A.M. No. 03-8-22-SC. September 16, 2003 RE: EM NO.

03-010 - ORDER OF THE FIRST DIVISION OF THE COMMISSION ON ELECTIONS DATED AUGUST 15, 2003. EN BANC Gentlemen: Quoted hereunder, for your information, is a resolution of the Court En Banc dated 16 SEP 2003 A.M. No. 03-8-22 SC. (Re: EM No. 03-010 Order of the First Division of the Commission on Elections dated August 15, 2003.) On 10 September 2003, the First Division bf the Commission Elections (COMELEC) promulgated a Resolution in EM Nos. 03-010 & 03-011,[1] which disposed thus:
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"WHEREFORE, for the reasons given, this Commission may be persuaded to pronounce the existence of sufficient grounds to declare respondents in contempt of this Commission and accordingly impose the proper penalty. Nevertheless, we are constitutionally enjoined from doing so without respondents first going through the process of impeachment. "As prayed for by Petitioner Rodolfo T. AIbano III and Intervenor Rodrigo B. Gutang, let [a] copy of this resolution be forwarded [to] the House of Representatives. "However, in the light of the foregoing discussion, we find the filing of the present petitions premature because of the authoritative doctrine that impeachable officers must first be removed from office by impeachment before any punitive measure may be imposed against them. Consequently, the actions being untimely filed, as explained by the Supreme Court, the Petitions for Indirect Contempt deserve nothing less than outright dismissal. Let the above-captioned cases be, as they are hereby ordered, DISMISSED. "SO ORDERED." On 26 August 2003, prior to the promulgation of the above Resolution of the COMELEC's First Division, this Court en banc issued its own Resolution, quoted in full as follows: "Acting on the Order of the Commission on Elections dated August 15, 2003 signed by Presiding Commissioner Rufino SB. Javier of the Comelec First Division addressed to Chief Justice Hilario G. Davide Jr. and Associate Justices Josue N. Bellosillo, Reynato S. Puno and Artemio V. Panganiban, sending them copies of Petition's for Indirect Contempt filed against them in the Commission by the Malay Democrats of the Philippines (signed by Ma. Linda Olaguer Montayre), Rodolfo T. Albano III and Rodrigo B. Gutang, and advising them that they may, if they so desire, send to (the) Commission within a reasonable time their observation or comment on the afore-enumerated pleadings to help the Commission in intelligently disposing of them, the Court RESOLVED (1) to treat it as an administrative matter cognizable by the Courts en banc as it affects the entire Court, and (2.) to inform the Commission that the subject matter of the Petitions involves a, review of the final decision and/or official actions of this Court in G.R. Nos. 147589 and 147613, June 26, 2001 (Ang Bagong Bayani-OFW Labor Party vs. commission on Elections, et al.), a review that is, unquestionably beyond the jurisdiction of the Commission. Under the Constitution and pursuant to the principle of separation of powers, decisions, orders and official actions of the Supreme Court and its Members cannot be reviewed, passed upon, modified, much less reversed by any department, agency or branch of government, whether directly or indirectly under any guise whatsoever. Accordingly, the Petitions for Indirect Contempt deserve nothing less than outright dismissal. "SO ORDERED" While this Court does not fault the COMELEC's First Division for outrightly DISMISSING the Petitions for Contempt, it cannot let the "reasons given" therefor pass unchallenged and uncorrected. These reasons were proffered without jurisdiction or with grave abuse of discretion, in clear contravention of the Constitution and the above-quoted Resolution. In its 38-page Resolution, the COMELEC First Division basically insinuates two points as follows: (1) that it possesses the power to hold in contempt the Chief Justice and some Associate Justices for their participation and vote in decisions and orders of this Court, which allegedly interfered with or impeded the proceedings of the Commission; and that it had in fact determined the "existence of sufficient grounds to declare respondents in contempt of [the] Commission and to 'impose the proper penalty," were it not for the fact that the Justices were impeachable officers who "must first be removed from office by impeachment before any punitive measure may be imposed against them."

(2)

These ratiocinations constitute plain and simple legal balderdash.

FIRST, as already stated in our foregoing 26 August 2003 Resolution, the Commission has no. jurisdiction to hold the Court or any of its Members in contempt for any, decision, order or official action they issue. Initially, the COMELEC's First Division and its three signatory Commissioners openly conceded that, indeed, they did not have any power to review, alter or reverse such act. Yet, it did pass upon them in its Resolution and concluded thereafter that the "June 6, 2001 Decision, Order of October 8, 2002, and Resolution dated February 18, 2003 restrained the COMELEC from performing its constitutional duties and prerogatives." That restraint allegedly constituted contempt of the Commission. There is no need to explain in detail or to defend the aforesaid three issuances of this Court in G.R. Nos. 147589 and 147613, (Ang Bagong Bayani-OFW Labor Party v. Commission on Elections), because they speak for themselves. Suffice it to say that they were its official actions promulgated in appropriate certiorari proceedings, in, which the Commission's previous Decision on the matter was, REVERSED. That the Supreme Court has the authority to pass upon, modify or reverse the quasi-judicial actions of the COMELEC is UNQUESTIONED. Verily, under Article VIII, Section 1 of the Constitution "[j]udicial power includes the duty of the courts of justice x x x 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." More specifically, Article. IX, Section 7 of the Constitution grants the Supreme Court the authority to pass upon on certiorari "any decision, order or ruling" of the COMELEC and other constitutional commissions. Giving flesh to these constitutional provisions is Rule 64 of the Rules of Court which provides that" "[a] judgment or final order or resolution of the Commission on Elections x x x may be brought x x x to .the Supreme Court on certiorari under Rule 65." On the other hand, Rule 65 states: "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, x x x" the Supreme Court may annul or modify the proceedings of such tribunal, board or officer, and grant such incidental reliefs as law and justice may require. Finally, Rules 135 and 136 list the inherent powers of courts and judicial officers to ensure that their decisions or orders are: carried out, including the power of meting out contempt. True, the COMELEC -- along with the Commission on Audit, the Commission on Civil Service and the, Ombudsman -- is a constitutionally created body with constitutionally mandated functions. However, as already stated, the actions of all such constitutional, bodies are subject to" certiorari review by the Supreme Court as was done in G.R. Nos. 147589 and 147613. Thus, the Court may intervene, strike down or modify COMELEC's actions without itself incurring any liability for contempt; whether its Justices happen to be impeachable officers or not if the Supreme Court (or its Members) can be held liable for contempt for official actions, then it would cease to be "supreme" in its task of interpreting the law and would become subordinate to whichever agency claims the power to cite the Court or its Members for contempt. In short, the fact that Supreme Court Justices are impeachable officers should not be the ground for the COMELEC's dismissal of the contempt charges. Rather, they cannot be held liable for contempt, because their herein questioned Decision, Resolution, and Order that have allegedly interfered with, proceedings of the COMELEC were made pursuant to their constitutional function. To stop or impede COMELEC's proceedings when these have been conducted without or in excess of jurisdiction or with grave abuse of discretion is not merely a judicial prerogative; the Constitution mandates such move as a judicial duty." The performance of this duty cannot subject the Court or its Members to contempt of the COMELEC; otherwise, they would not be able to reverse or modify its abusive actions. "The sound, salutary and self-evident principle, prevailing in this as in most jurisdictions, is that judgments of the highest tribunal of the land may not be reviewed by any other agency branch, department, or official of Government. Once the Supreme Court has spoken, there the matter must rest. Its decision should not and cannot be appealed to or reviewed by any other entity, much less reversed or modified on the ground that it is, tainted by error in its findings of fact or conclusions of law, flawed in its logic or language, or otherwise erroneous in some other respect. This, on the indisputable and unshakeable foundation of public policy, and constitutional and traditional principle." (In Re Joaquin T. Borromeo, 311 Phil. 441, 509, February 21, 1995) SECOND. The COMELEC's notion that impeachable officers cannot be held in contempt is palpably incorrect or at least misleading. Maliciously implied in this notion is that the Supreme Court erred in holding the Chairman and Members of the COMELEC in contempt via its Resolution dated 18 February 2003 in the same G.R. Nos. 147589 and 147613. As mentioned earlier, this Court has undisputed certiorari powers over the actions of the Commission on Elections. As an incident of such prerogative, the Court has the inherent authority to enforce its orders and to hold the COMELEC's Chairman and Commissioners in contempt when they impede, obstruct, or degrade its proceedings or orders, or disobey, ignore or otherwise offend its dignity. Clearly, the COMELEC has no reciprocal constitutional power to pass upon the actions of this Court or its Members Hence, the Commission has absolutely no authority to hold them in contempt as an incident of its inexistent power of review. Even more clearly, it has no right to recriminate or sulk when its imprudent actions are reversed, or its Members held in contempt for their rash actions. By voluntarily paying the fine imposed in our contempt Resolution of 18 February 2003, the Chairman and all the Commissioners of the COMELEC displayed a becoming regard for the rule of law in thereby recognizing this Court's authority to hold in contempt impeachable officials like them. It is a source of wonder why the First Division composed of only three -- a minority -- of the seven COMELEC members are now in a tantrum over a final and executed contempt Order of this Court.

"x x x [T]he punishment for contempt of court is a remedial, preservative or coercive act, rather than a vindictive or punitive one, and is imposed for the benefit of complainant or the other party to the suit who has been injured, and its object is to compel obedience to, or the performance of, the court's orders or decrees, which the contemnor refuses to obey although able to do so, and thus, to secure, preserve, vindicate, enforce, or advance the rights of such private parties, as well as to vindicate the court's authority." (Facinal vs. Cruz, 213 SCRA 23.8, 244-245, September 2, 1992) As to the First division's reckless innuendo that. COMELEC Commissioners are exempt' from criminal prosecution and thus from the criminal aspects of contempt, they should read De. Venecia vs. Sandiganbayan (G.R. No. 130240, February 5, 2002), People vs. Jalosjos (381 Phil. 6901, February .3, 2000), Santiago vs. Sandiganbayan; (363 Phil. 605, March 8, 1999), Paredes, vs. Sandiganbayan (G.R. No. 118354, August 8, 1995), and Martinez vs. Morfe (44 SCRA 22, March 24, 1972). In those Decisions, lawmakers are not totally exempt from criminal proceedings; how then can the First Division Commissioners pretend to be more special than they? THIRD, under the doctrine of separation of powers, the three major branches of government -- the Executive, the Legislative and the Judicial -- are coequal and coordinate with each other. But none may interfere with, review or pass upon the exclusive powers vested in each of them by the Constitution. Specifically, not even the other two great branches of government may reverse or modify decisions and orders of the Supreme Court in given case -- not the President, not Congress much less the COMELEC. But, as part of the system of checks and balances, if. Congress does not agree with the Court's interpretation of a law, it may repeal, modify or amend the statute; but it cannot directly overturn the decision or hold the magistrates writing or voting thereon liable for contempt or for any administrative, criminal, civil or any other liability. On the other hand, the President may appoint justices who may change the interpretation in the future. But no act of Congress or the President may alter a final and executory decision of this Court. "Indeed, resolutions of the Supreme Court as a collegiate court, whether en banc or division, speak for themselves and are entitled to full faith and credence and are beyond investigation or inquiry under the same principle of conclusiveness of enrolled bills of the legislature. (U.S. vs. Pons, 34 Phil. 729; Gardiner, et al. vs. Paredes, et al., 61 Phil. 118; Mabanag vs. Lopez Vito, 78 Phil. 1) The Supreme Court's pronouncement of the doctrine that (l)t is well settled that the enrolled bill . . . is conclusive upon the courts as regards the tenor of the measure passed by Congress and approved by the President. If there has been any mistake in the printing of the bill before it was certified by the officers of Congress and approved by the Executive [as claimed by petitioner-importer who unsuccessfully sought refund of margin fees] - on which' we cannot speculate, without jeopardizing the principle of separation of powers and undermining one of the cornerstones of our democratic system - the remedy is by amendment or curative legislation, not by judicial decree is fully and reciprocally applicable to Supreme Court orders, resolutions and decisions, mutatis mutandis. (Casco Phil. Chemical Co., Inc. vs. Gimenez, 7 SCRA 347, 350. (Citing Primicias vs. Paredes, 61 'Phil. 118, 120; Mabanag vs. Lopez Vito, 78 Phil. 1; Macias vs. Comelec, 3 SCRA 1) "The Court has consistently stressed that the doctrine of separation, of powers calls for the executive, legislative and judicial departments being left alone to discharge their duties as they see fit (Tan vs. Macapagal, 43 SCRA 677). It has thus maintained in the same way that the judiciary has a right to expect that neither the President nor Congress would cast doubt on the mainspring of its orders or decisions, it should refrain from speculating as to alleged hidden forces at work that could have impelled either coordinate branch into acting the way it did. The concept of separation of powers presupposes mutual' respect by and between the three departments of the government (Tecson vs. Salas, 34 SCRA 275, 286-287) "To allow litigants to go beyond the Courts resolution and claim that the members acted 'with deliberate bad faith' and rendered (an) 'unjust resolution' in disregard or violation of the duty of their high office to act upon their own independent consideration and judgment of the matter at hand would be to destroy the authenticity, integrity and conclusiveness of such collegiate acts and resolutions and to disregard utterly' the presumption of regular performance' of official duty. To allow such collateral attack would destroy the separation of powers and undermine the role of the Supreme Court as the final arbiter of all justiciable disputes." (In Re Wenceslao Laureta, 148 SCRA 382, 419-420, March 12, 1987; italics in original) While the COMELEC is given specific powers and functions by the Constitution, the Commission does not have the same level and standing as the three great branches of government. Hence, erroneous and whimsical are all pretentions of equality, with those three, as unabashedly propositioned directly or indirectly -- in the COMELEC Order of 10 September 2003. FOURTH, citing the Separate Opinions of Justices Jose C. Vitug and, Vicente V. Mendoza in the same cases (G.R. Nos. 147589 and 147613), the COMELEC's First division peremptorily and erroneously charges the Chief Justice and the concerned Associate Justices with "judicial legislation" allegedly constituting contempt. To begin with, the, dissenting Justices, particularly Justice Vitug who is still a sitting Member, merely said that the ponencia "x x x may unwittingly be crossing the limits of judicial legislation." The Dissent advisedly used the words "may" and "unwittingly," but the First Division deviously misinterpreted these terms to mean a posit ive charge of judicial lawmaking. The main objection of the COMELEC's First Division which was earlier espoused by Justices Vitug and Mendoza during 'the Court's deliberation namely, that the majority ignored the alleged intent of the framers of the Constitution to open the party-list system to all groups, and not exclusively to the "marginalized and underrepresented," has already been adequately: addressed by the Court's 26 June 2001 Decision, from which we quote in part as follows:

"The Separate Opinions of our distinguished colleagues, Justices Jose C. Vitug and Vicente V. Mendoza, are anchored mainly on the supposed intent of the framers of the Constitution as culled, from their deliberations. "The fundamental principle in constitutional construction, however, is that the primary source from. Which to ascertain constitutional intent or purpose is the language of the provision itself. The presumption is that the words in which the constitutional provisions are couched express the' objective sought to be attained. In other words, verba legis still prevails. Only when the meaning of the words used .is unclear and equivocal should resort be made to extraneous aids of construction and interpretation, such as the proceedings of the Constitutional Commission or Convention, in order to shed light on and ascertain the true intent or purpose of the provision being construed. "Indeed, as cited in the Separate Opinion of Justice Mendoza, this Court stated in Civil Liberties Union v. Executive Secretary that 'the debates and proceedings of the constitutional convention [may be consulted in order to arrive at the reason and purpose of the resulting Constitution x x x only when other guides fail as said proceedings are powerless to vary the terms of the Constitution when the meaning is clear. Debates in the constitutional convention 'are of value as showing the views of the individual members, and as indicating the reason for their votes, but they give us no light as to the views of the large majority who did not talk, much less of the mass of our fellow citizens whose votes at the polls that instrument the force of fundamental law. We think it safer to construe the Constitution from what appears upon its face.' The proper interpretation therefore depends more on how it was understood by the people adopting it than in the framers' understanding thereof.' "Section 5, Article VI of the Constitution, relatives to the party-list system, is couched in clear terms: the mechanics of the system shall be provided by law. Pursuant thereto, Congress enacted RA 7941. In understanding and implementing party-list representation, we should therefore look at the law first. Only when we find its provisions ambiguous should the use of extraneous aids of construction be resorted to. "But, as discussed earlier, the intent of the law is obvious and clear from its plain words. Section 2 thereof unequivocally states that the party-list system of electing congressional representatives was designed to 'enable underrepresented sectors, organizations and parties, and who lack well-defined political' constituencies but who could contribute to the formulation and enactment of appropriate legislation that will benefit the nation as a whole x x x.' The criteria for participation is well defined. .Thus, there is no need for recourse to constitutional deliberations, not even to the proceedings of Congress. In any event, the framers deliberations merely express their individual opinions and are, at best, only persuasive in construing the meaning and purpose of the constitution or statute. "Be it remembered that the constitutionality or validity of Sections 2 and 5 of RA 7941 is hot an issue here. Hence, they remain parts of the law, which must be applied plainly and simply." (Citations omitted.) Also, the Opinions of' the two esteemed Justices were merely those of individual Members But the Court's Decision, Resolution and Order impugned by the COMELEC's First Division constituted the collective rulings of the Court, not individual opinions of those writing or voting for them. Unlike the members of the First Division, the dissenting Justices have graciously accepted without any complaint, rancor or tantrum these collective actions of the Court which, to quote the First Division itself, "form part of the legal system of the land." The fact that the dissenters touched on the subject of judicial legislation means that the issue had been thoroughly discussed by the Justices; but that after meticulous deliberation and judicious study, the Court by majority vote held that its carefully crafted Decision did not amount to usurpation of legislative' functions. Despite the foregoing explanation, the C0MELEC First Division still condemned the Court for .championing "the cause of the marginalized and underrepresented sectors [and] judicially [giving] them a better chance to win the elections by prescribing that "nominees x x x must [also] belong to marginalized and underrepresented sectors." It likewise contended that by disqualifying parties that received funding, from the government (and not just from foreign governments), the Court had unconstitutionally expanded the grounds for disqualification of party-list candidates. Again, our 26 June 2001 Decision has adequately taken up these concerns quite extensively. We need not repeat here the lengthy discussions therein, except to say that: (1) The Court's conclusion that the party-list system was intended for the marginalized and underrepresented was, painstakingly and carefully culled from the Constitution and the law. It was made only after, debate, discussion and a long study, as can be gleaned from even a cursory reading of our Decision. That there were dissents even among the justices themselves is proof enough of these spirited Deliberations. Finally, in consonance with the social justice principle espoused by the partly-list law, the Court said: "In the end, the role of the Comelec is to see to it that only those Filipinos who are marginalized and underrepresented' become members of Congress under the party list system, Filipino-style. "The intent of the Constitution is clear to give genuine power to the people, not only by giving more law to those who have less in life, but more so by enabling them to become veritable Lawmakers themselves Consistent with this intent, the policy of the implementing law, we repeat, is likewise clear 'to enable Filipino citizens belonging to marginalized and underrepresented sectors, organizations and parties, x x x, to become members of the House of Representatives.' Where the language of the law is clear, it must be applied according to its express terms. (Citation omitted)

Additionally, to stress the social Justice rationale of the law, the Court observed, as follows: "It is ironic, therefore, that the marginalized and underrepresented in our midst are the majority who wallow in poverty, destitution and infirmity It was for them that the party-list system was enacted - to give them not only genuine hope, but genuine power; to give them the opportunity to be elected and to represent the specific concerns of their constituencies, and simply to give them a direct voice in Congress and in the larger affairs of the State In its noblest sense, the patty-list system truly empowers the masses and ushers a new hope for genuine change. Verily, it invites those marginalized and under represented in the past - the farm hands, the fisher folk, the urban poor, even those in the underground movement to come out and participate, as indeed many of them came out and participated during the last elections. The State cannot now disappoint and frustrate them by disabling and desecrating this social justice vehicle." (2) Citing Section 2(4) of Article IX (B) of the Constitution and Article 261(o) of B.P. Big. 881, the Court held that "the participation of the government or its officials in the affairs of a party-list candidate is not only illegal and unfair to other parties, but also deleterious to the objective of the law to enable citizens belonging to marginalized and underrepresented sectors an d organizations to be elected to the House of Representatives." Thus, in formulating one of the guidelines for determining the qualifications of a party-list candidate, the Court ruled that the "party or organization must not be an adjunct of, or a project organized or an entity funded or assisted by, the government" FIFTH, the COMELEC'S First Division ruled that in the same cases (G.R. Nos. 147589 and 1 4761 3), the Court had allegedly degraded the Commission by making the latter a mere recommendatory body" and thus deprived it of its constitutional powers to enforce election laws. Again, this is pure legal heresy. In our 26 June 2001 Decision in those cases, a fact-finding task was delegated to the COMELEC: to determine which of the partylist candidates had complied with the eight-point guideline we had issued. This task had to be delegated because the Court is not a trier of facts, and' the Corn mission is' precisely the constitutional agency that is supposedly knowledgeable of election matters and the principal trier thereof. Clearly delineated in our Decision was the specific work remanded to the COMELEC fact-findings It did not involve, much less impair, the normal powers and duties of the poll body. To stress, its task of fact-finding was specific and limited, one that accrued only as a direct result of the disposition" in the said cases. In other words, its authority in this specific instance was coextensive only with that which, was delegated to it to implement the Decision. To its credit, it performed its delegated task without much ado and later submitted its three Compliance Reports, which were subsequently affirmed by this Court. Thus, the Court is now bewildered at these new sanctimonious perorations of the First Division, complaining about the COMELEC being allegedly "scale(d) down to a mere recommendatory body x x x virtually making it a mere rubber stamp" of the Court. These complaints had never been aired by the Commission en banc which, as earlier stated, had performed its fact-finding mission with commendable alacrity. Only when it overstepped as very limited and delegated fact-finding authority and usurped the Court's work in relation to the aforementioned cases (G.R. Nos. 147589 and 147613) did its attention have to be called by way of our conte mpt Resolution dated 28 February 2003. Incidentally, in this connection, the First Division is "astonished" at the fact that after penalizing the COMELEC Commissioners for their improvident issuance of their Resolution proclaiming certain party-list candidates, this Court did not void the proclamation. Plainly, the answer is contained in our 25 June 2003 Resolution: The affected parties deserve due process, and a decision or order affecting them may be issued only after they have completed their arguments on the legal effects of the wrongful proclamation Indeed, there is a distinction between holding in contempt the authors of an arbitrary proclamation resolution, on the one hand, and, on the other, unseating those who have been proclaimed, have taken their seats in Congress, and have begun performing their lawmaking duties. Has the First Division, wallowing in its own tantrums, overlooked this significant difference? SIXTH. The First Division also raised a big fuss about the alleged deprivation of due process and equal protection. Again, the Honorable Division may have overlooked the fact that the basic requirement of due process is the opportunity to be heard. The COMELEC has had more than as just share of that opportunity. Prior to the Court's imposition of a penalty on them, the COMELEC's Chairman and Members were asked to show cause why they should not be cited for contempt via our rather lengthy Resolution dated December 17, 2002. And they responded and tried vainly, it turned out in the end to justify their contumacious actions. Too, they were heard via their Motion for Reconsideration which, after due deliberation, was denied by this Court. As already stated, all seven Members (including the Chairman) of the Comelec paid the fine. Why are the three Members of, the First Division a minority in the banc of seven now whining about their liability for contempt? SEVENTH. That the official actions of this Court may be commented on or even criticized is a right granted by the Constitution. But criticism that takes the form of malicious insinuation, brazen ridicule or capricious innuendo has no place in a formal resolution of an agency that seeks wrongly to hold in contempt this Court's Members for issuing decisions and orders that have allegedly interfered with its proceedings. This truism remains clear and untrammeled in our system of government, no matter how extravagantly the Members of the Commission First Division may regard their own intellectual capacities and how poorly those of others. They must bear in mind that there is only one Supreme Court to which all judicial and quasi-judicial agencies must take their bearings. By their oath of office, they are bound to respect and obey its decisions and orders, even if they may not agree with

them. They need only to be reminded of the following dictum which, though issued by the Court many years ago, still holds sway up to now: "We concede that a lawyer may think highly of his intellectual, endowment. That is his privilege. And, he may suffer frustrat ion at what he feels is others' lack of it. That is his misfortune. x x x (S)uch frame of mind, however, should not be allowed to harden into a belief that he may attack a court's decision in words calculated to jettison the time-honored aphorism that courts are the temples of right." (Rheem of the Philippines vs. Ferrer, 20 SCRA 441, 444, June 26, 1967) WHEREFORE, the Resolution promulgated by the First Division of the Commission on Elections in EM-03-010 and EM-03-01 1, is NOTED insofar as it DISMISSED the Petitions for Contempt; but its "reasons given" therefor are DECLARED UTTERLY BASELESS for having been 'palpably issued without jurisdiction, being in clear contravention of the Constitution and, of our Resolution dated 26 August 2003. Inasmuch as "the COMELEC's First Division forwarded September 2003 Resolution to the House of Representatives, let a copy of this unanimous en banc' Resolution of the Court be sent also to the House of Representatives as well as to- the Chairman of the Commission on Elections. Very truly yours, LUZVIMINDA D. PUNO

DENNIS A. B. FUNA, Petitioner,

G.R. No. 192791 Present: CORONA, C.J., CARPIO, VELASCO, JR., LEONARDO-DE CASTRO, BRION, PERALTA, BERSAMIN, DEL CASTILLO, ABAD, VILLARAMA, JR., PEREZ, MENDOZA, SERENO, REYES, and PERLAS-BERNABE, JJ. Promulgated:

- versus -

THE CHAIRMAN, COMMISSION ON AUDIT, REYNALDO A. VILLAR, Respondent.

April 24, 2012 x-----------------------------------------------------------------------------------------x DECISION VELASCO, JR., J.: In this Petition for Certiorari and Prohibition under Rule 65, Dennis A. B. Funa challenges the constitutionality of the appointment of Reynaldo A. Villar as Chairman of the Commission on Audit and accordingly prays that a judgment issue declaring the unconstitutionality of the appointment. The facts of the case are as follows: On February 15, 2001, President Gloria Macapagal-Arroyo (President Macapagal-Arroyo) appointed Guillermo N. Carague (Carague) as Chairman of the Commission on Audit (COA) for a term of seven (7) years, pursuant to the 1987

Constitution.[1] Caragues term of office started on February 2, 2001 to end on February 2, 2008. Meanwhile, on February 7, 2004, President Macapagal-Arroyo appointed Reynaldo A. Villar (Villar) as the third member of the COA for a term of seven (7) years starting February 2, 2004 until February 2, 2011. Following the retirement of Carague on February 2, 2008 and during the fourth year of Villar as COA Commissioner, Villar was designated as Acting Chairman of COA from February 4, 2008 to April 14, 2008. Subsequently, on April 18, 2008, Villar was nominated and appointed as Chairman of the COA. Shortly thereafter, on June 11, 2008, the Commission on Appointments confirmed his appointment. He was to serve as Chairman of COA, as expressly indicated in the appointment papers, until the expiration of the original term of his office as COA Commissioner or on February 2, 2011. Challenged in this recourse, Villar, in an obvious bid to lend color of title to his hold on the chairmanship, insists that his appointment as COA Chairman accorded him a fresh term of seven (7) years which is yet to lapse. He would argue, in fine, that his term of office, as such chairman, is up to February 2, 2015, or 7 years reckoned from February 2, 2008 when he was appointed to that position. Meanwhile, Evelyn R. San Buenaventura (San Buenaventura) was appointed as COA Commissioner to serve the unexpired term of Villar as Commissioner or up to February 2, 2011. Before the Court could resolve this petition, Villar, via a letter dated February 22, 2011 addressed to President Benigno S. Aquino III, signified his intention to step down from office upon the appointment of his replacement. True to his word, Villar vacated his position when President Benigno Simeon Aquino III named Ma. Gracia Pulido-Tan (Chairman Tan) COA Chairman. This development has rendered this petition and the main issue tendered therein moot and academic. A case is considered moot and academic when its purpose has become stale, or when it ceases to present a justiciable controversy owing to the onset of supervening events,[3] so that a resolution of the case or a declaration on the issue would be of no practical value or use.[4] In such instance, there is no actual substantial relief which a petitioner would be entitled to, and which will anyway be negated by the dismissal of the basic petition.[5] As a general rule, it is not within Our charge and function to act upon and decide a moot case. However, in David v.
[2]

Macapagal-Arroyo,[6] We acknowledged and accepted certain exceptions to the issue of mootness, thus:
The moot and academic principle is not a magical formula that can automatically dissuade the courts in resolving a case. Courts will decide cases, otherwise moot and academic, if: first, there is a grave violation of the Constitution, second, the exceptional character of the situation and the paramount public interest is involved, third, when constitutional issue raised requires formulation of controlling principles to guide the bench, the bar, and the public, and fourth, the case is capable of repetition yet evading review.

Although deemed moot due to the intervening appointment of Chairman Tan and the resignation of Villar, We consider the instant case as falling within the requirements for review of a moot and academic case, since it asserts at least four exceptions to the mootness rule discussed in David, namely: there is a grave violation of the Constitution; the case involves a situation of exceptional character and is of paramount public interest; the constitutional issue raised requires the formulation of controlling principles to guide the bench, the bar and the public; and the case is capable of repetition yet evading review.[7] The situation presently obtaining is definitely of such exceptional nature as to necessarily call for the promulgation of principles that will henceforth guide the bench, the bar and the public should like circumstance arise. Confusion in similar future situations would be smoothed out if the contentious issues advanced in the instant case are resolved straightaway and settled definitely. There are times when although the dispute has disappeared, as in this case, it nevertheless cries out to be addressed. To borrow from Javier v. Pacificador,[8] Justice demands that we act then, not only for the vindication of the outraged right, though gone, but also for the guidance of and as a restraint in the future. Both procedural and substantive issues are raised in this proceeding. The procedural aspect comes down to the question of whether or not the following requisites for the exercise of judicial review of an executive act obtain in this petition, viz: (1) there must be an actual case or justiciable controversy before the court; (2) the question before it must be ripe for adjudication; (3) the person challenging the act must be a proper party; and (4) the issue of constitutionality must be raised at the earliest opportunity and must be the very litis mota of the case.[9]

To Villar, all the requisites have not been met, it being alleged in particular that petitioner, suing as a taxpayer and citizen, lacks the necessary standing to challenge his appointment.[10] On the other hand, the Office of the Solicitor General (OSG), while recognizing the validity of Villars appointment for the period ending February 11, 2011, has expressed the view that petitioner should have had filed a petition for declaratory relief or quo warranto under Rule 63 or Rule 66, respectively, of the Rules of Court instead of certiorari under Rule 65. Villars posture on the absence of some of the mandatory requisites for the exercise by the Court of its power of judicial review must fail. As a general rule, a petitioner must have the necessary personality or standing (locus standi) before a court will recognize the issues presented. In Integrated Bar of the Philippines v. Zamora, We defined locus standi as:
x x x a personal and substantial interest in the case such that the party has sustained or will sustain a direct injury as a result of the governmental act that is being challenged. The term interest means a material interest, an interest in issue affected by the decree, as distinguished from mere interest in the question involved, or a mere incidental interest. The gist of the question of standing is whether a party alleges such personal stake in the outcome of the controversy as to assure the concrete adverseness which sharpens the presentation of issues upon which the court depends for illumination of difficult constitutional questions.[11]

To have legal standing, therefore, a suitor must show that he has sustained or will sustain a direct injury as a result of a government action, or have a material interest in the issue affected by the challenged official act.[12] However, the Court has time and again acted liberally on the locus standi requirements and has accorded certain individuals, not otherwise directly injured, or with material interest affected, by a Government act, standing to sue provided a constitutional issue of critical significance is at stake.[13] The rule on locus standi is after all a mere procedural technicality in relation to which the Court, in a catena of cases involving a subject of transcendental import, has waived, or relaxed, thus allowing non-traditional plaintiffs, such as concerned citizens, taxpayers, voters or legislators, to sue in the public interest, albeit they may not have been personally injured by the operation of a law or any other government act.[14] In David, the Court laid out the bare minimum norm before the so-called non-traditional suitors may be extended standing to sue, thusly:

1.) For taxpayers, there must be a claim of illegal disbursement of public funds or that the tax measure is unconstitutional; 2.) For voters, there must be a showing of obvious interest in the validity of the election law in question; 3.) For concerned citizens, there must be a showing that the issues raised are of transcendental importance which must be settled early; and 4.) For legislators, there must be a claim that the official action complained of infringes their prerogatives as legislators.

This case before Us is of transcendental importance, since it obviously has far-reaching implications, and there is a need to promulgate rules that will guide the bench, bar, and the public in future analogous cases. We, thus, assume a liberal stance and allow petitioner to institute the instant petition. Anent the aforestated posture of the OSG, there is no serious disagreement as to the propriety of the availment of certiorari as a medium to inquire on whether the assailed appointment of respondent Villar as COA Chairman infringed the constitution or was infected with grave abuse of discretion. For under the expanded concept of judicial review under the 1987 Constitution, the corrective hand of certiorari may be invoked not only to settl e actual controversies involving rights which are legally demandable and enforceable, but also to determine whether or not there has been a grave abuse of discretion amounting to lack or excess of jurisdiction on the part of any branch or instrumentality of the government.[15] Grave abuse of discretion denotes:
such capricious and whimsical exercise of judgment as is equivalent to lack of jurisdiction, or, in other words, where the power is exercised in an arbitrary or despotic manner by reason of passion or personal hostility, and it must be so patent and gross as to amount to an evasion of positive duty or to a virtual refusal to perform the duty enjoined or to act in contemplation of law.[16]

We find the remedy of certiorari applicable to the instant case in view of the allegation that then President Macapagal-Arroyo exercised her appointing power in a manner constituting grave abuse of discretion. This brings Us to the pivotal substantive issue of whether or not Villars appointment as COA Chairman, while sitting in that body and after having served for four (4) years of his seven (7) year term as COA commissioner, is valid in light

of the term limitations imposed under, and the circumscribing concepts tucked in, Sec. 1 (2), Art. IX(D) of the Constitution, which reads:
(2) The Chairman and Commissioners [on Audit] shall be appointed by the President with the consent of the Commission on Appointmentsfor a term of seven years without reappointment. Of those first appointed, the Chairman shall hold office for seven years, one commissioner for five years, and the other commissioner for three years, without reappointment. Appointment to any vacancy shall be only for the unexpired portion of the term of the predecessor. In no case shall any member be appointed or designated in a temporary or acting capacity. (Emphasis added.)[17]

And if valid, for how long can he serve? At once clear from a perusal of the aforequoted provision are the defined restricting features in the matter of the composition of COA and the appointment of its members (commissioners and chairman) designed to safeguard the independence and impartiality of the commission as a body and that of its individual members.[18] These are, first, the rotational plan or the staggering term in the commission membership, such that the appointment of commission members subsequent to the original set appointed after the effectivity of the 1987 Constitution shall occur every two years; second, the maximum but a fixed termlimit of seven (7) years for all commission members whose appointments came about by reason of the expiration of term save the aforementioned first set of appointees and those made to fill up vacancies resulting from certain causes; third, the prohibition against reappointment of commission members who served the full term of seven years or of members first appointed under the Constitution who served their respective terms of office; fourth, the limitation of the term of a member to the unexpired portion of the term of the predecessor; and fifth, the proscription against temporary appointment or designation. To elucidate on the mechanics of and the adverted limitations on the matter of COA-member appointments with fixed but staggered terms of office, the Court lays down the following postulates deducible from pertinent constitutional provisions, as construed by the Court: 1. The terms of office and appointments of the first set of commissioners, or the seven, five and three-year termers referred to in Sec. 1(2), Art. IX(D) of the

Constitution, had already expired. Hence, their respective terms of office find relevancy for the most part only in understanding the operation of the rotational plan. In Gaminde v. Commission on Audit,[19] the Court described how the smooth functioning of the rotational system contemplated in said and like provisions covering the two other independent commissions is achieved thru the staggering of terms:
x x x [T]he terms of the first Chairmen and Commissioners of the Constitutional Commissions under the 1987 Constitution must start on a common date [February 02, 1987, when the 1987 Constitution was ratified] irrespective of the variations in the dates of appointments and qualifications of the appointees in order that the expiration of the first terms of seven, five and three years should lead to the regular recurrence of the two-year interval between the expiration of the terms. x x x In case of a belated appointment, the interval between the start of the terms and the actual appointment shall be counted against the appointee.[20] (Italization in the original; emphasis added.)

Early on, in Republic v. Imperial,[21] the Court wrote of two conditions, both indispensable to [the] workability of the rotational plan. These conditions may be described as follows: (a) that the terms of the first batch of commissioners should start on a common date; and (b) that any vacancy due to death, resignation or disability before the expiration of the term should be filled only for the unexpired balance of the term. Otherwise, Imperial continued, the regularity of the intervals between appointments would be destroyed. There appears to be near unanimity as to the purpose/s of the rotational system, as originally conceived, i.e., to place in the commission a new appointee at a fixed interval (every two years presently), thus preventing a four-year administration appointing more than one permanent and regular commissioner,[22] or to borrow from Commissioner Monsod of the 1986 CONCOM, to prevent one person (the President of the Philippines) from dominating the commissions.[23] It has been declared too that the rotational plan ensures continuity in, and, as indicated earlier, secure the independence of, the commissions as a body.[24]

2. An appointment to any vacancy in COA, which arose from an expiration of a term, after the first chairman and commissioners appointed under the 1987 Constitution have bowed out, shall, by express constitutional fiat, be for a term of seven (7) years, save when the appointment is to fill up a vacancy for the corresponding unserved term of an outgoing member. In that case, the appointment shall only be for the unexpired portion of the departing commissioners term of office. There can only be an unexpired portion when, as a direct result of his demise, disability, resignation or impeachment, as the case may be, a sitting member is unable to complete his term of office.[25] To repeat, should the vacancy arise out of the expiration of the term of the incumbent, then there is technically no unexpired portion to speak of. The vacancy is for a new and complete seven-year term and, ergo, the appointment thereto shall in all instances be for a maximum seven (7) years. 3. Sec. 1(2), Art. IX(D) of the 1987 Constitution prohibits the reappointment of a member of COA after his appointment for seven (7) years. Writing for the Court in Nacionalista Party v. De Vera,[26] a case involving the promotion of then COMELEC Commissioner De Vera to the position of chairman, then Chief Justice Manuel Moran called attention to the fact that the prohibition against reappointment comes as a continuation of the requirement that the commissionersreferring to members of the COMELEC under the 1935 Constitutionshall hold office for a term of nine (9) years. This sentence formulation imports, notes Chief Justice Moran, that reappointment is not an absolute prohibition. 4. The adverted system of regular rotation or the staggering of appointments and terms in the membership for all three constitutional commissions, namely the COA, Commission on Elections (COMELEC) and Civil Service Commission (CSC) found in the 1987 Constitution was patterned after the amended 1935 Constitution for the appointment of the members of COMELEC[27] with this difference: the 1935 version entailed a regular interval of vacancy every three (3) years, instead of the present two (2) years and there was no express provision on appointment to any vacancy being limited to the unexpired portion of the his predecessors term. The model 1935 provision reads:
Section 1. There shall be an independent Commission on Elections composed of a Chairman and two other members to be appointed by the President with the consent of the Commission on Appointments, who shall hold office for a term of nine years and may

not be reappointed. Of the Members of the Commission first appointed, one shall hold office for nine years, another for six years and the third for three years. x x x

Petitioner now asseverates the view that Sec. 1(2), Art. IX(D) of the 1987 Constitution proscribes reappointment of any kind within the commission, the point being that a second appointment, be it for the same position (commissioner to another position of commissioner) or upgraded position (commissioner to chairperson) is a prohibited reappointment and is a nullity ab initio. Attention is drawn in this regard to the Courts disposition in Matibag v. Benipayo.[28] Villars promotional appointment, so it is argued, is void from the start, constituting as it did a reappointment enjoined by the Constitution, since it actually needed another appointment to a different office and requiring another confirmation by the Commission on Appointments. Central to the adjudication of the instant petition is the correct meaning to be given to Sec. 1(2), Article IX(D) of the Constitution on the ban against reappointment in relation to the appointment issued to respondent Villar to the position of COA Chairman. Without question, the parties have presented two (2) contrasting and conflicting positions. Petitioner contends that Villars appointment is proscribed by the constitutional ban on reappointment under the aforecited constitutional provision. On the other hand, respondent Villar initially asserted that his appointment as COA Chairman is valid up to February 2, 2015 pursuant to the same provision. The Court finds petitioners position bereft of merit. The flaw lies in regarding the word reappointment as, in context, embracing any and all species of appointment. The rule is that if a statute or constitutional provision is clear, plain and free from ambiguity, it must be given its literal meaning and applied without attempted interpretation.[29] This is known as the plain meaning rule enunciated by the maximverba legis non est recedendum, or from the words of a statute there should be no departure.[30] The primary source whence to ascertain constitutional intent or purpose is the language of the provision itself.[31] If possible, the words in the Constitution

must be given their ordinary meaning, save where technical terms are employed. J.M. Tuason & Co., Inc. v. Land Tenure Administration illustrates the verbal legis rule in this wise:
We look to the language of the document itself in our search for its meaning. We do not of course stop there, but that is where we begin. It is to be assumed that the words in which constitutional provisions are couched express the objective sought to be attained. They are to be given their ordinary meaning except where technical terms are employed in which case the significance thus attached to them prevails. As the Constitution is not primarily a lawyers document, it being essential for the rule of law to obtain that it should ever be present in the peoples consciousness, its language as much as possible should be understood in the sense they have in common use. What it says according to the text of the provision to be construed compels acceptance and negates the power of the courts to alter it, based on the postulate that the framers and the people mean what they say. Thus there are cases where the need for construction is reduced to a minimum.[32] (Emphasis supplied.)

Let us dissect and examine closely the provision in question:

(2) The Chairman and Commissioners [on Audit] shall be appointed by the President with the consent of the Commission on Appointments for a term of seven years without reappointment. Of those first appointed, the Chairman shall hold office for seven years, one commissioner for five years, and the other commissioner for three years, without reappointment. Appointment to any vacancy shall be only for the unexpired portion of the term of the predecessor. x x x (Emphasis added.)

The first sentence is unequivocal enough. The COA Chairman shall be appointed by the President for a term of seven years, and if he has served the full term, then he can no longer be reappointed or extended another appointment. In the same vein, a Commissioner who was appointed for a term of seven years who likewise served the full term is barred from being reappointed. In short, once the Chairman or Commissioner shall have served the full term of seven years, then he can no longer be reappointed to either the position of Chairman or Commissioner. The obvious intent of the framers is to prevent the president from

dominating the Commission by allowing him to appoint an additional or two more commissioners. The same purpose obtains in the second sentence of Sec. 1(2). The Constitutional Convention barred reappointment to be extended to commissionermembers first appointed under the 1987 Constitution to prevent the President from controlling the commission. Thus, the first Chairman appointed under the 1987 Constitution who served the full term of seven years can no longer be extended a reappointment. Neither can the Commissioners first appointed for the terms of five years and three years be eligible for reappointment. This is the plain meaning attached to the second sentence of Sec. 1(2), Article IX(D). On the other hand, the provision, on its face, does not prohibit a promotional appointment from commissioner to chairman as long as the commissioner has not served the full term of seven years, further qualified by the third sentence of Sec. 1(2), Article IX (D) that the appointment to any vacancy shall be only for the unexpired portion of the term of the predecessor. In addition, such promotional appointment to the position of Chairman must conform to the rotational plan or the staggering of terms in the commission membership such that the aggregate of the service of the Commissioner in said position and the term to which he will be appointed to the position of Chairman must not exceed seven years so as not to disrupt the rotational system in the commission prescribed by Sec. 1(2), Art. IX(D). In conclusion, there is nothing in Sec. 1(2), Article IX(D) that explicitly precludes a promotional appointment from Commissioner to Chairman, provided it is made under the aforestated circumstances or conditions. It may be argued that there is doubt or ambiguity on whether Sec. 1(2), Art. IX(D), as couched, allows a promotional appointment from Commissioner to Chairman. Even if We concede the existence of an ambiguity, the outcome will remain the same. J.M. Tuason & Co., Inc.[33] teaches that in case of doubt as to the import and react of a constitutional provision, resort should be made to extraneous aids of construction, such as debates and proceedings of the Constitutional Convention, to shed light on and ascertain the intent of the framers or the purpose of the provision being construed. The understanding of the Convention as to what was meant by the terms of the constitutional provision which was the subject of the deliberation goes a long

way toward explaining the understanding of the people when they ratified it. The Court applied this principle in Civil Liberties Union v. Executive Secretary:
A foolproof yardstick in constitutional construction is the intention underlying the provision under consideration. Thus, it has been held that the Court in construing a Constitution should bear in mind the object sought to be accomplished by its adoption, and the evils, if any, sought to be prevented or remedied. A doubtful provision will be examined in the light of the history of the times, and the condition and circumstances under which the Constitution was framed. The object is to ascertain the reason which induced the framers of the Constitution to enact the particular provision and the purpose sought to be accomplished thereby, in order to construe the whole as to make the words consonant to that reason and calculated to effect that purpose.[34] (Emphasis added.)

And again in Nitafan v. Commissioner on Internal Revenue:

x x x The ascertainment of that intent is but in keeping with the fundamental principle of constitutional construction that the intent of the framers of the organic law and of the people adopting it should be given effect. The primary task in constitutional construction is to ascertain and thereafter assure the realization of the purpose of the framers and of the people in the adoption of the Constitution. It may also be safely assumed that the people in ratifying the Constitution were guided mainly by the explanation offered by the framers.[35] (Emphasis added.)

Much weight and due respect must be accorded to the intent of the framers of the Constitution in interpreting its provisions. Far from prohibiting reappointment of any kind, including a situation where a commissioner is upgraded to the position of chairman, the 1987 Constitution in fact unequivocally allows promotional appointment, but subject to defined parameters. The ensuing exchanges during the deliberations of the 1986 Constitutional Commission (CONCOM) on a draft proposal of what would eventually be Sec. 1(2), Art. IX(D) of the present Constitution amply support the thesis that a promotional appointment is allowed provided no one may be in the COA for an aggregate threshold period of 7 years:
MS. AQUINO: In the same paragraph, I would propose an amendment x x x. Between x x x the sentence which begins with In no

case, insert THE APPOINTEE SHALL IN NO CASE SERVE AN AGGREGATE PERIOD OF MORE THAN SEVEN YEARS. I was thinking that this may approximate the situation wherein a commissioner is first appointed as chairman. I am willing to withdraw that amendment if there is a representation on the part of the Committee that there is an implicit intention to prohibit a term that in the aggregate will exceed more than seven years. If that is the intention, I am willing to withdraw my amendment. MR. MONSOD: If the [Gentlewoman] will read the whole Article, she will notice that there is no reappointment of any kind and, therefore, as a whole there is no way somebody can serve for more than seven years. The purpose of the last sentence is to make sure that this does not happen by including in the appointment both temporary and acting capacities. MS. AQUINO. Yes. Reappointment is fine; that is accounted for. But I was thinking of a situation wherein a commissioner is upgraded to a position of chairman. But if this provision is intended to cover that kind of situation, then I am willing to withdraw my amendment. MR. MONSOD. It is covered. MR. FOZ. There is a provision on line 29 precisely to cover that situation. It states: Appointment to any vacancy shall be only for the unexpired portion of the predecessor. In other words, if there is upgrading of position from commissioner to chairman, the appointee can serve only the unexpired portion of the term of the predecessor. MS. AQUINO: But we have to be very specific x x x because it might shorten the term because he serves only the unexpired portion of the term of the predecessor. MR. FOZ: He takes it at his own risk. He knows that he will only have to serve the unexpired portion of the term of the predecessor. (Emphasis added.)[36]

The phrase upgrading of position found in the underscored portion unmistakably shows that Sec. 1(2), Art. IX(D) of the 1987 Constitution, for all its

caveat against reappointment, does not per se preclude, in any and all cases, the promotional appointment or upgrade of a commissioner to chairman, subject to this proviso: the appointees tenure in office does not exceed 7 years in all. Indeed, such appointment does not contextually come within the restricting phrase without reappointment twice written in that section. Delegate Foz even cautioned, as a matter of fact, that a sitting commissioner accepting a promotional appointment to fill up an unexpired portion pertaining to the higher office does so at the risk of shortening his original term. To illustrate the Fozs concern: assume that Carague left COA for reasons other than the expiration of his threshold 7-year term and Villar accepted an appointment to fill up the vacancy. In this situation, the latter can only stay at the COA and served the unexpired portion of Caragues unexpired term as departing COA Chairman, even if, in the process, his (Villars) own 7-yearterm as COA commissioner has not yet come to an end. In this illustration, the inviolable regularity of the intervals between appointments in the COA is preserved. Moreover, jurisprudence tells us that the word reappointment means a second appointment to one and the same office.[37] As Justice Arsenio Dizon (Justice Dizon) aptly observed in his dissent in Visarra v. Miraflor,[38] the constitutional prohibition against the reappointment of a commissioner refers to his second appointment to the same office after holding it for nine years.[39] As Justice Dizon observed, [T]he occupant of an office obviously needs no such second appointment unless, for some valid cause, such as the expiration of his term or resignation, he had ceased to be the legal occupant thereof. [40] The inevitable implication of Justice Dizons cogent observation is tha t a promotion from commissioner to chairman, albeit entailing a second appointment, involves a different office and, hence, not, in the strict legal viewpoint, a reappointment. Stated a bit differently, reappointment refers to a movement to one and the s ame office. Necessarily, a movement to a different position within the commission (from Commissioner to Chairman) would constitute an appointment, or a second appointment, to be precise, but not reappointment. A similar opinion was expressed in the same Visarra case by the concurring Justice Angelo Bautista, although he expressly alluded to a promotional appointment as not being a prohibited appointment under Art. X of the 1935 Constitution. Petitioners invocation of Matibag as additional argument to contest the constitutionality of Villars elevation to the COA chairmanship is inapposite. In Matibag, then President Macapagal-Arroyo appointed, ad interim, Alfredo

Benipayo as COMELEC Chairman and Resurreccion Borra and Florentino Tuason as Commissioners, each for a term of office of seven (7) years. All three immediately took their oath of, and assumed, office. These appointments were twice renewed because the Commission on Appointments failed to act on the first two ad interim appointments. Via a petition for prohibition, some disgruntled COMELEC officials assail as infirm the appointments of Benipayo, et al. Matibag lists (4) four situations where the prohibition on reappointment would arise, or to be specific, where the proviso [t]he Ch airman and the Commissioners shall be appointed x x x for a term of seven years without reappointment shall apply. Justice Antonio T. Carpio declares in his dissent that Villars appointment falls under a combination of two of the four situations. Conceding for the nonce the correctness of the premises depicted in the situations referred to in Matibag, that case is of doubtful applicability to the instant petition. Not only is it cast against a different milieu, but the lis mota of the case, as expressly declared in the main opinion, is the very constitutional issue raised by petitioner.[41] And what is/are this/these issue/s? Only two defined issues in Matibag are relevant, viz: (1) the nature of an ad interim appointment and subsumed thereto the effect of a by-passed ad interim appointment; and (2) the constitutionality of renewals of ad interim appointments. The opinion defined these issues in the following wise: Petitioner [Matibag] filed the instant petition questioning the appointment and the right to remain in office of Benipayo, Borra and Tuason as Chairman and Commissioners of the COMELEC, respectively. Petitioner claims that the ad interim appointments of Benipayo, et al. violate the constitutional provisions on the independence of COMELEC, as well as on the prohibitions on temporary appointments and reappointments of its Chairman and members. As may distinctly be noted, an upgrade or promotion was not in issue in Matibag. We shall briefly address the four adverted situations outlined in Matibag, in which, as there urged, the uniform proviso on no reappointment after a member of any of the three constitutional commissions is appointed for a term of seven (7) yearsshall apply. Matibag made the following formulation:
The first situation is where an ad interim appointee after confirmation by the Commission on Appointments serves his full 7-year term. Such person cannot be reappointed whether as a member or as chairman because he will then be actually serving more than seven (7) years.

The second situation is where the appointee, after confirmation, serves part of his term and then resigns before his seven-year term of office ends. Such person cannot be reappointed whether as a member or as chair to a vacancy arising from retirement because a reappointment will result in the appointee serving more than seven years. The third situation is where the appointee is confirmed to serve the unexpired portion of someone who died or resigned, and the appointee completes the unexpired term. Such person cannot be reappointed whether as a member or as chair to a vacancy arising from retirement because a reappointment will result in the appointee also serving more than seven (7) years. The fourth situation is where the appointee has previously served a term of less than seven (7) years, and a vacancy arises from death or resignation. Even if it will not result in his serving more than seven years, a reappointment of such person to serve an unexpired term is also prohibited because his situation will be similar to those appointed under the second sentence of Sec. 1(20), Art. IX-C of the Constitution [referring to the first set of appointees (the 5 and 3 year termers) whose term of office are less than 7 years but are barred from being reappointed under any situation].[42] (Words in brackets and emphasis supplied.)

The situations just described constitute an obiter dictum, hence without the force of adjudication, for the corresponding formulation of the four situations was not in any way necessary to resolve any of the determinative issues specifically defined inMatibag. An opinion entirely unnecessary for the decision of the case or one expressed upon a point not necessarily involved in the determination of the case is an obiter.[43] There can be no serious objection to the scenarios depicted in the first, second and third situations, both hewing with the proposition that no one can stay in any of the three independent commissions for an aggregate period of more than seven (7) years. The fourth situation, however, does not commend itself for concurrence inasmuch as it is basically predicated on the postulate that reappointment, as earlier herein defined, of any kind is prohibited under any and all circumstances. To reiterate, the word reappointment means a second appointment to one and the same office; and Sec. 1(2), Art. IX(D) of the 1987 Constitution and similar provisions do not peremptorily prohibit the promotional appointment of a commissioner to chairman, provided the new appointees tenure

in both capacities does not exceed seven (7) years in all. The statements in Matibagenunciating the ban on reappointment in the aforecited fourth situation, perforce, must be abandoned, for, indeed, a promotional appointment from the position of Commissioner to that of Chairman is constitutionally permissible and not barred by Sec. 1(2), Art. IX (D) of the Constitution. One of the aims behind the prohibition on reappointment, petitioner urges, is to ensure and preserve the independence of COA and its members, [44] citing what the dissenting Justice J.B.L Reyes wrote in Visarra, that once appointed and confirmed, the commissioners should be free to act as their conscience demands, without fear of retaliation or hope or reward. Pursued to its logical conclusion, petitioners thesis is that a COA member may no longer act with independence if he or she can be rewarded with a promotion or appointment, for then he or she will do the bidding of the appointing authority in the hope of being promoted or reappointed. The unstated reason behind Justice J.B.L. Reyes counsel is that independence is really a matter of choice. Without taking anything away from the gem imparted by the eminent jurist, what Chief Justice Moran said on the subject of independence is just as logically sound and perhaps even more compelling, as follows:
A Commissioner, hopeful of reappointment may strive to do good. Whereas, without that hope or other hope of material reward, his enthusiasm may decline as the end of his term approaches and he may even lean to abuses if there is no higher restrain in his moral character. Moral character is no doubt the most effective safeguard of independence. With moral integrity, a commissioner will be independent with or without the possibility of reappointment.[45]

The Court is likewise unable to sustain Villars proposition that his promotional appointment as COA Chairman gave him a completely fresh 7-year termfrom February 2008 to February 2015given his four (4)-year tenure as COA commissioner devalues all the past pronouncements made by this Court, starting in De Vera, then Imperial, Visarra, and finally Matibag. While there had been divergence of opinion as to the import of the word reappointment, there has been unanimity on the dictum that in no case can one be a COA member, either as chairman or commissioner, or a mix of both positions, for an aggregate term of more than 7 years. A contrary view would allow a circumvention of the aggregate 7-year service limitation and would be constitutionally offensive as it would wreak

havoc to the spirit of the rotational system of succession. Imperial, passing upon the rotational system as it applied to the then organizational set-up of the COMELEC, stated:
The provision that of the first three commissioners appointed one shall hold office for 9 years, another for 6 years and the third for 3 years, when taken together with the prescribed term of office for 9 years without reappointment, evinces a deliberate plan to have a regular rotation or cycle in the membership of the commission, by having subsequent members appointable only once every three years.[46]

To be sure, Villars appointment as COA Chairman partakes of a promotional appointment which, under appropriate setting, would be outside the purview of the constitutional reappointment ban in Sec 1(2), Art. IX(D) of the Constitution. Nonetheless, such appointment, even for the term appearing in the underlying appointment paper, ought still to be struck down as unconstitutional for the reason as shall be explained. Consider: In a mandatory tone, the aforecited constitutional provision decrees that the appointment of a COA member shall be for a fixed 7-year term if the vacancy results from the expiration of the term of the predecessor. We reproduce in its pertinent part the provision referred to:
(2) The Chairman and Commissioners [on Audit] shall be appointed x x x for a term of seven years without reappointment. x x xAppointment to any vacancy shall be only for the unexpired portion of the term of the predecessor. x x x

Accordingly, the promotional appointment as COA Chairman of Villar for a stated fixed term of less than seven (7) years is void for violating a clear, but mandatory constitutional prescription. There can be no denying that the vacancy in the position of COA chairman when Carague stepped down in February 2, 2008 resulted from the expiration of his 7-year term. Hence, the appointment to the vacancy thus created ought to have been one for seven (7) years in line with the verbal legis approach[47] of interpreting the Constitution. It is to be understood, however, following Gaminde, that in case of a belated appointment, the interval between the start of the term and the actual appointment shall be counted against the 7-year term of the appointee. Posing, however, as an insurmountable barrier to

a full 7-year appointment for Villar is the rule against one serving the commission for an aggregate term of more than seven (7) years. Where the Constitution or, for that matter, a statute, has fixed the term of office of a public official, the appointing authority is without authority to specify in the appointment a term shorter or longer than what the law provides. If the vacancy calls for a full seven-year appointment, the President is without discretion to extend a promotional appointment for more or for less than seven (7) years. There is no in between. He or she cannot split terms. It is not within the power of the appointing authority to override the positive provision of the Constitution which dictates that the term of office of members of constitutional bodies shall be seven (7) years.[48] A contrary reasoning would make the term of office to depend up on the pleasure or caprice of the [appointing authority] and not upon the will [of the framers of the Constitution] of the legislature as expressed in plain and undoubted language in the law.[49] In net effect, then President Macapagal-Arroyo could not have had, under any circumstance, validly appointed Villar as COA Chairman, for a full 7-year appointment, as the Constitution decrees, was not legally feasible in light of the 7year aggregate rule. Villar had already served 4 years of his 7-year term as COA Commissioner. A shorter term, however, to comply with said rule would also be invalid as the corresponding appointment would effectively breach the clear purpose of the Constitution of giving to every appointee so appointed subsequent to the first set of commissioners, a fixed term of office of 7 years. To recapitulate, a COA commissioner like respondent Villar who serves for a period less than seven (7) years cannot be appointed as chairman when such position became vacant as a result of the expiration of the 7-year term of the predecessor (Carague). Such appointment to a full term is not valid and constitutional, as the appointee will be allowed to serve more than seven (7) years under the constitutional ban. On the other hand, a commissioner who resigned before serving his 7- year term can be extended an appointment to the position of chairman for the unexpired period of the term of the latter, provided the aggregate of the period he served as commissioner and the period he will serve as chairman will not exceed seven (7) years. This situation will only obtain when the chairman leaves the office by reason of death, disability, resignation or impeachment. Let us consider, in the concrete, the situation of then Chairman Carague and his successor, Villar. Carague was appointed COA Chairman effective February 2, 2001 for a term of seven (7) years, or up to February 2, 2008. Villar was appointed as

Commissioner on February 2, 2004 with a 7-year term to end on February 2, 2011. If Carague for some reason vacated the chairmanship in 2007, then Villar can resign as commissioner in the same year and later be appointed as chairman to serve only up to February 2, 2008, the end of the unexpired portion of Caragues term. In this hypothetical scenario, Villars appointment to the position of chairman is valid and constitutional as the aggregate periods of his two (2) appointments will only be five (5) years which neither distorts the rotational scheme nor violates the rule that the sum total of said appointments shall not exceed seven (7) years. Villar would, however,forfeit two (2) years of his original seven (7)-year term as Commissioner, since, by accepting an upgraded appointment to Caragues position, he agreed to serve the unexpired portion of the term of the predecessor. As illustrated earlier, following Mr. Fozs line, if there is an upgrading of position from commissioner to chairman, the appointee takes the risk of cutting short his original term, knowing pretty well before hand that he will serve only the unexpired portion of the term of his predecessor, the outgoing COA chairman. In the extreme hypothetical situation that Villar vacates the position of chairman for causes other than the expiration of the original term of Carague, the President can only appoint the successor of Villar for the unexpired portion of the Carague term in line with Sec. 1(2), Art. IX(D) of the Constitution. Upon the expiration of the original 7-year term of Carague, the President can appoint a new chairman for a term of seven (7) full years. In his separate dissent, my esteemed colleague, Mr. Justice Mendoza, takes strong exception to the view that the promotional appointment of a sitting commissioner is plausible only when he is appointed to the position of chairman for the unexpired portion of the term of said official who leaves the office by reason of any the following reasons: death, disability, resignation or impeachment, not when the vacancy arises out as a result of the expiration of the 7-year term of the past chairman. There is nothing in the Constitution, so Justice Mendoza counters, that restricts the promotion of an incumbent commissioner to the chairmanship only in instances where the tenure of his predecessor was cut short by any of the four events referred to. As earlier explained, the majority view springs from the interplay of the following premises: The explicit command of the Constitution is that the Chairman and the Commissioners shall be appointed by the President x x x for a term of seven years [and] appointment to any vacancy shall be only for the unexpired portion of the term of the predecessor. To repeat, the President has two and only two options on term appointments. Either he extends an appointment for a full 7-year term when the vacancy results from the

expiration of term, or for a shorter period corresponding to the unexpired term of the predecessor when the vacancy occurs by reason of death, physical disability, resignation or impeachment. If the vacancy calls for a full seven-year appointment, the Chief Executive is barred from extending a promotional appointment for less than seven years. Else, the President can trifle with terms of office fixed by the Constitution. Justice Mendoza likewise invites attention to an instance in history when a commissioner had been promoted chairman after the expiration of the term of his predecessor, referring specifically to the appointment of then COMELEC Commissioner Gaudencio Garcia to succeed Jose P. Carag after the expiration of the latters term in 1959 as COMELEC chairman. Such appointment to the position of chairman is not constitutionally permissible under the 1987 Constitution because of the policy and intent of its framers that a COA member who has served his full term of seven (7) years or even for a shorter period can no longer be extended another appointment to the position of chairman for a full term of seven (7) years. As revealed in the deliberations of the Constitutional Commission that crafted the 1987 Constitution, a member of COA who also served as a commissioner for less than seven (7) years in said position cannot be appointed to the position of chairman for a full term of seven (7) years since the aggregate will exceed seven (7) years. Thus, the adverted Garcia appointment in 1959 made under the 1935 Constitution cannot be used as a precedent to an appointment of such nature under the 1987 Constitution. The dissent further notes that the upgrading remained uncontested. In this regard, suffice it to state that the promotion in question was either legal or it was not. If it were not, no amount of repetitive practices would clear it of invalidating taint. Lastly, Villars appointment as chairman ending February 2, 2011 which Justice Mendoza considers as valid is likewise unconstitutional, as it will destroy the rationale and policy behind the rotational system or the staggering of appointments and terms in COA as prescribed in the Constitution. It disturbs in a way the staggered rotational system of appointment under Sec. 1(2), Art. IX(D) of the 1987 Constitution. Consider: If Villars term as COA chairman up to February 2, 2011 is viewed as valid and constitutional as espoused by my esteemed colleague, then two vacancies have simultaneously occurred and two (2) COA members going out of office at once, opening positions for two (2) appointables on that date as Commissioner San Buenaventuras term also e xpired on that day. This is precisely one of the mischiefs the staggering of terms and the regular intervals appointments seek to address. Note that San Buenaventura was specifically appointed to succeed Villar as commissioner, meaning she merely occupied the

position vacated by her predecessor whose term as such commissioner expired on February 2, 2011. The result is what the framers of the Constitution doubtless sought to avoid, a sitting President with a 6-year term of office, like President Benigno C. Aquino III, appointing all or at least two (2) members of the three-man Commission during his term. He appointed Ma. Gracia Pulido-Tan as Chairman for the term ending February 2, 2015 upon the relinquishment of the post by respondent Villar, and Heidi Mendoza was appointed Commissioner for a 7-year term ending February 2, 2018 to replace San Buenaventura. If Justice Mendozas version is adopted, then situations like the one which obtains in the Commission will definitely be replicated in gross breach of the Constitution and in clear contravention of the intent of its framers. Presidents in the future can easily control the Commission depriving it of its independence and impartiality. To sum up, the Court restates its ruling on Sec. 1(2), Art. IX(D) of the Constitution, viz: 1. The appointment of members of any of the three constitutional commissions, after the expiration of the uneven terms of office of the first set of commissioners, shall always be for a fixed term of seven (7) years; an appointment for a lesser period is void and unconstitutional. The appointing authority cannot validly shorten the full term of seven (7) years in case of the expiration of the term as this will result in the distortion of the rotational system prescribed by the Constitution. 2. Appointments to vacancies resulting from certain causes (death, resignation, disability or impeachment) shall only be for the unexpired portion of the term of the predecessor, but such appointments cannot be less than the unexpired portion as this will likewise disrupt the staggering of terms laid down under Sec. 1(2), Art. IX(D). 3. Members of the Commission, e.g. COA, COMELEC or CSC, who were appointed for a full term of seven years and who served the entire period, are barred from reappointment to any position in the Commission. Corollarily, the first appointees in the Commission under the Constitution are also covered by the prohibition against reappointment. 4. A commissioner who resigns after serving in the Commission for less than seven years is eligible for an appointment to the position of Chairman for the unexpired portion of the term of the departing chairman. Such appointment is not

covered by the ban on reappointment, provided that the aggregate period of the length of service as commissioner and the unexpired period of the term of the predecessor will not exceed seven (7) years and provided further that the vacancy in the position of Chairman resulted from death, resignation, disability or removal by impeachment. The Court clarifies that reappointment found in Sec. 1(2), Art. IX(D) means a movement to one and the same office (Commissioner to Commissioner or Chairman to Chairman). On the other hand, an appointment involving a movement to a different position or office (Commissioner to Chairman) would constitute a new appointment and, hence, not, in the strict legal sense, a reappointment barred under the Constitution. 5. Any member of the Commission cannot be appointed or designated in a temporary or acting capacity. WHEREFORE the petition is PARTLY GRANTED. The appointment of then Commissioner Reynaldo A. Villar to the position of Chairman of the Commission on Audit to replace Guillermo N. Carague, whose term of office as such chairman has expired, is hereby declared UNCONSTITUTIONAL for violation of Sec. 1(2), Art. IX(D) of the Constitution. SO ORDERED.

G.R. No. 173264

February 22, 2008

CIVIL SERVICE COMMISSION, petitioner, vs. NITA P. JAVIER, respondent. DECISION AUSTRIA-MARTINEZ, J.: Before the Court is a Petition for Review on Certiorari under Rule 45 of the Rules of Court, seeking to reverse the Decision1 of the Court of Appeals (CA) dated September 29, 2005, as well as its Resolution of June 5, 2006, in CAG.R. SP No. 88568, which set aside the resolutions and orders of the Civil Service Commission (CSC) invalidating the appointment of respondent as Corporate Secretary of the Board of Trustees of the Government Service and Insurance System (GSIS). The facts are undisputed. According to her service record,2 respondent was first employed as Private Secretary in the GSIS, a government owned and controlled corporation (GOCC), on February 23, 1960, on a " confidential" status. On July 1, 1962, respondent was promoted to Tabulating Equipment Operator with "permanent" status. The "permanent" status stayed

with respondent throughout her career. She spent her entire career with GSIS, earning several more promotions, until on December 16, 1986, she was appointed Corporate Secretary of the Board of Trustees of the corporation. On July 16, 2001, a month shy of her 64th birthday,3 respondent opted for early retirement and received the corresponding monetary benefits.4 On April 3, 2002, GSIS President Winston F. Garcia, with the approval of the Board of Trustees, reappointed respondent as Corporate Secretary, the same position she left and retired from barely a year earlier. Respondent was 64 years old at the time of her reappointment.5 In its Resolution, the Board of Trustees classified her appointment as "confidential in nature and the tenure of office is at the pleasure of the Board." 6 Petitioner alleges that respondent's reappointment on confidential status was meant to illegally extend her service and circumvent the laws on compulsory retirement. 7 This is because under Republic Act (R.A.) No. 8291, or the Government Service Insurance System Act of 1997, the compulsory retirement age for government employees is 65 years, thus: Sec. 13. x x x (b) Unless the service is extended by appropriate authorities, retirement shall be compulsory for an employee at sixty-five (65) years of age with at least fifteen (15) years of service: Provided, That if he has less than fifteen (15) years of service, he may be allowed to continue in the service in accordance with existing civil service rules and regulations. Under the civil service regulations, those who are in primarily confidential positions may serve even beyond the age of 65 years. Rule XIII of the Revised Omnibus Rules on Appointments and Other Personnel Actions, as amended, provides that: Sec. 12. (a) No person who has reached the compulsory retirement age of 65 years can be appointed to any position in the government, subject only to the exception provided under sub-section (b) hereof. xxxx b. A person who has already reached the compulsory retirement age of 65 can still be appointed to a coterminous/primarily confidential position in the government. A person appointed to a coterminous/primarily confidential position who reaches the age of 65 is considered automatically extended in the service until the expiry date of his/her appointment or until his/her services are earlier terminated.8 It is for these obvious reasons that respondent's appointment was characterized as "confidential" by the GSIS. On October 10, 2002, petitioner issued Resolution No. 021314, invalidating the reappointment of respondent as Corporate Secretary, on the ground that the position is a permanent, career position and not primarily confidential.9 On November 2, 2002, the CSC, in a letter of even date, through its Chairperson Karina Constantino-David, informed GSIS of CSC's invalidation of respondent's appointment, stating, thus: Records show that Ms. Javier was formerly appointed as Corporate Secretary in a "Permanent" capacity until her retirement in July 16, 2001. The Plantilla of Positions shows that said position is a career position. However, she was re-employed as Corporate Secretary, a position now declared as confidential by the Board of Trustees pursuant to Board Resolution No. 94 dated April 3, 2002. Since the position was not declared primarily confidential by the Civil Service Commission or by any law, the appointment of Ms. Javier as Corporate Secretary is hereby invalidated. 10

Respondent and GSIS sought to reconsider the ruling of petitioner. CSC replied that the position of Corporate Secretary is a permanent (career) position, and not primarily confidential (non-career); thus, it was wrong to appoint respondent to this position since she no longer complies with eligibility requirements for a permanent career status. More importantly, as respondent by then has reached compulsory retirement at age 65, respondent was no longer qualified for a permanent career position.11 With the denial of respondent's plea for reconsideration, she filed a Petition for Review with the Court of Appeals. On September 29, 2005, the CA rendered a Decision setting aside the resolution of petitioner invalidating respondent's appointment.12 The CA ruled that in determining whether a position is primarily confidential or otherwise, the nature of its functions, duties and responsibilities must be looked into, and not just its formal classification.13 Examining the functions, duties and responsibilities of the GSIS Corporate Secretary, the CA concluded that indeed, such a position is primarily confidential in nature. Petitioner filed a motion for reconsideration, which was denied by the CA on June 5, 2006. Hence, herein petition. The petition assails the CA Decision, contending that the position of Corporate Secretary is a career position and not primarily confidential in nature.14 Further, it adds that the power to declare whether any position in government is primarily confidential, highly technical or policy determining rests solely in petitioner by virtue of its constitutional power as the central personnel agency of the government. 15 Respondent avers otherwise, maintaining that the position of Corporate Secretary is confidential in nature and that it is within the powers of the GSIS Board of Trustees to declare it so. 16 She argues that in determining the proper classification of a position, one should be guided by the nature of the office or position, and not by its formal designation.17 Thus, the Court is confronted with the following issues: whether the courts may determine the proper classification of a position in government; and whether the position of corporate secretary in a GOCC is primarily confidential in nature. The Court's Ruling The courts may determine the proper classification of a position in government. Under Executive Order No. 292, or the Administrative Code of 1987, civil service positions are currently classified into either 1) career service and 2) non-career service positions.18 Career positions are characterized by: (1) entrance based on merit and fitness to be determined as far as practicable by competitive examinations, or based on highly technical qualifications; (2) opportunity for advancement to higher career positions; and (3) security of tenure.19 In addition, the Administrative Code, under its Book V, sub-classifies career positions according to "appointment status," divided into: 1) permanent - which is issued to a person who meets all the requirements for the positions to which he is being appointed, including the appropriate eligibility prescribed, in accordance with the provisions of law, rules and standards promulgated in pursuance thereof; and 2) temporary - which is issued, in the absence of appropriate eligibles and when it becomes necessary in the public interest to fill a vacancy, to a person who meets all the requirements for the position to which he is being appointed except the appropriate civil service eligibility; provided, that such temporary appointment shall not exceed twelve months, and the appointee may be replaced sooner if a qualified civil service eligible becomes available. 20 Positions that do not fall under the career service are considered non-career positions, which are characterized by: (1) entrance on bases other than those of the usual tests of merit and fitness utilized for the career service; and (2) tenure which is limited to a period specified by law, or which is co-terminous with that of the appointing authority or subject to his pleasure, or which is limited to the duration of a particular projectfor which purpose employment was made.21

Examples of positions in the non-career service enumerated in the Administrative Code are: Sec. 9. Non-Career Service. - x x x The Non-Career Service shall include: (1) Elective officials and their personal or confidential staff; (2) Secretaries and other officials of Cabinet rank who hold their positions at the pleasure of the President and their personal or confidential staff(s); (3) Chairman and members of commissions and boards with fixed terms of office and their personal or confidential staff; (4) Contractual personnel or those whose employment in the government is in accordance with a special contract to undertake a specific work or job, requiring special or technical skills not available in the employing agency, to be accomplished within a specific period, which in no case shall exceed one year, and performs or accomplishes the specific work or job, under his own responsibility with a minimum of direction and supervision from the hiring agency; and (5) Emergency and seasonal personnel. (Emphasis supplied) A strict reading of the law reveals that primarily confidential positions fall under the non-career service. It is also clear that, unlike career positions, primarily confidential and other non-career positions do not have security of tenure. The tenure of a confidential employee is co-terminous with that of the appointing authority, or is at the latter's pleasure. However, the confidential employee may be appointed or remain in the position even beyond the compulsory retirement age of 65 years.22 Stated differently, the instant petition raises the question of whether the position of corporate secretary in a GOCC, currently classified by the CSC as belonging to the permanent, career service, should be classified as primarily confidential, i.e., belonging to the non-career service. The current GSIS Board holds the affirmative view, which is ardently opposed by petitioner. Petitioner maintains that it alone can classify government positions, and that the determination it made earlier, classifying the position of GOCC corporate secretary as a permanent, career position, should be maintained. At present, there is no law enacted by the legislature that defines or sets definite criteria for determining primarily confidential positions in the civil service. Neither is there a law that gives an enumeration of positions classified as primarily confidential. What is available is only petitioner's own classification of civil service positions, as well as jurisprudence which describe or give examples of confidential positions in government. Thus, the corollary issue arises: should the Court be bound by a classification of a position as confidential already made by an agency or branch of government? Jurisprudence establishes that the Court is not bound by the classification of positions in the civil service made by the legislative or executive branches, or even by a constitutional body like the petitioner. 23 The Court is expected to make its own determination as to the nature of a particular position, such as whether it is a primarily confidential position or not, without being bound by prior classifications made by other bodies. 24 The findings of the other branches of government are merely considered initial and not conclusive to the Court. 25 Moreover, it is well-established that in case the findings of various agencies of government, such as the petitioner and the CA in the instant case, are in conflict, the Court must exercise its constitutional role as final arbiter of all justiciable controversies and disputes. 26 Piero v. Hechanova,27 interpreting R.A. No. 2260, or the Civil Service Act of 1959, emphasized how the legislature refrained from declaring which positions in the bureaucracy are primarily confidential, policy determining or highly technical in nature, and declared that such a determination is better left to the judgment of the courts. The Court, with the ponencia of Justice J.B.L. Reyes, expounded, thus:

The change from the original wording of the bill (expressly declared by law x x x to be policy determining, etc.) to that finally approved and enacted ("or which are policy determining, etc. in nature") came aboutbecause of the observations of Senator Taada, that as originally worded the proposed bill gave Congress power to declare by fiat of law a certain position as primarily confidential or policy determining, which should not be the case. The Senator urged that since the Constitution speaks of positions which are "primarily confidential, policy determining or highly technical in nature," it is not within the power of Congress to declare what positions are primarily confidential or policy determining."It is the nature alone of the position that determines whether it is policy determining or primarily confidential." Hence, the Senator further observed, the matter should be left to the "proper implementation of the laws, depending upon the nature of the position to be filled", and if the position is "highly confidential" then the President and the Civil Service Commissioner must implement the law. To a question of Senator Tolentino, "But in positions that involved both confidential matters and matters which are routine, x x x who is going to determine whether it is primarily confidential?" Senator Taada replied: "SENATOR TAADA: Well. at the first instance, it is the appointing power that determines that: the nature of the position. In case of conflict then it is the Court that determines whether the position is primarily confidential or not. "I remember a case that has been decided by the Supreme Court involving the position of a district engineer in Baguio, and there. precisely, the nature of the position was in issue. It was the Supreme Court that passed upon the nature of the position, and held that the President could not transfer the district engineer in Baguio against his consent." Senator Taada, therefore, proposed an amendment to section 5 of the bill, deleting the words "to be" and inserting in lieu thereof the words "Positions which are by their nature" policy determining, etc., and deleting the last words "in nature". Subsequently, Senator Padilla presented an amendment to the Taada amendment by adopting the very words of the Constitution, i.e., "those which are policy determining, primarily confidential and highly technical in nature". The Padilla amendment was adopted, and it was this last wording with which section 5 was passed and was enacted (Senate Journal, May 10, 1959, Vol. 11, No. 32, pp. 679-681). It is plain that, at least since the enactment of the 1959 Civil Service Act (R. A. 2260), it is the nature of the position which finally determines whether a position is primarily confidential, policy determining or highly technical. Executive pronouncements can be no more than initial determinations that are not conclusive in case of conflict. And it must be so, or else it would then lie within the discretion of title Chief Executive to deny to any officer, by executive fiat, the protection of section 4, Article XII, of the Constitution.28 (Emphasis and underscoring supplied) This doctrine in Piero was reiterated in several succeeding cases.29 Presently, it is still the rule that executive and legislative identification or classification of primarily confidential, policydetermining or highly technical positions in government is no more than mere declarations, and does not foreclose judicial review, especially in the event of conflict. Far from what is merely declared by executive or legislative fiat, it is the nature of the position which finally determines whether it is primarily confidential, policy determining or highly technical, and no department in government is better qualified to make such an ultimate finding than the judicial branch. Judicial review was also extended to determinations made by petitioner. In Grio v. Civil Service Commission,30 the Court held: The fact that the position of respondent Arandela as provincial attorney has already been classified as one under the career service and certified as permanent by the Civil Service Commission cannot conceal or alter its highly confidential nature. As in Cadiente where the position of the city legal officer was duly attested as permanent by the Civil Service Commission before this Court declared that the same was primarily confidential, this Court holds that the position of respondent Arandela as the provincial attorney of Iloilo is also a primarily confidential position. To rule otherwise would be tantamount to classifying two positions with the same nature and functions in two incompatible categories. 31

The framers of the 1987 Constitution were of the same disposition. Section 2 (2) Article IX (B) of the Constitution provides that: Appointments in the civil service shall be made only according to merit and fitness to be determined, as far as practicable, and, except to positions which are policy-determining, primarily confidential, or highly technical, by competitive examination. The phrase "in nature" after the phrase "policy-determining, primarily confidential, or highly technical" was deleted from the 1987 Constitution.32 However, the intent to lay in the courts the power to determine the nature of a position is evident in the following deliberation: MR. FOZ. Which department of government has the power or authority to determine whether a position is policy-determining or primarily confidential or highly technical? FR. BERNAS: The initial decision is made by the legislative body or by the executive department, but the final decision is done by the court. The Supreme Court has constantly held that whether or not a position is policy-determining, primarily confidential or highly technical, it is determined not by the title but by the nature of the task that is entrusted to it. For instance, we might have a case where a position is created requiring that the holder of that position should be a member of the Bar and the law classifies this position as highly technical. However, the Supreme Court has said before that a position which requires mere membership in the Bar is not a highly technical position. Since the term 'highly technical' means something beyond the ordinary requirements of the profession, it is always a question of fact. MR. FOZ. Does not Commissioner Bernas agree that the general rule should be that the merit system or the competitive system should be upheld? FR. BERNAS. I agree that that it should be the general rule; that is why we are putting this as an exception. MR. FOZ. The declaration that certain positions are policy-determining, primarily confidential or highly technical has been the source of practices which amount to the spoils system. FR. BERNAS. The Supreme Court has always said that, but if the law of the administrative agency says that a position is primarily confidential when in fact it is not, we can always challenge that in court. It is not enough that the law calls it primarily confidential to make it such; it is the nature of the duties which makes a position primarily confidential. MR. FOZ. The effect of a declaration that a position is policy-determining, primarily confidential or highly technical - as an exception - is to take it away from the usual rules and provisions of the Civil Service Law and to place it in a class by itself so that it can avail itself of certain privileges not available to the ordinary run of government employees and officers. FR. BERNAS. As I have already said, this classification does not do away with the requirement of merit and fitness. All it says is that there are certain positions which should not be determined by competitive examination. For instance, I have just mentioned a position in the Atomic Energy Commission. Shall we require a physicist to undergo a competitive examination before appointment? Or a confidential secretary or any position in policy-determining administrative bodies, for that matter? There are other ways of determining merit and fitness than competitive examination. This is not a denial of the requirement of merit and fitness.33(Emphasis supplied) This explicit intent of the framers was recognized in Civil Service Commission v. Salas,34 and Philippine Amusement and Gaming Corporation v. Rilloraza,35 which leave no doubt that the question of whether the position of Corporate Secretary of GSIS is confidential in nature may be determined by the Court.

The position of corporate secretary in a government owned and controlled corporation, currently classified as a permanent career position, is primarily confidential in nature. First, there is a need to examine how the term "primarily confidential in nature" is described in jurisprudence. According to Salas,36 Prior to the passage of the x x x Civil Service Act of 1959 (R.A. No. 2260), there were two recognized instances when a position may be considered primarily confidential: Firstly, when the President, upon recommendation of the Commissioner of Civil Service, has declared the position to be primarily confidential; and, secondly in the absence of such declaration, when by the nature of the functions of the office there exists "close intimacy" between the appointee and appointing power which insures freedom of intercourse without embarrassment or freedom from misgivings of betrayals of personal trust or confidential matters of state.37 (Emphasis supplied) However, Salas declared that since the enactment of R.A. No. 2260 and Piero,38 it is the nature of the position which finally determines whether a position is primarily confidential or not, without regard to existing executive or legislative pronouncements either way, since the latter will not bind the courts in case of conflict. A position that is primarily confidential in nature is defined as early as 1950 in De los Santos v. Mallare,39 through the ponencia of Justice Pedro Tuason, to wit: x x x These positions (policy-determining, primarily confidential and highly technical positions), involve the highest degree of confidence, or are closely bound up with and dependent on other positions to which they are subordinate, or are temporary in nature. It may truly be said that the good of the service itself demands that appointments coming under this category be terminable at the will of the officer that makes them. xxxx Every appointment implies confidence, but much more than ordinary confidence is reposed in the occupant of a position that is primarily confidential. The latter phrase denotes not only confidence in the aptitude of the appointee for the duties of the office but primarily close intimacy which insures freedom of [discussion, delegation and reporting] without embarrassment or freedom from misgivings of betrayals of personal trust or confidential matters of state. x x x 40 (Emphasis supplied) Since the definition in De los Santos came out, it has guided numerous other cases.41 Thus, it still stands that a position is primarily confidential when by the nature of the functions of the office there exists "close intimacy" between the appointee and appointing power which insures freedom of intercourse without embarrassment or freedom from misgivings of betrayals of personal trust or confidential matters of state. In classifying a position as primarily confidential, its functions must not be routinary, ordinary and day to day in character.42 A position is not necessarily confidential though the one in office may sometimes handle confidential matters or documents.43 Only ordinary confidence is required for all positions in the bureaucracy. But, as held in De los Santos,[44] for someone holding a primarily confidential position, more than ordinary confidence is required. In Ingles v. Mutuc,45 the Court, through Chief Justice Roberto Concepcion as ponente, stated: Indeed, physicians handle confidential matters. Judges, fiscals and court stenographers generally handle matters of similar nature. The Presiding and Associate Justices of the Court of Appeals sometimes investigate, by designation of the Supreme Court, administrative complaints against judges of first instance, which are confidential in nature. Officers of the Department of Justice, likewise, investigate charges against municipal judges. Assistant Solicitors in the Office of the Solicitor General often investigate malpractice charges against members of the Bar. All of these are "confidential" matters, but such fact does not warrant the conclusion that the office or position of all government physicians and all Judges, as well as the aforementioned assistant solicitors and officers of the Department of Justice areprimarily confidential in character.46 (Emphasis supplied)

It is from De los Santos that the so-called "proximity rule" was derived. A position is considered to be primarily confidential when there is a primarily close intimacy between the appointing authority and the appointee, which ensures the highest degree of trust and unfettered communication and discussion on the most confidential of matters.47 This means that where the position occupied is already remote from that of the appointing authority, the element of trust between them is no longer predominant. 48 On further interpretation in Grio, this was clarified to mean that a confidential nature would be limited to those positions not separated from the position of the appointing authority by an intervening public officer, or series of public officers, in the bureaucratic hierarchy. 49 Consequently, brought upon by their remoteness to the position of the appointing authority, the following were declared by the Court to be not primarily confidential positions: City Engineer; 50 Assistant Secretary to the Mayor;51 members of the Customs Police Force or Port Patrol;52 Special Assistant of the Governor of the Central Bank, Export Department;53 Senior Executive Assistant, Clerk I and Supervising Clerk I and Stenographer in the Office of the President;54 Management and Audit Analyst I of the Finance Ministry Intelligence Bureau; 55Provincial Administrator;56 Internal Security Staff of the Philippine Amusement and Gaming Corporation (PAGCOR); 57 Casino Operations Manager;58 and Slot Machine Attendant.59 All positions were declared to be not primarily confidential despite having been previously declared such either by their respective appointing authorities or the legislature. The following were declared in jurisprudence to be primarily confidential positions: Chief Legal Counsel of the Philippine National Bank;60 Confidential Agent of the Office of the Auditor, GSIS;61 Secretary of the SangguniangBayan;62 Secretary to the City Mayor;63 Senior Security and Security Guard in the Office of the Vice Mayor;64Secretary to the Board of a government corporation;65 City Legal Counsel, City Legal Officer or City Attorney;66Provincial Attorney;67 Private Secretary;68 and Board Secretary II of the Philippine State College of Aeronautics.69 In fine, a primarily confidential position is characterized by the close proximity of the positions of the appointer and appointee as well as the high degree of trust and confidence inherent in their relationship . Ineluctably therefore, the position of Corporate Secretary of GSIS, or any GOCC, for that matter, is a primarily confidential position. The position is clearly in close proximity and intimacy with the appointing power. It also calls for the highest degree of confidence between the appointer and appointee. In classifying the position of Corporate Secretary of GSIS as primarily confidential, the Court took into consideration the proximity rule together with the duties of the corporate secretary, enumerated as follows:70 1. Performs all duties, and exercises the power, as defined and enumerated in Section 4, Title IX, P.D. No. 1146; 2. Undertakes research into past Board resolutions, policies, decisions, directives and other Board action, and relate these to present matters under Board consideration; 3. Analyzes and evaluates the impact, effects and relevance of matters under Board consideration on existing Board policies and provide the individual Board members with these information so as to guide or enlighten them in their Board decision; 4. Records, documents and reproduces in sufficient number all proceedings of Board meetings and disseminate relevant Board decisions/information to those units concerned; 5. Coordinates with all functional areas and units concerned and monitors the manner of implementation of approved Board resolutions, policies and directives; 6. Maintains a permanent, complete, systematic and secure compilation of all previous minutes of Board meetings, together with all their supporting documents; 7. Attends, testifies and produces in Court or in administrative bodies duly certified copies of Board resolutions, whenever required;

8. Undertakes the necessary physical preparations for scheduled Board meetings; 9. Pays honoraria of the members of the Board who attend Board meetings; 10. Takes custody of the corporate seal and safeguards against unauthorized use; and 11. Performs such other functions as the Board may direct and/or require. The nature of the duties and functions attached to the position points to its highly confidential character. 71 The secretary reports directly to the board of directors, without an intervening officer in between them.72 In such an arrangement, the board expects from the secretary nothing less than the highest degree of honesty, integrity and loyalty, which is crucial to maintaining between them "freedom of intercourse without embarrassment or freedom from misgivings or betrayals of personal trust or confidential matters of state." 73 The responsibilities of the corporate secretary are not merely clerical or routinary in nature. The work involves constant exposure to sensitive policy matters and confidential deliberations that are not always open to the public, as unscrupulous persons may use them to harm the corporation. Board members must have the highest confidence in the secretary to ensure that their honest sentiments are always and fully expressed, in the interest of the corporation. In this respect, the nature of the corporate secretary's work is akin to that of a personal secretary of a public official, a position long recognized to be primarily confidential in nature.74 The only distinction is that the corporate secretary is secretary to the entire board, composed of a number of persons, but who essentially act as one body, while the private secretary works for only one person. However, the degree of confidence involved is essentially the same. Not only do the tasks listed point to sensitive and confidential acts that the corporate secretary must perform, they also include "such other functions as the Board may direct and/or require," a clear indication of a closely intimate relationship that exists between the secretary and the board. In such a highly acquainted relation, great trust and confidence between appointer and appointee is required. The loss of such trust or confidence could easily result in the board's termination of the secretary's services and ending of his term. This is understandably justified, as the board could not be expected to function freely with a suspicious officer in its midst. It is for these same reasons that jurisprudence, as earlier cited, has consistently characterized personal or private secretaries, and board secretaries, as positions of a primarily confidential nature. 75 The CA did not err in declaring that the position of Corporate Secretary of GSIS is primarily confidential in nature and does not belong to the career service. The Court is aware that this decision has repercussions on the tenure of other corporate secretaries in various GOCCs. The officers likely assumed their positions on permanent career status, expecting protection for their tenure and appointments, but are now re-classified as primarily confidential appointees. Such concern is unfounded, however, since the statutes themselves do not classify the position of corporate secretary as permanent and career in nature. Moreover, there is no absolute guarantee that it will not be classified as confidential when a dispute arises. As earlier stated, the Court, by legal tradition, has the power to make a final determination as to which positions in government are primarily confidential or otherwise. In the light of the instant controversy, the Court's view is that the greater public interest is served if the position of a corporate secretary is classified as primarily confidential in nature. Moreover, it is a basic tenet in the country's constitutional system that "public office is a public trust," 76 and that there is no vested right in public office, nor an absolute right to hold office. 77 No proprietary title attaches to a public office, as public service is not a property right.78 Excepting constitutional offices which provide for special immunity as regards salary and tenure, no one can be said to have any vested right in an office.79 The rule is that offices in government, except those created by the constitution, may be abolished, altered, or created anytime by statute.80 And any issues on the classification for a position in government may be brought to and determined by the courts. 81 WHEREFORE, premises considered, the Petition is DENIED. The Decision of the Court of Appeals dated September 29, 2005, in CA-G.R. SP No. 88568, as well as its Resolution of June 5, 2006 are hereby AFFIRMEDin toto. No costs.

SO ORDERED.

LUCIANO VELOSO, ABRAHAM CABOCHAN, JOCELYN DAWISASUNCION and MARLON M. LACSON, Petitioners,

G.R. No. 193677 Present: CORONA, C.J., CARPIO, VELASCO, JR., LEONARDO-DE CASTRO, BRION, PERALTA, BERSAMIN, DEL CASTILLO, ABAD, VILLARAMA, JR., PEREZ, MENDOZA, SERENO,* and REYES,** JJ. Promulgated:

- versus -

COMMISSION ON AUDIT, Respondent.

September 6, 2011 x-------------------------------------------------x

DECISION

PERALTA, J.: This is a Petition for Review on Certiorari under Rule 65 of the Rules of Court assailing Decision No. 2008-088[1] dated September 26, 2008 and Decision No. 2010-077[2] dated August 23, 2010 of the Commission on Audit (COA) sustaining Notice of Disallowance (ND) No. 06-010-100-05[3] dated May 24, 2006 disallowing the payment of monetary reward as part of the Exemplary Public Service Award (EPSA) to former three-term councilors of the City of Manila authorized by City Ordinance No. 8040.

The facts of the case are as follows: On December 7, 2000, the City Council of Manila enacted Ordinance No. 8040 entitled An Ordinance Authorizing the Conferment of Exemplary Public Service Award to Elective Local Officials of Manila Who Have Been Elected for Three (3) Consecutive Terms in the Same Position. Section 2 thereof provides:
SEC. 2. The EPSA shall consist of a Plaque of Appreciation, retirement and gratuity pay remuneration equivalent to the actual time served in the position for three (3) consecutive terms, subject to the availability of funds as certified by the City Treasurer. PROVIDED, That [it] shall be accorded to qualified elected City Officials on or before the first day of service in an appropriated public ceremony to be conducted for the purpose. PROVIDED FURTHER, That this Ordinance shall only cover the Position of Mayor, Vice-Mayor and Councilor: PROVIDED FURTHERMORE, That those who were elected for this term and run for higher elective position thereafter, after being elected shall still be eligible for this award for the actual time served: PROVIDED FINALLY That the necessary and incidental expenses needed to implement the provisions of this Ordinance shall be appropriated and be included in the executive budget for the year when any city official will qualify for the Award.[4]

The ordinance was deemed approved on August 23, 2002. Pursuant to the ordinance, the City made partial payments in favor of the following former councilors:
Councilor/Recipients Abraham C. Cabochan Julio E. Logarta, Jr. Luciano M. Veloso Jocelyn DawisAsuncion Marlon M. Lacson Heirs of Hilarion C. Silva TOTAL Check 353010 353156 353778 353155 353157 353093 Date 06/07/05 06/14/05 06/30/05 06/14/05 06/14/05 06/09/05 Amount P1,658,989.09 P1,658,989.08 P1,658,989.08 P1,658,989.08 P1,658,989.08 P1,628,311.59 P9,923,257.00[5]

On August 8, 2005, Atty. Gabriel J. Espina (Atty. Espina), Supervising Auditor of the City of Manila, issued Audit Observation Memorandum (AOM) No. 2005-100(05)07(05)[6] with the following observations:
1. The initial payment of monetary reward as part of Exemplary Public Service Award (EPSA) amounting to P9,923,257.00 to former councilors of the City Government of Manila who have been elected for three (3) consecutive terms to the same position as authorized by City Ordinance No. 8040 is without legal basis. 2. The amount granted as monetary reward is excessive and tantamount to double compensation in contravention to Article 170 (c) of the IRR of RA 7160 which provides that no elective or appointive local official shall receive additional, double or indirect compensation unless specifically authorized by law. 3. The appropriations for retirement gratuity to implement EPSA ordinance was classified as Maintenance and Other Operating Expenses instead of Personal Services contrary to Section 7, Volume III of the Manual on the New Government Accounting System (NGAS) for local government units and COA Circular No. 2004-008 dated September 20, 2004 which provide the updated description of accounts under the NGAS.[7]

After evaluation of the AOM, the Director, Legal and Adjudication Office (LAO)-Local of the COA issued ND No. 06-010-100-05[8] dated May 24, 2006. On November 9, 2006, former councilors Jocelyn Dawis-Asuncion (DawisAsuncion), Luciano M. Veloso (Veloso), Abraham C. Cabochan (Cabochan), Marlon M. Lacson (Lacson), Julio E. Logarta, Jr., and Monina U. Silva, City Accountant Gloria C. Quilantang, City Budget Officer Alicia Moscaya and then Vice Mayor and Presiding Officer Danilo B. Lacuna filed a Motion to Lift the Notice of Disallowance.[9] In its Decision No. 2007-171[10] dated November 29, 2007, the LAO-Local decided in favor of the movants, the pertinent portion of which reads:
WHEREFORE, premises considered, the motion of former ViceMayor Danilo B. Lacuna, et al., is GRANTED and ND No. 06-010-10005 dated May 24, 2006 is hereby ordered lifted as the reasons for the disallowance have been sufficiently explained. This decision, however, should not be taken as precedence (sic) to other or similar personal

benefits that a local government unit may extend which should be appreciated based on their separate and peculiar circumstances.[11]

Citing Article 170 of the Implementing Rules and Regulations (IRR) of Republic Act (RA) No. 7160, the LAO-Local held that the monetary reward given to the former councilors can be one of gratuity and, therefore, cannot be considered as additional, double or indirect compensation. Giving importance to the principle of local autonomy, the LAO-local upheld the power of local government units (LGUs) to grant allowances. More importantly, it emphasized that the Department of Budget and Management (DBM) did not disapprove the appropriation for the EPSA of the City which indicate that the same is valid.[12] Upon review, the COA rendered the assailed Decision No. 2008-088 sustaining ND No. 06-010-100-05.[13] The motion for reconsideration was likewise denied in Decision No. 2010-077.[14] The COA opined that the monetary reward under the EPSA is covered by the term compensation. Though it recognizes the local autonomy of LGUs, it emphasized the limitations thereof set forth in the Salary Standardization Law (SSL). It explained that the SSL does not authorize the grant of such monetary reward or gratuity. It also stressed the absence of a specific law passed by Congress which ordains the conferment of such monetary reward or gratuity to the former councilors.[15] In Decision No. 2010-077, in response to the question on its jurisdiction to rule on the legality of the disbursement, the COA held that it is vested by the Constitution the power to determine whether government entities comply with laws and regulations in disbursing government funds and to disallow irregular disbursements.[16] Aggrieved, petitioners Veloso, Cabochan, Dawis-Asuncion and Lacson come before the Court in this special civil action forcertiorari alleging grave abuse of discretion on the part of the COA. Specifically, petitioners claim that:
The respondent Commission on Audit did not only commit a reversible error but was, in fact, guilty of grave abuse of discretion amounting to lack or excess of jurisdiction when it ruled that the monetary award given under the EPSA partakes of the nature of an additional compensation prohibited under the Salary Standardization Law, and other existing laws, rules and regulations, and not a GRATUITY voluntarily given in return for a favor or services rendered purely out of generosity of the giver or grantor. ( Plastic Tower Corporation vs. NLRC, 172 SCRA 580-581).

Apart from being totally oblivious of the fact that the monetary award given under the EPSA was intended or given in return for the exemplary service rendered by its recipient(s), the respondent COA further committed grave abuse of discretion when it effectively nullified a duly-enacted ordinance which is essentially a judicial function. In other words, in the guise of disallowing the disbursement in question, the respondent Commission arrogated unto itself an authority it did not possess, and a prerogative it did not have.[17]

On November 30, 2010, the Court issued a Status Quo Ante Order[18] requiring the parties to maintain the status quoprevailing before the implementation of the assailed COA decisions. There are two issues for resolution: (1) whether the COA has the authority to disallow the disbursement of local government funds; and (2) whether the COA committed grave abuse of discretion in affirming the disallowance of P9,923,257.00 covering the EPSA of former three-term councilors of the City of Manila authorized by Ordinance No. 8040. In their Reply,[19] petitioners insist that the power and authority of the COA to audit government funds and accounts does not carry with it in all instances the power to disallow a particular disbursement.[20] Citing Guevara v. Gimenez,[21]petitioners claim that the COA has no discretion or authority to disapprove payments on the ground that the same was unwise or that the amount is unreasonable. The COA's remedy, according to petitioners, is to bring to the attention of the proper administrative officer such expenditures that, in its opinion, are irregular, unnecessary, excessive or extravagant.[22] While admitting that the cited case was decided by the Court under the 1935 Constitution, petitioners submit that the same principle applies in the present case. We do not agree. As held in National Electrification Administration v. Commission on Audit, the ruling in Guevara cited by petitioners has already been overturned by the Court in Caltex Philippines, Inc. v. Commission on Audit.[24] The Court explained[25] that under the 1935 Constitution, the Auditor General could not correct irregular, unnecessary, excessive or extravagant expenditures of public funds, but could only bring the matter to the attention of the proper administrative
[23]

officer. Under the 1987 Constitution, however, the COA is vested with the authority to determine whether government entities, including LGUs, comply with laws and regulations in disbursing government funds, and to disallow illegal or irregular disbursements of these funds. Section 2, Article IX-D of the Constitution gives a broad outline of the powers and functions of the COA, to wit:
Section 2. (1) The Commission on Audit shall have the power, authority, and duty to examine, audit, and settle all accounts pertaining to the revenue and receipts of, and expenditures or uses of funds and property, owned or held in trust by, or pertaining to, the Government, or any of its subdivisions, agencies, or instrumentalities, including government-owned or controlled corporations with original charters, and on a post-audit basis: (a) constitutional bodies, commissions and offices that have been granted fiscal autonomy under this Constitution; (b) autonomous state colleges and universities; (c) other government-owned or controlled corporations and their subsidiaries; and (d) such nongovernmental entities receiving subsidy or equity, directly or indirectly, from or through the Government, which are required by law or the granting institution to submit to such audit as a condition of subsidy or equity. However, where the internal control system of the audited agencies is inadequate, the Commission may adopt such measures, including temporary or special pre-audit, as are necessary and appropriate to correct the deficiencies. It shall keep the general accounts of the Government and, for such period as may be provided by law, preserve the vouchers and other supporting papers pertaining thereto. (2) The Commission shall have exclusive authority, subject to the limitations in this Article, to define the scope of its audit and examination, establish the techniques and methods required therefor, and promulgate accounting and auditing rules and regulations, including those for the prevention and disallowance of irregular, unnecessary, excessive, extravagant, or unconscionable expenditures, or uses of government funds and properties.[26]

Section 11, Chapter 4, Subtitle B, Title I, Book V of the Administrative Code of 1987 echoes this constitutional mandate to COA.

Under the first paragraph of the above provision, the COA's audit jurisdiction extends to the government, or any of its subdivisions, agencies, or instrumentalities, including government-owned or controlled corporations with original charters. Its jurisdiction likewise covers, albeit on a post-audit basis, the constitutional bodies, commissions and offices that have been granted fiscal autonomy, autonomous state colleges and universities, other government-owned or controlled corporations and their subsidiaries, and such non-governmental entities receiving subsidy or equity from or through the government. The power of the COA to examine and audit government agencies cannot be taken away from it as Section 3, Article IX-D of the Constitution mandates that no law shall be passed exempting any entity of the Government or its subsidiary in any guise whatever, or any investment of public funds, from the jurisdiction of the [COA]. Pursuant to its mandate as the guardian of public funds, the COA is vested with broad powers over all accounts pertaining to government revenue and expenditures and the uses of public funds and property.[27] This includes the exclusive authority to define the scope of its audit and examination, establish the techniques and methods for such review, and promulgate accounting and auditing rules and regulations.[28] The COA is endowed with enough latitude to determine, prevent and disallow irregular, unnecessary, excessive, extravagant or unconscionable expenditures of government funds.[29] It is tasked to be vigilant and conscientious in safeguarding the proper use of the government's, and ultimately the people's, property.[30] The exercise of its general audit power is among the constitutional mechanisms that gives life to the check and balance system inherent in our form of government.[31] The Court had therefore previously upheld the authority of the COA to disapprove payments which it finds excessive and disadvantageous to the Government; to determine the meaning of public bidding and when there is failure in the bidding; to disallow expenditures which it finds unnecessary according to its rules even if disallowance will mean discontinuance of foreign aid; to disallow a contract even after it has been executed and goods have been delivered.[32] Thus, LGUs, though granted local fiscal autonomy, are still within the audit jurisdiction of the COA. Now on the more important issue of whether the COA properly exercised its jurisdiction in disallowing the disbursement of the City of Manila's funds for the EPSA of its former three-term councilors.

It is the general policy of the Court to sustain the decisions of administrative authorities, especially one which is constitutionally-created not only on the basis of the doctrine of separation of powers but also for their presumed expertise in the laws they are entrusted to enforce. Findings of administrative agencies are accorded not only respect but also finality when the decision and order are not tainted with unfairness or arbitrariness that would amount to grave abuse of discretion.[33] It is only when the COA has acted without or in excess of jurisdiction, or with grave abuse of discretion amounting to lack or excess of jurisdiction, that this Court entertains a petition questioning its rulings.[34] There is grave abuse of discretion when there is an evasion of a positive duty or a virtual refusal to perform a duty enjoined by law or to act in contemplation of law as when the judgment rendered is not based on law and evidence but on caprice, whim and despotism.[35] In this case, we find no grave abuse of discretion on the part of the COA in issuing the assailed decisions as will be discussed below.

Petitioners claim that the grant of the retirement and gratuity pay remuneration is a valid exercise of the powers of theSangguniang Panlungsod set forth in RA 7160. We disagree. Indeed, Section 458 of RA 7160 defines the power, duties, functions and compensation of the Sangguniang Panlungsod, to wit:
SEC. 458. Powers, Duties, Functions and Compensation. - (a) The Sangguniang Panlungsod, as the legislative body of the city, shall enact ordinances, approve resolutions and appropriate funds for the general welfare of the city and its inhabitants pursuant to Section 16 of this Code and in the proper exercise of the corporate powers of the city as provided for under Section 22 of this Code, and shall: xxxx (viii) Determine the positions and salaries, wages, allowances and other emoluments and benefits of officials and employees paid wholly or mainly from city funds and

provide for expenditures necessary for the proper conduct of programs, projects, services, and activities of the city government.

In the exercise of the above power, the City Council of Manila enacted on December 7, 2000 Ordinance No. 8040, but the same was deemed approved on August 23, 2002. The ordinance authorized the conferment of the EPSA to the former three-term councilors and, as part of the award, the qualified city officials were to be given retirement and gratuity pay remuneration. We believe that the award is a gratuity which is a free gift, a present, or benefit of pecuniary value bestowed without claim or demand, or without consideration.[36] However, as correctly held by the COA, the above power is not without limitations. These limitations are embodied in Section 81 of RA 7160, to wit:
SEC. 81. Compensation of Local Officials and Employees. The compensation of local officials and personnel shall be determined by the sanggunian concerned: Provided, That the increase in compensation of elective local officials shall take effect only after the terms of office of those approving such increase shall have expired: Provided, further, That the increase in compensation of the appointive officials and employees shall take effect as provided in the ordinance authorizing such increase; Provided however, That said increases shall not exceed the limitations on budgetary allocations for personal services provided under Title Five, Book II of this Code: Provided finally, That such compensation may be based upon the pertinent provisions of Republic Act Numbered Sixty-seven fifty-eight (R.A. No. 6758), otherwise known as the Compensation and Position Classification Act of 1989.

Moreover, the IRR of RA 7160 reproduced the Constitutional provision that no elective or appointive local official or employee shall receive additional, double, or indirect compensation, unless specifically authorized by law, nor accept without the consent of the Congress, any present, emoluments, office, or title of any kind from any foreign government. Section 325 of the law limit the total appropriations for personal services[37] of a local government unit to not more than 45% of its total annual income from regular sources realized in the next preceding fiscal year.

While it may be true that the above appropriation did not exceed the budgetary limitation set by RA 7160, we find that the COA is correct in sustaining ND No. 06-010-100-05. Section 2 of Ordinance No. 8040 provides for the payment of retirement and gratuity pay remuneration equivalent to the actual time served in the position for three (3) consecutive terms as part of the EPSA. The recomputation of the award disclosed that it is equivalent to the total compensation received by each awardee for nine years that includes basic salary, additional compensation, Personnel Economic Relief Allowance, representation and transportation allowance, rice allowance, financial assistance, clothing allowance, 13 th month pay and cash gift.[38] This is not disputed by petitioners. There is nothing wrong with the local government granting additional benefits to the officials and employees. The laws even encourage the granting of incentive benefits aimed at improving the services of these employees. Considering, however, that the payment of these benefits constitute disbursement of public funds, it must not contravene the law on disbursement of public funds.[39] As clearly explained by the Court in Yap v. Commission on Audit,[40] the disbursement of public funds, salaries and benefits of government officers and employees should be granted to compensate them for valuable public services rendered, and the salaries or benefits paid to such officers or employees must be commensurate with services rendered. In the same vein, additional allowances and benefits must be shown to be necessary or relevant to the fulfillment of the official duties and functions of the government officers and employees. Without this limitation, government officers and employees may be paid enormous sums without limit or without justification necessary other than that such sums are being paid to someone employed by the government. Public funds are the property of the people and must be used prudently at all times with a view to prevent dissipation and waste.[41] Undoubtedly, the above computation of the awardees' reward is excessive and tantamount to double and additional compensation. This cannot be justified by the mere fact that the awardees have been elected for three (3) consecutive terms in the same position. Neither can it be justified that the reward is given as a gratuity at the end of the last term of the qualified elective official. The fact remains that the remuneration is equivalent to everything that the awardees received during the entire period that he served as such official. Indirectly, their salaries and benefits are doubled, only that they receive half of them at the end of their last term.

The purpose of the prohibition against additional or double compensation is best expressed in Peralta v. Auditor General,[42] to wit:
This is to manifest a commitment to the fundamental principle that a public office is a public trust. It is expected of a government official or employee that he keeps uppermost in mind the demands of public welfare. He is there to render public service. He is of course entitled to be rewarded for the performance of the functions entrusted to him, but that should not be the overriding consideration. The intrusion of the thought of private gain should be unwelcome. The temptation to further personal ends, public employment as a means for the acquisition of wealth, is to be resisted. That at least is the idea. There is then to be an awareness on the part of the officer or employee of the government that he is to receive only such compensation as may be fixed by law. With such a realization, he is expected not to avail himself of devious or circuitous means to increase the remuneration attached to his position.[43]

Verily, the COA's assailed decisions were made in faithful compliance with its mandate and in judicious exercise of its general audit power as conferred on it by the Constitution.[44] The COA adheres to the policy that government funds and property should be fully protected and conserved and that irregular, unnecessary, excessive or extravagant expenditures or uses of such funds and property should be prevented.[45] However, in line with existing jurisprudence,[46] we need not require the refund of the disallowed amount because all the parties acted in good faith. In this case, the questioned disbursement was made pursuant to an ordinance enacted as early as December 7, 2000 although deemed approved only on August 22, 2002. The city officials disbursed the retirement and gratuity pay remuneration in the honest belief that the amounts given were due to the recipients and the latter accepted the same with gratitude, confident that they richly deserve such reward. WHEREFORE, the petition is DISMISSED. Decision No. 2008-088 dated September 26, 2008 and Decision No. 2010-077 dated August 23, 2010 of the Commission on Audit, are AFFIRMED WITH MODIFICATION. The recipients need not refund the retirement and gratuity pay remuneration that they already received.

Accordingly, the Status Quo Ante Order issued by the Court on November 30, 2010 is hereby RECALLED. In view, however, of this Court's decision not to require the refund of the amounts already received, the Commission on Audit isORDERED to cease and desist from enforcing the Notice of Finality of Decision[47] dated October 5, 2010. SO ORDERED.

G.R. No. 154952

July 16, 2012

HILARION F. DIMAGIBA, IRMA MENDOZA, and ELLEN RASCO, Petitioners, vs. JULITA ESPARTERO, MA. BERNARDITA L. CARREON and MELINA SAN PEDRO, Respondents. DECISION PERALTA, J.: Assailed in this petition for review on certiorari are the Decision 1 dated May 30, 2002 and the Resolution2 dated August 28, 2002 of the Court of Appeals issued in CA-G.R. SP No. 61261. Petitioners Hilarion Dimagiba (Dimagiba), Irma Mendoza (Mendoza), and Ellen Rasco (Rasco) were employees of The Livelihood Corporation (LIVECOR), a government-owned and controlled corporation created under Executive Order No. 866. Petitioner Dimagiba was the Group Manager, Asset Development and Management Group; petitioner Mendoza was the Division Chief III, Asset Development and Management Group; and petitioner Rasco was the Project Evaluation Officer IV, Asset Development and Management Group. On March 8, 1990, LIVECOR and the Human Settlement Development Corporation (HSDC), now known as Strategic Investment and Development Corporation (SIDCOR), also a government-owned and controlled corporation, created under Presidential Decree (P.D.) 1396, entered into a Trust Agreement 3 whereby the former would undertake the task of managing, administering, disposing and liquidating the corporate assets, projects and accounts of HSDC. In HSDC Board Resolution No. 3-26-A4 dated March 26, 1990, it was provided that in order to carry out the trust agreement, LIVECOR personnel must be designated concurrently to operate certain basic HSDC/SIDCOR functions, thus, LIVECOR personnel, namely, petitioners Dimagiba and Mendoza were designated as Assistant General Manager for Operations and Head, Inter-Agency Committee on Assets Disposal and as Treasurer and Controller, respectively. The same resolution provided for the designees' monthly honoraria and commutable reimbursable representation allowances (CRRA). Petitioner Rasco was designated as Technical Assistant to the Officer-in-Charge (OIC), also with CRRA, under HSDC Board Resolution No. 05-19-B5 dated May 19, 1993. In a letter6 dated November 14, 1997, the Department of Budget and Management informed LIVECOR of the approval of its organization/staffing pattern modifications which resulted in the abolition of petitioners' positions. As a result, petitioners were separated from the service effective June 30, 1998 and were each given a separation package7 as follows: Dimagiba Mendoza Rasco

1. 2. 3. 4. 5.

Separation Pay Gratuity Pay Terminal Pay Last Month Gross Salary Service Award TOTAL

P608,580.00 165,600.00 352,075.48 17,410.00 10,000.00

P815,021.91 132,150.00 58,398.18 15,815.00 10,000.00

P519,125.16 112,555.00 22,633.25 13,555.50 10,000.00 P678,169.91

P1,153,665.48 P1,031,385.00

The HSDC resolved to terminate petitioners' services because the latter's separation from LIVECOR would no longer allow them to perform their functions at the HSDC. However, the HSDC, through its OIC, Jose Rufino, wrote the Office of the Government Corporate Counsel (OGCC) and sought its opinion on the legality of HSDC's granting gratuity pay to petitioners. On April 8, 1998, the OGCC rendered Opinion No. 078,8 series of 1998, which resolved among others the grant of gratuity pay to petitioners. The OGCC found that it is within the power of the Board to grant reasonable Gratuity Pay/Package to petitioners subject to the usual rules of the Commission on Audit (COA) pertaining to allowances/benefits and disbursements of funds. On May 19, 1998, the HSDC Board passed Resolution No. 05-19-A9 terminating petitioners' services but resolved to grant petitioners their Gratuity Package/Pay, as follows: 1. MR. HILARION DIMAGIBA is hereby granted a Gratuity Package as follows: 1.1 Gratuity Pay in the amount of SEVEN HUNDRED THOUSAND PESOS (P700,000.00); 1.2 Termination of LBP Lease Agreement No. 282-C/Lease Schedule I (Nissan Sentra UDC 919) effective 15 July 1998 in favor of Mr. Dimagiba, with Mr. Dimagiba paying LBP Leasing Corporation all charges, fees penalties, etc., including pre-termination charges; 2. MS. IRMA MENDOZA is hereby granted a Gratuity Pay in the amount of ONE HUNDRED EIGHTY THOUSAND (P180,000.00) PESOS; 3. MS. ELLEN RASCO is hereby granted a Gratuity Pay in the amount of SIXTY THOUSAND PESOS (P60,000.00). RESOLVED FURTHER, That the total budgetary requirement and disbursement of the above Gratuity Pay is hereby approved and allocated from Corporate Funds; RESOLVED FINALLY, That the Officer-in-Charge and the Trustee of corporate funds are hereby directed and authorized to disburse funds and execute the necessary documentation, acts and deeds relative to the immediate and full implementation of this resolution.10 In a Memorandum dated July 17, 1998 issued by LIVECOR Administrator Manuel Portes (Portes), it was stated that any payment of gratuities by the HSDC/SIDCOR to LIVECOR officers concurrently performing HSDC functions shall not be processed without prior clearance from him as the same shall be first cleared with the COA and OGCC to avoid any legal problem. Portes then sought the opinion of LIVECORs Resident COA Auditor, Alejandro Fumar, regarding petitioners' claim for additional gratuity, who opined that such gratuity payment would amount to double compensation.

Subsequently, petitioners wrote a letter11 dated July 29, 1998 addressed to Portes requesting for the processing of their HSDC gratuity pay. Attached in their letter were OGCC Opinion No. 078 and a letter12 from the Presidential Management Staff (PMS), dated June 29, 1998, concurring with the OGCC's opinion. Portes then instructed respondent Atty. Ma. Bernardita L. Carreon (Carreon), Attorney IV of LIVECORs Legal Services Department and a designated member of Special Task Force for HSDC, to draft a letter seeking clarification on OGCC Opinion No. 078. He likewise requested the LIVECOR Legal Services Department to issue an opinion on the matter of petitioners' HSDC/SIDCOR gratuity pay. In a Memorandum13 dated August 25, 1998 addressed to Portes, respondent Atty. Julita A. Espartero (Espartero), then LIVECOR'S Chief Legal Counsel, wrote that petitioners' designation as HSDC officers would not entitle them to receive any gratuity pay because: First, the purpose for which Mr. Dimagiba, Ms. Mendoza and Ms. Rasco were elected or designated as SIDCOR officers is already made clear in the subject Resolution which provides as follows, viz: WHEREAS, in order to carry out the trust, LIVECOR personnel must be designated/elected concurrently to operate certain basic SIDCOR corporate offices/positions. The election or designation of Mr. Dimagiba, Ms. Mendoza and Ms. Rasco as SIDCOR officers were not intended to be independent of or separate from their employment with LIVECOR but was made precisely because of their being LIVECOR personnel tasked to carry out the Trust Agreement between SIDCOR and LIVECOR. Second, Mr. Dimagiba, Ms. Mendoza and Ms. Rasco do not receive salaries or wages from SIDCOR but CRREs. This clearly shows that they are not organic SIDCOR employees but, as heretofore indicated, LIVECOR officers merely holding concurrent positions in SIDCOR. The reason for the above-mentioned arrangement (grant of CRREs and not salaries or wages) is that: "While dual appointments in two government- owned corporations are permissible, dual compensation is not." To allow Mr. Dimagiba, Ms. Mendoza and Ms. Rasco, therefore, to receive gratuity pay/package apart from what they are entitled to receive or have already received from LIVECOR will be to subvert or indirectly circumvent the abovestated legal principle. Third, not being organic SIDCOR employees but LIVECOR officers merely holding concurrent positions in SIDCOR, Mr. Dimagiba, Ms. Mendoza and Ms. Rasco cannot be said to have been "separated" from SIDCOR. 14 In the meantime, petitioners had requested respondent Melina San Pedro (San Pedro), LIVECOR's Financial Analyst, to sign and process the disbursement vouchers for the payment of their gratuity pay but the latter refused to do so because of the adverse opinion of the LIVECOR Legal Department and based on the memorandum issued by Portes. In October 1998, Portes was replaced by Atty. Salvador C. Medialdea (Atty. Medialdea) to whom petitioners subsequently referred the matter of their gratuity payment. In a letter 15 dated June 14, 1999, Atty. Medialdea sought clarification from the OGCC regarding its Opinion No. 078. The OGCC responded with the issuance of its Opinion No. 019,16 s. 2000 on January 31, 2000, where it declared that HSDC Resolution No. 05-19-A, granting gratuities in favor of petitioners, could not be implemented as the intended beneficiaries were prohibited by law from receiving the same, citing Section 8 of Article IX-B of the Constitution, i.e., proscription on double compensation. On October 27, 1998, petitioners filed with the Office of the Ombudsman a Complaint-Affidavit charging Administrator Portes, Atty. Christine Tomas-Espinosa, Chief of Staff of the Office of the Administrator, respondents Espartero, Carreon, and San Pedro, with grave misconduct, conduct prejudicial to the best interest of the service, inefficiency and incompetence in the performance of official functions, and violation of Section 5 (a), Republic Act (RA) No. 6713. In their complaint-affidavit, petitioners alleged that respondents conspired in refusing to release their gratuity pay and that such refusal for an unreasonable length of time despite repeated demands constituted the offenses charged. Respondents filed their respective Counter-Affidavits denying the charges against them. Respondent Espartero contended that her actions relative to the processing of gratuity pay merely consisted of rendering an opinion that such gratuity would amount to double compensation, while respondent Carreon alleged that her only participation

with regard to petitioners' claims for additional gratuity was to draft a letter addressed to the OGCC. On the other hand, respondent San Pedro claimed that her refusal to affix her signature on petitioners' disbursement vouchers for the release of said gratuity pay was based on the memorandum of Administrator Portes preventing LIVECOR officers and employees from acting on any claims for gratuity without the latter's prior approval. On June 2, 2000, the Ombudsman rendered its Decision,17 the dispositive portion of which reads: WHEREFORE, foregoing premises considered, respondents JULITA ESPARTERO, BERNARDITA CARREON and MELINA SAN PEDRO are hereby found guilty of Gross Neglect of Duty, Oppression, Conduct Prejudicial to the Best Interest of Service, Inefficiency and Incompetence, and Violation of Section 5 (a), Republic Act No. 6713, and are hereby meted out the penalty of DISMISSAL from the service coupled with the accessory penalties of cancellation of their eligibilities, forfeiture of leave credits and retirement benefits as well as disqualification of reemployment in the government service pursuant to Sections 9, 17 and 22, Rule XIV of the Omnibus Rules Implementing Book V of Executive Order No. 292. On the contrary, the instant complaint against respondents MANUEL PORTES and CHRISTINE TOMAS-ESPINOSA is DISMISSED for being moot and academic, they being already out of the government service without prejudice to any civil or criminal actions filed against them. Furthermore, pursuant to Section 15 (2), Republic Act No. 6770, the incumbent Administrator of the Livelihood Corporation and other public officers concerned are hereby directed to facilitate the processing and payment of complainants gratuity in accordance with HSDC Board Resolution No. 05 -19-A, s. 1998. The Honorable Administrator, Livelihood Corporation (LIVECOR), 7/F Hanston Building, Emerald Avenue, Pasig City, is hereby tasked to implement this Decision in accordance with law informing this Office of the action taken thereon within ten (10) days upon receipt hereof. Let copies of this Decision be furnished the Civil Service Commission for their guidance and reference. SO ORDERED.18 In so ruling, the Ombudsman stated that the prohibition on double compensation would not apply to pensions or gratuities because they are gifts or bounty given in recognition of the employees' past services. It found that the HSDC Board had the discretion and authority to decide on matters which were within its competence and jurisdiction, such as granting of benefits and retirement gratuities to its officers and employees. It concluded that payment of petitioners' gratuities did not involve judgment or discretion on LIVECOR's part, hence, a ministerial act; and that Resolution No. 05-19-A which granted the gratuity pay to petitioners directed LIVECOR as HSDC's trustee to disburse funds and execute the necessary documentation for the full implementation of the same. Respondents filed their motions for reconsideration, which the Ombudsman disposed in an Order 19 dated August 8, 2000 in this wise: WHEREFORE, except as to the finding of guilt on respondent ESPARTEROs alleged violation of Section 5 (a), Republic Act No. 6713, the assailed June 23, 2000 DECISION is affirmed with finality.20 SO ORDERED. On September 7, 2000, the Ombudsman issued an Order21 directing the implementation of its decision; thus, LIVECOR's Final Notice of Dismissal from Service were subsequently served on respondents. Petitioners' gratuity pay were then released. Respondents filed with the CA a petition for review under Rule 43 with application for a writ of preliminary mandatory injunction and/or temporary restraining order (TRO) and/or writ of preliminary prohibitory injunction. The CA issued a TRO22 and later granted the writ of preliminary injunction.23 On May 30, 2002, the CA rendered its assailed Decision, the dispositive portion of which reads:

WHEREFORE, the petition is hereby GRANTED and the assailed decision of the Office of the Ombudsman, dated June 2, 2000, and the Order dated August 8, 2000, are REVERSED and SET ASIDE and judgment is hereby rendered: 1. Reinstating petitioners to their positions held prior to their dismissal from office with full backwages and benefits; 2. Ordering private respondents to return the gratuity packages received from HSDC; and 3. Granting a permanent and final injunction enjoining the Office of the Ombudsman from executing the assailed decision and Order.24 The CA found that the gratuity packages received by petitioners from HSDC constituted the prohibited additional or double compensation under the Constitution. It found no evidence to support the Ombudsman decision finding respondents guilty of the administrative charges as they acted accordingly as public officers. Anent the issue of the timeliness of the filing of the petition, the CA ruled that petitioners filed their appeal within the 15-day period prescribed under Section 4 of Rule 43 of the Rules of Court, relying on the case of Fabian v. Desierto.25 However, since there was no clear pronouncement that appeals of Ombudsman decision in administrative cases cannot be made under Section 4 of Rule 43, the dismissal of the petition on the ground that it was filed beyond the 10-day period provided under Section 27 of RA 6770, or the Ombudsman Act of 1989, would result to glaring injustice to respondents; and that dismissal of appeals purely on technical grounds is frowned upon especially if it will result to injustice. Petitioners' motion for reconsideration was denied by the CA in a Resolution dated August 28, 2002. Hence, this petition for review. Petitioners raise the following issues: WHETHER OR NOT THE HONORABLE COURT OF APPEALS ERRED WHEN IT GAVE DUE COURSE TO RESPONDENTS' PETITION FOR REVIEW DESPITE BEING FILED BEYOND THE REGLEMENTARY PERIOD OF TEN (10) DAYS SET BY SECTION 27 OF REPUBLIC ACT 6770. WHETHER OR NOT THE COURT OF APPEALS ERRED WHEN IT RULED THAT THE GRATUITIES GRANTED TO PETITIONERS DIMAGIBA, MENDOZA AND RASCO BY HSDC CONSTITUTE DOUBLE COMPENSATION PROHIBITED UNDER ARTICLE IX (B), SECTION 8 OF THE 1987 CONSTITUTION DESPITE THE FACT THAT SAID GRATUITIES CLEARLY FALL UNDER THE EXCEPTION UNDER THE SAME PROVISION.26 Anent the first issue, petitioners contend that the CA erred in acting on the petition which was filed beyond the 10-day reglementary period for filing the same as provided under Section 27 of RA 6770. They claim that respondents received the Ombudsman order denying their motion for reconsideration on August 25, 2000 and filed a motion for extension of time with the CA on September 11, 2000, which was the 15th day from receipt of the order, relying on our ruling in Fabian v. Desierto27 and Rule 43 of the Rules of Court. Petitioners cite the cases of Lapid v. CA28 and Barata v. Abalos, Jr.29 to support the application of the 10-day period for filing the petition in the CA from receipt of the Ombudsman order. We are not persuaded. Section 27 of RA 6770 provides as follows: Section 27. Effectivity and Finality of Decisions. - All provisionary orders of the Office of the Ombudsman are immediately effective and executory. xxxx Findings of fact by the Office of the Ombudsman when supported by substantial evidence are conclusive. Any order, directive or decision imposing the penalty of public censure or reprimand, suspension of not more than one month's salary shall be final and unappealable.

In all administrative disciplinary cases, orders, directives or decisions of the Office of the Ombudsman may be appealed to the Supreme Court by filing a petition for certiorari within ten (10) days from receipt of the written notice of the order, directive or decision or denial of the motion for reconsideration in accordance with Rule 45 of the Rules of Court. The then Rules of Procedure of the Office of the Ombudsman likewise contain a similar provision. Section 7, Rule III of Administrative Order (A.O.) No. 0730 provides as follows: Sec. 7. Finality and Execution of Decision - Where the respondent is absolved of the charge and in case of conviction where the penalty imposed is public censure or reprimand, suspension of not more than one month, or a fine equivalent to one month salary, the decision shall be final, executory and unappealable. In all other cases, the decision shall become final after the expiration of ten (10) days from receipt thereof by the respondent, unless a motion for reconsideration or petition for certiorari, shall have been filed by him as prescribed in Section 27 of R.A. 6770. In Fabian v. Desierto,31 we declared unconstitutional Section 27 of RA 6770 and Section 7, Rule III of A.O. No. 7 and any other provision of law implementing the aforesaid Act and insofar as they provide for appeals in administrative disciplinary cases from the Office of the Ombudsman to the Supreme Court. We held that such provision was violative of Section 30, Article VI of the Constitution as it expanded our appellate jurisdiction without our advice and concurrence; and that it was also inconsistent with Section 1, Rule 45 of the Rules of Court which provides that a petition for review on certiorari shall apply only to a review of judgments or final orders of the Court of Appeals, the Sandiganbayan, the Court of Tax Appeals, the Regional Trial Court, or other courts authorized by law. We then said: As a consequence of our ratiocination that Section 27 of Republic Act No. 6770 should be struck down as unconstitutional, and in line with the regulatory philosophy adopted in appeals from quasi-judicial agencies in the 1997 Revised Rules of Civil Procedure, appeals from decisions of the Office of the Ombudsman in administrative disciplinary cases should be taken to the Court of Appeals under the provisions of Rule 43. 32 Subsequently, in Lapid v. CA33 which involved the issue of whether or not the decision of the Ombudsman finding then Governor Manuel Lapid administratively liable for misconduct and imposing on him a penalty of one year suspension without pay is immediately executory. We then ruled: x x x The only provision affected by the Fabian ruling is the designation of the Court of Appeals as the proper forum and of Rule 43 of the Rules of Court as the proper mode of appeal. All other matters included in said Section 27, including the finality or non-finality of decisions, are not affected and still stand. 34 Thus, we said that since the penalty imposed on Lapid which was one year suspension was not among those enumerated under Section 27 as final and unappealable, an appeal timely filed by Lapid will stay the immediate implementation of the decision of the Ombudsman appealed from. Later came the case of Barata v. Abalos, Jr.35 which was decided in 2001. The issue brought to us then was whether the CA committed grave abuse of discretion in ruling that the Ombudsman decision exonerating respondent Mayor Abalos, Jr. of an administrative charge is not appealable, which we answered in the negative. We also said that even on the assumption that appeal is allowed, the same can no longer prosper, thus: This notwithstanding, even on the assumption that appeal is allowed, the same can no longer prosper. As correctly pointed out by private respondent, since the Order dated September 10, 1999 of the Ombudsman denying the motion for reconsideration was received by petitioner on October 15, 1999, petitioner had until October 25, 1999 to appeal in accordance with Section 27, R.A. 6770 or at the most, until November 24, 1999, if he availed of the 30-day extension provided under Section 2, Rule 43 of the 1997 Rules on Civil Procedure. However, the petition was filed with the Court of Appeals only on February 1, 2000, way beyond the reglementary period. 36 Thus, it appeared that the period provided under Section 27 of RA 6770 which is ten days must be observed in filing a petition with the CA assailing the Ombudsman decision in administrative case. In this case, respondents filed with the CA their motion for extension of time to file petition for review under Rule 43 on September 11, 2000, i.e., on the 15th day from receipt of the Ombudsman order denying their motion for reconsideration, and filed the petition on September 19, 2000. At the time the petition was filed, the matter of which

reglementary period must apply, whether 10 days under Section 27 of RA 6770 or 15 days under Section 4, Rule 43 of the Rules of Court, had not been established with definiteness until the Barata case was decided later. Considering that the Fabian ruling stated that Rule 43 of the Rules of Court should be the proper mode of appeal from an Ombudsman decision in administrative cases, and Section 4 of Rule 43 provides for 15 days from receipt of the order appealed from, the motion for extension to file petition which was filed on the 15th day from receipt of the Ombudsman order is considered timely filed. Moreover, as correctly stated by the CA, dismissal of appeals on purely technical ground is frowned upon especially if it will result to unfairness as in this case. In Baylon v. Fact-Finding Intelligence Bureau,37 we cited reasons or justifications to resist the strict adherence to procedure, to wit: (1) matters of life, liberty, honor and property; (2) counsel's negligence without the participatory negligence on the part of the client; (3) the existence of special or compelling circumstances; (4) the merits of the case; (5) a cause not entirely attributable to the fault or negligence of the party favored by the suspension of the rules; (6) a lack of any showing that the review sought is merely frivolous and dilatory; and (7) the other party will not be unjustly prejudiced thereby. Here, the Ombudsman found respondents guilty of the charges filed against them and imposed upon them the penalty of dismissal from the service. The penalty of dismissal is a severe punishment, because it blemishes a person's record in government service.38 It is an injury to one's reputation and honor which produces irreversible effects on one's career and private life. Worse, it implies loss of livelihood to the employee and his family.39 If only to assure the judicial mind that no injustice is allowed to take place due to a blind adherence to rules of procedure, the dismissal on technicality of respondents' petition, which is aimed at establishing not just their innocence but the truth, cannot stand.40 As to the second issue, petitioners contend that the gratuity given to them by the HSDC Board cannot be considered as additional or double compensation which is prohibited by the Constitution. We find no merit in this argument. The additional grant of gratuity pay to petitioners amounted to additional compensation prohibited by the Constitution. As provided under Section 8 of Article IX-B of the 1987 Constitution: Section 8. No elective or appointive public officer or employee shall receive additional, double, or indirect compensation, unless specifically authorized by law, nor accept without the consent of the Congress, any present, emolument, office, or title of any kind from any foreign government. Pensions or gratuities shall not be considered as additional, double, or indirect compensation. Clearly, the only exception for an employee to receive additional, double and indirect compensation is where the law allows him to receive extra compensation for services rendered in another position which is an extension or is connected with his basic work. The prohibition against additional or double compensation, except when specifically authorized by law, is considered a "constitutional curb" on the spending power of the government. In Peralta v. Mathay,41 we stated the purpose of the prohibition, to wit: x x x This is to manifest a commitment to the fundamental principle that a public office is a public trust. It is expected of a government official or employee that he keeps uppermost in mind the demands of public welfare. He is there to render public service. He is of course entitled to be rewarded for the performance of the functions entrusted to him, but that should not be the overriding consideration. The intrusion of the thought of private gain should be unwelcome. The temptation to further personal ends, public employment as a means for the acquisition of wealth, is to be resisted. That at least is the ideal. There is then to be awareness on the part of an officer or employee of the government that he is to receive only such compensation as may be fixed by law. With such a realization, he is expected not to avail himself of devious or circuitous means to increase the remuneration attached to his position. 42 x xx The gratuity pay being given to petitioners by the HSDC Board was by reason of the satisfactory performance of their work under the trust agreement. It is considered a bonus and by its very nature, a bonus partakes of an additional remuneration or compensation.43 It bears stressing that when petitioners were separated from LIVECOR, they were given separation pay which also included gratuity pay for all the years they worked thereat and concurrently in

HSDC/SIDCOR. Granting them another gratuity pay for the works done in HSDC under the trust agreement would be indirectly giving them additional compensation for services rendered in another position which is an extension or is connected with his basic work which is prohibited. This can only be allowed if there is a law which specifically authorizes them to receive an additional payment of gratuity. The HSDC Board Resolution No. 05-19-A granting petitioners gratuity pay is not a law which would exempt them from the Constitutional proscription against additional, double or indirect compensation. Neither does the HSDC law under P.D. 1396 contain a provision allowing the grant of such gratuity pay to petitioners. Section 9 of P.D. 1396 provides:
1wphi 1

Section 9. Appointment, Control and Discipline of Personnel. The Board, upon recommendation of the General Manager of the Corporation, shall appoint the officers, and employees of the Corporation and its subsidiaries; fix their compensation, allowances and benefits, their working hours and such other conditions of employment as it may deem proper; grant them leaves of absence under such regulations as it may promulgate; discipline and/or remove them for cause; and establish and maintain a recruitment and merit system for the Corporation and its affiliates and subsidiaries. The above-quoted provision applies to the persons appointed as employees of the HSDC and does not extend to petitioners who were LIVECOR employees merely designated in HSDC under a trust agreement. The fact that they were not HSDC employees was emphatically stated in Resolution No. 3-26-A passed by the HSDC Board of Directors on March 26, 1990, where it was provided that "in order to carry out the trust agreement, LIVECOR personnel must be designated/elected concurrently to operate certain basic SIDCOR corporate offices and positions." Petitioners claim that the proscription against double compensation does not include pensions and gratuity. We are not persuaded. We quote with approval what the CA said, thus: The second paragraph of Section 8, Article IX specifically adds that "pensions and gratuities shall not be considered as additional, double or indirect compensation." This has reference to compensation already earned, for instance by a retiree. A retiree receiving pensions or gratuities after retirement can continue to receive such pension or gratuity even if he accepts another government position to which another compensation is attached. The grant to designees Dimagiba et al. of another gratuity from HSDC would not fall under the exception in the second paragraph as the same had not been primarily earned, but rather being granted for service simultaneously rendered to LIVECOR and HSDC. Hence, to allow the release of the second gratuity from HSDC would run afoul over the well-settled rule that "in the absence of an express legal exception, pension or gratuity laws should be construed as to preclude any person from receiving double compensation. 44 We thus find no reversible error committed by theCA in granting the petition filed by respondents and reversing the Ombudsman decision finding them guilty of the administrative charges. WHEREFORE, the petition for review is DENIED. The Decision dated May 30, 2002 and the Resolution dated August 28, 2002 of the Court of Appeals are hereby AFFIRMED. SO ORDERED
1wphi 1

PHILIPPINE SOCIETY FOR THE PREVENTION OF CRUELTY TO ANIMALS,

G.R. No. 169752

Petitioners,

Members:

PUNO, C.J. QUISUMBING, YNARES-SANTIAGO, SANDOVAL-GUTIERREZ, CARPIO, AUSTRIA-MARTINEZ, CORONA, - versus CARPIO-MORALES, AZCUNA, TINGA, CHICO-NAZARIO, GARCIA, VELASCO, JR., NACHURA, and REYES, JJ. COMMISSION ON AUDIT, DIR. RODULFO J. ARIESGA (in his official capacity as Director of the Commission on Audit), MS.

MERLE M. VALENTIN and MS. SUSAN GUARDIAN (in their official capacities as Team Leader and Team Member, respectively, of the audit Team of the Commission on Audit), Respondents. Promulgated: September 25, 2007

x----------------------------------------------------------- x

DECISION

AUSTRIA-MARTINEZ, J.:

Before the Court is a special civil action for Certiorari and Prohibition under Rule 65 of the Rules of Court, in relation to Section 2 of Rule 64, filed by the petitioner assailing Office Order No. 2005-021[1] dated September 14, 2005 issued by the respondents which constituted the audit team, as well as its September 23, 2005 Letter[2] informing the petitioner that respondents audit team shall conduct an audit survey on the petitioner for a detailed audit of its accounts, operations, and financial transactions. No temporary restraining order was issued.

The petitioner was incorporated as a juridical entity over one hundred years ago by virtue of Act No. 1285, enacted onJanuary 19, 1905, by the Philippine Commission. The petitioner, at the time it was created, was composed of animal aficionados and animal propagandists. The objects of the petitioner, as stated in Section 2 of its charter, shall be to enforce laws relating to cruelty inflicted upon animals or the protection of animals in the Philippine Islands, and generally, to do

and perform all things which may tend in any way to alleviate the suffering of animals and promote their welfare.[3]

At the time of the enactment of Act No. 1285, the original Corporation Law, Act No. 1459, was not yet in existence. Act No. 1285 antedated both the Corporation Law and the constitution of the Securities and Exchange Commission. Important to note is that the nature of the petitioner as a corporate entity is distinguished from the sociedad anonimas under the Spanish Code of Commerce.

For the purpose of enhancing its powers in promoting animal welfare and enforcing laws for the protection of animals, the petitioner was initially imbued under its charter with the power to apprehend violators of animal welfare laws. In addition, the petitioner was to share one-half (1/2) of the fines imposed and collected through its efforts for violations of the laws related thereto. As originally worded, Sections 4 and 5 of Act No. 1285 provide:

SEC. 4. The said society is authorized to appoint not to exceed five agents in the City of Manila, and not to exceed two in each of the provinces of the Philippine Islands who shall have all the power and authority of a police officer to make arrests for violation of the laws enacted for the prevention of cruelty to animals and the protection of animals, and to serve any process in connection with the execution of such laws; and in addition thereto, all the police force of the Philippine Islands, wherever organized, shall, as occasion requires, assist said society, its members or agents, in the enforcement of all such laws.

SEC. 5. One-half of all the fines imposed and collected through the efforts of said society, its members or its agents, for violations of the laws enacted for the prevention of cruelty to animals and for their

protection, shall belong to said society and shall be used to promote its objects.

(emphasis supplied)

Subsequently, however, the power to make arrests as well as the privilege to retain a portion of the fines collected for violation of animal-related laws were recalled by virtue of Commonwealth Act (C.A.) No. 148,[4] which reads, in its entirety, thus:

Be it enacted by the National Assembly of the Philippines:

Section 1. Section four of Act Numbered Twelve hundred and eighty-five as amended by Act Numbered Thirty five hundred and fortyeight, is hereby further amended so as to read as follows:

Sec. 4. The said society is authorized to appoint not to exceed ten agents in the City of Manila, and not to exceed one in each municipality of the Philippines who shall have the authority to denounce to regular peace officers any violation of the laws enacted for the prevention of cruelty to animals and the protection of animals and to cooperate with said peace officers in the prosecution of transgressors of such laws.

Sec. 2. The full amount of the fines collected for violation of the laws against cruelty to animals and for the protection of animals,shall

accrue to the general fund of the Municipality where the offense was committed.

Sec. 3. This Act shall take effect upon its approval.

Approved, November 8, 1936. (Emphasis supplied)

Immediately thereafter, then President Manuel L. Quezon issued Executive Order (E.O.) No. 63 dated November 12, 1936, portions of which provide:

Whereas, during the first regular session of the National Assembly, Commonwealth Act Numbered One Hundred Forty Eight wasenacted depriving the agents of the Society for the Prevention of Cruelty to Animals of their power to arrest persons who have violated the laws prohibiting cruelty to animals thereby correcting a serious defect in one of the laws existing in our statute books.

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Whereas, the cruel treatment of animals is an offense against the State, penalized under our statutes, which the Government is duty bound to enforce; Now, therefore, I, Manuel L. Quezon, President of the Philippines, pursuant to the authority conferred upon me by the Constitution, hereby decree, order, and direct the Commissioner of

Public Safety, the Provost Marshal General as head of the Constabulary Division of the Philippine Army, every Mayor of a chartered city, and every municipal president to detail and organize special members of the police force, local, national, and the Constabulary to watch, capture, and prosecute offenders against the laws enacted to prevent cruelty to animals. (Emphasis supplied)

On December 1, 2003, an audit team from respondent Commission on Audit (COA) visited the office of the petitioner to conduct an audit survey pursuant to COA Office Order No. 2003-051 dated November 18, 2003[5] addressed to the petitioner. The petitioner demurred on the ground that it was a private entity not under the jurisdiction of COA, citing Section 2(1) of Article IX of the Constitution which specifies the general jurisdiction of the COA, viz:

Section 1. General Jurisdiction. The Commission on Audit shall have the power, authority, and duty to examine, audit, and settle all accounts pertaining to the revenue and receipts of, and expenditures or uses of funds and property, owned or held in trust by, or pertaining to the Government, or any of its subdivisions, agencies, or instrumentalities, including government-owned and controlled corporations with original charters, and on a post-audit basis: (a) constitutional bodies, commissions and officers that have been granted fiscal autonomy under the Constitution; (b) autonomous state colleges and universities; (c) other government-owned or controlled corporations and their subsidiaries; and (d) such non-governmental entities receiving subsidy or equity, directly or indirectly, from or through the government, which are required by law or the granting institution to submit to such audit as a condition of subsidy or equity. However, where the internal control system of the audited agencies is inadequate, the Commission may adopt such measures, including temporary or special pre-audit, as are necessary and appropriate to correct the deficiencies. It shall keep

the general accounts of the Government, and for such period as may be provided by law, preserve the vouchers and other supporting papers pertaining thereto. (Emphasis supplied)

Petitioner explained thus:

a. Although the petitioner was created by special legislation, this necessarily came about because in January 1905 there was as yet neither a Corporation Law or any other general law under which it may be organized and incorporated, nor a Securities and Exchange Commission which would have passed upon its organization and incorporation.

b. That Executive Order No. 63, issued during the Commonwealth period, effectively deprived the petitioner of its power to make arrests, and that the petitioner lost its operational funding, underscore the fact that it exercises no governmental function. In fine, the government itself, by its overt acts, confirmed petitioners status as a private juridical entity.

The COA General Counsel issued a Memorandum[6] dated May 6, 2004, asserting that the petitioner was subject to its audit authority. In a letter dated May 17, 2004,[7] respondent COA informed the petitioner of the result of the evaluation, furnishing it with a copy of said Memorandum dated May 6, 2004 of the General Counsel.

Petitioner thereafter filed with the respondent COA a Request for Reevaluation dated May 19, 2004,[8] insisting that it was a private domestic corporation.

Acting on the said request, the General Counsel of respondent COA, in a Memorandum dated July 13, 2004,[9] affirmed her earlier opinion that the petitioner was a government entity that was subject to the audit jurisdiction of respondent COA. In a letter dated September 14, 2004, the respondent COA informed the petitioner of the result of the re-evaluation, maintaining its position that the petitioner was subject to its audit jurisdiction, and requested an initial conference with the respondents.

In a Memorandum dated September 16, 2004, Director Delfin Aguilar reported to COA Assistant Commissioner JuanitoEspino, Corporate Government Sector, that the audit survey was not conducted due to the refusal of the petitioner because the latter maintained that it was a private corporation.

Petitioner received on September 27, 2005 the subject COA Office Order 2005-021 dated September 14, 2005 and the COA Letter dated September 23, 2005.

Hence, herein Petition on the following grounds:

A.

RESPONDENT COMMISSION ON AUDIT COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION WHEN IT RULED THAT PETITIONER IS SUBJECT TO ITS AUDIT AUTHORITY.

B.

PETITIONER IS ENTITLED TO THE RELIEF SOUGHT, THERE BEING NO APPEAL, NOR ANY PLAIN, SPEEDY AND ADEQUATE REMEDY IN THE ORDINARY COURSE OF LAW AVAILABLE TO IT.[10]

The essential question before this Court is whether the petitioner qualifies as a government agency that may be subject to audit by respondent COA.

Petitioner argues: first, even though it was created by special legislation in 1905 as there was no general law then existing under which it may be organized or incorporated, it exercises no governmental functions because these have been revoked by C.A. No. 148 and E.O. No. 63; second, nowhere in its charter is it indicated that it is a public corporation, unlike, for instance, C.A. No. 111 which created the Boy Scouts of the Philippines, defined its powers and purposes, and specifically stated that it was An Act to Create a Public Corporation in which, even as amended by Presidential Decree No. 460, the law still adverted to the Boy Scouts of the Philippines as a public corporation, all of which are not obtaining in the charter of the petitioner; third, if it were a government body, there would have been no need for the State to grant it tax exemptions under Republic Act No. 1178, and the fact that it was so exempted strengthens its position that it is a private institution; fourth, the employees of the petitioner are registered and covered by the Social Security System at the latters initiative and not through the Government Service Insurance System, which should have been the case had the employees been considered government employees; fifth, the petitioner does not receive any form of financial assistance from the government, since C.A. No. 148, amending Section 5 of Act No. 1285, states that the full amount of the fines, collected for violation of the laws against cruelty to animals and for the protection of animals, shall accrue to the general fund of the Municipality where the offense was committed; sixth, C.A. No. 148 effectively deprived the petitioner of its powers to make arrests and serve processes as these functions were placed in the hands of the police force;seventh, no government appointee or representative sits on the board of trustees of the petitioner; eighth, a reading of the provisions of its charter (Act No. 1285) fails to show that any act or decision of the petitioner is subject to the approval of or control by any government agency, except to the

extent that it is governed by the law on private corporations in general; and finally, ninth, the Committee on Animal Welfare, under the Animal Welfare Act of 1998, includes members from both the private and the public sectors.

The respondents contend that since the petitioner is a body politic created by virtue of a special legislation and endowed with a governmental purpose, then, indubitably, the COA may audit the financial activities of the latter. Respondents in effect divide their contentions into six strains: first, the test to determine whether an entity is a government corporation lies in the manner of its creation, and, since the petitioner was created by virtue of a special charter, it is thus a government corporation subject to respondents auditing power; second, the petitioner exercises sovereign powers, that is, it is tasked to enforce the laws for the protection and welfare of animals which ultimately redound to the public good and welfare, and, therefore, it is deemed to be a government instrumentality as defined under the Administrative Code of 1987, the purpose of which is connected with the administration of government, as purportedly affirmed by American jurisprudence; third, by virtue of Section 23,[11] Title II, Book III of the same Code, the Office of the President exercises supervision or control over the petitioner; fourth, under the same Code, the requirement under its special charter for the petitioner to render a report to the Civil Governor, whose functions have been inherited by the Office of the President, clearly reflects the nature of the petitioner as a government instrumentality; fifth, despite the passage of the Corporation Code, the law creating the petitioner had not been abolished, nor had it been re-incorporated under any general corporation law; and finally, sixth, Republic Act No. 8485, otherwise known as the Animal Welfare Act of 1998, designates the petitioner as a member of its Committee on Animal Welfare which is attached to the Department of Agriculture.

In view of the phrase One-half of all the fines imposed and collected through the efforts of said society, the Court, in a Resolution dated January 30, 2007, required the Office of the Solicitor General (OSG) and the parties to comment on: a) petitioner's authority to impose fines and the validity of the provisions of Act No. 1285 and Commonwealth Act No. 148 considering that there are no standard measures provided for in the aforecited laws as to the manner of implementation, the specific violations of the law, the person/s authorized to

impose fine and in what amount; and, b) the effect of the 1935 and 1987 Constitutions on whether petitioner continues to exist or should organize as a private corporation under the Corporation Code,B.P. Blg. 68 as amended.

Petitioner and the OSG filed their respective Comments. Respondents filed a Manifestation stating that since they were being represented by the OSG which filed its Comment, they opted to dispense with the filing of a separate one and adopt for the purpose that of the OSG.

The petitioner avers that it does not have the authority to impose fines for violation of animal welfare laws; it only enjoyed the privilege of sharing in the fines imposed and collected from its efforts in the enforcement of animal welfare laws; such privilege, however, was subsequently abolished by C.A. No. 148; that it continues to exist as a private corporation since it was created by the Philippine Commission before the effectivity of the Corporation law, Act No. 1459; and the 1935 and 1987 Constitutions.

The OSG submits that Act No. 1285 and its amendatory laws did not give petitioner the authority to impose fines for violation of laws[12] relating to the prevention of cruelty to animals and the protection of animals; that even prior to the amendment of Act No. 1285, petitioner was only entitled to share in the fines imposed; C.A. No. 148 abolished that privilege to share in the fines collected; that petitioner is a public corporation and has continued to exist since Act No. 1285; petitioner was not repealed by the 1935 and 1987 Constitutions which contain transitory provisions maintaining all laws issued not inconsistent therewith until amended, modified or repealed.

The petition is impressed with merit.

The arguments of the parties, interlaced as they are, can be disposed of in five points.

First, the Court agrees with the petitioner that the charter test cannot be applied.

Essentially, the charter test as it stands today provides:

[T]he test to determine whether a corporation is government owned or controlled, or private in nature is simple. Is it created by its own charter for the exercise of a public function, or by incorporation under the general corporation law? Those with special charters are government corporations subject to its provisions, and its employees are under the jurisdiction of the Civil Service Commission, and are compulsory members of the Government Service Insurance System. xxx (Emphasis supplied)[13]

The petitioner is correct in stating that the charter test is predicated, at best, on the legal regime established by the 1935 Constitution, Section 7, Article XIII, which states:
Sec. 7. The National Assembly shall not, except by general law, provide for the formation, organization, or regulation of private corporations, unless such corporations are owned or controlled by the Government or any subdivision or instrumentality thereof.[14]

The foregoing proscription has been carried over to the 1973 and the 1987 Constitutions. Section 16 of Article XII of the present Constitution provides:
Sec. 16. The Congress shall not, except by general law, provide for the formation, organization, or regulation of private corporations. Government-owned or controlled corporations may be created or established by special charters in the interest of the common good and subject to the test of economic viability.

Section 16 is essentially a re-enactment of Section 7 of Article XVI of the 1935 Constitution and Section 4 of Article XIV of the 1973 Constitution. During the formulation of the 1935 Constitution, the Committee on Franchises recommended the foregoing proscription to prevent the pressure of special interests upon the lawmaking body in the creation of corporations or in the regulation of the same. To permit the lawmaking body by special law to provide for the organization, formation, or regulation of private corporations would be in effect to offer to it the temptation in many cases to favor certain groups, to the prejudice of others or to the prejudice of the interests of the country.[15] And since the underpinnings of the charter test had been introduced by the 1935 Constitution and not earlier, it follows that the test cannot apply to the petitioner, which was incorporated by virtue of Act No. 1285, enacted on January 19, 1905. Settled is the rule that laws in general have no retroactive effect, unless the contrary is provided.[16] All statutes are to be construed as having only a prospective operation, unless the purpose and intention of the legislature to give them a retrospective effect is expressly declared or is necessarily implied from the language used. In case of doubt, the doubt must be resolved against the retrospective effect.[17]

There are a few exceptions. Statutes can be given retroactive effect in the following cases: (1) when the law itself so expressly provides; (2) in case of remedial statutes; (3) in case of curative statutes; (4) in case of laws interpreting others; and (5) in case of laws creating new rights.[18] None of the exceptions is present in the instant case.

The general principle of prospectivity of the law likewise applies to Act No. 1459, otherwise known as the Corporation Law, which had been enacted by virtue of the plenary powers of the Philippine Commission on March 1, 1906, a little over a year afterJanuary 19, 1905, the time the petitioner emerged as a juridical entity. Even the Corporation Law respects the rights and powers of juridical entities organized beforehand, viz:

SEC. 75. Any corporation or sociedad anonima formed, organized, and existing under the laws of the Philippine Islands and lawfully transacting business in the Philippine Islands on the date of the passage of this Act, shall be subject to the provisions hereof so far as such provisions may be applicable and shall be entitled at its option either to continue business as such corporation or to reform and organize under and by virtue of the provisions of this Act, transferring all corporate interests to the new corporation which, if a stock corporation, is authorized to issue its shares of stock at par to the stockholders or members of the old corporation according to their interests. (Emphasis supplied).

As pointed out by the OSG, both the 1935 and 1987 Constitutions contain transitory provisions maintaining all laws issued not inconsistent therewith until amended, modified or repealed.[19] In a legal regime where the charter test doctrine cannot be applied, the mere fact that a corporation has been created by virtue of a special law does not necessarily qualify it as a public corporation. What then is the nature of the petitioner as a corporate entity? What legal regime governs its rights, powers, and duties? As stated, at the time the petitioner was formed, the applicable law was the Philippine Bill of 1902, and, emphatically, as also stated above, no proscription similar to the charter test can be found therein. The textual foundation of the charter test, which placed a limitation on the power of the legislature, first appeared in the 1935 Constitution. However, the petitioner was incorporated in 1905 by virtue of Act No. 1258, a law antedating the Corporation Law (Act No. 1459) by a year, and the 1935 Constitution, by thirty years. There being neither a general law on the formation and organization of private corporations nor a restriction on the legislature to create private

corporations by direct legislation, the Philippine Commission at that moment in history was well within its powers in 1905 to constitute the petitioner as a private juridical entity.

Time and again the Court must caution even the most brilliant scholars of the law and all constitutional historians on the danger of imposing legal concepts of a later date on facts of an earlier date.[20]

The amendments introduced by C.A. No. 148 made it clear that the petitioner was a private corporation and not an agency of the government. This was evident in Executive Order No. 63, issued by then President of the Philippines Manuel L. Quezon, declaring that the revocation of the powers of the petitioner to appoint agents with powers of arrest corrected a serious defect in one of the laws existing in the statute books.

As a curative statute, and based on the doctrines so far discussed, C.A. No. 148 has to be given retroactive effect, thereby freeing all doubt as to which class of corporations the petitioner belongs, that is, it is a quasi-public corporation, a kind of private domestic corporation, which the Court will further elaborate on under the fourth point.

Second, a reading of petitioners charter shows that it is not subject to control or supervision by any agency of the State, unlike government-owned and controlled corporations. No government representative sits on the board of trustees of the petitioner. Like all private corporations, the successors of its members are determined voluntarily and solely by the petitioner in accordance with its by-laws, and may exercise those powers generally accorded to private corporations, such as the powers to hold property, to sue and be sued, to use a common seal, and so forth. It may adopt by-laws for its internal operations: the petitioner shall be managed or operated by its officers in accordance with its bylaws in force. The pertinent provisions of the charter provide:

Section 1. Anna L. Ide, Kate S. Wright, John L. Chamberlain, William F. Tucker, Mary S. Fergusson, Amasa S. Crossfield, Spencer Cosby, Sealy B. Rossiter, Richard P. Strong, Jose Robles Lahesa, Josefina R. de Luzuriaga, and such other persons as may be associated with them in conformity with this act, and their successors, are hereby constituted and created a body politic and corporate at law, under the name and style of The Philippines Society for the Prevention of Cruelty to Animals.

As incorporated by this Act, said society shall have the power to add to its organization such and as many members as it desires, to provide for and choose such officers as it may deem advisable, and in such manner as it may wish, and to remove members as it shall provide.

It shall have the right to sue and be sued, to use a common seal, to receive legacies and donations, to conduct social enterprises for t he purpose of obtaining funds, to levy dues upon its members and provide for their collection to hold real and personal estate such as may be necessary for the accomplishment of the purposes of the society, and to adopt such by-laws for its government as may not be inconsistent with law or this charter.

xxxx

Sec. 3. The said society shall be operated under the direction of its officers, in accordance with its by-laws in force, and this charter.

xxxx

Sec. 6. The principal office of the society shall be kept in the city of Manila, and the society shall have full power to locate and establish branch offices of the society wherever it may deem advisable in the Philippine Islands, such branch offices to be under the supervision and control of the principal office.

Third. The employees of the petitioner are registered and covered by the Social Security System at the latters initiative, and not through the Government Service Insurance System, which should be the case if the employees are considered government employees. This is another indication of petitioners nature as a private entity. Section 1 of Republic Act No. 1161, as amended by Republic Act No. 8282, otherwise known as the Social Security Act of 1997, defines the employer:

Employer Any person, natural or juridical, domestic or foreign, who carries on in the Philippines any trade, business, industry, undertaking or activity of any kind and uses the services of another person who is under his orders as regards the employment, except the Government and any of its political subdivisions, branches or instrumentalities, including corporations owned or controlled by the Government: Provided, That a self-employed person shall be both employee and employer at the same time. (Emphasis supplied)

Fourth. The respondents contend that the petitioner is a body politic because its primary purpose is to secure the protection and welfare of animals which, in turn, redounds to the public good.

This argument, is, at best, specious. The fact that a certain juridical entity is impressed with public interest does not, by that circumstance alone, make the entity a public corporation, inasmuch as a corporation may be private although its charter contains provisions of a public character, incorporated solely for the public good. This class of corporations may be considered quasi-public corporations, which are private corporations that render public service, supply public wants,[21] or pursue other eleemosynary objectives. While purposely organized for the gain or benefit of its members, they are required by law to discharge functions for the public benefit. Examples of these corporations are utility,[22] railroad, warehouse, telegraph, telephone, water supply corporations and transportation companies.[23] It must be stressed that a quasi-public corporation is a species of private corporations, but the qualifying factor is the type of service the former renders to the public: if it performs a public service, then it becomes a quasi-public corporation.[24] Authorities are of the view that the purpose alone of the corporation cannot be taken as a safe guide, for the fact is that almost all corporations are nowadays created to promote the interest, good, or convenience of the public. A bank, for example, is a private corporation; yet, it is created for a public benefit. Private schools and universities are likewise private corporations; and yet, they are rendering public service. Private hospitals and wards are charged with heavy social responsibilities. More so with all common carriers. On the other hand, there may exist a public corporation even if it is endowed with gifts or donations from private individuals. The true criterion, therefore, to determine whether a corporation is public or private is found in the totality of the relation of the corporation to the State. If the corporation is created by the State as the latters own agency or instrumentality to help it in carrying out its governmental functions, then that corporation is considered public; otherwise, it is private. Applying the above test, provinces, chartered cities, and barangays can best exemplify public corporations. They are created by the State as its own device and agency for the accomplishment of parts of its own public works.[25]

It is clear that the amendments introduced by C.A. No. 148 revoked the powers of the petitioner to arrest offenders of animal welfare laws and the power to serve processes in connection therewith.

Fifth. The respondents argue that since the charter of the petitioner requires the latter to render periodic reports to the Civil Governor, whose functions have been inherited by the President, the petitioner is, therefore, a government instrumentality.

This contention is inconclusive. By virtue of the fiction that all corporations owe their very existence and powers to the State, the reportorial requirement is applicable to all corporations of whatever nature, whether they are public, quasipublic, or private corporationsas creatures of the State, there is a reserved right in the legislature to investigate the activities of a corporation to determine whether it acted within its powers. In other words, the reportorial requirement is the principal means by which the State may see to it that its creature acted according to the powers and functions conferred upon it. These principles were extensively discussed in Bataan Shipyard & Engineering Co., Inc. v. Presidential Commission on Good Government.[26] Here, the Court, in holding that the subject corporation could not invoke the right against self-incrimination whenever the State demanded the production of its corporate books and papers, extensively discussed the purpose of reportorial requirements, viz:

x x x The corporation is a creature of the state. It is presumed to be incorporated for the benefit of the public. It received certain special privileges and franchises, and holds them subject to the laws of the state and the limitations of its charter. Its powers are limited by law. It can make no contract not authorized by its charter. Its rights to act as a corporation are only preserved to it so long as it obeys the laws of its creation. There is a reserve[d] right in the legislature to investigate its contracts and find out whether it has exceeded its powers. It would be a strange anomaly to hold that a state, having chartered a corporation to make use of certain franchises, could not, in the exercise of sovereignty,

inquire how these franchises had been employed, and whether they had been abused, and demand the production of the corporate books and papers for that purpose. The defense amounts to this, that an officer of the corporation which is charged with a criminal violation of the statute may plead the criminality of such corporation as a refusal to produce its books. To state this proposition is to answer it. While an individual may lawfully refuse to answer incriminating questions unless protected by an immunity statute, it does not follow that a corporation vested with special privileges and franchises may refuse to show its hand when charged with an abuse of such privileges. (Wilson v. United States, 55 Law Ed., 771, 780.)[27]

WHEREFORE, the petition is GRANTED. Petitioner is DECLARED a private domestic corporation subject to the jurisdiction of the Securities and Exchange Commission. The respondents are ENJOINED from investigating, examining and auditing the petitioner's fiscal and financial affairs.

SO ORDERED.

2nd LT. SALVADOR PARREO represented by his daughter Myrna P. Caintic, Petitioner,

G.R. No. 162224

Present: PUNO,* C.J., QUISUMBING,** YNARES-SANTIAGO,

SANDOVAL-GUTIERREZ, CARPIO, AUSTRIA-MARTINEZ, CORONA, - versus CARPIO MORALES, AZCUNA, TINGA, CHICO-NAZARIO, GARCIA, VELASCO, JR., and NACHURA, JJ.

COMMISSION ON AUDIT and CHIEF OF STAFF, ARMED FORCES OF THE PHILIPPINES, Respondents.

Promulgated:

June 7, 2007

x---------------------------------------------------x

DECISION

CARPIO, J.:

The Case

Before the Court is a petition for certiorari[1] assailing the 9 January 2003 Decision[2] and 13 January 2004Resolution[3] of the Commission on Audit (COA).

The Antecedent Facts

Salvador Parreo (petitioner) served in the Armed Forces of the Philippines (AFP) for 32 years. On 5 January 1982, petitioner retired from the Philippine Constabulary with the rank of 2nd Lieutenant. Petitioner availed, and received payment, of a lump sum pension equivalent to three years pay. In 1985, petitioner started receiving his monthly pension amounting toP13,680.

Petitioner migrated to Hawaii and became a naturalized American citizen. In January 2001, the AFP stopped petitioners monthly pension in accordance with Section 27 of Presidential Decree No. 1638[4] (PD 1638), as amended by Presidential Decree No. 1650.[5] Section 27 of PD 1638, as amended, provides that a retiree who loses his Filipino citizenship shall be removed from the retired list and his retirement benefits terminated upon loss of Filipino citizenship. Petitioner requested for reconsideration but the Judge Advocate General of the AFP denied the request.

Petitioner filed a claim before the COA for the continuance of his monthly pension.

The Ruling of the Commission on Audit

In its 9 January 2003 Decision, the COA denied petitioners claim for lack of jurisdiction. The COA ruled:
It becomes immediately noticeable that the resolution of the issue at hand hinges upon the validity of Section 27 of P.D. No. 1638, as amended. Pursuant to the mandate of the Constitution, whenever a dispute involves the validity of laws, the courts, as guardians of the Constitution, have the inherent authority to determine whether a statute enacted by the legislature transcends the limit imposed by the fundamental law. Where the statute violates the Constitution, it is not only the right but the duty of the judiciary to declare such act as unconstitutional and void. (Tatad vs. Secretary of Department of Energy, 281 SCRA 330) That being so, prudence dictates that this Commission defer to the authority and jurisdiction of the judiciary to rule in the first instance upon the constitutionality of the provision in question.

Premises considered, the request is denied for lack of jurisdiction to adjudicate the same. Claimant is advised to file his claim with the proper court of original jurisdiction.[6]

Petitioner filed a motion for reconsideration. Petitioner alleged that the COA has the power and authority to incidentally rule on the constitutionality of Section 27 of PD 1638, as amended. Petitioner alleged that a direct recourse to the court would be dismissed for failure to exhaust administrative remedies. Petitioner further alleged that since his monthly pension involves government funds, the reason for the termination of the pension is subject to COAs authority and jurisdiction.

In its 13 January 2004 Resolution, the COA denied the motion. The COA ruled that the doctrine of exhaustion of administrative remedies does not apply if

the administrative body has, in the first place, no jurisdiction over the case. The COA further ruled that even if it assumed jurisdiction over the claim, petitioners entitlement to the retirement benefits he was previously receiving must necessarily cease upon the loss of his Filipino citizenship in accordance with Section 27 of PD 1638, as amended.

Hence, the petition before this Court.

The Issues

Petitioner raises the following issues:

1. Whether Section 27 of PD 1638, as amended, is constitutional;

2. Whether the COA has jurisdiction to rule on the constitutionality of Section 27 of PD 1638, as amended; and

3. Whether PD 1638, as amended, has retroactive or prospective effect.[7]

The Ruling of this Court

The petition has no merit.

Jurisdiction of the COA

Petitioner filed his money claim before the COA. A money claim is a demand for payment of a sum of money, reimbursement or compensation arising from law or contract due from or owing to a government agency.[8] Under Commonwealth Act No. 327,[9] as amended by Presidential Decree No. 1445,[10] money claims against the government shall be filed before the COA.[11] Section 2(1), Article IX(D) of the 1987 Constitution prescribes the powers of the COA, as follows:

Sec. 2. (1) The Commission on Audit shall have the power, authority, and duty to examine, audit, and settle all accounts pertaining to the revenue and receipts of, and expenditures or uses of funds and property, owned or held in trust by, or pertaining to, the Government, or any of its subdivisions, agencies, or instrumentalities, including government-owned or controlled corporations with original charters, and on a post-audit basis; (a) constitutional bodies, commissions and offices that have been granted fiscal autonomy under this Constitution; (b) autonomous state colleges and universities; (c) other government-owned or controlled corporations and their subsidiaries; and (d) such non-governmental entities receiving subsidy or equity, directly or indirectly, from or through the Government, which are required by law or the granting institution to submit such audit as a condition of subsidy or equity. However, where the internal control system of the audited agencies is inadequate, the Commission may adopt such measures, including temporary or special pre-audit, as are necessary and appropriate to correct the deficiencies. It shall keep the

general accounts of the Government and, for such period as may be provided by law, preserve the vouchers and other supporting papers pertaining thereto.

The jurisdiction of the COA over money claims against the government does not include the power to rule on the constitutionality or validity of laws. The 1987 Constitution vests the power of judicial review or the power to declare unconstitutional a law, treaty, international or executive agreement, presidential decree, order, instruction, ordinance, or regulation in this Court and in all Regional Trial Courts.[12] Petitioners money claim essentially involved the constitutionalityof Section 27 of PD 1638, as amended. Hence, the COA did not commit grave abuse of discretion in dismissing petitioners money claim.

Petitioner submits that the COA has the authority to order the restoration of his pension even without ruling on the constitutionality of Section 27 of PD 1638, as amended. The COA actually ruled on the matter in its 13 January 2004Resolution, thus:

Furthermore, assuming arguendo that this Commission assumed jurisdiction over the instant case, claimants entitlement to the retirement benefits he was previously receiving must necessarily be severed or stopped upon the loss of his Filipino citizenship as prescribed in Section 27, P.D. No. 1638, as amended by P.D. No. 1650.[13]

The COA effectively denied petitioners claim because of the loss of his Filipino citizenship.

Application of PD 1638, as amended

Petitioner alleges that PD 1638, as amended, should apply prospectively. The Office of the Solicitor General (OSG) agrees with petitioner. The OSG argues that PD 1638, as amended, should apply only to those who joined the military service after its effectivity, citing Sections 33 and 35, thus:

Section 33. Nothing in this Decree shall be construed in any manner to reduce whatever retirement and separation pay or gratuity or other monetary benefits which any person is heretofore receiving or is entitled to receive under the provisions of existing law.

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Section. 35. Except those necessary to give effect to the provisions of this Decree and to preserve the rights granted to retired or separated military personnel, all laws, rules and regulations inconsistent with the provisions of this Decree are hereby repealed or modified accordingly.

The OSG further argues that retirement laws are liberally construed in favor of the retirees. Article 4 of the Civil Code provides: Laws shall have no retroactive effect, unless the contrary is provided. Section 36 of PD 1638, as amended, provides that it shall take effect upon its approval. It was signed on 10 September 1979. PD 1638, as amended, does not provide for its retroactive application. There is no question that PD 1638, as amended, applies prospectively.

However, we do not agree with the interpretation of petitioner and the OSG that PD 1638, as amended, should apply only to those who joined the military after its effectivity. Since PD 1638, as amended, is about the new system of retirement and separation from service of military personnel, it should apply to those who were in the service at the time of its approval. In fact, Section 2 of PD 1638, as amended, provides that th[e] Decree shall apply to all military personnel in the service of the Armed Forces of the Philippines. PD 1638, as amended, was signed on 10 September 1979. Petitioner retired in 1982, long after the approval of PD 1638, as amended. Hence, the provisions of PD 1638, as amended, apply to petitioner.

Petitioner Has No Vested Right to his Retirement Benefits

Petitioner alleges that Section 27 of PD 1638, as amended, deprives him of his property which the Constitution and statutes vest in him. Petitioner alleges that his pension, being a property vested by the Constitution, cannot be removed or taken from him just because he became a naturalized American citizen. Petitioner further alleges that the termination of his monthly pension is a penalty equivalent to deprivation of his life.

The allegations have no merit. PD 1638, as amended, does not impair any vested right or interest of petitioner. Where the employee retires and meets the eligibility requirements, he acquires a vested right to the benefits that is protected by the due process clause.[14] At the time of the approval of PD 1638 and at the time of its amendment, petitioner was still in active service. Hence, petitioners retirement benefits were only future benefits and did not constitute a vested right. Before a right to retirement benefits or pension vests in an employee, he must have met the stated conditions of eligibility with respect to the nature of employment, age, and length of service.[15] It is only upon retirement that military personnel acquire a vested right to retirement

benefits. Retirees enjoy a protected property interest whenever they acquire a right to immediate payment under pre-existing law.[16]

Further, the retirement benefits of military personnel are purely gratuitous in nature. They are not similar to pension plans where employee participation is mandatory, hence, the employees have contractual or vested rights in the pension which forms part of the compensation.[17]

Constitutionality of Section 27 of PD 1638

Section 27 of PD 1638, as amended, provides:

Section 27. Military personnel retired under Sections 4, 5, 10, 11 and 12 shall be carried in the retired list of the Armed Forces of the Philippines. The name of a retiree who loses his Filipino citizenship shall be removed from the retired list and his retirement benefits terminated upon such loss.

The OSG agrees with petitioner that Section 27 of PD 1638, as amended, is unconstitutional. The OSG argues that the obligation imposed on petitioner to retain his Filipino citizenship as a condition for him to remain in the AFP retired list and receive his retirement benefit is contrary to public policy and welfare, oppressive, discriminatory, and violative of the due process clause of the Constitution. The OSG argues that the retirement law is in the nature of a contract between the government and its employees. The OSG further argues that Section 27 of PD 1638, as amended, discriminates against AFP retirees who have changed their nationality.

We do not agree.

The constitutional right to equal protection of the laws is not absolute but is subject to reasonable classification.[18] To be reasonable, the classification (a) must be based on substantial distinctions which make real differences; (b) must be germane to the purpose of the law; (c) must not be limited to existing conditions only; and (d) must apply equally to each member of the class.[19]

There is compliance with all these conditions. There is a substantial difference between retirees who are citizens of thePhilippines and retirees who lost their Filipino citizenship by naturalization in another country, such as petitioner in the case before us. The constitutional right of the state to require all citizens to render personal and military service[20] necessarily includes not only private citizens but also citizens who have retired from military service. A retiree who had lost his Filipino citizenship already renounced his allegiance to the state. Thus, he may no longer be compelled by the state to render compulsory military service when the need arises. Petitioners loss of Filipino citizenship constitutes a substantial distinction that distinguishes him from other retirees who retain their Filipino citizenship. If the groupings are characterized by substantial distinctions that make real differences, one class may be treated and regulated differently from another.[21]

Republic Act No. 7077[22] (RA 7077) affirmed the constitutional right of the state to a Citizen Armed Forces. Section 11 of RA 7077 provides that citizen soldiers or reservists include ex-servicemen and retired officers of the AFP. Hence, even when a retiree is no longer in the active service, he is still a part of the Citizen Armed Forces. Thus, we do not find the requirement imposed by Section 27 of PD 1638, as amended, oppressive, discriminatory, or contrary to public policy. The state has the right to impose a reasonable condition that is necessary for national defense. To rule otherwise would be detrimental to the interest of the state.

There was no denial of due process in this case. When petitioner lost his Filipino citizenship, the AFP had no choice but to stop his monthly pension in accordance with Section 27 of PD 1638, as amended. Petitioner had the opportunity to contest the termination of his pension when he requested for reconsideration of the removal of his name from the list of retirees and the termination of his pension. The Judge Advocate General denied the request pursuant to Section 27 of PD 1638, as amended.

Petitioner argues that he can reacquire his Filipino citizenship under Republic Act No. 9225[23] (RA 9225), in which case he will still be considered a natural-born Filipino. However, petitioner alleges that if he reacquires his Filipino citizenship under RA 9225, he will still not be entitled to his pension because of its prior termination. This situation is speculative. In the first place, petitioner has not shown that he has any intention of reacquiring, or has done anything to reacquire, his Filipino citizenship. Secondly, in response to the request for opinion of then AFP Chief of Staff, General Efren L. Abu, the Department of Justice (DOJ) issued DOJ Opinion No. 12, series of 2005, dated 19 January 2005, thus:

[T]he AFP uniformed personnel retirees, having re-acquired Philippine citizenship pursuant to R.A. No. 9225 and its IRR, are entitled to pension and gratuity benefits reckoned from the date they have taken their oath of allegiance to the Republic of the Philippines. It goes without saying that these retirees have no right to receive such pension benefits during the time that they have ceased to be Filipinos pursuant to the aforequoted P.D. No. 1638, as amended, and any payment made to them should be returned to the AFP. x x x.[24]

Hence, petitioner has other recourse if he desires to continue receiving his monthly pension. Just recently, in AASJS Member-Hector Gumangan Calilung v. Simeon Datumanong,[25] this Court upheld the constitutionality of RA 9225. If petitioner reacquires his Filipino citizenship, he will even recover his natural-born

citizenship.[26] In Tabasa v. Court of Appeals,[27] this Court reiterated that [t]he repatriation of the former Filipino will allow him to recover his natural-born citizenship x x x.

Petitioner will be entitled to receive his monthly pension should he reacquire his Filipino citizenship since he will again be entitled to the benefits and privileges of Filipino citizenship reckoned from the time of his reacquisition of Filipino citizenship. There is no legal obstacle to the resumption of his retirement benefits from the time he complies again with the condition of the law, that is, he can receive his retirement benefits provided he is a Filipino citizen.

We acknowledge the service rendered to the country by petitioner and those similarly situated. However, petitioner failed to overcome the presumption of constitutionality of Section 27 of PD 1638, as amended. Unless the provision is amended or repealed in the future, the AFP has to apply Section 27 of PD 1638, as amended.

WHEREFORE, we DISMISS the petition. We AFFIRM the 9 January 2003 Decision and 13 January 2004Resolution of the Commission on Audit.

SO ORDERED.