EN BANC
[G.R. No. 122156. February 3, 1997]
MANILA PRINCE HOTEL, petitioner, vs. GOVERNMENT SERVICE
INSURANCE SYSTEM, MANILA HOTEL CORPORATION, COMMITTEE
ON PRIVATIZATION and OFFICE OF THE GOVERNMENT CORPORATE
COUNSEL, respondents.
DECISION
BELLOSILLO, J.:
The Filipino First Policy enshrined in the 1987
Constitution, i.e., in the grant of rights, privileges, and concessions
covering the national economy and patrimony, the State shall give
preference to qualified Filipinos,[1] is invoked by petitioner in its bid
to acquire 51% of the shares of the Manila Hotel Corporation (MHC)
which owns the historic Manila Hotel. Opposing, respondents
maintain that the provision is not self-executing but requires an
implementing legislation for its enforcement. Corollarily, they ask
whether the 51% shares form part of the national economy and
patrimony covered by the protective mantle of the Constitution.
The controversy arose when respondent Government Service
Insurance System (GSIS), pursuant to the privatization program of
the Philippine Government under Proclamation No. 50 dated 8
December 1986, decided to sell through public bidding 30% to 51%
of the issued and outstanding shares of respondent MHC. The
winning bidder, or the eventual strategic partner, is to provide
management expertise and/or an international
marketing/reservation system, and financial support to strengthen
the profitability and performance of the Manila Hotel.[2] In a close
bidding held on 18 September 1995 only two (2) bidders
participated: petitioner Manila Prince Hotel Corporation, a Filipino
corporation, which offered to buy 51% of the MHC or 15,300,000
shares at P41.58 per share, and Renong Berhad, a Malaysian firm,
with ITT-Sheraton as its hotel operator, which bid for the same
number of shares at P44.00 per share, or P2.42 more than the bid of
petitioner.
Pertinent provisions of the bidding rules prepared by
respondent GSIS state -
I. EXECUTION OF THE NECESSARY CONTRACTS WITH GSIS/MHC -
1. The Highest Bidder must comply with the conditions set forth
below by October 23, 1995 (reset to November 3, 1995) or the
Highest Bidder will lose the right to purchase the Block of Shares and
GSIS will instead offer the Block of Shares to the other Qualified
Bidders:
a. The Highest Bidder must negotiate and execute with the
GSIS/MHC the Management Contract, International
Marketing/Reservation System Contract or other type of contract
specified by the Highest Bidder in its strategic plan for the Manila
Hotel x x x x
b. The Highest Bidder must execute the Stock Purchase and Sale
Agreement with GSIS x x x x
K. DECLARATION OF THE WINNING BIDDER/STRATEGIC PARTNER -
The Highest Bidder will be declared the Winning Bidder/Strategic
Partner after the following conditions are met:
a. Execution of the necessary contracts with GSIS/MHC not later
than October 23, 1995 (reset to November 3, 1995); and
b. Requisite approvals from the GSIS/MHC and COP (Committee on
Privatization)/ OGCC (Office of the Government Corporate Counsel)
are obtained.[3]
Pending the declaration of Renong Berhard as the winning
bidder/strategic partner and the execution of the necessary
contracts, petitioner in a letter to respondent GSIS dated 28
September 1995 matched the bid price of P44.00 per share tendered
by Renong Berhad.[4] In a subsequent letter dated 10 October 1995
petitioner sent a managers check issued by Philtrust Bank for Thirty-
three Million Pesos (P33,000,000.00) as Bid Security to match the bid
of the Malaysian Group, Messrs. Renong Berhad x x x x[5] which
respondent GSIS refused to accept.
On 17 October 1995, perhaps apprehensive that respondent
GSIS has disregarded the tender of the matching bid and that the
sale of 51% of the MHC may be hastened by respondent GSIS and
consummated with Renong Berhad, petitioner came to this Court on
prohibition and mandamus. On 18 October 1995 the Court issued a
temporary restraining order enjoining respondents from perfecting
and consummating the sale to the Malaysian firm.
On 10 September 1996 the instant case was accepted by the
Court En Banc after it was referred to it by the First Division. The case
was then set for oral arguments with former Chief Justice Enrique M.
Fernando and Fr. Joaquin G. Bernas, S.J., as amici curiae.
In the main, petitioner invokes Sec. 10, second par., Art. XII, of
the 1987 Constitution and submits that the Manila Hotel has been
identified with the Filipino nation and has practically become a
historical monument which reflects the vibrancy of Philippine
heritage and culture. It is a proud legacy of an earlier generation of
Filipinos who believed in the nobility and sacredness of independence
and its power and capacity to release the full potential of the Filipino
people. To all intents and purposes, it has become a part of the
national patrimony.[6] Petitioner also argues that since 51% of the
shares of the MHC carries with it the ownership of the business of
the hotel which is owned by respondent GSIS, a government-owned
and controlled corporation, the hotel business of respondent GSIS
being a part of the tourism industry is unquestionably a part of the
national economy. Thus, any transaction involving 51% of the shares
of stock of the MHC is clearly covered by the term national economy,
to which Sec. 10, second par., Art. XII, 1987 Constitution, applies.[7]
It is also the thesis of petitioner that since Manila Hotel is part
of the national patrimony and its business also unquestionably part
of the national economy petitioner should be preferred after it has
matched the bid offer of the Malaysian firm. For the bidding rules
mandate that if for any reason, the Highest Bidder cannot be
awarded the Block of Shares, GSIS may offer this to the other
Qualified Bidders that have validly submitted bids provided that
these Qualified Bidders are willing to match the highest bid in terms
of price per share.[8]
Respondents except. They maintain that: First, Sec. 10, second
par., Art. XII, of the 1987 Constitution is merely a statement of
principle and policy since it is not a self-executing provision and
requires implementing legislation(s) x x x x Thus, for the said
provision to operate, there must be existing laws to lay down
conditions under which business may be done.[9]
 Second, granting that this provision is self-executing, Manila
Hotel does not fall under the term national patrimony which only
refers to lands of the public domain, waters, minerals, coal,
petroleum and other mineral oils, all forces of potential energy,
fisheries, forests or timber, wildlife, flora and fauna and all marine
wealth in its territorial sea, and exclusive marine zone as cited in the
first and second paragraphs of Sec. 2, Art. XII, 1987
Constitution. According to respondents, while petitioner speaks of
the guests who have slept in the hotel and the events that have
transpired therein which make the hotel historic, these alone do not
make the hotel fall under the patrimony of the nation. What is more,
the mandate of the Constitution is addressed to the State, not to
respondent GSIS which possesses a personality of its own separate
and distinct from the Philippines as a State.
Third, granting that the Manila Hotel forms part of the national
patrimony, the constitutional provision invoked is still inapplicable
since what is being sold is only 51% of the outstanding shares of the
corporation, not the hotel building nor the land upon which the
building stands. Certainly, 51% of the equity of the MHC cannot be
considered part of the national patrimony. Moreover, if the
disposition of the shares of the MHC is really contrary to the
Constitution, petitioner should have questioned it right from the
beginning and not after it had lost in the bidding.
Fourth, the reliance by petitioner on par. V., subpar. J. 1., of the
bidding rules which provides that if for any reason, the Highest
Bidder cannot be awarded the Block of Shares, GSIS may offer this to
the other Qualified Bidders that have validly submitted bids provided
that these Qualified Bidders are willing to match the highest bid in
terms of price per share, is misplaced. Respondents postulate that
the privilege of submitting a matching bid has not yet arisen since it
only takes place if for any reason, the Highest Bidder cannot be
awarded the Block of Shares. Thus the submission by petitioner of a
matching bid is premature since Renong Berhad could still very well
be awarded the block of shares and the condition giving rise to the
exercise of the privilege to submit a matching bid had not yet taken
place.
Finally, the prayer for prohibition grounded on grave abuse of
discretion should fail since respondent GSIS did not exercise its
discretion in a capricious, whimsical manner, and if ever it did abuse
its discretion it was not so patent and gross as to amount to an
evasion of a positive duty or a virtual refusal to perform a duty
enjoined by law. Similarly, the petition for mandamus should fail as
petitioner has no clear legal right to what it demands and
respondents do not have an imperative duty to perform the act
required of them by petitioner.
We now resolve. A constitution is a system of fundamental laws
for the governance and administration of a nation. It is supreme,
imperious, absolute and unalterable except by the authority from
which it emanates. It has been defined as the fundamental and
paramount law of the nation.[10] It prescribes the permanent
framework of a system of government, assigns to the different
departments their respective powers and duties, and establishes
certain fixed principles on which government is founded. The
fundamental conception in other words is that it is a supreme law to
which all other laws must conform and in accordance with which all
private rights must be determined and all public authority
administered.[11] Under the doctrine of constitutional supremacy, if
a law or contract violates any norm of the constitution that law or
contract whether promulgated by the legislative or by the executive constitutional mandate, the presumption now is that all provisions
branch or entered into by private persons for private purposes is null of the constitution are self-executing. If the constitutional provisions
and void and without any force and effect. Thus, since the are treated as requiring legislation instead of self-executing, the
Constitution is the fundamental, paramount and supreme law of the legislature would have the power to ignore and practically nullify the
nation, it is deemed written in every statute and contract. mandate of the fundamental law.[14] This can be cataclysmic. That is
why the prevailing view is, as it has always been, that -
Admittedly, some constitutions are merely declarations of
policies and principles. Their provisions command the legislature to
x x x x in case of doubt, the Constitution should be considered self-
enact laws and carry out the purposes of the framers who merely
executing rather than non-self-executing x x x x Unless the contrary
establish an outline of government providing for the different
is clearly intended, the provisions of the Constitution should be
departments of the governmental machinery and securing certain
considered self-executing, as a contrary rule would give the
fundamental and inalienable rights of citizens.[12] A provision which
legislature discretion to determine when, or whether, they shall be
lays down a general principle, such as those found in Art. II of the
effective. These provisions would be subordinated to the will of the
1987 Constitution, is usually not self-executing. But a provision
lawmaking body, which could make them entirely meaningless by
which is complete in itself and becomes operative without the aid of
simply refusing to pass the needed implementing statute.[15]
supplementary or enabling legislation, or that which supplies
sufficient rule by means of which the right it grants may be enjoyed
Respondents argue that Sec. 10, second par., Art. XII, of the
or protected, is self-executing. Thus a constitutional provision is self-
1987 Constitution is clearly not self-executing, as they quote from
executing if the nature and extent of the right conferred and the
discussions on the floor of the 1986 Constitutional Commission -
liability imposed are fixed by the constitution itself, so that they can
be determined by an examination and construction of its terms, and MR. RODRIGO. Madam President, I am asking this question
there is no language indicating that the subject is referred to the as the Chairman of the Committee on Style. If the
legislature for action.[13] wording of PREFERENCE is given to QUALIFIED
FILIPINOS, can it be understood as a preference to
As against constitutions of the past, modern constitutions have
qualified Filipinos vis-a-vis Filipinos who are not
been generally drafted upon a different principle and have often
qualified. So, why do we not make it clear? To qualified
become in effect extensive codes of laws intended to operate
Filipinos as against aliens?
directly upon the people in a manner similar to that of statutory
enactments, and the function of constitutional conventions has THE PRESIDENT. What is the question of Commissioner
evolved into one more like that of a legislative body. Hence, unless Rodrigo? Is it to remove the word QUALIFIED?
it is expressly provided that a legislative act is necessary to enforce a
 MR. RODRIGO. No, no, but say definitely TO QUALIFIED self-executing constitutional provision does not render such a
FILIPINOS as against whom? As against aliens or over provision ineffective in the absence of such legislation. The omission
aliens ? from a constitution of any express provision for a remedy for
enforcing a right or liability is not necessarily an indication that it was
MR. NOLLEDO. Madam President, I think that is
not intended to be self-executing. The rule is that a self-executing
understood. We use the word QUALIFIED because
provision of the constitution does not necessarily exhaust legislative
the existing laws or prospective laws will always lay
power on the subject, but any legislation must be in harmony with
down conditions under which business may be
the constitution, further the exercise of constitutional right and
done. For example, qualifications on capital,
make it more available.[17] Subsequent legislation however does not
qualifications on the setting up of other financial
necessarily mean that the subject constitutional provision is not, by
structures, et cetera (underscoring supplied by
itself, fully enforceable.
respondents).
Respondents also argue that the non-self-executing nature of
MR. RODRIGO. It is just a matter of style.
Sec. 10, second par., of Art. XII is implied from the tenor of the first
MR. NOLLEDO. Yes.[16] and third paragraphs of the same section which undoubtedly are not
self-executing.[18] The argument is flawed. If the first and third
Quite apparently, Sec. 10, second par., of Art XII is couched in
paragraphs are not self-executing because Congress is still to enact
such a way as not to make it appear that it is non-self-executing but
measures to encourage the formation and operation of enterprises
simply for purposes of style. But, certainly, the legislature is not
fully owned by Filipinos, as in the first paragraph, and the State still
precluded from enacting further laws to enforce the constitutional
needs legislation to regulate and exercise authority over foreign
provision so long as the contemplated statute squares with the
investments within its national jurisdiction, as in the third paragraph,
Constitution. Minor details may be left to the legislature without
then a fortiori, by the same logic, the second paragraph can only be
impairing the self-executing nature of constitutional provisions.
self-executing as it does not by its language require any legislation in
In self-executing constitutional provisions, the legislature may order to give preference to qualified Filipinos in the grant of rights,
still enact legislation to facilitate the exercise of powers directly privileges and concessions covering the national economy and
granted by the constitution, further the operation of such a patrimony. A constitutional provision may be self-executing in one
provision, prescribe a practice to be used for its enforcement, part and non-self-executing in another.[19]
provide a convenient remedy for the protection of the rights secured
Even the cases cited by respondents holding that certain
or the determination thereof, or place reasonable safeguards
constitutional provisions are merely statements of principles and
around the exercise of the right. The mere fact that legislation may
policies, which are basically not self-executing and only placed in the
supplement and add to or prescribe a penalty for the violation of a
Constitution as moral incentives to legislation, not as judicially
enforceable rights - are simply not in point. Basco v. Philippine
Amusements and Gaming Corporation[20] speaks of constitutional
provisions on personal dignity,[21] the sanctity of family life,[22] the
vital role of the youth in nation-building,[23] the promotion of social
justice,[24] and the values of education.[25] Tolentino v. Secretary of
Finance[26] refers to constitutional provisions on social justice and
human rights[27] and on education.[28] Lastly, Kilosbayan, Inc. v.
Morato[29] cites provisions on the promotion of general
welfare,[30] the sanctity of family life,[31] the vital role of the youth in
nation-building[32] and the promotion of total human liberation and
development.[33] A reading of these provisions indeed clearly shows
that they are not judicially enforceable constitutional rights but
merely guidelines for legislation. The very terms of the provisions
manifest that they are only principles upon which legislations must
be based. Res ipsa loquitur.
On the other hand, Sec. 10, second par., Art. XII of the 1987
Constitution is a mandatory, positive command which is complete in
itself and which needs no further guidelines or implementing laws or
rules for its enforcement. From its very words the provision does not
require any legislation to put it in operation. It is per se judicially
enforceable. When our Constitution mandates that [i]n the grant of
rights, privileges, and concessions covering national economy and
patrimony, the State shall give preference to qualified Filipinos, it
means just that - qualified Filipinos shall be preferred. And when our
Constitution declares that a right exists in certain specified
circumstances an action may be maintained to enforce such right
notwithstanding the absence of any legislation on the subject;
consequently, if there is no statute especially enacted to enforce
such constitutional right, such right enforces itself by its own
inherent potency and puissance, and from which all legislations must
take their bearings. Where there is a right there is a remedy. Ubi jus
ibi remedium.
As regards our national patrimony, a member of the 1986
Constitutional Commission[34] explains -
The patrimony of the Nation that should be conserved
and developed refers not only to our rich natural resources
but also to the cultural heritage of our race. It also refers to
our intelligence in arts, sciences and letters. Therefore, we
should develop not only our lands, forests, mines and other
natural resources but also the mental ability or faculty of our
people.
We agree. In its plain and ordinary meaning, the
term patrimony pertains to heritage.[35] When the Constitution
speaks of national patrimony, it refers not only to the natural
resources of the Philippines, as the Constitution could have very well
used the term natural resources, but also to the cultural heritage of
the Filipinos.
Manila Hotel has become a landmark - a living testimonial of
Philippine heritage. While it was restrictively an American hotel
when it first opened in 1912, it immediately evolved to be truly
Filipino.Formerly a concourse for the elite, it has since then become
the venue of various significant events which have shaped Philippine
history. It was called the Cultural Center of the 1930s. It was the site
of the festivities during the inauguration of the Philippine
Commonwealth. Dubbed as the Official Guest House of the
Philippine Government it plays host to dignitaries and official visitors
who are accorded the traditional Philippine hospitality.[36]
The history of the hotel has been chronicled in the book The
Manila Hotel: The Heart and Memory of a City.[37] During World War
II the hotel was converted by the Japanese Military Administration
into a military headquarters. When the American forces returned to
recapture Manila the hotel was selected by the Japanese together
with Intramuros as the two (2) places for their final stand.Thereafter,
in the 1950s and 1960s, the hotel became the center of political
activities, playing host to almost every political convention. In 1970
the hotel reopened after a renovation and reaped numerous
international recognitions, an acknowledgment of the Filipino talent
and ingenuity. In 1986 the hotel was the site of a failed coup
d etat where an aspirant for vice-president was proclaimed
President of the Philippine Republic.
For more than eight (8) decades Manila Hotel has bore mute
witness to the triumphs and failures, loves and frustrations of the
Filipinos; its existence is impressed with public interest; its own
historicity associated with our struggle for sovereignty,
independence and nationhood. Verily, Manila Hotel has become
part of our national economy and patrimony. For sure, 51% of the
equity of the MHC comes within the purview of the constitutional
shelter for it comprises the majority and controlling stock, so that
anyone who acquires or owns the 51% will have actual control and
management of the hotel. In this instance, 51% of the MHC cannot
be disassociated from the hotel and the land on which the hotel
edifice stands. Consequently, we cannot sustain respondents claim
that the Filipino First Policy provision is not applicable since what is
being sold is only 51% of the outstanding shares of the corporation,
not the Hotel building nor the land upon which the building stands.[38]
The argument is pure sophistry. The term qualified Filipinos as
used in our Constitution also includes corporations at least 60% of
which is owned by Filipinos. This is very clear from the proceedings
of the 1986 Constitutional Commission -
THE PRESIDENT. Commissioner Davide is recognized.
MR. DAVIDE. I would like to introduce an amendment to the
Nolledo amendment. And the amendment would
consist in substituting the words QUALIFIED FILIPINOS
with the following: CITIZENS OF THE PHILIPPINES OR
CORPORATIONS OR ASSOCIATIONS WHOSE CAPITAL
OR CONTROLLING STOCK IS WHOLLY OWNED BY SUCH
CITIZENS.
xxxx
MR. MONSOD. Madam President, apparently the
proponent is agreeable, but we have to raise a
question. Suppose it is a corporation that is 80-percent
Filipino, do we not give it preference?
MR. DAVIDE. The Nolledo amendment would refer to an
individual Filipino. What about a corporation wholly
owned by Filipino citizens?
MR. MONSOD. At least 60 percent, Madam President.
MR. DAVIDE. Is that the intention?
 MR. MONSOD. Yes, because, in fact, we would be limiting it
if we say that the preference should only be 100-
percent Filipino.
MR. DAVIDE. I want to get that meaning clear because
QUALIFIED FILIPINOS may refer only to individuals and
not to juridical personalities or entities.
MR. MONSOD. We agree, Madam President.[39]
xxxx
MR. RODRIGO. Before we vote, may I request that the
amendment be read again.
MR. NOLLEDO. The amendment will read: IN THE GRANT OF
RIGHTS, PRIVILEGES AND CONCESSIONS COVERING
THE NATIONAL ECONOMY AND PATRIMONY, THE
STATE SHALL GIVE PREFERENCE TO QUALIFIED
FILIPINOS. And the word Filipinos here, as intended by
the proponents, will include not only individual
Filipinos but also Filipino-controlled entities or entities
fully-controlled by Filipinos.[40]
The phrase preference to qualified Filipinos was explained thus -
MR. FOZ. Madam President, I would like to request
Commissioner Nolledo to please restate his
amendment so that I can ask a question.
MR. NOLLEDO. IN THE GRANT OF RIGHTS, PRIVILEGES AND
CONCESSIONS COVERING THE NATIONAL ECONOMY
AND PATRIMONY, THE STATE SHALL GIVE PREFERENCE
TO QUALIFIED FILIPINOS.
MR. FOZ. In connection with that amendment, if a foreign
enterprise is qualified and a Filipino enterprise is also
qualified, will the Filipino enterprise still be given a
preference?
MR. NOLLEDO. Obviously.
MR. FOZ. If the foreigner is more qualified in some aspects
than the Filipino enterprise, will the Filipino still be
preferred?
MR. NOLLEDO. The answer is yes.
MR. FOZ. Thank you.[41]
Expounding further on the Filipino First Policy provision
Commissioner Nolledo continues
MR. NOLLEDO. Yes, Madam President. Instead of MUST, it
will be SHALL - THE STATE SHALL GIVE PREFERENCE TO
QUALIFIED FILIPINOS. This embodies the so-called
Filipino First policy. That means that Filipinos should be
given preference in the grant of concessions, privileges
and rights covering the national patrimony.[42]
The exchange of views in the sessions of the Constitutional
Commission regarding the subject provision was still further clarified
by Commissioner Nolledo[43] -
Paragraph 2 of Section 10 explicitly mandates the Pro-Filipino bias in
all economic concerns. It is better known as the FILIPINO FIRST
Policy x x x x This provision was never found in previous
Constitutions x x x x
The term qualified Filipinos simply means that preference shall be
given to those citizens who can make a viable contribution to the
common good, because of credible competence and efficiency. It
certainly does NOT mandate the pampering and preferential
treatment to Filipino citizens or organizations that are incompetent
or inefficient, since such an indiscriminate preference would be
counterproductive and inimical to the common good.
In the granting of economic rights, privileges, and concessions, when
a choice has to be made between a qualified foreigner and a
qualified Filipino, the latter shall be chosen over the former.
Lastly, the word qualified is also determinable. Petitioner was
so considered by respondent GSIS and selected as one of
the qualified bidders. It was pre-qualified by respondent GSIS in
accordance with its own guidelines so that the sole inference here is
that petitioner has been found to be possessed of proven
management expertise in the hotel industry, or it has significant
equity ownership in another hotel company, or it has an overall
management and marketing proficiency to successfully operate the
Manila Hotel.[44]
The penchant to try to whittle away the mandate of the
Constitution by arguing that the subject provision is not self-
executory and requires implementing legislation is quite
disturbing. The attempt to violate a clear constitutional provision -
by the government itself - is only too distressing. To adopt such a line
of reasoning is to renounce the duty to ensure faithfulness to the
Constitution. For, even some of the provisions of the Constitution
which evidently need implementing legislation have juridical life of
their own and can be the source of a judicial remedy. We cannot
simply afford the government a defense that arises out of the failure
to enact further enabling, implementing or guiding legislation. In
fine, the discourse of Fr. Joaquin G. Bernas, S.J., on constitutional
government is apt -
The executive department has a constitutional duty to implement
laws, including the Constitution, even before Congress acts -
provided that there are discoverable legal standards for executive
action. When the executive acts, it must be guided by its own
understanding of the constitutional command and of applicable
laws. The responsibility for reading and understanding the
Constitution and the laws is not the sole prerogative of Congress. If
it were, the executive would have to ask Congress, or perhaps the
Court, for an interpretation every time the executive is confronted
by a constitutional command. That is not how constitutional
government operates.[45]
Respondents further argue that the constitutional provision is
addressed to the State, not to respondent GSIS which by itself
possesses a separate and distinct personality. This argument again is
at best specious. It is undisputed that the sale of 51% of the MHC
could only be carried out with the prior approval of the State acting
through respondent Committee on Privatization. As correctly
pointed out by Fr. Joaquin G. Bernas, S.J., this fact alone makes the
sale of the assets of respondents GSIS and MHC a state action. In
constitutional jurisprudence, the acts of persons distinct from the
government are considered state action covered by the Constitution
(1) when the activity it engages in is a public function; (2) when the
government is so significantly involved with the private actor as to
make the government responsible for his action; and, (3) when the
government has approved or authorized the action. It is evident that
the act of respondent GSIS in selling 51% of its share in respondent
MHC comes under the second and third categories of state
action. Without doubt therefore the transaction, although entered
into by respondent GSIS, is in fact a transaction of the State and
therefore subject to the constitutional command.[46]
When the Constitution addresses the State it refers not only to
the people but also to the government as elements of the
State. After all, government is composed of three (3) divisions of
power - legislative, executive and judicial. Accordingly, a
constitutional mandate directed to the State is correspondingly
directed to the three (3) branches of government. It is undeniable
that in this case the subject constitutional injunction is addressed
among others to the Executive Department and respondent GSIS, a
government instrumentality deriving its authority from the State.
It should be stressed that while the Malaysian firm offered the
higher bid it is not yet the winning bidder. The bidding rules
expressly provide that the highest bidder shall only be declared the
winning bidder after it has negotiated and executed the necessary
contracts, and secured the requisite approvals. Since the Filipino
First Policy provision of the Constitution bestows preference
on qualified Filipinos the mere tending of the highest bid is not an
assurance that the highest bidder will be declared the winning
bidder. Resultantly, respondents are not bound to make the award
yet, nor are they under obligation to enter into one with the highest
bidder. For in choosing the awardee respondents are mandated to
abide by the dictates of the 1987 Constitution the provisions of
which are presumed to be known to all the bidders and other
interested parties.
Adhering to the doctrine of constitutional supremacy, the
subject constitutional provision is, as it should be, impliedly written
in the bidding rules issued by respondent GSIS, lest the bidding rules
be nullified for being violative of the Constitution. It is a basic
principle in constitutional law that all laws and contracts must
conform with the fundamental law of the land. Those which violate
the Constitution lose their reason for being.
Paragraph V. J. 1 of the bidding rules provides that [i]f for any
reason the Highest Bidder cannot be awarded the Block of Shares,
GSIS may offer this to other Qualified Bidders that have validly
submitted bids provided that these Qualified Bidders are willing to
match the highest bid in terms of price per share.[47] Certainly, the
constitutional mandate itself is reason enough not to award the
block of shares immediately to the foreign bidder notwithstanding
its submission of a higher, or even the highest, bid. In fact, we cannot
conceive of a stronger reason than the constitutional injunction
itself.
In the instant case, where a foreign firm submits the highest bid
in a public bidding concerning the grant of rights, privileges and
concessions covering the national economy and patrimony, thereby
exceeding the bid of a Filipino, there is no question that the Filipino
will have to be allowed to match the bid of the foreign entity. And if
the Filipino matches the bid of a foreign firm the award should go to
the Filipino. It must be so if we are to give life and meaning to
the Filipino First Policy provision of the 1987 Constitution. For, while
this may neither be expressly stated nor contemplated in the bidding
rules, the constitutional fiat is omnipresent to be simply
disregarded. To ignore it would be to sanction a perilous skirting of
the basic law.
 This Court does not discount the apprehension that this policy
may discourage foreign investors. But the Constitution and laws of
the Philippines are understood to be always open to public
scrutiny. These are given factors which investors must consider
when venturing into business in a foreign jurisdiction. Any person
therefore desiring to do business in the Philippines or with any of its
agencies or instrumentalities is presumed to know his rights and
obligations under the Constitution and the laws of the forum.
The argument of respondents that petitioner is now estopped
from questioning the sale to Renong Berhad since petitioner was
well aware from the beginning that a foreigner could participate in
the bidding is meritless. Undoubtedly, Filipinos and foreigners alike
were invited to the bidding. But foreigners may be awarded the sale
only if no Filipino qualifies, or if the qualified Filipino fails to match
the highest bid tendered by the foreign entity. In the case before us,
while petitioner was already preferred at the inception of the
bidding because of the constitutional mandate, petitioner had not
yet matched the bid offered by Renong Berhad. Thus it did not have
the right or personality then to compel respondent GSIS to accept its
earlier bid. Rightly, only after it had matched the bid of the foreign
firm and the apparent disregard by respondent GSIS of petitioners
matching bid did the latter have a cause of action.
Besides, there is no time frame for invoking the constitutional
safeguard unless perhaps the award has been finally made. To insist
on selling the Manila Hotel to foreigners when there is a Filipino
group willing to match the bid of the foreign group is to insist that
government be treated as any other ordinary market player, and
bound by its mistakes or gross errors of judgment, regardless of the
consequences to the Filipino people. The miscomprehension of the
Constitution is regrettable. Thus we would rather remedy the
indiscretion while there is still an opportunity to do so than let the
government develop the habit of forgetting that the Constitution
lays down the basic conditions and parameters for its actions.
Since petitioner has already matched the bid price tendered by
Renong Berhad pursuant to the bidding rules, respondent GSIS is left
with no alternative but to award to petitioner the block of shares of
MHC and to execute the necessary agreements and documents to
effect the sale in accordance not only with the bidding guidelines and
procedures but with the Constitution as well. The refusal of
respondent GSIS to execute the corresponding documents with
petitioner as provided in the bidding rules after the latter has
matched the bid of the Malaysian firm clearly constitutes grave
abuse of discretion.
The Filipino First Policy is a product of Philippine nationalism. It
is embodied in the 1987 Constitution not merely to be used as a
guideline for future legislation but primarily to be enforced; so must
it be enforced. This Court as the ultimate guardian of the
Constitution will never shun, under any reasonable circumstance,
the duty of upholding the majesty of the Constitution which it is
tasked to defend. It is worth emphasizing that it is not the intention
of this Court to impede and diminish, much less undermine, the
influx of foreign investments. Far from it, the Court encourages and
welcomes more business opportunities but avowedly sanctions the
preference for Filipinos whenever such preference is ordained by the
Constitution. The position of the Court on this matter could have not
been more appropriately articulated by Chief Justice Narvasa -
As scrupulously as it has tried to observe that it is not its function to
substitute its judgment for that of the legislature or the executive
about the wisdom and feasibility of legislation economic in nature,
the Supreme Court has not been spared criticism for decisions
perceived as obstacles to economic progress and development x x x
x in connection with a temporary injunction issued by the Courts
First Division against the sale of the Manila Hotel to a Malaysian Firm
and its partner, certain statements were published in a major daily
to the effect that that injunction again demonstrates that the
Philippine legal system can be a major obstacle to doing business
here.
Let it be stated for the record once again that while it is no business
of the Court to intervene in contracts of the kind referred to or set
itself up as the judge of whether they are viable or attainable, it is its
bounden duty to make sure that they do not violate the Constitution
or the laws, or are not adopted or implemented with grave abuse of
discretion amounting to lack or excess of jurisdiction. It will never
shirk that duty, no matter how buffeted by winds of unfair and ill-
informed criticism.[48]
Privatization of a business asset for purposes of enhancing its
business viability and preventing further losses, regardless of the
character of the asset, should not take precedence over non-
material values. A commercial, nay even a budgetary, objective
should not be pursued at the expense of national pride and
dignity. For the Constitution enshrines higher and nobler non-
material values. Indeed, the Court will always defer to the
Constitution in the proper governance of a free society; after all,
there is nothing so sacrosanct in any economic policy as to draw
itself beyond judicial review when the Constitution is involved.[49]
Nationalism is inherent in the very concept of the Philippines
being a democratic and republican state, with sovereignty residing
in the Filipino people and from whom all government authority
emanates. In nationalism, the happiness and welfare of the people
must be the goal. The nation-state can have no higher purpose. Any
interpretation of any constitutional provision must adhere to such
basic concept. Protection of foreign investments, while laudible, is
merely a policy. It cannot override the demands of nationalism.[50]
The Manila Hotel or, for that matter, 51% of the MHC, is not just
any commodity to be sold to the highest bidder solely for the sake of
privatization. We are not talking about an ordinary piece of property
in a commercial district. We are talking about a historic relic that has
hosted many of the most important events in the short history of the
Philippines as a nation. We are talking about a hotel where heads of
states would prefer to be housed as a strong manifestation of their
desire to cloak the dignity of the highest state function to their
official visits to the Philippines. Thus the Manila Hotel has played and
continues to play a significant role as an authentic repository of
twentieth century Philippine history and culture. In this sense, it has
become truly a reflection of the Filipino soul - a place with a history
of grandeur; a most historical setting that has played a part in the
shaping of a country.[51]
This Court cannot extract rhyme nor reason from the
determined efforts of respondents to sell the historical landmark -
this Grand Old Dame of hotels in Asia - to a total stranger. For,
indeed, the conveyance of this epic exponent of the Filipino psyche
to alien hands cannot be less than mephistophelian for it is, in
whatever manner viewed, a veritable alienation of a nations soul for
some pieces of foreign silver. And so we ask: What advantage, which
cannot be equally drawn from a qualified Filipino, can be gained by
the Filipinos if Manila Hotel - and all that it stands for - is sold to a
non-Filipino? How much of national pride will vanish if the nations
cultural heritage is entrusted to a foreign entity? On the other hand,
how much dignity will be preserved and realized if the national
patrimony is safekept in the hands of a qualified, zealous and well-
meaning Filipino? This is the plain and simple meaning of the Filipino
First Policy provision of the Philippine Constitution. And this Court,
heeding the clarion call of the Constitution and accepting the duty of
being the elderly watchman of the nation, will continue to respect
and protect the sanctity of the Constitution.
WHEREFORE, respondents GOVERNMENT SERVICE INSURANCE
SYSTEM, MANILA HOTEL CORPORATION, COMMITTEE ON
PRIVATIZATION and OFFICE OF THE GOVERNMENT CORPORATE
COUNSEL are directed to CEASE and DESIST from selling 51% of the
shares of the Manila Hotel Corporation to RENONG BERHAD, and to
ACCEPT the matching bid of petitioner MANILA PRINCE HOTEL
CORPORATION to purchase the subject 51% of the shares of the
Manila Hotel Corporation at P44.00 per share and thereafter to
execute the necessary agreements and documents to effect the sale,
to issue the necessary clearances and to do such other acts and
deeds as may be necessary for the purpose.
SO ORDERED.
EN BANC
[G.R. No. 118295. May 2, 1997]
WIGBERTO E. TANADA petitioners, vs .EDGARDO ANGARA,
respondents.
Brief Historical Background
To hasten worldwide recovery from the devastation wrought by the
Second World War, plans for the establishment of three multilateral
institutions -- inspired by that grand political body, the United
Nations -- were discussed at Dumbarton Oaks and Bretton
Woods. The first was the World Bank (WB) which was to address the
rehabilitation and reconstruction of war-ravaged and later
developing countries; the second, the International Monetary Fund
(IMF) which was to deal with currency problems; and the third, the
International Trade Organization (ITO), which was to foster order
and predictability in world trade and to minimize unilateral
protectionist policies that invite challenge, even retaliation, from
other states. However, for a variety of reasons, including its non-
ratification by the United States, the ITO, unlike the IMF and WB,
never took off. What remained was only GATT -- the General
Agreement on Tariffs and Trade. GATT was a collection of treaties
governing access to the economies of treaty adherents with no
institutionalized body administering the agreements or dependable
system of dispute settlement.
After half a century and several dizzying rounds of negotiations,
principally the Kennedy Round, the Tokyo Round and the Uruguay
Round, the world finally gave birth to that administering body -- the
World Trade Organization -- with the signing of the Final Act in
Marrakesh, Morocco and the ratification of the WTO Agreement by
its members.[1]
Like many other developing countries, the Philippines joined WTO as
a founding member with the goal, as articulated by President Fidel
V. Ramos in two letters to the Senate (infra), of improving Philippine
access to foreign markets, especially its major trading partners,
through the reduction of tariffs on its exports, particularly
agricultural and industrial products. The President also saw in the
WTO the opening of new opportunities for the services sector x x x,
(the reduction of) costs and uncertainty associated with exporting x
x x, and (the attraction of) more investments into the
country.Although the Chief Executive did not expressly mention it in
his letter, the Philippines - - and this is of special interest to the legal
profession - - will benefit from the WTO system of dispute
settlement by judicial adjudication through the independent WTO
settlement bodies called (1) Dispute Settlement Panels and (2)
Appellate Tribunal. Heretofore, trade disputes were settled mainly
through negotiations where solutions were arrived at frequently on
the basis of relative bargaining strengths, and where naturally, weak
and underdeveloped countries were at a disadvantage.
The Petition in Brief
Arguing mainly (1) that the WTO requires the Philippines to place
nationals and products of member-countries on the same footing as
Filipinos and local products and (2) that the WTO intrudes, limits
and/or impairs the constitutional powers of both Congress and the
Supreme Court, the instant petition before this Court assails the
WTO Agreement for violating the mandate of the 1987 Constitution
to develop a self-reliant and independent national economy
effectively controlled by Filipinos x x x (to) give preference to
qualified Filipinos (and to) promote the preferential use of Filipino
labor, domestic materials and locally produced goods.
Simply stated, does the Philippine Constitution prohibit Philippine
participation in worldwide trade liberalization and economic
globalization? Does it prescribe Philippine integration into a global
economy that is liberalized, deregulated and privatized? These are
the main questions raised in this petition for certiorari, prohibition
and mandamus under Rule 65 of the Rules of Court praying (1) for
the nullification, on constitutional grounds, of the concurrence of
the Philippine Senate in the ratification by the President of the
Philippines of the Agreement Establishing the World Trade
Organization (WTO Agreement, for brevity) and (2) for the
prohibition of its implementation and enforcement through the
release and utilization of public funds, the assignment of public
officials and employees, as well as the use of government properties
and resources by respondent-heads of various executive offices
concerned therewith. This concurrence is embodied in Senate
Resolution No. 97, dated December 14, 1994.
The Facts
On April 15, 1994, Respondent Rizalino Navarro, then Secretary of
the Department of Trade and Industry (Secretary Navarro, for
brevity), representing the Government of the Republic of the
Philippines, signed in Marrakesh, Morocco, the Final Act Embodying
the Results of the Uruguay Round of Multilateral Negotiations (Final
Act, for brevity).
By signing the Final Act,[2] Secretary Navarro on behalf of the
Republic of the Philippines, agreed:
(a) to submit, as appropriate, the WTO Agreement for the
consideration of their respective competent authorities, with a view
to seeking approval of the Agreement in accordance with their
procedures; and
(b) to adopt the Ministerial Declarations and Decisions.
On August 12, 1994, the members of the Philippine Senate received
a letter dated August 11, 1994 from the President of the
Philippines,[3] stating among others that the Uruguay Round Final Act
is hereby submitted to the Senate for its concurrence pursuant to
Section 21, Article VII of the Constitution.
On August 13, 1994, the members of the Philippine Senate received
another letter from the President of the Philippines[4] likewise dated
August 11, 1994, which stated among others that the Uruguay
Round Final Act, the Agreement Establishing the World Trade
Organization, the Ministerial Declarations and Decisions, and the
Understanding on Commitments in Financial Services are hereby
submitted to the Senate for its concurrence pursuant to Section 21,
Article VII of the Constitution.
On December 9, 1994, the President of the Philippines certified the
necessity of the immediate adoption of P.S. 1083, a resolution
entitled Concurring in the Ratification of the Agreement Establishing
the World Trade Organization.[5]
On December 14, 1994, the Philippine Senate adopted Resolution
No. 97 which Resolved, as it is hereby resolved, that the Senate
concur, as it hereby concurs, in the ratification by the President of
the Philippines of the Agreement Establishing the World Trade
Organization.[6] The text of the WTO Agreement is written on pages
137 et seq. of Volume I of the 36-volume Uruguay Round of
Multilateral Trade Negotiations and includes various agreements
and associated legal instruments (identified in the said Agreement
as Annexes 1, 2 and 3 thereto and collectively referred to as
Multilateral Trade Agreements, for brevity) as follows:
ANNEX 1
Annex 1A: Multilateral Agreement on Trade in Goods
General Agreement on Tariffs and Trade 1994
Agreement on Agriculture
Agreement on the Application of Sanitary and
Phytosanitary Measures
Agreement on Textiles and Clothing
Agreement on Technical Barriers to Trade
Agreement on Trade-Related Investment Measures
Agreement on Implementation of Article VI of the General
Agreement on Tariffs and Trade 1994
Agreement on Implementation of Article VII of the General on Tariffs
and Trade 1994
Agreement on Pre-Shipment Inspection
Agreement on Rules of Origin
Agreement on Imports Licensing Procedures
Agreement on Subsidies and Coordinating Measures
Agreement on Safeguards
Annex 1B: General Agreement on Trade in Services and Annexes
Annex 1C: Agreement on Trade-Related Aspects of Intellectual
Property Rights
ANNEX 2
Understanding on Rules and Procedures Governing the Settlement
of Disputes
ANNEX 3
Trade Policy Review Mechanism
On December 16, 1994, the President of the Philippines signed[7] the
Instrument of Ratification, declaring:
NOW THEREFORE, be it known that I, FIDEL V. RAMOS, President of
the Republic of the Philippines, after having seen and considered the
aforementioned Agreement Establishing the World Trade
Organization and the agreements and associated legal instruments
included in Annexes one (1), two (2) and three (3) of that Agreement
which are integral parts thereof, signed at Marrakesh, Morocco on
15 April 1994, do hereby ratify and confirm the same and every
Article and Clause thereof.
To emphasize, the WTO Agreement ratified by the President of the
Philippines is composed of the Agreement Proper and the associated
legal instruments included in Annexes one (1), two (2) and three (3)
of that Agreement which are integral parts thereof.
On the other hand, the Final Act signed by Secretary Navarro
embodies not only the WTO Agreement (and its integral annexes
aforementioned) but also (1) the Ministerial Declarations and
Decisions and (2) the Understanding on Commitments in Financial
Services. In his Memorandum dated May 13, 1996,[8] the Solicitor
General describes these two latter documents as follows:
The Ministerial Decisions and Declarations are twenty-five
declarations and decisions on a wide range of matters, such as
measures in favor of least developed countries, notification
procedures, relationship of WTO with the International Monetary
Fund (IMF), and agreements on technical barriers to trade and on
dispute settlement.
The Understanding on Commitments in Financial Services dwell on,
among other things, standstill or limitations and qualifications of
commitments to existing non-conforming measures, market access,
national treatment, and definitions of non-resident supplier of
financial services, commercial presence and new financial service.
On December 29, 1994, the present petition was filed. After careful
deliberation on respondents comment and petitioners reply thereto,
the Court resolved on December 12, 1995, to give due course to the
petition, and the parties thereafter filed their respective
memoranda. The Court also requested the Honorable Lilia R.
Bautista, the Philippine Ambassador to the United Nations stationed
in Geneva, Switzerland, to submit a paper, hereafter referred to as
Bautista Paper,[9] for brevity, (1) providing a historical background of
and (2) summarizing the said agreements.
During the Oral Argument held on August 27, 1996, the Court
directed:
(a) the petitioners to submit the (1) Senate Committee Report on the
matter in controversy and (2) the transcript of proceedings/hearings
in the Senate; and
(b) the Solicitor General, as counsel for respondents, to file (1) a list
of Philippine treaties signed prior to the Philippine adherence to the
WTO Agreement, which derogate from Philippine sovereignty and
(2) copies of the multi-volume WTO Agreement and other
documents mentioned in the Final Act, as soon as possible.
After receipt of the foregoing documents, the Court said it would
consider the case submitted for resolution. In a Compliance dated
September 16, 1996, the Solicitor General submitted a printed copy
of the 36-volume Uruguay Round of Multilateral Trade Negotiations,
and in another Compliance dated October 24, 1996, he listed the
various bilateral or multilateral treaties or international instruments
involving derogation of Philippine sovereignty. Petitioners, on the
other hand, submitted their Compliance dated January 28, 1997, on
January 30, 1997.
The Issues
In their Memorandum dated March 11, 1996, petitioners
summarized the issues as follows:
A. Whether the petition presents a political question or is otherwise
not justiciable.
B. Whether the petitioner members of the Senate who participated
in the deliberations and voting leading to the concurrence are
estopped from impugning the validity of the Agreement Establishing
the World Trade Organization or of the validity of the concurrence.
C. Whether the provisions of the Agreement Establishing the World
Trade Organization contravene the provisions of Sec. 19, Article II,
and Secs. 10 and 12, Article XII, all of the 1987 Philippine
Constitution.
D. Whether provisions of the Agreement Establishing the World
Trade Organization unduly limit, restrict and impair Philippine
sovereignty specifically the legislative power which, under Sec. 2,
Article VI, 1987 Philippine Constitution is vested in the Congress of
the Philippines;
E. Whether provisions of the Agreement Establishing the World
Trade Organization interfere with the exercise of judicial power.
F. Whether the respondent members of the Senate acted in grave
abuse of discretion amounting to lack or excess of jurisdiction when
they voted for concurrence in the ratification of the constitutionally-
infirm Agreement Establishing the World Trade Organization.
G. Whether the respondent members of the Senate acted in grave
abuse of discretion amounting to lack or excess of jurisdiction when
they concurred only in the ratification of the Agreement Establishing
the World Trade Organization, and not with the Presidential
submission which included the Final Act, Ministerial Declaration and
Decisions, and the Understanding on Commitments in Financial
Services.
On the other hand, the Solicitor General as counsel for respondents
synthesized the several issues raised by petitioners into the
following:[10]
1. Whether or not the provisions of the Agreement Establishing the
World Trade Organization and the Agreements and Associated Legal
Instruments included in Annexes one (1), two (2) and three (3) of
that agreement cited by petitioners directly contravene or
undermine the letter, spirit and intent of Section 19, Article II and
Sections 10 and 12, Article XII of the 1987 Constitution.
2. Whether or not certain provisions of the Agreement unduly limit,
restrict or impair the exercise of legislative power by Congress.
3. Whether or not certain provisions of the Agreement impair the
exercise of judicial power by this Honorable Court in promulgating
the rules of evidence.
4. Whether or not the concurrence of the Senate in the ratification
by the President of the Philippines of the Agreement establishing the
World Trade Organization implied rejection of the treaty embodied
in the Final Act.
By raising and arguing only four issues against the seven presented
by petitioners, the Solicitor General has effectively ignored three,
namely: (1) whether the petition presents a political question or is
otherwise not justiciable; (2) whether petitioner-members of the
Senate (Wigberto E. Taada and Anna Dominique Coseteng) are
estopped from joining this suit; and (3) whether the respondent-
members of the Senate acted in grave abuse of discretion when they
voted for concurrence in the ratification of the WTO Agreement. The
foregoing notwithstanding, this Court resolved to deal with these
three issues thus:
(1) The political question issue -- being very fundamental and vital,
and being a matter that probes into the very jurisdiction of this Court
to hear and decide this case -- was deliberated upon by the Court
and will thus be ruled upon as the first issue;
(2) The matter of estoppel will not be taken up because this defense
is waivable and the respondents have effectively waived it by not
pursuing it in any of their pleadings; in any event, this issue, even if
ruled in respondents favor, will not cause the petitions dismissal as
there are petitioners other than the two senators, who are not
vulnerable to the defense of estoppel; and
(3) The issue of alleged grave abuse of discretion on the part of the
respondent senators will be taken up as an integral part of the
disposition of the four issues raised by the Solicitor General.
During its deliberations on the case, the Court noted that the
respondents did not question the locus standi of petitioners. Hence,
they are also deemed to have waived the benefit of such issue.They
probably realized that grave constitutional issues, expenditures of
public funds and serious international commitments of the nation
are involved here, and that transcendental public interest requires
that the substantive issues be met head on and decided on the
merits, rather than skirted or deflected by procedural matters.[11]
To recapitulate, the issues that will be ruled upon shortly are:
(1) DOES THE PETITION PRESENT A JUSTICIABLE
CONTROVERSY? OTHERWISE STATED, DOES THE PETITION INVOLVE
A POLITICAL QUESTION OVER WHICH THIS COURT HAS NO
JURISDICTION?
(2) DO THE PROVISIONS OF THE WTO AGREEMENT AND ITS THREE
ANNEXES CONTRAVENE SEC. 19, ARTICLE II, AND SECS. 10 AND 12,
ARTICLE XII, OF THE PHILIPPINE CONSTITUTION?
(3) DO THE PROVISIONS OF SAID AGREEMENT AND ITS ANNEXES
LIMIT, RESTRICT, OR IMPAIR THE EXERCISE OF LEGISLATIVE POWER
BY CONGRESS?
(4) DO SAID PROVISIONS UNDULY IMPAIR OR INTERFERE WITH THE
EXERCISE OF JUDICIAL POWER BY THIS COURT IN PROMULGATING
RULES ON EVIDENCE?
(5) WAS THE CONCURRENCE OF THE SENATE IN THE WTO
AGREEMENT AND ITS ANNEXES SUFFICIENT AND/OR VALID,
CONSIDERING THAT IT DID NOT INCLUDE THE FINAL ACT,
MINISTERIAL DECLARATIONS AND DECISIONS, AND THE
UNDERSTANDING ON COMMITMENTS IN FINANCIAL SERVICES?
The First Issue: Does the Court Have Jurisdiction Over the
Controversy?
In seeking to nullify an act of the Philippine Senate on the ground
that it contravenes the Constitution, the petition no doubt raises a
justiciable controversy. Where an action of the legislative branch is
seriously alleged to have infringed the Constitution, it becomes not
only the right but in fact the duty of the judiciary to settle the
dispute. The question thus posed is judicial rather than political. The
duty (to adjudicate) remains to assure that the supremacy of the
Constitution is upheld.[12] Once a controversy as to the application or
interpretation of a constitutional provision is raised before this Court
(as in the instant case), it becomes a legal issue which the Court is
bound by constitutional mandate to decide.[13]
The jurisdiction of this Court to adjudicate the matters[14] raised in
the petition is clearly set out in the 1987 Constitution,[15] as follows:
Judicial power includes the duty of the courts of justice to settle
actual controversies involving rights which are legally demandable
and enforceable, and to determine whether or not there has been a
grave abuse of discretion amounting to lack or excess of jurisdiction
on the part of any branch or instrumentality of the government.
The foregoing text emphasizes the judicial departments duty and
power to strike down grave abuse of discretion on the part of any
branch or instrumentality of government including Congress. It is an
innovation in our political law.[16] As explained by former Chief
Justice Roberto Concepcion,[17] the judiciary is the final arbiter on the
question of whether or not a branch of government or any of its
officials has acted without jurisdiction or in excess of jurisdiction or
so capriciously as to constitute an abuse of discretion amounting to
excess of jurisdiction. This is not only a judicial power but a duty to
pass judgment on matters of this nature.
As this Court has repeatedly and firmly emphasized in many
cases,[18] it will not shirk, digress from or abandon its sacred duty and
authority to uphold the Constitution in matters that involve grave
abuse of discretion brought before it in appropriate cases,
committed by any officer, agency, instrumentality or department of
the government.
As the petition alleges grave abuse of discretion and as there is no
other plain, speedy or adequate remedy in the ordinary course of
law, we have no hesitation at all in holding that this petition should
be given due course and the vital questions raised therein ruled upon
under Rule 65 of the Rules of Court. Indeed, certiorari, prohibition
and mandamus are appropriate remedies to raise constitutional
issues and to review and/or prohibit/nullify, when proper, acts of
legislative and executive officials. On this, we have no equivocation.
We should stress that, in deciding to take jurisdiction over this
petition, this Court will not review the wisdom of the decision of the
President and the Senate in enlisting the country into the WTO, or
pass upon the merits of trade liberalization as a policy espoused by
said international body. Neither will it rule on the propriety of the
governments economic policy of reducing/removing tariffs, taxes,
subsidies, quantitative restrictions, and other import/trade
barriers. Rather, it will only exercise its constitutional duty to
determine whether or not there had been a grave abuse of
discretion amounting to lack or excess of jurisdiction on the part of
the Senate in ratifying the WTO Agreement and its three annexes.
Second Issue: The WTO Agreement and Economic Nationalism
This is the lis mota, the main issue, raised by the petition.
Petitioners vigorously argue that the letter, spirit and intent of the
Constitution mandating economic nationalism are violated by the
so-called parity provisions and national treatment clauses scattered
in various parts not only of the WTO Agreement and its annexes but
also in the Ministerial Decisions and Declarations and in the
Understanding on Commitments in Financial Services.
Specifically, the flagship constitutional provisions referred to are Sec.
19, Article II, and Secs. 10 and 12, Article XII, of the Constitution,
which are worded as follows:
Article II
DECLARATION OF PRINCIPLES AND STATE POLICIES
xx xx xx xx
Sec. 19. The State shall develop a self-reliant and independent
national economy effectively controlled by Filipinos.
xx xx xx xx
Article XII
NATIONAL ECONOMY AND PATRIMONY
xx xx xx xx
Sec. 10. x x x. The Congress shall enact measures that will
encourage the formation and operation of enterprises whose capital
is wholly owned by Filipinos.
In the grant of rights, privileges, and concessions covering the
national economy and patrimony, the State shall give preference to
qualified Filipinos.
xx xx xx xx
Sec. 12. The State shall promote the preferential use of Filipino
labor, domestic materials and locally produced goods, and adopt
measures that help make them competitive.
Petitioners aver that these sacred constitutional principles are
desecrated by the following WTO provisions quoted in their
memorandum:[19]
a) In the area of investment measures related to trade in goods
(TRIMS, for brevity):
Article 2
National Treatment and Quantitative Restrictions.
1. Without prejudice to other rights and obligations under GATT
1994. no Member shall apply any TRIM that is inconsistent with the
provisions of Article III or Article XI of GATT 1994.
2. An Illustrative list of TRIMS that are inconsistent with the
obligations of general elimination of quantitative restrictions
provided for in paragraph I of Article XI of GATT 1994 is contained in
the Annex to this Agreement. (Agreement on Trade-Related
Investment Measures, Vol. 27, Uruguay Round, Legal Instruments,
p.22121, emphasis supplied).
The Annex referred to reads as follows:
ANNEX
Illustrative List
1. TRIMS that are inconsistent with the obligation of national
treatment provided for in paragraph 4 of Article III of GATT 1994
include those which are mandatory or enforceable under domestic
law or under administrative rulings, or compliance with which is
necessary to obtain an advantage, and which require:
(a) the purchase or use by an enterprise of products of domestic
origin or from any domestic source, whether specified in terms of
particular products, in terms of volume or value of products, or in
terms of proportion of volume or value of its local production; or
(b) that an enterprises purchases or use of imported products be
limited to an amount related to the volume or value of local products
that it exports.
2. TRIMS that are inconsistent with the obligations of general
elimination of quantitative restrictions provided for in paragraph 1
of Article XI of GATT 1994 include those which are mandatory or
enforceable under domestic laws or under administrative rulings, or
compliance with which is necessary to obtain an advantage, and
which restrict:
(a) the importation by an enterprise of products used in or related
to the local production that it exports;
(b) the importation by an enterprise of products used in or related
to its local production by restricting its access to foreign exchange
inflows attributable to the enterprise; or
(c) the exportation or sale for export specified in terms of particular
products, in terms of volume or value of products, or in terms of a
preparation of volume or value of its local production. (Annex to the
Agreement on Trade-Related Investment Measures, Vol. 27,
Uruguay Round Legal Documents, p.22125, emphasis supplied).
The paragraph 4 of Article III of GATT 1994 referred to is quoted as
follows:
The products of the territory of any contracting party imported into
the territory of any other contracting party shall be accorded
treatment no less favorable than that accorded to like products of
national origin in respect of laws, regulations and requirements
affecting their internal sale, offering for sale, purchase,
transportation, distribution or use. the provisions of this paragraph
shall not prevent the application of differential internal
transportation charges which are based exclusively on the economic
operation of the means of transport and not on the nationality of the
product. (Article III, GATT 1947, as amended by the Protocol
Modifying Part II, and Article XXVI of GATT, 14 September 1948, 62
UMTS 82-84 in relation to paragraph 1(a) of the General Agreement
on Tariffs and Trade 1994, Vol. 1, Uruguay Round, Legal Instruments
p.177, emphasis supplied).
b) In the area of trade related aspects of intellectual property rights
(TRIPS, for brevity):
Each Member shall accord to the nationals of other Members
treatment no less favourable than that it accords to its own
nationals with regard to the protection of intellectual
property... (par. 1, Article 3, Agreement on Trade-Related Aspect of
Intellectual Property rights, Vol. 31, Uruguay Round, Legal
Instruments, p.25432 (emphasis supplied)
(c) In the area of the General Agreement on Trade in Services:
National Treatment
1. In the sectors inscribed in its schedule, and subject to any
conditions and qualifications set out therein, each Member shall
accord to services and service suppliers of any other Member, in
respect of all measures affecting the supply of services, treatment
no less favourable than it accords to its own like services and
service suppliers.
2. A Member may meet the requirement of paragraph I by according
to services and service suppliers of any other Member, either
formally identical treatment or formally different treatment to that
it accords to its own like services and service suppliers.
3. Formally identical or formally different treatment shall be
considered to be less favourable if it modifies the conditions of
completion in favour of services or service suppliers of the Member
compared to like services or service suppliers of any other
Member. (Article XVII, General Agreement on Trade in Services, Vol.
28, Uruguay Round Legal Instruments, p.22610 emphasis supplied).
It is petitioners position that the foregoing national treatment and
parity provisions of the WTO Agreement place nationals and
products of member countries on the same footing as Filipinos and
local products, in contravention of the Filipino First policy of the
Constitution. They allegedly render meaningless the phrase
effectively controlled by Filipinos. The constitutional conflict
becomes more manifest when viewed in the context of the clear
duty imposed on the Philippines as a WTO member to ensure the
conformity of its laws, regulations and administrative procedures
with its obligations as provided in the annexed
agreements.[20] Petitioners further argue that these provisions
contravene constitutional limitations on the role exports play in
national development and negate the preferential treatment
accorded to Filipino labor, domestic materials and locally produced
goods.
On the other hand, respondents through the Solicitor General
counter (1) that such Charter provisions are not self-executing and
merely set out general policies; (2) that these nationalistic portions
of the Constitution invoked by petitioners should not be read in
isolation but should be related to other relevant provisions of Art.
XII, particularly Secs. 1 and 13 thereof; (3) that read properly, the
cited WTO clauses do not conflict with the Constitution; and (4) that
the WTO Agreement contains sufficient provisions to protect
developing countries like the Philippines from the harshness of
sudden trade liberalization.
We shall now discuss and rule on these arguments.
Declaration of Principles Not Self-Executing
By its very title, Article II of the Constitution is a declaration of
principles and state policies. The counterpart of this article in the
1935 Constitution[21] is called the basic political creed of the
nationby Dean Vicente Sinco.[22] These principles in Article II are not
intended to be self-executing principles ready for enforcement
through the courts.[23] They are used by the judiciary as aids or as
guides in the exercise of its power of judicial review, and by the
legislature in its enactment of laws. As held in the leading case
of Kilosbayan, Incorporated vs. Morato,[24] the principles and state
policies enumerated in Article II and some sections of Article XII are
not self-executing provisions, the disregard of which can give rise to
a cause of action in the courts. They do not embody judicially
enforceable constitutional rights but guidelines for legislation.
In the same light, we held in Basco vs. Pagcor[25] that broad
constitutional principles need legislative enactments to implement
them, thus:
On petitioners allegation that P.D. 1869 violates Sections 11
(Personal Dignity) 12 (Family) and 13 (Role of Youth) of Article II;
Section 13 (Social Justice) of Article XIII and Section 2 (Educational
Values) of Article XIV of the 1987 Constitution, suffice it to state also
that these are merely statements of principles and policies. As such,
they are basically not self-executing, meaning a law should be passed
by Congress to clearly define and effectuate such principles.
In general, therefore, the 1935 provisions were not intended to be
self-executing principles ready for enforcement through the
courts. They were rather directives addressed to the executive and
to the legislature. If the executive and the legislature failed to heed
the directives of the article, the available remedy was not judicial but
political. The electorate could express their displeasure with the
failure of the executive and the legislature through the language of
the ballot. (Bernas, Vol. II, p. 2).
The reasons for denying a cause of action to an alleged infringement
of broad constitutional principles are sourced from basic
considerations of due process and the lack of judicial authority to
wade into the uncharted ocean of social and economic policy
making. Mr. Justice Florentino P. Feliciano in his concurring opinion
in Oposa vs. Factoran, Jr.,[26] explained these reasons as follows:
My suggestion is simply that petitioners must, before the trial court,
show a more specific legal right -- a right cast in language of a
significantly lower order of generality than Article II (15) of the
Constitution -- that is or may be violated by the actions, or failures
to act, imputed to the public respondent by petitioners so that the
trial court can validly render judgment granting all or part of the
relief prayed for. To my mind, the court should be understood as
simply saying that such a more specific legal right or rights may well
exist in our corpus of law, considering the general policy principles
found in the Constitution and the existence of the Philippine
Environment Code, and that the trial court should have given
petitioners an effective opportunity so to demonstrate, instead of
aborting the proceedings on a motion to dismiss.
It seems to me important that the legal right which is an essential
component of a cause of action be a specific, operable legal right,
rather than a constitutional or statutory policy, for at least two (2)
reasons. One is that unless the legal right claimed to have been
violated or disregarded is given specification in operational terms,
defendants may well be unable to defend themselves intelligently
and effectively; in other words, there are due process dimensions to
this matter.
The second is a broader-gauge consideration -- where a specific
violation of law or applicable regulation is not alleged or proved,
petitioners can be expected to fall back on the expanded conception
of judicial power in the second paragraph of Section 1 of Article VIII
of the Constitution which reads:
Section 1. x x x
Judicial power includes the duty of the courts of justice to settle
actual controversies involving rights which are legally demandable
and enforceable, and to determine whether or not there has been a
grave abuse of discretion amounting to lack or excess of jurisdiction
on the part of any branch or instrumentality of the
Government. (Emphases supplied)
When substantive standards as general as the right to a balanced
and healthy ecology and the right to health are combined with
remedial standards as broad ranging as a grave abuse of discretion
amounting to lack or excess of jurisdiction, the result will be, it is
respectfully submitted, to propel courts into the uncharted ocean of
social and economic policy making. At least in respect of the vast
area of environmental protection and management, our courts have
no claim to special technical competence and experience and
professional qualification. Where no specific, operable norms and
standards are shown to exist, then the policy making departments -
- the legislative and executive departments -- must be given a real
and effective opportunity to fashion and promulgate those norms
and standards, and to implement them before the courts should
intervene.
Economic Nationalism Should Be Read with Other Constitutional
Mandates to Attain Balanced Development of Economy
On the other hand, Secs. 10 and 12 of Article XII, apart from merely
laying down general principles relating to the national economy and
patrimony, should be read and understood in relation to the other
sections in said article, especially Secs. 1 and 13 thereof which read:
Section 1. The goals of the national economy are a more equitable
distribution of opportunities, income, and wealth; a sustained
increase in the amount of goods and services produced by the nation
for the benefit of the people; and an expanding productivity as the
key to raising the quality of life for all, especially the underprivileged.
The State shall promote industrialization and full employment based
on sound agricultural development and agrarian reform, through
industries that make full and efficient use of human and natural
resources, and which are competitive in both domestic and foreign
markets. However, the State shall protect Filipino enterprises
against unfair foreign competition and trade practices.
In the pursuit of these goals, all sectors of the economy and all
regions of the country shall be given optimum opportunity to
develop. x x x
xxxxxxxxx
Sec. 13. The State shall pursue a trade policy that serves the general
welfare and utilizes all forms and arrangements of exchange on the
basis of equality and reciprocity.
As pointed out by the Solicitor General, Sec. 1 lays down the basic
goals of national economic development, as follows:
1. A more equitable distribution of opportunities, income and
wealth;
2. A sustained increase in the amount of goods and services provided
by the nation for the benefit of the people; and
3. An expanding productivity as the key to raising the quality of life
for all especially the underprivileged.
With these goals in context, the Constitution then ordains the ideals
of economic nationalism (1) by expressing preference in favor of
qualified Filipinos in the grant of rights, privileges and concessions
covering the national economy and patrimony[27] and in the use of
Filipino labor, domestic materials and locally-produced goods; (2) by
mandating the State to adopt measures that help make them
competitive;[28] and (3) by requiring the State to develop a self-
reliant and independent national economy effectively controlled by
Filipinos.[29] In similar language, the Constitution takes into account
the realities of the outside world as it requires the pursuit of a trade
policy that serves the general welfare and utilizes all forms and
arrangements of exchange on the basis of equality and
reciprocity;[30] and speaks of industries which are competitive in
both domestic and foreign markets as well as of the protection of
Filipino enterprises against unfair foreign competition and trade
practices.
It is true that in the recent case of Manila Prince Hotel vs.
Government Service Insurance System, et al.,[31] this Court held that
Sec. 10, second par., Art. XII of the 1987 Constitution is a mandatory,
positive command which is complete in itself and which needs no
further guidelines or implementing laws or rules for its
enforcement. From its very words the provision does not require any
legislation to put it in operation. It is per se judicially
enforceable. However, as the constitutional provision itself states, it
is enforceable only in regard to the grants of rights, privileges and
concessions covering national economy and patrimony and not to
every aspect of trade and commerce. It refers to exceptions rather
than the rule. The issue here is not whether this paragraph of Sec.
10 of Art. XII is self-executing or not. Rather, the issue is whether, as
a rule, there are enough balancing provisions in the Constitution to
allow the Senate to ratify the Philippine concurrence in the WTO
Agreement. And we hold that there are.
All told, while the Constitution indeed mandates a bias in favor of
Filipino goods, services, labor and enterprises, at the same time, it
recognizes the need for business exchange with the rest of the world
on the bases of equality and reciprocity and limits protection of
Filipino enterprises only against foreign competition and trade
practices that are unfair.[32] In other words, the Constitution did not
intend to pursue an isolationist policy. It did not shut out foreign
investments, goods and services in the development of the
Philippine economy. While the Constitution does not encourage the
unlimited entry of foreign goods, services and investments into the
country, it does not prohibit them either. In fact, it allows an
exchange on the basis of equality and reciprocity, frowning only on
foreign competition that is unfair.
WTO Recognizes Need to Protect Weak Economies
Upon the other hand, respondents maintain that the WTO itself has
some built-in advantages to protect weak and developing
economies, which comprise the vast majority of its members. Unlike
in the UN where major states have permanent seats and veto
powers in the Security Council, in the WTO, decisions are made on
the basis of sovereign equality, with each members vote equal in
weight to that of any other. There is no WTO equivalent of the UN
Security Council.
WTO decides by consensus whenever possible, otherwise, decisions
of the Ministerial Conference and the General Council shall be taken
by the majority of the votes cast, except in cases of interpretation of
the Agreement or waiver of the obligation of a member which would
require three fourths vote. Amendments would require two thirds
vote in general. Amendments to MFN provisions and the
Amendments provision will require assent of all members. Any
member may withdraw from the Agreement upon the expiration of
six months from the date of notice of withdrawals.[33]
Hence, poor countries can protect their common interests more
effectively through the WTO than through one-on-one negotiations
with developed countries. Within the WTO, developing countries
can form powerful blocs to push their economic agenda more
decisively than outside the Organization. This is not merely a matter
of practical alliances but a negotiating strategy rooted in law. Thus,
the basic principles underlying the WTO Agreement recognize the
need of developing countries like the Philippines to share in the
growth in international trade commensurate with the needs of their
economic development. These basic principles are found in the
preamble[34] of the WTO Agreement as follows:
The Parties to this Agreement,
Recognizing that their relations in the field of trade and economic
endeavour should be conducted with a view to raising standards of
living, ensuring full employment and a large and steadily growing
volume of real income and effective demand, and expanding the
production of and trade in goods and services, while allowing for the
optimal use of the worlds resources in accordance with the objective
of sustainable development, seeking both to protect and preserve
the environment and to enhance the means for doing so in a manner
consistent with their respective needs and concerns at different
levels of economic development,
Recognizing further that there is need for positive efforts designed
to ensure that developing countries, and especially the least
developed among them, secure a share in the growth in
international trade commensurate with the needs of their economic
development,
Being desirous of contributing to these objectives by entering into
reciprocal and mutually advantageous arrangements directed to the
substantial reduction of tariffs and other barriers to trade and to
the elimination of discriminatory treatment in international trade
relations,
Resolved, therefore, to develop an integrated, more viable and
durable multilateral trading system encompassing the General
Agreement on Tariffs and Trade, the results of past trade
liberalization efforts, and all of the results of the Uruguay Round of
Multilateral Trade Negotiations,
Determined to preserve the basic principles and to further the
objectives underlying this multilateral trading system, x x
x. (underscoring supplied.)
Specific WTO Provisos Protect Developing Countries
So too, the Solicitor General points out that pursuant to and
consistent with the foregoing basic principles, the WTO Agreement
grants developing countries a more lenient treatment, giving their
domestic industries some protection from the rush of foreign
competition. Thus, with respect to tariffs in general, preferential
treatment is given to developing countries in terms of the amount of
tariff reduction and the period within which the reduction is to be
spread out. Specifically, GATT requires an average tariff reduction
rate of 36% for developed countries to be effected within a period
of six (6) years while developing countries -- including the Philippines
-- are required to effect an average tariff reduction of only 24%
within ten (10) years.
In respect to domestic subsidy, GATT requires developed
countries to reduce domestic support to agricultural products
by 20% over six (6) years, as compared to only 13% for developing
countries to be effected within ten (10) years.
In regard to export subsidy for agricultural products, GATT requires
developed countries to reduce their budgetary outlays for export
subsidy by 36% and export volumes receiving export subsidy by 21%
within a period of six (6) years. For developing countries, however,
the reduction rate is only two-thirds of that prescribed for
developed countries and a longer period of ten (10) years within
which to effect such reduction.
Moreover, GATT itself has provided built-in protection from unfair
foreign competition and trade practices including anti-dumping
measures, countervailing measures and safeguards against import
surges. Where local businesses are jeopardized by unfair foreign
competition, the Philippines can avail of these measures. There is
hardly therefore any basis for the statement that under the WTO,
local industries and enterprises will all be wiped out and that
Filipinos will be deprived of control of the economy. Quite the
contrary, the weaker situations of developing nations like the
Philippines have been taken into account; thus, there would be no
basis to say that in joining the WTO, the respondents have gravely
abused their discretion. True, they have made a bold decision to
steer the ship of state into the yet uncharted sea of economic
liberalization. But such decision cannot be set aside on the ground
of grave abuse of discretion, simply because we disagree with it or
simply because we believe only in other economic policies. As earlier
stated, the Court in taking jurisdiction of this case will not pass upon
the advantages and disadvantages of trade liberalization as an
economic policy. It will only perform its constitutional duty of
determining whether the Senate committed grave abuse of
discretion.
Constitution Does Not Rule Out Foreign Competition
Furthermore, the constitutional policy of a self-reliant and
independent national economy[35] does not necessarily rule out the
entry of foreign investments, goods and services. It contemplates
neither economic seclusion nor mendicancy in the international
community. As explained by Constitutional Commissioner Bernardo
Villegas, sponsor of this constitutional policy:
Economic self-reliance is a primary objective of a developing country
that is keenly aware of overdependence on external assistance for
even its most basic needs. It does not mean autarky or economic
seclusion; rather, it means avoiding mendicancy in the international
community. Independence refers to the freedom from undue
foreign control of the national economy, especially in such strategic
industries as in the development of natural resources and public
utilities.[36]
The WTO reliance on most favored nation, national treatment, and
trade without discrimination cannot be struck down as
unconstitutional as in fact they are rules of equality and reciprocity
that apply to all WTO members. Aside from envisioning a trade
policy based on equality and reciprocity,[37] the fundamental law
encourages industries that are competitive in both domestic and
foreign markets, thereby demonstrating a clear policy against a
sheltered domestic trade environment, but one in favor of the
gradual development of robust industries that can compete with the
best in the foreign markets. Indeed, Filipino managers and Filipino
enterprises have shown capability and tenacity to compete
internationally. And given a free trade environment, Filipino
entrepreneurs and managers in Hongkong have demonstrated the
Filipino capacity to grow and to prosper against the best offered
under a policy of laissez faire.
Constitution Favors Consumers, Not Industries or Enterprises
The Constitution has not really shown any unbalanced bias in favor
of any business or enterprise, nor does it contain any specific
pronouncement that Filipino companies should be pampered with a
total
proscription of foreign competition. On the other hand, respondent
s claim that WTO/GATT aims to make available to the Filipino
consumer the best goods and services obtainable anywhere in the
world at the most reasonable prices. Consequently, the question
boils down to whether WTO/GATT will favor the general welfare of
the public at large.
Will adherence to the WTO treaty bring this ideal (of favoring the
general welfare) to reality?
Will WTO/GATT succeed in promoting the Filipinos general welfare
because it will -- as promised by its promoters -- expand the countrys
exports and generate more employment?
Will it bring more prosperity, employment, purchasing power and
quality products at the most reasonable rates to the Filipino public?
The responses to these questions involve judgment calls by our
policy makers, for which they are answerable to our people during
appropriate electoral exercises. Such questions and the answers
thereto are not subject to judicial pronouncements based on grave
abuse of discretion.
Constitution Designed to Meet Future Events and Contingencies
No doubt, the WTO Agreement was not yet in existence when the
Constitution was drafted and ratified in 1987. That does not mean
however that the Charter is necessarily flawed in the sense that its
framers might not have anticipated the advent of a borderless world
of business. By the same token, the United Nations was not yet in
existence when the 1935 Constitution became effective.Did that
necessarily mean that the then Constitution might not have
contemplated a diminution of the absoluteness of sovereignty when
the Philippines signed the UN Charter, thereby effectively
surrendering part of its control over its foreign relations to the
decisions of various UN organs like the Security Council?
It is not difficult to answer this question. Constitutions are designed
to meet not only the vagaries of contemporary events. They should
be interpreted to cover even future and unknown circumstances. It
is to the credit of its drafters that a Constitution can withstand the
assaults of bigots and infidels but at the same time bend with the
refreshing winds of change necessitated by unfolding events. As one
eminent political law writer and respected jurist[38] explains:
The Constitution must be quintessential rather than superficial, the
root and not the blossom, the base and framework only of the edifice
that is yet to rise. It is but the core of the dream that must take
shape, not in a twinkling by mandate of our delegates, but slowly in
the crucible of Filipino minds and hearts, where it will in time
develop its sinews and gradually gather its strength and finally
achieve its substance. In fine, the Constitution cannot, like the
goddess Athena, rise full-grown from the brow of the Constitutional
Convention, nor can it conjure by mere fiat an instant Utopia. It must
grow with the society it seeks to re-structure and march apace with
the progress of the race, drawing from the vicissitudes of history the
dynamism and vitality that will keep it, far from becoming a petrified
rule, a pulsing, living law attuned to the heartbeat of the nation.
Third Issue: The WTO Agreement and Legislative Power
The WTO Agreement provides that (e)ach Member shall ensure the
conformity of its laws, regulations and administrative procedures
with its obligations as provided in the annexed
Agreements.[39] Petitioners maintain that this undertaking unduly
limits, restricts and impairs Philippine sovereignty, specifically the
legislative power which under Sec. 2, Article VI of the 1987 Philippine
Constitution is vested in the Congress of the Philippines. It is an
assault on the sovereign powers of the Philippines because this
means that Congress could not pass legislation that will be good for
our national interest and general welfare if such legislation will not
conform with the WTO Agreement, which not only relates to the
trade in goods x x x but also to the flow of investments and money x
x x as well as to a whole slew of agreements on socio-cultural matters
x x x.[40]
More specifically, petitioners claim that said WTO proviso derogates
from the power to tax, which is lodged in the Congress.[41] And while
the Constitution allows Congress to authorize the President to fix
tariff rates, import and export quotas, tonnage and wharfage dues,
and other duties or imposts, such authority is subject to specified
limits and x x x such limitations and restrictions as Congress may
provide,[42] as in fact it did under Sec. 401 of the Tariff and Customs
Code.
Sovereignty Limited by International Law and Treaties
This Court notes and appreciates the ferocity and passion by which
petitioners stressed their arguments on this issue. However, while
sovereignty has traditionally been deemed absolute and all-
encompassing on the domestic level, it is however subject to
restrictions and limitations voluntarily agreed to by the Philippines,
expressly or impliedly, as a member of the family of
nations.Unquestionably, the Constitution did not envision a hermit-
type isolation of the country from the rest of the world. In its
Declaration of Principles and State Policies, the Constitution adopts
the generally accepted principles of international law as part of the
law of the land, and adheres to the policy of peace, equality, justice,
freedom, cooperation and amity, with all nations."[43] By the
doctrine of incorporation, the country is bound by generally
accepted principles of international law, which are considered to be
automatically part of our own laws.[44] One of the oldest and most
fundamental rules in international law is pacta sunt servanda --
international agreements must be performed in good faith. A treaty
engagement is not a mere moral obligation but creates a legally
binding obligation on the parties x x x. A state which has contracted
valid international obligations is bound to make in its legislations
such modifications as may be necessary to ensure the fulfillment of
the obligations undertaken.[45]
By their inherent nature, treaties really limit or restrict the
absoluteness of sovereignty. By their voluntary act, nations may
surrender some aspects of their state power in exchange for greater
benefits granted by or derived from a convention or pact. After all,
states, like individuals, live with coequals, and in pursuit of mutually
covenanted objectives and benefits, they also commonly agree to
limit the exercise of their otherwise absolute rights. Thus, treaties
have been used to record agreements between States concerning
such widely diverse matters as, for example, the lease of naval bases,
the sale or cession of territory, the termination of war, the regulation
of conduct of hostilities, the formation of alliances, the regulation of
commercial relations, the settling of claims, the laying down of rules
governing conduct in peace and the establishment of international
organizations.[46] The sovereignty of a state therefore cannot in fact
and in reality be considered absolute. Certain restrictions enter into
the picture: (1) limitations imposed by the very nature of
membership in the family of nations and (2) limitations imposed by
treaty stipulations. As aptly put by John F. Kennedy, Today, no nation
can build its destiny alone. The age of self-sufficient nationalism is
over. The age of interdependence is here.[47]
UN Charter and Other Treaties Limit Sovereignty
Thus, when the Philippines joined the United Nations as one of its 51
charter members, it consented to restrict its sovereign rights under
the concept of sovereignty as auto-limitation.47-A Under Article 2 of
the UN Charter, (a)ll members shall give the United Nations every
assistance in any action it takes in accordance with the present
Charter, and shall refrain from giving assistance to any state against
which the United Nations is taking preventive or enforcement
action. Such assistance includes payment of its corresponding share
not merely in administrative expenses but also in expenditures for
the peace-keeping operations of the organization. In its advisory
opinion of July 20, 1961, the International Court of Justice held that
money used by the United Nations Emergency Force in the Middle
East and in the Congo were expenses of the United Nations under
Article 17, paragraph 2, of the UN Charter. Hence, all its members
must bear their corresponding share in such expenses. In this sense,
the Philippine Congress is restricted in its power to appropriate. It is
compelled to appropriate funds whether it agrees with such peace-
keeping expenses or not. So too, under Article 105 of the said
Charter, the UN and its representatives enjoy diplomatic privileges
and immunities, thereby limiting again the exercise of sovereignty of
members within their own territory.Another example: although
sovereign equality and domestic jurisdiction of all members are set
forth as underlying principles in the UN Charter, such provisos are
however subject to enforcement measures decided by the Security
Council for the maintenance of international peace and security
under Chapter VII of the Charter. A final example: under Article 103,
(i)n the event of a conflict between the obligations of the Members
of the United Nations under the present Charter and their
obligations under any other international agreement, their
obligation under the present charter shall prevail, thus
unquestionably denying the Philippines -- as a member -- the
sovereign power to make a choice as to which of conflicting
obligations, if any, to honor.
Apart from the UN Treaty, the Philippines has entered into many
other international pacts -- both bilateral and multilateral -- that
involve limitations on Philippine sovereignty. These are enumerated
by the Solicitor General in his Compliance dated October 24, 1996,
as follows:
(a) Bilateral convention with the United States regarding taxes on
income, where the Philippines agreed, among others, to exempt
from tax, income received in the Philippines by, among others, the
Federal Reserve Bank of the United States, the Export/Import Bank
of the United States, the Overseas Private Investment Corporation
of the United States. Likewise, in said convention, wages, salaries
and similar remunerations paid by the United States to its citizens
for labor and personal services performed by them as employees or
officials of the United States are exempt from income tax by the
Philippines.
(b) Bilateral agreement with Belgium, providing, among others, for
the avoidance of double taxation with respect to taxes on income.
(c) Bilateral convention with the Kingdom of Sweden for the
avoidance of double taxation.
(d) Bilateral convention with the French Republic for the avoidance
of double taxation.
(e) Bilateral air transport agreement with Korea where the
Philippines agreed to exempt from all customs duties, inspection
fees and other duties or taxes aircrafts of South Korea and the
regular equipment, spare parts and supplies arriving with said
aircrafts.
(f) Bilateral air service agreement with Japan, where the Philippines
agreed to exempt from customs duties, excise taxes, inspection fees
and other similar duties, taxes or charges fuel, lubricating oils, spare
parts, regular equipment, stores on board Japanese aircrafts while
on Philippine soil.
(g) Bilateral air service agreement with Belgium where the
Philippines granted Belgian air carriers the same privileges as those
granted to Japanese and Korean air carriers under separate air
service agreements.
(h) Bilateral notes with Israel for the abolition of transit and visitor
visas where the Philippines exempted Israeli nationals from the
requirement of obtaining transit or visitor visas for a sojourn in the
Philippines not exceeding 59 days.
(I) Bilateral agreement with France exempting French nationals from
the requirement of obtaining transit and visitor visa for a sojourn not
exceeding 59 days.
(j) Multilateral Convention on Special Missions, where the
Philippines agreed that premises of Special Missions in the
Philippines are inviolable and its agents can not enter said premises
without consent of the Head of Mission concerned. Special Missions
are also exempted from customs duties, taxes and related charges.
(k) Multilateral Convention on the Law of Treaties. In this
convention, the Philippines agreed to be governed by the Vienna
Convention on the Law of Treaties.
(l) Declaration of the President of the Philippines accepting
compulsory jurisdiction of the International Court of Justice. The
International Court of Justice has jurisdiction in all legal disputes
concerning the interpretation of a treaty, any question of
international law, the existence of any fact which, if established,
would constitute a breach of international obligation.
In the foregoing treaties, the Philippines has effectively agreed to
limit the exercise of its sovereign powers of taxation, eminent
domain and police power. The underlying consideration in this
partial surrender of sovereignty is the reciprocal commitment of the
other contracting states in granting the same privilege and
immunities to the Philippines, its officials and its citizens. The same
reciprocity characterizes the Philippine commitments under WTO-
GATT.
International treaties, whether relating to nuclear disarmament,
human rights, the environment, the law of the sea, or trade,
constrain domestic political sovereignty through the assumption of
external obligations. But unless anarchy in international relations is
preferred as an alternative, in most cases we accept that the benefits
of the reciprocal obligations involved outweigh the costs associated
with any loss of political sovereignty.(T)rade treaties that structure
relations by reference to durable, well-defined substantive norms
and objective dispute resolution procedures reduce the risks of
larger countries exploiting raw economic power to bully smaller
countries, by subjecting power relations to some form of legal
ordering. In addition, smaller countries typically stand to gain
disproportionately from trade liberalization. This is due to the simple
fact that liberalization will provide access to a larger set of potential
new trading relationship than in case of the larger country gaining
enhanced success to the smaller countrys market.[48]
The point is that, as shown by the foregoing treaties, a portion of
sovereignty may be waived without violating the Constitution, based
on the rationale that the Philippines adopts the generally accepted
principles of international law as part of the law of the land and
adheres to the policy of x x x cooperation and amity with all nations.
Fourth Issue: The WTO Agreement and Judicial Power
Petitioners aver that paragraph 1, Article 34 of the General
Provisions and Basic Principles of the Agreement on Trade-Related
Aspects of Intellectual Property Rights (TRIPS)[49] intrudes on the
power of the Supreme Court to promulgate rules concerning
pleading, practice and procedures.[50]
To understand the scope and meaning of Article 34, TRIPS,[51] it will
be fruitful to restate its full text as follows:
Article 34
Process Patents: Burden of Proof
1. For the purposes of civil proceedings in respect of the
infringement of the rights of the owner referred to in paragraph 1(b)
of Article 28, if the subject matter of a patent is a process for
obtaining a product, the judicial authorities shall have the authority
to order the defendant to prove that the process to obtain an
identical product is different from the patented process. Therefore,
Members shall provide, in at least one of the following
circumstances, that any identical product when produced without
the consent of the patent owner shall, in the absence of proof to the
contrary, be deemed to have been obtained by the patented
process:
(a) if the product obtained by the patented process is new;
(b) if there is a substantial likelihood that the identical product was
made by the process and the owner of the patent has been unable
through reasonable efforts to determine the process actually used.
2. Any Member shall be free to provide that the burden of proof
indicated in paragraph 1 shall be on the alleged infringer only if the
condition referred to in subparagraph (a) is fulfilled or only if the
condition referred to in subparagraph (b) is fulfilled.
3. In the adduction of proof to the contrary, the legitimate interests
of defendants in protecting their manufacturing and business secrets
shall be taken into account.
From the above, a WTO Member is required to provide a rule of
disputable (note the words in the absence of proof to the contrary)
presumption that a product shown to be identical to one produced
with the use of a patented process shall be deemed to have been
obtained by the (illegal) use of the said patented process, (1) where
such product obtained by the patented product is new, or (2) where
there is substantial likelihood that the identical product was made
with the use of the said patented process but the owner of the
patent could not determine the exact process used in obtaining such
identical product. Hence, the burden of proof contemplated by
Article 34 should actually be understood as the duty of the alleged
patent infringer to overthrow such presumption. Such burden,
properly understood, actually refers to the burden of
evidence (burden of going forward) placed on the producer of the
identical (or fake) product to show that his product was produced
without the use of the patented process.
The foregoing notwithstanding, the patent owner still has the
burden of proof since, regardless of the presumption provided under
paragraph 1 of Article 34, such owner still has to introduce evidence
of the existence of the alleged identical product, the fact that it is
identical to the genuine one produced by the patented process and
the fact of newness of the genuine product or the fact of substantial
likelihood that the identical product was made by the patented
process.
The foregoing should really present no problem in changing the rules
of evidence as the present law on the subject, Republic Act No. 165,
as amended, otherwise known as the Patent Law, provides a similar
presumption in cases of infringement of patented design or utility
model, thus:
SEC. 60. Infringement. - Infringement of a design patent or of a
patent for utility model shall consist in unauthorized copying of the
patented design or utility model for the purpose of trade or industry
in the article or product and in the making, using or selling of the
article or product copying the patented design or utility
model. Identity or substantial identity with the patented design or
utility model shall constitute evidence of copying. (underscoring
supplied)
Moreover, it should be noted that the requirement of Article 34 to
provide a disputable presumption applies only if (1) the product
obtained by the patented process is NEW or (2) there is a substantial
likelihood that the identical product was made by the process and
the process owner has not been able through reasonable effort to
determine the process used. Where either of these
two provisos does not obtain, members shall be free to determine
the appropriate method of implementing the provisions of TRIPS
within their own internal systems and processes.
By and large, the arguments adduced in connection with our
disposition of the third issue -- derogation of legislative power - will
apply to this fourth issue also. Suffice it to say that the reciprocity
clause more than justifies such intrusion, if any actually
exists. Besides, Article 34 does not contain an unreasonable burden,
consistent as it is with due process and the concept of adversarial
dispute settlement inherent in our judicial system.
So too, since the Philippine is a signatory to most international
conventions on patents, trademarks and copyrights, the adjustment
in legislation and rules of procedure will not be substantial.[52]
Fifth Issue: Concurrence Only in the WTO Agreement and Not in
Other Documents Contained in the Final Act
Petitioners allege that the Senate concurrence in the WTO
Agreement and its annexes -- but not in the other documents
referred to in the Final Act, namely the Ministerial Declaration and
Decisions and the Understanding on Commitments in Financial
Services -- is defective and insufficient and thus constitutes abuse of
discretion. They submit that such concurrence in the WTO
Agreement alone is flawed because it is in effect a rejection of the
Final Act, which in turn was the document signed by Secretary
Navarro, in representation of the Republic upon authority of the
President. They contend that the second letter of the President to
the Senate[53] which enumerated what constitutes the Final Act
should have been the subject of concurrence of the Senate.
A final act, sometimes called protocol de clture, is an instrument
which records the winding up of the proceedings of a diplomatic
conference and usually includes a reproduction of the texts of
treaties, conventions, recommendations and other acts agreed upon
and signed by the plenipotentiaries attending the conference.[54] It is
not the treaty itself. It is rather a summary of the proceedings of a
protracted conference which may have taken place over several
years. The text of the Final Act Embodying the Results of the Uruguay
Round of Multilateral Trade Negotiations is contained in just one
page[55] in Vol. I of the 36-volume Uruguay Round of Multilateral
Trade Negotiations. By signing said Final Act, Secretary Navarro as
representative of the Republic of the Philippines undertook:
"(a) to submit, as appropriate, the WTO Agreement for the
consideration of their respective competent authorities with a view
to seeking approval of the Agreement in accordance with their
procedures; and
(b) to adopt the Ministerial Declarations and Decisions."
The assailed Senate Resolution No. 97 expressed concurrence in
exactly what the Final Act required from its signatories, namely,
concurrence of the Senate in the WTO Agreement.
The Ministerial Declarations and Decisions were deemed adopted
without need for ratification. They were approved by the ministers
by virtue of Article XXV: 1 of GATT which provides that
representatives of the members can meet to give effect to those
provisions of this Agreement which invoke joint action, and generally
with a view to facilitating the operation and furthering the objectives
of this Agreement.[56]
The Understanding on Commitments in Financial Services also
approved in Marrakesh does not apply to the Philippines. It applies
only to those 27 Members which have indicated in their respective
schedules of commitments on standstill, elimination of monopoly,
expansion of operation of existing financial service suppliers,
temporary entry of personnel, free transfer and processing of
information, and national treatment with respect to access to
payment, clearing systems and refinancing available in the normal
course of business.[57]
On the other hand, the WTO Agreement itself expresses what
multilateral agreements are deemed included as its integral
parts,[58] as follows:
Article II
Scope of the WTO
1. The WTO shall provide the common institutional framework for
the conduct of trade relations among its Members in matters to the
agreements and associated legal instruments included in the
Annexes to this Agreement.
2. The Agreements and associated legal instruments included in
Annexes 1, 2, and 3 (hereinafter referred to as Multilateral
Agreements) are integral parts of this Agreement, binding on all
Members.
3. The Agreements and associated legal instruments included in
Annex 4 (hereinafter referred to as Plurilateral Trade Agreements)
are also part of this Agreement for those Members that have
accepted them, and are binding on those Members. The Plurilateral
Trade Agreements do not create either obligation or rights for
Members that have not accepted them.
4. The General Agreement on Tariffs and Trade 1994 as specified in
annex 1A (hereinafter referred to as GATT 1994) is legally distinct
from the General Agreement on Tariffs and Trade, dated 30 October
1947, annexed to the Final Act adopted at the conclusion of the
Second Session of the Preparatory Committee of the United Nations
Conference on Trade and Employment, as subsequently rectified,
amended or modified (hereinafter referred to as GATT 1947).
It should be added that the Senate was well-aware of what it was
concurring in as shown by the members deliberation on August 25,
1994. After reading the letter of President Ramos dated August 11,
1994,[59] the senators of the Republic minutely dissected what the
Senate was concurring in, as follows: [60]
THE CHAIRMAN: Yes. Now, the question of the validity of the
submission came up in the first day hearing of this Committee
yesterday. Was the observation made by Senator Taada that what
was submitted to the Senate was not the agreement on establishing
the World Trade Organization by the final act of the Uruguay Round
which is not the same as the agreement establishing the World Trade
Organization? And on that basis, Senator Tolentino raised a point of
order which, however, he agreed to withdraw upon understanding
that his suggestion for an alternative solution at that time was
acceptable. That suggestion was to treat the proceedings of the
Committee as being in the nature of briefings for Senators until the
question of the submission could be clarified.
And so, Secretary Romulo, in effect, is the President submitting a
new... is he making a new submission which improves on the clarity
of the first submission?
MR. ROMULO: Mr. Chairman, to make sure that it is clear cut and
there should be no misunderstanding, it was his intention to clarify
all matters by giving this letter.
THE CHAIRMAN: Thank you.
Can this Committee hear from Senator Taada and later on Senator
Tolentino since they were the ones that raised this question
yesterday?
Senator Taada, please.
SEN. TAADA: Thank you, Mr. Chairman.
Based on what Secretary Romulo has read, it would now clearly
appear that what is being submitted to the Senate for ratification is
not the Final Act of the Uruguay Round, but rather the Agreement
on the World Trade Organization as well as the Ministerial
Declarations and Decisions, and the Understanding and
Commitments in Financial Services.
I am now satisfied with the wording of the new submission of
President Ramos.
SEN. TAADA. . . . of President Ramos, Mr. Chairman.
THE CHAIRMAN. Thank you, Senator Taada. Can we hear from
Senator Tolentino? And after him Senator Neptali Gonzales and
Senator Lina.
SEN TOLENTINO, Mr. Chairman, I have not seen the new submission
actually transmitted to us but I saw the draft of his earlier, and I think
it now complies with the provisions of the Constitution, and with the
Final Act itself. The Constitution does not require us to ratify the
Final Act. It requires us to ratify the Agreement which is now being
submitted. The Final Act itself specifies what is going to be submitted
to with the governments of the participants.
In paragraph 2 of the Final Act, we read and I quote:
By signing the present Final Act, the representatives agree: (a) to
submit as appropriate the WTO Agreement for the consideration of
the respective competent authorities with a view to seeking
approval of the Agreement in accordance with their procedures.
In other words, it is not the Final Act that was agreed to be submitted
to the governments for ratification or acceptance as whatever their
constitutional procedures may provide but it is the World Trade
Organization Agreement. And if that is the one that is being
submitted now, I think it satisfies both the Constitution and the Final
Act itself.
Thank you, Mr. Chairman.
THE CHAIRMAN. Thank you, Senator Tolentino, May I call on Senator
Gonzales.
SEN. GONZALES. Mr. Chairman, my views on this matter are already
a matter of record. And they had been adequately reflected in the
journal of yesterdays session and I dont see any need for repeating
the same.
Now, I would consider the new submission as an act ex abudante
cautela.
THE CHAIRMAN. Thank you, Senator Gonzales. Senator Lina, do you
want to make any comment on this?
SEN. LINA. Mr. President, I agree with the observation just made by
Senator Gonzales out of the abundance of question. Then the new
submission is, I believe, stating the obvious and therefore I have no
further comment to make.
Epilogue
In praying for the nullification of the Philippine ratification of the
WTO Agreement, petitioners are invoking this Courts
constitutionally imposed duty to determine whether or not there
has been grave abuse of discretion amounting to lack or excess of
jurisdiction on the part of the Senate in giving its concurrence
therein via Senate Resolution No. 97. Procedurally, a writ
of certiorari grounded on grave abuse of discretion may be issued by
the Court under Rule 65 of the Rules of Court when it is amply shown
that petitioners have no other plain, speedy and adequate remedy
in the ordinary course of law.
By grave abuse of discretion is meant such capricious and whimsical
exercise of judgment as is equivalent to lack of jurisdiction.[61] Mere
abuse of discretion is not enough. It must be grave abuse of
discretion as when the power is exercised in an arbitrary or despotic
manner by reason of passion or personal hostility, and must be so
patent and so gross as to amount to an evasion of a positive duty or
to a virtual refusal to perform the duty enjoined or to act at all in
contemplation of law.[62] Failure on the part of the petitioner to
show grave abuse of discretion will result in the dismissal of the
petition.[63]
In rendering this Decision, this Court never forgets that the Senate,
whose act is under review, is one of two sovereign houses of
Congress and is thus entitled to great respect in its actions. It is itself
a constitutional body independent and coordinate, and thus its
actions are presumed regular and done in good faith. Unless
convincing proof and persuasive arguments are presented to
overthrow such presumptions, this Court will resolve every doubt in
its favor. Using the foregoing well-accepted definition of grave abuse
of discretion and the presumption of regularity in the Senates
processes, this Court cannot find any cogent reason to impute grave
abuse of discretion to the Senates exercise of its power of
concurrence in the WTO Agreement granted it by Sec. 21 of Article
VII of the Constitution.[64]
It is true, as alleged by petitioners, that broad constitutional
principles require the State to develop an independent national
economy effectively controlled by Filipinos; and to protect and/or
prefer Filipino labor, products, domestic materials and locally
produced goods. But it is equally true that such principles -- while
serving as judicial and legislative guides -- are not in themselves
sources of causes of action. Moreover, there are other equally
fundamental constitutional principles relied upon by the Senate
which mandate the pursuit of a trade policy that serves the general
welfare and utilizes all forms and arrangements of exchange on the
basis of equality and reciprocity and the promotion of industries
which are competitive in both domestic and foreign markets,
thereby justifying its acceptance of said treaty. So too, the alleged
impairment of sovereignty in the exercise of legislative and judicial
powers is balanced by the adoption of the generally accepted
principles of international law as part of the law of the land and the
adherence of the Constitution to the policy of cooperation and amity
with all nations.
That the Senate, after deliberation and voting, voluntarily and
overwhelmingly gave its consent to the WTO Agreement thereby
making it a part of the law of the land is a legitimate exercise of its
sovereign duty and power. We find no patent and gross arbitrariness
or despotism by reason of passion or personal hostility in such
exercise. It is not impossible to surmise that this Court, or at least
some of its members, may even agree with petitioners that it is more
advantageous to the national interest to strike down Senate
Resolution No. 97. But that is not a legal reason to attribute grave
abuse of discretion to the Senate and to nullify its decision. To do so
would constitute grave abuse in the exercise of our own judicial
power and duty. Ineludably, what the Senate did was a valid exercise
of its authority. As to whether such exercise was wise, beneficial or
viable is outside the realm of judicial inquiry and review. That is a
matter between the elected policy makers and the people. As to
whether the nation should join the worldwide march toward trade
liberalization and economic globalization is a matter that our people
should determine in electing their policy makers.After all, the WTO
Agreement allows withdrawal of membership, should this be the
political desire of a member.
The eminent futurist John Naisbitt, author of the best
seller Megatrends, predicts an Asian Renaissance[65] where the East
will become the dominant region of the world economically,
politically and culturally in the next century. He refers to the free
market espoused by WTO as the catalyst in this coming Asian
ascendancy. There are at present about 31 countries including
China, Russia and Saudi Arabia negotiating for membership in the
WTO. Notwithstanding objections against possible limitations on
national sovereignty, the WTO remains as the only viable structure
for multilateral trading and the veritable forum for the development
of international trade law. The alternative to WTO is isolation,
stagnation, if not economic self-destruction. Duly enriched with
original membership, keenly aware of the advantages and
disadvantages of globalization with its on-line experience, and
endowed with a vision of the future, the Philippines now straddles
the crossroads of an international strategy for economic prosperity
and stability in the new millennium. Let the people, through their
duly authorized elected officers, make their free choice.
WHEREFORE, the petition is DISMISSED for lack of merit.
SO ORDERED.
EN BANC
[G.R. No. 134015. July 19, 1999]
JUAN DOMINO, petitioner, vs. COMMISSION ON ELECTIONS,
NARCISO Ra. GRAFILO, JR., EDDY B. JAVA, JUAN P. BAYONITO, JR.,
ROSARIO SAMSON and DIONISIO P. LIM, SR., respondents.
LUCILLE CHIONGBIAN-SOLON, intervenor.
DECISION
DAVIDE, JR., C.J.:
Challenged in this case for certiorari with a prayer for preliminary
injunction are the Resolution of 6 May 1998[1] of the Second Division
of the Commission on Elections (hereafter COMELEC), declaring
petitioner Juan Domino (hereafter DOMINO) disqualified as
candidate for representative of the Lone Legislative District of the
Province of Sarangani in the 11 May 1998 elections, and the Decision
of 29 May 1998[2] of the COMELEC en banc denying DOMINOs
motion for reconsideration.
The antecedents are not disputed.
On 25 March 1998, DOMINO filed his certificate of candidacy for the
position of Representative of the Lone Legislative District of the
Province of Sarangani indicating in item nine (9) of his certificate that
he had resided in the constituency where he seeks to be elected for
one (1) year and two (2) months immediately preceding the
election.[3]
On 30 March 1998, private respondents Narciso Ra. Grafilo, Jr., Eddy
B. Java, Juan P. Bayonito, Jr., Rosario Samson and Dionisio P. Lim, Sr.,
filed with the COMELEC a Petition to Deny Due Course to or Cancel
Certificate of Candidacy, which was docketed as SPA No. 98-022 and
assigned to the Second Division of the COMELEC. Private
respondents alleged that DOMINO, contrary to his declaration in the
certificate of candidacy, is not a resident, much less a registered
voter, of the province of Sarangani where he seeks election. To
substantiate their allegations, private respondents presented the
following evidence:
1. Annex A the Certificate of Candidacy of respondent for the
position of Congressman of the Lone District of the Province of
Sarangani filed with the Office of the Provincial Election Supervisor
of Sarangani on March 25, 1998, where in item 4 thereof he wrote
his date of birth as December 5, 1953; in item 9, he claims he have
resided in the constituency where he seeks election for one (1) year
and two (2) months; and, in item 10, that he is registered voter of
Precinct No. 14A-1, Barangay Poblacion, Alabel, Sarangani;
2. Annex B Voters Registration Record with SN 31326504 dated June
22, 1997 indicating respondents registration at Precinct No. 4400-A,
Old Balara, Quezon City;
3. Annex C Respondents Community Tax Certificate No. 11132214C
dated January 15, 1997;
4. Annex D Certified true copy of the letter of Herson D. Dema-ala,
Deputy Provincial & Municipal Treasurer of Alabel, Sarangani, dated
February 26, 1998, addressed to Mr. Conrado G. Butil, which reads:
In connection with your letter of even date, we are furnishing you
herewith certified xerox copy of the triplicate copy of COMMUNITY
TAX CERTIFICATE NO. 11132214C in the name of Juan Domino.
Furthermore, Community Tax Certificate No. 11132212C of the same
stub was issued to Carlito Engcong on September 5, 1997, while
Certificate No. 11132213C was also issued to Mr. Juan Domino but
was cancelled and serial no. 11132215C was issued in the name of
Marianita Letigio on September 8, 1997.
5. Annex E The triplicate copy of the Community Tax Certificate No.
11132214C in the name of Juan Domino dated September 5, 1997;
6. Annex F Copy of the letter of Provincial Treasurer Lourdes P. Riego
dated March 2, 1998 addressed to Mr. Herson D. Dema-ala, Deputy
Provincial Treasurer and Municipal Treasurer of Alabel, Sarangani,
which states:
For easy reference, kindly turn-over to the undersigned for
safekeeping, the stub of Community Tax Certificate containing Nos.
11132201C-11132250C issued to you on June 13, 1997 and paid
under Official Receipt No. 7854744.
Upon request of Congressman James L. Chiongbian.
7. Annex G Certificate of Candidacy of respondent for the position of
Congressman in the 3rd District of Quezon City for the 1995 elections
filed with the Office of the Regional Election Director, National
Capital Region, on March 17, 1995, where, in item 4 thereof, he
wrote his birth date as December 22, 1953; in item 8 thereof
his residence in the constituency where I seek to be elected
immediately preceding the election as 3 years and 5 months; and, in
item 9, that he is a registered voter of Precinct No. 182, Barangay
Balara, Quezon City;
8. Annex H a copy of the APPLICATION FOR TRANSFER OF
REGISTRATION RECORDS DUE TO CHANGE OF RESIDENCE of
respondent dated August 30, 1997 addressed to and received by
Election Officer Mantil Alim, Alabel, Sarangani, on September 22,
1997, stating among others, that [T]he undersigneds previous
residence is at 24 Bonifacio Street, Ayala Heights, Quezon City, III
District, Quezon City; wherein he is a registered voter and that for
business and residence purposes, the undersigned has transferred
and conducts his business and reside at Barangay Poblacion, Alabel,
Province of Sarangani prior to this application;
9. Annex I Copy of the SWORN APPLICATION FOR CANCELLATION OF
VOTERS [TRANSFER OF] PREVIOUS REGISTRATION of respondent
subscribed and sworn to on 22 October 1997 before Election Officer
Mantil Allim at Alabel, Sarangani.[4]
For his defense, DOMINO maintains that he had complied with the
one-year residence requirement and that he has been residing in
Sarangani since January 1997. In support of the said contention,
DOMINO presented before the COMELEC the following exhibits, to
wit:
1. Annex 1 - Copy of the Contract of Lease between Nora Dacaldacal
as Lessor and Administrator of the properties of deceased spouses
Maximo and Remedios Dacaldacal and respondent as Lessee
executed on January 15, 1997, subscribed and sworn to before
Notary Public Johnny P. Landero;
2. Annex 2 - Copy of the Extra-Judicial Settlement of Estate with
Absolute Deed of sale executed by and between the heirs of
deceased spouses Maximo and Remedios Dacaldacal, namely: Maria
Lourdes, Jupiter and Beberlie and the respondent on November 4,
1997, subscribed and sworn to before Notary Public Jose A. Alegario;
3. Annex 3 - True Carbon Xerox copy of the Decision dated January
19, 1998, of the Metropolitan Trial Court of Metro Manila, Branch
35, Quezon City, in Election Case NO. 725 captioned as In the Matter
of the Petition for the Exclusion from the List of voters of Precinct No.
4400-A Brgy. Old Balara, Quezon City, Spouses Juan and Zorayda
Domino, Petitioners, -versus- Elmer M. Kayanan, Election Officer,
Quezon City, District III, and the Board of Election Inspectors of
Precinct No. 4400-A, Old Balara, Quezon City, Respondents. The
dispositive portion of which reads:
1. Declaring the registration of petitioners as voters of Precinct No.
4400-A, Barangay Old Balara, in District III Quezon City as completely
erroneous as petitioners were no longer residents of Quezon City but
of Alabel, Sarangani where they have been residing since December
1996;
2. Declaring this erroneous registration of petitioners in Quezon City
as done in good faith due to an honest mistake caused by
circumstances beyond their control and without any fault of
petitioners;
3. Approving the transfer of registration of voters of petitioners from
Precinct No. 4400-A of Barangay Old Balara, Quezon City to Precinct
No. 14A1 of Barangay Poblacion of Alabel, Sarangani; and
4. Ordering the respondents to immediately transfer and forward all
the election/voters registration records of the petitioners in Quezon
City to the Election Officer, the Election Registration Board and other
Comelec Offices of Alabel, Sarangani where the petitioners are
obviously qualified to exercise their respective rights of suffrage.
4. Annex 4 - Copy of the Application for Transfer of Registration
Records due to Change of Residence addressed to Mantil Alim,
COMELEC Registrar, Alabel, Sarangani, dated August 30, 1997.
5. Annex 5 - Certified True Copy of the Notice of Approval of
Application, the roster of applications for registration approved by
the Election Registration Board on October 20, 1997, showing the
spouses Juan and Zorayda Bailon Domino listed as numbers 111 and
112 both under Precinct No. 14A1, the last two names in the slate
indicated as transferees without VRR numbers and their application
dated August 30, 1997 and September 30, 1997, respectively.
6. Annex 6 - same as Annex 5
7. Annex 6-a - Copy of the Sworn Application for Cancellation of
Voters Previous Registration (Annex I, Petition);
8. Annex 7 - Copy of claim card in the name of respondent showing
his VRR No. 31326504 dated October 20, 1997 as a registered voter
of Precinct No. 14A1, Barangay Poblacion, Alabel, Sarangani;
9. Annex 7-a - Certification dated April 16, 1998, issued by Atty.
Elmer M. Kayanan, Election Officer IV, District III, Quezon City, which
reads:
This is to certify that the spouses JUAN and ZORAYDA DOMINO are
no longer registered voters of District III, Quezon City. Their
registration records (VRR) were transferred and are now in the
possession of the Election Officer of Alabel, Sarangani.
This certification is being issued upon the request of Mr. JUAN
DOMINO.
10. Annex 8 - Affidavit of Nora Dacaldacal and Maria Lourdes
Dacaldacal stating the circumstances and incidents detailing their
alleged acquaintance with respondent.
11. Annexes 8-a, 8-b, 8-c and 8-d - Copies of the uniform affidavits of
witness Myrna Dalaguit, Hilario Fuentes, Coraminda Lomibao and
Elena V. Piodos subscribed and sworn to before Notary Public
Bonifacio F. Doria, Jr., on April 18, 1998, embodying their alleged
personal knowledge of respondents residency in Alabel, Sarangani;
12. Annex 8-e - A certification dated April 20, 1998, subscribed and
sworn to before Notary Public Bonifacio, containing a listing of the
names of fifty-five(55) residents of Alabel, Sarangani, declaring and
certifying under oath that they personally know the respondent as a
permanent resident of Alabel, Sarangani since January 1997 up to
present;
13. Annexes 9, 9-a and 9-b- Copies of Individual Income Tax Return
for the year 1997, BIR form 2316 and W-2, respectively, of
respondent; and,
14. Annex 10 - The affidavit of respondent reciting the chronology of
events and circumstances leading to his relocation to the
Municipality of Alabel, Sarangani, appending Annexes A, B, C, D, D-
1, E, F, G with sub-markings G-1 and G-2 and H his CTC No.
111`32214C dated September 5, 1997, which are the same as
Annexes 1, 2, 4, 5, 6-a, 3, 7, 9 with sub-markings 9-a and 9-b except
Annex H.[5]
On 6 May 1998, the COMELEC 2nd Division promulgated a resolution
declaring DOMINO disqualified as candidate for the position of
representative of the lone district of Sarangani for lack of the one-
year residence requirement and likewise ordered the cancellation of
his certificate of candidacy, on the basis of the following findings:
What militates against respondents claim that he has met the
residency requirement for the position sought is his own Voters
Registration Record No. 31326504 dated June 22, 1997 [Annex B,
Petition] and his address indicated as 24 Bonifacio St., Ayala
Heights, Old Balara, Quezon City. This evidence, standing alone,
negates all his protestations that he established residence at
Barangay Poblacion, Alabel, Sarangani, as early as January 1997. It is
highly improbable, nay incredible, for respondent who previously
ran for the same position in the 3rd Legislative District of Quezon
City during the elections of 1995 to unwittingly forget the residency
requirement for the office sought.
Counting, therefore, from the day after June 22, 1997 when
respondent registered at Precinct No. 4400-A, up to and until the day
of the elections on May 11, 1998, respondent clearly lacks the one
(1) year residency requirement provided for candidates for Member
of the House of Representatives under Section 6, Article VI of the
Constitution.
All told, petitioners evidence conspire to attest to respondents lack
of residence in the constituency where he seeks election and while
it may be conceded that he is a registered voter as contemplated
under Section 12 of R.A. 8189, he lacks the qualification to run for
the position of Congressman for the Lone District of the Province of
Sarangani.[6]
On 11 May 1998, the day of the election, the COMELEC issued
Supplemental Omnibus Resolution No. 3046, ordering that the votes
cast for DOMINO be counted but to suspend the proclamation if
winning, considering that the Resolution disqualifying him as
candidate had not yet become final and executory.[7]
The result of the election, per Statement of Votes certified by the
Chairman of the Provincial Board of Canvassers,[8] shows that
DOMINO garnered the highest number of votes over his opponents
for the position of Congressman of the Province of Sarangani.
On 15 May 1998, DOMINO filed a motion for reconsideration of the
Resolution dated 6 May 1998, which was denied by the COMELEC en
banc in its decision dated 29 May 1998. Hence, the present Petition
for Certiorari with prayer for Preliminary Mandatory Injunction
alleging, in the main, that the COMELEC committed grave abuse of
discretion amounting to excess or lack of jurisdiction when it ruled
that he did not meet the one-year residence requirement.
On 14 July 1998, acting on DOMINOs Motion for Issuance of
Temporary Restraining Order, the Court directed the parties to
maintain the status quo prevailing at the time of the filing of the
instant petition.[9]
On 15 September 1998, Lucille L. Chiongbian-Solon, (hereafter
INTERVENOR), the candidate receiving the second highest number
of votes, was allowed by the Court to Intervene.[10]
INTERVENOR in her Motion for Leave to Intervene and in
her Comment in Intervention[11] is asking the Court to uphold the
disqualification of petitioner Juan Domino and to proclaim her as the
duly elected representative of Sarangani in the 11 May 1998
elections.
Before us DOMINO raised the following issues for resolution, to wit:
a. Whether or not the judgment of the Metropolitan Trial Court of
Quezon City declaring petitioner as resident of Sarangani and not of
Quezon City is final, conclusive and binding upon the whole world,
including the Commission on Elections.
b. Whether or not petitioner herein has resided in the subject
congressional district for at least one (1) year immediately preceding
the May 11, 1998 elections; and
c. Whether or not respondent COMELEC has jurisdiction over the
petition a quo for the disqualification of petitioner.[12]
The first issue.
The contention of DOMINO that the decision of the Metropolitan
Trial Court of Quezon City in the exclusion proceedings declaring him
a resident of the Province of Sarangani and not of Quezon City is final
and conclusive upon the COMELEC cannot be sustained.
The COMELEC has jurisdiction as provided in Sec. 78, Art. IX of the
Omnibus Election Code, over a petition to deny due course to or
cancel certificate of candidacy. In the exercise of the said
jurisdiction, it is within the competence of the COMELEC to
determine whether false representation as to material facts was
made in the certificate of candidacy, that will include, among others,
the residence of the candidate.
The determination of the Metropolitan Trial Court of Quezon City in
the exclusion proceedings as to the right of DOMINO to be included
or excluded from the list of voters in the precinct within its territorial
jurisdiction, does not preclude the COMELEC, in the determination
of DOMINOs qualification as a candidate, to pass upon the issue of
compliance with the residency requirement.
The proceedings for the exclusion or inclusion of voters in the list of
voters are summary in character. Thus, the factual findings of the
trial court and its resultant conclusions in the exclusion proceedings
on matters other than the right to vote in the precinct within its
territorial jurisdiction are not conclusive upon the
COMELEC. Although the court in inclusion or exclusion proceedings
may pass upon any question necessary to decide the issue raised
including the questions of citizenship and residence of the
challenged voter, the authority to order the inclusion in or exclusion
from the list of voters necessarily caries with it the power to inquire
into and settle all matters essential to the exercise of said
authority. However, except for the right to remain in the list of
voters or for being excluded therefrom for the particular election in
relation to which the proceedings had been held, a decision in an
exclusion or inclusion proceeding, even if final and unappealable,
does not acquire the nature of res judicata.[13] In this sense, it does
not operate as a bar to any future action that a party may take
concerning the subject passed upon in the proceeding.[14] Thus, a
decision in an exclusion proceeding would neither be conclusive on
the voters political status, nor bar subsequent proceedings on his
right to be registered as a voter in any other election.[15]
Thus, in Tan Cohon v. Election Registrar[16] we ruled that:
xxx It is made clear that even as it is here held that the order of the
City Court in question has become final, the same does not
constitute res adjudicata as to any of the matters therein
contained. It is ridiculous to suppose that such an important and
intricate matter of citizenship may be passed upon and determined
with finality in such a summary and peremptory proceeding as that
of inclusion and exclusion of persons in the registry list of
voters. Even if the City Court had granted appellants petition for
inclusion in the permanent list of voters on the allegation that she is
a Filipino citizen qualified to vote, her alleged Filipino citizenship
would still have been left open to question.
Moreover, the Metropolitan Trial Court of Quezon City in its 18
January decision exceeded its jurisdiction when it declared DOMINO
a resident of the Province of Sarangani, approved and ordered the
transfer of his voters registration from Precinct No. 4400-A of
Barangay Old Balara, Quezon City to precinct 14A1 of Barangay
Poblacion, Alabel, Sarangani. It is not within the competence of the
trial court, in an exclusion proceedings, to declare the challenged
voter a resident of another municipality. The jurisdiction of the
lower court over exclusion cases is limited only to determining the
right of voter to remain in the list of voters or to declare that the
challenged voter is not qualified to vote in the precinct in which he
is registered, specifying the ground of the voters
disqualification. The trial court has no power to order the change or
transfer of registration from one place of residence to another for it
is the function of the election Registration Board as provided under
Section 12 of R.A. No. 8189.[17] The only effect of the decision of the
lower court excluding the challenged voter from the list of voters, is
for the Election Registration Board, upon receipt of the final
decision, to remove the voters registration record from the
corresponding book of voters, enter the order of exclusion therein,
and thereafter place the record in the inactive file.[18]
Finally, the application of the rule on res judicata is
unavailing. Identity of parties, subject matter and cause of action are
indispensable requirements for the application of said
doctrine. Neither herein Private Respondents nor INTERVENOR, is a
party in the exclusion proceedings. The Petition for Exclusion was
filed by DOMINO himself and his wife, praying that he and his wife
be excluded from the Voters List on the ground of erroneous
registration while the Petition to Deny Due Course to or Cancel
Certificate of Candidacy was filed by private respondents against
DOMINO for alleged false representation in his certificate of
candidacy. For the decision to be a basis for the dismissal by reason
of res judicata, it is essential that there must be between the first
and the second action identity of parties, identity of subject matter
and identity of causes of action.[19] In the present case, the aforesaid
essential requisites are not present. In the case of Nuval v. Guray, et
al.,[20] the Supreme Court in resolving a similar issue ruled that:
The question to be solved under the first assignment of error is
whether or not the judgment rendered in the case of the petition for
the exclusion of Norberto Gurays name from the election list of Luna,
is res judicata, so as to prevent the institution and prosecution of an
action in quo warranto, which is now before us.
The procedure prescribed by section 437 of the Administrative Code,
as amended by Act No. 3387, is of a summary character and the
judgment rendered therein is not appealable except when the
petition is tried before the justice of the peace of the capital or the
circuit judge, in which case it may be appealed to the judge of first
instance, with whom said two lower judges have concurrent
jurisdiction.
The petition for exclusion was presented by Gregorio Nuval in his
dual capacity as qualified voter of the municipality of Luna, and as a
duly registered candidate for the office of president of said
municipality, against Norberto Guray as a registered voter in the
election list of said municipality. The present proceeding of quo
warranto was interposed by Gregorio Nuval in his capacity as a
registered candidate voted for the office of municipal president of
Luna, against Norberto Guray, as an elected candidate for the same
office. Therefore, there is no identity of parties in the two cases,
since it is not enough that there be an identity of persons, but there
must be an identity of capacities in which said persons litigate. ( Art.
1259 of the Civil Code; Bowler vs. Estate of Alvarez, 23 Phil., 561; 34
Corpus Juris, p. 756, par. 1165)
In said case of the petition for the exclusion, the object of the
litigation, or the litigious matter was the exclusion of Norberto Guray
as a voter from the election list of the municipality of Luna, while in
the present quo warranto proceeding, the object of the litigation, or
the litigious matter is his exclusion or expulsion from the office to
which he has been elected. Neither does there exist, then, any
identity in the object of the litigation, or the litigious matter.
In said case of the petition for exclusion, the cause of action was that
Norberto Guray had not the six months legal residence in the
municipality of Luna to be a qualified voter thereof, while in the
present proceeding of quo warranto, the cause of action is that
Norberto Guray has not the one years legal residence required for
eligibility to the office of municipal president of Luna. Neither does
there exist therefore, identity of causes of action.
In order that res judicata may exist the following are necessary: (a)
identity of parties; (b) identity of things; and (c) identity of issues
(Aquino vs. Director of Lands, 39 Phil. 850). And as in the case of the
petition for exclusion and in the present quo warranto proceeding,
as there is no identity of parties, or of things or litigious matter, or of
issues or causes of action, there is no res judicata.
The Second Issue.
Was DOMINO a resident of the Province of Sarangani for at least one
year immediately preceding the 11 May 1998 election as stated in
his certificate of candidacy?
We hold in the negative.
It is doctrinally settled that the term residence, as used in the law
prescribing the qualifications for suffrage and for elective office,
means the same thing as domicile, which imports not only an
intention to reside in a fixed place but also personal presence in that
place, coupled with conduct indicative of such intention.[21] Domicile
denotes a fixed permanent residence to which, whenever absent for
business, pleasure, or some other reasons, one intends to
return.[22] Domicile is a question of intention and circumstances. In
the consideration of circumstances, three rules must be borne in
mind, namely: (1) that a man must have a residence or domicile
somewhere; (2) when once established it remains until a new one is
acquired; and (3) a man can have but one residence or domicile at a
time.[23]
Records show that petitioners domicile of origin was Candon, Ilocos
Sur[24] and that sometime in 1991, he acquired a new domicile of
choice at 24 Bonifacio St. Ayala Heights, Old Balara, Quezon City, as
shown by his certificate of candidacy for the position of
representative of the 3rd District of Quezon City in the May 1995
election. Petitioner is now claiming that he had effectively
abandoned his residence in Quezon City and has established a new
domicile of choice at the Province of Sarangani.
A persons domicile once established is considered to continue and
will not be deemed lost until a new one is established.[25] To
successfully effect a change of domicile one must demonstrate an
actual removal or an actual change of domicile; a bona fide intention
of abandoning the former place of residence and establishing a new
one and definite acts which correspond with the purpose.[26] In other
words, there must basically be animus manendi coupled
with animus non revertendi. The purpose to remain in or at the
domicile of choice must be for an indefinite period of time; the
change of residence must be voluntary; and the residence at the
place chosen for the new domicile must be actual.[27]
It is the contention of petitioner that his actual physical presence in
Alabel, Sarangani since December 1996 was sufficiently established
by the lease of a house and lot located therein in January 1997 and
by the affidavits and certifications under oath of the residents of that
place that they have seen petitioner and his family residing in their
locality.
While this may be so, actual and physical is not in itself sufficient to
show that from said date he had transferred his residence in that
place. To establish a new domicile of choice, personal presence in
the place must be coupled with conduct indicative of that
intention. While residence simply requires bodily presence in a given
place, domicile requires not only such bodily presence in that place
but also a declared and probable intent to make it ones fixed and
permanent place of abode, ones home.[28]
As a general rule, the principal elements of domicile, physical
presence in the locality involved and intention to adopt it as a
domicile, must concur in order to establish a new domicile. No
change of domicile will result if either of these elements is
absent. Intention to acquire a domicile without actual residence in
the locality does not result in acquisition of domicile, nor does the
fact of physical presence without intention.[29]
The lease contract entered into sometime in January 1997, does not
adequately support a change of domicile. The lease contract may be
indicative of DOMINOs intention to reside in Sarangani but it does
not engender the kind of permanency required to prove
abandonment of ones original domicile. The mere absence of
individual from his permanent residence, no matter how long,
without the intention to abandon it does not result in loss or change
of domicile.[30] Thus the date of the contract of lease of a house and
lot located in the province of Sarangani, i.e., 15 January 1997, cannot
be used, in the absence of other circumstances, as the reckoning
period of the one-year residence requirement.
Further, Dominos lack of intention to abandon his residence in
Quezon City is further strengthened by his act of registering as voter
in one of the precincts in Quezon City. While voting is not conclusive
of residence, it does give rise to a strong presumption of residence
especially in this case where DOMINO registered in his former
barangay. Exercising the right of election franchise is a deliberate
public assertion of the fact of residence, and is said to have decided
preponderance is a doubtful case upon the place the elector claims
as, or believes to be, his residence.[31] The fact that a party
continuously voted in a particular locality is a strong factor in
assisting to determine the status of his domicile.[32]
His claim that his registration in Quezon City was erroneous and was
caused by events over which he had no control cannot be
sustained. The general registration of voters for purposes of the May
1998 elections was scheduled for two (2) consecutive
weekends, viz.: June 14, 15, 21, and 22.[33]
While, Dominos intention to establish residence in Sarangani can be
gleaned from the fact that be bought the house he was renting on
November 4, 1997, that he sought cancellation of his previous
registration in Quezon City on 22 October 1997,[34] and that he
applied for transfer of registration from Quezon City to Sarangani by
reason of change of residence on 30 August 1997,[35] DOMINO still
falls short of the one year residency requirement under the
Constitution.
In showing compliance with the residency requirement, both intent
and actual presence in the district one intends to represent must
satisfy the length of time prescribed by the fundamental
law.[36] Dominos failure to do so rendered him ineligible and his
election to office null and void.[37]
The Third Issue.
DOMINOs contention that the COMELEC has no jurisdiction in the
present petition is bereft of merit.
As previously mentioned, the COMELEC, under Sec. 78, Art. IX of the
Omnibus Election Code, has jurisdiction over a petition to deny due
course to or cancel certificate of candidacy. Such jurisdiction
continues even after election, if for any reason no final judgment of
disqualification is rendered before the election, and the candidate
facing disqualification is voted for and receives the highest number
of votes[38] and provided further that the winning candidate has not
been proclaimed or has taken his oath of office.[39]
It has been repeatedly held in a number of cases, that the House of
Representatives Electoral Tribunals sole and exclusive jurisdiction
over all contests relating to the election, returns and qualifications
of members of Congress as provided under Section 17 of Article VI
of the Constitution begins only after a candidate has become a
member of the House of Representatives.[40]
The fact of obtaining the highest number of votes in an election does
not automatically vest the position in the winning candidate.[41] A
candidate must be proclaimed and must have taken his oath of office
before he can be considered a member of the House of
Representatives.
In the instant case, DOMINO was not proclaimed as Congressman-
elect of the Lone Congressional District of the Province of Sarangani
by reason of a Supplemental Omnibus Resolution issued by the
COMELEC on the day of the election ordering the suspension of
DOMINOs proclamation should he obtain the winning number of
votes. This resolution was issued by the COMELEC in view of the non-
finality of its 6 May 1998 resolution disqualifying DOMINO as
candidate for the position.
Considering that DOMINO has not been proclaimed as
Congressman-elect in the Lone Congressional District of the Province
of Sarangani he cannot be deemed a member of the House of
Representative. Hence, it is the COMELEC and not the Electoral
Tribunal which has jurisdiction over the issue of his ineligibility as a
candidate.[42]
Issue raised by INTERVENOR.
After finding that DOMINO is disqualified as candidate for the
position of representative of the province of Sarangani, may
INTERVENOR, as the candidate who received the next highest
number of votes, be proclaimed as the winning candidate?
It is now settled doctrine that the candidate who obtains the second
highest number of votes may not be proclaimed winner in case the
winning candidate is disqualified.[43]
In every election, the peoples choice is the paramount consideration
and their expressed will must, at all times, be given effect. When the
majority speaks and elects into office a candidate by giving the
highest number of votes cast in the election for that office, no one
can be declared elected in his place.[44]
It would be extremely repugnant to the basic concept of the
constitutionally guaranteed right to suffrage if a candidate who has
not acquired the majority or plurality of votes is proclaimed a winner
and imposed as the representative of a constituency, the majority of
which have positively declared through their ballots that they do not
choose him.[45] To simplistically assume that the second placer
would have received the other votes would be to substitute our
judgment for the mind of the voters. He could not be considered the
first among qualified candidates because in a field which excludes
the qualified candidate, the conditions would have substantially
changed.[46]
Sound policy dictates that public elective offices are filled by those
who have received the highest number of votes cast in the election
for that office, and it is fundamental idea in all republican forms of
government that no one can be declared elected and no measure
can be declared carried unless he or it receives a majority or plurality
of the legal votes cast in the election.[47]
The effect of a decision declaring a person ineligible to hold an office
is only that the election fails entirely, that the wreath of victory
cannot be transferred[48] from the disqualified winner to the
repudiated loser because the law then as now only authorizes a
declaration of election in favor of the person who haS obtained a
plurality of votes[49] and does not entitle the candidate receiving the
next highest number of votes to be declared elected. In such case,
the electors have failed to make a choice and the election is a
nullity.[50] To allow the defeated and repudiated candidate to take
over the elective position despite his rejection by the electorate is to
disenfranchise the electorate without any fault on their part and to
undermine the importance and meaning of democracy and the
peoples right to elect officials of their choice.[51]
INTERVENORs plea that the votes cast in favor of DOMINO be
considered stray votes cannot be sustained. INTERVENORs reliance
on the opinion made in the Labo, Jr. case[52] to wit: if the electorate,
fully aware in fact and in law of a candidates disqualification so as to
bring such awareness within the realm of notoriety, would
nevertheless cast their votes in favor of the ineligible candidate, the
electorate may be said to have waived the validity and efficacy of
their votes by notoriously misapplying their franchise or throwing
away their votes, in which case, the eligible candidate obtaining the
next higher number of votes may be deemed elected, is misplaced.
Contrary to the claim of INTERVENOR, petitioner was not notoriously
known by the public as an ineligible candidate. Although the
resolution declaring him ineligible as candidate was rendered before
the election, however, the same is not yet final and executory. In
fact, it was no less than the COMELEC in its Supplemental Omnibus
Resolution No. 3046 that allowed DOMINO to be voted for the office
and ordered that the votes cast for him be counted as the Resolution
declaring him ineligible has not yet attained finality. Thus the votes
cast for DOMINO are presumed to have been cast in the sincere
belief that he was a qualified candidate, without any intention to
misapply their franchise. Thus, said votes can not be treated as stray,
void, or meaningless.[53]
WHEREFORE, the instant petition is DISMISSED. The resolution
dated 6 May 1998 of the COMELEC 2nd Division and the decision
dated 29 May 1998 of the COMELEC En Banc, are hereby AFFIRMED.
SO ORDERED.
G.R. No. 161872 April 13, 2004
REV. ELLY CHAVEZ PAMATONG, ESQUIRE, petitioner,
vs.
COMMISSION ON ELECTIONS, respondent.
RESOLUTION
TINGA, J.:
Petitioner Rev. Elly Velez Pamatong filed his Certificate of
Candidacy for President on December 17, 2003. Respondent
Commission on Elections (COMELEC) refused to give due course to
petitioner’s Certificate of Candidacy in its Resolution No. 6558 dated
January 17, 2004. The decision, however, was not unanimous since
Commissioners Luzviminda G. Tancangco and Mehol K. Sadain voted
to include petitioner as they believed he had parties or movements
to back up his candidacy.
On January 15, 2004, petitioner moved for reconsideration
of Resolution No. 6558. Petitioner’s Motion for Reconsideration was
docketed as SPP (MP) No. 04-001. The COMELEC, acting on
petitioner’s Motion for Reconsideration and on similar motions filed
by other aspirants for national elective positions, denied the same
under the aegis of Omnibus Resolution No. 6604 dated February 11,
2004. The COMELEC declared petitioner and thirty-five (35) others
nuisance candidates who could not wage a nationwide campaign
and/or are not nominated by a political party or are not supported
by a registered political party with a national constituency.
Commissioner Sadain maintained his vote for petitioner. By then,
Commissioner Tancangco had retired.
In this Petition For Writ of Certiorari, petitioner seeks to reverse the
resolutions which were allegedly rendered in violation of his right to
"equal access to opportunities for public service" under Section 26,
Article II of the 1987
Constitution,1 by limiting the number of qualified candidates only to
those who can afford to wage a nationwide campaign and/or are
nominated by political parties. In so doing, petitioner argues that the
COMELEC indirectly amended the constitutional provisions on the
electoral process and limited the power of the sovereign people to
choose their leaders. The COMELEC supposedly erred in disqualifying
him since he is the most qualified among all the presidential
candidates, i.e., he possesses all the constitutional and legal
qualifications for the office of the president, he is capable of waging
a national campaign since he has numerous national organizations
under his leadership, he also has the capacity to wage an
international campaign since he has practiced law in other countries,
and he has a platform of government. Petitioner likewise attacks the
validity of the form for the Certificate of Candidacy prepared by the
COMELEC. Petitioner claims that the form does not provide clear and
reasonable guidelines for determining the qualifications of
candidates since it does not ask for the candidate’s bio-data and his
program of government.
First, the constitutional and legal dimensions involved.
Implicit in the petitioner’s invocation of the constitutional provision
ensuring "equal access to opportunities for public office" is the claim
that there is a constitutional right to run for or hold public office and,
particularly in his case, to seek the presidency. There is none. What
is recognized is merely a privilege subject to limitations imposed by
law. Section 26, Article II of the Constitution neither bestows such a
right nor elevates the privilege to the level of an enforceable right.
There is nothing in the plain language of the provision which
suggests such a thrust or justifies an interpretation of the sort.
The "equal access" provision is a subsumed part of Article II of the
Constitution, entitled "Declaration of Principles and State Policies."
The provisions under the Article are generally considered not self-
executing,2 and there is no plausible reason for according a different
treatment to the "equal access" provision. Like the rest of the
policies enumerated in Article II, the provision does not contain any
judicially enforceable constitutional right but merely specifies a
guideline for legislative or executive action.3 The disregard of the
provision does not give rise to any cause of action before the courts.4
An inquiry into the intent of the framers5 produces the same
determination that the provision is not self-executory. The original
wording of the present Section 26, Article II had read, "The State
shall broaden opportunities to public office and prohibit public
dynasties."6 Commissioner (now Chief Justice) Hilario Davide, Jr.
successfully brought forth an amendment that changed the word
"broaden" to the phrase "ensure equal access," and the substitution
of the word "office" to "service." He explained his proposal in this
wise:
I changed the word "broaden" to "ENSURE EQUAL ACCESS TO"
because what is important would be equal access to the
opportunity. If you broaden, it would necessarily mean that the
government would be mandated to create as many offices as are
possible to accommodate as many people as are also possible. That
is the meaning of broadening opportunities to public service. So, in
order that we should not mandate the State to make the
government the number one employer and to limit offices only to
what may be necessary and expedient yet offering equal
opportunities to access to it, I change the word
"broaden."7 (emphasis supplied)
Obviously, the provision is not intended to compel the State to enact
positive measures that would accommodate as many people as
possible into public office. The approval of the "Davide amendment"
indicates the design of the framers to cast the provision as simply
enunciatory of a desired policy objective and not reflective of the
imposition of a clear State burden.
Moreover, the provision as written leaves much to be desired if it is
to be regarded as the source of positive rights. It is difficult to
interpret the clause as operative in the absence of legislation since
its effective means and reach are not properly defined. Broadly
written, the myriad of claims that can be subsumed under this rubric
appear to be entirely open-ended.8 Words and phrases such as
"equal access," "opportunities," and "public service" are susceptible
to countless interpretations owing to their inherent impreciseness.
Certainly, it was not the intention of the framers to inflict on the
people an operative but amorphous foundation from which innately
unenforceable rights may be sourced.
As earlier noted, the privilege of equal access to opportunities to
public office may be subjected to limitations. Some valid limitations
specifically on the privilege to seek elective office are found in the
provisions9 of the Omnibus Election Code on "Nuisance Candidates"
and COMELEC Resolution No. 645210 dated December 10, 2002
outlining the instances wherein the COMELEC may motu
proprio refuse to give due course to or cancel a Certificate of
Candidacy.
As long as the limitations apply to everybody equally without
discrimination, however, the equal access clause is not violated.
Equality is not sacrificed as long as the burdens engendered by the
limitations are meant to be borne by any one who is minded to file a
certificate of candidacy. In the case at bar, there is no showing that
any person is exempt from the limitations or the burdens which they
create.
Significantly, petitioner does not challenge the constitutionality or
validity of Section 69 of the Omnibus Election Code and COMELEC
Resolution No. 6452 dated 10 December 2003. Thus, their presumed
validity stands and has to be accorded due weight.
Clearly, therefore, petitioner’s reliance on the equal access clause in
Section 26, Article II of the Constitution is misplaced.
The rationale behind the prohibition against nuisance candidates
and the disqualification of candidates who have not evinced
a bona fide intention to run for office is easy to divine. The State has
a compelling interest to ensure that its electoral exercises are
rational, objective, and orderly. Towards this end, the State takes
into account the practical considerations in conducting elections.
Inevitably, the greater the number of candidates, the greater the
opportunities for logistical confusion, not to mention the increased
allocation of time and resources in preparation for the election.
These practical difficulties should, of course, never exempt the State
from the conduct of a mandated electoral exercise. At the same
time, remedial actions should be available to alleviate these
logistical hardships, whenever necessary and proper. Ultimately, a
disorderly election is not merely a textbook example of inefficiency,
but a rot that erodes faith in our democratic institutions. As the
United States Supreme Court held:
[T]here is surely an important state interest in requiring some
preliminary showing of a significant modicum of support before
printing the name of a political organization and its candidates on
the ballot – the interest, if no other, in avoiding confusion, deception
and even frustration of the democratic [process].11
The COMELEC itself recognized these practical considerations when
it promulgated Resolution No. 6558 on 17 January 2004, adopting
the study Memorandum of its Law Department dated 11 January
2004. As observed in the COMELEC’s Comment:
There is a need to limit the number of candidates especially in the
case of candidates for national positions because the election
process becomes a mockery even if those who cannot clearly wage
a national campaign are allowed to run. Their names would have to
be printed in the Certified List of Candidates, Voters Information
Sheet and the Official Ballots. These would entail additional costs to
the government. For the official ballots in automated counting and
canvassing of votes, an additional page would amount to more or
less FOUR HUNDRED FIFTY MILLION PESOS (₱450,000,000.00).
xxx[I]t serves no practical purpose to allow those candidates to
continue if they cannot wage a decent campaign enough to project
the prospect of winning, no matter how slim.12
The preparation of ballots is but one aspect that would be affected
by allowance of "nuisance candidates" to run in the elections. Our
election laws provide various entitlements for candidates for public
office, such as watchers in every polling place,13 watchers in the
board of canvassers,14 or even the receipt of electoral
contributions.15Moreover, there are election rules and regulations
the formulations of which are dependent on the number of
candidates in a given election.
Given these considerations, the ignominious nature of a nuisance
candidacy becomes even more galling. The organization of an
election with bona fide candidates standing is onerous enough. To
add into the mix candidates with no serious intentions or capabilities
to run a viable campaign would actually impair the electoral process.
This is not to mention the candidacies which are palpably ridiculous
so as to constitute a one-note joke. The poll body would be bogged
by irrelevant minutiae covering every step of the electoral process,
most probably posed at the instance of these nuisance candidates.
It would be a senseless sacrifice on the part of the State.
Owing to the superior interest in ensuring a credible and orderly
election, the State could exclude nuisance candidates and need not
indulge in, as the song goes, "their trips to the moon on gossamer
wings."
The Omnibus Election Code and COMELEC Resolution No. 6452 are
cognizant of the compelling State interest to ensure orderly and
credible elections by excising impediments thereto, such as nuisance
candidacies that distract and detract from the larger purpose. The
COMELEC is mandated by the Constitution with the administration
of elections16 and endowed with considerable latitude in adopting
means and methods that will ensure the promotion of free, orderly
and honest elections.17 Moreover, the Constitution guarantees that
only bona fide candidates for public office shall be free from any
form of harassment and discrimination.18 The determination of bona
fidecandidates is governed by the statutes, and the concept, to our
mind is, satisfactorily defined in the Omnibus Election Code.
Now, the needed factual premises.
However valid the law and the COMELEC issuance involved are, their
proper application in the case of the petitioner cannot be tested and
reviewed by this Court on the basis of what is now before it. The
assailed resolutions of the COMELEC do not direct the Court to the
evidence which it considered in determining that petitioner was a
nuisance candidate. This precludes the Court from reviewing at this
instance whether the COMELEC committed grave abuse of discretion
in disqualifying petitioner, since such a review would necessarily
take into account the matters which the COMELEC considered in
arriving at its decisions.
Petitioner has submitted to this Court mere photocopies of various
documents purportedly evincing his credentials as an eligible
candidate for the presidency. Yet this Court, not being a trier of facts,
can not properly pass upon the reproductions as evidence at this
level. Neither the COMELEC nor the Solicitor General appended any
document to their respective Comments.
The question of whether a candidate is a nuisance candidate or not
is both legal and factual. The basis of the factual determination is not
before this Court. Thus, the remand of this case for the reception of
further evidence is in order.
A word of caution is in order. What is at stake is petitioner’s
aspiration and offer to serve in the government. It deserves not a
cursory treatment but a hearing which conforms to the
requirements of due process.
As to petitioner’s attacks on the validity of the form for the
certificate of candidacy, suffice it to say that the form strictly
complies with Section 74 of the Omnibus Election Code. This
provision specifically enumerates what a certificate of candidacy
should contain, with the required information tending to show that
the candidate possesses the minimum qualifications for the position
aspired for as established by the Constitution and other election
laws.
IN VIEW OF THE FOREGOING, COMELEC Case No. SPP (MP) No. 04-
001 is hereby remanded to the COMELEC for the reception of further
evidence, to determine the question on whether petitioner Elly
Velez Lao Pamatong is a nuisance candidate as contemplated in
Section 69 of the Omnibus Election Code.
The COMELEC is directed to hold and complete the reception of
evidence and report its findings to this Court with deliberate
dispatch.
G.R. No. 168081 October 17, 2008
ARMANDO G. YRASUEGUI, petitioners,
vs.
PHILIPPINE AIRLINES, INC., respondents.
The Facts
Petitioner Armando G. Yrasuegui was a former international flight
steward of Philippine Airlines, Inc. (PAL). He stands five feet and
eight inches (5’8") with a large body frame. The proper weight for a
man of his height and body structure is from 147 to 166 pounds, the
ideal weight being 166 pounds, as mandated by the Cabin and Crew
Administration Manual1 of PAL.
The weight problem of petitioner dates back to 1984. Back then, PAL
advised him to go on an extended vacation leave from December 29,
1984 to March 4, 1985 to address his weight concerns. Apparently,
petitioner failed to meet the company’s weight standards,
prompting another leave without pay from March 5, 1985 to
November 1985.
After meeting the required weight, petitioner was allowed to return
to work. But petitioner’s weight problem recurred. He again went on
leave without pay from October 17, 1988 to February 1989.
On April 26, 1989, petitioner weighed 209 pounds, 43 pounds over
his ideal weight. In line with company policy, he was removed from
flight duty effective May 6, 1989 to July 3, 1989. He was formally
requested to trim down to his ideal weight and report for weight
checks on several dates. He was also told that he may avail of the
services of the company physician should he wish to do so. He was
advised that his case will be evaluated on July 3, 1989.2
On February 25, 1989, petitioner underwent weight check. It was
discovered that he gained, instead of losing, weight. He was
overweight at 215 pounds, which is 49 pounds beyond the limit.
Consequently, his off-duty status was retained.
On October 17, 1989, PAL Line Administrator Gloria Dizon personally
visited petitioner at his residence to check on the progress of his
effort to lose weight. Petitioner weighed 217 pounds, gaining 2
pounds from his previous weight. After the visit, petitioner made a
commitment3 to reduce weight in a letter addressed to Cabin Crew
Group Manager Augusto Barrios. The letter, in full, reads:
Dear Sir:
I would like to guaranty my commitment towards a weight loss
from 217 pounds to 200 pounds from today until 31 Dec. 1989.
From thereon, I promise to continue reducing at a reasonable
percentage until such time that my ideal weight is achieved.
Likewise, I promise to personally report to your office at the
designated time schedule you will set for my weight check.
Respectfully Yours,
F/S Armando Yrasuegui4
Despite the lapse of a ninety-day period given him to reach his ideal
weight, petitioner remained overweight. On January 3, 1990, he was
informed of the PAL decision for him to remain grounded until such
time that he satisfactorily complies with the weight standards.
Again, he was directed to report every two weeks for weight checks.
Petitioner failed to report for weight checks. Despite that, he was
given one more month to comply with the weight requirement. As
usual, he was asked to report for weight check on different dates. He
was reminded that his grounding would continue pending
satisfactory compliance with the weight standards.5
Again, petitioner failed to report for weight checks, although he was
seen submitting his passport for processing at the PAL Staff Service
Division.
On April 17, 1990, petitioner was formally warned that a repeated
refusal to report for weight check would be dealt with accordingly.
He was given another set of weight check dates.6 Again, petitioner
ignored the directive and did not report for weight checks. On June
26, 1990, petitioner was required to explain his refusal to undergo
weight checks.7
When petitioner tipped the scale on July 30, 1990, he weighed at 212
pounds. Clearly, he was still way over his ideal weight of 166 pounds.
From then on, nothing was heard from petitioner until he followed
up his case requesting for leniency on the latter part of 1992. He
weighed at 219 pounds on August 20, 1992 and 205 pounds on
November 5, 1992.
On November 13, 1992, PAL finally served petitioner a Notice of
Administrative Charge for violation of company standards on weight
requirements. He was given ten (10) days from receipt of the charge
within which to file his answer and submit controverting evidence.8
On December 7, 1992, petitioner submitted his Answer.9 Notably, he
did not deny being overweight. What he claimed, instead, is that his
violation, if any, had already been condoned by PAL since "no action
has been taken by the company" regarding his case "since 1988." He
also claimed that PAL discriminated against him because "the
company has not been fair in treating the cabin crew members who
are similarly situated."
On December 8, 1992, a clarificatory hearing was held where
petitioner manifested that he was undergoing a weight reduction
program to lose at least two (2) pounds per week so as to attain his
ideal weight.10
On June 15, 1993, petitioner was formally informed by PAL that due
to his inability to attain his ideal weight, "and considering the utmost
leniency" extended to him "which spanned a period covering a total
of almost five (5) years," his services were considered terminated
"effective immediately."11
His motion for reconsideration having been denied,12 petitioner filed
a complaint for illegal dismissal against PAL.
Labor Arbiter, NLRC and CA Dispositions
On November 18, 1998, Labor Arbiter Valentin C. Reyes ruled 13 that
petitioner was illegally dismissed. The dispositive part of the Arbiter
ruling runs as follows:
WHEREFORE, in view of the foregoing, judgment is hereby rendered,
declaring the complainant’s dismissal illegal, and ordering the
respondent to reinstate him to his former position or substantially
equivalent one, and to pay him:
a. Backwages of Php10,500.00 per month from his dismissal on June
15, 1993 until reinstated, which for purposes of appeal is hereby set
from June 15, 1993 up to August 15, 1998 at ₱651,000.00;
b. Attorney’s fees of five percent (5%) of the total award.
SO ORDERED.14
The Labor Arbiter held that the weight standards of PAL are
reasonable in view of the nature of the job of petitioner.15 However,
the weight standards need not be complied with under pain of
dismissal since his weight did not hamper the performance of his
duties.16 Assuming that it did, petitioner could be transferred to
other positions where his weight would not be a negative
factor.17 Notably, other overweight employees, i.e., Mr. Palacios,
Mr. Cui, and Mr. Barrios, were promoted instead of being
disciplined.18
Both parties appealed to the National Labor Relations Commission
(NLRC).19
On October 8, 1999, the Labor Arbiter issued a writ of execution
directing the reinstatement of petitioner without loss of seniority
rights and other benefits.20
On February 1, 2000, the Labor Arbiter denied21 the Motion to
Quash Writ of Execution22 of PAL.
On March 6, 2000, PAL appealed the denial of its motion to quash to
the NLRC.23
On June 23, 2000, the NLRC rendered judgment24 in the following
tenor:
WHEREFORE, premises considered[,] the Decision of the Arbiter
dated 18 November 1998 as modified by our findings herein, is
hereby AFFIRMED and that part of the dispositive portion of said
decision concerning complainant’s entitlement to backwages shall
be deemed to refer to complainant’s entitlement to his full
backwages, inclusive of allowances and to his other benefits or their
monetary equivalent instead of simply backwages, from date of
dismissal until his actual reinstatement or finality hereof.
Respondent is enjoined to manifests (sic) its choice of the form of
the reinstatement of complainant, whether physical or through
payroll within ten (10) days from notice failing which, the same shall
be deemed as complainant’s reinstatement through payroll and
execution in case of non-payment shall accordingly be issued by the
Arbiter. Both appeals of respondent thus, are DISMISSED for utter
lack of merit.25
According to the NLRC, "obesity, or the tendency to gain weight
uncontrollably regardless of the amount of food intake, is a disease
in itself."26 As a consequence, there can be no intentional defiance
or serious misconduct by petitioner to the lawful order of PAL for
him to lose weight.27
Like the Labor Arbiter, the NLRC found the weight standards of PAL
to be reasonable. However, it found as unnecessary the Labor
Arbiter holding that petitioner was not remiss in the performance of
his duties as flight steward despite being overweight. According to
the NLRC, the Labor Arbiter should have limited himself to the issue
of whether the failure of petitioner to attain his ideal weight
constituted willful defiance of the weight standards of PAL.28
PAL moved for reconsideration to no avail.29 Thus, PAL elevated the
matter to the Court of Appeals (CA) via a petition for certiorari under
Rule 65 of the 1997 Rules of Civil Procedure.30
By Decision dated August 31, 2004, the CA reversed31 the NLRC:
WHEREFORE, premises considered, we hereby GRANT the petition.
The assailed NLRC decision is declared NULL and VOID and is hereby
SET ASIDE. The private respondent’s complaint is hereby DISMISSED.
No costs.
SO ORDERED.32
The CA opined that there was grave abuse of discretion on the part
of the NLRC because it "looked at wrong and irrelevant
considerations"33 in evaluating the evidence of the parties. Contrary
to the NLRC ruling, the weight standards of PAL are meant to be
a continuing qualification for an employee’s position.34 The failure
to adhere to the weight standards is an analogous cause for the
dismissal of an employee under Article 282(e) of the Labor Code in
relation to Article 282(a). It is not willful disobedience as the NLRC
seemed to suggest.35 Said the CA, "the element of willfulness that
the NLRC decision cites is an irrelevant consideration in arriving at a
conclusion on whether the dismissal is legally proper."36 In other
words, "the relevant question to ask is not one of willfulness but one
of reasonableness of the standard and whether or not the employee
qualifies or continues to qualify under this standard."37
Just like the Labor Arbiter and the NLRC, the CA held that the weight
standards of PAL are reasonable.38 Thus, petitioner was legally
dismissed because he repeatedly failed to meet the prescribed
weight standards.39 It is obvious that the issue of discrimination was
only invoked by petitioner for purposes of escaping the result of his
dismissal for being overweight.40
On May 10, 2005, the CA denied petitioner’s motion for
reconsideration.41 Elaborating on its earlier ruling, the CA held that
the weight standards of PAL are a bona fide occupational
qualification which, in case of violation, "justifies an employee’s
separation from the service."42
Issues
In this Rule 45 petition for review, the following issues are posed for
resolution:
I.
WHETHER OR NOT THE COURT OF APPEALS GRAVELY ERRED IN
HOLDING THAT PETITIONER’S OBESITY CAN BE A GROUND FOR
DISMISSAL UNDER PARAGRAPH (e) OF ARTICLE 282 OF THE LABOR
CODE OF THE PHILIPPINES;
II.
WHETHER OR NOT THE COURT OF APPEALS GRAVELY ERRED IN
HOLDING THAT PETITIONER’S DISMISSAL FOR OBESITY CAN BE
PREDICATED ON THE "BONA FIDE OCCUPATIONAL QUALIFICATION
(BFOQ) DEFENSE";
III.
WHETHER OR NOT THE COURT OF APPEALS GRAVELY ERRED IN
HOLDING THAT PETITIONER WAS NOT UNDULY DISCRIMINATED
AGAINST WHEN HE WAS DISMISSED WHILE OTHER OVERWEIGHT
CABIN ATTENDANTS WERE EITHER GIVEN FLYING DUTIES OR
PROMOTED;
IV.
WHETHER OR NOT THE COURT OF APPEALS GRAVELY ERRED WHEN
IT BRUSHED ASIDE PETITIONER’S CLAIMS FOR REINSTATEMENT
[AND] WAGES ALLEGEDLY FOR BEING MOOT AND
ACADEMIC.43 (Underscoring supplied)
Our Ruling
I. The obesity of petitioner is a ground for dismissal under Article
282(e) 44 of the Labor Code.
A reading of the weight standards of PAL would lead to no other
conclusion than that they constitute a continuing qualification of an
employee in order to keep the job. Tersely put, an employee may be
dismissed the moment he is unable to comply with his ideal weight
as prescribed by the weight standards. The dismissal of the
employee would thus fall under Article 282(e) of the Labor Code. As
explained by the CA:
x x x [T]he standards violated in this case were not mere "orders" of
the employer; they were the "prescribed weights" that a cabin crew
must maintain in order to qualify for and keep his or her position in
the company. In other words, they were standards that
establish continuing qualifications for an employee’s position. In
this sense, the failure to maintain these standards does not fall under
Article 282(a) whose express terms require the element of
willfulness in order to be a ground for dismissal. The failure to meet
the employer’s qualifying standards is in fact a ground that does not
squarely fall under grounds (a) to (d) and is therefore one that falls
under Article 282(e) – the "other causes analogous to the foregoing."
By its nature, these "qualifying standards" are norms that apply prior
to and after an employee is hired. They apply prior to
employment because these are the standards a job applicant must
initially meet in order to be hired. They apply after hiring because
an employee must continue to meet these standards while on the
job in order to keep his job. Under this perspective, a violation is not
one of the faults for which an employee can be dismissed pursuant
to pars. (a) to (d) of Article 282; the employee can be dismissed
simply because he no longer "qualifies" for his job irrespective of
whether or not the failure to qualify was willful or intentional. x x x45
Petitioner, though, advances a very interesting argument. He claims
that obesity is a "physical abnormality and/or illness."46 Relying
on Nadura v. Benguet Consolidated, Inc.,47 he says his dismissal is
illegal:
Conscious of the fact that Nadura’s case cannot be made to fall
squarely within the specific causes enumerated in subparagraphs
1(a) to (e), Benguet invokes the provisions of subparagraph 1(f) and
says that Nadura’s illness – occasional attacks of asthma – is a cause
analogous to them.
Even a cursory reading of the legal provision under consideration is
sufficient to convince anyone that, as the trial court said, "illness
cannot be included as an analogous cause by any stretch of
imagination."
It is clear that, except the just cause mentioned in sub-paragraph
1(a), all the others expressly enumerated in the law are due to the
voluntary and/or willful act of the employee. How Nadura’s illness
could be considered as "analogous" to any of them is beyond our
understanding, there being no claim or pretense that the same was
contracted through his own voluntary act.48
The reliance on Nadura is off-tangent. The factual milieu
in Nadura is substantially different from the case at
bar. First, Nadura was not decided under the Labor Code. The law
applied in that case was Republic Act (RA) No. 1787. Second, the
issue of flight safety is absent in Nadura, thus, the rationale there
cannot apply here. Third, in Nadura, the employee who was a miner,
was laid off from work because of illness, i.e., asthma. Here,
petitioner was dismissed for his failure to meet the weight standards
of PAL. He was not dismissed due to illness. Fourth, the issue
in Nadura is whether or not the dismissed employee is entitled to
separation pay and damages. Here, the issue centers on the
propriety of the dismissal of petitioner for his failure to meet the
weight standards of PAL. Fifth, in Nadura, the employee was not
accorded due process. Here, petitioner was accorded utmost
leniency. He was given more than four (4) years to comply with the
weight standards of PAL.
In the case at bar, the evidence on record militates against
petitioner’s claims that obesity is a disease. That he was able to
reduce his weight from 1984 to 1992 clearly shows that it is possible
for him to lose weight given the proper attitude, determination, and
self-discipline. Indeed, during the clarificatory hearing on December
8, 1992, petitioner himself claimed that "[t]he issue is could I bring
my weight down to ideal weight which is 172, then the answer is yes.
I can do it now."49
True, petitioner claims that reducing weight is costing him "a lot of
expenses."50 However, petitioner has only himself to blame. He
could have easily availed the assistance of the company physician,
per the advice of PAL.51 He chose to ignore the suggestion. In fact,
he repeatedly failed to report when required to undergo weight
checks, without offering a valid explanation. Thus, his fluctuating
weight indicates absence of willpower rather than an illness.
Petitioner cites Bonnie Cook v. State of Rhode Island, Department of
Mental Health, Retardation and Hospitals,52decided by the United
States Court of Appeals (First Circuit). In that case, Cook worked from
1978 to 1980 and from 1981 to 1986 as an institutional attendant for
the mentally retarded at the Ladd Center that was being operated
by respondent. She twice resigned voluntarily with an unblemished
record. Even respondent admitted that her performance met the
Center’s legitimate expectations. In 1988, Cook re-applied for a
similar position. At that time, "she stood 5’2" tall and weighed over
320 pounds." Respondent claimed that the morbid obesity of
plaintiff compromised her ability to evacuate patients in case of
emergency and it also put her at greater risk of serious diseases.
Cook contended that the action of respondent amounted to
discrimination on the basis of a handicap. This was in direct violation
of Section 504(a) of the Rehabilitation Act of 1973,53 which
incorporates the remedies contained in Title VI of the Civil Rights Act
of 1964. Respondent claimed, however, that morbid obesity could
never constitute a handicap within the purview of the Rehabilitation
Act. Among others, obesity is a mutable condition, thus plaintiff
could simply lose weight and rid herself of concomitant disability.
The appellate Court disagreed and held that morbid obesity is a
disability under the Rehabilitation Act and that respondent
discriminated against Cook based on "perceived" disability. The
evidence included expert testimony that morbid obesity is a
physiological disorder. It involves a dysfunction of both the
metabolic system and the neurological appetite – suppressing signal
system, which is capable of causing adverse effects within the
musculoskeletal, respiratory, and cardiovascular systems. Notably,
the Court stated that "mutability is relevant only in determining the
substantiality of the limitation flowing from a given impairment,"
thus "mutability only precludes those conditions that an individual
can easily and quickly reverse by behavioral alteration."
Unlike Cook, however, petitioner is not morbidly obese. In the words
of the District Court for the District of Rhode Island, Cook was
sometime before 1978 "at least one hundred pounds more than
what is considered appropriate of her height." According to the
Circuit Judge, Cook weighed "over 320 pounds" in 1988. Clearly, that
is not the case here. At his heaviest, petitioner was only less than 50
pounds over his ideal weight.
In fine, We hold that the obesity of petitioner, when placed in the
context of his work as flight attendant, becomes an analogous cause
under Article 282(e) of the Labor Code that justifies his dismissal
from the service. His obesity may not be unintended, but is
nonetheless voluntary. As the CA correctly puts it, "[v]oluntariness
basically means that the just cause is solely attributable to the
employee without any external force influencing or controlling his
actions. This element runs through all just causes under Article 282,
whether they be in the nature of a wrongful action or omission.
Gross and habitual neglect, a recognized just cause, is considered
voluntary although it lacks the element of intent found in Article
282(a), (c), and (d)."54
II. The dismissal of petitioner can be predicated on the bona fide
occupational qualification defense.
Employment in particular jobs may not be limited to persons of a
particular sex, religion, or national origin unless the employer can
show that sex, religion, or national origin is an actual qualification for
performing the job. The qualification is called a bona fide
occupational qualification (BFOQ).55 In the United States, there are a
few federal and many state job discrimination laws that contain an
exception allowing an employer to engage in an otherwise unlawful
form of prohibited discrimination when the action is based on a
BFOQ necessary to the normal operation of a business or
enterprise.56
Petitioner contends that BFOQ is a statutory defense. It does not
exist if there is no statute providing for it.57 Further, there is no
existing BFOQ statute that could justify his dismissal.58
Both arguments must fail.
First, the Constitution,59 the Labor Code,60 and RA No. 727761 or the
Magna Carta for Disabled Persons62 contain provisions similar to
BFOQ.
Second, in British Columbia Public Service Employee Commission
(BSPSERC) v. The British Columbia Government and Service
Employee’s Union (BCGSEU),63 the Supreme Court of Canada
adopted the so-called "Meiorin Test" in determining whether an
employment policy is justified. Under this test, (1) the employer
must show that it adopted the standard for a purpose rationally
connected to the performance of the job;64 (2) the employer must
establish that the standard is reasonably necessary65 to the
accomplishment of that work-related purpose; and (3) the employer
must establish that the standard is reasonably necessary in order to
accomplish the legitimate work-related purpose. Similarly, in Star
Paper Corporation v. Simbol,66 this Court held that in order to justify
a BFOQ, the employer must prove that (1) the employment
qualification is reasonably related to the essential operation of the
job involved; and (2) that there is factual basis for believing that all
or substantially all persons meeting the qualification would be
unable to properly perform the duties of the job.67
In short, the test of reasonableness of the company policy is used
because it is parallel to BFOQ.68 BFOQ is valid "provided it reflects an
inherent quality reasonably necessary for satisfactory job
performance."69
In Duncan Association of Detailman-PTGWTO v. Glaxo Wellcome
Philippines, Inc.,70 the Court did not hesitate to pass upon the validity
of a company policy which prohibits its employees from marrying
employees of a rival company. It was held that the company policy
is reasonable considering that its purpose is the protection of the
interests of the company against possible competitor infiltration on
its trade secrets and procedures.
Verily, there is no merit to the argument that BFOQ cannot be
applied if it has no supporting statute. Too, the Labor
Arbiter,71 NLRC,72 and CA73 are one in holding that the weight
standards of PAL are reasonable. A common carrier, from the nature
of its business and for reasons of public policy, is bound to observe
extraordinary diligence for the safety of the passengers it
transports.74 It is bound to carry its passengers safely as far as human
care and foresight can provide, using the utmost diligence of very
cautious persons, with due regard for all the circumstances.75
The law leaves no room for mistake or oversight on the part of a
common carrier. Thus, it is only logical to hold that the weight
standards of PAL show its effort to comply with the exacting
obligations imposed upon it by law by virtue of being a common
carrier.
The business of PAL is air transportation. As such, it has committed
itself to safely transport its passengers. In order to achieve this, it
must necessarily rely on its employees, most particularly the cabin
flight deck crew who are on board the aircraft. The weight standards
of PAL should be viewed as imposing strict norms of discipline upon
its employees.
In other words, the primary objective of PAL in the imposition of the
weight standards for cabin crew is flight safety. It cannot be gainsaid
that cabin attendants must maintain agility at all times in order to
inspire passenger confidence on their ability to care for the
passengers when something goes wrong. It is not farfetched to say
that airline companies, just like all common carriers, thrive due to
public confidence on their safety records. People, especially the
riding public, expect no less than that airline companies transport
their passengers to their respective destinations safely and soundly.
A lesser performance is unacceptable.
The task of a cabin crew or flight attendant is not limited to serving
meals or attending to the whims and caprices of the passengers. The
most important activity of the cabin crew is to care for the safety of
passengers and the evacuation of the aircraft when an emergency
occurs. Passenger safety goes to the core of the job of a cabin
attendant. Truly, airlines need cabin attendants who have the
necessary strength to open emergency doors, the agility to attend to
passengers in cramped working conditions, and the stamina to
withstand grueling flight schedules.
On board an aircraft, the body weight and size of a cabin attendant
are important factors to consider in case of emergency. Aircrafts
have constricted cabin space, and narrow aisles and exit doors. Thus,
the arguments of respondent that "[w]hether the airline’s flight
attendants are overweight or not has no direct relation to its mission
of transporting passengers to their destination"; and that the weight
standards "has nothing to do with airworthiness of respondent’s
airlines," must fail.
The rationale in Western Air Lines v. Criswell76 relied upon by
petitioner cannot apply to his case. What was involved there were
two (2) airline pilots who were denied reassignment as flight
engineers upon reaching the age of 60, and a flight engineer who
was forced to retire at age 60. They sued the airline company,
alleging that the age-60 retirement for flight engineers violated the
Age Discrimination in Employment Act of 1967. Age-based BFOQ and
being overweight are not the same. The case of overweight cabin
attendants is another matter. Given the cramped cabin space and
narrow aisles and emergency exit doors of the airplane, any
overweight cabin attendant would certainly have difficulty
navigating the cramped cabin area.
In short, there is no need to individually evaluate their ability to
perform their task. That an obese cabin attendant occupies more
space than a slim one is an unquestionable fact which courts can
judicially recognize without introduction of evidence.77 It would also
be absurd to require airline companies to reconfigure the aircraft in
order to widen the aisles and exit doors just to accommodate
overweight cabin attendants like petitioner.
The biggest problem with an overweight cabin attendant is the
possibility of impeding passengers from evacuating the aircraft,
should the occasion call for it. The job of a cabin attendant during
emergencies is to speedily get the passengers out of the aircraft
safely. Being overweight necessarily impedes mobility. Indeed, in an
emergency situation, seconds are what cabin attendants are dealing
with, not minutes. Three lost seconds can translate into three lost
lives. Evacuation might slow down just because a wide-bodied cabin
attendant is blocking the narrow aisles. These possibilities are not
remote.
Petitioner is also in estoppel. He does not dispute that the weight
standards of PAL were made known to him prior to his employment.
He is presumed to know the weight limit that he must maintain at all
times.78 In fact, never did he question the authority of PAL when he
was repeatedly asked to trim down his weight. Bona fides exigit ut
quod convenit fiat. Good faith demands that what is agreed upon
shall be done. Kung ang tao ay tapat kanyang tutuparin ang
napagkasunduan.
Too, the weight standards of PAL provide for separate weight
limitations based on height and body frame for both male and
female cabin attendants. A progressive discipline is imposed to allow
non-compliant cabin attendants sufficient opportunity to meet the
weight standards. Thus, the clear-cut rules obviate any possibility for
the commission of abuse or arbitrary action on the part of PAL.
III. Petitioner failed to substantiate his claim that he was
discriminated against by PAL.
Petitioner next claims that PAL is using passenger safety as a
convenient excuse to discriminate against him.79 We are
constrained, however, to hold otherwise. We agree with the CA that
"[t]he element of discrimination came into play in this case as a
secondary position for the private respondent in order to escape the
consequence of dismissal that being overweight entailed. It is a
confession-and-avoidance position that impliedly admitted the
cause of dismissal, including the reasonableness of the applicable
standard and the private respondent’s failure to comply."80It is a
basic rule in evidence that each party must prove his affirmative
allegation.81
Since the burden of evidence lies with the party who asserts an
affirmative allegation, petitioner has to prove his allegation with
particularity. There is nothing on the records which could support
the finding of discriminatory treatment. Petitioner cannot establish
discrimination by simply naming the supposed cabin attendants who
are allegedly similarly situated with him. Substantial proof must be
shown as to how and why they are similarly situated and the
differential treatment petitioner got from PAL despite the similarity
of his situation with other employees.
Indeed, except for pointing out the names of the supposed
overweight cabin attendants, petitioner miserably failed to indicate
their respective ideal weights; weights over their ideal weights; the
periods they were allowed to fly despite their being overweight; the
particular flights assigned to them; the discriminating treatment
they got from PAL; and other relevant data that could have
adequately established a case of discriminatory treatment by PAL. In
the words of the CA, "PAL really had no substantial case of
discrimination to meet."82
We are not unmindful that findings of facts of administrative
agencies, like the Labor Arbiter and the NLRC, are accorded respect,
even finality.83 The reason is simple: administrative agencies are
experts in matters within their specific and specialized
jurisdiction.84 But the principle is not a hard and fast rule. It only
applies if the findings of facts are duly supported by substantial
evidence. If it can be shown that administrative bodies grossly
misappreciated evidence of such nature so as to compel a conclusion
to the contrary, their findings of facts must necessarily be reversed.
Factual findings of administrative agencies do not have infallibility
and must be set aside when they fail the test of arbitrariness.85
Here, the Labor Arbiter and the NLRC inexplicably misappreciated
evidence. We thus annul their findings.
To make his claim more believable, petitioner invokes the equal
protection clause guaranty86 of the Constitution. However, in the
absence of governmental interference, the liberties guaranteed by
the Constitution cannot be invoked.87 Put differently, the Bill of
Rights is not meant to be invoked against acts of private
individuals.88 Indeed, the United States Supreme Court, in
interpreting the Fourteenth Amendment,89 which is the source of
our equal protection guarantee, is consistent in saying that the equal
protection erects no shield against private conduct, however
discriminatory or wrongful.90 Private actions, no matter how
egregious, cannot violate the equal protection guarantee.91
IV. The claims of petitioner for reinstatement and wages are moot.
As his last contention, petitioner avers that his claims for
reinstatement and wages have not been mooted. He is entitled to
reinstatement and his full backwages, "from the time he was illegally
dismissed" up to the time that the NLRC was reversed by the CA.92
At this point, Article 223 of the Labor Code finds relevance:
In any event, the decision of the Labor Arbiter reinstating a dismissed
or separated employee, insofar as the reinstatement aspect is
concerned, shall immediately be executory, even pending appeal.
The employee shall either be admitted back to work under the same
terms and conditions prevailing prior to his dismissal or separation
or, at the option of the employer, merely reinstated in the payroll.
The posting of a bond by the employer shall not stay the execution
for reinstatement provided herein.
The law is very clear. Although an award or order of reinstatement
is self-executory and does not require a writ of execution,93 the
option to exercise actual reinstatement or payroll reinstatement
belongs to the employer. It does not belong to the employee, to the
labor tribunals, or even to the courts.
Contrary to the allegation of petitioner that PAL "did everything
under the sun" to frustrate his "immediate return to his previous
position,"94 there is evidence that PAL opted to physically reinstate
him to a substantially equivalent position in accordance with the
order of the Labor Arbiter.95 In fact, petitioner duly received the
return to work notice on February 23, 2001, as shown by his
signature.96
Petitioner cannot take refuge in the pronouncements of the Court in
a case97 that "[t]he unjustified refusal of the employer to reinstate
the dismissed employee entitles him to payment of his salaries
effective from the time the employer failed to reinstate him despite
the issuance of a writ of execution"98 and ""even if the order of
reinstatement of the Labor Arbiter is reversed on appeal, it is
obligatory on the part of the employer to reinstate and pay the
wages of the employee during the period of appeal until reversal by
the higher court."99 He failed to prove that he complied with the
return to work order of PAL. Neither does it appear on record that
he actually rendered services for PAL from the moment he was
dismissed, in order to insist on the payment of his full backwages.
In insisting that he be reinstated to his actual position despite being
overweight, petitioner in effect wants to render the issues in the
present case moot. He asks PAL to comply with the impossible. Time
and again, the Court ruled that the law does not exact compliance
with the impossible.100
V. Petitioner is entitled to separation pay.
Be that as it may, all is not lost for petitioner.
Normally, a legally dismissed employee is not entitled to separation
pay. This may be deduced from the language of Article 279 of the
Labor Code that "[a]n employee who is unjustly dismissed from work
shall be entitled to reinstatement without loss of seniority rights and
other privileges and to his full backwages, inclusive of allowances,
and to his other benefits or their monetary equivalent computed
from the time his compensation was withheld from him up to the
time of his actual reinstatement." Luckily for petitioner, this is not an
ironclad rule.
Exceptionally, separation pay is granted to a legally dismissed
employee as an act "social justice,"101 or based on "equity."102 In
both instances, it is required that the dismissal (1) was not for serious
misconduct; and (2) does not reflect on the moral character of the
employee.103
Here, We grant petitioner separation pay equivalent to one-half
(1/2) month’s pay for every year of service.104 It should include
regular allowances which he might have been receiving.105 We are
not blind to the fact that he was not dismissed for any serious
misconduct or to any act which would reflect on his moral character.
We also recognize that his employment with PAL lasted for more or
less a decade.
WHEREFORE, the appealed Decision of the Court of Appeals
is AFFIRMED but MODIFIED in that petitioner Armando G. Yrasuegui
is entitled to separation pay in an amount equivalent to one-half
(1/2) month’s pay for every year of service, which should include his
regular allowances.
SO ORDERED.

G.R. No. 202242 April 16, 2013
FRANCISCO I. CHAVEZ, Petitioner,
vs.
JUDICIALAND BAR COUNCIL, SEN. FRANCIS JOSEPH G. ESCUDERO
and REP. NIEL C. TUPAS, JR., Respondents.
RESOLUTION
MENDOZA, J.:
This resolves the Motion for Reconsideration1 filed by the Office of
the Solicitor General (OSG) on behalf of the respondents, Senator
Francis Joseph G. Escudero and Congressman Niel C. Tupas, Jr.
(respondents), duly opposed2 by the petitioner, former Solicitor
General Francisco I. Chavez (petitioner).
By way of recapitulation, the present action stemmed from the
unexpected departure of former Chief Justice Renato C. Corona on
May 29, 2012, and the nomination of petitioner, as his potential
successor. In his initiatory pleading, petitioner asked the Court to
determine 1] whether the first paragraph of Section 8, Article VIII of
the 1987 Constitution allows more than one (1) member of Congress
to sit in the JBC; and 2] if the practice of having two (2)
representatives from each House of Congress with one (1) vote each
is sanctioned by the Constitution.
On July 17, 2012, the Court handed down the assailed subject
decision, disposing the same in the following manner:
WHEREFORE, the petition is GRANTED. The current numerical
composition of the Judicial and Bar Council is declared
UNCONSTITUTIONAL. The Judicial and Bar Council is hereby enjoined
to reconstitute itself so that only one (1) member of Congress will sit
as a representative in its proceedings, in accordance with Section
8(1), Article VIII of the 1987 Constitution.
This disposition is immediately executory.
SO ORDERED.
On July 31, 2012, following respondents’ motion for reconsideration
and with due regard to Senate Resolution Nos. 111,3 112,4 113,5 and
114,6 the Court set the subject motion for oral arguments on August
2, 2012.7 On August 3, 2012, the Court discussed the merits of the
arguments and agreed, in the meantime, to suspend the effects of
the second paragraph of the dispositive portion of the July 17, 2012
Decision which decreed that it was immediately executory. The
decretal portion of the August 3, 2012 Resolution8 reads:
WHEREFORE, the parties are hereby directed to submit their
respective MEMORANDA within ten (10) days from notice. Until
further orders, the Court hereby SUSPENDS the effect of the second
paragraph of the dispositive portion of the Court’s July 17, 2012
Decision, which reads: "This disposition is immediately executory."9
Pursuant to the same resolution, petitioner and respondents filed
their respective memoranda.10
Brief Statement of the Antecedents
In this disposition, it bears reiterating that from the birth of the
Philippine Republic, the exercise of appointing members of the
Judiciary has always been the exclusive prerogative of the executive
and legislative branches of the government. Like their progenitor of
American origins, both the Malolos Constitution11 and the 1935
Constitution12vested the power to appoint the members of the
Judiciary in the President, subject to confirmation by the
Commission on Appointments. It was during these times that the
country became witness to the deplorable practice of aspirants
seeking confirmation of their appointment in the Judiciary to
ingratiate themselves with the members of the legislative body.13
Then, under the 1973 Constitution,14 with the fusion of the executive
and legislative powers in one body, the appointment of judges and
justices ceased to be subject of scrutiny by another body. The power
became exclusive and absolute to the Executive, subject only to the
condition that the appointees must have all the qualifications and
none of the disqualifications.
Prompted by the clamor to rid the process of appointments to the
Judiciary of the evils of political pressure and partisan activities,15 the
members of the Constitutional Commission saw it wise to create a
separate, competent and independent body to recommend
nominees to the President.
Thus, it conceived of a body, representative of all the stakeholders
in the judicial appointment process, and called it the Judicial and Bar
Council (JBC). The Framers carefully worded Section 8, Article VIII of
the 1987 Constitution in this wise:
Section 8. (1) A Judicial and Bar Council is hereby created under the
supervision of the Supreme Court composed of the Chief Justice as
ex officio Chairman, the Secretary of Justice, and a representative of
the Congress as ex officio Members, a representative of the
Integrated Bar, a professor of law, a retired Member of the Supreme
Court, and a representative of the private sector.
From the moment of the creation of the JBC, Congress designated
one (1) representative to sit in the JBC to act as one of the ex-officio
members.16 Pursuant to the constitutional provision that Congress is
entitled to one (1) representative, each House sent a representative
to the JBC, not together, but alternately or by rotation.
In 1994, the seven-member composition of the JBC was substantially
altered.1âwphi1 An eighth member was added to the JBC as the two
(2) representatives from Congress began sitting simultaneously in
the JBC, with each having one-half (1/2) of a vote.17
In 2001, the JBC En Banc decided to allow the representatives from
the Senate and the House of Representatives one full vote each.18 It
has been the situation since then.
Grounds relied upon by Respondents
Through the subject motion, respondents pray that the Court
reconsider its decision and dismiss the petition on the following
grounds: 1] that allowing only one representative from Congress in
the JBC would lead to absurdity considering its bicameral nature; 2]
that the failure of the Framers to make the proper adjustment when
there was a shift from unilateralism to bicameralism was a plain
oversight; 3] that two representatives from Congress would not
subvert the intention of the Framers to insulate the JBC from political
partisanship; and 4] that the rationale of the Court in declaring a
seven-member composition would provide a solution should there
be a stalemate is not exactly correct.
While the Court may find some sense in the reasoning in
amplification of the third and fourth grounds listed by respondents,
still, it finds itself unable to reverse the assailed decision on the
principal issues covered by the first and second grounds for lack of
merit. Significantly, the conclusion arrived at, with respect to the
first and second grounds, carries greater bearing in the final
resolution of this case.
As these two issues are interrelated, the Court shall discuss them
jointly.
Ruling of the Court
The Constitution evinces the direct action of the Filipino people by
which the fundamental powers of government are established,
limited and defined and by which those powers are distributed
among the several departments for their safe and useful exercise for
the benefit of the body politic.19 The Framers reposed their wisdom
and vision on one suprema lex to be the ultimate expression of the
principles and the framework upon which government and society
were to operate. Thus, in the interpretation of the constitutional
provisions, the Court firmly relies on the basic postulate that the
Framers mean what they say. The language used in the Constitution
must be taken to have been deliberately chosen for a definite
purpose. Every word employed in the Constitution must be
interpreted to exude its deliberate intent which must be maintained
inviolate against disobedience and defiance. What the Constitution
clearly says, according to its text, compels acceptance and bars
modification even by the branch tasked to interpret it.
For this reason, the Court cannot accede to the argument of plain
oversight in order to justify constitutional construction. As stated in
the July 17, 2012 Decision, in opting to use the singular letter "a" to
describe "representative of Congress," the Filipino people through
the Framers intended that Congress be entitled to only one (1) seat
in the JBC. Had the intention been otherwise, the Constitution could
have, in no uncertain terms, so provided, as can be read in its other
provisions.
A reading of the 1987 Constitution would reveal that several
provisions were indeed adjusted as to be in tune with the shift to
bicameralism. One example is Section 4, Article VII, which provides
that a tie in the presidential election shall be broken "by a majority
of all the Members of both Houses of the Congress, voting
separately."20 Another is Section 8 thereof which requires the
nominee to replace the Vice-President to be confirmed "by a
majority of all the Members of both Houses of the Congress, voting
separately."21 Similarly, under Section 18, the proclamation of
martial law or the suspension of the privilege of the writ of habeas
corpus may be revoked or continued by the Congress, voting
separately, by a vote of at least a majority of all its Members."22 In
all these provisions, the bicameral nature of Congress was
recognized and, clearly, the corresponding adjustments were made
as to how a matter would be handled and voted upon by its two
Houses.
Thus, to say that the Framers simply failed to adjust Section 8, Article
VIII, by sheer inadvertence, to their decision to shift to a bicameral
form of the legislature, is not persuasive enough. Respondents
cannot just lean on plain oversight to justify a conclusion favorable
to them. It is very clear that the Framers were not keen on adjusting
the provision on congressional representation in the JBC because it
was not in the exercise of its primary function – to legislate. JBC was
created to support the executive power to appoint, and Congress, as
one whole body, was merely assigned a contributory non-legislative
function.
The underlying reason for such a limited participation can easily be
discerned. Congress has two (2) Houses. The need to recognize the
existence and the role of each House is essential considering that the
Constitution employs precise language in laying down the functions
which particular House plays, regardless of whether the two Houses
consummate an official act by voting jointly or separately. Whether
in the exercise of its legislative23 or its non-legislative functions such
as inter alia, the power of appropriation,24 the declaration of an
existence of a state of war,25 canvassing of electoral returns for the
President and Vice-President,26 and impeachment,27 the dichotomy
of each House must be acknowledged and recognized considering
the interplay between these two Houses. In all these instances, each
House is constitutionally granted with powers and functions peculiar
to its nature and with keen consideration to 1) its relationship with
the other chamber; and 2) in consonance with the principle of checks
and balances, as to the other branches of government.
In checkered contrast, there is essentially no interaction between
the two Houses in their participation in the JBC. No mechanism is
required between the Senate and the House of Representatives in
the screening and nomination of judicial officers. Rather, in the
creation of the JBC, the Framers arrived at a unique system by adding
to the four (4) regular members, three (3) representatives from the
major branches of government - the Chief Justice as ex-officio
Chairman (representing the Judicial Department), the Secretary of
Justice (representing the Executive Department), and a
representative of the Congress (representing the Legislative
Department). The total is seven (7), not eight. In so providing, the
Framers simply gave recognition to the Legislature, not because it
was in the interest of a certain constituency, but in reverence to it as
a major branch of government.
On this score, a Member of Congress, Hon. Simeon A. Datumanong,
from the Second District of Maguindanao, submitted his well-
considered position28 to then Chief Justice Reynato S. Puno:
I humbly reiterate my position that there should be only one
representative of Congress in the JBC in accordance with Article VIII,
Section 8 (1) of the 1987 Constitution x x x.
The aforesaid provision is clear and unambiguous and does not need
any further interpretation. Perhaps, it is apt to mention that the oft-
repeated doctrine that "construction and interpretation come only
after it has been demonstrated that application is impossible or
inadequate without them."
Further, to allow Congress to have two representatives in the
Council, with one vote each, is to negate the principle of equality
among the three branches of government which is enshrined in the
Constitution.
In view of the foregoing, I vote for the proposition that the Council
should adopt the rule of single representation of Congress in the JBC
in order to respect and give the right meaning to the above-quoted
provision of the Constitution. (Emphases and underscoring supplied)
On March 14, 2007, then Associate Justice Leonardo A. Quisumbing,
also a JBC Consultant, submitted to the Chief Justice and ex-officio
JBC Chairman his opinion,29 which reads:
8. Two things can be gleaned from the excerpts and citations above:
the creation of the JBC is intended to curtail the influence of politics
in Congress in the appointment of judges, and the understanding is
that seven (7) persons will compose the JBC. As such, the
interpretation of two votes for Congress runs counter to the
intendment of the framers. Such interpretation actually gives
Congress more influence in the appointment of judges. Also, two
votes for Congress would increase the number of JBC members to
eight, which could lead to voting deadlock by reason of even-
numbered membership, and a clear violation of 7 enumerated
members in the Constitution. (Emphases and underscoring supplied)
In an undated position paper,30 then Secretary of Justice Agnes VST
Devanadera opined:
As can be gleaned from the above constitutional provision, the JBC
is composed of seven (7) representatives coming from different
sectors. From the enumeration it is patent that each category of
members pertained to a single individual only. Thus, while we do not
lose sight of the bicameral nature of our legislative department, it is
beyond dispute that Art. VIII, Section 8 (1) of the 1987 Constitution
is explicit and specific that "Congress" shall have only "xxx a
representative." Thus, two (2) representatives from Congress would
increase the number of JBC members to eight (8), a number beyond
what the Constitution has contemplated. (Emphases and
underscoring supplied)
In this regard, the scholarly dissection on the matter by retired
Justice Consuelo Ynares-Santiago, a former JBC consultant, is worth
reiterating.31 Thus:
A perusal of the records of the Constitutional Commission reveals
that the composition of the JBC reflects the Commission’s desire "to
have in the Council a representation for the major elements of the
community." xxx The ex-officio members of the Council consist of
representatives from the three main branches of government while
the regular members are composed of various stakeholders in the
judiciary. The unmistakeable tenor of Article VIII, Section 8(1) was to
treat each ex-officio member as representing one co-equal branch
of government. xxx Thus, the JBC was designed to have seven voting
members with the three ex-officio members having equal say in the
choice of judicial nominees.
xxx
No parallelism can be drawn between the representative of
Congress in the JBC and the exercise by Congress of its legislative
powers under Article VI and constituent powers under Article XVII of
the Constitution. Congress, in relation to the executive and judicial
branches of government, is constitutionally treated as another co-
equal branch in the matter of its representative in the JBC. On the
other hand, the exercise of legislative and constituent powers
requires the Senate and the House of Representatives to coordinate
and act as distinct bodies in furtherance of Congress’ role under our
constitutional scheme. While the latter justifies and, in fact,
necessitates the separateness of the two Houses of Congress as they
relate inter se, no such dichotomy need be made when Congress
interacts with the other two co-equal branches of government.
It is more in keeping with the co-equal nature of the three
governmental branches to assign the same weight to considerations
that any of its representatives may have regarding aspiring nominees
to the judiciary. The representatives of the Senate and the House of
Representatives act as such for one branch and should not have any
more quantitative influence as the other branches in the exercise of
prerogatives evenly bestowed upon the three. Sound reason and
principle of equality among the three branches support this
conclusion. [Emphases and underscoring supplied]
The argument that a senator cannot represent a member of the
House of Representatives in the JBC and vice-versa is, thus,
misplaced. In the JBC, any member of Congress, whether from the
Senate or the House of Representatives, is constitutionally
empowered to represent the entire Congress. It may be a constricted
constitutional authority, but it is not an absurdity.
From this score stems the conclusion that the lone representative of
Congress is entitled to one full vote. This pronouncement effectively
disallows the scheme of splitting the said vote into half (1/2),
between two representatives of Congress. Not only can this
unsanctioned practice cause disorder in the voting process, it is
clearly against the essence of what the Constitution authorized.
After all, basic and reasonable is the rule that what cannot be legally
done directly cannot be done indirectly. To permit or tolerate the
splitting of one vote into two or more is clearly a constitutional
circumvention that cannot be countenanced by the Court. Succinctly
put, when the Constitution envisioned one member of Congress
sitting in the JBC, it is sensible to presume that this representation
carries with him one full vote.
It is also an error for respondents to argue that the President, in
effect, has more influence over the JBC simply because all of the
regular members of the JBC are his appointees. The principle of
checks and balances is still safeguarded because the appointment of
all the regular members of the JBC is subject to a stringent process
of confirmation by the Commission on Appointments, which is
composed of members of Congress.
Respondents’ contention that the current irregular composition of
the JBC should be accepted, simply because it was only questioned
for the first time through the present action, deserves scant
consideration. Well-settled is the rule that acts done in violation of
the Constitution no matter how frequent, usual or notorious cannot
develop or gain acceptance under the doctrine of estoppel or laches,
because once an act is considered as an infringement of the
Constitution it is void from the very beginning and cannot be the
source of any power or authority.
It would not be amiss to point out, however, that as a general rule,
an unconstitutional act is not a law; it confers no rights; it imposes
no duties; it affords no protection; it creates no office; it is
inoperative as if it has not been passed at all. This rule, however, is
not absolute. Under the doctrine of operative facts, actions previous
to the declaration of unconstitutionality are legally recognized. They
are not nullified. This is essential in the interest of fair play. To
reiterate the doctrine enunciated in Planters Products, Inc. v.
Fertiphil Corporation:32
The doctrine of operative fact, as an exception to the general rule,
only applies as a matter of equity and fair play. It nullifies the effects
of an unconstitutional law by recognizing that the existence of a
statute prior to a determination of unconstitutionality is an
operative fact and may have consequences which cannot always be
ignored. The past cannot always be erased by a new judicial
declaration. The doctrine is applicable when a declaration of
unconstitutionality will impose an undue burden on those who have
relied on the invalid law. Thus, it was applied to a criminal case when
a declaration of unconstitutionality would put the accused in double
jeopardy or would put in limbo the acts done by a municipality in
reliance upon a law creating it.33
Under the circumstances, the Court finds the exception applicable in
this case and holds that notwithstanding its finding of
unconstitutionality in the current composition of the JBC, all its prior
official actions are nonetheless valid.
Considering that the Court is duty bound to protect the Constitution
which was ratified by the direct action of the Filipino people, it
cannot correct what respondents perceive as a mistake in its
mandate. Neither can the Court, in the exercise of its power to
interpret the spirit of the Constitution, read into the law something
that is contrary to its express provisions and justify the same as
correcting a perceived inadvertence. To do so would otherwise
sanction the Court action of making amendment to the Constitution
through a judicial pronouncement.
In other words, the Court cannot supply the legislative omission.
According to the rule of casus omissus "a case omitted is to be held
as intentionally omitted."34 "The principle proceeds from a
reasonable certainty that a particular person, object or thing has
been omitted from a legislative enumeration."35 Pursuant to this,
"the Court cannot under its power of interpretation supply the
omission even though the omission may have resulted from
inadvertence or because the case in question was not foreseen or
contemplated."36 "The Court cannot supply what it thinks the
legislature would have supplied had its attention been called to the
omission, as that would be judicial legislation."37
Stated differently, the Court has no power to add another member
by judicial construction.
The call for judicial activism fails to stir the sensibilities of the Court
tasked to guard the Constitution against usurpation. The Court
remains steadfast in confining its powers in the sphere granted by
the Constitution itself. Judicial activism should never be allowed to
become judicial exuberance.38 In cases like this, no amount of
practical logic or convenience can convince the Court to perform
either an excision or an insertion that will change the manifest intent
of the Framers. To broaden the scope of congressional
representation in the JBC is tantamount to the inclusion of a subject
matter which was not included in the provision as enacted. True to
its constitutional mandate, the Court cannot craft and tailor
constitutional provisions in order to accommodate all of situations
no matter how ideal or reasonable the proposed solution may
sound. To the exercise of this intrusion, the Court declines.
WHEREFORE, the Motion for Reconsideration filed by respondents is
hereby DENIED.
The suspension of the effects of the second paragraph of the
dispositive portion of the July 17, 2012 Decision of the Court, which
reads, "This disposition is immediately executory," is hereby LIFTED.
SO ORDERED.
G.R. No. 181704 December 6, 2011
BUREAU OF CUSTOMS EMPLOYEES ASSOCIATION (BOCEA),
represented by its National President (BOCEA National Executive
Council) Mr. Romulo A. Pagulayan, Petitioner,
vs.
HON. MARGARITO B. TEVES, in his capacity as Secretary of the
Department of Finance, HON. NAPOLEON L. MORALES, in his
capacity as Commissioner of the Bureau of Customs, HON. LILIAN
B. HEFTI, in her capacity as Commissioner of the Bureau of Internal
Revenue, Respondents.
The Facts
On January 25, 2005, former President Gloria Macapagal-Arroyo
signed into law R.A. No. 9335 which took effect on February 11,
2005.
In Abakada Guro Party List v. Purisima4 (Abakada), we said of R.A.
No. 9335:
RA [No.] 9335 was enacted to optimize the revenue-generation
capability and collection of the Bureau of Internal Revenue (BIR) and
the Bureau of Customs (BOC). The law intends to encourage BIR and
BOC officials and employees to exceed their revenue targets by
providing a system of rewards and sanctions through the creation of
a Rewards and Incentives Fund (Fund) and a Revenue Performance
Evaluation Board (Board). It covers all officials and employees of the
BIR and the BOC with at least six months of service, regardless of
employment status.
The Fund is sourced from the collection of the BIR and the BOC in
excess of their revenue targets for the year, as determined by the
Development Budget and Coordinating Committee (DBCC). Any
incentive or reward is taken from the fund and allocated to the BIR
and the BOC in proportion to their contribution in the excess
collection of the targeted amount of tax revenue.
The Boards in the BIR and the BOC are composed of the Secretary of
the Department of Finance (DOF) or his/her Undersecretary, the
Secretary of the Department of Budget and Management (DBM) or
his/her Undersecretary, the Director General of the National
Economic Development Authority (NEDA) or his/her Deputy Director
General, the Commissioners of the BIR and the BOC or their Deputy
Commissioners, two representatives from the rank-and-file
employees and a representative from the officials nominated by
their recognized organization.
Each Board has the duty to (1) prescribe the rules and guidelines for
the allocation, distribution and release of the Fund; (2) set criteria
and procedures for removing from the service officials and
employees whose revenue collection falls short of the target; (3)
terminate personnel in accordance with the criteria adopted by the
Board; (4) prescribe a system for performance evaluation; (5)
perform other functions, including the issuance of rules and
regulations and (6) submit an annual report to Congress.
The DOF, DBM, NEDA, BIR, BOC and the Civil Service Commission
(CSC) were tasked to promulgate and issue the implementing rules
and regulations of RA [No.] 9335, to be approved by a Joint
Congressional Oversight Committee created for such purpose.5
The Joint Congressional Oversight Committee approved the assailed
IRR on May 22, 2006. Subsequently, the IRR was published on May
30, 2006 in two newspapers of general circulation, the Philippine
Star and the Manila Standard, and became effective fifteen (15) days
later.6
Contending that the enactment and implementation of R.A. No.
9335 are tainted with constitutional infirmities in violation of the
fundamental rights of its members, petitioner Bureau of Customs
Employees Association (BOCEA), an association of rank-and-file
employees of the Bureau of Customs (BOC), duly registered with the
Department of Labor and Employment (DOLE) and the Civil Service
Commission (CSC), and represented by its National President, Mr.
Romulo A. Pagulayan (Pagulayan), directly filed the present petition
before this Court against respondents Margarito B. Teves, in his
capacity as Secretary of the Department of Finance (DOF),
Commissioner Napoleon L. Morales (Commissioner Morales), in his
capacity as BOC Commissioner, and Lilian B. Hefti, in her capacity as
Commissioner of the Bureau of Internal Revenue (BIR). In its petition,
BOCEA made the following averments:
Sometime in 2008, high-ranking officials of the BOC pursuant to the
mandate of R.A. No. 9335 and its IRR, and in order to comply with
the stringent deadlines thereof, started to disseminate Collection
District Performance Contracts7 (Performance Contracts) for the
lower ranking officials and rank-and-file employees to sign. The
Performance Contract pertinently provided:
xxxx
WHEREAS, pursuant to the provisions of Sec. 25 (b) of the
Implementing Rules and Regulations (IRR) of the Attrition Act of
2005, that provides for the setting of criteria and procedures for
removing from the service Officials and Employees whose revenue
collection fall short of the target in accordance with Section 7 of
Republic Act 9335.
xxxx
NOW, THEREFORE, for and in consideration of the foregoing
premises, parties unto this Agreement hereby agree and so agreed
to perform the following:
xxxx
2. The "Section 2, PA/PE" hereby accepts the allocated Revenue
Collection Target and further accepts/commits to meet the said
target under the following conditions:
a.) That he/she will meet the allocated Revenue Collection Target
and thereby undertakes and binds himself/herself that in the event
the revenue collection falls short of the target with due
consideration of all relevant factors affecting the level of collection
as provided in the rules and regulations promulgated under the Act
and its IRR, he/she will voluntarily submit to the provisions of Sec. 25
(b) of the IRR and Sec. 7 of the Act; and
b.) That he/she will cascade and/or allocate to respective
Appraisers/Examiners or Employees under his/her section the said
Revenue Collection Target and require them to execute a
Performance Contract, and direct them to accept their individual
target. The Performance Contract executed by the respective
Examiners/Appraisers/Employees shall be submitted to the Office of
the Commissioner through the LAIC on or before March 31, 2008.
x x x x8
BOCEA opined that the revenue target was impossible to meet due
to the Government’s own policies on reduced tariff rates and tax
breaks to big businesses, the occurrence of natural calamities and
because of other economic factors. BOCEA claimed that some BOC
employees were coerced and forced to sign the Performance
Contract. The majority of them, however, did not sign. In particular,
officers of BOCEA were summoned and required to sign the
Performance Contracts but they also refused. To ease the brewing
tension, BOCEA claimed that its officers sent letters, and sought
several dialogues with BOC officials but the latter refused to heed
them.
In addition, BOCEA alleged that Commissioner Morales exerted
heavy pressure on the District Collectors, Chiefs of Formal Entry
Divisions, Principal Customs Appraisers and Principal Customs
Examiners of the BOC during command conferences to make them
sign their Performance Contracts. Likewise, BOC Deputy
Commissioner Reynaldo Umali (Deputy Commissioner Umali)
individually spoke to said personnel to convince them to sign said
contracts. Said personnel were threatened that if they do not sign
their respective Performance Contracts, they would face possible
reassignment, reshuffling, or worse, be placed on floating status.
Thus, all the District Collectors, except a certain Atty. Carlos So of the
Collection District III of the Ninoy Aquino International Airport
(NAIA), signed the Performance Contracts.
BOCEA further claimed that Pagulayan was constantly harassed and
threatened with lawsuits. Pagulayan approached Deputy
Commissioner Umali to ask the BOC officials to stop all forms of
harassment, but the latter merely said that he would look into the
matter. On February 5, 2008, BOCEA through counsel wrote the
Revenue Performance Evaluation Board (Board) to desist from
implementing R.A. No. 9335 and its IRR and from requiring rank-and-
file employees of the BOC and BIR to sign Performance Contracts.9 In
his letter-reply10 dated February 12, 2008, Deputy Commissioner
Umali denied having coerced any BOC employee to sign a
Performance Contract. He also defended the BOC, invoking its
mandate of merely implementing the law. Finally, Pagulayan and
BOCEA’s counsel, on separate occasions, requested for a certified
true copy of the Performance Contract from Deputy Commissioner
Umali but the latter failed to furnish them a copy.11
This petition was filed directly with this Court on March 3, 2008.
BOCEA asserted that in view of the unconstitutionality of R.A. No.
9335 and its IRR, and their adverse effects on the constitutional
rights of BOC officials and employees, direct resort to this Court is
justified. BOCEA argued, among others, that its members and other
BOC employees are in great danger of losing their jobs should they
fail to meet the required quota provided under the law, in clear
violation of their constitutional right to security of tenure, and at
their and their respective families’ prejudice.
In their Comment,12 respondents, through the Office of the Solicitor
General (OSG), countered that R.A. No. 9335 and its IRR do not
violate the right to due process and right to security of tenure of BIR
and BOC employees. The OSG stressed that the guarantee of security
of tenure under the 1987 Constitution is not a guarantee of
perpetual employment. R.A. No. 9335 and its IRR provided a
reasonable and valid ground for the dismissal of an employee which
is germane to the purpose of the law. Likewise, R.A. No. 9335 and its
IRR provided that an employee may only be separated from the
service upon compliance with substantive and procedural due
process. The OSG added that R.A. No. 9335 and its IRR must enjoy
the presumption of constitutionality.
In its Reply,13 BOCEA claimed that R.A. No. 9335 employs means that
are unreasonable to achieve its stated objectives; that the law is
unduly oppressive of BIR and BOC employees as it shifts the extreme
burden upon their shoulders when the Government itself has
adopted measures that make collection difficult such as reduced
tariff rates to almost zero percent and tax exemption of big
businesses; and that the law is discriminatory of BIR and BOC
employees. BOCEA manifested that only the high-ranking officials of
the BOC benefited largely from the reward system under R.A. No.
9335 despite the fact that they were not the ones directly toiling to
collect revenue. Moreover, despite the BOCEA’s numerous
requests,14 BOC continually refused to provide BOCEA the
Expenditure Plan on how such reward was distributed.
Since BOCEA was seeking similar reliefs as that of the petitioners in
Abakada Guro Party List v. Purisima, BOCEA filed a Motion to
Consolidate15 the present case with Abakada on April 16, 2008.
However, pending action on said motion, the Court rendered its
decision in Abakada on August 14, 2008. Thus, the consolidation of
this case with Abakada was rendered no longer possible.16
In Abakada, this Court, through then Associate Justice, now Chief
Justice Renato C. Corona, declared Section 1217of R.A. No. 9335
creating a Joint Congressional Oversight Committee to approve the
IRR as unconstitutional and violative of the principle of separation of
powers. However, the constitutionality of the remaining provisions
of R.A. No. 9335 was upheld pursuant to Section 1318 of R.A. No.
9335. The Court also held that until the contrary is shown, the IRR of
R.A. No. 9335 is presumed valid and effective even without the
approval of the Joint Congressional Oversight Committee.19
Notwithstanding our ruling in Abakada, both parties complied with
our Resolution20 dated February 10, 2009, requiring them to submit
their respective Memoranda.
The Issues
BOCEA raises the following issues:
I.
WHETHER OR NOT THE ATTRITION LAW, REPUBLIC ACT [NO.] 9335,
AND ITS IMPLEMENTING RULES AND REGULATIONS ARE
UNCONSTITUTIONAL AS THESE VIOLATE THE RIGHT TO DUE
PROCESS OF THE COVERED BIR AND BOC OFFICIALS AND
EMPLOYEES[;]
II.
WHETHER OR NOT THE ATTRITION LAW, REPUBLIC ACT [NO.] 9335,
AND ITS IMPLEMENTING RULES AND REGULATIONS ARE
UNCONSTITUTIONAL AS THESE VIOLATE THE RIGHT OF BIR AND BOC
OFFICIALS AND EMPLOYEES TO THE EQUAL PROTECTION OF THE
LAWS[;]
III.
WHETHER OR NOT REPUBLIC ACT [NO.] 9335 AND ITS
IMPLEMENTING RULES AND REGULATIONS VIOLATE THE RIGHT TO
SECURITY OF TENURE OF BIR AND BOC OFFICIALS AND EMPLOYEES
AS ENSHRINED UNDER SECTION 2 (3), ARTICLE IX (B) OF THE
CONSTITUTION[;]
IV.
WHETHER OR NOT REPUBLIC ACT [NO.] 9335 AND ITS
IMPLEMENTING RULES AND REGULATIONS ARE
UNCONSTITUTIONAL AS THEY CONSTITUTE UNDUE DELEGATION OF
LEGISLATIVE POWERS TO THE REVENUE PERFORMANCE
EVALUATION BOARD IN VIOLATION OF THE PRINCIPLE OF
SEPARATION OF POWERS ENSHRINED IN THE CONSTITUTION[; AND]
V.
WHETHER OR NOT REPUBLIC ACT [NO.] 9335 IS A BILL OF ATTAINDER
AND HENCE[,] UNCONSTITUTIONAL BECAUSE IT INFLICTS
PUNISHMENT THROUGH LEGISLATIVE FIAT UPON A PARTICULAR
GROUP OR CLASS OF OFFICIALS AND EMPLOYEES WITHOUT TRIAL.21
BOCEA manifested that while waiting for the Court to give due
course to its petition, events unfolded showing the patent
unconstitutionality of R.A. No. 9335. It narrated that during the first
year of the implementation of R.A. No. 9335, BOC employees
exerted commendable efforts to attain their revenue target of ₱196
billion which they surpassed by as much as ₱2 billion for that year
alone. However, this was attained only because oil companies made
advance tax payments to BOC. Moreover, BOC employees were
given their "reward" for surpassing said target only in 2008, the
distribution of which they described as unjust, unfair, dubious and
fraudulent because only top officials of BOC got the huge sum of
reward while the employees, who did the hard task of collecting,
received a mere pittance of around ₱8,500.00. In the same manner,
the Bonds Division of BOC-NAIA collected 400+% of its designated
target but the higher management gave out to the employees a
measly sum of ₱8,500.00 while the top level officials partook of
millions of the excess collections. BOCEA relies on a piece of
information revealed by a newspaper showing the list of BOC
officials who apparently earned huge amounts of money by way of
reward.22 It claims that the recipients thereof included lawyers,
support personnel and other employees, including a dentist, who
performed no collection functions at all. These alleged anomalous
selection, distribution and allocation of rewards was due to the
failure of R.A. No. 9335 to set out clear guidelines.23
In addition, BOCEA avers that the Board initiated the first few cases
of attrition for the Fiscal Year 2007 by subjecting five BOC officials
from the Port of Manila to attrition despite the fact that the Port of
Manila substantially complied with the provisions of R.A. No. 9335.
It is thus submitted that the selection of these officials for attrition
without proper investigation was nothing less than arbitrary.
Further, the legislative and executive departments’ promulgation of
issuances and the Government’s accession to regional trade
agreements have caused a significant diminution of the tariff rates,
thus, decreasing over-all collection. These unrealistic settings of
revenue targets seriously affect BIR and BOC employees tasked with
the burden of collection, and worse, subjected them to attrition.24
BOCEA assails the constitutionality of R.A. No. 9335 and its IRR on
the following grounds:
1. R.A. No. 9335 and its IRR violate the BIR and BOC employees’ right
to due process because the termination of employees who had not
attained their revenue targets for the year is peremptory and done
without any form of hearing to allow said employees to ventilate
their side. Moreover, R.A. No. 9335 and its IRR do not comply with
the requirements under CSC rules and regulations as the dismissal in
this case is immediately executory. Such immediately executory
nature of the Board’s decision negates the remedies available to an
employee as provided under the CSC rules.
2. R.A. No. 9335 and its IRR violate the BIR and BOC employees’ right
to equal protection of the law because R.A. No. 9335 and its IRR
unduly discriminates against BIR and BOC employees as compared
to employees of other revenue generating government agencies like
the Philippine Amusement and Gaming Corporation, Department of
Transportation and Communication, the Air Transportation Office,
the Land Transportation Office, and the Philippine Charity
Sweepstakes Office, among others, which are not subject to
attrition.
3. R.A. No. 9335 and its IRR violate the BIR and BOC employees’ right
to security of tenure because R.A. No. 9335 and its IRR effectively
removed remedies provided in the ordinary course of administrative
procedure afforded to government employees. The law likewise
created another ground for dismissal, i.e., non-attainment of
revenue collection target, which is not provided under CSC rules and
which is, by its nature, unpredictable and therefore arbitrary and
unreasonable.
4. R.A. No. 9335 and its IRR violate the 1987 Constitution because
Congress granted to the Revenue Performance Evaluation Board
(Board) the unbridled discretion of formulating the criteria for
termination, the manner of allocating targets, the distribution of
rewards and the determination of relevant factors affecting the
targets of collection, which is tantamount to undue delegation of
legislative power.
5. R.A. No. 9335 is a bill of attainder because it inflicts punishment
upon a particular group or class of officials and employees without
trial. This is evident from the fact that the law confers upon the
Board the power to impose the penalty of removal upon employees
who do not meet their revenue targets; that the same is without the
benefit of hearing; and that the removal from service is immediately
executory. Lastly, it disregards the presumption of regularity in the
performance of the official functions of a public officer.25
On the other hand, respondents through the OSG stress that except
for Section 12 of R.A. No. 9335, R.A. No. 9335 and its IRR are
constitutional, as per our ruling in Abakada. Nevertheless, the OSG
argues that the classification of BIR and BOC employees as public
officers under R.A. No. 9335 is based on a valid and substantial
distinction since the revenue generated by the BIR and BOC is
essentially in the form of taxes, which is the lifeblood of the State,
while the revenue produced by other agencies is merely incidental
or secondary to their governmental functions; that in view of their
mandate, and for purposes of tax collection, the BIR and BOC are sui
generis; that R.A. No. 9335 complies with the "completeness" and
"sufficient standard" tests for the permissive delegation of legislative
power to the Board; that the Board exercises its delegated power
consistent with the policy laid down in the law, that is, to optimize
the revenue generation capability and collection of the BIR and the
BOC; that parameters were set in order that the Board may identify
the officials and employees subject to attrition, and the proper
procedure for their removal in case they fail to meet the targets set
in the Performance Contract were provided; and that the rights of
BIR and BOC employees to due process of law and security of tenure
are duly accorded by R.A. No. 9335. The OSG likewise maintains that
there was no encroachment of judicial power in the enactment of
R.A. No. 9335 amounting to a bill of attainder since R.A. No. 9335
and its IRR merely defined the offense and provided for the penalty
that may be imposed. Finally, the OSG reiterates that the separation
from the service of any BIR or BOC employee under R.A. No. 9335
and its IRR shall be done only upon due consideration of all relevant
factors affecting the level of collection, subject to Civil Service laws,
rules and regulations, and in compliance with substantive and
procedural due process. The OSG opines that the Performance
Contract, far from violating the BIR and BOC employees’ right to due
process, actually serves as a notice of the revenue target they have
to meet and the possible consequences of failing to meet the same.
More, there is nothing in the law which prevents the aggrieved party
from appealing the unfavorable decision of dismissal.26
In essence, the issues for our resolution are:
1. Whether there is undue delegation of legislative power to the
Board;
2. Whether R.A. No. 9335 and its IRR violate the rights of BOCEA’s
members to: (a) equal protection of laws, (b) security of tenure and
(c) due process; and
3. Whether R.A. No. 9335 is a bill of attainder.
Our Ruling
Prefatorily, we note that it is clear, and in fact uncontroverted, that
BOCEA has locus standi. BOCEA impugns the constitutionality of R.A.
No. 9335 and its IRR because its members, who are rank-and-file
employees of the BOC, are actually covered by the law and its IRR.
BOCEA’s members have a personal and substantial interest in the
case, such that they have sustained or will sustain, direct injury as a
result of the enforcement of R.A. No. 9335 and its IRR.27
However, we find no merit in the petition and perforce dismiss the
same.
It must be noted that this is not the first time the constitutionality of
R.A. No. 9335 and its IRR are being challenged. The Court already
settled the majority of the same issues raised by BOCEA in our
decision in Abakada, which attained finality on September 17, 2008.
As such, our ruling therein is worthy of reiteration in this case.
We resolve the first issue in the negative.
The principle of separation of powers ordains that each of the three
great branches of government has exclusive cognizance of and is
supreme in matters falling within its own constitutionally allocated
sphere.28 Necessarily imbedded in this doctrine is the principle of
non-delegation of powers, as expressed in the Latin maxim potestas
delegata non delegari potest, which means "what has been
delegated, cannot be delegated." This doctrine is based on the
ethical principle that such delegated power constitutes not only a
right but a duty to be performed by the delegate through the
instrumentality of his own judgment and not through the
intervening mind of another.29However, this principle of non-
delegation of powers admits of numerous exceptions,30 one of which
is the delegation of legislative power to various specialized
administrative agencies like the Board in this case.
The rationale for the aforementioned exception was clearly
explained in our ruling in Gerochi v. Department of Energy,31 to wit:
In the face of the increasing complexity of modern life, delegation of
legislative power to various specialized administrative agencies is
allowed as an exception to this principle. Given the volume and
variety of interactions in today’s society, it is doubtful if the
legislature can promulgate laws that will deal adequately with and
respond promptly to the minutiae of everyday life. Hence, the need
to delegate to administrative bodies — the principal agencies tasked
to execute laws in their specialized fields — the authority to
promulgate rules and regulations to implement a given statute and
effectuate its policies. All that is required for the valid exercise of this
power of subordinate legislation is that the regulation be germane
to the objects and purposes of the law and that the regulation be not
in contradiction to, but in conformity with, the standards prescribed
by the law. These requirements are denominated as the
completeness test and the sufficient standard test.32
Thus, in Abakada, we held,
Two tests determine the validity of delegation of legislative power:
(1) the completeness test and (2) the sufficient standard test. A law
is complete when it sets forth therein the policy to be executed,
carried out or implemented by the delegate. It lays down a sufficient
standard when it provides adequate guidelines or limitations in the
law to map out the boundaries of the delegate’s authority and
prevent the delegation from running riot. To be sufficient, the
standard must specify the limits of the delegate’s authority,
announce the legislative policy and identify the conditions under
which it is to be implemented.
RA [No.] 9335 adequately states the policy and standards to guide
the President in fixing revenue targets and the implementing
agencies in carrying out the provisions of the law. Section 2 spells
out the policy of the law:
"SEC. 2. Declaration of Policy. — It is the policy of the State to
optimize the revenue-generation capability and collection of the
Bureau of Internal Revenue (BIR) and the Bureau of Customs (BOC)
by providing for a system of rewards and sanctions through the Revenue targets are based on the original estimated revenue
creation of a Rewards and Incentives Fund and a Revenue collection expected respectively of the BIR and the BOC for a given
Performance Evaluation Board in the above agencies for the purpose fiscal year as approved by the DBCC and stated in the BESF submitted
of encouraging their officials and employees to exceed their revenue by the President to Congress. Thus, the determination of revenue
targets." targets does not rest solely on the President as it also undergoes the
Section 4 "canalized within banks that keep it from overflowing" the scrutiny of the DBCC.
delegated power to the President to fix revenue targets: On the other hand, Section 7 specifies the limits of the Board’s
"SEC. 4. Rewards and Incentives Fund. — A Rewards and Incentives authority and identifies the conditions under which officials and
Fund, hereinafter referred to as the Fund, is hereby created, to be employees whose revenue collection falls short of the target by at
sourced from the collection of the BIR and the BOC in excess of their least 7.5% may be removed from the service:
respective revenue targets of the year, as determined by the "SEC. 7. Powers and Functions of the Board. — The Board in the
Development Budget and Coordinating Committee (DBCC), in the agency shall have the following powers and functions:
following percentages: xxx xxx xxx
Excess of Collection [Over] the Revenue Percent (%) of the (b) To set
Excess the criteria
Collection to and procedures for removing from service
Targets Accrue to the Fund officials and employees whose revenue collection falls short of the
30% or below — 15% target by at least seven and a half percent (7.5%), with due
More than 30% — consideration
15% of the first 30% plus 20% of of all
therelevant factors affecting the level of collection
remaining excess as provided in the rules and regulations promulgated under this Act,
The Fund shall be deemed automatically appropriated the year subject to civil service laws, rules and regulations and compliance
immediately following the year when the revenue collection target with substantive and procedural due process: Provided, That the
was exceeded and shall be released on the same fiscal year. following exemptions shall apply:
Revenue targets shall refer to the original estimated revenue 1. Where the district or area of responsibility is newly-created, not
collection expected of the BIR and the BOC for a given fiscal year as exceeding two years in operation, and has no historical record of
stated in the Budget of Expenditures and Sources of Financing (BESF) collection performance that can be used as basis for evaluation; and
submitted by the President to Congress. The BIR and the BOC shall 2. Where the revenue or customs official or employee is a recent
submit to the DBCC the distribution of the agencies’ revenue targets transferee in the middle of the period under consideration unless
as allocated among its revenue districts in the case of the BIR, and the transfer was due to nonperformance of revenue targets or
the collection districts in the case of the BOC. potential nonperformance of revenue targets: Provided, however,
xxx xxx x x x" That when the district or area of responsibility covered by revenue
or customs officials or employees has suffered from economic
difficulties brought about by natural calamities or force majeure or
economic causes as may be determined by the Board, termination
shall be considered only after careful and proper review by the
Board.
(c) To terminate personnel in accordance with the criteria adopted
in the preceding paragraph: Provided, That such decision shall be
immediately executory: Provided, further, That the application of
the criteria for the separation of an official or employee from service
under this Act shall be without prejudice to the application of other
relevant laws on accountability of public officers and employees,
such as the Code of Conduct and Ethical Standards of Public Officers
and Employees and the Anti-Graft and Corrupt Practices Act;
xxx xxx x x x"
At any rate, this Court has recognized the following as sufficient
standards: "public interest", "justice and equity", "public
convenience and welfare" and "simplicity, economy and welfare". In
this case, the declared policy of optimization of the revenue-
generation capability and collection of the BIR and the BOC is infused
with public interest.33
We could not but deduce that the completeness test and the
sufficient standard test were fully satisfied by R.A. No. 9335, as
evident from the aforementioned Sections 2, 4 and 7 thereof.
Moreover, Section 534 of R.A. No. 9335 also provides for the
incentives due to District Collection Offices. While it is apparent that
the last paragraph of Section 5 provides that "[t]he allocation,
distribution and release of the district reward shall likewise be
prescribed by the rules and regulations of the Revenue Performance
and Evaluation Board," Section 7 (a)35 of R.A. No. 9335 clearly
mandates and sets the parameters for the Board by providing that
such rules and guidelines for the allocation, distribution and release
of the fund shall be in accordance with Sections 4 and 5 of R.A. No.
9335. In sum, the Court finds that R.A. No. 9335, read and
appreciated in its entirety, is complete in all its essential terms and
conditions, and that it contains sufficient standards as to negate
BOCEA’s supposition of undue delegation of legislative power to the
Board.
Similarly, we resolve the second issue in the negative.
Equal protection simply provides that all persons or things similarly
situated should be treated in a similar manner, both as to rights
conferred and responsibilities imposed. The purpose of the equal
protection clause is to secure every person within a state’s
jurisdiction against intentional and arbitrary discrimination, whether
occasioned by the express terms of a statute or by its improper
execution through the state’s duly constituted authorities. In other
words, the concept of equal justice under the law requires the state
to govern impartially, and it may not draw distinctions between
individuals solely on differences that are irrelevant to a legitimate
governmental objective.361awphil
Thus, on the issue on equal protection of the laws, we held in
Abakada:
The equal protection clause recognizes a valid classification, that is,
a classification that has a reasonable foundation or rational basis and
not arbitrary. With respect to RA [No.] 9335, its expressed public
policy is the optimization of the revenue-generation capability and
collection of the BIR and the BOC. Since the subject of the law is the
revenue-generation capability and collection of the BIR and the BOC,
the incentives and/or sanctions provided in the law should logically
pertain to the said agencies. Moreover, the law concerns only the
BIR and the BOC because they have the common distinct primary
function of generating revenues for the national government
through the collection of taxes, customs duties, fees and charges.
The BIR performs the following functions:
"Sec. 18. The Bureau of Internal Revenue. — The Bureau of Internal
Revenue, which shall be headed by and subject to the supervision
and control of the Commissioner of Internal Revenue, who shall be
appointed by the President upon the recommendation of the
Secretary [of the DOF], shall have the following functions:
(1) Assess and collect all taxes, fees and charges and account for all
revenues collected;
(2) Exercise duly delegated police powers for the proper
performance of its functions and duties;
(3) Prevent and prosecute tax evasions and all other illegal economic
activities;
(4) Exercise supervision and control over its constituent and
subordinate units; and
(5) Perform such other functions as may be provided by law.
xxx xxx x x x"
On the other hand, the BOC has the following functions:
"Sec. 23. The Bureau of Customs. — The Bureau of Customs which
shall be headed and subject to the management and control of the
Commissioner of Customs, who shall be appointed by the President
upon the recommendation of the Secretary [of the DOF] and
hereinafter referred to as Commissioner, shall have the following
functions:
(1) Collect custom duties, taxes and the corresponding fees, charges
and penalties;
(2) Account for all customs revenues collected;
(3) Exercise police authority for the enforcement of tariff and
customs laws;
(4) Prevent and suppress smuggling, pilferage and all other economic
frauds within all ports of entry;
(5) Supervise and control exports, imports, foreign mails and the
clearance of vessels and aircrafts in all ports of entry;
(6) Administer all legal requirements that are appropriate;
(7) Prevent and prosecute smuggling and other illegal activities in all
ports under its jurisdiction;
(8) Exercise supervision and control over its constituent units;
(9) Perform such other functions as may be provided by law.
xxx xxx x x x"
Both the BIR and the BOC are bureaus under the DOF. They
principally perform the special function of being the
instrumentalities through which the State exercises one of its great
inherent functions — taxation. Indubitably, such substantial
distinction is germane and intimately related to the purpose of the
law. Hence, the classification and treatment accorded to the BIR and
the BOC under RA [No.] 9335 fully satisfy the demands of equal
protection.37
As it was imperatively correlated to the issue on equal protection,
the issues on the security of tenure of affected BIR and BOC officials
and employees and their entitlement to due process were also
settled in Abakada:
Clearly, RA [No.] 9335 in no way violates the security of tenure of
officials and employees of the BIR and the BOC. The guarantee of
security of tenure only means that an employee cannot be dismissed
from the service for causes other than those provided by law and
only after due process is accorded the employee. In the case of RA
[No.] 9335, it lays down a reasonable yardstick for removal (when
the revenue collection falls short of the target by at least 7.5%) with
due consideration of all relevant factors affecting the level of
collection. This standard is analogous to inefficiency and
incompetence in the performance of official duties, a ground for
disciplinary action under civil service laws. The action for removal is
also subject to civil service laws, rules and regulations and
compliance with substantive and procedural due process.38
In addition, the essence of due process is simply an opportunity to
be heard, or as applied to administrative proceedings, a fair and
reasonable opportunity to explain one’s side.39 BOCEA’s
apprehension of deprivation of due process finds its answer in
Section 7 (b) and (c) of R.A. No. 9335.40 The concerned BIR or BOC
official or employee is not simply given a target revenue collection
and capriciously left without any quarter. R.A. No. 9335 and its IRR
clearly give due consideration to all relevant factors41 that may affect
the level of collection. In the same manner, exemptions42 were set,
contravening BOCEA’s claim that its members may be removed for
unattained target collection even due to causes which are beyond
their control. Moreover, an employee’s right to be heard is not at all
prevented and his right to appeal is not deprived of him.43 In fine, a
BIR or BOC official or employee in this case cannot be arbitrarily
removed from the service without according him his constitutional
right to due process. No less than R.A. No. 9335 in accordance with
the 1987 Constitution guarantees this.
We have spoken, and these issues were finally laid to rest. Now, the
Court proceeds to resolve the last, but new issue raised by BOCEA,
that is, whether R.A. No. 9335 is a bill of attainder proscribed under
Section 22,44 Article III of the 1987 Constitution.
On this score, we hold that R.A. No. 9335 is not a bill of attainder. A
bill of attainder is a legislative act which inflicts punishment on
individuals or members of a particular group without a judicial trial.
Essential to a bill of attainder are a specification of certain individuals
or a group of individuals, the imposition of a punishment, penal or
otherwise, and the lack of judicial trial.451avvphi1
In his Concurring Opinion in Tuason v. Register of Deeds, Caloocan
City,46 Justice Florentino P. Feliciano traces the roots of a Bill of
Attainder, to wit:
Bills of attainder are an ancient instrument of tyranny. In England a
few centuries back, Parliament would at times enact bills or statutes
which declared certain persons attainted and their blood corrupted
so that it lost all heritable quality (Ex Parte Garland, 4 Wall. 333, 18
L.Ed. 366 [1867]). In more modern terms, a bill of attainder is
essentially a usurpation of judicial power by a legislative body. It
envisages and effects the imposition of a penalty — the deprivation
of life or liberty or property — not by the ordinary processes of
judicial trial, but by legislative fiat. While cast in the form of special
legislation, a bill of attainder (or bill of pains and penalties, if it
prescribed a penalty other than death) is in intent and effect a penal
judgment visited upon an identified person or group of persons (and
not upon the general community) without a prior charge or demand,
without notice and hearing, without an opportunity to defend,
without any of the civilized forms and safeguards of the judicial
process as we know it (People v. Ferrer, 48 SCRA 382 [1972];
Cummings and Missouri, 4 Wall. 277, 18 L. Ed. 356 [1867]; U.S. v.
Lovett, 328, U.S. 303, 90 L.Ed. 1252 [1945]; U.S. v. Brown, 381 U.S.
437, 14 L.Ed. 2d. 484 [1965]. Such is the archetypal bill of attainder
wielded as a means of legislative oppression. x x x47
R.A. No. 9335 does not possess the elements of a bill of attainder. It
does not seek to inflict punishment without a judicial trial. R.A. No.
9335 merely lays down the grounds for the termination of a BIR or
BOC official or employee and provides for the consequences thereof.
The democratic processes are still followed and the constitutional
rights of the concerned employee are amply protected.
A final note.
We find that BOCEA’s petition is replete with allegations of defects
and anomalies in allocation, distribution and receipt of rewards.
While BOCEA intimates that it intends to curb graft and corruption
in the BOC in particular and in the government in general which is
nothing but noble, these intentions do not actually pertain to the
constitutionality of R.A. No. 9335 and its IRR, but rather in the
faithful implementation thereof. R.A. No. 9335 itself does not
tolerate these pernicious acts of graft and corruption.48 As the Court
is not a trier of facts, the investigation on the veracity of, and the
proper action on these anomalies are in the hands of the Executive
branch. Correlatively, the wisdom for the enactment of this law
remains within the domain of the Legislative branch. We merely
interpret the law as it is. The Court has no discretion to give statutes
a meaning detached from the manifest intendment and language
thereof.49 Just like any other law, R.A. No. 9335 has in its favor the
presumption of constitutionality, and to justify its nullification, there
must be a clear and unequivocal breach of the Constitution and not
one that is doubtful, speculative, or argumentative.50 We have so
declared in Abakada, and we now reiterate that R.A. No. 9335 and
its IRR are constitutional.
WHEREFORE, the present petition for certiorari and prohibition with
prayer for injunctive relief/s is DISMISSED.
No costs.
SO ORDERED.
Adm. Case No. 6475 January 30, 2013
FE A. YLAYA, Complainant,
vs.
ATTY. GLENN CARLOS GACOTT, Respondent.
DECISION
BRION, J.:
For the Court's consideration is the disbarment complaint1 tiled by
Fe A. Ylaya (complainant) against Atty. Glenn Carlos Gacott
(respondent) who allegedly deceived the complainant and her late
husband, Laurentino L. Ylaya, into signing a "preparatory" Deed of
Sale that the respondent converted into a Deed of Absolute Sale in
favor of his relatives.
After the submission of the respondent's comment to the complaint,
the Court referred the complaint to the Commission on Bar
Discipline ofthe Integrated Bar of the Philippines (IBP) for
investigation, evaluation and recommendation.
The complainant alleged that she and her late husband are the
registered owners of two (2) parcels of land covered by Transfer
Certificate of Title ( TCT) Nos. 162632 and 162633 located at
Barangay Sta. Lourdes, Puerto Princesa City. Prior to the acquisition
of these properties, TCT No. 162632 (property) was already the
subject of expropriation proceedings filed by the City Government of
Puerto Princesa (City Government) on May 23, 1996 against its
former registered owner, Cirilo Arellano. The expropriation case was
filed with the Regional Trial Court (RTC) of Palawan and Puerto
Princesa, Branch 95, and was docketed as Civil Case No. 2902. The
RTC already fixed the price and issued an order for the City
Government to deposit ₱6,000,000.00 as just compensation for the
property.2
The respondent briefly represented the complainant and her late
husband in the expropriation case as intervenors for being the new
registered owners of the property. The complainant alleged that the
respondent convinced them to sign a "preparatory deed of sale" for
the sale of the property, but he left blank the space for the name of
the buyer and for the amount of consideration. The respondent
further alleged that the deed would be used in the sale to the City
Government when the RTC issues the order to transfer the
titles.3 The respondent then fraudulently – without their knowledge
and consent, and contrary to their understanding – converted the
"preparatory deed of sale" into a Deed of Absolute Sale dated June
4, 2001,4 selling the subject property to Reynold So and Sylvia Carlos
So for ₱200,000.00.5
The complainant denied that she and Laurentino were paid the
₱200,000.00 purchase price or that they would sell the property "for
such a measly sum" when they stood to get at least ₱6,000,000.00
as just compensation.6
The complainant also claimed that the respondent notarized the
Deed of Absolute Sale dated June 4, 2001 even though Reynold and
Sylvia (his mother’s sister) are his uncle and his aunt, respectively.7
The respondent denied all the allegations in the complaint.8
The respondent argued that the complainant’s greed to get the just
Compensation9 caused her to file this "baseless, unfounded and
malicious" disbarment case.10 He claimed that the sale was their
voluntary transaction and that he "simply ratified the
document."11 He also claimed that Reynold and Laurentino had
originally jointly purchased the properties from Cirilo Arellano on
July 10, 2000; that they were co-owners for some time; and that
Laurentino subsequently sold his share to Reynold under a Deed of
Absolute Sale dated June 4, 2001.12
The respondent specifically denied asking the complainant and her
late husband to execute any "preparatory deed of sale" in favor of
the City Government.13 He also denied that the Deed of Absolute
Sale contained blanks when they signed it.14 That he filed for the
spouses Ylaya and Reynold an opposition to the just compensation
the RTC fixed proved that there was no agreement to use the
document for the expropriation case.15 He also argued that it was
clear from the document that the intended buyer was a natural
person, not a juridical person, because there were spaces for the
buyer’s legal age, marital status, and citizenship,16 and he was even
constrained to file a subsequent Motion to Intervene on behalf of
Reynold because the complainant "maliciously retained" the TCTs to
the subject properties after borrowing them from his office.17 Lastly,
he denied violating the Rules on Notarial Practice.18
On September 4, 2006, the respondent filed a Motion to Resolve or
Decide the Case dated August 24, 2006 praying for the early
resolution of the complaint.19
On December 5, 2006, the complainant filed an Ex Parte Motion to
Withdraw the Verified Complaint and To Dismiss the Case dated
November 14, 2006.20
On February 28, 2008, the complainant executed an
Affidavit21 affirming and confirming the existence, genuineness and
due execution of the Deed of Absolute Sale notarized on March 6,
2000;22 the Memorandum of Agreement (MOA) dated April 19,
2000;23 and the Deed of Absolute Sale notarized in 2001.24 The
respondent submitted this Affidavit to the IBP as an attachment to
his Motion for Reconsideration of April 21, 2008.25
The IBP’s Findings
In her Report and Recommendation dated November 19, 2007, IBP
Commissioner Anna Caridad Sazon-Dupaya found the respondent
administratively liable for violating Canon 1, Rule 1.01 (A lawyer shall
not engage in unlawful, dishonest, immoral or deceitful conduct) and
Canon 16 ("A lawyer shall hold in trust all moneys and properties of
his client that may come into his possession) of the Code of
Professional Responsibility, and Section 3(c), Rule IV of A.M. No. 02-
8-13-SC (2004 Rules on Notarial Practice).26 She recommended his
suspension from the practice of law for a period of six (6) months.27
In its Resolution No. XVIII-2007-30228 dated December 14, 2007, the
IBP Board of Governors adopted the IBP Commissioner’s finding, but
increased the penalty imposed to two (2) years suspension and a
warning:
RESOLVED to ADOPT and APPROVE, as it is hereby unanimously
ADOPTED and APPROVED, with modification, the Report and
Recommendation of the Investigating Commissioner [in] the above-
entitled case, herein made part of this Resolution as Annex "A"; and,
finding the recommendation fully supported by the evidence on
record and the applicable laws and rules, and considering
respondent’s violations of Canon 1, [Rule] 1.01 and Canon 16 of the
Code of Professional Responsibility and Rule IV, Sec. 39(c) of A.M.
No. 02-8-13-SC (2004 Rules on Notarial Practice), Atty. Glenn Carlos
Gacott is hereby SUSPENDED from practice of law for two (2) years
with a Warning that commission of a similar offense will be dealt
with more severely. [emphases supplied]
On May 8, 2008, the respondent filed a Motion for Reconsideration
dated April 21, 2008, attaching, among others, a copy of the
complainant’s Affidavit dated February 27, 2008, admitting the
existence, genuineness and due execution of the Deed of Absolute
Sale between Cirilo and Laurentino; the MOA between Laurentino
and Reynold; the Deed of Absolute Sale between Laurentino and
Reynold; and the Compromise Agreement between Reynold and the
complainant dated November 14, 2006 for the expropriation case.29
On September 4, 2008, the respondent filed a Manifestation with
the Supreme Court, requesting that the IBP be directed to resolve his
Motion for Reconsideration.30
By Resolution No. XIX-2010-545 dated October 8, 2010,31 the IBP
Board of Governors denied the respondent’s Motion for
Reconsideration for failing to raise any new substantial matter or any
cogent reason to warrant a reversal or even a modification of its
Resolution No. XVIII-2007-302.32
On March 14, 2012, the respondent filed a Petition for Review (on
appeal) assailing the IBP’s findings, as follows:33
a) In conveniently concluding that the Deed of Absolute Sale was
pre-signed and fraudulently notarized without requiring Fe Ylaya to
adduce evidence in a formal hearing thus, violated the respondent’s
right to due process as he was not able to cross-examine her. This is
not to mention that the complainant failed to offer corroborative
proof to prove her bare allegations;
b) In sweepingly and arbitrarily disregarded/skirted (sic) the public
documents (MOA and 2 other DOAS) duly executed by the parties
therein and notarized by the respondent;
c) In totally ignoring the complainant’s Affidavit admitting the
genuineness and due execution of the Deed of Absolute Sale in issue;
d) In arbitrarily concluding the absence of co-ownership by Reynold
So and Fe Ylaya of the subject lots despite the existence of a
notarized MOA clearly showing the co-ownership of Ylaya and So;
and
e) In finding the respondent/appellant’s act of notarizing the DOAS
as contrary to the notarial rules.
The Issues
From the assigned errors, the complainant poses the following
issues:
(1) whether the IBP violated the respondent’s right to due process;
and
(2) whether the evidence presented supports a finding that the
respondent is administratively liable for violating Canon 1, Rule 1.01
and Canon 16 of the Code of Professional Responsibility, and Section
3(c), Rule IV of A.M. No. 02-8-13-SC.
The Court’s Ruling
We set aside the findings and recommendations of the IBP
Commissioner and those of the IBP Board of Governors finding the
respondent liable for violating Canon 1, Rules 1.01 and Section 3(c),
Rule IV of A.M. No. 02-8-13-SC.34
We however hold the respondent liable for violating Canon 16 of the
Code of Professional Responsibility for being remiss in his obligation
to hold in trust his client’s properties. We likewise find him liable for
violation of (1) Canon 15, Rule 15.03 for representing conflicting
interests without the written consent of the represented parties,
thus, violating the rule on conflict of interests; and (2) Canon 18, Rule
18.03 for neglecting a legal matter entrusted to him.
a. Due process violation
The most basic tenet of due process is the right to be heard. Denial
of due process means the total lack of opportunity to be heard or to
have one’s day in court. As a rule, no denial of due process takes
place where a party has been given an opportunity to be heard and
to present his case;35 what is prohibited is the absolute lack of
opportunity to be heard.
The respondent claims that the IBP violated his right to due process
because he was not given the "amplest opportunity to defend
himself, to cross examine the witness complainant, to object to the
admissibility of documents or present controverting
36
evidence" when the IBP rendered its conclusion without requiring
the complainant to adduce evidence in a formal hearing and despite
the absence of corroborative proof. He insists that these defects
rendered the complainant’s allegations as hearsay, and the IBP’s
report, recommendation or resolution null and void.
Although the respondent failed to have a face-to-face confrontation
with the complainant when she failed to appear at the required
mandatory conference on October 6, 2005,37 the records reveal that
the respondent fully participated during the entire proceedings and
submitted numerous pleadings, including evidence, before the IBP.
He was even allowed to file a motion for reconsideration supported
by his submitted evidence, which motion the IBP considered and
ruled upon in its Resolution No. XIX-2010-545 dated October 8,
2010.38
In Alliance of Democratic Free Labor Organization v. Laguesma,39 we
held that due process, as applied to administrative proceedings, is
the opportunity to explain one’s side. In Samalio v. Court of
Appeals,40 due process in an administrative context does not require
trial-type proceedings similar to those in courts of justice. Where the
opportunity to be heard, either through oral arguments or through
pleadings, is accorded, no denial of procedural due process takes
place. The requirements of due process are satisfied where the
parties are afforded a fair and reasonable opportunity to explain
their side of the controversy at hand.
Similarly, in A.Z. Arnaiz Realty, Inc. v. Office of the President,41 we
held that "due process, as a constitutional precept, does not always,
and in all situations, require a trial-type proceeding. Litigants may be
heard through pleadings, written explanations, position papers,
memoranda or oral arguments. The standard of due process that
must be met in administrative tribunals allows a certain degree of
latitude[, provided that] fairness is not ignored. It is, therefore, not
legally objectionable for being violative of due process, for an
administrative agency to resolve a case based solely on position
papers, affidavits or documentary evidence submitted by the
parties."42
In this case, the respondent’s failure to cross-examine the
complainant is not a sufficient ground to support the claim that he
had not been afforded due process. The respondent was heard
through his pleadings, his submission of alleged controverting
evidence, and his oral testimony during the October 6, 2005
mandatory conference. These pleadings, evidence and testimony
were received and considered by the IBP Commissioner when she
arrived at her findings and recommendation, and were the bases for
the IBP Board’s Resolution.
Moreover, "any seeming defect in the observance of due process is
cured by the filing of a motion for reconsideration. A denia of due
process cannot be successfully invoked by a party who has had the
opportunity to be heard on his motion for reconsideration.
Undoubtedly in this case, the requirement of the law was afforded
to the respondent."43
We also note that the respondent, on a Motion to Resolve or Decide
the Case dated August 24, 2006, submitted his case to the IBP for its
resolution without any further hearings. The motion, filed almost
one year after the mandatory conference on October 6, 2005,
significantly did not contain any statement regarding a denial of due
process. In effect, the respondent himself waived his cross-
examination of the complainant when he asked the IBP Board of
Governors to resolve the case based on the pleadings and the
evidence on record. To quote his own submission:
1. On June 30, 2004, a complaint was filed in this case;
2. On October 19, 2004, the respondent filed his comment with all
its attachments denying all the allegations in the complaint;
3. On June 23, 2005, the respondent filed his position paper. On April
28, 2006, the respondent also filed his supplemental position paper.
By contrast, up to this date, the complainant/petitioner has not filed
her verified position paper thus, waived her right to file the same;
4. There being no other genuine issues to be heard in this case as all
the defenses and counter-arguments are supported by documentary
evidence, it is most respectfully prayed that the instant case be
resolved on its merits or be ordered dismissed for lack of merit
without further hearing;
5. Further, considering that there is an on-going case in Branch 52 of
the Regional Trial Court of Palawan in Civil Case No. 2902 for
Expropriation involving the same property, and such fact was
deliberately omitted by the complainant in her Verified Complaint as
shown in the certification of non-forum shopping, the outright
dismissal of this case is warranted, hence, this motion; and
6. This is meant to expedite the termination of this
case.44 (underscore ours; italics supplied)
Finally, we note Section 11, Rule 139-B of the Rules of Court which
provides that:
No defect in a complaint, notice, answer, or in the proceeding or the
Investigator’s Report shall be considered as substantial unless the
Board of Governors, upon considering the whole record, finds that
such defect has resulted or may result in a miscarriage of justice, in
which event the
Board shall take such remedial action as the circumstances may
warrant, including invalidation of the entire proceedings.
In this case, the IBP Commissioner’s findings were twice reviewed by
the IBP Board of Governors – the first review resulted in Resolution
No. XVIII-2007-30245 dated December 14, 2007, affirming the IBP
Commissioner’s findings, but modifying the penalty; the second
review resulted in Resolution No. XIX-2010-545 dated October 8,
2010,46denying the respondent’s motion for reconsideration. In both
instances, the IBP Board of Governors found no defect or miscarriage
of justice warranting a remedial action or the invalidation of the
proceedings.
We emphasize that disciplinary proceedings against lawyers are sui
generis in that they are neither purely civil nor purely criminal; they
involve investigations by the Court into the conduct of one of its
officers,47 not the trial of an action or a suit.
Disciplinary proceedings against lawyers are sui generis. Neither
purely civil nor purely criminal, they do not involve a trial of an action
or a suit, but is rather an investigation by the Court into the conduct
of one of its officers. Not being intended to inflict punishment, it is
in no sense a criminal prosecution. Accordingly, there is neither a
plaintiff nor a prosecutor therein. It may be initiated by the Court
motu proprio. Public interest is its primary objective, and the real
question for determination is whether or not the attorney is still a fit
person to be allowed the privileges as such. Hence, in the exercise of
its disciplinary powers, the Court merely calls upon a member of the
Bar to account for his actuations as an officer of the Court with the
end in view of preserving the purity of the legal profession and the
proper and honest administration of justice by purging the
profession of members who by their misconduct have proved
themselves no longer worthy to be entrusted with the duties and
responsibilities pertaining to the office of an attorney. In such
posture, there can thus be no occasion to speak of a complainant or
a prosecutor. [emphases deleted]
The complainant in disbarment cases is not a direct party to the case
but a witness who brought the matter to the attention of the
Court.48 Flowing from its sui generis character, it is not mandatory to
have a formal hearing in which the complainant must adduce
evidence.
From all these, we find it clear that the complainant is not
indispensable to the disciplinary proceedings and her failure to
appear for cross-examination or to provide corroborative evidence
of her allegations is of no merit. What is important is whether, upon
due investigation, the IBP
Board of Governors finds sufficient evidence of the respondent’s
misconduct to warrant the exercise of its disciplinary powers.
b. Merits of the Complaint
"In administrative cases against lawyers, the quantum of proof
required is preponderance of evidence which the complainant has
the burden to discharge."49 Preponderance of evidence means that
the evidence adduced by one side is, as a whole, superior to or has a
greater weight than that of the other. It means evidence which is
more convincing to the court as worthy of belief compared to the
presented contrary evidence.
Under Section 1, Rule 133 of the Rules of Court, in determining
whether preponderance of evidence exists, the court may consider
the following: (a) all the facts and circumstances of the case; (b) the
witnesses’ manner of testifying, their intelligence, their means and
opportunity of knowing the facts to which they are testifying, the
nature of the facts to which they testify, and the probability or
improbability of their testimony; (c) the witnesses’ interest or want
of interest, and also their personal credibility so far as the same may
ultimately appear in the trial; and (d) the number of witnesses,
although it does not mean that preponderance is necessarily with
the greater number.50 By law, a lawyer enjoys the legal presumption
that he is innocent of the charges against him until the contrary is
proven, and that as an officer of the court, he is presumed to have
performed his duties in accordance with his oath.51
The IBP Commissioner set out her findings as follows:
The undersigned, after a careful evaluation of the evidence
presented by both parties, finds that the charges of the complainant
against the respondent are worthy of belief based on the following:
First, the allegation of the respondent that Reynold So was actually
co-owner of spouses Ylanas (sic) in the properties subject of the
Deed of Sale between Felix Arellano and Spouses Ylanas (sic) is hard
to believe despite the presentation of the Memorandum of
Agreement.
It is elementary in Rules of Evidence that when the contents of a
written document are put in issue, the best evidence would be the
document itself. In the Deed of Sale between Felix Arellano and
Spouses Ylanas (sic), the buyer of the subject properties is only
Laurentino L. Ylaya married to Fe A. Ylaya. The document does not
state that Reynold So was likewise a buyer together with Laurentino
Ylaya, or that the former paid half of the purchase price.
Also, it is hard for this Commission to believe that Reynold So,
assisted by a lawyer at that and who allegedly paid half of the
purchase price, would not insist for the inclusion of his name in the
Deed of Sale as well as the Transfer Certificate of Title subsequently
issued.
The Memorandum of Agreement between the spouses Ylaya and
Reynold So produced by the respondent cannot overturn the belief
of this Commission considering that the Memorandum of
Agreement was executed more than a month AFTER the Deed of Sale
between Felix Arellano and the Ylayas was notarized. This is not to
mention the fact that the complainant denied ever having executed
the Memorandum of Agreement. A close examination of the
signatories in the said Memorandum of Agreement would reveal
that indeed, the alleged signatures of the complainant and her
husband are not the same with their signatures in other documents.
Assuming, for the sake of argument, that the Memorandum of
Agreement is valid, thereby making Laurentino Ylaya and co-owner
Reynold So co-owners of the subject properties (Please see Annex
"B" of respondent’s Comment), this Commission finds it hard to
believe Laurentino Ylaya would sell it to Reynold So for ₱200,000 x x
x when his minimum expenses for the purchase thereof is already
₱225,000.00 and he was expecting to receive ₱7,000,000.00, more
or less. That would mean that if Reynold So and the complainant
were co-owners, the ₱7,000,000.00 would then be equally divided
among them at ₱3,500,000.00 each, far above the ₱200,000.00
selling price reflected in the pre-signed Deed of Sale.
As to the second issue, this Commission believes that the respondent
committed serious error in notarizing the Deed of Sale and the
Memorandum of Agreement between his uncle Reynold So and
Laurentino Ylaya based on Rule IV, Section 3 (c) of A.M. No. 02-8-13-
SC which provides as follows:
"Sec. 3. Disqualifications – a notary public is disqualified from
performing a notarial act if he:
(a) x x x.
(b) x x x.
(c) is a spouse, common-law partner, ancestor, descendant, or
relative by affinity or consanguinity of the principal within the fourth
civil degree."
The defense therefore of the respondent that he did not violate the
aforementioned Rule becausehis uncle Reynold So, the buyer is not
the principal in the Subject Deed of Sale but the seller Laurentino
Ylaya (please see page 3 of the respondent’s Supplemental Position
Paper) is misplaced. Clearly, both the buyer and the seller in the
instant case are considered principals in the contract entered into.
Furthermore, if we are to consider the argument of the respondent
that his uncle was not a principal so as to apply the afore-quoted
provision of the Rules, the respondent still violated the Rules when
he notarized the subject Memorandum of Agreement between
Laurentino Ylaya and his uncle Reynold So. Clearly, both complainant
and Reynold So were principal parties in the said Memorandum of
Agreement.52
The respondent argues that the IBP Commissioner’s findings are
contrary to the presented evidence, specifically to the MOA
executed by Laurentino and Reynold acknowledging the existence of
a co-ownership;53 to the complainant’s Ex Parte Motion to Withdraw
the Verified Complaint and To Dismiss the Case dated November 14,
2006 where she stated that the parties have entered into a
compromise agreement in Civil Case No. 2902, and that the
disbarment complaint arose from a misunderstanding,
miscommunication and improper appreciation of facts;54to her
Affidavit dated February 27, 200855 affirming and confirming the
existence, genuineness and due execution of the Deed of Absolute
Sale notarized on March 6, 2000;56 and to the Deed of Absolute Sale
notarized in 2001.57
In all, the respondent claims that these cited pieces of evidence
prove that this administrative complaint against him is fabricated,
false and untrue. He also points to Atty. Robert Peneyra, the
complainant’s counsel in this administrative case, as the hand
behind the complaint.58 According to the respondent, Atty. Peneyra
harbors ill-will against him and his family after his father filed several
administrative cases against Atty. Peneyra, one of which resulted in
the imposition of a warning and a reprimand on Atty. Peneyra.59
Reynold, in his Affidavit dated October 11, 2004, confirms that there
was a co-ownership between him and Laurentino; that Laurentino
decided to sell his half of the property to Reynold because he
(Laurentino) had been sickly and in dire need of money to pay for his
medical bills; that Laurentino agreed to the price of ₱200,000.00 as
this was almost the same value of his investment when he and
Reynold jointly acquired the property; and that the sale to Reynold
was with the agreement and consent of the complainant who
voluntarily signed the Deed of Sale.60
After examining the whole record of the case, we agree with the
respondent and find the evidence insufficient to prove the charge
that he violated Canon 1, Rule 1.01 of the Code of Professional
Responsibility and Section 3(c), Rule IV of A.M. No. 02-8-13-SC.
Specifically, (1) the evidence against the respondent fails to show the
alleged fraudulent and deceitful acts he has taken to mislead the
complainant and her husband into signing a "preparatory deed of
sale" and the conversion into a Deed of Absolute Sale dated June 4,
2001 in favor of Reynold; and (2) no prohibition exists against the
notarization of a document in which any of the parties interested is
the notary’s relative within the 4th civil degree, by affinity or
consanguinity, at that time the respondent notarized the
documents.
In her Report and Recommendation,61 the IBP Commissioner
concluded that the respondent is liable for deceit and fraud because
he failed to prove the existence of a co-ownership between
Laurentino and Reynold; in her opinion, the signatures of the
complainant and of her husband on the MOA "are not the same with
their signatures in other documents."62
We do not agree with this finding. While the facts of this case may
raise some questions regarding the respondent’s legal practice, we
nevertheless found nothing constituting clear evidence of the
respondent’s specific acts of fraud and deceit. His failure to prove
the existence of a co-ownership does not lead us to the conclusion
that the MOA and the Deed of Absolute Sale dated June 4, 2001 are
spurious and that the respondent was responsible for creating these
spurious documents. We are further persuaded, after noting that in
disregarding the MOA, the IBP Commissioner failed to specify what
differences she observed in the spouses Ylaya’s signatures in the
MOA and what documents were used in comparison.
Apart from her allegations, the complainant’s pieces of evidence
consist of TCT Nos. 162632 and 162633;63 her Motion for Leave to
Intervene in Civil Case No. 2902 dated May 17, 2000;64 the RTC order
in Civil Case No. 2902 dated November 6, 2000 fixing the price of just
compensation;65 the Deed of Absolute Sale dated June 4, 2001;66the
spouses Ylaya’s Verified Manifestation dated September 2, 2002,
filed with the RTC in Civil Case No. 2902, assailing the Motion to
Deposit Just Compensation filed by the respondent on behalf of
Reynold and manifesting the sale between Laurentino and
Reynold;67 the Provincial Prosecutor’s Subpoena to the complainant
in connection with the respondent’s complaint for libel;68 the
respondent’s complaint for libel against the complainant dated
August 27, 2003;69 the complainant’s Counter Affidavit dated March
26, 2004 against the charge of libel;70 and the respondent’s letter to
the Provincial Attorney of Palawan dated April 5, 2004, requesting
for "official information regarding the actual attendance of Atty.
ROBERT Y. PENEYRA" at an MCLE seminar.71
We do not see these documentary pieces of evidence as proof of
specific acts constituting deceit or fraud on the respondent’s part.
The documents by themselves are neutral and, at the most, show
the breakdown of the attorney-client relationship between the
respondent and the complainant. It is one thing to allege deceit and
misconduct, and it is another to demonstrate by evidence the
specific acts constituting these allegations.72
We reiterate that in disbarment proceedings, the burden of proof is
on the complainant; the Court exercises its disciplinary power only if
the complainant establishes her case by clear, convincing, and
satisfactory evidence.73Preponderance of evidence means that the
evidence adduced by one side is, as a whole, superior to or has a
greater weight than that of the other party. When the pieces of
evidence of the parties are evenly balanced or when doubt exists on
the preponderance of evidence, the equipoise rule dictates that the
decision be against the party carrying the burden of proof.74
In this case, we find that the complainant’s evidence and the records
of the case do not show the respondent’s deliberate fraudulent and
deceitful acts. In the absence of such proof, the complaint for fraud
and deceit under Canon 1, Rule 1.01 of the Code of Professional
Responsibility must perforce be dismissed.
We note that the respondent has not squarely addressed the issue
of his relationship with Reynold, whom the complainant alleges to
be the respondent’s uncle because Reynold is married to the
respondent’s maternal aunt.75However, this is of no moment as the
respondent cannot be held liable for violating Section 3(c), Rule IV of
A.M. No. 02-8-13-SC because the Deed of Absolute Sale dated June
4, 200176 and the MOA dated April 19, 200077 were notarized by the
respondent prior to the effectivity of A.M. No. 02-8-13-SC on July 6,
2004. The notarial law in force in the years 2000 - 2001 was Chapter
11 of Act No. 2711 (the Revised Administrative Code of 1917) which
did not contain the present prohibition against notarizing
documents where the parties are related to the notary public within
the 4th civil degree, by affinity or consanguinity. Thus, we must
likewise dismiss the charge for violation of A.M. No. 02-8-13-SC.
c. Liability under Canons 15, 16 and 18 We find the respondent liable
under Canon 15, Rule 15.03 for representing conflicting interests
without the written consent of all concerned, particularly the
complainant; under Canon 16 for being remiss in his obligation to
hold in trust his client’s properties; and under Canon 18, Rule 18.03
for neglecting a legal matter entrusted to him.
Canon 15, Rule 15.03 states:
A lawyer shall not represent conflicting interests except by written
consent of all concerned given after a full disclosure of the facts.
[emphasis ours]
The relationship between a lawyer and his client should ideally be
imbued with the highest level of trust and confidence. Necessity and
public interest require that this be so. Part of the lawyer’s duty to his
client is to avoid representing conflicting interests. He is duty bound
to decline professional employment, no matter how attractive the
fee offered may be, if its acceptance involves a violation of the
proscription against conflict of interest, or any of the rules of
professional conduct. Thus, a lawyer may not accept a retainer from
a defendant after he has given professional advice to the plaintiff
concerning his claim; nor can he accept employment from another
in a matter adversely affecting any interest of his former client. It is
his duty to decline employment in any of these and similar
circumstances in view of the rule prohibiting representation of
conflicting interests.78
The proscription against representation of conflicting interest
applies "even if the lawyer would not be called upon to contend for
one client that which the lawyer has to oppose for the other, or that
there would be no occasion to use the confidential information
acquired from one to the disadvantage of the other as the two
actions are wholly unrelated."79 The sole exception is provided in
Canon 15, Rule 15.03 of the Code of Professional Responsibility – if
there is a written consent from all the parties after full disclosure.
Based on the records, we find substantial evidence to hold the
respondent liable for violating Canon 15, Rule 15.03 of the Code of
Professional Responsibility. The facts of this case show that the
respondent retained clients who had close dealings with each other.
The respondent admits to acting as legal counsel for Cirilo Arellano,
the spouses Ylaya and Reynold at one point during the proceedings
in Civil Case No. 2902.80 Subsequently, he represented only Reynold
in the same proceedings,81 asserting Reynold’s ownership over the
property against all other claims, including that of the spouses
Ylaya.82
We find no record of any written consent from any of the parties
involved and we cannot give the respondent the benefit of the doubt
in this regard. We find it clear from the facts of this case that the
respondent retained Reynold as his client and actively opposed the
interests of his former client, the complainant. He thus violated
Canon 15, Rule 15.03 of the Code of Professional Responsibility.
We affirm the IBP Commissioner’s finding that the respondent
violated Canon 16. The respondent admits to losing certificates of
land titles that were entrusted to his care by Reynold.83 According to
the respondent, the complainant "maliciously retained" the TCTs
over the properties sold by Laurentino to Reynold after she
borrowed them from his office.84 Reynold confirms that the TCTs
were taken by the complainant from the respondent’s law office.85
The respondent is reminded that his duty under Canon 16 is to "hold
in trust all moneys and properties of his client that may come into
his possession." Allowing a party to take the original TCTs of
properties owned by another – an act that could result in damage –
should merit a finding of legal malpractice. While we note that it was
his legal staff who allowed the complainant to borrow the TCTs and
it does not appear that the respondent was aware or present when
the complainant borrowed the TCTs,86 we nevertheless hold the
respondent liable, as the TCTs were entrusted to his care and
custody; he failed to exercise due diligence in caring for his client’s
properties that were in his custody.
We likewise find the respondent liable for violating Canon 18, Rule
18.03 for neglecting a legal matter entrusted to him. Despite the
respondent’s admission that he represented the complainant and
her late husband in Civil Case No. 2902 and that he purportedly filed
a Motion for Leave to Intervene in their behalf, the records show
that he never filed such a motion for the spouses Ylaya. The
complainant herself states that she and her late husband were
forced to file the Motion for Leave to Intervene on their own behalf.
The records of the case, which include the Motion for Leave to
Intervene filed by the spouses Ylaya, support this conclusion.87
Canon 18, Rule 18.03 requires that a lawyer "shall not neglect a legal
matter entrusted to him, and his negligence in connection
[therewith] shall render him liable." What amounts to carelessness
or negligence in a lawyer’s discharge of his duty to his client is
incapable of an exact formulation, but the Court has consistently
held that the mere failure of a lawyer to perform the obligations due
his client is per se a violation.88
In Canoy v. Ortiz,89 we held that a lawyer’s failure to file a position
paper was per se a violation of Rule 18.03 of the Code of Professional
Responsibility. Similar to Canoy, the respondent clearly failed in this
case in his duty to his client when, without any explanation, he failed
to file the Motion for Leave to Intervene on behalf of the spouses
Ylaya. Under the circumstances, we find that there was want of
diligence; without sufficient justification, this is sufficient to hold the
respondent liable for violating Canon 18, Rule 18.03 of the Code of
Professional Responsibility.
d. The Complainant’s Ex Parte Motion to Withdraw the Verified
Complaint and to Dismiss the Case and her Affidavit
We are aware of the complainant’s Ex Parte Motion to Withdraw the
Verified Complaint and To Dismiss the Case dated November 14,
200690 and her Affidavit91 affirming and confirming the existence,
genuineness and due execution of the Deed of Absolute Sale
notarized on March 6, 2000.92 The complainant explains that the
parties have entered into a compromise agreement in Civil Case No.
2902, and that this disbarment complaint was filed because of a
"misunderstanding, miscommunication and improper appreciation
of facts";93 she erroneously accused the respondent of ill motives
and bad intentions, but after being enlightened, she is convinced
that he has no personal or pecuniary interests over the properties in
Civil Case No. 2902; that such misunderstanding was due to her
unfamiliarity with the transactions of her late husband during his
lifetime.94 The complainant now pleads for the respondent’s
forgiveness, stating that he has been her and her late husband’s
lawyer for over a decade and affirms her trust and confidence in
him.95 We take note that under their Compromise Agreement dated
November 14, 2006 for the expropriation case,96 the complainant
and Reynold equally share the just compensation, which have since
increased to ₱10,000,000.00.
While the submitted Ex Parte Motion to Withdraw the Verified
Complaint and to Dismiss the Case and the Affidavit appear to
exonerate the respondent, complete exoneration is not the
necessary legal effect as the submitted motion and affidavit are
immaterial for purposes of the present proceedings. Section 5, Rule
139-B of the Rules of Court states that, "No investigation shall be
interrupted or terminated by reason of the desistance, settlement,
compromise, restitution, withdrawal of charges, or failure of the
complainant to prosecute the same."
In Angalan v. Delante,97 despite the Affidavit of Desistance, we
disbarred the respondent therein for taking advantage of his clients
and for transferring the title of their property to his name. In Bautista
v. Bernabe,98 we revoked the lawyer’s notarial commission,
disqualified him from reappointment as a notary public for two
years, and suspended him from the practice of law for one year for
notarizing a document without requiring the affiant to personally
appear before him. In this cited case, we said:
Complainant’s desistance or withdrawal of the complaint does not
exonerate respondent or put an end to the administrative
proceedings. A case of suspension or disbarment may proceed
regardless of interest or lack of interest of the complainant. What
matters is whether, on the basis of the facts borne out by the record,
the charge of deceit and grossly immoral conduct has been proven.
This rule is premised on the nature of disciplinary proceedings. A
proceeding for suspension or disbarment is not a civil action where
the complainant is a plaintiff and the respondent lawyer is a
defendant. Disciplinary proceedings involve no private interest and
afford no redress for private grievance. They are undertaken and
prosecuted solely for the public welfare. They are undertaken for the
purpose of preserving courts of justice from the official ministration
of persons unfit to practice in them. The attorney is called to answer
to the court for his conduct as an officer of the court. The
complainant or the person who called the attention of the court to
the attorney’s alleged misconduct is in no sense a party, and has
generally no interest in the outcome except as all good citizens may
have in the proper administration of justice.99
In sum, in administrative proceedings against lawyers, the
complainant’s desistance or withdrawal does not terminate the
proceedings. This is particularly true in the present case where
pecuniary consideration has been given to the complainant as a
consideration for her desistance. We note in this regard that she
would receive ₱5,000,000.00, or half of the just compensation under
the Compromise Agreement,100 and thus agreed to withdraw all
charges against the respondent.101 From this perspective, we
consider the complainant’s desistance to be suspect; it is not
grounded on the fact that the respondent did not commit any actual
misconduct; rather, because of the consideration, the complainant
is now amenable to the position of the respondent and/or Reynold.
e. Procedural aspect
We remind all parties that resolutions from the IBP Board of
Governors are merely recommendatory and do not attain finality
without a final action from this Court. Section 12, Rule 139-B is clear
on this point that:
Section 12. Review and decision by the Board of Governors. –
xxxx
(b) If the Board, by the vote of a majority of its total membership,
determines that the respondent should be suspended from the
practice of law or disbarred, it shall issue a resolution setting forth
its findings and recommendations which, together with the whole
record of the case, shall forthwith be transmitted to the Supreme
Court for final action.1âwphi1
The Supreme Court exercises exclusive jurisdiction to regulate the
practice of law.102 It exercises such disciplinary functions through the
IBP, but it does not relinquish its duty to form its own judgment.
Disbarment proceedings are exercised under the sole jurisdiction of
the Supreme Court, and the IBP’s recommendations imposing the
penalty of suspension from the practice of law or disbarment are
always subject to this Court’s review and approval.
The Penalty
In Solidon v. Macalalad,103 we imposed the penalty of suspension of
six ( 6) months from the practice of law on the respondent therein
for his violation of Canon 18, Rule 18.03 and Canon 16, Rule 16.01 of
the Code of Professional Responsibility. In Josefina M. Aniñon v. Atty.
Clemencio Sabitsana, Jr.,104 we suspended the respondent therein
from the practice of law for one (1) year, for violating Canon 15, Rule
15.03 of the Code of Professional Responsibility. Under the
circumstances, we find a one (1) year suspension to be a sufficient
and appropriate sanction against the respondent.
WHEREFORE, premises considered, we set aside Resolution No.
XVIII-.2007-302 dated December 14, 2007 and Resolution No. XIX-
2010-545 dated October 8, 2010 of the IBP Board of Governors, and
find respondent Atty. Glenn Carlos Gacott GUILTY of violating Rule
15.03 of Canon 15, Canon 16, and Rule 18.03 of Canon 18 of the Code
of Professional Responsibility. As a penalty, he is SUSPENDED from
the practice of law for one (1) year, with a WARNING that a
repetition of the same or similar act will be dealt with more severely.
SO ORDERED.
G.R. No. 176830 February 11, 2014
SATURNINO C. OCAMPO, Petitioner,
vs.
HON. EPHREM S. ABANDO, Respondents.
SERENO, CJ.:
On 26 August 2006, a mass grave was discovered by elements of the
43rd Infantry Brigade of the Philippine Army at Sitio Sapang Daco,
Barangay Kaulisihan, Inopacan, Leyte.1 The mass grave contained
skeletal remains of individuals believed to be victims of "Operation
Venereal Disease" (Operation VD) launched by members of the
Communist Party of the Philippines/New People’s Army/National
Democratic Front of the Philippines (CPP/NPA/NDFP) to purge their
ranks of suspected military informers.
While the doctrine of hierarchy of courts normally precludes a direct
invocation of this Court’s jurisdiction, we take cognizance of these
petitions considering that petitioners have chosen to take recourse
directly before us and that the cases are of significant national
interest.
Petitioners have raised several issues, but most are too insubstantial
to require consideration. Accordingly, in the exercise of sound
judicial discretion and economy, this Court will pass primarily upon
the following:
1. Whether petitioners were denied due process during preliminary
investigation and in the issuance of the warrants of arrest.
2. Whether the murder charges against petitioners should be
dismissed under the political offense doctrine.
ANTECEDENT FACTS
These are petitions for certiorari and prohibition2 seeking the
annulment of the orders and resolutions of public respondents with
regard to the indictment and issuance of warrants of arrest against
petitioners for the crime of multiple murder.
Police Chief Inspector George L. Almaden (P C/Insp. Almaden) of the
Philippine National Police (PNP) Regional Office 8 and Staff Judge
Advocate Captain Allan Tiu (Army Captain Tiu) of the 8th Infantry
Division of the Philippine Army sent 12 undated letters to the
Provincial Prosecutor of Leyte through Assistant Provincial
Prosecutor Rosulo U. Vivero (Prosecutor Vivero).3 The letters
requested appropriate legal action on 12 complaint-affidavits
attached therewith accusing 71 named members of the Communist
Party of the Philippines/New People’s Army/National Democratic
Front of the Philippines (CPP/NPA/NDFP) of murder, including
petitioners herein along with several other unnamed members.
The letters narrated that on 26 August 2006, elements of the 43rd
Infantry Brigade of the Philippine Army discovered a mass grave site
of the CPP/NPA/NDFP at Sitio Sapang Daco, Barangay Kaulisihan,
Inopacan, Leyte.4Recovered from the grave site were 67 severely
deteriorated skeletal remains believed to be victims of Operation
VD.5
The PNP Scene of the Crime Operation (SOCO) Team based in
Regional Office 8 was immediately dispatched to the mass grave site
to conduct crime investigation, and to collect, preserve and analyze
the skeletal remains.6 Also, from 11-17 September 2006, an
investigation team composed of intelligence officers, and medico-
legal and DNA experts, conducted forensic crime analysis and
collected from alleged relatives of the victims DNA samples for
matching.7
The Initial Specialist Report8 dated 18 September 2006 issued by the
PNP Crime Laboratory in Camp Crame, Quezon City, was inconclusive
with regard to the identities of the skeletal remains and even the
length of time that they had been buried. The report recommended
the conduct of further tests to confirm the identities of the remains
and the time window of death.9
However, in a Special Report10 dated 2 October 2006, the Case
Secretariat of the Regional and National Inter-Agency Legal Action
Group (IALAG) came up with the names of ten (10) possible victims
after comparison and examination based on testimonies of relatives
and witnesses.11
The 12 complaint-affidavits were from relatives of the alleged
victims of Operation VD. All of them swore that their relatives had
been abducted or last seen with members of the CPP/NPA/NDFP and
were never seen again.
They also expressed belief that their relatives’ remains were among
those discovered at the mass grave site.
Also attached to the letters were the affidavits of Zacarias
Piedad,12 Leonardo C. Tanaid, Floro M. Tanaid, Numeriano
Beringuel, Glecerio Roluna and Veronica P. Tabara. They narrated
that they were former members of the CPP/NPA/NDFP.13 According
to them, Operation VD was ordered in 1985 by the CPP/NPA/NDFP
Central Committee.14 Allegedly, petitioners Saturnino C. Ocampo
(Ocampo),15 Randall B. Echanis (Echanis),16 Rafael G. Baylosis
(Baylosis),17 and Vicente P. Ladlad (Ladlad)18 were then members of
the Central Committee.
According to these former members, four sub-groups were formed
to implement Operation VD, namely, (1) the Intel Group responsible
for gathering information on suspected military spies and civilians
who would not support the movement; (2) the Arresting Group
charged with their arrests; (3) the Investigation Group which would
subject those arrested to questioning; and (4) the Execution Group
or the "cleaners" of those confirmed to be military spies and civilians
who would not support the movement.19
From 1985 to 1992, at least 100 people had been abducted, hog-tied,
tortured and executed by members of the CPP/NPA/NDF20 pursuant
to Operation VD.21
On the basis of the 12 letters and their attachments, Prosecutor
Vivero issued a subpoena requiring, among others, petitioners to
submit their counter-affidavits and those of their
22
witnesses. Petitioner Ocampo submitted his counter-
affidavit.23 Petitioners Echanis24 and Baylosis25 did not file counter-
affidavits because they were allegedly not served the copy of the
complaint and the attached documents or evidence. Counsel of
petitioner Ladlad made a formal entry of appearance on 8 December
2006 during the preliminary investigation.26 However, petitioner
Ladlad did not file a counter-affidavit because he was allegedly not
served a subpoena.27
In a Resolution28 dated 16 February 2007, Prosecutor Vivero
recommended the filing of an Information for 15 counts of multiple
murder against 54 named members of the CPP/NPA/NDFP, including
petitioners herein, for the death of the following: 1) Juanita Aviola,
2) Concepcion Aragon, 3) Gregorio Eras, 4) Teodoro Recones, Jr., 5)
Restituto Ejoc, 6) Rolando Vasquez, 7) Junior Milyapis, 8) Crispin
Dalmacio, 9) Zacarias Casil, 10) Pablo Daniel, 11) Romeo Tayabas, 12)
Domingo Napoles, 13) Ciriaco Daniel, 14) Crispin Prado, and 15)
Ereberto Prado.29
Prosecutor Vivero also recommended that Zacarias Piedad,
Leonardo Tanaid, Numeriano Beringuel and Glecerio Roluna be
dropped as respondents and utilized as state witnesses, as their
testimonies were vital to the success of the prosecution.30 The
Resolution was silent with regard to Veronica Tabara.
The Information was filed before the Regional Trial Court (RTC)
Hilongos, Leyte, Branch 18 (RTC Hilongos, Leyte) presided by Judge
Ephrem S. Abando (Judge Abando) on 28 February 2007, and
docketed as Criminal Case No. H-1581.31 Petitioner Ocampo filed an
Ex Parte Motion to Set Case for Clarificatory Hearing dated 5 March
2007 prior to receiving a copy of the Resolution recommending the
filing of the Information.32
On 6 March 2007, Judge Abando issued an Order finding probable
cause "in the commission by all mentioned accused of the crime
charged."33 He ordered the issuance of warrants of arrest against
them with no recommended bail for their temporary liberty.34
On 16 March 2007, petitioner Ocampo filed before us this special
civil action for certiorari and prohibition under Rule 65 of the Rules
of Court and docketed as G.R. No. 176830 seeking the annulment of
the 6 March 2007 Order of Judge Abando and the 16 February 2007
Resolution of Prosecutor Vivero.35 The petition prayed for the
unconditional release of petitioner Ocampo from PNP custody, as
well as the issuance of a temporary restraining order/ writ of
preliminary injunction to restrain the conduct of further proceedings
during the pendency of the petition.36
Petitioner Ocampo argued that a case for rebellion against him and
44 others (including petitioners Echanis and Baylosis37 and Ladlad38)
docketed as Criminal Case No. 06-944 was then pending before the
RTC Makati, Branch 150 (RTC Makati).39 Putting forward the political
offense doctrine, petitioner Ocampo argues that common crimes,
such as murder in this case, are already absorbed by the crime of
rebellion when committed as a necessary means, in connection with
and in furtherance of rebellion.40
We required41 the Office of the Solicitor General (OSG) to comment
on the petition and the prayer for the issuance of a temporary
restraining order/ writ of preliminary injunction, and set 42 the case
for oral arguments on 30 March 2007. The OSG filed its Comment on
27 March 2007.43
The following were the legal issues discussed by the parties during
the oral arguments:
1. Whether the present petition for certiorari and prohibition is the
proper remedy of petitioner Ocampo;
2. Assuming it is the proper remedy, whether he was denied due
process during preliminary investigation and in the issuance of the
warrant of arrest;
3. Whether the murder charges against him are already included in
the rebellion charge against him in the RTC.44
Afterwards, the parties were ordered to submit their memoranda
within 10 days.45 On 3 April 2007, the Court ordered the provisional
release of petitioner Ocampo under a ₱100,000 cash bond.46
Acting on the observation of the Court during the oral arguments
that the single Information filed before the RTC Hilongos, Leyte was
defective for charging 15 counts of murder, the prosecution filed a
Motion to Admit Amended Information and New Informations on 11
April 2007.47 In an Order dated 27 July 2007, Judge Abando held in
abeyance the resolution thereof and effectively suspended the
proceedings during the pendency of G.R. No. 176830 before this
Court.48
While the proceedings were suspended, petitioner Echanis was
arrested on 28 January 2008 by virtue of the warrant of arrest issued
by Judge Abando on 6 March 2007.49 On 1 February 2008,
petitioners Echanis and Baylosis filed a Motion for Judicial
Reinvestigation/ Determination of Probable Cause with Prayer to
Dismiss the Case Outright and Alternative Prayer to Recall/ Suspend
Service of Warrant.50
On 30 April 2008, Judge Abando issued an Order denying the
motion.51 Petitioners Echanis and Baylosis filed a Motion for
Reconsideration52 dated 30 May 2008, but before being able to rule
thereon, Judge Abando issued an Order dated 12 June 2008
transmitting the records of Criminal Case No. H-1581 to the Office of
the Clerk of Court, RTC Manila.53 The Order was issued in compliance
with the Resolution dated 23 April 2008 of this Court granting the
request of then Secretary of Justice Raul Gonzales to transfer the
venue of the case.
The case was re-raffled to RTC Manila, Branch 32 (RTC Manila)
presided by Judge Thelma Bunyi-Medina (Judge Medina) and re-
docketed as Criminal Case No. 08-262163.54 Petitioner Echanis was
transferred to the PNP Custodial Center in Camp Crame, Quezon
City. On 12 August 2008, petitioners Echanis and Baylosis filed their
Supplemental Arguments to Motion for Reconsideration.55
In an Order56 dated 27 October 2008, Judge Medina suspended the
proceedings of the case pending the resolution of G.R. No. 176830
by this Court.
On 18 December 2008, petitioner Ladlad filed with the RTC Manila a
Motion to Quash and/or Dismiss.57
On 23 December 2008, petitioner Echanis filed before us a special
civil action for certiorari and prohibition under Rule 65 of the Rules
of Court seeking the annulment of the 30 April 2008 Order of Judge
Abando and the 27 October 2008 Order of Judge Medina.58 The
petition, docketed as G.R. No. 185587, prayed for the unconditional
and immediate release of petitioner Echanis, as well as the issuance
of a temporary restraining order/writ of preliminary injunction to
restrain his further incarceration.59
On 5 January 2009, petitioner Baylosis filed before us a special civil
action for certiorari and prohibition under Rule 65 of the Rules of
Court also seeking the annulment of the 30 April 2008 Order of Judge
Abando and the 27 October 2008 Order of Judge Medina.60 The
petition, docketed as G.R. No. 185636, prayed for the issuance of a
temporary restraining order/ writ of preliminary injunction to
restrain the implementation of the warrant of arrest against
petitioner Baylosis.61
The Court consolidated G.R. Nos. 185587 and 185636 on 12 January
2009.62
On 3 March 2009, the Court ordered the further consolidation of
these two cases with G.R. No. 176830.63 We required64 the OSG to
comment on the prayer for petitioner Echanis’s immediate release,
to which the OSG did not interpose any objection on these
conditions: that the temporary release shall only be for the purpose
of his attendance and participation in the formal peace negotiations
between the Government of the Republic of the Philippines (GRP)
and the CPP/NPA/NDFP, set to begin in August 2009; and that his
temporary release shall not exceed six (6) months.65 The latter
condition was later modified, such that his temporary liberty shall
continue for the duration of his actual participation in the peace
negotiations.66
On 11 August 2009, the Court ordered the provisional release of
petitioner Echanis under a ₱100,000 cash bond, for the purpose of
his participation in the formal peace negotiations.67
Meanwhile, the Department of Justice (DOJ) filed its Opposition68 to
petitioner Ladlad’s motion to quash before the RTC Manila. The trial
court conducted a hearing on the motion on 13 February 2009.69
On 6 May 2009, Judge Medina issued an Order70 denying the motion
to quash. The motion for reconsideration filed by petitioner Ladlad
was also denied on 27 August 2009.71
On 9 November 2009, petitioner Ladlad filed before us a special civil
action for certiorari under Rule 65 of the Rules of Court seeking the
annulment of the 6 May 2009 and 27 August 2009 Orders of Judge
Medina.72 The petition was docketed as G.R. No. 190005.
On 11 January 2010, we ordered the consolidation of G.R. No.
190005 with G.R. Nos. 176830, 185587 and 185636.73 We also
required the OSG to file its comment thereon. The OSG submitted its
Comment74 on 7 May 2010.
On 27 July 2010, we likewise required the OSG to file its Comment in
G.R. Nos. 185636 and 185587.75 These Comments were filed by the
OSG on 13 December 201076 and on 21 January 2011,77 respectively.
Petitioners Echanis and Baylosis filed their Consolidated Reply78 on 7
June 2011.
On 2 May 2011, petitioner Ladlad filed an Urgent Motion to Fix
Bail.79 On 21 July 2011, petitioner Baylosis filed A Motion to Allow
Petitioner to Post Bail.80 The OSG interposed no objection to the
grant of a ₱100,000 cash bail to them considering that they were
consultants of the NDFP negotiating team, which was then holding
negotiations with the GRP peace panel for the signing of a peace
accord.81
On 17 January 2012, we granted the motions of petitioners Ladlad
and Baylosis and fixed their bail in the amount of ₱100,000, subject
to the condition that their temporary release shall be limited to the
period of their actual participation in the peace negotiations.82
Petitioner Ladlad filed his Reply83 to the OSG Comment on 18
January 2013.
OUR RULING
Petitioners were accorded due
process during preliminary
investigation and in the issuance of
the warrants of arrest.
A. Preliminary Investigation
A preliminary investigation is "not a casual affair."84 It is conducted
to protect the innocent from the embarrassment, expense and
anxiety of a public trial.85 While the right to have a preliminary
investigation before trial is statutory rather than constitutional, it is
a substantive right and a component of due process in the
administration of criminal justice.86
In the context of a preliminary investigation, the right to due process
of law entails the opportunity to be heard.87 It serves to accord an
opportunity for the presentation of the respondent’s side with
regard to the accusation. Afterwards, the investigating officer shall
decide whether the allegations and defenses lead to a reasonable
belief that a crime has been committed, and that it was the
respondent who committed it. Otherwise, the investigating officer is
bound to dismiss the complaint.
"The essence of due process is reasonable opportunity to be heard
and submit evidence in support of one's defense."88 What is
proscribed is lack of opportunity to be heard.89 Thus, one who has
been afforded a chance to present one’s own side of the story
cannot claim denial of due process.90
Petitioners Echanis and Baylosis allege that they did not receive a
copy of the complaint and the attached documents or
evidence.91 Petitioner Ladlad claims that he was not served a
subpoena due to the false address indicated in the 12 undated
letters of P C/Insp. Almaden and Army Captain Tiu to Prosecutor
Vivero.92 Furthermore, even though his counsels filed their formal
entry of appearance before the Office of the Prosecutor, petitioner
Ladlad was still not sent a subpoena through his counsels’
addresses.93 Thus, they were deprived of the right to file counter-
affidavits.
Petitioner Ocampo claims that Prosecutor Vivero, in collusion with P
C/Insp. Almaden and Army Captain Tiu, surreptitiously inserted the
Supplemental Affidavit of Zacarias Piedad in the records of the case
without furnishing petitioner Ocampo a copy.94 The original affidavit
of Zacarias Piedad dated 14 September 2006 stated that a meeting
presided by petitioner Ocampo was held in 1984, when the
launching of Operation VD was agreed upon.95Petitioner Ocampo
refuted this claim in his Counter-affidavit dated 22 December 2006
stating that he was in military custody from October 1976 until his
escape in May 1985.96 Thereafter, the Supplemental Affidavit of
Zacarias Piedad dated 12 January 2007 admitted that he made a
mistake in his original affidavit, and that the meeting actually took
place in June 1985.97 Petitioner Ocampo argues that he was denied
the opportunity to reply to the Supplemental Affidavit by not being
furnished a copy thereof.
Petitioner Ocampo also claims that he was denied the right to file a
motion for reconsideration or to appeal the Resolution of Prosecutor
Vivero, because the latter deliberately delayed the service of the
Resolution by 19 days, effectively denying petitioner Ocampo his
right to due process.98
As to the claim of petitioners Echanis and Baylosis, we quote the
pertinent portion of Prosecutor Vivero’s Resolution, which states:
In connection with the foregoing and pursuant to the Revised Rules
of Criminal Procedure[,] the respondents were issued and served
with Subpoena at their last known address for them to submit their
counter-affidavits and that of their witnesses.
Majority of the respondents did not submit their counter-affidavits
because they could no longer be found in their last known address,
per return of the subpoenas. On the other hand, Saturnino Ocampo
@ Satur, Fides Lim, Maureen Palejaro and Ruben Manatad
submitted their Counter-Affidavits. However, Vicente Ladlad and
Jasmin Jerusalem failed to submit the required Counter Affidavits in
spite entry of appearance by their respective counsels.99
Section 3(d), Rule 112 of the Rules of Court, allows Prosecutor Vivero
to resolve the complaint based on the evidence before him if a
respondent could not be subpoenaed. As long as efforts to reach a
respondent were made, and he was given an opportunity to present
countervailing evidence, the preliminary investigation remains
valid.100The rule was put in place in order to foil underhanded
attempts of a respondent to delay the prosecution of offenses.101
In this case, the Resolution stated that efforts were undertaken to
serve subpoenas on the named respondents at their last known
addresses. This is sufficient for due process. It was only because a
majority of them could no longer be found at their last known
addresses that they were not served copies of the complaint and the
attached documents or evidence.
Petitioner Ladlad claims that his subpoena was sent to the
nonexistent address "53 Sct. Rallos St., QC,"102 which had never been
his address at any time.103 In connection with this claim, we take
note of the fact that the subpoena to Fides Lim, petitioner Ladlad’s
wife,104 was sent to the same address, and that she was among those
mentioned in the Resolution as having timely submitted their
counter-affidavits.
Despite supposedly never receiving a subpoena, petitioner Ladlad’s
counsel filed a formal entry of appearance on 8 December
2006.105 Prosecutor Vivero had a reason to believe that petitioner
Ladlad had received the subpoena and accordingly instructed his
counsel to prepare his defense.
Petitioner Ladlad, through his counsel, had every opportunity to
secure copies of the complaint after his counsel’s formal entry of
appearance and, thereafter, to participate fully in the preliminary
investigation. Instead, he refused to participate.
We have previously cautioned that "litigants represented by counsel
should not expect that all they need to do is sit back, relax and await
the outcome of their case."106 Having opted to remain passive during
the preliminary investigation, petitioner Ladlad and his counsel
cannot now claim a denial of due process, since their failure to file a
counter-affidavit was of their own doing.
Neither do we find any merit in petitioner Ocampo’s allegation of
collusion to surreptitiously insert the Supplemental Affidavit of
Zacarias Piedad in the records. There was nothing surreptitious
about the Supplemental Affidavit since it clearly alludes to an earlier
affidavit and admits the mistake committed regarding the date of
the alleged meeting. The date of the execution of the Supplemental
Affidavit was also clearly stated. Thus, it was clear that it was
executed after petitioner Ocampo had submitted his counter-
affidavit. Should the case go to trial, that will provide petitioner
Ocampo with the opportunity to question the execution of Zacarias
Piedad’s Supplemental Affidavit.
Neither can we uphold petitioner Ocampo’s contention that he was
denied the right to be heard. For him to claim that he was denied
due process by not being furnished a copy of the Supplemental
Affidavit of Zacarias Piedad would imply that the entire case of the
prosecution rested on the Supplemental Affidavit. The OSG has
asserted that the indictment of petitioner Ocampo was based on the
collective affidavits of several other witnesses107 attesting to the
allegation that he was a member of the CPP/NPA/NDFP Central
Committee, which had ordered the launch of Operation VD.
As to his claim that he was denied the right to file a motion for
reconsideration or to appeal the Resolution of Prosecutor Vivero due
to the 19-day delay in the service of the Resolution, it must be
pointed out that the period for filing a motion for reconsideration or
an appeal to the Secretary of Justice is reckoned from the date of
receipt of the resolution of the prosecutor, not from the date of the
resolution. This is clear from Section 3 of the 2000 National
Prosecution Service Rule on Appeal:
Sec. 3. Period to appeal. – The appeal shall be taken within fifteen
(15) days from receipt of the resolution, or of the denial of the
motion for reconsideration/ reinvestigation if one has been filed
within fifteen (15) days from receipt of the assailed resolution. Only
one motion for reconsideration shall be allowed. (Emphasis
supplied)
Thus, when petitioner Ocampo received the Resolution of
Prosecutor Vivero on 12 March 2007,108 the former had until 27
March 2007 within which to file either a motion for reconsideration
before the latter or an appeal before the Secretary of Justice.
Instead, petitioner Ocampo chose to file the instant petition for
certiorari directly before this Court on 16 March 2007.
B. Issuance of the Warrants of Arrest
Article III, Section 2 of the Constitution provides that "no search
warrant or warrant of arrest shall issue except upon probable cause
to be determined personally by the judge after examination under
oath or affirmation of the complainant and the witnesses he may
produce."
Petitioner Ocampo alleges that Judge Abando did not comply with
the requirements of the Constitution in finding the existence of
probable cause for the issuance of warrants of arrest against
petitioners.109
Probable cause for the issuance of a warrant of arrest has been
defined as "such facts and circumstances which would lead a
reasonably discreet and prudent man to believe that an offense has
been committed by the person sought to be arrested."110 Although
the Constitution provides that probable cause shall be determined
by the judge after an examination under oath or an affirmation of
the complainant and the witnesses, we have ruled that a hearing is
not necessary for the determination thereof.111 In fact, the judge’s
personal examination of the complainant and the witnesses is not
mandatory and indispensable for determining the aptness of issuing
a warrant of arrest.112
It is enough that the judge personally evaluates the prosecutor’s
report and supporting documents showing the existence of probable
cause for the indictment and, on the basis thereof, issue a warrant
of arrest; or if, on the basis of his evaluation, he finds no probable
cause, to disregard the prosecutor's resolution and require the
submission of additional affidavits of witnesses to aid him in
determining its existence.113
Petitioners Echanis and Baylosis claim that, had Judge Abando
painstakingly examined the records submitted by Prosecutor Vivero,
the judge would have inevitably dismissed the charge against
them.114 Additionally, petitioner Ocampo alleges that Judge Abando
did not point out facts and evidence in the record that were used as
bases for his finding of probable cause to issue a warrant of arrest.115
The determination of probable cause for the issuance of warrants of
arrest against petitioners is addressed to the sound discretion of
Judge Abando as the trial judge.116 Further elucidating on the wide
latitude given to trial judges in the issuance of warrants of arrest, this
Court stated in Sarigumba v. Sandiganbayan117 as follows:
x x x. The trial court's exercise of its judicial discretion should not, as
a general rule, be interfered with in the absence of grave abuse of
discretion. Indeed, certiorari will not lie to cure errors in the trial
court's appreciation of the evidence of the parties, the conclusion of
facts it reached based on the said findings, as well as the conclusions
of law. x x x.
Whether or not there is probable cause for the issuance of warrants
for the arrest of the accused is a question of fact based on the
allegations in the Informations, the Resolution of the Investigating
Prosecutor, including other documents and/or evidence appended
to the Information.
Here, the allegations of petitioners point to factual matters indicated
in the affidavits of the complainants and witnesses as bases for the
contention that there was no probable cause for petitioners’
indictment for multiple murder or for the issuance of warrants for
their arrest. As stated above, the trial judge’s appreciation of the
evidence and conclusion of facts based thereon are not interfered
with in the absence of grave abuse of discretion. Again, "he
sufficiently complies with the requirement of personal
determination if he reviews the [I]nformation and the documents
attached thereto, and on the basis thereof forms a belief that the
accused is probably guilty of the crime with which he is being
charged."118
Judge Abando’s review of the Information and the supporting
documents is shown by the following portion of the judge’s 6 March
2007 Order:
On the evaluation of the Resolution and its Information as submitted
and filed by the Provincial Prosecution of Leyte Province supported
by the following documents: Affidavits of Complainants, Sworn
Statements of Witnesses and other pertinent documents issued by
the Regional Crime Laboratory Office, PNP, Region VIII and Camp common crimes. No one disputes the well-entrenched principle in
Crame, Quezon City, pictures of the grave site and skeletal remains, criminal procedure that the institution of criminal charges, including
this court has the findings [sic] of probable cause in the commission whom and what to charge, is addressed to the sound discretion of
by all mentioned accused of the crime charged.119 the public prosecutor.123
At bottom, issues involving the finding of probable cause for an But when the political offense doctrine is asserted as a defense in
indictment and issuance of a warrant of arrest, as petitioners are the trial court, it becomes crucial for the court to determine whether
doubtless aware, are primarily questions of fact that are normally the act of killing was done in furtherance of a political end, and for
not within the purview of a petition for certiorari,120 such as the the political motive of the act to be conclusively demonstrated.124
petitions filed in the instant consolidated cases. Petitioners aver that the records show that the alleged murders
The political offense doctrine is not a were committed in furtherance of the CPP/NPA/NDFP rebellion, and
ground to dismiss the charge against that the political motivation behind the alleged murders can be
petitioners prior to a determination clearly seen from the charge against the alleged top leaders of the
by the trial court that the murders CPP/NPA/NDFP as co-conspirators.
were committed in furtherance of We had already ruled that the burden of demonstrating political
rebellion. motivation must be discharged by the defense, since motive is a
Under the political offense doctrine, "common crimes, perpetrated state of mind which only the accused knows.125 The proof showing
in furtherance of a political offense, are divested of their character political motivation is adduced during trial where the accused is
as "common" offenses and assume the political complexion of the assured an opportunity to present evidence supporting his defense.
main crime of which they are mere ingredients, and, consequently, It is not for this Court to determine this factual matter in the instant
cannot be punished separately from the principal offense, or petitions.
complexed with the same, to justify the imposition of a graver As held in the case of Office of the Provincial Prosecutor of
penalty."121 Zamboanga Del Norte v. CA,126 if during trial, petitioners are able to
Any ordinary act assumes a different nature by being absorbed in the show that the alleged murders were indeed committed in
crime of rebellion.122 Thus, when a killing is committed in furtherance of rebellion, Section 14, Rule 110 of the Rules of Court
furtherance of rebellion, the killing is not homicide or murder. provides the remedy, to wit:
Rather, the killing assumes the political complexion of rebellion as its SECTION 14. Amendment or substitution. — A complaint or
mere ingredient and must be prosecuted and punished as rebellion information may be amended, in form or in substance, without leave
alone. of court, at any time before the accused enters his plea. After the
However, this is not to say that public prosecutors are obliged to plea and during the trial, a formal amendment may only be made
consistently charge respondents with simple rebellion instead of
with leave of court and when it can be done without causing
prejudice to the rights of the accused.
However, any amendment before plea, which downgrades the
nature of the offense charged in or excludes any accused from the
complaint or information, can be made only upon motion by the
prosecutor, with notice to the offended party and with leave of
court. The court shall state its reasons in resolving the motion and
copies of its order shall be furnished all parties, especially the
offended party. (n)
If it appears at any time before judgment that a mistake has been
made in charging the proper offense, the court shall dismiss the
original complaint or information upon the filing of a new one
charging the proper offense in accordance with Section 19, Rule 119,
provided the accused shall not be placed in double jeopardy. The
court may require the witnesses to give bail for their appearance at
the trial. (Emphasis supplied)
Thus, if it is shown that the proper charge against petitioners should
have been simple rebellion, the trial court shall dismiss the murder
charges upon the filing of the Information for simple rebellion, as
long as petitioners would not be placed in double jeopardy.
Section 7, Rule 117 of the Rules of Court, states:
SEC. 7. Former conviction or acquittal; double jeopardy. — When an
accused has been convicted or acquitted, or the case against him
dismissed or otherwise terminated without his express consent by a
court of competent jurisdiction, upon a valid complaint or
information or other formal charge sufficient in form and substance
to sustain a conviction and after the accused had pleaded to the
charge, the conviction or acquittal of the accused or the dismissal of
the case shall be a bar to another prosecution for the offense
charged, or for any attempt to commit the same or frustration
thereof, or for any offense which necessarily includes or is
necessarily included in the offense charged in the former complaint
or information.
Based on the above provision, double jeopardy only applies when:
(1) a first jeopardy attached; (2) it has been validly terminated; and
(3) a second jeopardy is for the same offense as in the first.127
A first jeopardy attaches only after the accused has been acquitted
or convicted, or the case has been dismissed or otherwise
terminated without his express consent, by a competent court in a
valid indictment for which the accused has entered a valid plea
during arraignment.128
To recall, on 12 May 2006, an Information for the crime of rebellion,
as defined and penalized under Article 134 in relation to Article 135
of the Revised Penal Code, docketed as Criminal Case No. 06-944 was
filed before the RTC Makati against petitioners and several others.129
However, petitioners were never arraigned in Criminal Case No. 06-
944.1awp++i1 Even before the indictment for rebellion was filed
before the RTC Makati, petitioners Ocampo, Echanis and Ladlad had
already filed a petition before this Court to seek the nullification of
the Orders of the DOJ denying their motion for the inhibition of the
members of the prosecution panel due to lack of impartiality and
independence.130 When the indictment was filed, petitioners
Ocampo, Echanis and Ladlad filed supplemental petitions to enjoin
the prosecution of Criminal Case No. 06-944.131We eventually
ordered the dismissal of the rebellion case. It is clear then that a first
jeopardy never had a chance to attach.
Petitioner Ocampo shall remain on provisional liberty under the
₱100,000 cash bond posted before the Office of the Clerk of Court.
He shall remain on provisional liberty until the termination of the
proceedings before the RTC Manila.1âwphi1
The OSG has given its conformity to the provisional liberty of
petitioners Echanis, Baylosis and Ladlad in view of the ongoing peace
negotiations. Their provisional release from detention under the
cash bond of ₱100,000 each shall continue under the condition that
their temporary release shall be limited to the period of their actual
participation as CPP-NDF consultants in the peace negotiations with
the government or until the termination of the proceedings before
the RTC Manila, whichever is sooner. It shall be the duty of the
government to inform this Court the moment that peace
negotiations are concluded.
WHEREFORE, the instant consolidated petitions are DISMISSED. The
RTC of Manila, Branch 32, is hereby ORDERED to proceed with
dispatch with the hearing of Criminal Case No. 08-262163. Petitioner
Saturnino C. Ocampo shall remain on temporary liberty under the
same bail granted by this Court until the termination of the
proceedings before the RTC Manila. Petitioners Randall B. Echanis,
Rafael G. Baylosis and Vicente P. Ladlad shall remain on temporary
liberty under the same bail granted by this Court until their actual
participation as CPP-NDF consultants in the peace negotiations with
the government are concluded or terminated, or until the
termination of the proceedings before the RTC Manila, whichever is
sooner.
SO ORDERED.
 G.R. No. 200628, January 13, 2015
MARIA THERESA G. GUTIERREZ, Petitioner, v. COMMISSION ON AUDIT
AND AUDITOR NARCISA DJ JOAQUIN, Respondents.
DECISION
LEONEN, J.:
A cashier who is found to have been negligent in keeping the funds in his or
her custody cannot be relieved from his or her accountability for amounts
lost through robbery.
This is a Petition for Certiorari under Rule 65 of the Rules of Court assailing
the June 5, 2008 withholding order and the Commission on Audit's January
31, 2012 decision holding Maria Theresa G. Gutierrez (Gutierrez) liable for
the P10,105,687.25 that was lost through robbery.
Gutierrez is a Cash Collecting Officer, with the designation of Cashier III at
National Food Authority-National Capital Region, National District Office
(NFA-NCR, NDO).1 On May 30, 2008, she had collections amounting to
F9,390,834.00, covered by Official Receipt Nos. 0420975 to 0421246.2 On
that day, she placed the collections in a wooden cabinet.3
The next day,.Gutierrez's collections amounted to P1,505,625.00.4 Of that
amount, P714,852.75 and an undeposited amount of P0.50 from March
2008 were placed in a wooden cabinet.5 The rest was placed in the safety
vault.6
The total undeposited collection as of March 31, 2008 was P10,896,459.50.
Of that amount, P10,105,687.25 was placed in the "pearless" boxes7 in a
wooden cabinet and P790,772.25 was placed in the safety vault.8
On June 1, 2008, at about 1:35 a.m., armed men in military uniforms with
Philippine National Police-Security Agencies and Guards Supervision Division
(PNP-SAGSD) identifications entered the NFA-NCR, NDO.9 The armed men
disarmed NFA-NCR, NDO's security guards and took Gutierrez's undeposited
collections.10 Lockheed Detective and Watchman Agency, Inc. was NFA-NCR,
NDO's contracted security agency.11
The security guards on duty executed their respective affidavits. Based on
their affidavits, armed men entered the NFA-NCR, NDO compound after they
had been disarmed, threatened, and tied up.12 The security guards
immediately reported the incident to the Valenzuela Police Station,13 where
an investigation report14 was issued consistent with the security guards'
narrations in their affidavits.15
On June 3, 2008, the Commission on Audit, National Food Authority-NCR,
North District Office, Malanday, Valenzuela City, through State Auditor
Narcisa DJ Joaquin (State Auditor Joaquin), issued a demand letter to
Gutierrez.16 Gutierrez was informed that she must immediately produce the
missing funds amounting to P10,105,686.75.17 She was also ordered to
submit within 72 hours a written explanation why such shortage occurred.18
On June 5, 2008, the Commission on Audit, through State Auditor Joaquin,
issued a withholding order, addressed to Roberto S. Musngi (Musngi),
Manager of National Food Authority, North District Office.19Musngi was
informed that upon examination of Gutierrez's account on June 1, 2008, it
was established that there was a P10,105,686.75 shortage in Gutierrez's
accountabilities.20 Pursuant to Section 37 of Presidential Decree No. 1445,
Musngi was directed to withhold Gutierrez's salaries and other emoluments
so these could be applied to the satisfaction of the shortage.21
In response to the June 3, 2008 demand letter of the Commission on Audit,
Gutierrez executed an affidavit dated June 6, 2008 wherein she narrated
that she had been serving as National Food Authority's Cash Collecting
Officer since 1985.22 Her office was located at the far end of the National
Food Authority building.23 That was where the "pearless" boxes and the
cabinet where she kept her collections could be found.24 Quoted below is her
explanation for using "pearless" boxes to keep her collections:
chan roblesv irtuallawl ib rary
6. That because of the volume of money I accept every day, which averages
from 4 to 6 million pesos every day depending on the seasons, most of my
time inside the office is spent to counting, bundling by different
denominations the money. To emphasize the point, the money that I am
accepting from remittances and payments are of different denominations,
from twenty five centavo (Php0.25) coins to one thousand peso
(Php1,000.00) bills. The coins alone would amount in the average of Twelve
thousand pesos (Php12,000.00). I could literally say that from the time I
timed in the office at about 6:30 a.m. up to the time I timed out at about
6:30 p.m., my only rest from my work is to [be] going to the ladies room
and the break during lunch time.
....
8. That when the rice crises came up on April 2008, volume of work
including the amount of money that comes into my office almost doubled.
That because of the heavy operations in our office I had an average
collection starting April 2008 of 6 to 9 Million Pesos every day of every
denomination, with coins averaging from 12 to 16 thousand pesos that
needs to be counted, receipted, bundled, balanced, reported and kept.
9. That it is almost automatic that when I enter my office what comes to my
mind is to count the money and bundle them by the hundreds and prepare
receipts for the payments and remittances until the time to leave at about
6:30 p.m. I would also cause the deposit of the money collected the day
before to Land Bank. But there were even times that because of the volume
of the money, bank representatives could not sort out all the smaller bills
(P20s and P50s) being picked up from our office as the Armor van should be
in the bank at 3:00 p.m. Thus, there would be arrangements in the bank
that the counting would continue inside their office, which oftentimes lasts
until late night.
10. That since April 2008 or the start of the heavy operations, I have been
putting some of the money in the "pearless" box, because of the volume,
which I have to carry and keep safe at the cabinet inside. I have six (6)
pearless boxes in the office.
....
13. That since May 30, 2008 is a Friday, banks are closed the following day
and the money collected on said date would have remained in my office until
the next banking day.
....
18. It was very unfortunate that the money accepted on May 30, 2008 and
the collection in the night before the robbery were left in the pearless box
inside the cabinet and not inside the vault. But with the volume of money,
the vault has not enough space to accommodate all of it.
19. And with the amount of work that I am doing every day from 6:30 in the
morning up to 6:30 p.m., more or less, where my only rest is literally going
to the ladies room, and with the safe location of my office, it did not come to
my mind that this incident would come.
20. That I have nothing to do with what happened in the incident of June 1,
2008 at 1:30 in the morning and I am not in control now to produce those
missing funds taken by the robbers.25 c ralawlawli bra ry
On June 10, 2008, Gutierrez requested relief from money accountability for
the loss of the collections.26The letter was addressed to State Auditor
Joaquin.
In the letter dated June 26, 2008 addressed to State Auditor Joaquin,
Gutierrez appealed the withholding order issued on June 5, 2008.27 She
prayed that her salaries and emoluments be given to her while the robbery
incident was still under investigation.28 She was a widow who had three (3)
dependents and an 85-year-old mother residing with her in need of medical
attention.29 She had no other source of income to support herself, her
dependents, and her mother.30
On June 26, 2008, State Auditor Joaquin denied Gutierrez's appeal of the
withholding order.31 State Auditor Joaquin informed Gutierrez that there was
already a prima facie case for malversation against her under Article 217 of
the Revised Penal Code.32
On July 11, 2008, Gutierrez filed a notice of appeal of State Auditor
Joaquin's withholding order dated June 5, 2008.33
On July 21, 2008, Atty. Saturnino R. Rola, Jr., Director of the National Food
Authority, Enforcement, Investigation and Prosecution Department,
submitted a memorandum addressed to the Administrator, Jessup P.
Navarro.34 He found that the security agency was solidarity liable with
security guard Romeo Casta for the amount lost.35 He also found that
Gutierrez, by keeping her collections in unsecured "pearless" boxes and not
in a vault, was grossly negligent in safekeeping her collections.36 He
recommended that Gutierrez be administratively charged with dishonesty,
gross neglect of duty, conduct prejudicial to the best interest of the service,
and violation of reasonable office rules and regulations without prejudice to
the filing of appropriate criminal charges.37 He also recommended the
restitution of the amount lost from Lockheed Detective and Watchman
Agency, Inc. Further, he recommended the ban of security guard Romeo
Casta from deployment in any National Food Authority installations.38
Similar incidents of robbery at different National Food Authority offices
involving Lockheed Detective and Watchman Agency, Inc. were reported
between 2006 and 2008.39
On September 11, 2008, Commission on Audit Director IV Tito S. Nabua
(Director Nabua) issued a decision denying Gutierrez's appeal40 and
expressing his agreement with the issuance of the withholding order.41 The
robbery incident was acknowledged in the decision.42 However, Gutierrez's
alleged act of negligence in the performance of her duties could not be set
aside.43 Her failure to follow safekeeping procedures showed lack of due care
on her part.44 Aside from Article 217 of the Revised Penal Code, the liabilities
of an accountable officer are found in Section 105 of Presidential Decree No.
1445.45
Gutierrez filed a motion for reconsideration of the September 11, 2008
decision of Director Nabua on the ground that he did not give her a chance
to file a memorandum of appeal before submission of the case for
resolution.46 According to Gutierrez, this was a violation of the rules and of
her right to due process.47She also cited reversible error in upholding State
Auditor Joaquin's order despite lack of factual and legal bases as ground for
her motion.48
On January 31, 2012, the Commission on Audit denied her request for relief
from money accountability.49Its ruling is reproduced as follows: c hanro blesvi rt uallawl ibra ry
WHEREFORE, premises considered, this Commission DENIES the herein
request for relief from money accountability, there being positive showing of
fault or negligence on the part of Ms. Maria Theresa G. Gutierrez in the
safekeeping and custody of subject government funds.
Accordingly, Ms. Gutierrez shall be liable to pay to1 the NFA the missing
amount of P10,105,687.25. This is without prejudice to the right of the NFA-
NCR, NDO to proceed against Lockheed Detective and Watchman Agency,
Inc. for the indemnification of the loss as security services provider to the
NFA-NCR, NDO, Valenzuela City.50 cralawlawli bra ry
The Commission on Audit found that Gutierrez was negligent in safekeeping
her collections.51 Placement of collections in a "pearless" box instead of in
the safety vault, especially given the volume of collections, constituted gross
negligence on her part.52 Her 20-year service aggravated her
negligence.53 It should have made her more "security-conscious."54
The Commission on Audit also found that the security guards' failure to
secure National Food Authority's premises was a violation of the contract
between National Food Authority and Lockheed Detective and Watchman
Agency, Inc.55
We decide whether Gutierrez's due process rights were violated when the
Commission on Audit decided her appeal without requiring her to file an
appeal memorandum. We also decide whether Gutierrez is liable for the
amounts lost through a robbery.
Petitioner emphasizes that she was first assisted by counsel only when she
filed a notice of appeal. Respondent auditor had already issued the
withholding order dated June 5, 2008 and .letter dated June 26, 2008 before
petitioner was assisted by counsel.
Petitioner argues that her right to due process was violated when a decision
was rendered against her without giving her a chance to file an appeal
memorandum in accordance with Section 5 of Rule V of the Revised Rules of
Procedure of the Commission on Audit. The appeal memorandum was her
chance to raise issues against respondent auditor's orders to prove her case
and to submit evidence to support her defense.56
Petitioner's right to due process was further violated when her motion for
reconsideration was resolved by the Commission on Audit instead of by
Director Nabua. This prevented her from filing a petition for review of
Director Nabua's decision before the Commission on Audit.57
Petitioner cites Article IX(A), Section 7 of the Constitution to support her
argument that she has a right to present her side in a memorandum.58 It
provides:c han roblesv irt uallawl ibra ry
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. (Emphasis
supplied)
Petitioner argues that aside from the right to be heard, administrative due
process also requires the right to present evidence and for such evidence to
be considered by the deciding tribunal.59
Lastly, petitioner points out that the cause of the shortage was the robbery
incident, which was a result of the negligence of the security guards and not
her negligence.60 The vault that was assigned to her did not have enough
space to accommodate her collections.61
On the other hand, respondents argue that petitioner was not deprived of
due process when she was not given the opportunity to file an appeal
memorandum. Her affidavit was a sufficient platform to raise her
defenses.62 Moreover, the presence of a counsel is not required in
administrative proceedings.63
Respondents also argue that petitioner cannot ask the Director or the
Auditor to allow her to file an appeal memorandum since it is the
Commission on Audit that has the exclusive jurisdiction over requests for
relief from accountability in excess of P500,000.00.64 This, according to
respondent, is based on Commission on Audit Resolution No. 93-605 dated
August 3, 1993.65
Finally, respondents argue that the circumstances show that petitioner fell
short of the demands of her position as cashier.66 What she could have done
was to request additional vaults if the vaults in her possession were not
enough to accommodate all her collections.67
We rule for respondents. cha nRoblesv irt ual Lawlib rary
I primarily to preserve public trust and protect the integrity of public service.72
Petitioner's due process rights were not violated
Petitioner argues that she was assisted by counsel only after a withholding
order had already been issued. She also argued that the Commission on
Audit Director's issuance of a decision on her appeal without requiring her to
file an appeal memorandum was a violation of her due process rights.
Petitioner's arguments are not tenable.
The right to counsel under Section 12(1) of Article III of the Constitution
applies in criminal proceedings, but not in administrative proceedings. It is a
right given to persons accused of an offense during criminal
investigation.68 Any proceeding conducted by an administrative body is not
part of the criminal investigation or prosecution.69
Thus, this court said in Remolona v. Civil Service Commission:70 ChanRoble sVirt ualawli bra ry
While investigations conducted by an administrative body may at times be
akin to a criminal proceeding, the fact remains that under existing laws, a
party in an administrative inquiry may or may not be assisted by counsel,
irrespective of the nature of the charges and of the respondent's capacity to
represent himself, and no duty rests on such body to furnish the person
being investigated with counsel. In an administrative proceeding, a
respondent has the option of engaging the services of counsel or not. This is
clear from the provisions of Section 32, Article VII of Republic Act No. 2260
(otherwise known as the Civil Service Act) and Section 39, paragraph 2,
Rule XIV (on discipline) of the Omnibus Rules Implementing Book V of
Executive Order No. 292 (otherwise known as the Administrative Code of
1987). Thus, the right to counsel is not always imperative in administrative
investigations because such inquiries are conducted merely to determine
whether there are facts that merit disciplinary measure against erring public
officers and employees, with the purpose of maintaining the dignity of
government service. As such, the hearing conducted by the investigating
authority is not part of a criminal prosecution.71 cra lawlawlib rary
While the purpose of criminal proceedings is to determine if a person
suspected of committing an offense has indeed committed an offense, the
purpose of an administrative proceeding is to determine if a person in public
office has violated the trust reposed in him or her by the public. In a criminal
proceeding, if a person is found guilty of an offense, the corresponding
punishment is imposed primarily to protect the public from being exposed to
and correct his or her deviant behavior. In an administrative proceeding, if a
person is found administratively liable, the corresponding penalty is imposed
Petitioner is not being accused of or investigated for a crime. The
Commission on Audit's withholding order and its denial of petitioner's
request for relief from shortage were issued after it had made a finding that
the money entrusted to petitioner was lost. A finding of criminal liability was
not the reason for the Commission on Audit's issuances. The Commission on
Audit has no jurisdiction to investigate a crime or to make a finding of
criminal liability. Any proceeding conducted prior to these issuances was for
the purpose of determining if petitioner's salaries should be withheld or if
petitioner should be relieved from her liability as a cashier.
Petitioner argues that Rule V, Section 5 of the Revised Rules of Procedure of
the Commission on Audit73requires that she be given an opportunity to file
an appeal memorandum before the case is submitted for decision. Section 5
is cited as follows:
c hanro blesvi rt uallawl ibra ry
Section 5. APPEAL MEMORANDUM AND REPLY - Upon receipt of the records
of the case, the Director shall issue an Order requiring the appellant to file
an appeal memorandum within twenty (20) days from receipt of the order.
The appellant shall serve a copy of his appeal memorandum to the Auditor
or appellee who may reply thereto within the same period of time. With the
filing of the appeal memorandum and reply or lapse of the period within
which to file them, the appeal shall be deemed submitted for decision.
Petitioner also argues that her due process rights were violated when the
Commission on Audit decided her motion for reconsideration of the
Commission on Audit Director's decision dated September 11, 2008, and
denied her request for relief from accountability without her filing a Corporate and National
memorandum or a petition for review. She cites Article IX(A), Section 7 of
the Constitution:chanroble svi rtual lawlib rary
Unit Auditor Provincial and not exceeding P5 0,000
Section 7. Each Commission shall decide by a majority vote of all its City Auditor
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, Director/Officer-in-Charge
or memorandum required by the rules of the Commission or by the in excess of P50,000 up to
of Central and Regional
Commission itself. Unless otherwise provided by this Constitution or by law, P100,000
any decision, order, or ruling of each Commission may be brought to the Offices
Supreme Court on certiorari by the aggrieved party within thirty days from
receipt of a copy thereof. (Emphasis supplied)
in excess of P100,000 up
Petitioner's due process rights were not violated when the Commission on Assistant Commissioner
Audit Director had failed to require her to submit an appeal memorandum to P200,000
before he decided her appeal of the State Auditor's issuance of a withholding
order. There was also no violation of due process rights when the
Commission on Audit issued its January 31, 2012 decision denying her in excess of P200,000 up
COA Chairman
request for relief from accountability, without a petition for review of the to P500,000
Commission on Audit Director's decision. The right to appeal is not part of
due process.74 Neither is it a natural right.75
Commission Proper above P500,000
Moreover, petitioner's relief from accountability may be decided by the The lost accountability involved in this case amounts to 10,105,687.75.
Commission on Audit at the first instance. Based on Commission on Audit
Resolution No. 93-605,76 only the Commission on Audit may approve In any case, we determine if petitioner's due process rights were violated in
requests for relief from accountabilities amounting to more than the course of the proceedings before the Commission on Audit.
P500,000.00. Thus: chanrob lesvi rtua llawlib ra ry

Now, therefore, pursuant to Article IX-D, Section 2(2) of the Constitution, This court in Ang Tibay v. Court of Industrial Relations77 ruled that
Section 73 of PD 1445 and in conformity with Section 378 of the Local administrative due process requires only the following: c han roblesv irt uall awlibra ry

Government Code, the Commission Proper hereby resolves, as it does

hereby resolve, to authorize the following COA Officials to act on requests
(a) The party should be allowed to present his or her
for relief from property and/or money accountability in the amounts own case and submit supporting evidence;
indicated hereunder, except in cases of questions of law, without prejudice (b) The deciding tribunal must consider the party's
to the usual appeal that may be taken therefrom to the Commission Proper,
pursuant to Section 48 of PD 1445. evidence;
(c) There is evidence to support the tribunal's
Total Amount of Money decision;
Approving COA Official or Cost of Property (d) The evidence supporting the tribunal's decision
Involved must be substantial or such "relevant evidence as
a reasonable mind might accept as adequate to
support a conclusion";78
(e) The tribunal's decision was based on the evidence
The decisions of the State Auditor, the Commission on Audit Director, and
presented or the records of the case disclosed to the Commission on Audit had considered these facts and defenses before
the parties; they made conclusions' against petitioner. Therefore, petitioner cannot say
that her due process rights were violated for the lack of order to file an
(f) The tribunal's decision must be based on the appeal memorandum.
judges' independent consideration of the facts and
chanRoblesvirtual Lawli bra ry

law governing the case; and II

(g) The tribunal's decision must be rendered such that Relief from cashier's liability cannot be granted if the cashier was
the issues of the case and the reasons for the negligent in keeping funds under his or her custody
decisions are known to the parties.79 As a cashier for the National Food Authority, petitioner qualified as an
In sum, due process in administrative proceedings does not necessarily
accountable officer under Presidential Decree No. 1445. Accountable officers
require a trial type of hearing. Neither does it require an exchange of
are government officers whose duties require them to possess or be in
pleadings between or among the parties. Due process is satisfied if the party
custody of government funds or properties.82 They are in charge of the
who is properly notified of allegations against him or her is given an
safekeeping of the funds or properties under their custody.83
opportunity to defend himself or herself against those allegations, and such
defense was considered by the tribunal in arriving at its own independent
Presidential Decree No. 1445 makes cashiers liable for the value of the
conclusions. This court explained in Ledesma v. Court of Appeals:80
money or property in their custody in case they were lost because of
ChanRob les Vi rtualawl ib rary

Due process is satisfied when a person is notified of the charge against him
negligence or unlawful deposit, use, or application. Thus:
and given an opportunity to explain or defend himself. In administrative
chan roblesv irtuallawl ib rary

Section 105. Measure of liability of accountable officers.

proceedings, the filing of charges and giving reasonable opportunity for the
person so charged to answer the accusations against him constitute the
(1) Every officer accountable for government property shall be liable for its
minimum requirements of due process. The essence of due process is simply
money value in case of improper or unauthorized use or misapplication
to be heard, or as applied to administrative proceedings, an opportunity to
thereof, by himself or any person for whose acts he may be responsible. We
explain one's side, or an opportunity to seek a reconsideration of the action
shall likewise be liable for all losses, damages, or deterioration occasioned
or ruling complained of.
by negligence in the keeping or use of the property, whether or not it be at
the time in his actual custody.
....
(2) Every officer accountable for government funds shall be liable for all
Administrative due process cannot be fully equated with due process in its
losses resulting from the unlawful deposit, use, or application thereof and for
strict judicial sense for it is enough that the party is given the chance to be
all losses attributable to negligence in the keeping of the funds.
heard before the case against him is decided.81
Imposing liability on cashiers for lost money or property in their custody
cralaw lawlib rary

Petitioner's arguments and the issues she raised are sufficiently expressed in
means that the value of the money or property becomes their debt.
her affidavit submitted to the Commission on Audit, her motion for
reconsideration of the Commission on Audit Director's decision, and her
The Commission on Audit has the power to withhold payment of money due
petition and memorandum submitted to this court. Even though petitioner
to persons indebted to the government. Section 37 of Presidential Decree
was not able to file an appeal memorandum, she was able to state her
No. 1445 provides:
substantive defenses in the pleadings she filed before the Commission on
cha nro blesvi rtua llawli bra ry

Section 37. Retention of money for satisfaction of indebtedness to

Audit and this court. According to petitioner, the money that was lost
government. When any person is indebted to any government agency, the
through robbery was not a result of her negligence. She kept the money in
Commission may direct the proper officer to withhold the payment of any
"pearless" boxes for practical and not for malicious reasons.
money due such person or his estate to be applied in satisfaction of the
indebtedness.
Petitioner does not deny that the money for which she was accountable as a
cashier was lost through robbery. She also did not deny that she kept the
greater portion of the amount lost, not in the vault, but in boxes, for
practical reasons. She was not motivated by malice when she kept the
money that was in her possession in the boxes.
Without going to the issue of the existence of negligence, the Commission
on Audit may already issue a withholding order for petitioner's salaries and
emoluments because of this. Petitioner's act of keeping the money in boxes
instead of in the vault can be subsumed under "unlawful deposit" that may
cause a cashier to incur liability in case the unlawfully deposited money was
lost.
A similar case, Leano v. Domingo,84 showed that the safety of money cannot
be ensured when it is deposited in enclosures other than the safety
vault. Leano also involves a government cashier whose money accountability
was lost through robbery. As in this case, the cashier did not keep her
money accountabilities in the vault. Requesting this court to review the
Commission on Audit's denial of her request for accountability, Leano argued
that she had no other choice but to use a steel cabinet to keep her money
accountabilities because the former cashier did not entrust to her the safety
vault's combination. This court upheld the Commission on Audit's decision to
deny Leano's request for relief from accountabilities and found her to be
negligent in handling her money accountabilities: chan roble svirtual lawlib rary
[I]t is evident that petitioner fell short of the demands inherent in her
position. As aptly argued by the Solicitor General, an exercise of proper
diligence expected of her position would have compelled petitioner to
request an immediate change of the combination of the safe. However, the
record is bare of any showing that petitioner had, at least, exerted any effort
to have the combination changed, content with the fact that, according to
her, the former cashier also used the steel cabinet as depository of the
funds.
In addition, it was found that the use of the steel cabinet was not a wise and
prudent decision. The steel cabinet, even when locked, at times could be
pulled open, thus it can be surmised that even without the use of a key, the
robbery could be committed once the culprits succeed in entering the room
(Progress Report of the Police dated February 28, 1985). Moreover, the
original key of the steel cabinet was left inside a small wooden box placed
near the steel cabinet; it is therefore highly possible that the said steel
cabinet was opened with the use of its original key (Police Alarm Report).85
Hence, keeping National Food Authority collections outside the vault
constituted negligence on the part of petitioner.
The test of negligence is stated in Picart v. Smith, Jr.:86
ChanRoblesVirt ualawli bra ry
The test by which to determine the existence of negligence in a particular
case may be stated as follows: Did the defendant in doing the alleged
negligent act use that reasonable care and caution which an ordinarily
prudent person would have used in the same situation? If not, then he is
guilty of negligence.87
c ralawlawli bra ry
"The existence of negligence in a given case is not determined by reference
to the personal judgment of the actor in the situation before him. The Law
considers what would be reckless, blameworthy, or negligent in the man of
ordinary intelligence and prudence and determines liability by that."88
Petitioner is negligent because she failed to use "that reasonable care and
caution which an ordinarily prudent person would have used in the same
situation."89 A cashier in her position would have used the vault to keep her
collections. Petitioner failed to do this. Her negligence is made more
pronounced by the fact that the collections kept in the vault were not taken
by the robbers.
Petitioner insists that the space in the vault was not enough to
accommodate all her collections. However, she admitted that she had been
receiving relatively large collections in the past three (3) months prior to the
robbery. She should have requested an additional vault wherein she could
safely keep her collections. She could also have set aside time to deposit her
collections for the day considering the. amount of cash she had been
collecting, in order to prevent its accumulation. This could have ensured that
the vault's space would be sufficient to keep any remaining collection after
the deposit. This could also have prevented her collections from
accumulating to an amount that rendered any loss through untoward
incidents such as robbery significant. Petitioner failed to even allege that she
exerted effort to obtain additional vaults or to set aside time to deposit her
collections to the bank.
For these reasons, petitioner cannot be relieved from liability. A person who
is negligent in keeping the funds cannot be relieved from liability.90
WHEREFORE, the petition is DENIED.
SO ORDERED.
cra lawlawlib ra ry
G.R. No. 181381 July 20, 2015
SECURITIES and EXCHANGE COMMISSION, Petitioner,
vs.
UNIVERSAL RIGHTFIELD PROPERTY HOLDINGS, INC., Respondent.
The facts are as follows:
Respondent Universal Rightfield Property Holdings, Inc. (URPHI) is a
corporation duly registered and existing under the Philippine Laws,
and is engaged in the business of providing residential and leisure-
related needs and wants of the middle and upper middle-income
market.
On May 29, 2003, petitioner Securities and Exchange Commission
(SEC), through its Corporate Finance Department, issued an Order
revoking URPHI's Registration of Securities and Permit to Sell
Securities to the Public for its failure to timely file its Year 2001
Annual Report and Year 2002 1st, 2nd and 3rd Quarterly Reports
pursuant to Section 173 of the Securities Regulation Code (SRC),
Republic Act No. 8799.
On October 16, 2003, URPHI filed with the SEC a
Manifestation/Urgent Motion to Set Aside Revocation Order and
Reinstate Registration after complying with its reportorial
requirements.
On October 24, 2003, the SEC granted URPHI's motion to lift the
revocation order, considering the current economic situation,
URPHI's belated filing of the required annual and quarterly reports,
and its payment of the reduced fine of ₱82,000.00.
Thereafter, URPHI failed again to comply with the same reportorial
requirements.
In a Notice of Hearing dated June 25, 2004, the SEC directed URPHI
to show cause why its Registration of Securities and Certificate of
Permit to Sell Securities to the Public should not be suspended for
failure to submit the said requirements. Pertinent portion of the
notice reads: Records show that the corporation has failed to submit
the following reports in violation of SRC Rule 17.1:
(1) 2003 Annual Report (SEC Form 17-A); and
(2) 2004 1st Quarter Report (SEC Form 17-Q)
The company has been allowed a non-extendible period until May
31, 2004 within which to file its 2003 Annual Report but to date the
said report has not been submitted.
In view of the foregoing and considering the inadequate information
available to the public, the corporation is hereby directed to show
cause why the Registration of its Securities and Certificate of Permit
to Sell Securities should not be suspended, in a hearing scheduled
before Atty. Francia A. Tiuseco-Manlapaz on July 6, 2004, at the
Securities Registration Division, Corporation Finance Department of
the Commission, 6th Floor, SEC Building, EDA, Greenhills,
Mandaluyong, Metro Manila at 10:00 o'clock in the morning. Failure
of the company to appear, through its representative, at the said
hearing shall be deemed a waiver on its part to be heard with regard
to the suspension of its Certificate of Permit to Sell Securities to the
Public.
SO ORDERED.4
During the scheduled hearing on July 6, 2004, URPHI, through its
Chief Accountant, Rhodora Lahaylahay, informed the SEC why it
failed to submit the reportorial requirements, viz.: (1) it was
constrained to reduce its accounting staff due to cost-cutting
measures; thus, some of the audit requirements were not completed
within the original timetable; and (2) its audited financial statements
for the period ending December 31, 2003 could not be finalized by
reason of the delay in the completion of some of its audit
requirements.
In an Order dated July 27, 2004, the SEC suspended URPHI's
Registration of Securities and Permit to Sell Securities to the Public
for failure to submit its reportorial requirements despite the lapse of
the extension period, and due to lack of sufficient justification for its
inability to comply with the said requirements.
On August 23, 2004, the SEC, through its Corporation Finance
Department, informed URPHI that it failed to submit its 2004 2nd
Quarter Report (SEC Form 17-Q) in violation of the Amended
Implementing Rules and Regulations of the SRC Rule 17
.1(1)(A)(ii).5 It also directed URPHI to file the said report, and to show
cause why it should not be held liable for violation of the said rule.
In a letter dated September 28, 2004, URPHI requested for a final
extension, or until November 15, 2004, within which to submit its
reportorial requirements. Pertinent portions of the letter read:
We refer to your Order dated 27 July 2004, wherein the Commission
resolved to SUSPEND the Corporation's Registration of Securities
and Permit to Sell Securities to the Public due to non-filing of the
Corporation's reportorial requirements under SRC Rule 17 effective
for sixty (60) days or until the reporting requirements are complied
[with]; otherwise, the Commission shall proceed with the revocation
of the Corporation's registration [of] securities. To date, the
Corporation has not filed with the Commission its 2003 Annual
Report in SEC Form 17-A and 2004 1st and 2°d Quarterly reports in
SEC Form 17-Q. The non-submission of these reportorial
requirements, as we have already disclosed to you per our letter
dated 13 September 2004, was due to the non-finalization of the
Corporation's audited financial statement for the fiscal year ended
December 31, 2003.
During our meeting with our external auditor, SGV & Co. last 8
September 2004, SGV agreed to facilitate the finalization of our
financial statements within two (2) weeks. Notwithstanding the
same, the Corporation foresees the impossibility of complying with
its submission until the end of the month, as the partners of SGV are
still reviewing the final draft of the financial statements. The
Corporation intends to comply with its reportorial requirements.
However, due to the foregoing circumstances, the finalization of our
financial statement has again been delayed. In this regard, may we
request for the last time until November 15, 2004 within which to
submit said reportorial requirements.6
On December 1, 2004, URPHI filed with the SEC its 2003 Annual
Report.
In an Order of Revocation7 dated December 8, 2004, the SEC revoked
URPHI's Registration of Securities and Permit to Sell Securities to the
Public for its failure to submit its reportorial requirements within the
final extension period.
On December 9, 10, and 14, 2004, URPHI finally submitted to the SEC
its 1st Quarterly Report for 2004, 2nd Quarterly Report for 2004, and
3rd Quarterly Report for 2004, respectively. Meantime, URPHI
appealed the SEC Order of Revocation dated December 8, 2004 by
filing a Notice of Appeal and a Memorandum both dated January 3,
2005.
In a Resolution dated December 15, 2005, the SEC denied URPHI's
appeal, thus: WHEREFORE, premises considered, the Memorandum
dated 03 January 2005 of Universal Rightfield Property Holdings, Inc.
praying for the reversal of the Order of Revocation dated 08
December 2004 is DENIED for lack of merit.
SO ORDERED.8
Aggrieved, URPHI filed a petition for review with the CA.
In a Decision dated January 21, 2008, the CA granted the petition and
set aside the SEC Order of Revocation after finding that URPHI was
not afforded due process because no due notice was given and no
hearing was conducted before its registration of securities and
permit to sell them to the public was revoked. The CA noted that the
hearing conducted on July 6, 2004 was only for the purpose of
determining whether URPHI's registration and permit to sell should
be suspended and not whether said registration should be revoked.
The CA ruled that based on how Sections 5.1 (m)9 and 13.110 of the
SRC are worded, suspension and revocation of URPHI's registration
of securities each requires separate notices and hearings. It also held
that the Ruling11 in Globe Telecom, Inc. v. The National
Telecommunications Commission12 (Globe Telecom, Inc.) applies
squarely to this case since the Section 13.1 of the SRC itself provides
that due notice and hearing are required before revocation may be
ordered by the SEC. In view of such specific mandate of the SRC in
cases of revocation, the CA rejected the SEC's argument that the
hearing conducted for the suspension of URPHI's registration can
already be considered as the hearing for revocation.
The CA also held that the SEC cannot brush aside the specific
mandate of Section 13 .1 of the SRC by merely invoking the doctrine
that administrative due process is satisfied when the party is given
the opportunity to explain one's side or the opportunity to seek a
reconsideration of the action or ruling taken. Citing Globe Telecom,
Inc.13 the CA explained that while such doctrine remains valid and
has been applied in numerous instances, it must give way in
instances when the statute itself, such as Section 13 .1, demands
prior notice and hearing. It added that the imperativeness for a
hearing in cases of revocation of registration of securities assumes
greater significance, considering that revocation is a measure
punitive in character undertaken by an administrative agency in the
exercise of its quasi-judicial functions. Dissatisfied with the CA
Decision, the SEC filed the instant petition for review on certiorari,
raising the sole issue that:
THE COURT OF APPEALS DECIDED A QUESTION OF SUBSTANCE
WHICH IS NOT IN ACCORD WITH THE LAW AND PREVAILING
JURISPRUDENCE.14
On the one hand, the SEC contends that URPHI was accorded all the
opportunity to be heard and comply with all the reportorial
requirements before the Order of Revocation was issued.
Specifically, in the Order dated July 27, 2004 suspending URPHI's
registration of securities for 60 days, the SEC expressly warned that
such registration would be revoked should it persistently fail to
comply with the said requirements. Still, URPHI continuously failed
to submit the required reports. On August 23, 2004, the SEC directed
again URPHI to submit the required report and to show cause why it
should not be held liable for violation of the law. Instead of
submitting the required reports, URPHI requested for a final
extension, or until November 15, 2004, within which to comply with
its reportorial requirements. For URPHI's failure to submit the said
reports, the SEC issued the Order of Revocation dated December 8,
2004. URPHI immediately filed a motion for reconsideration thereof
through a Notice of Appeal and a Memorandum both dated January
3, 2005, which the SEC later denied in the Resolution dated
December 15, 2005. Hence, URPHI was amply accorded its
guaranteed right to due process.
The SEC also submits that the factual milieu of Globe Telecom,
Inc.15 cited by the CA in its Decision is starkly different from this case.
Unlike in the former case where the Court ruled that the fine
imposed by the National Telecommunications Commission without
notice and hearing, was null and void due to the denial of petitioner's
right to due process, the SEC points out that URPHI was duly notified
of its violations and the corresponding penalty that may be imposed
should it fail to submit the required reports, and was given more
than enough time to comply before the Order of Revocation was
issued. The SEC adds that a hearing was conducted on July 6, 2004
as to URPHI's repeated failure to submit the reportorial
requirements as mandated by the SRC and its implementing rules
and regulations, which was the basis in issuing the said Order.
On the other hand, URPHI insists that the CA was correct in ruling
that the SRC requires separate notices and hearings for revocation
and suspension of registration of securities and permit to sell them
to the public. It then asserts that the warning contained in the SEC's
suspension Order dated July 27, 2004 does not meet the
requirement of notice under the SRC. It stresses that while the SEC
issued a separate notice of hearing for such suspension, no similar
notice was issued as regards such revocation. It also notes that the
July 6, 2004 hearing was with regard to the suspension of its
registration of securities, and that no hearing was ever conducted
for purposes of revocation of such registration.
On the SEC's claim that URPHI was afforded due process because it
was already given the opportunity to seek a reconsideration of the
Order of Revocation by filing its Notice of Appeal and Memorandum,
URPHI argues that the filing of such appeal did not cure the violation
of its right to due process. In support of its argument, URPHI cites
the Globe Telecom, Inc.16 ruling that notice and hearing are
indispensable when an administrative agency exercises quasi-
judicial functions and that such requirements become even more
imperative if the statute itself demands it.
URPHI further cites the ruling17 in BLTB, Co. v. Cadiao, et al.,18 to
support its view that a motion for reconsideration is curative of a
defect in procedural due process only if a party is given sufficient
opportunity to explain his side of the controversy. It claims that the
controversy referred to is the underlying substantive controversy of
which the procedural due process controversy is but an offshoot.
Noting that the only issue raised in its appeal was procedural, i.e.,
whether it was denied prior notice and hearing under the SRC, URPHI
contends that it cannot be said that by appealing to the SEC, it had
the opportunity to explain its side on substantive controversy which
pertains to its alleged violation of the SRC and failure to comply with
the reportorial requirements that prompted the SEC to issue the
Order of Revocation. Hence, such appeal cannot be considered
curative of the defect in procedural due process which attended the
issuance of the said Order.
URPHI further submits that the prior revocation of its registration on
May 29, 2003 did not cure the lack of due process which attended
the revocation of its registration on December 8, 2004. Since the SEC
deemed it proper to lift the prior revocation, such can no longer be
used to sustain another revocation order, much less one issued
without prior notice and hearing. Granted that it was accorded due
process, URPHI asserts that the revocation of its registration of
securities and permit to sell them to the public is inequitable under
the circumstances. It calls attention to the severe and certain
consequences of such revocation, i.e., termination of the public
offering of its securities, return of payments received from
purchasers thereof, and its delisting from the PSE, which will cause
financial ruin and jeopardize its efforts to recover from its current
financial distress. Claiming that it exerted best effort and exercised
good faith in complying with the reportorial requirements, URPHI
avers that the interest of the investing public will be better served if,
instead of revoking its registration of securities, the SEC will merely
impose penalties and allow it to continue as a going concern in the
hope that it may later return to profitability.
The petition is meritorious.
There is no dispute that violation of the reportorial requirements
under Section 17.119 of the Amended Implementing Rules and
Regulation20 of the SRC is a ground for suspension or revocation of
registration of securities pursuant to Sections 13.1 and 54.1 of the
SRC. However, contrary to the CA ruling that separate notices and
hearings for suspension and revocation of registration of securities
and permit to sell them to the public are required, Sections 13 .1 and
54.1 of the SRC expressly provide that the SEC may suspend or
revoke such registration only after due notice and hearing, to wit:
13.1. The Commission may reject a registration statement and refuse
registration of the security thereunder, or revoke the effectivity of a
registration statement and the registration of the security
thereunder after due notice and hearing by issuing an order to such
effect, setting forth its findings in respect thereto, if it finds that:
a) The issuer:
xxxx
(ii) Has violated any of the provisions of this Code, the rules
promulgated pursuant thereto, or any order of the Commission of
which the issuer has notice in connection with the offering for which
a registration statement has been filed;21
xxxx
54.1. If, after due notice and hearing, the Commission finds that: (a)
There is a violation of this Code, its rules, or its orders; (b) Any
registered broker or dealer, associated person thereof has failed
reasonably to supervise, with a view to preventing violations,
another person subject to supervision who commits any such
violation; ( c) Any registrant or other person has, in a registration
statement or in other reports, applications, accounts, records or
documents required by law or rules to be filed with the Commission,
made any untrue statement of a material fact, or omitted to state
any material fact required to be stated therein or necessary to make
the statements therein not misleading; or, in the case of an
underwriter, has failed to conduct an inquiry with reasonable
diligence to insure that a registration statement is accurate and
complete in all material respects; or ( d) Any person has refused to
permit any lawful examinations into its affairs, it shall, in its
discretion, and subject only to the limitations hereinafter prescribed,
impose any or all of the following sanctions as may be appropriate
in light of the facts and circumstances:
(i) Suspension, or revocation of any registration for the offering of
securities;22
The Court has consistently held that the essence of due process is
simply an opportunity to be heard, or as applied to administrative
proceedings, an opportunity to explain one's side or an opportunity
to seek a reconsideration of the action or ruling complained of.23 Any
seeming defect in its observance is cured by the filing of a motion for
reconsideration, and denial of due process cannot be successfully
invoked by a party who has had the opportunity to be heard on such
motion.24 What the law prohibits is not the absence of previous
notice, but the absolute absence thereof and the lack of opportunity
to be heard.25
In the present case, due notice of revocation was given to URPHI
through the SEC Order dated July 27, 2004 which reads:
Considering that the company is under rehabilitation, the request
was granted and it was given a non-extendible period until May 31,
2004 within which to comply.
Despite the extension[,] however, it failed to submit said reports.
Hence, a hearing was held on July 6, 2004 wherein the company's
representative, its Chief Accountant and a Researcher appeared. No
sufficient reason or justification for the company's inability to
comply with its reporting obligation was presented.
In view thereof, the Commission[,] in its meeting held on July 22,
2004, resolved to SUSPEND the Registration of Securities and Permit
to Sell Securities to the Public issued to UNIVERSAL RIGHTFIELD
PROPERTY HOLDINGS, INC., in accordance with Section 54 of the
Securities Regulation Code.
This said Suspension shall be effective for sixty (60) days or until the
reporting requirements are complied [with,] otherwise the
Commission shall proceed with the revocation of the company's
registration of securities.
Let this Order be published in a newspaper of general circulation in
the Philippines or on the Commission's web page.
SO ORDERED.26
Contrary to the view that a separate notice of hearing to revoke is
necessary to initiate the revocation proceeding, the Court holds that
such notice would be a superfluity since the Order dated July 27,
2004 already states that such proceeding shall ensue if URPHI would
still fail to submit the reportorial requirements after the lapse of the
60-day suspension period. After all, "due notice" simply means the
information that must be given or made to a particular person or to
the public within a legally mandated period of time so that its
recipient will have the opportunity to respond to a situation or to
allegations that affect the individual's or public's legal rights or
duties.27
Granted that no formal hearing was held before the issuance of the
Order of Revocation, the Court finds that there was substantial
compliance with the requirements of due process when URPHI was
given opportunity to be heard. Upon receipt of the SEC Order dated
July 27, 2004, URPHI filed the letters dated September 13 and 28,
2004, seeking a final extension to submit the reportorial
requirements, and admitting that its failure to submit its 2nd
Quarterly Report for 2004 was due to the same reasons that it was
unable to submit its 2003 Annual Report and 1st Quarterly Report
for 2004. Notably, in its Order of Revocation, the SEC considered
URPHI's letters and stated that it still failed to submit the required
reports, despite the lapse of the final extension requested.
In A.Z. Arnaiz, Realty, Inc. v. Office of the President,28 the Court held
that due process, as a constitutional precept, does not always, and
in all situations, require a trial-type proceeding. Litigants may be
heard through pleadings, written explanations, position papers,
memoranda or oral arguments. The standard of due process that
must be met in administrative tribunals allows a certain degree of
latitude as long as fairness is not ignored. It is, therefore, not legally
objectionable for being violative of due process for an administrative
agency to resolve a case based solely on position papers, affidavits
or documentary evidence submitted by the parties. Guided by the
foregoing principle, the Court rules that URPHI was afforded
opportunity to be heard when the SEC took into account in its Order
of Revocation URPHI's September 13 and 28, 2004 letters, explaining
its failure to submit the reportorial requirements, as well as its
request for final extension within which to comply. Pertinent
portions of the said Order read:
The Commission in its meeting held on July 22, 2004 resolved to
suspend its Registration of Securities and Permit to Sell Securities to
the Public. The Order of Suspension stated that it was to be effective
for sixty (60) days or until the reporting requirements were complied
with by the company; otherwise, the Commission shall proceed with
the revocation of the company's registration of securities.
The sixty (60)-day period had elapsed on September 25, 2004 but the
Commission received a letter on September 29, 2004 from the
President of the company, Mr. Jose L. Merin. In the said letter, it was
admitted that the corporation had failed to submit its 2003 Annual
Report (SEC Form 17-A) and its 2004 1st and 2nd Quarterly Reports
(SEC Form 17-Q) but explained that the reason for its inability to
submit said reports was due to the non-finalization of the company's
audited financial statements for the fiscal year ended December 31,
2003. It further stated that during its meeting with its external
auditor, SGV & Co., last September 8, 2004, SGV agreed to facilitate
the finalization of its financial statements within two (2) weeks. The
corporation foresaw the impossibility of complying with its
submission until the end of the month as the partners of SGV were
still reviewing the final draft of the financial statements, thus, the
request for extension FOR THE LAST TIME until November 15, 2004
within which to comply.
SEC Form 17-A (for 2003) was finally submitted on December 1,
2004.
IN VIEW THEREOF, the Commission, in its meeting held on December
2, 2004, resolved to REVOKE the Registration of Securities and
Permit to Sell Securities to the Public issued to UNIVERSAL
RIGHTFIELD PROPERTY HOLDINGS, INC.29
Aside from having been given the opportunity to be heard before the
SEC issued the Order of Revocation, URPHI was likewise able to seek
reconsideration of such action complained of. After the issuance of
the said Order, URPHI filed a Notice of Appeal and a Memorandum,
asserting that it was issued without due notice and hearing, and that
the revocation is inequitable under the circumstances. In the
Resolution dated December 15, 2004, the SEC denied URPHI's appeal
in this wise:
In the instant case, URPHI was accorded due process when its Chief
Financial Officer gave its side on the imputed violation and informed
the Commission that it will not be able to submit its Annual Report
(SEC Form 17-A) for the fiscal year ending on 31 December 2003 and
requested for additional time to comply with the said requirements.
The Commission granted URPHI a non-extendible period of forty-
seven (47) calendar days or until 15 November 2004 within which to
comply.
In spite of the extension of time given, URPHI still failed to submit
the said reports. During the 06 July 2004 hearing where the Chief
Accountant and researcher of URPHI were present, both failed to
present sufficient justifications for URPHI's inability to comply with
its reporting obligations.
It is also noteworthy to mention that URPHI's Registration of
Securities and Permit to Sell Securities to the Public had been
revoked on several occasions on account of the same deficiency.
URPHI is aware of the SRC Rules and must suffer the consequences
of its reported violations.30
Verily, URPHI was given the opportunity to be heard before the
Order of Revocation was issued, as well as the opportunity to seek
the reconsideration of such order.
Meanwhile, the Court disagrees with URPHI's claim that the Globe
Telecom, Inc.31 ruling - that notice and hearing are indispensable
when an administrative agency exercises quasi-judicial functions and
that such requirements become even more imperative if the statute
itself demands it -is applicable to the present case.
In Gamboa v. Finance Secretary,32 the Court has held that the SEC
has both regulatory and adjudicative functions, thus:
Under its regulatory responsibilities, the SEC may pass upon
applications for, or may suspend or revoke (after due notice and
hearing), certificates of registration of corporations, partnerships
and associations (excluding cooperatives, homeowners associations,
and labor unions); compel legal and regulatory compliances; conduct
inspections; and impose fines or other penalties for violations of the
Revised Securities Act, as well as implementing rules and directives
of the SEC, such as may be warranted.
Relative to its adjudicative authority, the SEC has original and
exclusive jurisdiction to hear and decide controversies and cases
involving
– and make decisions, it does so in the course of the performance of
a. Intra-corporate and partnership relations between or
among the corporation, officers and stockholders and
partners, including their elections or appointments;
b. State and corporate affairs in relation to the legal existence
of corporations, partnerships and associations or to their
franchises; and
c. Investors and corporate affairs particularly in respect of
devices and schemes, such as fraudulent practices, employed
by directors, officers, business associates, and/or other
stockholders, partners, or members of registered firms; x x x
As can be gleaned from the aforequoted ruling, the revocation of
registration of securities and permit to sell them to the public is not
an exercise of the SEC's quasi-judicial power, but of its regulatory
power. A "quasi-judicial function" is a term which applies to the
action, discretion, etc., of public administrative officers or bodies,
who are required to investigate facts, or ascertain the existence of
facts, hold hearings, and draw conclusions from them, as a basis for
their official action and to exercise discretion of a judicial
nature.33 Although Section 13.1 of the SRC requires due notice and
hearing before issuing an order of revocation, the SEC does not
perform such quasi-judicial functions and exercise discretion of a
judicial nature in the exercise of such regulatory power. It neither
settles actual controversies involving rights which are legally
demandable and enforceable, nor adjudicates private rights and
obligations in cases of adversarial nature. Rather, when the SEC
exercises its incidental power to conduct administrative hearings
its regulatory and law enforcement function.
Significantly, unlike in Globe Telecom, Inc.34 where the Court ruled
that the fine imposed by the NTC without notice and hearing, was
null and void due to the denial of petitioner's right to due process,
the revocation of URPHI's registration of securities and permit to sell
them to the public cannot be considered a penalty but a withdrawal
of a privilege, which regulatory power the SEC validly exercised after
giving it due notice and opportunity to be heard.
While URPHI correctly relied in BLTB Co., Inc. v. Cadiao35 to support
its view that a motion for reconsideration is curative of a defect in
procedural due process only if a party is given sufficient opportunity
to explain his side of the controversy, the Court rejects URPHI's claim
that it did not have the opportunity to explain the substantive
controversy of its violation of the SRC reportorial
requirements.36 Contrary to the claim that only the issue of
procedural due process was raised in its appeal with the SEC, URPHI
also raised in its Memorandum dated January 3, 2005 the reasons
why it failed to comply with the said requirements, and why
revocation is inequitable under the circumstances.37
For the late filing of annual report and quarterly report, SEC
Memorandum Circular No. 6, Series of 2005, the Consolidated Scale
of Fines in effect at the time the offenses were committed, provides
for the following administrative penalties:
It bears emphasis that URPHI had committed several offenses for
failure to comply with the reportorial requirements for which it was
fined and its registration of securities revoked. On May 29, 2003, the
SEC issued an Order revoking URPHI's Registration of Securities and
Permit to Sell Securities to the Public for its failure to timely file its
Year 2001 Annual Report and Year 2002 1st, 2nd and 3rd Quarterly
Reports. Then, on October 24, 2003, the SEC granted URPHI's
petition to lift the revocation, considering the current economic
situation, its belated filing of the required annual and quarterly
reports, and its payment of the reduced fine of ₱82,000.00. Despite
the foregoing, URPHI failed again to submit its 2003 Annual Report,
and Year 2004 1st, 2nd and 3rd Quarterly Reports within the
requested extension periods.
Therefore, notwithstanding the belated filing of the said reports, as
well as the claim that public interest would be better served if the
SEC will merely impose penalties and allow it to continue in order to
become profitable again, the SEC cannot be faulted for revoking
once again URPHI's registration of securities and permit to sell them
to the public due to its repeated failure to timely submit such
reports. Needless to state, such continuing reportorial requirements
are pursuant to the state policies declared in Section 238 of the SRC
of protecting investors and ensuring full and fair disclosure of
information about securities and their issuer.
All told, the CA erred in ruling that the SEC revoked URPHI's
registration of securities and permit to sell them to the public
without due process of law.1âwphi1 Quite the contrary, the
requirements of due notice and hearing under Sections 13 .1 and
54.1 of the SRC were substantially complied with. Due notice was
made through the Order dated July 27, 2004 stating that revocation
proceeding shall ensue if URPHI would still fail to submit the
reportorial requirements after the lapse of the 60-day suspension
period. Though no formal hearing was held, URPHI was still given an
opportunity to be heard through the letters dated September 13 and
18, 2004 before the Order of Revocation was issued, as well as
through its Notice of Appeal and Memorandum when it moved to
reconsider the said order.
WHEREFORE, the petition is GRANTED and the Decision dated
January 21, 2008 of the Court of Appeals in CA-G.R. SP No. 93337, is
REVERSED and SET ASIDE. In lieu thereof, the Resolution dated
December 15, 2005 of the Securities and Exchange Commission and
its Order of Revocation dated December 8, 2004 are REINSTATED.
SO ORDERED.
 G.R. No. 169343, August 05, 2015
Despite receipt of the afore-mentioned letter, BF Homes failed or refused to
SAN MIGUEL PROPERTIES, INC., Petitioner, v. BF HOMES, heed the demand of SMPI. Consequently, SMPI filed a Complaint8 for specific
INC., Respondent. performance with damages before the HLURB on August 24, 2000 to compel
BF Homes to deliver the remaining 20 TCTs to SMPI. The case was docketed
as HLURB Case No. REM-082400-11183.
DECISION
In its Answer (With Counterclaim),9 BF Homes alleged that the Deeds of
LEONARDO-DE CASTRO, J.: Absolute Sale executed in 1992 to 1993 were entered into by Orendain in his
personal capacity and without authority, as his appointment as rehabilitation
receiver was revoked by the SEC in an Order dated May 17, 1989. In
Assailed in this Petition for Review on Certiorari under Rule 45 of the
support of its counterclaims, BF Homes averred that the consideration paid
Revised Rules of Court filed by San Miguel Properties, Inc. (SMPI) are: 1)
by SMPI for the 130 Italia II lots was grossly inadequate and
the Decision1 dated January 31, 2005 of the Court of Appeals in CA-G.R. SP
disadvantageous to BF Homes; and that the Deeds of Absolute Sale were
No. 83631, which affirmed with modification the Decision dated January 27,
undated and not notarized. Hence, BF Homes prayed that the HLURB render
2004 of the Office of the President (OP), in O.P. Case No. 03-E-203, and
judgment: 1) dismissing the complaint of SMPI; 2) declaring the sale of the
remanded the case to the Housing and Land Use Regulatory Board (HLURB)
130 Italia II lots null and void; 3) ordering SMPI to reconvey to BF Homes
for further proceedings; and 2) the Resolution2 dated August 9, 2005 of the
the titles for the [110] Italia II lots; and 4) ordering SMPI to pay BF Homes
appellate court in the same case, which denied the Motion for
exemplary damages, attorney's fees, and cost of suit.
Reconsideration of SMPI.
SMPI, in its Reply (Answer with Counterclaim dated October 16,
The antecedents of the case are as follows:
2000),10 countered that the validity of the three Deeds of Absolute Sale was
chanRoblesv irtual Lawlib rary

already upheld by the SEC in its Omnibus Order dated November 7, 1994,
BF Homes, Inc. (BF Homes) is the owner of several parcels of land located in
and the motion for reconsideration of BF Homes of said Omnibus Order was
the northern portion of BF Homes Parañaque Subdivision, particularly
denied by the SEC in its subsequent Order dated August 22, 1995. Both
identified as Italia II lots.
Orders were deemed final, executory, and unappealable by the SEC in
another Omnibus Order dated July 31, 1996. As a result, the Deeds of
BF Homes, represented by Florencio B. Orendain (Orendain), as
Absolute Sale were binding on BF Homes. SMPI further maintained that
rehabilitation receiver appointed by the Securities and Exchange
Orendain was authorized to sign the Deeds of Absolute Sale for and in behalf
Commission (SEC); and SMPI, represented by Federico C. Gonzales,
of FBO Networks Management, Inc. - the receiver which the SEC appointed
President, entered into three successive Deeds of Absolute Sale whereby the
to replace Orendain, upon the latter's motion to convert his involvement in
former sold to the latter a total of 130 Italia II lots with a combined area of
the receivership from an individual to a corporate capacity. SMPI additionally
44,345 square meters for the aggregate consideration of P106,247,701.00,
asserted that absent substantiation, the allegation of BF Homes of
broken down as follows:
inadequate consideration for the sale of the Italia II lots was self-serving;
chanRoble svi rtual Lawli bra ry

SMPI completed the payments for the 130 Italia II lots in December
1995.6 In compliance with Section 37 of all the three Deeds of Absolute Sale,
BF Homes delivered the Transfer Certificates of Title (TCTs) to SMPI but only
for 110 of the 130 Italia II lots purchased by SMPI.
SMPI, thru counsel, sent BF Homes a letter on May 20, 1996 demanding the
delivery of the remaining 20 TCTs, specifically:
and that despite being undated and not notarized, the Deeds of Absolute
Sale were valid since they contained the essential elements of a contract.
And even assuming that the Deeds of Absolute Sale may be rescinded, SMPI
argued that BF Homes did not offer and was not prepared to return the
consideration paid by SMPI, plus interest.
BF Homes filed a Rejoinder (To Complainant's Reply)11 contending that the
SEC Omnibus Order dated July 31, 1996 has not yet become final as BF
Homes assailed the said Order in a Petition for Certioraribefore the SEC. In
chanRo blesvi rtua lLaw lib rary
its Decision dated May 8, 1997, the SEC neither confirmed the authority of
Orendain nor cleared Orendain/FBO Networks Management, Inc. from any
liability for his/its unauthorized acts, but clarified that the final report of the
rehabilitation receiver was not yet approved and was merely admitted as
part of the records. BF Homes also stated that although the SEC Order dated
September 12, 2000 already terminated the rehabilitation proceedings
because of the improvement in the solvency status of BF Homes, BF Homes
filed a Motion for Clarification and/or Partial Reconsideration of said SEC
Order and sought a resolution of the issues relating to the receiver's
irregular acts, including the sale of the Italia II lots to SMPI. BiF Homes
insisted that the transactions entered into by Orendain were anomalous as
the latter sold the 130 Italia II lots to SMPI at a price that was inadequate
and disadvantageous to BF Homes.
Housing and Land Use Arbiter Rowena C. Balasolla (Arbiter Balasolla) issued
an Order dated January 22, 200112 directing the parties to submit their
respective position papers and supporting evidence, as well as their draft
decisions. Thereafter, the case was deemed submitted for resolution.
In her Decision13 dated January 25, 2002, Arbiter Balasolla suspended the
proceedings in HLURB Case No. REM-082400-11183 for the following
reasons: cralawlawli bra ry
What clearly is the issue to be resolved is whether or not [BF Homes] is
obligated to deliver the title of the remaining twenty (20) lots to [SMPI]
notwithstanding that the latter had fully paid the same.
Were this is a simple case of non-delivery of title of the lot or unit to the
buyer upon full payment, sans the attendant problems, the answer would
readily be in the affirmative. But this is not so in the instant case. This is a
case of non-delivery of titles of a sale of 20 lots between two developers,
and the lots sold are from an existing subdivision, which was under
rehabilitation and made by a receiver which authority had been continuously
questioned by the controlling stockholders of a corporation under
rehabilitation.
In the light thereof, it becomes imperative to discuss the antecedent facts
that would help in arriving at a judicious resolution of the instant complaint.
Sometime in September 1984, respondent [BF Homes] filed with the SEC a
petition for rehabilitation and for declaration of suspension of payments. In
February 1988, the SEC appointed Florencio Orendain as [BF Homes']
rehabilitation receiver. In May 1989, the SEC revoked the appointment of
Mr. Orendain and appointed FBO Networks Management, Inc. (FBO) as
receiver of the [BF Homes].
It was during the time 1992-1993 that [SMPI] bought from [BF Homes] the
130 parcels of land located in the northern portion of BF Homes, Paranaque
City.
In June 1994, Mr. Orendain, on behalf of FBO, submitted to the SEC the
Closing Report on [BF Homes] I of the receivership program covering the
period from March 1988 to January 1994. [BF Homes] protested and
questioned the said report by filing the corresponding pleadings with the
SEC praying that the receivership of FBO represented by Mr. Orendain be
suspended due to violations of trust and breach of fiduciary obligation and
sought the nullification of the transaction entered into by Mr. Orendain. In
November 1994, FBO was relieved of its duties and responsibilities as
rehabilitation receiver and a Committee of Receivers was appointed in lieu
thereof, to undertake and continue the rehabilitation program of [BF
Homes].
In July 1996, the SEC issued an Omnibus Order in regard to rehabilitation
case. Subsequently, however, [BF Homes] filed a petition for review for
which the SEC rendered a decision in May 1997. In the said decision, the
SEC held that the admission of the Receiver's Closing Report is merely for
the purpose of receiving and noting them for inclusion in the records of the
case and not an admittance (sic) and acceptance of the merits and veracity
of the contents thereof.
In September 2000, the SEC issued another Order terminating the
rehabilitation proceedings without, however, deciding on the merits and
veracity of the contents of the Receiver's Closing Report. Hence, [BF Homes]
filed in October 2000 a Motion for Clarification and/or Partial Reconsideration
of the said Order which remains pending with the SEC until the present.
Apparently, it is in the context of the foregoing issues that [BF Homes]
refused to deliver the remaining twenty (20) titles of the lots sold to [SMPI]
as the former claimed, among others, that Mr. Orendain did not have the
authority to sell the 130 parcels of land in the first place.
As the peculiar background of this case would tell, it is inevitable that the
resolution of the issues raised in the instant complaint would be largely
influenced by the outcome of the cases pending in other tribunals which are
directly and ineluctably related to the issues brought before this Board.
This Board is cognizant of the fact that respondent had questioned the
action of its rehabilitation receiver before the SEC, raising several issues
against him, including but not limited, to his authority to sell the subject lots
to the complainant the resolution of which is still pending the said body.
Thus, while this Board may have jurisdiction over the instant complaint, the
issue on whether or not Mr. Orendain has overstepped his authority which is
pending resolution by the SEC, is to our mind a condition sine qua non, the
final resolution of which by said body is a logical antecedent to the issue
involved in the instant complaint and which only the SEC has exclusive
jurisdiction to decide.
Under the circumstances, we are inclined to suspend the proceedings before
the Board until the SEC shall have resolved with finality on the issue of the
authority of Mr. Orendain/FBO Networks Management to enter into such
transactions on behalf of [BF Homes].
WHEREFORE, PREMISES CONSIDERED, this Office hereby suspends the
proceedings of the instant complaint until the final resolution of the pending
incidents before the Securities and Exchange Commission.14 chanro bleslaw
SMPI filed a Petition for Review (Re: Decision dated January 25,
2002)15 with the HLURB Board of Commissioners, asseverating that: 1) the
SEC, in its Orders dated November 7, 1994 and August 22, 1995, had
upheld the validity of the Deeds of Absolute Sale and confirmed the
authority of the receiver to sell the 130 Italia II lots to SMPI, and said
Orders already became final after BF Homes failed to appeal the same
before the Court of Appeals, as provided for in Section 3,16 Republic Act No.
5434, the law in force at that time; 2) Orendain and/or FBO Networks
Management, Inc. were immune from suit pursuant to Section 9, Rule 917 of
the Interim Rules of Procedure Governing Intra-corporate Controversies and
Section 17, Rule 418 of the Interim Rules of Procedure on Corporate
Rehabilitation; 3) BF Homes was estopped from refusing to deliver the
remaining 20 titles since it had already received the consideration and
benefits from the sale of the Italia II lots to SMPI and delivered 110 out of
130 TCTs to SMPI; 4) the principle of suspending a case due to a prejudicial
question only applies to criminal cases; 5) BF Homes was mandated, under
pain of criminal sanction under Section 25,19 in relation to Section 3920 of
Presidential Decree No. 957,21 also known as "The Subdivision and
Condominium Buyer's Protection Decree," to deliver the TCTs of the
remaining 20 Italia II lots, which had already been fully paid for by SMPI; 6)
assuming that Orendain exceeded his authority as receiver of BF Homes in
selling the 130 Italia II lots to SMPI, then Orendain could be held liable for
damages but the titles to said lots acquired by SMPI by reason of the sale
would be unaffected, absent any action for reconveyance instituted by BF
Homes; and 7) the issue regarding Orendain's authority to undertake the
sale of the Italia II lots to SMPI was rendered moot and academic by the
issuance of SEC Order dated September 12, 2000, terminating the
receivership of BF Homes.
After a further exchange of pleadings by the parties, the HLURB Board of
Commissioners22 rendered its Decision23 dated March 28, 2003, ruling
thus: cralawlawli bra ry
We find no evidence to support the argument that the SEC had upheld with
finality on the sales transaction entered into by Orendain with [SMPI]. On
the contrary the order of the SEC stated that the closing report of the
receiver is being accepted for inclusion of the records and not an admittance
(sic) or acceptance of the merits and veracity of the contents thereof. The
issue of whether Orendain had authority to sell the lots is still unresolved.
While this board may have the competence to rule on the validity of the
sales transaction entered into by Orendain ostensibly in behalf of BF Homes,
we decline to rule on the said issue in deference to the SEC or its successor-
in-interest, which has first taken cognizance of the issue, applying the
doctrine of primary jurisdiction. Thus, in Vidad vs. RTC of Negros Oriental, it
was held: chanRoble svirtual Lawlib ra ry
While no prejudicial question strictly arises where one is a civil case and the
other is an administrative proceeding, in the interest of good order, it
behooves the court to suspend its action on the cases before it pending the
final outcome of the administrative proceedings. The doctrine of primary
jurisdiction does not warrant a court to arrogate unto itself the authority to
resolve a controversy the jurisdiction over which is initially lodged with an
administrative body [of special competence].
Wherefore, the petition for review is denied and the decision of the office
below is affirmed.24
chanrobles law
SMPI appealed the foregoing Decision of the HLURB Board of Commissioners
before the OP. The appeal was docketed as O.P. Case No. 03-E-203. The OP,
in its Decision25 dated January 27, 2004, adjudged that the HLURB should
have resolved HLURB Case No. REM-082400-11183:
cralaw lawlib rary
The basic complaint in this case is one for specific performance under
Section 25 of Presidential Decree (PD) 957 - "The Subdivision and
Condominium Buyers' Protective", infra.
As early as August 1987, the Supreme Court already recognized the
authority of the HLURB, as successor agency of the National Housing
Authority (NHA), to regulate, pursuant to PD 957 in relation to PD 1344, the
real estate trade, with exclusive jurisdiction to hear and decide cases
"involving specific performance of contractual and statutory obligations filed
by buyers of subdivision lots . . . against the owner, developer, dealer,
broker or salesman" (Antipolo Realty Corp. vs. National Housing
Authority (153 SCRA). Then came the reiterative rulings in Solid Homes vs.
Pavawal (177 SCRA 72 [1989]), United Housing Corp. vs. Dayrit (181 SCRA
295 [1990]), and Realty Exchange Venture Corp. vs. Sendino, 233 SCRA
665 [1994]. And as stressed in Realty Exchange, citing C.T. Torres
Enterprises, Inc. vs. Hibionada (191 SCRA 268 [1990], the HLURB, in the
exercise of its adjudicatory powers and functions, "must interpret and apply
contracts, determine the rights of the parties under these contracts and
award damages whenever appropriate."
Given its clear statutory mandate, the HLURB's decision to await for some
other forum to decide - if ever one is forthcoming - the issue on the
authority of Orendain to dispose of subject lots before it peremptorily
resolves the basic complaint is unwarranted, the issues thereon having been
joined and the respective position papers and the evidence of the parties
having been submitted. To us, it behooved the HLURB to adjudicate, with
usual dispatch, the right and obligations of the parties in line with its
appreciation of the obtaining facts and applicable law. To borrow
from Mabuhay Textile Mills Corp. vs. Ongpin(141 SCRA 437), it does not
have to rely on the findings of others to discharge this adjudicatory
functions.26chanrob leslaw
The OP then proceeded to resolve the question of whether or not SMPI was
entitled to the delivery of the 20 TCTs:cralawlawlibra ry
There can be no quibbling about the following postulates: 1) The existence
of a perfected deed of absolute sale covering the said lots; 2) SMPI appears
to be an innocent purchaser for value; 3) Full payment and receipt by [BF
Homes] of the stipulated purchase price; 4) Admission by the SEC of FBO's
audited Closing Report; 5). Termination of the rehabilitation proceedings,
and 6) The obligation of the owner or developer under Sec. 25 of PD 957
to "deliver the title of the lot or units to the buyer upon [full] payment of the
lot or unit."
Given the foregoing perspective, the question thus formulated should be
answered in the affirmative. [BF Homes'] challenge against the validity of
the conveying deed on the ground of inadequacy of the purchase price
cannot be given cogency. As a matter of law, lesion or inadequacy of cause
shall not invalidate a contract, save in cases specified by law or unless there
has been fraud, mistake or undue influence (Art. 1355, Civil Code). Thus,
[BF Homes'] allegation about the inadequacy of price for the twenty (20)
lots, even if true, cannot invalidate the sale in question, absent a showing
that such sale is a case exempted by law from the operation of said article
or that fraud, mistake or undue influence attended the sale (Auyong Hian vs.
CTA, 59 SCRA 110).
[BF Homes'] posture regarding the invalidity of the same sales transaction
owing to Orendain's alleged lack of authority to execute the corresponding
deed may be accorded serious consideration were it not for its acceptance
and retention of the purchase price for the covered lots. As aptly argued in
this appeal, citing jurisprudence, estoppel attached to [BF Homes] when it
accepted the benefits arising from the performance of SMPI of its
undertaking under the contract of sale. By the doctrine of estoppel, a party
is barred from repudiating or canceling an otherwise defective or rescissible
contract by his receipt of payments due thereunder (Republic v. Acoje
Mining Co., Inc., 7 SCRA 361; Angeles v. Calasanz, 135 SCRA 332); the bar
of estoppel also precludes one who, by his conduct, had induced another to
act in a particular manner, from adopting an inconsistent position that
thereby causes prejudice to another (Cruz vs. CA, 293 SCRA 239).
Significantly, Orendain signed the three deeds of sale adverted to covering
130 lots in 1992 and 1993, or during FBO's watch as receiver. Yet, [BF
Homes] opted to fully implement the transactions covered by two of these
deeds and partially implement the third by delivering the titles to 110 lots.
In net effect, [BF Homes] did recognize the authority of Orendain to execute
those contracts. But if Orendain was indeed bereft of authority during the
time material, as [BF Homes] would have this Office believe, how explain
(sic) its inaction to recover damages against one it veritably depicts as an
impostor?
xxxx
Much has been made about the sale of the 130 lots not having been
approved by the SEC. It bears to stress in this regard that the Closing
Report which, doubtless includes the said sale, had been confirmed and
admitted by the SEC Hearing Panel. It may be that the Commission en
banc did not specifically confirm and approve the sale. But neither did it
interpose objection thereto, let alone disapprove the same. Be that as it
may, the presumptive validity and enforceability of such sale must be
posited.27
chanrobles law
The OP denied the claims for damages of both parties for insufficiency of
evidence but awarded attorney's fees in the amount of PI00,000.00 to SMPI,
which was compelled to litigate. In the end, the OP decreed:
IN VIEW OF ALL THE FOREGOING, judgment is hereby entered ordering BF
Homes, Inc., to deliver to San Miguel Properties, Inc., the corresponding
titles to the lots subject of the instant case, free from all liens aind
encumbrances, except to the subdivision restrictions referred to in the
conveying deed of sale, and to pay the latter the sum of P100,000.00 as
and. by way of attorneys' fees. All other claims and counterclaims are
hereby DISMISSED. The decision of the HLURB dated 28 March 2003 is
accordingly REVERSED and SET ASIDE.28
BF Homes filed a Motion for Reconsideration but it was denied by the OP in a
Resolution29 dated March 26, 2004.
Aggrieved, BF Homes sought recourse from the Court of Appeals by way of a
Petition for Review30 under Rule 43 of the Revised Rules of Court, which was
docketed as CA-G.R. SP No. 83631. In its Decision31dated January 31, 2005,
the Court of Appeals agreed with the OP that the HLURB had the primary
and exclusive jurisdiction to resolve the complaint for specific performance
and damages of SMPI and should not have suspended the proceedings until
the SEC had ruled with finality on the issue of Orendain's authority to sell
the 130 Italia II lots to SMPI: cralawlaw lib rary
Presidential Decree No. 957 was issued on 12 July 1976. It was promulgated
to cover questions that relate to subdivisions and condominiums. Its object
is to provide for an appropriate government agency, the HLURB, to which all
parties aggrieved in the enforcement of contractual rights with respect to
said category of real estate may take course.
In the case of JESUS LIM ARRANZA vs. B.F. HOMES, INC., the Supreme
Court said: Section 3 ofP.D. No. 957 empowered the National
cralawlawlib ra ry
Housing Authority (NHA) with the "exclusive jurisdiction to regulate
the real estate trade and business." On 2 April
1978, P.D. No. 1344 was issued to expand the jurisdiction of the NHA to
include the following:
cha nRoblesv irt ual Lawlib rary
SECTION 1. In the exercise of its functions to regulate the real
estate trade and business and in addition to its powers provided for
in Presidential Decree No. 957, the National Housing Authority shall
have exclusive jurisdiction to hear and decide cases of the following
nature: chanRoblesvirtu alLawlibrary
c ralawlawli bra ry
A. Unsound real estate business practices; ChanRoblesVirtual awlibrar y
B. Claims involving refund and any other claims filed by subdivision
lot or condominium unit buyer against the project owner, developer,
dealer, broker or salesman; and
C. Cases involving specific performance of contractual and statutory
obligations filed by buyers of subdivision lot or condominium unit
asainst the owner, developer, dealer, broker or salesman. (Emphasis
chanrobleslaw
supplied.)
Thereafter, the regulatory and quasi-judicial functions of the NHA
were transferred to the Human Settlements Regulatory Commission
(HSRC) by virtue of Executive Order No. 648 dated 7 February 1981.
Section 8 thereof specifies the functions of the NHA that were
transferred to the HSRC including the authority to hear and decide
"cases on unsound real estate business practices; claims involving
refund filed against project owners, developers, dealers, brokers or
salesmen and cases of specific performance." Executive Order No.
90 dated 17 December 1986 renamed the HSRC as the Housing and
Land Use Resulatory Board (HLURB). (Underscoring supplied.)
Certainly, in the instant case, [SMPI] is a buyer within the contemplation of
P.D. 957. Clearly, the acquisition of the one hundred thirty (130) lots was
for a valuable consideration.
The jurisdiction of the SEC, on the other hand, is defined by P.D. No. 902-
A, as amended, as follows:
Sec. 5. In addition to the regulatory and adjudicative functions of
the Securities and Exchange Commission over corporations,
partnerships and other forms of associations registered with it as
expressly granted under existing laws and decrees, it shall have
original and exclusive jurisdiction to hear and decide cases
involving.
(a) Devices or schemes employed by or any acts, of the board of
directors, business associates, its officers or partnership, amounting
to fraud and misrepresentation which may be detrimental to the
interest of the public and/or of the stockholder, partners, members
of associations or organizations registered with the Commission; ChanRoblesVirtu alawlibrar y
(b) Controversies arising out of intra-corporate or partnership
relations, between and among stockholders, members, or
associates; between any or all of them and the corporation,
partnership or association of which they are stockholders, members
or associates, respectively; and between such corporation,
partnership or association and the state insofar as it concerns their
individual franchise or right to exist as such entity; and
(c) Controversies in the election or appointments of directors,
trustees, officers or managers of such corporations, partnerships or
associations.
In the ARRANZA case, the Supreme Court said that:
For the SEC to acquire jurisdiction over any controversy under these
provisions, two elements must be considered: (1) the status or
relationship of the parties; and (2) the nature of the Question that is
the subject of their controversy.
The first element requires that the controversy must arise "out of
intra-corporate or partnership relations between and among
stockholders, members or associates; between any or all of them
and the corporation, partnership or association of which they are
stockholders, members or associates, respectively; and between
such corporation, partnership or association and the State in so far
as it concerns their individual franchises.
In the instant case, [SMPI] is not a stockholder, member or associate of [BF
Homes]. It is a lot buyer in the subdivision developed by [BF Homes.]
The second element requires that the dispute among the parties
be intrinsically connected with the regulation or the internal affairs of the
corporation, partnership or association.
In the case at hand, [SMPI's] complaint before the HLURB is for specific
performance to enforce its rights as purchaser of subdivision lots as regards
the delivery of twenty (20) TCTs. Certainly, the issue in this case is not
related to the "regulation" of [BF Homes] or to [BF Homes'] "internal
affairs."
As a matter of fact, Section 25 of PD 957 provides:
Section 25. Issuance of Title. The owner or developer shall deliver
the title of the lot or unit to the buyer upon full payment of the lot or
unit. No fee, except those required for the registration of the deed of
sale in the Registry of Deeds, shall be collected for the issuance of
such title. In the event a mortgage over the lot or unit is outstanding
at the time of the issuance of the title to the buyer, the owner or
developer shall redeem the mortgage or the corresponding portion
thereof within six months from such issuance in order that the title
over any fully paid lot or unit may be secured and delivered to the
buyer in accordance herewith, (underscoring supplied.)
In the above-mentioned case of Arranza, the Supreme Court also said:
P.D. No. 902-A, as amended, defines the jurisdiction of the SEC; while P.D.
No. 957, as amended, delineates that of the HLURB. These two quasi-judicial
agencies exercise functions that are distinct from each other. The SEC has
authority over the operation of all kinds of corporations, partnerships or
associations with the end in view of protecting the interests of the investing
public and creditors. On the other hand, the HLURB has jurisdiction over
matters relating to observance of laws governing corporations engaged in
the specific business of development of subdivisions and condominiums. The
HLURB and the SEC being bestowed with distinct powers and functions, the
exercise of those functions by one shall not abate the performance by the
other of its own functions. As respondent puts it, "there is no contradiction
between P.D. No. 902-A and P.D. No. 957."
Hence, the powers of the HLURB can not be in derogation of the SEC's
authority. P.D. Nos. 902-A and 957 are laws in pari materia. This is because
P.D. No. 902-A relates to all corporations, while P.D. No. 957 pertains to
corporations engaged in the particular business of developing subdivisions
and condominiums.
Next, this brings us to the collateral issue of whether or not HLURB properly
suspended the proceeding until SEC shall have resolved with finality the
issue of authority of Mr. Orendain.
Given the foregoing perspective, the collateral issue thus formulated should
be answered in the negative. Furthermore, in several cases decided by the
Supreme Court, the High Court has consistently ruled that the NHA or the
HLURB has jurisdiction over complaints arising from contracts between the
subdivision developer and the lot buyer or those aimed at compelling the
subdivision developer to comply with its contractual and statutory
obligations.
Hence, the HLURB should take jurisdiction over respondent's complaint
because it pertains to matters within the HLURB's competence and
expertise. The proceedings before the HLURB should not be suspended.32 chan roble slaw

The Court of Appeals, however, differed from the OP Decision by ordering
the; remand of the case to the HLURB in recognition of the doctrine of
primary jurisdiction. The dispositive portion of the Decision of the appellate
court reads:cralawlawl ibra ry
WHEREFORE, the questioned Decision of the Office of the President [is]
AFFIRMED with modification. The case is REMANDED to the Housing and
Land Use Regulatory Board for continuation of proceedings with dispatch.33
SMPI filed a Motion for Partial Reconsideration (Re: Decision dated January
31, 2005)34 insofar as the Court of Appeals remanded the case to the HLURB
for further proceedings. The appellate court denied said Motion in a
Resolution35 dated August 9, 2005.
SMPI now comes before this Court,. through the instant Petition, assailing
the aforementioned Decision and Resolution of the Court of Appeals based
on the following assignment of errors:
c ralawlawli bra ry
I.
THE COURT OF APPEALS' DECISION DATED 31 JANUARY 2005 REMANDING
THE CASE TO THE HLURB IS CONSTITUTIONALLY FLAWED AND A PATENT
NULLITY CONSIDERING THAT:
chanRoblesv irt ual Lawlib rary
1. IT MISERABLY FAILED TO DISCUSS CLEARLY AND
DISTINCTLY THE LEGAL BASIS AND/OR JUSTIFICATION
FOR REMANDING THE CASE TO THE HLURB AS MANDATED
BY SECTION 14, ARTICLE VIII, 1987 CONSTITUTION.
2. WORSE, THE COURT OF APPEALS FAILED TO IDENTIFY THE
FACTUAL MATTERS THAT IT CLAIMS NEED STILL BE TRIED
OR DETERMINED BY THE HLURB THAT WOULD HAVE
JUSTIFIED THE REMAND OF THE CASE.
3. IN ANY EVENT, [BF HOMES] AND THE COURT OF APPEALS'
CLAIMED DOCTRINE OF PRIMARY JURISDICTION IS
FOREVER BARRED AS IT COULD NOT BE INVOKED FOR THE
FIRST TIME ON APPEAL.
4. EVEN ASSUMING ARGUENDO THAT THE DOCTRINE OF
PRIMARY JURISDICTION IS STILL INVOCABLE, IT IS
NONETHELESS INAPPLICABLE SINCE THE PARTIES HAD
DULY AMPLIFIED THEIR RESPECTIVE CAUSES OF ACTION
AND DEFENSES VIA THEIR SUBMISSION OF PLEADINGS
AND POSITION PAPERS BEFORE THE HLURB, AND UPON
WHICH THE OFFICE OF THE PRESIDENT DECIDED ON THE
MERITS.
II.
EVEN THEN, THE COURT OF APPEALS COMMITTED GRAVE, SERIOUS AND
REVERSIBLE ERROR WHEN IT REMANDED THE CASE TO THE HLURB FOR
FURTHER "PRESENTATION OF EVIDENCE" DESPITE THE DECISION ON THE
MERITS OF THE OFFICE OF THE PRESIDENT IN THAT:
chanRoblesvi rtua lLaw libra ry
1. THE ISSUE HERE BEING A SIMPLE QUESTION OF LAW ON
WHETHER OR NOT SMPI WAS ENTITLED TO THE DELIVERY
OF THE BALANCE OF 130 FULLY PAID LOTS/TITLES OR
EQUIVALENT TO TWENTY (20) TITLES, THE COURT OF
APPEALS SHOULD HAVE AFFIRMED THE DECISION ON THE
MERITS OF THE OFFICE OF THE PRESIDENT.
2. IN FACT, THE RELEVANT FACTS OF THE CASE, E.G. FULL
PAYMENT OF THE PURCHASE PRICE OF THE SUBJECT LOTS
IN FAVOR OF [BF HOMES] AND NON-DELIVERY TO SMPI OF
THE TITLES OVER THE SUBJECT LOTS BY [BF HOMES],
WERE UNDISPUTED AND MORE SO ADMITTED BY THE
PARTIES IN THEIR RESPECTIVE HLURB POSITION PAPERS
AND OTHER PLEADINGS FOR WHICH NO TRIABLE
EVIDENTIARY MATTER IS LEFT TO BE RESOLVED BY THE
HLURB.
3. INDEED, THE OFFICE OF THE PRESIDENT, PER ITS
DECISION DATED 27 JANUARY 2004, CORRECTLY
RESOLVED THIS SIMPLE ISSUE, AND FORTUNATELY IN
FAVOR OF SMPI, BASED ON THE PLEADINGS AND
POSITION PAPERS FILED BY THE PARTIES IN ACCORDANCE
WITH SECTION 5, RULE VI, HLURB RULES. THE COURT OF
APPEALS OUGHT TO HAVE SIMILARLY ENFORCED THIS
HLURB RULE.
4. FURTHER PROCEEDINGS BEFORE THE HLURB IS DILATORY,
UNNECESSARY, SUPERFLUOUS AND CIRCUITOUS.
HIERARCHICALLY (sic), THE HLURB IS PRECLUDED AND
 BARRED FROM REOPENING, MUCH LESS REVERSING THE
DECISION OF THE OFFICE OF THE PRESIDENT.
5. THE COURT OF APPEALS' STANCE IS TANTAMOUNT TO A
RE-OPENING OF THE OFFICE OF THE PRESIDENT'S
DECISION, HENCE WOULD WREAK HAVOC TO THE
DOCTRINE OF SUBSTANTIAL RES JUDICATA.
6. IF AT ALL, THE HLURB NEED ONLY BE DIRECTED TO
RESOLVE SMPI'S PENDING MOTION FOR EXECUTION, AND
NOT CONDUCT FURTHER PROCEEDINGS FOR RECEPTION
OF THE PARTIES' EVIDENCE THAT ARE UNSPECIFIED.
III.
THE COURT OF APPEALS COMMITTED GRAVE, SERIOUS AND REVERSIBLE
ERROR WHEN IT FAILED AND/OR REFUSED TO AFFIRM THE OFFICE OF THE
PRESIDENT'S DECISION DATED 27 JANUARY 2004 IN THAT:chanRoblesvi rtua lLawl ibra ry
1. THE SUBJECT SALE TRANSACTIONS, DULY APPROVED AND
CONFIRMED BY THE SEC PER ITS ORDERS DATED 07
NOVEMBER 1994 AND 31 JULY-1996, ARE PRESUMED
VALID AND REGULAR SINCE THESE WERE OFFICIAL ACTS
OF SEC-APPOINTED RECEIVER MR. FLORENCIO B.
ORENDAIN.
2. IN FACT, SEC RECEIVER ORENDAIN'S ACTS CANNOT BE
IMPUGNED BY [BF HOMES] SINCE UNDER SECTION 9,
RULE 9, INTERIM RULES OF PROCEDURE GOVERNING
INTRA- CORPORATE CONTROVERSIES AND SECTION 17,
RULE 4, INTERIM RULES OF PROCEDURE ON CORPORATE
REHABILITATION, WHICH OPERATES RETROACTIVELY
BEING A PROCEDURAL RULE, RECEIVERS ENJOY IMMUNITY
FROM SUITS ARISING FROM THE EXERCISE OF THEIR
FUNCTIONS AND DUTIES.
3. NONETHELESS, [BF HOMES] IS ESTOPPED FROM REFUSING
TO DELIVER THE REMAINING 20 TCTs SINCE IT HAD
PREVIOUSLY DELIVERED TO SMPI 110 TCTs OUT OF 130
TCTs FOR WHICH [BF HOMES] HAD DULY .RECEIVED FULL
PAYMENT THEREFOR IN THE TOTAL AMOUNT
PHP104,600,402.47.36 CONSEQUENTLY, [BF HOMES] IS
OBLIGED TO DELIVER THE TITLES TO SMPI PURSUANT TO
SECTION 25, P.D. 957.
4. THE MATTER OF THE PURCHASE PRICE IS IRRELEVANT
CONSIDERING THE BIG VOLUME INVOLVED. IN FACT, THE
AVERAGE PURCHASE PRICE OF THE LOTS IN THE AMOUNT
OF PHP2,500.00 PER SQ. M. IS VALID AND REASONABLE
SINCE THE SALE INVOLVED A TOTAL OF 130 LOTS
AMOUNTING TO PHP 104,600,402.47.
5. EVEN ASSUMING ARGUENDO THAT THERE MAY BE
SUBSTANTIAL DISPARITY BETWEEN THE AVERAGE
PURCHASE PRICE OF PHP2.500/SQ.M. AND THE MARKET
VALUE AT PHP3,500/SQ.M. AS [BF HOMES] CLAIMS, MERE
INADEQUACY OF THE PURCHASE PRICE, STANDING ALONE
AND WITHOUT PROOF OF ACTUAL FRAUD, CANNOT
INVALIDATE THE PARTIES' SALES CONTRACT PER ARTICLE
1355, NEW CIVIL CODE.
6. IF AT ALL, [BF HOMES'] REMEDY IS TO FILE THE
APPROPRIATE ACTION FOR RECONVEYANCE WITH THE
REGULAR COURT, ABSENT WHICH, IT IS LEGALLY BOUND
TO DELIVER TO SMPI THE SUBJECT TITLES.
7. ACCORDINGLY, SINCE SMPI WAS CONSTRAINED TO
LITIGATE DUE TO [BF HOMES'] UNJUSTIFIED REFUSAL TO
DELIVER THE SUBJECT TITLES, SMPI IS ENTITLED TO THE
PAYMENT OF ATTORNEY'S FEES.37
chanrobles law
The Petition is meritorious.
Presidential Decree No. 95738 dated July 12, 1976 conferred exclusive
jurisdiction to regulate the real estate trade and business upon the National
Housing Authority (NHA).39 Presidential Decree No. 134440dated April 2,
1978 expanded the quasi-judicial powers of NHA by providing as follows: c ralawlawl ibra ry
Section 1. In the exercise of its functions to regulate the real estate trade
and business and in addition to its powers provided for in Presidential
Decree No. 957, the National Housing Authority shall have exclusive
jurisdiction to hear and decide cases of the following nature: chanRoblesv irt ual Lawlib rary
 A. Unsound real estate business practices;
B. Claims involving refund and any other claims filed by
subdivision lot or condominium unit buyer against the
project owner, developer, dealer, broker or salesman; and
C. Cases involving specific performance of contractual
and statutory obligations filed by buyers of
subdivision lot or condominium unit against the
owner, developer, dealer, broker or salesman."
(Emphases ours.)
chanrobles law
Per Executive Order No. 64841 dated February 7, 1981, the powers of the
NHA were transferred to the Human Settlements Regulatory Commission,
which, pursuant to Executive Order No. 90 dated December 17, 1986, was
subsequently renamed as HLURB.42 In Siasoco v. Narvaja,43 the Court
highlighted the exclusive jurisdiction of the HLURB over complaints for
specific performance in certain real estate transactions: crala wlawlibra ry
Under the Executive Order creating it, the HLURB has exclusive
jurisdiction to "hear and decide cases of unsound real estate business
practices; claims involving refund filed against project owners, developers,
dealers, brokers, or salesmen; and cases of specific performance."
Accordingly, in United Housing Corporation v. Dayrit, we ruled that it is the
HLURB, not the trial court, which has jurisdiction over complaints for
specific performance filed against subdivision developers to compel
the latter to execute deeds of absolute sale and to deliver the
certificates of title to buyers. (Emphases supplied.) chan roble slaw
The Court reiterated in Bank of the Philippines Islands v. ALS Management
and Development Corporation44 that: cralawlawlib rary
[T]he jurisdiction of the HLURB over cases enumerated in Section 1 of PD
No. 1344 is exclusive. Thus, we have ruled that the board has sole
jurisdiction in a complaint of specific performance for the delivery of
a certificate of title to a buyer of a subdivision lot; for claims of refund
regardless of whether the sale is perfected or not; and for determining
whether there is a perfected contract of sale. (Emphases supplied.)
chanrobles law
It is clear from the plain language of Section 1 of Presidential Decree No.
1344 and aforecited jurisprudence that the HLURB had exclusive jurisdiction
ChanRobles Vi rtua lawlib rary over the complaint for specific performance filed by SMPI against BF Homes
for the delivery of the remaining 20 TCTs.
In fact, in the instant case, the HLURB did exercise jurisdiction over and did
take cognizance of the complaint of SMPI. Arbiter Balasolla received
pleadings and evidences from the parties, and after the period for filing
position papers and draft decisions by the parties had lapsed, deemed the
case submitted for decision. However, at this stage, Arbiter Balasolla
demurred, and instead of deciding the case, suspended the proceedings until
the SEC ruled on the issue of whether or not Orendain, the receiver of BF
Homes, had authority to execute the Deeds of Absolute Sale over the 130
Italia II lots in favor of SMPI. On appeal, the HLURB Board of Commissioners
affirmed the suspension of proceedings.
When the case was appealed to the OP by SMPI, and then to the Court of
Appeals by BF Homes, both the OP and the Court of Appeals sustained the
jurisdiction of HLURB over the complaint for specific performance filed by
SMPI, the only difference being that the OP proceeded to resolve the case on
the merits based on the evidence on record while the appellate court
remanded the case to the HLURB for further proceedings.
The OP and the Court of Appeals are correct that the HLURB, in the exercise
of its exclusive jurisdiction, did not have to suspend the proceedings and
should have went ahead to resolve the complaint for specific performance
filed by SMPI given its statutory mandate under Section 1 of Presidential
Decree No. 1344 and its technical competence and expertise over the
subject matter. The HLURB was called upon to determine the contractual
obligations of BF Homes and SMPI, as seller and buyer of subdivision lots,
respectively, under the terms and conditions of the Deeds of Absolute Sale
in relation to the provisions of Presidential Decree No. 957. In contrast, the
proceedings before the SEC involved the receivership of BF Homes, an intra-
corporate matter, as pointed out by the Court of Appeals. While the HLURB
and SEC proceedings may be related (i.e., Orendain executed the Deeds of
Absolute Sale of the 130 Italia II lots as receiver of BF Homes), the two
cases could proceed independently of one another. A ruling by the SEC that
Orendain did not have or had exceeded his authority as receiver in executing
the Deeds of Absolute Sale is not absolutely determinative of the fate of the
complaint for specific performance of SMPI before the HLURB. It would not
automatically result in the nullification or rescission of the said Deeds or
justify the refusal of BF Homes to deliver the 20 TCTs to SMPI as there
would be other issues which need to be considered, such as the good faith
or bad faith of SMPI as buyer, ratification by BF Homes of the
Deeds, etc., and the HLURB is not obliged to suspend its proceedings until
all of these issues are resolved or decided by other courts/tribunals. HLURB
could already make a preliminary finding on the validity of the Deeds of
Absolute Sale executed by Orendain for the purpose of ascertaining the right
of SMPI to the delivery of the 20 TCTs. The HLURB is behooved to settle the
controversy brought before it with dispatch if only to achieve the purpose of
Presidential Decree No. 957, to wit: cralaw lawlib rary
The provisions of P.D No. 957 were intended to encompass all questions
regarding subdivisions and condominiums. The intention was to provide for
an appropriate government agency, the HLURB, to which all parties - buyers
and sellers of subdivision and condominium units - may seek remedial
recourse. The law recognized, too, that subdivision and condominium
development involves public interest and welfare and should be brought to a
body, like the HLURB, that has technical expertise. In the exercise of its
powers, the HLURB, on the other hand, is empowered to interpret and apply
contracts, and determine the rights of private parties under these contracts.
This ancillary power, generally judicial, is now no longer with the regular
courts to the extent that the pertinent HLURB laws provide.45
chanrobles law
Nonetheless, the Court disagrees with the Court of Appeals and finds no
more need to remand the case to the HLURB.
To recall, the parties were able to file pleadings and submit evidence before
Arbiter Balasolla. The case was already deemed submitted for resolution
with Arbiter Balasolla stopping short only of actually rendering a decision.
Taking into account that the necessary pleadings and evidence of the parties
are already on record, returning the instant case to the HLURB for further
proceedings will simply be circuitous and inconsistent with the summary
nature of HLURB proceedings.46 The Court keeps in mind the shared
objective of Rule 1, Section 2 of the 1996 Rules of Procedure of the HLURB,
as amended, and Rule 1, Section 6 of the Revised Rules of Court to promote
a just, speedy, and inexpensive disposition/determination of every action.47
Pursuant to the doctrine of primary jurisdiction, "the courts cannot or will
not determine a controversy involving a question which is within the
jurisdiction of an administrative tribunal, where the question demands the
exercise of sound administrative discretion requiring the special knowledge,
experience, and services of the administrative tribunal to determine
technical and intricate matters of fact, and a uniformity of ruling is essential
to comply with the purposes of the regulatory statute
administered."48However, said doctrine is not an absolute or inflexible rule.
The Court recognized several exceptions in Republic v. Lacap,49viz.: cralawlawli bra ry
[T]he doctrine of exhaustion of administrative remedies and the corollary
doctrine of primary jurisdiction, which are based on sound public policy and
practical considerations, are not inflexible rules. There are many accepted
exceptions, such as: (a) where there is estoppel on the part of the party
invoking the doctrine; (b) where the challenged administrative act is
patently illegal, amounting to lack of jurisdiction; (c) where there is
unreasonable delay or official inaction that will irretrievably prejudice the
complainant; (d) where the amount involved is relatively small so as to
make the rule impractical and oppressive; (e) where the question involved is
purely legal and will ultimately have to be decided by the courts of justice;
(f) where judicial intervention is urgent; (g) when its application may
cause great and irreparable damage; (h) where the controverted acts violate
due process; (i) when the issue of non-exhaustion of administrative
remedies has been rendered moot; (j) when there is no other plain, speedy
and adequate remedy; (k)when strong public interest is involved; and,
(1) in quo warranto proceedings, x x x. (Emphases supplied.) c han robles law
The contractual relationship between BF Homes as owner and SMPI as buyer
of subdivision lots is governed by Presidential Decree No. 957 and is
undeniably imbued with public interest. Hence, it is crucial that the dispute
between them be resolved as swiftly as possible. In Spouses Chua v.
Ang,50 the Court declared that "public interest and welfare are involved in
subdivision and condominium development, as the terms of Presidential
Decree Nos. 957 and 1344 expressly reflect, x x x Shelter is a basic human
need whose fulfillment cannot afford any kind of delay."
Even if the case is no longer remanded, BF Homes cannot claim denial of
due process. "The essence of due process is to be heard, and, as applied to
administrative proceedings, this means a fair and reasonable opportunity to
explain one's side, or an opportunity to seek a reconsideration of the action
or ruling complained of. Administrative due process cannot be fully equated
with due process in its strict judicial sense, for in the former a formal or
trial-type hearing is not always necessary, and technical rules of procedure
are not strictly applied."51 In the instant case, SMPI and BF Homes were
afforded the opportunity to present and address each other's arguments
through an exchange of pleadings, as well as to submit their respective
evidence before Arbiter Balasolla. To recall, the case was already submitted
for decision before Arbiter Balasolla, meaning, there is nothing more left for
the parties to submit or do. To remand the case and repeat the entire
process once again before the HLURB Arbiter will not only be impractical, but
also unreasonable and oppressive for SMPI.
Relevant herein are the following pronouncements of the Court in Ching v.
Court of Appeals52:cralaw lawlib rary
[T]he Supreme Court may, on certain exceptional instances, resolve the
merit:? of a case on the basis of the records and other evidence before it,
most especially when the resolution of these issues would best serve the
ends of justice and promote the speedy disposition of cases.
Thus, considering the peculiar circumstances attendant in the instant case,
this Court sees the cogency to exercise its plenary power:
"It is a rule of procedure for the Supreme Court to strive to settle the entire
controversy in a single proceeding leaving no root or branch to bear the
seeds of future litigation. No useful purpose will be served if a case or the
determination of an issue in a case is remanded to the trial court only to
have its decision raised again to the Court of Appeals and from there to the
Supreme Court (citing Board of Commissioners vs. Judge Joselito de la Rosa
and Judge Capulong, G.R. Nos. 95122-23).
"We have laid down the rule that the remand of the case or of an issue to
the lower court for further reception of evidence is not necessary where the
Court is in position to resolve the dispute based on the records before it and
particularly where the ends of justice would not be subserved by the remand
thereof (Escudem vs. Dulay, 158 SCRA 69). Moreover, the Supreme Court is
clothed with ample authority to review matters, even those not raised on
appeal if it finds that their consideration is necessary in arriving at a just
disposition of the case."
On many occasions, the Court, in the public interest and for the expeditious
administration of justice, has resolved actions on the merits instead of
remanding them to the trial court for further proceedings, such as where the
ends of justice would not be subserved by the remand of the case.
chanrobles law
Consequently, the Court proceeds to resolve the primary issue in this case:
Whether or not SMPI is entitled to the delivery of the remaining 20 TCTs for
the lots it purchased from BF Homes.
The Court answers affirmatively.
Section 25 of Presidential Decree No. 957 explicitly mandates that "[t]he
owner or developer shall deliver the title of the [subdivision] lot or
[condominium] unit to the buyer upon full payment of the lot or unit."
Section 3 of all the three Deeds of Absolute Sale also reads: cralawlawli bra ry
3. [BF Homes] likewise covenants to deliver to [SMPI] the properties free
and clear of tenants, if any, and shall submit any and all titles, documents
and/or papers which may be required to effect the transfer of the properties
to [SMPI][.]53chanrobles law
In the case at bench, SMPI submitted adequate proof showing full payment
to and receipt by BF Homes of the purchase price for the 130 Italia II lots as
fixed in the Deeds of Absolute Sale.54 BF Homes expressly admitted receipt
of some payments, while it remained silent as to the others without
presenting controverting evidence.
Upon full payment by SMPI of the purchase price for the 130 Italia II lots to
BF Homes, it became mandatory upon BF Homes to deliver the TCTs for said
lots to SMPI. As the Court held in G.O.A.L., Inc. v. Court of Appeals55: c ralawlawl ibra ry
Upon full payment of the agreed price, petitioner is mandated by law
to deliver the title of the lot or unit to the buyer. Both the "Contract to
Sell" of petitioner and private respondents, and Sec. 25 of P.D. 957 state -
Sec. III (Contract to Sell). - Title and Ownership of Unit. Upon full payment
by the vendees of the full amount of the purchase price stipulated under
Sec. Ill hereof, the assessments and expenses under Sec. IV and otherwise
upon compliance by the VENDEES of all obligations therein, the VENDOR will
convey to the VENDEE all rights and interests of the former and to the Unit,
subject hereof together with the interest in the common area and in the
Condominium Corporation appurtenant to such unit x x x."
Sec. 25, P.D. 957 - Issuance of Title. - The owner or developer shall
deliver the title of the lot or unit to the buyer upon full payment of
the lot or unit x x x. In the event a mortgage over the lot or unit is
outstanding at the time of the issuance of the title to the buyer, the owner
or developer shall redeem the mortgage or the corresponding portion
thereof within six months from such issuance in order that the title over any
paid lot or unit may be secured and delivered to the buyer in accordance
herewith."
Petitioner also attempts to justify its failure to deliver the certificate of title
of private respondent Teng by claiming that it used the title as part collateral
for the additional loan NHA had extended for the construction of the fifth
floor.
The Court observes the frequent allusion of petitioner to its predicament
brought about by the abandonment of the project by the first
contractor. But such is irrelevant in light of Sec. 25 of P.D. 957 as well
as of the Contract to Sell of the parties. While we empathize with
petitioner in its financial dilemma we cannot make innocent parties
suffer the consequences of the former's lack of business acumen.
Upon full payment of a unit, petitioner loses all its rights and
interests to the unit in favor of the buyer, x x x. (Emphases supplied.)
To justify its refusal to deliver the remaining 20 TCTs to SMPI, BF Homes
asserts that 1) the Deeds of Absolute Sale were undated and not notarized;
2) Orendain did not have or exceeded his authority as receiver in entering
into the contracts of sale of the Italia II lots with SMPI; and 3) the
consideration for the said Italia II lots were grossly inadequate and
disadvantageous for BF Homes.
The Court is not persuaded.
Article 1358(1) of the Civil Code requires that "[a]cts and contracts which
have for their object the creation, transmission, modification or
extinguishment of real rights over immovable property" must appear in a
public document; and sales of real property or of an interest therein shall be
governed by Article 1403(2) and 1405 of the same Code. Pertinent portions
of Articles 1403(2) and 1405 of the Civil Code are reproduced below:
Art. 1403. The following contracts are unenforceable, unless they are
ratified:
c hanRoble svirtual Lawlib rary
xxxx
(2) Those that do not comply with the Statute of Frauds as set forth in this
number. In the following cases an agreement hereafter made shall be
unenforceable by action, unless the same, or some note or memorandum,
thereof, be in writing, and subscribed by the party charged, or by his agent;
evidence, therefore, of the agreement cannot be received without the
writing, or a secondary evidence of its contents:
xxxx
(e) An agreement of the leasing for a longer period than one year, or for the
sale of real property or of an interest therein;
ChanRob les Vi rtualaw lib rary
xxxx
Art. 1405. Contracts infringing the Statute of Frauds, referred to in No. 2 of
Article 1403, are ratified by the failure to object to the presentation of oral
evidence to prove the same, or by the acceptance of benefit under them.
The contracts of sale of the 130 Italia II lots between BF Homes and SMPI
were actually reduced into writing into the three Deeds of Absolute Sale
which were signed by the representatives of the two corporations. The only
defect was that the Deeds were not notarized and, therefore, were not
chan roble slaw public documents as required by Article 1358(1) of the Civil Code. Cenido v.
Spouses Apacionado56 involved a closely similar situation and the Court
adjudged therein that: cra lawlawlib rary
The sale of real property should be in writing and subscribed by the party
charged for it to be enforceable. The "Pagpapatunay" is in writing and
subscribed by Bonifacio Aparato, the vendor; hence, it is enforceable
under the Statute of Frauds. Not having been subscribed and sworn to
before a notary public, however, the "Pagpapatunay" is not a public
document, and therefore does not comply with Article 1358, Paragraph 1 of
the Civil Code.
The requirement of a public document in Article 1358 is not for the
validity of the instrument but for its efficacy. Although a conveyance
of land is not made in a public document, it does not affect the
validity of such conveyance. Article 1358 does not require the
c ralawlawl ibra ry
accomplishment of the acts or contracts in a public instrument in order to
validate the act or contract but only to insure its efficacy, so that after the
existence of said contract has been admitted, the party bound may be
compelled to execute the proper document, x x x.
xxxx
The private conveyance of the house and lot is therefore valid between
Bonifacio Aparato and respondent spouses, x x x For greater efficacy of the
contract, convenience of the parties and to bind third persons, respondent
spouses have the right to compel the vendor or his heirs; to execute the
necessary document to properly convey the property. cha nrob leslaw
Also instructive is the following discussion of the Court in Swedish Match v.
Court of Appeals,57 on the Statute of Frauds: cralawlawlibra ry
The Statute of Frauds embodied in Article 1403, paragraph (2), of the Civil
Code requires certain contracts enumerated therein to be evidenced by
some note or memorandum in order to be enforceable. The term "Statute of
Frauds" is descriptive of statutes which require certain classes of contracts
to be in writing. The Statute does not deprive the parties of the right
chan robles law
to contract with respect to the matters therein involved, but merely
regulates the formalities of the contract necessary to render it
enforceable. Evidence of the agreement cannot be received without
the writing or a secondary evidence of its contents.
The Statute, however, simply provides the method by which the
contracts enumerated therein may be proved but does not declare
them invalid because they are not reduced to writing. By law,
contracts are obligatory in whatever form they may have been entered into,
provided all the essential requisites for their validity are present.
However, when the law requires that a contract be in some form in
order that it may be valid or enforceable, or that a contract be
proved in a certain way, that requirement is absolute and
indispensable. Consequently, the effect of non-compliance with the
requirement of the Statute is simply that no action can be enforced
unless the requirement is complied with. Clearly, the form required is
for evidentiary purposes only. Hence, if the parties permit a contract to be
proved, without any objection, it is then just as binding as if the Statute has
been complied with.
The purpose of the Statute is to prevent fraud and perjury in the
enforcement of obligations depending for their evidence on the unassisted
memory of witnesses, by requiring certain enumerated contracts and
transactions to be evidenced by a writing signed by the party to be charged.
However, for a note or memorandum to satisfy the Statute, it must be
complete in itself and cannot rest partly in writing and partly in parol. The
note or memorandum must contain the names of the parties, the terms and
conditions of the contract, and a description of the property sufficient to
render it capable of identification. Such note or memorandum must contain
the essential elements of the contract expressed with certainty that may be
ascertained from the note or memorandum itself, or some other writing to
which it refers or within which it is connected, without resorting to parol
evidence.
xxxx
The Statute of Frauds is applicable only to contracts which are
executory and not to those which have been consummated either
totally or partially. If a contract has been totally or partially
performed, the exclusion of parol evidence would promote fraud or
bad faith, for it would enable the defendant to keep the benefits
already derived by him from the transaction in litigation, and at the
same time, evade the obligations, responsibilities or liabilities
assumed or contracted by him thereby. This rule, however, is
predicated on the fact of ratification of the contract within the
meaning of Article 1405 of the Civil Code either (1) by failure to
object to the presentation of oral evidence to prove the same, or (2)
by the acceptance of benefits under them. x x x. (Emphases
supplied.)c han robles law
Based on the afore-quoted jurisprudence, the Deeds of Absolute Sale are
enforceable. First, the Deeds are already in writing and signed by the
parties, and only lack notarization, a formality which SMPI could compel BF
Homes to comply with. As private documents, the Deeds are still binding
between the parties and the conveyance of the 130 Italia II lots by BF
Homes to SMPI by virtue of said Deeds is valid. And second, the Deeds were
already ratified as BF Homes had accepted the benefits from said contracts
when it received full payment from SMPI of the purchase price for the 130
Italia II lots. The Deeds were also substantially performed considering that
BF Homes had previously delivered to SMPI the TCTs for 110 out of the 130
lots, only refusing to deliver the TCTs for the remaining 20 lots.
BF Homes cannot insist on the lack of authority of Orendain as receiver to
sign the Deeds of Absolute Sale for the 130 Italia II lots. While it is true the
SEC revoked the appointment of Orendain as rehabilitation receiver of BF
Homes in 1989, the SEC thereafter immediately appointed FBO Networks
Management, Inc., in replacement as receiver. Orendain was the Chairman
of FBO Networks Management, Inc. Hence, when Orendain signed the Deeds
of Absolute Sale for the 130 Italia II lots, he did so as Chairman of FBO
Networks Management, Inc., the appointed receiver of BF Homes.
Under Section 6(d) of Presidential Decree No. 902-A, otherwise known as
the SEC Reorganization Act, the management committee or rehabilitation
receiver is empowered to take custody and control of all existing assets and
properties of such corporations under management; to evaluate the existing
assets and liabilities, earnings and operations of such corporations; to
determine the best way to salvage and protect the interest of investors and
creditors; to study, review and evaluate the feasibility of continuing
operations, and restructure and rehabilitate such entities if determined to be
feasible by the SEC.58 The acts of the receiver, being an appointed officer of
the SEC,59 enjoy the presumption of regularity.60
In the instant case, the acts of FBO Networks Management, Inc., as receiver
of BF Homes, undertaken through Orendain, including the sale of the 130
Italia II lots to SMPI in 1992 and 1993, are so far presumed to have been
regularly performed absent evidence to the contrary. While BF Homes
questioned the acts of Orendain/FBO Networks Management, Inc. as
receiver before the SEC, the SEC terminated the rehabilitation proceedings
without definitively ruling on the same and recognized the transfer of
jurisdiction over such subject matter to the Regional Trial Courts (RTC) with
the passage of Republic Act No. 8799, otherwise known as the Securities
Regulation Code. There is no showing herein whether BF Homes pursued
before the RTC any case to nullify or invalidate the alleged unauthorized or
irregular acts of Orendain/FBO Networks Management, Inc. as receiver.
Moreover, even assuming for the sake of argument that Orendain/FBO
Networks Management, Inc. did act without or beyond his/its authority as
receiver in entering into the contracts of sale of the 130 Italia II lots with
SMPI, then the said contracts were merely unenforceable and could be
ratified, Article 1403(1) of the Civil Code provides:cra lawlawlib rary
ARTICLE 1403. The following contracts are unenforceable, unless they are
ratified:
c hanRoble svirtual Lawlib rary
(1) Those entered into in the name of another person by one who has been
given no authority or legal representation, or who has acted beyond his
powers[.] chan rob leslaw
As the OP observed, BF Homes ratified the Deeds of Absolute Sale with SMPI
by accepting full payment from SMPI of the purchase price for the 130 Italia
II lots, and fully implementing the transaction covered by the first two
Deeds and partially implementing the third by delivering the TCTs for 110 of
the 130 lots.
Receiving full payment for the 130 Italia II lots from SMPI also estops BF
Homes from denying the authority of Orendain/FBO Networks Management,
Inc. to enter into the Deeds of Absolute Sale. The Court applies by analogy
its declarations in Bisaya Land Transportation, Inc. v. Sanchez,61 which
involved the acts of a court-appointed receiver for an estate: cralawlawli bra ry
Furthermore, it is clear that BISTRANCO received material benefits from the
contracts of agency of Sanchez, based upon the monthly statements of
income of BISTRANCO, upon which the commissions of Sanchez were based,
x x x.
xxxx
[I]n our considered opinion, the doctrine of estoppel precludes BISTRANCO
from repudiating an obligation voluntarily assumed by it, after having
accepted benefits therefrom.' To countenance such repudiation would be
contrary to equity and would put a premium on fraud or misrepresentation,
which this Court will not sanction.
chanro bleslaw
Furthermore, the averment of BF Homes of inadequacy of the purchase price
for the 130 Italia II lots deserves scant consideration. Section 3(p), Rule 131
of the Revised Rules of Court presumes that private transactions have been
fair and regular. The only evidence submitted by BF Homes in support of its
claim is the appraisal report which valued the lots at P3,500.00 and
P3,000.00 per square meter. The appraisal report, however, does not
necessarily prove that the purchase price for the lots agreed upon in the
Deeds of Absolute Sale, averaged at P2,500.00 per square meter, is grossly
inadequate and disadvantageous to BF Homes. There are considerations for
which sellers may agree to sell their property for less than the market value,
such as the urgent financial need of the seller, cash or immediate payment,
and/or the high number of properties purchased at the same time. In this
case, SMPI explained that it was granted a lower purchase price because it
bought the Italia II lots in volume, and BF Homes was unable to repudiate
said explanation.
Finally, as to the award of attorney's fees, Article 2208 of the Civil Code
allows the recovery of attorney's fees and expenses of litigation, other than
judicial costs, even in the absence of stipulation, "[w]here the defendant
acted in gross and evident bad faith in refusing to satisfy the plaintiffs
plainly valid, just and demandable claim." SMPI obviously had a valid and
demandable claim against BF Homes, which unjustifiably and inexcusably
refused to comply with the mandate in Presidential Decree No. 957 and
undertaking in the Deeds of Absolute Sale to deliver the titles to the
subdivision lots upon complete payment for said properties. The sudden
refusal of BF Homes to deliver the last 20 TCTs, after having previously
delivered the other 110 TCTs, constitutes bad faith and justifies the award of
attorney's fees in favor of SMPI, which was forced to litigate to enforce its
rights. The amount of P100,000.00 awarded by the OP as attorney's fees is
just and reasonable under the circumstances.
WHEREFORE, premises considered, the Petition for Review on Certiorari of
San Miguel Properties, Inc. is GRANTED. The Decision dated January 31,
2005 and Resolution dated August 9, 2005 of the Court of Appeals in CA-
G.R. SP No. 83631 ordering the remand of the case to the Housing and Land
Use Regulatory Board is REVERSED and SET ASIDE; and the Decision
dated January 27, 2004 of the Office of the President in O.P. Case No. 03-E-
203 is REINSTATED.
SO ORDERED
G.R. No. 207145 July 28, 2015
GIL G. CAWAD, MARIO BENEDICT P. GALON, DOMINGO E. LUSAYA,
JEAN V. APOLINARES, MA. LUISA S. OREZCA, JULIO R. GARCIA,
NESTOR M. INTIA, RUBEN C. CALIWATAN, ADOLFO Q. ROSALES,
MA. LUISA NAVARRO, and the PHILIPPINE PUBLIC HEALTH
ASSOCIATION, INC., Petitioners,
vs.
FLORENCIO B. ABAD, in his capacity as Secretary of the Department
of Budget and Management (DBM); ENRIQUE T. ONA, in his
capacity as Secretary of the Department of Health (DOH); and
FRANCISCO T. DUQUE III, in his capacity as Chairman of the Civil
Service Commission (CSC), Respondents.
On March 26, 1992, Republic Act (RA) No. 7305, otherwise known
as The Magna Carta of Public Health Workerswas signed into law in
order to promote the social and economic well-being of health
workers, their living and working conditions and terms of
employment, to develop their skills and capabilities to be better
equipped to deliver health projects and programs, and to encourage
those with proper qualifications and excellent abilities to join and
remain in government service.3 Accordingly, public health workers
(PHWs) were granted the following allowances and benefits, among
others:
Section 20. Additional Compensation. - Notwithstanding Section 12
of Republic Act No. 6758, public health workers shall receive the
following allowances: hazard allowance, subsistence allowance,
longevity pay, laundry allowance and remote assignment allowance.
Section 21. Hazard Allowance. - Public health workers in hospitals,
sanitaria, rural health units, main health centers, health infirmaries,
barangay health stations, clinics and other health-related
establishments located in difficult areas, strife-torn or embattled
areas, distressed or isolated stations, prisons camps, mental
hospitals, radiation exposed clinics, laboratories or disease-infested
areas or in areas declared under state of calamity or emergency for
the duration thereof which expose them to great danger, contagion,
radiation, volcanic activity/eruption, occupational risks or perils to
life as determined by the Secretary of Health or the Head of the unit
with the approval of the Secretary of Health, shall be compensated
hazard allowances equivalent to at least twenty-five percent
(25%) of the monthly basic salary of health workers receiving salary
grade 19 and below, and five percent (5%) for health workers
with <="" b="">
Section 22. Subsistence Allowance. - Public health workers who are
required to render service within the premises of hospitals, sanitaria,
health infirmaries, main health centers, rural health units and
barangay health stations, or clinics, and other health-related
establishments in order to make their services available at any and
all times, shall be entitled to full subsistence allowance of three (3)
meals which may be computed in accordance with prevailing
circumstances as determined by the Secretary of Health in
consultation with the Management-Health Worker's Consultative
Councils, as established under Section 33 of this Act: Provided, That
representation and travel allowance shall be given to rural health
physicians as enjoyed by municipal agriculturists, municipal planning
and development officers and budget officers.
Section 23. Longevity Pay.- A monthly longevity pay equivalent
to five percent (5%)of the monthly basic pay shall be paid to a health
worker for every five (5) years of continuous, efficient and
meritorious services rendered as certified by the chief of office
concerned, commencing with the service after the approval of this
Act.4
Pursuant to Section 355 of the Magna Carta, the Secretary of Health
promulgated its Implementing Rules and Regulations (IRR) in July
1992. Thereafter, in November 1999, the DOH, in collaboration with
various government agencies and health workers' organizations,
promulgated a Revised IRR consolidating all additional and
clarificatory rules issued by the former Secretaries of Health dating
back from the effectivity of the Magna Carta. The pertinent
provisions of said Revised IRR provide:
6.3. Longevity Pay.- A monthly longevity pay equivalent to five
percent (5%)of the present monthly basic pay shall be paid to public
health workers for every five (5) years of continuous, efficient and
meritorious services rendered as certified by the Head of
Agency/Local Chief Executives commencing after the approval of the
Act. (April 17, 1992)
xxxx
7.1.1. Eligibility to Receive Hazard Pay.- All public health workers
covered under RA 7305 are eligible to receive hazard pay when the
nature of their work exposes them to high risk/low risk hazards for
at least fifty percent (50%) of their working hours as determined and
approved by the Secretary of Health or his authorized
representatives.
xxxx
7.2.1. Eligibility for Subsistence Allowance
a. All public health workers covered under RA 7305 are eligible to
receive full subsistence allowance as long as they render actual duty.
b. Public Health Workers shall be entitled to full Subsistence
Allowance of three (3) meals which may be computed in accordance
with prevailing circumstances as determined by the Secretary of
Health in consultation with the Management-Health Workers
Consultative Council, as established under Section 33 of the Act.
c. Those public health workers who are out of station shall be
entitled to per diems in place of Subsistence Allowance. Subsistence
Allowance may also be commuted.
xxxx
7.2.3 Rates of Subsistence Allowance
a. Subsistence allowance shall be implemented at not less than
Ph₱50.00 per day or Ph₱1,500.00 per month as certified by head of
agency.
xxxx
d. Part-time public health workers/consultants are entitled to one-
half (1/2)of the prescribed rates received by full-time public health
workers.6
On July 28, 2008, the Fourteenth Congress issued Joint Resolution
No. 4, entitled Joint Resolution Authorizing the President of the
Philippines to Modify the Compensation and Position Classification
System of Civilian Personnel and the Base Pay Schedule of Military
and Uniformed Personnel in the Government, and for other
Purposes, approved by then President Gloria Macapagal-Arroyo on
June 17,2009, which provided for certain amendments in the Magna
Carta and its IRR.
On September 3, 2012, respondents DBM and CSC issued one of the
two assailed issuances, DBM-CSC Joint Circular No. 1, Series of 2012,
to prescribe the rules on the grant of Step Increments due to
meritorious performance and Step Increment due to length of
service.7 Specifically, it provided that "an official or employee
authorized to be granted Longevity Pay under an existing law is not
eligible for the grant of Step Increment due to length of
service."8 Shortly thereafter, on November29, 2012, respondents
DBM and DOH then circulated the other assailed issuance, DBM-
DOH Joint Circular No. 1, Series of 2012, the relevant provisions of
which state:
7.0. Hazard Pay. - Hazard pay is an additional compensation for
performing hazardous duties and for enduring physical hardships in
the course of performance of duties.
As a general compensation policy, and in line with Section 21 of R. A.
No. 7305, Hazard Pay may be granted to PHWs only if the nature of
the duties and responsibilities of their positions, their actual
services, and location of work expose them to great danger,
occupational risks, perils of life, and physical hardships; and only
during periods of actual exposure to hazards and hardships.
xxxx
8.3 The Subsistence Allowance shall be ₱50for each day of actual full-
time service, or ₱25for each day of actual part-time service.
xxxx
9.0 Longevity Pay (LP)
9.1 Pursuant to Section 23 of R.A. No. 7305, a PHW may be granted
LP at 5% of his/her current monthly basic salary, in recognition of
every 5 years of continuous, efficient, and meritorious services
rendered as PHW. The grant thereof is based on the following
criteria:
9.1.1 The PHW holds a position in the agency plantilla of regular
positions; and
9.1.2 He/She has rendered at least satisfactory performance and has
not been found guilty of any administrative or criminal case within
all rating periods covered by the 5-year period.
In a letter9 dated January 23, 2013 addressed to respondents
Secretary of Budget and Management and Secretary of Health,
petitioners expressed their opposition to the Joint Circular cited
above on the ground that the same diminishes the benefits granted
by the Magna Carta to PHWs.
Unsatisfied, petitioners, on May 30, 2013, filed the instant petition
raising the following issues:
I.
WHETHER RESPONDENTS ENRIQUE T. ONA AND FLORENCIO B. ABAD
ACTED WITH GRAVE ABUSE OF DISCRETION AND VIOLATED
SUBSTANTIVE DUE PROCESS WHEN THEY ISSUED DBM-DOH JOINT
CIRCULAR NO. 1, S. 2012 WHICH:
A) MADE THE PAYMENT OF HAZARD PAY DEPENDENT ON THE
ACTUAL DAYS OF EXPOSURE TO THE RISK INVOLVED;
B) ALLOWED PAYMENT OF SUBSISTENCE ALLOWANCE AT ₱50 FOR
EACH DAY OF ACTUAL FULL-TIME SERVICE OR ₱25 FOR EACH DAY OF
ACTUAL PART-TIME SERVICE WITHOUT CONSIDERATION OF THE
PREVAILING CIRCUMSTANCES AS DETERMINED BY THE SECRETARY
OF HEALTH IN CONSULTATION WITH THE MANAGEMENT HEALTH
WORKERS' CONSULTATIVE COUNCILS;
C) REQUIRED THAT LONGEVITY PAY BE GRANTED ONLY TO PHWs
WHO HOLD PLANTILLA AND REGULAR POSITIONS; AND
D) MADE THE JOINT CIRCULAR EFFECTIVE ON JANUARY 1, 2013,
BARELY THREE (3) DAYS AFTER IT WAS PUBLISHED IN A NEWSPAPER
OF GENERAL CIRCULATION ON DECEMBER 29, 2012, IN VIOLATION
OF THE RULES ON PUBLICATION.
II.
WHETHER RESPONDENTS FRANCISCO T. DUQUE AND FLORENCIO B.
ABAD ACTED WITH GRAVE ABUSE OF DISCRETION WHEN THEY
ISSUED DBM-CSC JOINT CIRCULAR NO. 1, S. 2012 DATED SEPTEMBER
2, 2012 WHICH PROVIDED THAT AN OFFICIAL OR EMPLOYEE
ENTITLED TO LONGEVITY PAY UNDER EXISTING LAW SHALL NO
LONGER BE GRANTED STEP INCREMENT DUE TO LENGTH OF
SERVICE.
III.
WHETHER RESPONDENTS' ISSUANCE OF DBM-DOH JOINT CIRCULAR
NO. 1, S. 2012 IS NULL AND VOID FOR BEING AN UNDUE EXERCISE
OF LEGISLATIVE POWER BY ADMINISTRATIVE BODIES WHEN
RESPONDENT ONA ALLOWED RESPONDENT ABAD TOSIGNIFICANTLY
SHARE THE POWER TO FORMULATE AND PREPARE THE NECESSARY
RULES AND REGULATIONS TO IMPLEMENT THE PROVISIONS OF THE
MAGNA CARTA.
IV.
WHETHER RESPONDENT ONA WAS REMISS IN IMPLEMENTING THE
MANDATE OF THE MAGNA CARTA WHEN HE DID NOT INCLUDE THE
MAGNA CARTA BENEFITS IN THE DEPARTMENT'S YEARLY BUDGET.
V.
WHETHER RESPONDENTS' ISSUANCE OF DBM-DOH JOINT CIRCULAR
NO. 1, S. 2012 IS NULL AND VOID FOR BEING AN UNDUE EXERCISE
OF LEGISLATIVE POWER BY ADMINISTRATIVE BODIES WHEN THE
SAME WAS ISSUED SANS CONSULTATION WITH PROFESSIONAL AND
HEALTH WORKERS' ORGANZATIONS AND UNIONS.
Petitioners contend that respondents acted with grave abuse of
discretion when they issued DBM-DOH Joint Circular No. 1, Series of
2012 and DBM-CSC Joint Circular No. 1, Series of 2012 which
prescribe certain requirements on the grant of benefits that are not
otherwise required by RA No. 7305. Specifically, petitioners assert
that the DBM-DOH Joint Circular grants the payment of Hazard Pay
only if the nature of the PHWs' duties expose them to danger when
RA No. 7305 does not make any qualification. They likewise claim
that said circular unduly fixes Subsistence Allowance at ₱50 for each
day of full-time service and ₱25 for part-time service which are not
in accordance with prevailing circumstances determined by the
Secretary of Health as required by RA No. 7305. Moreover,
petitioners fault respondents for the premature effectivity of the
DBM-DOH Joint Circular which they believe should have been on
January 29, 2012 and not on January 1, 2012. As to the grant of
Longevity Pay, petitioners posit that the same was wrongfully
granted only to PHWs holding regular plantilla positions. Petitioners
likewise criticize the DBM-CSC Joint Circular insofar as it withheld the
Step Increment due to length of service from those who are already
being granted Longevity Pay. As a result, petitioners claim that the
subject circulars are void for being an undue exercise of legislative
power by administrative bodies.
In their Comment, respondents, through the Solicitor General, refute
petitioners' allegations in stating that the assailed circulars were
issued within the scope of their authority, and are therefore valid
and binding. They also assert the authority of Joint Resolution No. 4,
Series of 2009, approved by the President, in accordance with the
prescribed procedure. Moreover, respondents question the
remedies of Certiorari and Prohibition used by petitioners for the
assailed circulars were done in the exercise of their quasi-legislative,
and not of their judicial or quasi-judicial functions.
The petition is partly meritorious.
At the outset, the petition for certiorari and prohibition filed by
petitioners is not the appropriate remedy to assail the validity of
respondents' circulars. Sections 1 and 2 of Rule 65 of the Rules of
Court provide:
RULE 65
CERTIORARI, PROHIBITION AND MANDAMUS
Section 1. Petition for certiorari. - When any tribunal, board or
officer exercising judicial or quasi-judicial functions has acted
without or in excess of its or his jurisdiction, or with grave abuse of
discretion amounting to lack or excess of jurisdiction, and there is no
appeal, or any plain, speedy, and adequate remedy in the ordinary
course of law, a person aggrieved thereby may file a verified petition
in the proper court, alleging the facts with certainty and praying that
judgment be rendered annulling or modifying the proceedings of
such tribunal, board or officer, and granting such incidental reliefs as
law and justice may require.
xxxx
Sec. 2. Petition for Prohibition. - When the proceedings of any
tribunal, corporation, board, officer or person, whether exercising
judicial, quasi-judicial or ministerial functions, are without or in
excess of its jurisdiction, or with grave abuse of discretion amounting
to lack or excess of jurisdiction, and there is no appeal or any other
plain, speedy, and adequate remedy in the ordinary course of law, a
person aggrieved thereby may file a verified petition in the proper
court, alleging the facts with certainty and praying that judgment be
rendered commanding the respondent to desist from further
proceedings in the action or matter specified therein, or otherwise
granting such incidental reliefs as law and justice may require.10
Thus, on the one hand, certiorari as a special civil action is available
only if: (1) it is directed against a tribunal, board, or officer exercising
judicial or quasi-judicial functions; (2) the tribunal, board, or officer
acted without or in excess of jurisdiction or with grave abuse of
discretion amounting to lack or excess of jurisdiction; and (3) there
is no appeal nor any plain, speedy, and adequate remedy in the
ordinary course of law.11
On the other hand, prohibition is available only if: (1) it is directed
against a tribunal, corporation, board, officer, or person exercising
functions, judicial, quasi-judicial, or ministerial; (2) the tribunal,
corporation, board or person acted without or in excess of its
jurisdiction, or with grave abuse of discretion amounting to lack or
excess of jurisdiction; and (3) there is no appeal or any other plain,
speedy, and adequate remedy in the ordinary course of law.12 Based
on the foregoing, this Court has consistently reiterated that petitions
for certiorari and prohibition may be invoked only against tribunals,
corporations, boards, officers, or persons exercising judicial, quasi-
judicial or ministerial functions, and not against their exercise of
legislative or quasi-legislative functions.13
Judicial functions involve the power to determine what the law is
and what the legal rights of the parties are, and then undertaking to
determine these questions and adjudicate upon the rights of the
parties.14 Quasi judicial functions apply to the actions and discretion
of public administrative officers or bodies required to investigate
facts, hold hearings, and draw conclusions from them as a basis for
their official action, in their exercise of discretion of a judicial
nature.15 Ministerial functions are those which an officer or tribunal
performs in the context of a given set of facts, in a prescribed
manner and without regard to the exercise of his own judgment
upon the propriety or impropriety of the act done.16
Before a tribunal, board, or officer may exercise judicial or quasi-
judicial acts, it is necessary that there be a law that gives rise to some
specific rights under which adverse claims are made, and the
controversy ensuing therefrom is brought before a tribunal, board,
or officer clothed with authority to determine the law and adjudicate
the respective rights of the contending parties.17 In this case,
respondents did not act in any judicial, quasi-judicial, or ministerial
capacity in their issuance of the assailed joint circulars. In issuing and
implementing the subject circulars, respondents were not called
upon to adjudicate the rights of contending parties to exercise, in
any manner, discretion of a judicial nature. The issuance and
enforcement by the Secretaries of the DBM, CSC and DOH of the
questioned joint circulars were done in the exercise of their quasi-
legislative and administrative functions. It was in the nature of
subordinate legislation, promulgated by them in their exercise of
delegated power. Quasi-legislative power is exercised by
administrative agencies through the promulgation of rules and
regulations within the confines of the granting statute and the
doctrine of non-delegation of powers from the separation of the
branches of the government.18
Based on the foregoing, certiorari and prohibition do not lie against
herein respondents' issuances. It is beyond the province of certiorari
to declare the aforesaid administrative issuances illegal because
petitions for certiorari seek solely to correct defects in jurisdiction,
and not to correct just any error committed by a court, board, or
officer exercising judicial or quasi-judicial functions unless such
court, board, or officer thereby acts without or in excess of
jurisdiction or with such grave abuse of discretion amounting to lack
of jurisdiction.19
It is likewise beyond the territory of a writ of prohibition since
generally, the purpose of the same is to keep a lower court within
the limits of its jurisdiction in order to maintain the administration
of justice in orderly channels. It affords relief against usurpation of
jurisdiction by an inferior court, or when, in the exercise of
jurisdiction, the inferior court transgresses the bounds prescribed by
the law, or where there is no adequate remedy available in the
ordinary course of law.20
Be that as it may, We proceed to discuss the substantive issues raised
in the petition in order to finally resolve the doubt over the Joint
Circulars' validity. For proper guidance, the pressing issue of whether
or not the joint circulars regulating the salaries and benefits relied
upon by public health workers were tainted with grave abuse of
discretion rightly deserves its prompt resolution. With respect to the
infirmities of the DBM-DOH Joint Circular raised in the petition, they
cannot be said to have been issued with grave abuse of discretion
for not only are they reasonable, they were likewise issued well
within the scope of authority granted to the respondents. In fact, as
may be gathered from prior issuances on the matter, the circular did
not make any substantial deviation therefrom, but actually remained
consistent with, and germane to, the purposes of the law.
First, the qualification imposed by the DBM-DOH Joint Circular
granting the payment of Hazard Pay only if the nature of PHWs'
duties expose them to danger and depending on whether the risk
involved is high or low was merely derived from Section 7.1.1 of the
Revised IRR of RA No. 7305, duly promulgated by the DOH in
collaboration with various government health agencies and health
workers' organizations in November 1999, to wit:
SECTION 7.1.1. Eligibility to Receive Hazard Pay. - All public health
workers covered under RA 7305 are eligible to receive hazard pay
when the nature of their work exposes them to high risk/low risk
hazards for at least fifty percent (50%) of their working hours as
determined and approved by the Secretary of Health or his
authorized representatives.21
Second, fixing the Subsistence Allowance at ₱50 for each day of full-
time service and ₱25 for part-time service was also merely a
reiteration of the limits prescribed by the Revised IRR, validly issued
by the Secretary of Health pursuant to Section 3522 of RA No. 7305,
the pertinent portions of which states:
Section 7.2.3 Rates of Subsistence Allowance
a. Subsistence allowance shall be implemented at not less than
Ph₱50.00 per day or Ph₱1,500.00 per month as certified by head of
agency.
xxxx
d. Part-time public health workers/consultants are entitled to one-
half (1/2)of the prescribed rates received by full-time public health
workers.
Third, the condition imposed by the DBM-DOH Joint Circular
granting longevity pay only to those PHWs holding regular plantilla
positions merely implements the qualification imposed by the
Revised IRR which provides:
6.3. Longevity Pay. - A monthly longevity pay equivalent to five
percent (5%) of the present monthly basic pay shall be paid to public
health workers for every five (5) years of continuous, efficient and
meritorious services rendered as certified by the Head of
Agency/Local Chief Executives commencing after the approval of the
Act. (April 17, 1992)
6.3.1. Criteria for Efficient and Meritorious Service A Public Worker
shall have:
a. At least a satisfactory performance rating within the rating period.
b. Not been found guilty of any administrative or criminal case within
the rating period.
As can be gleaned from the aforequoted provision, petitioners failed
to show any real inconsistency in granting longevity pay to PHWs
holding regular plantilla positions. Not only are they based on the
same premise, but the intent of longevity pay, which is paid to
workers for every five (5) years of continuous, efficient and
meritorious services, necessarily coincides with that of
regularization. Thus, the assailed circular cannot be invalidated for
its issuance is consistent with, and germane to, the purposes of the
law.
Anent petitioners' contention that the DBM-DOH Joint Circular is null
and void for its failure to comply with Section 3523 of RA No. 7305
providing that its implementing rules shall take effect thirty (30) days
after publication in a newspaper of general circulation, as well as its
failure to file a copy of the same with the University of the
Philippines Law Center-Office of the National Administrative
Register (UP Law Center-ONAR), jurisprudence as well as the
circumstances of this case dictate otherwise.
Indeed, publication, as a basic postulate of procedural due process,
is required by law in order for administrative rules and regulations
to be effective.24 There are, however, several exceptions, one of
which are interpretative regulations which "need nothing further
than their bare issuance for they give no real consequence more
than what the law itself has already prescribed."25 These regulations
need not be published for they add nothing to the law and do not
affect substantial rights of any person.26
Thus, in Association of Southern Tagalog Electric Cooperatives, et. al.
v. Energy Regulatory Commission (ERC),27wherein several orders
issued by the ERC were sought to be invalidated for lack of
publication and non-submission of copies thereof to the UP Law
Center - ONAR, it has been held that since they merely interpret RA
No. 7832 and its IRR, particularly on the computation of the cost of
purchased power, without modifying, amending or supplanting the
same, they cannot be rendered ineffective, to wit:
When the policy guidelines of the ERC directed the exclusion of
discounts extended by power suppliers in the computation of the
cost of purchased power, the guidelines merely affirmed the plain
and unambiguous meaning of "cost" in Section 5, Rule IX of the IRR
of R.A. No. 7832."Cost" is an item of outlay, and must therefore
exclude discounts since these are "not amounts paid or charged for
the sale of electricity, but are reductions in rates.
xxxx
Thus, the policy guidelines of the ERC on the treatment of discounts
extended by power suppliers "give no real consequence more than
what the law itself has already prescribed." Publication is not
necessary for the effectivity of the policy guidelines.
As interpretative regulations, the policy guidelines of the ERC on the
treatment of discounts extended by power suppliers are also not
required to be filed with the U.P. Law Center in order to be effective.
Section 4, Chapter 2, Book VII of the Administrative Code of 1987
requires every rule adopted by an agency to be filed with the U.P.
Law Center to be effective. However, in Board of Trustees of the
Government Service Insurance System v. Velasco, this Court
pronounced that "not all rules and regulations adopted by every
government agency are to be filed with the UP Law Center."
Interpretative regulations and those merely internal in nature are
not required to be filed with the U.P. Law Center. Paragraph 9 (a) of
the Guidelines for Receiving and Publication of Rules and
Regulations Filed with the U.P. Law Center states:
9. Rules and Regulations which need not be filed with the U.P. Law
Center, shall, among others, include but not be limited to, the
following:
a. Those which are interpretative regulations and those merely
internal in nature, that is, regulating only the personnel of the
Administrative agency and not the public.
xxxx
Furthermore, the policy guidelines of the ERC did not create a new
obligation and impose a new duty, nor did it attach a new disability.
As previously discussed, the policy guidelines merely interpret R.A.
No. 7832 and its IRR, particularly on the computation of the cost of
purchased power. The policy guidelines did not modify, amend or
supplant the IRR.
Similarly, in Republic v. Drugmaker's Laboratories, Inc.,28 the validity
of circulars issued by the Food and Drug Administration (FDA) was
upheld in spite of the non-compliance with the publication, prior
hearing, and consultation requirements for they merely
implemented the provisions of Administrative Order No. 67, entitled
"Revised Rules and Regulations on Registration of Pharmaceutical
Products" issued by the DOH, in the following wise:
A careful scrutiny of the foregoing issuances would reveal that AO
67, s. 1989 is actually the rule that originally introduced the BA/BE
testing requirement as a component of applications for the
issuance of CPRs covering certain pharmaceutical products. As
such, it is considered an administrative regulation - a legislative rule
to be exact - issued by the Secretary of Health in consonance with
the express authority granted to him by RA 3720 to implement the
statutory mandate that all drugs and devices should first be
registered with the FDA prior to their manufacture and sale.
Considering that neither party contested the validity of its issuance,
the Court deems that AO 67, s. 1989 complied with the requirements
of prior hearing, notice, and publication pursuant to the
presumption of regularity accorded to the government in the
exercise of its official duties.42
On the other hand, Circular Nos. 1 and 8, s. 1997 cannot be
considered as administrative regulations because they do not: (a)
implement a primary legislation by providing the details thereof;
(b) interpret, clarify, or explain existing statutory regulations under
which the FDA operates; and/or (c) ascertain the existence of
certain facts or things upon which the enforcement of RA 3720
depends. In fact, the only purpose of these circulars is for the FDA
to administer and supervise the implementation of the provisions
of AO 67, s. 1989, including those covering the BA/BE testing
requirement, consistent with and pursuant to RA 3720.43
Therefore, the FDA has sufficient authority to issue the said
circulars and since they would not affect the substantive rights of
the parties that they seek to govern - as they are not, strictly
speaking, administrative regulations in the first place - no prior
hearing, consultation, and publication are needed for their validity.
In this case, the DBM-DOH Joint Circular in question gives no real
consequence more than what the law itself had already prescribed.
As previously discussed, the qualification of actual exposure to
danger for the PHW's entitlement to hazard pay, the rates of ₱50
and ₱25 subsistence allowance, and the entitlement to longevity pay
on the basis of PHW's status in the plantilla of regular positions were
already prescribed and authorized by pre-existing law. There is really
no new obligation or duty imposed by the subject circular for it
merely reiterated those embodied in RA No. 7305 and its Revised
IRR. The Joint Circular did not modify, amend nor supplant the
Revised IRR, the validity of which is undisputed. Consequently,
whether it was duly published and filed with the UP Law Center -
ONAR is necessarily immaterial to its validity because in view of the
pronouncements above, interpretative regulations, such as the
DBM-DOH circular herein, need not be published nor filed with the
UP Law Center - ONAR in order to be effective. Neither is prior
hearing or consultation mandatory.
Nevertheless, it bears stressing that in spite of the immateriality of
the publication requirement in this case, and even assuming the
necessity of the same, its basic objective in informing the public of
the contents of the law was sufficiently accomplished when the
DBM-DOH Joint Circular was published in the Philippine Star, a
newspaper of general circulation, on December 29, 2012.29
As to petitioners' allegation of grave abuse of discretion on the part
of respondent DOH Secretary in failing to include the Magna Carta
benefits in his department's yearly budget, the same is belied by the
fact that petitioners themselves specifically provided in their petition
an account of the amounts allocated for the same in the years 2012
and 2013.30
Based on the foregoing, it must be recalled that administrative
regulations, such as the DBM-DOH Joint Circular herein, enacted by
administrative agencies to implement and interpret the law they are
entrusted to enforce are entitled to great respect.31 They partake of
the nature of a statute and are just as binding as if they have been
written in the statute itself. As such, administrative regulations have
the force and effect of law and enjoy the presumption of legality.
Unless and until they are overcome by sufficient evidence showing
that they exceeded the bounds of the law,32 their validity and legality
must be upheld.
Thus, notwithstanding the contention that the Joint Resolution No.
4 promulgated by Congress cannot be a proper source of delegated
power, the subject Circular was nevertheless issued well within the
scope of authority granted to the respondents. The issue in this case
is not whether the Joint Resolution No. 4 can become law and,
consequently, authorize the issuance of the regulation in question,
but whether the circular can be struck down as invalid for being
tainted with grave abuse of discretion. Regardless, therefore, of the
validity or invalidity of Joint Resolution No. 4, the DBMDOH Joint
Circular assailed herein cannot be said to have been arbitrarily or
capriciously issued for being consistent with prior issuances duly
promulgated pursuant to valid and binding law.
Distinction must be made, however, with respect to the DBM-CSC
Joint Circular, the contested provision of which states:
6.5 An official or employee authorized to be granted Longevity Pay
under an existing law is not eligible for the grant of Step Increment
Due to Length of Service.
A review of RA No. 7305 and its Revised IRR reveals that the law does
not similarly impose such condition on the grant of longevity pay to
PHWs in the government service. As such, the DBM-CSC Joint
Circular effectively created a new imposition which was not
otherwise stipulated in the law it sought to interpret. Consequently,
the same exception granted to the DBM-DOH Joint Circular cannot
be applied to the DBM-CSC Joint Circular insofar as the requirements
on publication and submission with the UP Law Center - ONAR are
concerned. Thus, while it was well within the authority of the
respondents to issue rules regulating the grant of step increments as
provided by RA No. 6758, otherwise known as the Compensation
and Position Classification Act of 1989, which pertinently states:
Section 13. Pay Adjustments. - Paragraphs (b) and (c), Section 15 of
Presidential Decree No. 985 are hereby amended to read as follows:
xxxx
(c) Step Increments- Effective January 1, 1990 step increments shall
be granted based on merit and/or length of service in accordance
with rules and regulations that will be promulgated jointly by the
DBM and the Civil Service Commission,
and while it was duly published in the Philippine Star, a newspaper
of general circulation, on September 15, 2012,33the DBM-CSC Joint
Circular remains unenforceable for the failure of respondents to file
the same with the UP Law Center - ONAR.34 Moreover, insofar as the
DBM-DOH Joint Circular similarly withholds the Step Increment due
to length of service from those who are already being granted
Longevity Pay, the same must likewise be declared unenforceable.[35
Note also that the DBM-DOH Joint Circular must further be
invalidated insofar as it lowers the hazard pay at rates below the
minimum prescribed by Section 21 of RA No. 7305 and Section 7.1.5
(a) of its Revised IRR as follows:
SEC. 21. Hazard Allowance. - Public health worker in hospitals,
sanitaria, rural health units, main centers, health infirmaries,
barangay health stations, clinics and other health-related
establishments located in difficult areas, strife-torn or embattled
areas, distresses or isolated stations, prisons camps, mental
hospitals, radiation-exposed clinics, laboratories or disease-infested
areas or in areas declared under state of calamity or emergency for
the duration thereof which expose them to great danger, contagion,
radiation, volcanic activity/eruption occupational risks or perils to
life as determined by the Secretary of Health or the Head of the unit
with the approval of the Secretary of Health, shall be compensated
hazard allowance equivalent to at least twenty-five percent (25%)of
the monthly basic salary of health workers receiving salary grade 19
and below, and five percent (5%) for health workers with salary
grade 20 and above.
xxxx
7.1.5. Rates of Hazard Pay
a. Public health workers shall be compensated hazard allowances
equivalent to at least twenty five (25%)of the monthly basic salary of
health workers, receiving salary grade 19 and below, and five
percent (5%)for health workers with salary grade 20 and above. This
may be granted on a monthly, quarterly or annual basis.
It is evident from the foregoing provisions that the rates of hazard an existing law is not eligible for the grant of Step Increment Due to
pay must be at least25% of the basic monthly salary of PWHs Length of Service, is declared UNENFORCEABLE. The validity,
receiving salary grade 19 and below, and 5% receiving salary grade however, of the DBM-DOH Joint Circular as to the qualification of
20 and above. As such, RA No. 7305 and its implementing rules actual exposure to danger for the PHW's entitlement to hazard pay,
noticeably prescribe the minimum rates of hazard pay due all PHWs the rates of ₱50 and ₱25 subsistence allowance, and the entitlement
in the government, as is clear in the self-explanatory phrase "at to longevity pay on the basis of the PHW' s status in the plantilla of
least" used in both the law and the rules.36 Thus, the following rates regular positions, is UPHELD.
embodied in Section 7.2 of DBM-DOH Joint Circular must be struck SO ORDERED.
down as invalid for being contrary to the mandate of RA No. 7305
and its Revised IRR:
7.2.1 For PHWs whose positions are at SG-19 and below, Hazard Pay
shall be based on the degree of exposure to high risk or low risk
hazards, as specified in sub-items 7 .1.1 and 7 .1.2 above, and the
number of workdays of actual exposure over 22 workdays in a
month, at rates not to exceed 25% of monthly basic salary. In case of
exposure to both high risk and low risk hazards, the Hazard Pay for
the month shall be based on only one risk level, whichever is more
advantageous to the PHW.
7.2.2 PHWs whose positions are at SG-20 and above may be entitled
to Hazard Pay at 5% of their monthly basic salaries for all days of
exposure to high risk and/or low risk hazards. However, those
exposed to high risk hazards for 12 or more days in a month may be
entitled to a fixed amount of ₱4,989.75 per month.
Rates of Hazard Pay
WHEREFORE, premises considered, the instant petition is PARTLY
GRANTED. The DBM-DOH Joint Circular, insofar as it lowers the
hazard pay at rates below the minimum prescribed by Section 21 of
RA No. 7305 and Section 7.1.5 (a) of its Revised IRR, is declared
INVALID. The DBM-CSC Joint Circular, insofar as it provides that an
official or employee authorized to be granted Longevity Pay under
 G.R. No. 189081, August 10, 2016
GLORIA S. DY, Petitioner, v. PEOPLE OF THE PHILIPPINES, MANDY
COMMODITIES CO., INC., REPRESENTED BY ITS PRESIDENT,
WILLIAM MANDY, Respondent.
DECISION
The Facts
Petitioner was the former General Manager of MCCL. In the course of her
employment, petitioner assisted MCCI in its business involving several
properties. One such business pertained to the construction of warehouses
over a property (Numancia Property) that MCCI leased from the Philippine
National Bank (PNB). Sometime in May 1996, in pursuit of MCCI's business,
petitioner proposed to William Mandy (Mandy), President of MCCI, the
purchase of a property owned by Pantranco. As the transaction involved a
large amount of money, Mandy agreed to obtain a loan from the
International China Bank of Commerce (ICBC). Petitioner represented that
she could facilitate the approval of the loan. True enough, ICBC granted a
loan to MCCI in the amount of P20,000,000.00, evidenced by a promissory
note. As security, MCCI also executed a chattel mortgage over the
warehouses in the Numancia Property. Mandy entrusted petitioner with the
obligation to manage the payment of the loan.4 chanrobles law
In February 1999, MCCI received a notice of foreclosure over the mortgaged
property due to its default in paying the loan obligation.5 In order to prevent
the foreclosure, Mandy instructed petitioner to facilitate the payment of the
loan. MCCI, through Mandy, issued 13 Allied Bank checks and 12 Asia Trust
Bank checks in varying amounts and in different dates covering the period
from May 18, 1999 to April 4, 2000.6 The total amount of the checks, which
were all payable to cash, was P21,706,281.00. Mandy delivered the checks
to petitioner. Mandy claims that he delivered the checks with the instruction
that petitioner use the checks to pay the loan.7 Petitioner, on the other
hand, testified that she encashed the checks and returned the money to
Mandy.8 ICBC eventually foreclosed the mortgaged property as MCCI
continued to default in its obligation to pay. Mandy claims that it was only at
this point in time that he discovered that not a check was paid to ICBC.9 chanrobles law
Thus, on October 7, 2002, MCCI, represented by Mandy, filed a Compiamt-
Affidavit for Estafa10 before the Office of the City Prosecutor of Manila. On
March 3, 2004, an Information11 was filed against petitioner before the
Regional Trial Court (RTC) Manila.
After a full-blown trial, the RTC Manila rendered a decision12 dated
November 11, 2005 (RTC Decision) acquitting petitioner. The RTC Manila
found that while petitioner admitted that she received the checks, the
prosecution failed to establish that she was under any obligation to deliver
them to ICBC in payment of MCCFs loan. The trial court made this finding on
the strength of Mandy's admission that he gave the checks to petitioner with
the agreement that she would encash them. Petitioner would then pay ICBC
using her own checks. The trial court further made a finding that Mandy and
petitioner entered into a contract of loan.13 Thus, it held that the prosecution
failed to establish an important element of the crime of estafa—
misappropriation or conversion. However, while the RTC Manila acquitted
petitioner, it ordered her to pay the amount of the checks. The dispositive
portion of the RTC Decision states —
WHEREFORE, the prosecution having failed to establish the guilt of the
accused beyond reasonable doubt, judgment is hereby rendered
ACQUITTING the accused of the offense charged. With costs de officio.
The accused is however civilly liable to the complainant for the amount of
P21,706,281.00.
SO ORDERED.14 chanroblesv irtuallawl ib rary
Petitioner filed an appeal15 of the civil aspect of the RTC Decision with the
CA. In the Assailed Decision,16the CA found the appeal without merit. It held
that the acquittal of petitioner does not necessarily absolve her of civil
liability. The CA said that it is settled that when an accused is acquitted on
the basis of reasonable doubt, courts may still find him or her civilly liable if
the evidence so warrant. The CA explained that the evidence on record
adequately prove that petitioner received the checks as a loan from MCCI.
Thus, preventing the latter from recovering the amount of the checks would
constitute unjust enrichment. Hence, the Assailed Decision ruled
WHEREFORE, in view of the foregoing, the appeal is DENIED. The Decision
dated November 11, 2005 of the Regional Trial Court, Manila, Branch 33 in
Criminal Case No. 04-224294 which found Gloria Dy civilly liable to William
Mandy is AFFIRMED.
SO ORDERED.17 chanroblesv irt uallawl ibra ry
The CA also denied petitioner's motion for reconsideration in a
resolution18 dated August 3, 2009.
Hence, this Petition for Review on Certiorari (Petition). Petitioner argues that
since she was acquitted for failure of the prosecution to prove all the
elements of the crime charged, there was therefore no crime
committed.19 As there was no crime, any civil liability ex delicto cannot be
awarded.
The Issues
The central issue is the propriety of making a finding of civil liability in a
criminal case for estafa when the accused is acquitted for failure of the
prosecution to prove all the elements of the crime charged.
The Ruling of the Court
We grant the petition.
Civil Liability Arising From Crime
Our laws recognize a bright line distinction between criminal and civil
liabilities. A crime is a liability against the state. It is prosecuted by and for
the state. Acts considered criminal are penalized by law as a means to
protect the society from dangerous transgressions. As criminal liability
involves a penalty affecting a person's liberty, acts are only treated criminal
when the law clearly says so. On the other hand, civil liabilities take a less
public and more private nature. Civil liabilities are claimed through civil
actions as a means to enforce or protect a right or prevent or redress a
wrong.20 They do not carry with them the imposition of imprisonment as a
penalty. Instead, civil liabilities are compensated in the form of damages.
Nevertheless, our jurisdiction recognizes that a crime has a private civil
component. Thus, while an act considered criminal is a breach of law against
the State, our legal system allows for the recovery of civil damages where
there is a private person injured by a criminal act. It is in recognition of this
dual nature of a criminal act that our Revised Penal Code provides that
every person criminally liable is also civilly liable.21 This is the concept of
civil liability ex delicto.
This is echoed by the New Civil Code when it recognizes acts or omissions
punished by law as a separate source of obligation.22 This is reinforced by
Article 30 of the same code which refers to the filing of a separate civil
action to demand civil liability arising from a criminal offense.23
chan robles law
The Revised Penal Code fleshes out this civil liability in Article 10424 which
states that it includes restitution, reparation of damage caused and
indemnification for consequential damages.
Rules of procedure for criminal and civil actions involving the same act or
omission
The law and the rules of procedure provide for a precise mechanism in
instituting a civil action pertaining to an act or omission which is also subject
of a criminal case. Our Rules of Court prescribes a kind of fusion such that,
subject to certain defined qualifications, when a criminal action is instituted,
the civil action for the recovery of the civil liability arising from the offense is
deemed instituted as well.25 cra la wredchan rob leslaw
However, there is an important difference between civil and criminal
proceedings that require a fine distinction as to how these twin actions shall
proceed. These two proceedings involve two different standards of proof. A
criminal action requires proof of guilt beyond reasonable doubt while a civil
action requires a lesser quantum of proof, that of preponderance of
evidence. This distinction also agrees with the essential principle in our legal
system that while a criminal liability carries with it a corresponding civil
liability, they are nevertheless separate and distinct. In other words, these
two liabilities may co-exist but their existence is not dependent on each
other.26chan roble slaw
The Civil Code states that when an accused in a criminal prosecution is
acquitted on the ground that his guilt has not been proven beyond
reasonable doubt, a civil action for damages for the same act or omission
may be filed. In the latter case, only preponderance of evidence is
required.27 This is supported by the Rules of Court which provides that the
extinction of the criminal action does not result in the extinction of the
corresponding civil action.28 The latter may only be extinguished when there
is a "finding in a final judgment in the criminal action that the act or
omission from which the civil liability may arise did not exist."29 Consistent
with this, the Rules of Court requires that in judgments of acquittal the court
must state whether "the evidence of the prosecution absolutely failed to
prove the guilt of the accused or merely failed to prove his guilt beyond
reasonable doubt. In either case, the judgment shall determine if the act or
omission from which the civil liability might arise did not exist."30 chanro bles law
Thus, whether an exoneration from the criminal action should affect the
corresponding civil action depends on the varying kinds of acquittal.
In Manantan v. Court of Appeals,31 we explained —
Our law recognizes two kinds of acquittal, with different effects on the civil
liability of the accused. First is an acquittal on the ground that the accused is
not the author of the act or omission complained of. This instance closes the
door to civil liability, for a person who has been found to be not the
perpetrator of any act or omission cannot and can never be held liable for
such act or omission. There being no delict civil liability ex delicto is out of
the question, and the civil action, if any, which may be instituted must be
based on grounds other than the delict complained of. This is the situation
contemplated in Rule 111 of the Rules of Court. The second instance is an
acquittal based on reasonable doubt on the guilt of the accused. In this
case, even if the guilt of the accused has not been satisfactorily established,
he is not exempt from civil liability which may be proved by preponderance
of evidence only. This is the situation contemplated in Article 29 of the Civil
Code, where the civil action for damages is "for the same act or omission."
Although the two actions have different purposes, the matters discussed in
the civil case are similar to those discussed in the criminal case. However,
the judgment In the criminal proceeding cannot be read in evidence In the
civil action to establish any fact there determined, even though both actions
involve the same act or omission. The reason for this rule is that the parties
are not the same and secondarily, different rules of evidence are applicable.
Hence, notwithstanding herein petitioner's acquittal, the Court of Appeals in
determining whether Article 29 applied, was not precluded from looking into
the question of petitioner's negligence or reckless imprudence.32
chan roble svirtual lawlib rary
In Dayap v. Sendiong,33 we further said —
The acquittal of the accused does not automatically preclude a judgment
against him on the civil aspect of the case. The extinction of the penal action
does not carry with it the extinction of the civil liability where: (a) the
acquittal is based on reasonable doubt as only preponderance of evidence is
required; (b) the court declares that the liability of the accused is only civil;
and (c) the civil liability of the accused does not arise from or is not based
upon the crime of which the accused is acquitted. However, the civil action
based on delict may be deemed extinguished if mere is a finding on the final
judgment in the criminal action that the act or omission from which the civil
liability may arise did not exist or where the accused did not commit the acts
or omission imputed to him.34
chan roble svirtuallaw lib rary
Hence, a civil action filed for the purpose of enforcing civil liability ex delicto,
even if mandatorily instituted with the corresponding criminal action,
survives an acquittal when it is based on the presence of reasonable doubt.
In these instances, while the evidence presented does not establish the fact
of the crime with moral certainty, the civil action still prevails for as long as
the greater weight of evidence tilts in favor of a finding of liability. This
means that while the mind of the court cannot rest easy in penalizing the
accused for the commission of a crime, it nevertheless finds that he or she
committed or omitted to perform acts which serve as a separate source of
obligation. There is no sufficient proof that the act or omission is criminal
beyond reasonable doubt, but there is a preponderance of evidence to show
that the act or omission caused injury which demands compensation.
Civil Liability Ex Delicto in Estafa Cases
Our laws penalize criminal fraud which causes damage capable of pecuniary
estimation through estafaunder Article 315 of the Revised Penal Code. In
general, the elements of estafa are: ChanRobles Vi rtualaw lib rary
(1) That the accused defrauded another (a) by
abuse of confidence, or (b) by means of
deceit; and
(2) That damage or prejudice capable of
pecuniary estimation is caused to the
offended party or third person.
The essence of the crime is the unlawful abuse of confidence or deceit in
order to cause damage. As this Court previously held, "the element of fraud
or bad faith is indispensable."35 Our law abhors the act of defrauding another
person by abusing his trust or deceiving him, such that, it criminalizes this
kind of fraud.
Article 315 of the Revised Penal Code identifies the circumstances which
constitute estafa. Article 315, paragraph 1 (b) states that estafa is
committed by abuse of confidence —
Art. 315. Swindling (estafa) - x x x (b) By misappropriating or converting, to
the prejudice of another, money, goods, or any other personal property
received by the offender in trust or on commission, or for administration, or
under any other obligation involving the duty to make delivery of or to
return the same, even though such obligation be totally or partially
guaranteed by a bond; or by denying having received such money, goods,
or other property.
In this kind of estafa, the fraud which the law considers as criminal is the act
of misappropriation or conversion. When the element of misappropriation or
conversion is missing, there can be no estafa. In such case, applying the
foregoing discussions on civil liability ex delicto, there can be no civil liability
as there is no act or omission from which any civil liability may be sourced.
However, when an accused is acquitted because a reasonable doubt exists
as to the existence of misappropriation or conversion, then civil liability may
still be awarded. This means that, while there is evidence to prove fraud,
such evidence does not suffice to convince the court to the point of moral
certainty that the act of fraud amounts to estafa. As the act was
nevertheless proven, albeit without sufficient proof justifying the imposition
of any criminal penalty, civil liability exists.
In this case, the RTC Manila acquitted petitioner because the prosecution
failed to establish by sufficient evidence the element of misappropriation or
conversion. There was no adequate evidence to prove that Mandy gave the
checks to petitioner with the instruction that she will use them to pay the
ICBC loan. Citing Mandy's own testimony in open court, the RTC Manila held
that when Mandy delivered the checks to petitioner, their agreement was
that it was a "sort of loan."36 In the dispositive portion of the RTC Decision,
the RTC Manila ruled that the prosecution "failed to establish the guilt of the
accused beyond reasonable doubt."37 It then proceeded to order petitioner
to pay the amount of the loan.
The ruling of the RTC Manila was affirmed by the CA. It said that "[t]he
acquittal of Gloria Dy is anchored on the ground that her guilt was not
proved beyond reasonable doubt - not because she is not the author of the
act or omission complained of. x x x The trial court found no trickery nor
deceit in obtaining money from the private complainant; instead, it
concluded that the money obtained was undoubtedly a loan."38
Our jurisprudence on this matter diverges.
Earlier cases ordered the dismissal of the civil action for recovery of civil
liability ex delicto whenever there is a finding that there was no estafa but
rather an obligation to pay under a contract. In People v. Pantig,39 this Court
affirmed the ruling of the lower court acquitting Pantig, but revoked the
portion sentencing him to pay the offended party the amount of money
alleged to have been obtained through false and fraudulent representations,
thus —
The trial court found as a fact that the sum of P1,200, ordered to be paid in
the judgment of acquittal, was received by the defendant-appellant as loan.
This finding is inconsistent with the existence of the criminal act charged in
the information. The liability of the defendant for the return of the
amount so received arises from a civil contract, not from a criminal
act, and may not be enforced in the criminal case.
The portion of the judgment appealed from, which orders the defendant-
appellant to pay the sum of Pi ,200 to the offended party, is hereby revoked,
without prejudice to the filing of a civil action for the recovery of the said
amount.40 chanroblesv irt uallawl ibra ry
This was also the import of the ruling in People v. Singson.41 In that case,
this Court found that "the evidence [was] not sufficient to establish the
existence of fraud or deceit on the part of the accused. x x x And when there
is no proven deceit or fraud, there is no crime of estafa."42 While we also
said that the established facts may prove Singson's civil liability (obligation
to pay under a contract of sale), we nevertheless made no finding of civil
liability because "our mind cannot rest easy on the certainty of
guilt"43 considering the above finding. The dispositive portion stated that
Singson is acquitted "without prejudice to any civil liability which may be
established in a civil case against her."44 chanroble slaw
However, our jurisprudence on the matter appears to have changed in later
years.
In Eusebio-Calderon v. People,45 this Court affirmed the finding of the CA
that Calderon "did not employ trickery or deceit in obtaining money from the
private complainants, instead, it concluded that the money obtained was
undoubtedly loans for which [Calderon] paid interest."46 Thus, this Court
upheld Calderon's acquittal of estafa, but found her civilly liable for the
principal amount borrowed from the private complainants.47 chanro bles law
The ruling was similar in People v. Cuyugan.48 In that case, we acquitted
Cuyugan of estafa for failure of the prosecution to prove fraud. We held that
the transaction between Cuyugan and private complainants was a loan to be
used by Cuyugan in her business. Thus, this Court ruled that Cuyugan has
the obligation, which is civil in character, to pay the amount borrowed.49 chan roble slaw
We hold that the better rule in ascertaining civil liability in estafa cases is
that pronounced in Pantig and Singson. The rulings in these cases are more
in accord with the relevant provisions of the Civil Code, and the Rules of
Court. They are also logically consistent with this Court's pronouncement
in Manantan.
Under Pantig and Singson, whenever the elements of estafa are not
established, and that the delivery of any personal property was made
pursuant to a contract, any civil liability arising from the estafa cannot be
awarded in the criminal case. This is because the civil liability arising from
the contract is not civil liability ex delicto, which arises from the same act or
omission constituting the crime. Civil liability ex delicto is the liability sought
to be recovered in a civil action deemed instituted with the criminal case.
The situation envisioned in the foregoing cases, as in this case, is civil
liability ex contractu where the civil liability arises from an entirely different
source of obligation. Therefore, it is not the type of civil action deemed
instituted in the criminal case, and consequently must be filed separately.
This is necessarily so because whenever the court makes a finding that the
elements of estafa do not exist, it effectively says that there is no crime.
There is no act or omission that constitutes criminal fraud. Civil liability ex
delicto cannot be awarded as it cannot be sourced from something that does
not exist.
When the court finds that the source of obligation is in fact, a contract, as in
a contract of loan, it takes a position completely inconsistent with the
presence of estafa. In estafa, a person parts with his money because of
abuse of confidence or deceit. In a contract, a person willingly binds himself
or herself to give something or to render some service.50 In estafa, the
accused's failure to account for the property received amounts to criminal
fraud. In a contract, a party's failure to comply with his obligation is only a
contractual breach. Thus, any finding that the source of obligation is a
contract negates estafa. The finding, in turn, means that there is no civil
liability ex delicto. Thus, the rulings in the foregoing cases are consistent
with the concept of fused civil and criminal actions, and the different sources
of obligations under our laws.
We apply this doctrine to the facts of this case. Petitioner was acquitted by
the RTC Manila because of the absence of the element of misappropriation
or conversion. The RTC Manila, as affirmed by the CA, found that Mandy
delivered the checks to petitioner pursuant to a loan agreement. Clearly,
there is no crime of estafa. There is no proof of the presence of any act or
omission constituting criminal fraud. Thus, civil liability ex delicto cannot be
awarded because there is no act or omission punished by law which can
serve as the source of obligation. Any civil liability arising from the loan
takes the nature of a civil liability ex contractu. It does not pertain to the
civil action deemed instituted with the criminal case.
In Manantan, this Court explained the effects of this result on the civil
liability deemed instituted with the criminal case. At the risk of
repetition, Manantan held that when there is no delict, "civil liability ex
delicto is out of the question, and the civil action, if any, which may be
instituted must be based on grounds other than the delict complained
of."51 In Dy's case, the civil liability arises out of contract—a different source
of obligation apart from an act or omission punished by law—and must be
claimed in a separate civil action.
Violation of Due Process
We further note that the evidence on record never fully established the
terms of this loan contract. As the trial before the RTC Manila was focused
on proving estafa, the loan contract was, as a consequence, only
tangentially considered. This provides another compelling reason why the
civil liability arising from the loan should be instituted in a separate civil
case. A civil action for collection of sum of money filed before the proper
court will provide for a better venue where the terms of the loan and other
relevant details may be received. While this may postpone a warranted
recovery of the civil liability, this Court deems it more important to uphold
the principles underlying the inherent differences in the various sources of
obligations under our law, and the rule that fused actions only refer to
criminal and civil actions involving the same act or omission. These legal
tenets play a central role in this legal system. A confusion of these principles
will ultimately jeopardize the interests of the parties involved. Actions
focused on proving estafa is not the proper vehicle to thresh out civil liability
arising from a contract.52 The Due Process Clause of the Constitution
dictates that a civil liability arising from a contract must be litigated in a
separate civil action.
Section 1 of the Bill of Rights states that no person shall be deprived of
property without due process of law. This provision protects a person's right
to both substantive and procedural due process. Substantive due process
looks into the validity of a law and protects against
arbitrariness.53 Procedural due process, on the other hand, guarantees
procedural fairness.54 It requires an ascertainment of "what process is due,
when it is due, and the degree of what is due."55 This aspect of due process
is at the heart of this case.
In general terms, procedural due process means the right to notice and
hearing.56 More specifically, our Rules of Court provides for a set of
procedures through which a person may be notified of the claims against
him or her as well as methods through which he or she may be given the
adequate opportunity to be heard.
The Rules of Court requires that any person invoking the power of the
judiciary to protect or enforce a right or prevent or redress a wrong57 must
file an initiatory pleading which embodies a cause of action,58which is
defined as the act or omission by which a party violates a right of
another.59 The contents of an initiatory pleading alleging a cause of action
will vary depending on the source of the obligation involved. In the case of
an obligation arising from a contract, as in this case, the cause of action in
an initiatory pleading will involve the duties of the parties to the contract,
and what particular obligation was breached. On the other hand, when the
obligation arises from an act or omission constituting a crime, the cause of
action must necessarily be different. In such a case, the initiatory pleading
will assert as a cause of action the act or omission of respondent, and the
specific criminal statute he or she violated. Where the initiatory pleading
fails to state a cause of action, the respondent may file a motion to dismiss
even before trial.60 These rules embody the fundamental right to notice
under the Due Process Clause of the Constitution.
In a situation where a court (in a fused action for the enforcement of
criminal and civil liability) may validly order an accused-respondent to pay
an obligation arising from a contract, a person's right to be notified of the
complaint, and the right to have the complaint dismissed if there is no cause
of action, are completely defeated. In this event, the accused-respondent is
completely unaware of the nature of the liability claimed against him or her
at the onset of the case. The accused-respondent will not have read any
complaint stating the cause of action of an obligation arising from a contract.
All throughout the trial, the accused-respondent is made to believe that
should there be any civil liability awarded against him or her, this liability is
rooted from the act or omission constituting the crime. The accused-
respondent is also deprived of the remedy of having the complaint dismissed
through a motion to dismiss before trial. In a fused action, the accused-
respondent could not have availed of this remedy because he or she was not
even given an opportunity to ascertain what cause of action to look for in
the initiatory pleading. In such a case, the accused-respondent is blindsided.
He or she could not even have prepared the appropriate defenses and
evidence to protect his or her interest. This is not the concept of fair play
embodied in the Due Process Clause. It is a clear violation of a person's right
to due process.
The Rules of Court also allows a party to a civil action certain remedies that
enable him or her to effectively present his or her case. A party may file a
cross-claim, a counterclaim or a third-party complaint.61 The Rules of Court
prohibits these remedies in a fused civil and criminal case.62 The Rules of
Court requires that any cross-claim, counterclaim or third-party complaint
must be instituted in a separate civil action.63 In a legal regime where a
court may order an accused in a fused action to pay civil liability arising from
a contract, the accused-respondent is completely deprived of the remedy to
file a cross-claim, a counterclaim or a third-party complaint. This—coupled
with an accused-respondent's inability to adequately prepare his or her
defense because of lack of adequate notice of the claims against him or
her—prevents the accused-respondent from having any right to a
meaningful hearing. The right to be heard under the Due Process Clause
requires not just any kind of an opportunity to be heard. It mandates that a
party to a case must have the chance to be heard in a real and meaningful
sense. It does not require a perfunctory hearing, but a court proceeding
where the party may adequately avail of the procedural remedies granted to
him or her. A court decision resulting from this falls short of the mandate of
the Due Process Clause.
Indeed, the language of the Constitution is clear. No person shall be
deprived of property without due process of law. Due Process, in its
procedural sense, requires, in essence, the right to notice and hearing.
These rights are further fleshed out in the Rules of Court. The Rules of Court
enforces procedural due process because, to repeat the words of this Court
in Secretary of Justice v. Lantion, it provides for "what process is due, when
it is due, and the degree of what is due."64 A court ordering an accused in a
fused action to pay his or her contractual liability deprives him or her of his
or her property without the right to notice and hearing as expressed in the
procedures and remedies under the Rules of Court. Thus, any court ruling
directing an accused in a fused action to pay civil liability arising from a
contract is one that completely disregards the Due Process Clause. This
ruling must be reversed and the Constitution upheld.
Conclusion
The lower courts erred when they ordered petitioner to pay her civil
obligation arising from a contract of loan in the same criminal case where
she was acquitted on the ground that there was no crime. Any contractual
obligation she may have must be litigated in a separate civil action involving
the contract of loan. We clarify that in cases where the accused is acquitted
on the ground that there is no crime, the civil action deemed instituted with
the criminal case cannot prosper precisely because there is no delict from
which any civil obligation may be sourced. The peculiarity of this case is the
finding that petitioner, in fact, has an obligation arising from a contract. This
civil action arising from the contract is not necessarily extinguished. It can
be instituted in the proper court through the proper civil action.
We note that while there is no written contract of loan in this case, there is
an oral contract of loan which must be brought within six years.65 Under the
facts of the case, it appears that any breach in the obligation to pay the loan
may have happened between 1996 and 1999, or more than six years since
this case has been instituted. This notwithstanding, we find that the civil
action arising from the contract of loan has not yet prescribed. Article 1150
of the Civil Code states — SO ORDERED.
Art. 1150. The time for prescription for all kinds of actions, when there is no
special provision which ordains otherwise, shall be counted from the day
they may be brought.
We held in numerous cases that it is the legal possibility of bringing the
action that determines the starting point for the computation of the period of
prescription.67 We highlight the unique circumstances surrounding this case.
As discussed in this decision, there has been diverse jurisprudence as to the
propriety of ordering an accused to pay an obligation arising from a contract
in the criminal case where the accused was acquitted on the ground that
there is no crime. Litigants, such as MCCI, cannot be blamed for relying on
prior rulings where the recovery on a contract of loan in a criminal case
for estafawas allowed. We have found the opportunity to clarify this matter
through this decision. As it is only now that we delineate the rules governing
the fusion of criminal and civil actions pertaining to estafa, it is only upon
the promulgation of this judgment that litigants have a clear understanding
of the proper recourse in similar cases. We therefore rule that insofar as
MCCI is concerned, the filing of an action, if any (that may be sourced from
the contract of loan), becomes a legal possibility only upon the finality of
this decision which definitively ruled upon the principles on fused actions.

We add, however, that upon finality of this decision, prospective litigants

should become more circumspect in ascertaining their course of action in
similar cases. Whenever a litigant erroneously pursues an estafa case, and
the accused is subsequently acquitted because the obligation arose out of a
contract, the prescriptive period will still be counted from the time the cause
of action arose. In this eventuality, it is probable that the action has already
prescribed by the time the criminal case shall have been completed. This
possibility demands that prospective litigants do not haphazardly pursue the
filing of an estafa case in order to force an obligor to pay his or her
obligation with the threat of criminal conviction. It compels litigants to be
honest and fair in their judgment as to the proper action to be filed. This
ruling should deter litigants from turning to criminal courts as their collection
agents, and should provide a disincentive to the practice of filing of criminal
cases based on unfounded grounds in order to provide a litigant a bargaining
chip in enforcing contracts.

WHEREFORE, in view of the foregoing, the Petition is GRANTED. The

Decision of the CA dated February 25, 2009 is REVERSED. This is however,
without prejudice to any civil action which may be filed to claim civil liability
arising from the contract.
G.R. No. 217872
ALLIANCE FOR THE FAMILY FOUNDATION, PHILIPPINES, INC. (ALFI)
, Petitioners
vs.
HON. JANETTE L. GARIN, Respondents
MENDOZA, J.:
Subject of this resolution is the Omnibus Motion 1 filed by the
respondents, thru the Office of the Solicitor General (OSG), seeking
partial reconsideration of the August 24, 2016 Decision
(Decision),2 where the Court resolved the: [1] Petition for Certiorari,
Prohibition, Mandamus with Prayer for Issuance of a Temporary
Restraining Order and/or Writ of Preliminary Prohibitory and
Mandatory Injunction (G.R. No. 217872); and the [2] Petition for
Contempt of Court (G.R. No. 221866), in the following manner:
WHEREFORE, the case docketed as G.R No. 217872 is hereby
REMANDED to the Food and Drugs Administration which is hereby
ordered to observe the basic requirements of due process by
conducting a hearing, and allowing the petitioners to be heard, on
the re-certified, procured and administered contraceptive drugs and
devices, including Implanon and lmplanon NXT, and to determine
whether they are abortifacients or non-abortifacients.
Pursuant to the expanded jurisdiction of this Court and its power to
issue rules for the protection and enforcement of constitutional
rights, the Court hereby:
1. DIRECTS the Food and Drug Administration to formulate the rules
of procedure in the screening, evaluation and approval of all
contraceptive drugs and devices that will be used under Republic Act
No. 10354. The rules of procedure shall contain the following
minimum requirements of due process: (a) publication, notice and
hearing, (b) interested parties shall be allowed to intervene, (c) the
standard laid down in the Constitution, as adopted under Republic
Act No. 10354, as to what constitutes allowable contraceptives shall
be strictly followed, that is, those which do not harm or destroy the
life of the unborn from conception/fertilization, (d) in weighing the
evidence, all reasonable doubts shall be resolved in favor of the
protection and preservation of the right to life of the unborn from
conception/fertilization, and (e) the other requirements of
administrative due process, as summarized in Ang Tibay v. CIR, shall
be complied with.
2. DIRECTS the Department of Health in coordination with other
concerned agencies to formulate the rules and regulations or
guidelines which will govern the purchase and distribution/
dispensation of the products or supplies under Section 9 of Republic
Act No. 10354 covered by the certification from the Food and Drug
Administration that said product and supply is made available on the
condition that it will not be used as an abortifacient subject to the
following minimum due process requirements: (a) publication,
notice and hearing, and (b) interested parties shall be allowed to
intervene. The rules and regulations or guidelines shall provide
sufficient detail as to the manner by which said product and supply
shall be strictly regulated in order that they will not be used as an
abortifacient and in order to sufficiently safeguard the right to life of
the unborn.
3. DIRECTS the Department of Health to generate the complete and
correct list of the government's reproductive health programs and
services under Republic Act No. 10354 which will serve as the
template for the complete and correct information standard and,
hence, the duty to inform under Section 23(a)(l) of Republic Act No.
10354. The Department of Health is DIRECTED to distribute copies of
this template to all health care service providers covered by Republic proceeding, the due process requirements of notice and hearing
Act No. 10354. need not be complied with.6
The respondents are hereby also ordered to amend the Stated differently, the respondents assert that as long as the act of
Implementing Rules and Regulations to conform to the rulings and the FDA is exercised pursuant to its regulatory power, it need not
guidelines in G.R. No. 204819 and related cases. comply with the due process requirements of notice and hearing.
The above foregoing directives notwithstanding, within 30 days from Corollary to this, the respondents wanted the Court to consider that
receipt of this disposition, the Food and Drugs Administration should the FDA had delineated its functions among different persons and
commence to conduct the necessary hearing guided by the cardinal bodies in its organization. Thus, they asked the Court to make a
rights of the parties laid down in CIR v. Ang Tibay. distinction between the "quasi-judicial powers" exercised by
Pending the resolution of the controversy, the motion to lift the the Director-General of the FDA under Section 2(b)7 of Article 3,
Temporary Restraining Order is DENIED. Book I of the Implementing Rules and Regulations (IRR) of R.A. No.
With respect to the contempt petition, docketed as G.R No. 221866, 9711,8 and the "regulatory/administrative powers"exercised
it is hereby DENIED for lack of concrete basis. by the FDA under Section 2(c )(1) 9 of the same. For the respondents,
SO ORDERED.3 the distinction given in the above-cited provisions was all but proof
Arguments of the Respondents that the issuance of CPR did not require notice and hearing.
Part 1: Due Process need not be After detailing the process by which the FDA's Center for Drug
complied with as the questioned Regulation and Research (CDRR) examined and tested the
acts of the Food and Drug contraceptives for non-abortifacience, 10 the respondents stressed
Administration (FDA) were in that the Decision wreaked havoc on the organizational structure of
the exercise of its Regulatory Powers the FDA, whose myriad of functions had been carefully delineated in
In the subject Omnibus Motion, the respondents argued that their the IRR of R.A. No. 9711. 11 The respondents, thus, prayed for the
actions should be sustained, even if the petitioners were not lifting of the Temporary Restraining Order (TR0). 12
afforded notice and hearing, because the contested acts of Part 2: The requirements of due
registering, re-certifying, procuring, and administering contraceptive process need not be complied with as
drugs and devices were all done in the exercise of its regulatory the elements of procedural due
power.4 They contended that considering that the issuance of the process laid down in Ang Tibay v.
certificate of product registration (CPR) by the FDA under Section CIR are not applicable
7.04, Rule5 of the Implementing Rules and Regulations of Republic The respondents further claimed in their omnibus motion that the
Act (R.A.) No. 10354 (RH-IRR) did not involve the adjudication of the requirements of due process need not be complied with because the
parties' opposing rights and liabilities through an adversarial standards of procedural due process laid down in Ang Tibay v.
CIR 13 were inapplicable considering that: a) substantial evidence
could not be used as a measure in determining whether a
contraceptive drug or device was abortifacient; 14 b) the courts had
neither jurisdiction nor competence to review the findings of the
FDA on the non-abortifacient character of contraceptive drugs or
devices; 15 c) the FDA was not bound by the rules of admissibility and
presentation of evidence under the Rules of Court; 16 and d) the
findings of the FDA could not be subject of the rule on res
judicata and stare-decisis. 17
The respondents then insisted that Implanon and Implanon NXT
were not abortifacients and lamented that the continued injunction
of the Court had hampered the efforts of the FDA to provide for the
reproductive health needs of Filipino women. For the respondents,
to require them to afford the parties like the petitioners an
opportunity to question their findings would cause inordinate delay
in the distribution of the subject contraceptive drugs and devices
which would have a dire impact on the effective implementation of
the RH Law.
The Court's Ruling
After an assiduous assessment of the arguments of the parties, the
Court denies the Omnibus Motion, but deems that a clarification on
some points is in order.
Judicial Review
The powers of an administrative body are classified into two
fundamental powers: quasi-legislative and quasi-judicial. Quasi-
legislative power, otherwise known as the power of subordinate
legislation, has been defined as the authority delegated by the
lawmaking body to the administrative body to adopt rules and
regulations intended to carry out the provisions of law and
implement legislative policy. 18 "[A] legislative rule is in the nature of
subordinate legislation, designed to implement a primary legislation
by providing the details thereof." 19 The exercise by the
administrative body of its quasi-legislative power through the
promulgation of regulations of general application does not, as a
rule, require notice and hearing. The only exception being where the
Legislature itself requires it and mandates that the regulation shall
be based on certain facts as determined at an appropriate
investigation.20
Quasi-judicial power, on the other hand, is known as the power of
the administrative agency to determine questions of fact to which
the legislative policy is to apply, in accordance with the standards
laid down by the law itself.21 As it involves the exercise of discretion
in determining the rights and liabilities of the parties, the proper
exercise of quasi-judicial power requires the concurrence of two
elements: one, jurisdiction which must be acquired by the
administrative body and two, the observance of the requirements
of due process, that is, the right to notice and hearing.22
On the argument that the certification proceedings were conducted
by the FDA in the exercise of its "regulatory powers" and, therefore,
beyond judicial review, the Court holds that it has the power to
review all acts and decisions where there is a commission of grave
abuse of discretion. No less than the Constitution decrees that the
Court must exercise its duty to ensure that no grave abuse of
discretion amounting to lack or excess of jurisdiction is committed
by any branch or instrumentality of the Government. Such is
committed when there is a violation of the constitutional mandate
that "no person is deprived of life, liberty, and property without due
process of law." The Court's power cannot be curtailed by the FDA's
invocation of its regulatory power.
In so arguing, the respondents cited Atty. Carlo L. Cruz in his
book, Philippine Administrative Law.
Lest there be any inaccuracy, the relevant portions of the book cited
by the respondents are hereby quoted as follows:
xxx.
B. The Quasi-Judicial Power
xxx
2. Determinative Powers
To better enable the administrative body to exercise its quasi
judicial authority, it is also vested with what is known
as determinative powers and functions.
Professor Freund classifies them generally into the enabling powers
and the directing powers. The latter includes
the dispensing, the examining, and the summary powers.
The enabling vowers are those that permit the doing of an act
which the law undertakes to regulate and which would be
unlawful with government approval. The most common example is
the issuance of licenses to engage in a particular business or
occupation, like the operation of a liquor store or restaurant. x x
x. 23 [Emphases and underscoring supplied]
From the above, two things are apparent: one, the "enabling
powers" cover "regulatory powers" as defined by the respondents;
and two, they refer to a subcategory of a quasi-judicial power which,
as explained in the Decision, requires the compliance with the twin
requirements of notice and hearing. Nowhere from the above-
quoted texts can it be inferred that the exercise of "regulatory
power" places an administrative agency beyond the reach of judicial
review. When there is grave abuse of discretion, such as denying a
party of his constitutional right to due process, the Court can come
in and exercise its power of judicial review. It can review the
challenged acts, whether exercised by the FDA in its ministerial,
quasi-judicial or regulatory power. In the past, the Court exercised
its power of judicial review over acts and decisions of agencies
exercising their regulatory powers, such as
24 25 26 27
DPWH, TRB, NEA, and the SEC, among others. In Diocese of
Bacolod v. Commission on Elections,28 the Court properly exercised
its power of judicial review over a Comelec resolution issued in the
exercise of its regulatory power.
Clearly, the argument of the FDA is flawed.
Petitioners were Denied their
Right to Due Process
Due process of law has two aspects: substantive and procedural. In
order that a particular act may not be impugned as violative of the
due process clause, there must be compliance with both the
substantive and the procedural requirements thereof. 29 Substantive
due process refers to the intrinsic validity of a law that interferes
with the rights of a person to his property.30 Procedural due process,
on the other hand, means compliance with the procedures or steps,
even periods, prescribed by the statute, in conformity with the
standard of fair play and without arbitrariness on the part of those
who are called upon to administer it.31
The undisputed fact is that the petitioners were deprived of their
constitutional right to due process of law.
As expounded by the Court, what it found to be primarily deplorable
is the failure of the respondents to act upon, much less address, the
various oppositions filed by the petitioners against the product
registration, recertification, procurement, and distribution of the
questioned contraceptive drugs and devices. Instead of addressing
the petitioners' assertion that the questioned contraceptive drugs
and devices fell within the definition of an "abortifacient" under
Section 4(a) of the RH Law because of their "secondary mechanism
of action which induces abortion or destruction of the fetus inside
the mother's womb or the prevention of the fertilized ovum to reach
and be implanted in the mother's womb,"32 the respondents chose
to ignore them and proceeded with the registration, recertification,
procurement, and distribution of several contraceptive drugs and
devices.
A cursory reading of the subject Omnibus Motion shows that the
respondents proffer no cogent explanation as to why they did not
act on the petitioners' opposition. As stated by the Court in the
Decision, rather than provide concrete action to meet the
petitioners' opposition, the respondents simply relied on their
challenge questioning the propriety of the subject petition on
technical and procedural grounds. 33 The Court, thus, finds the
subject motion to be simply a rehash of the earlier arguments
presented before, with the respondents still harping on the
peculiarity of the FDA's functions to exempt it from compliance with
the constitutional mandate that "no person shall be deprived oflife,
liberty and property without due process of law."
The law and the rules demand
compliance with due process
requirements
A reading of the various provisions, cited by the respondents in
support of their assertion that due process need not be complied
with in the approval of contraceptive drugs or devices, all the more
reinforces the Court's conclusion that the FDA did fail to afford the
petitioners a genuine opportunity to be heard.
As outlined by the respondents themselves, the steps by which the
FDA approves contraceptive drugs or devices, demand compliance
with the requirements of due process viz:
Step 1. Identify contraceptive products in the database. Create
another database containing the following details of contraceptive
products: generic name, dosage strength and form, brand name (if
any), registration number, manufacturer, MAH, and the period of
validity of the CPR.
Step 2. Identify contraceptive products which are classified as
essential medicines in the Philippine Drug Formulary.
Step 3. Retrieve the contraceptive product's file and the CPR
duplicate of all registered contraceptive products. Create a database
of the contraceptive product's history, including its initial, renewal,
amendment, and/or variation applications.
Step 4. Conduct a preliminary review of the following:
a. general physiology of female reproductive system, including
hormones involved, female reproductive cycle, and conditions of the
female reproductive system during pregnancy.
b. classification of hormonal contraceptives;
c. regulatory status of the products in benchmark countries; and
d. mechanism of action of hormonal contraceptives based on
reputable journals, meta-analyses, systemic reviews, evaluation of
regulatory authorities in other countries, textbooks, among others.
Step 5. Issue a notice to all concerned MAHs, requiring them to
submit scientific evidence that their product is non-abortifacient,
as defined in the RH Law and Imbong.
Step 6. Post a list of contraceptive products which were applied for
re-certification for public comments in the FDA website.
Step 7. Evaluate contraceptive products for re-certification.
A. Part I (Review of Chemistry, Manufacture and Controls)
1. Unit Dose and Finished Product Formulation
2. Technical Finished Product Specifications
3. Certificate of Analysis
B. Part II (Evaluation of Whether the Contraceptive Product is
Abortifacient)
1. Evaluation of the scientific evidence submitted by the applicant
and the public.
2. Review and evaluation of extraneous evidence, e.g., scientific
journals, meta-analyses, etc.
Step 8. Assess and review the documentary requirements submitted
by the applicant. Technical reviewers considered scientific evidence
such as meta-analyses, systemic reviews, national and clinical
practice guidelines and recommendations of international medical
organizations submitted by the companies, organizations and
individuals, to be part of the review.34 [Emphases and Underlining
supplied]
The Court notes that the above-outlined procedure is deficient
insofar as it only allows public comments to cases of re-
certification. It fails to allow the public to comment in cases where a
reproductive drug or device is being subject to the certification
process for the first time. This is clearly in contravention of the
mandate of the Court in lmbong that the IRR should be amended
to conform to it.
More importantly, the Court notes that Step 5 requires the FDA to
issue a notice to all concerned MAHs and require them to submit
scientific evidence that their product is non-abortifacient; and that
Step 6 requires the posting of the list of contraceptive products
which were applied for re-certification for public comments in the
FDA website.
If an opposition or adverse comment is filed on the ground that the
drug or devise has abortifacient features or violative of the RH Law,
based on the pronouncements of the Court in Im bong or any other
law or rule, the FDA is duty-bound to take into account and consider
the basis of the opposition.
To conclude that product registration, recertification, procurement,
and distribution of the questioned contraceptive drugs and devices
by the FDA in the exercise of its regulatory power need not comply
with the requirements of due process would render the issuance of
notices to concerned MAHs and the posting of a list of
contraceptives for public comment a meaningless exercise.
Concerned MAHs and the public in general will be deprived of any
significant participation if what they will submit will not be
considered.
Section 7.04, Rule 7 of the IRR of the RH Law (RH-IRR),35 relied upon
by the respondents in support of their claims, expressly allows the
consideration of conflicting evidence, such as that supplied by the
petitioners in support of their opposition to the approval of certain
contraceptive drugs and devices. In fact, the said provision mandates
that the FDA utilize the "best evidence available" to ensure that no
bortifacient is approved as a family planning drug or device. It bears
mentioning that the same provision even allows an independent
evidence review group (ERG) to ensure that evidence for or against
the certification of a contraceptive drug or device is duly considered.
Structure of the FDA
As earlier mentioned, the respondents argue that the Decision
"wreaked havoc on the organizational structure of the FDA, whose
myriad of functions have been carefully delineated under R.A. No.
9711 IRR."36 Citing Section 7.04, Rule 7 of the RH-IRR, the FDA insists
that the function it exercises in certifying family planning supplies is
in the exercise of its regulatory power, which cannot be the subject
of judicial review, and that it is the Director-General of the FDA who
exercises quasi-judicial powers, citing Section 2(b) of Article 3, Book
I of the RH-IRR.37
The FDA wants the Court to consider that, as a body, it has a distinct
and separate personality from the Director-General, who exercises
quasi-judicial power. The Court cannot accommodate the position of
the respondents. Section 6(a) of R.A. No. 3720, as amended by
Section 7 of R.A. No. 9711,38 provides that "(a) The FDA shall be
headed by a director-general with the rank of undersecretary,
xxx." How can the head be separated from the body?
For the record, Section 4 of R.A. No. 3720, as amended by Section 5
of R.A. No. 9711, also recognizes compliance with the requirements
of due process, although the proceedings are not adversarial. Thus:
Section 5. Section 4 of Republic Act No. 3720, as amended, is hereby
further amended to read as follows:
"SEC. 4. To carry out the provisions of this Act, there is hereby
created an office to be called the Food and Drug Administration
(FDA) in the Department of Health (DOH). Said Administration shall
be under the Office of the Secretary and shall have the following
functions, powers and duties:
"(a) To administer the effective implementation of this Act and of
the rules and regulations issued pursuant to the same;
"(b) To assume primary jurisdiction in the collection of samples of
health products;
"(c) To analyze and inspect health products in connection with the
implementation of this Act;
"(d) To establish analytical data to serve as basis for the preparation
of health products standards, and to recommend standards of
identity, purity, safety, efficacy, quality and fill of container;
"(e) To issue certificates of compliance with technical requirements
to serve as basis for the issuance of appropriate authorization and
spot-check for compliance with regulations regarding operation of
manufacturers, importers, exporters, distributors, wholesalers, drug
outlets, and other establishments and facilities of health products,
as determined by the FDA;
"xxx
"(h) To conduct appropriate tests on all applicable health products
prior to the issuance of appropriate authorizations to ensure safety,
efficacy, purity, and quality;
"(i) To require all manufacturers, traders, distributors, importers,
exporters, wholesalers, retailers, consumers, and non-consumer
users of health products to report to the FDA any incident that
reasonably indicates that said product has caused or contributed to
the death, serious illness or serious injury to a consumer, a patient,
or any person;
"G) To issue cease and desist orders motu propio or upon verified
com plaint for health products, whether or not registered with the
FDA Provided, That for registered health products, the cease and
desist order is valid for thirty (30) days and may be extended for sixty
(60) days only after due process has been observed;
"(k) After due process, to order the ban, recall, and/or withdrawal
of any health product found to have caused the death, serious illness
or serious injury to a consumer or patient, or is found to be
imminently injurious, unsafe, dangerous, or grossly deceptive, and
to require all concerned to implement the risk management plan
which is a requirement for the issuance of the appropriate
authorization;
"(l) To strengthen the post market surveillance system in monitoring
health products as defined in this Act and incidents of adverse events
involving such products;
"(m) To develop and issue standards and appropriate authorizations
that would cover establishments, facilities and health products;
"(n) To conduct, supervise, monitor and audit research studies on
health and safety issues of health products undertaken by entities
duly approved by the FDA;
"(o) To prescribe standards, guidelines, and regulations with respect
to information, advertisements and other marketing instruments
and promotion, sponsorship, and other marketing activities about
the health products as covered in this Act;
"(p) To maintain bonded warehouses and/or establish the same,
whenever necessary or appropriate, as determined by the director-
general for confiscated goods in strategic areas of the country
especially at major ports of entry; and
"(q) To exercise such other powers and perform such other functions
as may be necessary to carry out its duties and responsibilities under
this Act. [Emphases supplied]
The Cardinal Rights of Parties in
Administrative Proceedings as
laid down in Ang Tibay v. CIR
In Ang Tibay v. CJR,39 the Court laid down the cardinal rights of
parties in administrative proceedings, as follows:
1) The right to a hearing, which includes the right to present one's
case and submit evidence in support thereof;
2) The tribunal must consider the evidence presented;
3) The decision must have something to support itself;
4) The evidence must be substantial;
5) The decision must be rendered on the evidence presented at the
hearing, or at least contained in the record and disclosed to the
parties affected;
6) The tribunal or body or any of its judges must act on its or his own
independent consideration of the law and facts of the controversy
and not simply accept the views of a subordinate in arriving at a
decision; and
7) The board or body should, in all controversial questions, render its
decision in such a manner that the parties to the proceeding can
know the various issues involved, and the reason for the decision
rendered. 40
In the Decision, the Court found that the FDA certified, procured and
administered contraceptive drugs and devices, without the
observance of the basic tenets of due process, that is, without notice
and without public hearing. It appeared that, other than the notice
inviting stakeholders to apply for certification/recertification of their
reproductive health products, there was no showing that the
respondents considered the opposition of the petitioners. Thus, the
Court wrote:
Rather than provide concrete evidence to meet the petitioners'
opposition, the respondents simply relied on their challenge
questioning the propriety of the subject petition on technical and
procedural grounds. The Court notes that even the letters submitted
by the petitioners to the FDA and the DOH seeking information on
the actions taken by the agencies regarding their opposition were
left unanswered as if they did not exist at all. The mere fact that the
RH Law was declared as not unconstitutional does not permit the
respondents to run roughshod over the constitutional rights,
substantive and procedural, of the petitioners.
Indeed, although the law tasks the FDA as the primary agency to
determine whether a contraceptive drug or certain device has no
abortifacient effects, its findings and conclusion should be allowed
to be questioned and those who oppose the same must be given a
genuine opportunity to be heard in their stance. After all, under
Section 4(k) of R.A. No. 3720, as amended by R.A. No. 9711, the FDA
is mandated to order the ban, recall and/ or withdrawal of any health
product found to have caused death, serious illness or serious injury
to a consumer or patient, or found to be imminently injurious,
unsafe, dangerous, or grossly deceptive, after due process.
Due to the failure of the respondents to observe and comply with
the basic requirements of due process, the Court is of the view that
the certifications/re-certifications and the distribution of the
questioned contraceptive drugs by the respondents should be struck
down as violative of the constitutional right to due process.
Verily, it is a cardinal precept that where there is a violation of basic
constitutional rights, the courts are ousted from their jurisdiction.
The violation of a party's right to due process raises a serious
jurisdictional issue which cannot be glossed over or disregarded at
will. Where the denial of the fundamental right to due process is
apparent, a decision rendered in disregard of that right is void for
lack of jurisdiction. This rule is equally true in quasi-judicial and
administrative proceedings, for the constitutional guarantee that no
man shall be deprived of life, liberty, or property without due
process is unqualified by the type of proceedings (whether judicial
or administrative) where he stands to lose the same.41
The Court stands by that finding and, accordingly, reiterates its order
of remand of the case to the FDA.
Procedure in the FDA; No Trial-Type Hearing
The Court is of the view that the FDA need not conduct a trial-type
hearing. Indeed, due process does not require the conduct of a trial-
type hearing to satisfy its requirements. All that the Constitution
requires is that the FDA afford the people their right to due process
of law and decide on the applications submitted by MAHs after
affording the oppositors like the petitioners a genuine opportunity
to present their science-based evidence. As earlier pointed out, this
the FDA failed to do. It simply ignored the opposition of the
petitioners. In the case of Perez, et al. v. Philippine Telegraph and
Telephone Company, et al., 42 it was stated that:
A formal trial-type hearing is not even essential to due process. It is
enough that the parties are given a fair and reasonable opportunity
to explain their respective sides of the controversy and to present
supporting evidence on which a fair decision can be based.
In the fairly recent case of Vivo v. Pagcor,43 the Court explained:
The observance of fairness in the conduct of any investigation is at
the very heart of procedural due process. The essence of due process
is to be heard, and, as applied to administrative proceedings, this
means a fair and reasonable opportunity to explain one's side, or an
opportunity to seek a reconsideration of the action or ruling
complained of. Administrative due process cannot be fully equated
with due process in its strict judicial sense, for in the former a
formal or trial-type hearing is not always necessary, and technical
rules of procedure are not strictly applied. Ledesma v. Court of
Appeals elaborates on the well-established meaning of due process
in administrative proceedings in this wise:
x x x Due process, as a constitutional precept, does not always and
in all situations require a trial-type proceeding. Due process is
satisfied when a person is notified of the charge against him and
given an opportunity to explain or defend himself. In administrative
proceedings, the filing of charges and giving reasonable opportunity
for the person so charged to answer the accusations against him
constitute the minimum requirements of due process. The essence
of due process is simply to be heard, or as applied to administrative
proceedings, an opportunity to explain one's side, or an opportunity
to seek a reconsideration of the action or ruling complained of.
[Emphasis supplied; citations omitted]
Best Evidence Available
Section 5, Rule 133 of the Rules of Court provides:
Section 5. In all cases filed before administrative or quasi-
judicialbodies, a fact may be deemed established if it is supported
by substantialevidence, or the amount of relevant evidence which a
reasonable mind might accept as adequate to justify a conclusion.
As applied to certification proceedings at the FDA, "substantial
evidence" refers to the best scientific evidence
44
available, "including but not limited to: meta analyses, systematic
reviews, national clinical practice guidelines where available, and
recommendations of international medical organizations," needed
to support a conclusion whether a contraceptive drug or device is an
abortifacient or not. The FDA need not be bound or limited by the
evidence adduced by the parties, but it can conduct its own search
for related scientific data. It can also consult other technical scientific
experts known in their fields. It is also not bound by the principle
of stare decisis or res judicata, but may update itself and cancel
certifications motu proprio when new contrary scientific findings
become available or there arise manifest risks which have not been
earlier predicted.
On the Competence of the Court
to review the Findings of the FDA
The fact that any appeal to the courts will involve scientific matters
will neither place the actions of the respondents beyond the need to
comply with the requirements of Ang Tibay nor place the actions of
the FDA in certification proceedings beyond judicial review.
It should be pointed out that nowhere in Batas Pambansa Blg. 129,
as amended, are the courts ousted of their jurisdiction whenever the
issues involve questions of scientific nature. A court is not
considered incompetent either in reviewing the findings of the FDA
simply because it will be weighing the scientific evidence presented
by both the FDA and its oppositors in determining whether the
contraceptive drug or device has complied with the requirements of
the law.
Although the FDA is not strictly bound by the technical rules on
evidence, as stated in the Rules of Court, or it cannot be bound by
the principle of stare decisis or res judicata, it is not excused from
complying with the requirements of due process. To reiterate for
emphasis, due process does not require that the FDA conduct trial-
type hearing to satisfy its requirements. All that the Constitution
requires is that the FDA afford the people their right to due process
of law and decide on the applications submitted by the MAHs after
affording the oppositors, like the petitioners, a genuine opportunity
to present their sciencebased evidence.
The Appellate Procedure;
Appeal to the Office of the President
Incidentally, Section 32 of R.A. No. 3720 and Section 9 of Executive
Order (E.O.) No. 247 provide that any decision by the FDA would
then be appealable to the Secretary of Health, whose decision, in
tum, may be appealed to the Office of the President (OP). Thus:
Sec. 32. The orders, rulings or decisions of the FDA shall be
appealable to the Secretary of Health. - An appeal shall be deemed
perfected upon filing of the notice of appeal and posting of the
corresponding appeal bond.
An appeal shall not stay the decision appealed from unless an order
from the Secretary of Health is issued to stay the execution thereof.
Sec. 9. Appeals. - Decisions of the Secretary (DENR, DA, DOH or
DOST) may be appealed to the Office of the President. Recourse to
the courts shall be allowed after exhaustion of all administrative
remedies.
In view thereof, the Court should modify that part of the Decision
which allows direct appeal of the FDA decision to the Court of
Appeals.1âwphi1 As stated in the said decision, the FDA decision
need not be appealed to the Secretary of Health because she herself
is a party herein. Considering that the Executive
Secretary is not a party herein, the appeal should be to the OP as
provided in Section 9.
On the Prayer to Lift the TRO
The respondents lament that the assailed decision undermines the
functions of the FDA as the specialized agency tasked to determine
whether a contraceptive drug or device is safe, effective and non-
abortifacient. They also claim that the assailed decision requiring
notice and hearing would unduly delay the issuance of CPR thereby
affecting public access to State-funded contraceptives. Finally, in a
veritable attempt to sow panic, the respondents claim that the TRO
issued by the Court would result in "a nationwide stockout of family
planning supplies in accredited public health facilities and the
commercial market. "45
On this score, it should be clarified that the Decision simply enjoined
the respondents from registering, recertifying, procuring, and
administering only those contraceptive drugs and devices which
were the subjects of the petitioners' opposition, specifically
Implanon and Implanon NXT. It never meant to enjoin the processing
of the entire gamut of family planning supplies that have been
declared as unquestionably non-abortifacient. Moreover, the
injunction issued by the Court was only subject to the condition that
the respondents afford the petitioners a genuine opportunity to
their right to due process.
As the Decision explained, the Court cannot lift the TRO prior to the
summary hearing to be conducted by the FDA. To do so would
render the summary hearing an exercise in futility. Specifically, the
respondents would want the Court to consider their argument that
Implanon and Implanon NXT have no abortifacient effects. According
to them, "the FDA tested these devices for safety, efficacy, purity,
quality, and non-abortiveness prior to the issuance of certificates of
registration and recertification, and after the promulgation of
Imbong." 46 The Court, however, cannot make such determination
or pronouncement at this time. To grant its prayer to lift the TRO
would be premature and presumptuous. Any declaration by the
Court at this time would have no basis because the FDA, which has
the mandate and expertise on the matter, has to first resolve the
controversy pending before its office.
This Court also explained in the Decision that the issuance of the TRO
did not mean that the FDA should stop fulfilling its mandate to test,
analyze, scrutinize, and inspect other drugs and devices. Thus:
Nothing in this resolution, however, should be construed as
restraining or stopping the FDA from carrying on its mandate and
duty to test, analyze, scrutinize, and inspect drugs and devices. What
are being enjoined are the grant of certifications/re-certifications of
contraceptive drugs without affording the petitioners due process,
and the distribution and administration of the questioned
contraceptive drugs and devices including Implanon and Implanon
NXT until they are determined to be safe and non-abortifacient.47
On Delay
The respondents claim that this judicial review of the administrative
decision of the FDA in certifying and recertifying drugs has caused
much delay in the distribution of the subject drugs with a dire impact
on the effective implementation of the RH Law.
In this regard, the respondents have only themselves to blame. After compliance with due process and upon promulgation of the
Instead of complying with the orders of the Court as stated in the decision of the Food and Drug Administration, the Temporary
Decision to conduct a summary hearing, the respondents have Restraining Order would be deemed lifted if the questioned drugs
returned to this Court, asking the Court to reconsider the said and devices are found not abortifacients.
decision claiming that it has wreaked havoc on the organizational After the final resolution by the Food and Drug Administration, any
structure of the FDA. appeal should be to the Office of the President pursuant to Section
Had the FDA immediately conducted a summary hearing, by this 9 of E.O. No. 247.
time it would have finished it and resolved the opposition of the As ordered in the August 24, 2016 Decision, the Food and Drug
petitioners.1âwphi1 Note that there was already a finding by the Administration is directed to amend the Implementing Rules and
FDA, which was its basis in registering, certifying and recertifying the Regulations of R.A. No. 10354 so that it would be strictly compliant
questioned drugs and devices. The pharmaceutical companies or the with the mandates of the Court in lmbong v. Ochoa.
MAHs need not present the same evidence it earlier adduced to SO ORDERED.
convince the FDA unless they want to present additional evidence to
fortify their positions. The only entities that would present evidence
would be the petitioners to make their point by proving with
relevant scientific evidence that the contraceptives have
abortifacient effects. Thereafter, the FDA can resolve the
controversy.
Indeed, in addition to guaranteeing that no person shall be deprived
of life, liberty and property without due process of law,48 the
Constitution commands that "all persons shall have the right to a
speedy disposition of their cases before all judicial, quasi-judicial and
administrative bodies."49
WHEREFORE, the August 24, 2016 Decision
is MODIFIED. Accordingly, the Food and Drug Administration is
ordered to consider the oppositions filed by the petitioners with
respect to the listed drugs, including Implanon and Implanon NXT,
based on the standards of the Reproductive Health Law, as
construed in lmbong v. Ochoa, and to decide the case within sixty
(60) days from the date it will be deemed submitted for resolution.
OCA v Silongan
The Facts
In Office of the Court Administrator, Complainant, v. Judge Cader P.
Indar, Presiding Judge and Acting Presiding Judge of the Regional
Trial Court, Branch 14, Cotabato City and Branch 15, Shariff Aguak,
Maguindanao, respectively, Respondent,[2] this Court issued a
Resolution dated 28 September 2010 directing Justice Angelita A.
Gacutan (Justice Gacutan) to conduct a fact-finding investigation to
determine the authenticity of decisions on numerous annulment of
marriage cases rendered by Judge Indar and to ascertain who are the
parties responsible for the issuance of the questioned decisions.
The fact-finding investigation revealed that the questioned decisions
do not exist in the records of the Office of the Clerk of Court of the
Regional Trial Court, Branch 14 in Cotabato City (RTC Branch 14) or
the Regional Trial Court, Branch 15 in Shariff Aguak, Maguindanao
(RTC Branch 15). These decisions were also accompanied by
Certificates of Finality issued by Silongan and in one case, by Abie M.
Amilil (Amilil), Officer-in-Charge (OIC) Branch Clerk of Court. At the
time Justice Gacutan conducted the fact-finding investigation,
Silongan and Amilil were employees of the Judiciary.
In a Decision dated 10 April 2012, this Court dismissed Judge Indar
from the service for gross misconduct and dishonesty in issuing the
spurious decisions on numerous annulment of marriage cases. The
Court likewise directed the OCA to investigate Silongan, Acting Clerk
of Court of RTC Branch 14, on her alleged participation in the
authentication of the said decisions.
Upon investigation, the OCA found that:
(1) Silongan certified as true copy 27 decisions[3] issued by Judge
Indar in RTC Branch 14. These cases cannot be found in the docket
books. Neither have these cases been filed before RTC Branch 14,
per Certification[4] issued by Clerk of Court Atty. Janis Rohaniah
G. Dumama-Kadatuan (Atty. Kadatuan).
Silongan also certified as true copy an Order in Special Proceeding
Case No. 08-1163, entitled Carmelita Balagtas v. The Local Civil
Registrar of the City of Manila, which is also non-existent in the
dockets of RTC Branch 15.
On 3 January 2011, the Employees Welfare Benefit Division of the
Office of Administrative Services (OAS) received from Silongan an
Application for Separation Benefit[5] effective 31 December 2010.
(2) On 24 January 2008, Amilil issued a Certificate of Finality[6] and
certified as true copy Judge Indar's decision in Special Civil Case No.
508, entitled Caroline Flor Buenafe v. Roberto R. Buenafe, Jr., which
case does not appear in the court docket per letter of the current
OIC Clerk of Court Atty. Dennis U. Relayson (Atty. Relayson).
Amilil also certified as true copy an Order issued by Judge Indar in
Special Civil Case No. 1049, involving a petition for cancellation of
certificates of live birth of two children, which case is not docketed
in the trial court.
(3) On 15 April 2005, then RTC Branch 15 Clerk of Court Salick U.
Panda, Jr. (Panda) issued a Certificate of Finality[7] for Civil Case No.
517, a case supposedly involving declaration of nullity of marriage.
The docket of RTC Branch 15, however, reveals that Civil Case No.
517 is actually a case for foreclosure of mortgage.
Based on OAS's records, Panda was temporarily appointed as Clerk
of Court VI on 11 April 2005 and his appointment expired on 5 April
2006.
Thus, in its Memorandum dated 29 October 2012 addressed to the
Office of the Chief Justice,[8] the OCA recommended that Silongan,
Amilil, and Panda be investigated.
In a Resolution dated 15 January 2013,[9] the Court En Banc, upon
recommendation of the OCA, resolved to: (a) docket separately the
matter involving Silongan, Amilil, and Panda as OCA IPI No. 13-4035-
P; (b) refer the remaining matter to the Executive Justice of the Court
of Appeals (CA), stationed in Cagayan de Oro City, for raffle among
the members of the said court; and (c) direct the CA Justice to whom
this case will be assigned to investigate and submit his/her report
and recommendation within 60 days from notice.
The case was raffled to Justice Henri Jean-Paul B. Inting
(Investigating Justice) of the CA Cagayan de Oro City.
In an Order dated 22 March 2013,[10] the Investigating Justice set the
hearing on 23, 24, and 25 April 2013, and required Silongan, Amilil,
and Panda to appear and submit their counter-affidavit/s and
affidavit/s of their witnesses, if any.
In a Return of Service dated 27 March 2013,[11] Atty. Kadatuan stated
that Amilil and Panda received the notice of hearing as evidenced by
their signatures in the Order, while Silongan's copy of the notice was
forwarded to her brother, who refused to acknowledge its receipt.
Thereafter, Panda requested for a copy of the formal charge against
him to enable him to prepare his counter-affidavit.
On 23 April 2013, Silongan and Amilil failed to appear before the
Investigating Justice. Only Panda appeared during the hearing.
Panda informed the Investigating Justice that he is no longer a Clerk
of Court, but an administrative officer in the Provincial Prosecution
Office of Maguindanao. He was then informed of the nature of the
investigation against him, furnished a copy of the certificate of
finality he issued, and given ten days to file his responsive pleading.
The Investigating Justice then directed the Clerks of Court of RTC
Branches 14 and 15 to submit the employment status of Silongan
and Amilil.
In an Order dated 25 April 2013,[12] the Investigating Justice set the
continuation of the hearing on 21 May 2013, considering that
Silongan and Amilil failed to appear on the 24 and 25 April 2013
hearings.
In his Affidavit dated 2 May 2013,[13] Panda alleged that the copy of
the certificate of finality he signed was one of the voluminous
documents presented to him during the period of transition; he was
barely a week in office when he signed the document. He alleged
that he unceremoniously affixed his signature upon Silongan's
assurance and based on the judgment attached. He further
contended that he only performed his duties as Acting Clerk of Court
and he did not act with malice when he signed the document.
In a Return of Service dated 17 May 2013,[14] Atty. Kadatuan stated
that: (1) Panda affixed his signature on the Order dated 25 April
2013; (2) Amilil acknowledged the receipt of the Order and
subpoena but refused to sign; and (3) Silongan's copy was again
forwarded to her brother, who refused to sign in the subpoena. On
21 May 2013, Panda, Amilil, and Silongan failed to appear in the
hearing.
In an Order dated 30 May 2013,[15] the Investigating Justice directed
Silongan and Amilil to show cause why they should not be cited in
contempt of court for their failure to attend the hearings. The
Investigating Justice likewise directed the Clerks of Court of RTC
Branches 14 and 15 to issue a certification regarding the
employment status of Silongan and Amilil. Further hearings were set
on 25 and 26 June 2013.
On 10 June 2013, the OIC Designate Sheriff of RTC Branch 14 filed a
Return of Service[16] stating that the Order dated 30 May 2013 and
subpoenas were duly served to: (1) Panda; (2) Atty. Lalaine T.
Mastura (Atty. Mastura), Clerk of Court of RTC Branch 15; (3) Atty.
Relayson, OIC Clerk of Court of RTC Branch 14; (4) Aileen M. Burahan
of RTC Branch 14, who received AmiliPs subpoena; and (5) the
brother of Silongan, who again refused to sign in the subpoena.
In the meantime, Atty. Relayson filed a Certification stating that
Amilil resigned as Sheriff IV effective 17 September 2012.[17] Atty.
Mastura also filed a Certification stating that Silongan applied for
early retirement, which is still pending due to the present
administrative case.[18]
In an Order dated 11 July 2013,[19] the Investigating Justice stated
that since they failed to appear during the 25 and 26 June 2013
hearings, Silongan's and Amilil's rights to be heard and defend
themselves are deemed waived.
In his Report dated 19 August 2013,[20] the Investigating Justice
found that Silongan and Amilil were given due process, since they
were aware of the administrative matter against them and they
chose not to attend the hearings and be heard.
The Investigating Justice held Silongan and Amilil liable for grave
misconduct and dishonesty for certifying as true and correct bogus
decisions in their capacity as court personnel. According to the
Investigating Justice, their acts of certifying several bogus decisions
indicate a pattern of willful intention to violate and disregard
established rules. On the other hand, since Panda certified one
decision only and acted without malice, the Investigating Justice held
him liable for simple neglect of duty.
The Investigating Justice then recommended the imposition of fines,
instead of dismissal and suspension from office, after finding that
Silongan, Amilil, and Panda are no longer connected with the
Judiciary, to wit:
WHEREFORE, the undersigned investigating justice respectfully
recommends to the Honorable Supreme Court the following:
 1. The case be Re-docketed as a regular administrative matter;
2. Atty. Silongan and Mr. Amilil be held liable for Grave
Misconduct and Dishonesty;
3. Mr. Panda be held liable for Simple [Neglect of Duty];
4. Considering that Atty. Silongan had already retired and Mr.
Amilil resigned from Office, they be Fined in the amount of
P40,000 with forfeiture of retirement benefits and perpetual
disqualification [from] re-employment in any government
service;
5. Considering that this is Mr. Panda's first administrative
complaint and absent any showing that he acted with malice,
he be Fined the amount of P5,000.
Respectfully submitted, August 19, 2013, Cagayan de Oro City.[21]
In a Resolution dated 19 November 2013,[22] the Court directed the
Presiding Judge of RTC Branch 14 to furnish the Court with the
present and correct address of Silongan, considering that a
resolution addressed to Silongan was returned unserved with
notation on the letter-envelope: "RTS-No Longer Connected." Both
the Executive Judge of RTC Branch 13 and Acting Presiding Judge of
RTC Branch 15 sent letters to the Court informing it of the present
address of Silongan.[23] Thereafter, all court processes were
delivered to Silongan's present address.
The Ruling of the Court
We adopt the recommendations of the Investigating Justice for
Silongan and Amilil, but modify it for Panda.
The Revised Rules on Administrative Cases in the Civil Service, which
govern the conduct of disciplinary and non-disciplinary proceedings
in administrative cases, clearly provide that "[administrative
investigations shall be conducted without strict recourse to the
technical rules of procedure and evidence applicable to judicial
proceedings."[24] Thus, administrative due process cannot be fully
equated with due process in its strict judicial sense.[25]
In administrative proceedings, the essence of due process is simply
an opportunity to explain one's side or an opportunity to seek a
reconsideration of the action or ruling complained of.[26] It is enough
that the party is given the chance to be heard before the case is
decided.[27] Due process is not violated when a person is not heard
because he or she has chosen, for whatever reason, not to be
heard.[28] If one opts to be silent when one has a right to speak, one
cannot later be heard to complain that he or she was unduly
silenced.[29]
In the present case, the Investigating Justice set six hearings, and
both Silongan and Amilil were duly notified of the hearings and the
administrative case against them. As aptly found by the Investigating
Justice:
Silongan was furnished a copy of the Decision of the Supreme Court
ordering the OCA to investigate her alleged participation in the
authentication of questioned Decisions by the Judge Indar.
Moreover, the benefits due her from her early retirement were put
on hold because of the pending investigation. These notices in
addition to the Subpoenas issued to her and received by her brother
clearly show that she is aware of the pending investigation. Thus,
there can be no doubt that Silongan is aware of the administrative
matter against her. Yet she chose not to attend the hearings and to
be heard.
Amilil on the other hand resigned from office. Despite Subpoenas
received by him, he did not attend the hearings and did not submit
his counter-affidavit.[30]
Thus, Silongan and Amilil cannot feign ignorance of the
administrative investigation against them. They were given ample
opportunity to controvert the charges against them; yet, they
chose not to appear in any of the hearings or file any explanation.
Unlike Panda, both Silongan and Amilil chose not to be heard
despite the opportunity given to them.
Having found that Silongan and Amilil were accorded due process,
we resolve the issue of whether Silongan, Amilil, and Panda are
administratively liable in this case.
The Court defines misconduct as a transgression of some
established and definite rule of action, more particularly, unlawful
behavior or gross negligence by a public officer.[31] As distinguished
from simple misconduct, the element of corruption, clear intent to
violate the law, or flagrant disregard of established rule, must be
manifest in a charge of grave misconduct.[32]
In the present case, both the OCA and the Investigating Justice
found that Silongan and Amilil certified as true copies spurious
annulment decisions issued by Judge Indar. There is no question as
to their guilt as the records speak for itself. The records clearly
show that the 27 cases, which were certified as true copies by
Silongan, were not in the court dockets nor have they been filed
before the trial court. Amilil also certified as true copies two
decisions, which did not appear in the court dockets. As custodians
of court records in RTC Branches 14 and 15, Silongan and Amilil
should have known that there were no existing records that could
have served as basis for the issuance of the certificates.
A certificate is a written assurance, or official representation, that
some act has or has not been done, or some event occurred, or
some legal formality has been complied with.[33] To certify is to
attest to the truthfulness of the document.[34] Without the records
to verify the truthfulness and authenticity of a document, no
certification should be issued.[35]
Thus, Silongan and Amilil. should not have attested to the
truthfulness of the decisions issued by Judge Indar knowing that
there were no records to verify its truthfulness, as the decisions
were not even in the court dockets. Their acts of authenticating and
certifying as true and correct spurious decisions issued by Judge
Indar undoubtedly constitute grave misconduct as those acts
manifest clear intention to violate the law or to flagrantly disregard
established rule.
Their acts also amount to dishonesty, which is defined as
"disposition to lie, cheat, deceive, or defraud; untrustworthiness;
lack of integrity; lack of honesty, probity or integrity in principle;
lack of fairness and straightforwardness; disposition to defraud,
deceive or betray."[36] Their acts further amount to a breach of
Canon IV of the Code of Conduct for Court Personnel which states
that: "Court personnel shall at all times perform official duties
properly and with diligence. They shall commit themselves
exclusively to the business and responsibilities of their office during
working hours."
In Atty. Alcantara-Aquino v. Dela Cruz,[37] we held respondent
therein liable for gross misconduct and dishonesty for
authenticating documents despite lack of authority to do so and
lack of records that could have served as basis for issuance of the
certificate. In Balanza v. Criste,[38] we found respondent guilty of
serious dishonesty for certifying a spurious decision and certificate
of finality without authority.
No less than the Constitution mandates that all public officers and
employees should serve with responsibility, integrity and efficiency,
for public office is a public trust.[39] No other office in the
government service exacts a greater demand for moral
righteousness and uprightness from an employee than the
Judiciary.[40] Thus, this Court has often stated that the conduct of
court personnel, from the presiding judge to the lowliest clerk,
must always be beyond reproach and must be circumscribed with
the heavy burden of responsibility as to let them be free from any
suspicion that may taint the Judiciary.[41] The Court condemns any
conduct, act, or omission on the part of all those involved in the
administration of justice which would violate the norm of public
accountability and diminish the faith of the people in the
Judiciary.[42]
Silongan and Amilil should have known that when they certified the
questioned decisions, they did so under the seal of the court. Thus,
by their actions, they undoubtedly jeopardized the integrity of the
court. Their acts betray their complicity, if not participation, in acts
that were irregular and violative of ethics and procedure, causing
damage not only to the complainant but also to the public.[43]
The Revised Rules on Administrative Cases in the Civil Service
provide that gross misconduct and dishonesty are grave offenses
punishable by dismissal even for the first offense.[44] The Court
notes that this is not Silongan's and Amilil's first offense. In A.M.
No. P-06-2267,[45] the Court fined Silongan with PI,000 for neglect
of duty because she failed to produce 303 cases for examination by
the audit team, make a report on the actual status of these 303
cases, and take action on 22 civil cases. On the other hand, in A.M.
No. RTJ-07-2069,[46] Amilil was found guilty of neglect of duty and
was suspended for two months without pay because he: (1) failed
to inform Judge Indar of the existence of Court decisions which
nullified and set aside Judge Indar's Order; (2) failed to inform and
send the parties notices and court orders; and (3) issued a
Certificate of Finality without verifying if indeed a motion for
reconsideration was filed in connection with the case.
Considering that the penalty of dismissal can no longer be imposed
due to Silongan's retirement and Amilil's resignation, we find the
recommendation of the Investigating Justice to be appropriate
under the circumstances and impose on both Silongan and Amilil
the penalty of fine in the amount of P40,000 each with forfeiture of
all benefits, except accrued leave credits, if any. They are further
declared disqualified from any future government employment.
As for Panda, we dismiss the administrative case against him.

It is well-settled that in order for the Court to acquire jurisdiction
over an administrative case, the complaint must be filed during the
incumbency of the respondent public official or employee.[47] In Re:
Missing Exhibits and Court Properties in Regional Trial Court,
Branch 4, Panabo City, Davao del Norte,[48] we dismissed the
complaint against a respondent judge since the Memorandum
recommending the filing of an administrative case against the judge
was submitted by the OCA to the Court on 10 July 2012, or more
than two years after the judge retired. In the similar case of Office
of the Court Administrator v. Grageda,[49] the Court held that the
respondent judge's retirement effectively barred the Court from
pursuing the administrative proceeding that was instituted after his
tenure in office, and divested the Court of any jurisdiction to still
subject him to administrative investigation and to penalize him
administratively for the infractions committed while he was still in
the service. In Office of the Court Administrator v. Judge
Andaya,[50] we likewise dismissed the administrative case against
the respondent judge upon finding that the administrative
complaint was docketed only on 29 April 2009, or after his
compulsory retirement on 27 March 2009. The Court also dismissed
an administrative case filed against a retired court stenographer for
having been initiated over a month after her retirement from the
service.[51]
In the present case, Panda's temporary appointment in the
Judiciary expired on 5 April 2006, while the OCA submitted its
Memorandum dated 29 October 2012 to the Court recommending
his investigation on 7 January 2013 or more than six years after he
left the Judiciary. Accordingly, we no longer have jurisdiction to
impose an administrative penalty on him.
WHEREFORE, we find respondent Umaima L.
Silongan GUILTY of GRAVE MISCONDUCT and DISHONESTY. Since
she had retired from the service, she is, instead of being dismissed
from the service, ordered to pay a FINE in the amount
of P40,000 with forfeiture of all retirement benefits and privileges,
except accrued leave credits, if any, and with prejudice to re-
employment in any branch or instrumentality of the government,
including government-owned or controlled corporations.
We likewise find respondent Abie M. Amilil GUILTY of GRAVE
MISCONDUCT and DISHONESTY. Since he had resigned from the
service, he is, instead of being dismissed from the service, ordered
to pay a FINE in the amount of P40,000 with forfeiture of all
retirement benefits and privileges, except accrued leave credits, if
any, and with prejudice to re-employment in any branch or
instrumentality of the government, including government-owned
or controlled corporations.
We DISMISS the administrative case against respondent Salick U.
Panda, Jr. for lack of jurisdiction.
Let a copy of this Decision be furnished the Office of the
Ombudsman for whatever appropriate action the Ombudsman may
wish to take with respect to the possible criminal liability of
respondents Umaima L. Silongan and Abie M. Amilil.
SO ORDERED.