INTERPLEADER

1. Mesina v. IAC, 145 SCRA 497 (1986)

Facts: Said case (an Interpleader) was filed by Associated Bank against Jose Go and
Marcelo A. Mesina regarding their conflicting claims over Associated Bank Cashier's
Check No. 011302 for P800,000.00, dated December 29, 1983. Jose Go left said
check on the top of the desk of the bank manager when he left the bank. The bank
manager entrusted the check for safekeeping to a bank official, a certain Albert Uy,
who had then a visitor in the person of Alexander Lim. Uy had to answer a phone
call on a nearby telephone after which he proceeded to the men's room. When he
returned to his desk, his visitor Lim was already gone. Xxx Several days later,
respondent Associated Bank received a letter, dated January 9, 1984, from a certain
Atty. Lorenzo Navarro demanding payment on the cashier's check in question, which
was being held by his client. respondent Associated Bank on February 2, 1984 filed
an action for Interpleader naming as respondent, Jose Go and one John Doe, Atty.
Navarro's then unnamed client.
Ruling: In his second assignment of error, petitioner stubbornly insists that there is
no showing of conflicting claims and interpleader is out of the question. There is
enough evidence to establish the contrary. Considering the aforementioned facts
and circumstances, respondent bank merely took the necessary precaution not to
make a mistake as to whom to pay and therefore interpleader was its proper
remedy. It has been shown that the interpleader suit was filed by respondent bank
because petitioner and Jose Go were both laying their claims on the check,
petitioner asking payment thereon and Jose Go as the purchaser or owner. The
allegation of petitioner that respondent bank had effectively relieved itself of its
primary liability under the check by simply filing a complaint for interpleader is
belied by the willingness of respondent bank to issue a certificate of time deposit in
the amount of P800,000 representing the cashier's check in question in the name of
the Clerk of Court of Manila to be awarded to whoever wig be found by the court as
validly entitled to it. Said validity will depend on the strength of the parties'
respective rights and titles thereto. Bank filed the interpleader suit not because
petitioner sued it but because petitioner is laying claim to the same check that Go is
claiming.

2. Pasricha v. Don Luis Dizon Realty, Inc. 548 SCRA 273 Interpleader - not to
protect a person against double liability but to protect him against double
vexation in respect of one liability.
Facts: Respondent Don Luis Dison Realty, Inc. and petitioners executed two
Contracts of Lease.xxx Because petitioners still refused to comply, a complaint for
ejectment was filed by private respondent. Petitioners admitted their failure to pay
the stipulated rent for the leased premises starting July until November 1992, but
claimed that such refusal was justified because of the internal squabble in
respondent company as to the person authorized to receive payment. The evidence
of petitioners non-payment of the stipulated rent is overwhelming. Petitioners,
however, claim that such non-payment is justified by the following: 1) the refusal of
respondent to allow petitioners to use the leased properties, except room 35; 2)
respondents refusal to turn over Rooms 36, 37 and 38; and 3) respondents refusal

to accept payment tendered by petitioners. Petitioners justifications are belied by

the evidence on record.
Ruling: What was, instead, clearly established by the evidence was petitioners nonpayment of rentals because ostensibly they did not know to whom payment should
be made. However, this did not justify their failure to pay, because if such were the
case, they were not without any remedy. They should have availed of the provisions
of the Civil Code of the Philippines on the consignation of payment and of the Rules
of Court on interpleader.
Otherwise stated, an action for interpleader is proper when the lessee does not
know to whom payment of rentals should be made due to conflicting claims on the
property (or on the right to collect).60 The remedy is afforded not to protect a
person against double liability but to protect him against double vexation in respect
of one liability.
(Consignation Art. 1258)

3. Ocampo v. Tirona, 455 SCRA 62

Facts: Ocampo alleged that he is the owner of a parcel of land Xxx Possession and
administration of the subject land are claimed to be already in Ocampos
management even though the TCT is not yet in his name. Tirona, on the other hand,
is a lessee occupying a portion of the subject land. In view of the fact that the
subject premises was declared under area for priority development, [Tirona] is
invoking her right of first refusal and in connection thereto [Tirona] will temporarily
stop paying her monthly rentals until and unless the National Housing Authority
have processed the pertinent papers as regards the amount due to [Ocampo] by
reason of the implementation of the above law (PD 1517 Urban Land Reform Law).
Ocampo file UD; In her amended answer, Tirona maintained that Ocampo is not the
owner of the subject land.
Ruling: We hold that Tirona is estopped from denying her possession under a
lease32 and that there was a violation of the lease agreement.xxx Contrary to
Tironas position, the issue of ownership is not essential to an action for unlawful
detainer. The fact of the lease and the expiration of its term are the only elements
of the action.
The good faith of Tirona is put in question in her preference for Maria Lourdes
Breton-Mendiola. As a stakeholder, Tirona should have used reasonable diligence in
hailing the contending claimants to court. Tirona need not have awaited actual
institution of a suit by Ocampo against her before filing a bill of interpleader.37 An
action for interpleader is proper when the lessee does not know the person to whom
to pay rentals due to conflicting claims on the property.38
The action of interpleader is a remedy whereby a person who has property whether
personal or real, in his possession, or an obligation to render wholly or partially,
without claiming any right in both, or claims an interest which in whole or
in part is not disputed by the conflicting claimants, comes to court and asks
that the persons who claim the said property or who consider themselves entitled to
demand compliance with the obligation, be required to litigate among themselves,
in order to determine finally who is entitled to one or the other thing. The remedy is
afforded not to protect a person against a double liability but to protect him against
a double vexation in respect of one liability. When the court orders that the

claimants litigate among themselves, there arises in reality a new action and the
former are styled interpleaders, and in such a case the pleading which initiates the
action is called a complaint of interpleader and not a cross-complaint.

4. Vda. De Camilo v. Arcamo, 3 Phil. 146

Facts: Petitioner Petra Carpio Vda. de Camilo, had been by herself and predecessor
in interest in peaceful, open and adverse possession of a parcel of public foreshore
land. Xxx Respondent Ong Peng Kee was a lessee of one of the apartments of said
commercial building. On September 1, 1957, the two commercial buildings were
burned down. Two weeks thereafter, respondents Ong Peng Kee and Adelia Ong,
constructed a building of their own, occupying about 120 square meters. The
building, however, was so built that portions of the lands previously occupied by
petitioner (De Camilo and the Franciscos) were encroached upon. Forcible entry
case was filed against them Xxx Pending trial of the two cases, the respondents Ong
Peng Kee and Adelia Ong filed a complaint for Interpleader against De Camilo,
Severino Estrada, the Franciscos, Arthur Evert Bannister, the Mayor and Treasurer of
Malangas (Civ. Case No. 108), alleging that the filing of the three cases of forcible
entry (Civ. Cases Nos. 64, 78 an 105), indicated that the defendants (in the
Interpleader) had conflicting interests, since they all claimed to be entitled to the
possession of the lot in question and they (Peng Kee and Adelia) could not
determine without hazard to themselves who of defendants was entitled to the
possession. Interpleader plaintiffs further alleged that they had no interest in the
property other than as mere lessees.
The only issue raised in the present appeal is whether or not the Justice of the Peace
Court has jurisdiction to take cognizance of the Interpleader case.
Ruling: (Improper Interpleader) where the occupants of two different parcels of land adjoining
each other belonging to two separate plaintiffs, but on which the occupants had constructed a
building encroaching upon both parcels of land, faced two ejectment suits from the plaintiffs, each
plaintiff claiming the right of possession and recovery over his respective portion of the lands
encroached upon, this Court held that the occupants could not properly file an interpleader suit,
against the plaintiffs, to litigate their alleged conflicting claims; for evidently, the two plaintiff did not
have any conflicting claims upon the same subject matter against the occupants, but were enforcing
separate and distinct claims on their respective properties.
The petitioners claimed the possession of the respective portion of the lands
belonging to them on which the respondents had erected their house after the fire
which destroyed petitioners' buildings. This being the case, the contention of
petitioners-appellants that the complaint to interplead lacked cause of action, is
correct. Xxx The petitioners did not have conflicting claims against the respondents.
Their respective claim was separate and distinct from the other. Furthermore, it is
not true that respondents Ong Peng Kee and Adelia Ong did not have any interest in
the subject matter. Their interest was the prolongation of their occupancy or
possession of the portions encroached upon by them.
Even in the supposition that the complaint presented a cause of action for
Interpleader, still We hold that the JP had no jurisdiction to take cognizance thereof.
The complaint asking the petitioners to interplead, practically took the case out of
the jurisdiction of the JP court, because the action would then necessarily "involve
the title to or possession of real property or any interest therein" over which the CFI

has original jurisdiction (par. [b], sec. 44, Judiciary Act, as amended). Then also, the
subject matter of the complaint (interpleader) would come under the original
jurisdiction of the CFI, because it would not be capable of pecuniary estimation (Sec.
44, par. [a], Judiciary Act), there having been no showing that rentals were asked by
the petitioners from respondents.

5. Makati Devt. Corp. v. Tanjuatco, 27 SCRA 401 (1969) - jurisdiction

Facts: With his consent, plaintiff withheld said amount from the final payment made
to him and, in view of his subsequent failure to settle the issue thereon with the
Supplier, on September 16, 1955, plaintiff instituted the present action, in the Court
of First Instance of Rizal, against Tanjuatco and the Supplier, to compel them "to
interplead their conflicting claims."
On October 4, 1965, Tanjuatco moved to dismiss the case, upon the ground that the
court had no jurisdiction over the subject-matter of the litigation, the amount
involved therein being less than P10,000.00. 1 Finding this motion "to be welltaken", the lower court granted the same, over plaintiffs opposition thereto, and,
accordingly, issued an order, dated November 16, 1965, dismissing the case,
without costs. Hence, this appeal, in which plaintiff maintains that the subjectmatter of this litigation is not the aforementioned sum of P5,198.75, but the right to
compel the defendants "to litigate among themselves" in order to protect the
plaintiff "against a double vexation in respect to one liability."
Ruling: We find no merit in this contention. There is no question in this case that
plaintiff may compel the defendants to interplead among themselves, concerning
the aforementioned sum of P5,198.75. The only issue is who among the defendants
is entitled to collect the same. This is the object of the action, which is not within
the jurisdiction of the lower court (CFI, but of MTC).
To begin with, the jurisdiction of our courts over the subject-matter of justiciable
controversies is governed by Rep. Act No. 296, as amended, pursuant to which 2
municipal courts shall have exclusive original jurisdiction in all civil cases "in which
the demand, exclusive of interest, or the value of the property in controversy",
amounts to not more than "ten thousand pesos." Secondly, "the power to define,
prescribe, and apportion the jurisdiction of the various courts" belongs to Congress
3 and is beyond the rule-making power of the Supreme Court, which is limited to
matters concerning pleading, practice, and procedure in all courts, and the
admission to the practice of law. 4 Thirdly, the failure of said section 19 of Rule 5 of
the present Rules of Court to make its Rule 63, on interpleading, applicable to
inferior courts, merely implies that the same are not bound to follow Rule 63 in
dealing with cases of interpleading, but may apply thereto the general rules on
procedure applicable to ordinary civil action in said courts.

6. Beltran v. PHCC, 29 SCRA 145

Facts: Tenants paid to PHCC with entitlement to purchase their units. Tthen,
management of the project transferred to GSIS due to PHCCs debt to GSIS. xxx
Subsequently, however, PHHC through its new Chairman-General Manager,
Esmeraldo Eco, refused to recognize all agreements and undertakings previously
entered into with GSIS, while GSIS insisted on its legal rights to enforce the said
agreements

Appeal on purely questions of law from an order of dismissal of the complaint for
interpleader, on the ground that it does not state a cause of action, as certified to
this Court by the Court of Appeals. We affirm the dismissal on the ground that where
the defendants sought to be interpleaded as conflicting claimants have no
conflicting claims against plaintiff, as correctly found by the trial court, the special
civil action of interpleader will not lie. This interpleader suit was filed on August 21,
1962, by plaintiffs in their own behalf and in behalf of all residents of Project 4 in
Quezon City, praying that the two defendant-government corporations (PHCC and
GSIS) be compelled to litigate and interplead between themselves their alleged
conflicting claims involving said Project 4.
Ruling: (Improper interpleader) Plaintiffs entirely miss the vital element of an action
of interpleader. Rule 63, section 1 of the Revised Rules of Court (formerly Rule 14)
requires as an indispensable element that "conflicting claims upon the same subject
matter are or may be made" against the plaintiff-in-interpleader "who claims no
interest whatever in the subject matter or an interest which in whole or in part is not
disputed by the claimants." While the two defendant corporations may have
conflicting claims between themselves with regard to the management,
administration and ownership of Project 4, such conflicting claims are not against
the plaintiffs nor do they involve or affect the plaintiffs. No allegation is made in
their complaint that any corporation other than the PHHC which was the only entity
privy to their lease-purchase agreement, ever made on them any claim or demand
for payment of the rentals or amortization payments. The questions of fact raised in
their complaint concerning the enforceability, and recognition or non-enforceability
and non-recognition of the turnover agreement of December 27, 1961 between the
two defendant corporations are irrelevant to their action of interpleader, for these
conflicting claims, loosely so-called, are between the two corporations and not
against plaintiffs. Both defendant corporations werein conformity and had no
dispute, as pointed out by the trial court that the monthly payments and
amortizations should be made directly to the PHHC alone. Xxx The GSIS' undertaking to
recognize and respect the previous commitments of PHHC towards its tenants is expressly set forth
in Par. III, section M of the turnover agreement, Annex "F" of plaintiffs' complaint, wherein it is
provided that "GSIS shall recognize and respect all awards, contracts of sale, lease agreements and
transfer of rights to lots and housing units made and approved by PHHC,
(It would have been different if GSIS demanded their payments also)

7. Wack-Wack Golf and Country Club v. Won, 70 SCRA 165

Facts: In its amended and supplemental complaint of October 23, 1963, the Wack
Wack Golf & Country Club, Inc., a non-stock, civic and athletic corporation duly
organized under the laws of the Philippines, with principal office in Mandaluyong,
Rizal (hereinafter referred to as the Corporation), alleged, for its first cause of
action, that the defendant Lee E. Won claims ownership of its membership fee
certificate 201, by virtue of the decision rendered in civil case 26044 of the CFI of
Manila, entitled "Lee E. Won alias Ramon Lee vs. Wack Wack Golf & Country Club,
Inc." and also by virtue of membership fee certificate 201-serial no. 1478 issued on
October 17, 1963 by Ponciano B. Jacinto, deputy clerk of court of the said CFI of
Manila, for and in behalf of the president and the secretary of the Corporation and
of the People's Bank & Trust Company as transfer agent of the said Corporation,

pursuant to the order of September 23, 1963 in the said case; that the defendant
Bienvenido A. Tan, on the other hand, claims to be lawful owner of its aforesaid
membership fee certificate 201 by virtue of membership fee certificate 201-serial
no. 1199 issued to him on July 24, 1950 pursuant to an assignment made in his
favor by "Swan, Culbertson and Fritz," the original owner and holder of membership
fee certificate 201; that under its articles of incorporation and by-laws the
Corporation is authorized to issue a maximum of 400 membership fee certificates to
persons duly elected or admitted to proprietary membership, all of which have been
issued as early as December 1939; that it claims no interest whatsoever in the said
membership fee certificate 201; that it has no means of determining who of the two
defendants is the lawful owner thereof; that it is without power to issue two
separate certificates for the same membership fee certificate 201, or to issue
another membership fee certificate to the defendant Lee, without violating its
articles of incorporation and by-laws; and that the membership fee certificate 201serial no. 1199 held by the defendant Tan and the membership fee certificate 201serial No. 1478 issued to the defendant Lee proceed from the same membership fee
certificate 201, originally issued in the name of "Swan, Culbertson and Fritz".
For its second cause of action. it alleged that the membership fee certificate 201serial no. 1478 issued by the deputy clerk of court of court of the CFI of Manila in
behalf of the Corporation is null and void because issued in violation of its by-laws,
which require the surrender and cancellation of the outstanding membership fee
certificate 201 before issuance may be made to the transferee of a new certificate
duly signed by its president and secretary, aside from the fact that the decision of
the CFI of Manila in civil case 26044 is not binding upon the defendant Tan, holder of
membership fee certificate 201-serial no. 1199; that Tan is made a party because of
his refusal to join it in this action or bring a separate action to protect his rights
despite the fact that he has a legal and beneficial interest in the subject matter of
this litigation; and that he is made a part so that complete relief may be accorded
herein.
In this appeal, the Corporation contends that the court a quo erred (1) in finding
that the allegations in its amended and supplemental complaint do not constitute a
valid ground for an action of interpleader, and in holding that "the principal motive
for the present action is to reopen the Manila Case and collaterally attack the
decision of the said Court"; (2) in finding that the decision in civil case 26044 of the
CFI of Manila constitutes res judicata and bars its present action; and (3) in
dismissing its action instead of compelling the appellees to interplead and litigate
between themselves their respective claims.
Ruling: It has been held that a stakeholder's action of interpleader is too late when
filed after judgment has been rendered against him in favor of one of the
contending claimants.
The Corporation has not shown any justifiable reason why it did not file an
application for interpleader in civil case 26044 to compel the appellees herein to
litigate between themselves their conflicting claims of ownership. It was only after
adverse final judgment was rendered against it that the remedy of interpleader was
invoked by it. By then it was too late, because to be entitled to this remedy the
applicant must be able to show that lie has not been made independently liable to
any of the claimants. And since the Corporation is already liable to Lee under a final
judgment, the present interpleader suit is clearly improper and unavailing.

Besides, a successful litigant cannot later be impleaded by his defeated adversary

in an interpleader suit and compelled to prove his claim anew against other adverse
claimants, as that would in effect be a collateral attack upon the judgment.

8. Vlasons Ent. Corp. v. CA, 155 SCRA 186 (1987)

Facts: Some five months before the filing of the suit, or more precisely on June 21,
1979, those propeller pieces had been seized by METROCOM agents from Florencio
Sosuan on the strength of a search warrant issued by another branch of the same
Manila Court of First Instance, presided over by Judge Maximo Maceren. The search
warrant was issued at the instance of Vlasons, which claimed to be the owner of the
propeller.
In a civil action for the recovery of possession of two (2) pieces of a salvaged bronze
propeller of a sunken vessel, instituted in the Manila Court of First Instance, Judge
Alfredo Cruz, Jr., issued an Order dated March 22, 1982 granting the motion of
Sosuan ". . . to Repossess Propeller Pieces" pendente lite.
Ruling:
1. It is therefore this Court's holding that where personalty has been seized under a
search warrant, and it appears reasonably definite that the seizure will not be
followed by the filing of any criminal action for the prosecution of the offenses in
connection with which the warrant was issued, the public prosecutors having
pronounced the absence of basis therefor, and there are, moreover, conflicting
claims asserted over the seized property, the appropriate remedy is the institution
of an ordinary civil action by any interested party, or of a special civil action of
interpleader by the Government itself (who?), that action being cognizable not
exclusively by the court issuing the search warrant but by any other competent
court to which it may be assigned by raffle. In such a case, the seizing court shall
transfer custody of the seized articles to the court having jurisdiction of the civil
action at any time, upon due application by an interested party. But such a transfer,
it must be emphasized, is a matter of comity, founded on pragmatic considerations,
not compellable by or resulting from any overriding authority, of a writ or process of
the court having cognizance of the civil action.
2. The theory that the act of one branch of a court of first instance (regional trial
court) may be deemed to be the act of another branch of the same court is, upon its
face, absurd. It flies in the teeth of the all too familiar actuality that each branch is a
distinct and separate court, exercising jurisdiction over the cases assigned to it to
the exclusion of all other branches.

DECLARATORY RELIEF
1. Province of Camarines Sur v. CA, 600 SCRA 569

In the instant case, the controversy concerns the construction of the provisions of Republic Act No.
305 or the Charter of the City of Naga. Specifically, the City of Naga seeks an interpretation of
Section 2, Article I of its Charter, as well as a declaration of the rights of the parties to this case
thereunder.

Facts: The property subject of the instant case is a parcel of land, known as
Plaza Rizal, situated within the territory of herein respondent City of Naga.
On 18 June 1948, Republic Act No. 3055 took effect and, by virtue thereof,
the Municipality of Naga was converted into the City of Naga. Subsequently,
on 16 June 1955, Republic Act No. 13366 was approved, transferring the site
of the provincial capitol of Camarines Sur from the City of Naga to the barrio
of Palestina, Municipality of Pili. On 13 January 1997, the City of Naga filed a
Complaint9 for Declaratory Relief and/or Quieting of Title against Camarines
Sur The City of Naga stressed that it did not intend to acquire ownership of
Plaza Rizal. Being a property of the public domain, Plaza Rizal could not be
claimed by any subdivision of the state, as it belonged to the public in
general. Instead, the City of Naga sought a declaration that the
administrative control and management of Plaza Rizal should be vested in it,
given that the said property is situated within its territorial jurisdiction.
CamSur filed answer with MTD - Furthermore, the remedy of Declaratory
Relief
was
inappropriate
because
there
was
no
ju
sticiable controversy, given that the City of Naga did not intend to acquire
ownership of Plaza Rizal; and Camarines Sur, being the owner of Plaza Rizal,
had the right to the management, maintenance, control, and supervision
thereof.
RTC: WHEREFORE, premises considered, [Section 2, Article I] of [Republic Act
No.] 305 is hereby interpreted and declared in this Court to mean that the
administrative control and management of Plaza Rizal is within the City of
Naga and not with the Province of Camarines Sur.
Ruling: The Court rules that the City of Naga properly resorted to the filing of an action for
declaratory relief. Declaratory relief is defined as an action by any person interested in a deed, will,
contract or other written instrument, executive order or resolution, to determine any question of
construction or validity arising from the instrument, executive order or regulation, or statute; and for a
declaration of his rights and duties thereunder.31The only issue that may be raised in such a petition
is the question of construction or validity of provisions in an instrument or statute. The requisites of
an action for declaratory relief are: (1) there must be a justiciable controversy between persons
whose interests are adverse; (2) the party seeking the relief has a legal interest in the controversy;
and (3) the issue is ripe for judicial determination.
By virtue of the enactment of Republic Act No. 305 and as specified in Section 2, Article I thereof the
local government unit that is the proper agent of the Republic of the Philippines that should
administer and possess Plaza Rizal is the City of Naga.

2. Meralco v. Phil. Consumers Foundation, Inc. 374 SCRA 262

Facts: And finally, as stated by the Solicitor General, if only to put the issue
to final rest, BOEs decision authorizing Meralco to retain the savings
resulting from the reduction of franchise tax as long as its rate of return falls
below the 12% allowable rate is supported by P.D. No. 551. (And this has
been affirmed by the SC in a previous case so res judicata)
Ruling: Corollarily, let it not be overlooked that the purpose of an action for declaratory relief is to
secure an authoritative statement of the rights and obligations of the parties under a statute, deed,
contract etc. for their guidance in the enforcement thereof, or compliance therewith, and not to settle
issues arising from an alleged breach thereof. It may be entertained only before the breach or
violation of the statute, deed, contract etc., to which it refers. 23 The petition gives a practical remedy
in ending controversies which have not reached the stage where other relief is immediately
available. It supplies the need for a form of action that will set controversies at rest before they lead
to repudiation of obligations, invasion of rights, and the commission of wrongs. 24 Here, private
respondents brought the petition for declaratory relief long after the alleged violation of P.D. No. 551.
1wphi1

A lower court cannot reverse or set aside decisions or orders of a superior court, especially of this
Court, for to do so will negate the principle of hierarchy of courts and nullify the essence of review. A
final judgment, albeit erroneous, is binding on the whole world.xxx Although judicial determinations
are not infallible, judicial error should be corrected through appeals, not through repeated suits on
the same claim.

3. Almeda v. Bathala Marketing Industries, Inc. 542 SCRA 470

Construction of lease contract WON lesee is liable to pay VAT and inflation
Facts: Sometime in May 1997, respondent Bathala Marketing Industries, Inc.,
as lessee, represented by its president Ramon H. Garcia, renewed its
Contract of Lease4 with Ponciano L. Almeda (Ponciano), as lessor, husband of
petitioner Eufemia and father of petitioner Romel Almeda. Under the said
contract, Ponciano agreed to lease a portion of the Almeda Compound,
located at 2208 Pasong Tamo Street, Makati City, consisting of 7,348.25
square meters, for a monthly rental of P1,107,348.69, for a term of four (4)
years from May 1, 1997 unless sooner terminated as provided in the
contract.
Respondent refused to pay the VAT and adjusted rentals as demanded by
petitioners but continued to pay the stipulated amount set forth in their contract.
respondent instituted an action for declaratory relief for purposes of determining
the correct interpretation of condition Nos. 6 and 7 of the lease contract to prevent
damage and prejudice.
In fine, the issues for our resolution are as follows: 1) whether the action for declaratory relief is
proper; 2) whether respondent is liable to pay 10% VAT pursuant to Republic Act (RA) 7716; and 3)
whether the amount of rentals due the petitioners should be adjusted by reason of extraordinary
inflation or devaluation.
Ruling: Declaratory relief is defined as an action by any person interested in a deed, will, contract or
other written instrument, executive order or resolution, to determine any question of construction or
validity arising from the instrument, executive order or regulation, or statute, and for a declaration of
his rights and duties thereunder. The only issue that may be raised in such a petition is the question

of construction or validity of provisions in an instrument or statute. Corollary is the general rule that
such an action must be justified, as no other adequate relief or remedy is available under the
circumstances. 15
Decisional law enumerates the requisites of an action for declaratory relief, as follows: 1) the subject
matter of the controversy must be a deed, will, contract or other written instrument, statute, executive
order or regulation, or ordinance; 2) the terms of said documents and the validity thereof are doubtful
and require judicial construction; 3) there must have been no breach of the documents in question;
4) there must be an actual justiciable controversy or the "ripening seeds" of one between persons
whose interests are adverse; 5) the issue must be ripe for judicial determination; and 6) adequate
relief is not available through other means or other forms of action or proceeding.
After petitioners demanded payment of adjusted rentals and in the months that followed, respondent
complied with the terms and conditions set forth in their contract of lease by paying the rentals
stipulated therein. Respondent religiously fulfilled its obligations to petitioners even during the
pendency of the present suit. There is no showing that respondent committed an act constituting a
breach of the subject contract of lease. Thus, respondent is not barred from instituting before the trial
court the petition for declaratory relief.
It is true that in Panganiban v. Pilipinas Shell Petroleum Corporation 17 we held that the petition for declaratory
relief should be dismissed in view of the pendency of a separate action for unlawful detainer. However, we
cannot apply the same ruling to the instant case. In Panganiban, the unlawful detainer case had already been
resolved by the trial court before the dismissal of the declaratory relief case; and it was petitioner in that case
who insisted that the action for declaratory relief be preferred over the action for unlawful detainer. Conversely,
in the case at bench, the trial court had not yet resolved the rescission/ejectment case during the pendency of
the declaratory relief petition. In fact, the trial court, where the rescission case was on appeal, itself initiated the
suspension of the proceedings pending the resolution of the action for declaratory relief.
We are not unmindful of the doctrine enunciated in Teodoro, Jr. v. Mirasol18 where the declaratory relief action
was dismissed because the issue therein could be threshed out in the unlawful detainer suit. Yet, again, in that
case, there was already a breach of contract at the time of the filing of the declaratory relief petition. This
dissimilar factual milieu proscribes the Court from applying Teodoro to the instant case.
Given all these attendant circumstances, the Court is disposed to entertain the instant declaratory relief action
instead of dismissing it, notwithstanding the pendency of the ejectment/rescission case before the trial court.
The resolution of the present petition would write finis to the parties' dispute, as it would settle once and for all
the question of the proper interpretation of the two contractual stipulations subject of this controversy.

4. Edades v. Edades, 99 Phil 675 (1956)

Facts: Plaintif brought this action before the Court of First Instance of Pangasinan
seeking a declaratory judgment on his hereditary rights in the property of his
alleged father and incidentally the recognition of his status as an illegitimate son of
Emigdio Edades.
Defendants, instead of answering, filed a motion to dismiss on the ground that the
complaint does not state facts sufficient to constitute a cause of action. The court
sustained the motion holding that An action for declaratory relief just for the
purpose of clearing away doubt, uncertainty, or insecurity to the Plaintifs status or
rights would seem to be improper and outside the purview of a declaratory relief.
Neither can it be availed of for the purpose of compelling recognition of such rights,
if disputed or objected to. Consequently, the court dismissed the complaint,
without costs. From the order of dismissal, Plaintif has appealed and the case was
certified to this court because only questions of law are involved in the appeal.

Ruling: The present case does not come within the purview of the law authorizing an
action for declaratory relief for it neither concerns a deed, will, contract or other
written instrument, nor does it affect a statute or ordinance, the construction or
validity of which is involved. Nor is it predicated on any justiciable controversy for
admittedly the alleged rights of inheritance whichPlaintif desires to assert against
the Defendants as basis of the relief he is seeking for have not yet accrued for the
simple reason that his alleged father Emigdio Edades has not yet died.
This right is impliedly recognized by Article 289 which permits the investigation of
the paternity or maternity of an illegitimate child in the same manner as in the case
of a natural child. Considering that the rules of procedure shall be liberally
construed to promote their object and avoid an expensive litigation (section 2, Rule
1), we hold that the present action may be maintained in the light of the view herein
expressed.

5. Santos v. Aquino, 94 Phil 65 (1953)

Facts:

This action purports to obtain a declaratory relief but the prayer of the petition seeks to have
Ordinance No. 61, series of 1946, and Ordinance No. 10, series of 1947, of the Municipality of Malabon,
Province of Rizal, declared null and void xxx. Ordinance No. 61, series of 1946, adopted by the Municipal
Council of Malabon on 8 December 1946, imposes a license tax of P1,000 per annum on the said theater in
addition to a license tax on all tickets sold in theaters and cinemas in Malabon, pursuant to Ordinance No.
58, series of 1946, adopted on the same date as Ordinance No. 61, the same series xxx
Ruling: This is not an action for declaratory relief, because the terms of the ordinances assailed are not
ambiguous or of doubtful meaning which require a construction thereof by the Court. And granting that the
validity or legality of an ordinance may be drawn in question in an action for declaratory relief, such relief
must be asked before a violation of the ordinance be committed. 1 When this action was brought on 12 May
1949, payment of the municipal license taxes imposed by both ordinances, the tax rate of the last having
been reduced by the Department of Finance, was already due, and the prayer of the petition shows that the
petitioner had not paid them. In those circumstances the petitioner cannot bring an action for declaratory
relief.
The rule that actions must be brought in the name of the real party in interest 2 applies to actions brought
under Rule 66 for declaratory relief. 3 The fact that he is the manager of the theater does not make him a
real party in interest.
Side note: REYES, J., dissenting
having in mind the principle of separation of powers which pervades the system of government ordained by
our Constitution, I take it that the veto power thus conferred upon the Secretary of Finance only authorizes
that officer to approve or disapprove an ordinance that is submitted to him in accordance with the abovequoted provision of the Commonwealth Act, and that it does not empower him to change, alter or modify
the terms of the ordinance, for that would be investing an executive officer with legislative functions. Where
a municipal ordinance, therefore, increases or decreases in certain cases the rate of a license tax on
business, occupation or privilege by more than 50 per cent and the Secretary of Finance increases or
decreases the new rate prescribed in the ordinance, the action of the Secretary of Finance can only be taken
as a recommendation, so that the modified ordinance will have no effect until it is repassed by the municipal
council

6. Gomez v. Palomar, 25 SCRA 827 (1968)

Facts: This appeal puts in issue the constitutionality of Republic Act 1635,1 as
amended by Republic Act 2631,2 which provides as follows. - To help raise funds for the
Philippine Tuberculosis Society, the Director of Posts shall order for the period from August nineteen
to September thirty every year the printing and issue of semi-postal stamps xxx
petitioner Benjamin P. Gomez mailed a letter at the post officexxx. Because this
letter did not bear the special anti-TB stamp required by the statute, it was returned
to the petitioner. (he questioned the constitutionality of the law) RTC ruled in his
favor.

Ruling: While conceding that the mailing by the petitioner of a letter without the
additional anti-TB stamp was a violation of Republic Act 1635, as amended, the trial
court nevertheless refused to dismiss the action on the ground that under section 6
of Rule 64 of the Rules of Court, "If before the final termination of the case a breach
or violation of ... a statute ... should take place, the action may thereupon be
converted into an ordinary action."
The prime specification of an action for declaratory relief is that it must be brought
"before breach or violation" of the statute has been committed. Rule 64, section 1
so provides. Section 6 of the same rule, which allows the court to treat an action for
declaratory relief as an ordinary action, applies only if the breach or violation occurs
after the filing of the action but before the termination thereof.
Hence, if, as the trial court itself admitted, there had been a breach of the statute
before the firing of this action, then indeed the remedy of declaratory relief cannot
be availed of, much less can the suit be converted into an ordinary action.
Nor is there merit in the petitioner's argument that the mailing of the letter in
question did not constitute a breach of the statute because the statute appears to
be addressed only to postal authorities.xx the mere attempt to use the mails without the
stamp constitutes a violation of the statute.
Nevertheless, we are of the view that the petitioner's choice of remedy is
correct because this suit was filed not only with respect to the letter which
he mailed on September 15, 1963, but also with regard to any other mail
that he might send in the future. Thus, in his complaint, the petitioner
prayed that due course be given to "other mails without the semi-postal
stamps which he may deliver for mailing.

7. Lim v. Republic, 37 SCRA 78

Facts:

Appeal, taken by the Solicitor General, from a decision of the Court of First Instance of Zamboanga
City, granting repatriation to petitioner. Xxx. upon the ground inter alia, that she had not duly established
either the nationality of her alleged father, Lorenzo, or her alleged relation with him, and u nder our laws,
there can be no action or proceeding for the judicial declaration of the citizenship of an individual (Republic
v. Maddela, supra).Only as an incident of the adjudication of the rights of the parties to a controversy may
the Court pass upon and make a pronouncement relative to their status. Otherwise, such pronouncement is
beyond judicial power.
Ruling: The appeal taken by the Government is well taken. The procedure for the repatriation of a female
citizen of the Philippines, who has lost her citizenship by reason of marriage to an alien, is as simple as it
can possibly be. All that is required of her, upon termination of her marital status, is for her to take the
necessary oath of allegiance to the Republic of the Philippines and to register said oath in the proper civil
registry. 1 In fact, the allegations and, particularly, the prayer in the petition of appellee herein suggest that
she is aware of the pertinent legal provisions. It is, moreover, apparent that her objective is to settle her
political status prior to marriage. In other words, thru her petition herein, she hopes to establish that she
was a citizen of the Philippines before she contracted marriage. As a consequence, her petition is, in effect,
one for a declaratory relief, which this Court has repeatedly held to be inapplicable to the political status of
natural persons.
Declaratory relief in this jurisdiction is a special civil action which may lie only when any person interested
under a deed, will, contract or other written instrument, or whose rights are affected by statute or
ordinance, demands construction thereof for a declaration of his rights thereunder. None of the above
circumstances exists in the case under consideration. And this Court has already held that there is no
proceeding established by law or the rules by which any person claiming to be a citizen may get a
declaration in a court of justice to that effect or in regard to his citizenship.

"it is now well settled . . . that there is no proceeding established by law, or the rules, for the judicial
declaration of the citizenship of an individual . . . and that citizenship is not a proper subject for declaratory
judgment.
In essence, the appellees merely wanted to remove all doubts in their minds as to their
citizenship, but an action for declaratory judgment cannot be invoked solely to determine or try
issues or to determine a moot, abstract or theoretical question, or to decide claims which are
uncertain or hypothetical.

8. CJH Devt. Corp. v. BIR, G.R. No. 172457, December 24, 2008
Facts: he RTC dismissed the petition for declaratory relief filed by petitioner CJH
Development Corporation
Proclamation No. 420 (the Proclamation) was issued by then President Fidel V.
Ramos to create a Special Economic Zone (SEZ) in a portion of Camp John Hay in
Baguio City. Section 34 of the Proclamation granted to the newly created SEZ the
same incentives then already enjoyed by the Subic SEZ. Among these incentives
are the exemption from the payment of taxes, both local and national, for
businesses located inside the SEZ, and the operation of the SEZ as a special
customs territory providing for tax and duty free importations of raw materials,
capital and equipment.
In line with the Proclamation, the Bureau of Internal Revenue (BIR) issued Revenue
Regulations No. 12-976 while the Bureau of Customs (BOC) issued Customs
Administrative Order No. 2-98.7 The two issuances provided the rules and
regulations to be implemented within the Camp John Hay SEZ. Subsequently,
however, Section 3 of the Proclamation was declared unconstitutional in part by the
Court en banc in John Hay Peoples Alternative Coalition v. Lim. (SO BIR and BOC
assessed CJH with taxes)
In an Order16 dated 28 June 2005, the RTC dropped the City of Baguio as a party to
the case. The remaining parties were required to submit their respective
memoranda. On 14 October 2005, the RTC rendered its assailed order. 17 It held that
the decision in G.R. No. 119775 applies retroactively because the tax exemption
granted by Proclamation No. 420 is null and void from the beginning. The RTC also
ruled that the petition for declaratory relief is not the appropriate remedy. A
judgment of the court cannot be the proper subject of a petition for declaratory
relief; the enumeration in Rule 64 is exclusive. Moreover, the RTC held that
Commonwealth Act No. 55 (CA No. 55) which proscribes the use of declaratory relief
in cases where a taxpayer questions his tax liability is still in force and effect.
Ruling: DR not proper. CA No. 55 is still in effect and holds sway. Precisely, it has
removed from the courts jurisdiction over petitions for declaratory relief involving
tax assessments. The Court cannot repeal, modify or alter an act of the Legislature.
Moreover, the proper subject matter of a declaratory relief is a deed, will, contract,
or other written instrument, or the construction or validity of statute or
ordinance.23 CJH hinges its petition on the demand letter or assessment sent to it by
the BOC. However, it is really not the demand letter which is the subject matter of
the petition. Ultimately, this Court is asked to determine whether the decision of the
Court en banc in G.R. No. 119775 has a retroactive effect. This approach cannot be
countenanced. A petition for declaratory relief cannot properly have a court decision
as its subject matter.

There are other remedies available to a party who is not agreeable to a decision whether it be a
question of law or fact. If it involves a decision of an appellate court, the party may file a motion for
reconsideration or new trial in order that the defect may be corrected. 26 In case of ambiguity of the
decision, a party may file a motion for a clarificatory judgment. 27 One of the requisites of a
declaratory relief is that the issue must be ripe for judicial determination. This means that litigation is
inevitable28 or there is no adequate relief available in any other form or proceeding

9. Social Justice Society v Lina, 574 SCRA 462

Facts: Filed with the trial court on September 12, 2002, by petitioner Social Justice
Society, a registered political party, was a petition for declaratory relief against the
then Secretary of the Department of Interior and Local Government (DILG),
respondent Jose D. Lina,[3] praying for the proper construction of Section 90 of
Republic Act (R.A.) No. 7160. Xxx Based on the said provision, specifically paragraph
(a) thereof, petitioner posited that actors who were elected as governors, city and
municipal mayors were disallowed by law to appear in movies and television
programs as one of the characters therein, for this would give them undue
advantage over their political opponents, and would considerably reduce the time
that they must devote to their constituents.
Ruling: we find as proper the trial courts dismissal of the petition for declaratory
relief in Civil Case No. 02-104585. Readily discernable is that the same is an
inappropriate remedy to enforce compliance with Section 90 of R.A. 7160, and to
prevent local chief executives Santos-Recto, Lapid and Marquez from taking roles in
movies and television shows.
or the action to prosper, it must be shown that (1) there is a justiciable controversy;
(2) the controversy is between persons whose interests are adverse; (3) the party
seeking the relief has a legal interest in the controversy; and (4) the issue is ripe for
judicial determination.[13] Suffice it to state that, in the petition filed with the trial
court, petitioner failed to allege the ultimate facts which satisfy these requisites.
Not only that, as admitted by the petitioner, the provision the
interpretation of which is being sought has already been breached by the
respondents. (since they are already elected) Declaratory relief cannot thus be
availed of.

10. Baguio Citizens Action, Inc. v. The City Council, 121 SCRA 368

Facts: In this petition for declaratory relief originally filed in the Court of First
Instance of Baguio, Branch II, what is involved is the validity of Ordinance 386
passed by the City Council of Baguio City
N ORDINANCE CONSIDERING ALL SQUATTERS OF PUBLIC LAND, OTHER THAN THOSE
EARMARKED FOR PUBLIC USE IN THE CITY OF BAGUIO WHO ARE DULY REGISTERED
AS SUCH AT THE TIME OF THE PROMULGATION OF THIS ORDINANCE AS BONAFIDE
OCCUPANTS OF THEIR RESPECTIVE LOTS AND WHICH SHALL HEREAFTER BE
EMBRACED AS A CITY GOVERNMENT HOUSING PROJECT AND PROVIDING FOR
OTHER PURPOSES.
n the decision thereafter rendered, the petition was dismissed on the grounds that:
1) another court, the Court of First Instance of Baguio, Branch I, had declared the
Ordinance valid in a criminal case filed against the squatters for illegal construction,
and the Branch II of the same court cannot, in a declaratory proceeding, review and
determine the validity of said judgment pursuant to the policy of judicial respect
and stability; 2) those who come within the protection of the ordinance have not
been made parties to the suit in accordance with Section 2 of Rule 64 and it has

been held that the non-joinder of such parties is a jurisdictional defect; and 3) the
court is clothed with discretion to refuse to make any declaration where the
declaration is not necessary and proper at the time under all circumstances, e.g.
where the declaration would be of no practical help in ending the controversy or
would not stabilize the disputed legal relation
Ruling: DR proper, granted. The case before the Court of First Instance of Baguio,
Branch 1, dealt with the criminal liability of the accused for constructing their
houses without obtaining building permits xxx Said court merely confined itself to
Sections 2 and 3 of Ordinance 386. It did not make any definite pronouncement
whether or not the City Council has the power to legalize the illegal occupation of
public land which is the issue in the instant case.
The Ordinance in question is a patent nullity.
Being unquestionably a public land, no disposition thereof could be made by the
City of Baguio without prior legislative authority. It is the fundamental principle that
the state possesses plenary power in law to determine who shall be favored
recipients of public domain, as well as under what terms such privilege may be
granted not excluding the placing of obstacles in the way of exercising what
otherwise would be ordinary acts of ownership. And the law has laid in the Director
of Lands the power of exclusive control, administrations, disposition and alienation
of public land that includes the survey, classification, lease, sale or any other form
of concessions or disposition and management of the lands of public domains.

11. Galicto v. Aquino III, 667 SCRA 150 (2012)

Facts: Before us is a Petition for Certiorari and Prohibition with Application for
Writ of Preliminary Injunction and/or Temporary Restraining Order,1 seeking
to nullify and enjoin the implementation of Executive Order No. (EO) 7 issued
by the Office of the President on September 8, 2010. Petitioner Jelbert B.
Galicto asserts that EO 7 is unconstitutional for having been issued beyond
the powers of the President and for being in breach of existing laws.
Heeding the call of Congress, Pres. Aquino, on September 8, 2010, issued EO
7, entitled "Directing the Rationalization of the Compensation and Position
Classification System in the [GOCCs] and [GFIs], and for Other Purposes." EO
7 provided for the guiding principles and framework to establish a fixed
compensation and position classification system for GOCCs and GFIs
Ruling: We resolve to DISMISS the petition for its patent formal and procedural infirmities, and for
having been mooted by subsequent events.
Under the Rules of Court, petitions for Certiorari and Prohibition are availed of to question judicial,
quasi-judicial and mandatory acts. Since the issuance of an EO is not judicial, quasi-judicial or a
mandatory act, a petition for certiorari and prohibition is an incorrect remedy; instead a petition for
declaratory relief under Rule 63 of the Rules of Court, filed with the Regional Trial Court (RTC), is the
proper recourse to assail the validity of EO 7
he respondents neither acted in any judicial or quasi-judicial capacity nor arrogated
unto themselves any judicial or quasi-judicial prerogatives. A petition for certiorari
under Rule 65 of the 1997 Rules of Civil Procedure is a special civil action that may
be invoked only against a tribunal, board, or officer exercising judicial or quasijudicial functions.

Second, although the instant petition is styled as a petition for certiorari, in essence, it seeks the
declaration by this Court of the unconstitutionality or illegality of the questioned ordinance and
executive order. It, thus, partakes of the nature of a petition for declaratory relief over which this
Court has only appellate, not original, jurisdiction. Section 5, Article VIII of the Constitution provides:
Sec. 5. The Supreme Court shall have the following powers:
(1) Exercise original jurisdiction over cases affecting ambassadors, other public ministers
and consuls, and over petitions for certiorari, prohibition, mandamus, quo warranto, and
habeas corpus.
(2) Review, revise, reverse, modify, or affirm on appeal or certiorari as the law or the Rules of
Court may provide, final judgments and orders of lower courts in:
(a) All cases in which the constitutionality or validity of any treaty, international or
executive agreement, law, presidential decree, proclamation, order,
instruction, ordinance, or regulation is in question. (Italics supplied).

Side note: Moot (This is the present situation here. Congress, thru R.A. No. 10149,
has expressly empowered the President to establish the compensation systems of
GOCCs and GFIs. For the Court to still rule upon the supposed unconstitutionality of
EO 7 will merely be an academic exercise.)

12. Reyes v. Ortiz, G.R. No. 137794. August 11, 2010

Facts: The instant cases are consolidated Petitions1 for Declaratory Relief, Certiorari,
and Prohibition. The petitioners in G.R. No. 137794 seek to declare null and void the
proceedings in Civil Case No. 23477, an ejectment case, before the Metropolitan
Trial Court (MeTC), Caloocan City, Branch 49, and Civil Case No. C-17725, a
complaint for Recovery of Possession and Ownership, filed with the Regional Trial
Court (RTC), Caloocan City, Branch 124;2 while the petitioners in G.R. No. 149664
pray for the nullity of the following ejectment proceedings before the different
branches of the Caloocan City MeTC: (1) Civil Case No. 99-25011, Branch 52; (2)
Civil Case No. 22559 and Civil Case No. 18575, Branch 49 and its appeal to the RTC,
Branch 131; (3) Civil Case No. 00-25892, Branch 51; and (4) Civil Case No. 0025889, Branch 51.3 G.R. No. 149664 was considered closed and terminated by the
Courts Resolution dated August 30, 2006.
The parcels of land which are the subject matter of these cases are part of the Tala
Estate, situated between the boundaries of Caloocan City and Quezon City and
encompassing an area of 7,007.9515 hectares more or less.
Ruling:
The foregoing section can be dissected into two parts. The first paragraph concerns declaratory
relief, which has been defined as a special civil action by any person interested under a deed, will,
contract or other written instrument or whose rights are affected by a statute, ordinance, executive
order or regulation to determine any question of construction or validity arising under the instrument,
executive order or regulation, or statute and for a declaration of his rights and duties thereunder. The
second paragraph pertains to (1) an action for the reformation of an instrument; (2) an action to quiet
title; and (3) an action to consolidate ownership in a sale with a right to repurchase. 43

The first paragraph of Section 1 of Rule 63 enumerates the subject matter to be inquired upon in a
declaratory relief namely, deed, will, contract or other written instrument, a statute, executive order or
regulation, or any government regulation. This Court, in Lerum v. Cruz,44 declared that the subject
matters to be tested in a petition for declaratory relief are exclusive, viz:
Under this rule, only a person who is interested "under a deed, will, contract or other written
instrument, and whose rights are affected by a statute or ordinance, may bring an action to
determine any question of construction or validity arising under the instrument or statute and
for a declaration of his rights or duties thereunder." This means that the subject matter must
refer to a deed, will, contract or other written instrument, or to a statute or ordinance, to
warrant declaratory relief. Any other matter not mentioned therein is deemed excluded. This
is under the principle of expressio unius est exclussio alterius. Xxx court decision cannot be
interpreted as included within the purview of the words "other written instrument,

In the instant case, petitioners Erlinda Reyes and Rosemarie Matienzo assailed via
Declaratory Relief under Rule 63 of the Rules of Court, the orders of the trial courts
denying their motions to suspend proceedings. This recourse by petitioners,
unfortunately, cannot be countenanced since a court order is not one of those
subjects to be examined under Rule 63.
Finally, while a petition for declaratory relief may be treated as one for
prohibition if it has far reaching implications and raises questions that
need to be resolved, there is no allegation of facts by petitioner tending to
show that she is entitled to such a writ. The judicial policy must thus
remain that this Court will not entertain direct resort to it, except when
the redress sought cannot be obtained in the proper courts or when
exceptional and compelling circumstances warrant availment of a remedy
within and calling for the exercise of this Court's primary jurisdiction.
petitioner Matienzo obviously availed of the instant declaratory relief to substitute for a petition
for certiorari, a remedy which she sadly lost by inaction.

REVIEW OF JUDGMENTS AND FINAL ORDERS OR RESOLUTIONS OF

THE COMELEC AND COA
1. Aratuc v. COMELEC, 88 SCRA 251
Facts:

1. OVER THE OBJECTION OF THE KONSENSIYA NG BAYAN (KB) CANDIDATES, THE

REGIONAL BOARD OF CANVASSERS OF REGION XII ISSUED A RESOLUTION
DECLARING ALL THE EIGHT KILUSAN NG BAGONG LIPUNAN (KBL) CANDIDATES
ELECTED REPRESENTATIVES TO THE BATASANG PAMBANSA. THE KB CANDIDATES
APPEALED THE RESOLUTION TO THE COMELEC WHICH CONSEQUENTLY ISSUED THE
NOW ASSAILED RESOLUTION DECLARING SEVEN KBL CANDIDATES AND ONE KB
CANDIDATES AS HAVING OBTAIN THE FIRST EIGHT PLACES, AND ORDERING THE
REGIONAL BOARD OF CANVASSERS TO PROCLAIM THE WINNING CANDIDATES. THE
ARATUC PETITION ALLEGED THAT THE COMELEC IN ARRIVING AT ITS CONCLUSION
COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF JURISDICTION.
THE MANDANGAN PETITION, ON THE OTHER HAND, CLAIMS THAT IT WAS ERROR OF

LAW FOR COMELEC TO CONSIDER SPURIOUS AND MANUFACTURED THE RETURNS IN

VOTING CENTERS SHOWING THAT THE VOTES OF THE CANDIDATES OBTAINING THE
HIGHEST NUMBER OF VOTES EXCEEDED THE HIGHEST POSSIBLE NUMBER OF VALID
VOTES, BECAUSE THE EXCESS WAS NOT MORE THAN 40% AS WAS THE RULE
FOLLOWED IN BASHIER/BASMAN (L-33758, FEBRUARY 24, 1972), AND THAT THE
COMELEC EXCEEDED ITS JURISDICTION AND DENIED DUE PROCESS TO PETITIONER
IN EXTENDING ITS INQUIRY BEYOND THE ELECTION RECORDS OF "THE 878 VOTING
CENTERS EXAMINED BY THE KB EXPERTS AND PASSED UPON BY THE REGIONAL
BOARD OF CANVASSERS" AND IN EXCLUDING FROM THE CANVASS THE RETURNS
FORM VOTING CENTERS SHOWING 90% TO 100% VOTING IN PLACES WHERE
MILITARY OPERATIONS WERE CERTIFIED BY THE ARMY TO BE GOING ON, THE SAME
BEING UNSUPPORTED BY EVIDENCE.
THE SUPREME COURT FOUND NO GRAVE ABUSE OF DISCRETION IN THE
ACTUATIONS OF THE COMELEC AND IN MANDANGAN HELD (1) THAT CONSIDERING
THE HISTORICAL ANTECEDENTS RELATIVE TO THE HIGHLY QUESTIONABLE MANNER
IN WHICH ELECTIONS HAVE BEEN HELD IN THE PAST IN THE PROVINCES INVOLVED,
THE COMELEC MAY DEEM SPURIOUS AND MANUFACTURED THE RETURNS IN VOTING
CENTERS SHOWING THAT THE VOTES OF THE CANDIDATES OBTAINING THE HIGHEST
NUMBER OF VALID VOTES EXCEEDED THE HIGHEST POSSIBLE NUMBER OF VOTES
CAST THEREIN EVEN IF THE EXCESS NUMBER OF VOTES WERE NOT MORE THAN
40%; AND (2) THAT THE COMELEC COULD EXTEND ITS INQUIRY BEYOND THAT
UNDERTAKEN BY THE BOARD OF CANVASSERS AND TAKE COGNIZANCE OF THE FACT
THAT VOTING CENTERS AFFECTED BY MILITARY OPERATIONS HAVE BEEN
TRANSFERRED TO THE POBLACIONES, BECAUSE AS A SUPERIOR BODY HAVING
SUPERVISION AND CONTROL OVER THE BOARD OF CANVASSERS, IT MAY DO
DIRECTLY WHAT THE LATTER WAS SUPPOSED OR OUGHT TO HAVE DONE. IN ARATUC
ET AL., THE SUPREME COURT FOUND THAT THE COMELEC DID CONSIDER THE HIGH
PERCENTAGE OF VOTING COUPLED WITH MASS SUBSTITUTE VOTING AS PROOF
THAT THE PERTINENT RETURNS HAD BEEN MANUFACTURED, AND THAT APART FROM
PRESUMING REGULARITY IN THE PERFORMANCE OF ITS DUTIES, THE COMELEC HAD
ADHERED TO THE SUPREME COURT'S GUIDELINES IN EXAMINING AND PASSING ON
THE RETURNS FROM THE VOTING CENTERS AND IN DENYING PETITIONER'S MOTION
FOR THE OPENING OF BALLOT BOXES CONCERNED. FURTHER, THE HIGH COURT
STATED, IT MIGHT DISAGREE WITH THE COMELEC AS TO WHICH VOTING CENTER
SHOULD BE EXCLUDED OR INCLUDED, BUT STILL A CASE OF GRAVE ABUSE OF
DISCRETION WOULD NOT COME OUT CONSIDERING THAT COMELEC, WHICH
CONCEDEDLY IS IN A BETTER POSITION TO APPRECIATE AND ASSESS THE
VITAL CIRCUMSTANCES CLEARLY AND ACCURATELY, CANNOT BE SAID TO
HAVE ACTED WHIMSICALLY OR CAPRICIOUSLY, OR WITHOUT BASIS.
PETITION DISMISSED.
SYLLABUS
OF THE RULING OF THE COURT
1.
CONSTITUTIONAL LAW; NATURE AND EXTENT OF SUPREME COURT'S POWER
OF CERTIORARI OVER DECISIONS, ORDERS, AND RULINGS OF THE COMELEC UNDER
THE 1978 CONSTITUTION. WHILE UNDER THE CONSTITUTION OF 1935 "THE
DECISIONS, ORDERS, AND RULINGS OF THE COMMISSIONS SHALL BE SUBJECT TO
REVIEW BY THE SUPREME COURT" (SECTION 2, FIRST PAR., ARTICLE X), THE 1973
CONSTITUTION PROVIDES SOMEWHAT DIFFERENTLY THUS: "ANY DECISION, ORDER
OR RULING OF THE COMMISSION MAY BE BROUGHT TO THE SUPREME COURT ON

CERTIORARI BY THE AGGRIEVED PARTY WITHIN 30 DAYS FROM HIS RECEIPT OF A

COPY THEREOF" (SECTION II, ARTICLE XII), EVEN AS IT ORDAINS THAT THE
COMMISSION SHALL "BE THE SOLE JUDGE OF ALL CONTESTS RELATING TO THE
ELECTION RETURNS AND QUALIFICATIONS OF ALL MEMBERS OF THE NATIONAL
ASSEMBLY AND ELECTIVE PROVINCIAL AND CITY OFFICIALS" (SECTION 2(2), ARTICLE
XII). CORRESPONDINGLY, THE ELECTION CODE OF 1978, WHICH IS THE FIRST
LEGISLATIVE CONSTRUCTION OF THESE PERTINENT CONSTITUTIONAL PROVISIONS,
MAKES THE COMMISSION ALSO THE "SOLE JUDGE OF ALL PRE-PROCLAMATION
CONTROVERSIES" AND FURTHER PROVIDES THAT "ANY OF ITS DECISIONS, ORDERS
OR RULINGS (IN SUCH CONTROVERSIES) SHALL BE FINAL AND EXECUTORY", JUST AS
IN ELECTION CONTESTS, "THE DECISIONS OF THE COMMISSION SHALL BE FINAL
AND APPEALABLE" (SECTION 192). THE FRAMERS OF THE NEW CONSTITUTION
MUST BE PRESUMED TO HAVE DEFINITE KNOWLEDGE OF WHAT ITS MEANS
TO MAKE THE DECISIONS, ORDERS AND RULINGS OF THE COMMISSION
"SUBJECT TO REVIEW BY THE SUPREME COURT". AND SINCE INSTEAD OF
MAINTAINING THAT PROVISION INTACT, IT ORDAINED THAT THE
COMMISSION'S ACTUATIONS BE INSTEAD BROUGHT TO THE SUPREME
COURT ON CERTIORARI", THE SUPREME COURT CANNOT INSIST THAT
THERE WAS NO INTENT TO CHANGE THE NATURE OF THE REMEDY,
CONSIDERING THAT THE LIMITED SCOPE OF CERTIORARI, COMPARED TO A
REVIEW, IS WELL KNOWN IN REMEDIAL LAW. A REVIEW INCLUDES DIGGING
INTO THE MERITS OR UNEARTHING ERRORS OF JUDGMENT, WHILE CERTIORARI
DEALS EXCLUSIVELY WITH GRAVE ABUSE OF DISCRETION, WHICH MAY NOT
EXIST EVEN WHEN THE DECISION IS OTHERWISE ERRONEOUS. CERTIORARI
IMPLIES INDIFFERENT DISREGARD OF THE LAW, ARBITRARINESS AND CAPRICE, AN
OMISSION TO WEIGH PERTINENT CONSIDERATIONS, A DECISION ARRIVED AT
WITHOUT RATIONAL DELIBERATION. WHILE THE EFFECTS OF AN ERROR OF
JUDGMENT MAY NOT DIFFER FROM THAT OF AN INDISCRETION, AS A MATTER OF
POLICY, THERE ARE MATTERS THAT BY THEIR NATURE OUGHT TO BE LEFT FOR FINAL
DETERMINATION TO THE SOUND DISCRETION OF CERTAIN OFFICERS OR ENTITIES,
RESERVING IT TO THE SUPREME COURT TO INSURE THE FAITHFUL OBSERVANCE OF
DUE PROCESS ONLY IN CASES OF PATENT ARBITRARINESS.
2.
CERTIORARI; GRAVE ABUSE OF DISCRETION; CONSIDERING AS SPURIOUS
VOTES EXCEEDING THE HIGHEST POSSIBLE NUMBER OF VALID VOTES THAT CAN BE
CAST IN A VOTING CENTER, NOT A CASE OF. IT IS NOT GRAVE ABUSE OF
DISCRETION FOR THE COMELEC TO DEEM AS SPURIOUS AND MANUFACTURED
VOTES EXCEEDING THE HIGHEST POSSIBLE NUMBER OF VALID VOTES THAT CAN BE
CAST IN A VOTING CENTER EVEN IF THE TOTAL NUMBER OF EXCESS VOTES IN THE
VOTING CENTER IS NOT MORE THAN 40%, CONSIDERING THE HISTORICAL
ANTECEDENTS RELATIVE TO THE HIGHLY QUESTIONABLE MANNER IN WHICH
ELECTIONS HAVE BEEN HELD IN THE PAST IN THE PROVINCES INVOLVED IN THIS
CASE, OF WHICH THE SUPREME COURT HAS JUDICIAL NOTICE.
3.
ID.; ID.; NOT A CASE OF; COMELEC MAY DO DIRECTLY WHAT THE BOARD OF
CANVASSERS IS SUPPOSED TO DO OR OUGHT TO HAVE DONE. UNDER SECTION
168 OF THE REVISED ELECTION CODE OF 1978, THE COMELEC SHALL HAVE DIRECT
CONTROL AND SUPERVISION OF THE BOARD OF CANVASSERS, AND THAT
RELATEDLY SECTION 175 OF THE SAME CODE PROVIDES THAT IT "SHALL BE THE
SOLE JUDGE OF ALL PRE-PROCLAMATION CONTROVERSIES." THE AUTHORITY OF THE
COMMISSION IN REVIEWING ACTUATIONS OF THE BOARD OF CANVASSERS DOES
NOT SPRING FROM ANY APPELLATE JURISDICTION CONFERRED BY ANY SPECIFIC

PROVISION OF LAW, FOR THERE IS NONE SUCH PROVISION ANY WHERE IN THE
ELECTION CODE, BUT FROM THE PLENARY PREROGATIVE OF DIRECT CONTROL AND
SUPERVISION ENDOWED BY SECTION 168 OF THE CODE. AND IN ADMINISTRATIVE
LAW, IT IS A TOO WELL SETTLED POSTULATE TO NEED ANY SUPPORTING CITATION,
THAT A SUPERIOR BODY OR OFFICE HAVING SUPERVISION AND CONTROL OVER
ANOTHER MAY DO DIRECTLY WHAT THE LATTER IS SUPPOSED TO DO OR OUGHT TO
HAVE DONE.
4.
ID.; ID.; ERRORS OF JUDGMENT NOT REVIEWABLE BY THE SUPREME COURT.
WHERE IT APPEARS FROM THE RECORDS THAT THE COMELEC HAS TAKEN PAINS TO
CONSIDER AS METICULOUSLY AS THE NATURE OF THE EVIDENCE PRESENTED BY
BOTH PARTIES WOULD PERMIT ALL THE CONTENTIONS OF PETITIONERS RELATIVE
TO THE WEIGHT THAT SHOULD BE GIVEN TO SUCH EVIDENCE, THE SUPREME COURT
WILL NOT HOLD THAT THE COMELEC ACTED WANTONLY AND ARBITRARILY IN
DRAWING ITS CONCLUSIONS. IF ERRORS THERE ARE IN ANY OF THOSE
CONCLUSIONS, THEY ARE ERRORS OF JUDGMENT WHICH ARE NOT
REVIEWABLE IN CERTIORARI, SO LONG AS THEY ARE FOUNDED ON SUBSTANTIAL
EVIDENCE.
5.
ID.; ID.; NOT A CASE OF; WHERE COMELEC PASSED UPON RETURNS USING
COMMON SENSE AND PERCEPTION ONLY; PRESUMPTION OF REGULARITY IN THE
PERFORMANCE OF DUTIES. WHERE THE COMELEC DID NOT EXAMINE THE
QUESTIONED ELECTION RETURNS WITH THE AID OF EXPERTS BUT "USING COMMON
SENSE AND PERCEPTION ONLY", APART FROM PRESUMING REGULARITY IN THE
PERFORMANCE OF ITS DUTIES, A CASE OF GRAVE ABUSE OF DISCRETION WOULD
NOT COME OUT, CONSIDERING THAT COMELEC CANNOT BE SAID TO HAVE ACTED
WHIMSICALLY OR CAPRICIOUSLY OR WITHOUT ANY RATIONAL BASIS, PARTICULARITY
IF IT IS CONSIDERED THAT IN MANY RESPECTS AND FROM THE VERY NATURE OF THE
SUPREME COURT'S AND THE COMMISSION'S RESPECTIVE FUNCTIONS, THE
COMMISSION IS IN A BETTER POSITION TO APPRECIATE AND ASSESS THE
VITAL CIRCUMSTANCES CLOSELY AND ACCURATELY.
6.
ID.; NON-IDENTIFICATION OF BALLOT BOXES IN DEFECTIVE CONDITIONS DOES
NOT CONSTITUTE GRAVE ABUSE OF DISCRETION WHERE COMELEC HAS EXAMINED,
STUDIED AND PASSED UPON THE RECORDS RELATED THERETO. NONIDENTIFICATION OF DEFECTIVE BALLOT BOXES BY THE COMELEC DOES NOT
CONSTITUTE GRAVE ABUSE OF DISCRETION WHERE IT HAS EXAMINED, STUDIED
AND PASSED UPON THE RECORDS RELATED THERETO. IF AT ALL, DEEPER
INQUIRY INTO THIS POINT WOULD BE OF REAL VALUE IN AN ELECTORAL
PROTEST.
--------------------------------------------------------------EN BANC
[G.R. NO. 167219. FEBRUARY 8, 2011.]
RUBEN REYNA AND LLOYD SORIA, PETITIONERS, VS. COMMISSION ON
AUDIT, RESPONDENT.
DECISION
PERALTA, J P:
Before this Court is a Petition for certiorari, 1 under Rule 64 of the Rules of Court,
seeking to set aside Resolution No. 2004-046, 2 dated December 7, 2004, of the
Commission on Audit (COA). ESTcIA
The facts of the case are as follows:

The Land Bank of the Philippines (Land Bank) was engaged in a cattlefinancing program wherein loans were granted to various cooperatives.
Pursuant thereto, Land Bank's Ipil, Zamboanga del Sur Branch (Ipil Branch) went
into a massive information campaign offering the program to cooperatives.
Cooperatives who wish to avail of a loan under the program must fill up a Credit
Facility Proposal (CFP) which will be reviewed by the Ipil Branch. As alleged by
Emmanuel B. Bartocillo, Department Manager of the Ipil Branch, the CFP is a
standard and prepared form provided by the Land Bank main office to be used in
the loan application as mandated by the Field Operations Manual. 3 One of the
conditions stipulated in the CFP is that prior to the release of the loan, a
Memorandum of Agreement (MOA) between the supplier of the cattle, Remad
Livestock Corporation (REMAD), and the cooperative, shall have been signed
providing the level of inventory of stocks to be delivered, specifications as to breed,
condition of health, age, color, and weight. The MOA shall further provide for a buyback agreement, technology, transfer, provisions for biologics requirement and
technical visits and replacement of sterile, unproductive stocks. 4 Allegedly
contained in the contracts was a stipulation that the release of the loan shall be
made sixty (60) days prior to the delivery of the stocks. 5
The Ipil Branch approved the applications of four cooperatives. R.T. Lim Rubber
Marketing Cooperative (RT Lim RMC) and Buluan Agrarian Reform Beneficiaries MPC
(BARBEMCO) were each granted two loans. Tungawan Paglaum Multi-Purpose
Cooperative (Tungawan PFMPC) and Siay Farmers' Multi-Purpose Cooperative
(SIFAMCO) were each granted one loan. Pursuant to the terms of the CFP, the
cooperatives individually entered into a contract with REMAD, denominated as a
"Cattle-Breeding and Buy-Back Marketing Agreement." 6
In December 1993, the Ipil Branch granted six loans to the four cooperative
borrowers in the following amounts: aScIAC
Date Name Amount
Amount of Amount Paid
of
of
of
Livestock
to Cattle
Release
Borrower
Loan Insurance
Supplier (REMAD)
12-10-93
RTLim RMC P795,305
P62,305
P733,000
12-10-93
BARBEMCO 482,825
37,825
445,000
12-16-93
Tungawan PFMPC 482,825
37,825
445,000
12-22-93
SIFAMCO
983,010
77,010
906,000
12-22-93
RTLim RMC 187,705
14,705
173,000
12-22-93
BARBEMCO 448,105
35,105
413,000

TOTALP3,375,775 264,775
3,115,000 7
=========
======
========
As alleged by petitioners, the terms of the CFP allowed for pre-payments or
advancement of the payments prior to the delivery of the cattle by the supplier
REMAD. This Court notes, however, that copies of the CFPs were not attached to the
records of the case at bar. More importantly, the very contract entered into by the
cooperatives and REMAD, or the "Cattle-Breeding and Buy-Back Marketing
Agreement" 8 did not contain a provision authorizing prepayment.
Three checks were issued by the Ipil Branch to REMAD to serve as advanced
payment for the cattle. REMAD, however, failed to supply the cattle on the dates
agreed upon.
In post audit, the Land Bank Auditor disallowed the amount of
P3,115,000.00 under CSB No. 95-005 dated December 27, 1996 and

Notices of Disallowance Nos. 96-014 to 96-019 in view of the non-delivery

of the cattle. 9 Also made as the basis of the disallowance was the fact that
advanced payment was made in violation of bank policies and COA rules and
regulations. Specifically, the auditor found deficiencies in the CFPs, to wit:
The Auditor commented that the failure of such loan projects deprived the farmerbeneficiaries the opportunity to improve their economic condition.
From the Credit Facilities Proposals (CFP), the Auditor noted the following
deficiencies. CcHDSA
xxx
xxx
xxx
4.
No. 1 of the loan terms and conditions allowed prepayments without taking
into consideration the interest of the Bank. Nowhere in the documents reviewed
disclosed about prepayment scheme with REMAD, the supplier/dealer.
There was no justification for the prepayment scheme. Such is a clear deviation
from existing procedures on asset financing under which the Bank will first issue a
"letter guarantee" for the account of the borrower. Payment thereof will only be
effected upon delivery of asset, inspection and acceptance of the same by the
borrower.
The prepayment arrangement also violates Section 88 of Presidential Decree (PD)
No. 1445, to quote:
Prohibition against advance payment on government Except with the
prior approval of the President (Prime Minister), the government shall not
be obliged to make an advance payment for services not yet rendered or
for supplies and materials not yet delivered under any contract therefor.
No payment, partial or final shall be made on any such contract except upon a
certification by the head of the agency concerned to have effect that the services or
supplies and materials have been delivered in accordance with the terms of the
contract and have been duly inspected and accepted.
Moreover, the Manual on FOG Lending Operations (page 35) provides the systems
and procedures for releasing loans, to quote:
Loan Proceeds Released Directly to the Supplier/Dealer Proceeds of loans granted
for the acquisition of farm machinery equipment; and sub-loan components for the
purchase of construction materials, farm inputs, etc. shall be released directly to the
accredited dealers/suppliers. Payment to the dealer shall be made after
presentation of reimbursement documents (delivery/official receipts/purchase
orders) acknowledged by the authorized LBP representative that same has been
delivered. STIcaE
In cases where supplier requires Cash on Delivery (COD), the checks may be issued
and the cooperative and a LBP representative shall release the check to the supplier
and then take delivery of the object of financing." 10
The persons found liable by the Auditor for the amount of P3,115,000.00 which was
advanced to REMAD were the following employees of the Ipil Branch:
1.
Emmanuel B. Bartocillo Department Manager II
2.
George G. Hebrona Chief, Loans and Discounts Division
3.
Petitioner Ruben A. Reyna Senior Field Operations Specialist
4.
Petitioner Lloyd V. Soria Loans and Credit Analyst II
5.
Mary Jane T. Cunting 11 Cash Clerk IV
6.
Leona O. Cabanatan Bookkeeper III/Acting Accountant. 12
The same employees, including petitioners, were also made respondents in a
Complaint filed by the COA Regional Office No. IX, Zamboanga City, before the
Office of the Ombudsman for Gross Negligence, Violation of Reasonable Office Rules

and Regulations, Conduct Prejudicial to the Interest of the Bank and Giving
Unwarranted Benefits to persons, causing undue injury in violation of Section 3 (e)
of Republic Act (R.A.) No. 3019, otherwise known as the Anti-Graft and Corrupt
Practices Act. 13
On January 28, 1997, petitioners filed a Joint Motion for Reconsideration claiming
that the issuance of the Notice of Disallowance was premature in view of the
pending case in the Office of the Ombudsman. The Motion was denied by the
Auditor. Unfazed, petitioners filed an appeal with the Director of COA Regional Office
No. IX, Zamboanga City. On August 29, 1997, the COA Regional Office issued
Decision No. 97-001 affirming the findings of the Auditor. On February 4, 1998,
petitioners filed a Motion for Reconsideration, which was denied by the Regional
Office in Decision No. 98-005 14 issued on February 18, 1998. CTacSE
Petitioners did not file a Petition for Review or a Notice of Appeal from the COA
Regional Office Decision as required under Section 3, Rule VI 15 of the 1997 Revised
Rules of Procedure of the COA. Thus, the Decision of the Director of COA Regional
Office No. IX became final and executory pursuant to Section 51 16 of the
Government Auditing Code of the Philippines. Consequently, on April 12, 1999, the
Director of the COA Regional Office No. IX issued a Memorandum to the Auditor
directing him to require the accountant of the Ipil Branch to record in their books of
account the said disallowance. 17
On July 12, 1999, the Auditor sent a letter to the Land Bank Branch
Manager requiring him to record the disallowance in their books of
account. On August 10, 1999, petitioners sent a letter 18 to COA Regional
Office No. IX, seeking to have the booking of the disallowance set aside,
on the grounds that they were absolved by the Ombudsman in a February
23, 1999 Resolution, 19 and that the Bangko Sentral ng Pilipinas had
approved the writing off of the subject loans.
The February 23, 1999 Resolution of the Ombudsman was approved by Margarito P.
Gervacio, Jr. the Deputy Ombudsman for Mindanao, the dispositive portion of which
reads:
WHEREFORE, premises considered, the instant complaint is hereby dismissed for
lack of sufficient evidence.
SO ORDERED. 20
COA Regional Office No. IX endorsed to the Commission proper the matter raised by
the petitioners in their August 10, 1999 letter. This is contained in its February 28,
2000 letter/endorsement, 21 wherein the Director of COA Regional Office No. IX
maintained his stand that the time for filing of a petition for review had already
lapsed. The Regional Director affirmed the disallowance of the transactions since
the same were irregular and disadvantageous to the government, notwithstanding
the Ombudsman resolution absolving petitioners from fault.
In a Notice 22 dated June 29, 2000, the COA requested petitioners to submit a reply
in response to the letter/endorsement of the Regional Office Director. On August 10,
2000, petitioners submitted their Compliance/Reply, 23 wherein they argued that
the Ombudsman Resolution is a supervening event and is a sufficient ground for
exemption from the requirement to submit a Petition for Review or a Notice of
Appeal to the Commission proper. Petitioners also argued that by invoking the
jurisdiction of the Commission proper, the Regional Director had waived the fact
that the case had already been resolved for failure to submit the required Petition
for Review. cIHCST

On July 17, 2003, the COA rendered Decision No. 2003-107 24 affirming the rulings
of the Auditor and the Regional Office, to wit:
WHEREFORE, foregoing premises considered, this Commission hereby affirms both
the subject disallowance amounting to P3,115,000 and the Order of the Director,
COA Regional Office No. IX, Zamboanga City, directing the recording of subject
disallowance in the LBP books of accounts. This is, however, without prejudice to the
right of herein appellants to run after the supplier for reimbursement of the advance
payment for the cattle. 25
In denying petitioners request for the lifting of the booking of the disallowance, the
COA ruled that after a circumspect evaluation of the facts and circumstances, the
dismissal by the Office of the Ombudsman of the complaint did not affect the
validity and propriety of the disallowance which had become final and executory. 26
On August 22, 2003, petitioners filed a Motion for Reconsideration, which was,
however, denied by the COA in a Resolution 27 dated December 7, 2004.
Hence, herein petition, with petitioners raising the following grounds in support of
the petition, to wit:
RESPONDENT COA COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK
OF JURISDICTION IN DECLARING THE PREPAYMENT STIPULATION IN THE CONTRACT
BETWEEN THE BANK AND REMAD PROSCRIBED BY SECTION 103 OF P.D. NO. 1445,
OTHERWISE KNOWN AS THE STATE AUDIT CODE OF THE PHILIPPINES.
RESPONDENT COA COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK
OF JURISDICTION FOR HOLDING THE PETITIONERS ADMINISTRATIVELY LIABLE FOR
HAVING PROCESSED THE LOANS OF THE BORROWING COOPERATIVES IN
ACCORDANCE WITH THE BANK'S MANUAL (FOG) LENDING OPERATIONS.
RESPONDENT COA COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK
OF JURISDICTION WHEN IT HELD THE PETITIONERS LIABLE AND, THEREFORE, IN
EFFECT LIKEWISE OBLIGATED TO REFUND THE DISALLOWED AMOUNT EVEN AS
AMONG OTHER THINGS THEY ACTED IN EVIDENT GOOD FAITH. MORE SO, AS THE
COLLECTIBLES HAVE BEEN ALREADY EFFECTIVELY WRITTEN-OFF. 28 ACaDTH
The petition is not meritorious.
I.
Anent the first issue raised by petitioners, the same is without merit. Petitioners
argue said issue on three points: first, the COA is estopped from declaring the
prepayment stipulation as invalid; 29 second, the prepayment clause in the Land
Bank-REMAD contract is valid; 30 and third, it is a matter of judicial knowledge that
is not unusual for winning bidders involving public works to enter into contracts with
the government providing for partial prepayment of the contract price in the form of
mobilization funds. 31
As to their contention that the COA is estopped from declaring the prepayment
stipulation as invalid, petitioners argue in the wise:
xxx
xxx
xxx
The CATTLE BREEDING AND BUY BACK MARKETING AGREEMENT sample of which is
attached as Annex "I" was a Contract prepared by the bank and REMAD, it was
agreed to by the cooperatives. It was a standard Contract used in twenty two (22)
Land Bank branches throughout the country. It provided in part:
6.1
That the release of the loan shall be made directly to the supplier 60 days
prior to the delivery of stocks per prepayment term of REMAD LIVESTOCK
CORPORATION (supplier). Inspection shall be done before the 60th day/delivery of
the stocks.

Again, these Contracts were standard bank forms from Land Bank head office. None
of the Petitioners participated in the drafting of the same. 32
In the absence of grave abuse of discretion, questions of fact cannot be
raised in a petition for certiorari, under Rule 64 of the Rules of Court. The
office of the petition for certiorari is not to correct simple errors of
judgment; any resort to the said petition under Rule 64, in relation to Rule
65, of the 1997 Rules of Civil Procedure is limited to the resolution of
jurisdictional issues. 33 Accordingly, since the validity of the prepayment scheme
is inherently a question of fact, the same should no longer be looked into by
this Court. aHCSTD
In any case, even assuming that factual questions may be entertained, the facts do
not help petitioners' cause for the following reasons: first, the supposed Annex "I"
does not contain a stipulation authorizing a pre-payment scheme; and second,
petitioners clearly violated the procedure of releasing loans contained in the Bank's
Manual on Field Office Guidelines on Lending Operations (Manual on Lending
Operations).
A perusal of the aforementioned Annex "I," 34 the Cattle-Breeding and Buy-Back
Marketing Agreement, would show that stipulation "6.1" which allegedly authorizes
prepayment does not exist. To make matters problematic is that nowhere in the
records of the petition can one find a document which embodies such a stipulation.
It bears stressing that the Auditor noted in his report that, "nowhere in the
documents reviewed disclosed about prepayment scheme with REMAD, the
supplier/dealer."
Moreover, it is surprising that one of petitioners' defense is that they processed the
cooperatives' applications in accordance with their individual job descriptions as
provided in the Bank's Manual on Field Office Guidelines on Lending Operations 35
when, on the contrary, petitioners seem to be oblivious of the fact that they
clearly violated the procedure in releasing loans which is embodied in the
very same Manual on Lending Operations, to wit:
Loan Proceeds Released Directly to the Supplier/Dealer Proceeds of loans granted
for the acquisition of farm machinery equipment; and sub-loan components for the
purchase of construction materials, farm inputs, etc. shall be released directly to the
accredited dealers/suppliers. Payment to the dealer shall be made after
presentation of reimbursement documents (delivery/official receipts/purchase
orders) acknowledged by the authorized LBP representative that same has been
delivered. 36
However, this Court is not unmindful of the fact that petitioners contend that the
Legal Department of Land Bank supposedly passed upon the issue of application of
Section 88 of PD 1445. Petitioners argue that in an alleged August 22, 1996
Memorandum issued by the Land Bank, it opined that Section 88 of PD 1445 is not
applicable. 37 Be that as it may, this Court is again constrained by the fact that
petitioners did not offer in evidence the alleged August 22, 1996 Land Bank
Memorandum. Therefore, the supposed tenor of the said document deserves scant
consideration. In any case, even assuming arguendo that petitioners are correct in
their claim, they still cannot hide from the fact that they violated the procedure in
releasing loans embodied in the Manual on Lending Operations as previously
discussed. ASaTHc
To emphasize, the Auditor noted that "nowhere in the documents reviewed
disclosed about prepayment scheme with REMAD." It is well settled that findings of
fact of quasi-judicial agencies, such as the COA, are generally accorded respect and

even finality by this Court, if supported by substantial evidence, in recognition of

their expertise on the specific matters under their jurisdiction. 38 If the prepayment
scheme was in fact authorized, petitioners should have produced the document to
prove such fact as alleged by them in the present petition. However, as stated
before, even this Court is at a loss as to whether the prepayment scheme was
authorized as a review of "Annex I," the document to which petitioners base their
authority to make advance payments, does not contain such a stipulation or
provision. Highlighted also is the fact that petitioners clearly violated the procedure
in releasing loans found in the Manual on Lending Operations which provides that
payments to the dealer shall only be made after presentation of reimbursement
documents acknowledged by the authorized LBP representative that the same has
been delivered.
In addition, this Court notes that much reliance is made by petitioners on their
allegation that the terms of the CFP allowed for prepayments or advancement of the
payments prior to the delivery of the cattle by the supplier REMAD. It appears,
however, that a CFP, even if admittedly a pro forma contract and emanating from
the Land Bank main office, is merely a facility proposal and not the contract of loan
between Land Bank and the cooperatives. It is in the loan contract that the
parties embody the terms and conditions of a transaction. If there is any
agreement to release the loan in advance to REMAD as a form of
prepayment scheme, such a stipulation should exist in the loan contract.
There is, nevertheless, no proof of such stipulation as petitioners had failed to
attach the CFPs or the loan contracts relating to the present petition.
Based on the foregoing, the COA should, therefore, not be faulted for finding that
petitioners facilitated the commission of the irregular transaction. The evidence
they presented before the COA was insufficient to prove their case. So also, even
this Court is at a loss as to the truthfulness and veracity of petitioners' allegations
as they did not even present before this Court the documents that would serve as
the basis for their claims. DEHaTC
II.
Anent the second ground raised by petitioners, the same is again without merit.
Petitioners impute on the COA grave abuse of discretion when it held petitioners
administratively liable for having processed the loans of the borrowing cooperatives.
This Court stresses, however, that petitioners cannot rely on their supposed
observance of the procedure outlined in the Manual on Lending Operations when
clearly the same provides that "payment to the dealer shall be made after
presentation of reimbursement documents (delivery/official receipts/purchase
orders) acknowledged by the authorized LBP representative that the same has been
delivered." Petitioners have not made a case to dispute the COA's finding that they
violated the foregoing provision. Any presumption, therefore, that public officials are
in the regular performance of their public functions must necessarily fail in the
presence of an explicit rule that was violated.
There is no grave abuse of discretion on the part of the COA as petitioners were
given all the opportunity to argue their case and present any supporting evidence
with the COA Regional Director. Moreover, it bears to point out that even if
petitioners' period to appeal had already lapsed, the COA Commission Proper even
resolved their August 10, 1999 letter where they raised in issue the favorable ruling
of the Ombudsman.
III.

Anent, the last issue raised by petitioners, the same is without merit. Petitioners
contend that respondent's Order, requiring them to refund the disallowed
transaction, is functus officio, the amount having been legally written-off. 39
A perusal of the records would show that Land Bank Vice-President Conrado B.
Roxas sent a Memorandum 40 dated August 5, 1998 to the Head of the Ipil Branch,
advising them that the accounts subject of the present petition have been writtenoff, to wit:
We are pleased to inform you that Bangko Sentral ng Pilipinas (BSP) in its letter
dated July 20, 1998 has approved the write-off of your recommended Agrarian
Reform Loan Accounts and Commercial Loan Accounts as covered by LBP Board
Resolution Nos. 98-291 and 98-292, respectively, both dated June 18, 1998 . . . . 41
CIHAED
The Schedule of Accounts for Write-Off 42 attached to the August 5, 1998
Memorandum shows that the same covered the two loans given to BARBEMCO, the
two loans given to RTLim RMC, and the only loan given to Tungawan PFPMC. The
total amount approved for write-off was P2,209,000.00. 43 Moreover, petitioners
contend that the last loan given to SIFAMCO was also the subject of a write-off in a
similar advice given to the Buug Branch. The total approved write-off in the second
Memorandum 44 was for P906,000.00.
In its Comment, 45 the COA argues that the fact that the audit disallowance was
allegedly written-off is of no moment. Respondent maintains that Section 66 of PD
1445 46 expressly granted unto it the right to compromise monetary liabilities of
the government. 47 The COA, thus, theorizes that without its approval, the alleged
write-off is ineffectual. The same argument was reiterated by the COA in its
Memorandum. 48
The COA's argument deserves scant consideration.
A write-off is a financial accounting concept that allows for the reduction
in value of an asset or earnings by the amount of an expense or loss. It is
a means of removing bad debts from the financial records of the business.
In Land Bank of the Philippines v. Commission on Audit, 49 this Court ruled that
Land Bank has the power and authority to write-off loans, to wit:
LBP was created as a body corporate and government instrumentality to provide
timely and adequate financial support in all phases involved in the execution of
needed agrarian reform (Rep. Act No. 3844, as amended, Sec. 74). Section 75 of its
Charter vests in LBP specific powers normally exercised by banking institutions,
such as the authority to grant short, medium and long-term loans and advances
against security of real estate and/or other acceptable assets; to guarantee
acceptance(s), credits, loans, transactions or obligations; and to borrow from, or
rediscount notes, bills of exchange and other commercial papers with the Central
Bank. In addition to the enumeration of specific powers granted to LBP, Section 75
of its Charter also authorizes it:
12.
To exercise the general powers mentioned in the Corporation Law and the
General Banking Act, as amended, insofar as they are not inconsistent or
incompatible with this Decree. cSIACD
One of the general powers mentioned in the General Banking Act is that provided
for in Section 84 thereof, reading:
xxx
xxx
xxx
Writing-off loans and advances with an outstanding amount of one hundred
thousand pesos or more shall require the prior approval of the Monetary Board (As
amended by PD 71).

It will, thus, be seen that LBP is a unique and specialized banking institution, not an
ordinary "government agency" within the scope of Section 36 of Pres. Decree No.
1445. As a bank, it is specifically placed under the supervision and regulation of the
Central Bank of the Philippines pursuant to its Charter (Sec. 97, Rep. Act No. 3844,
as amended by Pres. Decree No. 251). In so far as loans and advances are
concerned, therefore, it should be deemed primarily governed by Central Bank
Circular No. 958, Series of 1983, which vests the determination of the frequency of
writing-off loans in the Board of Directors of a bank provided that the loans writtenoff do not exceed a certain aggregate amount. The pertinent portion of that Circular
reads:
b.
Frequency/ceiling of write-off. The frequency for writing-off loans and
advances shall be left to the discretion of the Board of Directors of the bank
concerned. Provided, that the aggregate amount of loans and advances which may
be written-off during the year, shall in no case exceed 3% of total loans and
investments; Provided, further, that charge-offs are made against allowance for
possible losses, earnings during the year and/or retained earnings. 50
While the power to write-off is not expressly granted in the charter of the Land
Bank, it can be logically implied, however, from the Land Bank's authority to
exercise the general powers vested in banking institutions as provided in the
General Banking Act (Republic Act 337). The clear intendment of its charter is for
the Land Bank to be clothed not only with the express powers granted to it, but also
with those implied, incidental and necessary for the exercise of those express
powers. 51
In the case at bar, it is thus clear that the writing-off of the loans involved was a
valid act of the Land Bank. In writing-off the loans, the only requirement for the
Land Bank was that the same be in accordance with the applicable Bangko Sentral
circulars, it being under the supervision and regulation thereof. The Land Bank
recommended for write-off all six loans granted to the cooperatives, and it is worthy
to note that the Bangko Sentral granted the same. The write-offs being clearly in
accordance with law, the COA should, therefore, adhere to the same, unless under
its general audit jurisdiction under PD 1445, it finds that under Section 25 (1) the
fiscal responsibility that rests directly with the head of the government agency has
not been properly and effectively discharged. TcDAHS
On this note, the reliance of respondent on Section 66 of PD 1445 is baseless as a
reading thereof would show that the same does not pertain to the COA's power to
compromise claims. Probably, what respondent wanted to refer to was Section 36
which provides:
Section 36. Power to compromise claims.
1.
When the interest of the government so requires, the Commission may
compromise or release in whole or in part, any claim or settled liability to any
government agency not exceeding ten thousand pesos and with the written
approval of the Prime Minister, it may likewise compromise or release any similar
claim or liability not exceeding one hundred thousand pesos, the application for
relief therefrom shall be submitted, through the Commission and the Prime Minister,
with their recommendations, to the National Assembly.
2.
The respective governing bodies of government-owned or controlled
corporations, and self-governing boards, commissions or agencies of the
government shall have the exclusive power to compromise or release any similar
claim or liability when expressly authorized by their charters and if in their
judgment, the interest of their respective corporations or agencies so requires.

When the charters do not so provide, the power to compromise shall be exercised
by the Commission in accordance with the preceding paragraph.
xxx
xxx
xxx 52
Under Section 36, the use of the word "may" shows that the power of the COA to
compromise claims is only permissive, and not mandatory. Further, the second
paragraph of Section 36 clearly states that respective governing bodies of
government-owned or controlled corporations, and self-governing boards,
commissions or agencies of the government shall have the exclusive power to
compromise or release any similar claim or liability when expressly authorized by
their charters. Nowhere in Section 36 does it state that the COA must approve a
compromise made by a government agency; the only requirement is that it be
authorized by its charter. It, therefore, bears to stress that the COA does not have
the exclusive prerogative to settle and compromise liabilities to the Government.
The foregoing pronouncements notwithstanding, this Court rules that writing-off a
loan does not equate to a condonation or release of a debt by the creditor. HDIATS
As an accounting strategy, the use of write-off is a task that can help a company
maintain a more accurate inventory of the worth of its current assets. In general
banking practice, the write-off method is used when an account is determined to be
uncollectible and an uncollectible expense is recorded in the books of account. If in
the future, the debt appears to be collectible, as when the debtor becomes solvent,
then the books will be adjusted to reflect the amount to be collected as an asset. In
turn, income will be credited by the same amount of increase in the accounts
receivable.
Write-off is not one of the legal grounds for extinguishing an obligation under the
Civil Code. 53 It is not a compromise of liability. Neither is it a condonation, since in
condonation gratuity on the part of the obligee and acceptance by the obligor are
required. 54 In making the write-off, only the creditor takes action by removing the
uncollectible account from its books even without the approval or participation of
the debtor.
Furthermore, write-off cannot be likened to a novation, since the obligations of both
parties have not been modified. 55 When a write-off occurs, the actual worth of the
asset is reflected in the books of accounts of the creditor, but the legal relationship
between the creditor and the debtor still remains the same the debtor continues
to be liable to the creditor for the full extent of the unpaid debt.
Based on the foregoing, as creditor, Land Bank may write-off in its books of account
the advance payment released to REMAD in the interest of accounting accuracy
given that the loans were already uncollectible. Such write-off, however, as
previously discussed, does not equate to a release from liability of petitioners.
Accordingly, the Land Bank Ipil Branch must be required to record in its books of
account the Php3,115,000.00 disallowance, and petitioners, together with their four
co-employees, 56 should be personally liable for the said amount. Such liability, is,
however, without prejudice to petitioners' right to run after REMAD, to whom they
illegally disbursed the loan, for the full reimbursement of the advance payment for
the cattle as correctly ruled by the COA in its July 17, 2003 Decision. 57
On a final note, it bears to point out that a cursory reading of the Ombudsman's
resolution will show that the complaint against petitioners was dismissed not
because of a finding of good faith but because of a finding of lack of sufficient
evidence. While the evidence presented before the Ombudsman may not have been
sufficient to overcome the burden in criminal cases of proof beyond reasonable
doubt, 58 it does not, however, necessarily follow, that the administrative

proceedings will suffer the same fate as only substantial evidence is required, or
that amount of relevant evidence which a reasonable mind might accept as
adequate to justify a conclusion. 59 ACcEHI
An absolution from a criminal charge is not a bar to an administrative prosecution or
vice versa. 60 The criminal case filed before the Office of the Ombudsman is distinct
and separate from the proceedings on the disallowance before the COA. So also, the
dismissal by Margarito P. Gervacio, Jr., Deputy Ombudsman for Mindanao, of the
criminal charges against petitioners does not necessarily foreclose the matter of
their possible liability as warranted by the findings of the COA.
In addition, this Court notes that the Ombudsman's Resolution relied on an alleged
"April 6, 1992 Memorandum of the Field Loans Review Department" which
supposedly authorized the Field Offices to undertake a prepayment scheme. On the
other hand, the same Ombudsman's Resolution also made reference to a "January
19, 1994 Memorandum of EVP Diaz" and a "May 31, 1994 Memorandum of VP FSD"
which tackled the prohibition on advance payment to suppliers. All these
documents, however, were again not attached to the records of the case at bar.
Particularly, the supposed "April 6, 1992 Memorandum of the Field Loans Review
Department" was not even mentioned nor raised by petitioners as a defense in
herein petition.
The decisions and resolutions emanating from the COA did not tackle the supposed
April 6, 1992 Memorandum of the Field Loans Review Department which allegedly
authorized the Field Offices to undertake a prepayment scheme. While it is possible
that such document would have shown that petitioners were in good faith, the same
should have been presented by them in the proceedings before the Commission
proper an act which they were not able to do because of their own negligence in
allowing the period to file an appeal to lapse. The April 6, 1992 Memorandum of the
Field Loans Review Department would have been the best evidence to free
petitioners from their liability. It appears, however, that they did not present
the same before the COA and it is already too late in the day for them to
present such document before this Court.
Petitioners' allegation of grave abuse of discretion by the COA implies
such capricious and whimsical exercise of judgment as is equivalent to
lack of jurisdiction or, in other words, the exercise of the power in an
arbitrary manner by reason of passion, prejudice, or personal hostility;
and it must be so patent or 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. 61 It is imperative for petitioners to show caprice
and arbitrariness on the part of the COA whose exercise of discretion is
being assailed. Proof of such grave abuse of discretion, however, is
wanting in this case. aESIDH
WHEREFORE, premises considered, the petition is DENIED. Decision No. 2003-107
dated July 17, 2003 and Resolution No. 2004-046 dated December 7, 2004, of the
Commission on Audit, are hereby AFFIRMED.
SO ORDERED.
Corona, C.J., Carpio, Carpio Morales, Brion, Bersamin, Villarama, Jr., Perez and
Mendoza, JJ., concur.
Velasco, Jr., Leonardo-de Castro, Del Castillo and Sereno, JJ., join the dissent of
Justice Abad.
Nachura, J., took no part. Filed pleading as Solicitor General.

Abad, J., see my dissenting opinion.

-------------------------------------------------------------------------------NILO T. PATES, petitioner, vs. COMMISSION ON ELECTIONS and EMELITA B.
ALMIRANTE, respondents.
RESOLUTION
BRION, J p:
Our Resolution of November 11, 2008 dismissed the petition in caption pursuant to
Section 3, Rule 64 of the Rules of Court which provides: HECTaA
SEC. 3.
Time to file petition. The petition shall be filed within thirty (30) days
from notice of the judgment or final order or resolution sought to be reviewed. The
filing of a motion for new trial or reconsideration of said judgment or final order or
resolution, if allowed under the procedural rules of the Commission concerned, shall
interrupt the period herein fixed. If the motion is denied, the aggrieved party may
file the petition within the remaining period, but which shall not be less than five (5)
days in any event, reckoned from notice of denial.
taking into account the following material antecedents:
a.
February 1, 2008 The COMELEC First Division issued its Resolution
(assailed in the petition);
b.
February 4, 2008 The counsel for petitioner Nilo T. Pates (petitioner)
received a copy of the February 1, 2008 Resolution; TAEcSC
c.
February 8, 2008 The petitioner filed his motion for reconsideration (MR) of
the February 1, 2008 Resolution (4 days from receipt of the February 1, 2008
Resolution)
d.
September 18, 2008 The COMELEC en banc issued a Resolution denying
the petitioner's MR (also assailed in the petition).
e.
September 22, 2008 The petitioner received the COMELEC en banc
Resolution of September 18, 2008 AaITCH
Under this chronology, the last day for the filing of a petition for certiorari, i.e., 30
days from notice of the final COMELEC Resolution, fell on a Saturday (October 18,
2008), as the petitioner only had the remaining period of 26 days to file his petition,
after using up 4 days in preparing and filing his Motion for Reconsideration.
Effectively, the last day for filing was October 20, 2008 the following Monday or
the first working day after October 18, 2008. The petitioner filed his petition with us
on October 22, 2008 or two days late; hence, our Resolution of dismissal of
November 11, 2008.
The Motion for Reconsideration
The petitioner asks us in his "Urgent Motion for Reconsideration with Reiteration for
the Issuance of a Temporary Restraining Order" to reverse the dismissal of his
petition, arguing that the petition was seasonably filed under the fresh period rule
enunciated by the Supreme Court in a number of cases decided beginning the year
2005. The "fresh period" refers to the original period provided under the Rules of
Court counted from notice of the ruling on the motion for reconsideration by the
tribunal below, without deducting the period for the preparation and filing of the
motion for reconsideration. SIDTCa
He claims that, historically, the fresh period rule was the prevailing rule in filing
petitions for certiorari. This Court, he continues, changed this rule when it
promulgated the 1997 Rules of Civil Procedure and Circular No. 39-98, which both
provided for the filing of petitions within the remainder of the original period, the

"remainder" being the original period less the days used up in preparing and filing a
motion for reconsideration. He then points out that on September 1, 2000 or only
three years after, this Court promulgated A.M. No. 00-02-03-SC bringing back the
fresh period rule. According to the petitioner, the reason for the change, which we
supposedly articulated in Narzoles v. National Labor Relations Commission, 1 was
the tremendous confusion generated by Circular No. 39-98.
The fresh period rule, the petitioner further asserts, was subsequently applied by
this Court in the following cases:
(1)
Neypes v. Court of Appeals 2 which thenceforth applied the fresh eriod rule to
ordinary appeals of decisions of the Regional Trial Court to the Court of Appeals;
SDAcaT
(2)
Spouses de los Santos v. Vda. de Mangubat 3 reiterating Neypes;
(3)
Active Realty and Development Corporation v. Fernandez 4 which, following
Neypes, applied the fresh period rule to ordinary appeals from the decisions of the
Municipal Trial Court to the Regional Trial Court; and
(4)
Romero v. Court of Appeals 5 which emphasized that A.M. No. 00-02-03-SC is
a curative statute that may be applied retroactively.
A reading of the ruling in these cases, the petitioner argues, shows that this Court
has consistently held that the order or resolution denying the motion for
reconsideration or new trial is considered as the final order finally disposing of the
case, and the date of its receipt by a party is the correct reckoning point for
counting the period for appellate review. CADSHI
The Respondent's Comment
We asked the respondents to comment on the petitioner's motion for
reconsideration. The Office of the Solicitor General (OSG), citing Section 5, Rule 65
of the Rules of Court and its related cases, asked via a "Manifestation and Motion"
that it be excused from filing a separate comment. We granted the OSG's
manifestation and motion.
For her part, respondent Emelita B. Almirante (respondent Almirante) filed a
comment stating that: (1) we are absolutely correct in concluding that the petition
was filed out of time; and (2) the petitioner's reliance on Section 4, Rule 65 of the
Rules of Court (as amended by A.M. No. 00-02-03-SC) is totally misplaced, as Rule
64, not Rule 65, is the vehicle for review of judgments and final orders or resolutions
of the COMELEC. Respondent Almirante points out that Rule 64 and Rule 65 are
different; Rule 65 provides for a 60-day period for filing petitions for certiorari, while
Rule 64 provides for 30 days.
OUR RULING
We do not find the motion for reconsideration meritorious.
A.
As a Matter of Law
Section 7, Article IX-A of the Constitution provides that unless otherwise provided by
the Constitution or by law, any decision, order, or ruling of each Commission may be
brought to the Court on certiorari by the aggrieved party within 30 days from
receipt of a copy thereof. For this reason, the Rules of Court provide for a separate
rule (Rule 64) specifically applicable only to decisions of the COMELEC and the
Commission on Audit. This Rule expressly refers to the application of Rule 65 in the
filing of a petition for certiorari, subject to the exception clause "except as
hereinafter provided". 6 SaIACT
Even a superficial reading of the motion for reconsideration shows that the
petitioner has not challenged our conclusion that his petition was filed outside the
period required by Section 3, Rule 64; he merely insists that the fresh period rule

applicable to a petition for certiorari under Rule 65 should likewise apply to petitions
for certiorari of COMELEC rulings filed under Rule 64.
Rule 64, however, cannot simply be equated to Rule 65 even if it expressly
refers to the latter rule. They exist as separate rules for substantive
reasons as discussed below. Procedurally, the most patent difference
between the two i.e., the exception that Section 2, Rule 64 refers to is
Section 3 which provides for a special period for the filing of petitions for certiorari
from decisions or rulings of the COMELEC en banc. The period is 30 days from
notice of the decision or ruling (instead of the 60 days that Rule 65
provides), with the intervening period used for the filing of any motion for
reconsideration deductible from the originally-granted 30 days (instead of
the fresh period of 60 days that Rule 65 provides). HICATc
Thus, as a matter of law, our ruling of November 11, 2008 to dismiss the petition for
late filing cannot but be correct. This ruling is not without its precedent; we have
previously ordered a similar dismissal in the earlier case of Domingo v. Commission
on Elections. 7 The Court, too, has countless times in the past stressed that the
Rules of Court must be followed. Thus, we had this to say in Fortich v. Corona: 8
Procedural rules, we must stress, should be treated with utmost respect and due
regard since they are designed to facilitate the adjudication of cases to remedy the
worsening problem of delay in the resolution of rival claims and in the
administration of justice. The requirement is in pursuance to the bill of rights
inscribed in the Constitution which guarantees that "all persons shall have a right to
the speedy disposition of their before all judicial, quasi-judicial and administrative
bodies," the adjudicatory bodies and the parties to a case are thus enjoined to abide
strictly by the rules. While it is true that a litigation is not a game of technicalities, it
is equally true that every case must be prosecuted in accordance with the
prescribed procedure to ensure an orderly and speedy administration of justice.
There have been some instances wherein this Court allowed a relaxation in the
application of the rules, but this flexibility was "never intended to forge a bastion for
erring litigants to violate the rules with impunity." A liberal interpretation and
application of the rules of procedure can be resorted to only in proper cases and
under justifiable causes and circumstances. (Emphasis supplied) ISCDEA
As emphasized above, exceptional circumstances or compelling reasons may have
existed in the past when we either suspended the operation of the Rules or
exempted a particular case from their application. 9 But, these instances were the
exceptions rather than the rule, and we invariably took this course of action only
upon a meritorious plea for the liberal construction of the Rules of Court based on
attendant exceptional circumstances. These uncommon exceptions allowed us to
maintain the stability of our rulings, while allowing for the unusual cases when the
dictates of justice demand a correspondingly different treatment.
Under this unique nature of the exceptions, a party asking for the suspension of the
Rules of Court comes to us with the heavy burden of proving that he deserves to be
accorded exceptional treatment. Every plea for a liberal construction of the Rules
must at least be accompanied by an explanation of why the party-litigant failed to
comply with the rules and by a justification for the requested liberal construction. 10
Significantly, the petitioner presented no exceptional circumstance or any
compelling reason to warrant the non-application of Section 3, Rule 64 to
his petition. He failed to explain why his filing was late. Other than his
appeal to history, uniformity, and convenience, he did not explain why we
should adopt and apply the fresh period rule to an election case. EHSADc

To us, the petitioner's omissions are fatal, as his motion does not provide us any
reason specific to his case why we should act as he advocates.
B.
As a Matter of Policy
In harking back to the history of the fresh period rule, what the petitioner
apparently wants for reasons of uniformity and convenience is the
simultaneous amendment of Section 3, Rule 64 and the application of his proposed
new rule to his case. To state the obvious, any amendment of this provision is an
exercise in the power of this Court to promulgate rules on practice and procedure as
provided by Section 5 (5), Article VIII of the Constitution. Our rulemaking, as every
lawyer should know, is different from our adjudicatory function. Rulemaking is an
act of legislation, directly assigned to us by the Constitution, that requires the
formulation of policies rather than the determination of the legal rights and
obligations of litigants before us. As a rule, rulemaking requires that we consult with
our own constituencies, not necessarily with the parties directly affected in their
individual cases, in order to ensure that the rule and the policy that it enunciates
are the most reasonable that we can promulgate under the circumstances, taking
into account the interests of everyone not the least of which are the
constitutional parameters and guidelines for our actions. We point these out as our
adjudicatory powers should not be confused with our rulemaking prerogative.
We acknowledge that the avoidance of confusion through the use of uniform
standards is not without its merits. We are not unmindful, too, that no less than the
Constitution requires that "motions for reconsideration of [division] decisions shall
be decided by the Commission en banc". 11 Thus, the ruling of the Commission en
banc on reconsideration is effectively a new ruling rendered separately and
independently from that made by a division. SEcITC
Counterbalanced against these reasons, however, are other considerations no less
weighty, the most significant of which is the importance the Constitution and this
Court, in obedience to the Constitution, accord to elections and the prompt
determination of their results. Section 3, Article IX-C of the Constitution expressly
requires that the COMELEC's rules of procedure should expedite the disposition of
election cases. This Court labors under the same command, as our proceedings are
in fact the constitutional extension of cases that start with the COMELEC.
Based on these considerations, we do not find convenience and uniformity
to be reasons sufficiently compelling to modify the required period for the
filing of petitions for certiorari under Rule 64. While the petitioner is
correct in his historical data about the Court's treatment of the periods for
the filing of the different modes of review, he misses out on the reason
why the period under Section 3, Rule 64 has been retained. The reason,
as made clear above, is constitutionally-based and is no less than
the importance our Constitution accords to the prompt determination of
election results. This reason far outweighs convenience and uniformity.
We significantly note that the present petition itself, through its plea for
the grant of a restraining order, recognizes the need for haste in deciding
election cases.
C.
Our Liberal Approach
Largely for the same reason and as discussed below, we are not inclined to suspend
the rules to come to the rescue of a litigant whose counsel has blundered by
reading the wrong applicable provision. The Rules of Court are with us for the
prompt and orderly administration of justice; litigants cannot, after resorting to a

wrong remedy, simply cry for the liberal construction of these rules. 12 Our ruling in
Lapid v. Laurea 13 succinctly emphasized this point when we said: cIECaS
Members of the bar are reminded that their first duty is to comply with the rules of
procedure, rather than seek exceptions as loopholes. Technical rules of procedure
are not designed to frustrate the ends of justice. These are provided to effect the
prompt, proper and orderly disposition of cases and, thus, effectively prevent the
clogging of court dockets. Utter disregard of these rules cannot justly be
rationalized by harking on the policy of liberal construction. [Emphasis supplied.]
We add that even for this Court, liberality does not signify an unbridled exercise of
discretion. It has its limits; to serve its purpose and to preserve its true worth, it
must be exercised only in the most appropriate cases. 14
WHEREFORE, premises considered, we DENY the motion for reconsideration for lack
of merit. Our Resolution of November 11, 2008 is hereby declared FINAL. Let entry
of judgment be made in due course. EcTIDA
SO ORDERED.
Puno, C.J., Quisumbing, Ynares-Santiago, Carpio, Corona, Chico-Nazario, Velasco, Jr.,
Nachura, Leonardo-de Castro, Peralta and Bersamin, JJ., concur.
Carpio Morales, J., is on leave.
Footnotes
1.
G.R. No. 141959, September 29, 2000, 341 SCRA 533.
2.
G.R. No. 141524, September 15, 2005, 469 SCRA 633.
3.
G.R. No. 149508, October 10, 2007, 535 SCRA 411.
4.
G.R. No. 157186, October 19, 2007, 537 SCRA 116.
5.
G.R. No. 142803, November 20, 2007, 537 SCRA 643.
6.
RULES OF COURT, Rules 64, Section 2.
7.
G.R. No. 136587, August 30, 1999, 313 SCRA 311.
8.
G.R. No. 131457, November 17, 1998, 298 SCRA 679, 690-691.
9.
See: Ponciano v. Laguna Lake Development Authority, G.R. No. 1745636,
October 29, 2008 and Tagle v. Equitable PCI Bank, G.R. No. 172299, April 22, 2008,
552 SCRA 424.
10.
Prudential Guarantee and Assurance, Inc. v. Court of Appeals, G.R. No.
146559, August 13, 2004, 436 SCRA 478, 483.
11.
CONSTITUTION, Article IX-C, Section 3.
12.
Aguila v. Baldovizo, G.R. No. 163186, February 28, 2007, 517 SCRA 91.
13.
G.R. No. 139607, October 28, 2002, 391 SCRA 277.
14.
See: Lozano, et al. v. Nograles, G.R. Nos. 187883 and 187910, June 16, 2009,
that, from another perspective, also speaks of the limits of liberality.
--------------------------------------------------NDRES SANCHEZ, LEONARDO D. REGALA, RAFAEL D. BARATA, NORMA AGBAYANI,
and CESAR N. SARINO, petitioners, vs. COMMISSION ON AUDIT, respondent.
DECISION
TINGA, J p:
The 1987 Constitution has made the Commission on Audit (COA) the guardian of
public funds, vesting it with broad powers over all accounts pertaining to
government revenue and expenditures and the uses of public funds and property,
including the exclusive authority to define the scope of its audit and examination,
establish the techniques and methods for such review, and promulgate accounting
and auditing rules and regulations. 1 Its exercise of its general audit power is among

the constitutional mechanisms that give life to the check and balance system
inherent in our form of government. 2
The exercise of this power by the Department Auditor of the Department of the
Interior and Local Government (DILG) is the subject of the instant Petition for Review
3 dated 10 February 1997. SAHIaD
A chronicle of the operative incidents is needed.
In 1991, Congress passed Republic Act No. 7180 (R.A. 7180) otherwise
known as the General Appropriations Act of 1992. This law provided an
appropriation for the DILG under Title XIII and set aside the amount of
P75,000,000.00 for the DILG's Capability Building Program. TSADaI
The usage of the Capability Building Program Fund (Fund) is provided under the
Special Provisions of the law as follows:
Special Provisions
1.
Capability Building Program for Local Personnel. The amount herein
appropriated for the Capability Building Program for local personnel shall be used
for local government and community capability building programs, such as training
and technical assistance, with the necessary support for training materials, supplies
and facilities: PROVIDED, That savings from the appropriations may be used to
acquire equipment, except motor vehicles, in further support of the programs.
DIETcH
The Capability Building Program shall be implemented nationwide by the
Department of the Interior and Local Government through the Local Government
Academy and shall involve local officials and employees, including barangay
officials, elected and appointed.
The appropriations authorized herein shall be administered by the Department of
the Interior and Local Government and shall be released upon submission of a work
and financial plan supported by a detailed breakdown of the projects, activities and
objects of expenditures proposed to be funded. AcISTE
Savings generated over and above the requirements prescribed in Section 18 of the
General Provisions of this Act shall be made available for the Capability Building
Program of the Department of the Interior and Local Government for local officials
and employees, subject to Section 40 of P.D. 1177 (Sec. 35, Book VI of E.O. No.
292). aSIAHC
On 11 November 1991, Atty. Hiram C. Mendoza (Atty. Mendoza), Project Director of
the Ad Hoc Task Force for Inter-Agency Coordination to Implement Local Autonomy,
informed then Deputy Executive Secretary Dionisio de la Serna of the proposal to
constitute and implement a "shamrock" type task force to implement local
autonomy institutionalized under the Local Government Code of 1991. IHEDAT
The stated purpose for the creation of the task force was to design programs,
strategize and prepare modules for an effective program for local autonomy. The
estimated expenses for its operation was P2,388,000.00 for a period of six months
beginning on 1 December 1991 up to 31 May 1992 unless the above ceiling is
sooner expended and/or the project is earlier pre-terminated. cHSIDa
The proposal was accepted by the Deputy Executive Secretary and attested by then
DILG Secretary Cesar N. Sarino, one of the petitioners herein, who consequently
issued a memorandum for the transfer and remittance to the Office of the President
of the sum of P300,000.00 for the operational expenses of the task force. An
additional cash advance of P300,000.00 was requested. These amounts were taken
from the Fund. IDAaCc

Two (2) cash advances both in the amount of P300,000.00 were withdrawn from the
Fund by the DILG and transferred to the Cashier of the Office of the President. The
"Particulars of Payment" column of the disbursement voucher states that the
transfer of funds was made "to the Office of the President for Ad-Hoc Task Force
for Inter-Agency Coordination to Implement Local Autonomy." 4
The first cash advance in the amount of P300,000.00 was liquidated in the following
manner although no receipts were presented to support the expenditures:
Payroll
P226,000.00
Office rentals
60,000.00
Office furnitures
7,500.00
Office supplies
3,682.50
Xerox 300.30
Transportation expense 406.00
Bank charges
75.00
Miscellaneous
60.00

P298,023.80
Balance 31 March 1992 P1,976.00 5
There is no record of the liquidation of the second cash advance in the amount of
P300,000.00. SDAcaT
Upon post-audit conducted by Department auditor Iluminada M.V. Fabroa,
however, the amounts were disallowed for the following reasons stated in
the 3rd Endorsement dated 25 May 1992:
1.
No legal basis for the created Task Force to claim payment thru DILG
by way of cash advance.
2.
Previous cash advance granted to accountable officer has not yet
been liquidated.
3.
Expenditures funded from capability building are subject to
restrictions/conditions embodied in the Special Provisions of the DILG
Appropriations of R.A. 7180 which should be met.
4.
Estimate of expenses covered by the cash advance not specified. 6
The disallowance was reiterated in the Notice of Disallowance dated 29 March 1993,
which states:
The transfer of fund from DILG to the Office of the President to defray salaries of
personnel, office supplies, office rentals, foods and meals, etc. of an Ad Hoc Task
Force for Inter-Agency Coordination to Implement Local Autonomy taken from the
Capability Building Program Fund is violative of the Special Provisions of R.A. 7180.
7
A Notice of Disallowance dated 29 March 1993 was then sent to Mr. Sarino, et al.
holding the latter jointly and severally liable for the amount and directing them to
immediately settle the disallowance. cdasia
Aggrieved by such action, Mr. Sarino, et al. requested reconsideration of the
disallowance on the following grounds:
1.
That the transfer was for the operational expenses of an ad hoc task force for
inter-agency coordination to implement local autonomy; hence, for a public
purpose;
2.
Legally, the question of whether or not the transfer of funds by the DILG
taken from the capability building program of the Office of the President is violative
of R.A. 7180 is exclusively within the competence and jurisdiction of the courts and
not of any other office. As it is, the matter involves a prejudicial issue that

necessitates prior authoritative determination by the courts. Unless there is a

pronouncement to the contrary, the transfer of funds for a public purpose effected
by the executive branch of government thru the department head is presumed legal
and regular. Likewise, the DILG Auditor's conclusion of violation of the law cannot
overcome the presumption of legality and regularity of acts done by public officers
in the performance of public duty. At best, such conclusion is gratuitous and devoid
of legal force and effect;
3.
That the alleged violation is not specific and stated with particularity so as to
apprise the respondents of the nature and cause of the alleged violation. Legally,
therefore, the disallowance is completely void for being violative of the
constitutional guarantee of due process; and
4.
In the case of Binamira v. Garrucho, 188 SCRA 155, the Supreme Court held
that the acts of department heads, unless reprobated or disapproved by the Chief
Executive, performed and promulgated in the regular course of business are
presumed valid and presumptively considered acts of the President of the
Philippines. 8
Countering the foregoing points raised in the request for reconsideration, the
Department Auditor denied the request, thus:
1.
That the expenses was for a public purpose.
Yes, it may be granted that the expenses was for a public purpose, but it was
different from the purpose for which the fund was created. Expenditures, as earlier
pointed out, funded from the Capability Building Program are subject to compliance
to the restrictions/conditions embodied in the Special Provisions of the General
Appropriations Act of 1992. aHIEcS
Section 37, P.D. 1177 provides that "All money appropriated for functions, activities,
projects and programs shall be available solely for the specific purpose for which
these are appropriated." (Underscoring supplied)
2.
We believe that there is no prejudicial issue involved in this particular case
that needs the pronouncement by the Courts. It is clearly stated in the Special
Provisions of the DILG Appropriations of R.A. No. 7180 that the Capability Building
Program Fund shall be used for local government and community capability building
programs. Therefore the transfer and expenditures of the funds in the Office of the
Deputy Executive Secretary has completely abandoned the raison d' etre for which
the fund was established. CDHacE
Every expenditure or obligation authorized or incurred in violation of law shall be
the personal liability of the persons who authorized the expenditure. There is no
need for the officer or employee to misappropriate public funds but merely
appropriating public funds for a purpose other than that authorized by law.
(Underscoring supplied)
3.
We beg to disagree to the Counsel's claim that the alleged violation was not
specific and stated with particularity so as to apprise the clients of the nature and
cause of the alleged violation. ADSTCa
The grounds for our disallowance were specifically enumerated in our 3rd
Indorsement dated May 25, 1992, to the FMS Director, this Department. TAacIE
4.
The mere transfer of the fund from DILG to the Office of the Deputy Executive
Secretary to defray the salaries of the personnel, office supplies, office rentals,
foods and meals, etc. is already in violation of law. Section 84 (2) of P.D. 1445
provides that "Trust funds shall not be paid out of any public treasury or depository
except in fulfillment of the purpose for which the trust was created or funds
received, and upon authorization of the legislative body or head of any other

agency of the government having control thereof, and subject to pertinent budget
law, rules and regulations. (Underscoring supplied) 9
Finding no reason to deviate from the findings of the Department Auditor, the COA
affirmed the disallowance in its assailed COA Decision No. 96-654 10 dated 21
November 1996. TSEHcA
It is worth noting at this juncture that while Commissioner Sofronio B. Ursal
(Commissioner Ursal) signed the assailed Decision, he nonetheless submitted a
dissenting opinion stating that the transfer of funds from the Fund to the Office of
the Executive Secretary falls within the authority of the President to augment any
item in the general appropriations law as provided in Sec. 25 (5), Art. VI of the 1987
Constitution. Thus, he concludes that the transfer is deemed an act of the President.
Further, the use of the Fund by the task force to implement local autonomy falls
within the purpose for which the Fund was created. However, he adds that the
individual disbursements made by the task force for such expenses as salaries,
allowances, rentals, food and the like should be audited by the Auditor for the Office
of the President in accordance with existing accounting and auditing rules. 11
Petitioners argue that the transfer of the questioned amount from the Fund of the
DILG to the Office of the President was legal and that the Notice of Disallowance
dated 29 May 1993 was without basis. They explain that the Capability Building
Program which was financed by the Fund was administered by the DILG and was
intended as a complementary resource to aid the DILG in its task of pursuing an
intensified program of enhancing local government autonomy capabilities. It was
pursuant to this goal that a task force was created to design programs, strategize
and prepare modules for an effective program for local autonomy with the expenses
therefor to be charged against the Fund. Thus, petitioners argue that the purpose of
the task force was actually within the framework of the Special Provisions of R.A. No.
7180, and the transfer of funds to effectuate this purpose was not violative of the
said law contrary to the Department Auditor's conclusion. aEIcHA
Further, petitioners aver that the law did not prohibit the DILG from directly
coordinating with the Office of the President in attaining the objectives of local
autonomy. ITSacC
The Office of the Solicitor General (OSG) filed a Manifestation and Motion in Lieu of
Comment 12 dated 19 January 1998, which it later disavowed, however, stating that
the petition is meritorious. According to the OSG then, far from being categorically
different from the purpose for which the Fund was created, the transfer of the
amount in question complemented, if not enhanced, the DILG's program to promote
local autonomy. The transfer of a portion of the Fund for the operational expenses of
the task force to implement local autonomy did not therefore violate the Special
Provisions of R.A. No. 7180. CScTDE
Because of the position initially taken by the OSG, the COA filed its own Comment
13 dated 16 March 1998, maintaining that it acted according to its constitutional
mandate when it disallowed the disbursement considering that the transfer of funds
from the DILG to the Office of the President was violative of the Special Provisions of
R.A. No. 7180. The COA considers the Fund a trust fund which may not be paid out
except in fulfillment of the purpose for which it was created and upon authorization
of the head of agency and subject to budget law, rules and regulations. aSCHcA
Petitioners filed their Reply 14 dated 9 March 2001. Thereafter, the parties were
required to submit their respective memoranda in the Resolution 15 dated 12

February 2002. In compliance with this directive, the parties filed their memoranda
16 in reiteration of their respective positions. cDCSTA
For further elucidation of the issues, the Court set the case for oral argument,
crystallizing the decisive issues in this case as follows:
(1)
Whether there is legal basis for the transfer of funds of the Capability Building
Program Fund appropriated in the 1992 General Appropriation Act from the
Department of Interior and Local Government to the Office of the President;
aEDCSI
(2)
Whether the conditions or requisites for the transfer of funds under the
applicable law were present in this case;
(3)
Whether the Capability Building Program Fund is a trust fund, a special fund,
a trust receipt or a regular appropriation; and finally
(4)
Whether the questioned disallowance by the Commission on Audit is valid. 17
The parties were required to simultaneously submit their memoranda in
amplification of their arguments on the foregoing issues. SDTcAH
Retracting its previous stance, the OSG avers in its Memorandum 18 dated 6 July
2005 that the transfer of funds from the DILG to the Office of the President has no
legal basis and that COA's disallowance of the transfer is valid. According to the
OSG, the creation of a task force to implement local autonomy, if one was
necessary, should have been done through the Local Government Academy with the
approval of its board of trustees in accordance with R.A. No. 7180. HIaAED
Moreover, Sec. 25 (5), Art. VI of the Constitution authorizes the transfer of funds
within the OP if made by the President for purposes of augmenting an item in the
Office of the President. In this case, it was not the President but the Deputy
Executive Secretary who caused the transfers and the latter was not shown to have
been authorized by the President to do so. TcSHaD
The OSG's Memorandum also brings to the surface several facts which had
theretofore remained hidden. For instance, it was disclosed that the disallowed
transfers were released without the submission of a work and financial plan
supported by a detailed breakdown of the projects, activities and objects of
expenditures proposed to be funded. 19 There was also no proper liquidation of the
P600,000.00 cash advance made to Atty. Mendoza who, in addition, was not even
an employee either of the DILG or the Office of the President. 20
In the absence of evidence of bad faith, malice or gross negligence, however, the
OSG submits that petitioners may not be held civilly and personally liable for the
disallowed expenditure. IADCES
The COA, in its Memorandum 21 dated 18 July 2005, reiterates its position that
there is no legal basis for the transfers in question because the Fund was meant to
be implemented by the Local Government Academy. Further, transfer of funds under
Sec. 25 (5), Art. VI of the Constitution may be made only by the persons mentioned
in the section and may not be re-delegated being already a delegated authority.
Additionally, the funds transferred must come only from savings of the office in
other items of its appropriation and must be used for other items in the
appropriation of the same office. In this case, there were no savings from which
augmentation can be taken because the releases of funds to the Office of the
President were made at the beginning of the budget year 1992. EcTCAD
The COA also posits that while the Fund is a regular appropriation, it partakes the
nature of a trust fund because it was allocated for a specific purpose. Thus, it may
be used only for the specific purpose for which it was created or the fund received.

The COA concludes that petitioners should be held civilly and criminally liable for
the disallowed expenditures. cHaICD
For their part, petitioners maintain in their Memorandum 22 that the transfer of
funds was never repudiated by the President and that operational control over the
amount transferred remained with the DILG as evidenced by the fact that liquidation
was done by the latter and not by the Office of the President. Petitioners also insist
that the Fund is a regular item of appropriation and not a trust fund because after
the end of the calendar year, any unexpended amount will be reverted to the
General Fund. cTSHaE
We affirm the ruling of the COA.
The COA is endowed with enough latitude to determine, prevent and
disallow irregular, unnecessary, excessive, extravagant or unconscionable
expenditures of government funds. 23 It has the power to ascertain whether
public funds were utilized for the purpose for which they had been intended.
aACHDS
The Court had therefore previously upheld the authority of the COA to disapprove
payments which it finds excessive and disadvantageous to the Government; to
determine the meaning of "public bidding" and when there is "failure" in the
bidding; to disallow expenditures which it finds unnecessary according to its rules
even if disallowance will mean discontinuance of foreign aid; to disallow a contract
even after it has been executed and goods have been delivered. 24 Likewise, we
sustained the findings of the COA disallowing the disbursements of the National
Home Mortgage Finance Corporation for failure to submit certain documentary
requirements and for being irregular and excessive. 25
We have also ruled that the final determination of the Department of Finance and
the BIR as to a person's entitlement to an informer's reward is conclusive only upon
the executive agencies concerned and not on the COA, the latter being an
independent constitutional commission. 26 The COA is traditionally given free rein
in the exercise of its constitutional duty to examine and audit expenditures of public
funds especially those which are palpably beyond what is allowed by law. TIaCHA
Verily, it is the general policy of the Court to sustain the decisions of
administrative authorities, especially one which is constitutionallycreated, 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. 27 It is, in fact, an oft-repeated rule that 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. 28
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. We find no
grave abuse of discretion on the part of the COA in issuing the assailed
Decision as will be discussed hereafter.
Petitioners have flip-flopped on whether an actual transfer of the disallowed amount
had taken place. In response a pointed question during oral argument, counsel for
petitioners stated that there was no transfer of even a centavo of the P600,000.00
to the Office of the President. 30 On the other hand, in their Memorandum 31 dated
28 August 2005, petitioners aver that "the transfer of funds was made by the DILG

to the Office of the President, through the request of then Deputy Executive
Secretary Dionisio de la Serna. The transfer of funds was never repudiated nor
questioned by the President." 32
The OSG, on the other hand, unmistakably confirms the actual transfer in its
Memorandum attaching the disbursement voucher and receipts covering the
transfer of funds from the DILG to the Office of the President. ScHAIT
The resolution of these divergent theories is critical. If, on one hand, there was no
actual transfer of funds, the propriety of the disallowance would be evaluated on
the basis of whether the purpose for which the fund was used was indeed violative
of R.A. No. 7180. On the other hand, if there was an actual transfer of funds, the
Court would have to ascertain whether the criteria laid out in Sec. 25 (5), Art. VI of
the 1987 Constitution had been met. HDATSI
In the following exchange between then Justice (now Chief Justice) Puno and COA
Assistant Commissioner Raquel Habitan, the latter reiterated that petitioners have
always stood pat on their argument that there was a transfer of funds but that the
transfer was valid as it was for a public purpose:
JUSTICE PUNO:
May I go to the question of transfer, am I correct in assuming that this case
was resolved by your office on the theory that the transfer of funds violated the
provision of the Constitution and related laws?
COMMISSIONER HABITAN:
Yes, Your Honor.
JUSTICE PUNO:
Was the question of transfer an issue raised by the petitioners when this case
was under litigation up to the time when it reached your office. In other words, did
the petitioners ever raise the issue that there was no transfer of any funds involved
in the case?
COMMISSIONER HABITAN:
Your Honor, in the motion for reconsideration of then Secretary Sarino when
he requested reconsideration of disallowance he relied on the following grounds
that the transfer was for the operational expenses of an Ad Hoc Task Force for inter
agency coordination implement local autonomy hence for a public purpose that was
the number one ground for the motion for reconsideration for the disallowance, Your
Honor.
JUSTICE PUNO:
But did they ever take the position that indeed there was no transfer of funds
from the DILG to the Office of the President and then back, was that position taken
by petitioner?
COMMISSIONER HABITAN:
But the records will show Your Honor that there was two (2) separate
vouchers one for Three Hundred Thousand each which was actually disallowed by
the COA, Your Honor.
JUSTICE PUNO:
No, I am asking you whether the petitioners ever took that position that there
was no transfer of funds at all from the DILG to the Office of the President. I ask that
question because I am confused by the change of answers of the counsel for the
petitioners. So, I am asking that question whether the fact of transfer was a subject
of litigation up to your office.
COMMISSIONER HABITAN:

Yes, Your Honor, I am reading the COA decision itself and in the motion for
reconsideration of Secretary Sarino. It was one of the grounds relied upon, that the
transfer was for the operational expenses. He tried to justify that the operational
expenses of the Ad Hoc Task Force was for a public purpose.
JUSTICE PUNO:
He concedes that there was a transfer, but the defense was the validity of the
transfer?
COMMISSIONER HABITAN:
Yes, Your Honor.
JUSTICE PUNO:
What is the test on whether there was a transfer of funds from one agency to
another agency? Let us take for example, a situation where a Task Force is created
and the task of that committee is subject that properly belongs in this case with the
DILG and so the task force agreed that disbursements of money should be
undertaken and controlled by the head of the DILG, would the fact of control of
disbursement show that there was no transfer of funds?
COMMISSIONER HABITAN:
But they cannot erase the fact for the record of the case that there were two
(2) separate vouchers as I said.
JUSTICE PUNO:
Exactly, I am asking you that question would the mere fact that
disbursements were under the control of the DILG, would that lead to the conclusion
that there was no transfer of funds from the DILG to the Office of the President?
COMMISSIONER HABITAN:
But the check, Your Honor, was in the name of the Task Force. So, evidently
there was an actual transfer of the funds from DILG to the Office of the President
pursuant to the Memorandum of Agreement creating the Task Force. 33 [Emphasis
supplied]
The theory that there was an actual transfer of funds but the same was for a public
purpose has been at the core of petitioners' arguments since they requested
reconsideration of the Notice of Disallowance dated 29 March 1993. Even their
pleadings before the Court reveal an unwavering adherence to their theory that the
transferred funds should not have been disallowed because they were used for a
public purpose. CaSAcH
Commissioner Ursal's dissent, which first brought to fore the opinion that the
disallowed transfer was a valid exercise of the President's power to augment under
Sec. 25 (5), Art. VI of the 1987 Constitution, is therefore clearly just a gratuitous
argument because petitioners themselves never justified the transfer as an exercise
of the President's constitutional prerogative. EHSADc
At any rate, in order to finally lay this case to rest, we shall discuss whether the
disallowed transfer satisfies the standard laid down for the augmentation from
savings under Sec. 25 (5), Art. VI of the 1987 Constitution. TCacIE
The General Provisions of R.A. No. 7180 provides that "[E]xcept by act of the
Congress of the Philippines, no change or modification shall be made in the
expenditure items authorized in this Act and other appropriations laws unless in
cases of augmentations from savings in appropriations as authorized under Section
25 (5) of Article VI of the Constitution." 34
Sec. 25 (5), Art. VI of the 1987 Constitution, in turn, provides:
Sec. 25 (5) No law shall be passed authorizing any transfer of appropriations;
However, the President, the President of the Senate, The Speaker of the House of

Representatives, the Chief Justice of the Supreme Court, and the heads of
Constitutional Commissions may, by law, be authorized to augment any item in the
general appropriations law for their respective offices from savings in other items of
their respective appropriations. AHaDSI
It is important to underscore the fact that the power to transfer savings under Sec.
25 (5), Art. VI of the 1987 Constitution pertains exclusively to the President, the
President of the Senate, the Speaker of the House of Representatives, the Chief
Justice of the Supreme Court, and the heads of Constitutional Commissions and no
other. HCTDIS
In Philippine Constitution Association v. Enriquez, 35 the Court declared that
individual members of Congress may only determine the necessity of the
realignment of savings in the allotments for their operating expenses because they
are in the best position to know whether there are savings available in some items
and whether there are deficiencies in other items of their operating expenses that
need augmentation. However, it is the Senate President and the Speaker of the
House of Representatives who shall approve the realignment. 36
In the same case, the Court also ruled that the Chief of Staff of the Armed Forces of
the Philippines may not be given authority to transfer funds under this article
because the realignment of savings to augment items in the general appropriations
law for the executive branch must and can be exercised only by the President
pursuant to a specific law. 37
Parenthetically, petitioners fail to point out to the Court the specific law and
provision thereof which authorizes the transfer of funds in this case. ACTEHI
Thus, the submission that there was a valid transfer of funds within the Executive
Department should be rejected as it overlooks the fact that the power and authority
to transfer in this case was exercised not by the President but only at the instance
of the Deputy Executive Secretary, not the Executive Secretary himself. Even if the
DILG Secretary had corroborated the initiative of the Deputy Executive Secretary, it
does not even appear that the matter was authorized by the President. More
fundamentally, as will be shown later, even the President himself could not have
validly authorized the transfer under the Constitution. IDESTH
The deliberations of the Constitutional Commission are instructive as regards the
extent of the President's power to augment:
MR. SARMENTO:
I have one last question. Section 25, paragraph (5) authorizes the Chief
Justice of the Supreme Court, the Speaker of the House of Representatives, the
President, the President of the Senate to augment any item in the General
Appropriations Law. Do we have a limit in terms of percentage as to how much they
should augment any item in the General Appropriations Law?
MR. AZCUNA:
The limit is not in percentage but "from savings". So it is only to the extent of
their savings. 38
The 1973 Constitution contained an identical provision:
Sec. 16(5). No law shall be passed authorizing any transfer of appropriations,
however, the President, the Prime Minister, the Speaker, the Chief Justice of the
Supreme Court, and the heads of constitutional commissions may by law be
authorized to augment any item in the general appropriations law for their
respective offices from savings in other items of their respective appropriations.
cIACaT

Construing this provision, the Court ruled in the pre-eminent case of Demetria v.
Alba: 39
The prohibition to transfer an appropriation for one item to another was explicit and
categorical under the 1973 Constitution. However, to afford the heads of the
different branches of the government and those of the constitutional commissions
considerable flexibility in the use of public funds and resources, the constitution
allowed the enactment of a law authorizing the transfer of funds for the purpose of
augmenting an item from savings in another item in the appropriation concerned.
The leeway granted was thus limited. The purpose and conditions for which funds
may be transferred were specified, i.e. transfer may be allowed for the purpose of
augmenting an item and such transfer may be made only if there are savings from
another item in the appropriation of the government branch or constitutional body.
[Emphasis supplied]
Thus, we declared unconstitutional par. 1, Sec. 44 of Presidential Decree No. 1177
which authorized the President "to transfer any fund, appropriated for the different
departments, bureaus, offices and agencies of the Executive Department, which are
included in the General Appropriations Act, to any program, project or activity of
any department, bureau or office included in the General Appropriations Act or
approved after its enactment" because it unduly overextends the privilege granted
under Sec. 16 (5) of the 1973 Constitution. CDAEHS
We ruled that the President cannot indiscriminately transfer funds from one
department, bureau, office or agency of the Executive Department to any program,
project or activity of any department, bureau or office included in the General
Appropriations Act or approved after its enactment, without regard to whether the
funds to be transferred are actually savings in the item from which the same are to
be taken, or whether or not the transfer is for the purpose of augmenting the item
to which the transfer is to be made. 40
R.A. 7180 contains a similar provision on the President's power to augment and
provides the meaning of "savings" and "augmentation", thus:
Sec. 17.
Use of Savings. The President of the Philippines, the President of the
Senate, the Speaker of the House of Representatives, the Chief Justice of the
Supreme Court, the Heads of Constitutional Commissions under Article IX of the
Constitution, the Ombudsman and the Commission on Human Rights are hereby
authorized to augment any item in this Act for their respective offices from savings
in other items of their respective appropriations. CAHTIS
xxx
xxx
xxx
Sec. 19.
Meaning of Savings and Augmentation. Savings refer to portions or
balances of any programmed appropriation free of any obligation or encumbrance
still available after the satisfactory completion or unavoidable discontinuance or
abandonment of the work, activity or purpose for which the appropriation is
authorized, or arising from unpaid compensation and related costs pertaining to
vacant positions and leaves of absence without pay. Augmentation implies the
existence in this Act of an item, project, activity or purpose with an appropriation
which upon implementation or subsequent evaluation of needed resources is
determined to be deficient. In no case, therefore, shall a non-existent item, project,
activity, purpose or object of expenditure be funded by augmentation from savings
or by the use of appropriations authorized otherwise in this act. 41
Clearly, there are two essential requisites in order that a transfer of
appropriation with the corresponding funds may legally be effected. First,
there must be savings in the programmed appropriation of the

transferring agency. Second, there must be an existing item, project or

activity with an appropriation in the receiving agency to which the savings
will be transferred. TcSHaD
Actual savings is a sine qua non to a valid transfer of funds from one government
agency to another. The word "actual" denotes that something is real or substantial,
or exists presently in fact as opposed to something which is merely theoretical,
possible, potential or hypothetical. 42
As a case in point, the Chief Justice himself transfers funds only when there are
actual savings, e.g., from unfilled positions in the Judiciary. 43
The thesis that savings may and should be presumed from the mere transfer of
funds is plainly anathema to the doctrine laid down in Demetria v. Alba as it makes
the prohibition against transfer of appropriations the general rule rather than the
stringent exception the constitutional framers clearly intended it to be. It makes a
mockery of Demetria v. Alba as it would have the Court allow the mere expectancy
of savings to be transferred. cHaCAS
Contrary to another submission in this case, the President, Chief Justice, Senate
President, and the heads of constitutional commissions need not first prove and
declare the existence of savings before transferring funds, the Court in Philconsa v.
Enriquez, supra, categorically declared that the Senate President and the Speaker of
the House of Representatives, as the case may be, shall approve the realignment
(of savings). However, "[B]efore giving their stamp of approval, these two officials
will have to see to it that: (1) The funds to be realigned or transferred are actually
savings in the items of expenditures from which the same are to be taken; and (2)
The transfer or realignment is for the purpose of augmenting the items of
expenditure to which said transfer or realignment is to be made." 44
As it is, the fact that the permissible transfers contemplated by Section 25 (5),
Article VI of the 1987 Constitution would occur entirely within the framework of the
executive, legislative, judiciary, or the constitutional commissions, already makes
wanton and unmitigated malversation of public funds all too easy, without the Court
abetting it by ruling that transfer of funds ipso facto denotes the existence of
savings. SAHaTc
Precisely, the restriction on the transfer of funds, and similar constitutional
limitations such as the specification of purpose for special appropriations bill, 45 the
restriction on disbursement of discretionary funds, 46 the conditions on the release
of money from the Treasury, 47 among others, "were all safeguards designed to
forestall abuses in the expenditure of public funds". 48
The following exchange between Mdme. Justice Sandoval-Gutierrez and counsel for
petitioners inexorably reveals that petitioners had known that there were no savings
in the DILG at the time of the questioned transfers, thus:
JUSTICE GUTIERREZ:
All Right, according to the law augmentation implies the existence of an item,
project, activity or purpose with an appropriation upon which implementation or
subsequent evaluation of needed resources is determined to be deficient, my
question is is there a funding in the task force to be augmented or was there
insufficient funds in the task force to be augmented?
ATTY. MADRIAGA:
If Your Honors please, I am not privy to the appropriation for the Office of the
President, but we know, Your Honor, is that these amount of Six Hundred Thousand
Pesos was only to augment or to increase whatever funds perhaps would be under
the Office of the President for such a gargantuan task as the implementation or

preparation for the implementation of the Code, Your Honor. So, I am sorry but I do
not have knowledge as to the appropriations of the Office of the President in regard
to this type of activities, Your Honor.
JUSTICE GUTIERREZ:
In that case, Counsel, you cannot say categorically that the transfer is valid
because you cannot inform the Court whether or not there was a need to augment
and whether or not there was really a funding, a sufficient funding for the task force,
is that right?
ATTY. MADRIAGA:
Yes, Your Honor.
JUSTICE GUTIERREZ:
Second requirement is that there must be actual savings in the item from
which the same are to be taken, can you tell us now if you know for a fact that there
were actual savings before the fund was transferred?
ATTY. MADRIAGA:
If Your Honor please, the transfer of funds was made at the start of the
calendar year 1992. The General Appropriations Act, Republic Act 7180 took effect
that year. So, I would surmise, Your Honors, so as of that time there was no savings
as yet that was accumulated by the department but because of the exigency of the
purpose, Your Honor, considering that the Department of Interior and Local
Government had only two (2) months and twenty (20) days for the preparation of
the implementation of the Local Government Code which was signed, as I said, on
October 10, 1991 and which was supposed to become effective on January 1, 1992,
there was the urgent need, Your Honor, to prepare and there was therefore that
transfer of funds, Your Honor.
JUSTICE GUTIERREZ:
What you are saying right now is that actually there were no savings to be
transferred?
ATTY. MADRIAGA:
As of that time, Your Honor. [Emphasis supplied] 49
Further, the records of this case unmistakably point to the reality that there were no
savings at the time of the questioned transfer. To begin with, the first disallowed
voucher in the amount of P300,000.00 was paid under Check No. 160404 dated 31
January 1992. The records indicate that the second transfer occurred on 28 April
1992. 50 Presumably, the disallowed amount was remitted to and spent by the ad
hoc task force within the first two quarters of fiscal year 1992. 51 There could not
have been savings from the Fund on 31 January 1992 because the 1992 GAA took
effect only on 1 January 1992 or 30 days before. 52
Obviously, the amount transferred from the Fund did not constitute savings as there
were no such savings at the time of the transfer. It is preposterous to pronounce
that savings already existed as early as 31 January 1992. It is even more ridiculous
to claim that savings may be presumed from the mere transfer of funds. 53
The fact that the subsequent years' appropriations acts, i.e., the 1993 and 1994
GAA, 54 provided an appropriation for the Capability Building Program, moreover,
signifies that there were no savings from the Fund from the prior year's
appropriation in the 1992 GAA that could have been validly transferred. DcIHSa
The appropriation for the Capability Building Program was presented in the 1992
GAA in the following manner: 55
xxx
xxx
xxx
B.
LocallyPersonal
Maintenance Capital
Total

Funded
Projects

Services
and Other
Outlays
Operating
Expenses
xxx
xxx
xxx
4.
Capability
75,000,000
75,000,000
Building
Program
It is worthy of note, therefore, that the 1992 GAA only provided an appropriation for
maintenance and other operating expenses in the appropriation for the Capability
Building Program, and not a single centavo for capital outlay or for personal
services. SDHAcI
Maintenance and other operating expenses cover traveling expense;
communication services; repair and maintenance of government facilities; use,
repairs and maintenance of government vehicles; transportation services; supplies
and materials; rents; interests; grants, subsidies and contributions; awards and
indemnities;
loan
repayments
and
sinking
fund
contributions;
losses/depreciation/depletion; water, illumination and power service; social security
benefits, rewards and other claims; auditing services; training and seminars;
extraordinary and miscellaneous expenses; confidential and intelligence expenses;
anti-insurgency/contingency/emergency expenses; taxes and other duties;
trading/production; advertising and publication expenses; fidelity bond and
insurance premiums; loss on foreign exchange; commitment fees/charges; and
other services such as repairs and maintenance; printing and binding; subscription
to periodicals and magazines; radiocast, telecast and documentary films; legal
expenses; security and janitorial services and meal and transportation allowance.
56
Personal services, on the other hand, include the payment of salaries and wages;
per diem compensation; social security insurance premium; overtime pay; and
commutable allowances, 57 while capital outlays refer to appropriations for the
purchase of goods and services, the benefits of which extend beyond the fiscal year
and which add to the assets of government, including investments in the capital of
government-owned or controlled corporations and their subsidiaries as well as
investments in public utilities such as public markets and slaughterhouses. 58
Maintenance and operating expenses and personal services are classified as current
operating expenditures or appropriations for the purchase of goods and services for
current consumption or for benefits expected to terminate within the fiscal year. 59
By the nature of maintenance and operating expenses, savings may generally be
determined at the end of the year, or earlier in case of completion, discontinuance
or abandonment of the work for which the appropriation was authorized. In contrast,
savings from personal services may generally be determined even at the opening of
the fiscal year in case of unpaid compensation pertaining to vacant positions and
leaves of absence without pay. aTHASC
It should be emphasized that the 1992 GAA did not provide an appropriation for
personal services for the Capability Building Program. Savings from vacant positions
which pertain to personal services, therefore, may not be considered savings from
the Fund which may be transferred. TSADaI
It is odd that during oral argument, petitioners did not bother to assert to the Court
that there was actual savings from the Fund which could have been transferred,
prompting Justice (later Chief Justice) Panganiban to point out that petitioners

should have ascertained the existence of actual savings lest the petition be
dismissed as it is based on speculation. aHCSTD
JUSTICE PANGANIBAN:
So you still agree with the position of Justice Gutierrez that first, the first
requirement is that there must be an existing item to be augmented. Meaning,
there is insufficiency of funds in that item and then there are savings in another
item in another department of government which can be transferred?
ATTY. MADRIAGA:
Yes, Your Honor.
JUSTICE PANGANIBAN:
But you are not aware of any savings, actual saving, it is just projected
saving?
ATTY. MADRIAGA:
At that time, Your Honor, I said.
JUSTICE PANGANIBAN:
How about now?
ATTY. MADRIAGA:
Your Honor?
Now was there an actual saving?
I think the Commission on Audit would be in a better position to answer that,
Your Honor, because they are in possession of the records (interrupted)
JUSTICE PANGANIBAN:
But when you filed your petition here you must have researched on this
whether in fact there was savings to transfer.
ATTY. MADRIAGA:
As a matter of fact, Your Honor, (interrupted)
JUSTICE PANGANIBAN:
Otherwise, your petition would have been based on mere speculation? 60
From the foregoing, there is no question that there were no savings from the Fund at
the time of the transfer. The Court cannot hold on to the disputable presumptions
that official duty had been regularly performed and that the law had been obeyed.
HEITAD
Furthermore, the 1992 GAA itself forecloses the use of savings from the Fund for
purposes other than those for which it was established as specified under the law.
The Special Provisions plainly state: TEcCHD
Special Provisions
2.
Capability Building Program for Local Personnel. The amount herein
appropriated for the Capability Building Program for local personnel shall be used
for local government and community capability building programs, such as training
and technical assistance, with the necessary support for training materials, supplies
and facilities: PROVIDED, That savings from the appropriation may be used to
acquire equipment, except motor vehicles, in further support of the programs.
The Capability Building Program shall be implemented nationwide by the
Department of the Interior and Local Government through the Local Government
Academy and shall involve local officials and employees, including barangay
officials, elected and appointed. IDEHCa
The appropriations authorized herein shall be administered by the Department of
the Interior and Local Government and shall be released upon submission of a work
and financial plan supported by a detailed breakdown of the projects, activities and
objects of expenditures proposed to be funded. cEAaIS

Savings generated over and above the requirements prescribed in Section 18 of the
General Provisions of this Act shall be made available for the Capability Building
Program of the Department of the Interior and Local Government for local officials
and employees, subject to Section 40 of P.D. 1177 (Sec. 35, Book VI of E.O. No.
292). HCTaAS
Thus, assuming that there were savings from the appropriation for the Executive
Department, the Capability Building Program should have been the recipient of any
transfer thereof subject only to Section 18 61 of the 1992 GAA. The Fund should
have been the beneficiary and not the benefactor. Moreover, such savings should
have first been used to acquire equipment in furtherance of the Capability Building
Program as was the clear intent of the law. TAECaD
As regards the requirement that there be an item to be augmented, which is also a
sine qua non like the first requirement on the existence of savings, there was no
item for augmentation in the appropriation for the Office of the President at the time
of the transfers in question. Augmentation denotes that an appropriation was
determined to be deficient after the implementation of the project or activity for
which an appropriation was made, or after an evaluation of the needed resources.
To say that the existing items in the appropriation for the Office of the President
already needed augmentation as early as 31 January 1992 is putting the cart before
the horse. EDISaA
The task force spent the disallowed amount on behalf of the DILG allegedly to
implement an item of appropriation of the DILG. This evinces the fact that there was
no item in the appropriation for the Office of the President which the disallowed
amount could have augmented. AEScHa
The ad hoc 62 nature of the task force whose operations the illegally transferred
funds were supposed to finance precisely underscores the impermanence and
transitoriness of the group and its activities. Hence, the ad hoc body itself is
inconsistent with the notion that there was an existing item of appropriation which
needed to be augmented. CHcETA
The absence of any item to be augmented starkly projects the illegality of the
diversion of the funds and the profligate spending thereof. DaTHAc
With the foregoing considerations, it is clear that no valid transfer of the Fund to the
Office of the President could have occurred in this case as there was neither
allegation nor proof that the amount transferred was savings or that the transfer
was for the purpose of augmenting the item to which the transfer was made.
SAHIDc
Further, we find that the use of the transferred funds was not in accordance with the
purposes laid down by the Special Provisions of R.A. 7180. aTCADc
The Capability Building Program was established pursuant to the mandate of local
autonomy under the 1987 Constitution carried out by the Local Government Code of
1991. It was supposed to guide local communities to become self-reliant and
capable of self-governance. In order to finance the program, R.A. No. 7180 set up
the Fund explicitly declaring that it shall be used for local government and
community capability building programs, such as training and technical assistance,
with the necessary support for training materials, supplies and facilities. The Fund
was to be administered by the DILG. ASTIED
Construed flexibly in the context of the general objective of attaining local
autonomy, the stated purpose for the creation of the task force, which was to
design programs, strategize and prepare modules for an effective program for local
autonomy, would have fallen within the general intendment of the Fund. It is not

enough, however, for petitioners to loosely claim that the amount was used for a
public purpose or that it was used to advance local autonomy. It is imperative for
them to show that the questioned amount was used directly in fulfillment of the
purpose for which the Fund was created. ADEHTS
In this case, there is no evidence on record as to how the task force was created,
what its functions were and who composed it. Atty. Mendoza, the project director of
the task force, does not even appear to have been an officer or employee of or
connected in any capacity to either the DILG or the Office of the President, or at
least to have been acting under the authority of either office. The proposal to create
the task force was initiated by Atty. Mendoza in his personal capacity and on his
own authority. 63
There is also no evidence to the effect that the amount taken from the Fund was
actually spent for the task force's avowed objectives or that the purpose of the task
force came to fruition. There is no indication at all whether the task force was
actually able to design programs, strategize and prepare modules in furtherance of
local autonomy using the Fund. AcCTaD
What is apparent from the records is that the amount in question was spent to
"defray salaries of personnel, office supplies, office rentals, foods and meals, etc."
64 The audit conducted by the DILG Auditor covered both the invalidity of the
transfer of funds and the illegality of the use thereof. The Department Auditor
concluded that the questioned amount was not used for the purposes enumerated
in the Special Provisions of R.A. 7180. CTIEac
This evaluation was upheld by the COA itself also on both points. It said:
Reviewing the grounds of this motion for reconsideration, this Commission finds no
legal justification to deviate from the stand taken by the DILG Auditor. Appellants
postulate that the transfer of funds was for a public purpose. However, it was
categorically different from the purpose for which the fund was created.
Expenditures funded from the capability building program are subject to compliance
of the restrictions/conditions embodied in the special provisions of R.A. No. 7180
and Section 37 of P.D. 1177 also provides: cADaIH
All money appropriated for functions, activities, projects and programs shall be
available solely for the specific purpose for which these were appropriated.
(Underscoring supplied)
It cannot also be validly argued that this case involves a prejudicial issue that
necessitates prior determination by the courts. Thus, it is clearly stated in the
special provisions of the DILG Appropriations of R.A. 7180 that the capability
building program fund shall be used for local government and community capability
building programs. Therefore, the transfer and expenditure of subject fund to the
Office of the Executive Secretary has completely abandoned the reason or purpose
for which the fund was established. It bears stressing that the mere appropriation of
public funds for a purpose other than that authorized by law such as the subject
transfer of funds from DILG to the Office of the Executive Secretary to defray the
salaries of office personnel, supplies, rentals, foods and meals, etc. is already a
violation of law. Section 84, par. 2, of P.D. 1445 provides, viz:
Trust funds shall not be paid out of any public treasury or depository except in
fulfillment of the purpose for which the trust was created or funds received, and
upon authorization of the legislative body or head of any other agency of the
government having control thereof and subject to pertinent budget law, rules and
regulations. (Underscoring supplied)

Appellants cannot dispute the fact that they were duly informed of the nature and
cause of the alleged infraction. The constitutional guarantee of due process of law
was strictly observed as the grounds for the disallowance were specifically
enumerated in the 3rd Indorsement dated May 25, 1992 to the FMS Director, DILG.
AaDSTH
Lastly, the case of Binamira vs. Garrucho cited by the appellants refers to a petition
for quo warranto filed by Mr. Ramon P. Binamira against then Secretary of Tourism
Peter D. Garrucho for reinstatement to the Office of the General Manager of the
Philippine Tourism Authority from which he claims to have been removed without
cause in violation of his security of tenure. Appellants contend that pursuant to the
aforementioned case, the transfer of funds from the DILG to the Office of the
Executive Secretary was performed and promulgated in the regular course of
business and is presumptively the act of the Chief Executive, unless disapproved or
reprobated. This argument cannot prevail because what is disputed in the instant
case is the expenditure of public funds which is subject to audit by this Commission
as constitutionally mandated. Necessarily, for audit purposes, this Commission has
the sole jurisdiction to determine whether or not the disbursement is in the first
place legal and proper. 65
The fact that the audit was conducted by the DILG Auditor and not by the Auditor of
the Office of the President is inconsequential because the findings and conclusion of
the DILG Auditor were passed upon and upheld by the COA itself. cDSaEH
In Olaguer v. Domingo, 66 the COA affirmed the ruling of the Resident Auditor for
the National Home Mortgage Finance Corporation disallowing in audit the latter's
disbursements for the purchase of a parcel of land under the Community Mortgage
Program. We sustained the COA reiterating that in this jurisdiction, findings which
have been affirmed and reaffirmed along the administrative hierarchy are generally
conclusive on the courts. We held:
With these substantial findings, we affirm the ruling of respondent
Commission on Audit. As to the other claims raised by petitioners, suffice
it to state that in this jurisdiction, courts will not interfere in matters
which are addressed to the sound discretion of government agencies
which are entrusted with the regulation of activities coming under the
special technical knowledge and training of such agencies. With all the
more reason should this rule hold when, as in the instant case, the
findings of respondent Razon have been affirmed and reaffirmed along the
administrative hierarchy. 67
The ineluctable conclusion is that petitioners should be held personally liable for the
disallowed disbursement by virtue of their position as public officials held
accountable for public funds. 68 Sec. 103 of P.D. No. 1445 provides: CaEIST
Sec. 103.
General liability for unlawful expenditures. Expenditures of
government funds or uses of government property in violation of law or regulations
shall be a personal liability of the official or employee found to be directly
responsible therefor. DTAcIa
Section 19 of the Manual of Certificate of Settlement and Balances states:
19.1 The liability of public officers and other persons for audit disallowances shall
be determined on the basis of: (a) the nature of the disallowance; (b) the duties,
responsibilities or obligations of the officers/persons concerned; (c) the extent of
their participation or involvement in the disallowed transaction; and (d) the amount
of losses or damages suffered by the government thereby. The following are
illustrative examples: HScDIC

xxx
xxx
xxx
19.1.3Public officers who approve or authorize transactions involving the
expenditure of government funds and uses of government properties shall be liable
for all losses arising out of their negligence or failure to exercise the diligence of a
good father of a family. TaDSCA
xxx
xxx
xxx
19.2 The liability for audit charges shall be measured by the individual
participation or involvement of persons in the charged transaction; i.e. public
officers whose duties require the appraisal/assessment/collection of government
revenues and receipts shall be liable for under-appraisal, under-assessment, and
under-collection thereof."
Petitioners Sarino, Sanchez, Regala, Barata and Agbayani, at the time of the
disallowed transfers, were all responsible officers of the DILG being then the
Department's Secretary, Undersecretary, Chief Accountant, Director, and Chief of
the Management Division, respectively. Their participation, assent and approval
were indispensable to the consummation of the illegal transfer of funds and render
them accountable therefor. DCcTHa
In view of the foregoing, we find no grave abuse of discretion on the part of the COA
in rendering the assailed Decision. The constitutional body should even be lauded
for its commitment in ensuring that public funds are not spent in a manner not
strictly within the intendment of the law. cCHITA
WHEREFORE, the instant petition is DISMISSED and the assailed Decision of the
Commission on Audit is AFFIRMED. No pronouncement as to costs. EDHCSI
SO ORDERED. cCaIET
Puno, C.J., Quisumbing, Ynares-Santiago, Carpio, Austria-Martinez, Corona (I certify
that J. Corona voted in favor of the Decision), Carpio-Morales, Azcuna, ChicoNazario, Velasco, Jr., Nachura, Reyes, Leonardo-de Castro and Brion, JJ., concur.
Footnotes
1.
Sec. 2 (1) and (2), Art. IX, 1987 CONST.
2.
Olaguer v. Domingo, G.R. No. 109666, 20 June 2001, 359 SCRA 78.
3.
Rollo, pp. 15-27.
4.
Annex "B-1". Memorandum of the OSG dated 6 July 2005; Rollo, p. 208.
5.
Id. at 211. Annex "C". TcEaDS
6.
Id. at 212, Annex "D".
7.
Rollo, p. 22, Annex "A" of the petition.
8.
Id. at 23-24.
9.
COA Records, 1st Indorsement dated 16 September 1994, signed by Danilo
M. Rodriguez, State Auditor IV, Department Auditor.
10.
Supra note 3 at 23-26, Annex "B" of the petition. Chairman Celso D. Gangan
wrote the decision with Commissioners Rogelio B. Espiritu and Sofronio B. Ursal
signing. ATCEIc
11.
Supra note 6, Dissenting Opinion dated 6 September 1996 signed by
Commissioner Sofronio B. Ursal.
12.
Id. at 66-75.
13.
Id. at 86-95.
14.
Id. at 123-124.
15.
Id. at 128-129. aAHTDS
16.
Memorandum of the OSG dated 17 May 2002, Rollo, pp. 133-141;
Memorandum of the COA dated 22 May 2002, id. at 143-153; Petitioners'
Memorandum dated 28 June 2002, id. at 167-175.

17.
Rollo (unpaginated).
18.
Id. at 184-203.
19.
Id. at 197-198.
20.
Id. at 198, 189. ESHAcI
21.
Id. at 228-240.
22.
Id. at 259-274.
23.
Sec. 2 (1) The Commission on Audit shall have the power, authority and duty
to examine, audit, and settle all accounts pertaining to the revenue and receipts of,
and expenditures or uses of funds and property, owned or held in trust by, or
pertaining to, the government, or any of its subdivisions, agencies, or
instrumentalities, including government-owned and controlled corporations with
original charters, and on a post-audit basis (a) constitutional bodies, commissions
and offices that have been granted fiscal autonomy under this constitution; (b)
autonomous state colleges and universities; (c) other government-owned or
controlled corporations and their subsidiaries; and (d) such non-governmental
entities receiving subsidy or equity, directly or indirectly, from or through the
government, which are required by law or the law granting institution to submit to
such audit as a condition of subsidy or equity. However, where the internal control
system of the audited agencies is inadequate, the commission may adopt such
measures, including temporary or special pre-audit, as are necessary and
appropriate to correct the deficiencies. It shall keep the general accounts of the
government and, for such period as may be provided by law, preserve the vouchers
and other supporting papers pertaining thereto.
(2)
The Commission shall have exclusive authority, subject to the
limitations in this article, to define the scope of its audit and examination, establish
the techniques and methods required therefor, and promulgate accounting and
auditing rules and regulations, including those for the prevention and disallowance
of irregular, unnecessary, excessive, extravagant or unconscionable expenditures,
or uses of government funds and properties. [Art. IX Constitutional Commissions]
1987 Constitution.
24.
Supra note 1 citing Dingcong v. Guingona, Jr., 162 SCRA 782 (1988); Caltex
Philippines v. COA, G.R. No. 92585, 8 May 1992; Sambeli v. Province of Isabela, G.R.
No. 92279, 18 June 1992; Danville Maritime, Inc. v. COA, 175 SCRA 701 (1989);
National Housing Corporation v. COA, 226 SCRA 55 (1993).
25.
Supra note 2. cIHCST
26.
Commissioner of Internal Revenue v. COA, G.R. No. 101976, 29 January 1993,
218 SCRA 203.
27.
Cuerdo v. COA, No. L-84592, October 27, 1988, citing Tagum Doctors
Enterprises v. Gregorio Apsay, et al., G.R. No. 81188, 30 August 1988.
28.
Id. citing Mangubat v. de Castro, No. L-33892, 28 July 1988.
29.
Reyes v. COA, G.R. No. 125129, 29 March 1999, 305 SCRA 512.
30.
TSN, Vol. I, 21 June 2005, p. 118. HCDaAS
31.
Rollo, pp. 255-274.
32.
Id. at 259.
33.
TSN, Vol. II, 21 June 2005, pp. 168-174.
34.
Sec. 16, General Provisions, R.A. No. 7180.
35.
G.R. No. 113105, 19 August 1994. aCIHAD
36.
Id. at 528.
37.
Id. at 544.
38.
RECORD OF THE CONSTITUTIONAL COMMISSION, Vol. Two, p. 111.

39.
No. L-71977, 27 February 1987, 148 SCRA 208.
40.
Id. EIaDHS
41.
General Provisions, R.A. No. 7180.
42.
BLACK'S LAW DICTIONARY, 6th ed.
43.
According to Mrs. Corazon M. Ordoez, Chief, Fiscal Management and Budget
Office, Supreme Court.
44.
At p. 528.
45.
Sec. 25(4), Art. VI, 1987 CONST. CTaIHE
46.
Sec. 25(6), Art. VI, 1987 CONST.
47.
Sec. 29(1), Art. VI, 1987 CONST.
48.
Demetria v. Alba, supra, p. 215.
49.
TSN, 21 June 2005, Vol. I, pp. 25-29.
50.
Note that on 17 February 1992, Atty. Hiram Mendoza, Project Director of the
ad hoc task force requested replenishment of the initial transfer in the amount of
P300,000.00 allegedly in anticipation of additional legal and technical personnel.
Upon Deputy Executive Secretary Dionisio dela Serna request for approval,
Secretary Cesar Sarino directed the Financial Management Service (FMS) to process
progress payments. Consequently, Mr. Rafael D. Barata, FMS Director, issued a
memorandum addressed to Undersecretary Leonor de Jesus requesting that the
additional amount of P300,000.00 be charged to the Fund. However, there is no
proof that Undersecretary de Jesus approved Mr. Barata's proposal. See Records, 1st
Indorsement dated 16 September 1994. EAICTS
51.
Each fiscal year is divided into four quarterly allotment periods beginning,
respectively, on the first day of January, April, July and October. [Sec. 146, Title 2,
Book III, Government Accounting and Auditing Manual.
52.
Sec. 74, General Provisions, 1992 GAA.
53.
The great bulk of the appropriated money is remitted by the DBM to the
agencies in March and April following the collection of income taxes.
54.
Republic Act No. 7645 and Republic Act No. 7663, respectively.
55.
Title XIII (A), 1992 GAA. HDIaET
56.
Title 6, Book III, Government Accounting and Auditing Manual.
57.
Title 5, Book III, Government Accounting and Auditing Manual.
58.
Sec. 155(b), Art. 1, Title 3, Book III, Government Accounting and Auditing
Manual.
59.
Sec. 155(a), Art. 1, Title 3, Book III, Government Accounting and Auditing
Manual.
60.
TSN, Vol. I, 21 June 2005, pp. 34-40. ACcTDS
61.
Section 18 of the General Provision of the 1992 GAA referred to provides:
Sec. 18.
Priority in the Use of Savings. In the use of savings priority shall
be given to the augmentation of the amounts set aside for salary standardization,
bonus and retirement and terminal leave benefits in the order listed.
62.
The Latin words mean "for a particular or special purpose". LATIN WORDS &
PHRASES FOR LAWYERS. Published for Law and Business Publications, Inc., 1006575 Madison Avenue, New York, N.Y. 10022, USA (1980) p. 23.
63.
TSN, Vol. II, 21 June 2005, pp. 197-200; TSN, Vol. 3, 21 June 2005, pp. 281284.
64.
Supra note 4.
65.
COA Decision No. 96-654 dated 21 November 1996. DaEATc
66.
Supra note 2.
67.
Id. at 89-90.

68.

Osmea v. COA, G.R. No. 98355, 2 March 1994.

------------------------------------------------------------------SYNOPSIS
Ruperto A. Ambil, Jr. and Jose T. Ramirez were candidates for the position of
Governor in Eastern Samar, during the May 11, 1998 elections. The Provincial Board
of Canvassers proclaimed Ruperto A. Ambil, Jr. as the duly elected Governor.
Ramirez filed with the Commission on Elections (Comelec) an election protest
challenging the results of the said election. The case was assigned to the First
Division. On January 27, 2000, Commissioner Japal M. Guiani prepared and signed a
proposed resolution in the case. To such proposed ponencia, Commissioner Julio F.
Desamito dissented, while Commissioner Luzviminda G. Tancangco did not indicate
her vote at first because she wished to see both positions, if any, before she will
make a final decision. On February 15, 2000, Commissioner Guiani retired from the
service. On or about February 24, 2000, petitioner Ambil and Ramirez received a
purported resolution promulgated on February 14, 2000. The result was in favor of
Ramirez who was declared as winner. On February 28, 2000, the Comelec, First
Division, declared the said resolution as a useless scrap of paper which should be
ignored by the parties as there was no promulgation that took place on the said
Resolution. On March 31, 2000, the Comelec, First Division, issued an order setting
the promulgation of the resolution of their case. Ambil filed a motion to cancel
promulgation challenging the validity of the purported Guiani resolution. The
Comelec, First Division, acting on the said motion, postponed the promulgation. On
June 14, 2000, Commissioner Luzviminda G. Tancangco and the new Commissioner,
Rufino S. Javier, recommended the promulgation of the subject resolution on the
ground that the aggrieved party can challenge it through a Motion for
Reconsideration before the Commission en banc or through a certiorari case before
the Supreme Court. On June 15, 2000, the Comelec, First Division, through
Commissioner Julio F. Desamito, issued an order setting the promulgation of the
resolution on June 20, 2000. Without waiting for the said date, Ambil interposed the
instant petition.
There is nothing irregular about the order of promulgation of the resolution in the
case, except in the mind of suspicious parties. Perhaps what was wrong in the order
was the reference to the memorandum of the two commissioners that was not
necessary and was a superfluity, or excessus in linguae. All the members of the
Division were incumbent Commissioners of the Comelec and had authority to decide
the case in the Division. What appeared to be patently null and void is the so-called
Guiani resolution if it is the one to be promulgated. It cannot be assumed that the
Comelec will promulgate a void resolution and violate the Constitution and the law.
It must be assumed that the members of the Commission in Division or en banc are
sworn to uphold and will obey the Constitution.
Moreover, the instant case does not fall under any of the recognized exceptions to
the rule in certiorari cases dispensing with a motion for reconsideration prior to the
filing of a petition. The exceptions do not apply to election cases where a
motion for reconsideration is mandatory by Constitutional fiat to elevate
the case to the Comelec en banc, whose final decision is what is
reviewable via certiorari before the Supreme Court. Consequently, the filing
of the instant petition before this Court was premature. Petitioner failed to exhaust
adequate administrative remedies available before the COMELEC.
The Court dismissed the petition for prematurity.

SYLLABUS
1.
REMEDIAL LAW; SPECIAL CIVIL ACTIONS; CERTIORARI; SUPREME COURT HAS
NO POWER TO REVIEW INTERLOCUTORY ORDER OR EVEN FINAL RESOLUTION OF A
DIVISION OF THE COMMISSION ON ELECTIONS (COMELEC). [T]he power of the
Supreme Court to review decisions of the Comelec is prescribed in the Constitution,
as follows: "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, 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." "We have
interpreted this provision to mean final orders, rulings and decisions of the
COMELEC rendered in the exercise of its adjudicatory or quasi-judicial powers." This
decision must be a final decision or resolution of the Comelec en banc, not of a
division, certainly not an interlocutory order of a division. The Supreme Court has
no power to review via certiorari, an interlocutory order or even a final
resolution of a Division of the Commission on Elections.
2.
ID.; ID.; ID.; MODE BY WHICH A DECISION, ORDER OR RULING OF THE
COMELEC EN BANC MAY BE ELEVATED TO THE SUPREME COURT. The mode by
which a decision, order or ruling of the Comelec en banc may be elevated to the
Supreme Court is by the special civil action of certiorari under Rule 65 of the 1964
Revised Rules of Court, now expressly provided in Rule 64, 1997 Rules of Civil
Procedure, as amended.
3.
ID.; ID.; ID.; REQUIRES THAT THERE BE NO APPEAL, OR ANY PLAIN, SPEEDY
AND ADEQUATE REMEDY IN THE ORDINARY COURSE OF LAW. Rule 65, Section 1,
1997 Rules of Civil Procedure, as amended, requires that there be no appeal, or any
plain, speedy and adequate remedy in the ordinary course of law. A motion for
reconsideration is a plain and adequate remedy provided by law. Failure to abide by
this procedural requirement constitutes a ground for dismissal of the petition.
4.
POLITICAL LAW; ELECTION LAW; COMELEC RULES OF PROCEDURE; DECISION,
ORDER, OR RESOLUTION OF THE COMELEC IN DIVISION MUST BE REVIEWED BY THE
COMELEC EN BANC BEFORE THE FINAL EN BANC DECISION MAY BE BROUGHT TO
THE SUPREME COURT. [D]ecision, order or resolution of a division of the Comelec
must be reviewed by the Comelec en banc via a motion for reconsideration before
the final en banc decision may be brought to the Supreme Court on certiorari. The
pre-requisite filing of a motion for reconsideration is mandatory. Article IX-C, Section
3, 1987 Constitution provides as follows: "Section 3. The Commission on
Elections may sit en banc or in two divisions, and shall promulgate its
rules of procedure in order to expedite disposition of election cases,
including pre-proclamation controversies. All such election cases shall be
heard and decided in division, provided that motions for reconsideration
of decisions shall be decided by the Commission en banc. Similarly, the
Rules of Procedure of the Comelec provide that a decision of a division
may be raised to the en banc via a motion for reconsideration.
5.
ID.; ID.; ID.; ID.; NOT COMPLIED IN CASE AT BAR. The case at bar is an
election protest involving the position of Governor, Eastern Samar. It is within the
original jurisdiction of the Commission on Elections in division. Admittedly,
petitioner did not ask for a reconsideration of the division's resolution or final

decision. In fact, there was really no resolution or decision to speak of because there
was yet no promulgation, which was still scheduled on June 20, 2000 at 2:00 o'clock
in the afternoon. Petitioner went directly to the Supreme Court from an order of
"promulgation of the Resolution of this case" by the First Division of the Comelec.
EaIcAS
6.
REMEDIAL LAW; SPECIAL CIVIL ACTION; CERTIORARI; MOTION FOR
RECONSIDERATION PRIOR TO THE FILING OF THE PETITION IS MANDATORY IN
ELECTION CASES. Under the existing Constitutional scheme, a party to an
election case within the jurisdiction of the Comelec in division can not dispense with
the filing of a motion for reconsideration of a decision, resolution or final order of
the Division of the Commission on Elections because the case would not reach the
Comelec en banc without such motion for reconsideration having been filed and
resolved by the Division. The instant case does not fall under any of the recognized
exceptions to the rule in certiorari cases dispensing with a motion for
reconsideration prior to the filing of a petition. In truth, the exceptions do not apply
to election cases where a motion for reconsideration is mandatory by Constitutional
fiat to elevate the case to the Comelec en banc, whose final decision is what is
reviewable via certiorari before the Supreme Court.
7.
POLITICAL LAW; ELECTION LAW; COMELEC RULES OF PROCEDURE; KHO VS.
COMMISSION ON ELECTIONS; RESOLUTION OF COMELEC IN DIVISION WHICH DOES
NOT FALL UNDER SECTION 2, RULE 3 OF THE COMELEC RULES OF PROCEDURE CAN
BE ELEVATED TO THE SUPREME COURT. We are aware of the ruling in Kho v.
Commission on Elections, that "in a situation such as this where the Commission on
Elections in division committed grave abuse of discretion or acted without or in
excess of jurisdiction in issuing interlocutory orders relative to an action pending
before it and the controversy did not fall under any of the instances mentioned in
Section 2, Rule 3 of the COMELEC Rules of Procedure, the remedy of the aggrieved
party is not to refer the controversy to the Commission en banc as this is not
permissible under its present rules but to elevate it to this Court via a petition for
certiorari under Rule 65 of the Rules of Court."
8.
ID.; ID.; ID.; ID.; NOT APPLICABLE IN CASE AT BAR. [T]he Kho case has no
application to the case at bar. The issue therein is, may the Commission on
Elections in division admit an answer with counter-protest after the period to file the
same has expired? The Comelec First Division admitted the answer with counterprotest of the respondent. The Supreme Court declared such order void for having
been issued with grave abuse of discretion tantamount to lack of jurisdiction.
However, an important moiety in the Kho case was not mentioned in the dissent. It
is that the Comelec, First Division, denied the prayer of petitioner for the elevation
of the case to en banc because the orders of admission were mere interlocutory
orders. Hence, the aggrieved party had no choice but to seek recourse in the
Supreme Court. Such important fact is not present in the case at bar. We must
emphasize that what is questioned here is the order dated June 15, 2000, which is a
mere notice of the promulgation of the resolution in EPC Case No. 98-29. . . . There
is nothing irregular about the order of promulgation of the resolution in the case,
except in the mind of suspicious parties. Perhaps what was wrong in the order was
the reference to the memorandum of the two commissioners that was not
necessary and was a superfluity, or excessus in linguae. All the members of the
Division were incumbent Commissioners of the Commission on Elections (COMELEC)
and had authority to decide the case in the Division. What appears to be patently
null and void is the so-called Guiani resolution if it is the one to be promulgated. We

cannot assume that the Comelec will promulgate a void resolution and violate the
Constitution and the law. We must assume that the members of the Commission in
Division or en banc are sworn to uphold and will obey the Constitution.
Consequently, the Guiani resolution is not at issue in the case at bar. No one knows
the contents of the sealed envelope containing the resolution to be promulgated on
June 20, 2000, simply because it has not been promulgated.
9.
ID.; ID.; ID.; RESOLUTION NOT PROMULGATED IS DEEMED VACATED UPON
RETIREMENT OF THE COMMISSIONER WHO PREPARED IT; CASE AT BAR. It may be
true that the parties received a copy of what purports to be the Guiani resolution,
declaring respondent Jose T. Ramirez the victor in the case. Such Guiani resolution is
admitted by the parties and considered by the Commission on Elections as void. The
Solicitor General submitted an advice that the same resolution is deemed vacated
by the retirement of Commissioner Guiani on February 15, 2000. It can not be
promulgated anymore for all legal intents and purposes. We rule that the so-called
Guiani resolution is void for the following reasons: First: A final decision or resolution
becomes binding only after it is promulgated and not before. Accordingly, one who
is no longer a member of the Commission at the time the final decision or resolution
is promulgated cannot validly take part in that resolution or decision. Much more
could he be the ponente of the resolution or decision. The resolution or decision of
the Division must be signed by a majority of its members and duly promulgated.
Commissioner Guiani might have signed a draft ponencia prior to his retirement
from office, but when he vacated his office without the final decision or resolution
having been promulgated, his vote was automatically invalidated. Before that
resolution or decision is so signed and promulgated, there is no valid resolution or
decision to speak of. Second: Atty. Zacarias C. Zaragoza, Jr., Clerk of the First
Division, Commission on Elections, denied the release or promulgation of the Guiani
resolution. . . . Third: By an order dated February 28, 2000, the Comelec, First
Division, disclaimed the "alleged thirteen (13) page resolution" for being "a useless
scrap of paper which should be ignored by the parties" there being no promulgation
of the resolution in the case. Fourth: It is unlikely that Commissioner Tancangco
affixed her signature on the Guiani resolution. On the date that it was purportedly
promulgated, which was February 14, 2000, the Division issued an order where
Commissioner Tancangco expressed her reservations and stated that she wished to
see both positions, if any, before she made her final decision.
10.
ID.; ID.; ID.; FINAL DECISION OR RESOLUTION OF THE COMELEC IS
PROMULGATED ON A DATE PREVIOUSLY FIXED. A final decision or resolution of the
Comelec, in Division or en banc is promulgated 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.
11.
ID.; ID.; ID.; ID.; DECISION OR RESOLUTION OF THE COMELEC MAY BE
CHANGED ANY TIME BEFORE PROMULGATION. It is jurisprudentially recognized
that at any time before promulgation of a decision or resolution, the ponente may
change his mind. Moreover, in this case, before a final decision or resolution could
be promulgated, the ponente retired and a new commissioner appointed. And the
incoming commissioner has decided to take part in the resolution of the case. It is
presumed that he had taken the position of his predecessor because he co-signed
the request for the promulgation of the Guiani resolution.
12.
POLITICAL LAW; ADMINISTRATIVE LAW; EXHAUSTION OF ADMINISTRATIVE
REMEDIES; A PARTY COULD SEEK RECONSIDERATION OF A PATENTLY VOID
RESOLUTION. If petitioner were afraid that what would be promulgated by the

Division was the Guiani resolution, a copy of which he received by mail, which, as
heretofore stated, was not promulgated and the signature thereon of the clerk of
court was a forgery, petitioner could seek reconsideration of such patently void
resolution and thereby the case would be elevated to the Commission en banc.
Considering the factual circumstances, we speculated ex mero motu that the
Comelec would promulgate a void resolution. "The sea of suspicion has no shore,
and the court that embarks upon it is without rudder or compass." We must not
speculate that the Comelec would still promulgate a void resolution despite
knowledge that it is invalid or void ab initio. Consequently, the filing of the instant
petition before this Court was premature. Petitioner failed to exhaust adequate
administrative remedies available before the COMELEC.
13.
ID.; ID.; ID.; ELUCIDATED. In a long line of cases, this Court has held
consistently that "before a party is allowed to seek the intervention of the court, it is
a pre-condition that he should have availed of all the means of administrative
processes afforded him. Hence, if a remedy within the administrative machinery can
still be resorted to by giving the administrative officer concerned every opportunity
to decide on a matter that comes within his jurisdiction, then such remedy should
be exhausted first before the court's judicial power can be sought. The premature
invocation of court's intervention is fatal to one's cause of action."
14.
ID.; ID.; ID.; MOTION FOR RECONSIDERATION IS A PRE-REQUISITE TO THE
VIABILITY OF A SPECIAL CIVIL ACTION FOR CERTIORARI; EXCEPTIONS. "This is the
rule on exhaustion of administrative remedies. A motion for reconsideration then is
a pre-requisite to the viability of a special civil action for certiorari, unless the party
who avails of the latter can convincingly show that his case falls under any of the
following exceptions to the rule: (1) when the question is purely legal, (2) where
judicial intervention is urgent, (3) where its application may cause great and
irreparable damage, (4) where the controverted acts violate due process, (5) failure
of a high government official from whom relief is sought to act on the matter, and
(6) when the issue for non-exhaustion of administrative remedies has been
rendered moot."
15.
ID.; ID.; ID.; RATIONALE. "This doctrine of exhaustion of administrative
remedies was not without its practical and legal reasons, for one thing, availment of
administrative remedy entails lesser expenses and provides for a speedier
disposition of controversies. It is no less true to state that the courts of justice for
reasons of comity and convenience will shy away from a dispute until the system of
administrative redress has been completed and complied with so as to give the
administrative agency concerned every opportunity to correct its error and to
dispose of the case. However, we are not amiss to reiterate that the principle of
exhaustion of administrative remedies as tested by a battery of cases is not an
ironclad rule.
16.
ID.; ID.; ID.; EXCEPTIONS TO THE APPLICATION THEREOF. This doctrine is a
relative one and its flexibility is called upon by the peculiarity and uniqueness of the
factual and circumstantial settings of a case. Hence, it is disregarded (1) when there
is a violation of due process, (2) when the issue involved is purely a legal question,
(3) when the administrative action is patently illegal amounting to lack or excess of
jurisdiction, (4) when there is estoppel on the part of the administrative agency
concerned, (5) when there is irreparable injury, (6) when the respondent is a
department secretary whose acts as an alter ego of the president bears the implied
and assumed approval of the latter, (7) when to require exhaustion of
administrative remedies would be unreasonable, (8) when it would amount to a

nullification of a claim, (9) when the subject matter is a private land in land case
proceedings, (10) when the rule does not provide a plain, speedy and adequate
remedy, and (11) when there are circumstances indicating the urgency of judicial
intervention."
17.
ID.; ID.; ID.; ID.; DO NOT APPLY TO AN ELECTION CASE WITHIN THE
JURISDICTION OF THE COMELEC IN DIVISION; CASE AT BAR. The administrative
authorities must be given an opportunity to act and correct the errors committed in
the administrative forum. Only after administrative remedies are exhausted may
judicial recourse be allowed. This case does not fall under any of the exceptions and
indeed, as heretofore stated, the exceptions do not apply to an election case within
the jurisdiction of the Comelec in Division. Hence, the petition at bar must be
dismissed for prematurity. "Failure to exhaust administrative remedies is fatal to a
party's cause of action and a dismissal based on that ground is tantamount to a
dismissal based on lack of cause of action." TIcEDC
DE LEON, JR., J., dissenting opinion:
1.
POLITICAL LAW; ELECTION LAW; COMELEC RULES OF PROCEDURE; KHO VS.
COMMISSION ON ELECTIONS; INTERLOCUTORY ORDERS ISSUED BY THE COMELEC IN
DIVISION WHICH DO NOT FALL UNDER SECTION 2, RULE 3 OF THE COMELEC RULES
OF PROCEDURE CAN BE ELEVATED TO THE SUPREME COURT. [I]n the 1997 case
of Kho v. Commission on Elections, this Court declared that "[I]n a situation where
the Commission on Elections in division commits grave abuse of discretion or acts
without or in excess of jurisdiction in issuing interlocutory orders relative to an
action pending before it and the controversy does not fall under any of the
instances mentioned in Section 2, Rule 3 of the COMELEC Rules of Procedure, the
remedy of the aggrieved party is NOT to refer the controversy to the Commission en
banc but to elevate it to the Supreme Court via a petition for certiorari under Rule
65 of the Rules of Court."
2.
ID.; ID.; ID.; ID.; ID.; APPLICABLE IN CASE AT BAR. Like the Kho case, it does
not appear that the case at bench is one of the cases specifically provided under
the COMELEC Rules of Procedure in which the Commission may sit en banc. Neither
is it shown that the present controversy is a case where a division is not authorized
to act nor a situation wherein the members of the First Division unanimously voted
to refer the subject case to the Commission en banc. Clearly, the Commission en
banc, under the circumstances shown above, cannot be the proper forum under
which the matter concerning the assailed order can be referred to.
3.
REMEDIAL LAW; SPECIAL CIVIL ACTION; CERTIORARI; MOTION FOR
RECONSIDERATION MUST FIRST BE FILED; EXCEPTIONS. [T]here are settled
exceptions to the rule that a motion for reconsideration must first be filed before a
certiorari petition may be instituted. Among these are: (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 proceeding 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 the 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 proceedings was 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. cIaCTS
4.
ID.; ID.; ID.; MOTION FOR RECONSIDERATION IS NOT NECESSARY WHEN
THERE IS GREAT NECESSITY TO RESOLVE AN ELECTION CASE LIKE WHEN ANOTHER
ELECTION IS FAST APPROACHING; CASE AT BAR. A thorough analysis of the
challenged actions of the COMELEC First Division reveals clearly that the instant
petition falls under the exception for not only is there a great necessity to resolve
the election protest case with utmost dispatch inasmuch as another election is fast
approaching but, in addition, the challenged order is a patent nullity.
5.
POLITICAL LAW; ELECTION LAW; COMELEC RULES OF PROCEDURE; DUMAYAS
VS. BERNAL; CANNOT BE RELIED UPON SINCE IT IS NOT A FINAL DECISION. The . .
. Joint Memorandum clearly dictated that the ponencia of retired Commissioner
Guiani is the very resolution to be promulgated. To sustain the promulgation of the
Guiani resolution, Commissioners Tancangco and Javier erroneously contended that
"what is controlling is the date the ponente signed the questioned Resolution as
what we did in promulgating the case of Dumayas v. Bernal (SPC 98-137)." The said
case of Dumayas v. Bernal however cannot be relied upon by the Commissioners
since the same is not a final decision. It is the subject of a petition for certiorari
pending resolution before this Court.
6.
REMEDIAL LAW; JUDGMENT; TO BE VALID, MUST BE SIGNED AND
PROMULGATED DURING THE INCUMBENCY OF THE JUDGE WHO SIGNED IT. The
COMELEC Commissioners . . . can and do commit errors and in the case at bench
they in fact gravely abused their discretion for they violated the elementary
doctrine that for a judgment to be valid, it must be signed and promulgated during
the incumbency of the judge who signed it. Thus, when a judge or a member of the
collegiate court, who had signed or registered his vote, has vacated his office at the
time of the promulgation of a decision or resolution, his vote is automatically
withdrawn or cancelled.
7.
ID.; ID.; ID.; RATIONALE. The rationale for this rule is well-elucidated in the
landmark case of Araneta v. Dinglasan, wherein this Court, speaking through Chief
Justice Manuel V. Moran, stated: "Accordingly, one who is no longer a member of
this Court at the time a decision is signed and promulgated, cannot validly take part
in that decision. As above indicated, the true decision of the Court is the decision
signed by the Justices and duly promulgated. Before that decision is so signed and
promulgated, there is no decision of the Court to speak of. The vote cast by a
member of the Court after the deliberation is always understood to be subject to
confirmation at the time he has to sign the decision that is to be promulgated. That
vote is of no value if it is not thus confirmed by the Justice casting it. The purpose of
this practice is apparent. Members of this Court, even after they have cast their
votes, wish to preserve their freedom of action till the last moment when they have
to sign the decision, so that they may take full advantage of what they may believe
to be the best fruit of their most mature reflection and deliberation. In consonance
with this practice, before a decision is signed and promulgated, all opinions and
conclusions stated during and after the deliberation of the Court, remain in the
breasts of the Justices, binding upon no one, not even upon the Justices themselves.
Of course, they may serve for determining what the opinion of the majority
provisionally is and for designating a member to prepare the decision of the Court,
but in no way is that decision binding unless and until duly signed and
promulgated."

8.
ID.; ID.; ID.; APPLICABLE IN CASE AT BAR. Applying the foregoing principle
to the case at bench, when Commissioner Guiani retired on February 15, 2000, he
ceased to be a commissioner of the COMELEC where he sat in judgment; and thus,
also "retired" and terminated are all his authority to decide any case, i.e., to write,
sign and promulgate the decision thereon. Otherwise stated, he had lost entirely his
power and legal authority to act on all cases assigned to him prior to his retirement.
cHaDIA
9.
ID.; ID.; ANY TIME BEFORE PROMULGATION, THE PONENCIA MAY BE CHANGED
BY THE PONENTE; THE PONENCIA DIED WITH THE PONENTE. In the case of
Consolidated Bank and Trust Corporation v. Intermediate Appellate Court, this Court
further ratiocinated: ". . . [A]t any time before promulgation, the ponencia may be
changed by the ponente. Indeed, if any member of the court who may have already
signed it so desires, he may still withdraw his concurrence and register a
qualification or dissent as long as the decision has not yet been promulgated. A
promulgation signifies that on the date it was made the judge or judges who signed
the decision continued to support it. If at the time of the promulgation, a judge or a
member of a collegiate court has already vacated his office, his vote is
automatically withdrawn. This was what happened in the Araneta case, where
Justice Gregorio Perfecto's signature on the original decision was disregarded when
he died before it could be promulgated. The decision remained valid, however,
because it was still supported by a majority of the Supreme Court then, and, no less
importantly, Justice Perfecto was not the ponente. The ponente in a collegiate court
should remain a member thereof at the time his ponencia is promulgated because,
at any time before that, he has the privilege of changing his opinion for the
consideration of his colleagues. As a rule, his recommendations are accepted in
recognition of the special study he is supposed to have made of the case after his
designation as its ponente. It is important that he be incumbent at the time the
decision is promulgated, in the event he may want to make last-minute changes
therein with the approval of the other members. Obviously, he cannot exercise this
privilege if he is no longer in office. It is on this justification that, as a matter of
practice (and of courtesy), this Court defers promulgation of a decision written by a
member on official leave until his return. The author is afforded an opportunity to
suggest to the rest of the Court any change he may want to make in his ponencia
before it is officially pronounced. Applying the above rules, we hold that the
questioned ponencia died with the ponente and consequently could not be
promulgated thereafter."