nevertheless cries out to be
addressed. To borrow from Javier v. Pacificador, "Justice demands that we act then, not only for the vindication of
the outraged right, though gone, but also for the guidance of and as a restraint in the future."  (Citations omitted)
47

III. E

Thus, the addendum in the characterization of the power of judicial review should not be seen as a full and blanket
reversal of the policy of caution and courtesy embedded in the concept of political questions. It assumes that the act
or acts complained of would appear initially to have been done within the powers delegated to the respondents.
However, upon perusal or evaluation of its consequences, it may be shown that there are violations of law or
provisions of the Constitution.

The use of the Priority Development Assistance Fund or the "pork barrel" itself is questioned. It is not the act of a
few but the practice of members of Congress and the President. The current Priority Development Assistance Fund
amounts to twenty four (24) billion pesos; the alternative uses of this amount have great impact. Its wastage also will
have lasting effects. To get a sense of its magnitude, we can compare it with the proposed budgetary allocation for
the entire Judiciary. All courts get a collective budget that is about eighteen (18) billion pesos. The whole system of
adjudication is dwarfed by a system that allocates funds for unclear political motives. The concepts of accountability
and separation of powers are fundamental values in our constitutional democracy. The effect of the use of the
Priority Development Assistance Fund can have repercussions on these principles. Yet, it is difficult to discover
anomalies if any. It took the Commission on Audit some time to make its special report for a period ending in 2009.
269
It is difficult to expect such detail from ordinary citizens who wish to avail their rights as taxpayers. Clearly, had it not
been for reports in both mainstream and social media, the public would not have been made aware of the
magnitude.

What the present Petitions present is an opportune occasion to exercise the expanded power of judicial review. Due
course should be given because these Petitions suggest a case where (a) there may be indications that there are
pervasive breaches of the Constitution; (b) there is no doubt that there is a large and lasting impact on our societies;
(c) what are at stake are fundamental values of our constitutional order; (d) there are obstacles to timely discovering
facts which would serve as basis for regular constitutional challenges; and (e) the conditions are such that any delay
in our resolution of the case to await action by the political branches will not entirely address the violations. With
respect to the latter, our Decision will prevent the repetition of the same acts which have been historically shown to
be "capable of repetition" and yet "evading review." Our Decision today will also provide guidance for bench and
bar.

IV

Respondents also argued that we should continue to respect our precedents. They invoke the doctrine of stare
decisis.

Stare decisis is a functional doctrine necessary for courts committed to the rule of law. It is not, however, an
encrusted and inflexible canon.  Slavishly adhering to precedent potentially undermines the value of a Judiciary.
48

IV. A

Stare decisis is based on the logical concept of analogy.  It usually applies for two concepts. The first is the
49

meaning that is authoritatively given to a text of a provision of law with an established set of facts.  The second may
50

be the choices or methods of interpretation to arrive at a meaning of a certain kind of rule.

This case concerns itself with the first kind of stare decisis; that is, whether recommendations made by members of
Congress with respect to the projects to be funded by the President continue to be constitutional.

Ruling by precedent assists the members of the public in ordering their lives in accordance with law and the
authoritative meanings promulgated by our courts.  It provides reasonable expectations.  Ruling by precedent
51 52

provides the necessary comfort to the public that courts will be objective. At the very least, courts will have to
provide clear and lucid reasons should it not apply a given precedent in a specific case. 53

IV. B

However, the use of precedents is never mechanical. 54

Some assumptions normally creep into the facts established for past cases. These assumptions may later on prove
to be inaccurate or to be accurate only for a given historical period. Sometimes, the effects assumed by justices who
decide past cases do not necessarily happen.  Assumed effects are given primacy whenever the spirit or intent of
55

the law is considered in the interpretation of a legal provision. Some aspect of the facts or the context of these facts
would not have been fully considered. It is also possible that doctrines in other aspects of the law related to a
precedent may have also evolved. 56

In such cases, the use of precedents will unduly burden the parties or produce absurd or unworkable outcomes.
Precedents will not be useful to achieve the purposes for which the law would have been passed. 57

Precedents also need to be abandoned when this Court discerns, after full deliberation, that a continuing error in the
interpretation of the spirit and intent of a constitutional provision exists, especially when it concerns one of the
fundamental values or premises of our constitutional democracy.  The failure of this Court to do so would be to
58

renege on its duty to give full effect to the Constitution. 59

IV. C

PHILCONSA v. Enriquez held that the appropriation for the Countrywide Development Fund in the General
Appropriations Act of 1994 is constitutional. This Court ruled that "the authority given to the members of Congress is
only to propose and identify projects to be implemented by the President. x x x. The proposals made by the
members of Congress are merely recommendatory." 60

Subsequent challenges to various forms of the "pork barrel system" were mounted after PHILCONSA.

In Sarmiento v. The Treasurer of the Philippines,  the constitutionality of the appropriation of the Countrywide
61

Development Fund in the General Appropriations Act of 1996 was assailed. This Court applied the principle of stare
270
decisis and found "no compelling justification to review, much less reverse, this Court's ruling on the constitutionality
of the CDF."

The latest case was Lawyers Against Monopoly and Poverty (LAMP) v. Secretary of Budget and
Management. Petitioners in LAMP argue that in implementing the provisions of the Priority Development Assistance
62

Fund in the General Appropriations Act of 2004, direct releases of the fund were made to members of
Congress.  However, this Court found that petitioners failed to present convincing proof to support their
63

allegations.  The presumption of constitutionality of the acts of Congress was not rebutted.  Further, this Court
64 65

applied the ruling in PHILCONSA on the authority of members of Congress to propose and identify projects.  Thus,66

we upheld the constitutionality of the appropriation of the Priority Development Assistance Fund in the General
Appropriations Act of 2004.

There are some indications that this Court’s holding in PHILCONSA suffered from a lack of factual context.

The ponencia describes a history of increasing restrictions on the prerogative of members of the House of
Representatives and the Senate to recommend projects. There was no reliance simply on the dicta in PHILCONSA.
This shows that successive administrations saw the need to prevent abuses.

There are indicators of the failure of both Congress and the Executive to stem these abuses.

Just last September, this Court’s En Banc unanimously found in Delos Santos v. Commission on Audit  that there
67

was irregular disbursement of the Priority Development Assistance Fund of then Congressman Antonio V. Cuenco.

In Delos Santos, Congressman Cuenco entered into a Memorandum of Agreement with Vicente Sotto Memorial
Medical Center. The Memorandum of Agreement was for the purpose of providing medical assistance to indigent
patients. The amount of ₱1,500,000.00 was appropriated from the Priority Development Assistance Fund of
Congressman Cuenco. It may be noted that in the Memorandum of Agreement, Congressman Cuenco "shall
identify and recommend the indigent patients who may avail of the benefits of the Tony N’ Tommy (TNT) Health
Program x x x." 68

The Special Audits Team of the Commission on Audit assigned to investigate the TNT Health Program had the
following findings, which were upheld by us:

1. The TNT Program was not implemented by the appropriate implementing agency but by the office set up
by Congressman Cuenco.

2. The medicines purchased did not go through the required public bidding in violation of applicable
procurement laws and rules.

3. Specific provisions of the MOA itself setting standards for the implementation of the same program were
not observed. 69

In the disposition of the case, this Court "referred the case to the Office of the Ombudsman for proper investigation
and criminal prosecution of those involved in the irregular disbursement of then Congressman Antonio V. Cuenco's
Priority Development Assistance Fund." 70

While the special report of the Commission on Audit may not definitively be used to establish the facts that it alleges,
it may be one of the indicators that we should consider in concluding that the context of the Decision in PHILCONSA
may have changed.

In addition, but no less important, is that PHILCONSA perpetuates an error in the interpretation of some of the
fundamental premises of our Constitution.

To give life and fully live the values contained in the words of the Constitution, this Court must be open to timely re-
evaluation of doctrine when the opportunity presents itself. We should be ready to set things right so that what
becomes final is truly relevant to the lives of our people and consistent with our laws.

Mechanical application of stare decisis, at times, is not consistency with principle. At these times, consistency with
principle requires that we reject what appears as stare decisis.

Nowhere is public trust so important than in the management and use of the finances of government.

V. A

271
One of the central constitutional provisions is Article VI, Section 29(1) which provides:

No money shall be paid out of the Treasury except in pursuance of an appropriation made by law.

The President first submits to Congress a "budget of expenditures and sources of financing" in compliance with
Article VII, Section 22 which provides thus:

The President shall submit to the Congress, within thirty days from the opening of every regular session as the basis
of the general appropriations bill, a budget of expenditures and sources of financing, including receipts from existing
and proposed revenue measures.

This budget of expenditures and sources of financing (also called the National Expenditure Plan) is first filed with the
House of Representatives and can only originate from there. Thus, in Article VI, Section 24:

All appropriation, revenue or tariff bills, bills authorizing increase of the public debt, bills of local application, and
private bills, shall originate exclusively in the House of Representatives, but the Senate may propose or concur with
amendments.

Thereafter, the General Appropriations Bill is considered by Congress in three readings like other pieces of
legislation.  Should it become necessary, a bicameral committee is convened to harmonize the differences in the
71

Third Reading copies of each Legislative chamber. This is later on submitted to both the House and the Senate for
ratification.
72

The bill as approved by Congress shall then be presented to the President for approval. The President, in addition
to a full approval or veto, is granted the power of an item veto. Article VI, Section 27 (2) provides:

The President shall have the power to veto any particular item or items in an appropriation, revenue, or tariff bill, but
the veto shall not affect the item or items to which he does not object.

We have had, in several cases, interpreted the power of item veto of the President. 73

In Bengzon v. Drilon,  we said that a provision is different from an item. Thus,
74

We distinguish an item from a provision in the following manner:

The terms item and provision in budgetary legislations are concededly different. An item in a bill refers to the
particulars, the details, the distinct and severable parts x x x of the bill. It is an indivisible sum of money dedicated to
a stated purpose. The United States Supreme Court, in the case of Bengzon v. Secretary of Justice, declared ‘that
an ‘item’ of an appropriation bill obviously means an item which in itself is a specific appropriation of money, not
some general provision of law, which happens to be put into an appropriation bill. 75

A provision does not "directly appropriate funds x x x [but specifies] certain conditions and restrictions in the manner
by which the funds to which they relate have to be spent." 76

In PHILCONSA v. Enriquez,  we clarified that an unconstitutional provision is one that is inappropriate, and
77

therefore, has no effect:

As the Constitution is explicit that the provision which Congress can include in an appropriations bill must "relate
specifically to some particular appropriation therein" and "be limited in its operation to the appropriation to which it
relates," it follows that any provision which does not relate to any particular item, or which extends in its operation
beyond an item of appropriation, is considered "an inappropriate provision" which can be vetoed separately from an
item. Also to be included in the category of "inappropriate provisions" are unconstitutional provisions and provisions
which are intended to amend other laws, because clearly these kinds of laws have no place in an appropriations bill.
These are matters of general legislation more appropriately dealt with in separate enactments. Former Justice Irene
Cortes, as Amicus Curiae, commented that Congress cannot by law establish conditions for and regulate the
exercise of powers of the President given by the Constitution for that would be an unconstitutional intrusion into
executive prerogative. 78

V. B

What is readily apparent from the provisions of the Constitution is a clear distinction between the role of the
Legislature and that of the Executive when it comes to the budget process. 79

The Executive is given the task of preparing the budget and the prerogative to spend from an authorized budget. 80

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The Legislature, on the other hand, is given the power to authorize a budget for the coming fiscal year. 81

This power to authorize is given to the Legislature collectively. Nowhere in the Constitution does it allow specific
members of the House of Representatives or the Senate to implement projects and programs. Their role is clear.
Rather, it is the local government units that are given the prerogative to execute projects and programs. 82

Implicit in the power to authorize a budget for government is the necessary function of evaluating the past year's
spending performance as well as the determination of future goals for the economy. 83

A budget provides the backbone of any plan of action. Every plan of action should have goals but should also be
enriched by past failures. The deliberations to craft a budget that happen in Congress is informed by the inquiries
made on the performance of every agency of government. The collective inquiries made by representatives of
various districts should contribute to a clearer view of the mistakes or inefficiencies that have happened in the past.
It should assist elected representatives to discern the plans, programs, and projects that work and do not work.
Evaluating the spending of every agency in government requires that the Legislature is able to exact accountability.
Not only must it determine whether the expenditures were efficient. The Legislature must also examine whether
there have been unauthorized leakages — or graft and corruption — that have occurred.

The members of the Legislature do not do the formal audit of expenditures. This is the principal prerogative of the
Commission on Audit.  Rather, they benefit from such formal audits. These formal audits assist the members of the
84

House of Representatives and the Senators to do their constitutional roles. The formal audits also make public and
transparent the purposes, methods used, and achievements and failures of each and every expenditure made on
behalf of the government so that their constituencies can judge them as they go on to authorize another budget for
another fiscal year.

Any system where members of Congress participate in the execution of projects in any way compromises them. It
encroaches on their ability to do their constitutional duties. The violation is apparent in two ways: their ability to
efficiently make judgments to authorize a budget and the interference in the constitutional mandate of the President
to be the Executive.

Besides, interference in any government project other than that of congressional activities is a direct violation of
Article VI, Section 14 of the 1987 Constitution in so far as Title XLIV of the 2013 General Appropriations Act allows
participation by Congress. Article VI, Section 14 provides:

No Senator or Member of the House of Representatives may personally appear as counsel before any court of
justice or before the Electoral Tribunals, or quasi-judicial and other administrative bodies. Neither shall he, directly or
indirectly, be interested financially in any contract with, or in any franchise or special privilege granted by the
Government, or any subdivision, agency, or instrumentality thereof, including government owned or controlled
corporation, or its subsidiary, during his term of office. He shall not intervene in any matter before any office of the
Government for his pecuniary benefit or where he may be called upon to act on account of his office.  (Emphasis
85

provided)

V. C

Title XLIV of the General Appropriations Act of 2013 is the appropriation for the Priority Development Assistance
Fund of a lump sum amount of ₱24,790,000,000.00.

The Special Provisions of the Priority Development Assistance Fund are:

1. Use of Fund. The amount appropriated herein shall be used to fund the following priority programs and projects to
be implemented by the corresponding agencies:

A project menu follows

PROVIDED, That this Fund shall not be used for the payment of Personal Services expenditures: PROVIDED,
FURTHER, That all procurement shall comply with the provisions of R.A. No. 9184 and its Revised Implementing
Rules and Regulations: PROVIDED, FINALLY, That for infrastructure projects, LGUs may only be identified as
implementing agencies if they have the technical capability to implement the same.

2. Project Identification. Identification of projects and/or designation of beneficiaries shall conform to the priority list,
standard or design prepared by each implementing agency: PROVIDED, That preference shall be given to projects
located in the 4th to 6th class municipalities or indigents identified under the MHTS-PR by the DSWD. For this
purpose, the implementing agency shall submit to Congress said priority list, standard or design within ninety (90)
days from effectivity of this Act.

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All programs/projects, except for assistance to indigent patients and scholarships, identified by a member of the
House of Representatives outside his/her legislative district shall have the written concurrence of the member of the
House of Representatives of the recipient or beneficiary legislative district, endorsed by the Speaker of the House of
Representatives.

3. Legislator’s Allocation. The Total amount of projects to be identified by legislators shall be as follows:

a. For Congressional District or Party-List Representative: Thirty Million Pesos (₱30,000,000.00) for soft
programs and projects listed under Item A and Forty Million Pesos (₱40,000,000.00) for infrastructure
projects listed under Item B, the purposes of which are in the project menu of Special Provision No. 1; and

b. For Senators: One Hundred Million Pesos (₱100,000,000.00) for soft programs and projects listed under
Item A and One Hundred Million Pesos (₱100,000,000.00) for infrastructure projects listed under Item B, the
purposes of which are in the project menu of Special Provision No. 1.

Subject to the approved fiscal program for the year and applicable Special Provisions on the use and release of
fund, only fifty percent (50%) of the foregoing amounts may be released in the first semester and the remaining fifty
percent (50%) may be released in the second semester.

4. Realignment of Funds. Realignment under this Fund may only be allowed once. The Secretaries of Agriculture,
Education, Energy, Interior and Local Government, Labor and Employment, Public Works and Highways, Social
Welfare and Development and Trade and Industry are also authorized to approve realignment from one
project/scope to another within the allotment received from this Fund, subject to the following: (i) for infrastructure
projects, realignment is within the same implementing unit and the same project category as the original
concurrence of the legislator concerned. The DBM must be informed in writing of any realignment within five (5)
calendar days from approval thereof: PROVIDED, That any realignment under this Fund shall be limited within the
same classification of soft or hard programs/projects listed under Special Provision 1hereof: PROVIDED,
FURTHER, That in case of realignments, modifications and revisions of projects to be implemented by LGUs, the
LGU concerned shall certify that the cash has not yet been disbursed and the funds have been deposited back to
the BTr.

Any realignment, modification and revision of the project identification shall be submitted to the House Committee
on Appropriations and the Senate Committee on Finance, for favorable endorsement to the DBM or the
implementing agency, as the case may be.

5. Release of Funds. All request for release of funds shall be supported by the documents prescribed under Special
Provision No. 1 and favorably endorsed by the House Committee on Appropriations and the Senate Committee on
Finance, as the case may be. Funds shall be released to the implementing agencies subject to the conditions under
Special Provision No. 1 and the limits prescribed under Special Provision No. 3.

6. Posting Requirements. The DBM and respective heads of implementing agencies and their web administrator or
equivalent shall be responsible for ensuring that the following information, as may be applicable, are posted on their
respective official websites:

(i) all releases and realignments under this Fund; (ii) priority list, standard and design submitted to Congress; (iii)
projects identified and names of proponent legislator; (iv) names of project beneficiaries and/or recipients; (v) any
authorized realignment; (vi) status of project implementation and (vii) program/project evaluation and/or assessment
reports. Moreover, for any procurement to be undertaken using this Fund, implementing agencies shall likewise post
on the Philippine Government Electronic Procurement System all invitations to bid, names of participating bidders
with their corresponding bids, and awards of contract.

Once the General Appropriations Act is signed into law as explained above, the budget execution stage takes place.

x x x Budget execution comes under the domain of the Executive branch which deals with the operational aspects of
the cycle including the allocation and release of funds earmarked for various projects. Simply put, from the
regulation of fund releases, the implementation of payment schedules and up to the actual spending of the funds
specified in the law, the Executive takes the wheel. 86

Generally, the first step to budget execution is the issuance by the Department of Budget and Management of
Guidelines on the Release of Funds. For the year 2013, the Department of Budget and Management issued
National Budget Circular No. 545 entitled "Guidelines for the Release of Funds for FY 2013."

Under National Budget Circular No. 545, the appropriations shall be made available to the agency of the
government upon the issuance by the Department of Budget and Management of either an Agency Budget Matrix or
a Special Allotment Release Order.  The Agency Budget Matrix will act as a comprehensive release of allotment
87

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covering agency-specific budgets that do not need prior clearance.  The Special Allotment Release Order is
88

required for those allotments needing clearance, among others. 89

For the issuance of the Special Allotment Release Order, a request for allotment of funds (Special Budget
Request)  shall be made by the head of the department or agency requesting for the allotment to the Department of
90

Budget and Management. 91

Once the Special Allotment Release Order is issued, disbursement authorities such as a Notice of Cash Allowance
will be issued.

Applying the provisions of the Priority Development Assistance Fund in the General Appropriations Act of 2013 in
accordance with the budget execution stage outlined above, we will readily see the difference.

The allotment for the appropriation of the Priority Development and Assistance Fund of 2013 needs clearance and,
therefore, a Special Allotment Release Order must be issued by the Department of Budget and Management. 92

Unlike other appropriations, the written endorsement of the Chairman of the Senate Committee on Finance or the
Chairman of the Committee on Appropriations of the House of Representatives, as the case may be, is required.

A Special Budget Request is required for the issuance of the Special Allotment Release Order.  The Department of
93

Budget and Management issued a National Budget Circular No. 547 for the Guidelines for the Release of the
Priority Development Assistance Fund in the General Appropriations Act of 2013, which provides:

All requests for issuance of allotment shall be supported with the following: 3.1.1 List of priority programs/projects
including the supporting documents in accordance with the PDAF Project Menu; 3.1.2 Written endorsements by the
following: 3.1.2.1 In case of the Senate, the Senate President and the Chairman of the Committee on Finance; and
3.1.2.2 In case of the House of Representatives, the Speaker of the House of Representatives and the Chairman of
the Committee on Appropriations. 94

The Department of Budget and Management National Budget Circular No. 547 has been amended by Department
of Budget and Management National Budget Circular No. 547-A. The written endorsements of the Senate President
and the Speaker of the House of Representatives are not required anymore. The amendment reconciled the special
provisions of the Priority Development Assistance Fund under the General Appropriations Act of 2013 and the
Guidelines for the Release of the Priority Development Assistance Fund 2013.

Even a textual reading of the Special Provisions of the Priority Development Assistance Fund under the General
Appropriations Act of 2013 shows that the identification of projects and endorsements by the Chairman of the
Senate Committee on Finance and the Chairman of the Committee on Appropriations of the House of
Representatives are mandatory. The Special Provisions use the word, "shall."

Respondents argue that the participation of members of Congress in the allocation and release of the Priority
Development Assistance Fund is merely recommendatory upon the Executive. However, respondents failed to
substantiate in any manner their arguments. During the oral arguments for this case, the Solicitor General was
asked if he knew of any instance when the Priority Development Assistance Fund was released without the
identification made by Congress. The Solicitor General did not know of any case. 95

Besides, it is the recommendation itself which constitutes the evil. It is that interference which amounts to a
constitutional violation. This Court has implied that the participation of Congress is limited to the exercise of its
power of oversight.

Any post-enactment congressional measure such as this should be limited to scrutiny and investigation. In
particular, congressional oversight must be confined to the following:

1. scrutiny based primarily on Congress’ power of appropriation and the budget hearings conducted in
connection with it, its power to ask heads of departments to appear before and be heard by either of its
Houses on any matter pertaining to their departments and its power of confirmation and

2. investigation and monitoring of the implementation of laws pursuant to the power of Congress to conduct
inquiries in aid of legislation.96

x x x As such, it is only upon its effectivity that a law may be executed and the executive branch acquires the duties
and powers to execute the said law. Before that point, the role of the executive branch, particularly of the President,
is limited to approving or vetoing the law.

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From the moment the law becomes effective, any provision of law that empowers Congress or any of its members to
play any role in the implementation or enforcement of the law violates the principle of separation of powers and is
thus unconstitutional.97

Further, "x x x to forestall the danger of congressional encroachment "beyond the legislative sphere," the
Constitution imposes two basic and related constraints on Congress. It may not vest itself, any of its committees or
its members with either Executive or Judicial power. When Congress exercises its legislative power, it must follow
the "single, finely wrought and exhaustively considered, procedures" specified under the Constitution, including the
procedure for enactment of laws and presentment." 98

The participation of members of Congress — even if only to recommend — amounts to an unconstitutional post-
enactment interference in the role of the Executive. It also defeats the purpose of the powers granted by the
Constitution to Congress to authorize a budget.

V. D

Also, the Priority Development Assistance Fund has no discernable purpose.

The lack of purpose can readily be seen. This exchange during the oral arguments is instructive:

Justice Leonen: x x x First, can I ask you whether each legislative district will be getting the same amount under that
title? Each legislator gets 70 Million, is that not correct?

Solicitor General Jardeleza: There will be no appropriation like that, Your Honor.

Justice Leonen: No, I mean in terms of Title XLIV right now, at present.

Solicitor General Jardeleza: Oh, I'm sorry.

Justice Leonen: Of the 24 Billion each Member of the House of Representatives and a party list gets 70 Million, is
that not correct?

Solicitor General Jardeleza: Yes, Your Honor.

Justice Leonen: Second, that each senator gets 200 Million, is that not correct?

Solicitor General: Yes, Your Honor.

Justice Leonen: Let's go to congressional districts, are they of the same size?

Solicitor General Jardeleza: No, Your Honor.

Justice Leonen: So there can be smaller congressional districts and very big congressional districts, is that not
correct?

Solicitor General: Yes.

Justice Leonen: And there are congressional districts that have smaller populations and congressional districts that
have a very large population?

Solicitor General Jardeleza: Yes, Your Honor.

Justice Leonen: Batanes, for instance, has about 4,000 to 5,000 votes, is that not correct? Solicitor General
Jardeleza: I believed so.

Justice Leonen: Whereas, my district is District 4 of Quezon City has definitely more than that, is that not correct?

Solicitor General Jardeleza: I believed so, Your Honor.

Justice Leonen: And therefore there are differences in sizes?

Solicitor General Jardeleza: Yes.

Justice Leonen: Metro Manila congressional districts, each of them earn in the Million, is that not correct?

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Solicitor General Jardeleza: I believed so, Your Honor.

Justice Leonen: Whereas there are poorer congressional districts that do not earn in the Millions or even Billions, is
that not correct?

Solicitor General Jardeleza: Yes, Your Honor.

Justice Leonen: So the pork barrel or the PDAF for that matter is allocated not on the basis of size, not on the basis
of population, not on the basis of the amounts now available to the local government units, is that not correct?

Solicitor General Jardeleza: Yes, Your Honor.

Justice Leonen: It is allocated on the basis of congressmen and senators, is that not correct? Solicitor General
Jardeleza: Yes, Your Honor.

Justice Leonen: So, it's an appropriation for a congressman and a senator, is that not correct? Solicitor General
Jardeleza: Yes, Your Honor.

Justice Leonen: Not as Members of the House or Members of the Senate because this is not their function but it is
allocated to them simply because they are members of the House and members of the Senate?

Solicitor General Jardeleza: Well, it is allocated to them as Members, Your Honor, yes, as Members of the House
and as Members of the Senate.

Justice Leonen: Can you tell us, Counsel, whether the allocation for the Office of the Solicitor General is for you or is
it for the Office?

Solicitor General Jardeleza: For the Office, Your Honor.

Justice Leonen: The allocation for the Supreme Court, is it for anyone of the fifteen of us or is it for the entire
Supreme Court?

Solicitor General: For the Office, Your Honor.

Justice Leonen: So you have here an item in the budget which is allocated for a legislator not for a congressional
district, is that not correct?

Solicitor General Jardeleza: Well, for both, Your Honor.

Justice Leonen: Is this a valid appropriation? 99

Had it been to address the developmental needs of the Legislative districts, then the amounts would have varied
based on the needs of such districts. Hence, the poorest district would receive the largest share as compared to its
well-off counterparts.

If it were to address the needs of the constituents, then the amounts allocated would have varied in relation to
population. Thus, the more populous areas would have the larger allocation in comparison with areas which have a
sparse population.

There is no attempt to do any of these. The equal allocation among members of the House of Representatives and
more so among Senators shows the true color of the Priority Development Assistance Fund. It is to give a lump sum
for each member of the House of Representatives and the Senate for them to spend on projects of their own
choosing. This is usually for any purpose whether among their constituents and whether for the present or future.

In short, the Priority Development Assistance Fund is an appropriation for each Member of the House of
Representative and each Senator.

This is why this item in the General Appropriations Act of 2013 is an invalid appropriation. It is allocated for use
which is not inherent in the role of a member of Congress. The power to spend is an Executive constitutional
discretion — not a Legislative one.

V. E

A valid item is an authorized amount that may be spent for a discernible purpose.

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An item becomes invalid when it is just an amount allocated to an official absent a purpose. In such a case, the item
facilitates an unconstitutional delegation of the power to authorize a budget. Instead of Congress acting collectively
with its elected representatives deciding on the magnitude of the amounts for spending, it will be the officer who
either recommends or spends who decides what the budget will be.

This is not what is meant when the Constitution provides that "no money shall be paid out of the Treasury except in
pursuance of an appropriation made by law." When no discernible purpose is defined in the law, money is paid out
for a public official and not in pursuance of an appropriation. This is exactly the nature of the Priority Development
Assistance Fund.

Seventy million pesos of taxpayers’ money is appropriated for each member of the House of Representatives while
two hundred million pesos is authorized for each Senator. The purpose is not discernible. The menu of options does
not relate to each other in order to reveal a discernible purpose. Each legislator chooses the amounts that will be
spent as well as the projects. The projects may not relate to each other. They will not be the subject of a purposive
spending program envisioned to create a result. It is a kitty — a mini-budget — allowed to each legislator. That each
legislator has his or her own mini-budget makes the situation worse. Again, those who should check on the
expenditures of all offices of government are compromised. They will not have the high moral ground to exact
efficiency when there is none that can be evaluated from their allocation under the Priority Development Assistance
Fund.

Purposes can be achieved through various programmed spending or through a series of related projects. In some
instances, like in the provision of farm to market roads, the purpose must be specific enough to mention where the
road will be built. Funding for the Climate Change Commission can be in lump sums as it could be expected that its
expenditures would be dependent on the proper activities that should be done in the next fiscal year and within the
powers and purposes that the Commission has in its enabling charter. In other instances, like for calamity funds, the
amounts will be huge and the purpose cannot be more general than for expenses that may have to be done in
cases of calamities.

Parenthetically, the provision of Various Infrastructure and Local Projects in the Department of Public Works and
Highways title of the 2013 General Appropriations Act is also a clear example of an invalid appropriation.

In some instances, the purpose of the funding may be general because it is a requirement of either constitutional or
statutory autonomy. Thus, the ideal would be that this Court would have just one item with a bulk amount with the
expenditures to be determined by this Court’s En Banc. State universities and colleges may have just one lump sum
for their institutions because the purposes for which they have been established are already provided in their
charter.

While I agree generally with the view of the ponencia that "an item of appropriation must be an item characterized
by a singular correspondence — meaning an allocation of a specified singular amount for a specified singular
purpose," our opinions on the generality of the stated purpose should be limited only to the Priority Development
Assistance Fund as it is now in the 2013 General Appropriations Act. The agreement seems to be that the item has
no discernible purpose. 100

There may be no need, for now, to go as detailed as to discuss the fine line between "line" and "lump sum"
budgeting. A reading of the ponencia and the Concurring Opinions raises valid considerations about line and lump
sum items. However, it is a discussion which should be clarified further in a more appropriate case. 101

Our doctrine on unlawful delegation of legislative power does not fully square in cases of appropriations. Budgets
are integral parts of plans of action. There are various ways by which a plan can be generated and fully understood
by those who are to implement it. There are also many requirements for those who implement such plans to adjust
to given realities which are not available through foresight.

The Constitution should not be read as a shackle that bounds creativity too restrictively. Rather, it should be seen as
a framework within which a lot of leeway is given to those who have to deal with the fundamental vagaries of budget
implementation. What it requires is an appropriation for a discernable purpose. The Priority Development Assistance
Fund fails this requirement.

VI

The Constitution in Article VI, Section 29 (3) provides for another type of appropriations act, thus:

All money collected on any tax levied for a special purpose shall be treated as a special fund and paid out for such
purpose only. If the purpose for which a special fund was created has been fulfilled or abandoned, the balance, if
any, shall be transferred to the general funds of the government.

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This provision provides the basis for special laws that create special funds and to this extent qualifies my
concurrence with the ponencia’s result in so far as Section 8 of Presidential Decree No. 910 is concerned. This
provision states:

x x x All fees, revenues, and receipts of the Board from any and all sources including receipts from service contracts
and agreements such as application and processing fees, signature bonus, discovery bonus, production bonus; all
money collected from concessionaires, representing unspent work obligations, fines and penalties under the
Petroleum Act of 1949; as well as the government share representing royalties, rentals, production share on service
contracts and similar payments on the exploration, development and exploitation of energy resources, shall form
part of a Special Fund to be used to finance energy resource development and exploitation programs and projects
of the government and for such other purposes as may be hereafter directed by the President. (Emphasis provided)

It is true that it may be the current administration’s view that the underscored provision should be read in relation to
the specific purposes enumerated before it. However, there is no proscription to textually view it in any other way.
Besides, there should have been no reason to provide this phrase had the intent of the law been as how the current
administration reads and applies it.

As has been the practice in the past administration, monies coming from this special provision have been used for
various purposes which do not in any way relate to "the energy resource development and exploitation programs
and projects of the government." Some of these expenditures are embodied in Administrative Order No. 244 dated
October 23, 2008;  and Executive Orders 254, 254-A, and 405 dated December 8, 2003, March 3, 2004, and
102

February 1, 2005, respectively. 103

The phrase "for such other purposes as may hereafter directed by the President" has, thus, been read as all the
infinite possibilities of any project or program. Since it prescribes all, it prescribes none.

Thus, I concur with the ponencia in treating this portion of Section 8, Presidential Decree No. 910, which allows the
expenditures of that special fund "for other purposes as may be hereafter directed by the President," as null and
void.

The same vice infects a portion of the law providing for a Presidential Social Fund.  Section 12 of Presidential
104

Decree No. 1869 as amended by Presidential Decree No. 1993 provides that the fund may be used "to finance the
priority infrastructure projects and to finance the restoration of damaged or destroyed facilities due to calamities, as
may be directed and authorized by the Office of the President of the Philippines."

Two uses are contemplated by the provision: one, to finance "priority infrastructure projects," and two, to provide the
Executive with flexibility in times of calamities.

I agree that "priority infrastructure projects" may be too broad so as to actually encompass everything else. The
questions that readily come to mind are which kinds of infrastructure projects are not covered and what kinds of
parameters will be used to determine the priorities. These are not textually discoverable, and therefore, allow an
incumbent to have broad leeway. This amounts to an unconstitutional delegation of the determination of the purpose
for which the special levies resulting in the creation of the special fund. This certainly was not contemplated by
Article VI, Section 29(3) of the Constitution.

I regret, however, that I cannot join Justice Brion in his view that even the phrase "to be used to finance energy
resource development and exploitation programs and projects of the government" in Section 8 of Presidential
Decree No. 910 is too broad. This is even granting that this phrase is likewise qualified with "as may be hereafter
determined by the President."

The kinds of projects relating to energy resource development and exploitation are determinable. There are obvious
activities that do not square with this intent, for instance, expenditures solely for agriculture. The extent of latitude
that the President is given is also commensurate with the importance of the energy sector itself. Energy is
fundamental for the functioning of government as well as the private sector. It is essential to power all projects
whether commercial or for the public interest. The formulation, thus, reasonably communicates discretion but puts it
within reasonable bounds. In my view, and with due respect to the opinion of Justice Brion, the challenge of this
phrase’s unconstitutionality lacks the clarity that should compel us to strike it down.

VII

A member of the House of Representatives or a Senator is not an automated teller machine or ATM from which the
public could withdraw funds for sundry private purposes. They should be honorable elected officials tasked with
having a longer and broader view. Their role is to use their experience and their understanding of their constituents
to craft policy articulated in laws. Congress is entrusted to work with political foresight.

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Congress, as a whole, checks the spending of the President as it goes through the annual exercise of deciding what
to authorize in the budget. A level of independence and maturity is required in relation to the passage of laws
requested by the Executive. Poverty and inefficiencies in government are the result of lack of accountability.
Accountability should no longer be compromised.

Pork barrel funds historically encourage dole-outs. It inculcates a perverse understanding of representative
democracy. It encourages a culture that misunderstands the important function of public representation in Congress.
It does not truly empower those who are impoverished or found in the margins of our society.

There are better, more lasting and systematic ways to help our people survive. A better kind of democracy should
not be the ideal. It should be the norm.

We listen to our people as we read the Constitution. We watch as others do their part and are willing to do more. We
note the public's message:

Politics should not be as it was. Eradicate greed. Exact accountability. Build a government that has a collective
passion for real social justice.

ACCORDINGLY, I vote to GRANT the Petitions and DECLARE Title XLIV of the General Appropriations Act of 2013
UNCONSTITUTIONAL The proviso in Section 8 of Presidential Decree No. 910, which states for such other
purposes as may hereafter be directed by the President and the phrase in Section 12, Title IV of Presidential Decree
No. 1869, as amended by Presidential Decree No. 1993, which states to finance the priority infrastructure
development projects, are likewise deemed UNCONSTITUTIONAL. I also vote to make permanent the Temporary
Restraining Order issued by this Court on September 10, 2013.

Republic of the Philippines

SUPREME COURT
Manila

THIRD DIVISION

G.R. No. 208290               December 11, 2013

PEOPLE OF THE PHILIPPINES, Petitioner, 

vs.
THE HONORABLE JUANITO C. CASTANEDA, JR., HONORABLE CAESAR A. CASANOVA, HONORABLE
CIELITO N. MINDARO-GRULLA, AS ASSOCIATE JUSTICES OF THE SPECIAL SECOND DIVISION, COURT
OF TAX APPEALS; and MYRNA M. GARCIA AND CUSTODIO MENDOZA VESTIDAS, JR., Respondents.

RESOLUTION

PER CURIAM:

This is a petition for certiorari under Rule 65 of the Rules of Court seeking to review the March 26, 2013  and May
1

15, 2013  Resolutions of the Court of Tax Appeals (CTA) in CTA Crim. Case No. 0-285, ordering the dismissal of the
2

280
case against the private respondents for violation of Section 3602  in relation to Sections 2503 and 2530 (f) (i) and 1,
3

(3) (4) and (5) of the Tariff and Customs Codeof the Philippines, as amended, on the ground of insufficiency of
evidence.

The antecedentsas culled from the records:

Private respondents Myrna M. Garcia (Garcia) and Custodio Mendoza Vestidas, Jr.(VestidasJr.)were charged
before the CTA under an Information which reads:

That on or about November 5, 2011, or prior or subsequent thereto, in the City of Manila, Philippines, and within the
jurisdiction of this Honorable Court, the above-named accused Myrna M. Garcia and Custodio Mendoza Vestidas,
Jr. as owner/proprietress and broker of Plinth Enterprise respectively, conspiring and confederating with each other,
with intent to defraud the government, did then and there willfully, unlawfully and fraudulently import into the Port of
Manila, 858 cartons of 17,160 pieces of Anti-Virus Software Kaspersky Internet Security Premium 2012, subject to
customs duties,by misdeclaration under Import Entry No. C-181011 and Bill of Lading No. PFCMAN1715, filed with
the Bureau of Customs (BOC),covering One Forty Footer (1x40) container van shipment bearing No. KKFU7195683
which was falsely declared to contain 40 pallets/1,690 cartons of CD kit cleaner and plastic CD case, said imported
items having customs duties amounting to Three Million Three Hundred Forty One Thousand Two Hundred Forty
Five Pesos (Php 3,341,245) of which only the amount of One Hundred Thousand Three Hundred Sixty Two Pesos
(Php100,362) was paid, in violation of the above-captioned law, and to the prejudice and damage of the
Government in the amount of Three Million Two Hundred Forty Thousand Eight Hundred Eighty Three Pesos
(Php3,240,883). 4

In a hearing held on August 1, 2012, Garcia and VestidasJr.pleaded "Not Guilty" to the aforementioned charge.
Thereafter, a preliminary conference was held on September 5, 2012 followed by thepre-trial on September 13,
2012. Both the prosecution and the defense agreed to adopt the joint stipulations of facts and issues entered in the
course of the preliminary conference.

Thereafter, trial ensued.

The prosecution presented a number of witnesses whoessentially observed  the physical examination of Container
5

Van No. KKFU 7195638 conducted  by the Bureau of Customs (BOC) and explained  the process of electronic filing
6 7

under the Electronic to Mobile (E2M) Customs Systems of the BOC and the alleged misdeclared goods therein.

Subsequent to the presentation of witnesses, the prosecution filed its Formal Offer of Evidence on December 10,
2012.

On January 15, 2013, Garcia and Vestidas, Jr. filed their Omnibus Motion to File Demurrer to Evidence with Leave
of Court to Cancel Hearing Scheduled on January 21, 2013,whichwas grantedby the CTA. Thereafter, they filed
theDemurrer to Evidence, dated January 13, 2012, claimingthat the prosecution failed to prove their guilt beyond
reasonable doubt for the following reasons:

a)The pieces of documentary evidence submitted by the prosecution were inadmissible incourt;

b)The object evidence consisting of the allegedly misdeclared goods were not presented as evidence; and

c)None of the witnesses for the prosecution made a positive identification of the two accused as the ones
responsible for the supposed misdeclaration.

Despite opposition, the CTA dismissed the caseagainst Garcia and Vestidas Jr.in its March 26, 2013 Resolution, for
failure of the prosecution to establish theirguilt beyond reasonable doubt.

According to the CTA, "no proof whatsoever was presented by the prosecution showing that the certified true copies
of the public documents offered in evidence against both accused were in fact issued by thelegal custodians."  It 8

cited Section 26, Rule 132 of the Revised Rules of Court, whichprovidesthat"when the original of a document is a
public record, it should not generally be removed from the office or place in which it is kept."  As stated in Section 7,
9

Rule 130,  its contents may be proven using secondary evidence and such evidence may pertain to the certified
10

true copy of the original document issued by the public officer in custody thereof.Hence, the CTA wrotethat the
certified true copiesof the public documents offered in evidence should have been presented in court.

Anent its offer of private documents,  the prosecution likewise failed to comply with Section 27, Rule 132 of the
11

Rules of Court, which reads, "[a]n authorized public record of a private document may be proved by the original
record, or by a copy thereof, attested by the legal custodian of the record, with an appropriate certificate that such
officer has the custody." Considering that the private documents were submitted and filed with the BOC, the same
became part of public records. Again, the records show that the prosecution failed to present the certified true
copies of thedocuments.

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The CTA noted that,in its Opposition to the Demurrer,the prosecution even admitted that none of their witnesses
ever positively identified the accused in open court and that the alleged misdeclared goods were not competently
and properly identified in court by any of the prosecution witnesses.

The prosecution filed its motion for reconsideration, but it was deniedby the CTAin its May 15, 2013 Resolution,
stressing, among others, that to grant it would place the accused in double jeopardy. 12

On July 24, 2013, the Run After the Smugglers (RATS) Group, Revenue Collection Monitoring Group (RCMG), as
counsel for the BOC, received a copy of the July 15, 2013 Resolution of the CTA ordering the entry of judgment in
the case.

Hence,this petition for certiorari, ascribing grave abuse of discretion on the part of theCTA when in ruled that: 1) the
pieces of documentary evidence submitted by the prosecution were inadmissible in evidence; 2) the object evidence
consisting of the alleged misdeclared goods were not presented as evidence; and 3) the witnesses failed to
positively identifythe accused as responsible forthe misdeclaration of goods.

The Court agrees with the disposition of the CTA.

At the outset, it should be noted that the petition was filed beyond the reglementary periodfor the filingthereof under
Rule 65. The petition itself statedthat a copy of the May 15, 2013 Resolution was received by the BOC two (2) days
after its promulgation, or on May 17, 2013. Nonetheless, the RATS was only alerted by the developments in the
case on July 24, 2013, when Atty. Danilo M. Campos Jr. (Atty. Campos) received the July 15, 2013 Resolution of
the CTA ordering the entry of judgment in the case, considering that no appeal was taken by any of the parties.
According toAtty. Campos, it was only on that occasion when he discovered the May 15, 2013 Resolution of the
CTA.Thus, it was prayed that the petitionbe given due course despite its late filing.

This belated filing cannot be countenanced by the Court.

Section 4, Rule 65 of the 1997 Rules of Civil Procedureis explicit in stating thatcertiorarishould be instituted within a
period of 60 days from notice of the judgment, orderor resolution sought to be assailed. The 60-day period is
inextendible to avoid any unreasonable delay that would violate the constitutional rights of parties to a speedy
disposition of their case.  While there are recognized exceptions  to such strict observance, there should be an
13 14

effort on the part of the party invoking liberality to advance a reasonable or meritorious explanation for his/her failure
to comply with the rules.15

In the case at bench, no convincing justification for the belated filing of the petition was advanced to warrant the
relaxation of the Rules.Notably, the records show that the petition was filedonly on August 12, 2013, or almost a
month late from the due date which fell on July 16, 2013. To excuse this grave procedural lapse will not only be
unfairto the other party, but it will also sanction a seeming rudimentary attempt to circumvent standing rules of
procedure. Suffice it to say, the reasons proffered by the petitioner do not carry even a tinge of merit that would
deserve leniency.

The late filing of the petition was borne out of the petitioner’s failure to monitor incoming court processes that
neededto be addressed by the office. Clearly, this is an admission of inefficiency, if not lack of zeal, on the part of an
office tasked toeffectively curb smuggling activities which rob the government of millions of revenue every year.

The display of patent violations of even the elementary rules leads the Court to suspectthat the case against Garcia
and Vestidas Jr. was doomed by designfrom the start. The failure to present the certified true copies of documentary
evidence; the failure to competently and properly identify the misdeclared goods; the failure to identify the accused
in court; and,worse, the failure to file this petition on time challenging a judgment of acquittal, are tell-tale signs ofa
reluctantand subduedattitude in pursuing the case. This stance taken by the lawyers in government service rouses
the Court’s vigilance against inefficiency in the administration of justice. Verily, the lawyersrepresenting the offices
under the executive branchshould be reminded that theystill remain as officers of the courtfrom whom a high sense
of competence and fervor is expected. The Courtwill not close its eyes to this sense of apathy in RATS lawyers, lest
the government’s goal of revenue enhancement continues to suffer the blows of smuggling and similar activities.

Even the error committed by the RATS in filing a motion for reconsideration with the CTA displays gross ignorance
as to the effects of an acquittal in a criminal case and the constitutional proscription on double jeopardy. Had the
RATS been eager and keen in prosecuting the respondents, it would have, in the first place, presented its evidence
with the CTA in strict compliance with the Rules.

In any case, even if the Court decides to suspend the rules and permit this recourse, the end result would remain
the same. While a judgment of acquittal in a criminal case may be assailed in a petition for certiorari under Rule 65
of the Rules of Court,it must be shown that there was grave abuse of discretion amounting to lack or excess of
jurisdiction or a denial of due process.In this case, a perusal of the challenged resolutions ofthe CTAdoes not
disclose any indication of grave abuse of discretion on its partor denial of due process.The records are replete with

282
indicators that the petitioner actively participated during the trial and, in fact, presented its offer of evidence and
opposed the demurrer. 1âwphi1

Grave abuse of discretion is defined as capricious or whimsical exercise of judgment as is equivalent to lack of
jurisdiction. The abuse of discretion must be patent and gross as to amount to an evasion of 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 and hostility.  Here, the subject resolutions of
16

the CTA have been issued in accordance with the rules on evidence and existing jurisprudence.

On a final note, the Court deems it proper to remind the lawyers in the Bureau of Customs that the canons
embodied in the Code of Professional Responsibility equally apply to lawyers in government service in the discharge
of their official tasks.   Thus, RA TS lawyers should exert every effort and consider it their duty to assist in the
17

speedy and efficient administration of justice. 18

WHEREFORE, the petition is DISMISSED and the assailed March 26, 2013 and May 15, 2013 Resolutions of the
Court of Tax Appeals are AFFIRMED.

The Office of the Ombudsman is hereby ordered to conduct an investigation for possible criminal or administrative
offenses committed by the Run After the Smugglers (RA TS) Group, Revenue Collection Monitoring Group (RCMG),
Bureau of Customs, relative to the filing and handling of the subject complaint for violations of the Tariff and
Customs Code of the Philippines.

Let copies of this resolution be furnished the Office of the President, the Secretary of Finance, the Collector of
Customs, and the Office of the Ombudsman for their guidance and appropriate action.

SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila

EN BANC

A.M. No. 13-04-03-SC               December 10, 2013

RE: NOMINATION OF ATTY. LYNDA CHAGUILE, IBP IFUGAO PRESIDENT, AS REPLACEMENT FOR IBP
GOVERNOR FOR NORTHERN LUZON, DENIS B. HABAWEL

x---------------x

A.M. No. 13-05-08-SC

RE: ALLEGED NULLITY OF THE ELECTION OF IBP SOUTHERN LUZON GOVERNOR VICENTE M. JOYAS AS
IBP EXECUTIVE VICE PRESIDENT [FOR 2011-2013]

283
x---------------x

A.M. No. 13-06-11-SC

RE: LETTER RESQUEST OF THE NATIONAL SECRETARY OF THE IBP RE PROPOSED OATH TAKING
BEFORE THE SUPREME COURT OF THE ELECTED IBP REGIONAL GOVERNORS AND THE EXECUTIVE
VICE PRESIDENT FOR THE TERM 2013 TO 2015

RESOLUTION

LEONEN, J.:

This is yet another controversy involving the leadership of the Integrated Bar of the Philippines (IBP) that could have
been resolved at the Integrated Bar of the Philippines’ level but was instead referred to this aking away precious
resources that could have been better applied to resolve other conflicts for the public interest.

The consolidated cases involve two Administrative Matters. The first Administrative Matter (A.M. No. 13-04-03-SC)
arose from a Motion filed by Atty. Marlou B. Ubano, IBP Governor for Western Visayas. Atty. Ubano sought to
invalidate or have this Court declare as ultra vires the portion of the March 21, 2013 Resolution of the IBP Board of
Governors which approved the nomination of Atty. Lynda Chaguile as replacement of IBP Governor for Northern
Luzon, Denis B. Habawel. The second Administrative Matter arose from another Motion filed by Atty. Ubano who
sought to nullify the May 22, 2013 election for IBP Executive Vice President (EVP) and restrain Atty. Vicente M.
Joyas from discharging the duties of IBP EVP/Acting President. In a Resolution dated June 18, 2013, this Court
consolidated the second Administrative Matter with the first.

A.M. No. 13-04-03-SC

The first Administrative Matter is an incident arising from: (1) A.M. No. 09-5-2-SC (In the Matter of the Brewing
Controversies in the Election in the· Integrated Bar of the Philippines, Atty. Marven B. Daquilanea, Movant-
Intervenor; Presidents of IBP Chapter in Western Visayas Region, Intervenors; IBP Capiz Chapter,
Intervenor); and (2) A.C. No. 8292 (Attys. Marcial M Magsino, Manuel M Maramba, and Nasser Marohomsalic v.
Attys. Rogelio A. Vinluan, Abelardo C. Estrada, Bonifacio T. Barandon, Jr., Evergisto S. Escalon, and Raymund
Jorge A. Mercado).

On March 27, 2013, Atty. Marlou B. Ubano, IBP Governor for Western Visayas, filed a Motion (Original Motion) in
relation to A.M. No. 09-5-2-SC. Atty. Ubano sought to invalidate or have this Court declare as ultra vires the portion
of the March 21, 2013 Resolution of the IBP Board of Governors which approved the nomination of Atty. Lynda
Chaguile as the replacement of IBP Governor for Northern Luzon, Denis B. Habawel. In this Original Motion, Atty.
Ubano noted that on December 4, 2012, this Court approved an amendment to Article I, Section 4 of the IBP By-
Laws which considers as ipso facto resigned from his or her post any official of the Integrated Bar of the Philippines
who files a Certificate of Candidacy for any elective public office. Under the amended By-Laws, the resignation
takes effect on the starting date of the official campaign period.  Atty. Ubano alleged that the IBP Governor for
1

Northern Luzon, Denis B. Habawel, filed a Certificate of Candidacy to run for the position of Provincial Governor of
the Province of Ifugao on or before October 5, 2012, and that on or before December 21, 2012, IBP President, Roan
Libarios, filed a Certificate of Substitution to run as a substitute congressional candidate for the First District of
Agusan del Norte. 2

Atty. Ubano further alleged that "[i]n light of the impending ipso facto resignation of Pres. Libarios on 30 March
2013,"  the IBP Board of Governors agreed to constitute a five (5)-member Executive Committee (Ex Com) to
3

"prevent hiatus in the leadership of the IBP."  The Executive Committee was "tasked to temporarily administer the
4

affairs of the IBP without prejudice to the outcome of the Honorable Court’s resolution of the pending incident."  Atty.
5

Ubano also alleged that Atty. Habawel nominated Atty. Lynda Chaguile, IBP Ifugao Chapter President, as his
successor to the position of IBP Governor for Northern Luzon.  Atty. Ubano claimed that Atty. Libarios began
6

"dictating the tenor of the IBP [Board of Governors] Resolution about the creation of Ex Com"  and, without prior
7

deliberation and voting, declared that the Board of Governors approved the succession of Atty. Chaguile as IBP
Governor for Northern Luzon. Atty. Ubano, together with two (2) other IBP Governors, allegedly objected. However,
when the matter was put to a vote, the other governors, Atty. Habawel included, approved Atty. Chaguile’s
replacement of Atty. Habawel as IBP Governor for Northern Luzon. 8

In this Original Motion, Atty. Ubano challenged the IBP Board of Governor’s approval of Atty. Chaguile’s succession
as IBP Governor for Northern Luzon on two grounds: First, there was, as yet, no vacancy. Atty. Habawel was
himself present at the meeting where his replacement was named. There was, therefore, no need to name a
replacement. Second, the right to elect the successor of a resigned IBP Governor is vested, not in the IBP Board of
9

Governors, but in the delegates of the concerned region; thus, the IBP Board of Governors’ approval of the nominee
to succeed Atty. Habawel is ultra vires.10In support of this second ground, Atty. Ubano cited the third paragraph of
Section 44 of the IBP By-Laws: Sec. 44. Removal of members. x x x x x x[x] In case of any vacancy in the office of
Governor for whatever cause, the delegates from the region shall by majority vote, elect a successor from among
284
the members of the Chapter to which the resigned governor is a member to serve as governor for the unexpired
portion of the term.  In a Resolution dated April 2, 2013, this Court resolved to treat this Original Motion as an
11

Administrative Matter separate from A.M. No. 09-5-2-SC and A.C. No. 8292. It was re-docketed as A.M. No. 13-04-
03-SC. This Court required the IBP Board of Governors to file its Comment. In its Comment, the IBP Board of
Governors assailed the first ground raised by Atty. Ubano by saying that it was not necessary for a position to be
absolutely vacant before a successor may be appointed or elected.  As for the second ground, the IBP Board of
12

Governors argued that it has been the "tradition"  of the Integrated Bar of the Philippines that "where the unexpired
13

term is only for a very short period of time, it is usually the Board of Governors which appoint [sic]a replacement or
an officer in charge to serve the unexpired term."  The IBP Board of Governors cited seven (7) precedents attesting
14

to this "tradition":

1. On January 24, 1979, the IBP Board of Governors "unanimously resolved to designate Jose F. Lim, Vice
President of the IBP Samar Chapter, [as]acting Governor and ex-oficio Vice President for Eastern Visayas in
view of the absence of Gov. Juan G. Figueroa." 15

2.On June 1, 1984, the IBP Board of Governors approved the replacements of two (2) governors who
resigned to run in the Batasang Pambansa elections:

a. The President of the IBP Baguio-Benguet Chapter, Reynaldo A. Cortes, was elected by the IBP
Board of Governors to replace Gov. Honorato Aquino who himself nominated Cortes;

b."The President of the IBP Southern Leyte Chapter, Porfirio P. Siaynco, was elected by the Board
to replace Gov. Cirilo Montejo." 16

3. On January 27, 1989, the IBP Board of Governors "elected Nancy Sison Roxas, Treasurer of the House
of Delegates, as Governor for Central Luzon" in lieu of Cesar L. Paras, who passed away. 17

4. On October 7, 1991, Governor for Eastern Mindanao, Teodoro Palma Gil, who was previously appointed
as a Regional Trial Court (RTC) judge, recommended that Teodoro Nano, Jr., President of the IBP Davao
Oriental Chapter, be his replacement.  On November 8, 1991, Nano was eventually elected by the IBP
18

Board of Governors as Governor for Eastern Mindanao. 19

5. On September 26, 1998, the IBP "Board of Governors confirmed the designation of Teofilo S. Pilando, Jr.
as Governor for Northern Luzon, to serve the unexpired portion of the term of Gov. Roy S. Pilando, who ran
for public office." 20

6. On September 12, 2002, the IBP Board of Governors "resolved to appoint acting Governor Rogelio
Velarde as regular Governor of Southern Luzon Region after learning of the death of the regular Governor,
Josefina S. Angara." 21

7. On August 17, 2006, the IBP Board of Governors "appointed Abelardo C. Estrada as OIC for IBP
Northern Luzon [in lieu of] Silvestre H. Bello who was facing a disqualification case as Governor of IBP
Northern Luzon." 22

In his Reply, Atty. Ubano questioned the IBP Board of Governors’ claim that it is not necessary for a position to be
absolutely vacant before a successor may be appointed or elected. Citing the third paragraph of Section 44of the
IBP By-Laws’ use of the word "vacancy" (i.e., "any vacancy in the office of Governor") and "resignation" (i.e.,
"resigned governor"), Atty. Ubano claimed that the text of the By-Laws is "abundantly clear and unequivocal that
there must be first a "vacancy" or a prior resignation before the delegates of the Region can lawfully elect a
successor x x x."23

Atty. Ubano likewise challenged the precedents cited by the IBP Board of Governors and claimed that no such
tradition of appointing the successor of a resigned governor existed.  He pointed out that prior to its amendment in
24

March 2, 1993, the IBP By-Laws had allowed the IBP Board of Governors to elect, and not appoint, "a successor ofa
resigned Governor."  However, the amended By-Laws now require that a successor be elected by the delegates of
25

the concerned region.  Even if it were true that the IBP Board of Governors had a tradition of appointing the
26

successor of a resigned governor, the tradition cannot be validated in view of the first paragraph of Article 7 of the
Civil Code which reads:

Article 7. Laws are repealed only by subsequent ones, and their violation or non-observance shall not be excused
by disuse, or custom or practice to the contrary. 27

Meanwhile, on April 23, 2013, Atty. Ubano filed another Motion (Urgent Motion to Defer/Restrain Performance of
Duties as Successor Governor of IBP Northern Luzon Region) seeking to prevent Atty. Chaguile from exercising the
functions of IBP Governor for Northern Luzon.

285
This Court also received on May 16, 2013 an undated Resolution purportedly signed by delegates of the IBP
Northern Luzon Region. The signatories called for an election on May 18, 2013 to name Atty. Habawel’s successor.

On May 20, 2013, these same signatories filed before this Court their Opposition to Atty. Chaguile’s nomination. As
with the second ground cited by Atty. Ubano in his Original Motion, this Opposition was anchored on the third
paragraph of Section 44 of the IBP By-Laws.

Also on May 20, 2013, Atty. Ubano filed a "Motion for Leave to File Reply with Very Urgent Motion to Restrain Atty.
Chaguile from Voting in the EVP Election on 22 May 2013."  Attached to the Motion was his "Reply with Very
28

Urgent Motion to Restrain Atty. Chaguile from Voting in the EVP Election on 22 May 2013."  Atty. Ubano also sent a
29

letter to Associate Justice Mariano C. del Castillo "pray[ing] and beg[ging] the indulgence of the Honorable Court to
immediately restrain Atty. Lynda Chaguile from voting in the IBP [Executive Vice President]Election to be held on 22
May2013." 30

In a Resolution dated June 4, 2013, this Court required the IBP Board of Governors to file its Comment on Atty.
Ubano’s (1) Urgent Motion to Defer/Restrain Performance of Duties as Successor Governor of IBP Northern Luzon
Region; (2) Motion for Leave to File Reply; and (3) Reply. It also required the IBP Board of Governors to comment
on the Opposition filed by the signatories purporting to be the delegates of the IBP Northern Luzon Region.

On July 8, 2013, the IBP Board of Governors filed a Compliance (i.e., Comment in Compliance) with this Court’s
June 4, 2013 Resolution.

With respect to Atty. Ubano’s Urgent Motion to Defer/Restrain Performance of Duties as Successor Governor of IBP
Northern Luzon Region, the IBP Board of Governors pointed out that Atty. Chaguile’s term expired on June 30,
2013.31

As to the Opposition filed by signatories purporting to be the delegates of the IBP Northern Luzon Region, the IBP
Board of Governors alleged that the term of the House of Delegates of Northern Luzon for 2011 to 2013 expired on
March 31, 2013. As such, the Opposition signed by the purported delegates was ultra vires, and therefore, null and
void.  The IBP Board of Governors pointed out that "[t]he issue about the eligibility of Atty. Lynda Chaguile as
32

replacement Governor for Atty. Denis B. Habawel was traversed over in the Comment x x x dated April 24, 2013." 33

A.M. No. 13-05-08-SC

The second Administrative Matter assails the conduct of the May 22, 2013 election of the IBP Executive Vice
President (EVP). In this election, Atty. Vicente M. Joy as was elected IBP Governor for Southern Luzon.

On May 31, 2013,Atty. Ubano filed an Urgent Omnibus Motion to (1) nullify the May 22, 2013 IBP Executive Vice
President election and (2) restrain Atty. Vicente M. Joyas from discharging the duties of EVP/Acting President. This
Motion was docketed as A.M. No. 13-05-08-SC. In this Court’s Resolution dated June 18, 2013, this Administrative
Matter was consolidated with A.M. No. 13-04-03-SC(the first Administrative Matter).

Atty. Ubano sought to nullify the May 22, 2013 election on two (2) grounds:

First, he claimed that the IBP election of the EVP was marred by inordinate haste, grave irregularities, patent
hostility, manifest bias and prejudice, as well as the presiding officer’s absolute lack of independence.
34

Second, he claimed that the election violated Section 47 of the IBP By-Laws which requires that the EVP be elected
by a vote of at least five (5) Governors. Atty. Ubano emphasized that Atty. Chaguile’s vote in favor of Atty. Joyas
was invalid, as Atty. Chaguile’s appointment as governor was itself ultra vires, and therefore,void ab initio.

Section 47 of the IBP By-Laws, as amended pursuant to this Court’s Resolution dated April 11, 2013 in A.M. No. 09-
5-2-SC and A.C. No. 8292, now reads:

Sec. 47. Election of National President Executive Vice President. –The Integrated Bar of the Philippines shall have a
President, an Executive Vice President, and nine (9) regional Governors. The Governors shall be ex-officio Vice
President for their respective regions.

The Board of Governors shall elect the President and Executive Vice President from among themselves each by a
vote of at least five (5) Governors. Upon expiration of the term of the President, the Executive Vice-President shall
automatically succeed as President.

In the Compliance that the IBP Board of Governors filed in A.M. No. 13-04-03-SC, it addressed Atty. Ubano’s
allegations as follows:

1. On the conduct of the election

286
 a. The Report on the Conduct of Election filed by the Regional Trial Court - Pasig Executive Judge
(and Supreme Court Designated Observer)  indicates that Atty. Ubano’s objection to the
35

appointment of the presiding officer was thoroughly discussed and properly put to a vote.  Further,
36

there is no factual basis for claiming that the presiding officer was not independent. Atty. Ubano was
also noted to have been allowed the most number of interventions and the longest time spent for
deliberations.37

b. Atty. Ubano was properly ruled out of order when he moved that the elections be moved to a later
date and when he objected to the participation of Atty. Chaguile. 38

2. On the supposed invalidity of Atty. Chaguile’s vote, the IBP Board of Governors pointed out that, as of the
time of the election, there was no basis for invalidating the vote.39

Stripped of technical maneuverings and legal histrionics, we are called to rule upon the validity of Atty. Lynda
Chaguile’s appointment as IBP Governor for Northern Luzon in lieu of Atty. Denis B. Habawel. The resolution of this
matter is decisive of the validity of her acts as IBP Governor for Northern Luzon — including her participation in the
election of the IBP EVP.

Likewise, we are asked to review the conduct of the election for the IBP EVP. We must determine whether the
election was attended by irregularities, biases, and prejudice that would invalidate its results.

We note that certain issues raised in several Motions filed as part of the first Administrative Matter have been
rendered moot and academic.

In the first Administrative Matter, Atty. Ubano sought to (1) declare as ultra vires or as invalid the portion of the IBP
Board of Governors Omnibus Resolution dated March 21, 2013 which approved the nomination of Atty. Chaguile as
IBP Governor for Northern Luzon in lieu of Atty. Denis Habawel and (2) restrain Atty. Chaguile from exercising the
functions of IBP Governor for Northern Luzon, among which was voting in the May 22, 2013 election for IBP
EVP.Also in the first Administrative Matter, several signatories purporting to be the delegates of the IBP Northern
Luzon Region opposed Atty. Chaguile’s nomination on substantially the same grounds as Atty. Ubano.

As pointed out by the IBP Board of Governorsin its Compliance, "the term of Atty. Lynda Chaguile as Governor for
Northern Luzon expired on June 30, 2013."  A new Governor for Northern Luzon, Atty. Oliver Cachapero, was
40

elected.  As Atty. Chaguile is no longer serving as IBP Governor for Northern Luzon, the matter of ousting or
41

restraining Atty. Chaguile from exercising the functions of such office is no longer an available relief.

As we have explained in Pormento v. Estrada: 42

As a rule, this Court may only adjudicate actual, ongoing controversies. The Court is not empowered to decide moot
questions or abstract propositions, or to declare principles or rules of law which cannot affect the result as to the
thing in issue in the case before it. In other words, when a case is moot, it becomes non-justiciable.

An action is considered "moot" when it no longer presents a justiciable controversy because the issues involved
have become academic or dead or when the matter in dispute has already been resolved and hence, one is not
entitled to judicial intervention unless the issue is likely to be raised again between the parties. There is nothing for
the court to resolve as the determination thereof has been overtaken by subsequent events. 43

However, we recognize that the validity of Atty. Chaguile’s appointment as Governor for Northern Luzon affects the
validity of her actions as the occupant of thisoffice, especially her participation in the IBP Board of Governors’
election of the IBP EVP, which is the subject of the second Administrative Matter.

Atty. Ubano cited two grounds as bases for claiming that the IBP Board of Governors improperly approved Atty.
Chaguile’s succession as Governor for Northern Luzon. First, there was no vacancy at the time of Atty. Chaguile’s
designation. Atty. Habawel was then still Governor for Northern Luzon, and there was no need to name a
replacement yet. Second, the IBP Board of Governors acted ultra vires or beyond its competence considering that
the third paragraph of Section 44 of the IBP By-Laws vests the right to elect the successor of a resigned IBP
governor inthe delegates of the concerned region and not in the IBP Board of Governors.

On the first ground, we sustain the position of the IBP Board of Governors.

Indeed, it is not only erroneous but also absurd to insist that a vacancy must actually and literally exist at the precise
moment that a successor to an office is identified. Where a vacancy is anticipated with reasonable certainty—as
when a term is ending or the effectivity of a resignation or a retirement is forthcoming—it is but reasonable that
those who are in a position to designate a replacement act promptly. New officials are elected before the end of an
incumbent’s term; replacements are recruited (and even trained) ahead of an anticipated resignation or retirement.
This is necessary to ensure the smooth and effective functioning of an office. Between prompt and lackadaisical

287
action, the former is preferable. It is immaterial that there is an identified successor-in-waiting so long as there are
no simultaneous occupants of an office. On the second ground, the third paragraph of Section 44 of the IBP By-
Laws clearly provides that "the delegates from the region shall by majority, elect a successor from among the
members of the Chapter to which the resigned governor is a member." There is no ambiguity in this text. We are
surprised that the IBP—an institution expected to uphold the rule of law—has chosen to rely on "tradition" to validate
its action. The IBP Board of Governors arrogated unto itself a power which is vested in the delegates of the
concerned IBP region. This arrogation is a manifest violation of the clear and unmistakable terms of the IBP’s By-
Laws. We cannot countenance this. No amount of previous practice or "tradition" can validate such a patently
erroneous action. It is, therefore, lear that Atty. Chaguile’s designation as IBP Governor for Northern Luzon is
tainted with irregularity, and therefore, invalid.

Nevertheless, following the adoption of the IBP Board of Governors Omnibus Resolution dated March 21, 2013at
the time Atty. Ubano filed the Original Motion and up until June 30, 2013 when her "term x x x expired,"  Atty.
44

Chaguile acted as and performed the functions of the IBP Governor for Northern Luzon. This is an accomplished
fact which no amount of legal abstraction can undo. It is in this context, with the backdrop of this consummated
truth,that we rule on the Administrative Matters before us. Given these circumstances, we hold that Atty. Chaguile
took on the role of IBP Governor for Northern Luzon in a de facto capacity.

De facto means "in point of fact."  To speak of something as being de factois,thus,to say that it is "[a]ctual [or]
45

existing in fact"  as opposed to "[e]xisting by right or according to law,"  that is, de jure. Being factual though not
46 47

being founded on right or law, de facto is,therefore, "illegitimate but in effect." 48

The concept of a de facto officer was explained in Civil Service Commission v. Joson, Jr.: 49

The broad definition of what constitutes an officer de facto was formulated by Lord Holt in Parker v. Kent, and
reiterated by Lord Ellenborough and full King’s Bench in 1865 in Rex v. Bedford Level, "One who has the reputation
of being the officer he assumes and yet is not a good officer in point of law." A de facto officer is one who is in
possession of the office and discharging its duties under color of authority. By color of authority is meant that
derived from an election or appointment, however irregular or informal, so that the incumbent is not a mere
volunteer. (Emphasis and underscoring supplied)
50

A de facto officer is distinguished form a de jure officer, as follows:

The difference between the basis of the authority of a de jure officer and that of a de facto officer is that one rests on
right, the other on reputation. It may be likened to the difference between character and reputation. One is the truth
of a man, the other is what is thought of him. 51

Moreover, as against a mere usurper, "[i]t is the color of authority, not the color of title that distinguishes an
officer de facto from a usurper."  Thus, a mere usurper is one "who takes possession of [an] office and undertakes
52

to act officially without any color of right or authority, either actual or apparent."  A usurper is no officer at all.
53 54

The expanse of the de facto doctrine was established early in the development of our jurisprudence. In Luna v.
Rodriguez,  the doctrine was established to contemplate situations where the duties of the office were exercised: (a)
55

Without a known appointment or election, but under such circumstances of reputation or acquiescence as were
calculated to induce people, without inquiry, to submit to or invoke his action, supposing him to be the officer he
assumes to be; (b) under color of a known or valid appointment or election, where the officer has failed to conform
to some precedent requirement or condition, for example, a failure to take the oath or give a bond, or similar defect;
(c) under color of a known election or appointment, void because the officer was not eligible, or because there was
a want of power in the electing or appointing body, or by reason of some defect or irregularity in its exercise, such
ineligibility, want of power or defect being unknown to the public; and (d) under color of an election, or appointment,
by or pursuant to a public unconstitutional law, before the same is adjudged to be such.  (Emphases and
56

underscoring supplied)

This coverage, affirmed and reiterated in subsequent jurisprudence,  unequivocally includes officers whose election
57

is void because the body that elected (or otherwise designated) them lacked the capacity to do so. This is precisely
the situation in this case: The power to elect an IBP Governor is lodged in the delegates of the concerned region,
not in the IBP Board of Governors; yet the IBP Board of Governors approved Atty. Chaguile’s nomination as IBP
Governor for Northern Luzon.

To be a de facto officer, all of the following elements must be present:

1) There must be a de jure office; 

2) There must be color of right orgeneral acquiescence by the public; and

3) There must be actual physical possession of the office in good faith.  (Underscoring supplied)
58

288
In the present case, there is no dispute that a de jure office—that of IBP Governor for Northern Luzon—exists.

Neither is there any dispute that Atty. Chaguile took possession of and performed the functions of such office. In
fact, the Motions submitted as part of the first Administrative Matter were precisely intended to put a stop to her
performance of these functions. Likewise, Atty. Chaguile took possession of and performed the functions of the IBP
Governor for Northern Luzon through a process, albeit "irregular or informal, so that [she] is not a mere
volunteer," that is, not through her own actions but through those of the IBP Board of Governors. Thus, she did so
59

under "color of authority," as defined in settled jurisprudence (e.g., Civil Service Commission v. Joson,
Jr.,  Dimaandal v. Commission on Audit,  and Dennis A.B. Funa v. Acting Secretary of Justice Alberto C. Agra  ).
60 61 62

The IBP Board of Governors’ approval was secured through a process that it characterized as a "tradition," allowing
it to appoint a replacement for an officer who vacates his or her office shortly before his or her term expires. It cited
seven (7) cases, spanning a period of more than twenty-six (26) years, in which this tradition was exercised. Of
these, three (3) occurred after the March 2, 1993 amendment of the IBP By-Laws which requires that a successor
governor be elected by the delegates of the concerned region. Thus, the "tradition" persisted even after the
amended By-Laws had vested the power to elect a replacement in the delegates of the concerned region.

Being in violation of the IBP By-Laws (as amended on March 2, 1993), this supposed tradition cannot earn
our imprimatur. Be that as it may, in all of the occasions cited by the IBP Board of Governors, the authority of
replacement governors was derived from a process, which, though irregular, enabled them to act as and be
accepted as governors. It was with this backdrop that Atty. Chaguile herself was designated as IBP Governor for
Northern Luzon. Illumined by this context, thecolor of authority or right under which Atty. Chaguile became IBP
Governor for Northern Luzon is all the more stark.

This same color of authority or right negates any insinuation that Atty. Chaguile assumed office out of her own
design or contrivance; that is, that she did so in bad faith. She precisely relied on established practice, now
established as invalid but nevertheless historically accepted. Atty. Ubano alleged that then IBP President Roan
Libarios imposed upon the IBP Board of Governors the approval of Atty. Chaguile’s nomination; that Atty. Habawel
wrongly participated in the vote to approve Atty. Chaguile’s nomination; and that the IBP Board of Governors itself
violated the IBP By-Laws. Yet, he failed to allege that Atty. Chaguile was her self a party to any scheme or artifice
that might have been designed so that she would be able to secure the IBP Governorship for Northern Luzon.
Furthermore, no evidence was presented to show that there was coercion imposed on the other governors of the
Integrated Bar of the Philippines.

We note that on May 16, 2013,signatories claiming to be delegates of the IBP Northern Luzon Region submitted to
this Court a copy of an undated Resolution calling for an election to name Atty. Denis B. Habawel’s successor as
IBP Governor for Northern Luzon. We also note that on May 20, 2013, the same individuals submitted their
Opposition to Atty. Chaguile’s nomination as Atty. Habawel’s replacement. On the basis of this, there appears to be
a ground for arguing that there was no "general acquiescence by the public"  to Atty. Chaguile’s having replaced
63

Atty. Habawel.

The second requisite for being a de facto officer, as spelled out in Tuandav. Sandiganbayan,  reads: "There must be
64

color of right or general acquiescence by the public."  Clearly, the requisite is stated in the alternative. Color of right
65

also suffices. We have already discussed how Atty. Chaguile took on the role of IBP Governor for Northern Luzon
with color of right (or authority).

We fail to see how the action of six(6) individuals66sustains the assertion that the public never acquiesced to Atty.
Chaguile’s having replaced Atty. Habawel. The requisite speaks of "general acquiescence." To be "general" is not to
be "absolute." It is to speak of a commonality that exists for the most partbut not necessarily entirely. It admits of
exceptions. That there are those who count themselves as objectors merely attests to their existence. It does not, in
and of itself, repudiate that which may generally exist. Thus,to equate the action of a handful ofactive objectors with
the utter lack of "general acquiescence" would be non sequitur.

Granting that these six(6) individuals are in fact the legitimate delegates of the IBP Northern Luzon Region and even
if we disregard their sheer number, they still fail to represent or embody the "public." They are direct participants,
having been the individuals whose right to elect the IBP Governor for Northern Luzon was supposedly undermined.
Precisely, their being direct participants –meaning, persons whose supposed rights were violated –makes them
actual parties to the controversy. That they themselves chose to file an Opposition and submit themselves to this
Court’s adjudication of this case evidences their own acknowledgement of this.

The de facto doctrine was devised to benefit the public. On the validity of actions made by de facto officers, it is
settled that "the acts of the de facto officer are just as valid for all purposes as those of a de jure officer, in so far as
the public or third persons who are interested therein are concerned."  This is premised on the reality that "[t]hird
67

persons x x x cannot always investigate the right of one assuming to hold an important office. They have aright to
assume that officials apparently qualified and in office are legally such." 68

289
The third party affected by the nature of the assumption into office by Atty. Chaguile is the mass of lawyers
belonging to the Integrated Bar of the Philippines. Again, the whole legal profession becomes witness to how the
selection of its leaders has practically become annual intramurals of both political and legal controversy. In our April
11, 2013 Resolution in A.M. No. 09-5-2-SC and A.C. No. 8292, we observed that this has brought about
disenchantment within the ranks of the Integrated Bar of the Philippines. In truth, many suspect that these elections
are contests between exclusive groups that maneuver to find allies year in and year out to control the helm of this
mandatory lawyers’ organization. 

The disposition we give to this case is also partly to quiet these conflicts and to deny any reward to further legal
controversy. After all, in our April 11, 2013 Resolution in A.M. No. 09-5-2-SC and A.C. No. 8292, we created a
permanent Committee for IBP Affairs "to primarily attend to the problems and needs of a very important professional
body and to make recommendation for its improvement and strengthening." 69

Should that initiative still fail, this Court should seriously review the present modality of the Integrated Bar. Instead of
individual membership, a more functional alternative might be organizational membership. This means that
voluntary organizations such as the Free Legal Assistance Group (FLAG), the Alternative Law Groups (ALG), the
Philippine Bar Association (PBA), the U.P. Women Lawyers’ Circle (WILOCI), and other organizations can coalesce
and nominate leaders to comprise a council. Thus, every lawyer will have a mature choice to determine which of
these organizations best represents his or her interests. This harmonizes better with their right to free association.

All considered, the circumstances under which Atty. Chaguile’s nomination was approved and under which Atty.
Chaguile subsequently assumed the role of IBP Governor for Northern Luzon are sufficient to induce a generalbelief
that she was properly the IBP Governor for Northern Luzon and that her actions in this office were properly invoked.

Having said these, we agree with a point raised by Atty. Ubano. As with statutes, the IBP By-Laws’ "violation or non-
observance [ought] not be excused by disuse, or custom, or practice to the contrary."  We do not validate the IBP
70

Board of Governors’ erroneous practice. To reiterate our earlier words: "We cannot countenance this. No amount of
previous practice or "tradition" can validate such a patently erroneous action."

Nonetheless, even as we decry the IBP Board of Governor’s reliance on "tradition," we do not lose sight of the fact,
palpable and immutable, that Atty. Chaguile has so acted as IBP Governor for Northern Luzon. Thankfully, our legal
system has an established means through which we are able to avert the "chaos that would result from multiple and
repetitious [challenges to] every action taken by [an] official whose claim to office could be open to question."  It is 71

strictly in view of this that we make a determination that Atty. Chaguile was the de facto IBP Governor for Northern
Luzon.We are not validating a wrong; we are merely addressing an exigency.

Having established that Atty. Chaguile was the IBP Governor for Northern Luzon in a de facto capacity, we turn to
the validity of her actions as a de facto officer.

To reiterate, one that is de facto is "illegitimate but in effect."  Thus, it is settled that "the acts of the de facto officer
72

are just as valid for all purposes as those of a de jure officer, in so far as the public or third persons who are
interested therein are concerned."  This is necessary so as to protect the sanctity of their dealings with those relying
73

on their ostensible authority:"[t]hird persons x x x cannot always investigate the right of one assuming to hold an
important office. They have a right to assume that officials apparently qualified and in office are legally such." 74

Accordingly, we hold that all official actions of Atty. Chaguile as de facto IBP Governor for Northern Luzon must be
deemed valid, binding, and effective, as though she were the officer validly appointed and qualified for the office. It
follows that her participation and vote in the election for IBP EVP held on May 22, 2013 are in order.

We now proceed to the points raised by Atty. Ubano assailing the conduct of the May 22, 2013 election for the IBP
EVP.

The Report on the Conduct of Election prepared by this Court’s designated observer, Executive Judge Danilo S.
Cruz, reveals that Atty. Ubano’s objections were properly and thoroughly discussed. He was given a considerable
length of time to air and argue his points. It was only after thorough discussions that Atty. Ubano’s Motion to
postpone the elections—which he insisted on raising even when the body was in the process of nominating
candidates for the position of EVP—was declared out of order.  Atty. Ubano himself was then nominated for IBP
75

EVP.  He accepted his nomination subject to the resolution of his Motion for Reconsideration in A.M. No. 09-5-2-SC
76

and A.C. No. 8292, as well as the resolution of the first Administrative Matter. 77

Before the members of the IBP Board of Governors placed their votes, Atty. Ubano had sought to have Atty.
Chaguile’s ballot segregated and sealed pending the resolution of his Motion for Reconsideration in A.M. No. 09-5-
2-SC and A.C. No. 8292, as well as the resolution of the first Administrative Matter. His Motion was denied.  Votes 78

were then cast, followed by tally and canvassing. After the votes had been tallied, Atty. Vicente M. Joyas received
five (5) votes while Atty. Ubano received four(4) votes. The Certificate of Election was then prepared, certified by the
presiding officer and noted by this Court’s observer. 79

290
Atty. Ubano was accorded more than an ample opportunity to arguehis position. More importantly, his position was
amply considered by the body. Another IBP governor, IBP Greater Manila Governor Dominic C.M. Solis, even
initially supported Atty. Ubano’s insistence that the election be postponed, but Atty. Solis subsequently withdrew
hissupport.80

In his Urgent Omnibus Motion which gave rise to the second Administrative Matter, Atty. Ubano made an issue out
of Atty. Vicente M. Joyas’ having designated IBP National Secretary Nasser A. Marohomsalic as Chairman of the
Commission on Elections considering that Atty.Joyas supposedly lacked the authority to do so. Atty. Ubano made
much of Atty. Joyas’ status as IBP Governor for Southern Luzon. Atty. Ubano, however, lost sight of the fact that
Atty. Joyas was likewise the Chairman of the IBP Executive Committee.

The Report on the Conduct of Election prepared by Executive Judge Danilo S. Cruz recalls the pertinent events as
follows:

The election was scheduled at 11 A.M. Chairman Joyas called the meeting to order at11:05 A.M. National Secretary
Marohomsalic certified that all members of the Board were notified of the election schedule and that with the
presence of five (5) members of the Board,  there was a quorum. The Chairman placed on record that the
81

undersigned Court Observer was in attendance.

Chairman Joyas said the meeting was for the purpose of electing the EVP for 2011-2013 and designated the
COMELEC for the election, thus: Secretary Marohomsalic as Chairman, Atty. Rosario T. Setlas-Reyes, as second
member, and IBP Head Executive Assistant Aurora G. Geronimo as third member and recorder of the proceedings.
Chairman Joyas then relinquished the Chair to COMELEC Chairman Nasser A. Marohomsalic.   82

Atty. Ubano’s own description of the circumstances leading to the creation of the Executive Committee states:

In light of the impending ipso facto resignation of Pres. Libarios on 30 March 2013 which is the start of the official
campaign period, the IBP [Board of Governors]discussed a mechanism to prevent hiatus [sic]in the leadership of the
IBP. After debate and deliberation, it was agreed to constitute a five (5)[-] member Executive Committee ("Ex Com")
tasked to temporarily administer the affairs of the IBP x x x.
83

From Atty. Ubano’s description of the Executive Committee’s function, it is evident that its principal purpose is to
ensure that the functions of the IBP National President shall continue to be performed despite IBP National
President Roan Libarios’ resignation. Conformably with the Omnibus Resolution creating the Executive Committee,
Atty. Vicente M. Joyas was designated as the Executive Committee Chairman. It is pursuant to this designation and
the Executive Committee’s general function that Atty. Joyas designated the Commission on Elections for the
election of the IBP EVP.

Further, Section 50 (d) of the IBP By-Laws provides:

(d) Secretary: The Secretary shall attend all meetings of the Board of Governors, and keep a record of all the
proceedings thereof; prepare and maintain a register of all members of the Integrated Bar; notify national officers as
well as members of national committees of their election or appointment; cause to be prepared the necessary official
ballots for the election of Governors; and perform such other duties as are assigned to him by these By-Laws, by the
President and by the Board of Governors.(Underscoring supplied)

As IBP National Secretary, Atty. Marohomsalic may, therefore, properly perform such other duties assigned to him
by the IBP National President. Thus, Atty. Vicente M. Joyas, acting for the IBP Executive Committee(in his capacity
as its Chairman) and pursuant to the Executive Committee’s purpose of ensuring that the functions of the IBP
National President shall continue to be performed, was in a position to designate the IBP National Secretary to
perform a duty other than those explicitly articulated in the IBP By-Laws. As regards this case, that duty was to be
the duty of the Chairman of the Commission on Elections. In turn, it was in his capacity as Commission on Elections
Chairman that Atty. Marohomsalic presided over the conduct of the election.

In sum, we fail to see how the election could have been tainted with the presiding officer’s absolute lack of
independence, manifest bias and prejudice, patent hostility, and inordinate haste.  We find no reason to invalidate
84

the election.

The Integrated Bar of the Philippines has long been beset by leadership crises.  Our April 11, 2013 Resolution in
1âwphi1

A.M. No. 09-5-2-SC and A.C. No. 8292—the same cases from which the subject matter of this Resolution arose—
chronicled the long, acrimonious history of the leadership of the Integrated Bar of the Philippines. It is, at the very
least, strange that the Integrated Bar has suffered these episodes while other lawyers’ organizations have not.
Again, it is worth while to consider if there are other means of integrating the members of the Bar— alternative ways
that might enable the Integrated Bar to satisfy its objectives more effectively, democratize its leadership, and
minimize its need to seek the intervention of this Court.

291
The leadership of our Integrated Bar must find a better way of resolving its conflicts other than elevating these
matters to this Court. It cannot fail to show maturity in resolving its own conflicts. It behooves the members of the
legal profession to avoid being solitigious that they lose sightof the primordial public interests that must be upheld in
every case and conflict that is raised to the level of this Court.

Otherwise, the Integrated Bar of the Philippines will continue to alienate its mass membership through political
contestations that may be viewed as parochial intramurals from which only a few lawyers benefit. It will be
generations of leaders who model needless litigation and wasted time and energy. This is not what an integrated
bar of a noble profession should be. 1âwphi1

WHEREFORE, the Motion to Declare dated March 27, 2013 as Ultra Vires or Invalid the Urgent Motion to
Defer/Restrain Performance of Duties as Successor Governor of IBP Northern Luzon Regiondated April 22,
2013and the Very Urgent Motion to Restrain Atty. Chaguile from Voting in the EVP Election on May22, 2013 dated
May 20, 2013filed by Atty. Marlou B. Ubano are DENIED for being moot and academic.

We DECLARE that Atty. Lynda Chaguilewas indeed a de factoofficer during her tenure as IBP Governor for
Northern Luzon and that her acts as de factoofficer—includingher having voted in the May 22, 2013 electionfor the
Executive Vice President of the Integrated Bar of the Philippines—are valid, binding,and effective. The Urgent
Omnibus Motion to (1) Nullify the EVP Election on May 22, 2013 and (2) Restrain Gov. Vicente M. Joyas of
Southern Luzon Region from Discharging the Duties of EVP/Acting President until the Final Resolution of the Issues
is DENIED.

Let a copy of this Resolution be given to the Supreme Court Oversight Committee on the Integrated Bar of the
Philippines reorganized by virtue of Memorandum Order No. 20-2013 on June 13, 2013 for its proper advice.

SO ORDERED

Republic of the Philippines

SUPREME COURT
Manila

EN BANC

G.R. No. 192803               December 10, 2013

ALLIANCE FOR RURAL AND AGRARIAN RECONSTRUCTION, INC., ALSO KNOWN AS ARARO PARTY-
LIST,Petitioner, 
vs.
COMMISSION ON ELECTIONS, Respondent.

DECISION

LEONEN, J.:

292
It is beyond human expectations that we charge voters with knowledge as to which among the many party-list
groups listed in the ballot they are presented with during election day is disqualified. To do so will amount to their
disenfranchisement and the failure to comply with the proportionality for party-list representatives required by the
Constitution and by law.

We are asked to decide the Petition for Review on Certiorari filed by a party-list group that ran for the 2010 national
elections. The petitioner questions the validity of the formula used by the Commission on Elections in determining
and proclaiming the winning party-list groups. 1

We rule that the Petition is moot and academic. However, we provide guidance for the bench and the bar with
respect to the formula used in determining the winning party-list groups. We refine the divisor in the formula use din
getting the percentage of votes garnered by a party-list.

The facts as established on record are as follows:

Petitioner, Alliance for Rural and Agrarian Reconstruction, Inc.,(ARARO) was a duly accredited party-list under
Republic Act No. 7941.2Itgarnered a total of one hundred forty-seven thousand two hundred four (147,204) votes in
the May 10, 2010 elections and ranked fiftieth (50th).  The Commission on Elections En Banc sitting as the National
3

Board of Canvassers initially proclaimed twenty-eight (28) party-list organizations as winners involving a total of
thirty-five (35) seats guaranteed and additional seats.  The result was based on the Commission on Elections’ count
4

of one hundred twenty-one (121) Certificates of Canvass or a total of twenty-nine million seven hundred fifty
thousand and forty-one (29,750,041) votes for the Party-List System. 5

The winning party-list groups were the following: 6

NUMBER OF
PARTY
SEATS

1 COALITION OF ASSOCIATIONS OF SENIOR CITIZENS OF THE PHILIPPINES, INC. 2

2 AKBAYAN! CITIZEN’S ACTION PARTY 2

3 GABRIELA WOMEN’S PARTY 2

4 COOPERATIVE NATCCO NETWORK PARTY 2

5 ABONO 2

6 BAYAN MUNA 2

7 AN WARAY 2

8 AGRICULTURAL SECTOR ALLIANCE SECTOR OF THE PHILIPPINES, INC. 1

9 ALLIANCE FOR BARANGAY CONCERNS PARTY 1

10 ANAKPAWIS 1

11 KABATAAN PARTYLIST 1

12 ABANTE MINDANAO, INC. 1

13 ACT TEACHERS 1

14 YOU AGAINST CORRUPTION AND POVERTY 1

15 KASANGGA SA KAUNLARAN, INC. 1

293
16 BAGONG HENERASYON 1

17 ANG GALING PINOY 1

18 AGBIAG! TIMPUYOG ILOCANO, INC. 1

19 PUWERSA NG BAYANing ATLETA 1

20 ARTS BUSINESS AND SCIENCE PROFESSIONALS 1

21 TRADE UNION CONGRESS PARTY 1

22 ALYANSA NG MGA GRUPONG HALIGI NG AGHAM AT TEKNOLOHIYA PARA SA 1

MAMAMAYAN, INC.

23 DEMOCRATIC INDEPENDENT WORKERS’ ASSOCIATION, INC. 1

24 KAPATIRAN NG MGA NAKULONG NA WALANG SALA 1

25 KALINGA-ADVOCACY FOR SOCIAL EMPOWERMENT AND NATION BUILDING 1

THROUGH EASING POVERTY, INC.

26 ALAGAD PARTY-LIST 1

27 UNA ANG PAMILYA FORMERLY ALLIANCE OF NEO-CONSERVATIVES 1

28 ALLIANCE OF VOLUNTEER EDUCATORS 1

TOTAL SEATS 35

Petitioner then filed an election protest before the House of Representatives Electoral Tribunal questioning the
Resolution of the Commission on Elections that proclaimed the 28 party-list groups listed above. 7

Without waiting for the resolution of the House of Representatives Electoral Tribunal, the petitioner filed the present
Petition for Review on Certiorari with Prayer for Preliminary Injunction and Temporary Restraining Order.  The
8

petitioner asks that this Court:

1. modify the Commission on Elections’ interpretation of the formula stated in BANAT v. COMELEC  by 9

making the divisor for the computation of the percentage votes, from total number of votes cast minus the
votes for the disqualified party-list candidates, to the total number of votes cast regardless whether party-list
groups are disqualified;

2. enjoin the public respondent Commission on Elections from proclaiming the remaining winning party-list
candidates until it modifies the interpretation of the formula used in BANAT v. COMELEC to the formula
proposed by the petitioner; and

3. issue a Temporary Restraining Order against the public respondent until it modifies the present formula
for computing the number of seats for the winning party-list candidates to the formula proposed by the
petitioner.10This Court did not issue any Temporary Restraining Order.11By Resolution, the National Board
of Canvassers proclaimed the winning party-list groups with the following computation: 12

WHEREAS, as of May 17, 2010, the projected/maximum total party-list votes cannot go any higher than thirty million
two hundred sixty[-]four thousand five hundred seventy[-]nine (30,264,579)given the following statistical data:

REGISTERED
DESCRIPTION
VOTERS

294
Total party-list votes already canvassed/tabulated 29,750,041

Less: Votes garnered by the eight (8) disqualified parties 308,335

Total party-list votes already canvassed/tabulated after deducting votes of the eight (8) disqualified 29,441,706
parties

Add: Party-list votes still uncanvassed Lanao del Sur 515,488

Local Absentee Voting 19,071

Overseas Absentee Voting 9,299

Due to lowering of threshold 92,740

Precincts reporting Final Testing and Sealing results 186,275

Maximum Total Party-List Votes 30,264,579

WHEREAS, since there are twohundred twenty-nine (229) legislative districts, the total number of party-list seats
available for the May 10, 2010 automated national and local elections is fifty-seven (57) based on the following
formula: number of legislative districts/0.80 x 0.20;

WHEREAS, the provision of Section 11 of Republic Act No. 7941 provides, in part, that:

"(b) The parties, organizations, and coalitions receiving at least two percent (2%) of the total votes cast for the party-
list system shall be entitled to one seat each: Provided, That those garnering more than two [sic] (2%) of the votes
shall be entitled to additional seats in proportion to their total number of votes: Provided, finally, That each party,
organization or coalitions shall be entitled to not more than three (3) seats."

WHEREAS, applying the formula in the case of Barangay Association for National Advancement and Transparency
(BANAT) v. Commission on Elections, and [sic] Bayan Muna, Advocacy for Teacher Empowerment, Cooperation
and Harmony Towards Educational Reforms, Inc., and Abono [v.]Commission on Elections, the ranking of the
participating parties, organizations and coalitions from highest to lowest based on the number of votes garnered as
of May 17, 2010, and the seats that may be obtained by each party to complete the allocation of the available 57
party-list seats, are shown below: 13

VOTES
GARNERED (B) plus
GUARANTEED ADDITIONAL
OVER TOTAL (C), in
VOTES SEAT First SEATS
RANK PARTY VOTES FOR whole
GARNERED Round  Second Round
PARTY LIST, integers 
(B) (C)
in % (D)
(A)

1 AKO BICOL POLITICAL 1,522,986 5.0322% 1 2.26 3

PARTY

2 COALITION OF 1,292,182 4.2696% 1 1.92 2

ASSOCIATIONS OF
SENIOR CITIZENS OF THE
PHILIPPINES, INC.

3 BUHAY HAYAAN 1,249,555 4.1288% 1 1.85 2

YUMABONG

295
4 AKBAYAN! CITIZEN'S 1,058,691 3.4981% 1 1.57 2
ACTION PARTY

5 GABRIELAWOMEN’S 1,001,421 3.3089% 1 1.48 2

PARTY

6 COOPERATIVE NATCCO 943,529 3.1176% 1 1.40 2

NETWORK PARTY

7 1ST CONSUMERS 768,829 2.5404% 1 1.14 2

ALLIANCE FOR RURAL
ENERGY

8 ABONO 766,615 2.5330% 1 1.13 2

9 BAYAN MUNA 746,019 2.4650% 1 1.10 2

10 AN WARAY 711,631 2.3514% 1 1.05 2

11 CITIZEN'S BATTLE 647,483 2.1394% 1 0.96 1

AGAINST CORRUPTION

12 ADVOCACY FOR 614,725 2.0312% 1 0.91 1

TEACHER
EMPOWERMENT
THROUGH ACTION
COOPERATION AND
HARMONY TOWARDS
EDUCATIONAL REFORMS

13 AGRICULTURAL SECTOR 515,501 1.7033% 0 1 1

ALLIANCE SECTOR OF
THE PHILIPPINES, INC.

14 BUTIL FARMERS PARTY 506,703 1.6742% 0 1 1

15 ALLIANCE FOR 469,093 1.5500% 0 1 1

BARANGAY CONCERNS
PARTY

16 ANAKPAWIS 445,628 1.4724% 0 1 1

17 KABATAAN PARTYLIST 417,923 1.3809% 0 1 1

18 LPG MARKETERS 417,600 1.3798% 0 1 1

ASSOCIATION, INC.

19 ABANTE MINDANAO, INC. 376,011 1.2424% 0 1 1

20 ACT TEACHERS 369,564 1.2211% 0 1 1

21 ANG ASOSASYON SANG 357,009 1.1796% 0 1 1

MANGUNGUMA NGA
BISAYA-OWA

296
 MANGUNGUMA, INC.

22 YOU AGAINST 335,635 1.1090% 0 1 1

CORRUPTION AND
POVERTY

23 ASSOCIATION OF 313,359 1.0354% 0 1 1

PHILIPPINE ELECTRIC
COOPERATIVES

24 KASANGGA SA 296,368 0.9793% 0 1 1

KAUNLARAN, INC.

25 BAGONG HENERASYON 292,875 0.9677% 0 1 1

26 ALLIANCE FOR 292,057 0.9650% 0 1 1

NATIONALISM AND
DEMOCRACY

27 ANG GALING PINOY 269,009 0.8889% 0 1 1

28 AGBIAG! TIMBUYOG 262,298 0.8667% 0 1 1

ILOCANO, INC.

29 PUWERSA NG BAYANING 258,498 0.8541% 0 1 1

ATLETA

30 ARTS BUSINESS AND 257,301 0.8502% 0 1 1

SCIENCE
PROFESSIONALS

31 TRADE UNION 244,623 0.8083% 0 1 1

CONGRESS PARTY

32 ALYANSA NG MGA 241,898 0.7993% 0 1 1

GRUPONG HALIGI NG
AGHAM AT TEKNOLOHIYA
PARA SA MAMAMAYAN,
INC.

33 DEMOCRATIC 238,675 0.7886% 0 1 1

INDEPENDENT
WORKERS'
ASSOCIATION, INC.

34 KAPATIRAN NG MGA 234,717 0.7756% 0 1 1

NAKULONG NA WALANG
SALA

35 KALINGA-ADVOCACY FOR 229,198 0.7573% 0 1 1

SOCIAL EMPOWERMENT
AND NATION BUILDING
THROUGH EASING
POVERTY, INC.

297
36 ALAGAD PARTY-LIST 227,116 0.7504% 0 1 1

37 1-UNITED TRANSPORT 220,002 0.7269% 0 1 1

KOALISYON

38 UNA ANG PAMILYA 217,032 0.7171% 0 1 1

FORMERLY ALLIANCE OF
NEO-CONSERVATIVES

39 ALLIANCE OF 214,760 0.7096% 0 1 1

VOLUNTEER EDUCATORS

40 AANGAT TAYO 176,074 0.5818% 0 1 1

41 ADHIKAING 173,711 0.5740% 0 1 1

TINATAGUYOD NG
KOOPERATIBA

42 ANG LABAN NG 170,304 0.5627% 0 1 1

INDIGONG FILIPINO

43 ASSOCIATION OF 167,654 0.5540% 0 1 1

LABORERS AND
EMPLOYEES

44 KASOSYO PRODUCER- 166,432 0.5499% 0 1 1

CONSUMER EXCHANGE
ASSOCIATION, INC.

45 ALAY BUHAY 163,164 0.5391% 0 1 1

COMMUNITY
DEVELOPMENT
FOUNDATION, INC.

46 AKSYON MAGSASAKA 161,674 0.5342% 0 1 1

PARTIDO TINIG NG MASA

47 KATIPUNAN NG MGA 160,745 0.5311% 0 0 0

ANAK NG BAYAN ALL
FILIPINO DEMOCRATIC
MOVEMENT

48 ANAK MINDANAO 157,733 0.5212% 0 0 0

49 VETERANS FREEDOM 154,183 0.5095% 0 0 0

PARTY

50 ALLIANCE FOR RURAL 147,204 0.4864% 0 0 0

RECONSTRUCTION, INC.

51 ATONG PAGLAOM 145,435 0.4805% 0 0 0

52 PILIPINO ASSOCIATION 143,151 0.4730% 0 0 0

FOR COUNTRY-URBAN
POOR YOUTH

298
 ADVANCEMENT AND
WELFARE

53 ABANTE TRIBUNG 142,013 0.4692% 0 0 0

MAKABANSA

54 ANGAT ATING 141,780 0.4685% 0 0 0

KABUHAYAN PILIPINAS,
INC.

55 PARTIDO NG 140,000 0.4626% 0 0 0

MANGGAGAWA

56 ALYANSANG BAYANIHAN 137,842 0.4555% 0 0 0

NG MGA MAGSASAKA,
MANGGAGAWANG-BUKID
AT MANGINGISDA

57 ALLIANCE TRANSPORT 136,710 0.4517% 0 0 0

SECTOR

58 KAUNLARAN NG 130,270 0.4304% 0 0 0

AGRIKULTURA
ASENSADONG
PROBINSYA ANGAT NG
BAYAN

59 BARANGAY NATIN 126,462 0.4179% 0 0 0

60 1-AKO BABAENG ASTIG 120,734 0.3989% 0 0 0

AASENSO

61 1GUARDIANS 120,727 0.3989% 0 0 0

NATIONALIST OF THE
PHILIPPINES, INC.

62 BABAE PARA SA 117,299 0.3876% 0 0 0

KAUNLARAN

63 BAGONG BAYAN 115,428 0.3814% 0 0 0

NAGTATAGUYOD SA
DEMOKRATIKONG
IDEOLOHIYA AT LAYUNIN

64 AHON PINOY 115,197 0.3806% 0 0 0

65 ACTION FOR DYNAMIC 115,058 0.3802% 0 0 0

DEVELOPMENT, INC.

66 KATRIBU INDIGINOUS 114,891 0.3796% 0 0 0

PEOPLES SECTORAL
PARTY

67 ANG LADLAD LBGT 113,187 0.3740% 0 0 0

PARTY

299
68 CONFEDERATION OF 110,759 0.3660% 0 0 0
NON-STOCK SAVINGS
AND LOAN
ASSOCIATIONS, INC.

69 KABALIKAT NG MGA 109,739 0.3626% 0 0 0

MAMAMAYAN

70 ONE ADVOCACY FOR 109,682 0.3624% 0 0 0

HEALTH, PROGRESS AND
OPPORTUNITY

71 BINHI; PARTIDO NG MGA 108,005 0.3569% 0 0 0

MAGSASAKA PARA SA
MGA MAGSASAKA

72 1-AANI 107,970 0.3568% 0 0 0

73 AKAP BATA, INC. 107,154 0.3541% 0 0 0

74 ANG ASOSASYON NG 107,135 0.3540% 0 0 0

MGA TRABAHADOR AT
PAHINANTE

75 AGILA NG MGA 105,009 0.3470% 0 0 0

KATUTUBONG PILIPINO,
INC.

The petitioner suggests that the formula used by the Commission on Elections is flawed because votes that were
spoiled or that were not made for any party-lists were not counted. According to the petitioner, around seven million
(7,000,000) votes were disregarded as a result of the Commission on Elections’ erroneous interpretation. The figure
presented by petitioner resulted from the following computations: 14

37,377,371 (Number of voters who actually voted LESS votes 

for disqualified party lists)

less 30,264,579 (Number of votes for party-list candidates LESS 

number of votes for disqualified party-list candidates)

7,112,792 (Total number of disregarded votes 

according to petitioner ARARO)

First, the total number of votes for disqualified party-lists is deducted from the total number of voters that actually
voted. The total number of votes for disqualified party-list groups is three hundred eight thousand three hundred
thirty-five (308,335).   The total number of voters that actually voted is thirty-seven million six hundred eighty-five
15

thousand seven hundred six (37,685,706).  After subtracting the amounts, the result is thirty-seven million three
16

hundred seventy-seven thousand three hundred seventy-one (37,377,371)votes.

Second, the number of votes for disqualified party-list groups is again deducted from the number of votes for party-
list candidates which the petitioner pegged at thirty million five hundred seventy-two thousand nine hundred fourteen
votes (30,572,914).  The difference then is thirty million two hundred sixty-four thousand five hundred seventy-nine
17

(30,264,579) votes.

Lastly, to get the total number of votes disregarded by the Commission on Elections’ interpretation, 30,264,579 is
subtracted from 37,377,371.The computation then results to seven million one hundred twelve thousand seven
hundred ninety-two (7,112,792) votes disregarded using the Commission on Elections’ interpretation.

300
On the other hand, the formula used by the Commission on Elections En Banc sitting as the National Board of
Canvassers is the following:

Number of seats available to

legislative districts Number of seats 
x .20 = available to party-list 
representatives
.08

Thus, the total number of party-list seats available for the May 2010 elections is 57 as shown below:

229

x .20 = 57

.80

The National Board of Canvassers’ Resolution No. 10-009 applies the formula used in Barangay Association for
National Advancement and Transparency (BANAT) v. COMELEC  to arrive at the winning party-list groups and their
18

guaranteed seats, where:

Number of votes of party-list

Proportion or 
= Percentage of votes 
Total number of votes for  garnered by party-list
party-list candidates

The Proportion or Percentage of votes garnered by party-list should be greater than or equal to 2% or 0.02 to entitle
a party-list candidate to one (1) seat in the first round. There will be a second round if the total number of
guaranteed seats awarded in the first round is less than the total number of party-list seats available. Thus:

Proportion or
Number of
Total number Percentage of
seats Additional
of party-list - x votes =
allocated in seats awarded
seats available garnered by
first round
party-list

If the total seats available for party-lists are not yet awarded after the second round (this is computed by getting the
sum of the seats awarded in the first round and the additional seats awarded in the second round), the next in the
party-list ranking will be given one (1) seat each until all seats are fully distributed. A three-seat cap per party-list,
however, is imposed on winning groups. Fractional seats are not rounded off and are disregarded.

The petitioner argues that the Commission on Elections’ interpretation of the formula used in BANAT v. COMELECis
flawed because it is not in accordance with the law.  The petitioner distinguishes the phrases, valid votes cast for
19

party-list candidates on the one hand as against votes cast for the party-list system on the other.

The petitioner puts in issue the interpretation of Sections 11 and 12 of Republic Act No.7941 or "An Act Providing for
the Election of Party-List Representatives Through the Party-List System, and Appropriating Funds Therefor." The
sections provide the guidelines in allocating seats to party-list representatives:

Section 11. Number of Party-List Representatives. The party-list representatives shall constitute twenty per centum
(20%) of the total number of the members of the House of Representatives including those under the party-list.

For purposes of the May 1998 elections, the first five (5) major political parties on the basis of party representation in
the House of Representatives at the start of the Tenth Congress of the Philippines shall not be entitled to participate
in the party-list system.

In determining the allocation of seats for the second vote, the following procedure shall be observed:
301
 (a) The parties, organizations, and coalitions shall be ranked from the highest to the lowest based on the
number of votes they garnered during the elections.

(b) The parties, organizations, and coalitions receiving at least two percent (2%) of the total votes cast for
the party-list system shall be entitled to one seat each: Provided, That those garnering more than two
percent (2%) of the votes shall be entitled to additional seats in proportion to their total number of votes:
Provided, finally, That each party, organization, or coalition shall be entitled to not more than three (3) seats.

Section 12. Procedure in Allocating Seats for Party-List Representatives. The COMELEC shall tally all the votes for
the parties, organizations, or coalitions on a nationwide basis, rank them according to the number of votes received
and allocate party-list representatives proportionately according to the percentage of votes obtained by each party,
organization, or coalition as against the total nationwide votes cast for the party-list system.(Emphasis provided)

The petitioner argues that the correct interpretation of the provisions of Republic Act No. 7941 or the Party-list Law
does not distinguish between valid and invalid votes, to wit:

Therefore, votes for specific party lists are not the same as votes for the party-list system. Hence, people whose
votes were spoiled for instance (like checking or failure to properly shade the ovals in the ballots, or voted for two
party lists when the requirement is only one, or had erasures on their ballots for instance), or did not vote for any
party-list at all are still voters for the party-list system. The votes for the party-list system [include] all those people
who voted whether their votes were counted or not as long as the mechanism for the selection of party-list is in
place.  (Emphasis provided)
20

In its November 12, 2010 Comment,  the Commission on Elections through the Office of the Solicitor General took
21

the position that invalid or stray votes should not be counted in determining the divisor. The Commission on
Elections argues that this will contradict Citizens’ Battle Against Corruption (CIBAC) v. COMELEC  and Barangay
22

Association for National Advancement and Transparency (BANAT) v. COMELEC.  It asserts that:
23

Neither can the phrase be construed to include the number of voters who did not even vote for any qualified party-
list candidate, as these voters cannot be considered to have cast any vote "for the party-list system." 24

The issues in this case are as follows:

I. Whether the case is already moot and academic

II. Whether petitioners have legal standing

III. Whether the Commission on Elections committed grave abuse of discretion in its interpretation of the
formula used in BANAT v. COMELEC  to determine the party-list groups that would be proclaimed in the
25

2010 elections

The third issue requires our determination of the computation of the correct divisor to be used. The options are:

A. All votes cast for the party-list system less the votes cast for subsequently disqualified party-list groups
and votes declared spoiled

B. The total votes cast

C. The total number of valid votes cast for the party-list system including votes cast for party-list groups
listed in the ballot even if subsequently declared disqualified. The divisor should not include votes that are
declared spoiled or invalid.

We decide as follows:

This case is moot and academic. Mendoza v. Villas  defines a moot and academic case:
26

A moot and academic case is one that ceases to present a justiciable controversy by virtue of supervening events,
so that a declaration thereon would be of no practical value. As a rule, courts decline jurisdiction over such case, or
dismiss it on ground of mootness. 27

Several supervening events have already rendered this case moot and academic. First, the Commission on
Elections En Banc already proclaimed other winning party-list groups.  Second, the term of office of the winning
28

302
party-list groups in the May 2010 national elections ended on June 30, 2013. Finally, the conduct of the May 13,
2013 elections resulted in a new set of party-list groups.

We held that the expiration of the challenged term of office renders the corresponding Petition moot and
academic. This leaves any ruling on the issues raised by the petitioner with no practical or useful value.
29 30

However, the following exceptions to the rule of declining jurisdiction over moot and academic cases are allowed:
(1) there was a grave violation of the Constitution; (2) the case involved a situation of exceptional character and was
of paramount public interest; (3) the issues raised required the formulation of controlling principles to guide the
Bench, the Bar and the public; and (4) the case was capable of repetition yet evading review.  On the importance of
31

the assailed formula, this Court will discuss the issues raised by the petitioner as these are capable of repetition yet
evading review  and for the guidance of the bench, bar, and public.
32 33

II

The petitioner is not the real party in interest

"A real party in interest is the party who stands to be benefited or injured by the judgement in the suit, or the party
entitled to the avails of the suit."  The party’s interest must be direct, substantial, and material.  In this case, the
34 35

petitioner attacks the validity of the formula used and upheld in BANAT. It also proposes its own interpretation of the
formula to determine the proportional representation of party-list candidates in the House of Representatives.
However despite any new computation, ARARO’s proposed divisor of total votes cast for the party-list system
whether valid or invalid still fails to secure one seat for ARARO. Reviewing the figures presented by the petitioner: 36

With Divisor of total valid votes cast for With Divisor of votes cast for the party-
party-list system minus votes cast for list system as proposed by ARARO
disqualified party-lists or invalid votes  (37,377,371)
(30,264,579)

Votes garnered 147,204 147,204

Votes garnered over  0.4864 0.3939

total votes cast for party-lists (%)

Guaranteed Seat 0 0

This table clearly shows that the petitioner does not suffer a direct, substantial or material injury from the application
of the formula interpreted and used in BANAT in proclaiming the winning party-lists in the assailed National Board of
Canvassers Resolution. The computation proposed by petitioner ARARO even lowers its chances to meet the 2%
threshold required by law for a guaranteed seat. Its arguments will neither benefit nor injure the party. Thus, it has
no legal standing to raise the argument in this Court.

III

However, we review the interpretation of the formula used for the determination of wining party-list candidates with
respect to the divisor used for the guidance of bench and bar and for future elections.

The textual references for determining the formula to be used are found in the Constitution and the statute
interpreting the relevant provisions.

Article VI, Section 5,paragraphs 1 and 2 of the 1987 Constitution provide the following:

1. The House of Representatives shall be composed of not more than two hundred and fifty members,
unless otherwise fixed by law, who shall be elected from legislative districts apportioned among the
provinces, cities, and the Metropolitan Manila area in accordance with the number of their respective
inhabitants, and on the basis of a uniform and progressive ratio, and those who, as provided by law, shall be
elected through a party-list system of registered national, regional, and sectoral parties or organizations.

2. The party-list representatives shall constitute twenty per centum of the total number of representatives
including those under the party list. For three consecutive terms after the ratification of this Constitution, one-
half of the seats allocated to party-list representatives shall be filled, as provided by law, by selection or

303
 election from the labor, peasant, urban poor, indigenous cultural communities, women, youth, and such
other sectors as may be provided by law, except the religious sector.

Sections 11 and 12 of Republic Act No. 7941,thus, provide:

Section 11. Number of Party-List Representatives. The party-list representatives shall constitute twenty per centum
(20%) of the total number of the members of the House of Representatives including those under the party-list.

For purposes of the May 1998 elections, the first five (5) major political parties on the basis of party representation in
the House of Representatives at the start of the Tenth Congress of the Philippines shall not be entitled to participate
in the party-list system.

In determining the allocation of seats for the second vote, the following procedure shall be observed:

(a) The parties, organizations, and coalitions shall be ranked from the highest to the lowest based on the
number of votes they garnered during the elections.

(b) The parties, organizations, and coalitions receiving at least two percent (2%) of the total votes cast for
the party-list systemshall be entitled to one seat each: Provided, That those garnering more than two
percent (2%) of the votes shall be entitled to additional seats in proportion to their total number of votes:
Provided, finally, That each party, organization, or coalition shall be entitled to not more than three(3) seats.

Section 12. Procedure in Allocating Seats for Party-List Representatives. The COMELEC shall tally all the votes for
the parties, organizations, or coalitions on a nationwide basis, rank them according to the number of votes received
and allocate party-list representatives proportionately according to the percentage of votes obtained by each party,
organization, or coalition as against the total nationwide votes cast for the party-list system.(Emphasis provided)

In Veterans Federation Party v. Commission on Elections,  we reversed the Commission on Elections’ ruling that
37

the respondent parties, coalitions, and organizations were each entitled to a party-list seat despite their failure to
reach the 2% threshold in the 1998 party-list election. Veterans also stated that the 20% requirement in the
Constitution is merely a ceiling.

Veterans laid down the "four inviolable parameters" in determining the winners in a Philippine-style party-list election
based on a reading of the Constitution and Republic Act No. 7941:

First, the twenty percent allocation-the combined number of all party-list congressmen shall not exceed
twenty percent of the total membership of the House of Representatives, including those elected under the
party list.

Second, the two percent threshold-only those parties garnering a minimum of two percent of the total valid
votes cast for the party-list system are "qualified" to have a seat in the House of Representatives.

Third, the three-seat limit-each qualified party, regardless of the number of votes it actually obtained, is
entitled to a maximum of three seats; that is, one "qualifying" and two additional seats.

Fourth, proportional representation-the additional seats which a qualified party is entitled to shall be
computed "in proportion to their total number of votes."  (Emphasis provided)
38

In Partido ng Manggagawa (PM) and Butil Farmers Party (Butil) v. COMELEC,  the petitioning party-list groups
39

sought the immediate proclamation by the Commission on Elections of their respective second nominee, claiming
that they were entitled to one (1) additional seat each in the House of Representatives. We held that the correct
formula to be used is the one used in Veterans and reiterated it in Ang Bagong Bayani – OFW Labor Party v.
COMELEC.  This Court in CIBAC v. COMELEC  differentiates the formula used in Ang Bagong Bayani but upholds
40 41

the validity of the Veterans formula.

In BANAT v. COMELEC,  we declared the 2% threshold in relation to the distribution of the additional seats as void.
42

We said in that case that:

x x x The two percent threshold presents an unwarranted obstacle to the full implementation of Section 5(2), Article
VI of the Constitution and prevents the attainment of "the broadest possible representation of party, sectoral or
group interests in the House of Representatives." (Republic Act No. 7941, Section 2)

xxxx

x x x There are two steps in the second round of seat allocation. First, the percentage is multiplied by the remaining
available seats, 38, which is the difference between the 55 maximum seats reserved under the Party-List System
304
and the 17 guaranteed seats of the two-percenters. The whole integer of the product of the percentage and of the
remaining available seats corresponds to a party’s share in the remaining available seats. Second, we assign one
party-list seat to each of the parties next in rank until all available seats are completely distributed. We distributed all
of the remaining 38 seats in the second round of seat allocation. Finally, we apply the three-seat cap to determine
the number of seats each qualified party-list candidate is entitled. 43

The most recent Atong Paglaum v. COMELEC  does not in any way modify the formula set in Veterans. It only
44

corrects the definition of valid party-list groups. We affirmed that party-list groups maybe national, regional, and
sectoral parties or organizations. We abandoned the requirement introduced in Ang Bagong Bayani that all party-list
groups should prove that they represent a "marginalized" or "under-represented" sector.

Proportional representation is provided in Section 2 of Republic Act No. 7941.  BANAT overturned Veterans’
45

interpretation of the phrase in proportion to their total number of votes. We clarified that the interpretation that only
those that obtained at least 2% of the votes may get additional seats will not result in proportional representation
because it will make it impossible for the party-list seats to be filled completely. As demonstrated in BANAT, the
20% share may never be filled if the 2% threshold is maintained.

The divisor, thus, helps to determine the correct percentage of representation of party-list groups as intended by the
law. This is part of the index of proportionality of the representation of a party-list to the House of Representatives. It 46

measures the relation between the share of the total seats and the share of the total votes of the party-
list.  In Veterans, where the 20% requirement in the Constitution was treated only as a ceiling, the mandate for
47

proportional representation was not achieved, and thus, was held void by this Court.

The petitioner now argues that the votes of all the registered voters who actually voted in the May 2010 elections
should be included in the computation of the divisor whether valid or invalid.  According to the petitioner, votes cast
48

for the party-list candidates is not the same as the votes cast under or for the party-list system. Specifically, it said
that: The party list system is not just for the specific party lists as provided in the ballot, but pertains to the system of
selection of the party list to be part of the House of Representatives.  The petitioner claims that there should be no
49

distinction in law between valid and invalid votes. Invalid votes include those votes that were made for disqualified
party-list groups, votes that were spoiled due to improper shading, erasures in the ballots, and even those that did
not vote for any party-list candidate at all.  All of the votes should be included in the divisor to determine the 2%
50

threshold.

We agree with the petitioner but only to the extent that votes later on determined to be invalid due to no
cause attributable to the voter should not be excluded in the divisor. In other words, votes cast validly for a
party-list group listed in the ballot but later on disqualified should be counted as part of the divisor. To do
otherwise would be to disenfranchise the voters who voted on the basis of good faith that that ballot
contained all the qualified candidates. However, following this rationale, party-list groups listed in the ballot
but whose disqualification attained finality prior to the elections and whose disqualification was reasonably
made known by the Commission on Elections to the voters prior to such elections should not be included
in the divisor.

Not all votes cast in the elections should be included in the divisor. Contrary to the argument of the petitioner,
Section 11(b) of Republic Act No. 7941 is clear that only those votes cast for the party-list system shall be
considered in the computation of the percentage of representation:

(b) The parties, organizations, and coalitions receiving at least two percent (2%) of the total votes cast for the party-
list systemshall be entitled to one seat each: Provided, That those garnering more than two percent (2%) of the
votes shall be entitled to additional seats in proportion to their total number of votes: Provided, finally, That each
party, organization, or coalition shall be entitled to not more than three (3) seats. (Emphasisprovided)

The total votes cast do not include invalid votes. The invalid votes, for the determination of the denominator, may be
votes that were spoiled or votes that resulted from the following: improper shading or having no shade at
all; existence of stray or ambiguous marks;  tears in the ballot; and/or ballots rejected by the Precinct Count Optical
51 52

Scan (PCOS) machines under the paper-based53automated election system. All these are causes that nullify the
count for that vote that can be attributable to the voter’s action.

Votes cast for the party-list system should, however, include all votes cast for party-list groups contained in the
ballot even if subsequently they are disqualified by the Commission on Elections or by our courts. Thus, the content
of the divisor in the formula to determine the seat allocation for the party-list component of the House of
Representatives should be amended accordingly.

We qualify that the divisor to be used in interpreting the formula used in BANAT is the total votes cast for the party-
list system. This should not include the invalid votes. However, so as not to disenfranchise a substantial portion of
the electorate, total votes cast for the party-list system should mean all the votes validly cast for all the candidates
listed in the ballot. The voter relies on the ballot when making his or her choices.

305
To the voter, the listing of candidates in the official ballot represents the extent of his or her choices for an electoral
exercise. He or she is entitled to the expectation that these names have properly been vetted by the Commission on
Elections. Therefore, he or she is also by right entitled to the expectation that his or her choice based on the listed
names in the ballot will be counted.

In Reyes v.COMELEC  as cited in Loreto v. Brion,  this Court said "that the votes cast for the disqualified candidate
54 55

are presumed to have been cast in the belief that he is qualified."  Therefore, the votes cast for disqualified
56

candidates are presumed to be made with a sincere belief that the voters’ choices were qualified candidates and
that they were without any intention to misapply their franchise.  Their votes may not be treated as stray, void or
57

meaningless58for purposes of the divisor in the party-list elections. Assuming arguendo that petitions

for certiorari do not stay the execution of the judgment or final order or resolution sought to be reviewed,  the finality
59

of the disqualification of a candidate should not be a means for the disenfranchisement of the votes cast for the
party-list system.

Section 10 of the Party-list Law should thus be read in conjunction with the intention of the law as seen in Section 2,
to wit:

Sec. 2. Declaration of Policy. -The State shall promote proportional representation in the election of representatives
to the House of Representatives through a party-list system of registered national, regional and sectoral parties or
organizations or coalitions thereof, which will enable Filipino citizens belonging to the marginalized and
underrepresented sectors, organizations and parties, and who lack well-defined political constituencies but who
could contribute to the formulation and enactment of appropriate legislation that will benefit the nation as a whole, to
become members of the House of Representatives. Towards this end, the State shall develop and guarantee a full,
free and open party system in order to attain the broadest possible representation of party, sectoral or group
interests in the House of Representatives by enhancing their chances to compete for and win seats in the
legislature, and shall provide the simplest scheme possible. (Emphasis provided)

Section 10 of Republic Act No. 7941, which governs party-list elections, states that votes cast for a party-list "not
entitled to be voted for shall not be counted." It does not specify any reckoning period of the finding of
disqualification or cancellation of registration for the validity or the invalidity of votes unlike that in Section 72 of the
Omnibus Election Code, as amended by Section 6, Republic Act No. 6646.  Taking Sections 2 and 10 together, this
60

Court must consider the intention of the law and the nature of Philippine style party-list elections. Party-list groups
provide for a different and special representation in Congress. To disregard votes of party-list groups disqualified
after the conduct of the elections means the disenfranchisement of thousands, if not hundreds of thousands of
votes, of the Filipino people. Definitely, it is not the voter’s fault that the party-list group in the ballot it votes for will
be subsequently disqualified. The voter should not be penalized.

The counting of votes for party-list groups in the ballot but subsequently declared as disqualified is, thus, corollary to
the "fundamental tenet of representative democracy that the people should be allowed to choose whom they please
to govern them."  It is also part of the right of suffrage, and the law’s intention to ensure a more representative
61

Congress should be given priority.

Therefore, the divisor should now include all votes cast for party-list groups that are subsequently disqualified for so
long as they were presented as a choice to the electorate.

If his or her vote is not counted as part of the divisor, then this would amount to a disenfranchisement of a basic
constitutional right to be able to choose representatives of the House of Representatives in two ways. First, his or
her vote will be nullified. Second, he or she will be deprived of choosing another party-list group to represent his or
her interest should the party listed in the ballot be declared disqualified.

However, there are instances when the Commission on Elections include the name of the party-list group in the
ballot but such group is disqualified with finality prior to the elections. In applying and interpreting the provisions of
Section 6 of Republic Act No. 6646,we said in Cayat v. Commission on Elections  that votes cast in favor of a
62

candidate "disqualified with finality" should be considered stray and not be counted. To be consistent, the party-list
group in the ballot that has been disqualified with finality and whose final disqualification was made known to the
electorate by the Commission on Elections should also not be included in the divisor. This is to accord weight to the
disqualification as well as accord respect to the inherent right of suffrage of the voters.

Thus, the formula to determine the proportion garnered by the party-list group would now henceforth be:

Number of votes of party-list

Proportion or Percentage of
=
votes garnered by party-list
Total number of valid votes for party-list candidates

306
The total votes cast for the party-list system include those votes made for party-list groups indicated in the ballot
regardless of the pendency of their motions for reconsideration or petitions before any tribunal in relation to their
cancellation or disqualification cases. However, votes made for those party-list groups whose disqualification
attained finality prior to the elections should be excluded if the electorate is notified of the finality of their
disqualification by the Commission on Elections. The divisor also shall not include invalid votes.

WHEREFORE from the above discussion:

1. The prayer to enjoin the Commission on Elections from proclaiming the qualified party-list groups is
denied for being moot and academic;

2. The formula in determining the winning party-list groups, as used and interpreted in the case of BANAT v.
COMELEC, is MODIFIED as follows:

Number of votes. of party-list Total number of valid votes for party-list candidates Proportion or Percentage of votes
garnered by party-list

The divisor shall be the total number of valid votes cast for the party-list system including votes cast for party-list
groups whose names are in the ballot but are subsequently disqualified. Party-list groups listed in the ballot but
whose disqualification attained finality prior to the elections and whose disqualification was reasonably made known
by the Commission on Elections to the voters prior to such elections should not be included in the divisor. The
divisor shall also not include votes that are declared spoiled or invalid.

The refined formula shall apply prospectively to succeeding party-list elections from the date of finality of this case.

SO ORDERED.

307
 Republic of the Philippines
SUPREME COURT
Manila

EN BANC

G.R. No. 184621               December 10, 2013

REPUBLIC OF THE PHILIPPINES, Petitioner, 

vs.
MARIA FE ESPINOSA CANTOR, Respondent.

DECISION

BRION, J.:

The petition for review on certiorari  before us assails the decision  dated August 27, 2008 of the Court of Appeals
1 2

(CA) in CA-G.R. SP No. 01558-MIN which affirmed be order  dated December 15, 2006 of the Regional Trial Court
3

(RTC), Branch 25, Koronadal City, South Cotabato, in SP Proc. Case No. 313-25, declaring Jerry F. Cantor,
respondent Maria Fe Espinosa Cantor’s husband, presumptively dead under Article 41 of the Family Code.

The Factual Antecedents

The respondent and Jerry were married on September 20, 1997. They lived together as husband and wife in their
conjugal dwelling in Agan Homes, Koronadal City, South Cotabato. Sometime in January 1998, the couple had a
violent quarrel brought about by: (1) the respondent’s inability to reach "sexual climax" whenever she and Jerry
would have intimate moments; and (2) Jerry’s expression of animosity toward the respondent’s father.

After their quarrel, Jerry left their conjugal dwelling and this was the last time that the respondent ever saw him.
Since then, she had not seen, communicated nor heard anything from Jerry or about his whereabouts.

On May 21, 2002, or more than four (4) years from the time of Jerry’s disappearance, the respondent filed before
the RTC a petition4for her husband’s declaration of presumptive death, docketed as SP Proc. Case No. 313-25.
She claimed that she had a well-founded belief that Jerry was already dead. She alleged that she had inquired from
her mother-in-law, her brothers-in-law, her sisters-in-law, as well as her neighbors and friends, but to no avail. In the
hopes of finding Jerry, she also allegedly made it a point to check the patients’ directory whenever she went to a
hospital. All these earnest efforts, the respondent claimed, proved futile, prompting her to file the petition in court.

The Ruling of the RTC

After due proceedings, the RTC issued an order granting the respondent’s petition and declaring Jerry
presumptively dead. It concluded that the respondent had a well-founded belief that her husband was already dead
since more than four (4) years had passed without the former receiving any news about the latter or his
whereabouts. The dispositive portion of the order dated December 15, 2006 reads:

308
WHEREFORE, the Court hereby declares, as it hereby declared that respondent Jerry F. Cantor is presumptively
dead pursuant to Article 41 of the Family Code of the Philippines without prejudice to the effect of the reappearance
of the absent spouse Jerry F. Cantor. 5

The Ruling of the CA

The case reached the CA through a petition for certiorari6filed by the petitioner, Republic of the Philippines, through
the Office of the Solicitor General (OSG). In its August 27, 2008 decision, the CA dismissed the petitioner’s petition,
finding no grave abuse of discretion on the RTC’s part, and, accordingly, fully affirmed the latter’s order, thus:

WHEREFORE, premises foregoing (sic), the instant petition is hereby DISMISSED and the assailed Order dated
December 15, 2006 declaring Jerry F. Cantor presumptively dead is hereby AFFIRMED in toto. 7

The petitioner brought the matter via a Rule 45 petition before this Court. The Petition The petitioner contends that
certiorari lies to challenge the decisions, judgments or final orders of trial courts in petitions for declaration of
presumptive death of an absent spouse under Rule 41 of the Family Code. It maintains that although judgments of
trial courts in summary judicial proceedings, including presumptive death cases, are deemed immediately final and
executory (hence, not appeal able under Article 247 of the Family Code), this rule does not mean that they are not
subject to review on certiorari.

The petitioner also posits that the respondent did not have a well-founded belief to justify the declaration of her
husband’s presumptive death. It claims that the respondent failed to conduct the requisite diligent search for her
missing husband. Likewise, the petitioner invites this Court’s attention to the attendant circumstances surrounding
the case, particularly, the degree of search conducted and the respondent’s resultant failure to meet the strict
standard under Article 41 of the Family Code.

The Issues

The petition poses to us the following issues:

(1) Whether certiorarilies to challenge the decisions, judgments or final orders of trial courts in petitions for
declaration of presumptive death of an absent spouse under Article 41 of the Family Code; and

(2) Whether the respondent had a well-founded belief that Jerry is already dead.

The Court’s Ruling

We grant the petition.

a. On the Issue of the Propriety of Certiorari as a Remedy

Court’s Judgment in the Judicial

Proceedings for Declaration of
Presumptive Death Is Final and
Executory, Hence, Unappealable

The Family Code was explicit that the court’s judgment in summary proceedings, such as the declaration of
presumptive death of an absent spouse under Article 41 of the Family Code, shall be immediately final and
executory.

Article 41,in relation to Article 247, of the Family Code provides:

Art. 41. A marriage contracted by any person during subsistence of a previous marriage shall be null and void,
unless before the celebration of the subsequent marriage, the prior spouse had been absent for four consecutive
years and the spouse present has a well-founded belief that the absent spouse was already dead. In case of
disappearance where there is danger of death under the circumstances set forth in the provisions of Article 391 of
the Civil Code, an absence of only two years shall be sufficient.

For the purpose of contracting the subsequent marriage under the preceding paragraph the spouse present must
institute a summary proceeding as provided in this Code for the declaration of presumptive death of the absentee,
without prejudice to the effect of reappearance of the absent spouse.

Art. 247. The judgment of the court shall be immediately final and executory. [underscores ours]

309
With the judgment being final, it necessarily follows that it is no longer subject to an appeal, the dispositions and
conclusions therein having become immutable and unalterable not only as against the parties but even as against
the courts.  Modification of the court’s ruling, no matter how erroneous is no longer permissible. The final and
8

executory nature of this summary proceeding thus prohibits the resort to appeal. As explained in Republic of the
Phils. v. Bermudez-Lorino,  the right to appeal is not granted to parties because of the express mandate of Article
9

247 of the Family Code, to wit:

In Summary Judicial Proceedings under the Family Code, there is no reglementary period within which to perfect an
appeal, precisely because judgments rendered thereunder, by express provision of [Article] 247, Family Code,
supra, are "immediately final and executory." It was erroneous, therefore, on the part of the RTCto give due course
to the Republic’s appeal and order the transmittal of the entire records of the case to the Court of Appeals.

An appellate court acquires no jurisdiction to review a judgment which, by express provision of law, is immediately
final and executory. As we have said in Veloria vs. Comelec, "the right to appeal is not a natural right nor is it a part
of due process, for it is merely a statutory privilege." Since, by express mandate of Article 247 of the Family Code,
all judgments rendered in summary judicial proceedings in Family Law are "immediately final and executory," the
right to appeal was not granted to any of the parties therein. The Republic of the Philippines, as oppositor in the
petition for declaration of presumptive death, should not be treated differently. It had no right to appeal the RTC
decision of November 7, 2001. [emphases ours; italics supplied]

Certiorari Lies to Challenge the 

Decisions, Judgments or Final 
Orders of Trial Courts in a Summary 
Proceeding for the Declaration of Presumptive 
Death Under the Family Code

A losing party in this proceeding, however, is not entirely left without a remedy. While jurisprudence tells us that no
appeal can be made from the trial court's judgment, an aggrieved party may, nevertheless, file a petition for
certiorari under Rule 65 of the Rules of Court to question any abuse of discretion amounting to lack or excess of
jurisdiction that transpired.

As held in Delos Santos v. Rodriguez, et al.,  the fact that a decision has become final does not automatically
10

negate the original action of the CA to issue certiorari, prohibition and mandamus in connection with orders or
processes issued by the trial court. Certiorari may be availed of where a court has acted without or in excess of
jurisdiction or with grave abuse of discretion, and where the ordinary remedy of appeal is not available. Such a
procedure finds support in the case of Republic v. Tango,  wherein we held that:
11

This case presents an opportunity for us to settle the rule on appeal of judgments rendered in summary proceedings
under the Family Code and accordingly, refine our previous decisions thereon.

Article 238 of the Family Code, under Title XI: SUMMARY JUDICIAL PROCEEDINGS IN THE FAMILY LAW,
establishes the rules that govern summary court proceedings in the Family Code:

"ART. 238. Until modified by the Supreme Court, the procedural rules in this Title shall apply in all cases provided
for in this Code requiring summary court proceedings. Such cases shall be decided in an expeditious manner
without regard to technical rules."

In turn, Article 253 of the Family Code specifies the cases covered by the rules in chapters two and three of the
same title. It states:

"ART. 253. The foregoing rules in Chapters 2and 3 hereof shall likewise govern summary proceedings filed under
Articles 41, 51, 69, 73, 96, 124 and 217, insofar as they are applicable."(Emphasis supplied.)

In plain text, Article 247 in Chapter 2 of the same title reads:

"ART.247. The judgment of the court shall be immediately final and executory."

By express provision of law, the judgment of the court in a summary proceeding shall be immediately final and
executory. As a matter of course, it follows that no appeal can be had of the trial court's judgment ina summary
proceeding for the declaration of presumptive death of an absent spouse under Article 41 of the Family Code. It
goes without saying, however, that an aggrieved party may file a petition for certiorari to question abuse of
discretion amounting to lack of jurisdiction. Such petition should be filed in the Court of Appeals in accordance with
the Doctrine of Hierarchy of Courts. To be sure, even if the Court's original jurisdiction to issue a writ of certiorari is
concurrent with the RTCs and the Court of Appeals in certain cases, such concurrence does not sanction an
unrestricted freedom of choice of court forum. [emphasis ours]

310
Viewed in this light, we find that the petitioner’s resort to certiorari under Rule 65 of the Rules of Court to question
the RTC’s order declaring Jerry presumptively dead was proper.

b. On the Issue of the Existence of Well-Founded Belief

The Essential Requisites for the 

Declaration of Presumptive Death 
Under Article 41 of the Family Code

Before a judicial declaration of presumptive death can be obtained, it must be shown that the prior spouse had been
absent for four consecutive years and the present spouse had a well-founded belief that the prior spouse was
already dead. Under Article 41 of the Family Code, there are four (4) essential requisites for the declaration of
presumptive death:

1. That the absent spouse has been missing for four consecutive years, or two consecutive years if the
disappearance occurred where there is danger of death under the circumstances laid down in Article 391,
Civil Code;

2. That the present spouse wishes to remarry;

3. That the present spouse has a well-founded belief that the absentee is dead; and

4. That the present spouse files a summary proceeding for the declaration of presumptive death of the
absentee. 12

The Present Spouse Has the Burden 

of Proof to Show that All the 
Requisites Under Article 41 of the 
Family Code Are Present

The burden of proof rests on the present spouse to show that all the requisites under Article 41 of the Family Code
are present. Since it is the present spouse who, for purposes of declaration of presumptive death, substantially
asserts the affirmative of the issue, it stands to reason that the burden of proof lies with him/her. He who alleges a
fact has the burden of proving it and mere allegation is not evidence. 13

Declaration of Presumptive Death 

Under Article 41 of the Family Code 
Imposes a Stricter Standard

Notably, Article 41 of the Family Code, compared to the old provision of the Civil Code which it superseded,
imposes a stricter standard. It requires a "well-founded belief " that the absentee is already dead before a petition
for declaration of presumptive death can be granted. We have had occasion to make the same observation
in Republic v. Nolasco,  where we noted the crucial differences between Article 41 of the Family Code and Article
14

83 of the Civil Code, to wit:

Under Article 41, the time required for the presumption to arise has been shortened to four (4) years; however, there
is need for a judicial declaration of presumptive death to enable the spouse present to remarry. Also, Article 41 of
the Family Code imposes a stricter standard than the Civil Code: Article 83 of the Civil Code merely requires either
that there be no news that such absentee is still alive; or the absentee is generally considered to be dead and
believed to be so by the spouse present, or is presumed dead under Articles 390 and 391 of the Civil Code. The
Family Code, upon the other hand, prescribes as "well founded belief" that the absentee is already dead before a
petition for declaration of presumptive death can be granted.

Thus, mere absence of the spouse (even for such period required by the law), lack of any news that such absentee
is still alive, failure to communicate or general presumption of absence under the Civil Code would not suffice. This
conclusion proceeds from the premise that Article 41 of the Family Code places upon the present spouse the
burden of proving the additional and more stringent requirement of "well-founded belief" which can only be
discharged upon a showing of proper and honest-to-goodness inquiries and efforts to ascertain not only the absent
spouse’s whereabouts but, more importantly, that the absent spouse is still alive or is already dead. 15

The Requirement of Well-Founded Belief

The law did not define what is meant by "well-founded belief." It depends upon the circumstances of each particular
case. Its determination, so to speak, remains on a case-to-case basis. To be able to comply with this requirement,
the present spouse must prove that his/her belief was the result of diligent and reasonable efforts and inquiries to

311
locate the absent spouse and that based on these efforts and inquiries, he/she believes that under the
circumstances, the absent spouseis already dead. It requires exertion of active effort (not a mere passive one).

To illustrate this degree of "diligent and reasonable search" required by the law, an analysis of the following relevant
cases is warranted:

i. Republic of the Philippines v. Court of Appeals (Tenth Div.) 16

In Republic of the Philippines v. Court of Appeals (Tenth Div.),  the Court ruled that the present spouse failed to
17

prove that he had a well-founded belief that his absent spouse was already dead before he filed his petition. His
efforts to locate his absent wife allegedly consisted of the following:

(1) He went to his in-laws’ house to look for her;

(2) He sought the barangay captain’s aid to locate her;

(3) He went to her friends’ houses to find her and inquired about her whereabouts among his friends;

(4) He went to Manila and worked as a part-time taxi driver to look for her in malls during his free time;

(5) He went back to Catbalogan and again looked for her; and

(6) He reported her disappearance to the local police station and to the NBI.

Despite these alleged "earnest efforts," the Court still ruled against the present spouse. The Court found that he
failed to present the persons from whom he allegedly made inquiries and only reported his wife’s absence after the
OSG filed its notice to dismiss his petition in the RTC.

The Court also provided the following criteria for determining the existence of a "well-founded belief" under Article
41 of the Family Code:

The belief of the present spouse must be the result of proper and honest to goodness inquiries and efforts to
ascertain the whereabouts of the absent spouse and whether the absent spouse is still alive or is already dead.
Whether or not the spouse present acted on a well-founded belief of death of the absent spouse depends upon the
inquiries to be drawn from a great many circumstances occurring before and after the disappearance of the absent
spouse and the nature and extent of the inquiries made by [the] present spouse. 18

ii. Republic v. Granada 19

Similarly in Granada, the Court ruled that the absent spouse failed to prove her "well-founded belief" that her absent
spouse was already dead prior to her filing of the petition. In this case, the present spouse alleged that her brother
had made inquiries from their relatives regarding the absent spouse’s whereabouts. The present spouse did not
report to the police nor seek the aid of the mass media. Applying the standards in Republic of the Philippines v.
Court of Appeals (Tenth Div.),  the Court ruled against the present spouse, as follows:
20

Applying the foregoing standards to the present case, petitioner points out that respondent Yolanda did not initiate a
diligent search to locate her absent husband. While her brother Diosdado Cadacio testified to having inquiredabout
the whereabouts of Cyrus from the latter’s relatives, these relatives were not presented to corroborate Diosdado’s
testimony. In short, respondent was allegedly not diligent in her search for her husband. Petitioner argues that if she
were, she would have sought information from the Taiwanese Consular Office or assistance from other government
agencies in Taiwan or the Philippines. She could have also utilized mass media for this end, but she did not. Worse,
she failed to explain these omissions.

iii.Republic v. Nolasco 21

In Nolasco, the present spouse filed a petition for declaration of presumptive death of his wife, who had been
missing for more than four years. He testified that his efforts to find her consisted of:

(1) Searching for her whenever his ship docked in England;

(2) Sending her letters which were all returned to him; and

(3) Inquiring from their friends regarding her whereabouts, which all proved fruitless. The Court ruled that the
present spouse’s investigations were too sketchy to form a basis that his wife was already dead and ruled

312
 that the pieces of evidence only proved that his wife had chosen not to communicate with their common
acquaintances, and not that she was dead.

iv.The present case

In the case at bar, the respondent’s "well-founded belief" was anchored on her alleged "earnest efforts" to locate
Jerry, which consisted of the following:

(1) She made inquiries about Jerry’s whereabouts from her in-laws, neighbors and friends; and

(2) Whenever she went to a hospital, she saw to it that she looked through the patients’ directory, hoping to
find Jerry.

These efforts, however, fell short of the "stringent standard" and degree of diligence required by jurisprudence for
the following reasons:

First, the respondent did not actively look for her missing husband.  It can be inferred from the records that her
1âwphi1

hospital visits and her consequent checking of the patients’ directory therein were unintentional. She did not
purposely undertake a diligent search for her husband as her hospital visits were not planned nor primarily directed
to look for him. This Court thus considers these attempts insufficient to engender a belief that her husband is dead.

Second, she did not report Jerry’s absence to the police nor did she seek the aid of the authorities to look for him.
While a finding of well-founded belief varies with the nature of the situation in which the present spouse is placed,
under present conditions, we find it proper and prudent for a present spouse, whose spouse had been missing, to
seek the aid of the authorities or, at the very least, report his/her absence to the police.

Third, she did not present as witnesses Jerry’s relatives or their neighbors and friends, who can corroborate her
efforts to locate Jerry. Worse, these persons, from whom she allegedly made inquiries, were not even named. As
held in Nolasco, the present spouse’s bare assertion that he inquired from his friends about his absent spouse’s
whereabouts is insufficient as the names of the friends from whom he made inquiries were not identified in the
testimony nor presented as witnesses.

Lastly, there was no other corroborative evidence to support the respondent’s claim that she conducted a diligent
search. Neither was there supporting evidence proving that she had a well-founded belief other than her bare claims
that she inquired from her friends and in-laws about her husband’s whereabouts. In sum, the Court is of the view
that the respondent merely engaged in a "passive search" where she relied on uncorroborated inquiries from her in-
laws, neighbors and friends. She failed to conduct a diligent search because her alleged efforts are insufficient to
form a well-founded belief that her husband was already dead. As held in Republic of the Philippines v. Court of
Appeals (Tenth Div.),  "[w]hether or not the spouse present acted on a well-founded belief of death of the absent
22

spouse depends upon the inquiries to be drawn from a great many circumstances occurring before and after the
disappearance of the absent spouse and the natureand extent of the inquiries made by [the] present spouse."

Strict Standard Approach Is

Consistent with the State’s Policy
to Protect and Strengthen Marriage

In the above-cited cases, the Court, fully aware of the possible collusion of spouses in nullifying their marriage, has
consistently applied the "strictstandard" approach. This is to ensure that a petition for declaration of presumptive
death under Article 41 of the Family Code is not used as a tool to conveniently circumvent the laws. Courts should
never allow procedural shortcuts and should ensure that the stricter standard required by the Family Code is met.
In Republic of the Philippines v. Court of Appeals (Tenth Div.),  we emphasized that:
23

In view of the summary nature of proceedings under Article 41 of the Family Code for the declaration of presumptive
death of one’s spouse, the degree of due diligence set by this Honorable Court in the above-mentioned cases in
locating the whereabouts of a missing spouse must be strictly complied with. There have been times when Article 41
of the Family Code had been resorted to by parties wishing to remarry knowing fully well that their alleged missing
spouses are alive and well. It is even possible that those who cannot have their marriages xxx declared null and
void under Article 36 of the Family Code resort to Article 41 of the Family Code for relief because of the xxx
summary nature of its proceedings.

The application of this stricter standard becomes even more imperative if we consider the State’s policy to protect
and strengthen the institution of marriage.  Since marriage serves as the family’s foundation  and since it is the
24 25

state’s policy to protect and strengthen the family as a basic social institution,  marriage should not be permitted to
26

be dissolved at the whim of the parties. In interpreting and applying Article 41, this is the underlying rationale –to
uphold the sanctity of marriage. Arroyo, Jr.v. Court of Appeals  reflected this sentiment when we stressed:
27

313
[The]protection of the basic social institutions of marriage and the family in the preservation of which the State has
the strongest interest; the public policy here involved is of the most fundamental kind. In Article II, Section 12 of the
Constitution there is set forth the following basic state policy:

The State recognizes the sanctity of family life and shall protect and strengthen the family as a basic autonomous
social institution.

Strict Standard Prescribed Under

Article 41 of the Family Code
Is for the Present Spouse’s Benefit

The requisite judicial declaration of presumptive death of the absent spouse (and consequently, the application of a
stringent standard for its issuance) is also for the present spouse's benefit. It is intended to protect him/her from a
criminal prosecution of bigamy under Article 349 of the Revised Penal Code which might come into play if he/she
would prematurely remarry sans the court's declaration.

Upon the issuance of the decision declaring his/her absent spouse presumptively dead, the present spouse's good
faith in contracting a second marriage is effectively established. The decision of the competent court constitutes
sufficient proof of his/her good faith and his/her criminal intent in case of remarriage is effectively negated.  Thus,
28

for purposes of remarriage, it is necessary to strictly comply with the stringent standard and have the absent spouse
judicially declared presumptively dead.

Final Word

As a final word, it has not escaped this Court's attention that the strict standard required in petitions for declaration
of presumptive death has not been fully observed by the lower courts. We need only to cite the instances when this
Court, on review, has consistently ruled on the sanctity of marriage and reiterated that anything less than the use of
the strict standard necessitates a denial. To rectify this situation, lower courts are now expressly put on notice of the
strict standard this Court requires in cases under Article 41 of the Family Code.

WHEREFORE, in view of the foregoing, the assailed decision dated August 27, 2008 of the Court of Appeals, which
affirmed the order dated December 15, 2006 of the Regional Trial Court, Branch 25, Koronadal City, South
Cotabato, declaring Jerry F. Cantor presumptively dead is hereby REVERSED and SET ASIDE.

SO ORDERED. 

DISSENTING OPINION

LEONEN, J.:

"Love cannot endure indifference. It needs to be wanted. Like a lamp it needs to be fed out of the oil of another’s
heart or its flames burn low."

Henry Ward Beecher

I dissent.

A wife, abandoned with impunity, also deserves to be happy.

The Case

Through this Rule 45 petition for review on certiorari, the Office of the Solicitor General for the Republic of the
Philippines prays that the decision 1 of the Court of Appeals be reversed and set aside and that a new judgment be
entered annulling and setting aside the order2 of the Regional Trial Court, Branch 25, Koronadal City, South
Cotabato.

On May 21, 4002, Maria Fe Espinosa Cantor filed a petition3 for the declaration of presumptive death of her
husband, Jerry F. Cantor.  She claimed that she had a well-founded belief that her husband was already dead since
4

four ( 4) years had lapsed without Jerry making his presence known to her.

Trial began after the Regional Trial Court found Maria Fe’s petition sufficient in form and substance.

According to their Certificate of Marriage,  Maria Fe and Jerry were married on September 20, 1997 at the Christ the
5

King Cathedral in Koronadal City, South Cotabato. They lived together in their conjugal dwelling in Agan Homes,
Koronadal City, South Cotabato. 6

314
In her petition, Maria Fe alleges that sometime in January 1998, she and Jerry had a violent quarrel in their house.
During the trial, she admitted that the quarrel had to do with her not being able to reach her "climax" whenever she
would have sexual intercourse with Jerry. Maria Fe emphasized that she even suggested to him that he consult a
doctor, but Jerry brushed aside this suggestion. She also said that during the quarrel, Jerry had expressed
animosity toward her father, saying "I will not respect that old man outside." 7

Jerry left after their quarrel.8Since then, Maria Fe had not seen or heard from him. On May 21, 2002 after more than
four (4) years without word from Jerry, Maria Fe filed her petition with the Regional Trial Court.

Maria Fe exerted "earnest efforts x x x to locate the whereabouts or actual address of [Jerry]."  She inquired from
9

her mother-in-law, brothers-in-law, sisters-in-law, neighbors, and friends, but no one could tell her where Jerry had
gone.  Whenever she went to a hospital, she would check the patients’ directory, hoping to find Jerry.
10 11

On December 15, 2006, the Regional Trial Court issued an order granting her petition declaring Jerry presumptively
dead. The Regional Trial Court agreed that she had a well-founded belief that Jerry was dead. It declared that Jerry
had not been heard from and his fate uncertain and whereabouts unknown for more than four (4) years at the time
Maria Fe’s petition was filed. When the Regional Trial Court issued its order, Jerry had been absent for eight (8)
years.

The fallo of the Regional Trial Court’s order  reads:

12

WHEREFORE, the Court hereby declares, as it hereby declared [sic]that respondent Jerry F. Cantor is
presumptively dead pursuant to Article 41 of the Family Codeof the Philippines without prejudice to the effect of the
reappearance of the absent spouse Jerry F. Cantor. 13

Not satisfied with the Regional Trial Court’s order, the Republic of the Philippines through the Office of the Solicitor
General filed a petition for certiorari with the Court of Appeals.

In a decision dated August 27, 2008, the Court of Appeals affirmed in toto the Regional Trial Court’s order dated
December 15, 2006. The Court of Appeals held that there was no grave abuse of discretion on the part of the
Regional Trial Court in having declared Jerry presumptively dead. The Court of Appeals also emphasized "that by
express mandate of Article 247 of the Family Code, all judgments rendered in summary judicial proceedings in
Family Law are ‘immediately final and executory’ upon notice to the parties; hence, no longer appealable." 14

Still dissatisfied with the ruling of the Court of Appeals, the Office of the Solicitor General filed the present petition for
review on certiorari under Rule 45 of the Rules of Civil Procedure.

The Office of the Solicitor General argued that a petition for certiorari lies to challenge decisions, judgments or final
orders of trial courts in petitions for the declaration of presumptive death of a missing or absent spouse. The Office
of the Solicitor General agreed that under Article 247 of the Family Code, decisions and final orders of trial courts in
petitions for the declaration of the presumptive death of a missing or absent spouse are immediately final and
executory, and therefore, cannot be appealed. However, the Office of the Solicitor General disagreed with the
assertion that judgments or decisions in these cases canno longer be reviewed by the higher courts. It maintained
that even though judgments or final ordersin summary judicial proceedings such as presumptive death cases are no
longer appealable, they may still be reviewed by the Court of Appeals, and, ultimately, by this court. 15

The Office of the Solicitor General pointed out that "appeal" and "certiorari" are not synonymous remedies. By filing
a petition for certiorari before the Court of Appeals, it could not be considered to have "appealed" the challenged
order of the Regional Trial Court. A petition for certiorari under Rule 65 is not, in its strict sense, an appeal. It is an
original action and a mode of review under which the Court of Appeals may re-examine the challenged order to
determine whether it was rendered in accordance with law and established jurisprudence. Hence, judgments of trial
courts in presumptive death cases are not immutable because such decisions may be reviewed by higher courts.
The only possible recourse of a losing party in summary judicial proceedings is a petition for certiorari under Rule
65.16

The Office of the Solicitor General likewise argued that Maria Fe did not have a well-founded belief that Jerry was
dead. It claimed that she failed to conduct a diligent search for her missing husband. Its theory was that Jerry
consciously chose not to return to their conjugal home and that he chose not to communicate with Maria Fe. The
Office of the Solicitor General claimed that it was possible that Jerry did not want to be found and that he chose to
live in a place where even his family and friends could not reach him. From the perspective of the Office of the
Solicitor General, it was Jerry’s choice to disappear; thus, in all likelihood, he was not dead.

The Office of the Solicitor General claimed that Article 41 of the Family Code requires more than the absence of the
missing spouse for him or her to be declared presumptively dead. There must be events, circumstances, and
reasons sufficient in themselves to at least support the proposition that the absentee spouse is already dead.
Absence per se is not enough.

315
The Office of the Solicitor General capitalized on the failure of Maria Fe to give the names of relatives and friends
she had approached when she testified. It asserted that she failed to present them at the witness stand.  Moreover,
17

the Office of the Solicitor General assailed the description of her husband as "not really healthy" when he left the
conjugal dwelling. It characterized this description as being "too vague to even support the speculation that Jerry is
already dead." 18

On June 26, 2009, Maria Fe filed her comment on the Office of the Solicitor General’s petition.  She argued that
1avvphi1

there was no factual or legal basis for the Office of the Solicitor General to seek a reversal of the Court of Appeal’s
decision. She asserted that the declaration of Jerry’s death was in order as it was in accord or consistent with
established facts, as well as with law and jurisprudence on the matter.

This court is asked to decide on the following issues:

1. Whether certiorari lies to challenge decisions, judgments or final orders oftrial courts in petitions for the
declaration of presumptive death of a missing person or absent spouse; and

2. Whether Maria Fe hasa well-founded belief that Jerry is already dead.

Certiorari lies as a remedy to annul the judgment of a trial court in summary proceedings for the declaration
of presumptive death of an absent spouse.

I agree that certiorari lies as a remedy to annul a judgment in proceedings for the declaration of presumptive death
of an absent spouse where grave abuse of discretion amounting to lack or excess of jurisdiction on the part of the
Regional Trial Court is clearly and convincingly shown.

A petition for the declaration of presumptive death of an absent spouse for the purpose of contracting a subsequent
marriage is a summary proceeding. Article 41 of the Family Code is clear on this point:

Art. 41. A marriage contracted by any person during subsistence of a previous marriage shall be null and void,
unless before the celebration of the subsequent marriage, the prior spouse had been absent for four consecutive
years and the spouse present has a well-founded belief that the absent spouse was already dead. In case of
disappearance where there is danger of death under the circumstances set forth in the provisions of Article 391 of
the Civil Code, an absence of only two years shall be sufficient.

For the purpose of contracting the subsequent marriage under the preceding paragraph the spouse present must
institute a summary proceeding as provided in this Code for the declaration of presumptive death of the absentee,
without prejudice to the effect of reappearance of the absent spouse.

Articles 238, 247,and 252 of Title XI of the Family Code (Summary Judicial Proceedings in the Family Law) provide:

Art. 238. Until modified by the Supreme Court, the procedural rules provided for in this Title shall apply as regards
separation in fact between husband and wife, abandonment by one of the other, and incidents involving parental
authority.

Art. 247.The judgment of the court shall be immediately final and executory.

Art. 252.The rules in Chapter 2 hereof shall also govern summary proceedings under this Chapter insofar as they
are applicable. (n)

From these provisions, it is clear that a petition for the declaration of presumptive death of an absent spouse is a
summary proceeding; more so, judgments of a trial court relating to such petitions shall be considered immediately
final and executory.

However, while a trial court’s judgment relating to a petition for the declaration of presumptive death ofan absent
spouse is considered immediately final and executory, the Office of the Solicitor General is not entirely without
remedy to assail the propriety of a trial court’s judgment. Where the judgment is attended by grave abuse of
discretion amounting to lack or excess of jurisdiction, the Office of the Solicitor General may file with the Court of
Appeals a petition for certiorari under Rule 65 and have the judgment annulled. Should the Court of Appeals still
render an adverse decision, the Office of the Solicitor General may then file a petition for review on certiorari under
Rule 45 with this court. This is what the Office of the Solicitor General did in this case.

Any doubt on this matter was settled in Republic v. Granada:  At any rate, four years after Jomoc, this Court settled
19

the rule regarding appeal of judgments rendered in summary proceedings under the Family Code when it ruled
in Republic v. Tango:

316
"This case presents an opportunity for us to settle the rule on appeal of judgments rendered insummary proceedings
under the Family Code and accordingly, refine our previous decisions thereon.

Article 238 of the Family Code, under Title XI: SUMMARY JUDICIAL PROCEEDINGS IN THE FAMILY LAW,
establishes the rules that govern summary court proceedings in the Family Code:

ART. 238.Until modified by the Supreme Court, the procedural rules in this Title shall apply in all cases provided for
in this Code requiring summary court proceedings. Such cases shall be decided in an expeditious manner without
regard to technical rules.

In turn, Article 253 of the Family Code specifies the cases covered by the rules in chapters two and three of the
same title. It states:

ART. 253.The foregoing rules in Chapters 2 and 3 hereof shall likewise govern summary proceedings filed under
Articles 41, 51, 69, 73, 96, 124 and 217, insofar as they are applicable. (Emphasis supplied.)

In plain text, Article 247 in Chapter 2 of the same title reads:

ART 247.The judgment of the court shall be immediately final and executory.

By express provision of law, the judgment of the court in a summary proceeding shall be immediately final and
executory. As a matter of course, it follows that no appeal can be had of the trial court's judgment in a summary
proceeding for the declaration of presumptive death of an absent spouse under Article 41 of the Family Code. It
goes without saying, however, that an aggrieved party may file a petition for certiorarito question abuse of discretion
amounting to lack of jurisdiction. Such petition should be filed in the Court of Appeals in accordance with the
Doctrine of Hierarchy of Courts. To be sure, even if the Court's original jurisdiction to issue a writ of certiorari is
concurrent with the RTCs and the Court of Appeals in certain cases, such concurrence does not sanction an
unrestricted freedom of choice of court forum. From the decision of the Court of Appeals, the losing party may then
file a petition for review on certiorariunder Rule 45 of the Rules of Court with the Supreme Court. This is because
the errors which the court may commit in the exercise of jurisdiction are merely errors of judgment which are the
proper subject of an appeal."

In sum, under Article 41 of the Family Code, the losing party in a summary proceeding for the declaration of
presumptive death may file a petition for certiorari with the CA on the ground that, in rendering judgment thereon,
the trial court committed grave abuse of discretion amounting to lack of jurisdiction. From the decision of the CA, the
aggrieved party may elevate the matter to this Court via a petition for review on certiorari under Rule 45 of the Rules
of Court.20

Strict standards should not be 

imposed upon the present 
spouse in evaluating his or 
her efforts to search for the 
absent spouse

However, I disagree with the position that "well-founded belief" should be interpreted as an imposition of stringent
standards in evaluating the efforts and inquiries made by the present spouse in ascertaining the absent spouse’s
status and whereabouts. "Well-founded belief" should be based on the circumstances of each case. It should not be
based on a prior limited enumeration of what acts indicate a "well-founded belief."

In cases for declaration of presumptive death under Article 41 of the Family Code, we cannot ask the impossible
from a spouse who was abandoned. In interpreting this provision, we must keep in mind that both spouses are
under many obligations in the Family Code,  all of which require their presence.
21

Article 41 of the Family Code provides: Art. 41. A marriage contracted by any person during subsistence of a
previous marriage shall be null and void, unless before the celebration of the subsequent marriage, the prior spouse
had been absent for four consecutive years and the spouse present has a well-founded belief that the absent
spouse was already dead. In case of disappearance where there is danger of death under the circumstances set
forth in the provisions of Article 391 of the Civil Code, an absence of only two years shall be sufficient.

For the purpose of contracting the subsequent marriage under the preceding paragraph the spouse present must
institute a summary proceeding as provided in this Code for the declaration of presumptive death of the absentee,
without prejudice to the effect of reappearance of the absent spouse.

From the text of Article 41, there are two substantive requirements and two procedural requirements for a spouse to
be declared presumptively dead for the purpose of remarriage.

317
The two substantive requirements are the following: first, the absent spouse has been missing for four (4)
consecutive years or two (2) consecutive years if the disappearance occurred under circumstances where there is
danger of death per Article 391 of the Civil Code; second, the present spouse has a well-founded belief that the
absent spouse is dead.

The two procedural requirements are the following: first, the present spouse files a summary proceeding for the
declaration of presumptive death of the absent spouse; second, there is the underlying intent of the present spouse
to remarry.

In this case, it is necessary to interpret what is meant by "well-founded belief."

We said in Republic of the Philippines v. Court of Appeals and Alegro: 22

The spouse present is, thus, burdened to prove that his spouse has been absent and that he has a well-founded
belief that the absent spouse is already dead before the present spouse may contract a subsequent marriage. The
law does not define what is meant by a well-grounded belief.Cuello Callon writes that "es menester que su creencia
sea firme se funde en motivos racionales."

Belief is a state of the mind or condition prompting the doing of an overt act.It may be proved by direct evidence or
circumstantial evidence which may tend, even in a slight degree, to elucidate the inquiry or assist to a determination
probably founded in truth. Any fact or circumstance relating to the character, habits, conditions, attachments,
prosperity and objects of life which usually control the conduct of men, and are the motives of their actions, was, so
far as it tends to explain or characterize their disappearance or throw light on their intentions, competence evidence
on the ultimate question of his death.

The belief of the present spouse must be the result of proper and honest to goodness inquiries and efforts to
ascertain the whereabouts of the absent spouse and whether the absent spouse is still alive or is already dead.
Whether or not the spouse present acted on a well-founded belief of death of the absent spouse depends upon the
inquiries to be drawn from a great many circumstances occurring before and after the disappearance of the absent
spouse and the nature and extent of the inquiries made by present spouse. 23

Applying its construction of what constitutes a "well-founded belief" in Republic v. Nolasco,  this court reversed the
24

Regional Trial Court and Court of Appeals decisions which declared an absent spouse presumptively dead as the
present spouse was deemed to have "failed to conduct a search for his missing wife with such diligence as to give
rise to a ‘well-founded belief’ that she is dead."  In 2005, Republic of the Philippines v. Court of Appeals and
25

Alegro,  which relied heavily on Nolasco, likewise held that "the respondent failed to prove that he had a well-
26

founded belief x x x that his spouse x x x was already dead."  In the 2012 case of Republic v. Granada,  while this
27 28

court denied the Office of the Solicitor General’s petition on procedural grounds, this court nevertheless favorably
considered the Office of the Solicitor General’s assertions that "respondent was allegedly not diligent in her search
for her husband." 29

Belief is a state of mind and can only be as certained in reference to a person’s overt acts. In making such an
evaluation, one must evaluate a case on the basis of its own merits –cognizant of its unique facts, context, and other
nuances –rather than be compelled to satisfy a pre-conceived determination of what acts are sufficiently indicative
of the belief being ascertained.

A belief is well-founded when a person has reasonable basis for holding on to such belief. It is to say that such
belief is not arbitrary and whimsical. Such belief must,thus,be evaluated on the basic and uncomplicated standard of
rationality.

In declaring a person presumptively dead, a court is called upon to sustain a presumption. It is not called upon to
conclude on verity or to establish actuality. In so doing, a court infers despite an acknowledged uncertainty. Thus, to
insist on such demanding and extracting evidence as to practically requireenough proof of a well-founded belief, as
the Office of the Solicitor General suggests, is to insist on an inordinate, intemperate, and non-rational standard.

Maria Fe testified in court that months after their wedding, she and her husband had a violent quarrel, and he had
left after the fight. She noted the two (2) causes of the quarrel: first, she could not "climax" every time they would
have sexual intercourse; second, Jerry disrespected her father every time he would visit them. She likewise stated
that she went to see her mother-in-law, brothers-in-law, sisters-in-law, neighbors, and friends to ask about her
husband’s whereabouts. She said that every time she would go to a hospital, she would check its directory to find
out anything about her husband, but her efforts proved futile.

The Office of the Solicitor General faulted her for "fall[ing] short of the degree of diligence required for the search of
a missing spouse."  In effect, the Office of the Solicitor General insinuated that she should have exerted more
30

painstaking efforts to ascertain her husband’s where abouts.

318
The majority agrees with the Office of the Solicitor General. The majority views Maria Fe’s efforts as a mere
"passive search" that is short of the diligent search required to form a well-founded belief that her husband was
already dead. 31

Maria Fe exerted the best efforts to ascertain the location of her husband but to no avail. She bore the indignity of
being left behind. She suffered the indifference of her husband. Such indifference was not momentary. She
anguished through years of never hearing from him. The absence of a few days between spouses may be tolerable,
required by necessity. The absence of months may test one’s patience. But the absence of years of someone who
made the solemn promise to stand by his partner in sickness and in health, for richer or poorer, is intolerable. The
waiting is as painful to the spirit as the endless search for a person that probably did not want to be found or could
no longer be found.

To require more from Maria Fe who did what she could, given the resources available to her, is to assert the
oppressiveness of our laws. It is to tell her that she has to suffer from causes which she cannot understand for more
years to come. It should be in the public interest to assume that Jerry, or any husband for that matter, as a matter of
moral and legal obligation, would get in touch with Maria Fe even if only to tell her that he is alive.

It behooves this court not to have pre-conceived expectations of a standard operating procedure for spouses who
are abandoned. Instead, it should, with the public interest in mind and human sensitivity at heart, understand the
domestic situation.

A review of the cases that the Office of the Solicitor General cited reveals this same conclusion.

Republic of the Philippines v. Court of Appeals and Alegro  acknowledges that "testimonial evidence may suffice to
32

prove the well-founded belief of the present spouse that the absent spouse is already dead x x x." 33

In another case cited by the Office of the Solicitor General, Republic v. Nolasco,  which similarly considered the
34

matter of whether respondent therein was able to establish a well-founded belief of the death of his absent spouse,
this court cited the 1913 case of United States v. Biasbas,  finding it to be "instructive as to degree [sic]of diligence
35

required in searching for a missing spouse."  In Biasbas, defendant Biasbas’ defense of a good faith belief that his
36

wife was already dead was not sustained, and his conviction for bigamy was affirmed. Speaking on Biasbas’ lack of
due diligence, this court said:

While the defendant testified that he had made inquiries concerning the whereabouts of his wife, he fails to state of
whom he made such inquiries. He did not even write to the parents of his first wife, who lived in the Province of
Pampanga, for the purpose of securing information concerning her or her whereabouts. He admits that he had a
suspicion only that his first wife was dead. He admits that the only basis of his suspicion was the fact that she had
been absent.  (Emphasis supplied)
37

What was involved in Biasbas was a mere suspicion –totally bereft of any other rational basis. Moreover, the
defendant himself admitted that all he had was a mere suspicion.

What is involved in this case is not a mere suspicion. In Biasbas, the defendant could be faulted for failing to even
write the parents of his wife. Here, Maria Fe testified to her having visited and personally inquired with her mother-
in-law, brothers-in-law, sisters-in-law, neighbors, and friends. Moreover, Maria Fe repeatedly checked hospital
entries to check if her husband was admitted or otherwise was pronounced deceased.

While it may be true that it would have been ideal for Maria Fe to have exerted more exceptional efforts in locating
her husband, the hypothetical issue of what else she could have done or ought to have done should not diminish the
import of her efforts. It is for Maria Feto resort to the courses of action permitted to her given her stature and means.
We are called upon to make an appreciation of the reasonable, not of the exceptional. In adjudicating this case, this
court must ground itself on what is real, not dwell on a projected ideal.

In the case of Maria Fe, she did what, in her circumstances, are to be considered as an efficient search. Again, she
got in touch with her husband’s relatives and searched hospitals. More importantly, she waited for more than four (4)
long years for her husband to get in touch with her.

Also, the insistence on the need for Maria Fe to ascertain the whereabouts of her deserting husband undermines
the significance and weight of her husband’s own duty. In the normal course of things, a spouse is well in a position
to expect that the other spouse will return to their common dwelling. Article 68 of the Family Code obliges the
husband and the wife "to live together, observe mutual love, respect and fidelity, and render mutual help and
support."

The opinions of a recognized authority in civil law, Arturo M. Tolentino, are particularly enlightening:

319
Meaning of "Absent" Spouse.–The provisions of this article are of American origin, and must be construed in the
light of American jurisprudence. An identical provision (except for the period) exists in the California civil code
(section 61); California jurisprudence should, therefore, prove enlightening. It has been held in that jurisdiction that,
as respects the validity of a husband’s subsequent marriage, a presumption as to the death of his first wife cannot
be predicated upon an absence resulting from his leaving or deserting her, as it is his duty to keep her advised as to
his where abouts. The spouse who has been left or deserted is the one who is considered as the "spouse present";
such spouse is not required to ascertain the whereabouts of the deserting spouse, and after the required number of
years of absence of the latter, the former may validly remarry.  (Underscoring supplied)
38

Precisely, it is a deserting spouse’s failure to comply with what is reasonably expected of him or her and to fulfill the
responsibilities that are all but normal to a spouse which makes reasonable (i.e., well-founded)the belief that should
he or she fail to manifest his or her presence within a statutorily determined reasonable period, he or she must have
been deceased. The law is of the confidence that spouses will in fact "live together, observe mutual love, respect
and fidelity, and render mutual help and support"  such that it is not the business of the law to assume any other
39

circumstance than that a spouse is deceased in case he or she becomes absent.

It is unfortunate that the majority fails to appreciate Maria Fe's predicament and instead places upon her the burden
to prove good faith in her painstaking efforts.

To be present in any human relationship especially that of marriage is a complex affair. There are interests to be
compromised for each other, temperaments to be adjusted, evolving personalities to be understood in the crucible
of common experiences. The moments of bliss are paid for by the many moments of inevitable discomfort as
couples adjust their many standpoints, attitudes, and values for each other. It is a journey that takes time and in that
time, presence.

This case does not present that kind of complexity. It is simple enough. Maria Fe was left behind. She looked for
Jerry, in good faith. Jerry could not be found. He did not leave word. He did not make the slightest effort to get in
touch with Maria Fe. His absence did not make the difficult compromises possible. There were no adjustments in
their temperaments, no opportunities to further understand each other, no journey together. His absence was
palpable: not moments, not days, not months, but years. Maria Fe deserves more. The law, in Article 41, allows her
succor.

Given the circumstances, Maria Fe acted Her actions were sufficient to form the well-founded belief that her
husband passed away. It was proper that he be declared presumptively dead. In the far possibility that he reappears
and is not dead, the law provides remedies for him. In the meantime, the Court of Appeals committed no reversible
error in affirming the Regional Trial Court's declaration.

WHEREFORE, I vote to DENY the petition.

320
 Republic of the Philippines
SUPREME COURT
Manila

EN BANC

G.R. No. 175356               December 3, 2013

MANILA MEMORIAL PARK, INC. AND LA FUNERARIA PAZ-SUCAT, INC., Petitioners, 

vs.
SECRETARY OF THE DEPARTMENT OF SOCIAL WELFARE AND DEVELOPMENT and THE SECRETARY OF
THE DEPARTMENT OF FINANCE, Respondents.

DECISION

DEL CASTILLO, J.:

When a party challeges the constitutionality of a law, the burden of proof rests upon him.

Before us is a Petition for Prohibition  under Rule 65 of the Rules of Court filed by petitioners Manila Memorial Park,
2

Inc. and La Funeraria Paz-Sucat, Inc., domestic corporations engaged in the business of providing funeral and
burial services, against public respondents Secretaries of the Department of Social Welfare and Development
(DSWD) and the Department of Finance (DOF).

Petitioners assail the constitutionality of Section 4 of Republic Act (RA) No. 7432,  as amended by RA 9257,  and
3 4

the implementing rules and regulations issued by the DSWD and DOF insofar as these allow business
establishments to claim the 20% discount given to senior citizens as a tax deduction.

Factual Antecedents

On April 23, 1992, RA 7432 was passed into law, granting senior citizens the following privileges:

SECTION 4. Privileges for the Senior Citizens. – The senior citizens shall be entitled to the following:

321
 a) the grant of twenty percent (20%) discount from all establishments relative to utilization of transportation
services, hotels and similar lodging establishment[s], restaurants and recreation centers and purchase of
medicine anywhere in the country: Provided, That private establishments may claim the cost as tax credit;

b) a minimum of twenty percent (20%) discount on admission fees charged by theaters, cinema houses and
concert halls, circuses, carnivals and other similar places of culture, leisure, and amusement;

c) exemption from the payment of individual income taxes: Provided, That their annual taxable income does
not exceed the property level as determined by the National Economic and Development Authority (NEDA)
for that year;

d) exemption from training fees for socioeconomic programs undertaken by the OSCA as part of its work;

e) free medical and dental services in government establishment[s] anywhere in the country, subject to
guidelines to be issued by the Department of Health, the Government Service Insurance System and the
Social Security System;

f) to the extent practicable and feasible, the continuance of the same benefits and privileges given by the
Government Service Insurance System (GSIS), Social Security System (SSS) and PAG-IBIG, as the case
may be, as are enjoyed by those in actual service.

On August 23, 1993, Revenue Regulations (RR) No. 02-94 was issued to implement RA 7432. Sections 2(i) and 4
of RR No. 02-94 provide:

Sec. 2. DEFINITIONS. – For purposes of these regulations: i. Tax Credit – refers to the amount representing the
20% discount granted to a qualified senior citizen by all establishments relative to their utilization of transportation
services, hotels and similar lodging establishments, restaurants, drugstores, recreation centers, theaters, cinema
houses, concert halls, circuses, carnivals and other similar places of culture, leisure and amusement, which discount
shall be deducted by the said establishments from their gross income for income tax purposes and from their gross
sales for value-added tax or other percentage tax purposes. x x x x Sec. 4. RECORDING/BOOKKEEPING
REQUIREMENTS FOR PRIVATE ESTABLISHMENTS. – Private establishments, i.e., transport services, hotels and
similar lodging establishments, restaurants, recreation centers, drugstores, theaters, cinema houses, concert halls,
circuses, carnivals and other similar places of culture[,] leisure and amusement, giving 20% discounts to qualified
senior citizens are required to keep separate and accurate record[s] of sales made to senior citizens, which shall
include the name, identification number, gross sales/receipts, discounts, dates of transactions and invoice number
for every transaction. The amount of 20% discount shall be deducted from the gross income for income tax
purposes and from gross sales of the business enterprise concerned for purposes of the VAT and other percentage
taxes.

In Commissioner of Internal Revenue v. Central Luzon Drug Corporation,  the Court declared Sections 2(i) and 4 of
5

RR No. 02-94 as erroneous because these contravene RA 7432,  thus: 6

RA 7432 specifically allows private establishments to claim as tax credit the amount of discounts they grant. In turn,
the Implementing Rules and Regulations, issued pursuant thereto, provide the procedures for its availment. To deny
such credit, despite the plain mandate of the law and the regulations carrying out that mandate, is indefensible.
First, the definition given by petitioner is erroneous. It refers to tax credit as the amount representing the 20 percent
discount that "shall be deducted by the said establishments from their gross income for income tax purposes and
from their gross sales for value-added tax or other percentage tax purposes." In ordinary business language, the tax
credit represents the amount of such discount. However, the manner by which the discount shall be credited against
taxes has not been clarified by the revenue regulations. By ordinary acceptation, a discount is an "abatement or
reduction made from the gross amount or value of anything." To be more precise, it is in business parlance "a
deduction or lowering of an amount of money;" or "a reduction from the full amount or value of something, especially
a price." In business there are many kinds of discount, the most common of which is that affecting the income
statement or financial report upon which the income tax is based.

xxxx

Sections 2.i and 4 of Revenue Regulations No. (RR) 2-94 define tax credit as the 20 percent discount deductible
from gross income for income tax purposes, or from gross sales for VAT or other percentage tax purposes. In effect,
the tax credit benefit under RA 7432 is related to a sales discount. This contrived definition is improper, considering
that the latter has to be deducted from gross sales in order to compute the gross income in the income statement
and cannot be deducted again, even for purposes of computing the income tax. When the law says that the cost of
the discount may be claimed as a tax credit, it means that the amount — when claimed — shall be treated as a
reduction from any tax liability, plain and simple. The option to avail of the tax credit benefit depends upon the
existence of a tax liability, but to limit the benefit to a sales discount — which is not even identical to the discount
privilege that is granted by law — does not define it at all and serves no useful purpose. The definition must,
therefore, be stricken down.
322
Laws Not Amended by Regulations

Second, the law cannot be amended by a mere regulation. In fact, a regulation that "operates to create a rule out of
harmony with the statute is a mere nullity;" it cannot prevail. It is a cardinal rule that courts "will and should respect
the contemporaneous construction placed upon a statute by the executive officers whose duty it is to enforce it x x
x." In the scheme of judicial tax administration, the need for certainty and predictability in the implementation of tax
laws is crucial. Our tax authorities fill in the details that "Congress may not have the opportunity or competence to
provide." The regulations these authorities issue are relied upon by taxpayers, who are certain that these will be
followed by the courts. Courts, however, will not uphold these authorities’ interpretations when clearly absurd,
erroneous or improper. In the present case, the tax authorities have given the term tax credit in Sections 2.i and 4 of
RR 2-94 a meaning utterly in contrast to what RA 7432 provides. Their interpretation has muddled x x x the intent of
Congress in granting a mere discount privilege, not a sales discount. The administrative agency issuing these
regulations may not enlarge, alter or restrict the provisions of the law it administers; it cannot engraft additional
requirements not contemplated by the legislature.

In case of conflict, the law must prevail. A "regulation adopted pursuant to law is law." Conversely, a regulation or
any portion thereof not adopted pursuant to law is no law and has neither the force nor the effect of law. 7

On February 26, 2004, RA 9257  amended certain provisions of RA 7432, to wit:

8

SECTION 4. Privileges for the Senior Citizens. – The senior citizens shall be entitled to the following:

(a) the grant of twenty percent (20%) discount from all establishments relative to the utilization of services in hotels
and similar lodging establishments, restaurants and recreation centers, and purchase of medicines in all
establishments for the exclusive use or enjoyment of senior citizens, including funeral and burial services for the
death of senior citizens;

xxxx

The establishment may claim the discounts granted under (a), (f), (g) and (h) as tax deduction based on the net cost
of the goods sold or services rendered: Provided, That the cost of the discount shall be allowed as deduction from
gross income for the same taxable year that the discount is granted. Provided, further, That the total amount of the
claimed tax deduction net of value added tax if applicable, shall be included in their gross sales receipts for tax
purposes and shall be subject to proper documentation and to the provisions of the National Internal Revenue
Code, as amended.

To implement the tax provisions of RA 9257, the Secretary of Finance issued RR No. 4-2006, the pertinent provision
of which provides:

SEC. 8. AVAILMENT BY ESTABLISHMENTS OF SALES DISCOUNTS AS DEDUCTION FROM GROSS INCOME.

– Establishments enumerated in subparagraph (6) hereunder granting sales discounts to senior citizens on the sale
of goods and/or services specified thereunder are entitled to deduct the said discount from gross income subject to
the following conditions:

(1) Only that portion of the gross sales EXCLUSIVELY USED, CONSUMED OR ENJOYED BY THE
SENIOR CITIZEN shall be eligible for the deductible sales discount.

(2) The gross selling price and the sales discount MUST BE SEPARATELY INDICATED IN THE OFFICIAL
RECEIPT OR SALES INVOICE issued by the establishment for the sale of goods or services to the senior
citizen.

(3) Only the actual amount of the discount granted or a sales discount not exceeding 20% of the gross
selling price can be deducted from the gross income, net of value added tax, if applicable, for income tax
purposes, and from gross sales or gross receipts of the business enterprise concerned, for VAT or other
percentage tax purposes.

(4) The discount can only be allowed as deduction from gross income for the same taxable year that the
discount is granted.

(5) The business establishment giving sales discounts to qualified senior citizens is required to keep
separate and accurate record[s] of sales, which shall include the name of the senior citizen, TIN, OSCA ID,
gross sales/receipts, sales discount granted, [date] of [transaction] and invoice number for every sale
transaction to senior citizen.

(6) Only the following business establishments which granted sales discount to senior citizens on their sale
of goods and/or services may claim the said discount granted as deduction from gross income, namely:

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 xxxx

(i) Funeral parlors and similar establishments – The beneficiary or any person who shall shoulder the funeral and
burial expenses of the deceased senior citizen shall claim the discount, such as casket, embalmment, cremation
cost and other related services for the senior citizen upon payment and presentation of [his] death certificate.

The DSWD likewise issued its own Rules and Regulations Implementing RA 9257, to wit:

RULE VI DISCOUNTS AS TAX DEDUCTION OF ESTABLISHMENTS

Article 8. Tax Deduction of Establishments. – The establishment may claim the discounts granted under Rule V,
Section 4 – Discounts for Establishments, Section 9, Medical and Dental Services in Private Facilities and Sections
10 and 11 – Air, Sea and Land Transportation as tax deduction based on the net cost of the goods sold or services
rendered.

Provided, That the cost of the discount shall be allowed as deduction from gross income for the same taxable year
that the discount is granted; Provided, further, That the total amount of the claimed tax deduction net of value added
tax if applicable, shall be included in their gross sales receipts for tax purposes and shall be subject to proper
documentation and to the provisions of the National Internal Revenue Code, as amended; Provided, finally, that the
implementation of the tax deduction shall be subject to the Revenue Regulations to be issued by the Bureau of
Internal Revenue (BIR) and approved by the Department of Finance (DOF).

Feeling aggrieved by the tax deduction scheme, petitioners filed the present recourse, praying that Section 4 of RA
7432, as amended by RA 9257, and the implementing rules and regulations issued by the DSWD and the DOF be
declared unconstitutional insofar as these allow business establishments to claim the 20% discount given to senior
citizens as a tax deduction; that the DSWD and the DOF be prohibited from enforcing the same; and that the tax
credit treatment of the 20% discount under the former Section 4 (a) of RA 7432 be reinstated.

Issues

Petitioners raise the following issues:

A.

WHETHER THE PETITION PRESENTS AN ACTUAL CASE OR CONTROVERSY.

B.

WHETHER SECTION 4 OF REPUBLIC ACT NO. 9257 AND X X X ITS IMPLEMENTING RULES AND
REGULATIONS, INSOFAR AS THEY PROVIDE THAT THE TWENTY PERCENT (20%) DISCOUNT TO SENIOR
CITIZENS MAY BE CLAIMED AS A TAX DEDUCTION BY THE PRIVATE ESTABLISHMENTS, ARE INVALID AND
UNCONSTITUTIONAL. 9

Petitioners’ Arguments

Petitioners emphasize that they are not questioning the 20% discount granted to senior citizens but are only
assailing the constitutionality of the tax deduction scheme prescribed under RA 9257 and the implementing rules
and regulations issued by the DSWD and the DOF. 10

Petitioners posit that the tax deduction scheme contravenes Article III, Section 9 of the Constitution, which provides
that: "[p]rivate property shall not be taken for public use without just compensation." 11

In support of their position, petitioners cite Central Luzon Drug Corporation,  where it was ruled that the 20%
12

discount privilege constitutes taking of private property for public use which requires the payment of just
compensation,  and Carlos Superdrug Corporation v. Department of Social Welfare and Development,  where it
13 14

was acknowledged that the tax deduction scheme does not meet the definition of just compensation. 15

Petitioners likewise seek a reversal of the ruling in Carlos Superdrug Corporation  that the tax deduction scheme
16

adopted by the government is justified by police power. 17

They assert that "[a]lthough both police power and the power of eminent domain have the general welfare for their
object, there are still traditional distinctions between the two"  and that "eminent domain cannot be made less
18

supreme than police power." 19

324
Petitioners further claim that the legislature, in amending RA 7432, relied on an erroneous contemporaneous
construction that prior payment of taxes is required for tax credit. 20

Petitioners also contend that the tax deduction scheme violates Article XV, Section 4  and Article XIII, Section 11 of
21 22

the Constitution because it shifts the State’s constitutional mandate or duty of improving the welfare of the elderly to
the private sector.23

Under the tax deduction scheme, the private sector shoulders 65% of the discount because only 35%  of it is 24

actually returned by the government. 25

Consequently, the implementation of the tax deduction scheme prescribed under Section 4 of RA 9257 affects the
businesses of petitioners. 26

Thus, there exists an actual case or controversy of transcendental importance which deserves judicious disposition
on the merits by the highest court of the land. 27

Respondents’ Arguments

Respondents, on the other hand, question the filing of the instant Petition directly with the Supreme Court as this
disregards the hierarchy of courts. 28

They likewise assert that there is no justiciable controversy as petitioners failed to prove that the tax deduction
treatment is not a "fair and full equivalent of the loss sustained" by them. 29

As to the constitutionality of RA 9257 and its implementing rules and regulations, respondents contend that
petitioners failed to overturn its presumption of constitutionality.
30

More important, respondents maintain that the tax deduction scheme is a legitimate exercise of the State’s police
power. 31

Our Ruling

The Petition lacks merit.

There exists an actual case or controversy.

We shall first resolve the procedural issue. When the constitutionality of a law is put in issue, judicial review may be
availed of only if the following requisites concur: "(1) the existence of an actual and appropriate case; (2) the
existence of personal and substantial interest on the part of the party raising the [question of constitutionality]; (3)
recourse to judicial review is made at the earliest opportunity; and (4) the [question of constitutionality] is the lis mota
of the case."32

In this case, petitioners are challenging the constitutionality of the tax deduction scheme provided in RA 9257 and
the implementing rules and regulations issued by the DSWD and the DOF. Respondents, however, oppose the
Petition on the ground that there is no actual case or controversy. We do not agree with respondents. An actual
case or controversy exists when there is "a conflict of legal rights" or "an assertion of opposite legal claims
susceptible of judicial resolution."
33

The Petition must therefore show that "the governmental act being challenged has a direct adverse effect on the
individual challenging it." 34

In this case, the tax deduction scheme challenged by petitioners has a direct adverse effect on them. Thus, it cannot
be denied that there exists an actual case or controversy.

The validity of the 20% senior citizen discount and tax deduction scheme under RA 9257, as an exercise of
police power of the State, has already been settled in Carlos Superdrug Corporation.

Petitioners posit that the resolution of this case lies in the determination of whether the legally mandated 20% senior
citizen discount is an exercise of police power or eminent domain. If it is police power, no just compensation is
warranted. But if it is eminent domain, the tax deduction scheme is unconstitutional because it is not a peso for peso
reimbursement of the 20% discount given to senior citizens. Thus, it constitutes taking of private property without
payment of just compensation. At the outset, we note that this question has been settled in Carlos Superdrug
Corporation. 35

In that case, we ruled:

325
Petitioners assert that Section 4(a) of the law is unconstitutional because it constitutes deprivation of private
property. Compelling drugstore owners and establishments to grant the discount will result in a loss of profit and
capital because 1) drugstores impose a mark-up of only 5% to 10% on branded medicines; and 2) the law failed to
provide a scheme whereby drugstores will be justly compensated for the discount. Examining petitioners’
arguments, it is apparent that what petitioners are ultimately questioning is the validity of the tax deduction scheme
as a reimbursement mechanism for the twenty percent (20%) discount that they extend to senior citizens. Based on
the afore-stated DOF Opinion, the tax deduction scheme does not fully reimburse petitioners for the discount
privilege accorded to senior citizens. This is because the discount is treated as a deduction, a tax-deductible
expense that is subtracted from the gross income and results in a lower taxable income. Stated otherwise, it is an
amount that is allowed by law to reduce the income prior to the application of the tax rate to compute the amount of
tax which is due. Being a tax deduction, the discount does not reduce taxes owed on a peso for peso basis but
merely offers a fractional reduction in taxes owed. Theoretically, the treatment of the discount as a deduction
reduces the net income of the private establishments concerned. The discounts given would have entered the
coffers and formed part of the gross sales of the private establishments, were it not for R.A. No. 9257. The
permanent reduction in their total revenues is a forced subsidy corresponding to the taking of private property for
public use or benefit. This constitutes compensable taking for which petitioners would ordinarily become entitled to a
just compensation. Just compensation is defined as the full and fair equivalent of the property taken from its owner
by the expropriator. The measure is not the taker’s gain but the owner’s loss. The word just is used to intensify the
meaning of the word compensation, and to convey the idea that the equivalent to be rendered for the property to be
taken shall be real, substantial, full and ample. A tax deduction does not offer full reimbursement of the senior
citizen discount. As such, it would not meet the definition of just compensation. Having said that, this raises the
question of whether the State, in promoting the health and welfare of a special group of citizens, can impose upon
private establishments the burden of partly subsidizing a government program. The Court believes so. The Senior
Citizens Act was enacted primarily to maximize the contribution of senior citizens to nation-building, and to grant
benefits and privileges to them for their improvement and well-being as the State considers them an integral part of
our society. The priority given to senior citizens finds its basis in the Constitution as set forth in the law itself.  Thus,
1âwphi1

the Act provides: SEC. 2. Republic Act No. 7432 is hereby amended to read as follows:

SECTION 1. Declaration of Policies and Objectives. — Pursuant to Article XV, Section 4 of the Constitution, it is the
duty of the family to take care of its elderly members while the State may design programs of social security for
them. In addition to this, Section 10 in the Declaration of Principles and State Policies provides: "The State shall
provide social justice in all phases of national development." Further, Article XIII, Section 11, provides: "The State
shall adopt an integrated and comprehensive approach to health development which shall endeavor to make
essential goods, health and other social services available to all the people at affordable cost. There shall be priority
for the needs of the underprivileged sick, elderly, disabled, women and children." Consonant with these
constitutional principles the following are the declared policies of this Act:

x x x           x x x          x x x

(f) To recognize the important role of the private sector in the improvement of the welfare of senior citizens and to
actively seek their partnership.

To implement the above policy, the law grants a twenty percent discount to senior citizens for medical and dental
services, and diagnostic and laboratory fees; admission fees charged by theaters, concert halls, circuses, carnivals,
and other similar places of culture, leisure and amusement; fares for domestic land, air and sea travel; utilization of
services in hotels and similar lodging establishments, restaurants and recreation centers; and purchases of
medicines for the exclusive use or enjoyment of senior citizens. As a form of reimbursement, the law provides that
business establishments extending the twenty percent discount to senior citizens may claim the discount as a tax
deduction. The law is a legitimate exercise of police power which, similar to the power of eminent domain, has
general welfare for its object. Police power is not capable of an exact definition, but has been purposely veiled in
general terms to underscore its comprehensiveness to meet all exigencies and provide enough room for an efficient
and flexible response to conditions and circumstances, thus assuring the greatest benefits. Accordingly, it has been
described as "the most essential, insistent and the least limitable of powers, extending as it does to all the great
public needs." It is "[t]he power vested in the legislature by the constitution to make, ordain, and establish all manner
of wholesome and reasonable laws, statutes, and ordinances, either with penalties or without, not repugnant to the
constitution, as they shall judge to be for the good and welfare of the commonwealth, and of the subjects of the
same." For this reason, when the conditions so demand as determined by the legislature, property rights must bow
to the primacy of police power because property rights, though sheltered by due process, must yield to general
welfare. Police power as an attribute to promote the common good would be diluted considerably if on the mere
plea of petitioners that they will suffer loss of earnings and capital, the questioned provision is invalidated. Moreover,
in the absence of evidence demonstrating the alleged confiscatory effect of the provision in question, there is no
basis for its nullification in view of the presumption of validity which every law has in its favor. Given these, it is
incorrect for petitioners to insist that the grant of the senior citizen discount is unduly oppressive to their business,
because petitioners have not taken time to calculate correctly and come up with a financial report, so that they have
not been able to show properly whether or not the tax deduction scheme really works greatly to their disadvantage.
In treating the discount as a tax deduction, petitioners insist that they will incur losses because, referring to the DOF
Opinion, for every ₱1.00 senior citizen discount that petitioners would give, P0.68 will be shouldered by them as
only P0.32 will be refunded by the government by way of a tax deduction. To illustrate this point, petitioner Carlos
326
Super Drug cited the anti-hypertensive maintenance drug Norvasc as an example. According to the latter, it
acquires Norvasc from the distributors at ₱37.57 per tablet, and retails it at ₱39.60 (or at a margin of 5%). If it grants
a 20% discount to senior citizens or an amount equivalent to ₱7.92, then it would have to sell Norvasc at ₱31.68
which translates to a loss from capital of ₱5.89 per tablet. Even if the government will allow a tax deduction, only
₱2.53 per tablet will be refunded and not the full amount of the discount which is ₱7.92. In short, only 32% of the
20% discount will be reimbursed to the drugstores. Petitioners’ computation is flawed. For purposes of
reimbursement, the law states that the cost of the discount shall be deducted from gross income, the amount of
income derived from all sources before deducting allowable expenses, which will result in net income. Here,
petitioners tried to show a loss on a per transaction basis, which should not be the case. An income statement,
showing an accounting of petitioners' sales, expenses, and net profit (or loss) for a given period could have
accurately reflected the effect of the discount on their income. Absent any financial statement, petitioners cannot
substantiate their claim that they will be operating at a loss should they give the discount. In addition, the
computation was erroneously based on the assumption that their customers consisted wholly of senior citizens.
Lastly, the 32% tax rate is to be imposed on income, not on the amount of the discount.

Furthermore, it is unfair for petitioners to criticize the law because they cannot raise the prices of their medicines
given the cutthroat nature of the players in the industry. It is a business decision on the part of petitioners to peg the
mark-up at 5%. Selling the medicines below acquisition cost, as alleged by petitioners, is merely a result of this
decision. Inasmuch as pricing is a property right, petitioners cannot reproach the law for being oppressive, simply
because they cannot afford to raise their prices for fear of losing their customers to competition. The Court is not
oblivious of the retail side of the pharmaceutical industry and the competitive pricing component of the business.
While the Constitution protects property rights, petitioners must accept the realities of business and the State, in the
exercise of police power, can intervene in the operations of a business which may result in an impairment of
property rights in the process.

Moreover, the right to property has a social dimension. While Article XIII of the Constitution provides the precept for
the protection of property, various laws and jurisprudence, particularly on agrarian reform and the regulation of
contracts and public utilities, continuously serve as x x x reminder[s] that the right to property can be relinquished
upon the command of the State for the promotion of public good. Undeniably, the success of the senior citizens
program rests largely on the support imparted by petitioners and the other private establishments concerned. This
being the case, the means employed in invoking the active participation of the private sector, in order to achieve the
purpose or objective of the law, is reasonably and directly related. Without sufficient proof that Section 4 (a) of R.A.
No. 9257 is arbitrary, and that the continued implementation of the same would be unconscionably detrimental to
petitioners, the Court will refrain from quashing a legislative act.  (Bold in the original; underline supplied)
36

We, thus, found that the 20% discount as well as the tax deduction scheme is a valid exercise of the police power of
the State.

No compelling reason has been proffered to overturn, modify or abandon the ruling in Carlos Superdrug
Corporation.

Petitioners argue that we have previously ruled in Central Luzon Drug Corporation  that the 20% discount is an
37

exercise of the power of eminent domain, thus, requiring the payment of just compensation. They urge us to re-
examine our ruling in Carlos Superdrug Corporation  which allegedly reversed the ruling in Central Luzon Drug
38

Corporation. 39

They also point out that Carlos Superdrug Corporation  recognized that the tax deduction scheme under the
40

assailed law does not provide for sufficient just compensation. We agree with petitioners’ observation that there are
statements in Central Luzon Drug Corporation  describing the 20% discount as an exercise of the power of eminent
41

domain, viz.:

[T]he privilege enjoyed by senior citizens does not come directly from the State, but rather from the private
establishments concerned. Accordingly, the tax credit benefit granted to these establishments can be deemed as
their just compensation for private property taken by the State for public use. The concept of public use is no longer
confined to the traditional notion of use by the public, but held synonymous with public interest, public benefit, public
welfare, and public convenience. The discount privilege to which our senior citizens are entitled is actually a benefit
enjoyed by the general public to which these citizens belong. The discounts given would have entered the coffers
and formed part of the gross sales of the private establishments concerned, were it not for RA 7432. The permanent
reduction in their total revenues is a forced subsidy corresponding to the taking of private property for public use or
benefit. As a result of the 20 percent discount imposed by RA 7432, respondent becomes entitled to a just
compensation. This term refers not only to the issuance of a tax credit certificate indicating the correct amount of the
discounts given, but also to the promptness in its release. Equivalent to the payment of property taken by the State,
such issuance — when not done within a reasonable time from the grant of the discounts — cannot be considered
as just compensation. In effect, respondent is made to suffer the consequences of being immediately deprived of its
revenues while awaiting actual receipt, through the certificate, of the equivalent amount it needs to cope with the
reduction in its revenues. Besides, the taxation power can also be used as an implement for the exercise of the
power of eminent domain. Tax measures are but "enforced contributions exacted on pain of penal sanctions" and

327
"clearly imposed for a public purpose." In recent years, the power to tax has indeed become a most effective tool to
realize social justice, public welfare, and the equitable distribution of wealth. While it is a declared commitment
under Section 1 of RA 7432, social justice "cannot be invoked to trample on the rights of property owners who under
our Constitution and laws are also entitled to protection. The social justice consecrated in our [C]onstitution [is] not
intended to take away rights from a person and give them to another who is not entitled thereto." For this reason, a
just compensation for income that is taken away from respondent becomes necessary. It is in the tax credit that our
legislators find support to realize social justice, and no administrative body can alter that fact. To put it differently, a
private establishment that merely breaks even — without the discounts yet — will surely start to incur losses
because of such discounts. The same effect is expected if its mark-up is less than 20 percent, and if all its sales
come from retail purchases by senior citizens. Aside from the observation we have already raised earlier, it will also
be grossly unfair to an establishment if the discounts will be treated merely as deductions from either its gross
income or its gross sales.  Operating at a loss through no fault of its own, it will realize that the tax credit limitation
1âwphi1

under RR 2-94 is inutile, if not improper. Worse, profit-generating businesses will be put in a better position if they
avail themselves of tax credits denied those that are losing, because no taxes are due from the latter.  (Italics in the
42

original; emphasis supplied)

The above was partly incorporated in our ruling in Carlos Superdrug Corporation  when we stated preliminarily that
43

Petitioners assert that Section 4(a) of the law is unconstitutional because it constitutes deprivation of private
property. Compelling drugstore owners and establishments to grant the discount will result in a loss of profit and
capital because 1) drugstores impose a mark-up of only 5% to 10% on branded medicines; and 2) the law failed to
provide a scheme whereby drugstores will be justly compensated for the discount. Examining petitioners’
arguments, it is apparent that what petitioners are ultimately questioning is the validity of the tax deduction scheme
as a reimbursement mechanism for the twenty percent (20%) discount that they extend to senior citizens. Based on
the afore-stated DOF Opinion, the tax deduction scheme does not fully reimburse petitioners for the discount
privilege accorded to senior citizens. This is because the discount is treated as a deduction, a tax-deductible
expense that is subtracted from the gross income and results in a lower taxable income. Stated otherwise, it is an
amount that is allowed by law to reduce the income prior to the application of the tax rate to compute the amount of
tax which is due. Being a tax deduction, the discount does not reduce taxes owed on a peso for peso basis but
merely offers a fractional reduction in taxes owed. Theoretically, the treatment of the discount as a deduction
reduces the net income of the private establishments concerned. The discounts given would have entered the
coffers and formed part of the gross sales of the private establishments, were it not for R.A. No. 9257. The
permanent reduction in their total revenues is a forced subsidy corresponding to the taking of private property for
public use or benefit. This constitutes compensable taking for which petitioners would ordinarily become entitled to a
just compensation. Just compensation is defined as the full and fair equivalent of the property taken from its owner
by the expropriator. The measure is not the taker’s gain but the owner’s loss. The word just is used to intensify the
meaning of the word compensation, and to convey the idea that the equivalent to be rendered for the property to be
taken shall be real, substantial, full and ample. A tax deduction does not offer full reimbursement of the senior
citizen discount. As such, it would not meet the definition of just compensation. Having said that, this raises the
question of whether the State, in promoting the health and welfare of a special group of citizens, can impose upon
private establishments the burden of partly subsidizing a government program. The Court believes so. 44

This, notwithstanding, we went on to rule in Carlos Superdrug Corporation  that the 20% discount and tax deduction
45

scheme is a valid exercise of the police power of the State. The present case, thus, affords an opportunity for us to
clarify the above-quoted statements in Central Luzon Drug Corporation  and Carlos Superdrug Corporation.
46 47

First, we note that the above-quoted disquisition on eminent domain in Central Luzon Drug Corporation  is obiter 48

dicta and, thus, not binding precedent. As stated earlier, in Central Luzon Drug Corporation,  we ruled that the BIR
49

acted ultra vires when it effectively treated the 20% discount as a tax deduction, under Sections 2.i and 4 of RR No.
2-94, despite the clear wording of the previous law that the same should be treated as a tax credit. We were,
therefore, not confronted in that case with the issue as to whether the 20% discount is an exercise of police power
or eminent domain. Second, although we adverted to Central Luzon Drug Corporation  in our ruling in Carlos
50

Superdrug Corporation,  this referred only to preliminary matters. A fair reading of Carlos Superdrug
51

Corporation would show that we categorically ruled therein that the 20% discount is a valid exercise of police power.
52

Thus, even if the current law, through its tax deduction scheme (which abandoned the tax credit scheme under the
previous law), does not provide for a peso for peso reimbursement of the 20% discount given by private
establishments, no constitutional infirmity obtains because, being a valid exercise of police power, payment of just
compensation is not warranted. We have carefully reviewed the basis of our ruling in Carlos Superdrug
Corporation  and we find no cogent reason to overturn, modify or abandon it. We also note that petitioners’
53

arguments are a mere reiteration of those raised and resolved in Carlos Superdrug Corporation.  Thus, we sustain
54

Carlos Superdrug Corporation. 55

Nonetheless, we deem it proper, in what follows, to amplify our explanation in Carlos Superdrug Corporation  as to 56

why the 20% discount is a valid exercise of police power and why it may not, under the specific circumstances of
this case, be considered as an exercise of the power of eminent domain contrary to the obiter in Central Luzon Drug
Corporation. 57

328
Police power versus eminent domain.

Police power is the inherent power of the State to regulate or to restrain the use of liberty and property for public
welfare.58

The only limitation is that the restriction imposed should be reasonable, not oppressive. 59

In other words, to be a valid exercise of police power, it must have a lawful subject or objective and a lawful method
of accomplishing the goal. 60

Under the police power of the State, "property rights of individuals may be subjected to restraints and burdens in
order to fulfill the objectives of the government." 61

The State "may interfere with personal liberty, property, lawful businesses and occupations to promote the general
welfare [as long as] the interference [is] reasonable and not arbitrary." 62

Eminent domain, on the other hand, is the inherent power of the State to take or appropriate private property for
public use. 63

The Constitution, however, requires that private property shall not be taken without due process of law and the
payment of just compensation. 64

Traditional distinctions exist between police power and eminent domain. In the exercise of police power, a property
right is impaired by regulation,  or the use of property is merely prohibited, regulated or restricted  to promote public
65 66

welfare. In such cases, there is no compensable taking, hence, payment of just compensation is not required.
Examples of these regulations are property condemned for being noxious or intended for noxious purposes (e.g., a
building on the verge of collapse to be demolished for public safety, or obscene materials to be destroyed in the
interest of public morals)  as well as zoning ordinances prohibiting the use of property for purposes injurious to the
67

health, morals or safety of the community (e.g., dividing a city’s territory into residential and industrial areas). 68

It has, thus, been observed that, in the exercise of police power (as distinguished from eminent domain), although
the regulation affects the right of ownership, none of the bundle of rights which constitute ownership is appropriated
for use by or for the benefit of the public.
69

On the other hand, in the exercise of the power of eminent domain, property interests are appropriated and applied
to some public purpose which necessitates the payment of just compensation therefor. Normally, the title to and
possession of the property are transferred to the expropriating authority. Examples include the acquisition of lands
for the construction of public highways as well as agricultural lands acquired by the government under the agrarian
reform law for redistribution to qualified farmer beneficiaries. However, it is a settled rule that the acquisition of title
or total destruction of the property is not essential for "taking" under the power of eminent domain to be present. 70

Examples of these include establishment of easements such as where the land owner is perpetually deprived of his
proprietary rights because of the hazards posed by electric transmission lines constructed above his property  or the 71

compelled interconnection of the telephone system between the government and a private company. 72

In these cases, although the private property owner is not divested of ownership or possession, payment of just
compensation is warranted because of the burden placed on the property for the use or benefit of the public.

The 20% senior citizen discount is an exercise of police power.

It may not always be easy to determine whether a challenged governmental act is an exercise of police power or
eminent domain. The very nature of police power as elastic and responsive to various social conditions  as well as73

the evolving meaning and scope of public use  and just compensation  in eminent domain evinces that these are
74 75

not static concepts. Because of the exigencies of rapidly changing times, Congress may be compelled to adopt or
experiment with different measures to promote the general welfare which may not fall squarely within the
traditionally recognized categories of police power and eminent domain. The judicious approach, therefore, is to
look at the nature and effects of the challenged governmental act and decide, on the basis thereof, whether the act
is the exercise of police power or eminent domain. Thus, we now look at the nature and effects of the 20% discount
to determine if it constitutes an exercise of police power or eminent domain. The 20% discount is intended to
improve the welfare of senior citizens who, at their age, are less likely to be gainfully employed, more prone to
illnesses and other disabilities, and, thus, in need of subsidy in purchasing basic commodities. It may not be amiss
to mention also that the discount serves to honor senior citizens who presumably spent the productive years of their
lives on contributing to the development and progress of the nation. This distinct cultural Filipino practice of honoring
the elderly is an integral part of this law. As to its nature and effects, the 20% discount is a regulation affecting the
ability of private establishments to price their products and services relative to a special class of individuals, senior
citizens, for which the Constitution affords preferential concern. 76

329
In turn, this affects the amount of profits or income/gross sales that a private establishment can derive from senior
citizens. In other words, the subject regulation affects the pricing, and, hence, the profitability of a private
establishment. However, it does not purport to appropriate or burden specific properties, used in the operation or
conduct of the business of private establishments, for the use or benefit of the public, or senior citizens for that
matter, but merely regulates the pricing of goods and services relative to, and the amount of profits or income/gross
sales that such private establishments may derive from, senior citizens. The subject regulation may be said to be
similar to, but with substantial distinctions from, price control or rate of return on investment control laws which are
traditionally regarded as police power measures. 77

These laws generally regulate public utilities or industries/enterprises imbued with public interest in order to protect
consumers from exorbitant or unreasonable pricing as well as temper corporate greed by controlling the rate of
return on investment of these corporations considering that they have a monopoly over the goods or services that
they provide to the general public. The subject regulation differs therefrom in that (1) the discount does not prevent
the establishments from adjusting the level of prices of their goods and services, and (2) the discount does not apply
to all customers of a given establishment but only to the class of senior citizens. Nonetheless, to the degree material
to the resolution of this case, the 20% discount may be properly viewed as belonging to the category of price
regulatory measures which affect the profitability of establishments subjected thereto. On its face, therefore, the
subject regulation is a police power measure. The obiter in Central Luzon Drug Corporation,  however, describes
78

the 20% discount as an exercise of the power of eminent domain and the tax credit, under the previous law,
equivalent to the amount of discount given as the just compensation therefor. The reason is that (1) the discount
would have formed part of the gross sales of the establishment were it not for the law prescribing the 20% discount,
and (2) the permanent reduction in total revenues is a forced subsidy corresponding to the taking of private property
for public use or benefit. The flaw in this reasoning is in its premise. It presupposes that the subject regulation, which
impacts the pricing and, hence, the profitability of a private establishment, automatically amounts to a deprivation of
property without due process of law. If this were so, then all price and rate of return on investment control laws
would have to be invalidated because they impact, at some level, the regulated establishment’s profits or
income/gross sales, yet there is no provision for payment of just compensation. It would also mean that overnment
cannot set price or rate of return on investment limits, which reduce the profits or income/gross sales of private
establishments, if no just compensation is paid even if the measure is not confiscatory. The obiter is, thus, at odds
with the settled octrine that the State can employ police power measures to regulate the pricing of goods and
services, and, hence, the profitability of business establishments in order to pursue legitimate State objectives for
the common good, provided that the regulation does not go too far as to amount to "taking." 79

In City of Manila v. Laguio, Jr.,  we recognized that— x x x a taking also could be found if government regulation of
80

the use of property went "too far." When regulation reaches a certain magnitude, in most if not in all cases there
must be an exercise of eminent domain and compensation to support the act. While property may be regulated to a
certain extent, if regulation goes too far it will be recognized as a taking. No formula or rule can be devised to
answer the questions of what is too far and when regulation becomes a taking. In Mahon, Justice Holmes
recognized that it was "a question of degree and therefore cannot be disposed of by general propositions." On many
other occasions as well, the U.S. Supreme Court has said that the issue of when regulation constitutes a taking is a
matter of considering the facts in each case. The Court asks whether justice and fairness require that the economic
loss caused by public action must be compensated by the government and thus borne by the public as a whole, or
whether the loss should remain concentrated on those few persons subject to the public action. 81

The impact or effect of a regulation, such as the one under consideration, must, thus, be determined on a case-to-
case basis. Whether that line between permissible regulation under police power and "taking" under eminent
domain has been crossed must, under the specific circumstances of this case, be subject to proof and the one
assailing the constitutionality of the regulation carries the heavy burden of proving that the measure is
unreasonable, oppressive or confiscatory. The time-honored rule is that the burden of proving the unconstitutionality
of a law rests upon the one assailing it and "the burden becomes heavier when police power is at issue." 82

The 20% senior citizen discount has not been shown to be unreasonable, oppressive or confiscatory.

In Alalayan v. National Power Corporation,  petitioners, who were franchise holders of electric plants, challenged
83

the validity of a law limiting their allowable net profits to no more than 12% per annum of their investments plus two-
month operating expenses. In rejecting their plea, we ruled that, in an earlier case, it was found that 12% is a
reasonable rate of return and that petitioners failed to prove that the aforesaid rate is confiscatory in view of the
presumption of constitutionality. 84

We adopted a similar line of reasoning in Carlos Superdrug Corporation  when we ruled that petitioners therein
85

failed to prove that the 20% discount is arbitrary, oppressive or confiscatory. We noted that no evidence, such as a
financial report, to establish the impact of the 20% discount on the overall profitability of petitioners was presented in
order to show that they would be operating at a loss due to the subject regulation or that the continued
implementation of the law would be unconscionably detrimental to the business operations of petitioners. In the
case at bar, petitioners proceeded with a hypothetical computation of the alleged loss that they will suffer similar to
what the petitioners in Carlos Superdrug Corporation  did. Petitioners went directly to this Court without first
86

establishing the factual bases of their claims. Hence, the present recourse must, likewise, fail. Because all laws

330
enjoy the presumption of constitutionality, courts will uphold a law’s validity if any set of facts may be conceived to
sustain it.
87

On its face, we find that there are at least two conceivable bases to sustain the subject regulation’s validity absent
clear and convincing proof that it is unreasonable, oppressive or confiscatory. Congress may have legitimately
concluded that business establishments have the capacity to absorb a decrease in profits or income/gross sales
due to the 20% discount without substantially affecting the reasonable rate of return on their investments
considering (1) not all customers of a business establishment are senior citizens and (2) the level of its profit
margins on goods and services offered to the general public. Concurrently, Congress may have, likewise,
legitimately concluded that the establishments, which will be required to extend the 20% discount, have the capacity
to revise their pricing strategy so that whatever reduction in profits or income/gross sales that they may sustain
because of sales to senior citizens, can be recouped through higher mark-ups or from other products not subject of
discounts. As a result, the discounts resulting from sales to senior citizens will not be confiscatory or unduly
oppressive. In sum, we sustain our ruling in Carlos Superdrug Corporation  that the 20% senior citizen discount and
88

tax deduction scheme are valid exercises of police power of the State absent a clear showing that it is arbitrary,
oppressive or confiscatory.

Conclusion

In closing, we note that petitioners hypothesize, consistent with our previous ratiocinations, that the discount will
force establishments to raise their prices in order to compensate for its impact on overall profits or income/gross
sales. The general public, or those not belonging to the senior citizen class, are, thus, made to effectively shoulder
the subsidy for senior citizens. This, in petitioners’ view, is unfair.

As already mentioned, Congress may be reasonably assumed to have foreseen this eventuality. But, more
importantly, this goes into the wisdom, efficacy and expediency of the subject law which is not proper for judicial
review. In a way, this law pursues its social equity objective in a non-traditional manner unlike past and existing
direct subsidy programs of the government for the poor and marginalized sectors of our society. Verily, Congress
must be given sufficient leeway in formulating welfare legislations given the enormous challenges that the
government faces relative to, among others, resource adequacy and administrative capability in implementing social
reform measures which aim to protect and uphold the interests of those most vulnerable in our society. In the
process, the individual, who enjoys the rights, benefits and privileges of living in a democratic polity, must bear his
share in supporting measures intended for the common good. This is only fair. In fine, without the requisite showing
of a clear and unequivocal breach of the Constitution, the validity of the assailed law must be sustained.

Refutation of the Dissent

The main points of Justice Carpio’s Dissent may be summarized as follows: (1) the discussion on eminent domain in
Central Luzon Drug Corporation  is not obiter dicta ; (2) allowable taking, in police power, is limited to property that
89

is destroyed or placed outside the commerce of man for public welfare; (3) the amount of mandatory discount is
private property within the ambit of Article III, Section 9  of the Constitution; and (4) the permanent reduction in a
90

private establishment’s total revenue, arising from the mandatory discount, is a taking of private property for public
use or benefit, hence, an exercise of the power of eminent domain requiring the payment of just compensation. I We
maintain that the discussion on eminent domain in Central Luzon Drug Corporation  is obiter dicta. As previously
91

discussed, in Central Luzon Drug Corporation,  the BIR, pursuant to Sections 2.i and 4 of RR No. 2-94, treated the
92

senior citizen discount in the previous law, RA 7432, as a tax deduction instead of a tax credit despite the clear
provision in that law which stated –

SECTION 4. Privileges for the Senior Citizens. – The senior citizens shall be entitled to the following:

a) The grant of twenty percent (20%) discount from all establishments relative to utilization of transportation
services, hotels and similar lodging establishment, restaurants and recreation centers and purchase of
medicines anywhere in the country: Provided, That private establishments may claim the cost as tax credit;
(Emphasis supplied)

Thus, the Court ruled that the subject revenue regulation violated the law, viz:

The 20 percent discount required by the law to be given to senior citizens is a tax credit, not merely a tax deduction
from the gross income or gross sale of the establishment concerned. A tax credit is used by a private establishment
only after the tax has been computed; a tax deduction, before the tax is computed. RA 7432 unconditionally grants a
tax credit to all covered entities. Thus, the provisions of the revenue regulation that withdraw or modify such grant
are void. Basic is the rule that administrative regulations cannot amend or revoke the law. 93

As can be readily seen, the discussion on eminent domain was not necessary in order to arrive at this conclusion.
All that was needed was to point out that the revenue regulation contravened the law which it sought to implement.
And, precisely, this was done in Central Luzon Drug Corporation  by comparing the wording of the previous law vis-
94

à-vis the revenue regulation; employing the rules of statutory construction; and applying the settled principle that a
331
regulation cannot amend the law it seeks to implement. A close reading of Central Luzon Drug Corporation  would95

show that the Court went on to state that the tax credit "can be deemed" as just compensation only to explain why
the previous law provides for a tax credit instead of a tax deduction. The Court surmised that the tax credit was a
form of just compensation given to the establishments covered by the 20% discount. However, the reason why the
previous law provided for a tax credit and not a tax deduction was not necessary to resolve the issue as to whether
the revenue regulation contravenes the law. Hence, the discussion on eminent domain is obiter dicta.

A court, in resolving cases before it, may look into the possible purposes or reasons that impelled the enactment of
a particular statute or legal provision. However, statements made relative thereto are not always necessary in
resolving the actual controversies presented before it. This was the case in Central Luzon Drug
Corporation resulting in that unfortunate statement that the tax credit "can be deemed" as just compensation. This,
96

in turn, led to the erroneous conclusion, by deductive reasoning, that the 20% discount is an exercise of the power
of eminent domain. The Dissent essentially adopts this theory and reasoning which, as will be shown below, is
contrary to settled principles in police power and eminent domain analysis. II The Dissent discusses at length the
doctrine on "taking" in police power which occurs when private property is destroyed or placed outside the
commerce of man. Indeed, there is a whole class of police power measures which justify the destruction of private
property in order to preserve public health, morals, safety or welfare. As earlier mentioned, these would include a
building on the verge of collapse or confiscated obscene materials as well as those mentioned by the Dissent with
regard to property used in violating a criminal statute or one which constitutes a nuisance. In such cases, no
compensation is required. However, it is equally true that there is another class of police power measures which do
not involve the destruction of private property but merely regulate its use. The minimum wage law, zoning
ordinances, price control laws, laws regulating the operation of motels and hotels, laws limiting the working hours to
eight, and the like would fall under this category. The examples cited by the Dissent, likewise, fall under this
category: Article 157 of the Labor Code, Sections 19 and 18 of the Social Security Law, and Section 7 of the Pag-
IBIG Fund Law. These laws merely regulate or, to use the term of the Dissent, burden the conduct of the affairs of
business establishments. In such cases, payment of just compensation is not required because they fall within the
sphere of permissible police power measures. The senior citizen discount law falls under this latter category. III The
Dissent proceeds from the theory that the permanent reduction of profits or income/gross sales, due to the 20%
discount, is a "taking" of private property for public purpose without payment of just compensation. At the outset, it
must be emphasized that petitioners never presented any evidence to establish that they were forced to suffer
enormous losses or operate at a loss due to the effects of the assailed law. They came directly to this Court and
provided a hypothetical computation of the loss they would allegedly suffer due to the operation of the assailed law.
The central premise of the Dissent’s argument that the 20% discount results in a permanent reduction in profits or
income/gross sales, or forces a business establishment to operate at a loss is, thus, wholly unsupported by
competent evidence. To be sure, the Court can invalidate a law which, on its face, is arbitrary, oppressive or
confiscatory.97

But this is not the case here.

In the case at bar, evidence is indispensable before a determination of a constitutional violation can be made
because of the following reasons. First, the assailed law, by imposing the senior citizen discount, does not take any
of the properties used by a business establishment like, say, the land on which a manufacturing plant is constructed
or the equipment being used to produce goods or services. Second, rather than taking specific properties of a
business establishment, the senior citizen discount law merely regulates the prices of the goods or services being
sold to senior citizens by mandating a 20% discount. Thus, if a product is sold at ₱10.00 to the general public, then
it shall be sold at ₱8.00 ( i.e., ₱10.00 less 20%) to senior citizens. Note that the law does not impose at what
specific price the product shall be sold, only that a 20% discount shall be given to senior citizens based on the price
set by the business establishment. A business establishment is, thus, free to adjust the prices of the goods or
services it provides to the general public. Accordingly, it can increase the price of the above product to ₱20.00 but is
required to sell it at ₱16.00 (i.e. , ₱20.00 less 20%) to senior citizens. Third, because the law impacts the prices of
the goods or services of a particular establishment relative to its sales to senior citizens, its profits or income/gross
sales are affected. The extent of the impact would, however, depend on the profit margin of the business
establishment on a particular good or service. If a product costs ₱5.00 to produce and is sold at ₱10.00, then the
profit  is ₱5.00  or a profit margin  of 50%.
98 99 100 101

Under the assailed law, the aforesaid product would have to be sold at ₱8.00 to senior citizens yet the business
would still earn ₱3.00  or a 30%  profit margin. On the other hand, if the product costs ₱9.00 to produce and is
102 103

required to be sold at ₱8.00 to senior citizens, then the business would experience a loss of ₱1.00. 104

But note that since not all customers of a business establishment are senior citizens, the business establishment
may continue to earn ₱1.00 from non-senior citizens which, in turn, can offset any loss arising from sales to senior
citizens.

Fourth, when the law imposes the 20% discount in favor of senior citizens, it does not prevent the business
establishment from revising its pricing strategy.

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By revising its pricing strategy, a business establishment can recoup any reduction of profits or income/gross sales
which would otherwise arise from the giving of the 20% discount. To illustrate, suppose A has two customers: X, a
senior citizen, and Y, a non-senior citizen. Prior to the law, A sells his products at ₱10.00 a piece to X and Y
resulting in income/gross sales of ₱20.00 (₱10.00 + ₱10.00). With the passage of the law, A must now sell his
product to X at ₱8.00 (i.e., ₱10.00 less 20%) so that his income/gross sales would be ₱18.00 (₱8.00 + ₱10.00) or
lower by ₱2.00. To prevent this from happening, A decides to increase the price of his products to ₱11.11 per piece.
Thus, he sells his product to X at ₱8.89 (i.e. , ₱11.11 less 20%) and to Y at ₱11.11. As a result, his income/gross
sales would still be ₱20.00  (₱8.89 + ₱11.11). The capacity, then, of business establishments to revise their pricing
105

strategy makes it possible for them not to suffer any reduction in profits or income/gross sales, or, in the alternative,
mitigate the reduction of their profits or income/gross sales even after the passage of the law. In other words,
business establishments have the capacity to adjust their prices so that they may remain profitable even under the
operation of the assailed law.

The Dissent, however, states that – The explanation by the majority that private establishments can always increase
their prices to recover the mandatory discount will only encourage private establishments to adjust their prices
upwards to the prejudice of customers who do not enjoy the 20% discount. It was likewise suggested that if a
company increases its prices, despite the application of the 20% discount, the establishment becomes more
profitable than it was before the implementation of R.A. 7432. Such an economic justification is self-defeating, for
more consumers will suffer from the price increase than will benefit from the 20% discount. Even then, such ability to
increase prices cannot legally validate a violation of the eminent domain clause. 106

But, if it is possible that the business establishment, by adjusting its prices, will suffer no reduction in its profits or
income/gross sales (or suffer some reduction but continue to operate profitably) despite giving the discount, what
would be the basis to strike down the law? If it is possible that the business establishment, by adjusting its prices,
will not be unduly burdened, how can there be a finding that the assailed law is an unconstitutional exercise of
police power or eminent domain? That there may be a burden placed on business establishments or the consuming
public as a result of the operation of the assailed law is not, by itself, a ground to declare it unconstitutional for this
goes into the wisdom and expediency of the law.

The cost of most, if not all, regulatory measures of the government on business establishments is ultimately passed
on to the consumers but that, by itself, does not justify the wholesale nullification of these measures. It is a basic
postulate of our democratic system of government that the Constitution is a social contract whereby the people have
surrendered their sovereign powers to the State for the common good. 107

All persons may be burdened by regulatory measures intended for the common good or to serve some important
governmental interest, such as protecting or improving the welfare of a special class of people for which the
Constitution affords preferential concern. Indubitably, the one assailing the law has the heavy burden of proving that
the regulation is unreasonable, oppressive or confiscatory, or has gone "too far" as to amount to a "taking." Yet,
here, the Dissent would have this Court nullify the law without any proof of such nature.

Further, this Court is not the proper forum to debate the economic theories or realities that impelled Congress to
shift from the tax credit to the tax deduction scheme. It is not within our power or competence to judge which
scheme is more or less burdensome to business establishments or the consuming public and, thereafter, to choose
which scheme the State should use or pursue. The shift from the tax credit to tax deduction scheme is a policy
determination by Congress and the Court will respect it for as long as there is no showing, as here, that the subject
regulation has transgressed constitutional limitations. Unavoidably, the lack of evidence constrains the Dissent to
rely on speculative and hypothetical argumentation when it states that the 20% discount is a significant amount and
not a minimal loss (which erroneously assumes that the discount automatically results in a loss when it is possible
that the profit margin is greater than 20% and/or the pricing strategy can be revised to prevent or mitigate any
reduction in profits or income/gross sales as illustrated above),  and not all private establishments make a 20%
108

profit margin (which conversely implies that there are those who make more and, thus, would not be greatly affected
by this regulation).
109

In fine, because of the possible scenarios discussed above, we cannot assume that the 20% discount results in a
permanent reduction in profits or income/gross sales, much less that business establishments are forced to operate
at a loss under the assailed law. And, even if we gratuitously assume that the 20% discount results in some degree
of reduction in profits or income/gross sales, we cannot assume that such reduction is arbitrary, oppressive or
confiscatory. To repeat, there is no actual proof to back up this claim, and it could be that the loss suffered by a
business establishment was occasioned through its fault or negligence in not adapting to the effects of the assailed
law. The law uniformly applies to all business establishments covered thereunder. There is, therefore, no unjust
discrimination as the aforesaid business establishments are faced with the same constraints. The necessity of proof
is all the more pertinent in this case because, as similarly observed by Justice Velasco in his Concurring Opinion,
the law has been in operation for over nine years now. However, the grim picture painted by petitioners on the
unconscionable losses to be indiscriminately suffered by business establishments, which should have led to the
closure of numerous business establishments, has not come to pass. Verily, we cannot invalidate the assailed law
based on assumptions and conjectures. Without adequate proof, the presumption of constitutionality must prevail. IV
At this juncture, we note that the Dissent modified its original arguments by including a new paragraph, to wit:

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Section 9, Article III of the 1987 Constitution speaks of private property without any distinction. It does not state that
there should be profit before the taking of property is subject to just compensation. The private property referred to
for purposes of taking could be inherited, donated, purchased, mortgaged, or as in this case, part of the gross sales
of private establishments. They are all private property and any taking should be attended by corresponding
payment of just compensation. The 20% discount granted to senior citizens belong to private establishments,
whether these establishments make a profit or suffer a loss. In fact, the 20% discount applies to non-profit
establishments like country, social, or golf clubs which are open to the public and not only for exclusive membership.
The issue of profit or loss to the establishments is immaterial. 110

Two things may be said of this argument. First, it contradicts the rest of the arguments of the Dissent. After it states
that the issue of profit or loss is immaterial, the Dissent proceeds to argue that the 20% discount is not a minimal
loss  and that the 20% discount forces business establishments to operate at a loss.
111 112

Even the obiter in Central Luzon Drug Corporation,  which the Dissent essentially adopts and relies on, is premised
113

on the permanent reduction of total revenues and the loss that business establishments will be forced to suffer in
arguing that the 20% discount constitutes a "taking" under the power of eminent domain. Thus, when the Dissent
now argues that the issue of profit or loss is immaterial, it contradicts itself because it later argues, in order to justify
that there is a "taking" under the power of eminent domain in this case, that the 20% discount forces business
establishments to suffer a significant loss or to operate at a loss. Second, this argument suffers from the same flaw
as the Dissent's original arguments. It is an erroneous characterization of the 20% discount. According to the
Dissent, the 20% discount is part of the gross sales and, hence, private property belonging to business
establishments. However, as previously discussed, the 20% discount is not private property actually owned and/or
used by the business establishment. It should be distinguished from properties like lands or buildings actually used
in the operation of a business establishment which, if appropriated for public use, would amount to a "taking" under
the power of eminent domain. Instead, the 20% discount is a regulatory measure which impacts the pricing and,
hence, the profitability of business establishments. At the time the discount is imposed, no particular property of the
business establishment can be said to be "taken." That is, the State does not acquire or take anything from the
business establishment in the way that it takes a piece of private land to build a public road. While the 20% discount
may form part of the potential profits or income/gross sales  of the business establishment, as similarly
114

characterized by Justice Bersamin in his Concurring Opinion, potential profits or income/gross sales are not private
property, specifically cash or money, already belonging to the business establishment. They are a mere expectancy
because they are potential fruits of the successful conduct of the business. Prior to the sale of goods or services, a
business establishment may be subject to State regulations, such as the 20% senior citizen discount, which may
impact the level or amount of profits or income/gross sales that can be generated by such establishment. For this
reason, the validity of the discount is to be determined based on its overall effects on the operations of the business
establishment.

Again, as previously discussed, the 20% discount does not automatically result in a 20% reduction in profits, or, to
align it with the term used by the Dissent, the 20% discount does not mean that a 20% reduction in gross sales
necessarily results. Because (1) the profit margin of a product is not necessarily less than 20%, (2) not all customers
of a business establishment are senior citizens, and (3) the establishment may revise its pricing strategy, such
reduction in profits or income/gross sales may be prevented or, in the alternative, mitigated so that the business
establishment continues to operate profitably. Thus, even if we gratuitously assume that some degree of reduction
in profits or income/gross sales occurs because of the 20% discount, it does not follow that the regulation is
unreasonable, oppressive or confiscatory because the business establishment may make the necessary
adjustments to continue to operate profitably. No evidence was presented by petitioners to show otherwise. In fact,
no evidence was presented by petitioners at all. Justice Leonen, in his Concurring and Dissenting Opinion,
characterizes "profits" (or income/gross sales) as an inchoate right. Another way to view it, as stated by Justice
Velasco in his Concurring Opinion, is that the business establishment merely has a right to profits. The Constitution
adverts to it as the right of an enterprise to a reasonable return on investment. 115

Undeniably, this right, like any other right, may be regulated under the police power of the State to achieve
important governmental objectives like protecting the interests and improving the welfare of senior citizens. It should
be noted though that potential profits or income/gross sales are relevant in police power and eminent domain
analyses because they may, in appropriate cases, serve as an indicia when a regulation has gone "too far" as to
amount to a "taking" under the power of eminent domain. When the deprivation or reduction of profits or
income/gross sales is shown to be unreasonable, oppressive or confiscatory, then the challenged governmental
regulation may be nullified for being a "taking" under the power of eminent domain. In such a case, it is not profits or
income/gross sales which are actually taken and appropriated for public use. Rather, when the regulation causes an
establishment to incur losses in an unreasonable, oppressive or confiscatory manner, what is actually taken is
capital and the right of the business establishment to a reasonable return on investment. If the business losses are
not halted because of the continued operation of the regulation, this eventually leads to the destruction of the
business and the total loss of the capital invested therein. But, again, petitioners in this case failed to prove that the
subject regulation is unreasonable, oppressive or confiscatory.

V.

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The Dissent further argues that we erroneously used price and rate of return on investment control laws to justify the
senior citizen discount law. According to the Dissent, only profits from industries imbued with public interest may be
regulated because this is a condition of their franchises. Profits of establishments without franchises cannot be
regulated permanently because there is no law regulating their profits. The Dissent concludes that the permanent
reduction of total revenues or gross sales of business establishments without franchises is a taking of private
property under the power of eminent domain. In making this argument, it is unfortunate that the Dissent quotes only
a portion of the ponencia – The subject regulation may be said to be similar to, but with substantial distinctions from,
price control or rate of return on investment control laws which are traditionally regarded as police power measures.
These laws generally regulate public utilities or industries/enterprises imbued with public interest in order to protect
consumers from exorbitant or unreasonable pricing as well as temper corporate greed by controlling the rate of
return on investment of these corporations considering that they have a monopoly over the goods or services that
they provide to the general public. The subject regulation differs therefrom in that (1) the discount does not prevent
the establishments from adjusting the level of prices of their goods and services, and (2) the discount does not apply
to all customers of a given establishment but only to the class of senior citizens. x x x
116

The above paragraph, in full, states –

The subject regulation may be said to be similar to, but with substantial distinctions from, price control or rate of
return on investment control laws which are traditionally regarded as police power measures. These laws generally
regulate public utilities or industries/enterprises imbued with public interest in order to protect consumers from
exorbitant or unreasonable pricing as well as temper corporate greed by controlling the rate of return on investment
of these corporations considering that they have a monopoly over the goods or services that they provide to the
general public. The subject regulation differs therefrom in that (1) the discount does not prevent the establishments
from adjusting the level of prices of their goods and services, and (2) the discount does not apply to all customers of
a given establishment but only to the class of senior citizens.

Nonetheless, to the degree material to the resolution of this case, the 20% discount may be properly viewed as
belonging to the category of price regulatory measures which affects the profitability of establishments subjected
thereto. (Emphasis supplied)

The point of this paragraph is to simply show that the State has, in the past, regulated prices and profits of business
establishments. In other words, this type of regulatory measures is traditionally recognized as police power
measures so that the senior citizen discount may be considered as a police power measure as well. What is more,
the substantial distinctions between price and rate of return on investment control laws vis-à-vis the senior citizen
discount law provide greater reason to uphold the validity of the senior citizen discount law. As previously discussed,
the ability to adjust prices allows the establishment subject to the senior citizen discount to prevent or mitigate any
reduction of profits or income/gross sales arising from the giving of the discount. In contrast, establishments subject
to price and rate of return on investment control laws cannot adjust prices accordingly. Certainly, there is no
intention to say that price and rate of return on investment control laws are the justification for the senior citizen
discount law. Not at all. The justification for the senior citizen discount law is the plenary powers of Congress. The
legislative power to regulate business establishments is broad and covers a wide array of areas and subjects. It is
well within Congress’ legislative powers to regulate the profits or income/gross sales of industries and enterprises,
even those without franchises. For what are franchises but mere legislative enactments? There is nothing in the
Constitution that prohibits Congress from regulating the profits or income/gross sales of industries and enterprises
without franchises. On the contrary, the social justice provisions of the Constitution enjoin the State to regulate the
"acquisition, ownership, use, and disposition" of property and its increments. 117

This may cover the regulation of profits or income/gross sales of all businesses, without qualification, to attain the
objective of diffusing wealth in order to protect and enhance the right of all the people to human dignity.118

Thus, under the social justice policy of the Constitution, business establishments may be compelled to contribute to
uplifting the plight of vulnerable or marginalized groups in our society provided that the regulation is not arbitrary,
oppressive or confiscatory, or is not in breach of some specific constitutional limitation. When the Dissent, therefore,
states that the "profits of private establishments which are non-franchisees cannot be regulated permanently, and
there is no such law regulating their profits permanently,"  it is assuming what it ought to prove. First, there are laws
119

which, in effect, permanently regulate profits or income/gross sales of establishments without franchises, and RA
9257 is one such law. And, second, Congress can regulate such profits or income/gross sales because, as
previously noted, there is nothing in the Constitution to prevent it from doing so. Here, again, it must be emphasized
that petitioners failed to present any proof to show that the effects of the assailed law on their operations has been
unreasonable, oppressive or confiscatory. The permanent regulation of profits or income/gross sales of business
establishments, even those without franchises, is not as uncommon as the Dissent depicts it to be. For instance, the
minimum wage law allows the State to set the minimum wage of employees in a given region or geographical area.
Because of the added labor costs arising from the minimum wage, a permanent reduction of profits or income/gross
sales would result, assuming that the employer does not increase the prices of his goods or services. To illustrate,
suppose it costs a company ₱5.00 to produce a product and it sells the same at ₱10.00 with a 50% profit margin.
Later, the State increases the minimum wage. As a result, the company incurs greater labor costs so that it now
costs ₱7.00 to produce the same product. The profit per product of the company would be reduced to ₱3.00 with a
profit margin of 30%. The net effect would be the same as in the earlier example of granting a 20% senior citizen
335
discount. As can be seen, the minimum wage law could, likewise, lead to a permanent reduction of profits. Does this
mean that the minimum wage law should, likewise, be declared unconstitutional on the mere plea that it results in a
permanent reduction of profits? Taking it a step further, suppose the company decides to increase the price of its
product in order to offset the effects of the increase in labor cost; does this mean that the minimum wage law,
following the reasoning of the Dissent, is unconstitutional because the consuming public is effectively made to
subsidize the wage of a group of laborers, i.e., minimum wage earners? The same reasoning can be adopted
relative to the examples cited by the Dissent which, according to it, are valid police power regulations. Article 157 of
the Labor Code, Sections 19 and 18 of the Social Security Law, and Section 7 of the Pag-IBIG Fund Law would
effectively increase the labor cost of a business establishment.  This would, in turn, be integrated as part of the cost
1âwphi1

of its goods or services. Again, if the establishment does not increase its prices, the net effect would be a permanent
reduction in its profits or income/gross sales. Following the reasoning of the Dissent that "any form of permanent
taking of private property (including profits or income/gross sales)  is an exercise of eminent domain that requires
120

the State to pay just compensation,"  then these statutory provisions would, likewise, have to be declared
121

unconstitutional. It does not matter that these benefits are deemed part of the employees’ legislated wages because
the net effect is the same, that is, it leads to higher labor costs and a permanent reduction in the profits or
income/gross sales of the business establishments. 122

The point then is this – most, if not all, regulatory measures imposed by the State on business establishments
impact, at some level, the latter’s prices and/or profits or income/gross sales. 123

If the Court were to sustain the Dissent’s theory, then a wholesale nullification of such measures would inevitably
result. The police power of the State and the social justice provisions of the Constitution would, thus, be rendered
nugatory. There is nothing sacrosanct about profits or income/gross sales. This, we made clear in Carlos Superdrug
Corporation: 124

Police power as an attribute to promote the common good would be diluted considerably if on the mere plea of
petitioners that they will suffer loss of earnings and capital, the questioned provision is invalidated. Moreover, in the
absence of evidence demonstrating the alleged confiscatory effect of the provision in question, there is no basis for
its nullification in view of the presumption of validity which every law has in its favor.

xxxx

The Court is not oblivious of the retail side of the pharmaceutical industry and the competitive pricing component of
the business. While the Constitution protects property rights petitioners must the realities of business and the State,
in the exercise of police power, can intervene in the operations of a business which may result in an impairment of
property rights in the process.

Moreover, the right to property has a social dimension. While Article XIII of the Constitution provides the percept for
the protection of property, various laws and jurisprudence, particularly on agrarian reform and the regulation of
contracts and public utilities, continously serve as a reminder for the promotion of public good.

Undeniably, the success of the senior citizens program rests largely on the support imparted by petitioners and the
other private establishments concerned. This being the case, the means employed in invoking the active
participation of the private sector, in order to achieve the purpose or objective of the law, is reasonably and directly
related. Without sufficient proof that Section 4(a) of R.A. No. 9257 is arbitrary, and that the continued
implementation of the same would be unconscionably detrimental to petitioners, the Court will refrain form quashing
a legislative act. 125

In conclusion, we maintain that the correct rule in determining whether the subject regulatory measure has
amounted to a "taking" under the power of eminent domain is the one laid down in Alalayan v. National Power
Corporation  and followed in Carlos Superdurg Corporation  consistent with long standing principles in police
126 127

power and eminent domain analysis. Thus, the deprivation or reduction of profits or income. Gross sales must be
clearly shown to be unreasonable, oppressive or confiscatory. Under the specific circumstances of this case, such
determination can only be made upon the presentation of competent proof which petitioners failed to do. A law,
which has been in operation for many years and promotes the welfare of a group accorded special concern by the
Constitution, cannot and should not be summarily invalidated on a mere allegation that it reduces the profits or
income/gross sales of business establishments.

WHEREFORE, the Petition is hereby DISMISSED for lack of merit.

SO ORDERED.

CONCURRING AND DISSENTING OPINION

LEONEN, J.:

336
 This case involves the constitutionality of Section 4 of Republic Act No. 7432 as amended vy Republic Act No.
9257  as well as the implementing rules and regulations issued by respondents Department of Social Welfare and
1

Development and Department of Finance. The provisions allow the 20% discount given by business establishments
to senior citizens only as a tax deduction from their gross income. The provisions amend an earlier law that allows
the senior citizen discount as a tax credit from their total tax liability.

I concur with ponencia in denying the constitutional challenge.

The enactment of the provision as well as its implementing rules is a proper exercise of the inherent power to tax
and police power. However, I regret I cannot join my esteemed colleagues Justice Mariano del Castillo as
the ponencia and Justice Antonio Carpio in his thoughful dissent that the power of eminent domain is also involved.
It is for these reasons that the power of eminent domain also involved. It is for these reasons that IO offer this
separate opinion.

The Petition

Before us is a Petition for Prohibition  filed by Manila Memorial Park, Inc. and La Funeraria Paz-Sucat, Inc. against
2

the Secretaries of the Department of Social Welfare and Development and the Department of Finance. Petitioners
are domestic corporations engaged in the business of providing funeral and burial services. On April 23, 1992,
Republic Act No. 7432 was passed granting senior citizens privileges. Section 4(a) grants them a 20% discount from
certain establishments provided "[t]hat private establishments may claim the cost as tax credit." On August 23,
1993, Revenue Regulation No. 02-94 was issued to implement Republic Act No. 7432. Section 2(i) on the definition
of "tax credit" provides that the discount "shall be deducted by the said establishments from their gross income x x
x." Section 4 on bookkeeping requirements for private establishments similarly states that "[t]he amount of 20%
discount shall be deducted from the gross income for income tax purposes and from gross sales of the business
enterprise concerned for purposes of VAT and other percentage taxes." Commissioner of Internal Revenue v.
Central Luzon Drug Corporation  later declared these sections of Revenue Regulation No. 02-94 as erroneous for
3

contravening Republic Act No. 7432, which specifically allows establishments to claim a tax credit. On February 26,
2004, Republic Act No. 9257 was passed amending certain provisions of Republic Act No. 7432. Specifically,
Section 4 now provides as follows:

SECTION 4. Privileges for the Senior Citizens. – The senior citizens shall be entitled to the following:

(a) the grant of twenty percent (20%) discount from all establishments relative to the utilization of services in
hotels and similar lodging establishments, restaurants and recreation centers, and purchase of medicines in
all establishments for the exclusive use or enjoyment of senior citizens, including funeral and burial services
for the death of senior citizens; x x x x The establishment may claim the discounts granted under (a), (f), (g)
and (h) as tax deduction based on the net cost of the goods sold or services rendered: Provided, That the
cost of the discount shall be allowed as deduction from gross income for the same taxable year that the
discount is granted. Provided, further, That the total amount of the claimed tax deduction net of value added
tax if applicable, shall be included in their gross sales receipts for tax purposes and shall be subject to
proper documentation and to the provisions of the National Internal Revenue Code, as amended.

The Secretary of Finance issued Revenue Regulation No. 4-2006 to implement Republic Act No. 9257. The
Department of Social Welfare and Development also issued its own Rules and Regulations Implementing Republic
Act No. 9257. Petitioners, thus, filed this Petition urging that Section 4 of Republic Act No. 7432 as amended by
Republic Act No. 9257, as well as the implementing rules and regulations issued by respondents, be declared
unconstitutional insofar as these allow business establishments to claim the 20% discount given as a tax deduction;
that respondents be prohibited from enforcing them; and that the tax credit treatment of the 20% discount under the
former Section 4(a) of Republic Act No. 7432 be reinstated. 4

The most salient issue is as follows: whether Section 4 of Republic Act No. 7432 as amended by Republic Act No.
9257, as well as its implementing rules and regulations, insofar as they provide that the 20% discount to senior
citizens may be claimed as a tax deduction by private establishments, is invalid and unconstitutional. The arguments
of the parties as summarized in the ponencia are as follows: Petitioners contend that the tax deduction scheme
contravenes Article III, Section 9 of the Constitution, which states that: "[p]rivate property shall not be taken for
public use without just compensation." 5

Moreover, petitioners cite Commissioner of Internal Revenue v. Central Luzon Drug Corporation  ruling that the 20%
6

discount privilege constitutes taking of private property for public use which requires the payment of just
compensation,  and Carlos Superdrug Corporation v. Department of Social Welfare
7

and Development acknowledging that the tax deduction scheme does not meet the definition of just compensation.
8 9

Petitioners also seek a reversal of the ruling in Carlos Superdrug that the tax deduction scheme is justified by police
power. 10

337
They assert that "[a]lthough both police power and the power of eminent domain have the general welfare for their
object, there are still traditional distinctions between the two"  and that "eminent domain cannot be made less
11

supreme than police power." 12

They claim that in amending Republic Act No. 7432, the legislature relied on an erroneous contemporaneous
construction that prior payment of taxes is required for tax credit. 13

Petitioners likewise argue that the tax deduction scheme violates Article XV, Section 4, and Article XIII, Section 11
of the Constitution because it shifts the State’s constitutional mandate or duty of improving the welfare of the elderly
to the private sector. 14

Under the tax deduction scheme, the private sector shoulders 65% of the discount because only 35% (now 30%) of
it is actually returned by the government. 15

Consequently, its implementation affects petitioners’ businesses,  and there exists an actual case or controversy of
16

transcendental importance. 17

Respondents, on the other hand, question the filing of the instant Petition directly with this Court in disregard of the
hierarchy of courts.18

They assert that there is no justiciable controversy as petitioners failed to prove that the tax deduction treatment is
not a "fair and full equivalent of the loss sustained" by them.19

On the constitutionality of Republic Act No. 9257 and its implementing rules and regulations, respondents argue that
petitioners failed to overturn its presumption of constitutionality. 20

They maintain that the tax deduction scheme is a legitimate exercise of the State’s police power. 21

I Uncertain Burdens and Inchoate Losses What is in question here is not the actual imposition of a senior citizen
discount; rather, it is the treatment of that senior citizen discount for taxation purposes. From being a tax credit, it is
now only a tax deduction. The imposition of the senior citizen discount is an exercise of police power. The
determination that it will be a tax deduction, not a tax credit, is an exercise of the power to tax. The imposition of a
discount for senior citizens affects the price. It is thus an inherently regulatory function. However, nothing in the law
controls the prices of the goods subject to such discount. Legislation interferes with the autonomy of contractual
arrangements in that it imposes a two-tiered pricing system. There will be two prices for every good or service: one
is the regular price for everyone except for senior citizens who get a twenty percent (20%) discount. Businesses’
discretion to fix the regular price or improve the costs of the goods or the service that they offer to the public — and
therefore determine their profit — is not affected by the law. Of course, rational businesses will take into
consideration economic factors such as price elasticity,  the market structure, the kind of competition businesses
22

face, the barriers to entry that will make possible the expansion of suppliers should there be a change in the prices
and the profits that can be made in that industry. Taxes, which include qualifications such as exemptions, exclusions
and deductions, will be part of the cost of doing business for all such businesses.

No price restriction, no certain losses

There is no restriction in the law for businesses to attempt to recover the same amount of profits for the businesses
affected by the law. To put this idea in perspective, let us assume that Company A is in the business of the sale of
memorial lots. The demand for memorial lots is not usually influenced by price fluctuations. There will always be a
static demand for memorial lots because it is strictly based on a non-negotiable preference of the purchaser. Let us
also assume, for purposes of argument, that Company A acquired the plots of land at zero cost. This means that the
price of the plot multiplied by the number of plots sold will always be considered revenue. 23

To simplify, consider this formula:

R=PxQ

Where R = Revenue

P = Price per unit

Q = Quantity sold

Given these assumptions, let us presume that in any given year before the promulgation of any law for senior citizen
discounting, Company A sells 1,600 square meters of memorial plots at the price of ₱100.00 per square meter.
Considering the formula, the total profit of Company A will be:

338
 R0 = P x Q
R0 = ₱1000.00 x 1,600 sq. m.
R0 = ₱160,000.00

Let us assume further that out of the 1,600 square meters sold, only 320 square meters are bought by senior
citizens, and 1,280 square meters are bought by ordinary citizens. When Congress enacted Republic Act No. 7432,
Company A was forced to give a 20% discount to senior citizens. There will be a price discrimination scheme
wherein senior citizens can avail a square meter of a memorial plot for only ₱80.00 per square meter. The total
revenue received by Company A will now constitute revenue derived from plots sold to senior citizens added to the
revenue derived from plots sold to ordinary citizens. Hence, the formula becomes:

RT = RS  + RC

RS = RS x QS

RC = PC x QC

RT = (PS x QS) + (PC x QC)

Where

RT = Total Revenue R

RS = Revenue from Senior Citizens

RC = Revenue from Ordinary Citizens

PS = Price for Senior Citizens per Unit

QS = Quantity Sold to Senior Citizens

PC = Price for Ordinary Citizens per Unit

QC = Quantity Sold to Ordinary Citizens In our example, this means that the total revenue of Company A
becomes:

RT1 = (PS x QS)+ (PC x QC)

RT1 = (₱80.00 x 320 sq. m.) + (₱100.00 x 1,280 sq. m.)

RT1 = ₱25,600.00 + ₱128,000.00

RT1 = ₱153,600.00

Obviously, the Total Revenue after the discount was applied is lower than the Revenue derived by Company A
before the discount was imposed. The natural consequence of Company A, in order to maintain its profitability, is to
increase the price per square meter of a memorial lot. Assume that the price increase was ₱10.00. This makes the
price for ordinary citizens go up to ₱110.00 per square meter. Meanwhile, the discounted price for senior citizens
becomes ₱88.00 per square meter. The effects of that with respect to total revenue of Company A become:

RT2 = (PS x QS) + (PC x QC)

RT2 = (₱88.00 x 320 sq. m.) + (₱110.00 x 1,280 sq. m.)

RT2 = ₱28,160.00 + ₱140,800.00

RT2 = ₱168,960.00

After Company A increases its prices, despite the application of the mandated discount rates, Company A becomes
more profitable than it was before the implementation of Republic Act No. 7432. Again, nothing in the law prohibits
Company A from increasing its prices for regular customers. 24

The tax implications of Republic Act No. 7432 vis-à-vis the tax implications of the amendment introduced in Republic
Act No. 9257 are also augmented by controlling the price. If we compute for the tax liability and the net income of

339
Company A after the implementation of Republic Act No. 7432 and after treating the discount given to senior
citizens becomes tax credit for Company A, we will get:

Gross Income (RT1) ₱153,600

Less: Deductions (₱60,000)

Taxable Income ₱93,600 

Income Tax Rate 30% 
Income Tax Liability 28,080

Less: Senior Citizen Discount

Tax Credit (₱6,400)

Final Income Tax Liability ₱21,680

Net Income ₱131,920

Given the changes made in Republic Act No. 9257, senior citizen discount is considered a deduction.
Hence:

Gross Income (RT1) ₱153,600

Less: Deductions (₱60,000)

Less: Senior Citizen Discount (₱6,400)

Taxable Income ₱87,200

Income Tax Rate 30%

Income Tax Liability ₱26,160

Less: Tax Credit P0

Final Income Tax Liability ₱26,160

Net Income ₱127,440

Keeping the number of units sold to senior citizens and ordinary citizens constant, Republic Act No. 9257 will mean
a smaller net income for Company A. However, if Company A uses pricing to respond to Republic Act No. 9257, as
discussed in the earlier example where Company A increased its prices from ₱100.00 to ₱110.00, the net income
becomes:

Gross Income (RT2) ₱168,960

Less: Deductions (₱60,000)

Less: Senior Citizen Discount (₱7,040)

Taxable Income ₱101,920

Income Tax Rate 30%

Income Tax Liability ₱30,576

Less: Tax Credit P0

Final Income Tax Liability ₱30,576

Net Income ₱138,384

340
It becomes apparent that despite converting the discount from tax credit to an income deduction, Company A could
improve its net income than in the situation where the senior citizen discount was treated as a tax credit if it imposes
a price increase. Note that the price increase we provided in this example was even less than the discount given to
senior citizens.

The decision to increase price as well as its magnitude depends upon a number of non-legal factors. Businesses,
for instance, will consider whether they are in a situation of near monopoly or a competitive market. They will want to
know whether the change in their prices would encourage customers to shift their preferences to cremating their
loved ones instead of burying them. 25

They might also want to determine if the subsequent increase in relative profits will encourage the setting up of more
competition into their market.

Losses, therefore, are not guaranteed by the change in legislation challenged in this Petition. Put simply, losses are
not inevitable. On this basis alone, the constitutional challenge should fail. The case is premised on the inevitable
loss to be suffered by the petitioners. There is no factual basis for that kind of certainty. We do not decide
constitutional issues on the basis of inchoate losses and uncertain burdens.

Furthermore, income and profits are not vested rights. They are the results of good or bad business judgments
occasioned by the proper response to their economic environment. Profits and the maintenance of a steady stream
of income should be the reward of business acumen of entrepreneurship. Courts read law and in doing so provide
the givens in a business environment. We should not allow ourselves to become the tools for good business results
for some businesses.

Profits can improve with efficiency

Apart from increasing the price of goods and services, efficiency in the business can also maintain or even increase
profits. A more restrictive business environment should occasion a review of the cost structure of the economic
agent.26

We cannot simply assume that businesses, including the businesses of petitioners, are at their optimum level of
efficiency. The change in the tax treatment of senior citizen’s discount, therefore, in some cases, can be better for
the economy although it may, without any certainty, occasion some pain on some businesses. Our view should be
more all-encompassing. Besides, compensating for the alleged losses of the petitioners assumes that we accept
their current pricing as correct. That is, it is the price that covers their costs and provides them with profits that a
competitive market can bear. We cannot have the situation where establishments can just set any price and come to
court to recover whatever profit they were enjoying prior to a regulatory measure.

II
Power to Tax

The power to tax is "a principal attribute of sovereignty." 27

Such inherent power of the State anchors on its "social contract with its citizens [which] obliges it to promote public
interest and common good." 28

The scope of the legislative power to tax necessarily includes not only the power to determine the rate of tax but the
method of its collection as well. 29

We have held that Congress has the power to "define what tax shall be imposed, why it should be imposed, how
much tax shall be imposed, against whom (or what) it shall be imposed and where it shall be imposed." 30

In fact, the State has the power "to make reasonable and natural classifications for the purposes of taxation x x x
[w]hether it relates to the subject of taxation, the kind of property, the rates to be levied, or the amounts to be raised,
the methods of assessment, valuation and collection, the State’s power is entitled to presumption of validity x x x." 31

This means that the power to tax also allows Congress to determine matters as whether tax rates will be applied to
gross income or net income and whether costs such as discounts may be allowed as a deduction from gross income
or a tax credit from net income after tax. While the power to tax has been considered the strongest of all of
government’s powers  with taxes as the "lifeblood of the government," this power has its limits. In a number of
32

cases,  we have referred to our discussion in the 1988 case of Commissioner of Internal Revenue v. Algue,  as
33 34

follows:

Taxes are the lifeblood of the government and so should be collected without unnecessary hindrance. On the other
hand, such collection should be made in accordance with law as any arbitrariness will negate the very reason for
government itself. It is therefore necessary to reconcile the apparently conflicting interests of the authorities and the

341
taxpayers so that the real purpose of taxation, which is the promotion of the common good, may be achieved. x x x x
It is said that taxes are what we pay for civilized society. Without taxes, the government would be paralyzed for lack
of the motive power to activate and operate it. Hence, despite the natural reluctance to surrender part of one's hard-
earned income to the taxing authorities, every person who is able to must contribute his share in the running of the
government. The government, for its part, is expected to respond in the form of tangible and intangible benefits
intended to improve the lives of the people and enhance their moral and material values. This symbiotic relationship
is the rationale of taxation and should dispel the erroneous notion that it is an arbitrary method of exaction by those
in the seat of power.

But even as we concede the inevitability and indispensability of taxation, it is a requirement in all democratic
regimes that it be exercised reasonably and in accordance with the prescribed procedure.

If it is not, then the taxpayer has a right to complain and the courts will then come to his succor. For all the awesome
power of the tax collector, he may still be stopped in his tracks if the taxpayer can demonstrate, as it has here, that
the law has not been observed.  (Emphasis supplied)
35

The Constitution provides for limitations on the power of taxation. First, "[t]he rule of taxation shall be uniform and
equitable."36

This requirement for uniformity and equality means that "all taxable articles or kinds of property of the same class
[shall] be taxed at the same rate." 37

The tax deduction scheme for the 20% discount applies equally and uniformly to all the private establishments
covered by the law. Thus, it complies with this limitation. Second, taxes must neither be confiscatory nor arbitrary as
to amount to a "[deprivation] of property without due process of law." 38

In Chamber of Real Estate and Builders’ Associations, Inc. v. Executive Secretary Romulo,  petitioners questioned
39

the constitutionality of the Minimum Corporate Income Tax (MCIT) alleging among others that "pegging the tax base
of the MCIT to a corporation’s gross income is tantamount to a confiscation of capital because gross income, unlike
net income, is not ‘realized gain.’" 40

In dismissing the Petition, this Court discussed the due process limitation on the power to tax:

As a general rule, the power to tax is plenary and unlimited in its range, acknowledging in its very nature no limits,
so that the principal check against its abuse is to be found only in the responsibility of the legislature (which imposes
the tax) to its constituency who are to pay it. Nevertheless, it is circumscribed by constitutional limitations. At the
same time, like any other statute, tax legislation carries a presumption of constitutionality. The constitutional
safeguard of due process is embodied in the fiat "[no] person shall be deprived of life, liberty or property without due
process of law." In Sison, Jr. v. Ancheta, et al., we held that the due process clause may properly be invoked to
invalidate, in appropriate cases, a revenue measure when it amounts to a confiscation of property. But in the same
case, we also explained that we will not strike down a revenue measure as unconstitutional (for being violative of the
due process clause) on the mere allegation of arbitrariness by the taxpayer. There must be a factual foundation to
such an unconstitutional taint. This merely adheres to the authoritative doctrine that, where the due process clause
is invoked, considering that it is not a fixed rule but rather a broad standard, there is a need for proof of such
persuasive character. (Citations omitted) 41

In the present case, there is no showing that the tax deduction scheme is confiscatory. The portion of the 20%
discount petitioners are made to bear under the tax deduction scheme will not result in a complete loss of business
for private establishments. As illustrated earlier, these establishments are free to adjust factors as prices and costs
to recoup the 20% discount given to senior citizens. Neither is the scheme arbitrary. Rules and Regulations have
been issued by agencies as respondent Department of Finance to serve as guidelines for the implementation of the
20% discount and its tax deduction scheme. In fact, this Court has consistently upheld the doctrine that "taxing
power may be used as an implement of police power"  in order to promote the general welfare of the people.
42

III
Eminent Domain

Even assuming that the losses and the burdens can be determined and are specific, these are not enough to show
that eminent domain is involved. It is not enough to conclude that there is a violation of Article III, Section 9 of the
Constitution. This provision mandates that "[p]rivate property shall not be taken for public use without just
compensation." Petitioners claim that there is taking by the government of that portion of the 20% discount they are
required to give senior citizens under Republic Act No. 9257 but are not allowed to deduct from their tax liability in
full as a tax credit. They argue that they are inevitably made to bear a portion of the loss from the 20% discount
required by law. In their view, these speculative losses are to be provided with just compensation. Thus, they seek
to declare as unconstitutional Section 4 of Republic Act No. 7432 as amended by Republic Act No. 9257, as well as
the implementing rules and regulations issued by respondents Department of Social Welfare and Development and

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Department of Finance, for only allowing the 20% discount as a tax deduction from gross income, and not as a tax
credit from total tax liability. Petitioners cannot be faulted for this view.

Carlos Superdrug Corporation v. Department of Social Welfare and Development,  cited in the ponencia, hinted:
43

The permanent reduction in their total revenues is a forced subsidy corresponding to the taking of private property
for public use or benefit. This constitutes compensable taking for which petitioners would ordinarily become entitled
to a just compensation. Just compensation is defined as the full and fair equivalent of the property taken from its
owner by the expropriator. The measure is not the taker’s gain but the owner’s loss. The word just is used to
intensify the meaning of the word compensation, and to convey the idea that the equivalent to be rendered for the
property to be taken shall be real, substantial, full and ample. A tax deduction does not offer full reimbursement of
the senior citizen discount. As such, it would not meet the definition of just compensation. Having said that, this
raises the question of whether the State, in promoting the health and welfare of a special group of citizens, can
impose upon private establishments the burden of partly subsidizing a government program. The Court believes
so.44

The ponencia is, however, open to the possibility that eminent domain will apply. While the main opinion held that
the 20% senior citizen discount is a valid exercise of police power, it explained that this is due to the absence of any
clear showing that the discount is unreasonable, oppressive or confiscatory as to amount to a taking under eminent
domain requiring the payment of just compensation.  Alalayan v. National Power Corporation  and Carlos
45 46

Superdrug Corp. v. Department of Social Welfare and Development  were cited as examples when there was failure
47

to prove that the limited rate of return for franchise holders, or the required 20% senior citizens discount, "were
arbitrary, oppressive or confiscatory." 48

It found that petitioners similarly did not establish the factual bases of their claims and relied on hypothetical
computations. 49

The ponencia refers to City of Manila v. Hon. Laguio, Jr.  citing the U.S. case of Pennsylvania Coal v. Mahon in that
50

we must determine on a case to case basis as to when the regulation of property becomes a taking under eminent
domain.  It cites the U.S. case of Munn v. Illinois  in that the State can employ police power measures to regulate
51 52

pricing pursuant to the common good "provided that the regulation does not go too far as to amount to ‘taking’." 53

This concept of regulatory taking, as opposed to ordinary taking, is amorphous and has not been applied in our
jurisdiction. What we have is indirect expropriation amounting to compensable taking. In National Power Corporation
v. Sps. Gutierrez,  for example, we held that "the easement of right-of-way [due to electric transmission lines
54

constructed over the property] is definitely a taking under the power of eminent domain. x x x the limitation imposed
by NPC against the use of the land for an indefinite period deprives private respondents of its ordinary use." 55

The ponencia also compares the tax deduction scheme for the 20% discount with price controls or rate of return on
investment control laws which are valid exercises of police power. While it acknowledges that there are differences
between these laws and the subject tax deduction scheme,  it held that "the 20% discount may be properly viewed
56

as belonging to the category of price regulatory measures which affects the profitability of establishments subjected
thereto."57

I disagree. The eminent domain clause will still not apply even if we assume, without conceding, that the 20%
discount or a portion of it is lost profits for petitioners. Profits are intangible personal property  for which petitioners
58

merely have an inchoate right. These are types of property which cannot be "taken."

Nature of Profits: Inchoate and Intangible Property

Eminent domain has been defined as "an inherent power of the State that enables it to forcibly acquire private lands
intended for public use upon payment of just compensation to the owner." 59

Most if not all jurisprudence on eminent domain involves real property, specifically that of land. Although Rule 67 of
the Rules of Court, the rules governing expropriation proceedings, requires the complaint to "describe the real or
personal property sought to be expropriated,"  this refers to tangible personal property for which the court will
60

deliberate as to its value for purposes of just compensation. 61

In a sense, the forced nature of a sale under eminent domain is more justified for real property such as land. The
common situation is that the government needs a specific plot, for the construction of a public highway for example,
and the private owner cannot move his land to avoid being part of the project. On the other hand, most tangible
personal or movable property need not be subject of a forced sale when the government can procure these items in
a public bidding with several able and willing private sellers.

In Republic of the Philippines v. Vda. de Castelvi,  this Court also laid down five (5) "circumstances [that] must be
62

present in the ‘taking’ of property for purposes of eminent domain"  as follows:
63

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First, the expropriator must enter a private property.  x x x. Second, the entrance into private property must be for
1âwphi1

more than a momentary period. x x x. Third, the entry into the property should be under warrant or color of legal
authority. x x x. Fourth, the property must be devoted to a public use or otherwise informally appropriated or
injuriously affected. x x x. Fifth, the utilization of the property for public use must be in such a way as to oust the
owner and deprive him of all beneficial enjoyment of the property. x x x. 64

The requirement for "entry" or the element of "oust[ing] the owner" is not possible for intangible personal property
such as profits. Profits are not only intangible personal property. They are also inchoate rights. An inchoate right
means that the right "has not fully developed, matured, or vested." 65

It may or may not ripen. The existence of profits, more so its specific amount, is uncertain.  Business decisions are
1avvphi1

made every day dealing with factors such as price, quantity, and cost in order to manage potential outcomes of
profit or loss at any given point. Profits are thus considered as "future economic benefits" which, at best, entitles
petitioners only to an inchoate right.
66

This is not the private property referred in the Constitution that can be taken and would require the payment of just
compensation. 67

Just compensation has been defined "to be the just and complete equivalent of the loss which the owner of the thing
expropriated has to suffer by reason of the expropriation." 68

Petitioners’ position in seeking just compensation for the 20% discount assumes that the discount always translates
to lost profits. This is not always the case. There may be taxable periods when they will be reporting a loss in their
ending balance as a result of other factors such as high costs of goods sold. Moreover, not all their sales are made
to senior citizens. At most, profits can materialize in the form of cash, but even then, this is not the private property
contemplated by the Constitution and whose value will be deliberated by courts for purposes of just compensation.
We cannot compensate cash for cash. Justice Carpio submits in his dissent that the Constitution speaks of private
property without distinction, thus, the issue of profit or loss to private establishments like petitioners is immaterial.
The 20% discount belongs to them whether they make a profit or suffer a loss. 69

When the 20% discount is given to customers who are senior citizens, there is a perceived loss for the
establishment for that same amount at that precise moment. However, this moment is fleeting and the perceived
loss can easily be recouped by sales to ordinary citizens at higher prices. The concern that more consumers will
suffer as a result of a price increase  is a matter better addressed to the wisdom of the Congress. As it stands,
70

Republic Act No. 9257 does not establish a price control. For non-profit establishments, they may cut down on costs
and make other business decisions to optimize performance. Business decisions like these have been made even
before the 20% discount became law, and will continue to be made to adapt to the ever changing market. We
cannot consider this fluid concept of possible loss and potential profit as private property belonging to private
establishments. They are inchoate. They may or may not exist depending on many factors, some of which are within
the control of the private establishments. There is nothing concrete, earmarked, actual or specific for taking in this
scenario. Necessarily, there is nothing to compensate. Our determination of profits as a form of personal property
that can be taken in a constitutional sense as a result of valid regulation would invite untold consequences on our
legal system. Loss of profits will be difficult to prove and will tax the imagination and speculative abilities of judges
and justices. Every piece of legislation in the future would cause the filing of cases that will ask us to determine the
loss or damage caused to an ongoing business. This certainly is not the intent of the eminent domain provisions in
our bill of rights. This is not the sort of protection to property imagined by our constitutional order.

Final Note

Article XIII was introduced in the 1987 Constitution to specifically address Social Justice and Human Rights. For this
purpose, the state may regulate the acquisition, ownership, use and disposition of property and its increments, viz:

Section 1. The Congress shall give highest priority to the enactment of measures that protect and enhance the right
of all the people to human dignity, reduce social, economic, and political inequalities, and remove cultural the
acquisition, ownership, use, and disposition of property and its increments. 71

Thus in the exercise of its police power and in promoting senior citizen’s welfare the government "can impose upon
private establishments [like petitioners] the burden of partly subsidizing a government program." 72

Accordingly, I vote to DENY the Petition and hold that the challenge to the constitutionality of Section 4 of Republic
Act No. 7432 as amended by Republic Act No. 9257, as well as the implementing rules and regulations issued by
respondents Department of Social Welfare and Development and Department of Finance, should fail.

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