G.R. No.

113219 August 14, 1995

ANICETO G. MATEO, MAXIMO SAN DIEGO, QUIRINO MATEO, DANIEL FRANCISCO, and LEONILA KUIZON, petitioners,
vs.
HONORABLE COURT OF APPEALS, HON. ARTURO A. MARAVE, and EDGAR STA. MARIA, respondents.
PUNO, J.:
Upon complaint of some Morong Water District (MOWAD) employees, petitioners, all Board Members of MOWAD, conducted an investigation on
private respondent Edgar Sta. Maria, then General Manager.
1
On December 13, 1992, private respondent was placed under preventive
suspension and Maximo San Diego was designated in his place as Acting General Manager. He was later dismissed on January 7, 1993.
On January 18, 1993, private respondent filed a Special Civil Action for Quo Warranto and Mandamus with Preliminary Injunction
2
before the
Regional Trial Court of Rizal, Branch 78, challenging his dismissal by petitioners. The petition embodied three (3) causes of action. It reads:
xxx xxx xxx
FIRST CAUSE OF ACTION
xxx xxx xxx
II-2 Petitioner is the General Manager of the MOWAD since August 1984 with concomitant security of tenure in office and could not be
removed either temporarily or permanently, except for cause and only after compliance with the elementary rules of due process;
II-3 However, on December 14, 1992, contrary to the tenets of justice and fairness, as well as for want of procedural due process, the
respondents (petitioners) and members of the Board of Directors of the MOWAD have arbitrarily, whimsically, and unilaterally stopped
and prohibited the petitioner from exercising his rights and performing his duties as General Manager of the MOWAD and, in his
place, have designated the respondent (petitioner) Maximo San Diego as Acting General Manager . . .
II-4 On December 15, 1992, while petitioner was out of office on official travel, . . . thru stealth and strategy, the respondents have
conspired and helped one another in removing the petitioner from the Office of the General Manager of the MOWAD by forcibly
destroying its door and locked it with a replaced door-knob and all attempts on his part to gain access and entry proved futile; . . .
SECOND CAUSE OF ACTION
xxx xxx xxx
III-2 On January 7, 1993, . . . in confabulation with his co-respondents and members of the Board of Directors of the MOWAD, the
respondent Aniceto G. Mateo slapped the petitioner with an Order terminating his services as General Manger . . .
III-5 Petitioner has a clear right to the Office of General Manager of the MOWAD which is being usurped or unlawfully held by
respondent Maximo San Diego in conspiracy with his co-respondents; . . .
THIRD CAUSE OF ACTION
xxx xxx xxx
IV-1-a Petitioner is entitled to the relief mandated, and the whole or part of such relief consists in restraining the commission, or
continuance of the acts complained of more particularly the continuous acts of repondents in stopping and prohibiting him from
exercising his rights and performing his duties as General Manager of the MOWAD and from stopping and prohibiting him to gain
access and entry to office.
3

Petitioners, in turn, moved to dismiss the case on two (2) grounds: (1) the court had no jurisdiction over disciplinary actions of government
employees which is vested exclusively in the Civil Service Commission; and (2) quo warranto was not the proper remedy.
4
Respondent Judge
Arturo Marave denied the Motion to Dismiss on April 26, 1993, and the Motion for Reconsideration on June 9, 1993.
5

Petitioners then elevated the matter to this Court through a petition for certiorari under Rule 65 which was referred to respondent Court of Appeals
for adjudication. In its Decision, dated November 24, 1993, respondent Court of Appeals dismissed the petition for lack of merit, and in its
Resolution, dated January 11, 1994, denied the Motion for Reconsideration.
6

The main issue in this petition for review is whether or not the Regional Trial Court of Rizal has jurisdiction over Sp. Civil Case No. 014-M involving
dismissal of an employee of quasi-public corporation.
We hold that it has no jurisdiction.
There is no question that MOWAD is a quasi-public corporation created pursuant to Presidential Decree (P.D.) No. 198, known as the provincial
Water Utilities Act of 1973, as amended.
7
In Davao City Water District v. Civil Service Commissions 8 the Court en banc ruled that employees of
government-owned or controlled corporations with original charter fall under the jurisdiction of the Civil Service Commission, viz:
xxx xxx xxx
As early as Baguio Water District v. Trajano et, al., We already ruled that a water district is a corporation created pursuant to a special
law P.D. No. 198, as amended, and as such its officers and employees are covered by the Civil Service Law.
In another case (Hagonoy Water District v. NLRC), We ruled once again that local water districts are quasi-public corporations whose
employees belong to the Civil Service. (emphasis omitted)
Indeed, the established rule is that the hiring and firing of employees of goverment-own and controlled corporations are governed by the
provisions of the Civil Service Law and Rules and Regulations.
9

Presidential Decee No. 807, Executive Order No. 292,
10
and Rule II section 1 of Memorandum Circular No. 44 series of 1990 of the Civil Service
Commission spell out the initial remedy of private respondent against illegal dismissal. They categorically provide that the party aggrieved by a
decision, ruling, order, or action of an agency of the government involving termination of services may appeal to the Commission within fifteen (15)
days. Thereafter, private respondent could go on certiorari to this Court under Rule 65 of the Rules of Court if he still feels aggrieved by the ruling
of the Civil Service Commission. So We held in Mancita v. Barcinas,
11
viz:
xxx xxx xxx
[N]o appeal lies from the decision of the Service Commission, * and that parties aggrieved thereby may proceed to this Court alone on
certiorari under Rule 65 of the Rules of Court, within thirty (30) days from receipt of a copy thereof, pursuant to section 7, Article IX of
the 1987 Constitution. We quote:
Sec. 7. Unless otherwise provided by this Constitution or by law, any decision, order, or ruling of each
Commission may be brought to the Supreme Court on certiorari by the party within thirty days from receipt of
a copy thereof.
The Civil Service Commission under the Constitution, is the single arbiter of all contests relating to the Civil service and as such, its
judgments are unappealable and subject only to this Court's certiorari judgment.
Mancita, however, no longer governs for under the present rule, Revised Circular No. 1-91 as amended by Revised Administrative Circular No. 1-
95 which took effect on June 1, 1995, final resolutions of the Civil Service Commission shall be appealable to the Court of Appeals. In any event,
whether under the old rule or present rule, Regional Trial Courts have no jurisdiction to entertain cases involving dismissal of officers and
employees covered by the Civil Service Law.
IN VIEW HEREOF, the petition is GRANTED and the decision of respondent Court of Appeals dated November 24, 1993 and its Resolution dated
January 1, 1994 in CA G.R. SP No. 31530 are ANNULLED and SET ASIDE. No costs.
SO ORDERED.
G.R. No. 113212 December 29, 1995
THE DEPARTMENT OF HEALTH (DR. JOSE N. RODRIGUEZ MEMORIAL HOSPITAL) and CESAR J. VIARDO, M.D., in his capacity as
Director of the Dr. Jose N. Rodriguez Memorial Hospital, petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION, LABOR ARBITER CORNELIO L. LINSANGAN and CEFERINO R. LAUR, respondents.
HERMOSISIMA, JR., J.:
The eternal problem of jurisdiction over Government employees is again posed in this case: Which Government agency the National Labor
Relations Commission or the Civil Service Commission has jurisdiction over contests relating to the civil service?
This is a Petition for Certiorari and Prohibition filed by the Department of Health in behalf of the Dr. Jose N. Rodriguez Memorial Hospital (DJRMH)
and its Director, Cesar J. Viardo, seeking to review and set aside the Resolution of the National Labor Relations Commission in NLRC NCR CA
No. 002864-92 (NLRC Case No. 00-09-05194-90), dated September 7, 1993, which dismissed herein petitioners' appeal from the January 2, 1992
Decision of Labor Arbiter Cornelio L. Linsangan.
The antecedent facts, culled from the assailed Decision rendered by Labor Arbiter Cornelio Linsangan and that of the NLRC, respectively, as well
as from the pleadings of the parties, are not in dispute:
Private respondent Ceferino R Laur was a patient of the then Tala Leprosarium (now Jose N. Rodriguez Memorial Hospital), having been admitted
thereto in 1951 for treatment of Hansen's disease, commonly termed leprosy. He was discharged in 1956 after he was deemed to have been
cured of his affliction.
In 1975, he was employed at the DJRMH as a patient-assistant by the then Hospital Director, Dr. Artemio F. Runez, upon the recommendation of
the Barangay Captain of Tala. Specifically assigned as a member of the Patient-Assistant Police Force, he was accorded a compensation/salary,
initially, in the amount of P110.00. This was gradually increased through the years, depending upon the availability of funds. His salary was
chargeable to the maintenance and operating expenses of the hospital.
On September 15, 1989, complaints for Alarm and Scandal, Oral Defamation, Grave Threats, Concealment of Deadly Weapon, Violation of the
Code of Ethics of Policemen, and Conduct Unbecoming of a Police Officer were filed against said private respondent, pursuant to a report made
by his Chief of Police. Upon a finding of guilt of the aforesaid offenses, the said private respondent was meted the penalty of suspension for sixty
(60) days, with a stern warning that a repetition of the same would result in his outright dismissal by petitioner Dr. Cesar J. Viardo in his capacity
as Chief of Hospital.
1

On July 15, 1990, private respondent Laur got involved in the mauling of one, Jake Bondoc, along with two policemen, Corporal Ferrer and
Patrolman Berdon, Private respondent's account of the incident is to the effect that, while private respondent and his companions were manning
their posts at the hospital's Administration Building, a group of twelve (12) young boys engaged another group of four male youngsters (4) in a
stone-throwing encounter. This resulted in damage to the windows of the nearby Holy Rosary College. The caretaker of the college, Agustin Chan,
while assessing the damage caused, was chased by the smaller group and threw stones at him. Agustin Chan ran and took refuge at the
administration building where private respondent and the two policemen were on guard duty. It was at this point that one of the policemen hit one
of the stone throwers with a night stick.
2

A complaint filed by a certain Jake Bondoc, one of the young boys, against private respondent and his companions provoked an investigation
conducted on July 27, 1990, during which complainant Bondoc pointed to private respondent as the party responsible for his injuries even as
Patrolman Berdon admitted to having hit Bondoc.
On August 21, 1990, private respondent was dismissed by the Chief of Hospital, Dr. Cesar J. Viardo per Office Order No. 101, s-90, on the basis
of the Public Assistance Complaints Unit's (PACU) report/investigation finding private respondent and his companions to have indeed mauled
Jake Bondoc. The two policemen were merely suspended.
Consequently, on September 26, 1990, private respondent filed with the National Labor Relations Commission a complaint for illegal dismissal
with additional claims for payment of wage differentials, holiday pay, overtime pay and 13th month pay, as well as payment of moral and
exemplary damages, attorney's fees and expenses of litigation and with prayer for reinstatement without loss of seniority rights against Dr. Jose N.
Rodriguez Memorial Hospital (DJRMH) and Dr. Cesar J. Viardo. This was docketed as "NLRC NCR Case No. 00-09-05194-90" and subsequently
assigned to Labor Arbiter Cornelio Linsangan.
On January 2, 1993, Labor Arbiter Cornelio Linsangan rendered his Decision in private respondent's favor, the dispositive portion of which reads:
WHEREFORE, judgment is hereby rendered ordering the respondent hospital to:
1. reinstate complainant to his former position or if not possible, pay him separation pay equivalent to one month salary
for every year of service;
2. pay complainant the amount of P198,000.00 representing underpaid wages, unpaid overtime, holiday pay and 13th
month pay;
3. pay the complainant full backwages which as of this date amounts to P49,088.00;
4. pay the complainant the amount of P20,000.00 as moral and exemplary damages; and
5. pay the complainant attorney's fees equivalent to 10% of the total award.
3

Respondent Labor Arbiter Linsangan so ruled because first, he has determined that, contrary to the petitioners' position that private respondent's
employment was part of his medication and rehabilitative therapy, private respondent was in truth an employee in contemplation of the Labor
Code, the existence of an employer-employee relationship between petitioner hospital and private respondent being evident from the fact that
private respondent's work is necessary and desirable for the operation of the hospital. Private respondent was allegedly performing such functions
as were inherent to and undertaken by the members of the regular police force. This, the respondent Labor Arbiter believes to be an indication
that what private respondent was assigned to do was definitely beyond his rehabilitative therapy. Second, private respondent's dismissal was
illegal because it was not for a just cause. The mauling incident was not sufficiently established, and, even if so established, the same would not
justify his dismissal. Such dismissal was wanting in due process in view of the non-observance of the procedure prescribed for a valid exercise of
the power to dismiss under Sections 2, 5 and 6 of Rule XIV of the Rules Implementing B.P. Blg. 130.
4

The aforesaid decision was appealed to the NLRC. In its Resolution, dated September 27, 1993, the NLRC dismissed the appeal, the dispositive
portion of which reads:
WHEREFORE, respondents appeal is hereby dismissed for its failure to perfect the same on time.
5

The petitioners, thus, instituted this petition for certiorari.
The principal issue presented in this case is whether or not respondents NLRC and Labor Arbiter Cornelio L. Linsangan committed serious error in
their decisions and acted without jurisdiction when they took cognizance of the complaint filed by private respondent Ceferino R Laur before the
NLRC instead of the Civil Service Commission.
The petitioners mainly contend that since the DJRMH is a government hospital, its employees are covered by Civil Service rules and regulations
and not by the Labor Code. Therefore, any controversy concerning the relationship between the employees on the one hand and the hospital's
administration on the other, as is the case of private respondent, comes under the jurisdiction of the Merit Systems Board and the Civil Service
Commission.
We find the petition to be impressed with merit
The petitioner-hospital, the DJRMH, originally known as the Tala Leprosarium, was one of three leper colonies established under Commonwealth
Act No. 161. Maintained to this day as a public medical center and health facility attached to the Department of Health, the DJRMH exercises
strictly governmental functions relating to the management and control of the dreaded communicable Hansen's disease, commonly known as
leprosy. As it is clearly an agency of the Government, the DJRMH falls well within the scope and/or coverage of the Civil Service Law in
accordance with paragraph 1., Section 2, Article IX B, 1987 Constitution and the provisions of Executive Order No. 292, otherwise known as the
Administrative Code of 1987 and Presidential Decree No. 807, otherwise known as the Civil Service Decree of the Philippines.
As the central personnel agency of the Government, the Civil Service Commission administers the Civil Service Law. It is, therefore, the single
arbiter of all contests relating to the civil service.
6
The discharge of this particular function was formerly lodged in one of its offices, the Merit
Systems Protection Board (MSPB) which was vested with the power, among others, "to hear and decide on appeal administrative cases involving
officials and employees of the civil service and its decision shall be final except those involving dismissal or separation from the service which may
be appealed to the Commission".
7
However, with the issuance of Civil Service Commission Resolution No. 93-2387 on June 29, 1993, such
appeals shall now be filed directly with the Civil Service Commission. Pertinent portion of said resolution reads:
xxx xxx xxx
NOW, THEREFORE, pursuant to the provisions of Section 17 of Book V of the Administrative Code of 1987 which
authorizes the Commission, as an independent constitutional body, to effect changes in its organization as the need
arises, the Commission Resolves as it is hereby Resolved to effect the following changes:
1. Decisions in administrative cases involving officials and employees of the civil service appealable to the Commission
pursuant to Section 47 of Book V of the Code including personnel actions such as contested appointments shall now be
appealed directly to the Commission and not the MSPB;
8

xxx xxx xxx
Worthy to note in this connection is the fact that the Labor Code itself provides that "the terms and conditions of employment of government
employees shall be governed by the Civil Service Law, rules and regulations".
9

Conformably to the foregoing, it is, indeed, the Civil Service Commission which has jurisdiction over the present controversy. Its decisions are
subject to review by the Supreme Court.
10

Jurisdiction is conferred by law. Where there is none, no agreement of the parties can provide one.
11
Consequently, it was incorrect for the
respondent labor arbiter to have proceeded to hear the case, simply because private respondent Ceferino Laur happened to lodge his complaint
before his office,
12
or to hold that petitioners are estopped from assailing the respondent labor authorities' jurisdiction over the present case simply
because the petitioners have earlier submitted themselves to the said jurisdiction by virtue of their participation in all the stages of the proceedings
in the office of respondent Labor Arbiter Linsangan and in the NLRC, and that they failed to raise the issue of jurisdiction in the said proceedings.
13

Considering that the decision of a tribunal not vested with appropriate jurisdiction is null and void,
14
the respondent labor arbiter's finding of an
employer-employee relationship between the petitioner government agency and the private respondent should serve no purpose whatsoever.
Respondent labor arbiter's order of payment of private respondent's monetary claims is likewise null and should not be given effect.
WHEREFORE, finding the Dr. Jose N. Rodriguez Memorial Hospital to be within the scope of the Civil Service Law and not of the Labor Code, the
questioned decision of the respondent labor arbiter dated January 2, 1992 and the resolution of the NLRC, dated September 7, 1993, are hereby
REVERSED and SET ASIDE for having been rendered without jurisdiction. The Temporary Restraining Order issued on February 28, 1994 is
hereby made permanent.
SO ORDERED.


G.R. No. 96298 May 14, 1991
RENATO M. LAPINID, petitioner,
vs.
CIVIL SERVICE COMMISSION, PHILIPPINE PORTS AUTHORITY and JUANITO JUNSAY, respondents.
Brillantes, Nachura, Navarro & Arcilla Law Offices for petitioner.
Adolpho M. Guerzon for J. Junsay, Jr.
Evalyn L Fetalino, Rogelio C. Limare and Daisy B. Garcia-Tingzon for Civil Service Commission.
CRUZ, J.:p
The issue raised in this case has been categorically resolved in a long line of cases that should have since guided the policies and actions of the
respondent Civil Service Commission. Disregard of our consistent ruling on this matter has needlessly imposed on the valuable time of the Court
and indeed borders on disrespect for the highest tribunal. We state at the outset that this conduct can no longer be countenanced.
Petitioner Renato M. Lapinid was appointed by the Philippine Ports Authority to the position of Terminal Supervisor at the Manila International
Container Terminal on October 1, 1988. This appointment was protested on December 15, 1988, by private respondent Juanito Junsay, who
reiterated his earlier representations with the Appeals Board of the PPA on May 9, 1988, for a review of the decision of the Placement Committee
dated May 3, 1988. He contended that he should be designated terminal supervisor, or to any other comparable position, in view of his preferential
right thereto. On June 26, 1989, complaining that the PPA had not acted on his protest, Junsay went to the Civil Service Commission and
challenged Lapinid's appointment on the same grounds he had earlier raised before the PPA. In a resolution dated February 14, 1990, the
Commission disposed as follows:
After a careful review of the records of the case, the Commission finds the appeal meritorious. In the comparative
evaluation sheets, the parties were evaluated according to the following criteria, namely: eligibility; education; work
experience; productivity/performance/ attendance; integrity; initiative/leadership; and physical characteristics/personality
traits. The results of the evaluation are as follows:
JUNSAY, Juanito 79.5
VILLEGAS, Benjamin 79
LAPINID, Renato 75
DULFO, Antonio 78
MARIANO, Eleuterio 79
FLORES, Nestor 80
DE GUZMAN, Alfonso 80
VER, Cesar 80
It is thus obvious that Protestants Junsay (79.5) and Villegas (79) have an edge over that of protestees Lapinid (75) and
Dulfo (78).
Foregoing premises considered, it is directed that Appellants Juanito Junsay and Benjamin Villegas be appointed as
Terminal Supervisor (SG 18) vice protestees Renato Lapinid and Antonio Dulfo respectively who may be considered for
appointment to any position commensurate and suitable to their qualifications, and that the Commission be notified within
ten (10) days of the implementation hereof.
SO ORDERED.
Upon learning of the said resolution, Lapinid, 7who claimed he had not been informed of the appeal and had not been heard thereon, filed a
motion for reconsideration on March 19, 1990. This was denied on May 25, 1990. The Philippine Ports Authority also filed its own motion for
reconsideration on June 19, 1990, which was denied on August 17, 1990. A second motion for reconsideration filed on September 14, 1990,
based on the re-appreciation of Lapinid's rating from 75% to 84%, was also denied on October 19, 1990.
When the petitioner came to this Court on December 13, 1990, we resolved to require Comments from the respondents and in the meantime
issued a temporary restraining order. The Solicitor General took a stand against the Civil Service Commission which, at his suggestion, was
allowed to file its own Comment. The petitioner filed a Reply. The private respondent's Comment was dispensed with when it was not filed within
the prescribed period.
We see no reason to deviate from our consistent ruling on the issue before us.
In Luego v. Civil Service Commission,
1
this Court declared:
The issue is starkly simple: Is the Civil Service Commission authorized to disapprove a permanent appointment on the
ground that another person is better qualified than the appointee and, on the basis of this finding, order his replacement
by the latter?
xxx xxx xxx
Appointment is an essentially discretionary power and must be performed by the officer in which it is vested according to
his best lights, the only condition being that the appointee should possess the qualifications required by law. If he does,
then the appointment cannot be faulted on the ground that there are others better qualified who should have been
preferred. This is a political question involving considerations of wisdom which only the appointing authority can decide.
xxx xxx xxx
Significantly, the Commission on Civil Service acknowledged that both the petitioner and the private respondent were
qualified for the position in controversy. That recognition alone rendered it functus officio in the case and prevented it
from acting further thereon except to affirm the validity of the petitioner's appointment. To be sure, it had no authority to
revoke the said appointment simply because it believed that the private respondent was better qualified for that would
have constituted an encroachment on the discretion vested solely in the city mayor.
The same ruling has been affirmed, in practically the same language as Luego, in Central Bank v. Civil Service Commission, 171 SCRA 744;
Santiago v. Civil Service Commission, 178 SCRA 733; Pintor v. Tan, G.R. No. 84022 and G.R. No. 85804, March 9, 1989, En Banc, Minute
Resolution; Galura v. Civil Service Commission, G.R. No. 85812, June 1, 1989, En Banc, Minute Resolution; Zulueta v. Mamangun, G.R. No.
85941, June 15, 1989, En Banc, Minute Resolution; Remigio v. Chairman, Civil Service Commission, G.R. No. 86324, July 6, 1989, En Banc,
Minute Resolution; Aurora Macacua v. Civil Service Commission, G.R. No. 91520, July 31, 1990, En Banc, Minute Resolution; Abdulwahab A.
Bayao v. Civil Service Commission, G.R. No. 92388, September 11, 1990, En Banc, Minute Resolution; Orbos v. Civil Service Commission, G.R.
No. 92561, September 12, 1990; Alicia D. Tagaro v. The Hon. Civil Service Commission, et al., G.R. No. 90477, September 13, 1990, En Banc,
Minute Resolution; Elenito Lim v. Civil Service Commission, et al., G.R. No. 87145, October 11, 1990, En Banc, Minute Resolution; Teologo v.
Civil Service Commission, G.R. No. 92103, November 8, 1990; Simpao v. Civil Service Commission, G.R. No. 85976, November 15, 1990.
Only recently, in Gaspar v. Court of Appeals
2
this Court said:
The only function of the Civil Service Commission in cases of this nature, according to Luego, is to review the
appointment in the light of the requirements of the Civil Service Law, and when it finds the appointee to be qualified and
all other legal requirements have been otherwise satisfied, it has no choice but to attest to the appointment. Luego finally
points out that the recognition by the Commission that both the appointee and the protestant are qualified for the position
in controversy renders it functus officio in the case and prevents it from acting further thereon except to affirm the validity
of the former's appointment; it has no authority to revoke the appointment simply because it considers another employee
to be better qualified for that would constitute an encroachment on the discretion vested in the appointing authority.
xxx xxx xxx
The determination of who among several candidates for a vacant position has the best qualifications is vested in the
sound discretion of the Department Head or appointing authority and not in the Civil Service Commission. Every
particular job in an office calls for both formal and informal qualifications. Formal qualifications such as age, number of
academic units in a certain course, seminars attended, etc., may be valuable but so are such intangibles as
resourcefulness, team spirit, courtesy, initiative, loyalty, ambition, prospects for the future, and best interests, of the
service. Given the demands of a certain job, who can do it best should be left to the Head of the Office concerned
provided the legal requirements for the office are satisfied. The Civil Service Commission cannot substitute its judgment
for that of the Head of Office in this regard.
It is therefore incomprehensible to the Court why, despite these definitive pronouncements, the Civil Service Commission has seen fit to ignore, if
not defy, the clear mandate of the Court.
We declare once again, and let us hope for the last time, that the Civil Service Commission has no power of appointment except over its own
personnel. Neither does it have the authority to review the appointments made by other offices except only to ascertain if the appointee possesses
the required qualifications. The determination of who among aspirants with the minimum statutory qualifications should be preferred belongs to the
appointing authority and not the Civil Service Commission. It cannot disallow an appointment because it believes another person is better qualified
and much less can it direct the appointment of its own choice.
Appointment is a highly discretionary act that even this Court cannot compel. While the act of appointment may in proper cases be the subject of
mandamus, the selection itself of the appointeetaking into account the totality of his qualifications, including those abstract qualities that define
his personalityis the prerogative of the appointing authority. This is a matter addressed only to the discretion of the appointing authority. It is a
political question that the Civil Service Commission has no power to review under the Constitution and the applicable laws.
Commenting on the limits of the powers of the public respondent, Luego declared:
It is understandable if one is likely to be misled by the language of Section 9(h) of Article V of the Civil Service Decree
because it says the Commission has the power to "approve" and "disapprove" appointments. Thus, it is provided therein
that the Commission shall have inter alia the power to:
9(h) Approve all appointments, whether original or promotional, to positions in the civil service,
except those presidential appointees, members of the Armed Forces of the Philippines, police
forces, firemen, and jailguards, and disapprove those where the appointees do not possess
appropriate eligibility or required qualifications. (Emphasis supplied)
However, a full reading of the provision, especially of the underscored parts, will make it clear that all the Commission is
actually allowed to do is check whether or not the appointee possesses the appropriate civil service eligibility or the
required qualifications. If he does, his appointment is approved; if not, it is disapproved. No other criterion is permitted by
law to be employed by the Commission when it acts onor as the Decree says, "approves" or "disapproves'an
appointment made by the proper authorities.
The Court believes it has stated the foregoing doctrine clearly enough, and often enough, for the Civil Service Commission not to understand
them. The bench does; the bar does; and we see no reason why the Civil Service Commission does not. If it will not, then that is an entirely
different matter and shall be treated accordingly.
We note with stern disapproval that the Civil Service Commission has once again directed the appointment of its own choice in the case at bar.
We must therefore make the following injunctions which the Commission must note well and follow strictly.
Whatever the reasons for its conduct, the Civil Service Commission is ORDERED to desist from disregarding the doctrine announced in Luego v.
Civil Service Commission and the subsequent decisions reiterating such ruling. Up to this point, the Court has leniently regarded the attitude of the
public respondent on this matter as imputable to a lack of comprehension and not to intentional intransigence. But we are no longer disposed to
indulge that fiction. Henceforth, departure from the mandate of Luego by the Civil Service Commission after the date of the promulgation of this
decision shall be considered contempt of this Court and shall be dealt with severely, in view especially of the status of the contemner.
While we appreciate the fact that the Commission is a constitutional body, we must stress, as a necessary reminder, that every department and
office in the Republic must know its place in the scheme of the Constitution. The Civil Service Commission should recognize that its acts are
subject to reversal by this Court, which expects full compliance with its decisions even if the Commission may not agree with them.
The Commission on Civil Service has been duly warned. Henceforth, it disobeys at its peril.
WHEREFORE, the petition is GRANTED. The Resolutions of the respondent Civil Service Commission dated February 14, 1990, May 25, 1990,
August 17, 1990, and October 19, 1990, are REVERSED and SET ASIDE. The temporary restraining order dated December 13, 1990, is made
PERMANENT. No costs. SO ORDERED.
May 29, 1995


G.R. No. 112045
DANILO F.C. RIMONTE, petitioner,
vs.
CIVIL SERVICE COMMISSION, OFFICE OF THE OMBUDSMAN and HENRIETTA F. ROQUE, respondents.

BELLOSILLO, J.:Petitioner seeks review on certiorari of CSC Resolution No. 93-2368 dated 29 June 1993 1 which dismissed his appeal from the
appointment of respondent Henrietta F. Roque as Records Officer V, Central Records Division, Office of the Ombudsman, and CSC Resolution
No. 93-3775 dated 10 September 1993 2 denying his motion for reconsideration.
Bellosillo, J.:
Petitioner seeks review on certiorari of CSC Resolution No. 93-2368 dated 29 June 1993 1 which dismissed his appeal from the appointment of
respondent Henrietta F. Roque as Records Officer V, Central Records Division, Office of the Ombudsman, and CSC Resolution No. 93-3775
dated 10 September 1993 2 denying his motion for reconsideration.
On 7 November 1989 R.A. No. 6770, An Act Providing for the Functional and Structural Organization of the Office of the Ombudsman and for
other purposes, was enacted into law.
On 13 June 1990 Ombudsman Conrado M. Vasquez issued Office Order No. 90-32 directing the implementation of the performance appraisal
system as basis for evaluation of all incumbents. On 14 June 1990, he issued Office Order No. 90-33 providing for the General Policy and
Procedural Guidelines in the Placement of Personnel for the New Staffing Pattern.
Petitioner was then the incumbent Planning Officer III in the Office of the Ombudsman. On 27 June 1990, petitioner applied for any of the positions
of Records Officer V of the Central Records Division, Chief of Monitoring and EDP Division, or Administrative Officer V of the Office of the Deputy
Ombudsman for the Armed Forces.
On 1 October 1990, petitioner was appointed to the position of Associate Graft Investigation Officer III 3 while respondent Henrietta F. Roque was
appointed Records Officer V or Chief of the Central Records Division, Office of the Ombudsman.
On 19 November 1990 petitioner filed his appeal and protest against the appointment of respondent Roque. On 21 December 1990, in a letter to
petitioner, Ombudsman Vasquez denied the appeal thus -
Reference is made to your letter of appeal/reconsideration dated November 10, 1990 praying that the appointment of Ms. Henrietta F. Roque as
Records Officer V, Central Records Division, be recalled claiming you have better qualification than her and that you be appointed as such in her
place.
Please be informed that as appointing authority, I am given ample discretion to appoint to any vacant position any person who possesses at least
the minimum qualifications thereof. In your appeal, you failed to show that Ms. Roque is not qualified to hold the contested position. Accordingly,
your appeal is hereby denied. 4
On 4 January 1991 petitioner appealed from the decision of the Ombudsman to the Civil Service Commission alleging that the Ombudsman erred
(a) in holding that being the appointing authority he was given ample discretion to appoint to any vacant position any person who possesses at
least the minimum qualifications; and, (b) in holding that petitioner failed to show that respondent Roque was not qualified to hold the contested
position.
On 17 June 1993 respondent Roque submitted to respondent Commission her personal data and other documents to show that she was qualified
for the position of Records Officer V to which she was appointed.
On 29 June 1993, respondent Commission issued Resolution No. 93-2368 5 dismissing the appeal of petitioner on the basis of pronouncements
of this Court holding that an appointment is essentially discretionary on the part of the appointing authority provided the appointee is qualified.
Respondent Commission also found that petitioner did not dispute the qualification of respondent Roque to the contested position.
Petitioner moved to reconsider the resolution of respondent Commission alleging that the latter erred: (a) in applying the doctrine laid down in
Luego v. Civil Service Commission 6 to the appeal of petitioner; (b) in admitting the letter and documents submitted by respondent Roque in
support of her claim that she possessed the experience requirement for the position of Records Officer V; and, (c) in ruling that respondent Roque
was qualified for appointment to the contested position.
On 10 September 1993, respondent Commission issued Resolution No. 93-3775 7 stating that the grounds raised by petitioner had been
thoroughly discussed and resolved in Resolution No. 93-2368 dated 29 June 1993 and that it had already been established that respondent
Roque met the minimum requirements for the position.
Petitioner comes to us imputing error to respondent Civil Service Commission in not finding that the appointment by the Ombudsman of
respondent Roque as Records Officer V was not in accord with the legal requirements of R.A. 6656 and the Rules on Government
Reorganization, and in finding respondent Roque qualified for the position of Records Officer V.
We shall discuss jointly the issues raised by petitioner as they are interrelated.
Petitioner contends that there were flagrant violations of the reorganization law and rules attendant to the appointment of respondent Roque to the
post of Records Officer V. Petitioner also submits that the Final Ranking Form 8 for the position of Records Officer V signed by the members of
the Central Placement Committee shows certain violations, i.e., (a) no incumbent Ombudsman personnel was considered for the contested
position except respondent Roque despite his application for the position; (b) respondent Roque was considered and assessed for the contested
position on the basis of an ASSUMED performance rating given by the Central Placement Committee; and, (c) the percentage weight of the
criteria for evaluation used by the Central Placement Committee was different from those prescribed under Office Order No. 90-32. 9 Petitioner
alleges that respondent Civil Service Commission failed to take into account these violations when it affirmed the appointment of respondent
Roque. Petitioner insists that he is more qualified than Roque in terms of performance which is one of the criteria provided by the reorganization
law, and that while the appointing authority has discretion in the appointment of its personnel such discretion is not absolute but must yield to the
intent and criteria laid down by law.
The arguments of petitioner cannot be sustained.
The Civil Service Commission is the single arbiter of all contests relating to civil service; as such its judgments are unappealable and subject only
to the certiorari jurisdiction of this Court, 10 at least until 1 June 1995 when Rev. Adm. Circ. No. 1-95, amending Rev. Circ. No. 1-91, shall take
effect. 11 In view thereof this Court cannot engage in a review of facts found or even of law as interpreted by the agency concerned unless the
supposed errors of fact or law are so serious and prejudicial as to amount to a grave abuse of discretion. Moreover, erroneous findings and
conclusions do not render the respondent Commission vulnerable to the corrective writ of certiorari, for where the Commission has jurisdiction
over the case, even if its findings are not correct, they would at most constitute errors of law and not an abuse of discretion correctible by
certiorari.
After a review of the questioned CSC Resolutions Nos. 93-2368 and 93-3775, this Court fails to find any grave abuse of discretion committed by
respondent Civil Service Commission in the issuance thereof to justify a grant of the writ prayed for.
The qualification standards for the position of Records Officer V are: Education a Bachelors degree with training in Records Management;
Experience three (3) years of responsible experience in supervising personnel engaged in records management activities, developing work
standards and efficient methods and procedures in the maintenance of active continuing program of records disposition and preservation or other
related work; Eligibility CS Professional. 12
In order to comparatively assess the relative fitness and competence of employees considered for placement, Office Order No. 90-32 13 issued
13 June 1990 by Ombudsman Vasquez provided for the following criteria: (a) performance for the last two years or from the date of effectivity of
appointment until the present, 65%; (b) manifested personality attributes, 15%; (c) education and training, 10%; and, (d) experience and
outstanding accomplishments, 10%. Office Order No. 90-33 issued on 14 June 1990 by the Ombudsman provides that the latter shall be assisted
by a Central Placement Committee created by Office Order 90-27 in the selection of personnel to be recommended in the Central Office of the
Ombudsman. 14 It is worthy to emphasize at this point that even the internal rules of the Office of the Ombudsman in the selection and
appointment of its personnel confer upon the Ombudsman the ultimate discretionary power to appoint and that the evaluation or selection of
personnel by the Central Placement Committee is merely recommendatory.
Respondent Civil Service Commission found from the records that respondent Roque possessed the minimum qualifications required for the
position of Records Officer V to which she was appointed. She graduated with a degree of Bachelor of Business Administration. She has the
General Clerical, Stenographer and Career Service Professional eligibilities. Her work experience also shows she is qualified for the position. 15
These findings are not refuted by petitioner. He claims however that his performance rating is outstanding being placed at 65/65 16 which is
equivalent to 100%, while the performance rating of respondent Roque given by the Central Administrative Bureau is 2.4/3 17 which is equivalent
to .80 or 80%, and was indicated as an assumed rating only because none was given by her immediate supervisor. Petitioner banks on this
seeming disparity in their performance ratings, with him obtaining a higher rating, to justify the nullification of the appointment of respondent
Rogue.
The head of an agency who is the appointing power is the one most knowledgeable to decide who can best perform the functions of the office.
Appointment is an essentially discretionary power and must be performed by the officer vested with such power according to his best lights, the
only condition being that the appointee should possess the qualifications required by law. If he does, then the appointment cannot be faulted on
the ground that there are others better qualified who should have been preferred. Indeed, this is a prerogative of the appointing authority which he
alone can decide 18 The choice of appointee from among those who possess the required qualifications is a political and administrative decision
calling for considerations of wisdom, convenience, utility and the interests of the service which can best be made by the head of the office
concerned, the person most familiar with the organizational structure and environmental circumstances within which the appointee must function.
19 Hence, when Ombudsman Vasquez appointed respondent Roque to the position of Records Officer V, his act in doing so confirmed Roques
performance rating which can be understood to be at least very satisfactory. From the vantage point of the Ombudsman, she is the person who
can best fill the post and discharge its functions. We cannot argue against this proposition.
Since there is no doubt that Roque possesses the minimum qualifications for the position, respondent Civil Service Commission acted well within
its discretion in the exercise of its jurisdiction in attesting to the appointment of Roque. As long as the appointee is qualified the Civil Service
Commission has no choice but to attest to and respect the appointment even if it be proved that there are others with superior credentials. The law
limits the Commissions authority only to whether or not the appointees possess the legal qualifications and the appropriate civil service eligibility,
nothing else. If they do then the appointments are approved because the Commission cannot exceed its power by substituting its will for that of
the appointing authority. 20 Neither can we.
WHEREFORE, the petition is DISMISSED and the Resolutions of respondent Civil Service Commission Nos. 93-2368 dated 29 June 1993 and
93-3775 dated 10 September 1993 are AFFIRMED. SO ORDERED.
G.R. NO. 92585. May 8, 1992.
CALTEX PHILIPPINES, INC., Petitioner vs. THE HONORABLE COMMISSION ON AUDIT, HONORABLE COMMISSIONER BARTOLOME C.
FERNANDEZ and HONORABLE COMMISSIONER ALBERTO P. CRUZ.
D E C I S I O N
DAVIDE, JR., J.:
This is a petition erroneously brought under Rule 44 of the Rules of Court (*1) questioning the authority of the Commission on Audit (COA) in
disallowing petitioner's claims for reimbursement from the Oil Price Stabilization fund (OPSF) and seeking the reversal of said Commission's
decision denying its claim for recovery of financing charges from the Fund and reimbursement of underrecovery arising from sales to the National
Power Corporations, Atlas Consolidated Mining and Development Corporation (ATLAS) and Marcopper Mining Corporation (MARCOPPER),
preventing it from exercising the right to offset its remittances against its reimbursement vis-a-vis the OPSF and disallowing its claims are still
pending resolution before the Office of Energy Affairs (OEA) and the Department of Finance (DOF).
Pursuant to the 1987 Constitution, (*2) any decision, order or ruling of the Constitutional Commissions (*3) may be brought to this Court on
certiorari by the aggrieved party within thirty (30) days from receipt of a copy thereof. The certiorari referred to is the special civil action for
certiorari under Rule 65 of the Rules of Court. (*4)
Considering, however, that the allegations that the COA acted with: (a) total lack of jurisdiction in completely ignoring and showing absolutely no
respect for the findings and rulings of the administrator of the fund itself and in disallowing a claim which is still pending resolution at the OEA
level, and (b) "grave abuse of discretion and completely without jurisdiction" (*5) in declaring that petitioner cannot avail of the right to offset any
amount that it may be required under the law to remit to the OPSF against any amount that it may receive by way of reimbursement therefrom are
sufficient to bring this petition within Rule 65 of the Rules of Court, and, considering further the importance of the issue raised, the error in the
designation of the remedy pursued will, in this instance, be excused.
The issues raised revolve around the OPSF created under Section 8 of Presidential Decree (P.D.) No. 1956, as amended by Executive Order
(E.O.) No. 137. As amended, said Section 8 reads as follows:
"SECTION 8. There is hereby created a Trust Account in the books of accounts of the Ministry of Energy to be designated as Oil Price
Stabilization Fund (OPSF) for the purpose of minimizing frequent price changes brought about by exchange rate adjustments and/or changes in
world market prices of crude oil and imported petroleum products. The Oil Price Stabilization Fund may be sourced from any of the following:
a) Any increase in the tax collection from ad valorem tax or customs duty imposed on petroleum products subject to tax under this Decree arising
from exchange rate adjustment, as may be determined by the Minister of Finance in consultation with Board of Energy;
b) Any increase in the tax collection as a result of the lifting of tax exemptions of government corporations, as may be determined by the Minister
of Finance in consultation with the Board of Energy;
c) Any additional amount to be imposed on petroleum products to augment the resources of the Fund through an appropriate Order that may be
issued by the Board of Energy requiring payment by persons or companies engaged in the business of importing, manufacturing and/or marketing
petroleum products;
d) Any resulting peso cost differentials in case the actual peso costs paid by oil companies in the importation of crude oil and petroleum products
is less than the peso costs computed using the reference foreign exchange rate as fixed by the Board of Energy;
The Fund herein created shall be used for the following:
1) To reimburse the oil companies for cost increase in crude oil and imported petroleum products resulting from exchange rate adjustment and/or
increase in world market prices of crude oil;
2) To reimburse the oil companies for possible cost underrecovery incurred as result of the reduction of domestic prices of petroleum products.
The magnitude of the underrecovery, if any, shall be determined by the Ministry of Finance. Cost underrecovery shall include the following:
i. Reduction in oil company take as directed by the Board of Energy without the corresponding reduction in the landed cost of oil inventories in the
possession of the oil companies at the time of the price change;
ii. Reduction in internal ad valorem taxes as a result of foregoing government mandated price reductions;
iii. Other factors as may be determined by the Ministry of Finance to result in cost underrecovery.
The Oil Price Stabilization Fund (OPSF) shall be administered by the Ministry of Energy."
The material operative facts of this case, as gathered from the pleadings of the parties, are not disputed.
On 2 February 1989, the COA sent a letter to Caltex Philippines, Inc. (CPI), hereinafter referred to as Petitioner, directing the latter to remit to the
OPSF its collection, excluding that unremitted for the years 1986 and 1988, of the additional tax on petroleum products authorized under the
aforesaid Section 8 of P.D. No. 1956 which as of 31 December 1987, amounted to 335,037,649.00 and informing it that, pending such remittance,
all of its claims for from the OPSF shall be held in abeyance. (*6)
On 9 March 1989, the COA sent another letter to petitioner informing it that partial verification with the OEA showed that the grand total of its
unremitted collections of the above tax is P1,287,668,820.00, broke down as follows:
1986 - P233,190,916.00
1987 - 335,065,650.00
1988 - 719,412,254.00
directing it to remit the same, with interest and surcharges thereon, within sixty (60) days from receipt of the letter; advising it that the COA will
hold in abeyance the audit of all its claims for reimbursement from the OPSF; and directing it to desist from further offsetting the taxes collected
against outstanding claims in 1989 and subsequent periods. (7*)
In its letter of 3 May 1989, petitioner requested the COA for an early release of its reimbursement certificates from the OPSF covering claims with
the Office of energy Affairs since June 1987 up to March 1989, invoking in support thereof COA Circular No. 89-299 on the lifting of pre-audit of
government transactions of national government agencies and government-owned or controlled corporations.(*8)
In its Answer dated 8 May 1989, the COA denied petitioner's request for the early release of the reimbursement certificates from the OPSF and
repeated its earlier directive to petitioner to forward payment of the latter's unremitted collections to the OPSF to facilitate COA's audit action on
the reimbursement claims. (*9)
By way of reply, petitioner, in a letter dated 31 May 1989, submitted to the COA a proposal for the payment of the collections and the recovery of
claims, since the outright payment of the sum 1.287 billion to the OEA as a prerequisite for the processing of said claims against the OPSF will
cause a very serious impairment of its cash position. (10*) The proposal reads:
"We therefore, very respectfully propose the following:
(1) Any procedural arrangement acceptable to COA to facilitate monitoring of payments and reimbursements will be administered by the
ERB/Finance Dept./OEA, as agencies designated by law to administer/regulate OPSF.
(2) For the retroactive period, Caltex will deliver to EOA, 1.287 billion as payment to OPSF, similarly OEA will deliver to Caltex the same amount in
cash reimbursement from OPSF.
(3) The COA audit will commence immediately and will be conducted expeditiously.
(4) The review of current claims (1989) will be conducted expeditiously to preclude further accumulation of reimbursement from OPSF."
On 7 June 1989, the COA, with the Chairman taking no part, handed down Decision No. 921 accepting the above-stated proposal but prohibiting
petitioner from further offsetting remittances and reimbursements for the current and ensuing years. (*11) Decision No. 921 reads:
"This pertains to the within separate requests of Mr. Manuel A. Estrella, President, Petron corporation, and Mr. Francis Ablan, President and
Managing Director, Caltex (Philippines) Inc., for reconsideration of this Commission's adverse action embodied in its letters dated February 2,
1989 and March 9, 1989, the former directing immediate remittance to the Oil Price Stabilization Fund of collections made by the firms pursuant to
P.D. 1956, as amended by E.O. No. 137, S. 1987, and the latter reiterating the same directive but further advising the firms to desist from
offsetting collections against their claims with the notice that this Commission will hold in abeyance the audit of all xxx claims for reimbursement
from the OPSF.
It appears that under letters of authority issued the Chairman, Energy Regulatory Board, the aforenamed oil companies were allowed to offset the
amounts due to the Oil Price Stabilization Fund against their outstanding claims from the said Fund for the calendar year 1987 and 1988, pending
with the then Ministry of Energy, the government entity charged with administering the OPSF. This Commission, however, expressing serious
doubts as to the propriety of the offsetting of all types of reimbursements from the OPSF against all categories that such offsetting was bereft of
legal basis. Aggrieved thereby, these companies now seek reconsideration and in support thereof clearly manifest their intent to make
arrangements for the remittance to the Office of Energy Affairs of the amount of collections equivalent to what has been previously offset, provided
that this Commission authorizes the Office of Energy Affairs to prepare the corresponding checks representing reimbursement from the OPSF. It
is alleged that the implementation of such an arrangement, whereby the remittance of collections due to the OPSF and the reimbursement of
claims from the Fund shall be made within a period of not more than one week from each other, will benefit the Fund and not unduly jeopardize
the continuing daily cash requirements of these firms.
Upon a circumspect evaluation of the circumstances herein obtaining, this Commission perceives no further objectionable feature in the proposed
arrangement, provided that 15% of whatever amount is due from the Fund is retained by the Office of Energy Affairs, the same to be answerable
for suspensions or disallowances, errors or discrepancies which may be noted in the course of audit and surcharges for late remittances without
prejudice to similar future retentions to answer for any deficiency in such surcharges, and provided further that no offsetting of remittances and
reimbursements for the current and ensuing years shall be allowed."
Pursuant to this decision, the COA, on 18 August 1989, sent the following letter to Executive Director Wenceslao R. De la Paz of the Office of
Energy Affairs: (*12)
"Dear Atty. dela Paz:
Pursuant to the Commission on Audit Decision No. 921 dated June 7, 1989, and based on our initial verification of documents submitted to us by
your Office in support of Caltex (Philippines), Inc. offsets (sic) for the year 1986 to May 31, 1989, as well as its outstanding claims against the Oil
Price Stabilization Fund (OPSF) as of May 31, 1989, we are pleased to inform your Office that Caltex (Philippines), Inc. shall be required to remit
to OPSF an amount of P1,505,668,906, representing remittances to the OPSF which were offset against its claims reimbursements (net of
submitted claims). In addition, the Commission hereby authorize (sic) the Office of Energy Affairs (OEA) to cause payment of P1,959,182,612 to
Caltex, representing claims initially allowed in audit, the details of which are presented hereunder: x x x
As presented in the foregoing computation the disallowances totalled P387,683,535, which included P130,420,235 representing those claims
disallowed by OEA, details of which is (sic) shown in Schedule 1 as summarized as follows:
Disallowance of COA Amount
Particulars
Recovery of financing charges P 162,728,475 /a
Product Sales 48,402,398 /b
Inventory losses Borrow loan arrangement 14,034,786 /c
Sales to Atlas/Marcopper 32,097,083 /d
Sales to NPC 558
P 257,263,300
Disallowances of OEA 130,420,235
Total P 387,683,535
The reasons for the disallowances are discussed hereunder:
a. Recovery of Financing Charges
Review of the provisions of P.D. 1956 as amended by E.O. 137 seems to indicate that recovery of financing charges by oil companies is not
among the items for which the OPSF may be utilized. Therefore, it is our view that recovery if financing charges has no legal basis. The
mechanism for such claims is provided in DOF Circular 1-87.
b. Product Sales - Sales to International Vessels/Airlines
BOE Resolution No. 87-01 dated February 7, 1987 as implemented by OEA Order No. 87-03-095 indicating that (sic) February 7, 1987 as the
effectivity date that (sic) oil companies should pay OPSF impost on export sales of petroleum products. Effective February 7, 1987 sales to
international vessels/airlines should not be included as part of its domestic sales. Changing the effectivity date of the resolution from February 7,
1987 to October 20, 1987 as covered by subsequent ERB Resolution No. 88-12 dated November 18, 1988 has allowed Caltex to include in their
domestic sales volumes to international vessels/airlines and claim the corresponding reimbursements from OPSF during the period. It is our
opinion that the effectivity of the said resolution should be February 7, 1987.
c. Inventory losses - Settlement of Ad Valorem
We reviewed the system of handling Borrow and Loan (BLA) transactions including the related BLA agreement, as they affect the claims for
reimbursements of ad valorem taxes. We observed that oil companies immediately settle ad valorem taxes for BLA transaction (sic). Loan
balances therefore are not tax paid inventories of Caltex subject to reimbursement but those of the borrower. Hence, we recommend reduction of
the claim for July, August, and November, 1987 amounting to 14,034,786.
d. Sales to Atlas/Marcopper
LOI No. 1416 dated July 17, 1984 provides that I hereby order and direct the suspension of payment of all taxes, duties, fees, imposts and other
charges whether direct or indirect due
and payable by the copper mining companies in distress to the national and local governments'. It is our opinion that LOI 1416 which implements
the exemption from payment of OPSF imposts as effected by OEA has no legal basis.
Furthermore, we wish to emphasize that payment to Caltex (Phil.) Inc. of the amount as herein authorized shall be subject to availability of funds
of OPSF as of May 31, 1989 and applicable auditing rules and regulations. With regard to the disallowances, it is further informed that the
aggrieved party has 30 days within which to appeal the decision of the Commission in accordance with law."
On 8 September 1989, petitioner filed an Omnibus Request for the Reconsideration of the decision based on the following grounds: (*13)
"A) COA-DISALLOWED CLAIMS ARE AUTHORIZED UNDER EXISTING RULES, ORDERS, RESOLUTIONS, CIRCULARS ISSUED BY THE
DEPARTMENT OF FINANCE AND THE ENERGY REGULATORY BOARD PURSUANT TO EXECUTIVE ORDER NO. 137.
x x x
"B) ADMINISTRATIVE INTERPRETATIONS IN THE COURSE OF EXERCISE OF EXECUTIVE POWER BY DEPARTMENT OF FINANCE AND
ENERGY REGULATORY BOARD ARE LEGAL AND SHOULD BE RESPECTED AND APPLIED UNLESS DECLARED NULL AND VOID BY
COURTS OR REPEALED BY LEGISLATION.
x x x
"C) LEGAL BASIS FOR RETENTION OF OFFSET ARRANGEMENT, AS AUTHORIZED BY THE EXECUTIVE BRANCH OF GOVERNMENT,
REMAINS VALID."
x x x
On 6 November 1989, petitioner filed with the COA a Supplemental Omnibus Request for Reconsideration. (*14)
On 16 February 1990, the COA, with Chairman Domingo taking no part and with Commissioner Fernandez dissenting in part, handed down
Decision No. 1171 affirming the for recovery of financing charges, inventory losses, and sales to MARCOPPER and ATLAS, while allowing the
recovery of product sale or those arising from export sales. (*15) Decision No. 1171 reads as follows:
"Anent the recovery of financing charges, you contend that Caltex Phil. Inc. has the authority to recover financing charges from the OPSF on the
basis of Department of Finance (DOF) Circular 1-87, dated February 18, 1987, which allowed oil companies to recover cost of financing working
capital associated with crude oil shipments, and provided a schedule of in terms of peso per barrel. It appears that on November 6, 1989, the DOF
issued a Memorandum to the President of the Philippines explaining the nature of these financing charges and justifying their reimbursement as
follows:
As part of your program to promote economic recovery, oil companies (were authorized) to refinance their imports of crude oil and petroleum
products from the normal trade credit of 30 days up to 360 days from date of loading. Conformably, the oil companies deferred their foreign
exchange remittances for purchases by refinancing their import bills from the normal 30-day
payment term up to the desired 360 days. This refinancing of importations carried additional costs (financing charges) which then became, due to
government mandate, an inherent part of the cost of the purchases of our country's oil requirement.
We beg to disagree with such contention. The justification that financing charges increased oil costs and the schedule of reimbursement rate in
peso per barrel (Exhibit 1) used to support alleged increase (sic) were not validated in our independent inquiry. As manifested in Exhibit 2, using
the same formula which the DOF used in arriving at the reimbursement rate but using comparable percentages instead of pesos, the ineluctable
conclusion is that the oil companies are actually gaining rather than losing from the extension of credit because such extension enables them to
invest the collections in marketable securities which have much higher rates than those they incur due to the extension. The Data we used were
obtained from CPI (CALTEX) Management and can easily be verified from our records.
With respect to product sales or those arising from sales to international vessels or airlines, xxx it is believed that export sales (product sales) are
entitled to claim refund from the OPSF.
As regard your claim for underrecovery arising from inventory losses, xxx It is the considered view of this Commission that the OPSF is not liable
to refund such surtax on inventory losses because these are paid to BIR and not to OPSF, in view of which CPI (CALTEX) should seek refund
from BIR. x x x
Finally, as regards the sales to Atlas and Marcopper, it is represented that you are entitled to claim recovery form the OPSF pursuant to LOI 1416
issued July 17, 1984 since these copper mining companies did not pay CPI (CALTEX) and OPSF imposed which were added to the selling price.
Upon a circumspect evaluation, this Commission believes and so holds that the CPI (CALTEX) has no authority to claim reimbursement for this
uncollected OPSF impost because LOI 1416 dated July 17, 1984, which exempts distressed mining companies from all taxes, duties, import fees
and other charges was issued when OPSF was not yet in existence and could not have contemplated OPSF imposts at the time of its formulation.
Moreover, it is evident that OPSF was not created to aid distressed mining companies but rather to help the domestic oil industry by stabilizing oil
prices."
Unsatisfied with the decision, petitioner filed on 28 March 1990 the present petition wherein it imputes to the COA the commission of the following
errors: (*16)
"I
RESPONDENT COMMISSION ERRED IN DISALLOWING RECOVERY OF FINANCING CHARGES FROM THE OPSF.
II
RESPONDENT COMMISSION ERRED IN DISALLOWING CPI's (*17) CLAIM FOR REIMBURSEMENT OF UNDERRECOVERY ARISING FROM
SALES TO NPC.
III
RESPONDENT COMMISSION ERRED IN DENYING CPI's CLAIMS FOR REIMBURSEMENT ON SALES TO ATLAS AND MARCOPPER.
IV
RESPONDENT COMMISSION ERRED IN PREVENTING CPI FROM EXERCISING ITS LEGAL RIGHT TO OFFSET ITS REMITTANCES
AGAINST ITS REIMBURSEMENT VIS-A-VIS THE OPSF.
V
RESPONDENT COMMISSION ERRED IN DISALLOWING CPI's CLAIMS WHICH ARE STILL PENDING RESOLUTION BY (SIC) THE OEA AND
THE DOF."
In the Resolution of 5 April 1990, this Court required the respondents to comment on the petition within ten (10) days from notice. (*18)
On 6 September 1990, respondents COA and Commissioners Fernandez and Cruz, assisted by the Office of the Solicitor General, filed their
Comment. (19*)
This Court resolved to give due course to this petition on 30 May 1991 and required the parties to file their respective Memoranda within twenty
(20) days from notice. (*20)
In a Manifestation dated 18 July 1991, the Office of the Solicitor General prays that the Comment filed on 6 September 1990 be considered as the
Memorandum for respondents. (*21)
Upon the other hand, petitioner filed its Memorandum on 14 August 1991.
I. Petitioner dwells lengthily on its first assigned error contending, in support thereof, that:
(1) In view of the expanded role of the OPSF pursuant to Executive Order No. 137, which added a second purpose, to wit:
"2) To reimburse the oil companies for possible cost underrecovery incurred as a result of the reduction of domestic prices of petroleum products.
The magnitude of the underrecovery, if any, shall be determined by the Ministry of Finance. Cost underrecovery shall include the following:
i. Reduction in oil company take as directed by the Board of Energy without the corresponding reduction in the landed cost of oil inventories in the
possession of the oil companies at the time of the price change;
ii. Reduction in internal ad valorem taxes as a result of foregoing government mandated price reductions;
iii. Other factors as may be determined by the Ministry of Finance to result in cost underrecovery."
The "other factors" mentioned therein that may be determined by the Ministry (now Department) of Finance may include financing charges for "in
essence. financing charges constitute unrecovered cost of acquisition of crude oil incurred by the oil companies," as explained in the 6
November 1989 Memorandum to the President of the Department of Finance; they "directly translate to cost underrecovery in cases where the
money market placement rates decline and at the same time the tax on interest income increases. The relationship is such that the presence of
underrecovery or overrecovery is directly dependent on the amount and extent of financing charges."
(2) The claim for recovery of financing charges has clear legal and factual basis; it was filed on the basis of Department of Finance Circular No. 1-
87, dated 18 February 1987, which provides:
To allow oil companies to recover the costs of financing working capital associated with crude oil shipments, the following guidelines on the
utilization of the Oil Price Stabilization Fund pertaining to the payment of the foregoing (sic) exchange risk premium and recovery of financing
charges will be implemented.
1. The OPSF foreign exchange premium shall be reduced to a flat rate of one (1) percent for the first (6) months and 1/32 of one percent per
month thereafter up to a maximum period of one year, to be applied on crude oil shipments from January 1, 1987. Shipments with outstanding
financing as of January 1, 1987 shall be charged on the basis of the fee applicable to the remaining period of financing.
2. In addition, for shipments loaded after January 1987, oil companies shall be allowed to recover financing charges directly from the OPSF per
barrel of crude oil based on the following schedule:
Financing Period Reimbursement Rate Pesos per Barrel
Less than 180 days None
180 days to 239 days 1.90
241 (sic) days to 299 4.02
300 days to 369 (sic) days 6.16
360 days or more 8.28
The above rates shall be subject to review every sixty days." (*22)
Pursuant to this circular, the Department of Finance, in its letter of 18 February 1987, advised the Office of Energy Affairs as follows:
"HON. VICENTE T. PATERNO
Deputy Executive Secretary
For Energy Affairs
Office of the President
Makati, Metro Manila
Dear Sir:
This refers to the letters of the Oil Industry dated December 4, 1986 and February 5, 1987 and subsequent discussion held by the Price Review
committee on February 6, 1987.
On the basis of the representations made, the Department of Finance recognizes the necessity to reduce the foreign exchange risk premium
accruing to the Oil Price Stabilization
Fund (OPSF). Such a reduction would allow the industry to recover partly associated financing charges on crude oil imports. Accordingly, the
OPSF foreign exchange risk fee shall be reduced to a flat charge of 1% for the first six (6) months plus 1/32 of 1% per month thereafter up to a
maximum period of one year, effective January 1, 1987. In addition, since the prevailing company take would still leave unrecovered financing
charges, reimbursement may be secured from the OPSF in accordance with the provisions of the attached Department of Finance circular." (*23)
Acting on this letter, the OEA issued on 4 May 1987 Order No. 87-05-096 which contains the guidelines for the computation of the foreign
exchange risk fee and the recovery of financing charges from the OPSF, to wit:
"B. FINANCE CHARGES
1. Oil companies shall be allowed to recover financing charges directly from the OPSF for both crude and product shipments loaded after January
1, 1987 based on the following rates:
Financing Period Reimbursement Rate (PPb1.)
Less than 180 days None
180 days to 239 days 1.90
240 days to 229 days (sic) days 4.02
300 days to 359 days 6.16
360 days to more 8.28
2. The above rates shall be subject to review every sixty days." (*24)
Then on 22 November 1988, the Department of Finance issued Circular No. 4-88 imposing further guidelines on the recoverability of financing
charges, to wit:
"Following are the supplemental rules to Department of Finance Circular No. 1-87 dated February 18, 1987 which allowed the recovery of
financing charges directly from the Oil Price Stabilization Fund. (OPSF):
1. The claim for reimbursement shall be on a per shipment basis.
2. The claim shall be filed with the Office of Energy Affairs together with the claim on peso cost differential for a particular shipment and duly
certified supporting documents provided for under Ministry of Finance No. 11-85.
3. The reimbursement shall be on the form of reimbursement certificate (Annex A) to be issued by the Office of Energy Affairs. The said certificate
may be used to offset against amounts payable to the OPSF. The oil companies may also redeem said certificates in cash if not utilized, subject to
availability of funds." (*25)
The EOA disseminated this Circular to all oil companies in its Memorandum Circular No. 88-12-017.(*26)
The COA can neither ignore these issuances nor formulate its own interpretation of the laws in the light of the determination of executive
agencies. The determination by the Department of Finance and the EOA that financing charges are recoverable from the OPSF is entitled to great
weight and consideration. (*27) The function of the COA, particularly in the matter of allowing or disallowing certain expenditures, is limited to the
promulgation of accounting and auditing rules for, among others, the disallowance of irregular, unnecessary, excessive, extravagant, or
unconscionable expenditures, or uses of government funds and properties. (*28)
(3) Denial of petitioners claim for reimbursement would be inequitable. Additionally, COA's claim that petitioner is gaining, instead of losing, from
the extension of credit, is belatedly raised and not supported by expert analysis.
In impeaching the validity of petitioner's assertions, the respondents argue that:
1. The Constitution gives the COA discretionary power to disapprove irregular or unnecessary government expenditures and as the monetary
claims of petitioner are not allowed by law, the COA acted within its jurisdiction in denying them;
2. P.D. No. 1956 and E.O. No. 137 do not allow reimbursement of financing charges from the OPSF;
3. Under the principle of ejusdem generis, the "other factors" mentioned in the second purpose of the OPSF pursuant to E.O. No. 137 can only
include "factors which are of the same nature or analogous to those enumerated;"
4. In allowing reimbursement of financing charges from OPSF, Circular No. 1-87 of the Department of Finance violates P.D. No. 1956 and E.O.
No. 137; and
5. Department of Finance rules and regulations implementing P.D. 1956 do not likewise allow reimbursement of financing charges. (*29)
We find no merit in the first assigned error.
As to the power of the COA, which must first be resolved in view of its primacy, We find the theory of petitioner -- that such does not extend to the
disallowance of irregular, unnecessary, excessive, extravagant, or unconscionable expenditures, or use of government funds and properties, but
only to the promulgation of accounting and auditing rules for, among others, such disallowance -- to be untenable in the light of the provisions of
the 1987 Constitution and related laws.
Section 2, Subdivision D, Article IX of the 1987 Constitution expressly provides:
"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 and controlled corporations with original charters, and on a post-audit
basis: (a) constitutional bodies, commissions and offices that have been granted fiscal autonomy under this Constitution; (b) autonomous state
colleges and universities; (c) other government-owned or controlled corporations and their subsidiaries; and (d) such non-governmental entities
receiving subsidy or equity, directly or indirectly, from or through the government, which are
required by law or the 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."
These present powers, consistent with the declared independence of the Commission, (*30) are broader and more extensive than that conferred
by the 1973 Constitution. Under the latter, the Commission was empowered to:
"Examine, audit and settle, in accordance with law and regulations, all accounts pertaining to the revenues, and receipts of, and expenditures or
uses of funds and property, owned or held n trust by, or pertaining to, the Government, or any of its subdivisions, agencies, or instrumentalities
including government-owned or controlled corporations; keep the general accounts of the Government and, for such period as may be provided by
law, preserve the vouchers pertaining thereto; and promulgate accounting and auditing rules and regulations including those for the prevention of
irregular, unnecessary, excessive, or extravagant expenditures or uses of funds and property." (*31)
Upon the other hand, under the 1935 Constitution, the power and authority of the COA's precursor, the General Auditing Office, were,
unfortunately, limited; its very role was markedly passive. Section 2 of Article XI thereof provided:
"SECTION 2. The Auditor General shall examine, audit, and settle all accounts pertaining to the revenues and receipts from whatever source,
including trust funds derived from bond issues; and audit, in accordance with law and administrative regulations, all expenditures of funds or
property pertaining to or held in trust by the Government or the provinces or municipalities thereof. He shall keep the general accounts of the
Government and preserve the vouchers pertaining thereto. It shall be the duty of the Auditor General to bring to the attention of the proper
administrative officer expenditures of funds or property which, in his opinion, are irregular, unnecessary, excessive, or extravagant. He shall also
perform such other functions as may be prescribed by law."
As clearly shown above, in respect to irregular, unnecessary, excessive or extravagant expenditures or uses of funds, the 1935 Constitution did
not grant the Auditor General the power to issue rules and regulations to prevent the same. His was merely to bring that matter to the attention of
the proper administrative officer.
The ruling on this particular point, quoted by petitioner from the cases of Guevarra vs. Gimenez (*32) and Ramos vs. Aquino, (*33) are no longer
controlling as the two (2) were decided in the light of the 1935 Constitution.
There can be no doubt, however, that the audit power of the Auditor General under the 1935 Constitution and the Commission on Audit the 1973
Constitution authorized them to disallow illegal expenditures of funds or uses of funds and property. Our present Constitution retains that same
power and authority, further strengthened by the definition of the COA's general jurisdiction in Section 26 of the Government Auditing Code of the
Philippines (*34) and Administrative Code of 1987. (*35) Pursuant to its power to promulgate accounting and auditing rules and regulations for the
prevention of irregular, unnecessary, excessive or extravagant expenditures or uses of funds,(*36) the COA promulgated on 29 March 1977 COA
Circular No, 77-55. Since the COA is responsible for the enforcement of the rules and regulations, it goes without saying that failure to comply with
them is a ground for disapproving the payment of the proposed expenditure. As observed by one of the Commissioners of the 1986 Constitutional
Commission, Fr. Joaquin G. Bernas: (*37)
It should be noted, however, that whereas under Article XI, Section 2, of 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
officer under the 1987 Constitution, as also under the 1973 Constitution, the Commission on Audit can 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. Hence, since the Commission on Audit must ultimately be responsible for the
enforcement of these rules and regulations, the failure to comply with these regulations can be a ground for disapproving the payment of a
proposed expenditure."
Indeed, when the frames of the last two (2) Constitutions conferred upon the COA a more active role and invested it with broader and more
extensive powers, they did not intend merely to make the COA a toothless tiger, but rather envisioned a dynamic, effective, efficient and
independent watchdog of the Government.
The issue of the financing charges boils down to the validity of Department of Finance Circular No. 1-87, Department of Finance Circular No. 4-88
and the implementing circulars of the OEA, issued pursuant to Section 8, P.D. No. 1956, as amended by E.O. No. 137, authorizing it to determine
"other factors" which may result in cost underrecovery and a consequent reimbursement from the OPSF.
The Solicitor General maintains that, following the doctrine of ejusdem generis, financing charges are not included in "cost underrecovery" and,
therefore, cannot be considered as one of the "other factors." Section 8 of P.D. No. 1956, as amended by E.O. No. 137, does not explicitly define
what "cost underrecovery" is. It merely states what it includes. Thus:
Cost underrecovery shall include the following:
i. Reduction in oil company take as directed by the Board of Energy without the corresponding reduction in the landed cost of oil inventories in the
possession of the oil companies at the time of the price change;
ii. Reduction in internal ad valorem taxes as a result of foregoing government mandated price reductions;
iii. Other factors as may be determined by the Ministry of Finance to result in cost underrecovery."
These "other factors" can include only those which are of the same class or nature as the two specifically enumerated in subparagraphs (i) and (ii).
A common characteristic of both is that they are in the nature of government mandated price reductions. Hence, any other factor which seeks to
be a part of the enumeration, or which could qualify as a cost underrecovery, must be of the same class or nature as those specifically
enumerated.
Petitioner, however, suggests that E.O. No. 137 intended to grant the Department of Finance broad and unrestricted authority to determine or
define "other factors."
Both views are unacceptable to this Court.
The rule of ejusdem generis states that "where general words follow an enumeration of persons or things, by words of a particular and specific
meaning, such general words are not to be construed in their widest extent, but are held to be as applying only to persons or things of the same
kind or class as those specifically mentioned."(*38) A reading of subparagraphs (i) and (ii) easily discloses that they do not have a common
characteristic. The first relates to price reduction as directed by the Board of Energy while the second refers to reduction in internal ad valorem
taxes. Therefore, subparagraph (iii) cannot be limited by the enumeration in these subparagraphs. What should be considered for purposes of
determining the "other factors" in subparagraph (iii) is the first sentence of paragraph (2) of the Section which explicitly allows cost underrecovery
only if such were incurred as a result of the reduction of domestic prices of petroleum products.
Although petitioner's financing losses, if indeed incurred, may constitute cost underrecovery in the sense that such were incurred as a result of the
inability to fully offset financing expenses from yields in money market placements, they do not, however, fall under the foregoing provision of P.D.
No. 1956, as amended, because the same did not result from the reduction of the domestic price of petroleum products. Until paragraph (2),
Section 8 of the decree, as amended, is further amended by Congress, this Court can do nothing. The duty of this Court is not to legislate, but to
apply or interpret the law. Be that as it may, this Court wishes to emphasize that as the facts in this case have shown, it was at the behest of the
government that petitioner refinanced its oil import payments from the normal 30-day trade credit to a maximum of 360 days. Petitioner could be
correct in its assertion that owing to the extended period for payment, the financial institution which refinanced said payments charged a higher
interest, thereby resulting in higher financing expenses for the petitioner. It would appear then that equity considerations dictate that petitioner
should somehow be allowed to recover its financing losses, if any, which may have been sustained because it accommodated the request of the
Government. Although under Section 29 of the National Internal Revenue Code such losses may be deducted from gross income, the effect of
that loss would be merely to reduce its taxable income, but not to actually wipe out such losses. The Government then may consider some
positive measures to help petitioner and others similarly situated to obtain substantial relief. An amendment, as aforestated, may then be in order.
Upon the other hand, to accept petitioner's theory of "unrestricted authority" on the part of the Department of Finance to determine or define "other
factors" is to uphold an undue delegation of legislative power, it clearly appearing that the subject provision does not provide any standard for the
exercise of the authority. It is a fundamental rule that delegation of legislative power may be sustained only upon the ground that some standard
for its exercise is provided and that the legislature, in making the delegation, has prescribed the manner of the exercise of the delegated
authority.(*39)
Finally, whether petitioner gained or lost by reason of the extensive credit is rendered
irrelevant by reason of the foregoing disquisitions. It may nevertheless be stated that petitioner failed to disprove COA's claim that it had in fact
gained in the process. Otherwise stated, petitioner failed to sufficiently show that it incurred a loss. Such being the case, how can petitioner claim
for reimbursement? It cannot have its cake and eat it too.
II. Anent the claims arising from sales to the National Power Corporation, We find for the petitioner. The respondents themselves admit in their
Comment that underrecovery arising from sales to NPC are reimbursable because NPC was granted full exemption from the payment of taxes; to
prove this, respondents trace the laws providing for such exemption.(*40) The last law cited is the Fiscal Incentives Regulatory Board's Resolution
No. 17-87 of 24 June 1987 which provides, in part, "that the tax and duty exemption privileges of the National Power Corporation, including those
pertaining to its domestic purchases of petroleum and petroleum products... are restored effective March 10, 1987." In a Memorandum issued on 5
October 1987 by the Office of the President, NPC's tax exemption was confirmed and approved.
Furthermore, as pointed out by respondents, the intention to exempt sales of petroleum products to the NPC is evident in the recently passed
Republic Act No. 6952 establishing the Petroleum Price Standby Fund to support the OPSF.(*41) The pertinent part of Section 2, Republic Act No.
6952 provides:
"SECTION 2. Application of the Fund shall be subject to the following conditions:
(1) That the Fund shall be used to reimburse the oil companies for (a) cost increase of imported crude oil and finished petroleum products
resulting from foreign exchange rate adjustments and/or increases in world market prices of crude oil; (b) cost underrecovery incurred as a result
of fuel oil sales to the National Power Corporation (NPC); and (c) other cost underrecoveries incurred as may be finally decided by the Supreme
Court; x x x"
Hence, petitioner can recover its claim arising from sales of petroleum products to the National Power Corporation.
III. With respect to its claim for reimbursement on sales to ATLAS and MARCOPPER, petitioner relies on Letter of Instruction (LOI) 1416, dated 17
July 1984, which ordered the suspension of payments of all taxes, duties, fees and other charges, whether direct or indirect, due and payable by
the copper mining companies in distress to the national government. Pursuant to this LOI then Minister of Energy, Hon. Geronimo Velasco, issued
Memorandum Circular No. 84-11-22 advising the oil companies that Atlas Consolidated Mining Corporation are among those declared to be in
distress.
In denying the claims arising from sales to ATLAS and MARCOPPER, the COA, in its 18 August 1989 letter to Executive Director Wenceslao R.
de la Paz, states that "it is our opinion that LOI 1416 which implements the exemption from payment of OPSF imposts as effected by OEA has no
legal basis;"(*42) in its Decision No. 1171, it ruled that the CPI (CALTEX) (Caltex) has no authority to claim reimbursement for this uncollected
impost because LOI 1416 dated July 17, 1984, ... was issued when OPSF was not yet in existence and could not have contemplated OPSF
imposts at the time of its formulation."(*43) It is further stated that: "Moreover, it is evident that OPSF was not created to aid distressed mining
companies but rather to help the domestic oil industry by stabilizing oil prices."
In sustaining COA's stand, respondents vigorously maintain that LOI 1416 could not have intended to exempt said distressed mining companies
from the payment of OPSF dues for the following reasons:
a. LOI 1416 granting the alleged exemption was issued on July 17, 1984. P.D. 1956 creating the OPSF was promulgated on October 10, 1984,
while E.O. 137, amending P.D. 1956, was issued on February 25, 1987.
b. LOI 1416 was issued in 1984 to assist distressed copper mining companies in line with the government's effort to prevent the collapse of the
copper industry. P.D. 1956, as amended, was issued for the purpose of minimizing frequent price changes brought about by exchange rate
adjustments and/or changes in world market prices of crude oil and imported petroleum products'; and
c. LOI 1416 caused the 'suspension of all taxes, duties, fees, imposts and other charges, whether direct or indirect, due and payable by the copper
mining companies in distress to the National and Local Governments...' On the other hand, OPSF dues are not payable by (sic) distressed copper
companies but by oil companies. It is to be noted that the copper mining companies do not pay OPSF dues. Rather, such imposts are built in or
already incorporated in the prices of oil products."(*44)
Lastly, respondents allege that while LOI 1416 suspends the payment of taxes by distressed mining companies, it does not accord petitioner the
same privilege with respect to its obligation to pay OPSF dues.
We concur with the disquisitions of the respondents. Aside from such reasons, however, it is apparent that LOI 1416 was never published in the
Official Gazette as required by Article of the Civil Code, which reads:
"Laws shall take effect after fifteen days following the completion of their publication in the Official Gazette,(*45) unless it is otherwise provided. x x
x"
In applying said provision, this Court ruled in the case of Taada vs. Tuvera:(*46)
"WHEREFORE, the Court hereby orders respondents to publish in the Official Gazette all unpublished presidential issuances which are of general
application, and unless so published they shall have no binding force and effect."
Resolving the motion for reconsideration of said decision, this Court, in its Resolution promulgated on 29 December 1986, ruled:(*47)
"We hold therefore that all statutes, including those of local application and private laws, shall be published as a condition for their effectivity,
which shall begin fifteen days after publication unless a different effectivity date is fixed by the legislature.
Covered by this rule are presidential decrees and executive orders promulgated by the President in the exercise of legislative powers whenever
the same are validly delegated by the legislature or, at present, directly conferred by the Constitution. Administrative rules and regulations must
also be published if their purpose is to enforcer or implement existing laws pursuant also to a valid delegation.
x x x
WHEREFORE, it hereby declared that all laws as above defined shall immediately upon their approval, or as soon thereafter as possible, to
become effective only after fifteen days from
their publication, or on another date specified by the legislature, in accordance with Article 2 of the Civil Code."
LOI 1416 has, therefore, no binding force or effect as it was never published in the Official Gazette after its issuance or at any time after the
decision in the abovementioned cases.
Article 2 of the Civil Code was, however, later amended by Executive Order No. 200, issued on 18 June 1987. As amended, the said provision
now reads:
"Laws shall take effect after fifteen days following the completion of their publication either in the Official Gazette or in a newspaper of general
circulation in the Philippines, unless it is otherwise provided."
We are not aware of the publication of LOI 1416 in any newspaper of general circulation pursuant to Executive Order No. 200.
Furthermore, even granting arguendo that LOI 1416 has force and effect, petitioner's claim must still fail. Tax exemptions as a general rule are
construed strictly against the grantee and liberally in favor of the taxing authority.(*48) The burden of proof rests upon the party claiming
exemption to prove that it is in fact covered by the exemption so claimed. The party claiming exemption must therefore be expressly mentioned in
the exempting law or at least be within its purview by clear legislative intent.
In the case at bar, petitioner failed to prove that it is entitled, as a consequence of its sales to ATLAS and MARCOPPER, to claim reimbursement
from the OPSF under LOI 1416. Though LOI 1416 may suspend the payment of taxes by copper mining companies, it does not give petitioner the
same privilege with respect to the payment of OPSF dues.
IV. As to COA's disallowance of the amount of P130,420,235.00, petitioner maintains that the Department of Finance has still to issue a final and
definitive ruling thereon; accordingly, it was premature for COA to disallow it. By doing so, the latter acted beyond its jurisdiction.(*49)
Respondents, on the other hand, contend that said amount was already disallowed by the OEA for failure to substantiate it.(*50) In fact, when
OEA submitted the claims of petitioner for pre-audit, the abovementioned amount was already excluded.
An examination of the records of this case shows that petitioner failed to prove or substantiate it contention that the amount of P130,420,235.00 is
still pending before the OEA and the DOF. Additionally, We find no reason to doubt the submission of respondents that said amount has already
been passed upon by the OEA. Hence, the ruling of respondents COA disapproving said claims must be upheld.
V. The last issue to be resolved in this case whether or not the amounts due to the OPSF from petitioner may be offset against petitioner's
outstanding claims from said fund. Petitioner contends that it should be allowed to offset its claims from the OPSF against its contributions to the
fund as this has been allowed in the past, particularly in the years 1987 and 1988.(*51)
Furthermore, petitioner cites, as bases foroffsetting, the provisions of the New Civil Code on compensation and Section 21, Book V, Title I-B of the
Revised Administrative Code which provides for "Retention of Money for Satisfaction of Indebtedness to Government."(*52) Petitioner also
mentions communications from the Board of Energy and the Department of Finance that supposedly authorize compensation.
Respondents, on the other hand, citing Francia vs. IAC and Fernandez,(*53) contend that there can be no offsetting of taxes against the claims
that a taxpayer may have against the government, as taxes do not arise from contracts or depend upon the will of the taxpayer, but are imposed
by law. Respondents also allege that petitioner's reliance on Section 21, Book V, Title I-B of the Revised Administrative Code is misplaced
because "while this provision empowers the COA to withhold payments of government indebtedness to a person who is also indebted to the
government and apply the government indebtedness to the satisfaction of the obligation of the person to the government, like authority or right to
make compensation is not given to the private person."(*54) The reason for this, as stated in Commissioner of Internal Revenue vs. Algue,
Inc.,(*55) is that money due the government, either in the form of taxes or other dues, is its lifeblood and should be collected without hindrance.
Thus, instead of giving petitioner a reason for compensation or set-off, the Revised Administrative Code makes it the respondents' duty to collect
petitioner's indebtedness to the OPSF.
Refuting respondents' contention, petitioner claims that the amounts due from it do not arise as a result of taxation because "P.D. 1956, as
amended, did not create a source of taxation; it instead established a special fund...,"(*56) and that the OPSF contribution do not go to the general
fund of the state and are not used for public purpose, i.e., not for the support of the government, the administration of law, or the payment of public
expenses. This alleged lack of a public purpose behind expenses. This alleged lack of a public purpose behind OPSF exactions distinguishes
such from a tax. Hence, the ruling in the Francia case is inapplicable.
Lastly, petitioner cites R.A. No. 6952 creating the Petroleum Price Standby Fund to support the OPSF; the said law provides in part that:
SECTION 2. Application of the fund shall be subjected to the following conditions:
(3) That no amount of the Petroleum Price Standby Fund shall be used to pay any oil company which has an outstanding obligation to the
Government without said obligation being offset first, subject to the requirements of compensation or offset under the Civil Code."
We find no merit in petitioner's contention that the OPSF contributions are not for a public purpose because they go to a special fund of the
government. Taxation is no longer envisioned as a measure merely to raise revenue to support the existence of the government; taxes may be
levied with a regulatory purpose to provide means for the rehabilitation and stabilization of a threatened industry which is affected with public
interest as to be within the police power of the state.(*57) There can be no doubt that the oil industry is greatly imbued with public interest as it
vitally affects the general welfare. Any unregulated increase in oil prices could hurt the lives of a majority of the people and cause economic crisis
of untold proportions. It would have a chain reaction in terms of, among others, demands for wage increases and upward spiralling of the cost of
basic commodities. The stabilization then of oil prices is one of prime concern which the state, via its police power, may properly address.
Also P.D. No. 1956, as amended by E.O. No. 137, explicitly provides that the source of OPSF is taxation. No amount of semantical juggleries
could dim this fact.
It is settled that a taxpayer may not offset taxes due from the claims that he may have against the government.(*58) Taxes cannot be the subject
of compensation because the government and taxpayer are not mutually creditors and debtors of each other and a claim for taxes is not such a
debt, demand, contract or judgment as is allowed to be set-off.(*59)
We may even further state that technically, in respect to the taxes for the OPSF, the oil companies merely act as agents for the Government in the
latter's collection since the taxes are, in reality, passed unto the end-users -- the consuming public. In that capacity, the petitioner, as one of such
companies, has the primary obligation to account for and remit the taxes collected to the administrator of the OPSF. This duty stems from the
fiduciary relationship between the two; petitioner certainly cannot certainly cannot be considered merely as a debtor. In respect, therefore, to its
collection for the OPSF vis-a-vis its claims for reimbursement, no compensation is likewise legally feasible. Firstly, the Government and the
petitioner cannot be said to be mutually debtors and creditors of each other. Secondly, there is no proof that petitioner's claim is already due and
liquidated. Under Article 1279 of the Civil Code, in order that compensation may be proper, it is necessary that:
(1) each one of the obligors be bound principally, and that he be at the time a principal creditor of the other;
(2) both debts consist in a sum of money, or it the things due are consumable, they be of the same kind, and also of the same quality if the latter
has been stated;
(3) the two (2) debts be due;
(4) they be liquidated and demandable;
(5) over neither of then there be any retention or controversy, commenced by third persons and communicated in due time to the debtor.
That compensation had been the practice in the past can set no valid precedent. Such a practice has no legal basis. Lastly, R.A. Mo. 6952 does
not authorize oil companies to offset their claims against their OPSF contributions. Instead, it prohibits the government from paying any amount
from the Petroleum Price Standby Fund to oil companies which have outstanding obligations being offset first subject to the rules on
compensation in the Civil Code.
WHEREFORE, in view of the foregoing, judgment is hereby rendered AFFIRMING the challenged decision of the Commission on Audit, except
that portion thereof disallowing petitioner's claim for reimbursement of underrecovery arising from sales to the National Power Corporation, which
is hereby allowed.
With cost against petitioner.
So ordered.


G.R. No. 100113 September 3, 1991
RENATO CAYETANO, petitioner,
vs.
CHRISTIAN MONSOD, HON. JOVITO R. SALONGA, COMMISSION ON APPOINTMENT, and HON. GUILLERMO CARAGUE, in his capacity
as Secretary of Budget and Management, respondents.
Renato L. Cayetano for and in his own behalf.
Sabina E. Acut, Jr. and Mylene Garcia-Albano co-counsel for petitioner.
PARAS, J.:p



We are faced here with a controversy of far-reaching proportions. While ostensibly only legal issues are involved, the Court's decision in this case
would indubitably have a profound effect on the political aspect of our national existence.
The 1987 Constitution provides in Section 1 (1), Article IX-C:
There shall be a Commission on Elections composed of a Chairman and six Commissioners who shall be natural-born
citizens of the Philippines and, at the time of their appointment, at least thirty-five years of age, holders of a college
degree, and must not have been candidates for any elective position in the immediately preceding -elections. However, a
majority thereof, including the Chairman, shall be members of the Philippine Bar who have been engaged in the practice
of law for at least ten years. (Emphasis supplied)
The aforequoted provision is patterned after Section l(l), Article XII-C of the 1973 Constitution which similarly provides:
There shall be an independent Commission on Elections composed of a Chairman and eight Commissioners who shall be natural-born citizens of
the Philippines and, at the time of their appointment, at least thirty-five years of age and holders of a college degree. However, a majority thereof,
including the Chairman, shall be members of the Philippine Bar who have been engaged in the practice of law for at least ten years.' (Emphasis
supplied)
Regrettably, however, there seems to be no jurisprudence as to what constitutes practice of law as a legal qualification to an appointive office.
Black defines "practice of law" as:
The rendition of services requiring the knowledge and the application of legal principles and technique to serve the
interest of another with his consent. It is not limited to appearing in court, or advising and assisting in the conduct of
litigation, but embraces the preparation of pleadings, and other papers incident to actions and special proceedings,
conveyancing, the preparation of legal instruments of all kinds, and the giving of all legal advice to clients. It embraces all
advice to clients and all actions taken for them in matters connected with the law. An attorney engages in the practice of
law by maintaining an office where he is held out to be-an attorney, using a letterhead describing himself as an attorney,
counseling clients in legal matters, negotiating with opposing counsel about pending litigation, and fixing and collecting
fees for services rendered by his associate. (Black's Law Dictionary, 3rd ed.)
The practice of law is not limited to the conduct of cases in court. (Land Title Abstract and Trust Co. v. Dworken, 129 Ohio St. 23, 193 N.E. 650) A
person is also considered to be in the practice of law when he:
... for valuable consideration engages in the business of advising person, firms, associations or corporations as to their
rights under the law, or appears in a representative capacity as an advocate in proceedings pending or prospective,
before any court, commissioner, referee, board, body, committee, or commission constituted by law or authorized to
settle controversies and there, in such representative capacity performs any act or acts for the purpose of obtaining or
defending the rights of their clients under the law. Otherwise stated, one who, in a representative capacity, engages in the
business of advising clients as to their rights under the law, or while so engaged performs any act or acts either in court
or outside of court for that purpose, is engaged in the practice of law. (State ex. rel. Mckittrick v..C.S. Dudley and Co., 102
S.W. 2d 895, 340 Mo. 852)
This Court in the case of Philippine Lawyers Association v.Agrava, (105 Phil. 173,176-177) stated:
The practice of law is not limited to the conduct of cases or litigation in court; it embraces the preparation of pleadings
and other papers incident to actions and special proceedings, the management of such actions and proceedings on
behalf of clients before judges and courts, and in addition, conveying. In general, all advice to clients, and all action taken
for them in matters connected with the law incorporation services, assessment and condemnation services contemplating
an appearance before a judicial body, the foreclosure of a mortgage, enforcement of a creditor's claim in bankruptcy and
insolvency proceedings, and conducting proceedings in attachment, and in matters of estate and guardianship have been
held to constitute law practice, as do the preparation and drafting of legal instruments, where the work done involves the
determination by the trained legal mind of the legal effect of facts and conditions. (5 Am. Jr. p. 262, 263). (Emphasis
supplied)
Practice of law under modem conditions consists in no small part of work performed outside of any court and having no
immediate relation to proceedings in court. It embraces conveyancing, the giving of legal advice on a large variety of
subjects, and the preparation and execution of legal instruments covering an extensive field of business and trust
relations and other affairs. Although these transactions may have no direct connection with court proceedings, they are
always subject to become involved in litigation. They require in many aspects a high degree of legal skill, a wide
experience with men and affairs, and great capacity for adaptation to difficult and complex situations. These customary
functions of an attorney or counselor at law bear an intimate relation to the administration of justice by the courts. No valid
distinction, so far as concerns the question set forth in the order, can be drawn between that part of the work of the
lawyer which involves appearance in court and that part which involves advice and drafting of instruments in his office. It
is of importance to the welfare of the public that these manifold customary functions be performed by persons possessed
of adequate learning and skill, of sound moral character, and acting at all times under the heavy trust obligations to
clients which rests upon all attorneys. (Moran, Comments on the Rules of Court, Vol. 3 [1953 ed.] , p. 665-666, citing In re
Opinion of the Justices [Mass.], 194 N.E. 313, quoted in Rhode Is. Bar Assoc. v. Automobile Service Assoc. [R.I.] 179 A.
139,144). (Emphasis ours)
The University of the Philippines Law Center in conducting orientation briefing for new lawyers (1974-1975) listed the dimensions of the practice of
law in even broader terms as advocacy, counselling and public service.
One may be a practicing attorney in following any line of employment in the profession. If what he does exacts knowledge
of the law and is of a kind usual for attorneys engaging in the active practice of their profession, and he follows some one
or more lines of employment such as this he is a practicing attorney at law within the meaning of the statute. (Barr v.
Cardell, 155 NW 312)
Practice of law means any activity, in or out of court, which requires the application of law, legal procedure, knowledge, training and experience.
"To engage in the practice of law is to perform those acts which are characteristics of the profession. Generally, to practice law is to give notice or
render any kind of service, which device or service requires the use in any degree of legal knowledge or skill." (111 ALR 23)
The following records of the 1986 Constitutional Commission show that it has adopted a liberal interpretation of the term "practice of law."
MR. FOZ. Before we suspend the session, may I make a manifestation which I forgot to do
during our review of the provisions on the Commission on Audit. May I be allowed to make a
very brief statement?
THE PRESIDING OFFICER (Mr. Jamir).
The Commissioner will please proceed.
MR. FOZ. This has to do with the qualifications of the members of the Commission on Audit.
Among others, the qualifications provided for by Section I is that "They must be Members of the
Philippine Bar" I am quoting from the provision "who have been engaged in the practice of
law for at least ten years".
To avoid any misunderstanding which would result in excluding members of the Bar who are now employed in the COA
or Commission on Audit, we would like to make the clarification that this provision on qualifications regarding members of
the Bar does not necessarily refer or involve actual practice of law outside the COA We have to interpret this to mean that
as long as the lawyers who are employed in the COA are using their legal knowledge or legal talent in their respective
work within COA, then they are qualified to be considered for appointment as members or commissioners, even
chairman, of the Commission on Audit.
This has been discussed by the Committee on Constitutional Commissions and Agencies and we deem it important to
take it up on the floor so that this interpretation may be made available whenever this provision on the qualifications as
regards members of the Philippine Bar engaging in the practice of law for at least ten years is taken up.
MR. OPLE. Will Commissioner Foz yield to just one question.
MR. FOZ. Yes, Mr. Presiding Officer.
MR. OPLE. Is he, in effect, saying that service in the COA by a lawyer is equivalent to the
requirement of a law practice that is set forth in the Article on the Commission on Audit?
MR. FOZ. We must consider the fact that the work of COA, although it is auditing, will
necessarily involve legal work; it will involve legal work. And, therefore, lawyers who are
employed in COA now would have the necessary qualifications in accordance with the Provision
on qualifications under our provisions on the Commission on Audit. And, therefore, the answer is
yes.
MR. OPLE. Yes. So that the construction given to this is that this is equivalent to the practice of
law.
MR. FOZ. Yes, Mr. Presiding Officer.
MR. OPLE. Thank you.
... ( Emphasis supplied)
Section 1(1), Article IX-D of the 1987 Constitution, provides, among others, that the Chairman and two Commissioners of the Commission on
Audit (COA) should either be certified public accountants with not less than ten years of auditing practice, or members of the Philippine Bar who
have been engaged in the practice of law for at least ten years. (emphasis supplied)
Corollary to this is the term "private practitioner" and which is in many ways synonymous with the word "lawyer." Today, although many lawyers do
not engage in private practice, it is still a fact that the majority of lawyers are private practitioners. (Gary Munneke, Opportunities in Law Careers
[VGM Career Horizons: Illinois], [1986], p. 15).
At this point, it might be helpful to define private practice. The term, as commonly understood, means "an individual or organization engaged in the
business of delivering legal services." (Ibid.). Lawyers who practice alone are often called "sole practitioners." Groups of lawyers are called "firms."
The firm is usually a partnership and members of the firm are the partners. Some firms may be organized as professional corporations and the
members called shareholders. In either case, the members of the firm are the experienced attorneys. In most firms, there are younger or more
inexperienced salaried attorneyscalled "associates." (Ibid.).
The test that defines law practice by looking to traditional areas of law practice is essentially tautologous, unhelpful defining the practice of law as
that which lawyers do. (Charles W. Wolfram, Modern Legal Ethics [West Publishing Co.: Minnesota, 1986], p. 593). The practice of law is defined
as the performance of any acts . . . in or out of court, commonly understood to be the practice of law. (State Bar Ass'n v. Connecticut Bank & Trust
Co., 145 Conn. 222, 140 A.2d 863, 870 [1958] [quoting Grievance Comm. v. Payne, 128 Conn. 325, 22 A.2d 623, 626 [1941]). Because lawyers
perform almost every function known in the commercial and governmental realm, such a definition would obviously be too global to be
workable.(Wolfram, op. cit.).
The appearance of a lawyer in litigation in behalf of a client is at once the most publicly familiar role for lawyers as well as an uncommon role for
the average lawyer. Most lawyers spend little time in courtrooms, and a large percentage spend their entire practice without litigating a case. (Ibid.,
p. 593). Nonetheless, many lawyers do continue to litigate and the litigating lawyer's role colors much of both the public image and the self
perception of the legal profession. (Ibid.).
In this regard thus, the dominance of litigation in the public mind reflects history, not reality. (Ibid.). Why is this so? Recall that the late Alexander
SyCip, a corporate lawyer, once articulated on the importance of a lawyer as a business counselor in this wise: "Even today, there are still
uninformed laymen whose concept of an attorney is one who principally tries cases before the courts. The members of the bench and bar and the
informed laymen such as businessmen, know that in most developed societies today, substantially more legal work is transacted in law offices
than in the courtrooms. General practitioners of law who do both litigation and non-litigation work also know that in most cases they find
themselves spending more time doing what [is] loosely desccribe[d] as business counseling than in trying cases. The business lawyer has been
described as the planner, the diagnostician and the trial lawyer, the surgeon. I[t] need not [be] stress[ed] that in law, as in medicine, surgery
should be avoided where internal medicine can be effective." (Business Star, "Corporate Finance Law," Jan. 11, 1989, p. 4).
In the course of a working day the average general practitioner wig engage in a number of legal tasks, each involving different legal doctrines,
legal skills, legal processes, legal institutions, clients, and other interested parties. Even the increasing numbers of lawyers in specialized practice
wig usually perform at least some legal services outside their specialty. And even within a narrow specialty such as tax practice, a lawyer will shift
from one legal task or role such as advice-giving to an importantly different one such as representing a client before an administrative agency.
(Wolfram, supra, p. 687).
By no means will most of this work involve litigation, unless the lawyer is one of the relatively rare types a litigator who specializes in this work
to the exclusion of much else. Instead, the work will require the lawyer to have mastered the full range of traditional lawyer skills of client
counselling, advice-giving, document drafting, and negotiation. And increasingly lawyers find that the new skills of evaluation and mediation are
both effective for many clients and a source of employment. (Ibid.).
Most lawyers will engage in non-litigation legal work or in litigation work that is constrained in very important ways, at least theoretically, so as to
remove from it some of the salient features of adversarial litigation. Of these special roles, the most prominent is that of prosecutor. In some
lawyers' work the constraints are imposed both by the nature of the client and by the way in which the lawyer is organized into a social unit to
perform that work. The most common of these roles are those of corporate practice and government legal service. (Ibid.).
In several issues of the Business Star, a business daily, herein below quoted are emerging trends in corporate law practice, a departure from the
traditional concept of practice of law.
We are experiencing today what truly may be called a revolutionary transformation in corporate law practice. Lawyers and
other professional groups, in particular those members participating in various legal-policy decisional contexts, are finding
that understanding the major emerging trends in corporation law is indispensable to intelligent decision-making.
Constructive adjustment to major corporate problems of today requires an accurate understanding of the nature and
implications of the corporate law research function accompanied by an accelerating rate of information accumulation. The
recognition of the need for such improved corporate legal policy formulation, particularly "model-making" and
"contingency planning," has impressed upon us the inadequacy of traditional procedures in many decisional contexts.
In a complex legal problem the mass of information to be processed, the sorting and weighing of significant conditional
factors, the appraisal of major trends, the necessity of estimating the consequences of given courses of action, and the
need for fast decision and response in situations of acute danger have prompted the use of sophisticated concepts of
information flow theory, operational analysis, automatic data processing, and electronic computing equipment.
Understandably, an improved decisional structure must stress the predictive component of the policy-making process,
wherein a "model", of the decisional context or a segment thereof is developed to test projected alternative courses of
action in terms of futuristic effects flowing therefrom.
Although members of the legal profession are regularly engaged in predicting and projecting the trends of the law, the
subject of corporate finance law has received relatively little organized and formalized attention in the philosophy of
advancing corporate legal education. Nonetheless, a cross-disciplinary approach to legal research has become a vital
necessity.
Certainly, the general orientation for productive contributions by those trained primarily in the law can be improved
through an early introduction to multi-variable decisional context and the various approaches for handling such problems.
Lawyers, particularly with either a master's or doctorate degree in business administration or management, functioning at
the legal policy level of decision-making now have some appreciation for the concepts and analytical techniques of other
professions which are currently engaged in similar types of complex decision-making.
Truth to tell, many situations involving corporate finance problems would require the services of an astute attorney
because of the complex legal implications that arise from each and every necessary step in securing and maintaining the
business issue raised. (Business Star, "Corporate Finance Law," Jan. 11, 1989, p. 4).
In our litigation-prone country, a corporate lawyer is assiduously referred to as the "abogado de campanilla." He is the
"big-time" lawyer, earning big money and with a clientele composed of the tycoons and magnates of business and
industry.
Despite the growing number of corporate lawyers, many people could not explain what it is that a corporate lawyer does.
For one, the number of attorneys employed by a single corporation will vary with the size and type of the corporation.
Many smaller and some large corporations farm out all their legal problems to private law firms. Many others have in-
house counsel only for certain matters. Other corporation have a staff large enough to handle most legal problems in-
house.
A corporate lawyer, for all intents and purposes, is a lawyer who handles the legal affairs of a corporation. His areas of
concern or jurisdiction may include, inter alia: corporate legal research, tax laws research, acting out as corporate
secretary (in board meetings), appearances in both courts and other adjudicatory agencies (including the Securities and
Exchange Commission), and in other capacities which require an ability to deal with the law.
At any rate, a corporate lawyer may assume responsibilities other than the legal affairs of the business of the corporation
he is representing. These include such matters as determining policy and becoming involved in management. ( Emphasis
supplied.)
In a big company, for example, one may have a feeling of being isolated from the action, or not understanding how one's
work actually fits into the work of the orgarnization. This can be frustrating to someone who needs to see the results of his
work first hand. In short, a corporate lawyer is sometimes offered this fortune to be more closely involved in the running of
the business.
Moreover, a corporate lawyer's services may sometimes be engaged by a multinational corporation (MNC). Some large
MNCs provide one of the few opportunities available to corporate lawyers to enter the international law field. After all,
international law is practiced in a relatively small number of companies and law firms. Because working in a foreign
country is perceived by many as glamorous, tills is an area coveted by corporate lawyers. In most cases, however, the
overseas jobs go to experienced attorneys while the younger attorneys do their "international practice" in law libraries.
(Business Star, "Corporate Law Practice," May 25,1990, p. 4).
This brings us to the inevitable, i.e., the role of the lawyer in the realm of finance. To borrow the lines of Harvard-
educated lawyer Bruce Wassertein, to wit: "A bad lawyer is one who fails to spot problems, a good lawyer is one who
perceives the difficulties, and the excellent lawyer is one who surmounts them." (Business Star, "Corporate Finance Law,"
Jan. 11, 1989, p. 4).
Today, the study of corporate law practice direly needs a "shot in the arm," so to speak. No longer are we talking of the
traditional law teaching method of confining the subject study to the Corporation Code and the Securities Code but an
incursion as well into the intertwining modern management issues.
Such corporate legal management issues deal primarily with three (3) types of learning: (1) acquisition of insights into
current advances which are of particular significance to the corporate counsel; (2) an introduction to usable disciplinary
skins applicable to a corporate counsel's management responsibilities; and (3) a devotion to the organization and
management of the legal function itself.
These three subject areas may be thought of as intersecting circles, with a shared area linking them. Otherwise known as
"intersecting managerial jurisprudence," it forms a unifying theme for the corporate counsel's total learning.
Some current advances in behavior and policy sciences affect the counsel's role. For that matter, the corporate lawyer
reviews the globalization process, including the resulting strategic repositioning that the firms he provides counsel for are
required to make, and the need to think about a corporation's; strategy at multiple levels. The salience of the nation-state
is being reduced as firms deal both with global multinational entities and simultaneously with sub-national governmental
units. Firms increasingly collaborate not only with public entities but with each other often with those who are
competitors in other arenas.
Also, the nature of the lawyer's participation in decision-making within the corporation is rapidly changing. The modem
corporate lawyer has gained a new role as a stakeholder in some cases participating in the organization and
operations of governance through participation on boards and other decision-making roles. Often these new patterns
develop alongside existing legal institutions and laws are perceived as barriers. These trends are complicated as
corporations organize for global operations. ( Emphasis supplied)
The practising lawyer of today is familiar as well with governmental policies toward the promotion and management of
technology. New collaborative arrangements for promoting specific technologies or competitiveness more generally
require approaches from industry that differ from older, more adversarial relationships and traditional forms of seeking to
influence governmental policies. And there are lessons to be learned from other countries. In Europe, Esprit, Eureka and
Race are examples of collaborative efforts between governmental and business Japan's MITI is world famous. (Emphasis
supplied)
Following the concept of boundary spanning, the office of the Corporate Counsel comprises a distinct group within the
managerial structure of all kinds of organizations. Effectiveness of both long-term and temporary groups within
organizations has been found to be related to indentifiable factors in the group-context interaction such as the groups
actively revising their knowledge of the environment coordinating work with outsiders, promoting team achievements
within the organization. In general, such external activities are better predictors of team performance than internal group
processes.
In a crisis situation, the legal managerial capabilities of the corporate lawyer vis-a-vis the managerial mettle of
corporations are challenged. Current research is seeking ways both to anticipate effective managerial procedures and to
understand relationships of financial liability and insurance considerations. (Emphasis supplied)
Regarding the skills to apply by the corporate counsel, three factors are apropos:
First System Dynamics. The field of systems dynamics has been found an effective tool for new managerial thinking
regarding both planning and pressing immediate problems. An understanding of the role of feedback loops, inventory
levels, and rates of flow, enable users to simulate all sorts of systematic problems physical, economic, managerial,
social, and psychological. New programming techniques now make the system dynamics principles more accessible to
managers including corporate counsels. (Emphasis supplied)
Second Decision Analysis. This enables users to make better decisions involving complexity and uncertainty. In the
context of a law department, it can be used to appraise the settlement value of litigation, aid in negotiation settlement,
and minimize the cost and risk involved in managing a portfolio of cases. (Emphasis supplied)
Third Modeling for Negotiation Management. Computer-based models can be used directly by parties and mediators in all
lands of negotiations. All integrated set of such tools provide coherent and effective negotiation support, including hands-
on on instruction in these techniques. A simulation case of an international joint venture may be used to illustrate the
point.
[Be this as it may,] the organization and management of the legal function, concern three pointed areas of consideration,
thus:
Preventive Lawyering. Planning by lawyers requires special skills that comprise a major part of the general counsel's
responsibilities. They differ from those of remedial law. Preventive lawyering is concerned with minimizing the risks of
legal trouble and maximizing legal rights for such legal entities at that time when transactional or similar facts are being
considered and made.
Managerial Jurisprudence. This is the framework within which are undertaken those activities of the firm to which legal
consequences attach. It needs to be directly supportive of this nation's evolving economic and organizational fabric as
firms change to stay competitive in a global, interdependent environment. The practice and theory of "law" is not
adequate today to facilitate the relationships needed in trying to make a global economy work.
Organization and Functioning of the Corporate Counsel's Office. The general counsel has emerged in the last decade as
one of the most vibrant subsets of the legal profession. The corporate counsel hear responsibility for key aspects of the
firm's strategic issues, including structuring its global operations, managing improved relationships with an increasingly
diversified body of employees, managing expanded liability exposure, creating new and varied interactions with public
decision-makers, coping internally with more complex make or by decisions.
This whole exercise drives home the thesis that knowing corporate law is not enough to make one a good general
corporate counsel nor to give him a full sense of how the legal system shapes corporate activities. And even if the
corporate lawyer's aim is not the understand all of the law's effects on corporate activities, he must, at the very least, also
gain a working knowledge of the management issues if only to be able to grasp not only the basic legal "constitution' or
makeup of the modem corporation. "Business Star", "The Corporate Counsel," April 10, 1991, p. 4).
The challenge for lawyers (both of the bar and the bench) is to have more than a passing knowledge of financial law
affecting each aspect of their work. Yet, many would admit to ignorance of vast tracts of the financial law territory. What
transpires next is a dilemma of professional security: Will the lawyer admit ignorance and risk opprobrium?; or will he
feign understanding and risk exposure? (Business Star, "Corporate Finance law," Jan. 11, 1989, p. 4).
Respondent Christian Monsod was nominated by President Corazon C. Aquino to the position of Chairman of the COMELEC in a letter received
by the Secretariat of the Commission on Appointments on April 25, 1991. Petitioner opposed the nomination because allegedly Monsod does not
possess the required qualification of having been engaged in the practice of law for at least ten years.
On June 5, 1991, the Commission on Appointments confirmed the nomination of Monsod as Chairman of the COMELEC. On June 18, 1991, he
took his oath of office. On the same day, he assumed office as Chairman of the COMELEC.
Challenging the validity of the confirmation by the Commission on Appointments of Monsod's nomination, petitioner as a citizen and taxpayer, filed
the instant petition for certiorari and Prohibition praying that said confirmation and the consequent appointment of Monsod as Chairman of the
Commission on Elections be declared null and void.
Atty. Christian Monsod is a member of the Philippine Bar, having passed the bar examinations of 1960 with a grade of 86-55%. He has been a
dues paying member of the Integrated Bar of the Philippines since its inception in 1972-73. He has also been paying his professional license fees
as lawyer for more than ten years. (p. 124, Rollo)
After graduating from the College of Law (U.P.) and having hurdled the bar, Atty. Monsod worked in the law office of his father. During his stint in
the World Bank Group (1963-1970), Monsod worked as an operations officer for about two years in Costa Rica and Panama, which involved
getting acquainted with the laws of member-countries negotiating loans and coordinating legal, economic, and project work of the Bank. Upon
returning to the Philippines in 1970, he worked with the Meralco Group, served as chief executive officer of an investment bank and subsequently
of a business conglomerate, and since 1986, has rendered services to various companies as a legal and economic consultant or chief executive
officer. As former Secretary-General (1986) and National Chairman (1987) of NAMFREL. Monsod's work involved being knowledgeable in election
law. He appeared for NAMFREL in its accreditation hearings before the Comelec. In the field of advocacy, Monsod, in his personal capacity and
as former Co-Chairman of the Bishops Businessmen's Conference for Human Development, has worked with the under privileged sectors, such
as the farmer and urban poor groups, in initiating, lobbying for and engaging in affirmative action for the agrarian reform law and lately the urban
land reform bill. Monsod also made use of his legal knowledge as a member of the Davide Commission, a quast judicial body, which conducted
numerous hearings (1990) and as a member of the Constitutional Commission (1986-1987), and Chairman of its Committee on Accountability of
Public Officers, for which he was cited by the President of the Commission, Justice Cecilia Muoz-Palma for "innumerable amendments to
reconcile government functions with individual freedoms and public accountability and the party-list system for the House of Representative. (pp.
128-129 Rollo) ( Emphasis supplied)
Just a word about the work of a negotiating team of which Atty. Monsod used to be a member.
In a loan agreement, for instance, a negotiating panel acts as a team, and which is adequately constituted to meet the
various contingencies that arise during a negotiation. Besides top officials of the Borrower concerned, there are the legal
officer (such as the legal counsel), the finance manager, and an operations officer (such as an official involved in
negotiating the contracts) who comprise the members of the team. (Guillermo V. Soliven, "Loan Negotiating Strategies for
Developing Country Borrowers," Staff Paper No. 2, Central Bank of the Philippines, Manila, 1982, p. 11). (Emphasis
supplied)
After a fashion, the loan agreement is like a country's Constitution; it lays down the law as far as the loan transaction is
concerned. Thus, the meat of any Loan Agreement can be compartmentalized into five (5) fundamental parts: (1)
business terms; (2) borrower's representation; (3) conditions of closing; (4) covenants; and (5) events of default. (Ibid., p.
13).
In the same vein, lawyers play an important role in any debt restructuring program. For aside from performing the tasks of
legislative drafting and legal advising, they score national development policies as key factors in maintaining their
countries' sovereignty. (Condensed from the work paper, entitled "Wanted: Development Lawyers for Developing
Nations," submitted by L. Michael Hager, regional legal adviser of the United States Agency for International
Development, during the Session on Law for the Development of Nations at the Abidjan World Conference in Ivory Coast,
sponsored by the World Peace Through Law Center on August 26-31, 1973). ( Emphasis supplied)
Loan concessions and compromises, perhaps even more so than purely renegotiation policies, demand expertise in the
law of contracts, in legislation and agreement drafting and in renegotiation. Necessarily, a sovereign lawyer may work
with an international business specialist or an economist in the formulation of a model loan agreement. Debt restructuring
contract agreements contain such a mixture of technical language that they should be carefully drafted and signed only
with the advise of competent counsel in conjunction with the guidance of adequate technical support personnel. (See
International Law Aspects of the Philippine External Debts, an unpublished dissertation, U.S.T. Graduate School of Law,
1987, p. 321). ( Emphasis supplied)
A critical aspect of sovereign debt restructuring/contract construction is the set of terms and conditions which determines
the contractual remedies for a failure to perform one or more elements of the contract. A good agreement must not only
define the responsibilities of both parties, but must also state the recourse open to either party when the other fails to
discharge an obligation. For a compleat debt restructuring represents a devotion to that principle which in the ultimate
analysis is sine qua non for foreign loan agreements-an adherence to the rule of law in domestic and international affairs
of whose kind U.S. Supreme Court Justice Oliver Wendell Holmes, Jr. once said: "They carry no banners, they beat no
drums; but where they are, men learn that bustle and bush are not the equal of quiet genius and serene mastery." (See
Ricardo J. Romulo, "The Role of Lawyers in Foreign Investments," Integrated Bar of the Philippine Journal, Vol. 15, Nos.
3 and 4, Third and Fourth Quarters, 1977, p. 265).
Interpreted in the light of the various definitions of the term Practice of law". particularly the modern concept of law practice, and taking into
consideration the liberal construction intended by the framers of the Constitution, Atty. Monsod's past work experiences as a lawyer-economist, a
lawyer-manager, a lawyer-entrepreneur of industry, a lawyer-negotiator of contracts, and a lawyer-legislator of both the rich and the poor verily
more than satisfy the constitutional requirement that he has been engaged in the practice of law for at least ten years.
Besides in the leading case of Luego v. Civil Service Commission, 143 SCRA 327, the Court said:
Appointment is an essentially discretionary power and must be performed by the officer in which it is vested according to
his best lights, the only condition being that the appointee should possess the qualifications required by law. If he does,
then the appointment cannot be faulted on the ground that there are others better qualified who should have been
preferred. This is a political question involving considerations of wisdom which only the appointing authority can decide.
(emphasis supplied)
No less emphatic was the Court in the case of (Central Bank v. Civil Service Commission, 171 SCRA 744) where it stated:
It is well-settled that when the appointee is qualified, as in this case, and all the other legal requirements are satisfied, the
Commission has no alternative but to attest to the appointment in accordance with the Civil Service Law. The
Commission has no authority to revoke an appointment on the ground that another person is more qualified for a
particular position. It also has no authority to direct the appointment of a substitute of its choice. To do so would be an
encroachment on the discretion vested upon the appointing authority. An appointment is essentially within the
discretionary power of whomsoever it is vested, subject to the only condition that the appointee should possess the
qualifications required by law. ( Emphasis supplied)
The appointing process in a regular appointment as in the case at bar, consists of four (4) stages: (1) nomination; (2) confirmation by the
Commission on Appointments; (3) issuance of a commission (in the Philippines, upon submission by the Commission on Appointments of its
certificate of confirmation, the President issues the permanent appointment; and (4) acceptance e.g., oath-taking, posting of bond, etc. . . .
(Lacson v. Romero, No. L-3081, October 14, 1949; Gonzales, Law on Public Officers, p. 200)
The power of the Commission on Appointments to give its consent to the nomination of Monsod as Chairman of the Commission on Elections is
mandated by Section 1(2) Sub-Article C, Article IX of the Constitution which provides:
The Chairman and the Commisioners 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, three Members shall hold office
for seven years, two Members for five years, and the last Members for three years, without reappointment. Appointment
to any vacancy shall be only for the unexpired term of the predecessor. In no case shall any Member be appointed or
designated in a temporary or acting capacity.
Anent Justice Teodoro Padilla's separate opinion, suffice it to say that his definition of the practice of law is the traditional
or stereotyped notion of law practice, as distinguished from the modern concept of the practice of law, which modern
connotation is exactly what was intended by the eminent framers of the 1987 Constitution. Moreover, Justice Padilla's
definition would require generally a habitual law practice, perhaps practised two or three times a week and would outlaw
say, law practice once or twice a year for ten consecutive years. Clearly, this is far from the constitutional intent.
Upon the other hand, the separate opinion of Justice Isagani Cruz states that in my written opinion, I made use of a definition of law practice which
really means nothing because the definition says that law practice " . . . is what people ordinarily mean by the practice of law." True I cited the
definition but only by way of sarcasm as evident from my statement that the definition of law practice by "traditional areas of law practice is
essentially tautologous" or defining a phrase by means of the phrase itself that is being defined.
Justice Cruz goes on to say in substance that since the law covers almost all situations, most individuals, in making use of the law, or in advising
others on what the law means, are actually practicing law. In that sense, perhaps, but we should not lose sight of the fact that Mr. Monsod is a
lawyer, a member of the Philippine Bar, who has been practising law for over ten years. This is different from the acts of persons practising law,
without first becoming lawyers.
Justice Cruz also says that the Supreme Court can even disqualify an elected President of the Philippines, say, on the ground that he lacks one or
more qualifications. This matter, I greatly doubt. For one thing, how can an action or petition be brought against the President? And even
assuming that he is indeed disqualified, how can the action be entertained since he is the incumbent President?
We now proceed:
The Commission on the basis of evidence submitted doling the public hearings on Monsod's confirmation, implicitly determined that he possessed
the necessary qualifications as required by law. The judgment rendered by the Commission in the exercise of such an acknowledged power is
beyond judicial interference except only upon a clear showing of a grave abuse of discretion amounting to lack or excess of jurisdiction. (Art. VIII,
Sec. 1 Constitution). Thus, only where such grave abuse of discretion is clearly shown shall the Court interfere with the Commission's judgment. In
the instant case, there is no occasion for the exercise of the Court's corrective power, since no abuse, much less a grave abuse of discretion, that
would amount to lack or excess of jurisdiction and would warrant the issuance of the writs prayed, for has been clearly shown.
Additionally, consider the following:
(1) If the Commission on Appointments rejects a nominee by the President, may the Supreme Court reverse the
Commission, and thus in effect confirm the appointment? Clearly, the answer is in the negative.
(2) In the same vein, may the Court reject the nominee, whom the Commission has confirmed? The answer is likewise
clear.
(3) If the United States Senate (which is the confirming body in the U.S. Congress) decides to confirm a Presidential
nominee, it would be incredible that the U.S. Supreme Court would still reverse the U.S. Senate.
Finally, one significant legal maxim is:
We must interpret not by the letter that killeth, but by the spirit that giveth life.
Take this hypothetical case of Samson and Delilah. Once, the procurator of Judea asked Delilah (who was Samson's beloved) for help in
capturing Samson. Delilah agreed on condition that
No blade shall touch his skin;
No blood shall flow from his veins.
When Samson (his long hair cut by Delilah) was captured, the procurator placed an iron rod burning white-hot two or three inches away from in
front of Samson's eyes. This blinded the man. Upon hearing of what had happened to her beloved, Delilah was beside herself with anger, and
fuming with righteous fury, accused the procurator of reneging on his word. The procurator calmly replied: "Did any blade touch his skin? Did any
blood flow from his veins?" The procurator was clearly relying on the letter, not the spirit of the agreement.
In view of the foregoing, this petition is hereby DISMISSED.
SO ORDERED.


G.R. No. 69871 August 24, 1990
ANITA VILLA, petitioner,
vs.
MANUEL LAZARO, as Presidential Assistant for Legal Affairs, Office of the President, and the HUMAN SETTLEMENTS REGULATORY
COMMISSION, respondents.
Eliseo P. Vencer II for petitioner.
NARVASA, J.:
On January 18, 1980, Anita Villa was granted a building permit to construct a funeral parlor at Santiago Boulevard in Gen. Santos City.
1
The
permit was issued by the City Engineer after the application was "processed by Engineer Dominador Solana of the City Engineer's Office, and on
the strength of the Certification of Manuel Sales, City Planning and Development Coordinator that the "project was in consonance with the Land
Use Plan of the City and within the full provision of the Zoning Ordinance".
2
With financing obtained from the Development Bank of the
Philippines, Villa commenced construction of the building.
In October of that same year, as the funeral parlor was nearing completion, a suit for injunction was brought against Villa by Dr. Jesus Veneracion,
the owner of St. Elizabeth Hospital, standing about 132.36 meters from the funeral parlor.
3
The complaint sought the perpetual enjoinment of the
construction because allegedly violative of the Zoning Ordinance of General Santos City.
4
A status quo order was issued.
After appropriate proceedings and trial, judgment on the merits was rendered on November 17, 1981, dismissing Veneracion's complaint as well
as the counterclaim pleaded by Villa. The Trial Court found that there was a falsified Zoning Ordinance, containing a provision governing funeral
parlors, which had been submitted to and ratified by the Ministry of Human Settlements, but that ordinance had never been passed by the
Sangguniang Panlungsod and that the genuine Zoning Ordinance of General Santos City contained no prohibition whatever relative to such
parlors' "distance from hospitals, whether public or private".
5
Villa then resumed construction of her building and completed it.
6

Veneracion did not appeal from this adverse judgment which therefore became final. Instead, he brought the matter up with the Human
Settlements Regulatory Commission. He lodged a complaint with that commission praying "that the funeral parlor be relocated because it was
near the St. Elizabeth Hospital and Villa failed to secure the necessary locational clearance".
7
The complaint, as will at once be noted, is
substantially the same as that filed by him with the Court of First Instance and dismissed after trial. Furthermore, neither he nor the Commission,
as will hereafter be narrated, ever made known this second complaint to Villa until much, much later, after the respondent Commission had
rendered several adverse rulings to her.
8

Two months after the rendition of the judgment against Veneracion, or more precisely on January 22, 1982, Villa received a telegram dated
January 21 from Commissioner Raymundo R. Dizon of the Human Settlements Regulatory Commission reading as follows:
9

THE HUMAN SETTLEMENT REGULATORY COMMISSION REQUEST TRANSMITTAL OF PROOF OF LOCATIONAL
CLEARANCE GRANTED BY THIS OFFICE IMMEDIATELY UPON RECEIPT OF THIS . . NOT LATER THAN 21ST
JANUARY 1982 REGARDING YOUR ON GOING CONSTRUCTION OF A FUNERAL PARLOR AT SANTIAGO STREET
CORNER NATIONAL HIGHWAY GENERAL SANTOS CITY AN OFFICIAL COMMUNICATION TO THE EFFECT
FOLLOWS.
On the same day, January 22, 1982, Villa sent Dizon a reply telegram reading: "LOCATIONAL CLEARANCE BASED ON CERTIFICATION OF
CITY PLANNING AND DEVELOPMENT COORDINATOR AND HUMAN SETTLEMENT OFFICER, COPIES MAIL . . ."
10
This she did on January
27,1982; under Registry Receipt No. 1227 (Gen. Santos City Post Office),
11
Villa sent to Dizon
1) the certification dated October 24, 1980 of Josefina E. Alaba (Human Settlements Officer, Gen. Santos City) to the following effect:
12

. . that per scrutiny of the documents presented by Mrs. Anita Villa on her application for a Funeral Parlor and inspection
of lot No. 4997 along Santiago Boulevard where the building is to be constructed, the undersigned guarantees that the
application passed the criteria of this office for this purpose.
2) and the certification of Manuel O. Sales, City Planning and Development Coordinator, dated December 27, 1979,
13
that:
. . the proposed project (funeral Chapel) of Anita G. Villa, located at Lot No. 4997 along Santiago Boulevard is in
consonance with the land Use Plan of the City and within the full provision of the Zoning Ordinance.
On February 8, 1982 Villa received what was evidently the official communication" referred to in Commissioner Dizon's telegram of January 21,
1982, supra, an "Order to Present Proof of Locational Clearance" dated January 20, 1982. Knowing this and "considering also that she . . (had)
already sent the (required) locational clearance on January 27, 1982," Villa made no response.
14

No doubt with no little discomfiture Villa received on June 2, 1982 a "Show Cause" Order dated April 28,1982, signed by one Ernesto L. Mendiola
in behalf of the Commission, requiring her to show cause why a fine should not be imposed on her or a cease-and-desist order issued against her
for her failure to show proof of locational clearance.
15
The order made no reference whatever to the documents she had already sent by
registered mail as early as January 27, 1982. The following day Villa sent a telegram to Commissioner Dizon reading as follows:
16

LOCATIONAL CLEARANCE WAS MAILED THRU REGISTERED MAIL REGISTRY RECEIPT NUMBER 1227 DATED
JANUARY 27, 1982, SENDING AGAIN THRU REGISTERED MAIL REGISTRY RECEIPT NO. 6899 JUNE 3, 1982.
On the same day, she also sent to Commissioner Dizon by registered mail (Reg Receipt No. 6899), as indicated in her telegram, the
same certifications earlier sent by her also by registered mail (Reg Receipt No. 1227), supra.
If she thought the affair had thus been satisfactorily ended, she was sadly in error, of which she was very shortly made aware. On July 27, 1982,
she received an Order of Commissioner Dizon dated June 29, 1982 imposing on her a fine of P10,000.00 and requiring her to cease operations
until further orders from his office.
17
The order made no mention of the documents she had transmitted by registered mail on January 27, 1982
and June 3, 1982, or to her telegrams on the matter. Villa forthwith went to see the Deputized Zoning Administrator of General Santos City, Isidro
M. Olmedo. The latter issued to her a "CERTIFICATE OF ZONING COMPLIANCE" No. 0087, dated July 28,1982, inter alia attesting that the land
on which Villa's "proposed commercial building" was located in a vicinity in which the "dominant land uses" were
"commercial/institutional/residential," and the project conformed "WITH THE LAND USE PLAN OF THE CITY."
18
This certificate Villa sent on the
same day to Commissioner Dizon by registered mail (Reg. Receipt No. 1365 [Gen. Santos City P.O.]).
19
It is noteworthy that this Certificate No.
0087 is entirely consistent with the earlier certification dated November 27, 1979 of City Planning & Development Coordinator Sales that Villa's
funeral chapel was "in consonance with the Land Use Plan of the City and within the full provision of the Zoning Ordinance," supra,
20
and that of
Human Settlements Officer Alaba dated October 24, 1980, supra
21
that Villa's "application for a Funeral Parlor . . passed the criteria of this office
for this purpose." Villa could perhaps be understandably considered justified in believing, at this time, that the matter had finally been laid to rest.
One can then only imagine her consternation and shock when she was served on November 16, 1982 with a writ of execution signed by
Commissioner Dizon under the date of October 19, 1982 in implementation of his Order of June 29, 1982, above mentioned, imposing a fine of
P10,000.00 on her. Again, this Order, like the others issuing from respondent Commission, made no advertence whatever to the documents Villa
had already sent to respondent Commission by registered mail on January 27, June 29, and July 28, 1982, or her telegrams Be this as it may, she
lost no time in moving for reconsideration, by letter dated November 22, 1982 to which she attached copies of the documents she had earlier sent
to Commissioner Dizon, viz.: her telegram of January 22, 1982,
22
(2) the certification of the City Planning & Development Coordinator
23
(3) the
certification of the Human Settlements Officer
24
(4) the telegram dated June 3, 1982,
25
and (5) the Certificate of Zoning Compliance dated July
28, 1982.
26
In addition, Villa executed a special power of attorney on December 10, 1982 authorizing Anastacio Basas to "deliver to the Human
Settlements Regulatory Commission . . all my papers or documents required by the said Commission as requisites for the issuance to me and/or
the Funeraria Villa . . (of) the locational clearance for the construction of my funeral parlor along Santiago boulevard, General Santos City. . .
27

pursuant to which on December 15, 1982, said Basas delivered to the Commission (Enforcement Office), thru one Betty Jimenez
28
copies of
Villa's (1) building plan, (2) building permit,
29
(3) occupancy permit,
30
and (4) "the decision of the Court case involving the funeral parlor".
31

By Order dated January 21, 1983, Commissioner Dizon denied the reconsideration prayed for by Villa in her letter of November 22, 1982, opining
that the plea for reconsideration had been presented out of time,
32
and the order of June 29, 1982 had become final and executory.
33

Villa then filed an appeal with "the Commission Proper, which denied it in an order dated September 7, 1983, also on account of the finality of the
order of the Commissioner for Enforcement. Her subsequent motion for reconsideration . . (was also) denied in the order of June 7, 1984 . .
34

Villa then sought to take an appeal to the Office of the President. The matter was acted on by the Presidential Assistant for Legal Affairs,
respondent Manuel M. Lazaro. In a Resolution dated September 21, 1984, respondent Lazaro denied the "appeal and (Villa's) motion for
extension of time to submit an appeal memorandum".
35
It is noteworthy that Lazaro's resolution, like the orders of Commissioner Dizon and
respondent Commission, contains no reference whatsoever to the telegrams and documents sent by Villa to the latter on various occasions
evidencing her prompt responses to the orders of Dizon and the Commission, and her substantial compliance with the general requirement for her
to present the requisite clearances or documents of authority for the erection of her funeral parlor. The very skimpy narration of facts set out in the
resolution limits itself merely to a citation of the orders of Commissioner Dizon and the Commission; and on that basis, the resolution simplistically
concludes that "no appeal was seasonably taken by Mrs. Anita Villa from the order of June 29, 1982, of the HSRC . . (and) (a)ccordingly, said
order became final for which reason a writ of execution was issued . . (which) finality was confirmed in the subsequent orders of HSRC, dated
January 21, 1983, and September 7, 1983."
Villa filed a motion for reconsideration dated October 19, 1984, this time through counsel, contending that the resolution of September 21, 1984
was "not in conformity with the law and the evidence" and deprived her of due process of law.
36
But this, too, was denied (with finality) by
respondent Lazaro, in a Resolution dated December 14, 1984 which again omitted to refer to the several attempts of Villa to comply with the order
of Commissioner Dizon to present the requisite documents of authority anent her funeral parlor and adverted merely to the orders emanating from
Dizon and the respondent Commission.
37

These facts present a picture of official incompetence of gross negligence and abdication of duty, if not of active bias and partiality, that is most
reprehensible. The result has been to subvert and put to naught the Judgment rendered in a suit regularly tried and decided by a court of justice,
to deprive one party of rights confirmed and secured thereby and to accord her adversary, in a different forum, the relief he had sought and been
denied in said case.
There is no question that Dr. Jesus Veneracion had resorted to the proscribed practice of forum-shopping when, following adverse judgment of the
Court of First Instance in his suit to enjoin the construction of Villa's funeral parlor, he had, instead of appealing that judgment, lodged a complaint
with the respondent Commission on substantially the same ground litigated in the action. Also undisputed is that while the respondent
Commission took cognizance of the complaint and by telegram required Villa to submit a locational clearance, said respondent did not then or at
any time before issuance of the order and writ of execution complained of bother to put her on notice, formally or otherwise, of Veneracion's
complaint. It was therefore wholly natural for Villa to assume, as it is apparent she did, that no formal adversarial inquiry was underway and that
the telegram was what it purported to be on its face: a routinary request, issued motu proprio, to submit proof of compliance with locational
requirements. And such assumption was doubtless fortified by petitioner's knowledge that she already had in her favor a judgment on the subject
against which her opponent had taken no recourse by appeal or otherwise.
Neither is there any serious dispute about what transpired thereafter, as already recounted and, in particular, about the fact that in response to
that first and the subsequent demands sent by Commissioner Dizon, Villa not once but thrice furnished the Commission by registered mail with
copies, variously, of official documents certifying to her compliance with the pertinent locational, zoning and land use requirements and plans.
None of these documents appears to have made any impression on Commissioner Dizon, whose show-cause order of April 28, 1982 and order of
June 29, 1982 imposing a P10,000.00 fine on petitioner made no mention of them whatsoever. Not even Villa's submission of said documents a
fourth time to support her motion for reconsideration of a writ of execution could move Commissioner Dizon to stop acting as if said documents did
not exist at all. True, only copies had been submitted, but ordinary prudence and fairness dictated at least some inquiry into their authenticity, and
this would not have posed any great difficulty considering their purportedly official origins.
The mischief done by Commissioner Dizon's baffling failure (or obdurate refusal) even to acknowledge the existence of the documents furnished
by petitioner was perpetuated by the "Commissioner proper" and respondent Lazaro (Presidential Assistant on Legal Affairs), who threw out
petitioner's appeals with no reference whatsoever thereto and thereby kept in limbo evidence that would have been decisive. The Solicitor
General's brief Comment of September 3,
1985
38
neither admits nor denies Villa's claim of having submitted the required documents; it avoids any reference thereto and deals mainly with
the question of the timeliness of her appeal to the respondent Commission and the propriety of the present petition. From such silence and upon
what the record otherwise clearly shows, the Court remains in no doubt of the verity of said petitioner's claim that she had more than once
submitted those requisite documents.
There was absolutely no excuse for initiating what is held out as an administrative proceeding against Villa without informing her of the complaint
which initiated the case; for conducting that inquiry in the most informal manner by means only of communications requiring submission of certain
documents, which left the impression that compliance was all that was expected of her and with which directives she promptly and religiously
complied; assuming that one of the documents thus successively submitted had been received, but given the fact that on at least two occasions,
their transmission had been preceded by telegrams announcing that they would follow by mail, for failing to call Villa's attention to their non-receipt
or to make any other attempt to trace their whereabouts; for ruling against Villa on the spurious premise that she had failed to submit the
documents required; and for maintaining to the very end that pretense of lack of compliance even after being presented with a fourth set of
documents and the decision in the court case upholding her right to operate her funeral parlor in its questioned location.
Whether born of ineptitude negligence, bias or malice, such lapses are indefensible. No excuse can be advanced for avoiding all mention or
consideration of certifications issued by respondent Commission's own officials in General Santos City, which included the very relevant one
executed by Human Settlements Officer Josefina E. Alaba that petitioner's application for a funeral parlor at the questioned location had . . passed
the criteria of this office for this purpose.
39
It was thus not even necessary for petitioner to bring that document to the notice of the Commission
which, together with Commissioner Dizon, was chargeable with knowledge of its own workings and of all acts done in the performance of duty by
its officials and employees. Petitioner is plainly the victim of either gross ignorance or negligence or abuse of power, or a combination of both. All
of the foregoing translate to a denial of due process against which the defense of failure to take timely appeal will not avail. Well-esconced in our
jurisprudence is the rule:
. . that administrative proceedings are not exempt from the operation of certain basic and fundamental procedural
principles, such as the due process requirements in investigations and trials. And this administrative due process is
recognized to include (a) the right to notice, be it actual or constructive, of the institution of the proceedings that may
affect a person's legal right; (b) reasonable opportunity to appear and defend his rights, introduce witnesses and relevant
evidence in his favor, (c) a tribunal so constituted as to give him reasonable assurance of honesty and impartiality, and
one of competent jurisdiction; and (d) a finding or decision by that tribunal supported by substantial evidence presented at
the hearing, or at least contained in the records or disclosed to the parties affected.
40

and, it being clear that some, at least, of those essential elements did not obtain or were not present in the proceedings complained
of, any judgment rendered, or order issued, therein was null and void, could never become final, and could be attacked in any
appropriate proceeding.
The Court finds no merit in the proposition that relief is foreclosed to Villa because her motion for reconsideration of November 22, 1982 was filed
out of time. The very informal character of the so-called administrative proceedings, an informality for which Commissioner Dizon himself was
responsible and which he never sought to rectify, militates against imposing strict observance of the limiting periods applicable to proceedings
otherwise properly initiated and regularly conducted. Indeed, considering the rather "off-the-cuff" manner in which the inquiry was carried out, it is
not even certain that said petitioner is chargeable with tardiness in connection with any incident thereof. What the record shows is that she
invariably responded promptly, at times within a day or two of receiving them, to orders of communications sent to her. At any rate, the Court will
not permit the result of an administrative proceeding riddled with the serious defects already pointed out to negate an earlier judgment on the
merits on the same matter regularly rendered by competent court.
WHEREFORE, the petition is GRANTED. The proceedings complained of are ANNULLED and all orders, writs and resolutions issued in the
course thereof, beginning with the show cause order of June 2, 1982 up to and including the challenged Resolutions of September 21, 1984 and
December 14, 1984 of respondent Presidential Assistant Manuel Lazaro are VACATED and SET ASIDE, for having been taken and/or issued in
violation of petitioner's right to due process, without pronouncement as to costs. SO ORDERED.
[G.R. No. 135805. April 29, 1999]
CIVIL SERVICE COMMISSION, petitioner, vs. PEDRO O. DACOYCOY, respondent.
D E C I S I O N
PARDO, J.:
The case before us is an appeal via certiorari interposed by the Civil Service Commission from a decision of the Court of Appeals ruling that
respondent Pedro O. Dacoycoy was not guilty of nepotism and declaring null and void the Civil Service Commissions resolution dismissing him
from the service as Vocational School Administrator, Balicuatro College of Arts and Trade, Allen, Northern Samar.
The facts may be succinctly related as follows:
On November 29, 1995, George P. Suan, a Citizens Crime Watch Vice-President, Allen Chapter, Northern Samar, filed with the Civil Service
Commission, Quezon City, a complaint against Pedro O. Dacoycoy, for habitual drunkenness, misconduct and nepotism.[1]
After the fact-finding investigation, the Civil Service Regional Office No. 8, Tacloban City, found a prima facie case against respondent, and, on
March 5, 1996, issued the corresponding formal charge against him.[2] Accordingly, the Civil Service Commission conducted a formal
investigation, and, on January 28, 1997, the Civil Service Commission promulgated its resolution finding no substantial evidence to support the
charge of habitual drunkenness and misconduct. However, the Civil Service Commission found respondent Pedro O. Dacoycoy guilty of nepotism
on two counts as a result of the appointment of his two sons, Rito and Ped Dacoycoy, as driver and utility worker, respectively, and their
assignment under his immediate supervision and control as the Vocational School Administrator Balicuatro College of Arts and Trades, and
imposed on him the penalty of dismissal from the service.[3]
On February 25, 1997, respondent Dacoycoy filed a motion for reconsideration;[4] however, on May 20, 1997, the Civil Service Commission
denied the motion.[5]
On July 18, 1997, respondent Dacoycoy filed with the Court of Appeals a special civil action for certiorari with preliminary injunction[6] to set aside
the Civil Service Commissions resolutions.
On July 29, 1998, the Court of Appeals promulgated its decision reversing and setting aside the decision of the Civil Service Commission, ruling
that respondent did not appoint or recommend his two sons Rito and Ped, and, hence, was not guilty of nepotism. The Court further held that it is
the person who recommends or appoints who should be sanctioned, as it is he who performs the prohibited act.[7]
Hence, this appeal.
On November 17, 1998, we required respondent to comment on the petition within ten (10) days from notice.[8] On December 11, 1998,
respondent filed his comment
We give due course to the petition.
The basic issue raised is the scope of the ban on nepotism.
We agree with the Civil Service Commission that respondent Pedro O. Dacoycoy was guilty of nepotism and correctly meted out the penalty of
dismissal from the service.
The law defines nepotism[9] as follows:
Sec. 59. Nepotism. (1) All appointments to the national, provincial, city and municipal governments or in any branch or instrumentality thereof,
including government owned or controlled corporations, made in favor of a relative of the appointing or recommending authority, or of the chief of
the bureau or office, or of the persons exercising immediate supervision over him, are hereby prohibited.
As used in this Section, the word relative and members of the family referred to are those related within the third degree either of consanguinity
or of affinity.
(2) The following are exempted from the operations of the rules on nepotism: (a) persons employed in a confidential capacity, (b) teachers, (c)
physicians, and (d) members of the Armed Forces of the Philippines: Provided, however, That in each particular instance full report of such
appointment shall be made to the Commission.
Under the definition of nepotism, one is guilty of nepotism if an appointment is issued in favor of a relative within the third civil degree of
consanguinity or affinity of any of the following:
a) appointing authority;
b) recommending authority;
c) chief of the bureau or office, and
d) person exercising immediate supervision over the appointee.
Clearly, there are four situations covered. In the last two mentioned situations, it is immaterial who the appointing or recommending authority is. To
constitute a violation of the law, it suffices that an appointment is extended or issued in favor of a relative within the third civil degree of
consanguinity or affinity of the chief of the bureau or office, or the person exercising immediate supervision over the appointee.
Respondent Dacoycoy is the Vocational School Administrator, Balicuatro College of Arts and Trades, Allen, Northern Samar. It is true that he did
not appoint or recommend his two sons to the positions of driver and utility worker in the Balicuatro College of Arts and Trades. In fact, it was Mr.
Jaime Daclag, Head of the Vocational Department of the BCAT, who recommended the appointment of Rito. Mr. Daclag's authority to recommend
the appointment of first level positions such as watchmen, security guards, drivers, utility workers, and casuals and emergency laborers for short
durations of three to six months was recommended by respondent Dacoycoy and approved by DECS Regional Director Eladio C. Dioko, with the
provision that such positions shall be under Mr. Daclags immediate supervision. On July 1, 1992, Atty. Victorino B. Tirol II, Director III, DECS
Regional Office VIII, Palo, Leyte, appointed Rito Dacoycoy driver of the school. On January 3, 1993, Mr. Daclag also appointed Ped Dacoycoy
casual utility worker. However, it was respondent Dacoycoy who certified that funds are available for the proposed appointment of Rito Dacoycoy
and even rated his performance as very satisfactory. On the other hand, his son Ped stated in his position description form that his father was
his next higher supervisor. The circumvention of the ban on nepotism is quite obvious. Unquestionably, Mr. Daclag was a subordinate of
respondent Pedro O. Dacoycoy, who was the school administrator. He authorized Mr. Daclag to recommend the appointment of first level
employees under his immediate supervision. Then Mr. Daclag recommended the appointment of respondents two sons and placed them under
respondents immediate supervision serving as driver and utility worker of the school. Both positions are career positions.
To our mind, the unseen but obvious hand of respondent Dacoycoy was behind the appointing or recommending authority in the appointment of
his two sons. Clearly, he is guilty of nepotism.
At this point, we have necessarily to resolve the question of the party adversely affected who may take an appeal from an adverse decision of the
appellate court in an administrative civil service disciplinary case. There is no question that respondent Dacoycoy may appeal to the Court of
Appeals from the decision of the Civil Service Commission adverse to him.[10] He was the respondent official meted out the penalty of dismissal
from the service. On appeal to the Court of Appeals, the court required the petitioner therein, here respondent Dacoycoy, to implead the Civil
Service Commission as public respondent[11] as the government agency tasked with the duty to enforce the constitutional and statutory
provisions on the civil service.[12]
Subsequently, the Court of Appeals reversed the decision of the Civil Service Commission and held respondent not guilty of nepotism. Who now
may appeal the decision of the Court of Appeals to the Supreme Court? Certainly not the respondent, who was declared not guilty of the charge.
Nor the complainant George P. Suan, who was merely a witness for the government.[13] Consequently, the Civil Service Commission has
become the party adversely affected by such ruling, which seriously prejudices the civil service system. Hence, as an aggrieved party, it may
appeal the decision of the Court of Appeals to the Supreme Court.[14] By this ruling, we now expressly abandon and overrule extant jurisprudence
that the phrase party adversely affected by the decision refers to the government employee against whom the administrative case is filed for the
purpose of disciplinary action which may take the form of suspension, demotion in rank or salary, transfer, removal or dismissal from office[15]
and not included are cases where the penalty imposed is suspension for not more then thirty (30) days or fine in an amount not exceeding thirty
days salary[16] or when the respondent is exonerated of the charges, there is no occasion for appeal.[17] In other words, we overrule prior
decisions holding that the Civil Service Law does not contemplate a review of decisions exonerating officers or employees from administrative
charges enunciated in Paredes v. Civil Service Commission;[18] Mendez v. Civil Service Commission;[19] Magpale v. Civil Service
Commission;[20] Navarro v. Civil Service Commission and Export Processing Zone Authority[21] and more recently Del Castillo v. Civil Service
Commission[22]
The Court of Appeals reliance on Debulgado vs. Civil Service Commission,[23] to support its ruling is misplaced. The issues in Debulgado are
whether a promotional appointment is covered by the prohibition against nepotism or the prohibition applies only to original appointments to the
civil service, and whether the Commission had gravely abused its discretion in recalling and disapproving the promotional appointment given to
petitioner after the Commission had earlier approved that appointment. Debulgado never even impliedly limited the coverage of the ban on
nepotism to only the appointing or recommending authority for appointing a relative. Precisely, in Debulgado, the Court emphasized that Section
59 means exactly what it says in plain and ordinary language: x x x The public policy embodied in Section 59 is clearly fundamental in
importance, and the Court had neither authority nor inclination to dilute that important public policy by introducing a qualification here or a
distinction there.[24]
Nepotism is one pernicious evil impeding the civil service and the efficiency of its personnel. In Debulgado, we stressed that [T]the basic purpose
or objective of the prohibition against nepotism also strongly indicates that the prohibition was intended to be a comprehensive one.[25] The
Court was unwilling to restrict and limit the scope of the prohibition which is textually very broad and comprehensive.[26] If not within the
exceptions, it is a form of corruption that must be nipped in the bud or bated whenever or wherever it raises its ugly head. As we said in an earlier
case what we need now is not only to punish the wrongdoers or reward the outstanding civil servants, but also to plug the hidden gaps and
potholes of corruption as well as to insist on strict compliance with existing legal procedures in order to abate any occasion for graft or
circumvention of the law.[27]
WHEREFORE, the Court hereby GRANTS the petition and REVERSES the decision of the Court of Appeals in CA-G.R. SP No. 44711.
ACCORDINGLY, the Court REVIVES and AFFIRMS the resolutions of the Civil Service Commission dated January 28, 1998 and September 30,
1998, dismissing respondent Pedro O. Dacoycoy from the service.
No costs. SO ORDERED.


G.R. No. 136587 August 30, 1999
ERNESTO "BIBOT" A. DOMINGO, JR., petitioner,
vs.
COMMISSION ON ELECTIONS and BENJAMIN "BENHUR" D. ABALOS, JR., respondents.
GONZAGA-REYES, J.:
Assailed in this special civil action for certiorari are the En Banc Resolution of the Commission on Elections ("COMELEC"), dated December 1,
1998,
1
and the Resolution of the COMELEC First Division, dated July 2, 1998,
2
in SPA No. 98-361, which dismissed, for lack of merit, the petition
for disqualification filed against herein private respondent, the incumbent mayor of Mandaluyong City.1wphi1.nt
In May 11, 1998 elections, petitioner Ernesto Domingo, Jr. and private respondent Benjamin Abalos, Jr. were both mayoralty candidates of
Mandaluyong City. After private respondent's proclamation on May 17, 1998, petitioner filed the instant petition for disqualification, on the ground
that, during the campaign period, private respondent "prodded" his father, then incumbent Mandaluyong City Mayor Benjamin Abalos, Sr., to give
the "substantial allowances" to public school teachers appointed as chairpersons and members of the Boards of Election Inspector (BEIs) for
Mandaluyong City.
Petitioner's allegations obtain from an incident on April 14, 1998, wherein, in a "Pasyal-Aral" outing for Mandaluyong City public school teachers in
Sariaya, Quezon, then Mayor Benjamin Abalos, Sr. announced that the teachers appointed to the BEIs will each be given a hazard pay of
P1,000.00 and food allowance of P500.00, in addition to the allowance of P1,500.00.
3
In the petition for disqualification filed before the COMELEC
First Division, petitioner charged that private respondent's influence over his father on this matter was evident from the following declaration of
father Abalos, Sr.:
Your President [referring to Mr. Alfredo de Vera, President of the Federation of Mandaluyong Public School Teachers], together with
Benhur, walang tigil 'yan kakapunta sa akin at not because he is my son siya ang nakikipag-usap sa kanila and came up with a
beautiful compromise. . . .
4

As alleged by petitioner, the foregoing statement was revealing of how private respondent "prodded" his father, then Mayor Abalos, Sr., to award
"substantial allowances" to the public school teachers who will assume seats in the BEIs in the May 11, 1998 elections, as to influence them into
voting for him and ensuring his victory.
Mayor Abalos, Sr.'s speech, as well, as other activities in the aforesaid "Pasyal-Aral" outing, were recorded on videotape per instructions of Mr.
Perfecto Doroja, an "associate" of petitioner.
5
In addition to the videotape, petitioner also submitted photographs of a streamer, hung at the
entrance of the Tayabas Bay Beach Resort, Sariaya, Quezon, declaring Mayor Benjamin S. Abalos, Sr. as co-sponsor of the "Pasyal-Aral",
6
as
well as affidavits of three public school teachers who participated in the said activity.
7

Petitioner alleges that private respondent's act of "prodding" his father, then incumbent mayor Benjamin S. Abalos, Sr., to give "substantial
allowances" to the Mandaluyong City public school teachers constitutes a violation of Section 68 of the Omnibus Election Code, the pertinent
provisions of which read:
Sec. 68. Disqualifications. Any candidate who, in an action or protest in which he is a party is declared by final decision of a
competent court guilty of, or found by the Commission of having (a) given money or other material consideration to influence, induce
or corrupt the voters or public officials performing electoral functions; . . . shall be disqualified from continuing as a candidate, or if he
has been elected, from holding the office. . . .
In dismissing the petition for disqualification for insufficiency of evidence and lack of merit, the COMELEC First Division admonished petitioner and
his counsel for attempting to mislead the COMELEC by making false and untruthful statements
8
in his petition. On reconsideration, the
COMELEC, En Banc, affirmed the findings and conclusions of its First Division.
Before us, petitioner assails the Resolution of public respondent COMELEC for being violative of his right to due process, and thus, issued with
grave abuse of discretion. It is petitioner's argument that the dismissal of his petition for disqualification on the ground of insufficiency of evidence
was unfounded, considering that no hearing on the merits was conducted by public respondent on the matter.
Petitioner next contends that grave abuse of discretion was likewise attendant in public respondent's act of dismissing the petition for
disqualification for insufficiency of evidence, despite the "overwhelming" pieces of evidence of petitioner, consisting of the video cassette, pictures
and affidavits, which were "not denied" by private respondent.
9
Petitioner further decries the fact that private respondent presented "no evidence"
to substantiate his defense, while all the pieces of evidence that he submitted in his petition for disqualification were strong enough to prove
violation by private respondent of Section 68 of the Omnibus Election Code.
10

Before touching on the merits, we shall first resolve the procedural matters raised by private respondent, namely, forum-shopping and failure to file
this petition on time.
It is not disputed that, in addition to the petition for disqualification, petitioner also filed a criminal complaint
11
and an election protest ex abundante
cautelam
12
with public respondent COMELEC. Private respondent contends that, inasmuch as the petition for disqualification and the complaint
for election offense involve the same issues and charges, i.e., vote-buying, exerting undue influence on BEI members, petitioner should be held
liable for forum-shopping.
We rule to the contrary. Forum-shopping exists when the petitioner files multiple petitions or complaints involving the same issues in two or more
tribunals or agencies.
13
The issues in the two cases are different. The complaint for election offense is a criminal case which involves the
ascertainment of the guilt or innocence of the accused candidate and, like any other criminal case, requires a conviction on proof beyond
reasonable doubt.
14
A petition for disqualification, meanwhile, requires merely the determination of whether the respondent committed acts as to
merit his disqualification from office, and is done through an administrative proceeding which is summary in character and requires only a clear
preponderance of evidence.
15

Next, petitioner admits receiving a copy of the assailed COMELEC First Division Resolution on July 13, 1998. He also admits filing a motion for
reconsideration of the said COMELEC First Division Resolution on July 20, 1998. A copy of the assailed COMELEC En Banc Resolution dated
December 1, 1998 was received by petitioner on December 4, 1998. Under Section 3, Rule 64 of the Revised Rules of Court, petitions for
certiorari from orders or ruling of the COMELEC
shall be filed within thirty (30) days from notice of the judgment or final order or resolution sought to be reviewed. The filing of a motion
for new trial or reconsideration of the said judgment or final order or resolution . . . shall interrupt the period herein fixed. If the motion
is denied, the aggrieved party may file the petition within the remaining period, but which shall not be less than five (5) days in any
event, reckoned form notice of denial.
Sec. 4 of Rule 19 of the COMELEC Rules of Procedure likewise provides:
Effect of motion for reconsideration on period to appeal. A motion to reconsider a decision, resolution, order or ruling when not pro-
forma, suspends the running of the period to elevate the matter to the Supreme Court.
Inasmuch as the filing of a motion for reconsideration interrupts the 30-day period within which to file a petition for certiorari with this Court,
petitioner has effectively consumed seven days of the abovestated 30-day period when he filed his motion for reconsideration. Thus, as correctly
pointed out by private respondent, when petitioner received a copy of the assailed COMELEC En Banc Resolution, he only had 23 days from
December 4, 1998, the date when he received the COMELEC En Banc Resolution, or until December 27, 1998
16
, to file the instant petition for
certiorari. This petition was filed on January 4, 1999.
In any event, whether the petition was filed on time or not, an examination of the records leaves us satisfied that public respondent COMELEC did
not commit grave abuse of discretion in dismissing the petition for disqualification.
First, on the issue of due process, we find no violation thereof when public respondent COMELEC decided to dismiss the petition for
disqualification without hearing. Well-established is the rule that the essence of due process is simply an opportunity to be heard.
17
In Zaldivar vs.
Sandiganbayan
18
, cited in the recent case of Bautista vs. COMELEC
19
, we held that the right to be heard does not only refer to the right to present
verbal arguments in court. A party may also be heard through his pleadings. Where opportunity to be heard is accorded, either through oral
arguments or pleadings, there is no denial of procedural due process.
Furthermore, the filing by petitioner of a motion for reconsideration accorded him ample opportunity to dispute the findings of the COMELEC First
Division, so that he was as fully heard as he might have been had oral arguments actually taken place. Deprivation of due process cannot be
successfully invoked where a party was given the chance to be heard in his motion for reconsideration.
20

Next, petitioner re-asserts before us the sufficiency of his evidence to prove that private respondent influenced the Mandaluyong City public school
teachers, through his father, Abalos, Sr., in the performance of their functions as members of the BEIs.
Petitioner's evidence fails to persuade. First, the affidavits of the three teacher who participated in the controversial "Pasyal-Aral" do not contain
anything but the following bare declarations: (1) that they heard Abalos, Sr. promise that he will give hazard pay of P1,000.00 and food allowance
of P500.00, in addition to the regular living allowance of P1,500.00, and 2) that, before the May 11, 1998 elections they each received P1,500.00,
or half of the total allowances promised by Abalos, Sr. in his speech. Nothing in these affidavits suggests, let alone sets out, knowledge on any
degree of participation of private respondent in the grant of these allowances. The name of private respondent was not even mentioned or alluded
to by any of the three affiants.
Petitioner also submitted photographs taken of the streamer at the entrance of the Tayabas Bay Beach Resort, welcoming the participants to the
"Pasyal-Aral" and declaring the Mandaluyong City School Board and then mayor Abalos, Sr. as co-sponsors of the affair. Since by law, the mayor
is a co-chairman of the City School Board
21
, we find nothing unusual in his having co-sponsored the said event. We fail to see the connection
between these pictures and the alleged influence wielded by private respondent on the public school teachers of Mandaluyong City.
Yet it is upon the videotape recordings that petitioner lays much reliance on, in proving his case for disqualification. The recordings are supposed
to document how former mayor Abalos, Sr. announced that his son, private respondent herein, prodded his father to release substantial
allowances to teachers who will act as members of the BEIs. As found by the COMELEC First Division, the name uttered in the announcement
was not "Benhur", private respondent's nickname and what petitioner alleged was uttered, but "Lito Motivo", a name which truly sounded unlike
"Benhur".
22
Also, when the COMELEC, through its First Division, viewed the videotape submitted by petitioner, "the speech of Mayor Abalos, Sr.
was cut and so (they) also did not see and hear that part of Mayor Abalos, Sr.'s speech allegedly uttered by him."
23

In the Petition, petitioner's counsel admitted that the assailed quotation in the petition for disqualification was based on "erroneous transcript" of
the speech which was prepared by somebody else, and which he in turn failed to verify for errors. However, he denies having intended to mislead
the COMELEC with the inclusion of this statement, but instead submits that the word "Benhur" was "derived" from the succeeding pronouncement
of Abalos, Sr., "not because he is my son", which may in turn be inferred to refer to private respondent, who was a mayoralty candidate at the
time.
24

We find no grave abuse of discretion in the COMELEC's finding that Abalos, Sr.'s controversial statement, effectively reduced to this:
Your President, together with Lito Motivo, walang tigil yan kakapunta sa akin at not because he is my son siya ang nakikipag-usap sa
kanila and came up with a beautiful compromise. . . .
was seriously insufficient and vague to prove violation of Section 68 of the Omnibus Election Code. The burden of proving that private respondent
indirectly influenced the public school teachers of Mandaluyong City, through his father, Abalos, Sr., was a burden that petitioner failed to meet.
Neither is this burden overcome by the argument that private respondent, for himself, had "no evidence" to rebut petitioner's allegations, since the
burden of proving factual claims rests on the party raising them.
25
Besides, it is not true that private respondent gave only denials and did not
present any evidence to his defense, or to offer an explanation for his father's actions, which were assailed as having been influenced by him.
Private respondent presented in evidence a certified true copy of Joint Circular No. 1, series of 1998,
26
issued by the Department of Education,
Culture and Sports, Department of Budget and Management and Department of Interior and Local Government, which authorized the payment of
allowances of public school teachers chargeable to local government funds.
27
The Joint Circular provided the basis for private respondent's
argument that the disbursement of funds by then mayor Abalos, Sr. was valid as having been made pursuant to administrative circular, and was
not an unlawful attempt made in conspiracy with private respondent to secure the latter's victory in the elections.
In fine, we find no grave abuse of discretion in the COMELEC's decision to dismiss the petition for disqualification. The conclusion that petitioner's
evidence is insufficient to support the charge of violation of Section 68 of the Omnibus Election Code was arrived at only after a careful scrutiny of
the evidence at hand, especially of the videotapes of petitioner. This is clearly evident from the discussion of the COMELEC First Division, in the
Resolution dated July 2, 1998, which quoted extensively from the pleadings and evidence of petitioners, and provided adequate explanation for
why it considered petitioner's evidence insufficient and unconvincing.
Clearly, where there is no proof of grave abuse of discretion, arbitrariness, fraud or error of law in the questioned Resolutions, the Court may not
review the factual findings of COMELEC, nor substitute its own findings on the sufficiency of evidence.
28

Finally, the foregoing conclusion is without prejudice to the election protest and election offense cases involving the same parties pending with
public respondent COMELEC.
WHEREFORE, the petition is DISMISSED. The assailed COMELEC Resolutions dated July 2, 1998 and December 1, 1998, dismissing the
petition for insufficiency of evidence and lack of merit, and affirming the proclamation of private respondent Benjamin Abalos, Jr. as duly elected
mayor of Mandaluyong City, are hereby AFFIRMED. No costs.
SO ORDERED.







G.R. No. 137473 August 2, 2001
ESTELITO V. REMOLONA, petitioner,
vs.
CIVIL SERVICE COMMISSION, respondent.
PUNO, J.:
The present petition seeks to review and set aside the Decision rendered by the Court of Appeals dated July 31, 1998
1
upholding the decision of
the Civil Service Commission which ordered the dismissal of petitioner Estelito V. Remolona (Remolona) from the government service for
dishonesty, and the Resolution dated February 5, 1999
2
denying petitioner's motion for reconsideration.
Records show that petitioner Estelito V. Remolona is the Postmaster at the Postal Office Service in Infanta, Quezon, while his wife Nery
Remolona is a teacher at the Kiborosa Elementary School.
In a letter
3
dated January 3, 1991, Francisco R. America, District Supervisor of the Department of Education, Culture & Sports at Infanta, Quezon,
inquired from the Civil Service Commission (CSC) as to the status of the civil service eligibility of Mrs. Remolona who purportedly got a rating of
81.25% as per Report of Rating issued by the National Board for Teachers.
4
Mr. America likewise disclosed that he received information that Mrs.
Remolona was campaigning for a fee of P8,000.00 per examinee for a passing mark in the teacher's board examinations. --
On February 11, 1991, then CSC Chairman Patricia A. Sto. Tomas issued an Order directing CSC Region IV Director Bella Amilhasan to conduct
an investigation on Mrs. Remolona's eligibility, after verification from the Register of Eligibles in the Office for Central Personnel Records revealed
"that Remolona's name is not in the list of passing and failing examinees, and that the list of examinees for December 10, 1989 does not include
the name of Remolona. Furthermore, Examination No. 061285 as indicated in her report of rating belongs to a certain Marlou C. Madelo, who took
the examination in Cagayan de Oro and got a rating of 65.00%."
5

During the preliminary investigation conducted by Jaime G. Pasion, Director II, Civil Service Field Office, Lucena City, Quezon, only petitioner
Remolona appeared. He signed a written statement of facts
6
regarding the issuance of the questioned Report of Rating of Mrs. Remolona, which
is summarized in the Memorandum
7
submitted by Director Pasion as follows:
"3.1 That sometime in the first week of September, 1990, while riding in a Kapalaran Transit Bus from Sta. Cruz, Laguna on his way
to San Pablo City, he met one Atty. Hadji Salupadin (this is how it sounded) who happened to be sitting beside him;
3.2 That a conversation broke out between them until he was able to confide his problem to Atty. Salupadin about his wife having
difficulty in acquiring an eligibility;
3.3 That Atty. Salupadin who represented himself as working at the Batasan, offered his help for a fee of P3,000.00;
3.4 That the following day they met at the Batasan where he gave the amount of P2,000.00, requirements, application form and
picture of his wife;
3.5 That the following week, Thursday, at around 1:00 P.M., they met again at the Batasan where he handed to Atty. Salupadin the
amount of P1,000.00 plus P500.00 bonus who in turn handed to him the Report of Rating of one Nery C. Remolona with a passing
grade, then they parted;
3.6 That sometime in the last week of September, he showed the Report of Rating to the District Supervisor, Francisco America who
informed her (sic) that there was no vacancy;
3.7 That he went to Lucena City and complained to Dr. Magsino in writing . . . that Mr. America is asking for money in exchange for
the appointment of his wife but failed to make good his promise. He attached the corroborating affidavits of Mesdames Carmelinda
Pradillada and Rosemarie P. Romantico and Nery C. Remolona x x x;
3.8 That from 1986 to 1988, Mr. America was able to get six (6) checks at P2,600.00 each plus bonus of Nery C. Remolona;
3.9 That Mr. America got mad at them. And when he felt that Mr. America would verify the authenticity of his wife's Report of Rating,
he burned the original."
Furthermore, Remolona admitted that he was responsible in acquiring the alleged fake eligibility, that his wife has no knowledge thereof, and that
he did it because he wanted them to be together. Based on the foregoing, Director Pasion recommended the filing of the appropriate
administrative action against Remolona but absolved Mrs. Nery Remolona from any liability since it has not been shown that she willfully
participated in the commission of the offense.
Consequently, a Formal Charge dated April 6, 1993 was filed against petitioner Remolona, Nery C. Remolona, and Atty. Hadji Salupadin for
possession of fake eligibility, falsification and dishonesty.
8
A formal hearing ensued wherein the parties presented their respective evidence.
Thereafter, CSC Regional Director Bella A. Amilhasan issued a Memorandum dated February 14, 1995
9
recommending that the spouses Estelito
and Nery Remolona be found guilty as charged and be meted the corresponding penalty.
Said recommendation was adopted by the CSG which issued Resolution No. 95-2908 on April 20, 1995, finding the spouses Estelito and Nery
Remolona guilty of dishonesty and imposing the penalty of dismissal and all its accessory penalties. The case against Atty. Hadji Salupadin was
held in abeyance pending proof of his identity.
10
In its Resolution No. 965510
11
dated August 27, 1996, the CSC, acting on the motion for
reconsideration filed by the spouses Remolona, absolved Nery Remolona from liability and held that:
"Further, a review of the records and of the arguments presented fails to persuade this Commission to reconsider its earlier resolution
insofar as Estelito Remolona's culpability is concerned. The evidence is substantial enough to effect his conviction. His act of securing
a fake eligibility for his wife is proved by substantial evidence. However, in the case of Nery Remolona, the Commission finds her
innocent of the offense charged, for there is no evidence to show that she has used the fake eligibility to support an appointment or
promotion. In fact, Nery Remolona did not indicate in her Personal Data Sheet that she possesses any eligibility. It must be pointed
out that it was her husband who unilaterally worked to secure a fake eligibility for her.
WHEREFORE, the instant Motion for Reconsideration is hereby denied insofar as respondent Estelito Remolona is concerned.
However, Resolution No. 95-2908 is modified in the sense that respondent Nery Remolona is exonerated of the charges. Accordingly,
Nery Remolona is automatically reinstated to her former position as Teacher with back salaries and other benefits."
On appeal, the Court of Appeals rendered its questioned decision dismissing the petition for review filed by herein petitioner Remolona. His motion
for reconsideration and/or new trial was likewise denied. Hence, this petition for review.
Petitioner submits that the Court of Appeals erred:
"1. in denying petitioner's motion for new trial;
2. in holding that petitioner is liable for dishonesty; and
3. in sustaining the dismissal of the petitioner for an offense not work connected in relation to his official position in the government
service."
The main issue posed for resolution is whether a civil service employee can be dismissed from the government service for an offense which is not
work-related or which is not connected with the performance of his official duty. Remolona likewise imputes a violation of his right to due process
during the preliminary investigation because he was not assisted by counsel. He claims that the extra-judicial admission allegedly signed by him is
inadmissible because he was merely made to sign a blank form. He also avers that his motion for new trial should be granted on the ground that
the transcript of stenographic notes taken during the hearing of the case before the Regional Office of the CSC was not forwarded to the Court of
Appeals. Finally, he pleads that the penalty of dismissal with forfeiture of all benefits is too harsh considering the nature of the offense for which he
was convicted, the length of his service in government, that this is his first offense, and the fact that no damage was caused to the government.
The submission of Remolona that his alleged extra-judicial confession is inadmissible because he was not assisted by counsel during the
investigation as required under Section 12 paragraphs 1 and 3, Article III of the 1987 Constitution deserves scant consideration.
The right to counsel under Section 12 of the Bill of Rights is meant to protect a suspect in a criminal case under custodial investigation. Custodial
investigation is the stage where the police investigation is no longer a general inquiry into an unsolved crime but has begun to focus on a
particular suspect who had been taken into custody by the police to carry out a process of interrogation that lends itself to elicit incriminating
statements. It is when questions are initiated by law enforcement officers after a person has been taken into custody or otherwise deprived of his
freedom of action in any significant way. The right to counsel attaches only upon the start of such investigation. Therefore, the exclusionary rule
under paragraph (2), Section 12 of the Bill of Rights applies only to admissions made in a criminal investigation but not to those made in an
administrative investigation.
12

While investigations conducted by an administrative body may at times be akin to a criminal proceeding, the fact remains that under existing laws,
a party in an administrative inquiry may or may not be assisted by counsel, irrespective of the nature of the charges and of the respondent's
capacity to represent himself, and no duty rests on such body to furnish the person being investigated with counsel. In an administrative
proceeding, a respondent has the option of engaging the services of counsel or not. This is clear from the provisions of Section 32, Article VII of
Republic Act No. 2260 (otherwise known as the Civil Service Act) and Section 39, paragraph 2, Rule XIV (on discipline) of the Omnibus Rules
Implementing Book V of Executive Order No. 292 (otherwise known as the Administrative Code of 1987). Thus, the right to counsel is not always
imperative in administrative investigations because such inquiries are conducted merely to determine whether there are facts that merit
disciplinary measure against erring public officers and employees, with the purpose of maintaining the dignity of government service. As such, the
hearing conducted by the investigating authority is not part of a criminal prosecution.
13

In the case at bar, Remolona was not accused of any crime in the investigation conducted by the CSC field office. The investigation was
conducted for the purpose of ascertaining the facts and whether there is a prima facie evidence sufficient to form a belief that an offense
cognizable by the CSC has been committed and that Remolona is probably guilty thereof and should be administratively charged. Perforce, the
admissions made by Remolona during such investigation may be used as evidence to justify his dismissal.
The contention of Remolona that he never executed an extra-judicial admission and that he merely signed a blank form cannot be given credence.
Remolona occupies a high position in government as Postmaster at Infanta, Quezon and, as such, he is expected to be circumspect in his actions
specially where he is being administratively charged with a grave offense which carries the penalty of dismissal from service.
Remolona insists that his dismissal is a violation of his right to due process under Section 2(3), Article XI (B) of the Constitution which provides
that "no officer or employee in the Civil Service shall be removed or suspended except for cause." Although the offense of dishonesty is
punishable under the Civil Service law, Remolona opines that such act must have been committed in the performance of his function and duty as
Postmaster. Considering that the charge of dishonesty involves the falsification of the certificate of rating of his wife Nery Remolona, the same has
no bearing on his office and hence, he is deemed not to have been dismissed for cause. This proposition is untenable.
It cannot be denied that dishonesty is considered a grave offense punishable by dismissal for the first offense under Section 23, Rule XIV of the
Rules Implementing Book V of Executive Order No. 292. And the rule is that dishonesty, in order to warrant dismissal, need not be committed in
the course of the performance of duty by the person charged. The rationale for the rule is that if a government officer or employee is dishonest or
is guilty of oppression or grave misconduct, even if said defects of character are not connected with his office, they affect his right to continue in
office. The Government cannot tolerate in its service a dishonest official, even if he performs his duties correctly and well, because by reason of
his government position, he is given more and ample opportunity to commit acts of dishonesty against his fellow men, even against offices and
entities of the government other than the office where he is employed; and by reason of his office, he enjoys and possesses a certain influence
and power which renders the victims of his grave misconduct, oppression and dishonesty less disposed and prepared to resist and to counteract
his evil acts and actuations. The private life of an employee cannot be segregated from his public life. Dishonesty inevitably reflects on the fitness
of the officer or employee to continue in office and the discipline and morale of the service.
14

The principle is that when an officer or employee is disciplined, the object sought is not the punishment of such officer or employee but the
improvement of the public service and the preservation of the public's faith and confidence in the government.
15

The general rule is that where the findings of the administrative body are amply supported by substantial evidence, such findings are accorded not
only respect but also finality, and are binding on this Court.
16
It is not for the reviewing court to weigh the conflicting evidence, determine the
credibility of witnesses, or otherwise substitute its own judgment for that of the administrative agency on the sufficiency of evidence.
17
Thus, when
confronted with conflicting versions of factual matters, it is for the administrative agency concerned in the exercise of discretion to determine which
party deserves credence on the basis of the evidence received.
18
The rule, therefore, is that courts of justice will not generally interfere with purely
administrative matters which are addressed to the sound discretion of government agencies unless there is a clear showing that the latter acted
arbitrarily or with grave abuse of discretion or when they have acted in a capricious and whimsical manner such that their action may amount to an
excess of jurisdiction.
19

We have carefully scrutinized the records of the case below and we find no compelling reason to deviate from the findings of the CSC and the
Court of Appeals. The written admission of Remolona is replete with details that could have been known only to him. No ill-motive or bad faith was
ever imputed to Director Pasion who conducted the investigation. The presumption that official duty has been regularly performed remains
unrebutted.
The transmittal of the transcript of stenographic notes taken during the formal hearing before the CSC is entirely a matter of discretion on the part
of the Court of Appeals. Revised Administrative Circular No. 1-95 of this Court clearly states that in resolving appeals from quasi-judicial agencies,
it is within the discretion of the Court of Appeals to have the original records of the proceedings under review transmitted to it.
20
Verily, the Court of
Appeals decided the merits of the case on the bases of the uncontroverted facts and admissions contained in the pleadings filed by the parties.
We likewise find no merit in the contention of Remolona that the penalty of dismissal is too harsh considering that there was no damage caused to
the government since the certificate of rating was never used to get an appointment for his wife, Nery Remolona. Although no pecuniary damage
was incurred by the government, there was still falsification of an official document that constitutes gross dishonesty which cannot be
countenanced, considering that he was an accountable officer and occupied a sensitive position.
21
The Code of Conduct and Ethical Standards for
Public Officials and Employees enunciates the State policy of promoting a high standard of ethics and utmost responsibility in the public service.
22

WHEREFORE, the decision appealed from is hereby AFFIRMED in toto.
SO ORDERED.