[G.R. No. L-387. Octubre 25, 1946.

]
BALBINA MENDOZA, recurrente, contra PACIANO DIZON, en su capacidad como Auditor
General, recurrido.
Sres. Eulalio Chaves y Eugenio P. La Rosa, en representacion de la recurrente.
El Procurador General Auxiliar Sr. Alvendza y el Procurador Sr. Carreon, en
representacion del recurrido.
SYLLABUS

Committee set up under the Joint Resolution of Congress No. 5 Philippines adopted on July 28,
1945. "
Before December 7, or 4 of that month, as the appellant had sent a request to the Auditor
General, accompanied by the relevant documents that held, exposing the ciicunstancia of their
kinship with the late John M. Cuevas and ulla relationship relict of the goods, including certain
amounts of money with the Government, the National Bank and the Philippine Postal Savings
Bank, and therefore asking "who appoint as the next but the missus to enable it to receive
without delay any amount that was due to her late son .... "
Florence Cocadiz, the divorced wife, has not officially recido compared to the Auditor General,
nor presented any instance.

ADMINISTRATIVE LAW; BONUS (gratuity); SIGNIFICANCE OR CONCEPT. - Administrative

Order # 27 of 7 December 1945, uses the word gratuity having a known, categorical and
conclusive in law and jurisprudence significance. The government has issued together that
gratuity is not to wages, salary, or any other emoluments. Means gift, award, present, something
given and received by lucrative title. In this case acentuase but the difference between the two
considering that the Congress, in its Joint Resolution No. 5 adopted on 28 July 1945,
recommended the study of "ways and means to pay the back salaries, gratuities, bonuses or
other emoluments of the loyal and deserving employees of the Commonwealth .... " The fact,
therefore, that the President chose the term gratuity, leaving aside other words, indicates that
this is a calculated concession; clearly shows the intention to strictly limit the scope of the
privilege to the letter of the law.

The record shows that at first the Deputy Auditor General raised the issue in consultation with
the Department of Justice trying to seek a review, inter alia, whether "the divorced wife
mentioned here has any right to gratuity or gratuity to which the deceased intestate's husband or
his creditors and Administrative Order No. 27 dated December 7, 1945, whereas that sratlvity is
equivalent to its two salaries for the months of January and February, 1942. "The Department of
Justice refused to issue the requested opinion, among other reasons because the request
concerns a hypothetical case, considering that there was no conflict of claims, because the wife
was not complaining divociada not HAVlNG more instance that presented by Balbina Mendoza,
the surviving mother.

DECISION

Later - March 12, 1946 - The Auditor General Delegate, obviously using the powers conferred by
Article 262 of the Administrative Code, resolved on your Balbina Mendoza instance, issuing the
following error:

BRIONES, M p:
"Memorandum for Auditor Pedro Rivera
Versa this file on the application filed before this Court by originariarnente Balbina Mendoza,
appellant, in which this calls for, under the jurisdiction and powers conferred on us by rule 45 of
the Rules of the ibunales Tl, let's review the opinion issued by the Paciano Dizon's office
appealed, in his concept of Auditor General in the case of gratuity or gratuity of the late John M.
Cuevas, legitimate son of recurrent. The facts and key points of the case are as follows:
You play the office of Auditor of the province of Ilocos Sur, Juan M. Cuevas died in Vigan, capital
of the province, on November 3, 1945. When war broke out on December 8, 1941, was on active
duty as such Auditor .
Cuevas In 1932 he married Florence Cocadiz. This definitely stay dissolved marriage March 21,
1944 pursuant to a divorce decree firm issued by the Court of First Instance of gatangas on that
date. There was no offspring. It is undisputed that Balbina Mendoza, the appellant, is the next
most relative of the deceased and, therefore, entitled to heredarle, excluding brothers and
nephews that he himself left.

"Central office
"As the gratuity of the late Juan M. Cuevas under Administrative Order No. 27, dated December
7 1945, corresponds to his salary for the months of January and February, 1942, during which
his marriage with Florencia Cocadiz in 1932 was not yet dissolved, the decree of their divorce
having been issued by the Court of First Instance of Batangas only on March 21, 1944, the said
gratuity should be deemed to be a part of their conjugal estate. Only one half thereof may,
therefore be paid to his surviving mother, the herein claimant, who is hereby designated as his
next of kin, the other half being payable to his divorced wife as her share.

(Sgd.) "JUAN CONCON

"Deputy Auditor General"

On December 7, 1945 the President of the Commonwealth of the Philippines issued your
Administrative Order No. 27, which under certain conditions the payment of gratuities to officers
and employees of the National Government that had been in active service were available on
December 8, 1941 , have been called or not to return to their posts after liberation. This
Administrative Order by the President "was issued under the authority granted to me by the
existing law (referred to emergency powers) and to carry out the recommendations of the

In this ruling, the petitioner has filed his timely appeal, which we now proceed to decide.
The Attorney General, in his brief filed on behalf of the government, raises the contention
between the parties in the following summary, done with appropriate brevity and fairness:

"The question raised by the appellant is whether the gratuity (gratuity) payable to the late Juan
Cuevas under Administrative Order No. 27 dated December 7, 1945, belongs to his vacant
inheritance, or if the gratuity should be considered to perticiente acquired property of the
deceased and his wife divorced Government, itself, has no interest in the question,. supports the
obligation to pay the gratuity and is willing to do it to whom it is declared entitled thereto.
"The appellant contends that the Administrative Order No. 27, to provide for the payment of
gratuities, use this vovablo and not another, that is sinomina gratuity or equivalent freely given
gift or present, that the consideration paid in this Administrative Order have only been become
due and payable des its enactment,., and therefore the right of late Cuevas in Call such
gratuities I remain effective long after you have been sign the derecto by which divorce from his
wife after mature deliberation, this representation feels compelled, for the reasons given by the
appellant and others later will be exposed, to give their adhesion to the view that the gratuities in
question must belong to the estate of the deceased lying Cuevas. "(Case of the Attorney
General, pages 2 and 3.)
We judge and arranged to sound right conclucion appraisals and Attorney General.
The bonuses or gratuities in question should be governed by the law that provides, ie by
Administrative Order No. 27 which has character and force of law under emergency powers
granted by the Legislature to the President of the Philippines wake of the war, with the
Constitution sane. Article 1090 of the Civil Code precentua that "the obligations of the law are
not presumed enforceable Only those expressly determined in this Code or in special laws, and
shall be governed by the provision of the law which has established,. ... . "
However, the said Order Management uses the word gratuity having a known, categorical and
conclusive in law and jurisprudence significance. The government has issued together that
gratuity is not to wages, salary, or any other emoluments. Means gift, award, present, something
given and received by lucrative title. In this case acentuase but the difference between the two
considering that the Congress, in its Joint Resolution No. 5 adopted on 28 July 1945,
recommended the study of "ways and means to pay the back salaries, gratuities, bonuses or
other emoluments of the loyal and deserving employees of the Commonwealth .... "The fact,
therefore, that the escogiel-term gratuity to the President, leaving aside the other vocables,
indicates that it is a well calculated concession ; clearly shows the intention to strictly limit the
scope of the privilege to the letter of the law. When there is no ambiguity in the phraseology of
the law, the function is necessarily literalist, ministerial - resolves not to do subtleties and
deductions, playing with concepts like the juggler with his cups. . . .
What was said by the Auditor in its opinion that the gratuity in question corresponds to Cuevas
salaries for the months of January and February 1942 and that, therefore, the divorced wife is
entitled to half because at that time the spouses were not yet legally divorced, is utterly
groundless, for there is nothing in Administrative Order No. 27 which says that it granted
gratuities are specifically referred to the months. The terms of the arrangement are: "The
Authorized gratuities HEREIN Shall be equivalent to two months' basic salary at the rates
actually received on December 8, 1941." Clearly the phrase "two months" is here only for
purposes set of computation or determination of the amount of the gratuity, and the same may
correspond to any two months of 1942, 1943 June 1944, as any other two months of the year
1945, and after the liberation.
It seems superfluous to say that the decision in this case has nothing to do with the question of
whether the officers and employees of the Government of the Commonwealth on active duty at

the outbreak of the last war had no right to back pay (back wages), have not served during the
enemy occupation, or with another question whether the Government of the Republic is not
obliged to pay or such wages. None of these issues is before Nos. for determination and
resuluci.
On merits of the foregoing, the appeal dectamen object is modified and states that the appellant
is entitled to the full amount of the gratuity belonging to the late John M. Cuevas, subject of
course to any valid claim against the assets of relict said decedent under legal provisions as
goods deceased. No costs. So is ordered.
Moran, CJ Fair, Paul, Perfect, Bengzon, Padilla and Tuason, MM., Are conformity.

[G.R. No. 164789. August 27, 2009.]

CHRISTIAN GENERAL ASSEMBLY, INC., petitioner, vs. SPS. AVELINO C. IGNACIO and
PRISCILLA T. IGNACIO, respondents.
DECISION
BRION, J p:
We resolve in this Rule 45 petition the legal issue of whether an action to rescind a contract to
sell a subdivision lot that the buyer found to be under litigation falls under the exclusive
jurisdiction of the Housing and Land Use Regulatory Board (HLURB). ASDCaI
In this petition, 1 Christian General Assembly, Inc. (CGA) prays that we set aside the decision 2
issued by the Court of Appeals (CA) in CA-G.R. SP No. 75717 that dismissed its complaint for
rescission filed with the Regional Trial Court (RTC) of Bulacan for lack of jurisdiction, as well as
the CA resolution 3 that denied its motion for reconsideration.
FACTUAL ANTECEDENTS
The present controversy traces its roots to the case filed by CGA against the Spouses Avelino
and Priscilla Ignacio (respondents) for rescission of their Contract to Sell before the RTC,
Branch 14, Malolos, Bulacan. The facts, drawn from the records and outlined below, are not in
dispute.
On April 30, 1998, CGA entered into a Contract to Sell a subdivision lot 4 (subject property) with
the respondents the registered owners and developers of a housing subdivision known as
Villa Priscilla Subdivision located in Barangay Cutcut, Pulilan, Bulacan. Under the Contract to
Sell, CGA would pay P2,373,000.00 for the subject property on installment basis; they were to
pay a down payment of P1,186,500, with the balance payable within three years on equal
monthly amortization payments of P46,593.85, inclusive of interest at 24% per annum, starting
June 1998. cHSTEA
On August 5, 2000, the parties mutually agreed to amend the Contract to Sell to extend the
payment period from three to five years, calculated from the date of purchase and based on the
increased total consideration of P2,706,600, with equal monthly installments of P37,615.00,
inclusive of interest at 24% per annum, starting September 2000.

According to CGA, it religiously paid the monthly installments until its administrative pastor
discovered that the title covering the subject property suffered from fatal flaws and defects. CGA
learned that the subject property was actually part of two consolidated lots (Lots 2-F and 2-G
Bsd-04-000829 [OLT]) that the respondents had acquired from Nicanor Adriano (Adriano) and
Ceferino Sison (Sison), respectively. Adriano and Sison were former tenant-beneficiaries of
Purificacion S. Imperial (Imperial) whose property in Cutcut, Pulilan, Bulacan 5 had been placed
under Presidential Decree (PD) No. 27's Operation Land Transfer. 6 According to CGA, Imperial
applied for the retention of five hectares of her land under Republic Act No. 6657, 7 which the
Department of Agrarian Reform (DAR) granted in its October 2, 1997 order (DAR Order). The
DAR Order authorized Imperial to retain the farm lots previously awarded to the tenantbeneficiaries, including Lot 2-F previously awarded to Adriano, and Lot 2-G Bsd-04-000829
awarded to Sison. On appeal, the Office of the President 8 and the CA 9 upheld the DAR Order.
Through the Court's Resolution dated January 19, 2005 in G.R. No. 165650, we affirmed the
DAR Order by denying the petition for review of the appellate decision. aIDHET

(2)
in holding that the HLURB has exclusive jurisdiction over the petitioner's action by
applying Antipolo Realty Corp. v. National Housing Corporation 13 and other cited cases.
In essence, the main issue we are asked to resolve is which of the two the regular court or
the HLURB has exclusive jurisdiction over CGA's action for rescission and damages.
aSITDC
According to CGA, the exclusive jurisdiction of the HLURB, as set forth in PD No. 1344 and PD
No. 957, is limited to cases involving specific performance and does not cover actions for
rescission.
Taking the opposing view, respondents insist that since CGA's case involves the sale of a
subdivision lot, it falls under the HLURB's exclusive jurisdiction.
THE COURT'S RULING

Understandably aggrieved after discovering these circumstances, CGA filed a complaint against
the respondents before the RTC on April 30, 2002. 10 CGA claimed that the respondents
fraudulently concealed the fact that the subject property was part of a property under litigation;
thus, the Contract to Sell was a rescissible contract under Article 1381 of the Civil Code. CGA
asked the trial court to rescind the contract; order the respondents to return the amounts already
paid; and award actual, moral and exemplary damages, attorney's fees and litigation expenses.
Instead of filing an answer, the respondents filed a motion to dismiss asserting that the RTC had
no jurisdiction over the case. 11 Citing PD No. 957 12 and PD No. 1344, the respondents
claimed that the case falls within the exclusive jurisdiction of the HLURB since it involved the
sale of a subdivision lot. CGA opposed the motion to dismiss, claiming that the action is for
rescission of contract, not specific performance, and is not among the actions within the
exclusive jurisdiction of the HLURB, as specified by PD No. 957 and PD No. 1344. SHADcT
On October 15, 2002, the RTC issued an order denying the respondents' motion to dismiss. The
RTC held that the action for rescission of contract and damages due to the respondents'
fraudulent misrepresentation that they are the rightful owners of the subject property, free from
all liens and encumbrances, is outside the HLURB's jurisdiction.
The respondents countered by filing a petition for certiorari with the CA. In its October 20, 2003
decision, the CA found merit in the respondents' position and set the RTC order aside; the CA
ruled that the HLURB had exclusive jurisdiction over the subject matter of the complaint since it
involved a contract to sell a subdivision lot based on the provisions of PD No. 957 and PD No.
1344.
Contending that the CA committed reversible error, the CGA now comes before the Court asking
us to overturn the CA decision and resolution. TaEIcS
THE PETITION
In its petition, CGA argues that the CA erred
(1)
in applying Article 1191 of the Civil Code for breach of reciprocal obligation, while the
petitioner's action is for the rescission of a rescissible contract under Article 1381 of the same
Code, which is cognizable by the regular court; and

We find no merit in the petition and consequently affirm the CA decision.

Development of the HLURB's
jurisdiction
The nature of an action and the jurisdiction of a tribunal are determined by the material
allegations of the complaint and the law governing at the time the action was commenced. The
jurisdiction of the tribunal over the subject matter or nature of an action is conferred only by law,
not by the parties' consent or by their waiver in favor of a court that would otherwise have no
jurisdiction over the subject matter or the nature of an action. 14 Thus, the determination of
whether the CGA's cause of action falls under the jurisdiction of the HLURB necessitates a
closer examination of the laws defining the HLURB's jurisdiction and authority. ITaESD
PD No. 957, enacted on July 12, 1976, was intended to closely supervise and regulate the real
estate subdivision and condominium businesses in order to curb the growing number of
swindling and fraudulent manipulations perpetrated by unscrupulous subdivision and
condominium sellers and operators. As one of its "whereas clauses" states:
WHEREAS, reports of alarming magnitude also show cases of swindling and fraudulent
manipulations perpetrated by unscrupulous subdivision and condominium sellers and operators,
such as failure to deliver titles to the buyers or titles free from liens and encumbrances, and to
pay real estate taxes, and fraudulent sales of the same subdivision lots to different innocent
purchasers for value;
Section 3 of PD No. 957 granted the National Housing Authority (NHA) the "exclusive jurisdiction
to regulate the real estate trade and business". Thereafter, PD No. 1344 was issued on April 2,
1978 to expand the jurisdiction of the NHA to include the following: CIDaTc
SECTION 1.
In the exercise of its functions to regulate the real estate trade and business
and in addition to its powers provided for in Presidential Decree No. 957, the National Housing
Authority shall have exclusive jurisdiction to hear and decide cases of the following nature:
A.

Unsound real estate business practices;

B.
Claims involving refund and any other claims filed by subdivision lot or condominium
unit buyer against the project owner, developer, dealer, broker or salesman; and
C.
Cases involving specific performance of contractual and statutory obligations filed by
buyers of subdivision lot or condominium unit against the owner, developer, dealer, broker or
salesman. HAaDTE
Executive Order No. 648 (EO 648), dated February 7, 1981, transferred the regulatory and
quasi-judicial functions of the NHA to the Human Settlements Regulatory Commission (HSRC).
Section 8 of EO 648 provides:
SECTION 8.
Transfer of Functions. The regulatory functions of the National Housing
Authority pursuant to Presidential Decree Nos. 957, 1216, 1344 and other related laws are
hereby transferred to the Commission [Human Settlements Regulatory Commission]. . . . .
Among these regulatory functions are: 1) Regulation of the real estate trade and business; . . .
11) Hear and decide cases of unsound real estate business practices; claims involving refund
filed against project owners, developers, dealers, brokers, or salesmen; and cases of specific
performance.
Pursuant to Executive Order No. 90 dated December 17, 1986, the HSRC was renamed as the
HLURB. EaTCSA
Rationale for HLURB's
extensive quasi-judicial powers
The surge in the real estate business in the country brought with it an increasing number of
cases between subdivision owners/developers and lot buyers on the issue of the extent of the
HLURB's exclusive jurisdiction. In the cases that reached us, we have consistently ruled that the
HLURB has exclusive jurisdiction over complaints arising from contracts between the subdivision
developer and the lot buyer or those aimed at compelling the subdivision developer to comply
with its contractual and statutory obligations to make the subdivision a better place to live in. 15
We explained the HLURB's exclusive jurisdiction at length in Sps. Osea v. Ambrosio, 16 where
we said: aCITEH
Generally, the extent to which an administrative agency may exercise its powers depends
largely, if not wholly, on the provisions of the statute creating or empowering such agency.
Presidential Decree (P.D.) No. 1344, "EMPOWERING THE NATIONAL HOUSING AUTHORITY
TO ISSUE WRIT OF EXECUTION IN THE ENFORCEMENT OF ITS DECISION UNDER
PRESIDENTIAL DECREE NO. 957", clarifies and spells out the quasi-judicial dimensions of the
grant of jurisdiction to the HLURB in the following specific terms:
SEC. 1. In the exercise of its functions to regulate the real estate trade and business and in
addition to its powers provided for in Presidential Decree No. 957, the National Housing
Authority shall have exclusive jurisdiction to hear and decide cases of the following nature:
A.

Unsound real estate business practices;

B.
Claims involving refund and any other claims filed by subdivision lot or condominium
unit buyer against the project owner, developer, dealer, broker or salesman; and

C.
Cases involving specific performance of contractual and statutory obligations filed by
buyers of subdivision lots or condominium units against the owner, developer, dealer, broker or
salesman. EDIaSH
The extent to which the HLURB has been vested with quasi-judicial authority must also be
determined by referring to the terms of P.D. No. 957, "THE SUBDIVISION AND CONDOMINIUM
BUYERS' PROTECTIVE DECREE". Section 3 of this statute provides:
. . . National Housing Authority [now HLURB]. The National Housing Authority shall have
exclusive jurisdiction to regulate the real estate trade and business in accordance with the
provisions of this Decree.
The need for the scope of the regulatory authority thus lodged in the HLURB is indicated in the
second, third and fourth preambular paragraphs of PD 957 which provide:
WHEREAS, numerous reports reveal that many real estate subdivision owners, developers,
operators, and/or sellers have reneged on their representations and obligations to provide and
maintain properly subdivision roads, drainage, sewerage, water systems, lighting systems, and
other similar basic requirements, thus endangering the health and safety of home and lot buyers;
ScTaEA
WHEREAS, reports of alarming magnitude also show cases of swindling and fraudulent
manipulations perpetrated by unscrupulous subdivision and condominium sellers and operators,
such as failure to deliver titles to the buyers or titles free from liens and encumbrances, and to
pay real estate taxes, and fraudulent sales of the same subdivision lots to different innocent
purchasers for value;
xxx

xxx

xxx

WHEREAS, this state of affairs has rendered it imperative that the real estate subdivision and
condominium businesses be closely supervised and regulated, and that penalties be imposed on
fraudulent practices and manipulations committed in connection therewith. SETAcC
The provisions of PD 957 were intended to encompass all questions regarding subdivisions and
condominiums. The intention was aimed at providing for an appropriate government agency, the
HLURB, to which all parties aggrieved in the implementation of provisions and the enforcement
of contractual rights with respect to said category of real estate may take recourse. The business
of developing subdivisions and corporations being imbued with public interest and welfare, any
question arising from the exercise of that prerogative should be brought to the HLURB which has
the technical know-how on the matter. In the exercise of its powers, the HLURB must commonly
interpret and apply contracts and determine the rights of private parties under such contracts.
This ancillary power is no longer a uniquely judicial function, exercisable only by the regular
courts.
As observed in C.T. Torres Enterprises, Inc. v. Hibionada:
The argument that only courts of justice can adjudicate claims resoluble under the provisions of
the Civil Code is out of step with the fast-changing times. There are hundreds of administrative
bodies now performing this function by virtue of a valid authorization from the legislature. This
quasi-judicial function, as it is called, is exercised by them as an incident of the principal power
entrusted to them of regulating certain activities falling under their particular expertise. TEcAHI

In the Solid Homes case for example the Court affirmed the competence of the Housing and
Land Use Regulatory Board to award damages although this is an essentially judicial power
exercisable ordinarily only by the courts of justice. This departure from the traditional allocation
of governmental powers is justified by expediency, or the need of the government to respond
swiftly and competently to the pressing problems of the modern world. [Emphasis supplied.]
Another case Antipolo Realty Corporation v. NHA 17 explained the grant of the HLURB's
expansive quasi-judicial powers. We said:
In this era of clogged court dockets, the need for specialized administrative boards or
commissions with the special knowledge, experience and capability to hear and determine
promptly disputes on technical matters or essentially factual matters, subject to judicial review in
case of grave abuse of discretion, has become well nigh indispensable. Thus, in 1984, the Court
noted that 'between the power lodged in an administrative body and a court, the unmistakable
trend has been to refer it to the former'. ScaATD
xxx

xxx

xxx

In general, the quantum of judicial or quasi-judicial powers which an administrative agency may
exercise is defined in the enabling act of such agency. In other words, the extent to which an
administrative entity may exercise such powers depends largely, if not wholly on the provisions
of the statute creating or empowering such agency. In the exercise of such powers, the agency
concerned must commonly interpret and apply contracts and determine the rights of private
parties under such contracts, One thrust of the multiplication of administrative agencies is that
the interpretation of contracts and the determination of private rights thereunder is no longer a
uniquely judicial function, exercisable only by our regular courts. [Emphasis supplied.]

Pursuant to Roxas, we held in Pilar Development Corporation v. Villar 19 and Suntay v. Gocolay
20 that the HLURB has no jurisdiction over cases filed by subdivision or condominium owners or
developers against subdivision lot or condominium unit buyers or owners. The rationale behind
this can be found in the wordings of Sec. 1, PD No. 1344, which expressly qualifies that the
cases cognizable by the HLURB are those instituted by subdivision or condomium buyers or
owners against the project developer or owner. This is also in keeping with the policy of the law,
which is to curb unscrupulous practices in the real estate trade and business. 21
Thus, in the cases of Fajardo Jr. v. Freedom to Build, Inc., 22 and Cadimas v. Carrion, 23 we
upheld the RTC's jurisdiction even if the subject matter was a subdivision lot since it was the
subdivision developer who filed the action against the buyer for violation of the contract to sell.
HCaDIS
The only instance that HLURB may take cognizance of a case filed by the developer is when
said case is instituted as a compulsory counterclaim to a pending case filed against it by the
buyer or owner of a subdivision lot or condominium unit. This was what happened in Francel
Realty Corporation v. Sycip, 24 where the HLURB took cognizance of the developer's claim
against the buyer in order to forestall splitting of causes of action.
Obviously, where it is not clear from the allegations in the complaint that the property involved is
a subdivision lot, as in Javellana v. Hon. Presiding Judge, RTC, Branch 30, Manila, 25 the case
falls under the jurisdiction of the regular courts and not the HLURB. Similarly, in Spouses Dela
Cruz v. Court of Appeals, 26 we held that the RTC had jurisdiction over a case where the conflict
involved a subdivision lot buyer and a party who owned a number of subdivision lots but was not
himself the subdivision developer. HDTSCc
The Present Case

Subdivision cases under the

In the present case, CGA is unquestionably the buyer of a subdivision lot from the respondents,
who sold the property in their capacities as owner and developer. As CGA stated in its
complaint:

RTC's jurisdiction
The expansive grant of jurisdiction to the HLURB does not mean, however, that all cases
involving subdivision lots automatically fall under its jurisdiction. As we said in Roxas v. Court of
Appeals: 18 aHTEIA
In our view, the mere relationship between the parties, i.e., that of being subdivision
owner/developer and subdivision lot buyer, does not automatically vest jurisdiction in the
HLURB. For an action to fall within the exclusive jurisdiction of the HLURB, the decisive element
is the nature of the action as enumerated in Section 1 of P.D. 1344. On this matter, we have
consistently held that the concerned administrative agency, the National Housing Authority
(NHA) before and now the HLURB, has jurisdiction over complaints aimed at compelling the
subdivision developer to comply with its contractual and statutory obligations.
xxx

xxx

xxx

Note particularly pars. (b) and (c) as worded, where the HLURB's jurisdiction concerns cases
commenced by subdivision lot or condominium unit buyers. As to par. (a), concerning "unsound
real estate practices", it would appear that the logical complainant would be the buyers and
customers against the sellers (subdivision owners and developers or condominium builders and
realtors), and not vice versa. [Emphasis supplied.] ACcHIa

2.01
Defendants are the registered owners and developers of a housing subdivision
presently known as Villa Priscilla Subdivision located at Brgy. Cutcut, Pulilan, Bulacan;
2.02
On or about April 30, 1998, the plaintiff thru its Administrative Pastor bought from
defendants on installment basis a parcel of land designated at Lot 1, Block 4 of the said Villa
Priscilla Subdivision . . .
xxx

xxx

xxx

2.04
At the time of the execution of the second Contract to Sell (Annex "B"), Lot 1, Block 4
of the Villa Priscilla Subdivision was already covered by Transfer Certificate of Title No. T127776 of the Registry of Deeds of Quezon City in the name of Iluminada T. Soneja, married to
Asterio Soneja (defendant Priscilla T. Ignacio's sister and brother-in-law) and the defendants as
co-owners, but the latter represented themselves to be the real and absolute owners thereof, as
in fact it was annotated in the title that they were empowered to sell the same. Copy of TCT No.
T-127776 is hereto attached and made part hereof as Annex "C". AIHaCc
2.05
Plaintiff has been religiously paying the agreed monthly installments until its
Administrative Pastor discovered recently that while apparently clean on its face, the title

covering the subject lot actually suffers from fatal flaws and defects as it is part of the property
involved in litigation even before the original Contract to Sell (Annex "A"), which defendants
deliberately and fraudulently concealed from the plaintiff;
2.06
As shown in the technical description of TCT No. T-127776 (Annex "C"), it covers a
portion of consolidated Lots 2-F and 2-G Bsd-04-000829 (OLT), which were respectively
acquired by defendants from Nicanor Adriano and Ceferino Sison, former tenants-beneficiaries
of Purificacion S. Imperial, whose property at Cutcut, Pulilan, Bulacan originally covered by TCT
No. 240878 containing an area of 119,431 square meters was placed under Operation Land
Transfer under P.D. No. 27;
2.07
Said Purificacion S. Imperial applied for retention of five (5) hectares of her property at
Cutcut, Pulilan, Bulacan under Rep. Act No. 6657 and the same was granted by the Department
of Agrarian Reform (DAR) to cover in whole or in part farm lots previously awarded to tenantsbeneficiaries, including inter alia Nicanor Adriano's Lot 2-F and Ceferino Sison's Lot 2-G Bsd-04000829 (OLT). EcTDCI
xxx

xxx

B.
Claims involving refund and any other claims filed by subdivision lot or condominium
unit buyer against the project owner, developer, dealer, broker or salesman; and ESHAcI
We view CGA's contention that the CA erred in applying Article 1191 of the Civil Code as
basis for the contract's rescission to be a negligible point. Regardless of whether the
rescission of contract is based on Article 1191 or 1381 of the Civil Code, the fact remains that
what CGA principally wants is a refund of all payments it already made to the respondents. This
intent, amply articulated in its complaint, places its action within the ambit of the HLURB's
exclusive jurisdiction and outside the reach of the regular courts. Accordingly, CGA has to file its
complaint before the HLURB, the body with the proper jurisdiction.
WHEREFORE, premises considered, we DENY the petition and AFFIRM the October 20, 2003
Decision of the Court of Appeals in CA G.R. SP No. 75717 dismissing for lack of jurisdiction the
CGA complaint filed with the RTC, Branch 14 of Malolos, Bulacan. EDCcaS
SO ORDERED.

xxx

2.08
Said order of October 2, 1997 was affirmed and declared final and executory, and the
case was considered closed, as in fact there was already an Implementing Order dated
November 10, 1997.

THE UNITED STATES, complainant-appellee, vs. FRED L. DORR ET AL., defendantsappellants.

F .G. Waite for appellants.

xxx

xxx

xxx
Solicitor-General Araneta for appellee.

3.03
As may thus be seen, the defendants deliberately and fraudulently concealed from the
plaintiff that fact that the parcel of land sold to the latter under the Contract to Sell (Annexes "A"
and "B") is part of the property already under litigation and in fact part of the five-hectare
retention awarded to the original owner, Purificacion S. Imperial.
xxx

xxx

xxx

3.05
Plaintiff is by law entitled to the rescission of the Contracts to Sell (Annexes "A" and
"B") by restitution of what has already been paid to date for the subject property in the total
amount of P2,515,899.20, thus formal demand therefor was made on the defendants thru a
letter dated April 5, 2002, which they received but refused to acknowledge receipt. Copy of said
letter is hereto attached and made part hereof as Annex "J". 27 [Emphasis supplied.] EITcaD
From these allegations, the main thrust of the CGA complaint is clear to compel the
respondents to refund the payments already made for the subject property because the
respondents were selling a property that they apparently did not own. In other words, CGA
claims that since the respondents cannot comply with their obligations under the contract, i.e., to
deliver the property free from all liens and encumbrances, CGA is entitled to rescind the contract
and get a refund of the payments already made. This cause of action clearly falls under the
actions contemplated by Paragraph (b), Section 1 of PD No. 1344, which reads:
SEC. 1. In the exercise of its functions to regulate the real estate trade and business and in
addition to its powers provided for in Presidential Decree No. 957, the National Housing
Authority shall have exclusive jurisdiction to hear and decide cases of the following nature:

SYLLABUS
1.
CRIMINAL LAW; SEDITION; GOVERNMENT DEFINED. The term "government"
as employed in Act No. 292 of the United States Philippine Commission is used in the abstract
sense of the existing political system as distinguished from the concrete organism of the
Government.
2.
CRIMINAL PROCEDURE; COMPLAINT OR INFORMATION. When an offense
may be committed in any of several different modes and the complaint alleges the crime to have
been committed in two or more modes, it is sufficient to prove the offense committed in any one
of them.
3.
ID.; SEDITION. The publication of an article can not be punished under Act No. 292
of the United States Philippine Commission as having seditious tendencies unless it has a
tendency to produce disaffection or a feeling incompatible with a disposition to remain loyal to
the Government and obedient to its laws.
4.
ID.; ID. The publication of an article abusive of the United States Philippine
Commission and its members is not a libel upon the Government and does not fall within said
Act No. 292 of the United States Philippine Commission.
DECISION
LADD, J p:

xxx

xxx

xxx

The defendants have been convicted upon a complaint charging them with the offense of writing,
publishing, and circulating a scurrilous libel against the Government of the United States and the
Insular Government of the Philippine Islands. The complaint is based upon section 8 of Act No.
292 of the Commission, which is as follows:

to retain their seats on the Civil Commission, the executive body of the Philippine Government,
without an investigation?

"Every person who shall utter seditious words or speeches, write, publish, or circulate scurrilous
libels against the Government of the United States or the Insular Government of the Philippine
Islands, or which tend to disturb or obstruct any lawful officer in executing his office, or which
tend to instigate others to cabal or meet together for unlawful purposes, or which suggest or
incite rebellious conspiracies or riots, or which tend to stir up the people against the lawful
authorities, or to disturb the peace of the community, the safety and order of the Government, or
who shall knowingly conceal such evil practices, shall be punished by a fine not exceeding two
thousand dollars or by imprisonment not exceeding two years, or both, in the discretion of the
court."

"It is a notorious fact that many branches of the Government organized by the Civil Commission
are rotten and corrupt. The fiscal system, upon which life, liberty, and justice depends, is
admitted by the Attorney-General himself to be most unsatisfactory. It is a fact that the Philippine
judiciary is far from being what it should. Neither fiscals nor judges can be persuaded to convict
insurgents when they wish to protect them.

The alleged libel was published as an editorial in the issue of the "Manila Freedom" of April 6,
1902, under the caption of " A few hard facts."

xxx

xxx

"Sidney Adamson, in a late letter in 'Leslie's weekly,' has the following to say of the action of the
Civil Commission in appointing rascally natives to important Government positions:
"'It is a strong thing to say, but nevertheless true, that the Civil Commission, through its exinsurgent office holders, and by its continual disregard for the records of natives obtained during
the military rule of the Islands, has, in its distribution of offices, constituted a protectorate over a
set of men who should be in jail or deported. . . . [Reference is then made to the appointment of
one Tecson as justice of the peace.] This is the kind of foolish work that the Commission is doing
all over the Islands, reinstating insurgents and rogues and turning down the men who have
during the struggle, at the risk of their lives, aided the Americans.'
xxx

xxx

xxx

"There is no doubt but that the Filipino office holders of the Islands are in a good many instances
rascals.
xxx

xxx

xxx

"The Commission has exalted to the highest positions in the Islands Filipinos who are alleged to
be notoriously corrupt and rascally, and men of no personal character.
xxx

xxx

xxx

"Editor Valdez, of 'Miau,' made serious charges against two of the native Commissioners
charges against Trinidad H. Pardo de Tavera, which, if true, would brand the man as a coward
and a rascal, and with what result? . . . [Reference is then made to the prosecution and
conviction of Valdez for libel 'under a law which specifies that the greater the truth the greater
the libel.'] Is it the desire of the people of the United States that the natives against whom these
charges have been made (which, if true, absolutely vilify their personal characters ) be permitted

xxx

xxx

xxx

"Now we hear all sorts of reports as to rottenness existing in the province [of Tayabas], and
especially the northern end of it; it is said that it is impossible to secure the conviction of
lawbreakers and outlaws by the native justices, or a prosecution by the native fiscals.
xxx

The Attorney-General in his brief indicates the following passages of the article as those upon
which he relies to sustain the conviction:

xxx

xxx

xxx

"The long and short of it is that Americans will not stand for an arbitrary government, especially
when evidences of carpet bagging and rumors of graft are too thick to be pleasant."
We do not understand that it is claimed that the defendants succeeded in establishing at the trial
the truth of any of the foregoing statements. The only question which we have considered is
whether their publication constitutes an offense under section 8 of Act No. 292, above cited.
Several allied offenses or modes of committing the same offense are defined in that section, viz:
(1) The uttering of seditious words or speeches; (2) the writing, publishing, or circulating of
scurrilous libels against the Government of the United States or the Insular Government of the
Philippine Islands; (3) the writing, publishing, or circulating of libels which tend to disturb or
obstruct any lawful officer in executing his office; (4) or which tend to instigate others to cabal or
meet together for unlawful purposes; (5) or which suggest or incite rebellions conspiracies or
riots; (6) or which tend to stir up the people against the lawful authorities or to disturb the peace
of the community, the safety and order of the Government; (7) knowingly concealing such evil
practices.
The complaint appears to be framed upon the theory that a writing, in order to be punishable as
a libel under this section, must be of a scurrilous nature and directed against the Government of
the United States or the Insular Government of the Philippine Islands, and must, in addition, tend
to some one of the results enumerated in the section. The article in Question is described in the
complaint as "a scurrilous libel against the Government of the United States and the Insular
Government of the Philippine Islands, which tends to obstruct the lawful officers of the United
States and the Insular Government of the Philippine Islands in the execution of their offices, and
which tends to instigate others to cabal and meet together for unlawful purposes, and which
suggests and incites rebellious conspiracies, and which tends to stir up the people against the
lawful authorities, and which disturbs the safety and order of the Government of the United
States and the Insular Government of the Philippine Islands." But it is "a well-settled rule in
considering indictments that where an offense may be committed in any of several different
modes, and the offense, in any particular instance, is alleged to have been committed in two or
more modes specified, it is sufficient to prove the offense committed in any one of them,
provided that it be such as to constitute the substantive offense" (Com. vs. Kneeland, 20 Pick.,

Mass., 206, 215), and the defendants may, therefore, be convicted if any one of the substantive
charges into which the complaint may be separated has been made out.
We are all, however, agreed upon the proposition that the article in question has no appreciable
tendency to "disturb or obstruct any lawful officer in executing his office," or to "instigate'' any
person or class of persons "to cabal or meet together for unlawful purposes," or to "suggest or
incite rebellious conspiracies or riots," or to "stir up the people against the lawful authorities or to
disturb the peace of the community, the safety and order of the Government." All these various
tendencies, which are described in section 8 of Act No. 292, each one of which is made an
element of a certain form of libel, may be characterized in general terms as seditious tendencies.
This is recognized in the description of the offenses punished by this section, which is found in
the title of the act, where they are defined as the crimes of "seditious utterances, whether written
or spoken."
Excluding from consideration the offense of publishing "scurrilous libels against the Government
of the United States or the Insular Government of the Philippine Islands," which may conceivably
stand on a somewhat different footing, the offenses punished by this section all consist in
inciting, orally or in writing, to acts of disloyalty or disobedience to the lawfully constituted
authorities in these Islands. And while the article in question, which is, in the main, a virulent
attack against the policy of the Civil Commission in appointing natives to office, may have had
the effect of exciting among certain classes dissatisfaction with the Commission and its
measures, we are unable to discover anything in it which can be regarded as having a tendency
to produce anything like what may be called disaffection, or, in other words, a state of feeling
incompatible with a disposition to remain loyal to the Government and obedient to the laws.
There can be no conviction, therefore, for any of the offenses described in the section on which
the complaint is based, unless it is for the offense of publishing a scurrilous libel against the
Government of the United States or the Insular Government of the Philippine Islands.
Can the article be regarded as embraced within the description of "scurrilous libels against the
Government of the United States or the Insular Government of the Philippine Islands?" In the
determination of this question we have encountered great difficulty, by reason of the almost
entire lack of American precedents which might serve as a guide in the construction of the law.
There are, indeed, numerous English decisions, most of them of the eighteenth century, on the
subject of libelous attacks upon the "Government, the constitution, or the law generally," attacks
upon the Houses of Parliament, the Cabinet, the Established Church, and other governmental
organisms, but these decisions are not now accessible to us, and, if they were, they were made
under such different conditions from those which prevail at the present day, and are founded
upon theories of government so foreign to those which have inspired the legislation of which the
enactment in question forms a part, that they would probably afford but little light in the present
inquiry. In England, in the latter part of the eighteenth century, any "written censure upon public
men for their conduct as such," as well as any written censure "upon the laws or upon the
institutions of the country," would probably have been regarded as a libel upon the Government.
(2 Stephen, History of the Criminal Law of England, 348.) This has ceased to be the law in
England, and it is doubtful whether it was ever the common law of any American State. "It is true
that there are ancient dicta to the effect that any publication tending to possess the people with
an ill opinion of the Government is a seditious libel (per Holt, C. J., in R. vs. Tuchin, 1804, 5 St.
Tr., 532, and Ellenborough, C. J., in R. vs. Cobbett, 1804, 29 How. St. Tr., 49), but no one would
accept that doctrine now. Unless the words used directly tend to foment riot or rebellion or
otherwise to disturb the peace and tranquillity of the Kingdom, the utmost latitude is allowed in
the discussion of all public affairs." (11 Enc. of the Laws of England, 450.) Judge Cooley says
(Const. Lim., 528): "The English common-law rule which made libels on the constitution or the

government indictable, as it was administered by the courts, seems to us unsuited to the

condition and circumstances of the people of America, and therefore never to have been
adopted in the several States."
We find no decisions construing the Tennessee statute (Code, sec. 6663), which is apparently
the only existing American statute of a similar character to that in question, and from which much
of the phraseology of the latter appears to have been taken, though with some essential
modifications.
The important question is to determine what is meant in section 8 of Act No. "92 by the
expression "the Insular Government of the Philippine Islands." Does it mean in a general and
abstract sense the existing laws and institutions of the Islands, or does it mean the aggregate of
the individuals by whom the Government of the Islands is, for the time being, administered?
Either sense would doubtless be admissible.
"We understand, in modern political science . . . by the term "government", that institution or
aggregate of institutions by which an independent society makes and carries out those rules of
action which are necessary to enable men to live in a social state, or which are imposed upon
the people forming that society by those who possess the power or authority of prescribing them.
Government is the aggregate of authorities which rule a society. By "administration" again, we
understand in modern times, and especially in more or less free countries, the aggregate of
those persons in whose hands the reins of government are for the time being (the chief ministers
or heads of departments)." (Bouvier, Law Dictionary, 891.) But the writer adds that the terms
"government and ''administration" are not always used in their strictness, and that "government"
is often used for ''administration.''
In the act of Congress of July 14, 1798, commonly known as the "Sedition Act," it is made an
offense to "write, print, utter, or publish," or "cause to procure to be written, printed, uttered, or
published," or to "knowingly and willingly assist or aid in writing, printing, uttering, or publishing
any false, scandalous, and malicious writing or writings against the Government of the United
States, or either house of the Congress of the United States, or the President of the United
States, with intent to defame the said Government, or either house of the said Congress or the
said President, or to bring-them, or either of them, into contempt or disrepute, or to excite
against them or either or any of them the hatred of the good people of the United States," etc.
The term "government" would appeal to be used here in the abstract sense of the existing
political system, as distinguished from the concrete organisms of the Government the houses
of Congress and the Executive which are also specially mentioned.
Upon the whole, we are of the opinion that this is the sense in which the term is used in the
enactment under consideration.
It may be said that there can be no such thing as a scurrilous libel, or any sort of a libel, upon an
abstraction like the Government in the sense of the laws and institutions of a country, but we
think an answer to this suggestion is that the expression "scurrilous libel" is not used in section 8
of Act No. 292 in the sense in which it is used in the general libel law (Act No. 277) that is, in
the sense of written defamation of individuals but in the wider sense, in which it is applied in
the common law to blasphemous, obscene, or seditious publications in which there may be no
element of defamation whatever. "The word 'libel' as popularly used, seems to mean only
defamatory words; but words written, if obscene, blasphemous, or seditious, are technically
called libels, and the publication of them is, by the law of England, an indictable offense."

(Bradlaugh vs. The Queen, 3 Q. B. D., 607, 627, per Bramwell, L. J. See Com. vs. Kneeland, 20
Pick., 206, 211.)
While libels upon forms of government, unconnected with defamation of individuals, must in the
nature of things be of uncommon occurrence, the offense is by no means an imaginary one. An
instance of a prosecution for an offense essentially of this nature is Respublica vs. Dennie, 4
Yeates (Pa.), 267, where the defendant was indicted "as a factious and seditious person of a
wicked mind and unquiet and turbulent disposition and conversation, seditiously, maliciously,
and willfully intending, as much as in him lay, to bring into contempt and hatred the
independence of the United States, the constitution of this Commonwealth and of the United
States, to excite popular discontent and dissatisfaction against the scheme of polity instituted,
and upon trial in the said United States and in the said Commonwealth, to molest, disturb, and
destroy the peace and tranquillity of the said United States and of the said Commonwealth, to
condemn the principles of the Revolution, and revile, depreciate, and scandalize the characters
of the Revolutionary patriots and statesmen, to endanger, subvert, and totally destroy the
republican
constitutions and free governments of the said United States and this
Commonwealth, to involve the said United States and this Commonwealth in civil war,
desolation, and anarchy, and to procure by art and force a radical change and alteration in the
principles and forms of the said constitutions and governments, without the free will, wish, and
concurrence of the people of the said United States and this Commonwealth, respectively," the
charge being that "to fulfill, perfect, and bring to effect his wicked, seditious, and detestable
intentions aforesaid he . . . falsely, maliciously, factiously, and seditiously did make, compose,
write, and publish the following libel, to wit: 'A democracy is scarcely tolerable at any period of
national history. Its omens are always sinister and its powers are unpropitious. With all the lights
of experience blazing before our eves, it is impossible not to discover the futility of this form of
government. It was weak and wicked at Athens, it was bad in Sparta, and worse in Rome. It has
been tried in France and terminated in despotism. It was tried in England and rejected with the
utmost loathing and abhorrence. It is on its trial here and its issue will be civil war, desolation,
and anarchy. No wise man but discerns its imperfections; no good man but shudders at its
miseries; no honest man but proclaims its fraud, and no brave man but draws his sword against
its force. The institution of a scheme of polity so radically contemptible and vicious is a
memorable example of what the villainy of some men can devise, the folly of others receive, and
both establish, in despite of reason, reflection, and sensation.'"
An attack upon the lawfully established system of civil government in the Philippine Islands, like
that which Dennie was accused of making upon the republican form of government lawfully
established in the United States and in the State of Pennsylvania would, we think, if couched in
scandalous language, constitute the precise offense described in section 8 of Act No. 292 as a
scurrilous libel against the Insular Government of the Philippine Islands.
Defamation of individuals, whether holding official positions or not, and whether directed to their
public conduct or to their private life, may always be adequately punished under the general libel
law. Defamation of the Civil Commission as an aggregation, it being "a body of persons definite
and small enough for its individual members to be recognized as such" ( Stephen, Digest of the
Criminal Law, art. 277), as well as defamation of and of the individual members of the
Commission or of the Civil Governor, either in his public capacity or as a private individual, may
be so punished. The general libel law enacted by the Commission was in force when Act No.
292 was passed. There was no occasion for any further legislation on the subject of libels
against the individuals by whom the Insular Government is administered against the Insular
Government in the sense of the aggregate of such individuals. There was occasion for stringent
legislation against seditious words or libels, and that is the main if not the sole purpose of the

section under consideration. It is not unreasonable to suppose that the Commission, in enacting
this section, may have conceived of attacks of a malignant or scurrilous nature upon the existing
political system of the United States, or the political system established in these Islands by the
authority of the United States, as necessarily of a seditious tendency, but it is not so reasonable
to suppose that they conceived of attacks upon the personnel of the government as necessarily
tending to sedition. Had this been their view it seems probable that they would, like the framers
of the Sedition Act of 1798, have expressly and specifically mentioned the various public officials
and collegiate governmental bodies defamation of which they meant to punish as sedition.
The article in question contains no attack upon the governmental system of the United States,
and it is quite apparent that, though grossly abusive as respects both the Commission as a body
and some of its individual members, it contains no attack upon the governmental system by
which the authority of the United States is enforced in these Islands. The form of government by
a Civil Commission and a Civil Governor is not assailed. It is the character of the men who are
intrusted with the administration of the government that the writer is seeking to bring into
disrepute by impugning the purity of their motives, their public integrity, and their private morals,
and the wisdom of their policy. The publication of the article, therefore, no seditious tendency
being apparent, constitutes no offense under Act No. 292, section 8.
The judgment of conviction is reversed and the defendants are acquitted, with costs de oficio.
Arellano, C .J ., Torres, Willard and Mapa, JJ ., concur.

[G.R. No. 81954. August 8, 1989.]

CESAR Z. DARIO, petitioner, vs. HON. SALVADOR M. MISON, HON. VICENTE JAYME and
HON. CATALINO MACARAIG, JR., in their respective capacities as Commissioner of Customs,
Secretary of Finance, and Executive Secretary, respondents.
[G.R. No. 81967. August 8, 1989.]
VICENTE A. FERIA, JR., petitioner, vs. HON. SALVADOR M. MISON, HON. VICENTE JAYME,
and HON. CATALINO MACARAIG, JR., in their respective capacities as Commissioner of
Customs, Secretary of Finance, and Executive Secretary, respondents.
[G.R. No. 82023. August 8, 1989.]
ADOLFO CASARENO, PACIFICO LAGLEVA, JULIAN C. ESPIRITU, DENNIS A. AZARRAGA,
RENATO DE JESUS, NICASIO C. GAMBOA, CORAZON RALLOS NIEVES, FELICITACION R.
GELUZ, LEODEGARIO H. FLORESCA, SUBAER PACASUM, ZENAIDA LANARIA, JOSE B.
ORTIZ, GLICERIO R. DOLAR, CORNELIO NAPA, PABLO B. SANTOS, FERMIN RODRIGUEZ,
DALISAY BAUTISTA, LEONARDO JOSE, ALBERTO LONTOK, PORFIRIO TABINO, JOSE
BARREDO, ROBERTO ARNALDO, ESTER TAN, PEDRO BAKAL, ROSARIO DAVID,
RODOLFO AFUANG, LORENZO CATRE, LEONCIA CATRE, ROBERTO ABADA, petitioners,
vs. COMMISSIONER SALVADOR M. MISON, COMMISSIONER, BUREAU OF CUSTOMS,
respondent.
[G.R. No. 83737. August 8, 1989.]

BENEDICTO L. AMASA and WILLIAM S. DIONISIO, petitioners, vs. PATRICIA A. STO.

TOMAS, in her capacity as Chairman of the Civil Service Commission and SALVADOR MISON,
in his capacity as Commissioner of the Bureau of Customs, respondents.
[G.R. No. 85310. August 8, 1989.]
SALVADOR M. MISON, in his capacity as Commissioner of Customs, petitioner, vs. CIVIL
SERVICE COMMISSION, ABACA, SISINIO T., ABAD, ROGELIO C., ABADIANO, JOSE P.,
ABCEDE, NEMECIO C., ABIOG, ELY F., ABLAZA, AURORA M., AGBAYANI, NELSON I.,
AGRES, ANICETO, AGUILAR, FLOR, AGUILUCHO, MA. TERESA R., AGUSTIN, BONIFACIO
T., ALANO, ALEX P., ALBA, MAXIMO F. JR., ALBANO, ROBERT B., ALCANTARA, JOSE G.,
ALMARIO, RODOLFO F., ALVEZ, ROMUALDO R., AMISTAD, RUDY M., AMOS, FRANCIS F.,
ANDRES, RODRIGO V., ANGELES, RICARDO S., ANOLIN, MILAGROS H., AQUINO,
PASCASIO E., ARABE, MELINDA M., ARCANGEL, AGUSTIN S., JR., ARPON, ULPIANO U.,
JR., ARREZA, ARTEMIO M., JR., ARROJO, ANTONIO P., ARVISU, ALEXANDER S.,
ASCAO, ANTONIO T., ASLAHON, JULAHON P., ASUNCION, VICTOR R., ATANGAN,
LORNA S., ATIENZA, ALEXANDER R., BACAL, URSULINO C., BAAGA, MARLOWE, Z.,
BANTA, ALBERTO T., BARREDO, JOSE B., BARROS, VICTOR C., BARTOLOME, FELIPE A.,
BAYSAC, REYNALDO S., BELENO, ANTONIO B., BERNARDO, ROMEO D., BERNAS,
MARCIANO S., BOHOL, AUXILIADOR G., BRAVO, VICTOR M., BULEG, BALILIS R., CALNEA,
MERCEDES M., CALVO, HONESTO G., CAMACHO, CARLOS V., CAMPOS, RODOLFO C.,
CAPULONG, RODRIGO G., CARINGAL, GRACIA Z., CARLOS, LORENZO B., CARRANTO,
FIDEL U., CARUNGCONG, ALFREDO M., CASTRO, PATRICIA J., CATELO, ROGELIO B.,
CATURLA, MANUEL B., CENIZAL, JOSEFINA F., CINCO, LUISITO, CONDE, JOSE C., JR.,
CORCUERA, FIDEL S., CORNETA, VICENTE S., CORONADO, RICARDO S., CRUZ,
EDUARDO S., CRUZ EDILBERTO A., CRUZ, EFIGENIA B., CRUZADO, MARCIAL C.,
CUSTODIO, RODOLFO M., DABON, NORMA M., DALINDIN, EDNA MAE D., DANDAL, EDEN
F., DATUHARON, SATA A., DAZO, GODOFREDO L., DE CASTRO, LEOPAPA, DE GUZMAN,
ANTONIO A., DE GUZMAN, RENATO E., DE LA CRUZ, AMADO A., JR., DE LA CRUZ,
FRANCISCO C., DE LA PENA, LEONARDO, DEL CAMPO, ORLANDO, DEL RIO, MAMERTO
P., JR., DEMESA, WILHELMINA T., DIMAKUTA, SALIC L., DIZON, FELICITAS A., DOCTOR,
HEIDY M., DOLAR, GLICERIO R., DOMINGO, NICANOR J., DOMINGO, PERFECTO V., JR.,
DUAY, JUANA G., DYSANGCO, RENATO F., EDILLOR, ALFREDO P., ELEVAZO,
LEONARDO A., ESCUYOS, MANUEL M., JR., ESMERIA, ANTONIO E., ESPALDON, MA.
LOURDES H., ESPINA, FRANCO A., ESTURCO, RODOLFO C., EVANGELINO, FERMIN I.,
FELIX, ERNESTO G., FERNANDEZ, ANDREW M., FERRAREN, ANTONIO C., FERRERA,
WENCESLAO A., FRANCISCO, PELAGIO S., JR., FUENTES, RUDY L., GAGALANG,
RENATO V., GALANG, EDGARDO R., GAMBOA, ANTONIO C., GAN, ALBERTO R., GARCIA,
GILBERT M., GARCIA, EDNA V., CARCIA, JUAN L., GAVIOLA, LILIAN V., GEMPARO,
SEGUNDINA G., GOBENCIONG, FLORDELIZ B., GRATE, FREDERICK R., GREGORIO,
LAURO P., GUARTICO, AMMON H., GUIANG, MYRNA N., GUINTO, DELFIN C.,
HERNANDEZ, LUCAS A., HONRALES, LORETO N., HUERTO, LEOPOLDO H., HULAR,
LANNYROSS E., IBAEZ, ESTER C., ILAGAN, HONORATO C., INFANTE, REYNALDO C.,
ISAIS, RAY C., ISMAEL, HADJI AKRAM B., JANOLO, VIRGILIO M., JAVIER, AMADOR L.,
JAVIER, ROBERTO S., JAVIER, WILLIAM R., JOVEN, MEMIA A., JULIAN, REYNALDO V.,
JUMAMOY, ABUNDIO A., JUMAQUIAO, DOMINGO F., KAINDOY, PASCUAL B., JR., KOH,
NANIE G., LABILLES, ERNESTO S., LABRADOR, WILFREDO M., LAGA, BIENVENIDO M.,
LAGLEVA, PACIFICO Z., LAGMAN, EVANGELINE G., LAMPONG, WILFREDO G.,
LANDICHO, RESTITUTO A., LAPITAN, CAMILO M., LAURENTE, REYNALDO A., LICARTE,
EVARISTO R., LIPIO, VICTOR O., LITTAUA, FRANKLIN Z., LOPEZ, MELENCIO L., LUMBA,
OLIVIA R., MACAISA, BENITO T., MACAISA, ERLINDA C., MAGAT, ELPIDIO, MAGLAYA,

FERNANDO P., MALABANAN, ALFREDO C., MALIBIRAN, ROSITA D., MALIJAN, LAZARO V.,
MALLI, JAVIER M., MANAHAN, RAMON S., MANUEL, ELPIDIO R., MARAVILLA, GIL B.,
MARCELO, GIL C., MARIAS, RODOLFO V., MAROKET, JESUS C., MARTIN, NEMENCIO A.,
MARTINEZ, ROMEO M., MARTINEZ, ROSELINA M., MATIBAG, ANGELINA G., MATUGAS,
ERNESTO T., MATUGAS, FRANCISCO T., MAYUGA, PORTIA E., MEDINA, NESTOR M.,
MEDINA, ROLANDO S., MENDAVIA, AVELINO I., MENDOZA, POTENCIANO G., MIL, RAY M.,
MIRAVALLES, ANASTACIA L., MONFORTE, EUGENIO, JR., G., MONTANO, ERNESTO F.,
MONTERO, JUAN M. III., MORALDE, ESMERALDO B., JR., MORALES, CONCHITA D.L.,
MORALES, NESTOR P., MORALES, SHIRLEY S., MUNAR, JUANITA L., MUOZ, VICENTE
R., MURILLO, MANUEL M., NACION, PEDRO R., NAGAL, HENRY N., NAPA, CORNELIO B.,
NAVARRO, HENRY L., NEJAL, FREDRICK E., NICOLAS, REYNALDO S., NIEVES, RUFINO
A., OLAIVAR, SEBASTIAN T., OLEGARIO, LEO Q., ORTEGA, ARLENE R., ORTEGA, JESUS
R., OSORIO, ABNER S., PAPIO, FLORENTINO T. II, PASCUA, ARNULFO A., PASTOR,
ROSARIO, PELAYO, ROSARIO L., PEA, AIDA C., PEREZ, ESPERIDION B., PEREZ, JESUS
BAYANI M., PRE, ISIDRO A., PRUDENCIADO, EULOGIA S., PUNZALAN, LAMBERTO N.,
PURA, ARNOLD T., QUINONES, EDGARDO I., QUINTOS, AMADEO C., JR., QUIRAY,
NICOLAS C., RAMIREZ, ROBERTO P., RAADA, RODRIGO C., RARAS, ANTONIO A.,
RAVAL, VIOLETA V., RAZAL, BETTY R., REGALA, PONCE F., REYES, LIBERATO R.,
REYES, MANUEL E., REYES, NORMA Z., REYES, TELESFORO F., RIVERA, ROSITA L.,
ROCES, ROBERTO V., ROQUE, TERESITA S., ROSANES, MARILOU M., ROSETE, ADAN I.,
RUANTO, REY CRISTO C., JR., SABLADA, PASCASIO G., SALAZAR SILVERIA S.,
SALAZAR, VICTORIA A., SALIMBACOD, PERLITA C., SALMINGO, LOURDES M.,
SANTIAGO, EMELITA B., SATINA, PORFIRIO C., SEKITO, COSME B., JR., SIMON, RAMON
P., SINGSON, MELECIO C., SORIANO, ANGELO L., SORIANO, MAGDALENA R.,
SUMULONG, ISIDRO L., JR., SUNICO, ABELARDO T., TABIJE, EMMA B., TAN, RUDY
GOROSPE, TAN, ESTER, S., TAN, JULITA S., TECSON, BEATRIZ B., TOLENTINO,
BENIGNO A., TURINGAN, ENRICO T., JR., UMPA, ALI A., VALIC, LUCIO E., VASQUEZ,
NICANOR B., VELARDE, EDGARDO C., VERA, AVELINO A., VERAME, OSCAR E., VIADO,
LILIAN T., VIERNES, NAPOLEON K., VILLALON, DENNIS A., VILLAR, LUZ L., VILLALUZ,
EMELITO V., ZATA, ANGEL A., JR., ACHARON, CRISTETO, ALBA, RENATO B., AMON,
JULITA C., AUSTRIA, ERNESTO C., CALO, RAYMUNDO M., CENTENO, BENJAMIN R., DE
CASTRO, LEOPAPA C., DONATO, ESTELITA P., DONATO, FELIPE S., FLORES, PEDRITO
S., GALAROSA, RENATO, MALAWI, MAUYAG, MONTENEGRO, FRANCISCO M., OMEGA,
PETRONILO T., SANTOS, GUILLERMO F., TEMPLO, CELSO, VALDERAMA, JAIME B., and
VALDEZ, NORA M., respondents.
[G.R. No. 85335. August 8, 1989.]
FRANKLIN Z. LITTAUA, ADAN I. ROSETE, FRANCISCO T. MATUGAS, MA. J. ANGELINA G.
MATIBAG, LEODEGARDIO H. FLORESCA, LEONARDO A. DELA PEA, ABELARDO T.
SUNICO, MELENCIO L. LOPEZ, NEMENCIO A. MARTIN, RUDY M. AMISTAD, ERNESTO T.
MATUGAS, SILVERIA S. SALAZAR, LILLIAN V. GAVIOLA, MILAGROS ANOLIN, JOSE B.
ORTIZ, ARTEMIO ARREZA, JR., GILVERTO M. GARCIA, ANTONIO A. RARAS, FLORDELINA
B. GOBENCIONG, ANICETO AGRES, EDGAR Y. QUINONES, MANUEL B. CATURLA, ELY F.
ABIOG, RODRIGO C. RAADA, LAURO GREGORIO, ALBERTO I. GAN, EDGARDO
GALANG, RAY C. ISAIS, NICANOR B. VASQUEZ, MANUEL ESCUYOS, JR., ANTONIO B.
BELENO, ELPIO R. MANUEL, AUXILIADOR C. BOHOL, LEONARDO ELEVAZO, VICENTE S.
CORNETA, petitioners, vs. COM. SALVADOR M. MISON/BUREAU OF CUSTOMS and the
CIVIL SERVICE COMMISSION, respondents.
[G.R. No. 86241. August 8, 1989.]

SALVADOR M. MISON, in his capacity as Commissioner of Customs, petitioner, vs. CIVIL

SERVICE COMMISSION, SENEN S. DIMAGUILA, ROMEO P. ARABE, BERNARDO S.
QUINTONG, GREGORIO P. REYES, and ROMULO C. BADILLO, respondents.
SYLLABUS

redundancy of offices. Proclamation No. 3, on the other hand, effectuates the "progressive" type
of reorganization dictated by the exigencies of the historical and political upheaval at the time.
The "traditional" type is limited in scope. It is concerned with the individual approach where the
particular employee involved is charged administratively and where the requisites of notice and
hearing have to be observed. The "progressive" kind of reorganization, on the other hand, is the
collective way. It is wider in scope, and is the reorganization contemplated under Section 16.

MELENCIO-HERRERA, J., dissenting opinion:

1.
ADMINISTRATIVE LAW; CIVIL SERVICE ACT; REMOVAL OR SUSPENSION OF
CIVIL SERVICE OFFICER MUST BE FOR CAUSE; "FOR CAUSE" CONSTRUED. The
canon for the removal or suspension of a civil service officer or employee is that it must be FOR
CAUSE. That means "a guarantee of both procedural and substantive due process. Basically,
procedural due process would require that suspension or dismissal come only after notice and
hearing. Substantive due process would require that suspension or dismissal be 'for cause'.
2.
ID.; ID.; ID.; GUARANTEE ENSHRINED IN THE CONSTITUTION. The guarantee
of removal FOR CAUSE is enshrined in Article IX-B, Section 2(3) of the 1987 Constitution, which
states that "No officer or employee of the civil service shall be removed or suspended except
FOR CAUSE provided by law."
3.
REMEDIAL LAW; SUPREME COURT; JUDGMENT; OBITER DICTUM, DEFINED.
An obiter dictum or dictum has been defined as a remark or opinion uttered, by the way. It is a
statement of the court concerning a question which was not directly before it (In re Hess, 23 A.
2d. 298, 301, 20 N.J. Misc. 12). It is language unnecessary to a decision, (a) ruling on an issue
not raised, or (an) opinion of a judge which does not embody the resolution or determination of
the court, and is made without argument or full consideration of the point (Lawson v. US, 176
F2d 49, 51, 85 U.S. App. D.C. 167). It is an expression of opinion by the court or judge on a
collateral question not directly involved, (Crescent Ring Co. v. Traveler's Indemnity Co. 132 A.
106, 107, 102 N.J. Law 85) or not necessary for the decision (Du Bell v. Union Central Life Ins.
Co., 29, So. 2d 709, 712; 211 La. 167).
4.
ID.; ID.; ID.; RESOLUTION OF THE ULTIMATE ISSUES, NOT AN OBITER. The
ruling of the Court, therefore, on the Constitutional issues presented, particularly, the lapse of
the period mandated by Proclamation No. 3, and the validity of EO 127, cannot be said to be
mere "obiter." They were ultimate issues directly before the Court, expressly decided in the
course of the consideration of the case, so that any resolution thereon must be considered as
authoritative precedent, and not a mere dictum (See Valli v. US, 94 F.2d 687 certiorari granted
58 S. Ct. 760, 303 U.S. 82 L. Ed. 1092; See also Weedin v. Tayokichi Yamada 4 F. (2d) 455).
Such resolution would not lose its value as a precedent just because the disposition of the case
was also made on some other ground.
5.
ADMINISTRATIVE LAW; EXECUTIVE ORDER NO. 127; SEPARATION FROM
OFFICE; RIGHT TO BE INFORMED OF GROUND OF SEPARATION UNDER EXECUTIVE
ORDER NO. 17, DISPENSED WITH. The right granted by EO 17 to an employee to be
informed of the ground for his separation must be deemed to have been revoked by the
repealing clause of EO 127 (Section 67) providing that "all laws, ordinances or parts thereof,
which are inconsistent with this Executive Order, are hereby repealed and modified accordingly."
6.
ID.; CIVIL SERVICE ACT; REMOVAL FROM CAREER SERVICE; TYPES OF
REORGANIZATION. The standards laid down are the "traditional" criteria for removal of
employees from the career service, e.g. valid cause, due notice and hearing, abolition of, or

7.
ID.; ID.; ID.; RIGHTS AVAILABLE TO A REORGANIZED EMPLOYEE. A
reorganized employee is not without rights. His right lies in his past services, the entitlement to
which must be provided for by law. EO 127 provides for the same in its Section 59, and so does
SECTION 16 when the latter specified that career civil service employees separated from the
service not for cause: "shall be entitled to appropriate separation pay and to retirement and other
benefits accruing to them under the laws of general application in force at the time of their
separation. In lieu thereof, at the option of the employees, they may be considered for
employment in the Government or in any of its subdivisions, instrumentalities, or agencies,
including government-owned or controlled corporations and their subsidiaries. This provision
also applies to career officers whose resignation, tendered in line with the existing policy, has
been accepted."
8.
ID.; ID.; RIGHT TO AN OFFICE OR EMPLOYMENT WITH GOVERNMENT, NOT A
VESTED RIGHT. The right to an office or to employment with government or any of its
agencies is not a vested property right, and removal therefrom will not support the question of
due process" (Yantsin v. Aberdeen, 54 Wash 2d 787, 345 P 2d 178). A civil service employee
does not have a constitutionally protected right to his position, which position is in the nature of a
public office, political in character and held by way of grant or privilege extended by government;
generally he has been held to have no property right or vested interest to which due process
guaranties extend (See Taylor v. Beckham 178 U. S. 548, 44 L Ed. 1187; Angilly v. US (CA2
NY) 199 F 2d 642; People ex. rel. Baker v. Wilson, 39 III App 2d 443, 189 NE 2d 1; Kelliheller v.
NY State Civil Service Com., 21 Misc 2d 1034, 194 NYS 2d 89).
DECISION
SARMIENTO, J p:
The Court writes finis to this controversy that has raged bitterly for the past several months. It
does so out of a legitimate presentiment of more suits reaching it as a consequence of the
government reorganization and the instability it has wrought on the performance and efficiency
of the bureaucracy. The Court is apprehensive that unless the final word is given and the ground
rules are settled, the issue will fester, and likely foment a constitutional crisis for the nation, itself
beset with grave and serious problems. Cdpr
The facts are not in dispute.
On March 25, 1986, President Corazon Aquino promulgated Proclamation No. 3, "DECLARING
A NATIONAL POLICY TO IMPLEMENT THE REFORMS MANDATED BY THE PEOPLE,
PROTECTING THEIR BASIC RIGHTS, ADOPTING A PROVISIONAL CONSTITUTION, AND
PROVIDING FOR AN ORDERLY TRANSITION TO A GOVERNMENT UNDER A NEW
CONSTITUTION. Among other things, Proclamation No. 3 provided:
SECTION 1. . . .

The President shall give priority to measures to achieve the mandate of the people to:
(a) Completely reorganize the government, eradicate unjust and oppressive structures, and all
iniquitous vestiges of the previous regime; 1
Pursuant thereto, it was also provided:
SECTION 1.
In the reorganization of the government, priority shall be given to measures
to promote economy, efficiency, and the eradication of graft and corruption.
SECTION 2.
All elective and appointive officials and employees under the 1973
Constitution shall continue in office until otherwise provided by proclamation or executive order
or upon the appointment and qualification of the successors, if such is made within a period of
one year from February 25, 1986.
SECTION 3.
Any public officer or employee separated from the service as a result of the
organization effected under this Proclamation shall, if entitled under the laws then in force,
receive the retirement and other benefits accruing thereunder.
SECTION 4.
The records, equipment, buildings, facilities and other properties of all
government offices shall be carefully preserved. In case any office or body is abolished or
reorganized pursuant to this Proclamation, its funds and properties shall be transferred to the
office or body to which its powers, functions and responsibilities substantially pertain. 2
Actually, the reorganization process started as early as February 25, 1986, when the President,
in her first act in office, called upon "all appointive public officials to submit their courtesy
resignation(s) beginning with the members of the Supreme Court." 3 Later on, she abolished the
Batasang Pambansa 4 and the positions of Prime Minister and Cabinet 5 under the 1973
Constitution.

4)
Misuse of public office for partisan political purposes; 5) Any other analogous ground
showing that the incumbent is unfit to remain in the service or his separation/replacement is in
the interest of the service. 8
On January 30, 1987, the President promulgated Executive Order No. 127, "REORGANIZING
THE MINISTRY OF FINANCE". 9 Among other offices, Executive Order No. 127 provided for
the reorganization of the Bureau of Customs 10 and prescribed a new staffing pattern therefor.
Three days later, on February 2, 1987, 11 the Filipino people adopted the new Constitution.
On January 6, 1988, incumbent Commissioner of Customs Salvador Mison issued a
Memorandum, in the nature of "Guidelines on the Implementation of Reorganization Executive
Orders," 12 prescribing the procedure in personnel placement. It also provided:
1.
By February 28, 1988, all employees covered by Executive Order 127 and the grace
period extended to the Bureau of Customs by the President of the Philippines on reorganization
shall be:
a)

informed of their re-appointment, or

b)

offered another position in the same department or agency, or

c)

informed of their termination. 13

On the same date, Commissioner Mison constituted a Reorganization Appeals Board charged
with adjudicating appeals from removals under the above Memorandum. 14 On January 26,
1988, Commissioner Mison addressed several notices to various Customs officials, in the tenor
as follows:
Sir:

Since then, the President has issued a number of executive orders and directives reorganizing
various other government offices, a number of which, with respect to elected local officials, has
been challenged in this Court, 6 and two of which, with respect to appointed functionaries, have
likewise been questioned herein. 7
On May 28, 1986, the President enacted Executive Order No. 17, "PRESCRIBING RULES AND
REGULATIONS FOR THE IMPLEMENTATION OF SECTION 2, ARTICLE III OF THE
FREEDOM CONSTITUTION." Executive Order No. 17 recognized the "unnecessary anxiety and
demoralization among the deserving officials and employees" the ongoing government
reorganization had generated, and prescribed as "grounds for the separation/replacement of
personnel," the following:
SECTION 3.

The following shall be the grounds for separation/replacement of personnel:

1)
Existence of a case for summary dismissal pursuant to Section 40 of the Civil Service
Law; cdphil

Please be informed that the Bureau is now in the process of implementing the Reorganization
Program under Executive Order No. 127.
Pursuant to Section 59 of the same Executive Order, all officers and employees of the
Department of Finance, or the Bureau of Customs in particular, shall continue to perform their
respective duties and responsibilities in a hold-over capacity, and that those incumbents whose
positions are not carried in the new reorganization pattern, or who are not re-appointed, shall be
deemed separated from the service. LibLex
In this connection, we regret to inform you that your services are hereby terminated as of
February 28, 1988. Subject to the normal clearances, you may receive the retirement benefits to
which you may be entitled under existing laws, rules and regulations.
In the meantime, your name will be included in the consolidated list compiled by the Civil Service
Commission so that you may be given priority for future employment with the Government as the
need arises.

2)
Existence of a probable cause for violation of the Anti-Graft and Corrupt Practices Act
as determined by the Ministry Head concerned;

Sincerely yours,

3)

(Sgd) SALVADOR M. MISON

Gross incompetence or inefficiency in the discharge of functions;

Commissioner 15

25.

ESTER TAN

54.

AQUINO, PASCASIO E. L.

As far as the records will yield, the following were recipients of these notices:

26.

PEDRO BAKAL

55.

ARABE, MELINDA M.

LEONCIA CATRE

27.

ROSARIO DAVID

56.

ARCANGEL, AGUSTIN S., JR.

1.

CESAR DARIO

30.

2.

VICENTE FERIA, JR.

31.

ROBERTO ABADA

28.

RODOLFO AFUANG

58.

3.

ADOLFO CASARENO

32.

ABACA SISINIO T.

29.

LORENZO CATRE 59.

ARROJO, ANTONIO P.

4.

PACIFICO LAGLEVA

33.

ABAD, ROGELIO C.

60.

ARVISU, ALEXANDER S.

107.

DE GUZMAN, ANTONIO A.

5.

JULIAN C. ESPIRITU

34.

ABADIANO, JOSE P.

61.

ASCAO, ANTONIO T.

108.

DE GUZMAN, RENATO E.

6.

DENNIS A. AZARRAGA

35.

ABCEDE, NEMECIO C.

62.

ASLAHON, JULAHON P.

109.

GAN, ALBERTO R.

7.

RENATO DE JESUS

36.

ABIOG, ELY F.

63.

ASUNCION, VICTOR.

110.

DELA CRUZ, FRANCISCO C.

8.

NICASIO C. GAMBOA

37.

ABLAZA, AURORA M.

64.

ATANGAN, LORNA S.

111.

DE LA PEA, LEONARDO

9.

CORAZON RALLOS NIEVES 38.

AGBAYANI, NELSON I.

65.

ATIENZA, ALEXANDER.

112.

DEL CAMPO, ORLANDO

10.

FELICITACION R. GELUZ

AGRES, ANICETO.

66.

BACAL, URSULINO C.

113.

DEL RIO, MAMERTO P., JR.

11.

LEODEGARIO H. FLORESCA

40.

67.

BAAGA, MARLOWE Z.

114.

DE MESA, WILHELMINA T.

12.

SUBAER PACASUM

41.

AGUILUCHO, MA. TERESA R.

68.

BANTA, ALBERTO T.

115.

DIMAKUTA, SALIC L.

13.

ZENAIDA LANARIA 42.

AGUSTIN, BONIFACIO T.

69.

BARROS, VICTOR C.

116.

DIZON, FELICITAS A.

14.

JOSE B. ORTIZ

ALANO, ALEX P.

70.

BARTOLOME, FELIPE A.

117.

DOCTOR, HEIDY M.

15.

GLICERIO R. DOLAR

44.

71.

BAYSAC, REYNALDO S.

118.

DOMINGO, NICANOR J.

16.

CORNELIO NAPA 45.

ALBANO ROBERT B.

72.

BELENO, ANTONIO B.

119.

DOMINGO, PERFECTO V., JR.

17.

PABLO B. SANTOS 46.

ALCANTARA, JOSE G.

73.

BERNARDO, ROMEO D.

120.

DUAY, JUANA G.

18.

FERMIN RODRIGUEZ

47.

ALMARIO, RODOLFO F.

74.

BERNAS, MARCIANO S.

121.

DYSANGCO, RENATO F.

19.

DALISAY BAUTISTA

48.

ALVEZ, ROMUALDO R.

75.

BOHOL, AUXILIADOR G.

122.

EDILLOR, ALFREDO P.

20.

LEONARDO JOSE 49.

AMISTAD, RUDY M.

76.

BRAVO, VICTOR M.

123.

ELEVAZO, LEONARDO A.

21.

ALBERTO LONTOK

50.

77.

BULEG, BALILIS R. 124.

ESCUYOS, MANUEL M., JR.

22.

PORFIRIO TABINO 51.

ANDRES, RODRIGO V.

78.

CALNEA, MERCEDES M.

125.

ESMERIA, ANTONIO E.

23.

JOSE BARREDO

ANGELES, RICARDO S.

79.

CALVO, HONESTO G.

126.

ESPALDON, MA. LOURDES H.

24.

ROBERTO ARNALDO

53.

80.

CAMACHO, CARLOS V.

127.

ESPINA, FRANCO A.

43.

52.

39.

AGUILAR, FLOR

ALBA, MAXIMO F. JR.

AMOS, FRANCIS F.

ANOLIN, MILAGROS H.

ARREZA, ARTEMIO M., JR.

81.

CAMPOS, RODOLFO C.

128.

ESTURCO, RODOLFO C.

154.

HULAR, LANNYROSS E.

201.

82.

CAPULONG, RODRIGO G.

129.

EVANGELINO, FERMIN I.

155.

IBAEZ, ESTER C. 202.

MATUGAS, FRANCISCO T.

83.

CARINGAL, GRACIA Z.

130.

FELIX, ERNESTO G.

156.

ILAGAN, HONORATO C.

203.

MAYUGA, PORTIA E.

84.

CARLOS, LORENZO B.

131.

FERNANDEZ, ANDREW M.

157.

INFANTE, REYNALDO C.

204.

MEDINA, NESTOR M.

85.

CARRANTO, FIDEL U.

132.

FERRAREN, ANTONIO C.

158.

ISAIS, RAY C.

MEDINA, ROLANDO S.

CARUNGCONG, ALFREDO M.

133.

159.

ISMAEL, HADJI AKRAM B.

206.

MENDAVIA AVELINO I.

160.

JANOLO, VIRGILIO M.

207.

MENDOZA, POTENCIANO G.

87.

CASTRO, PATRICIA J.

134.

FRANCISCO, PELAGIO S., JR.

161.

JAVIER, AMADOR L.

208.

MIL, RAY M.

88.

CATELO, ROGELIO B.

135.

FUENTES, RUDY L.
162.

JAVIER, ROBERTO S.

209.

MIRAVALLES, ANASTACIA L.

89.

CATURLA, MANUEL B.

136.

GAGALANG, RENATO V.
163.

JAVIER, WILLIAM R.

210.

MONFORTE, EUGENIO, JR. G.

90.

CENIZAL, JOSEFINA F.

137.

GALANG, EDGARDO R.
164.

JOVEN, MEMIA A. 211.

MONTANO, ERNESTO F.

91.

CINCO, LUISITO

GAMBOA, ANTONIO C.
165.

JULIAN, REYNALDO V.

212.

MONTERO, JUAN M. III

92.

CONDE, JOSE C., JR.

139.

GAN, ALBERTO R.
166.

JUMAMOY, ABUNDIO A.

213.

MORALDE, ESMERALDO B., JR.

93.

CORCUERA, FIDEL S.

140.

GARCIA, GILBERT M.
167.

JUMAQUIAO, DOMINGO F. 214.

MORALES, CONCHITA D.L.

94.

CORNETA, VICENTE S.

141.

GARCIA, EDNA V.
163.

KAINDOY, PASCUAL B., JR. 215.

MORALES, NESTOR P.

95.

CORONADO, RICARDO S.

142.

GARCIA, JUAN L.
169.

KOH, NANIE G.

98.

CRUZ, EDUARDO S.

143.

GAVIOLA, LILIAN V.
170.

LABILLES, ERNESTO S.

97.

CRUZ, EDILBERTO A

144.

GEMPARO, SEGUNDINA G.
171.

LABRADOR, WILFREDO M. 213.

MUOZ, VICENTE R.

98.

CRUZ, EFIGENIA B.

145.

GOBENCIONG, FLORDELIZ B.
172.

LAGA, BIENVENIDO M.

MURILLO, MANUEL M.

99.

CRUZADO, MARCIAL C.

146.

GRATE, FREDERICK R.
173.

LAGMAN, EVANGELINE G. 220.

NACION, PEDRO R.

100.

CUSTUDIO, RODOLFO M.

147.

GREGORIO, LAURO P.
174.

LAMPONG, WILFREDO G.

NAGAL, HENRY N.

101.

DABON, NORMA M.

148.

GUARTICO, AMMON H.
175.

LANDICHO, RESTITUTO A. 222:

NAVARRO, HENRY L.

102.

DALINDIN, EDNA MAE D.

149.

GUIANG, MYRNA N.
176.

LAPITAN, CAMILO M.

NEJAL, FREDRICK E.

103.

DANDAL, EDEN F. 150.

GUINTO, DELFIN C.
177.

LAURENTE, REYNALDO A. 224.

NICOLAS, REYNALDO S.

104.

DATUHARON, SATA A.

151.

HERNANDEZ, LUCAS A.
178.

LICARTE, EVARISTO R.

225.

NIEVES, RUFINO A.

105.

DAZO, GODOFREDO L.

152.

HONRALES, LORETO N.
179.

LIPIO, VICTOR O. 226.

OLAIVAR, SEBASTIAN T.

106.

DE CASTRO, LEOPAPA

153.

HUERTO, LEOPOLDO H.

86.
WENCESLAO A.

138.

FERRERA,

205.

216.

MATUGAS, ERNESTO T.

MORALES, SHIRLEY S.
217.

219.

221.

223.

MUNAR, JUANITA L.

180.

LITTAUA, FRANKLIN Z.

227.

OLEGARIO, LEO Q.

258.

REYES, NORMA Z. 285.

VELARDE, EDGARDO C.

181.

LOPEZ, MELENCIO L.

228.

ORTEGA ARLENE R.

254.

REYES, TELESFORO F.

286.

VERA, AVELINO A.

182.

LUMBA OLIVIA R. 229.

ORTEGA, JESUS R.

255.

RIVERA, ROSITA L.

287.

VERAME, OSCAR E.

183.

MACAISA BENITO T.

230.

OSORIO, ABNER S.

256.

ROCES, ROBERTO V.

288.

VIADO, LILLIAN T.

184.

MACAISA ERLINDA C.

231.

PAPIO, FLORENTINO T. II

257.

ROQUE, TERESITA S.

289.

VIERNES, NAPOLEON K.

135.

MAGAT, ELPIDIO 232.

PASCUA, ARNULFO A.

258.

ROSANES, MARILOU M.

290.

VILLALON, DENNIS A.

136.

MAGLAYA, FERNANDO P.

233.

PASTOR, ROSARIO

259.

ROSETE, ADAN I. 291.

VILLAR, LUZ L.

137.

MALIBIRAN, ALFREDO C.

234.

PELAYO, ROSARIO L.

260.

RUANTO, REY CRISTO C., JR.

292.

138.

MALIBIRAN, ROSITA D.

235.

PEA, AIDA C.

261.

SABLADA, PASCASIO G.

293.

ZATA, ANGEL A, JR.

189.

MALIJAN, LAZARO V.

236.

PEREZ, ESPERIDION B.

262.

SALAZAR, SILVERIA S.

294.

ACHARON, CRISTETO

190.

MALLI, JAVIER M. 237.

PEREZ, JESUS BAYANI M.

263.

SALAZAR, VICTORIA A.

295.

ALBA, RENATO B.

191.

MANAHAN, RAMON S.

233.

PEREZ, ISIDRO A.

264.

SALIMBACOD, PERLITA C. 296.

AMON, JULITA C.

192.

MANUEL, ELPIDIO R.

239.

PRUDENCIADO, EULOGIA S.

265.

SALMINGO, LOURDES M.

297.

AUSTRIA, ERNESTO C.

193.

MARAVILLIA, GIL B.

240.

PUNZALAN, LAMBERTO N.

266.

SANTIAGO, EMELITA B.

293.

CALO, RAYMUNDO M.

194.

MARCELO, GIL C. 241.

PURA, ARNOLD T.

267.

SATINA, PORFIRIO C.

299.

CENTENO, BENJAMIN R.

195.

MARIAS, RODOLFO V.

242.

QUINONES, EDGARDO I.

268.

SEKITO, COSME B., JR.

300.

DONATO, ESTELITA P.

196.

MAROKET, JESUS C.

243.

QUINTOS, AMADEO C., JR.

269.

SIMON, RAMON P. 301.

DONATO, FELIPE S.

197.

MARTIN, NEMENCIO A.

244.

QUIRAY, NICOLAS C.

270.

SINGSON, MELECIO C.

302.

FLORES, PEDRITO S.

198.

MARTINEZ, ROMEO M.

245.

RAMIREZ, ROBERTO P.

271.

SORIANO, ANGELO L.

303.

GALAROSA, RENATO

199.

MARTINEZ, ROSELINA M.

246.

RANADA, RODRIGO C.

272.

SORIANO, MAGDALENA R. 304.

MALAWI, MAUYAG

200.

MATIBAG, ANGELINA G.

247.

RARAS, ANTONIO A.

SUMULONG, ISIDORO L., JR.

305.

248.

RAVAL, VIOLETA V.

280.

TOLENTINO, BENIGNO A.
274.

SUNICO, ABELARDO T.

306.

OMEGA, PETRONILO T.

249.

RAZAL, BETTY R. 281.

TURINGAN, ENRICO T., JR.

275.

TABIJE, EMMA B. 307.

SANTOS, GUILLERMO F.

250.

REGALA, PONCE F.

282.

UMPA, ALI A.
276.

TAN, RUDY GOROSPE

308.

251.

REYES, LIBERATO R.

283.

VALIC, LUCIO E.
277.

TAN, ESTER S.

309.

VALDERAMA, JAIME B.

252.

REYES, MANUEL E.

284.

VASQUEZ, NICANOR B.
273.

TAN, JULITA S.

310.

VALDEZ, NORA M.

273.
FRANCISCO M.

VILLALUZ, EMELITO V.

MONTENEGRO,

TEMPLO, CELSO

279.

TECSON, BEATRIZ B.

Cesar Dario is the petitioner in G.R. No. 81954; Vicente Feria, Jr., is the petitioner in G.R. No.
81967; Messrs. Adolfo Caserano, Pacifico Lagleva, Julian C. Espiritu, Dennis A. Azarraga,
Renato de Jesus, Nicasio C. Gamboa, Mesdames Corazon Rallos Nieves and Felicitacion R.
Geluz, Messrs. Leodegario H. Floresca, Subaer Pacasum, Ms. Zenaida Lanaria, Mr. Jose B.
Ortiz, Ms. Gliceria R. Dolar, Ms. Cornelia Napa, Pablo B. Santos, Fermin Rodriguez, Ms. Dalisay
Bautista, Messrs. Leonardo Jose, Alberto Lontok, Porfirio Tabino, Jose Barredo, Roberto
Arnaldo, Ms. Ester Tan, Messrs. Pedro Bakal, Rosario David, Rodolfo Afuang, Lorenzo Catre,
Ms. Leoncia Catre, and Roberto Abada, are the petitioners in G.R. No. 82023; the last 279 16
individuals mentioned are the private respondents in G.R. No. 85310. prcd
As far as the records will likewise reveal, 17 a total of 394 officials and employees of the Bureau
of Customs were given individual notices of separation. A number supposedly sought
reinstatement with the Reorganization Appeals Board while others went to the Civil Service
Commission. The first thirty one mentioned above came directly to this Court.
On June 30, 1988, the Civil Service Commission promulgated its ruling ordering the
reinstatement of the 279 employees, the 279 private respondents in G.R. No. 85310, the
dispositive portion of which reads as follows:

WHEREFORE, it is hereby ordered that:

1.
Appellants be immediately reappointed to positions of comparable or equivalent rank
in the Bureau of Customs without loss of seniority rights; and
2.
Appellants be paid their back salaries to be reckoned from the date of their illegal
termination based on the rates under the approved new staffing pattern but not lower than their
former salaries.
This action of the Commission should not, however, be interpreted as an exoneration of the
herein appellants from any accusation of any wrongdoing and therefore, their reappointments
are without prejudice to:
1.
Proceeding with investigation of appellants with pending administrative cases, if any,
and where investigations have been finished, to promptly, render the appropriate decisions; and
2.
The filing of appropriate administrative complaints against appellant with derogatory
reports or information, if any, and if evidence so warrants.
SO ORDERED. 20

1.
Appellants be immediately reappointed to positions of comparable or equivalent rank
in the Bureau of Customs without loss of seniority rights;

On January 6, 1989, Commissioner Mison challenged the Civil Service Commission's Resolution
in this Court; his petition has been docketed herein as G.R. No. 86241. The employees ordered
to be reinstated are Senen Dimaguila, Romeo Arabe, Bernardo Quintong, Gregorio Reyes, and
Romulo Badillo. 21

2.
Appellants be paid their back salaries reckoned from the dates of their illegal
termination based on the rates under the approved new staffing pattern but not lower than their
former salaries.

On June 10, 1988, Republic Act No. 6656, "AN ACT TO PROTECT THE SECURITY OF
TENURE OF CIVIL SERVICE OFFICERS AND EMPLOYEES IN THE IMPLEMENTATION OF
GOVERNMENT REORGANIZATION," 22 was signed into law. Under Section 9, thereof:

This action of the Commission should not, however, be interpreted as an exoneration of the
appellants from any accusation of wrongdoing and, therefore, their reappointments are without
prejudice to:

Sec. 9. All officers and employees who are found by the Civil Service Commission to have
been separated in violation of the provisions of this Act, shall be ordered reinstated or
reappointed as the case may be without loss of seniority and shall be entitled to full pay for the
period of separation. Unless also separated for cause, all officers and employees, including
casuals and temporary employees, who have been separated pursuant to reorganization shall, if
entitled thereto, be paid the appropriate separation pay and retirement and other benefits under
existing laws within ninety (90) days from the date of the effectivity of their separation or from the
date of the receipt of the resolution of their appeals as the case may be: Provided, That
application for clearance has been filed and no action thereon has been made by the
corresponding department or agency. Those who are not entitled to said benefits shall be paid a
separation gratuity in the amount equivalent to one (1) month salary for every year of service.
Such separation pay and retirement benefits shall have priority of payment out of the savings of
the department or agency concerned. 23

WHEREFORE, it is hereby ordered that:

1.
Proceeding with investigation of appellants with pending administrative cases, and
where investigations have been finished, to promptly render the appropriate decisions; cdrep
2.
The filing of appropriate administrative complaints against appellants with derogatory
reports or information if evidence so warrants.
SO ORDERED. 18
On July 15, 1988, Commissioner Mison, represented by the Solicitor General, filed a motion for
reconsideration. Acting on the motion, the Civil Service Commission, on September 20, 1988,
denied reconsideration. 19
On October 20, 1988, Commissioner Mison instituted certiorari proceedings with this Court,
docketed, as above-stated, as G.R. No. 85310 of this Court.

On June 23, 1988, Benedicto Amasa and William Dionisio, customs examiners appointed by
Commissioner Mison pursuant to the ostensible reorganization subject of this controversy,
petitioned the Court to contest the validity of the statute. The petition is docketed as G.R. No.
83737.

On November 16, 1988, the Civil Service Commission further disposed the appeal (from the
resolution of the Reorganization Appeals Board) of five more employees, holding as follows:

On October 21, 1988, thirty-five more Customs officials whom the Civil Service Commission had
ordered reinstated by its June 30, 1988 Resolution filed their own petition to compel the

Commissioner of Customs to comply with the said Resolution. The petition is docketed as G.R.
No. 85335. llcd
On November 29, 1988, we resolved to consolidate all seven petitions.
On the same date, we resolved to set the matter for hearing on January 12, 1989. At the said
hearing, the parties, represented by their counsels (a) retired Justice Ruperto Martin; (b) retired
Justice Lino Patajo; (c) former Dean Froilan Bacungan; (d) Atty. Lester Escobar; (e) Atty.
Faustino Tugade; and (f) Atty. Alexander Padilla, presented their arguments. Solicitor General
Francisco Chavez argued on behalf of the Commissioner of Customs (except in G.R. 85335, in
which he represented the Bureau of Customs and the Civil Service Commission). Former
Senator Ambrosio Padilla also appeared and argued as amicus curiae. Thereafter, we resolved
to require the parties to submit their respective memoranda which they did in due time.
There is no question that the administration may validly carry out a government reorganization
insofar as these cases are concerned, the reorganization of the Bureau of Customs by
mandate not only of the Provisional Constitution, supra, but also of the various Executive Orders
decreed by the Chief Executive in her capacity as sole lawmaking authority under the 1986-1987
revolutionary government. It should also be noted that under the present Constitution, there is a
recognition, albeit implied, that a government reorganization may be legitimately undertaken,
subject to certain conditions. 24
The Court understands that the parties are agreed on the validity of a reorganization per se, the
only question being, as shall be later seen: What is the nature and extent of this government
reorganization?
The Court disregards the questions raised as to procedure, failure to exhaust administrative
remedies, the standing of certain parties to sue, 25 and other technical objections, for two
reasons, "[b]ecause of the demands of public interest, including the need for stability in the
public service," 26 and because of the serious implications of these cases on the administration
of the Philippine civil service and the rights of public servants.
The urgings in G.R. Nos. 85335 and 85310, that the Civil Service Commission's Resolution
dated June 30, 1988 had attained a character of finality for failure of Commissioner Mison to
apply for judicial review or ask for reconsideration seasonably under Presidential Decree No.
807, 27 or under Republic Act No. 6656, 28 or under the Constitution, 29 are likewise rejected.
The records show that the Bureau of Customs had until July 15, 1988 to ask for reconsideration
or come to this Court pursuant to Section 39 of Presidential Decree No. 807. The records
likewise show that the Solicitor General filed a motion for reconsideration on July 15, 1988. 30
The Civil Service Commission issued its Resolution denying reconsideration on September 20,
1988; a copy of this Resolution was received by the Bureau on September 23, 1988. 31 Hence
the Bureau had until October 23, 1988 to elevate the matter on certiorari to this Court. 32 Since
the Bureau's petition was filed on October 20, 1988, it was filed on time.
We reject, finally, contentions that the Bureau's petition (in G.R. 85310) raises no jurisdictional
questions, and is therefore bereft of any basis as a petition for certiorari under Rule 65 of the
Rules of Court. 33 We find that the questions raised in Commissioner Mison's petition (in G.R.
85310) are, indeed, proper for certiorari, if by 'jurisdictional questions" we mean questions
having to do with "an indifferent disregard of the law, arbitrariness and caprice, or omission to
weigh pertinent considerations, a decision arrived at without rational deliberation," 34 as
distinguished from questions that require "digging into the merits and unearthing errors of

judgment" 35 which is the office, on the other hand, of review under Rule 45 of the said Rules.
What cannot be denied is the fact that the act of the Civil Service Commission of reinstating
hundreds of Customs employees Commissioner Mison had separated, has implications not only
on the entire reorganization process decreed no less than by the Provisional Constitution, but on
the Philippine bureaucracy in general; these implications are of such a magnitude that it cannot
be said that assuming that the Civil Service Commission erred the Commission committed
a plain "error of judgment" that Aratuc says cannot be corrected by the extraordinary remedy of
certiorari or any special civil action. We reaffirm the teaching of Aratuc as regards recourse to
this Court with respect to rulings of the Civil Service Commission which is that judgments of
the Commission may be brought to the Supreme Court through certiorari alone, under Rule 65 of
the Rules of Court.
In Aratuc, we declared:
It is once evident from these constitutional and statutory modifications that there is a definite
tendency to enhance and invigorate the role of the Commission on Elections as the independent
constitutional body charged with the safeguarding of free, peaceful and honest elections. The
framers of the new Constitution must be presumed to have definite knowledge of what it means
to make the decisions, orders and rulings of the Commission "subject to review by the Supreme
Court". And since instead of maintaining that provision intact, it ordained that the Commission's
actuations be instead "brought to the Supreme Court on certiorari', We cannot insist that there
was no intent to change the nature of the remedy, considering that the limited scope of certiorari,
compared to a review, is well known in remedial law. 36
We observe no fundamental difference between the Commission on Elections and the Civil
Service Commission (or the Commission on Audit for that matter) in terms of the constitutional
intent to leave the constitutional bodies alone in the enforcement of laws relative to elections,
with respect to the former, and the civil service, with respect to the latter (or the audit of
government accounts, with respect to the Commission on Audit). As the poll body is the "sole
judge" 37 of all election cases, so is the Civil Service Commission the single arbiter of all 5
controversies pertaining to the civil service.
It should also be noted that under the new Constitution, as under the 1973 Charter, "any
decision, order, or ruling of each Commission may be brought to the Supreme Court on
certiorari," 38 which, as Aratuc tells us, "technically connotes something less than saying that
the same 'shall be subject to review by the Supreme Court,'" 39 which in turn suggests an
appeal by petition for review under Rule 45. Therefore, our jurisdiction over cases emanating
from the Civil Service Commission is limited to complaints of lack or excess of jurisdiction or
grave abuse of discretion tantamount to lack or excess of jurisdiction, complaints that justify
certiorari under Rule 65. cdtai
While Republic Act No. 6656 states that judgments of the Commission are "final and executory"
40 and hence, unappealable, under Rule 65, certiorari precisely lies in the absence of an
appeal. 41
Accordingly, we accept Commissioner Mison's petition (G.R. No. 85310) which clearly charges
the Civil Service Commission with grave abuse of discretion, a proper subject of certiorari,
although it may not have so stated in explicit terms.
As to charges that the said petition has been filed out of time, we reiterate that it has been filed
seasonably. It is to be stressed that the Solicitor General had thirty days from September 23,

1988 (the date the Resolution, dated September 20, 1988, of the Civil Service Commission,
denying reconsideration, was received) to commence the instant certiorari proceedings. As we
stated, under the Constitution, an aggrieved party has thirty days within which to challenge "any
decision, order, or ruling" 42 of the Commission. To say that the period should be counted from
the Solicitor's receipt of the main Resolution, dated June 30, 1988, is to say that he should not
have asked for reconsideration. But to say that is to deny him the right to contest (by a motion
for reconsideration) any ruling, other than the main decision, when, precisely, the Constitution
gives him such a right. That is also to place him at a "no-win" situation because if he did not
move for a reconsideration, he would have been faulted for demanding certiorari too early, under
the general rule that a motion for reconsideration should preface a resort to a special civil action.
43 Hence, we must reckon the thirty-day period from receipt of the order of denial. cdasia
We come to the merits of these cases.
G.R. Nos. 81954, 81967, 82023, and 85335:
The Case for the Employees
The petitioner in G.R. No. 81954, Cesar Dario, was one of the Deputy Commissioners of the
Bureau of Customs until his relief on orders of Commissioner Mison on January 26, 1988. In
essence, he questions the legality of his dismissal, which he alleges was upon the authority of
Section 59 of Executive Order No. 127, supra, hereinbelow reproduced as follows:
SEC. 59. New Structure and Pattern. Upon approval of this Executive Order, the officers and
employees of the Ministry shall, in a holdover capacity, continue to perform their respective
duties and responsibilities and receive the corresponding salaries and benefits unless in the
meantime they are separated from government service pursuant to Executive Order No. 17
(1986) or Article III of the Freedom Constitution.
The new position structure and staffing pattern of the Ministry shall be approved and prescribed
by the Minister within one hundred twenty (120) days from the approval of this Executive Order
and the authorized positions created hereunder shall be filled with regular appointments by him
or by the President, as the case may be. Those incumbents whose positions are not included
therein or who are not reappointed shall be deemed separated from the service. Those
separated from the service shall receive the retirement benefits to which they may be entitled
under existing laws, rules and regulations. Otherwise, they shall be paid the equivalent of one
month basic salary for every year of service, or the equivalent nearest fraction thereof favorable
to them on the basis of highest salary received but in no case shall such payment exceed the
equivalent of 12 months salary.
No court or administrative body shall issue any writ of preliminary injunction or restraining order
to enjoin the separation/replacement of any officer or employee effected under this Executive
Order. 44
a provision he claims the Commissioner could not have legally invoked. He avers that he could
not have been legally deemed to be an "[incumbent] whose [position] [is] not included therein or
who [is] not reappointed" 45 to justify his separation from the service. He contends that neither
the Executive Order (under the second paragraph of the section) nor the staffing pattern
proposed by the Secretary of Finance 46 abolished the office of Deputy Commissioner of
Customs, but, rather, increased it to three. 47 Nor can it be said, so he further maintains, that he
had not been "reappointed" 48 (under the second paragraph of the section) because

"[r]eappointment therein presupposes that the position to which it refers is a new one in lieu of
that which has been abolished or although an existing one, has absorbed that which has been
abolished." 49 He claims, finally, that under the Provisional Constitution, the power to dismiss
public officials without cause ended on February 25, 1987, 50 and that thereafter, public officials
enjoyed security of tenure under the provisions of the 1987 Constitution. 51
Like Dario, Vicente Feria, the petitioner in G.R. No. 81967, was a Deputy Commissioner at the
Bureau until his separation directed by Commissioner Mison. And like Dario, he claims that
under the 1987 Constitution, he has acquired security of tenure and that he cannot be said to be
covered by Section 59 of Executive Order No. 127, having been appointed on April 22, 1986
during the effectivity of the Provisional Constitution. He adds that under Executive Order No. 39,
"ENLARGING THE POWERS AND FUNCTIONS OF THE COMMISSIONER OF CUSTOMS,"
52 the Commissioner of Customs has the power "[t]o appoint all Bureau personnel, except those
appointed by the President," 53 and that his position, which is that of a Presidential appointee, is
beyond the control of Commissioner Mison for purposes of reorganization.
The petitioners in G.R. No. 82023, collectors and examiners in various ports of the Philippines,
say, on the other hand, that the purpose of reorganization is to end corruption at the Bureau of
Customs and that since there is no finding that they are guilty of corruption, they cannot be
validly dismissed from the service. LLphil
The Case for Commissioner Mison
In his comments, the Commissioner relies on this Court's resolution in Jose v. Arroyo, 54 in
which the following statement appears in the last paragraph thereof:
The contention of petitioner that Executive Order No. 127 is violative of the provision of the 1987
Constitution guaranteeing career civil service employees security of tenure overlooks the
provisions of Section 16, Article XVIII (Transitory Provisions) which explicitly authorize the
removal of career civil service employees "not for cause but as a result of the reorganization
pursuant to Proclamation No. 3 dated March 25, 1986 and the reorganization following the
ratification of this Constitution." By virtue of said provision, the reorganization of the Bureau of
Customs under Executive Order No. 127 may continue even after the ratification of the
Constitution, and career civil service employees may be separated from the service without
cause as a result of such reorganization. 55
For this reason, Mison posits, claims of violation of security of tenure are allegedly no defense.
He further states that the deadline prescribed by the Provisional Constitution (February 25,
1987) has been superseded by the 1987 Constitution, specifically, the transitory provisions
thereof, 56 which allows a reorganization thereafter (after February 25, 1987) as this very Court
has so declared in Jose v. Arroyo. Mison submits that contrary to the employees' argument,
Section 59 of Executive Order No. 127 is applicable (in particular, to Dario and Feria), in the
sense that retention in the Bureau, under the Executive Order, depends on either retention of the
position in the new staffing pattern or reappointment of the incumbent, and since the dismissed
employees had not been reappointed, they had been considered legally separated. Moreover,
Mison proffers that under Section 59 incumbents are considered on holdover status, "which
means that all those positions were considered vacant." 57 The Solicitor General denies the
applicability of Palma-Fernandez v. De la Paz 58 because that case supposedly involved a mere
transfer and not a separation. He rejects, finally the force and effect of Executive Order Nos. 17
and 39 for the reason that Executive Order No. 17, which was meant to implement the
Provisional Constitution, 59 had ceased to have force and effect upon the ratification of the 1987

Constitution, and that, under Executive Order No. 39, the dismissals contemplated were "for
cause" while the separations now under question were "not for cause and were a result of
government reorganization decreed by Executive Order No. 127. Anent Republic Act No. 6656,
he expresses doubts on the constitutionality of the grant of retroactivity therein (as regards the
reinforcement of security of tenure) since the new Constitution clearly allows reorganization after
its effectivity. dctai
G.R. Nos. 85310 and 86241
The Position of Commissioner Mison
Commissioner's twin petitions are direct challenges to three rulings of the Civil Service
Commission: (1) the Resolution, dated June 30, 1988, reinstating the 265 customs employees
above-stated; (2) the Resolution, dated September 20, 1988, denying reconsideration; and (3)
the Resolution, dated November 16, 1988, reinstating five employees. The Commissioner's
arguments are as follows:
1.
The ongoing government reorganization is in the nature of a "progressive" 60
reorganization "impelled by the need to overhaul the entire government bureaucracy" 61
following the people power revolution of 1986;
2.
There was faithful compliance by the Bureau of the various guidelines issued by the
President, in particular, as to deliberation, and selection of personnel for appointment under the
new staffing pattern;
3.
The separated employees have been, under Section 59 of Executive Order No. 127,
on mere holdover standing, "which means that all positions are declared vacant;" 62
4.
Jose v. Arroyo has declared the validity of Executive Order No. 127 under the
transitory provisions of the 1987 Constitution;
5.

Republic Act No. 6656 is of doubtful constitutionality.

The Ruling of the Civil Service Commission

The position of the Civil Service Commission is as follows:
1.
Reorganizations occur where there has been a reduction in personnel or redundancy
of functions; there is no showing that the reorganization in question has been carried out for
either purpose on the contrary, the dismissals now disputed were carried out by mere service
of notices;

The Court's Ruling

Reorganization, Fundamental Principles of .
I.
The core provision of law involved is Section 16 Article XVIII, of the 1987 Constitution. We
quote:
Sec. 16. Career civil service employees separated from the service not for cause but as a
result of the reorganization pursuant to Proclamation No. 3 dated March 25, 1986 and the
reorganization following the ratification of this Constitution shall be entitled to appropriate
separation pay and to retirement and other benefits accruing to them under the laws of general
application in force at the time of their separation. In lieu thereof, at the option of the employees,
they may be considered for employment in the Government or in any of its subdivisions,
instrumentalities, or agencies, including government-owned or controlled corporations and their
subsidiaries. This provision also applies to career officers whose resignation, tendered in line
with the existing policy, had been accepted. 63
The Court considers the above provision critical for two reasons: (1) It is the only provision
insofar as it mentions removals not for cause that would arguably support the challenged
dismissals by mere notice, and (2) It is the single existing law on reorganization after the
ratification of the 1987 Charter, except Republic Act No. 6656, which came much later, on June
10, 1988. [Nota bene: Executive Orders No. 116 (covering the Ministry of Agriculture & Food),
117 (Ministry of Education, Culture & Sports), 119 (Health), 120 (Tourism), 123 (Social Welfare
& Development), 124 (Public Works & Highways), 125 (Transportation & Communications), 126
(Labor & Employment), 127 (Finance), 128 (Science & Technology), 129 (Agrarian Reform), 131
(Natural Resources), 132 (Foreign Affairs), and 133 (Trade & Industry) were all promulgated on
January 30, 1987, prior to the adoption of the Constitution on February 2, 1987]. 64
It is also to be observed that unlike the grants of power to effect reorganizations under the past
Constitutions, the above provision comes as a mere recognition of the right of the Government
to reorganize its offices, bureaus, and instrumentalities. Under Section 4, Article XVI, of the 1935
Constitution:
Section 4. All officers and employees in the existing Government of the Philippine Islands shall
continue in office until the Congress shall provide otherwise, but all officers whose appointments
are by this Constitution vested in the President shall vacate their respective office(s) upon the
appointment and qualification of their successors, if such appointment is made within a period of
one year from the date of the inauguration of the Commonwealth of the Philippines. 65
Under Section 9, Article XVII, of the 1973 Charter:

2.
The current Customs reorganization has not been made according to Malacaang
guidelines; information on file with the Commission shows that Commissioner Mison has been
appointing unqualified personnel;
3.
Jose v. Arroyo, in validating Executive Order No. 127, did not countenance illegal
removals; LLjur

Section 9. All officials and employees in the existing Government of the Republic of the
Philippines shall continue in office until otherwise provided by law or decreed by the incumbent
President of the Philippines, but all officials whose appointments are by this Constitution vested
in the Prime Minister shall vacate their respective offices upon the appointment and qualification
of their successors. 66

4.

The Freedom Constitution is, as earlier seen, couched in similar language:

Republic Act No. 6656 protects security of tenure in the course of reorganizations.

SECTION 2.
All elective and appointive officials and employees under the 1973
Constitution shall continue in office until otherwise provided by proclamation or executive order
or upon the appointment and qualification of their successors, if such is made within a period of
one year from February 25, 1986. 67
Other than references to "reorganization following the ratification of this Constitution," there is no
provision for "automatic" vacancies under the 1987 Constitution.
Invariably, transition periods are characterized by provisions for "automatic" vacancies. They are
dictated by the need to hasten the passage from the old to the new Constitution free from the
"fetters" of due process and security of tenure. cdlex
At this point, we must distinguish removals from separations arising from abolition of office (not
by virtue of the Constitution) as a result of reorganization carried out by reason of economy or to
remove redundancy of functions. In the latter case, the Government is obliged to prove good
faith. 68 In case of removals undertaken to comply with clear and explicit constitutional
mandates, the Government is not hard put to prove anything, plainly and simply because the
Constitution allows it.
Evidently, the question is whether or not Section 16 of Article XVIII of the 1987 Constitution is a
grant of a license upon the Government to remove career public officials it could have validly
done under an "automatic"-vacancy-authority and to remove them without rhyme or reason.
As we have seen, since 1935, transition periods have been characterized by provisions for
"automatic" vacancies. We take the silence of the 1987 Constitution on this matter as a restraint
upon the Government to dismiss public servants at a moment's notice.
What is, indeed, apparent is the fact that if the present Charter envisioned an "automatic"
vacancy, it should have said so in clearer terms, as its 1935, 1973, and 1986 counterparts had
so stated.
The constitutional "lapse" means either one of two things: (1) The Constitution meant to continue
the reorganization under the prior Charter (of the Revolutionary Government), in the sense that
the latter provides for "automatic" vacancies, or (2) It meant to put a stop to those "automatic"
vacancies. By itself, however, it is ambiguous, referring as it does to two stages of
reorganization the first, to its conferment or authorization under Proclamation No. 3 (Freedom
Charter) and the second, to its implementation on its effectivity date (February 2, 1987). But as
we asserted, if the intent of Section 16 of Article XVIII of the 1987 Constitution were to extend
the effects of reorganization under the Freedom Constitution, it should have said so in clear
terms. It is illogical why it should talk of two phases of reorganization when it could have simply
acknowledged the continuing effect of the first reorganization. cdll
Second, plainly the concern of Section 16 is to ensure compensation for "victims" of
constitutional revamps whether under the Freedom or existing Constitution and only
secondarily and impliedly, to allow reorganization. We turn to the records of the Constitutional
Commission:
INQUIRY OF MR. PADILLA
On the query of Mr. Padilla whether there is a need for a specific reference to Proclamation No.
3 and not merely state "result of the reorganization following the ratification of this Constitution",

Mr. Suarez, on behalf of the Committee, replied that it is necessary, inasmuch as there are two
stages of reorganization covered by the Section.
Mr. Padilla pointed out that since the proposals of the Commission on Government
Reorganization have not been implemented yet, it would be better to use the phrase
"reorganization before or after the ratification of the Constitution" to simplify the Section. Mr.
Suarez instead suggested the phrase "as a result of the reorganization effected before or after
the ratification of the Constitution" on the understanding that the provision would apply to
employees terminated because of the reorganization pursuant to Proclamation No. 3 and even
those affected by the reorganization during the Marcos regime. Additionally, Mr. Suarez pointed
out that it is also for this reason that the Committee specified the two Constitutions the
Freedom Constitution and the 1986 [1987] Constitution. 69
Simply, the provision benefits career civil service employees separated from the service. And the
separation contemplated must be due to or the result of (1) the reorganization pursuant to
Proclamation No. 3 dated March 25, 1986, (2) the reorganization from February 2, 1987, and (3)
the resignations of career officers tendered in line with the existing policy and which resignations
have been accepted. The phrase "not for cause" is clearly and primarily exclusionary, to exclude
those career civil service employees separated "for cause." In other words, in order to be entitled
to the benefits granted under Section 16 of Article XVIII of the Constitution of 1987, two
requisites, one negative and the other positive, must concur, to wit:
1.

the separation must not be for cause, and

2.

the separation must be due to any of the three situations mentioned above.

By its terms, the authority to remove public officials under the Provisional Constitution ended on
February 25, 1987, advanced by jurisprudence to February 2, 1987. 70 It can only mean, then,
that whatever reorganization is taking place is upon the authority of the present Charter, and
necessarily, upon the mantle of its provisions and safeguards. Hence, it can not be legitimately
stated that we are merely continuing what the revolutionary Constitution of the Revolutionary
Government had started. We are through with reorganization under the Freedom Constitution
the first stage. We are on the second stage that inferred from the provisions of Section 16 of
Article XVIII of the permanent basic document. cda
This is confirmed not only by the deliberations of the Constitutional Commission, supra, but is
apparent from the Charter's own words. It also warrants our holding in Esguerra and PalmaFernandez, in which we categorically declared that after February 2, 1987, incumbent officials
and employees have acquired security of tenure, which is not a deterrent against separation by
reorganization under the quondam fundamental law.
Finally, there is the concern of the State to ensure that this reorganization is no "purge" like the
execrated reorganizations under martial rule. And, of course, we also have the democratic
character of the Charter itself.
Commissioner Mison would have had a point, insofar as he contends that the reorganization is
open-ended ("progressive"), had it been a reorganization under the revolutionary authority,
specifically of the Provisional Constitution. For then, the power to remove government
employees would have been truly wide-ranging and limitless, not only because Proclamation No.
3 permitted it, but because of the nature of revolutionary authority itself, its totalitarian
tendencies, and the monopoly of power in the men and women who wield it.

What must be understood, however, is that notwithstanding her immense revolutionary powers,
the President was, nevertheless, magnanimous in her rule. This is apparent from Executive
Order No. 17, which established safeguards against the strong arm and ruthless propensity that
accompanies reorganizations notwithstanding the fact that removals arising therefrom were
"not for cause," and in spite of the fact that such removals would have been valid and
unquestionable. Despite that, the Chief Executive saw, as we said, the "unnecessary anxiety
and demoralization" in the government rank and file that reorganization was causing, and
prescribed guidelines for personnel action. Specifically, she said on May 28, 1986:
WHEREAS, in order to obviate unnecessary anxiety and demoralization among the deserving
officials and employees, particularly in the career civil service, it is necessary to prescribe the
rules and regulations for implementing the said constitutional provision to protect career civil
servants whose qualifications and performance meet the standards of service demanded by the
New Government, and to ensure that only those found corrupt, inefficient and undeserving are
separated from the government service; 71
Noteworthy is the injunction embodied in the Executive Order that dismissals should be made on
the basis of findings of inefficiency, graft, and unfitness to render public service. *
The President's Memorandum of October 14, 1987 should furthermore be considered. We
quote, in part:
Further to the Memorandum dated October 2, 1987 on the same subject, I have ordered that
there will be no further lay-offs this year of personnel as a result of the government
reorganization. 72
Assuming, then, that this reorganization allows removals "not for cause" in a manner that would
have been permissible in a revolutionary setting as Commissioner Mison so purports, it would
seem that the Commissioner would have been powerless, in any event, to order dismissals at
the Customs Bureau left and right. Hence, even if we accepted his "progressive" reorganization
theory, he would still have to come to terms with the Chief Executive's subsequent directives
moderating the revolutionary authority's plenary power to separate government officials and
employees. LLpr
Reorganization under the 1987 Constitution, Nature, Extent, and Limitations of ; Jose v. Arroyo,
clarified.
The controversy seems to be that we have, ourselves, supposedly extended the effects of
government reorganization under the Provisional Constitution to the regime of the 1987
Constitution. Jose v. Arroyo 73 is said to be the authority for this argument. Evidently, if Arroyo
indeed so ruled, Arroyo would be inconsistent with the earlier pronouncement of Esguerra and
the later holding of Palma-Fernandez. The question, however, is: Did Arroyo, in fact, extend the
effects of reorganization under the revolutionary Charter to the era of the new Constitution?
There are a few points about Arroyo that have to be explained. First, the opinion expressed
therein that "[b]y virtue of said provision the reorganization of the Bureau of Customs under
Executive Order No. 127 may continue even after the ratification of this constitution and career
civil service employees may be separated from the service without cause as a result of such
reorganization" 74 is in the nature of an obiter dictum. We dismissed Jose's petition 75 primarily
because it was "clearly premature, speculative, and purely anticipatory, based merely on
newspaper reports which do not show any direct or threatened injury,"76 it appearing that the

reorganization of the Bureau of Customs had not been, then, set in motion. Jose therefore had
no cause for complaint, which was enough basis to dismiss the petition. The remark anent
separation "without cause" was therefore not necessary for the disposition of the case. In
Morales v. Paredes, 77 it was held that an obiter dictum "lacks the force of an adjudication and
should not ordinarily be regarded as such." 78
Secondly, Arroyo is an unsigned resolution while Palma-Fernandez is a full-blown decision,
although both are en banc cases. While a resolution of the Court is no less forceful than a
decision, the latter has a special weight.
Thirdly, Palma-Fernandez v. De la Paz comes as a later doctrine. (Jose v. Arroyo was
promulgated on August 11, 1987 while Palma-Fernandez was decided on August 31, 1987.) It is
well-established that a later judgment supersedes a prior one in case of an inconsistency. prLL
As we have suggested, the transitory provisions of the 1987 Constitution allude to two stages of
the reorganization, the first stage being the reorganization under Proclamation No. 3 which
had already been consummated the second stage being that adverted to in the transitory
provisions themselves which is underway. Hence, when we spoke, in Arroyo, of
reorganization after the effectivity of the new Constitution, we referred to the second stage of the
reorganization. Accordingly, we cannot be said to have carried over reorganization under the
Freedom Constitution to its 1987 counterpart.
Finally, Arroyo is not necessarily incompatible with Palma-Fernandez (or Esguerra).
As we have demonstrated, reorganization under the aegis of the 1987 Constitution is not as
stern as reorganization under the prior Charter. Whereas the latter, sans the President's
subsequently imposed constraints, envisioned a purgation, the same cannot be said of the
reorganization inferred under the new Constitution because, precisely, the new Constitution
seeks to usher in a democratic regime. But even if we concede ex gratia argumenti that Section
16 is an exception to due process and no-removal-"except for cause provided by law" principles
enshrined in the very same 1987 Constitution, 79 which may possibly justify removals "not for
cause," there is no contradiction in terms here because, while the former Constitution left the
axe to fall where it might, the present organic act requires that removals "not for cause" must be
as a result of reorganization. As we observed, the Constitution does not provide for "automatic"
vacancies. It must also pass the test of good faith a test not obviously required under the
revolutionary government formerly prevailing, but a test well- established in democratic societies
and in this government under a democratic Charter.
When, therefore, Arroyo permitted a reorganization under Executive Order No. 127 after the
ratification of the 1987 Constitution, Arroyo permitted a reorganization provided that it is done in
good faith. Otherwise, security of tenure would be an insuperable impediment. 80
Reorganizations in this jurisdiction have been regarded as valid provided they are pursued in
good faith. 81 As a general rule, a reorganization is carried out in "good faith" if it is for the
purpose of economy or to make bureaucracy more efficient. In that event, no dismissal (in case
of a dismissal) or separation actually occurs because the position itself ceases to exist. And in
that case, security of tenure would not be a Chinese wall. Be that as it may, if the "abolition,"
which is nothing else but a separation or removal, is done for political reasons or purposely to
defeat security of tenure, or otherwise not in good faith, no valid "abolition" takes place and
whatever "abolition" is done, is void ab initio. There is an invalid "abolition" as where there is

merely a change of nomenclature of positions, 82 or where claims of economy are belied by the
existence of ample funds. 83

We are not, of course, striking down Executive Order No. 127 for repugnancy to the Constitution.
While the act is valid, still and all, the means with which it was implemented is not. 88

It is to be stressed that by predisposing a reorganization to the yardstick of good faith, we are

not, as a consequence, imposing a "cause" for restructuring. Retrenchment in the course of a
reorganization in good faith is still removal "not for cause," if by "cause" we refer to "grounds" or
conditions that call for disciplinary action. **

Executive Order No. 127, Specific Case of .

Good faith, as a component of a reorganization under a constitutional regime, is judged from the
facts of each case. However, under Republic Act No. 6656, we are told:
SEC. 2. No officer or employee in the career service shall be removed except for a valid cause
and after due notice and hearing. A valid cause for removal exists when, pursuant to a bona fide
reorganization, a position has been abolished or rendered redundant or there is a need to
merge, divide, or consolidate positions in order to meet the exigencies of the service, or other
lawful causes allowed by the Civil Service Law. The existence of any or some of the following
circumstances may be considered as evidence of bad faith in the removals made as a result of
reorganization, giving rise to a claim for reinstatement or reappointment by an aggrieved party:
(a) Where there is a significant increase in the number of positions in the new staffing pattern of
the department or agency concerned; (b) Where an office is abolished and another performing
substantially the same functions is created; (c) Where incumbents are replaced by those less
qualified in terms of status of appointment, performance and merit; (d) Where there is a
reclassification of offices in the department or agency concerned and the reclassified offices
perform substantially the same functions as the original offices; (e) Where the removal violates
the order of separation provided in Section 3 hereof. 84
It is in light hereof that we take up questions about Commissioner Mison's good faith, or lack of
it.
Reorganization of the Bureau of Customs,
Lack of Good Faith in.
The Court finds that after February 2, 1987 no perceptible restructuring of the Customs hierarchy
except for the change of personnel has occurred, which would have justified (all things
being equal) the contested dismissals. The contention that the staffing pattern at the Bureau
(which would have furnished a justification for a personnel movement) is the same staffing
pattern prescribed by Section 34 of Executive Order No. 127 already prevailing when
Commissioner Mison took over the Customs helm, has not been successfully contradicted. 85
There is no showing that legitimate structural changes have been made or a reorganization
actually undertaken, for that matter at the Bureau since Commissioner Mison assumed office,
which would have validly prompted him to hire and fire employees. There can therefore be no
actual reorganization to speak of, in the sense, say, of reduction of personnel, consolidation of
offices, or abolition thereof by reason of economy or redundancy of functions, but a revamp of
personnel pure and simple. LLpr
The records indeed show that Commissioner Mison separated about 394 Customs personnel
but replaced them with 522 as of August 18, 1988. 86 This betrays a clear intent to "pack" the
Bureau of Customs. He did so, furthermore, in defiance of the President's directive to halt further
lay-offs as a consequence of reorganization. 87 Finally, he was aware that lay-offs should
observe the procedure laid down by Executive Order No. 17.

With respect to Executive Order No. 127, Commissioner Mison submits that under Section 59
thereof, "[t]hose incumbents whose positions are not included therein or who are not
reappointed shall be deemed separated from the service." He submits that because the 394
removed personnel have not been "reappointed," they are considered terminated. To begin with,
the Commissioner's appointing power is subject to the provisions of Executive Order No. 39.
Under Executive Order No. 39, the Commissioner of Customs may "appoint all Bureau
personnels except those appointed by the President." 89
Accordingly, with respect to Deputy Commissioners Cesar Dario and Vicente Feria, Jr.,
Commissioner Mison could not have validly terminated them, they being Presidential
appointees.
Secondly, and as we have asserted, Section 59 has been rendered inoperative according to our
holding in Palma-Fernandez.
That Customs employees, under Section 59 of Executive Order No. 127 had been on a mere
holdover status cannot mean that the positions held by them had become vacant. In PalmaFernandez, we said in no uncertain terms:
The argument that, on the basis of this provision, petitioner's term of office ended on 30 January
1987 and that she continued in the performance of her duties merely in a hold-over capacity and
could be transferred to another position without violating any of her legal rights, is untenable.
The occupancy of a position in a hold-over capacity was conceived to facilitate reorganization
and would have lapsed on 25 February 1987 (under the Provisional Constitution), but advanced
to February 2, 1987 when the 1987 Constitution became effective (De Leon, et al., vs. Hon.
Benjamin B. Esquerra, et. al., G.R. No. 78059, 31 August 1987). After the said date the
provisions of the latter on security of tenure govern. 90
It should be seen, finally, that we are not barring Commissioner Mison from carrying out a
reorganization under the transitory provisions of the 1987 Constitution. But such a reorganization
should be subject to the criterion of good faith.
Resume.
In resume, we restate as follows:
1.
The President could have validly removed government employees, elected or
appointed, without cause but only before the effectivity of the 1987 Constitution on February 2,
1987 (De Leon v. Esguerra, supra; Palma-Fernandez vs. De la Paz, supra); in this connection,
Section 59 (on non-reappointment of incumbents) of Executive Order No. 127 cannot be a basis
for termination;
2.
In such a case, dismissed employees shall be paid separation and retirement benefits
or upon their option be given reemployment opportunities (CONST. [1987], art. XVIII, sec. 16;
Rep. Act No. 6656, sec. 9);

3.
From February 2, 1987, the State does not loss the right to reorganize the
Government resulting in the separation of career civil service employees [CONST. (1987),
supra] provided, that such a reorganization is made in good faith. (Rep. Act No. 6656, supra.)
G.R. No. 83737
This disposition also resolves G.R. No. 83737. As we have indicated, G.R. No. 83737 is a
challenge to the validity of Republic Act No. 6656. In brief, it is argued that the Act, insofar as it
strengthens security of tenure 91 and as far as it provides for a retroactive effect, 92 runs
counter to the transitory provisions of the new Constitution on removals not for cause.
It can be seen that the Act, insofar as it provides for reinstatement of employees separated
without "a valid cause and after due notice and hearing" 93 is not contrary to the transitory
provisions of the new Constitution. The Court reiterates that although the Charter's transitory
provisions mention separations "not for cause," separations thereunder must nevertheless be on
account of a valid reorganization and which do not come about automatically. Otherwise,
security of tenure may be invoked. Moreover, it can be seen that the statute itself recognizes
removals without cause. However, it also acknowledges the possibility of the leadership using
the artifice of reorganization to frustrate security of tenure. For this reason, it has installed
safeguards. There is nothing unconstitutional about the Act.
We recognize the injury Commissioner Mison's replacements would sustain. We also
commiserate with them. But our concern is the greater wrong inflicted on the dismissed
employees on account of their illegal separation from the civil service.
WHEREFORE, THE RESOLUTIONS OF THE CIVIL SERVICE COMMISSION, DATED JUNE
30, 1988, SEPTEMBER 20, 1988, NOVEMBER 16, 1988, INVOLVED IN G.R. NOS. 85310,
85335, AND 86241, AND MAY 8, 1989, INVOLVED IN G.R. NO. 85310, ARE AFFIRMED.

The historical underpinnings of Government efforts at reorganization hark back to the people
power phenomenon of 22-24 February 1986, and Proclamation No. 1 of President Corazon C.
Aquino, issued on 25 February 1986, stating in no uncertain terms that "the people expect a
reorganization of government." In its wake followed Executive Order No. 5, issued on 12 March
1986, "Creating a Presidential Commission on Government Reorganization," with the following
relevant provisions:
"WHEREAS, there is need to effect the necessary and proper changes in the organizational and
functional structures of the national and local governments, its agencies and instrumentalities,
including government-owned and controlled corporations and their subsidiaries, in order to
promote economy, efficiency and effectiveness in the delivery of public services
xxx

xxx

xxx

"Section 2.
The functional jurisdiction of the PCGR shall encompass, as necessary, the
reorganization of the national and local governments, its agencies and instrumentalities including
government-owned or controlled corporations and their subsidiaries. Cdpr
xxx

xxx

xxx" (Emphasis supplied)

Succeeding it was Proclamation No. 3, dated 25 March 1986, also known as the Freedom
Constitution, declaring, in part, in its Preamble as follows:
WHEREAS, the direct mandate of the people as manifested by their extraordinary action
demands the complete reorganization of the government, . . ." (Emphasis supplied)
and pertinently providing:
"ARTICLE II

THE PETITIONS IN G.R. NOS. 81954, 81967, 82023, AND 85335 ARE GRANTED. THE
PETITIONS IN G.R. NOS. 83737, 85310 AND 86241 ARE DISMISSED.
THE COMMISSIONER OF CUSTOMS IS ORDERED TO REINSTATE THE EMPLOYEES
SEPARATED AS A RESULT OF HIS NOTICES DATED JANUARY 26, 1988.

"Section I
". . .
"The President shall give priority to measures to achieve the mandate of the people to:

THE EMPLOYEES WHOM COMMISSIONER MISON MAY HAVE APPOINTED AS

REPLACEMENTS ARE ORDERED TO VACATE THEIR POSTS SUBJECT TO THE PAYMENT
OF WHATEVER BENEFITS THAT MAY BE PROVIDED BY LAW.

"(a)
Completely reorganize the government and eradicate unjust and oppressive
structures, and all iniquitous vestiges of the previous regime;" (Emphasis supplied)

NO COSTS.

xxx

IT IS SO ORDERED.

"ARTICLE III - GOVERNMENT REORGANIZATION

Gutierrez, Jr., Paras, Gancayco, Bidin, Cortes, Grio-Aquino and Medialdea, JJ ., concur.

"Section 2.
All elective and appointive officials and employees under the 1973
Constitution shall continue in office until otherwise provided by proclamation or executive order
or upon the designation or appointment and qualification of their successors, if such is made
within a period of one year from February 25, 1986.

Padilla, J ., took no part, related to counsel for respondent Abaca in G.R. No. 85310.

xxx

xxx

Separate Opinions
MELENCIO-HERRERA, J ., dissenting:

"Section 3.
Any public office or employee separated from the service as a result of the
reorganization effected under this Proclamation shall, if entitled under the laws then in force,
receive the retirement and other benefits accruing thereunder." (Emphasis ours)

On 28 May 1986, Executive Order No. 17 was issued "Prescribing Rules and Regulations for the
Implementation of Section 2, Article III of the Freedom Constitution" providing, inter alia, as
follows:

"SECTION 1.
In addition to the powers and functions of the Commissioner of Customs, he
is hereby authorized, subject to the Civil Service Law and its implementing rules and regulations:
a)

"Section 1.
In the course of implementing Article III, Section 2 of the Freedom
Constitution, the Head of each Ministry shall see to it that the separation or replacement of
officers and employees is made only for justifiable reasons, to prevent indiscriminate dismissals
of personnel in the career civil service whose qualifications and performance meet the standards
of public service of the New Government.
"xxx

xxx

xxx

To appoint all Bureau personnel, except those appointed by the President;

b)
To discipline, suspend, dismiss or otherwise penalize erring Bureau officers and
employees; cdphil
c)
To act on all matters pertaining to promotion, transfer, detail, reassignment,
reinstatement, reemployment and other personnel action, involving officers and employees of
the Bureau of Customs.

"The Ministry concerned shall adopt its own rules and procedures for the review and
assessment of its own personnel, including the identification of sensitive positions which require
more rigid assessment of the incumbents, and shall complete such review/assessment as
expeditiously as possible but not later than February 24, 1987 to prevent undue demoralization
in the public service.

xxx

"Section 2.
The Ministry Head concerned, on the basis of such review and assessment
shall determine who shall be separated from the service. Thereafter, he shall issue to the official
or employee concerned a notice of separation which shall indicate therein the reason/s or
ground/s for such separation and the fact that the separated official or employee has the right to
file a petition for reconsideration pursuant to this Order. Separation from the service shall be
effective upon receipt of such notice, either personally by the official or employee concerned or
on his behalf by a person of sufficient discretion.

"RECALLING that the reorganization of the government is mandated expressly in Article II,
Section l(a) and Article III of the Freedom Constitution;

"Section 3.

"BELIEVING that it is necessary to reorganize the Ministry of Finance to make it more capable
and responsive, organizationally and functionally, in its primary mandate of judiciously
generating and efficiently managing the financial resources of the Government, its subdivisions
and instrumentalities in order to attain the socio-economic objectives of the national
development programs.

1.
Law;

The following shall be the grounds for separation replacement of personnel:

Existence of a case for summary dismissal pursuant to Section 40 of the Civil Service

2.
Existence of a probable cause for violation of the Anti Graft and Corrupt Practice Act
as determined by the Ministry Head concerned;
3.

Gross incompetence or inefficiency in the discharge of functions;

4.

Misuse of Public office for partisan political purposes;

5.
Any other analogous ground showing that the incumbent is unfit to remain in the
service or his separation/replacement is in the interest of the service."
"Section 11.
This Executive Order shall not apply to elective officials or those designated
to replace them, presidential appointees, casual and contractual employees, or officials and
employees removed pursuant to disciplinary proceedings under the Civil Service Law and rules,
and to those laid off as a result of the reorganization under taken pursuant to Executive Order
No. 5." (Emphasis supplied)
On 6 August 1986, Executive Order No. 39 was issued by the President "Enlarging the Powers
and Functions of the Commissioner of Customs", as follows:
"xxx

xxx

xxx

xxx

xxx"

On 30 January 1987, Executive Order No. 127 was issued "Reorganizing the Ministry of
Finance." Similar Orders, approximately thirteen (13) in all, 1 were issued in respect of the other
executive departments. The relevant provisions relative to the Bureau of Customs read:

"HAVING IN MIND that pursuant to Executive Order No. 5 (1986), it is directed that the
necessary and proper changes in the organizational and functional structures of the government,
its agencies and instrumentalities, be effected in order to promote efficiency and effectiveness in
the delivery of public services;

"xxx

xxx

xxx"

"SEC. 2. Reorganization. The Ministry of Finance, hereinafter referred to as Ministry, is

hereby reorganized, structurally and functionally, in accordance with the provisions of this
Executive Order."
"SEC. 33. Bureau of Customs.
". . . Executive Order No. 39 dated 6 August 1986 which grants autonomy to the Commissioner
of Customs in matters of appointment and discipline of Customs personnel shall remain in
effect."
"SEC. 55. Abolition of Units Integral to Ministry. All units not included in the structural
organization as herein provided and all positions thereof are hereby deemed abolished. . . .
Their personnel shall be entitled to the benefits provided in the second paragraph of Section 59
hereof"
"SEC. 59. New Structure and Pattern. Upon approval of this Executive Order, the officers and
employees of the Ministry shall, in a holdover capacity, continue to perform their respective

duties and responsibilities and receive the corresponding salaries and benefits unless in the
meantime they are separated from government service pursuant to Executive Order No. 17
(1986) or Article III of the Freedom Constitution.

On 2 October 1987 "Malacaang Memorandum Re: Guidelines on the Implementation of

Reorganization Executive Orders" was issued reading, insofar as relevant to these cases, as
follows:

"The new position structure and staffing pattern of the Ministry shall be approved and prescribed
by the Minister within one hundred twenty (120) days from the approval of this Executive Order
and the authorized positions created hereunder shall be filled with regular appointments by him
or by the President, as the case may be. Those incumbents whose positions are not included
therein or who are not reappointed shall be deemed separated from the service. Those
separated from the service shall receive the retirement benefits to which they may be entitled
under the existing laws, rules and regulations. Otherwise, they shall be paid the equivalent of
one month basic salary for every year of service or the equivalent nearest fraction thereof
favorable to them on the basis of highest salary received, but in no case shall such payment
exceed the equivalent of 12 months salary.

"It is my concern that ongoing process of government reorganization be conducted in a manner

that is expeditious, as well as sensitive to the dislocating consequences arising from specific
personnel decisions.

"No court or administrative body shall issue any writ or preliminary injunction or restraining order
to enjoin the separation/replacement of any officer or employee affected under this Executive
Order."

"The entire process of reorganization, and in particular the process of separation from a service,
must be carried out in the most humane manner possible.
"For this purpose, the following guidelines shall be strictly followed:
1.
By October 21, 1987, all employees covered by the Executive Orders for each agency
on reorganization shall be:
a.

informed of their reappointment or

b.

offered another position in the same department/agency, or

"Section 67 All laws, ordinances, rules, regulations and other issuances or parts thereof,
which are inconsistent with this Executive Order, are hereby repealed or modified accordingly.

c.

informed of their termination.

"xxx

2.

In the event of an offer for a lower position, there will be no reduction in the salary.

xxx

xxx" (Emphasis supplied)

On 2 February 1987, the present Constitution took effect (De Leon, et al., vs. Esguerra, G.R. No.
78059, August 31, 1987, 153 SCRA 602). Reorganization in the Government service pursuant to
Proclamation No. 3, supra, was provided for in its Section 16, Article XVIII entitled Transitory
Provisions, reading:
"Section 16.
Career civil service employees separated from the service not for cause but
as a result of the reorganization pursuant to Proclamation No. 3 dated March 25, 1986 and the
reorganization following the ratification of this Constitution shall be entitled to appropriate
separation pay and to retirement and other benefits accruing to them under the laws of general
application in force at the time of their separation. In lieu thereof, at the option of the employees,
they may be considered for employment in the Government or in any of its subdivisions,
instrumentalities, or agencies, including government owned or controlled corporations and their
subsidiaries. This provision also applies to career officers whose resignation, tendered in line
with the existing policy, has been accepted." LibLex
On 24 May 1987 the then Commissioner of Customs, Alexander A. Padilla, transmitted to the
Department of Finance for approval the proposed "position structure and staffing pattern" of the
Bureau of Customs. Said Department gave its imprimatur. Thereafter, the staffing pattern was
transmitted to and approved by the Department of Budget and Management on 7 September
1987 for implementation. Under the old staffing pattern, there were 7,302 positions while under
the new staffing pattern, there are 6,530 positions (CSC Resolution in CSC Case No. 1, dated
20 September 1988, pp. 3-4).
On 22 September 1987, Salvador M. Mison assumed office as Commissioner of Customs.

xxx

xxx

xxx

4.
Each department/agency shall constitute a Reorganization Appeals Board at the
central office, on or before October 21, 1987, to review or reconsider appeals or complaints
relative to reorganization. All cases submitted to the Boards shall be resolved subject to the
following guidelines:
a.
publication or posting of the appeal procedure promulgated by the Department
Secretary;
b.

adherence to due process;

c.

disposition within 30 days from submission of the case;

d.

written notification of the action taken and the grounds thereof.

Action by the Appeals Review Board does not preclude appeal to the Civil Service Commission.
5.
Placement in the new staffing pattern of incumbent personnel shall be completed prior
to the hiring of new personnel, if any.
xxx

xxx

xxx" (Emphasis supplied)

On 25 November 1987 Commissioner Mison wrote the President requesting a grace period until
the end of February 1988 within which to completely undertake the reorganization of the Bureau
of Customs pursuant to Executive Order No. 127 dated 30 January 1987. Said request was
granted in a letter-reply by Executive Secretary Catalino Macaraig, Jr., dated 22 December
1987.

On 6 January 1988, within the extended period requested, Bureau of Customs Memorandum
"Re: Guidelines on the Implementation of Reorganization Executive Orders" was issued in the
same tenor as the Malacaang Memorandum of 2 October 1987, providing inter alia:

"SECTION 1.
It is hereby declared the policy of the State to protect the security of tenure
of civil service officers and employees in the reorganization of the various agencies of the
National government . . . .

"To effectively implement the reorganization at the Bureau of Customs, particularly in the
selection and placement of personnel, and insure that the best qualified and most competent
personnel in the career service are retained, the following guidelines are hereby prescribed for
the guidance of all concerned

"SECTION 2.
No officer or employee in the career service shall be removed except for a
valid cause and after due notice and hearing. A valid cause for removal exists when, pursuant to
a bona fide reorganization, a position has been abolished or rendered redundant or there is a
need to merge, divide, or consolidate positions in order to meet the exigencies of the service, or
other lawful causes allowed by the Civil Service Law. The existence of any or some of the
following circumstances may be considered as evidence of bad faith in the removals made as a
result of reorganization, giving rise to a claim for reinstatement or reappointment by an
aggrieved party:

1.
By February 28, 1988 all employees covered by Executive Order No. 127 and the
grace period extended to the Bureau of Customs by the President of the Philippines on
reorganization shall be:
a.

informed of their reappointment, or

b.

offered another position in the same department or agency, or

c.

informed of their termination.

2.

In the event of termination, the employee shall:

a.
be included in a consolidated list compiled by the Civil Service Commission. All
departments who are recruiting shall give preference to the employees in the list; and
b.

(a)
Where there is a significant increase in the number of positions in the new staffing
pattern of the department or agency concerned;
(b)
Where an office is abolished and another performing substantially the same functions
is created;
(c)
Where incumbents are replaced by those less qualified in terms of status of
appointment, performance and merit;
(d)
Where there is a reclassification of offices in the department or agency concerned and
the reclassified offices perform substantially the same functions as the original offices;

continue to receive salary and benefits until February 28, 1988, and
(e)

c.
be guaranteed the release of separation benefits within 45 days from termination and
in no case later than June 15, 1988.
xxx

xxx

xxx"

It is to be noted that paragraph 1 above and its sub-sections reproduced verbatim the
Malacaang Guidelines of 2 October 1987 in that the employees concerned were merely to be
informed of their termination.
On 28 January 1988 Commissioner Mison addressed identical letters of termination to Bureau of
Customs officers and employees effective on 28 February 1988.
As of 18 August 1988, Commissioner Mison appointed five hundred twenty-two (522) officials
and employees of the Bureau of Customs (CSC Resolution in CSC Case No. 1, dated 20
September 1988, p. 6). In fact, in a letter dated 27 January 1988, Commissioner Mison
recommended Jose M. Balde for appointment to President Aquino as one of three (3) Deputy
Commissioners under Executive Order No. 127. prcd

xxx

On 20 June 1988 Motions were filed, in these cases pending before this Court, invoking the
provisions of Republic Act No. 6656. The relevant provisions thereof read:

xxx

xxx

"SECTION 9.
All officers and employees who are found by the Civil Service Commission
to have been separated in violation of the provisions of this Act, shall be ordered reinstated or
reappointed as the case may be without loss of seniority and shall be entitled to full pay for the
period of separation. Unless also separated for cause, all officers and employees, including
casuals and temporary employees, who have been separated pursuant to reorganization shall, if
entitled thereto, be paid the appropriate separation pay and retirement and other benefits under
existing laws within ninety (90) days from the date of the effectivity of their separation or from the
date of the receipt of the resolution of their appeals as the case may be: Provided, That
application for clearance has been filed and no action thereon has been made by the
corresponding department or agency. Those who are not entitled to said benefits shall be paid a
separation gratuity in the amount equivalent to one (1) month salary for every year of service.
Such separation pay and retirement benefits shall have priority of payment out of the savings of
the department or agency concerned.
xxx

In the interim, during the pendency of these Petitions, Republic Act No. 6656, entitled "An Act to
Protect the Security of Tenure of Civil Service Officers and Employees in the Implementation of
Government Reorganization" was passed by Congress on 9 June 1988. The President signed it
into law on 10 June 1988 and the statute took effect on 29 June 1988.

Where the removal violates the order of separation provided in Section 3 hereof

xxx

xxx

"SECTION 11.
The executive branch of the government shall implement reorganization
schemes within a specified period of time authorized by law.
"In the case of the 1987 reorganization of the executive branch, all departments and agencies
which are authorized by executive orders promulgated by the President to reorganize shall have

ninety (90) days from the approval of this Act within which to Implement their respective
reorganization plans in accordance with the provisions of this Act.
xxx

xxx

xxx

"SECTION 13.
All laws, rules and regulations or parts thereof, inconsistent with the
provisions of this Act are hereby repealed or modified accordingly. The rights and benefits under
this Act shall be retroactive as of June 30, 1987.

It is obviously for that reason that Section 16 grants separation pay and retirement benefits to
those separated NOT FOR CAUSE but as a result of the reorganization precisely to soften the
impact of the non-observance of due process. "What is envisioned in Section 16 is not a remedy
for arbitrary removal of civil servants enjoying security of tenure but some form of relief for
members of the career civil service who may have been or may be legally but involuntarily
'reorganized out' of the service or may have voluntarily resigned pursuant to the reorganization
policy" (ibid., p. 615). cdrep
Reorganization Pursuant to Proclamation No. 3 to Continue Transitorily Even After Ratification

"xxx

xxx

xxx"

Given the foregoing statutory backdrop, the issues can now be addressed.
Scope of Section 16, Art. XVIII, 1987 Constitution
Crucial to the present controversy is the construction to be given to the abovementioned
Constitutional provision (SECTION 16, for brevity), which speaks of:
"Career civil service employees separated from the service not for cause

By its very context, SECTION 16 envisages the continuance of the reorganization pursuant to
Proclamation No. 3 even after ratification of the Constitution and during the transition period. The
two [2] stages contemplated, namely, (1) the stage before and (2) after ratification, refer to the
same nature of separation "NOT FOR CAUSE but as a result of Proclamation No. 3." No valid
reason has been advanced for a different treatment after ratification as the majority opines, i.e.,
that separation NOT FOR CAUSE is allowed before ratification but that, thereafter, separation
can only be FOR CAUSE.
A fundamental principle of Constitutional construction IS to assure the realization of the purpose
of the framers of the organic law and of the people who adopted it.

but as a result of the reorganization pursuant to Proclamation No. 3 dated March 25, 1986
and the reorganization following the ratification of this Constitution . . ." .
To our minds, SECTION 16 clearly recognizes (1) the reorganization authorized by Proclamation
No. 3; (2) that such separation is NOT FOR CAUSE but as a result of the reorganization
pursuant to said Proclamation; and (3) that the reorganization pursuant to Proclamation No. 3
may be continued even after the ratification of the 1987 Constitution during the transition period.
Separation NOT FOR CAUSE
The canon for the removal or suspension of a civil service officer or employee is that it must be
FOR CAUSE. That means "a guarantee of both procedural and substantive due process.
Basically, procedural due process would require that suspension or dismissal come only after
notice and hearing. Substantive due process would require that suspension or dismissal be 'for
cause'." (Bernas, The Constitution of the Republic of the Philippines: A Commentary, Vol. II,
First Edition, 1988, p. 334)

That the reorganization commenced pursuant to Proclamation No. 3 was envisioned to continue
even after the ratification of the 1987 Constitution, at least transitorily, is evident from the intent
of its authors discoverable from their deliberations held on 3 October 1986 and evincing their
awareness that such reorganization had not as yet been fully implemented. Thus:
"Mr. PADILLA. Mr. Presiding Officer, on lines 2 to 5 is the clause 'pursuant to the provisions of
Article III of Proclamation No. 3, issued on March 25, 1986, and the reorganization.' Are those
words necessary? Can we not just say 'result of the reorganization following the ratification of
this Constitution'? In other words, must we make specific reference to Proclamation No. 3?
"Mr. SUAREZ. Yes. I think the committee feels that is necessary, because in truth there has
been a reorganization by virtue of Proclamation No. 3. In other words, there are two stages of
reorganization covered by this section.
"Mr. PADILLA. I understand there is a reorganization committee headed by a minister?
"Mr. SUAREZ. Philippine Commission on Government Reorganization.

The guarantee of removal FOR CAUSE is enshrined in Article IX-B, Section 2(3) of the 1987
Constitution, which states that "No officer or employee of the civil service shall be removed or
suspended except FOR CAUSE provided by law."
There can be no question then as to the meaning of the phrase FOR CAUSE. It simply means
the observance of both procedural and substantive due process in cases of removal of officers
or employees of the civil service. When SECTION 16 speaks, therefore, of separation from the
service NOT FOR CAUSE, it can only mean the diametrical opposite. The constitutional intent to
exempt the separation of civil service employees pursuant to Proclamation No. 3 from the
operation of Article IX-B, Section 2(3), becomes readily apparent. A distinction is explicitly made
between removal FOR CAUSE, which as aforestated, requires due process, and dismissal NOT
FOR CAUSE, which implies that the latter is not bound by the "fetters" of due process.

"Mr. PADILLA. But whether that has already been implemented or not, I do not believe in it.
There has been a plan, but I do not think it has been implemented. If we want to include any
previous reorganization after or before the ratification, why do we not just say reorganization
before or after the ratification' to simplify the provision and eliminate two-and-a-half sentences
that may not be necessary? And as a result of the reorganization, if the committee feels there
has been reorganization before ratification and there be reorganization after, we just say 'before
or after the ratification of this Constitution.'
Mr. SUAREZ. Something like this: 'as a result of the reorganization effected before or after the
ratification of the Constitution' on the understanding, with the statement into the records, that this
would be applicable to those reorganized out pursuant to the Freedom Constitution also.

"Mr. PADILLA. That is understood if there has been a reorganization before the ratification or a
reorganization after the ratification." (RECORDS of the Constitutional Commission, Vol. 5, p.
416)
It should also be recalled that the deadline for the reorganization under Proclamation No. 3 was
"one year from February 25, 1986" (Article III, Section 2), or up to February 24, 1987. Executive
Order No. 17 itself provided that the review/assessment of personnel be completed "not later
than February 24, 1987." But, confronted with the reality of the ratification of the Constitution
before that deadline without reorganization having been completed, there was need for a
provision allowing for its continuance even after ratification and until completed. It was also to
beat that deadline that EO 127 and similar issuances, providing for the reorganization of
departments of government, were all dated 30 January 1987 or prior to the plebiscite held on 2
February 1987. The intent to continue and complete the reorganizations started is self-evident in
SECTION 16.
In Jose vs. Arroyo, et al. (G.R. No. 78435, August 11, 1987), which was a Petition for Certiorari
and Prohibition to enjoin the implementation of Executive Order No. 127, we recognized that the
reorganization pursuant to Proclamation No. 3 as mandated by SECTION 16, was to continue
even after ratification when we stated:
"The contention of petitioner that EO No. 127 is violative of the provision of the 1987 Constitution
guaranteeing career civil service employees security of tenure overlooks the provision of Section
16, Art. XVIII (Transitory Provisions) which explicitly authorizes the removal of career civil
service employees not for cause but as a result of the reorganization pursuant to Proclamation
No. 3 dated March 25, 1986 and the reorganization following the ratification of the Constitution.
By virtue of said provision, the reorganization of the Bureau of Customs under Executive Order
No. 127 may continue even after the ratification of this Constitution and career civil service
employees may be separated from the service without cause as a result of such
reorganization."(Emphasis ours)
With due respect to the majority, we disagree with its conclusion that the foregoing
pronouncement is mere "obiter dictum." llcd
"An obiter dictum or dictum has been defined as a remark or opinion uttered, by the way. It is a
statement of the court concerning a question which was not directly before it (In re Hess, 23 A.
2d. 298, 301, 20 N.J. Misc. 12). It is language unnecessary to a decision, (a) ruling on an issue
not raised, or (an) opinion of a judge which does not embody the resolution or determination of
the court, and is made without argument or full consideration of the point (Lawson v. US, 176
F2d 49, 51, 85 U.S. App. D.C. 167). It is an expression of opinion by the court or judge on a
collateral question not directly involved, (Crescent Ring Co. v. Traveler's Indemnity Co. 132 A.
106, 107, 102 N.J. Law 85) or not necessary for the decision (Du Bell v. Union Central Life Ins.
Co., 29, So. 2d 709, 712; 211 La. 167)."
In the case at bar, however, directly involved and squarely before the Court was the issue of
whether "EO 127 violates Section 2(3) of Article IX-B of the 1987 Constitution against removal of
civil service employees except for cause." Petitioner batted for the affirmative of the proposition,
while respondents contended that "removal of civil service employees without cause is allowed
not only under the Provisional Constitution but also under the 1987 Constitution if the same is
made pursuant to a reorganization after the ratification of the Constitution."

It may be that the Court dismissed that Petition for being "premature, speculative and purely
anticipatory" inasmuch as petitioner therein had "not received any communication terminating or
threatening to terminate his services." But that was only one consideration. The Court still
proceeded to decide all the issues adversatively contested by the parties, namely "1) that the
expiration date of February 25, 1987 fixed by Section 2 of Proclamation No. 3 on which said
Executive order is based had already lapsed; 2) that the Executive Order has not been
published in the Official Gazette as required by Article 2 of the Civil Code and Section 11 of the
Revised Administrative Code; and 3) that its enforcement violates Section 2(3) of Article IX-B of
the 1987 Constitution against removal of civil service employees except for cause."
The ruling of the Court, therefore, on the Constitutional issues presented, particularly, the lapse
of the period mandated by Proclamation No. 3, and the validity of EO 127, cannot be said to be
mere "obiter." They were ultimate issues directly before the Court, expressly decided in the
course of the consideration of the case, so that any resolution thereon must be considered as
authoritative precedent, and not a mere dictum (See Valli v. US, 94 F.2d 687 certiorari granted
58 S. Ct. 760, 303 U.S. 82 L. Ed. 1092; See also Weedin v. Tayokichi Yamada 4 F. (2d) 455).
Such resolution would not lose its value as a precedent just because the disposition of the case
was also made on some other ground.
". . . And this rule applies as to all pertinent questions although only incidentally involved, which
are presented and decided in the regular course of the consideration of the case, and lead up to
the final conclusion (Northern Pac. Ry. Co. v. Baker, D.C. Wash., 3 F. Suppl. 1; See also
Wisconsin Power and Light Co. v. City of Beloit, 254 NW 119; Chase v. American Cartage Co.
186 N.W. 598; City of Detroit, et al. v. Public Utilities Comm. 286 N.W. 368). Accordingly, a point
expressly decided does not lose its value as a precedent because the disposition of the case is
made on some other ground. (Wagner v. Corn Products Refining Co. D.C. N.J. 28 F 2d 617)
Where a case presents two or more points, any one of which is sufficient to determine the
ultimate issue, but the court actually decides all such points, the case is an authoritative
precedent as to every point decided, and none of such points can be regarded as having merely
the status of a dictum (See U.S. v. Title Insurance and Trust Co., Cal., 44 S. Ct. 621, 265 U.S.
472, 68 L. Ed. 1110; Van Dyke v. Parker 83 F. (2d) 35) and one point should not be denied
authority merely because another point was more dwelt on and more fully argued and
considered. (Richmond Screw Anchor Co. v. U.S. 48 S. Ct. 194, 275 U.S. 331, 72 L. Ed. 303)"
cdtai
It is true that in Palma-Fernandez vs. de la Paz (G.R. No. 78946, April 15, 1986, 160 SCRA
751), we had stated:
"The argument that, on the basis of this provision (Section 26 of Executive Order No. 119, or the
'Reorganization Act of the Ministry of Health'), petitioner's term of office ended on 30 January
1987 and that she continued in the performance of her duties merely in a hold-over capacity and
could be transferred to another position without violating any of her legal rights, is untenable.
The occupancy of a position in a hold-over capacity was conceived to facilitate reorganization
and would have lapsed on 25 February 1987 (under the Provisional Constitution), but advanced
to 2 February 1987 when the 1987 Constitution became effective (De Leon, et al., vs. Hon.
Esguerra, et al., G.R. No. 78059, 31 August 1987, 153 SCRA 602). After the said date the
provisions of the latter on security of tenure govern."
The factual situation in the two cases, however, radically differ. In the cited case, Dra. PalmaFernandez, the petitioner, had already been extended a permanent appointment as Assistant
Director for Professional Services of the East Avenue Medical Center but was still being

transferred by the Medical Center Chief to the Research office against her consent. Separation
from the service as a result of reorganization was not involved. The question then arose as to
whether the latter official had the authority to transfer or whether the power to appoint and
remove subordinate officers and employees was lodged in the Secretary of Health. Related to
that issue was the vital one of whether or not her transfer, effected on 29 May 1987, was
tantamount to a removal without cause. Significant, too, is the fact that the transfer was basically
made "in the interest of the service" pursuant to Section 24(c) of PD No. 807, or the Civil Service
Decree, and not because she was being reorganized out by virtue of EO 119 or the
"Reorganization Act of the Ministry of Health," although the said Act was invoked after the fact.
And so it was that SECTION 16 was never mentioned, much less invoked in the PalmaFernandez case.
Finally, on this point, it is inaccurate for the majority to state that there were no reorganization
orders after ratification. There were, namely, EO 181 (Reorganization Act of the Civil Service
Commission), June 1, 1987; EO 193 (Reorganization Act of the Office of Energy Affairs), June
10, 1987; EO 230 (Reorganization Act of NEDA), July 22, 1987; EO 262 (Reorganization Act of
the Department of Local Government), July 25, 1987; EO 297 (Reorganization Act of the office
of the Press Secretary), July 25, 1987.

On 25 November 1987 Commissioner Mison asked for and was granted by the President an
extension up to February 1988 within which to completely undertake the reorganization of the
Bureau of Customs.
On 6 January 1988, he issued Bureau of Customs Memorandum "Re Guidelines on the
Implementation of Reorganization Executive Orders" reiterating the above-quoted portion of the
Malacaang Memorandum of 2 October 1987. Pursuant thereto, on 28 January 1988,
Commissioner Mison addressed uniform letters of termination to the employees listed on pages
15,16 and 17 of the majority opinion, effective on 28 February 1988, within the extended period
granted. cdasia
The records further show that upon Commissioner Mison's official inquiry, Secretary of Justice
Secretary A. Ordoez, rendered the following Opinion:
". . . It is believed that customs employees who are reorganized out in the course of the
implementation of E.O. No. 127 (reorganizing the Department of Finance) need not be informed
of the nature and cause of their separation from the service. It is enough that they be informed of
their termination pursuant to section 1(c) of the Memorandum dated October 2, 1987 of
President Aquino, which reads:

The Element of Good Faith

The majority concedes that reorganization can be undertaken provided it be in good faith but
concludes that Commissioner Mison was not in good faith.

"1.
By October 21, 1987, all employees covered by the Executive orders for each agency
on reorganization shall be:
xxx

xxx

xxx

The aforesaid conclusion is contradicted by the records.

"c)
Executive Order No. 127, dated 30 January 1987, specifically authorized the reorganization of
the Bureau of Customs "structurally and functionally" and provided for the abolition of all units
and positions thereof not included in the structural organization (Section 55).
As stated heretofore, it was the former Commissioner of Customs, Alexander A. Padilla who, on
24 May 1987, transmitted to the Department of Finance for approval the proposed "position
structure and staffing pattern" of the Bureau of Customs. This was approved by the Department
of Finance. Thereafter, it was transmitted to and approved by the Department of Budget and
Management on 7 September 1987 for implementation. Under the old staffing pattern, there
were 7,302 positions while under the new staffing pattern, there are 6,530 positions.
On 2 October 1987 "Malacaang Memorandum Re: Guidelines on the Implementation of
Reorganization Executive Orders" provided:
"By October 21, 1987, all employees covered by the Executive orders for each agency on
reorganization shall be:
a.

informed of their reappointment, or

b.

offered another position in the same department or agency, or

c.

informed of their termination." (Emphasis supplied)

Informed of their terminations.

"The constitutional mandate that 'no officer or employee of the civil service shall be removed or
suspended except for cause as provided by law' (Sec. 2(4) (sic), Article IX-B of the 1987
Constitution) does not apply to employees who are separated from office as a result of the
reorganization of that Bureau as directed in Executive Order No. 127.
xxx

xxx

xxx

"Regarding your (third) query, the issue as to the constitutionality of Executive Order No. 127 is
set at rest, after the Supreme Court resolved to dismiss the petition for certiorari questioning its
enforceability, for lack of merit (see Jose vs. Arroyo, et al., supra)." (Opinion No. 41, s. 1988,
March 3, 1988)
The former Chairman of the Civil Service Commission, Celerina G. Gotladera, likewise
periodically consulted by Commissioner Mison, also expressed the opinion that "it is not a
prerequisite prior to the separation of an employee pursuant to reorganization that he be
administratively charged." (Annex 16, p. 411, Rollo, G.R. No. 85310)
Moreover, the records show that the final selection and placement of personnel was done by a
Placement Committee, one of whose members is the Head of the Civil Service Commission
Field Office, namely, Mrs. Purificacion Cuerdo. The appointment of employees made by
Commissioner Mison was based on the list approved by said Placement Committee.
But the majority further faults Mison for defying the President's directive to halt further lay-offs as
a consequence of reorganization, citing OP Memo of 14 October 1987, reading:

"Further to the Memorandum dated October 2, 1987 on the same subject, I have ordered that
there will be no further lay-offs this year of personnel as a result of the government
reorganization." (p 45, Decision)
The foregoing, however, must be deemed superseded by later developments, namely, the grant
to Commissioner Mison by the President on 22 December 1987 of a grace period until the end of
February 1988 within which to completely undertake the reorganization of the Bureau of
Customs, which was, in fact, accomplished by 28 February 1988.
To further show lack of good faith, the majority states that Commissioner Mison failed to observe
the procedure laid down by EO 17, supra, directing inter alia that a notice of separation be
issued to an employee to be terminated indicating therein the reason/s or ground/s for such
separation. That requirement, however, does not appear in Section S9 of EO 127, which
provides on the contrary "that those incumbents whose positions are not included in the new
position structure and staffing pattern of the Ministry or who are not reappointed shall be
deemed separated from the service." The right granted by EO 17 to an employee to be informed
of the ground for his separation must be deemed to have been revoked by the repealing clause
of EO 127 (Section 67) providing that "all laws, ordinances or parts thereof, which are
inconsistent with this Executive Order, are hereby repealed and modified accordingly." LLphil
Moreover, Section 11 of EO 17 explicitly excepts from its coverage a reorganization pursuant to
EO 5. Thus
"The Executive Order shall not apply to elective officials or those designated to replace them,
presidential appointees, casual and contractual employees, or officials and employees removed
pursuant to disciplinary proceedings under the Civil Service law and rules, and to those laid off
as a result of reorganization undertaken pursuant to Executive Order No. 5." (Emphasis ours)
That EO 127 was issued pursuant to or in implementation of EO 5, is shown by its introductory
portion reading:
"Recalling that the reorganization of the government is mandated expressly by Article II, Section
1 (a) and Article III of the Freedom Constitution;
"Having in mind that pursuant to Executive Order No. 5 (1986), it is directed that the necessary
and proper changes in the organizational and functional structures of the government, its
agencies and instrumentalities, be effected in order to promote efficiency and effectiveness in
the delivery of public service;" (Emphasis supplied)
Constitutionality of Republic Act No. 6656
The majority also relies on Republic Act No. 6656 entitled an "Act to Protect the Security of
Tenure of Civil Service Officers and Employees in the Implementation of Government
Reorganization," particularly Section 2 thereof, to test the good faith of Commissioner Mison.

No. 3 may be separated NOT FOR CAUSE. And yet, RA 6656 requires the exact opposite
separation FOR CAUSE. It would not be remiss to quote the provision again:
"SEC. 2. No officer or employee in the career service shall be removed except for a valid cause
and after due notice and hearing. A valid cause for removal exists when, pursuant to a bona fide
reorganization, a position has been abolished or rendered redundant or there is a need to
merge, divide, or consolidate positions in order to meet the exigencies of the service, or other
lawful causes allowed by the Civil Service law. The existence of any or some of the following
circumstances may be considered as evidence of bad faith in the removals made as a result of
reorganization, giving rise to a claim for reinstatement or reappointment by an aggrieved party:
(a) Where there is a significant increase in the number of positions in the new staffing pattern of
the department or agency concerned; (b) Where an office is abolished and another performing
substantially the same functions is created; (c) Where incumbents are replaced by those less
qualified in terms of status of appointment, performance and merit; (d) Where there is a
reclassification of offices in the department or agency concerned and the reclassified offices
perform substantially the same functions as the original offices; (e) Where the removal violates
the order of separation provided in Section 3 hereof (Republic Act No. 6156)
The standards laid down are the "traditional" criteria for removal of employees from the career
service, e.g. valid cause, due notice and hearing, abolition of, or redundancy of offices.
Proclamation No. 3, on the other hand, effectuates the "progressive" type of reorganization
dictated by the exigencies of the historical and political upheaval at the time. The "traditional"
type is limited in scope. It is concerned with the individual approach where the particular
employee involved is charged administratively and where the requisites of notice and hearing
have to be observed. The "progressive" kind of reorganization, on the other hand, is the
collective way. It is wider in scope, and is the reorganization contemplated under SECTION 16.
dctai
2)
By providing for reinstatement in its Section 9, RA 6656 adds a benefit not included in
SECTION 16. The benefits granted by the latter provision to employees separated NOT FOR
CAUSE but as a consequence of reorganization are "separation pay, retirement, and other
benefits accruing to them under the laws of general application in force at the time of their
separation." The benefit of reinstatement is not included. RA 6656, however, allows
reinstatement. That it cannot do because under SECTION 16, it is not one of the laws "in force
at the time of their separation."
The Constitution is the paramount law to which all laws must conform. It is from the Constitution
that all statutes must derive their bearings. The legislative authority of the State must yield to the
expression of the sovereign will. No statutory enactment can disregard the Charter from which it
draws its own existence (Phil. Long Distance Telephone Co. v. Collector of Internal Revenue, 90
Phil. 674 [1952]). But, that is exactly what RA 6656 does in providing for retroactivity it
disregards and contravenes a Constitutional imperative. To save it, it should be applied and
construed prospectively and not retroactively notwithstanding its explicit provision. Then, and
only then, would it make good law.

We are of the view, however, that in providing for retroactivity in its Section 13, RA 6656 clashes
frontally with SECTION 16.

Effects of Reorganization

1)
SECTION 16 clearly recognizes that career service employees separated from the
service by reason of the "complete reorganization of the government" pursuant to Proclamation

To be sure, the reorganization could effect the tenure of members of the career service as
defined in Section 5, Article IV of Presidential Decree No. 807, and may even result in the
separation from the office of some meritorious employees. But even then, the greater good of
the greatest number and the right of the citizenry to a good government, and as they themselves

have mandated through the vehicle of Proclamation No. 3, provide the justification for the said
injury to the individual. In terms of values, the interest of an employee to security of tenure must
yield to the interest of the entire populace and to an efficient and honest government.

I concur with the majority view so ably presented by Mr. Justice Abraham F. Sarmiento. While
additional comments may seem superfluous in view of the exhaustiveness of his ponencia, I
nevertheless offer the following brief observations for whatever they may be worth. cdlex

But a reorganized employee is not without rights. His right lies in his past services, the
entitlement to which must be provided for by law. EO 127 provides for the same in its Section
59, and so does SECTION 16 when the latter specified that career civil service employees
separated from the service not for cause:

Emphasizing Article XVII, Section 16 of the Constitution, the dissenting opinion considers the
ongoing government reorganization valid because it is merely a continuation of the
reorganization begun during the transition period. The reason for this conclusion is the phrase
"and the reorganization following the ratification of the Constitution," that is to say, after February
2, 1987, appearing in the said provision. The consequence (and I hope I have not misread it) is
that the present reorganization may still be undertaken with the same "absoluteness" that was
allowed the revolutionary reorganization although the Freedom Constitution is no longer in force.

"shall be entitled to appropriate separation pay and to retirement and other benefits accruing to
them under the laws of general application in force at the time of their separation. In lieu thereof,
at the option of the employees, they may be considered for employment in the Government or in
any of its subdivisions, instrumentalities, or agencies, including government-owned or controlled
corporations and their subsidiaries. This provision also applies to career officers whose
resignation, tendered in line with the existing policy, has been accepted."
This is a reward for the employee's past service to the Government. But this is all. There is no
vested property right to be reemployed in a reorganized office.
"The right to an office or to employment with government or any of its agencies is not a vested
property right, and removal therefrom will not support the question of due process" (Yantsin v.
Aberdeen, 54 Wash 2d 787, 345 P 2d 178). A civil service employee does not have a
constitutionally protected right to his position, which position is in the nature of a public office,
political in character and held by way of grant or privilege extended by government; generally he
has been held to have no property right or vested interest to which due process guaranties
extend (See Taylor v. Beckham 178 U. S. 548, 44 L Ed. 1187; Angilly v. US (CA2 NY) 199 F 2d
642; People ex. rel. Baker v. Wilson, 39 III App 2d 443, 189 NE 2d 1; Kelliheller v. NY State Civil
Service Com., 21 Misc 2d 1034, 194 NYS 2d 89).
To ensure, however, that no meritorious employee has been separated from the service, there
would be no harm, in fact, it could do a lot of good, if the Commissioner of Customs reviews the
evaluation and placements he has so far made and sees to it that those terminated are included
in a consolidated list to be given preference by departments who are recruiting (Section 2[a],
BOC Memorandum, January 6, 1988). LLjur
Conclusion
Premises considered, and subject to the observation hereinabove made, it is our considered
view that the separation from the service "NOT FOR CAUSE but as a result of the
reorganization pursuant to Proclamation No. 3 dated March 25, 1986" of the affected officers
and employees of the Bureau of Customs should be UPHELD, and the Resolutions of the Civil
Service Commission, dated 30 June 1988, 20 September 1988, and 16 November 1988 should
be SET ASIDE for having been issued in grave abuse of discretion.
Republic Act No. 6656, in so far as it provides for retroactivity, should be declared
UNCONSTITUTIONAL for being repugnant to the letter and spirit of Section 16, Article XVIII of
the 1987 Constitution.
Fernan, C .J ., Narvasa, Feliciano and Regalado, JJ ., concur.
CRUZ, J ., concurring:

Reorganization of the government may be required by the legislature even independently of

specific constitutional authorization, as in the case, for example, of R.A. No. 51 and B.P. No.
129. Being revolutionary in nature, the reorganization decreed by Article III of the Freedom
Constitution was unlimited as to its method except only as it was later restricted by President
Aquino herself through various issuances, particularly E.O. No. 17. But this reorganization, for all
its permitted summariness, was not indefinite. Under Section 3 of the said Article III, it was
allowed only up to February 29, 1987 (which we advanced to February 2, 1987, when the new
Constitution became effective).
The clear implication is that any government reorganization that may be undertaken thereafter
must be authorized by the legislature only and may not be allowed the special liberties and
protection enjoyed by the revolutionary reorganization. Otherwise, there would have been no
necessity at all for the time limitation expressly prescribed by the Freedom Constitution.
I cannot accept the view that Section 16 is an authorization for the open-ended reorganization of
the government "following the ratification of the Constitution." I read the provision as merely
conferring benefits deservedly or not on persons separated from the government as a
result of the reorganization of the government, whether undertaken during the transition period
or as a result of a law passed thereafter. What the provision grants is privileges to the retirees,
not power to the government. It is axiomatic that grants of power are not lightly inferred,
especially if these impinge on individual rights, and I do not see why we should depart from this
rule.
To hold that the present reorganization is a continuation of the one begun during the transition
period is to recognize the theory of the public respondent that all officers and employees not
separated earlier remain in a hold-over capacity only and so may be replaced at any time even
without cause. That is a dangerous proposition that threatens the security and stability of every
civil servant in the executive department. What is worse is that this situation may continue
indefinitely as the claimed "progressive" reorganization has no limitation as to time.
Removal imports the forcible separation of the incumbent before the expiration of his term and
can be done only for cause as provided by law. Contrary to common belief, a reorganization
does not result in removal but in a different mode of terminating official relations known as
abolition of the office (and the security of tenure attached thereto.) The erstwhile holder of the
abolished office cannot claim he has been removed without cause in violation of his
constitutional security of tenure. The reason is that the right itself has disappeared with the
abolished office as an accessory following the principal. (Ocampo v. Sec. of Justice, 51 O.G.
147; De la Llana v. Alba, 112 SCRA 294; Manalang v. Quitoriano, 94 Phil. 903.)

This notwithstanding, the power to reorganize is not unlimited. It is essential that it be based on
a valid purpose, such as the promotion of efficiency and economy in the government through a
pruning of offices or the streamlining of their functions. (Cervantes v. Auditor-General, 91 Phil.
359.) Normally, a reorganization cannot be validly undertaken as a means of purging the
undesirables for this would be a removal in disguise undertaken en masse to circumvent the
constitutional requirement of legal cause. (Eradication of graft and corruption was one of the
expressed purposes of the revolutionary organization, but this was authorized by the Freedom
Constitution itself. In short, a reorganization, to be valid, must be done in good faith. (Urgelio v.
Osmea, 9 SCRA 317; Cuneta v. Court of Appeals, 1 SCRA 663; Cario v. ACCFA, 18 SCRA
183.)
A mere recitation no matter how lengthy of the directives, guidelines, memoranda, etc.
issued by the government and the action purportedly taken thereunder does not by itself prove
good faith. We know only too well that these instructions, for all their noble and sterile purposes,
are rarely followed in their actual implementation. The reality in this case, as the majority opinion
has pointed out and as clearly established in the hearing we held, is that the supposed
reorganization was undertaken with an eye not to achieving the avowed objectives but to
accommodating new appointees at the expense of the dislodged petitioners. That was also the
finding of the Civil Service Commission, to which we must accord a becoming respect as the
constitutional office charged with the protection of the civil service from the evils of the spoils
system. cda
The present administration deserves full support in its desire to improve the civil service, but this
objective must be pursued in a manner consistent with the Constitution. This praiseworthy
purpose cannot be accomplished by an indiscriminate reorganization that will sweep in its wake
the innocent along with the redundant and inept, for the benefit of the current favorites.

In this Petition for Certiorari, petitioners Bernyl and Katherene urge this Court to "reverse and set
aside the Decision of the Court of Appeals, Special nineteenth (sic) [19th] division (sic), Cebu
City (sic) and accordingly, dismiss the complaint against the [petitioners Bernyl and Katherene]
in view of the absence of probable cause to warrant the filing of an information before the Court
and for utter lack of merit." 6
As culled from the records, the antecedents of the present case are as follows:
Petitioner Katherene was a Premier Customer Services Representative (PCSR) of respondent
bank, HSBC. As a PCSR, she managed the accounts of HSBC depositors with Premier Status.
One such client and/or depositor handled by her was Roger Dwayne York (York).
York maintained several accounts with respondent HSBC. Sometime in April 2002, he went to
respondent HSBC's Cebu Branch to transact with petitioner Katherene respecting his Dollar and
Peso Accounts. Petitioner Katherene being on vacation at the time, York was attended to by
another PCSR. While at the bank, York inquired about the status of his time deposit in the
amount of P2,500,000.00. The PCSR representative who attended to him, however, could not
find any record of said placement in the bank's data base. DCTHaS
York adamantly insisted, though, that through petitioner Katherene, he made a placement of the
aforementioned amount in a higher-earning time deposit. York further elaborated that petitioner
Katherene explained to him that the alleged higher-earning time deposit scheme was
supposedly being offered to Premier clients only. Upon further scrutiny and examination,
respondent HSBC's bank personnel discovered that: (1) on 18 January 2002, York preterminated a P1,000,000.00 time deposit; (2) there were cash movement tickets and withdrawal
slips all signed by York for the amount of P1,000,000.00; and (3) there were regular movements
in York's accounts, i.e., beginning in the month of January 2002, monthly deposits in the amount
of P12,500.00 and P8,333.33 were made, which York denied ever making, but surmised were
the regular interest earnings from the placement of the P2,500,000.00.

[G.R. No. 174350. August 13, 2008.]

SPOUSES BERNYL BALANGAUAN & KATHERENE BALANGAUAN, petitioners, vs. THE
HONORABLE COURT OF APPEALS, SPECIAL NINETEENTH (19TH) DIVISION, CEBU CITY
& THE HONGKONG AND SHANGHAI BANKING CORPORATION, LTD., respondents.
DECISION
CHICO-NAZARIO, J p:
Before Us is a Petition for Certiorari under Rule 65 of the Revised Rules of Court assailing the
28 April 2006 Decision 1 and 29 June 2006 Resolution 2 of the Court of Appeals in CA-G.R.
CEB-SP No. 00068, which annulled and set aside the 6 April 2004 3 and 30 August 2004 4
Resolutions of the Department of Justice (DOJ) in I.S. No. 02-9230-I, entitled "The Hongkong
and Shanghai Banking Corporation v. Katherine Balangauan, et al." The twin resolutions of the
DOJ affirmed, in essence, the Resolution of the Office of the City Prosecutor, 5 Cebu City, which
dismissed for lack of probable cause the criminal complaint for Estafa and/or Qualified Estafa,
filed against petitioner-Spouses Bernyl Balangauan (Bernyl) and Katherene Balangauan
(Katherene) by respondent Hong Kong and Shanghai Banking Corporation, Ltd. (HSBC).
DISEaC

It was likewise discovered that the above-mentioned deposits were transacted using petitioner
Katherene's computer and work station using the code or personal password "CEO8". The
significance of code "CEO8", according to the bank personnel of respondent HSBC, is that, "[i]t
is only Ms. Balangauan who can transact from [the] computer in the work station CEO-8, as she
is provided with a swipe card which she keeps sole custody of and only she can use, and which
she utilizes for purposes of performing bank transactions from that computer." 7 EHTISC
Bank personnel of respondent HSBC likewise recounted in their affidavits that prior to the filing
of the complaint for estafa and/or qualified estafa, they were in contact with petitioners Bernyl
and Katherene. Petitioner Bernyl supposedly met with them on two occasions. At first he
disavowed any knowledge regarding the whereabouts of York's money but later on admitted that
he knew that his wife invested the funds with Shell Company. He likewise admitted that he made
the phone banking deposit to credit York's account with the P12,500.00 and the P8,333.33 using
their landline telephone. With respect to petitioner Katherene, she allegedly spoke to the bank
personnel and York on several occasions and admitted that the funds were indeed invested with
Shell Company but that York knew about this.
So as not to ruin its name and goodwill among its clients, respondent HSBC reimbursed York
the P2,500,000.00.

Based on the foregoing factual circumstances, respondent HSBC, through its personnel, filed a
criminal complaint for Estafa and/or Qualified Estafa before the Office of the City Prosecutor,
Cebu City. IcHEaA
Petitioners Bernyl and Katherene submitted their joint counter-affidavit basically denying the
allegations contained in the affidavits of the aforenamed employees of respondent HSBC as well
as that made by York. They argued that the allegations in the Complaint-Affidavits were pure
fabrications. Specifically, petitioner Katherene denied 1) having spoken on the telephone with Dy
and York; and 2) having admitted to the personnel of respondent HSBC and York that she took
the P2,500,000.00 of York and invested the same with Shell Corporation. Petitioner Bernyl
similarly denied 1) having met with Dy, Iigo, Cortes and Arcuri; and 2) having admitted to them
that York knew about petitioner Katherene's move of investing the former's money with Shell
Corporation.
Respecting the P12,500.00 and P8,333.33 regular monthly deposits to York's account made
using the code "CEO8", petitioners Bernyl and Katherene, in their defense, argued that since it
was a deposit, it was her duty to accept the funds for deposit. As regards York's time deposit
with respondent HSBC, petitioners Bernyl and Katherene insisted that the funds therein were
never entrusted to Katherene in the latter's capacity as PCSR Employee of the former because
monies deposited "at any bank would not and will not be entrusted to specific bank employee
but to the bank as a whole". aDSIHc

Mr. York could not have been that unwary and unknowingly innocent to claim unfamiliarity with
withdrawal slips and cash movement tickets which Ms. Balangauan made him to sign on several
occasions. He is a premier client of HSBC maintaining an account in millions of pesos. A
withdrawal slip and cash movement tickets could not have had such intricate wordings or
terminology so as to render them non-understandable even to an ordinary account holder. Mr.
York admittedly is a long-standing client of the bank. Within the period of 'long-standing' he
certainly must have effected some withdrawals. It goes without saying therefore that the
occasions that Ms. Balangauan caused him to sign withdrawal slips are not his first encounter
with such kinds of documents.
The one ineluctable conclusion therefore that can be drawn from the premises is that Mr. York
freely and knowingly knew what was going on with his money, who has in possession of them
and where it was invested. These take out the elements of deceit, fraud, abuse of confidence
and without the owner's consent in the crimes charged. DAaIEc
The other leg on which complainant's cause of action stands rest on its claim for sum of money
against respondents allegedly after it reimbursed Mr. York for his missing account supposedly
taken/withdrawn by Ms. Balangauan. The bank's action against respondents would be a civil suit
against them which apparently it already did after the bank steps into the shoes of Mr. York and
becomes the creditor of Ms. Balangauan. 9
The ACP then concluded that:

Following the requisite preliminary investigation, Assistant City Prosecutor (ACP) Victor C.
Laborte, Prosecutor II of the OCP, Cebu City, in a Resolution 8 dated 21 February 2003, found
no probable cause to hold petitioners Bernyl and Katherene liable to stand trial for the criminal
complaint of estafa and/or qualified estafa, particularly Article 315 of the Revised Penal Code.
Accordingly, the ACP recommended the dismissal of respondent HSBC's complaint.

By and large, the evidence on record do (sic) not engender enough bases to establish a
probable cause against respondents. 10
On 1 July 2003, respondent HSBC appealed the above-quoted resolution and foregoing
comment to the Secretary of the DOJ by means of a Petition for Review.

The ACP explained his finding, viz.:

As in any other cases, we may never know the ultimate truth of this controversy. But on balance,
the evidence on record tend to be supportive of respondents' contention rather than that of
complaint.
xxx

xxx

xxx

In a Resolution dated 6 April 2004, the Chief State Prosecutor, Jovencito R. Zuo, for the
Secretary of the DOJ, dismissed the petition. In denying respondent HSBC's recourse, the Chief
State Prosecutor held that: cdasiajur
Sec. 12 (c) of Department Circular No. 70 dated July 2, 2000 provides that the Secretary of
Justice may, motu proprio, dismiss outright the petition if there is no showing of any reversible
error in the questioned resolution.

First of all, it is well to dwell on what Mr. York said in his affidavit. Thus:
'18.
For purposes of opening these two time deposits (sic) accounts, Ms. Balangauan
asked me to sign several Bank documents on several occasions, the nature of which I was
unfamiliar with.' HTCISE
'20.
I discovered later that these were withdrawal slips and cash movement tickets, with
which documents Ms. Balangauan apparently was able to withdraw the amount from my
accounts, and take the same from the premises of the Bank.'
In determining the credibility of an evidence, it is well to consider the probability or improbability
of one's statements for it has been said that there is no test of the truth of human testimony
except its conformity to our knowledge, observation and experience.

We carefully examined the petition and its attachments and found no reversible error that would
justify a reversal of the assailed resolution which is in accord with the law and evidence on the
matter.
Respondent HSBC's Motion for Reconsideration was likewise denied with finality by the DOJ in
a lengthier Resolution dated 30 August 2004.
The DOJ justified its ruling in this wise:
A perusal of the motion reveals no new matter or argument which was not taken into
consideration in our review of the case. Hence, we find no cogent reason to reconsider our
resolution. Appellant failed to present any iota of evidence directly showing that respondent
Katherene Balangauan took the money and invested it somewhere else. All it tried to establish
was that Katherene unlawfully took the money and fraudulently invested it somewhere else . . .,

because after the withdrawals were made, the money never reached Roger York as appellant
adopted hook, line and sinker the latter's declaration, despite York's signatures on the
withdrawal slips covering the total amount of P2,500,000.00 . . . . While appellant has every
reason to suspect Katherene for the loss of the P2,500,000.00 as per York's bank statements,
the cash deposits were identified by the numerals "CEO8" and it was only Katherene who could
transact from the computer in the work station CEO-8, plus alleged photographs showing
Katherene "leaving her office at 5:28 p.m. with a bulky plastic bag presumably containing cash"
since a portion of the funds was withdrawn, we do not, however, dwell on possibilities, suspicion
and speculation. We rule based on hard facts and solid evidence. ATEHDc

Required to comment on the petition, respondent HSBC remarked that the filing of the present
petition is improper and should be dismissed. It argued that the correct remedy is an appeal by
certiorari under Rule 45 of the Revised Rules of Court.

Moreover, an examination of the petition for review reveals that appellant failed to append
thereto all annexes to respondents' urgent manifestations . . . together with supplemental
affidavits of Melanie de Ocampo and Rex B. Balucan . . ., which are pertinent documents
required under Section 5 of Department Circular No. 70 dated July 3, 2000. 11

Given the foregoing arguments, there is need to address, first, the issue of the mode of appeal
resorted to by petitioners Bernyl and Katherene. The present petition is one for certiorari under
Rule 65 of the Revised Rules of Court. Notice that what is being assailed in this recourse is the
decision and resolution of the Court of Appeals dated 28 April 2006 and 29 June 2006,
respectively. The Revised Rules of Court, particularly Rule 45 thereof, specifically provides that
an appeal by certiorari from the judgments or final orders or resolutions of the appellate court is
by verified petition for review on certiorari. 20 TcDaSI

Respondent HSBC then went to the Court of Appeals by means of a Petition for Certiorari under
Rule 65 of the Revised Rules of Court.
On 28 April 2006, the Court of Appeals promulgated its Decision granting respondent HSBC's
petition, thereby annulling and setting aside the twin resolutions of the DOJ.
The fallo of the assailed decision reads:
WHEREFORE, in view of the foregoing premises, judgment is hereby rendered by us
GRANTING the petition filed in this case. The assailed Resolutions dated April 6, 2004 and
August 30, 2004 are ANNULLED and SET ASIDE. cDCaTH
The City Prosecutor of Cebu City is hereby ORDERED to file the appropriate Information against
the private respondents. 12
Petitioners Bernyl and Katherene's motion for reconsideration proved futile, as it was denied by
the appellate court in a Resolution dated 29 June 2006.
Hence, this petition for certiorari filed under Rule 65 of the Revised Rules of Court.
Petitioners Bernyl and Katherene filed the present petition on the argument that the Court of
Appeals committed grave abuse of discretion in reversing and setting aside the resolutions of
the DOJ when: (1) "[i]t reversed the resolution of the Secretary of Justice, Manila dated August
30, 2004 and correspondingly, gave due course to the Petition for Certiorari filed by HSBC on
April 28, 2006 despite want of probable cause to warrant the filing of an information against the
herein petitioners"; 13 (2) "[i]t appreciated the dubious evidence adduced by HSBC albeit the
absence of legal standing or personality of the latter";14 (3) "[i]t denied the motions for
reconsideration on June 29, 2006 notwithstanding the glaring evidence proving the innocence of
the petitioners"; 15 (4) "[i]t rebuffed the evidence of the herein petitioners in spite of the fact that,
examining such evidence alone would establish that the money in question was already
withdrawn by Mr. Roger Dwayne York"; 16 and (5) "[i]t failed to dismiss outright the petition by
HSBC considering that the required affidavit of service was not made part or attached in the said
petition pursuant to Section 13, Rule 13 in relation to Section 3, Rule 46, and Section 2, Rule 56
of the Rules of Court." 17 IaAHCE

Petitioners Bernyl and Katherene, on the other hand, asserted in their Reply 18 that the petition
filed under Rule 65 was rightfully filed considering that not only questions of law were raised but
questions of fact and error of jurisdiction as well. They insist that the Court of Appeals "clearly
usurped into the jurisdiction and authority of the Public Prosecutor/Secretary of justice (sic) . . . ."
19

In the present case, there is no question that the 28 April 2006 Decision and 29 June 2006
Resolution of the Court of Appeals granting the respondent HSBC's petition in CA-G.R. CEB. SP
No. 00068 is already a disposition on the merits. Therefore, both decision and resolution, issued
by the Court of Appeals, are in the nature of a final disposition of the case set before it, and
which, under Rule 45, are appealable to this Court via a Petition for Review on Certiorari, viz.:
SEC. 1. Filing of petition with Supreme Court. A party desiring to appeal by certiorari from a
judgment or final order or resolution of the Court of Appeals, the Sandiganbayan, the Regional
Trial Court or other courts whenever authorized by law, may file with the Supreme Court a
verified petition for review on certiorari. The petition shall raise only questions of law which must
be distinctly set forth. (Emphasis supplied.)
It is elementary in remedial law that a writ of certiorari will not issue where the remedy of appeal
is available to an aggrieved party. A remedy is considered "plain, speedy and adequate" if it will
promptly relieve the petitioners from the injurious effects of the judgment and the acts of the
lower court or agency. 21 In this case, appeal was not only available but also a speedy and
adequate remedy. 22 And while it is true that in accordance with the liberal spirit pervading the
Rules of Court and in the interest of substantial justice, 23 this Court has, before, 24 treated a
petition for certiorari as a petition for review on certiorari, particularly if the petition for certiorari
was filed within the reglementary period within which to file a petition for review on certiorari; 25
this exception is not applicable to the present factual milieu. aDSHIC
Pursuant to Sec. 2, Rule 45 of the Revised Rules of Court:
SEC. 2. Time for filing; extension. The petition shall be filed within fifteen (15) days from
notice of the judgment or final order or resolution appealed from, or of the denial of the
petitioner's motion for new trial or reconsideration filed in due time after notice of the judgment. .
...
a party litigant wishing to file a petition for review on certiorari must do so within 15 days from
receipt of the judgment, final order or resolution sought to be appealed. In this case, petitioners
Bernyl and Katherene's motion for reconsideration of the appellate court's Resolution was
denied by the Court of Appeals in its Resolution dated 29 June 2006, a copy of which was

received by petitioners on 4 July 2006. The present petition was filed on 1 September 2006;
thus, at the time of the filing of said petition, 59 days had elapsed, way beyond the 15-day period
within which to file a petition for review under Rule 45, and even beyond an extended period of
30 days, the maximum period for extension allowed by the rules had petitioners sought to move
for such extra time. As the facts stand, petitioners Bernyl and Katherene had lost the right to
appeal via Rule 45. DSETcC
Be that as it may, alternatively, if the decision of the appellate court is attended by grave abuse
of discretion amounting to lack or excess of jurisdiction, then such ruling is fatally defective on
jurisdictional ground and may be questioned even after the lapse of the period of appeal under
Rule 45 26 but still within the period for filing a petition for certiorari under Rule 65.
We have previously ruled that grave abuse of discretion may arise when a lower court or tribunal
violates and contravenes the Constitution, the law or existing jurisprudence. By grave abuse of
discretion is meant such capricious and whimsical exercise of judgment as is equivalent to lack
of jurisdiction. The abuse of discretion must be grave, as where the power is exercised in an
arbitrary or despotic manner by reason of passion or personal hostility and must be so patent
and gross as to amount to an evasion of positive duty or to a virtual refusal to perform the duty
enjoined by or to act at all in contemplation of law. 27 The word "capricious", usually used in
tandem with the term "arbitrary", conveys the notion of willful and unreasoning action. Thus,
when seeking the corrective hand of certiorari, a clear showing of caprice and arbitrariness in the
exercise of discretion is imperative. 28
In reversing and setting aside the resolutions of the DOJ, petitioners Bernyl and Katherene
contend that the Court of Appeals acted with grave abuse of discretion amounting to lack or
excess of jurisdiction. ITSCED
The Court of Appeals, when it resolved to grant the petition in CA-G.R. CEB. SP No. 00068, did
so on two grounds, i.e., 1) that "the public respondent (DOJ) gravely abused his discretion in
finding that there was no reversible error on the part of the Cebu City Prosecutor dismissing the
case against the private respondent without stating the facts and the law upon which this
conclusion was made"; 29 and 2) that "the public respondent (DOJ) made reference to the facts
and circumstances of the case leading to his finding that no probable cause exists, . . . (the) very
facts and circumstances (which) show that there exists a probable cause to believe that indeed
the private respondents committed the crimes . . . charged against them." 30 TcSICH

office carrying a bulky plastic bag. There was also the fact that the transactions in Mr. York's
account used the code 'CEO8' which presumably point to the private respondent Ms.
Balangauan as the author thereof for she is the one assigned to such work station. IHEDAT
Furthermore, petitioner was able to establish that it was Ms. Balangauan who handled Mr. York's
account and she was the one authorized to make the placement of the sum of P2,500,000.00.
Since said sum is nowhere to be found in the records of the bank, then, apparently, Ms.
Balangauan must be made to account for the same. 31
The appellate court then concluded that:
These facts engender a well-founded belief that that (sic) a crime has been committed and that
the private respondents are probably guilty thereof. In refusing to file the corresponding
information against the private respondents despite the presence of the circumstances making
out a prima facie case against them, the public respondent gravely abused his discretion
amounting to an evasion of a positive duty or to a virtual refusal either to perform the duty
enjoined or to act at all in contemplation of law. 32
The Court of Appeals found fault in the DOJ's failure to identify and discuss the issues raised by
the respondent HSBC in its Petition for Review filed therewith. And, in support thereof,
respondent HSBC maintains that it is incorrect to argue that "it was not necessary for the
Secretary of Justice to have his resolution recite the facts and the law on which it was based",
because courts and quasi-judicial bodies should faithfully comply with Section 14, Article VIII of
the Constitution requiring that decisions rendered by them should state clearly and distinctly the
facts of the case and the law on which the decision is based. 33 HaTDAE
Petitioners Bernyl and Katherene, joined by the Office of the Solicitor General, on the other
hand, defends the DOJ and assert that the questioned resolution was complete in that it stated
the legal basis for denying respondent HSBC's petition for review "that (after) an examination
(of) the petition and its attachment [it] found no reversible error that would justify a reversal of the
assailed resolution which is in accord with the law and evidence on the matter."

It explained that:

It must be remembered that a preliminary investigation is not a quasi-judicial proceeding, and

that the DOJ is not a quasi-judicial agency exercising a quasi-judicial function when it reviews
the findings of a public prosecutor regarding the presence of probable cause. In Bautista v.
Court of Appeals, 34 this Court held that a preliminary investigation is not a quasi-judicial
proceeding, thus:

In refusing to file the appropriate information against the private respondents because he 'does
not dwell on possibilities, suspicion and speculation' and that he rules 'based on hard facts and
solid evidence', (sic) the public respondent exceeded his authority and gravely abused his
discretion. It must be remembered that a finding of probable cause does not require an inquiry
into whether there is sufficient evidence to procure a conviction. It is enough that it is believed
that the act or omission complained of constitutes the offense charged. The term does not mean
'actual or positive cause;' (sic) nor does it import absolute certainty. It is merely based on opinion
and reasonable belief. [Citation omitted.] A trial is there precisely for the reception of evidence of
the prosecution in support of the charge.

[T]he prosecutor in a preliminary investigation does not determine the guilt or innocence of the
accused. He does not exercise adjudication nor rule-making functions. Preliminary investigation
is merely inquisitorial, and is often the only means of discovering the persons who may be
reasonably charged with a crime and to enable the fiscal to prepare his complaint or information.
It is not a trial of the case on the merits and has no purpose except that of determining whether a
crime has been committed and whether there is probable cause to believe that the accused is
guilty thereof. While the fiscal makes that determination, he cannot be said to be acting as a
quasi-court, for it is the courts, ultimately, that pass judgment on the accused, not the fiscal.
SEHACI

In this case, the petitioner had amply established that it has a prima facie case against the
private respondents. As observed by the public respondent in his second assailed resolution,
petitioner was able to present photographs of private respondent Ms. Balangauan leaving her

Though some cases 35 describe the public prosecutor's power to conduct a preliminary
investigation as quasi-judicial in nature, this is true only to the extent that, like quasi-judicial
bodies, the prosecutor is an officer of the executive department exercising powers akin to those

of a court, and the similarity ends at this point. 36 A quasi-judicial body is an organ of
government other than a court and other than a legislature which affects the rights of private
parties through either adjudication or rule-making. 37 A quasi-judicial agency performs
adjudicatory functions such that its awards, determine the rights of parties, and their decisions
have the same effect as judgments of a court. Such is not the case when a public prosecutor
conducts a preliminary investigation to determine probable cause to file an Information against a
person charged with a criminal offense, or when the Secretary of Justice is reviewing the
former's order or resolutions. In this case, since the DOJ is not a quasi-judicial body, Section 14,
Article VIII of the Constitution finds no application. Be that as it may, the DOJ rectified the
shortness of its first resolution by issuing a lengthier one when it resolved respondent HSBC's
motion for reconsideration.
Anent the substantial merit of the case, whether or not the Court of Appeals' decision and
resolution are tainted with grave abuse of discretion in finding probable cause, this Court finds
the petition dismissible. aCcSDT
The Court of Appeals cannot be said to have acted with grave abuse of discretion amounting to
lack or excess of jurisdiction in reversing and setting aside the resolutions of the DOJ. In the
resolutions of the DOJ, it affirmed the recommendation of ACP Laborte that no probable cause
existed to warrant the filing in court of an Information for estafa and/or qualified estafa against
petitioners Bernyl and Katherene. It was the reasoning of the DOJ that "[w]hile appellant has
every reason to suspect Katherene for the loss of the P2,500,000.00 as per York's bank
statements, the cash deposits were identified by the numerals 'CEO8' and it was only Katherene
who could transact from the computer in the work station CEO-8, plus alleged photographs
showing Katherene 'leaving her office at 5:28 p.m. with a bulky plastic bag presumably
containing cash' since a portion of the funds was withdrawn, we do not, however, dwell on
possibilities, suspicion and speculation. We rule based on hard facts and solid evidence." 38
We do not agree.
Probable cause has been defined as the existence of such facts and circumstances as would
excite belief in a reasonable mind, acting on the facts within the knowledge of the prosecutor,
that the person charged was guilty of the crime for which he was prosecuted. 39 A finding of
probable cause merely binds over the suspect to stand trial. It is not a pronouncement of guilt.
40 EIcSDC
The executive department of the government is accountable for the prosecution of crimes, its
principal obligation being the faithful execution of the laws of the land. A necessary component
of the power to execute the laws is the right to prosecute their violators, 41 the responsibility for
which is thrust upon the DOJ. Hence, the determination of whether or not probable cause exists
to warrant the prosecution in court of an accused is consigned and entrusted to the DOJ. And by
the nature of his office, a public prosecutor is under no compulsion to file a particular criminal
information where he is not convinced that he has evidence to prop up the averments thereof, or
that the evidence at hand points to a different conclusion.
But this is not to discount the possibility of the commission of abuses on the part of the
prosecutor. It is entirely possible that the investigating prosecutor has erroneously exercised the
discretion lodged in him by law. This, however, does not render his act amenable to correction
and annulment by the extraordinary remedy of certiorari, absent any showing of grave abuse of
discretion amounting to excess of jurisdiction. 42 ISEHTa

And while it is this Court's general policy not to interfere in the conduct of preliminary
investigations, leaving the investigating officers sufficient discretion to determine probable
cause, 43 we have nonetheless made some exceptions to the general rule, such as when the
acts of the officer are without or in excess of authority, 44 resulting from a grave abuse of
discretion. Although there is no general formula or fixed rule for the determination of probable
cause, since the same must be decided in the light of the conditions obtaining in given situations
and its existence depends to a large degree upon the finding or opinion of the judge conducting
the examination, such a finding should not disregard the facts before the judge (public
prosecutor) or run counter to the clear dictates of reason. 45
Applying the foregoing disquisition to the present petition, the reasons of DOJ for affirming the
dismissal of the criminal complaints for estafa and/or qualified estafa are determinative of
whether or not it committed grave abuse of discretion amounting to lack or excess of jurisdiction.
In requiring "hard facts and solid evidence" as the basis for a finding of probable cause to hold
petitioners Bernyl and Katherene liable to stand trial for the crime complained of, the DOJ
disregards the definition of probable cause that it is a reasonable ground of presumption that
a matter is, or may be, well-founded, such a state of facts in the mind of the prosecutor as would
lead a person of ordinary caution and prudence to believe, or entertain an honest or strong
suspicion, that a thing is so. 46 The term does not mean "actual and positive cause" nor does it
import absolute certainty. 47 It is merely based on opinion and reasonable belief; 48 that is, the
belief that the act or omission complained of constitutes the offense charged. While probable
cause demands more than "bare suspicion", it requires "less than evidence which would justify
conviction". Herein, the DOJ reasoned as if no evidence was actually presented by respondent
HSBC when in fact the records of the case were teeming; or it discounted the value of such
substantiation when in fact the evidence presented was adequate to excite in a reasonable mind
the probability that petitioners Bernyl and Katherene committed the crime/s complained of. In so
doing, the DOJ whimsically and capriciously exercised its discretion, amounting to grave abuse
of discretion, which rendered its resolutions amenable to correction and annulment by the
extraordinary remedy of certiorari. aTCAcI
From the records of the case, it is clear that a prima facie case for estafa/qualified estafa exists
against petitioners Bernyl and Katherene. A perusal of the records, i.e., the affidavits of
respondent HSBC's witnesses, the documentary evidence presented, as well as the analysis of
the factual milieu of the case, leads this Court to agree with the Court of Appeals that, taken
together, they are enough to excite the belief, in a reasonable mind, that the Spouses Bernyl
Balangauan and Katherene Balangauan are guilty of the crime complained of. Whether or not
they will be convicted by a trial court based on the same evidence is not a consideration. It is
enough that acts or omissions complained of by respondent HSBC constitute the crime of estafa
and/or qualified estafa.
Collectively, the photographs of petitioner Katherene leaving the premises of respondent HSBC
carrying a bulky plastic bag and the affidavits of respondent HSBC's witnesses sufficiently
establish acts adequate to constitute the crime of estafa and/or qualified estafa. What the
affidavits bear out are the following: that York was a Premier Client of respondent HSBC; that
petitioner Katherene handled all the accounts of York; that not one of York's accounts reflect the
P2,500,000.00 allegedly deposited in a higher yielding account; that prior to the discovery of her
alleged acts and omissions, petitioner Katherene supposedly persuaded York to invest in a "new
product" of respondent HSBC, i.e., a higher interest yielding time deposit; that York made a total
of P2,500,000.00 investment in the "new product" by authorizing petitioner Balangauan to
transfer said funds to it; that petitioner Katherene supposedly asked York to sign several
transaction documents in order to transfer the funds to the "new product"; that said documents

turned out to be withdrawal slips and cash movement tickets; that at no time did York receive the
cash as a result of signing the documents that turned out to be withdrawal slips/cash movement
tickets; that York's account was regularly credited "loose change" in the amounts of P12,500.00
and P8,333.33 beginning in the month after the alleged "transfer" of York's funds to the "new
product"; that the regular deposits of loose change were transacted with the use of petitioner
Katherene's work terminal accessed by her password "CEO8"; that the "CEO8" password was
keyed in with the use of a swipe card always in the possession of petitioner Katherene; that one
of the loose-change deposits was transacted via the phone banking feature of respondent HSBC
and that when traced, the phone number used was the landline number of the house of
petitioners Bernyl and Katherene; that respondent HSBC's bank personnel, as well as York,
supposedly a) talked with petitioner Katherene on the phone, and that she allegedly admitted
that the missing funds were invested with Shell Company, of which York approved, and that it
was only for one year; and b) met with petitioner Bernyl, and that the latter at first denied having
knowledge of his wife's complicity, but later on admitted that he knew of the investment with
Shell Company, and that he supposedly made the loose-change deposit via phone banking; that
after 23 April 2002, York was told that respondent HSBC had no "new product" or that it was
promoting investment with Shell Company; that York denied having any knowledge that his
money was invested outside of respondent HSBC; and that petitioner Katherene would not have
been able to facilitate the alleged acts or omissions without taking advantage of her position or
office, as a consequence of which, HSBC had to reimburse York the missing P2,500,000.00.
STIEHc
From the above, the alleged circumstances of the case at bar make up the elements of abuse of
confidence, deceit or fraudulent means, and damage under Art. 315 of the Revised Penal Code
on estafa and/or qualified estafa. They give rise to the presumption or reasonable belief that the
offense of estafa has been committed; and, thus, the filing of an Information against petitioners
Bernyl and Katherene is warranted. That respondent HSBC is supposed to have no personality
to file any criminal complaint against petitioners Bernyl and Katherene does not ipso facto clear
them of prima facie guilt. The same goes for their basic denial of the acts or omissions
complained of; or their attempt at shifting the doubt to the person of York; and their claim that
witnesses of respondent HSBC are guilty of fabricating the whole scenario. These are matters of
defense; their validity needs to be tested in the crucible of a full-blown trial. Lest it be forgotten,
the presence or absence of the elements of the crime is evidentiary in nature and is a matter of
defense, the truth of which can best be passed upon after a full-blown trial on the merits.
Litigation will prove petitioners Bernyl and Katherene's innocence if their defense be true.
In fine, the relaxation of procedural rules may be allowed only when there are exceptional
circumstances to justify the same. Try as we might, this Court cannot find grave abuse of
discretion on the part of the Court of Appeals, when it reversed and set aside the resolutions of
the DOJ. There is no showing that the appellate court acted in an arbitrary and despotic manner,
so patent or gross as to amount to an evasion or unilateral refusal to perform its legally
mandated duty. On the contrary, we find the assailed decision and resolution of the Court of
Appeals to be more in accordance with the evidence on record and relevant laws and
jurisprudence than the resolutions of the DOJ. Cdpr
Considering the allegations, issues and arguments adduced and our disquisition above, we
hereby dismiss the instant petition for being the wrong remedy under the Revised Rules of
Court, as well as for petitioner Bernyl and Katherene's failure to sufficiently show that the
challenged Decision and Resolution of the Court of Appeals were rendered in grave abuse of
discretion amounting to lack or excess of jurisdiction.

WHEREFORE, premises considered, the instant Petition for Certiorari is DISMISSED for lack of
merit. The 28 April 2006 Decision and the 29 June 2006 Resolution of the Court of Appeals in
CA-G.R. CEB-SP No. 00068, are hereby AFFIRMED. With costs against petitioners Spouses
Bernyl Balangauan and Katherene Balangauan.
SO ORDERED.

[G.R. No. 81385. February 21, 1989.]

EDUARDO B. OLAGUER AND CONRADO S. REYES in their official capacity as FISCAL
AGENTS OF THE PRESIDENTIAL COMMISSION ON GOOD GOVERNMENT, petitioners, vs.
THE REGIONAL TRIAL COURT, NATIONAL CAPITAL JUDICIAL REGION, BRANCH 48,
MANILA, PRESIDED BY THE HONORABLE JUDGE DEMETRIO M. BATARIO, JR., M.B.
OLIVARES, AUGUSTO VILLANUEVA, ARACELLI LINSANGAN, LUISA LINSANGAN,
ALEJANDRO MARAMAG, MANUEL SALAK, TURNITA SORIANO, LINO SISON, DOMINGO
FLORES, MILAGROS HIZON, and CARIDAD ORPIADA, respondents.
The Solicitor General for petitioners.
Delia L. Hermoso for private respondents.
SYLLABUS
1.
CONSTITUTIONAL
LAW;
PRESIDENTIAL
COMMISSION
ON
GOOD
GOVERNMENT (PCGG); CO-EQUAL BODY WITH THE REGIONAL TRIAL COURTS AND
THE COURT OF APPEALS. In the exercise of its functions, the PCGG is a co-equal body
with the regional trial courts and co-equal bodies have no power to control the other. The
regional trial courts and the Court of Appeals have no jurisdiction over the PCGG in the exercise
of its powers under the applicable Executive Orders and Section 26, Article XVIII of the 1987
Constitution and, therefore, may not interfere with and restrain or set aside the orders and
actions of the PCGG. By the same token, the regional trial courts have no jurisdiction over the
acts of fiscal agents of the PCGG acting for and in behalf of said commission.
2.
ID.; ID.; SEC. 4(a), EXECUTIVE ORDER NO. 1; AFFORDED MEMBERS OF SAID
COMMISSION IMMUNITY FROM SUIT FOR DAMAGES. The Commission should not be
embroiled in and swamped by legal suits before inferior courts all over the land. Otherwise, the
Commission will be forced to spend valuable time defending all its actuations in such courts.
This will defeat the very purpose behind the creation of the Commission. Accordingly, Section
4(a) of Executive Order No. 1 expressly accorded the Commission and its members immunity
from suit for damages in that: "No civil action shall lie against the Commission or any member
thereof for anything done or omitted in the discharge of the task contemplated by this order."
3.
SANDIGANBAYAN; VESTED WITH JURISDICTION OVER CASES INVOLVING
MEMBERS AND AGENTS OF THE PCGG. Petitioners, as fiscal agents of the PCGG, cannot
be sued in such capacity before the ordinary courts. The tribunal for such purpose is the
Sandiganbayan. It necessarily follows that the issues raised by the private respondents before
the respondent judge to the effect that petitioners are usurpers and have no right to sit in the
board of directors or act as corporate officers of the PJI are issues which should be addressed to
the Sandiganbayan.

DECISION
GANCAYCO, J p:
The parameters of the jurisdiction of the ordinary courts in relation to the Securities and
Exchange Commission (SEC) and the Sandiganbayan are put into issue in this petition.
On December 17, 1987, private respondents filed a complaint for injunction and damages,
with a prayer for the issuance of a writ of preliminary injunction and/or temporary restraining
order, in the Regional Trial Court (RTC) of Manila against petitioners and Winston
Marbella, Gaston Ortigas, Robeto Federis, Manuel C. Villa-Real, Emanuel Soriano, Jack
Arroyo and Benjamin Tulio.
The complaint alleges, among others, that private respondents are only stockholders with
the right to vote of the Philippine Journalists, Inc. (PJI), Publisher of several daily periodicals
such as Manila Journal, People's Journal, etc. Sometime in 1977, PJI, obtained from
Development Bank of the Philippines (DBP) certain financing accommodations and as
security thereof executed a first mortgage in favor of DBP on its assets enumerated in a list
attached to the mortgage. The PJI stockholders assigned to DBP the voting rights over 67%
of the total subscribed and outstanding voting shares of stock of the company held by
them. The DBP appointed said PJI stockholders as proxies to exercise its right to vote.
Due to some financial difficulty on its part, PJI requested for a restructuring of its loan
obligation with certain conditions. The request was granted by the DBP in a letter dated
August 4, 1986. Due to the default on the part of the PJI, the DBP cancelled the proxies in
favor of the assigning stockholders on September 30, 1986 and designated as its proxies
petitioner Eduardo Olaguer, Jose Mari Velez and Manuel de Leon. DBP scheduled a
special stockholders meeting for the purpose of electing new set of directors.
It is also alleged in the complaint that before the special meeting, petitioner Olaguer asked
private respondent Rosario M. Barreto Olivares to assign qualifying shares not only to
the three proxies of DBP but also to two others to be chosen by him so as to enable the
five of them to sit in the PJI board of directors, and that, accordingly, they may be able to
coordinate more effectively with DBP as regards the early evaluation and approval of the request
for another restructuring of the PJI loan. Thus respondent Olivares assigned her
shareholdings covered by Stock Certificate No. 34 (which were at that time assigned to
DBP) to petitioner Olaguer, Marbella, Ortigas, Mari Velez and de Leon, at one share each.
The deeds of assignment provided that the said assignment are valid only as long as the
nominees is the person designated by the DBP as its representative to sit in the board of
directors.
The complaint also alleges that although Olaguer was elected chairman of the board and
chief executive officer of PJI, he failed to comply with his commitment and that this gave
private respondents a reason to cancel the assignment. Olaguer also committed certain
illegal acts which gave rise to the filing of several complaints against him. However, before
these cases could be resolved, Olaguer's appointment as member of the board of directors
of DBP was terminated by President Corazon C. Aquino effective September 9, 1987. He
was informed about his termination through two letters dated August 27 and October 12,
1987. prcd
It is likewise alleged that, the termination notwithstanding, Olaguer continued to exercise and
retain full management and control of PJI. The DBP chief legal counsel wrote to petitioner Reyes

informing him of Olaguer's removal from office and enjoining him from implementing or
complying with any instructions from Olaguer and from disposing of the properties of PJI and
disbursing any funds without prior approval of the board of directors of PJI which will soon be
elected, except such amounts needed in the ordinary course of business. Accordingly, the DBP,
acting through its Chairman, Jesus Estanislao and its Director-in-Charge, Jose Mari
Velez, entered into an Interim Agreement with private respondents. The said agreement
called for a special stockholders meeting for the purpose of electing a new board of directors
which shall hold office until the next regular stockholders meeting to be held on February 2,
1988.
The complaint further alleges that in a letter dated December 14, 1987, the DBP chief legal
counsel informed the private respondents that the said Interim Agreement cannot be
implemented because Olaguer claims that he has just been designated the fiscal and
team leader of the Presidential Commission on Good Government (PCGG) assigned to
the PJI and that all his actions are sanctioned and reported to PCGG Chairman Ramon A.
Diaz, and that it is the PCGG which exercises the voting rights of all PJI common stocks
sequestered since 1986, including those assigned to DBP and that the PJI qualifying share
now held by PJI Directors came from shares sequestered by the PCGG. These
observations are contained in a letter dated October 31, 1987 written by petitioner Reyes in his
capacity as chief legal counsel and corporate secretary of PJI. It is stated therein that Olaguer,
together with Marbella, Ortigas, Soriano, Federis, Arroyo and Villa-Real have been acting as
corporate officers and/or members of the board without their having been elected by the majority
vote of stockholders and without their owning in their own right even a single qualifying share.
In addition, it is alleged that petitioner Reyes had been sending out notices to private
respondents about an alleged stockholders meeting to be held on December 21, 1987 at the
PJI building, and that in the letter written by the DBP chief legal counsel, 1 it is stated that
petitioner Olaguer and his associates who claim to be members of the board and
corporate officers of PJI do not represent DBP and that they are not authorized to act in
its behalf.
The complaint emphasizes that the claim of petitioner Reyes that Olaguer can sit as chairman of
the board of directors of PJI even if he is no longer a director of DBP but as long as he is the
fiscal agent and team leader of the PCGG assigned is baseless because: (a) the writs of
sequestration on the shares of respondents Hizon, Orpiada, Maramag, Flores and Sison, served
on them on or about February 19, 1987, and on respondents Linsangan, Salak, Soriano and
Villanueva, served on them on or about April 28, 1987, had been automatically lifted last August
19, 1987 and October 28, 1987, respectively, pursuant to Section 26, Article XVIII of the 1987
Constitution; and only the sequestration on the shares of respondent Olivares has not been lifted
since a complaint was filed against her before the expiration of the constitutional deadline for
filing cases; (b) the sequestered shares of respondent Olivares could not be voted upon by
petitioners herein and their companions under their claim of being PCGG fiscal agents under the
recent pronouncement of the Supreme Court in several cases clearly stating that sequestration
does not involve the right of ownership; (c) no other meeting has been validly called for the
election of a new set of directors after the members of the board elected last October 2, 1986
had ceased to be such directors, either by virtue of the cancellation of their qualifying shares or
their resignation; (d) with the filing of Civil Case No. 35 before the Sandiganbayan where the PJI
was listed as one of the involved corporations, all actions affecting said corporation, including
those which will affect rights of ownership and disposition of assets, must have the prior
approval of the Sandiganbayan which exercises jurisdiction over these corporations as one of
the properties in litigation; and (e) by order of President Aquino, petitioner Olaguer's separation

from the PJI was called for; that the acts of all the petitioners and their companions of either
continuing to sit in the board of directors of PJI and/or representing and acting as its corporate
officers are illegal and are the acts of usurpers and intruders violative of the rights of private
respondents as stockholders and are causing great damage and prejudice to them as well as to
the rights of the DBP under the Deed of Assignment, and that such acts of usurpation should be
enjoined by the trial court.
Under the second cause of action for damages, it is alleged that Olaguer acted illegally and
outside the authority granted him as nominee of DBP and, accordingly, Olivares cancelled
the Deed of Assignment of one qualifying share to him as well as the Deed of Assignment
in favor of Marbella and Ortigas. The notice of cancellation was served upon them on
December 5, 1986. As a consequence of such cancellation, the three failed to qualify to sit as
members of the board of PJI. LLpr
Private respondents also alleged that despite such notice, petitioner and his associates
continued to sit in the board and that Olaguer took over the complete management of the
corporation and even caused the appointment of other members of the board and/or
corporate officers even if such appointees do not own PJI shares of stock in their own
right. It is likewise alleged that the petitioner and his associates should be enjoined from
committing further acts of usurpation and that they should be held liable for all unlawful
disbursements they have made. It is further alleged that some of the private respondents had
been unlawfully dismissed and/or retired one after another thereby depriving them of all benefits
they are entitled to and subjecting them to great mental anguish, sleepless nights, deep
humiliation and great anxiety for which they must be paid damages in an amount left to the
sound discretion of the court. Private respondents also asked for exemplary damages as well as
the sum of P200,000.00 for attorney's fees and expenses litigation.
Private respondents prayed that pending a hearing on the merits of the case, a writ of
preliminary injunction or a temporary restraining order be issued against petitioner Reyes
enjoining him from holding the special stockholders meeting scheduled at 8:00 A.M. on
December 21, 1987, and enjoining Olaguer and his associates from sitting and acting as
members of the board of directors of PJI or as corporate officers. Private respondents also
prayed that such temporary restraining order and/or writ of preliminary injunction be made
permanent after due hearing and that Petitioner Olaguer and his associates be made to pay,
jointly and severally, actual damages as may be proved after audit, including moral and
exemplary damages, attorney's fees and litigation expenses in the amount of P200,000.00, and
the costs of the suit. 2
On December 18, 1987, an order was issued by the trial court setting the petition for the
issuance of a writ of preliminary injunction for hearing on January 4, 1988 at 1:30 in the
afternoon. A temporary restraining order was issued enjoining petitioner Reyes from holding the
special stockholders meeting scheduled for December 21, 1987 and enjoining all the other
petitioners including Olaguer from sitting and acting as members of the board and/or corporate
officers of PJI until further orders of the court.

On January 4, 1988, a motion to dismiss was filed by the petitioners on the ground that the court
has no jurisdiction over the persons of petitioners; that they were not served summons and that
the subject matter of the action involves controversies arising out of intra-corporate relations
between and among stockholders which are covered by the provisions of Section 5 of
Presidential Decree No. 902-A so that the matter is within the original and exclusive jurisdiction

of the Securities and Exchange Commission (SEC); that the venue for a petition seeking
injunctive relief should be the Sandiganbayan where aforesaid PCGG Case No. 0035 against
Benjamin Romualdez, Rosario Olivares, et al. is pending, pursuant to Executive Order No. 14
defining the jurisdiction over cases involving the alleged ill-gotten wealth of Former President
Marcos, et al.; that it is the SEC which should exercise jurisdiction over the case pursuant to
Section 6 of Presidential Decree No. 902-A; and that the complaint states no cause of action
inasmuch as the petitioners and the other defendants hold shares emanating from the PCGG,
and not from the DBP; that the shares issued to DBP for Olivares, et al on the basis of an
erroneous DBP legal opinion have been declared void ab initio and cancelled by the PCGG on
November 4, 1987 so that the DBP is not a stockholder of record; that the call for the
stockholders meeting by petitioner Reyes was with the approval of the PCGG Chairman; that PJI
is a sequestered corporation listed as item No. 49 under "Shares of Stock" in "Assets and Other
Property of Benjamin Romualdez" marked Annex "A", in Case No. 0035 for "Reconveyance,
Reversion, Accounting, Restitution and Damages," entitled "Republic of the Philippines, plaintiff
versus Benjamin (Kokoy) Romualdez, et al.,"; that the PJI, pursuant to its Board Resolution No.
43, dated November 14, 1987, has authorized the filing of criminal complaints against Benjamin
(Kokoy) Romualdez, Rosario Olivares, Tuynita Soriano, Jose T. Abundo, Evelyn Nicasio,
Alejandro Maramag, Caridad Orpiada and other former and present PJI officers and employees
who defrauded the company by conspiring in and/or authorizing the illegal disbursements of PJI
funds amounting to P10.6 million, all for the account and upon instructions of said Romualdez
who was neither an officer, director, stockholder of record of PJI nor a creditor or supplier
thereof; that regarding the sequestration of PJI pursuant to orders of the PCGG dated April 22,
1986 and February 19, 1987, the actual sequestration proceedings have not been terminated
upon the filing of PCGG & Case No. 0035 before the Sandiganbayan on July 31, 1987.
Petitioners maintain that under the pertinent provisions of the 1987 Constitution, the
commencement of a judicial action does not ipso facto lift the sequestration order. It is the nonfiling of a judicial action within six months from the ratification of the 1987 Constitution if the
sequestration order is issued before the ratification, or within six months from the time
sequestration order was issued if the same was issued after such ratification, which will
automatically lift the sequestration order. Petitioners also stated that while the PJI suffered huge
loses under the administration of private respondents, the corporation realized profits under the
management of petitioner Olaguer. All the common and preferred stocks of private respondents
have been sequestered pursuant to the orders of the PCGG dated April 22, 1986 and February
19, 1987 and it is the PCGG which exercises the voting rights pertaining to said sequestered
shares pursuant to the Memorandum of President Aquino to the PCGG dated June 26, 1986.
A Memorandum in support of the prayer for the issuance of a writ of preliminary injunction and
opposition to the motion to dismiss was filed by counsel for private respondents.
On January 14, 1988, an order was issued by the trial court denying the motion to dismiss and
issuing a writ of preliminary injunction as prayed for upon a bond in the amount of P50,000.00 to
be filed by private respondents.
Hence, the herein petition for certiorari and prohibition with a prayer for the issuance of a
temporary restraining order and/or a writ of preliminary injunction wherein the main issue is
whether or not the trial court has jurisdiction over the subject matter of the action.
On January 26, 1988, a resolution was issued by this Court requiring the respondents to
comment therein within ten (10) days from notice. A temporary restraining order was issued
enjoining the respondent judge to cease and desist from enforcing the order of the trial court

dated January 14, 1988 in Civil Case No. 87-43156 as well as the writ of preliminary injunction
issued against petitioners. LLphil

Petitioners, as fiscal agents of the PCGG, cannot be sued in such capacity before the ordinary
courts. The tribunal for such purpose is the Sandiganbayan.

Acting on the manifestation and motion filed by counsel for private respondents on February 4,
1988, this Court issued a resolution enjoining petitioner Reyes and/or the corporate officers of
PJI from holding another special stockholders meeting on February 5, 1988 or at any date
thereafter pending resolution of this case, and directing the parties to maintain the status quo
until further orders from the Court.

It necessarily follows that the issues raised by the private respondents before the respondent
judge to the effect that petitioners are usurpers and have no right to sit in the board of directors
or act as corporate officers of the PJI are issues which should be addressed to the
Sandiganbayan.

The private respondents filed their comment on the petition. Thereafter, the petitioners filed their
reply. On April 5, 1988, the court resolved to give due course to the petition and considered the
case submitted for decision. Nevertheless, the private respondents filed a rejoinder.
The petition is impressed with merit. There is no dispute that the PJI is now under sequestration
by the PCGG and that Civil Case No. 0035 was filed in the Sandiganbayan wherein the PJI is
listed as among the corporations involved in the unexplained wealth case against former
President Marcos, Romualdez and many others. The records likewise show that petitioner
Olaguer, among others, is a fiscal agent of the PCGG and that as Chairman of the Board of
Directors of the PJI, he was acting for and in behalf of the PCGG. Under Section 2 of Executive
Order No. 14, the Sandiganbayan has exclusive and original jurisdiction over all cases regarding
"the funds, moneys, assets and properties illegally acquired by Former President Ferdinand E.
Marcos, Mrs. Imelda Romualdez Marcos, their close relatives, subordinate, business associates,
dummies, agents, or nominees," 3 civil or criminal, including incidents arising from such cases.
The Decision of the Sandiganbayan is subject to review on certiorari exclusively by the Supreme
Court. 4

WHEREFORE, the petition is GRANTED. The respondent judge is permanently enjoined from
enforcing the order of the Trial Court dated January 14, 1988. The restraining order issued by
this Court dated February 4, 1988 enjoining petitioner Reyes and/or the corporate officers of the
PJI from holding the special stockholders meeting on February 5, 1988 or a any date thereafter,
and to preserve and maintain the status quo, is hereby lifted. The order of the trial court dated
January 14, 1988 is hereby SET ASIDE and another order is hereby issued dismissing the
complaint, without pronouncement as to costs. This Decision is immediately executory.
SO ORDERED.
Fernan, C.J., Narvasa, Melencio-Herrera, Cruz, Paras, Padilla, Bidin, Sarmiento, Corts, GrioAquino, Medialdea and Regalado, JJ., concur.
Separate Opinions
GUTIERREZ, JR. J ., dissenting:
I reiterate my dissent in PCGG vs. Pea, G.R. No. 77663, April 12, 1988.

In the exercise of its functions, the PCGG is a co-equal body with the regional trial courts and
co-equal bodies have no power to control the other. 5 The regional trial courts and the Court of
Appeals have no jurisdiction over the PCGG in the exercise of its powers under the applicable
Executive Orders and Section 26, Article XVIII of the 1987 Constitution and, therefore, may not
interfere with and restrain or set aside the orders and actions of the PCGG. 6 By the same
token, the regional trial courts have no jurisdiction over the acts of fiscal agents of the PCGG
acting for and in behalf of said commission.
The Commission should not be embroiled in and swamped by legal suits before inferior courts
all over the land. Otherwise, the Commission will be forced to spend valuable time defending all
its actuations in such courts. This will defeat the very purpose behind the creation of the
Commission. Accordingly, Section 4(a) of Executive Order No. 1 expressly accorded the
Commission and its members immunity from suit for damages in that: "No civil action shall lie
against the Commission or any member thereof for anything done or omitted in the discharge of
the task contemplated by this order."
Civil Case No. 87-43156 pending before the respondent judge is denominated as one for
"injunction with prayer for writ of preliminary injunction and/or temporary restraining order and
damages." Particularly, under paragraph 17(d) of the complaint, private respondents admitted
that the PJI is listed as one of the involved corporations in Civil Case No. 0035 pending before
the Sandiganbayan which now exercises jurisdiction over the said corporation. Petitioners
Olaguer and Reyes appear to be fiscal agents of the PCGG. There can be no doubt, therefore,
that the subject matter of the action (the PJI, its properties and assets) falls within the exclusive
jurisdiction of the Sandiganbayan. LLjur

FELICIANO, J ., concurring:
I concur in the result, for the reasons and with the qualification is set out in my separate opinion
in PCGG vs. Pea, G.R. No. 77553, 12 April 1988.

[G.R. No. 141949. October 14, 2002.]

CEFERINO PADUA, petitioner, vs. HON. SANTIAGO RANADA, PRESIDING JUDGE OF
MAKATI, RTC, BRANCH 137, PHILIPPINE NATIONAL CONSTRUCTION CORP., TOLL
REGULATORY BOARD, DEPARTMENT OF PUBLIC WORKS AND HIGHWAYS, and
REPUBLIC OF THE PHILIPPINES, respondents.
[G.R. No. 151108. October 14, 2002.]
EDUARDO C. ZIALCITA, petitioner, vs. TOLL REGULATORY BOARD AND CITRA METRO
MANILA TOLLWAYS CORPORATION, respondents.
Ceferino Padua Law Office for petitioner.
The Solicitor General for public respondents.
The Office of the Government Corporate Counsel for respondent.

SYNOPSIS
The Toll Regulatory Board (TRB) issued Resolution No. 2001-89 authorizing provisional toll rate
adjustments at the Metro Manila Skyway, effective January 1, 2002. Petitioners assailed before
this Court the validity and legality of the TRB Resolution.
The Supreme Court ruled that Letter of Instruction No. 1334-A expressly allowed the TRB to
grant ex-parte provisional or temporary increase in toll rates. It directs, orders and instructs the
TRB to issue provisional toll rates adjustment ex-parte without the need of notice, hearing and
publication. All that is necessary is that it be issued upon (1) a finding that the main petition is
sufficient in form and substance; (2) the submission of an affidavit showing that the increase in
rates substantially conforms to the formula, if any is stipulated in the franchise or toll operation
agreement, and that failure to immediately impose and collect the increase in rates would result
in great irreparable injury to the petitioner; and (3) the submission of a bond. The Court has ruled
in a number of cases that an administrative agency may be empowered to approve provisionally,
when demanded by urgent public need, rates of public utilities without a hearing. The reason is
easily discerned from the fact that provisional rates are by their nature temporary, and subject to
adjustment in conformity with the definitive rates approved after final hearing. The Court likewise
ruled that in the case at bar the initial proper recourse is to file a petition for review of the
adjusted toll rates with the TRB. The TRB, as the agency assigned to supervise the collection of
toll fees and the operation of toll facilities, has the necessary expertise, training and skills to
judiciously decide matters of this kind.
SYLLABUS
1.
POLITICAL LAW; ADMINISTRATIVE LAW; ADMINISTRATIVE BODIES; TOLL
REGULATORY BOARD; HAS NECESSARY EXPERTISE, TRAINING AND SKILLS TO
JUDICIOUSLY DECIDE MATTERS REGARDING COLLECTION OF TOLL FEES AND
OPERATION OF TOLL FACILITIES; CASE AT BAR. [T]he laws and the TRB Rules of
Procedure have provided the remedies of an interested Expressways user. The initial proper
recourse is to file a petition for review of the adjusted toll rates with the TRB. The need for a prior
resort to this body is with reason. The TRB, as the agency assigned to supervise the collection
of toll fees and the operation of toll facilities, has the necessary expertise, training and skills to
judiciously decide matters of this kind. As may be gleaned from the petition, the main thrust of
petitioner Zialcita's argument is that the provisional toll rate adjustments are exorbitant,
oppressive, onerous and unconscionable. This is obviously a question of fact requiring
knowledge of the formula used and the factors considered in determining the assailed rates.
Definitely, this task is within the province of the TRB.
2.
ID.; ID.; ID.; DOCTRINE OF PRIMARY ADMINISTRATIVE JURISDICTION AND
EXHAUSTION OF ADMINISTRATIVE REMEDIES; BETWEEN POWER LODGED IN
ADMINISTRATIVE BODY AND COURT, ADMINISTRATIVE DISPUTES REQUIRING
EXPERTISE OF ADMINISTRATIVE BODIES SHALL BE REFERRED TO THE FORMER. We
take cognizance of the wealth of jurisprudence on the doctrine of primary administrative
jurisdiction and exhaustion of administrative remedies. In this era of clogged court dockets, the
need for specialized administrative boards or commissions with the special knowledge,
experience and capability to hear and determine promptly disputes on technical matters or
intricate questions of facts, subject to judicial review in case of grave abuse of discretion, is
indispensable. Between the power lodged in an administrative body and a court, the
unmistakable trend is to refer it to the former. In Industrial Enterprises, Inc. vs. Court of Appeals,
we ruled: ". . ., if the case is such that its determination requires the expertise, specialized skills

and knowledge of the proper administrative bodies because technical matters or intricate
questions of facts are involved, then relief must first be obtained in an administrative proceeding
before a remedy will be supplied by the courts even though the matter is within the proper
jurisdiction of a court."
3.
REMEDIAL LAW; SPECIAL CIVIL ACTIONS; PROHIBITION; WHEN AVAILABLE;
CASE AT BAR. [P]etitioner Zialcita's resort to prohibition is intrinsically inappropriate. It bears
stressing that the office of this remedy is not to correct errors of judgment but to prevent or
restrain usurpation of jurisdiction or authority by inferior tribunals and to compel them to observe
the limitation of their jurisdictions. G.R. No. 151108, while designated as a petition for
prohibition, has for its object the setting aside of Resolution No. 2001-89 on the ground that it
was issued without prior notice, hearing and publication and that the provisional toll rate
adjustments are exorbitant. This is not the proper subject of prohibition because as long as the
inferior court, tribunal or board has jurisdiction over the person and subject matter of the
controversy, the writ will not lie to correct errors and irregularities in procedure, or to prevent an
erroneous decision or an enforcement of an erroneous judgment. And even in cases of
encroachment, usurpation, and improper assumption of jurisdiction, the writ will not issue where
an adequate and applicable remedy by appeal, writ or error, certiorari, or other prescribed
methods of review are available. In this case, petitioner Zialcita should have sought a review of
the assailed Resolution before the TRB.
4.
POLITICAL LAW; ADMINISTRATIVE LAW; ADMINISTRATIVE BODIES; TOLL
REGULATORY BOARD; PROVISIONAL TOLL RATES ADJUSTMENT; REQUISITES FOR
ISSUANCE THEREOF; CASE AT BAR. The language of LOI No. 1334-A is not susceptible of
equivocation. It "directs, orders and instructs" the TRB to issue provisional toll rates adjustment
ex-parte without the need of notice, hearing and publication. All that is necessary is that it be
issued upon (1) a finding that the main petition is sufficient in form and substance; (2) the
submission of an affidavit showing that the increase in rates substantially conforms to the
formula, if any is stipulated in the franchise or toll operation agreement, and that failure to
immediately impose and collect the increase in rates would result in great irreparable injury to
the petitioner; and (3) the submission of a bond.
5.
ID.; ID.; ID.; MAY BE EMPOWERED TO APPROVE PROVISIONALLY, WHEN
DEMANDED BY URGENT PUBLIC NEED, RATES OF PUBLIC UTILITIES WITHOUT
HEARING; RATIONALE. We have ruled in a number of cases that an administrative agency
may be empowered to approve provisionally, when demanded by urgent public need, rates of
public utilities without a hearing. The reason is easily discerned from the fact that provisional
rates are by their nature temporary and subject to adjustment in conformity with the definitive
rates approved after final hearing. In Maceda vs. Energy Regulatory Board, we ruled that while
the ERB is not precluded from conducting a hearing on the grant of provisional authority
which is of course, the better procedure however, it can not be stigmatized if it failed to
conduct one. STcAIa
6.
ID.; CONSTITUTIONAL LAW; COURTS; DECISIONS; MUST STATE FACTS AND
LAW ON WHICH IT IS BASED; RULE APPLIES ONLY TO DECISION OF COURT OF
JUSTICE. Petitioner Zialcita faults the TRB for not stating the facts and the law on which
Resolution No. 2001-89 is based. Petitioner is wrong. Suffice it to state that while Section 14,
Article VIII of the 1987 Constitution provides that "no decision shall be rendered by any court
without expressing therein clearly and distinctly the facts and the law on which it is based," this
rule applies only to a decision of a court of justice, not TRB.

DECISION

"Be APPROVED as it is hereby APPROVED.

SANDOVAL-GUTIERREZ, J p:

"RESOLVED FURTHERMORE, as it is hereby RESOLVED that the Provisional Toll Rates be

implemented in two (2) stages in accordance with the following schedule:

The focal point upon which these two consolidated cases converge is whether Resolution No.
2001-89 issued by the Toll Regulatory Board (TRB) is valid.
A brief narration of the factual backdrop is imperative, thus:

Section

TAEcSC

Unrounded Toll

Toll Rates for Implementation

Rates as For Class 1 as Reference

On November 9, 2001, the TRB issued Resolution No. 2001-89 authorizing provisional toll rate
adjustments at the Metro Manila Skyway, effective January 1, 2002, 1 thus:

Maximum for

JANUARY 1,

One (1) Year

2002 to

JULY 1, 2002,

to DECEMBER

"NOW THEREFORE, it is RESOLVED, as it is hereby RESOLVED:

JUNE 30, 2002

31 2002

75.00

65.00

75.00

19.35

15.00

20.00

Bicutan to Sucat

11.21

9.00

11.00

"Be APPROVED, as it is hereby APPROVED.

Sucat to Alabang

10.99

9.00

11.00

"RESOLVED FURTHER, as it is hereby RESOLVED:

"PROVIDED that the recovery of the sum from the interim rate adjustment shall be applied
starting the year 2003.

1.
That in view of urgent public interest, the Board hereby GRANTS to the Metro Manila
Skyway Project, Provisional Relief in accordance with Rule 10, Section 3 of the Rules of Practice
and Procedure Governing Hearing before the Toll Regulatory Board which states, among others
"that the Board may grant (provisional relief) . . . in its own initiative . . . without prejudice to the
final decision after completion of the hearing . . . ;"

Elevated Portion
At-Grade Portion
Magallanes to

2.
That the Provisional Relief shall be in form of an interim toll rate adjustment in
accordance with Section 7.04(3) of the Supplemental Toll Operation Agreement, dated
November 27, 1995, referring to Interim Adjustments in Toll Rates upon the occurrence of a
significant currency devaluation: cDTSHE

Bicutan

"That the Provisional Toll Rates, which are not to exceed the following:
"APPROVED as it is hereby APPROVED."
Section

Unrounded

Toll Rates for Implementation

Toll Rates

CLASS 1 CLASS 2 CLASS 3

Elevated Portion

75.00

75.00

150.00

225.00

19.35

19.50

38.50

58.00

Bicutan to Sucat

11.21

11.00

22.50

34.00

Sucat to Alabang

10.99

11.00

21.00

32.50

At-Grade Portion
Magallanes to
Bicutan

On December 17, 24 and 31, 2001, the above Resolution approving provisional toll rate
adjustments was published in the newspapers of general circulation. 2
Tracing back the events that led to the issuance of the said Resolution, it appears that on
February 27, 2001 the Citra Metro Manila Tollways Corporation (CITRA) filed with the TRB an
application for an interim adjustment of the toll rates at the Metro Manila Skyway Project Stage
1. 3 CITRA moored its petition on the provisions of the "Supplemental Toll Operation
Agreement" (STOA), 4 authorizing it, as the investor, to apply for and if warranted, to be granted
an interim adjustment of toll rates in the event of a "significant currency devaluation." The
relevant portions of the STOA read:
a.
The Investor and/or the Operator shall be entitled to apply for and if warranted, to be
granted an interim adjustment of Toll Rates upon the occurrence of any of the following events:
xxx

xxx

xxx

* includes C5 entry/exit and Merville exit.

(ii)
"For implementation starting January 1, 2002 after its publication once a week for three (3)
consecutive weeks in a newspaper of general circulation and that said Provisional Toll Rate
Increase shall remain in effect until such time that the TRB Board has determined otherwise:

xxx

a significant currency devaluation

xxx

xxx

(i)
A currency devaluation shall be deemed "significant" if it results in a depreciation of
the value of the Philippine peso relative to the US dollar by at least 10%. For purposes hereof
the exchange rate between the Philippine peso and the US dollar which shall be applicable shall
be the exchange rate between the above mentioned currencies in effect as of the date of
approval of the prevailing preceding Toll Rate.
(ii)
The Investor's right to apply for an interim Toll Rate adjustment under section 7.04 (3)
(a) (ii) shall be effective only while any Financing is outstanding and have not yet been paid in
full.
xxx

xxx

xxx

(iv)
An interim adjustment in Toll Rate shall be considered such amount as may be
required to provide interim relief to the Investor from a substantial increase in debt-service
burden resulting from the devaluation." 5
Claiming that the peso exchange rate to a U.S. dollar had devaluated from P26.1671 in 1995 to
P48.00 in 2000, CITRA alleged that there was a compelling need for the increase of the toll rates
to meet the loan obligations of the Project and the substantial increase in debt-service burden.
Due to heavy opposition, CITRA's petition remained unresolved. This prompted CITRA to file on
October 9, 2001 an "Urgent Motion for Provisional Approval," 6 this time, invoking Section 3,
Rule 10 of the "Rules of Practice and Procedure Governing Hearing Before the Toll Regulatory
Board" (TRB Rules of Procedure) which provides:
"SECTION 3.
Provisional Relief. Upon the filing of an application or petition for the
approval of the initial toll rate or toll rate adjustment, or at any stage, thereafter, the Board may
grant on motion of the pleader or in its own initiative, the relief prayed for without prejudice to a
final decision after completion of the hearing should the Board find that the pleading, together
with the affidavits and supporting documents attached thereto and such additional evidence as
may have been requested and presented, substantially support the provisional order; Provided:
That the Board may, motu proprio, continue to issue orders or grant relief in the exercise of its
powers of general supervision under existing laws. Provided: Finally, that pending finality of the
decision, the Board may require the Petitioner to deposit in whole or in part in escrow the
provisionally approved adjustment or initial toll rates." (Emphasis supplied)

Hence, petitioners Ceferino Padua and Eduardo Zialcita assail before this Court the validity and
legality of TRB Resolution No. 2001-89.
Petitioner Ceferino Padua, as a toll payer, filed an "Urgent Motion for a Temporary Restraining
Order to Stop Arbitrary Toll Fee Increases" 11 in G.R. No. 141949, 12 a petition for mandamus
earlier filed by him. In that petition, Padua seeks to compel respondent Judge Santiago Ranada
of the Regional Trial Court, Branch 137, Makati City, to issue a writ of execution for the
enforcement of the Court of Appeals' Decision dated August 4, 1989 in CA-G.R. SP No. 13235.
In its Decision, the Court of Appeals ordered the exclusion of certain portions of the
expressways (from Villamor Air Base to Alabang in the South, and from Balintawak to Tabang in
the North) from the franchise of the PNCC.
In his urgent motion, petitioner Padua claims that: (1) Resolution No. 2001-89 was issued
without the required publication and in violation of due process; (2) alone, TRB Executive
Director Jaime S. Dumlao, Jr., could not authorize the provisional toll rate adjustments because
the TRB is a collegial body; and (3) CITRA has no standing to apply for a toll fee increase since
it is an "investor" and not a "franchisee-operator."
On January 4, 2002, petitioner Padua filed a "Supplemental Urgent Motion for a TRO against
Toll Fee Increases," 13 arguing further that: (1) Resolution 2001-89 refers exclusively to the
Metro Manila Skyway Project, hence, there is no legal basis for the imposition of the increased
rate at the at-grade portions; (2) Resolution No. 2001-89 was issued without basis considering
that while it was signed by three (3) of the five members of the TRB, none of them actually
attended the hearing; and 3) the computation of the rate adjustment under the STOA is
inconsistent with the rate adjustment formula under Presidential Decree No. 1894. 14
On January 10, 2002, the Office of the Solicitor General (OSG) filed, in behalf of public
respondent TRB, Philippine National Construction Corporation (PNCC), Department of Public
Works and Highways (DPWH) and Judge Ranada, a "Consolidated Comment" 15 contending
that: (1) the TRB has the exclusive jurisdiction over all matters relating to toll rates; (2)
Resolution No. 2001-89 covers both the Skyway and the at-grade level of the South Luzon
Expressway as provided under the STOA; (3) that while Resolution No. 2001-89 does not
mention any factual basis to justify its issuance, however, it does not mean that TRB's finding of
facts is not supported by evidence; and (4) petitioner Padua cannot assail the validity of the
STOA because he is not a party thereto.

On October 30, 2001, CITRA moved to withdraw 7 its "Urgent Motion for Provisional Approval"
without prejudice to its right to seek or be granted provisional relief under the above-quoted
provisions of the TRB Rules of Procedure, obviously, referring to the power of the Board to act
on its own initiative.

Upon the other hand, on January 9, 2002, petitioner Eduardo Zialcita, as a taxpayer and as
Congressman of Paraaque City, filed the present petition for prohibition 16 with prayer for a
temporary restraining order and/or writ of preliminary injunction against TRB and CITRA,
docketed as G.R. No. 151108, impugning the same Resolution No. 2001-89.

On November 7, 2001, CITRA wrote a letter 8 to TRB expressing its concern over the undue
delay in the proceeding, stressing that any further setback would bring the Project's financial
condition, as well as the Philippine banking system, to a total collapse. CITRA recounted that out
of the US$354 million funding from creditors, two-thirds (2/3) thereof came from the Philippine
banks and financial institutions, such as the Landbank of the Philippines and the Government
Service Insurance Services. Thus, CITRA requested TRB to find a timely solution to its
predicament.

Petitioner Zialcita asserts that the provisional toll rate adjustments are exorbitant and that the
TRB violated its own Charter, Presidential Decree No. 1112, 17 when it promulgated Resolution
No. 2001-89 without the benefit of any public hearing. He also maintains that the TRB violated
the Constitution when it did not express clearly and distinctly the facts and the law on which
Resolution No. 2001-89 was based. And lastly, he claims that Section 3, Rule 10 of the TRB
Rules of Procedure is not sanctioned by P.D. No. 1112. SIcEHD

On November 9, 2001, TRB granted CITRA's motion to withdraw 9 the Urgent Motion for
Provisional Approval and, at the same time, issued Resolution No. 2001-89, 10 earlier quoted.

Private respondent CITRA, in its comment 18 on Congressman Zialcita's petition, counters that:
(1) the TRB has primary administrative jurisdiction over all matters relating to toll rates; (2)
prohibition is an inappropriate remedy because its function is to restrain acts about to be done

and not acts already accomplished; (3) Resolution No. 2001-89 was issued in accordance with
law; (4) Section 3, Rule 10 of the TRB Rules is constitutional; and (5) private respondent and the
Republic of the Philippines would suffer more irreparable damages than petitioner.

adjusted toll shall be enforceable and collectible by the GRANTEE effective on the first day of
January in accordance with the immediately preceding paragraph.
xxx

The TRB, through the OSG, filed a separate comment 19 reiterating the same arguments raised
by private respondent CITRA.
On January 11, 2002, this Court resolved to consolidate the instant petitions, G.R. No. 141949
and G.R. No. 151108. 20

xxx

xxx

e)
Decisions of the Toll Regulatory Board on petitions for review of adjusted toll shall be
appealable to the Office of the President within ten (10) days from the promulgation thereof."
These same provisions are incorporated in the TRB Rules of Procedure, particularly in Section
6, Rule 5 and Section 1, Rule 12 thereof. 22

We rule for the respondents.

In assailing Resolution No. 2001-89, petitioners came to us via two unconventional remedies
one is an urgent motion for a TRO to stop arbitrary toll fee increases; and the other is a petition
for prohibition. Unfortunately, both are procedurally impermissible.
I
Petitioner Padua's motion is a leap to a legal contest of different dimension. As previously
stated, G.R. No. 141949 is a petition for mandamus seeking to compel respondent Judge
Ranada to issue a writ of execution for the enforcement of the Court of Appeals' Decision dated
August 4, 1989 in CA-G.R. SP No. 13235. The issue therein is whether the application for a writ
of execution should be by a mere motion or by an action for revival of judgment. Thus, for
petitioner Padua to suddenly interject in the same petition the issue of whether Resolution No.
2001-89 is valid is to drag this Court to his web of legal convolution. Courts cannot, as a case
progresses, resolve the intrinsic merit of every issue that comes along its way, particularly those
which bear no relevance to the resolution of the case.
Certainly, petitioner Padua's recourse in challenging the validity of TRB Resolution No. 2001-89
should have been to institute an action, separate and independent from G.R. No. 141949.
II
The remedy of prohibition initiated by petitioner Zialcita in G.R. No. 151108 also suffers several
infirmities. Initially, it violates the twin doctrine of primary administrative jurisdiction and nonexhaustion of administrative remedies.
P.D. No. 1112 explicitly provides that "the decisions of the TRB on petitions for the increase of
toll rate shall be appealable to the Office of the President within ten (10) days from the
promulgation thereof." 21 P.D. No. 1894 reiterates this instruction and further provides:
"SECTION 9. The GRANTEE shall have the right and authority to adjust any existing toll being
charged the users of the Expressways under the following guidelines:
xxx

xxx

xxx

c)
Any interested Expressways user
(90) days after the date of publication of
Regulatory Board for a review of the
notwithstanding the filing of such petition

shall have the right to file, within a period of ninety

the adjusted toll rate(s), a petition with the Toll
adjusted toll rate(s); provided, however, that
and the pendency of the resolution thereof, the

Obviously, the laws and the TRB Rules of Procedure have provided the remedies of an
interested Expressways user. 23 The initial proper recourse is to file a petition for review of the
adjusted toll rates with the TRB. The need for a prior resort to this body is with reason. The TRB,
as the agency assigned to supervise the collection of toll fees and the operation of toll facilities,
has the necessary expertise, training and skills to judiciously decide matters of this kind. As may
be gleaned from the petition, the main thrust of petitioner Zialcita's argument is that the
provisional toll rate adjustments are exorbitant, oppressive, onerous and unconscionable. This is
obviously a question of fact requiring knowledge of the formula used and the factors considered
in determining the assailed rates. Definitely, this task is within the province of the TRB.
We take cognizance of the wealth of jurisprudence on the doctrine of primary administrative
jurisdiction and exhaustion of administrative remedies. In this era of clogged court dockets, the
need for specialized administrative boards or commissions with the special knowledge,
experience and capability to hear and determine promptly disputes on technical matters or
intricate questions of facts, subject to judicial review in case of grave abuse of discretion, is
indispensable. Between the power lodged in an administrative body and a court, the
unmistakable trend is to refer it to the former." 24 In Industrial Enterprises, Inc. vs. Court of
Appeals, 25 we ruled:
". . ., if the case is such that its determination requires the expertise, specialized skills and
knowledge of the proper administrative bodies because technical matters or intricate questions
of facts are involved, then relief must first be obtained in an administrative proceeding before a
remedy will be supplied by the courts even though the matter is within the proper jurisdiction of a
court."
Moreover, petitioner Zialcita's resort to prohibition is intrinsically inappropriate. It bears stressing
that the office of this remedy is not to correct errors of judgment but to prevent or restrain
usurpation of jurisdiction or authority by inferior tribunals and to compel them to observe the
limitation of their jurisdictions. G.R. No. 151108, while designated as a petition for prohibition,
has for its object the setting aside of Resolution No. 2001-89 on the ground that it was issued
without prior notice, hearing and publication and that the provisional toll rate adjustments are
exorbitant. This is not the proper subject of prohibition because as long as the inferior court,
tribunal or board has jurisdiction over the person and subject matter of the controversy, the writ
will not lie to correct errors and irregularities in procedure, or to prevent an erroneous decision or
an enforcement of an erroneous judgment. And even in cases of encroachment, usurpation, and
improper assumption of jurisdiction, the writ will not issue where an adequate and applicable
remedy by appeal, writ or error, certiorari, or other prescribed methods of review are available.
26 In this case, petitioner Zialcita should have sought a review of the assailed Resolution before
the TRB.

III
Even granting that petitioners' recourse to the instant remedies is in order, still, we cannot rule in
their favor.
For one, it is not true that the provisional toll rate adjustments were not published prior to its
implementation on January 1, 2002. Records show that they were published on December 17,
24 and 31, 2001 27 in three newspapers of general circulation, particularly the Philippine Star,
Philippine Daily Inquirer and The Manila Bulletin. Surely, such publications sufficiently complied
with Section 5 of P.D. No. 1112 which mandates that "no new rates shall be collected unless
published in a newspaper of general publication at least once a week for three consecutive
weeks." At any rate, it must be pointed out that under Letter of Instruction No. 1334-A, 28 the
TRB may grant and issue ex parte to any petitioner, without need of notice, publication or
hearing, provisional authority to collect, pending hearing and decision on the merits of the
petition, the increase in rates prayed for or such lesser amount as the TRB may in its discretion
provisionally grant. That LOI No. 1334-A has the force and effect of law finds support in a catena
of cases decreeing that "all proclamations, orders, decrees, instructions, and acts promulgated,
issued, or done by the former President (Ferdinand E. Marcos) are part of the law of the land,
and shall remain valid, legal, binding, and effective, unless modified, revoked or superseded by
subsequent proclamations, orders, decrees, instructions, or other acts of the President." 29 In
Association of Small Landowners in the Philippines, Inc. vs. Secretary of Agrarian Reform, 30
this Court held:
"The Court wryly observes that during the past dictatorship, every presidential issuance, by
whatever name it was called, had the force and effect of law because it came from President
Marcos. Such are the ways of despots. Hence, it is futile to argue, as the petitioners do in G.R.
No. 79744, that LOI 474 could not have repealed P.D. No. 27 because the former was only a
letter of instruction. The important thing is that it was issued by President Marcos, whose word
was law during that time." (Italics supplied)
For another, it is not true that it was TRB Executive Director Dumlao, Jr. alone who issued
Resolution No. 2001-89. The Resolution itself contains the signature of the four TRB Directors,
namely, Simeon A. Datumanong, Emmanuel P. Bonoan, Ruben S. Reinoso, Jr. and Mario K.
Espinosa. 31 Petitioner Padua would argue that while these Directors signed the Resolution,
none of them personally attended the hearing. This argument is misplaced. Under our
jurisprudence, an administrative agency may employ other persons, such as a hearing officer,
examiner or investigator, to receive evidence, conduct hearing and make reports, on the basis of
which the agency shall render its decision. Such a procedure is practical necessity. 32 Thus, in
Mollaneda vs. Umacob, 33 we ruled:
" . . . At any rate, it cannot be gainsaid that the term "administrative body or agency" includes the
subordinate officials upon whose hand the body or agency delegates a portion of its authority.
Included therein are the hearing officers through whose eyes and ears the administrative body or
agency observes the demeanor, conduct and attitude of the witnesses and listens to their
testimonies.
"It must be emphasized that the appointment of competent officers to hear and receive evidence
is commonly resorted to by administrative bodies or agencies in the interest of an orderly and
efficient disposition of administrative cases. . . .

". . . Corollarily, in a catena of cases, this Court laid down the cardinal requirements of due
process in administrative proceedings, one of which is that "the tribunal or body or any of its
judges must act on its or his own independent consideration of the law and facts of the
controversy, and not simply accept the views of a subordinate." Thus, it is logical to say that this
mandate was rendered precisely to ensure that in cases where the hearing or reception of
evidence is assigned to a subordinate, the body or agency shall not merely rely on his
recommendation but instead shall personally weigh and assess the evidence which the said
subordinate has gathered."
Be that as it may, we must stress that the TRB's authority to grant provisional toll rate
adjustments does not require the conduct of a hearing. Pertinent laws and jurisprudence support
this conclusion.
It may be recalled that Former President Ferdinand E. Marcos promulgated P.D. No. 1112
creating the TRB on March 31, 1977. The end in view was to authorize the collection of toll fees
for the use of certain public improvements in order to attract private sector investment in the
government infrastructure projects. The TRB was tasked to supervise the collection of toll fees
and the operation of toll facilities. One of its powers is to "issue, modify and promulgate from
time to time the rates of toll that will be charged the direct users of toll facilities and upon notice
and hearing, to approve or disapprove petitions for the increase thereof." 34
To clarify the intent of P.D. No. 1112 as to the extent of the TRB's power, 35 Former President
Marcos further issued LOI No. 1334-A expressly allowing the TRB to grant ex-parte provisional
or temporary increase in toll rates, thus: cDEHIC
"NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the Republic of the Philippines,
by virtue of the powers vested in me by the Constitution, do hereby direct, order and instruct the
Toll Regulatory Board to grant and issue ex-parte to any petitioner, without need of notice,
publication or hearing, provisional authority to collect, pending hearing of and decision on the
merits of such petition, the increase in rates prayed for or such lesser amount as the Board may
in its discretion provisionally grant, upon (a) a finding that the said petition is sufficient in form
and substance, (b) the submission of an affidavit by the petitioner showing that the increase in
rates substantially conforms to the formula, if any stipulated in the franchise or toll operation
agreement/certificate of the petitioner and that failure to immediately impose and collect the
increase in rates would result in outright delay or stoppage of urgently needed improvements,
expansion or repairs of toll facilities and/or in great irreparable injury to the petitioner, and (c) the
submission by the petitioner to the Board of a bond, in such amount and from such surety or
sureties and under such terms and conditions as the Board shall fix, to guarantee the refund of
the increase in rates to the affected toll payers in case it is finally determined, after notice and
hearing, that the petitioner is not entitled, in whole or in part, to the same. Any provisional toll
rate increases shall be effective immediately upon approval without need of publication."
Thereafter, the TRB promulgated as part of its Rules of Procedure, the following provision:
"RULE 5
PROCEDURE FOR APPROVAL OF TOLL RATE
"Section 2. Provisional Relief Upon initial findings of the Board that the Petition for the
approval of initial toll rate or the petition for toll rate adjustment is in accordance with Sections 1
and 2 of Rule 2, Section 2 of Rule 3 and Section 1 of Rule 4 hereof, the Board within a

reasonable time after the filing of the Petition, may in an en banc decision provisionally approve
the initial toll rate or toll rate adjustment, without the necessity of any notice and hearing."
From the foregoing, it is clear that a hearing is not necessary for the grant of provisional toll rate
adjustment. The language of LOI No. 1334-A is not susceptible of equivocation. It "directs,
orders and instructs" the TRB to issue provisional toll rates adjustment ex-parte without the need
of notice, hearing and publication. All that is necessary is that it be issued upon (1) a finding that
the main petition is sufficient in form and substance; (2) the submission of an affidavit showing
that the increase in rates substantially conforms to the formula, if any is stipulated in the
franchise or toll operation agreement, and that failure to immediately impose and collect the
increase in rates would result in great irreparable injury to the petitioner; and (3) the submission
of a bond. Again, whether or not CITRA complied with these requirements is an issue that must
be addressed to the TRB.
The practice is not something peculiar. We have ruled in a number of cases that an
administrative agency may be empowered to approve provisionally, when demanded by urgent
public need, rates of public utilities without a hearing. The reason is easily discerned from the
fact that provisional rates are by their nature temporary and subject to adjustment in conformity
with the definitive rates approved after final hearing. 36 In Maceda vs. Energy Regulatory Board,
37 we ruled that while the ERB is not precluded from conducting a hearing on the grant of
provisional authority which is of course, the better procedure however, it can not be
stigmatized if it failed to conduct one. Citing Citizens' Alliance for Consumer Protection vs.
Energy Regulatory Board, 38 this Court held:
In the light of Section 8 quoted above, public respondent Board need not even have conducted
formal hearings in these cases prior to issuance of its Order of 14 August 1987 granting a
provisional increase of prices. The Board, upon its own discretion and on the basis of documents
and evidence submitted by private respondents, could have issued an order granting provisional
relief immediately upon filing by private respondents of their respective applications. In this
respect, the Court considers the evidence presented by private respondents in support of their
applications i.e., evidence showing that importation costs of petroleum products had gone up;
that the peso had depreciated in value; and that the Oil Price Stabilization Fund (OPSF) had
been depleted as substantial and hence constitutive of at least prima facie basis for issuance
by the Board of a provisional relief order granting an increase in the prices of petroleum
products.

Petitioner Zialcita faults the TRB for not stating the facts and the law on which Resolution No.
2001-89 is based. Petitioner is wrong. Suffice it to state that while Section 14, Article VIII of the
1987 Constitution provides that "no decision shall be rendered by any court without expressing
therein clearly and distinctly the facts and the law on which it is based," this rule applies only to a
decision of a court of justice, not TRB. 42
At this point, let it be stressed that we are not passing upon the reasonableness of the
provisional toll rate adjustments. As we have earlier mentioned, this matter is best addressed to
the TRB.
IV
In fine, as what we intimated in Philippine National Construction Corp. vs. Court of Appeals, 43
we commend petitioners for devoting their time and effort on a matter so imbued with public
interest as in this case. But we can do no better than to brush aside their chief objections to the
provisional toll rate adjustments, for a different approach would lead this Court astray into the
field of factual conflict where its pronouncements would not rest on solid grounds. Time and
again, we have impressed that this Court is not a trier of facts, more so, in the consideration of
an extraordinary remedy of prohibition where only questions of lack or excess of jurisdiction or
grave abuse of discretion is to be entertained. CHATcE
And to accord the main petition for mandamus in G.R. No. 141949 the full deliberation it
deserves, we deem it appropriate to discuss its merit on another occasion. Anyway, G.R. No.
141949 was consolidated with G.R. No. 151108 only by reason of petitioner Padua's deviant
motion assailing Resolution 2001-89. As we have previously said, the main petition in G.R. No.
141949 presents an entirely different issue and is set on a different factual landscape.
WHEREFORE, petitioner Padua's "Urgent Motion for Temporary Restraining Order to Stop
Arbitrary Toll Fee Increases" is DENIED and petitioner Zialcita's "Petition for Prohibition" is
DISMISSED.
SO ORDERED.
Puno, Corona and Carpio-Morales, JJ., concur.
Panganiban, J., please see separate opinion.

Anent petitioner Padua's contention that CITRA has no standing to apply for a toll fee increase,
suffice it to say that CITRA's right stems from the STOA which was entered into by no less than
the Republic of the Philippines and by the PNCC. Section 7.04 of the STOA provides that the
Investor, CITRA, and/or the Operator, PNCC, shall be entitled to apply for and if warranted, to be
granted an interim adjustment of toll rates in case of force majeure and a significant currency
valuation. 39 Now, unless set aside through proper action, the STOA has the force and effect of
law between the contracting parties, and is entitled to recognition by this Court. 40 On the same
breath, we cannot sustain Padua's contention that the term "Metro Manila Skyway" Project
excludes the at-grade portions of the South Luzon Expressway considering that under the same
STOA the "Metro Manila Skyway" includes: "(a) the South Metro Manila Skyway, coupled with
the rehabilitated at grade portion of the South Luzon Expressway, from Alabang to Quirino
Avenue; (b) the Central Metro Manila Skyway, from Quirino Avenue to A. Bonifacio Avenue; . . .
." 41

Separate Opinions
PANGANIBAN, J.:
I vote to deny the Petitions but only on the procedural grounds discussed in Items I and II, pages
11-15 of the ponencia of Justice Gutierrez. However, I reserve my vote on the validity and the
reasonability of the toll rate increases if and when the appropriate proceedings are brought to
this Court in due course.

[G.R. No. 131255. May 20, 1998.]

HON. EDUARDO NONATO JOSON, in his capacity as the Governor of the Province of
Nueva Ecija, petitioners, vs. EXECUTIVE SECRETARY RUBEN D. TORRES, the
DEPARTMENT OF THE INTERIOR & LOCAL GOVERNMENTS, represented by
SECRETARY ROBERT Z. BARBERS and UNDERSECRETARY MANUEL R. SANCHEZ, MR.
OSCAR C. TINIO, in his capacity as Provincial Vice-Governor of Nueva Ecija, and MR.
LORETO P. PANGILINAN, MR. CRISPULO S. ESGUERRA, MS. SOLITA C. SANTOS, MR.
VICENTE C. PALILIO, and MR. NAPOLEON G. INTERIOR, in their capacity as Provincial
Board Members of Nueva Ecija, respondents.
Padilla Jimenez Kintanar & Asuncion Law Offices for petitioner.
Matias Pangilinan Bansale Tan Feliz Alberto Hernal Buazon & Associates Law Office for private
respondents.

Petitioner's right to a formal investigation was not satisfied when the complaint against him was
decided on the basis of position papers. There is nothing in the Local Government Code and in
A.O. No. 23 that provide that administrative cases against elective local officials can be decided
on position papers. A.O. No. 23 does not authorize the Investigating Authority to dispense with a
hearing in cases involving allegations of fact which are not only in contrast but contradictory to
each other. These contradictions are best settled by allowing the examination and crossexamination of witnesses.
The procedure of requiring position papers in lieu of a hearing in administrative cases is
expressly allowed with respect to appointive officials but not to elective officials.
The suspension order of Executive Secretary Torres is declared null and void.
SYLLABUS

SYNOPSIS
Private respondents filed with the Office of the President a letter-complaint charging petitioner
with grave misconduct and abuse of authority. Private respondents prayed for the suspension or
removal of petitioner.
The letter-complaint was sent to Secretary Robert Z. Barbers, who directed petitioner to submit
his answer, not a motion to dismiss. Petitioner filed several motions for extension of time.
Petitioner failed to file his answer within the period given him, so that three months later,
petitioner was declared in default. On recommendation of Secretary Barbers, Executive
Secretary Ruben Torres issued an order, by authority of the President, placing petitioner under
preventive suspension for sixty days pending investigation of the charges against him. STcEIC
Petitioner filed a petition for certiorari and prohibition with the Court of Appeals challenging the
order of preventive suspension and the order of default.
In the DILG proceedings, meanwhile, Undersecretary Sanchez denied petitioner's "Motion to
Dismiss." He likewise required the parties to submit their position papers within the inextendible
period of ten days from receipt of the order after which the case shall be deemed submitted for
resolution.
Petitioner filed his Answer Ad Cautelam claiming that there was nothing in his conduct that
threatened the members of the Sangguniang Panlalawigan or caused alarm to the employees.
His Answer Ad Cautelam having been admitted by Undersecretary Sanchez, petitioner claimed
his right to a formal investigation.
The Court of Appeals dismissed petitioner's petition. Hence, this recourse.

1.
ADMINISTRATIVE LAW; LOCAL GOVERNMENT; DISCIPLINARY ACTIONS
AGAINST ELECTIVE LOCAL OFFICIALS; GOVERNING LAWS. Administrative disciplinary
proceedings against elective local officials are governed by the Local Government Code of 1991,
the Rules and Regulations Implementing the Local Government Code of 1991, and
Administrative Order No. 23 entitled "Prescribing the Rules and Procedures on the Investigation
of Administrative Disciplinary Cases Against Elective Local Officials of Provinces, Highly
Urbanized Cities, Independent Component Cities, and Cities and Municipalities in Metropolitan
Manila." In all matters not provided in A.O. No. 23, the Rules of Court and the Administrative
Code of 1987 apply in a suppletory character. EAcTDH
2.
ID.; ID.; ID.; GROUNDS. Section 60 of Chapter 4, Title II, Book I of the Local
Government Code enumerates the grounds for which an elective local official may be
disciplined, suspended or removed from office. Section 60 reads: "Sec. 60. Grounds for
Disciplinary Actions. An elective local official may be disciplined, suspended, or removed from
office on any of the following grounds: (a) Disloyalty to the Republic of the Philippines; (b)
Culpable violation of the Constitution; (c) Dishonesty, oppression, misconduct in office, gross
negligence; or dereliction of duty; (d) Commission of any offense involving moral turpitude or an
offense punishable by at least prision mayor; (e) Abuse of authority; (f) Unauthorized absence
for fifteen (15) consecutive working days, except in the case of members of the sangguniang
panlalawigan, sangguniang panlunsod, sangguniang bayan, and sangguniang barangay; (g)
Application for, or acquisition of, foreign citizenship or residence or the status of an immigrant of
another country; and (h) Such other grounds as may be provided in this Code and other laws.
An elective local official may be removed from office on the grounds enumerated above by order
of the proper court."

The Supreme Court ruled that the petition has merit. The letter-complaint against petitioner, an
elective official of Nueva Ecija, was properly filed with the Office of the President, although it was
not verified. The lack of verification was not fatal. The requirement of verification was deemed
waived by the President himself when he acted on the letter-complaint. cCSTHA

3.
ID.; ID.; ID.; ADMINISTRATIVE COMPLAINT MUST BE VERIFIED AND FILED WITH
THE PROPER GOVERNMENT OFFICE. An administrative complaint against an erring
elective official must be verified and filed with the proper government office. A complaint against
an elective provincial or city official must be filed with the Office of the President. A complaint
against an elective municipal official must be filed with the Sangguniang Panlalawigan while that
of a barangay official must be filed before the Sangguniang Panlungsod or Sangguniang Bayan.

Petitioner's suspension was made without formal investigation required by Rule 7 of

Administrative Order No. 23. Petitioner filed a "Motion to Conduct Formal Investigation" three
months before the issuance of the order of suspension. The rejection of petitioner's right to a
formal investigation denied him procedural due process.

4.
ID.; ID.; ID.; ID.; PURPOSE. Verification is a formal, not jurisdictional requisite.
Verification is mainly intended to secure an assurance that the allegations therein made are
done in good faith or are true and correct and not mere speculation. The lack of verification is a
mere formal defect. The court may order the correction of the pleading, if not verified, or act on

the unverified pleading if the attending circumstances are such that a strict compliance with the
rule may be dispensed with in order that the ends of justice may be served. EcHAaS
5.
ID.; ID.; ID.; JURISDICTION IS LODGED IN THE DISCIPLINARY AND
INVESTIGATING AUTHORITIES. Jurisdiction over administrative disciplinary actions against
elective local officials is lodged in two authorities: the Disciplining Authority and the Investigating
Authority. This is explicit from A.O. No. 23. Pursuant to these provisions, the Disciplining
Authority is the President of the Philippines, whether acting by himself or through the Executive
Secretary. The Secretary of the Interior and Local Government is the Investigating Authority,
who may act by himself or constitute an Investigating Committee. The Secretary of the DILG,
however, is not the exclusive Investigating Authority. In lieu of the DILG Secretary, the
Disciplining Authority may designate a Special Investigating Committee.
6.
POLITICAL LAW; EXECUTIVE DEPARTMENT; PRESIDENT; POWER OF
GENERAL SUPERVISION OVER LOCAL GOVERNMENTS; CONSTRUED. The power of
the President over administrative disciplinary cases against elective local officials is derived from
his power of general supervision over local governments as provided in Section 4, Article X of
the 1987 Constitution. The power of supervision means "overseeing or the authority of an officer
to see that the subordinate officers perform their duties." If the subordinate officers fail or neglect
to fulfill their duties, the official may take such action or step as prescribed by law to make them
perform their duties. The President's power of general supervision means no more than the
power of ensuring that laws are faithfully executed, or that subordinate officers act within the law.
7.
ID.; ID.; ID.; ID.; DISTINGUISHED FROM THE POWER TO DISCIPLINE.
Supervision is not incompatible with discipline. And the power to discipline and ensure that the
laws be faithfully executed must be construed to authorize the President to order an
investigation of the act or conduct of local officials when in his opinion the good of the public
service so requires. The power to discipline evidently includes the power to investigate. As the
Disciplining Authority, the President has the power derived from the Constitution itself to
investigate complaints against local government officials. A.O. No. 23, however, delegates the
power to investigate to the DILG or a Special Investigating Committee, as may be constituted by
the Disciplining Authority. This is not undue delegation, contrary to petitioner Joson's claim. The
President remains the Disciplining Authority. What is delegated is the power to investigate, not
the power to discipline. ICcDaA

departments, bureaus, and offices. He shall ensure that the laws be faithfully executed." Control
is said to be the very heart of the power of the presidency. As head of the Executive
Department, the President, however, may delegate some of his powers to the Cabinet members
except when he is required by the Constitution to act in person or the exigencies of the situation
demand that he acts personally. The members of Cabinet may act for and in behalf of the
President in certain matters because the President cannot be expected to exercise his control
(and supervisory) powers personally all the time. Each head of a department is, and must be,
the President's alter ego in the matters of that department where the President is required by law
to exercise authority.
10.
ADMINISTRATIVE LAW; LOCAL GOVERNMENT; DISCIPLINARY ACTIONS
AGAINST ELECTIVE LOCAL OFFICIALS; PROCEDURE. The procedure how the
Disciplining and Investigating Authorities should exercise their powers is distinctly set forth in
Sec. 62 of the Local Government Code and Sections 1 and 3, Rule 5 of A.O. No. 23. When an
administrative complaint is therefore filed, the Disciplining Authority shall issue an order requiring
the respondent to submit his verified answer within fifteen (15) days from notice. Upon filing of
the answer, the Disciplining Authority shall refer the case to the Investigating Authority for
investigation. HAISEa
11.
ID.; ID.; ID.; PREVENTIVE SUSPENSION; WHEN ALLOWED. In view of
petitioner's inexcusable failure to file answer, the DILG did not err in recommending to the
Disciplining Authority his preventive suspension during the investigation. Preventive suspension
is authorized under Section 63 of the Local Government Code. In sum, preventive suspension
may be imposed by the Disciplining Authority at any time (a) after the issues are joined; (b) when
the evidence of guilt is strong; and (c) given the gravity of the offense, there is great probability
that the respondent, who continues to hold office, could influence the witnesses or pose a threat
to the safety and integrity of the records and other evidence.

8.
ID.; ID.; ID.; DOCTRINE OF QUALIFIED POLITICAL AGENCY; CONSTRUED.
The power of the DILG to investigate administrative complaints is based on the alter-ego
principle or the doctrine of qualified political agency. Thus: "Under this doctrine, which
recognizes the establishment of a single executive, all executive and administrative
organizations are adjuncts of the Executive Department, the heads of the various executive
departments are assistants and agents of the Chief Executive, and, except in cases where the
Chief Executive is required by the Constitution or law to act in person or the exigencies of the
situation demand that he acts personally, the multifarious executive and administrative functions
of the Chief Executive are performed by and through the executive departments, and the acts of
the Secretaries of such departments, performed and promulgated in the regular course of
business, are, unless disapproved or reprobated by the Chief Executive presumptively the acts
of the Chief Executive."

12.
ID.; ID.; ID.; ERRING ELECTIVE LOCAL OFFICIALS HAVE RIGHTS AKIN TO THE
CONSTITUTIONAL RIGHTS OF AN ACCUSED. The rejection of petitioner's right to a formal
investigation denied him procedural due process. Section 5 of A.O. No. 23 provides that at the
preliminary conference, the Investigating Authority shall summon the parties to consider whether
they desire a formal investigation. This provision does not give the Investigating Authority the
discretion to determine whether a formal investigation would be conducted. The records show
that petitioner filed a motion for formal investigation. As respondent, he is accorded several
rights under the law, to wit: "Sec. 65. Rights of Respondent. The respondent shall be
accorded full opportunity to appear and defend himself in person or by counsel, to confront and
cross-examine the witnesses against him, and to require the attendance of witnesses and the
production of documentary evidence in his favor through compulsory process of subpoena or
subpoena duces tecum." An erring elective local official has rights akin to the constitutional
rights of an accused. These rights are essentially part of procedural due process. The local
elective official has the (1) right to appear and defend himself in person or by counsel; (2) the
right to confront and cross-examine the witnesses against him; and (3) the right to compulsory
attendance of witness and the production of documentary evidence. These rights are reiterated
in the Rules Implementing the Local Government Code and in A.O. No. 23. Well to note,
petitioner formally claimed his right to a formal investigation after his Answer Ad Cautelam has
been admitted by Undersecretary Sanchez. HCEcaT

9.
ID.; ID.; ID.; ID.; COROLLARY TO THE CONTROL POWER OF THE PRESIDENT.
This doctrine is corollary to the control power of the President. The power of control is provided
in the Constitution, thus: "Sec. 17. The President shall have control of all the executive

13.
ID.; ID.; ID.; DIFFERENT AND SEPARATE FROM AN APPOINTIVE OFFICIAL. In
the Local Government Code, the entire Title II of Book I of the Code is devoted to elective
officials. It provides for their qualifications and election, vacancies and succession, local

legislation, disciplinary actions, and recall. Appointive officers and employees are covered in
Title III of Book I of the Code entitled "Human Resources and Development." All matters
pertinent to human resources and development in local government units are regulated by "the
civil service law and such rules and regulations and other issuances promulgated thereto, unless
otherwise provided in the Code." The "investigation and adjudication of administrative
complaints against appointive local officials and employees as well as their suspension and
removal" are "in accordance with the civil service law and rules and other pertinent laws," the
results of which "shall be reported to the Civil Service Commission." It is the Administrative Code
of 1987, specifically Book V on the Civil Service, that primarily governs appointive officials and
employees. Their qualifications are set forth in the Omnibus Rules Implementing Book V of the
said Code. The grounds for administrative disciplinary action in Book V are much more in
number and are specific than those enumerated in the Local Government Code against elective
local officials. The disciplining authority in such actions is the Civil Service Commission although
the Secretaries and heads of agencies and instrumentalities, provinces, cities and municipalities
are also given the power to investigate and decide disciplinary actions against officers and
employees under their jurisdiction. When a complaint is filed and the respondent answers, he
must "indicate whether or not he elects a formal investigation if his answer is not considered
satisfactory." If the officer or employee elects a formal investigation, the direct evidence for the
complainant and the respondent "consist[s] of the sworn statement and documents submitted in
support of the complaint and answer, as the case may be, without prejudice to the presentation
of additional evidence deemed necessary . . ., upon which the cross-examination by respondent
and the complainant, respectively, is based." The investigation is conducted without adhering to
the technical rules applicable in judicial proceedings." Moreover, the appointive official or
employee may be removed or dismissed summarily if (1) the charge is serious and the evidence
of guilt is strong; (2) when the respondent is a recidivist; and (3) when the respondent is
notoriously undesirable. TAcSCH
DECISION
PUNO, J p:

provincial budget officer and treasurer had earlier disclosed that the province could not afford to
contract another obligation; that petitioner's act of barging in and intimidating private
respondents was a serious insult to the integrity and independence of the Sangguniang
Panlalawigan; and that the presence of his private army posed grave danger to private
respondents' lives and safety. Private respondents prayed for the suspension or removal of
petitioner; for an emergency audit of the provincial treasury of Nueva Ecija; and for the review of
the proposed loan in light of the financial condition of the province, to wit:
"In this regard, we respectfully request for the following assistance from your good office:
1.
To immediately suspend Governor N. [sic] Joson considering the actual dangers that
we are facing now, and provide adequate police security detail for the Sangguniang
Panlalawigan of Nueva Ecija. Should the evidence warrant after investigation, to order his
removal from office.
2.
To conduct an emergency audit of the provincial treasury of Nueva Ecija by the
auditors from the Commission on Audit Central Office with adequate police security assistance.
Should the evidence so warrant, to file necessary charges against responsible and accountable
officers.
3.
To advise the Philippine National Bank to review the capability of the province of
Nueva Ecija to secure more loans and the feasibility of the same in the light of the present
financial condition of the province. Or if said loan will be contrary to sound banking practice,
recommend its disapproval." 1
The letter-complaint was submitted with the joint affidavit of Elnora Escombien and Jacqueline
Jane Perez, two (2) employees of the Sangguniang Panlalawigan who witnessed the incident.
The letter was endorsed by Congressmen Eleuterio Violago and Pacifico Fajardo of the Second
and Third Districts of Nueva Ecija, former Congressman Victorio Lorenzo of the Fourth District,
and Mayor Placido Calma, President of the Mayors' League of said province. 2

The case at bar involves the validity of the suspension from office of petitioner Eduardo Nonato
Joson as Governor of the province of Nueva Ecija. Private respondent Oscar C. Tinio is the
Vice-Governor of said province while private respondents Loreto P. Pangilinan, Crispulo S.
Esguerra, Solita C. Santos, Vicente C. Palilio and Napoleon G. Interior are members of the
Sangguniang Panlalawigan. dctai

The President acted on the complaint by writing on its margin the following:

On September 17, 1996, private respondents filed with the Office of the President a lettercomplaint dated September 13, 1997 charging petitioner with grave misconduct and abuse of
authority. Private respondents alleged that in the morning of September 12, 1996, they were at
the session hall of the provincial capitol for a scheduled session of the Sangguniang
Panlalawigan when petitioner belligerently barged into the Hall; petitioner angrily kicked the door
and chairs in the Hall and uttered threatening words at them; close behind petitioner were
several men with long and short firearms who encircled the area. Private respondents claim that
this incident was an offshoot of their resistance to a pending legislative measure supported by
petitioner that the province of Nueva Ecija obtain a loan of P150 million from the Philippine
National Bank; that petitioner's acts were intended to harass them into approving this loan; that
fortunately, no session of the Sangguniang Panlalawigan was held that day for lack of quorum
and the proposed legislative measure was not considered; that private respondents opposed the
loan because the province of Nueva Ecija had an unliquidated obligation of more than P70
million incurred without prior authorization from the Sangguniang Panlalawigan; that the

1.
Noted. There appears no justification for the use of force, intimidation or armed
followers in the situation of 12 Sep at the Session Hall. 2. Take appropriate preemptive and
investigative actions. 3. BREAK NOT the PEACE.

"17 Sep 96
To:

SILG info Exec. Sec. and Sec. of Justice:

FIDEL V. RAMOS
(Signed)." 3
President Ramos noted that the situation of "12 Sep at the Session Hall," i.e., the refusal of the
members of the Sangguniang Panlalawigan to approve the proposed loan, did not appear to
justify "the use of force, intimidation or armed followers." He thus instructed the then Secretary of
the Interior and Local Governments (SILG) Robert Barbers to "[t]ake appropriate preemptive and
investigative actions," but to "[b]reak not the peace."

The letter-complaint together with the President's marginal notes were sent to Secretary Robert
Z. Barbers on September 20, 1996. Acting upon the instructions of the President, Secretary
Barbers notified petitioner of the case against him 4 and attached to the notice a copy of the
complaint and its annexes. In the same notice, Secretary Barbers directed petitioner "to submit
[his] verified/sworn answer thereto, not a motion to dismiss, together with such documentary
evidence that [he] has in support thereof, within fifteen (15) days from receipt." 5
Immediately thereafter, Secretary Barbers proceeded to Nueva Ecija and summoned petitioner
and private respondents to a conference to settle the controversy. The parties entered into an
agreement whereby petitioner promised to maintain peace and order in the province while
private respondents promised to refrain from filing cases that would adversely affect their
peaceful co-existence. 6
The peace agreement was not respected by the parties and the private respondents reiterated
their letter-complaint. Petitioner was again ordered to file his answer to the letter-complaint
within fifteen days from receipt. Petitioner received a copy of this order on November 13, 1996.
On the same day, petitioner requested for an extension of thirty (30) days to submit his answer
because he was "trying to secure the services of legal counsel experienced in administrative law
practice." 7 The Department of the Interior and Local Government (DILG), acting through
Director Almario de los Santos, Officer-In-Charge of the Legal Service, granted the motion, with
the thirty-day extension to be reckoned, however, from November 13, 1996, i.e., the day
petitioner received the order to answer. 8
In a letter dated December 9, 1996, petitioner moved for another extension of thirty (30) days to
file his answer. He stated that he had already sent letters to various law firms in Metro Manila
but that he had not yet contracted their services; that the advent of the Christmas season kept
him busy with "numerous and inevitable official engagements." 9 The DILG granted the request
for extension "for the last time up to January 13 only." 10
On January 7, 1997, petitioner requested for another extension of thirty (30) days to file his
answer. According to him, the Christmas season kept him very busy and preoccupied with his
numerous official engagements; that the law firms he invited to handle his case have favorably
replied but that he needed time to confer with them personally; and that during this period, he,
with the help of his friends, was exploring the possibility of an amicable settlement of the case.
11 The DILG granted petitioner's request "for the last time" but gave him an extension of only
ten (10) days from January 13, 1997 to January 23, 1997. The DILG also informed him that his
"failure to submit answer will be considered a waiver and that the plaintiff [shall] be allowed to
present his evidence ex-parte." 12
Petitioner moved for reconsideration of the order. He reiterated his prayer for an extension of
thirty (30) days on the following grounds: (a) that he was still in the process of choosing
competent and experienced counsel; (b) that some law firms refused to accept his case because
it was perceived to be politically motivated; and (c) the multifarious activities, appointments and
official functions of his office hindered his efforts to secure counsel of choice. 13
Three months later, on April 22, 1997, Undersecretary Manuel Sanchez, then Acting Secretary
of the DILG, issued an order declaring petitioner in default and to have waived his right to
present evidence. Private respondents were ordered to present their evidence ex-parte. The
order reads as follows:
"ORDER

It appearing that respondent failed to submit his answer to the complaint despite the grant to him
of three (3) extensions, such unreasonable failure is deemed a waiver of his right to present
evidence in his behalf pursuant to Section 4, Rule 4 of Administrative Order No. 23 dated
December 17, 1992, as amended. dctai
Respondent is hereby declared in default, meanwhile, complainants are directed to present their
evidence ex-parte. However, considering the prohibition on the conduct of administrative
investigation due to the forthcoming barangay elections, complainants will be notified on the date
after the barangay election for them to present their evidence.
SO ORDERED." 14
Two days later, on April 24, 1997, the law firm of Padilla, Jimenez, Kintanar & Asuncion,
representing petitioner, filed with the DILG an "Entry of Appearance with Motion for Time to File
Answer Ad Cautelam."
Petitioner received a copy of the order of default on May 2, 1997. Through counsel, he moved
for reconsideration. On May 19, 1997, Undersecretary Sanchez reconsidered the order of
default in the interest of justice. He noted the appearance of petitioner's counsel and gave
petitioner "for the last time" fifteen (15) days from receipt to file his answer. 15
On June 23, 1997, Undersecretary Sanchez issued an order stating that petitioner's counsel,
whose office is in Manila, should have received a copy of the May 19, 1997 order ten days after
mailing on May 27, 1997. Since petitioner still failed to file his answer, he was deemed to have
waived his right to present evidence in his behalf. Undersecretary Sanchez reinstated the order
of default and directed private respondents to present their evidence ex-parte on July 15, 1997.
16
The following day, June 24, 1997, petitioner, through counsel, filed a "Motion to Dismiss."
Petitioner alleged that the letter-complaint was not verified on the day it was filed with the Office
of the President; and that the DILG had no jurisdiction over the case and no authority to require
him to answer the complaint.
On July 4, 1997, petitioner filed an "Urgent Ex-Parte Motion for Reconsideration" of the order of
June 23, 1997 reinstating the order of default. Petitioner also prayed that the hearing on the
merits of the case be held in abeyance until after the "Motion to Dismiss" shall have been
resolved.
On July 11, 1997, on recommendation of Secretary Barbers, Executive Secretary Ruben Torres
issued an order, by authority of the President, placing petitioner under preventive suspension for
sixty (60) days pending investigation of the charges against him. 17
Secretary Barbers directed the Philippine National Police to assist in the implementation of the
order of preventive suspension. In petitioner's stead, Secretary Barbers designated ViceGovernor Oscar Tinio as Acting Governor until such time as petitioner's temporary legal
incapacity shall have ceased to exist. 18
Forthwith, petitioner filed a petition for certiorari and prohibition with the Court of Appeals
challenging the order of preventive suspension and the order of default. 19

Meanwhile, the proceedings before the DILG continued. On August 20, 1997, Undersecretary
Sanchez issued an order denying petitioner's "Motion to Dismiss" and "Urgent Ex-Parte Motion
for Reconsideration." In the same order, he required the parties to submit their position papers
within an inextendible period of ten days from receipt after which the case shall be deemed
submitted for resolution, to wit:

held at the province of Nueva Ecija. 26 On October 29, 1997, petitioner submitted a
"Manifestation and Motion" before the DILG reiterating his right to a formal investigation.
In the meantime, on October 24, 1997, the Court of Appeals dismissed petitioner's petition. 27
Hence this recourse.

"WHEREFORE, for lack of merit, both motions are denied. However, for this office to have a
better appreciation of the issues raised in the instant case, the parties, through their respective
counsels are hereby directed to submit their position papers within a period of ten (10) days from
receipt hereof, which period is inextendible, after which the case is deemed submitted for
resolution." 20
On August 27, 1997, petitioner filed with the DILG a "Motion to Lift Order of Preventive
Suspension." On September 10, 1997, petitioner followed this with a "Motion to Lift Default
Order and Admit Answer Ad Cautelam. 21 Attached to the motion was the "Answer Ad
Cautelam" 22 and sworn statements of his witnesses. On the other hand, complainants (private
respondents herein) manifested that they were submitting the case for decision based on the
records, the complaint and affidavits of their witnesses. 23
In his Answer Ad Cautelam, petitioner alleged that in the morning of September 12, 1996, while
he was at his district office in the town of Munoz, he received a phone call from Sangguniang
Panlalawigan member Jose del Mundo. Del Mundo, who belonged to petitioner's political party,
informed him that Vice-Governor Tinio was enraged at the members of the Sangguniang
Panlalawigan who were in petitioner's party because they refused to place on the agenda the
ratification of the proposed P150 million loan of the province. Petitioner repaired to the provincial
capitol to advise his party-mates on their problem and at the same time attend to his official
functions. Upon arrival, he went to the Session Hall and asked the members present where
Vice-Governor Tinio was. However, without waiting for their reply, he left the Hall and proceeded
to his office.
Petitioner claimed that there was nothing in his conduct that threatened the members of the
Sangguniang Panlalawigan or caused alarm to the employees. He said that like Vice-Governor
Tinio, he was always accompanied by his official security escorts whenever he reported for
work. He also alleged that the joint affidavit of Elnora Escombien and Jacqueline Jane Perez
was false. Escombien was purportedly not inside the session hall during the incident but was at
her desk at the office and could not in any way have seen petitioner in the hall. To attest to the
truth of his allegations, petitioner submitted three (3) joint affidavits two (2) affidavits executed
by six (6) and ten (10) employees, respectively, of the provincial government, and a third by four
members of the Sangguniang Panlalawigan. 24

The proceedings before the DILG continued however. In an order dated November 11, 1997, the
DILG denied petitioner's "Motion to Conduct Formal Investigation" declaring that the submission
of position papers substantially complies with the requirements of procedural due process in
administrative proceedings. 28
A few days after filing the petition before this Court, petitioner filed a "Motion for Leave to File
Herein Incorporated Urgent Motion for the Issuance of a Temporary Restraining Order and/or a
Writ of Preliminary Injunction." Petitioner alleged that subsequent to the institution of this
petition, the Secretary of the Interior and Local Governments rendered a resolution on the case
finding him guilty of the offenses charged. 29 His finding was based on the position papers and
affidavits of witnesses submitted by the parties. The DILG Secretary found the affidavits of
complainants' witnesses to be "more natural, reasonable and probable" than those of herein
petitioner Joson's. 30
On January 8, 1998, the Executive Secretary, by authority of the President, adopted the findings
and recommendation of the DILG Secretary. He imposed on petitioner the penalty of suspension
from office for six (6) months without pay, to wit:
"WHEREFORE, as recommended by the Secretary of the Interior and Local Government,
respondent Nueva Ecija Governor Eduardo Nonato Joson is hereby found guilty of the offenses
charged and is meted the penalty of suspension from office for a period of six (6) months without
pay." 31
On January 14, 1998, we issued a temporary restraining order enjoining the implementation of
the order of the Executive Secretary.
On January 19, 1998, private respondents submitted a Manifestation informing this Court that
the suspension of petitioner was implemented on January 9, 1998; that on the same day, private
respondent Oscar Tinio was installed as Acting Governor of the province; and that in view of
these events, the temporary restraining order had lost its purpose and effectivity and was fait
accompli. 32 We noted this Manifestation.
In his petition, petitioner alleges that:

On September 11, 1997, petitioner filed an "Urgent Motion for Reconsideration" of the order of
August 20, 1997 denying his motion to dismiss. The "Urgent Motion for Reconsideration" was
rejected by Undersecretary Sanchez on October 8, 1997. Undersecretary Sanchez, however,
granted the "Motion to Lift Default Order and to Admit Answer Ad Cautelam" and admitted the
"Answer Ad Cautelam" as petitioner's position paper pursuant to the order of August 20, 1997.
25
On October 15, 1997, petitioner filed a "Motion to Conduct Formal Investigation." Petitioner
prayed that a formal investigation of his case be conducted pursuant to the provisions of the
Local Government Code of 1991 and Rule 7 of Administrative Order No. 23; and that this be

"I
THE COURT OF APPEALS GRAVELY ERRED IN HOLDING THAT RULES OF
PROCEDURE AND EVIDENCE SHOULD NOT BE STRICTLY APPLIED IN THE
ADMINISTRATIVE DISCIPLINARY AND CLEARLY PUNITIVE PROCEEDINGS IN THE CASE
AGAINST PETITIONER GOVERNOR EDNO JOSON;
II
THE COURT OF APPEALS GRAVELY ERRED IN APPLYING THE ALTER-EGO
PRINCIPLE BECAUSE, CONTRARY TO LAW, IT WAS THE SECRETARY OF THE DILG WHO
WAS EXERCISING THE POWERS OF THE PRESIDENT WHICH ARE CLEARLY VESTED BY
LAW ONLY UPON HIM OR THE EXECUTIVE SECRETARY.

III
THE COURT OF APPEALS ERRED IN RULING THAT THE PETITIONER WAS
PROPERLY DECLARED IN DEFAULT WHEN HE FILED A MOTION TO DISMISS INSTEAD
OF AN ANSWER, AS DIRECTED BY THE DILG, BECAUSE A MOTION TO DISMISS BASED
ON JURISDICTIONAL GROUNDS IS NOT A PROHIBITIVE [sic] PLEADING IN
ADMINISTRATIVE DISCIPLINARY CASES.
IV
THE COURT OF APPEALS ERRED IN RULING THAT THE IMPOSITION OF
PREVENTIVE SUSPENSION AGAINST THE PETITIONER WAS PROPER BECAUSE THERE
WAS NO JOINDER OF ISSUES YET UPON ITS IMPOSITION AND THERE WAS NO
EVIDENCE OF GUILT AGAINST PETITIONER." 33
In his "Motion for Leave to File Herein Incorporated Urgent Motion for the Issuance of a
Temporary Restraining Order and/or a Writ of Preliminary Injunction," petitioner also claims that:

(d)
Commission of any offense involving moral turpitude or an offense punishable by at
least prision mayor;
(e)

Abuse of authority;

(f)
Unauthorized absence for fifteen (15) consecutive working days, except in the case of
members of the sangguniang panlalawigan, sangguniang panlunsod, sangguniang bayan, and
sangguniang barangay;
(g)
Application for, or acquisition of, foreign citizenship or residence or the status of an
immigrant of another country; and
(h)

Such other grounds as may be provided in this Code and other laws.

"I
THE RESOLUTION OF JANUARY 8, 1998 AND THE MEMORANDA ISSUED
PURSUANT THERETO (i.e., ANNEXES "C," "D," "E," "F," AND "G" HEREOF) WERE ISSUED
WITH UNDUE HASTE, IN VIOLATION OF THE PERTINENT PROVISIONS OF THE 1991
LOCAL GOVERNMENT CODE AND ADMINISTRATIVE ORDER NO. 23, AND IN COMPLETE
DISREGARD OF PETITIONER'S CONSTITUTIONAL RIGHT TO DUE PROCESS.

An elective local official may be removed from office on the grounds enumerated above by order
of the proper court."

II
THE IMPLEMENTATION OF THE INVALID RESOLUTION OF JANUARY 8, 1998
(ANNEX "C" HEREOF) BY THE PUBLIC RESPONDENTS ENTITLES PETITIONER TO THE
IMMEDIATE ISSUANCE OF THE TEMPORARY RESTRAINING ORDER/WRIT OF
PRELIMINARY INJUNCTION HEREIN PRAYED FOR." 34

"Sec. 61. Form and Filing of Administrative Complaints. A verified complaint against any
erring local elective official shall be prepared as follows:

When an elective local official commits an act that falls under the grounds for disciplinary action,
the administrative complaint against him must be verified and filed with any of the following:

(a)
A complaint against any elective official of a province, a highly urbanized city, an
independent component city or component city shall be filed before the Office of the President.

We find merit in the petition.

Administrative disciplinary proceedings against elective local officials are governed by the Local
Government Code of 1991, the Rules and Regulations Implementing the Local Government
Code of 1991, and Administrative Order No. 23 entitled "Prescribing the Rules and Procedures
on the Investigation of Administrative Disciplinary Cases Against Elective Local Officials of
Provinces, Highly Urbanized Cities, Independent Component Cities, and Cities and
Municipalities in Metropolitan Manila." 35 In all matters not provided in A.O. No. 23, the Rules of
Court and the Administrative Code of 1987 apply in a suppletory character. 36
I
Section 60 of Chapter 4, Title II, Book I of the Local Government Code enumerates the grounds
for which an elective local official may be disciplined, suspended or removed from office. Section
60 reads: dctai
"Sec. 60. Grounds for Disciplinary Actions. An elective local official may be disciplined,
suspended, or removed from office on any of the following grounds:
(a)

Disloyalty to the Republic of the Philippines;

(b)

Culpable violation of the Constitution;

(c)

Dishonesty, oppression, misconduct in office, gross negligence, or dereliction of duty;

(b)
A complaint against any elective official of a municipality shall be filed before the
sangguniang panlalawigan whose decision may be appealed to the Office of the President; and
(c)
A complaint against any elective barangay official shall be filed before the
sangguniang panlungsod or sangguniang bayan concerned whose decision shall be final and
executory." 37
An administrative complaint against an erring elective official must be verified and filed with the
proper government office. A complaint against an elective provincial or city official must be filed
with the Office of the President. A complaint against an elective municipal official must be filed
with the Sangguniang Panlalawigan while that of a barangay official must be filed before the
Sangguniang Panlungsod or Sangguniang Bayan.
In the instant case, petitioner Joson is an elective official of the province of Nueva Ecija. The
letter-complaint against him was therefore properly filed with the Office of the President.
According to petitioner, however, the letter-complaint failed to conform with the formal
requirements set by the Code. He alleges that the complaint was not verified by private
respondents and was not supported by the joint affidavit of the two witnesses named therein;
that private respondents later realized these defects and surreptitiously inserted the verification
and sworn statement while the complaint was still pending with the Office of the President. 38 To
prove his allegations, petitioner submitted: (a) the sworn statement of private respondent Solita
C. Santos attesting to the alleged fact that after the letter-complaint was filed, Vice-Governor
Tinio made her and the other members of the Sangguniang Panlalawigan sign an additional
page which he had later notarized; and (b) the fact that the verification of the letter-complaint

and the joint affidavit of the witnesses do not indicate the document, page or book number of the
notarial register of the notary public before whom they were made. 39

The Disciplining Authority may, however, in the interest of the service, constitute a Special
Investigating Committee in lieu of the Secretary of the Interior and Local Government." 46

We find no merit in the contention of the petitioner. The absence of the document, page or book
number of the notarial register of the subscribing officer is insufficient to prove petitioner's claim.
The lack of these entries may constitute proof of neglect on the part of the subscribing officer in
complying with the requirements for notarization and proper verification. They may give grounds
for the revocation of his notarial commission. 40 But they do not indubitably prove that the
verification was inserted or intercalated after the letter-complaint was filed with the Office of the
President.

Pursuant to these provisions, the Disciplining Authority is the President of the Philippines,
whether acting by himself or through the Executive Secretary. The Secretary of the Interior and
Local Government is the Investigating Authority, who may act by himself or constitute an
Investigating Committee. The Secretary of the DILG, however, is not the exclusive Investigating
Authority. In lieu of the DILG Secretary, the Disciplining Authority may designate a Special
Investigating Committee.

Nor is the fact of intercalation sufficiently established by the affidavit of Solita C. Santos. Private
respondent Santos was one of the signatories to the letter-complaint. In her affidavit, she prayed
that she be dropped as one of the complainants since she had just joined the political party of
petitioner Joson. She decided to reveal the intercalation because she was disillusioned with the
"dirty tactics" of Vice-Governor Tinio to grab power from petitioner Joson. 41 Private respondent
Santos cannot in any way be considered an unbiased witness. Her motive and change of heart
render her affidavit suspect.
Assuming, nonetheless, that the letter-complaint was unverified when submitted to the Office of
the President, the defect was not fatal. The requirement of verification was deemed waived by
the President himself when he acted on the complaint.
Verification is a formal, not jurisdictional requisite. 42 Verification is mainly intended to secure an
assurance that the allegations therein made are done in good faith or are true and correct and
not mere speculation. 43 The lack of verification is a mere formal defect. 44 The court may order
the correction of the pleading, if not verified, or act on the unverified pleading if the attending
circumstances are such that a strict compliance with the rule may be dispensed with in order that
the ends of justice may be served. 45
II
In his second assigned error, petitioner questions the jurisdiction and authority of the DILG
Secretary over the case. He contends that under the law, it is the Office of the President that has
jurisdiction over the letter-complaint and that the Court of Appeals erred in applying the alter-ego
principle because the power to discipline elective local officials lies with the President, not with
the DILG Secretary.
Jurisdiction over administrative disciplinary actions against elective local officials is lodged in two
authorities: the Disciplining Authority and the Investigating Authority. This is explicit from A.O.
No. 23, to wit:
"Sec. 2. Disciplining Authority. All administrative complaints, duly verified, against elective
local officials mentioned in the preceding Section shall be acted upon by the President. The
President, who may act through the Executive Secretary, shall hereinafter be referred to as the
Disciplining Authority."
Sec. 3. Investigating Authority. The Secretary of the Interior and Local Government is
hereby designated as the Investigating Authority. He may constitute an Investigating Committee
in the Department of the Interior and Local Government for the purpose.

The power of the President over administrative disciplinary cases against elective local officials
is derived from his power of general supervision over local governments. Section 4, Article X of
the 1987 Constitution provides:
"Sec. 4. The President of the Philippines shall exercise general supervision over local
governments. Provinces with respect to component cities and municipalities, and cities and
municipalities with respect to component barangays shall ensure that the acts of their
component units are within the scope of their prescribed powers and functions." 47
The power of supervision means "overseeing or the authority of an officer to see that the
subordinate officers perform their duties. 48 If the subordinate officers fail or neglect to fulfill their
duties, the official may take such action or step as prescribed by law to make them perform their
duties. 49 The President's power of general supervision means no more than the power of
ensuring that laws are faithfully executed, or that subordinate officers act within the law. 50
Supervision is not incompatible with discipline. 51 And the power to discipline and ensure that
the laws be faithfully executed must be construed to authorize the President to order an
investigation of the act or conduct of local officials when in his opinion the good of the public
service so requires. 52 Thus:
"Independently of any statutory provision authorizing the President to conduct an investigation of
the nature involved in this proceeding, and in view of the nature and character of the executive
authority with which the President of the Philippines is invested, the constitutional grant to him of
power to exercise general supervision over all local governments and to take care that the laws
be faithfully executed must be construed to authorize him to order an investigation of the act or
conduct of the petitioner herein. Supervision is not a meaningless thing. It is an active power. It
is certainly not without limitation, but it at least implies authority to inquire into facts and
conditions in order to render the power real and effective. If supervision is to be conscientious
and rational, and not automatic and brutal, it must be founded upon a knowledge of actual facts
and conditions disclosed after careful study and investigation." 53
The power to discipline evidently includes the power to investigate. As the Disciplining Authority,
the President has the power derived from the Constitution itself to investigate complaints against
local government officials. A. O. No. 23, however, delegates the power to investigate to the DILG
or a Special Investigating Committee, as may be constituted by the Disciplining Authority. This is
not undue delegation, contrary to petitioner Joson's claim. The President remains the
Disciplining Authority. What is delegated is the power to investigate, not the power to discipline.
54
Moreover, the power of the DILG to investigate administrative complaints is based on the alterego principle or the doctrine of qualified political agency. Thus: dctai

"Under this doctrine, which recognizes the establishment of a single executive, all executive and
administrative organizations are adjuncts of the Executive Department, the heads of the various
executive departments are assistants and agents of the Chief Executive, and, except in cases
where the Chief Executive is required by the Constitution or law to act in person or the
exigencies of the situation demand that he act personally, the multifarious executive and
administrative functions of the Chief Executive are performed by and through the executive
departments, and the acts of the Secretaries of such departments, performed and promulgated
in the regular course of business, are, unless disapproved or reprobated by the Chief Executive
presumptively the acts of the Chief Executive." 55
This doctrine is corollary to the control power of the President. 56 The power of control is
provided in the Constitution, thus:
"Sec. 17. The President shall have control of all the executive departments, bureaus, and
offices. He shall ensure that the laws be faithfully executed." 57
Control is said to be the very heart of the power of the presidency. 58 As head of the Executive
Department, the President, however, may delegate some of his powers to the Cabinet members
except when he is required by the Constitution to act in person or the exigencies of the situation
demand that he acts personally. 59 The members of Cabinet may act for and in behalf of the
President in certain matters because the President cannot be expected to exercise his control
(and supervisory) powers personally all the time. Each head of a department is, and must be,
the President's alter ego in the matters of that department where the President is required by law
to exercise authority. 60
The procedure how the Disciplining and Investigating Authorities should exercise their powers is
distinctly set forth in the Local Government Code and A.O. No. 23. Section 62 of the Code
provides:
"Sec. 62. Notice of Hearing. (a) Within seven (7) days after the administrative complaint is
filed, the office of the President or the sanggunian concerned, as the case may be, shall require
the respondent to submit his verified answer within fifteen (15) days from receipt thereof , and
commence investigation of the case within ten (10) days after receipt of such answer of the
respondent.

When an administrative complaint is therefore filed, the Disciplining Authority shall issue an
order requiring the respondent to submit his verified answer within fifteen (15) days from notice.
Upon filing of the answer, the Disciplining Authority shall refer the case to the Investigating
Authority for investigation.
In the case at bar, petitioner claims that the DILG Secretary usurped the power of the President
when he required petitioner to answer the complaint. Undisputably, the letter-complaint was filed
with the Office of the President but it was the DILG Secretary who ordered petitioner to answer.
Strictly applying the rules, the Office of the President did not comply with the provisions of A.O.
No. 23. The Office should have first required petitioner to file his answer. Thereafter, the
complaint and the answer should have been referred to the Investigating Authority for further
proceedings. Be that as it may, this procedural lapse is not fatal. The filing of the answer is
necessary merely to enable the President to make a preliminary assessment of the case. 62 The
President found the complaint sufficient in form and substance to warrant its further
investigation. The judgment of the President on the matter is entitled to respect in the absence of
grave abuse of discretion.
III
In his third assigned error, petitioner also claims that the DILG erred in declaring him in default
for filing a motion to dismiss. He alleges that a motion to dismiss is not a pleading prohibited by
the law or the rules and therefore the DILG Secretary should have considered it and given him
time to file his answer.
It is true that a motion to dismiss is not a pleading prohibited under the Local Government Code
of 1991 nor in A.O. No. 23. Petitioner, however, was instructed not to file a motion to dismiss in
the order to file answer. Thrice, he requested for extension of time to file his answer citing as
reasons the search for competent counsel and the demands of his official duties. And thrice, his
requests were granted. Even the order of default was reconsidered and petitioner was given
additional time to file answer. After all the requests and seven months later, he filed a motion to
dismiss!

Sections 1 and 3, Rule 5 61 of A.O. No. 23 provide:

Petitioner should know that the formal investigation of the case is required by law to be finished
within one hundred twenty (120) days from the time of formal notice to the respondent. The
extensions petitioner requested consumed fifty-five (55) days of this period. 63 Petitioner, in fact,
filed his answer nine (9) months after the first notice. Indeed, this was more than sufficient time
for petitioner to comply with the order to file answer.

"Sec. 1. Commencement. Within forty-eight (48) hours from receipt of the answer, the
Disciplining Authority shall refer the complaint and answer, together with their attachments and
other relevant papers, to the Investigating Authority who shall commence the investigation of the
case within ten (10) days from receipt of the same.

The speedy disposition of administrative complaints is required by public service. The efficiency
of officials under investigation is impaired when a case hangs over their heads. Officials deserve
to be cleared expeditiously if they are innocent, also expeditiously if guilty, so that the business
of government will not be prejudiced. 64

"xxx

IV

xxx

xxx

xxx

xxx."

xxx

"Sec. 3. Evaluation. Within twenty (20) days from receipt of the complaint and answer, the
Investigating Authority shall determine whether there is a prima facie case to warrant the
institution of formal administrative proceedings."

In view of petitioner's inexcusable failure to file answer, the DILG did not err in recommending to
the Disciplining Authority his preventive suspension during the investigation. Preventive
suspension is authorized under Section 63 of the Local Government Code, viz:
"Sec. 63. Preventive Suspension. (a) Preventive suspension may be imposed:

(1)
By the President, if the respondent is an elective official of a province, a highly
urbanized or an independent component city;
xxx

xxx

xxx.

(b)
Preventive suspension may be imposed at any time after the issues are joined, when
the evidence of guilt is strong, and given the gravity of the offense, there is great probability that
the continuance in office of the respondent could influence the witnesses or pose a threat to the
safety and integrity of the records and other evidence; Provided, That, any single preventive
suspension of local elective officials shall not extend beyond sixty (60) days: Provided, further,
That in the event that several administrative cases are filed against an elective official, he cannot
be preventively suspended for more than ninety (90) days within a single year on the same
ground or grounds existing and known at the time of the first suspension.
xxx

xxx

WHEREFORE, and as recommended by the Department of the Interior and Local Government,
respondent EDUARDO N. JOSON, Governor of Nueva Ecija, is hereby placed under
PREVENTIVE SUSPENSION FOR A PERIOD OF SIXTY (60) DAYS, effective 11 July 1997,
pending investigation of the charges filed against him.
SO ORDERED." 65
Executive Secretary Torres found that all the requisites for the imposition of preventive
suspension had been complied with. Petitioner's failure to file his answer despite several
opportunities given him was construed as a waiver of his right to file answer and present
evidence; and as a result of this waiver, the issues were deemed to have been joined. The
Executive Secretary also found that the evidence of petitioner Joson's guilt was strong and that
his continuance in office during the pendency of the case could influence the witnesses and
pose a threat to the safety and integrity of the evidence against him.

xxx."
V

In sum, preventive suspension may be imposed by the Disciplining Authority at any time (a) after
the issues are joined; (b) when the evidence of guilt is strong; and (c) given the gravity of the
offense, there is great probability that the respondent, who continues to hold office, could
influence the witnesses or pose a threat to the safety and integrity of the records and other
evidence.

We now come to the validity of the January 8, 1998 Resolution of the Executive Secretary
finding petitioner guilty as charged and imposing on him the penalty of suspension from office for
six (6) months from office without pay.

Executive Secretary Torres, on behalf of the President, imposed preventive suspension on

petitioner Joson after finding that:

Petitioner claims that the suspension was made without formal investigation pursuant to the
provisions of Rule 7 of A.O. No. 23. Petitioner filed a "Motion To Conduct Formal Investigation"
three months before the issuance of the order of suspension and this motion was denied by the
DILG for the following reasons:

"xxx

xxx

xxx

DILG Secretary Robert Z. Barbers, in a memorandum for the President, dated 23 June 1997,
recommends that respondent be placed under preventive suspension considering that all the
requisites to justify the same are present. He stated therein that:
'Preventive suspension may be imposed at any time after the issues are joined, that is, after
respondent has answered the complaint, when the evidence of guilt is strong and, given the
gravity of the offense, there is a great possibility that the continuance in office of the respondent
could influence the witnesses or pose a threat to the safety and integrity of the records and other
evidence (Sec. 3, Rule 6 of Administrative Order No. 23).
The failure of respondent to file his answer despite several opportunities given him is construed
as a waiver of his right to present evidence in his behalf (Sec. 4, Rule 4 of Administrative Order
No. 23). The requisite of joinder of issues is squarely met with respondent's waiver of right to
submit his answer. The act of respondent in allegedly barging violently into the session hall of
the Sangguniang Panlalawigan in the company of armed men constitutes grave misconduct. The
allegations of complainants are bolstered by the joint-affidavit of two (2) employees of the
Sangguniang Panlalawigan. Respondent who is the chief executive of the province is in a
position to influence the witnesses. Further, the history of violent confrontational politics in the
province dictates that extreme precautionary measures be taken.'
Upon scrutiny of the records and the facts and circumstances attendant to this case, we concur
with the findings of the Secretary of the Interior and Local Government and find merit in the
aforesaid recommendation.

"On November 19, 1997, complainants, through counsel, filed a Manifestation calling our
attention to the Decision dated October 24, 1997 of the Court of Appeals, Fifth Division in CAG.R. SP No. 44694, entitled "Eduardo Nonato Joson versus Executive Secretary Ruben D.
Torres, et. al." In the aforestated decision, the Court of Appeals resolved to sustain the authority
of this Department to investigate this administrative case and has likewise validated the order of
default as well as the order of preventive suspension of the respondent.
We offer no objection and concur with the assertion of respondent that he has the right for the
conduct of formal investigation. However, before there shall be a formal investigation, joinder of
issues must already be present or respondent's answer has already been filed. In the case at
bar, the admission of respondent's answer after having been declared in default was conditioned
on the fact of submission of position papers by the parties, after which, the case shall be
deemed submitted for resolution. Respondent, instead of submitting his position paper filed his
subject motion while complainants manifested to forego the submission of position paper and
submit the case for resolution on the basis of the pleadings on hand.
Settled is the rule that in administrative proceedings, technical rules of procedure and evidence
are not strictly applied (Concerned Officials of the Metropolitan Waterworks and Sewerage
System v. Vasquez, 240 SCRA 502). The essence of due process is to be found in the
reasonable opportunity to be heard and to submit evidence one may have in support of one's
defense (Tajonera v. Lamaroza, 110 SCRA 438). To be heard does not only mean verbal
arguments in court; one may be heard also through pleadings. Where opportunity to be heard,
either through oral arguments or pleadings, is accorded, there is no denial of procedural due
process (Juanita Y . Say, et. al;. vs. IAC, G.R. No. 73451). Thus, when respondent failed to

submit his position paper as directed and insisted for the conduct of formal investigation, he was
not denied of his right of procedural process.

papers. On January 8, 1998, Executive Secretary Torres adopted Secretary Barbers' findings
and recommendations and imposed on petitioner the penalty of six (6) months suspension
without pay.

WHEREFORE, the Motion for the Conduct of Formal Investigation, for lack of merit, is DENIED.
SO ORDERED." 66
The denial of petitioner's Motion to Conduct Formal Investigation is erroneous. Petitioner's right
to a formal investigation is spelled out in the following provisions of A.O. No. 23, viz:
"SEC. 3. Evaluation. Within twenty (20) days from receipt of the complaint and answer, the
Investigating Authority shall determine whether there is a prima facie case to warrant the
institution of formal administrative proceedings.
SEC. 4. Dismissal motu proprio. If the Investigating Authority determines that there is no
prima facie case to warrant the institution of formal administrative proceedings, it shall, within the
same period prescribed under the preceding Section, submit its recommendation to the
Disciplining Authority for the motu proprio dismissal of the case, together, with the recommended
decision, resolution, and order.
SEC. 5. Preliminary conference. If the Investigating Authority determines that there is prima
facie case to warrant the institution of formal administrative proceedings, it shall, within the same
period prescribed under the preceding Section, summon the parties to a preliminary conference
to consider the following:
a)
whether the parties desire a formal investigation or are willing to submit the case for
resolution on the basis of the evidence on record; and
b)
If the parties desire a formal investigation, to consider the simplification of issues, the
possibility of obtaining stipulation or admission of facts and of documents, specifically affidavits
and depositions, to avoid unnecessary proof, the limitation of number of witnesses, and such
other matters as may be aid the prompt disposition of the case.
The Investigating Authority shall encourage the parties and their counsels to enter, at any stage
of the proceedings, into amicable settlement, compromise and arbitration, the terms and
conditions of which shall be subject to the approval of the Disciplining Authority.
After the preliminary conference, the Investigating Authority shall issue an order reciting the
matters taken up thereon, including the facts stipulated and the evidences marked, if any. Such
order shall limit the issues for hearing to those not disposed of by agreement or admission of the
parties, and shall schedule the formal investigation within ten (10) days from its issuance, unless
a later date is mutually agreed in writing by the parties concerned." 67
The records show that on August 27, 1997, petitioner submitted his Answer Ad Cautelam where
he disputed the truth of the allegations that he barged into the session hall of the capitol and
committed physical violence to harass the private respondents who were opposed to any move
for the province to contract a P150 million loan from PNB. In his Order of October 8, 1997,
Undersecretary Sanchez admitted petitioner's Answer Ad Cautelam but treated it as a position
paper. On October 15, 1997, petitioner filed a Motion to Conduct Formal Investigation. Petitioner
reiterated this motion on October 29, 1997. Petitioner's motion was denied on November 11,
1997. Secretary Barbers found petitioner guilty as charged on the basis of the parties' position

The rejection of petitioner's right to a formal investigation denied him procedural due process.
Section 5 of A.O. No. 23 provides that at the preliminary conference, the Investigating Authority
shall summon the parties to consider whether they desire a formal investigation. This provision
does not give the Investigating Authority the discretion to determine whether a formal
investigation would be conducted. The records show that petitioner filed a motion for formal
investigation. As respondent, he is accorded several rights under the law, to wit:
"Sec. 65. Rights of Respondent. The respondent shall be accorded full opportunity to appear
and defend himself in person or by counsel, to confront and cross-examine the witnesses
against him, and to require the attendance of witnesses and the production of documentary
evidence in his favor through compulsory process of subpoena or subpoena duces tecum."
An erring elective local official has rights akin to the constitutional rights of an accused. 68 These
rights are essentially part of procedural due process. 69 The local elective official has the (1)
right to appear and defend himself in person or by counsel; (2) the right to confront and crossexamine the witnesses against him; and (3) the right to compulsory attendance of witness and
the production of documentary evidence. These rights are reiterated in the Rules Implementing
the Local Government Code 70 and in A.O. No. 23. 71 Well to note, petitioner formally claimed
his right to a formal investigation after his Answer Ad Cautelam has been admitted by
Undersecretary Sanchez.
Petitioner's right to a formal investigation was not satisfied when the complaint against him was
decided on the basis of position papers. There is nothing in the Local Government Code and its
Implementing Rules and Regulations nor in A.O. No. 23 that provide that administrative cases
against elective local officials can be decided on the basis of position papers. A.O. No. 23 states
that the Investigating Authority may require the parties to submit their respective memoranda but
this is only after formal investigation and hearing. 72 A.O. No. 23 does not authorize the
Investigating Authority to dispense with a hearing especially in cases involving allegations of fact
which are not only in contrast but contradictory to each other. These contradictions are best
settled by allowing the examination and cross-examination of witnesses. Position papers are
often-times prepared with the assistance of lawyers and their artful preparation can make the
discovery of truth difficult. The jurisprudence cited by the DILG in its order denying petitioner's
motion for a formal investigation applies to appointive officials and employees. Administrative
disciplinary proceedings against elective government officials are not exactly similar to those
against appointive officials. In fact, the provisions that apply to elective local officials are
separate and distinct from appointive government officers and employees. This can be gleaned
from the Local Government Code itself.
In the Local Government Code, the entire Title II of Book I of the Code is devoted to elective
officials. It provides for their qualifications and election, 73 vacancies and succession, 74 local
legislation, 75 disciplinary actions, 76 and recall. 77 Appointive officers and employees are
covered in Title III of Book I of the Code entitled "Human Resources and Development." All
matters pertinent to human resources and development in local government units are regulated
by "the civil service law and such rules and regulations and other issuances promulgated.
thereto, unless otherwise provided in the Code." 78 The "investigation and adjudication of
administrative complaints against appointive local officials and employees as well as their

suspension and removal" are "in accordance with the civil service law and rules and other
pertinent laws," the results of which "shall be reported to the Civil Service Commission." 79
It is the Administrative Code of 1987, specifically Book V on the Civil Service, that primarily
governs appointive officials and employees. Their qualifications are set forth in the Omnibus
Rules Implementing Book V of the said Code. The grounds for administrative disciplinary action
in Book V are much more in number and are specific than those enumerated in the Local
Government Code against elective local officials. 80 The disciplining authority in such actions is
the Civil Service Commission 81 although the Secretaries and heads of agencies and
instrumentalities, provinces, cities and municipalities are also given the power to investigate and
decide disciplinary actions against officers and employees under their jurisdiction. 82 When a
complaint is filed and the respondent answers, he must "indicate whether or not he elects a
formal investigation if his answer is not considered satisfactory." 83 If the officer or employee
elects a formal investigation, the direct evidence for the complainant and the respondent
"consist[s] of the sworn statement and documents submitted in support of the complaint and
answer, as the case may be, without prejudice to the presentation of additional evidence
deemed necessary . . ., upon which the cross-examination by respondent and the complainant,
respectively, is based." 84 The investigation is conducted without adhering to the technical rules
applicable in judicial proceedings." 85 Moreover, the appointive official or employee may be
removed or dismissed summarily if (1) the charge is serious and the evidence of guilt is strong;
(2) when the respondent is a recidivist; and (3) when the respondent is notoriously undesirable.
86
The provisions for administrative disciplinary actions against elective local officials-are markedly
different from appointive officials. 87 The rules on the removal and suspension of elective local
officials are more stringent. The procedure of requiring position papers in lieu of a hearing in
administrative cases is expressly allowed with respect to appointive officials but not to those
elected. An elective official, elected by popular vote, is directly responsible to the community that
elected him. The official has a definite term of office fixed by law which is relatively of short
duration. Suspension and removal from office definitely affects and shortens this term of office.
When an elective official is suspended or removed, the people are deprived of the services of
the man they had elected. Implicit in the right of suffrage is that the people are entitled to the
services of the elective official of their choice. 88 Suspension and removal are thus imposed only
after the elective official is accorded his rights and the evidence against him strongly dictates
their imposition.
IN VIEW WHEREOF, the Resolution of January 8, 1998 of the public respondent Executive
Secretary is declared null and void and is set aside. No Cost.

SYLLABUS
1.
POLITICAL LAW; CIVIL SERVICE COMMISSION (CSC); CAREER EXECUTIVE
SERVICE BOARD (CESB); AN OFFICE CREATED BY LAW AND CAN ONLY BE ABOLISHED
BY LAW. The Career Executive Service Board (CESB) was created by Presidential Decree
(P.D.) No. 1 on September 1, 1974 which adopted the Integrated Reorganization Plan. As the
CESB was created by law, it can only be abolished by the legislature. This follows an unbroken
stream of rulings that the creation and abolition of public offices is primarily a legislative function.
As aptly summed up in AM JUR 2d on Public Officers and Employees, viz: Except for such
offices as are created by the Constitution, the creation of public offices is primarily a legislative
function. In so far as the legislative power in this respect is not restricted by constitutional
provisions, it is supreme, and the legislature may decide for itself what offices are suitable,
necessary, or convenient. When in the exigencies of government it is necessary to create and
define duties, the legislative department has the discretion to determine whether additional
offices shall be created, or whether these duties shall be attached to and become ex-officio
duties of existing offices. An office created by the legislature is wholly within the power of that
body, and it may prescribe the mode of filling the office and the powers and duties of the
incumbent, and, if it sees fit, abolish the office." In the petition at bench, the legislature has not
enacted any law authorizing the abolition of the CESB. On the contrary, in all the General
Appropriation Acts from 1975 to 1993, the legislature has set aside funds for the operation of
CESB.
2.
ID.; ID.; ID.; AUTONOMOUS ENTITY THAT CANNOT BE ABOLISHED BY CSC.
Respondent Commission invokes Section 17, Chapter 3, Subtitle A, Title I, Book V of the
Administrative Code of 1987 as the source of its power to abolish the CESB. Section 17 must be
read together with Section 16 of the said Code which enumerates the offices under the
respondent Commission. As read together, the inescapable conclusion is that respondent
Commission's power to reorganize is limited to offices under its control as enumerated in
Section 16. From its inception, the CESB was intended to be an autonomous entity, albeit
administratively attached to respondent Commission. As conceptualized by the Reorganization
Committee "the CESB shall be autonomous. It is expected to view the problem of building up
executive manpower in the government with a broad and positive outlook." The essential
autonomous character of the CESB is not negated by its attachment to respondent Commission.
By said attachment, CESB was not made to fall within the control of respondent Commission.
Under the Administrative Code of 1987, the purpose of attaching any functionally inter-related
government agency to another is to attain "policy and program coordination." This is clearly
etched out in Section 38(3), Chapter 7, Book IV of the aforecited Code.
DECISION

SO ORDERED.
PUNO, J p:

[G.R. No. 115863. March 31, 1995.]

AIDA D. EUGENIO, petitioner, vs. CIVIL SERVICE COMMISSION, HON. TEOFISTO T.
GUINGONA, JR. & HON. SALVADOR ENRIQUEZ, JR., respondent.
Mauricio Law Office for petitioner.
The Solicitor General for respondents.

The power of the Civil Service Commission to abolish the Career Executive Service Board is
challenged in this petition for certiorari and prohibition. cdphil
First the facts. Petitioner is the Deputy Director of the Philippine Nuclear Research Institute. She
applied for a Career Executive Service (CES) Eligibility and a CESO rank. On August 2, 1993,
she was given a CES eligibility. On September 15, 1993, she was recommended to the
President for a CESO rank by the Career Executive Service Board. 1

All was not to turn well for petitioner. On October 1, 1993, respondent Civil Service Commission
2 passed Resolution No. 93-4359, viz:
RESOLUTION NO. 93-4359
"WHEREAS, Section 1(1) of Article IX-B provides that the Civil Service shall be administered by
the Civil Service Commission, . . . ";
"WHEREAS, Section 3, Article IX-B of the 1987 Philippine Constitution provides that 'The Civil
Service Commission, as the central personnel agency of the government, is mandated to
establish a career service and adopt measures to promote morale, efficiency, integrity,
responsiveness, progressiveness and courtesy in the civil service, . . . ';
"WHEREAS, Section 12 (1), Title I, Subtitle A, Book V of the Administrative Code of 1987 grants
the Commission the power, among others, to administer and enforce the constitutional and
statutory provisions on the merit system for all levels and ranks in the Civil Service;
"WHEREAS, Section 7, Title I, Subtitle A, Book V of the Administrative Code of 1987 provides,
among others, that 'The Career Service shall be characterized by (1) entrance based on merit
and fitness to be determined as far as practicable by competitive examination, or based on
highly technical qualifications; (2) opportunity for advancement to higher career positions; and
(3) security of tenure;
"WHEREAS, Section 8 (c), Title I, Subtitle A, Book V of the Administrative Code of 1987
provides that 'The third level shall cover position in the Career Executive Service';
"WHEREAS, the Commission recognizes the imperative need to consolidate, integrate and unify
the administration of all levels of positions in the career service;
"WHEREAS, the provisions of Section 17, Title I, Subtitle A, Book V of the Administrative Code
of 1987 confers on the Commission the power and authority to effect changes in its organization
as the need arises.
"WHEREAS, Section 5, Article IX-A of the Constitution provides that the Civil Service
Commission shall enjoy fiscal autonomy and the necessary implications thereof;
"NOW THEREFORE, foregoing premises considered, the Civil Service Commission hereby
resolves to streamline, reorganize and effect changes in its organizational structure. Pursuant
thereto, the Career Executive Service Board, shall now be known as the Office for Career
Executive Service of the Civil Service Commission. Accordingly, the existing personnel, budget,
properties and equipment of the Career Executive Service Board shall now form part of the
Office for Career Executive Service."
The above resolution became an impediment to the appointment of petitioner as Civil Service
Officer, Rank IV. In a letter to petitioner, dated June 7, 1994, the Honorable Antonio T. Carpio,
Chief Presidential Legal Counsel, stated:
"xxx

xxx

xxx

"On 1 October 1993, the Civil Service Commission issued CSC Resolution No. 93-4359 which
abolished the Career Executive Service Board. prLL

"Several legal issues have arisen as a result of the issuance of CSC Resolution No. 93-4359,
including whether the Civil Service Commission has authority to abolish the Career Executive
Service Board. Because these issues remain unresolved, the Office of the President has
refrained from considering appointments of career service eligibles to career executive ranks.
"xxx

xxx

xxx

"You may, however, bring a case before the appropriate court to settle the legal issues arising
from the issuance by the Civil Service Commission of CSC Resolution No. 93-4359, for
guidance of all concerned.
"Thank you."
Finding herself bereft of further administrative relief as the Career Executive Service Board
which recommended her CESO Rank IV has been abolished, petitioner filed the petition at
bench to annul, among others, Resolution No. 93-4359. The petition is anchored on the following
arguments:
"A.
IN VIOLATION OF THE CONSTITUTION, RESPONDENT COMMISSION USURPED THE
LEGISLATIVE FUNCTIONS OF CONGRESS WHEN IT ABOLISHED THE CESB, AN OFFICE
CREATED BY LAW, THROUGH THE ISSUANCE OF CSC RESOLUTION NO. 93-4359;
"B.
ALSO IN VIOLATION OF THE CONSTITUTION, RESPONDENT CSC USURPED THE
LEGISLATIVE FUNCTIONS OF CONGRESS WHEN IT ILLEGALLY AUTHORIZED THE
TRANSFER OF PUBLIC MONEY, THROUGH THE ISSUANCE. OF CSC RESOLUTION NO.
93-4359."
Required to file its Comment, the Solicitor General agreed with the contentions of petitioner.
Respondent Commission, however, chose to defend its ground. It posited the following position:
"ARGUMENTS FOR PUBLIC RESPONDENT-CSC
"I.
THE INSTANT PETITION STATES NO CAUSE OF ACTION AGAINST THE PUBLIC
RESPONDENT-CSC.
"II.
THE RECOMMENDATION SUBMITTED TO THE PRESIDENT FOR APPOINTMENT
TO A CESO RANK OF PETITIONER EUGENIO WAS A VALID ACT OF THE CAREER
EXECUTIVE SERVICE BOARD OF THE CIVIL SERVICE COMMISSION AND IT DOES NOT
HAVE ANY DEFECT.
"III.
THE OFFICE OF THE PRESIDENT IS ESTOPPED FROM QUESTIONING THE
VALIDITY OF THE RECOMMENDATION OF THE CESB IN FAVOR OF PETITIONER
EUGENIO SINCE THE PRESIDENT HAS PREVIOUSLY APPOINTED TO CESO RANK FOUR
(4) OFFICIALS SIMILARLY SITUATED AS SAID PETITIONER. FURTHERMORE, LACK OF
MEMBERS TO CONSTITUTE A QUORUM, ASSUMING THERE WAS NO QUORUM, IS NOT
THE FAULT OF PUBLIC RESPONDENT CIVIL SERVICE COMMISSION BUT OF THE

PRESIDENT WHO HAS THE POWER TO APPOINT THE OTHER MEMBERS OF THE CESB.
LLphil
"IV.
THE INTEGRATION OF THE CESB INTO THE COMMISSION IS AUTHORIZED BY
LAW (Sec. 12(1), Title I, Subtitle A, Book V of the Administrative Code of 1987). THIS
PARTICULAR ISSUE HAD ALREADY BEEN SETTLED WHEN THE HONORABLE COURT
DISMISSED THE PETITION FILED BY THE HONORABLE MEMBERS OF THE HOUSE OF
REPRESENTATIVES, NAMELY: SIMEON A. DATUMANONG, FELICIANO R. BELMONTE,
JR., RENATO V. DIAZ, AND MANUEL M. GARCIA IN G.R. NO. 114380. THE
AFOREMENTIONED PETITIONERS ALSO QUESTIONED THE INTEGRATION OF THE CESB
WITH THE COMMISSION."

In the petition at bench, the legislature has not enacted any law authorizing the abolition of the
CESB. On the contrary, in all the General Appropriations Acts from 1975 to 1993, the legislature
has set aside funds for the operation of CESB. Respondent Commission, however, invokes
Section 17, Chapter 3, Subtitle A, Title I, Book V of the Administrative Code of 1987 as the
source of its power to abolish the CESB. Section 17 provides:
"Section 17.
Organizational Structure. Each office of the Commission shall be headed
by a Director with at least one Assistant Director, and may have such divisions as are necessary
to carry out their respective functions. As an independent constitutional body, the Commission
may effect changes in the organization as the need arises."

We find merit in the petition. 3

But, as well pointed out by petitioner and the Solicitor General, Section 17 must be read together
with Section 16 of the said Code which enumerates the offices under the respondent
Commission, viz:

The controlling fact is that the Career Executive Service Board (CESB) was created by
Presidential Decree (P.D.) No. 1 on September 1, 1974 4 which adopted the Integrated
Reorganization Plan. Article IV, Chapter I, Part III of the said Plan provides:

"SEC. 16. Offices in the Commission. The Commission shall have the following offices:

"Article IV Career Executive Service

"1.
A Career Executive Service is created to form a continuing pool of well-selected and
development-oriented career administrators who shall provide competent and faithful service.
"2.
A Career Executive Service Board, hereinafter referred to in this Chapter as the
Board, is created to serve as the governing body of the Career Executive Service. The Board
shall consist of the Chairman of the Civil Service Commission as presiding officer, the Executive
Secretary and the Commissioner of the Budget as ex-officio members and two other members
from the private sector and/or the academic community who are familiar with the principles and
methods of personnel administration.
"xxx

xxx

xxx

"5.
The Board shall promulgate rules, standards and procedures on the selection,
classification, compensation and career development of members of the Career Executive
Service. The Board shall set up the organization and operation of the service." (Emphasis
supplied)
It cannot be disputed, therefore, that as the CESB was created by law, it can only be abolished
by the legislature. This follows an unbroken stream of rulings that the creation and abolition of
public offices is primarily a legislative function. As aptly summed up in AM JUR 2d on Public
Officers and Employees, 5 viz:
"Except for such offices as are created by the Constitution, the creation of public offices is
primarily a legislative function. In so far as the legislative power in this respect is not restricted by
constitutional provisions, it is supreme, and the legislature may decide for itself what offices are
suitable, necessary, or convenient. When in the exigencies of government it is necessary to
create and define duties, the legislative department has the discretion to determine whether
additional offices shall be created, or whether these duties shall be attached to and become exofficio duties of existing offices. An office created by the legislature is wholly within the power of
that body, and it may prescribe the mode of filling the office and the powers and duties of the
incumbent and, if it sees fit, abolish the office."

"(1)
The Office of the Executive Director headed by an Executive Director, with a Deputy
Executive Director shall implement policies, standards, rules and regulations promulgated by the
Commission; coordinate the programs of the offices of the Commission and render periodic
reports on their operations, and perform such other functions as may be assigned by the
Commission. cdphil
"(2)
The Merit System Protection Board composed of a Chairman and two (2) members
shall have the following functions:
"xxx

xxx

xxx

"(3)
The Office of Legal Affairs shall provide the Chairman with legal advice and
assistance; render counselling services; undertake legal studies and researches; prepare
opinions and ruling in the interpretation and application of the Civil Service law, rules and
regulations; prosecute violations of such law, rules and regulations; and represent the
Commission, before any court or tribunal.
"(4)
The Office of Planning and Management shall formulate development plans, programs
and projects; undertake research and studies on the different aspects of public personnel
management; administer management improvement programs; and provide fiscal and budgetary
services.
"(5)
The Central Administrative Office shall provide the Commission with personnel,
financial, logistics and other basic support services.
"(6)
The Office of Central Personnel Records shall formulate and implement policies,
standards, rules and regulations pertaining to personnel records maintenance, security, control
and disposal; provide storage and extension services; and provide and maintain library services.
"(7)
The Office of Position Classification and Compensation shall formulate and implement
policies, standards, rules and regulations relative to the administration of position classification
and compensation.

"(8)
The Office of Recruitment, Examination and Placement shall provide leadership and
assistance in developing and implementing the overall Commission programs relating to
recruitment, execution and placement, and formulate policies, standards, rules and regulations
for the proper implementation of the Commission's examination and placement programs.
"(9)
The Office of Career Systems and Standards shall provide leadership and assistance
in the formulation and evaluation of personnel systems and standards, relative to performance
appraisal, merit promotion, and employee incentive benefits and awards.
"(10)
The Office of Human Resource Development shall provide leadership and assistance
in the development and retention of qualified and efficient work force in the Civil Service;
formulate standards for training and staff development; administer service-wide scholarship
programs; develop training literature and materials; coordinate and integrate all training activities
and evaluate training programs.
"(11)
The Office of Personnel Inspection and Relations and Audit shall develop policies,
standards, rules and regulations for the effective conduct or inspection and audit personnel and
personnel management programs and the exercise of delegated authority; provide technical and
advisory services to Civil Service Regional Offices and government agencies in the
implementation of their personnel programs and evaluation systems. LLjur
"(12)
The Office of Personnel Relations shall provide leadership and assistance in the
development and implementation of policies, standards, rules and regulations in the
accreditation of employee associations or organizations and in the adjustment and settlement of
employee grievances and management of employee disputes.
"(13)
The Office of Corporate Affairs shall formulate and implement policies, standards,
rules and regulations governing corporate officials and employees in the areas of recruitment,
examination, placement, career development, merit and awards systems, position classification
and compensation, performing appraisal, employee welfare and benefit, discipline and other
aspects of personnel management on the basis of comparable industry practices.
"(14)
The Office of Retirement Administration shall be responsible for the enforcement of
the constitutional and statutory provisions, relative to retirement and the regulation for the
effective implementation of the retirement of government officials and employees.
"(15)
The Regional and Field Offices. The Commission shall have not less than thirteen
(13) Regional offices each to be headed by a Director, and such field offices as may be needed,
each to be headed by an official with at least the rank of an Assistant Director.
As read together, the inescapable conclusion is that respondent Commission's power to
reorganize is limited to offices under its control as enumerated in Section 16, supra. From its
inception, the CESB was intended to be an autonomous entity, albeit administratively attached
to respondent Commission. As conceptualized by the Reorganization Committee "the CESB
shall be autonomous. It is expected to view the problem of building up executive manpower in
the government with a broad and positive outlook." 6 The essential autonomous character of the
CESB is not negated by its attachment to respondent Commission. By said attachment, CESB
was not made to fall within the control of respondent Commission. Under the Administrative
Code of 1987, the purpose of attaching one functionally inter-related government agency to
another is to attain "policy and program coordination." This is clearly etched out in Section 38(3),
Chapter 7, Book IV of the aforecited Code, to wit:

"(3)
Attachment. (a) This refers to the lateral relationship between the department or its
equivalent and the attached agency or corporation for purposes of policy and program
coordination. The coordination may be accomplished by having the department represented in
the governing board of the attached agency or corporation, either as chairman or as a member,
with or without voting rights, if this is permitted by the charter; having the attached corporation or
agency comply with a system of periodic reporting which shall reflect the progress of programs
and projects; and having the department or its equivalent provide general policies through its
representative in the board, which shall serve as the framework: for the internal policies of the
attached corporation or agency." llcd
Respondent Commission also relies on the case of Datumanong, et al. vs. Civil Service
Commission, G.R. No. 114380 where the petition assailing the abolition of the CESB was
dismissed for lack of cause of action. Suffice to state that the reliance is misplaced considering
that the cited case was dismissed for lack of standing of the petitioner, hence, the lack of cause
of action.
IN VIEW WHEREOF, the petition is granted and Resolution No. 93-4359 of the respondent
Commission is hereby annulled and set aside. No costs.
SO ORDERED.

[G.R. No. 109406. September 11, 1998.]

REMEDIOS T. BLAQUERA, ROMEO T. ACOSTA, DINAH A. AGATI, RODRIGO AGIR, JR.,
REY M.T. AGUINALDO, ELEAZAR S. ALAIRA, MARCIAL C. AMARO, JR., LEONOR M.
ARZADON, MARLENE C. ARZAGA, MIGUEL G. BADION, NORMITA S. BALLON,
SOCORRO B. DEL MONTE, TEODORA B. CABRERA, ERLINDA CANTIL, ARIEL P.
CATINDIG, MA. HAYLEY N. CONCEPCION, MARY ANN C. CRUZ, MA. VICTORIA
ASUMPTU P. DACANAY, FEBES M. DE LEON, LIBERTY M. DELIMA, MARITESS I.
ESCUBIO, RITA D. FLORELIZ, CARIDAD C. FRANCISCO, LEVI F. CABALFIN, FE
GARRIDO, JULIE GOROSPE, NELSON V. GOROSPE, IMELDA GUINTANGUIJO, NENITA
GUTIERREZ, SALLY B. IMPERIAL, NERISSA B. JARABE, FE G. LOO, MA IRENE E.
LORENZO, LORIDA D. MACARAAN, DANILO P. MANOLOTO, ADORACION M. MENDOZA,
CECILIA MENDOZA, EMMANUEL MIRAFLORES LLARINA S. MOJICA, ZENAIDA B.
MUNOZ, ALICIA S. NERY, NOEL O. PADILLA, ERVY C. PASCUAL, MA. MADELINE R.
PATAWARAN, CRISTINA B. PAULINO, IRENEO T. PEREZ, MA. EVELINA RASCO, AUDREY
T. ROSETE, LUMINADA C. ROTOL, FRANCISCO SANTOS, JR., JULIET U. TEXON, HELEN
A. TOBIAS, LARRY R. VILLAFLOR, RAYMOND R. VIRGINO, LILY YBAO, VICKY U.
YLAGAN, NENITA R. ZABALA, CHARLIE U. AGATI, NOEL C. AQUINO, ERLINDA P. AYAP,
CONRADO A. BRAVANTE, JR., EMMA F. CABRERA, MAY R. CANLAS, SUSAN CASTILLA,
CORAZON B. CHECA, BLESILDA T. CORRO, EMMA DIEZ, MA. LOURDES G. FERRER,
LILIHUA B. GARCIA, JESLINA B. GOROSPE, MYRNA GUMANGAN, LERMA D. HONRADO,
ISRAEL S. INOCENCIO, JONAS P. LEONES, AVEL A. MORADO, JUANITA NACINO,
GENEVIEVE AUSTRIA PADILLA, ALMA O. PELOBELLO, NELIA J. QUESADA, CRISTINA
M. REGUNAY, DEMILOUR B. REYES, MOLINA REYNALDO, GLENN ADONIS M. RICO,
BELEN E. SOTALBO, ANDREA B. TALOSIG, FLORDELIZA TENAZAS, MERLY B.
TOMILLUSO, MA. ROSALINA VELASCO, NATIVIDAD YABES, PAULO F. ABESAMIS,
FELICITAS AREVALO, FORCIA B. ATOS, BELINDA I. DEANG, CONSUELO T. DUANO,
ERNESTINA JOSE, GERARDO O. MENDOZA, LUZVIMINDA P. MENDOZA, AMANTE S.

PERALTA, YOLANDA M. TATANG, DOLORES M. ANGCO, MA. VENUS BERONGOY, LYDIA

M. BONA, MA. LOURDES CASAL, MABEL COLOMA, MARY JUNE D. DANDAN, ERLINDA
O. DOMINGO, JOSEPHINE P. EBORA, ELENA B. FERNANDEZ, EVANGELINE FERRERLIMYOLO, AMPARO V. GEREZ, ZENAIDA V. GUTIERREZ, MILAGROS C. IMBAO, JULIE
JALAAN, LETICIA A. LLAMERA, CAROLINA A. LOPEZ, MARIUS NORMAN MACALALAD,
ALICIA L. MALLILLIN, REMEDIOS L. MERCADO, DINA B. MONTEALEGRE, SUSAN
MORTOS, JUANITO F. MUNSAYAC, PAULA ONG, DALISAY PASCUAL, MA. ALMA M.
PILIPINA, NICETA A. ROXAS, AMADOR ATENDIDO, LUZCELY H. VEDAN, NELLY
VILLARAMA, ESTALA S. AGUILES, JEAN F. ALLADO, YVONNE B. BALDADO, EUPREFIA
BALDEMOR, NICETAS B. BAUTISTA, ANTONIO BENITEZ, JANETTE BERNARDO, MARIA
B. BONGCO, GREGORIO ALEXIS M. CAAYAO, FREDESVINDA G. CASUNCAD, ROSA G.
COPON, AMILYN DANTES, HERMINIA ECLEO, FILIPINA V. EDRALIN, ROSALINA O.
ENRIQUEZ, MARY FERNANDEZ, VICTORIA B. GIMENO, LEONARDO C. HERNANDEZ,
ERLINDA MENDOZA, AURORA V. PIDO, FORTUNATA C. RAYOSO, MARIA V. RICAFORT,
DORINA S. ROJAS, LEONITA R. SIBUNGA, ERNA D. SY, ALMEIDA J. TAGALA, EDGARDO
TUBANG, SOFIA VELACRUZ, EUGENE N. ANTOLIN, MA. ELVIRA P. JAVIER, LISETTE G.
MONENO, CLEOFE P. PATANAO, MARY JEAN V. REYES, SHIRLEY G. AQUINO, CHRISTY
GEMPES, JOSE FEDERICO M. GEMDRANO, JOSEPHINE G. RANCAP, JOSETTE B. SAN
LUIS, MARINA A. BORRETA, CHERRY B. CID, OLIVIA P. JOVE, MA. TERESA M. MARING,
BETTY P. MOJICA, EDITHA T. MUNIELA, EMMANUEL T. PILAR, JOVITA C. ROBOSA, MA.
NENA M. VILLANUEVA, MARK A. ANTONIO, PRISCILLA G. BACENA, SUSAN C. BENOZA,
RHODORA A. CALUNGCAGIN, ANA MARIA M. CRISOSTOMO, ELENITO E. CUNANAN,
ROMANA A. DE LEON, EDMUNDO B. FLORENDO, DANIEL GARCIA, AMELIN F. MAGAT,
PATRIA A. NULLAS, MYRNA S. TADENA, THELMA TOTANES, ALFONSO A. VERGARA,
BELEN M. ANTIPORDA, ROSALINA B. CARANDO, ESTELLA P. DE LEON, CRESENCIA I.
OLIVAR, LOURIE A. OLIVERIO, TERESITA A. RAMOS, ELISEO T. REYES, PUREZA T.
SAYON, JOSEFINA B. TEJANA, VILLAROSA C. ABEN, JONATHAN ACABAL,
POLICARPIO ALCARAZ, TERESITA C. AMOG, GLORIA AROGANTE, EVENLYN
BANDOLIN, GERRY BANDOLIN, ADOR BARROS, CELSO L. BAUTISTA, FELICITAS S.
BAUTISTA, CRISTNINA DE GUZMAN, ESTELA C. FACELO, RAMON FLORES, ANGELITO
V. FONTANILLA, GERMAN GALAOS, REMEDIOS S. GARCIA, MANNY G. GINGCO,
VIRGILIO HALILI, ZENAIDA IBAY, ERNESTO B. JARABE, OSCAR LEANO, TEODORA O.
LEONCIO, CARMEN R. LUARCA, EMER REX MATIBAG, MARLYN R. MENDOZA, BIBIANO
C. MIRANDA, ROMERICO MA. T. MOLINA, ERLINDA C. POYATOS, GIANINA H.
PUNZALAN, CRISTINA H. REYES, PETER RAMIL REYES, RUTH JEAN B. SOLANO,
WILFREDO C. TORREDONDO, NARCISO VILLAMOR, ERLINDA S. VILLANUEVA, OSCAR
H. VILLAS, GUILLERMA B. ALCONIS, AGNES CAMPO, JOCELYN CLEMENTE, AMADO B.
ESPANOL, LEONILO G. GONZALES, FE A. MENDIZABAL, TERESITA MORANARTE,
ERLINDA P. ROMULO, FLORA TANGCO, HONARIO T. TORRENUEVA, WILMA YNGENTE,
SUSANA N. ANTOLIN, JOEL U. BAUN, RHODORA C. BRUCAL, CARMELITA G. CAYABAN,
CARIDAD CLARIN, LIDINILA N. CONCEPCION FARIDA F. FLAVIANO, TEODORA B.
MACARAYAN, HILARIA G. MAGCULANG, HERNAN MARILLA, MONINA R. MENDRES,
HERMINA A. MOLINA, YOLANDA GIGI H. MOLINA, RHODORA C. PADILLA, SANTIAGO
PALACPAC, JR., ROMMEL PANGILINAN, DIANA JEAN N. PINAROC, MELANIE C. REY,
MERCY L. REYES, HELEN RUTH BRIONES TABION, MARIA AMELITA DJ. ORTIZ
TAMAYO, LEONIDES VALERO NELIA F. VILLANUEVA, MA. CRISTINA F. ABAYA,
MACARIO A. BASCON, NANCY ROSE CAUGMA, ELIGIO T. ILDEFONSO, MA. DELIA P.
MEIMBAN, ROMEO G. MENDIZABAL, MICHAEL LL. TADEO, JOSE HENRY M. TALABIS,
MELCHOR R. TARUC, PONCIANO M. ARANEZ, REMEDIOS A. ASUNCION, EDILBERTA
BUENO, ELIZABETH F. CRUZ, ARACELI V. ESPINO, RICARDO A. FIAN, LOURDES JM.
FLORES, MA. ELIZABETH GALANG, JOSE C. MORALES JR., JOSELITO R. OCHING,

JANET REYES, BENITO C. SORIANO, MARCELO B. VALDERAMA, LINDBERG M. S.

VALEROS, SARITA RENDON VALEROS, STEPHEN E. ABELLA, MARIA FRANCIA
ALFEREZ, FELY BALABBO, FE BOJOCAN, CARMELO Z. CAUSAPIN, NIDA R. DEDEL,
JOSEFINA S. DIMALANTA, MARIA TERESITA ESPINOL, BELEN FERNANDEZ, GERUNDIO
C. FERNANDEZ, HELEN LEE D. JIMENEZ, JAKE MAKI, ROSITA M. PINIANO, CHITO
REYES, EFREN F. REYES, EVELYN REYES, ENRICO A.O SANTOS, NELIE VALLANGCA
VALENTE VILLANUEVA, MANUEL D. ROJAS, PAULINA G. CASTRO, FANCY M. LEONES,
ZENAIDA R. OPENA, FRANCISCO B.A SAAVEDRA, ARNOLD L. SINZACA, MANUEL P.S.
SOLIS, DEMETRIA STA. ANA, LALLYJEAN S. AGUILAR, ELENA D. APOLONIO, RODOLFO
A. DE AUSEN, MARITES O. DELFIN, EMMANUEL M. ESGUERRA, NELSON ITLIONG,
ALBINO A. BELEN, ROBERTO E. BELEN, FELIPE H. CALLORINA, JR., ANTONIO
CENTENO, ERNESTO R. FRUTAS, JOSEFINA C. IGNACIO, PEDRITO N. KALALANG,
BELLA P. MILLO, TIRSO P. PARIAN, JR., CERLINO ALMENDAREZ, WILLIE V. AMBROCIO,
MA. TERESA G. AQUINO, JUANITA BAUTISTA, CELODONIO C. BERNABE, REMEDIOS T.
BLAQUERA, ALICIA CASTILLO, ANITA D. ESPARES, JOEL FLORES, CITA G. GERADA,
ROBERTO O. IGSOC, ANNALISA V. JAVIER, VICTORIA B. MALACAD, ANTONIO C.
MANILA, EVELYN MENDEZ, LERMA M. MENDOZA, EUFEMIA NUCUM, LEONVINA A.
OLIVO, AMIE T. RABANG, LILIA J. RADA, DELAGIA D. ROBEL, DEGNISITA G. SERRANO,
PETRONIO TADIOSA, RODERICO A. TAN, CHARLITO VALDEZ, ALMA M. VAZQUEZ,
PEDRO E. VICTORIA, SERGIO ABUAN, RODOLFO ANGELES, MARTINIANO ROTOL,
MERLIE T. CASIGAY, THELMA F. CHUSON, ENCARNACION CONCEPCION, IMELDA
CORTEZ, OBDULIA B. DORADO, EVELYN S. ESTRADA, MARIO S. FERNANDEZ,
RUPERTO E. GABUTAN, SONIA R. IGAYA, RAYMUNDA O. LABUGUEN, AUREA LACHICA,
LINA M. MANALAYSAY, SALVADOR MANIOSO, BERLINA B. MANOSO, FLORANGEL
MEDRANO, TERESITA S. MESTA, JOCELYN MONTILLANO, LUZ C. PERALTA, SOFIO B.
QUINTANA, YOLANDA B. QUINTANA, SANTOS RABARA, ROSALINO R. ROMUALDO,
MARIFE RUBA, CRISTETA RULLODA, RHORODA SANTOS, VICTOR SEE, ELNORA G.
TALEON, VIRGINIA V. TALEON, MELCHOR U. TAMAYO, MILAGROS VALDEZ, MARITA
WELGAS-BRIZ, VISITACION A. ZANO, ELVIRA D. AGPOON, VIRGINIA ANGELES,
ISABELITA V. AUSTRIA, ADELAIDA S. BALANZA, ORPHA B. BALILLA, FE T. CARPIO,
LOIDA E. HUNAT, ROSEMARIE LABIS, LUZ MARIA S. LANSIGAN, BONIFACIO RABANG,
ANGELITA RECELI, BERTRAM SIGAION, SARAH F. TUBIG, MYRNA M. VILORIA,
LOURDES C. WAGAN, SILVERIA M. ANTOLIN, BONIFACIO ARCE, MARINA ASIAO,
PERIGRINO S. BAGUNU, ARISCALITA A. BAKER, MARIETTA L. BAL, NELY M. BUTIC,
MOISES H. BUTIC, GLORIA S. CABATIC, GERARDO T. CABREROS, BENJAMIN C.
CARINO, ERASMO M. CORTADO, EVANGELINE J. DE LEON, EVARISTO C. EUSEBIO,
EDEN M. GAZAL, EVA M. JACA, VELERIANO V. LADIA, JR., NORMA CASUCOG, FELIX L.
LECHONCITO, MA. DOLORES M. LEGARDA, RODOLFO P. LIPAOPAO, JR., LETY A.
LORENZO, MARLON C. MELCHOR, ELPIDIO M. MOLINYAWE, JUAN S. ODANGA,
SUEMELITO V. PAA, VENIA T. RAYALA, FLORDELINO M. REY, CARME T. ROSETE,
CORAZON C. SALAMAT, ANASTACIO B. SISON, VICENTA F. GAERLAN, JULIET G.
TOLENTINO, GLORIA E. URBIZTONDO, ANDRA C. ABARQUEZ, THELMA S. ALCARAZ,
SALVE A. ASUNCION, ALLAN V. BARCENA, NERA S. BAYANI, NEMESIO E. BERONILLA,
PIO P. BOTE, DOLORES R. CATINDIG, CORWIN B. CECILLANO, ALEX A. CHENG,
GERTRUDEZ C. CORTEZ, ARNULFO A. ESCOBIDO, EUGENE V. ESTRADA, GENESIS J.
FRANCISCO, VIVIEN O. GALEON, FLORDELIZA D. GARCIA, MITCHELLE A. LACHICA,
THELMA I. LAGMAN, MA. CAROLINA G. MELICOR, MA. MAGDALENA E. MORENO,
FRANCIONIE G. NONO, BERNARDO A. RESURRECCION, VILMA A. SABADO, ELVIRA G.
SABANDO, ALEJANDRO R. SIBUCAO, JR., WILFREDO H. ZAPANTA, HERMENIGILDO S.
ALLASCO, REBECCA BURGOS, MARIEL D. GARCIA, BELINDA M. LEAL, AGAPITA
MAGBOJOS, MA. LOURDES VICTUELLES, CARMELITA ALMENDAREZ, PERLA ABELLA,

ESMERALDA R. DE CLARO, LOURDES DECAMORA, ROMUALDO DELA CRUZ, RUFINO

DIAROG, HAYDEE LATTO, CARMEN MELCHOR, MERCEDES U. ULIBAS, EMY R.
ZAPANTA, NELDA C. ABLAN, VENERANDO R. ATUD, NESTOR A. BAMBALAN, PROCESO
V. BAUTISTA, EMMA C. CONCEPCION, JUAN G. DAYAG, ELISA Q. FARRO, EMILIE M.
LICO, TEODORA B. PAJARILLAGA, CONCESA P. QUINONES, VERONICA G. REY,
TERESITA O. SERRANO, AVELINA VALDEZ, ELVIRA L. ADVINCULA, RENATO P.
AGUILAR, ROSALINA ALFORJA, LORENSO ALMENDAREZ, SATA H. ALTAP, JAIME
AQUINO, DOMINICO ARROBAN, JR., OCTAVIUS L. ASPACIO, MYRNA V. BERNABE,
CRECENSIO R. CALDERON, JR., RUPITO C. CARACAS, PILAR F. CHUA, ENGRACIA M.
CRUZ, MANUEL CRUZ, AGUSTIN DELASAN, NATIVIDAD C. ESPIRITU, ROLANDO I.
ETEROSA, EDEN FABIAN, LILIA A. FILAMOR, MIGUEL O. GAPAS, ODENCIO GARCIA,
PIEDAD R. GARCIA, BIEN GUICO, PRESENTASION O. HAZAL, MARILYN B. LAGADAY,
LORENZO LAMENDAREZ, ALEJANDRINO MANAS, ROMEO L. MANOSO, MELINDA
MARTINEZ, JOYBERT MIJARES, WENCESLADA A. MIRAN, TEOFILO V. OBLENA, AMELIA
C. OLIVERIA, SOCORRO C. PALENCIA, NELSON PANGILINAN, FAUSTINO PASON, ELIAS
PATAL, ANDRES PELA, AURORA V. PIOL, NOLI PRADO, ANITA C. RAMBAYON,
EVANGELINE E RODRIGUES, ROSE R. SUNICO, JULIETA F. TABERNILLA, SALVACION
B. VAZQUEZ, EMILY VERANO, EDWIN VILLANUEVA, JOEL V. VILLAR, SATURNINA VITE,
DON ABARRIENTOS, JOSENDEL O. AGRA, MARISTELA ARIEL, JOHN B. ARROBANG,
ALBERTO A. BANATAO, FEDERICO M. BARREDA, PAULO BERINA, RENATO M. BORJA,
GENARO BORQUIN, FLOR A. CABUNOG, ELIZABETH S. CALDERON FRESCILLA N.
CALIMAG, CRISTETA A. CASTRO, MA. ELENA CONSTANTINO, MILA CORRE, RENATO D.
CRUZ, JOSEFINA L. DE LEON, RHODORA R. DE VEYRA, CONSOLADORA A.
DIMARANAN, ERNESTO R. DIONISIO, ERNESTO S. DIONISIO, JR., LIGAYA B. DIONISIO,
OSCAR EMBERGA, PEDO FALLARIA, MA. LOURDES V. FELICITAS, GRISELDA V.
GALEON, CRESENCIO MAXIMO GARCIA, MARY ANN GENEROSO, WHYLEEN SM.
GONZALES, ANGELINA C. GREGORIO, SALVADOR B. JANA, JR., LYNETTE T. LAROYA,
OFELIA G. LIPORADA, GRACIANO MANUEL, BIBIANO H. MEJINO, THEODORE MORAL,
ANTONIO P. MORENO, JR., ANICETO D. ORDEN, IMELDA C. PANGGA, CONSOLACION
PANGILINAN, ROSITA P. PARINA, ELPIDIO N. QUITERO, MYRNA RAMOS, GLENDA B.
REFIL, MA. TERESA REFORSADO, HEIDI D. REGALA, RUFINA R. REYES, SUSAN H.
ROQUERO, AJIT RYE II, LEO J. SAGUGUIT, MARINO K. SANTOS, LINA D. SEGUNIAL,
ALBA SORIANO, JESSICA SORIANO, ROMEO B. TRONO, ANGELITA T. VILORIA, TIRSO
ABAD, FEDERICO ABILO, LOLITA L. ANOVA, OPRIASA ANTONIO, JERRY B. AQUINO,
RODERICK ARAO, RENATO ARROYO, RUBEN ASENSI, ERNESTO BALINGIT, ALBERTO
A. BANATA, JOSEPHINE BARRIENTOS, MARCELINO BERINA, WILFREDO BONILCA, ED
C. BONILLA, FRANCISO BRAZA, ANONINA S. BRILLANTES, ROGELIO O. CADADAN,
RENE CALICA, TERESITA CALUMA, EDGARDO CAPARAS, ALEX M. CARANDANG,
MIGNON C. CARLOS, CRISTETA CASTRO, MA. ERLINDA B. CAUSAY, REYNALDO M.
CENTENO, DANILO CERVANTES, ELEJIA R. CHARIE, CARMEN G. CLUTARlO, MANUEL
F. CRUZ, DOMINGO DE GUZMAN, ABAS DE JESUS, ROMULO DEL MUNDO, JUAN B.
DESPABILADERO, GAVINO ESMERO, FIDEL C. ESTANISLAO, ROWEN A. EUSTAQUIO,
CORAZON FERNANDEZ, ALBERTINE FLORES, RIOLITA H. GALLEGO, MARCELINO
GATCHALIAN, JIMMY GIDRAMA, RUFINO GUTIERREZ, MERCEDITA S. HARING, MAY
HARINGA, ROMEO P. IBARRIENTOS, BERLINO INFANTE, JOSELYN V. VILLA, CATALINO
LIMBO, ORIOSA LISING, BOYET F. LITA, ENRICO LIWANAG, ALTHEA O. LOTA, VINA P.
MACATANGAY NORBERTO MADADO, FLORINIA NADADO, JAIME NADADO, CONNIE
NAGAMOS, TESSIE NAGAMOS, AMALIA U. NELL, EDILBERTO OROCAY, RESTITUTO P.
PARDINAS, ROSITA P. PARINA, EUGENIO PATAG, FERMIN PAVIA, BERNARDO PENA,
JOSEMARIA P. PEREZ, ARMIDA D. PULLO, LAURO S. PUNZALAN, JUSTINA QUINORES,
NANOY C. REANO, EDDIE REYES, FRANCISCO ROMERO, SUSAN ROQUERO, WILFREDO

RUZGAL, CONRADO SALAZAR, ODENCIA C. SALVADOR, TEODORA B. SANDOVAL,

RODANTE SANTIAGO, GLORIA SANTOS, JOSE C. SANTOS, FLORANTE P. SOMERA,
MELISSA B. STA. CRUZ, JOSE TABIGAN ANTONIO TALASTAS, DOMINGO G. TARNATE,
JR. IGMEDIO TIONGSON, STEPHEN U. TOLEDO, ROMEO UMAYAN, BENJAMIN URBANO,
MALOU B. VERA, JERRY VISTO, AUGUSTO YUSON, JOSE S. AGUSTIN, LEIS
ALEJANDRO, EDWIN E. ALLADA, ROLANDO ANDRADE, LHITA CABUNGAN, LOUIE
CATUDIO, REYNALDO M. CENTENO, DIOSMEDADO T. COCAL, EVANGELINE I.
CORCUERA, REMY D. CORTEZ, JONATHAN C. DANGA, FRED DE CLARO, MAURO DE
JESUS, EFREN DE JUCOS, GEORGE DE LEON, SHIRLEY DEPASUCAT, MARIA REYNA
DONDAY, AURA ALELI P. DUIROS, DIONICIA DURANTE, MARCELO ENRIQUE,
FERDINAND ESPIRITU, MIRASOL ESPIRITU, RUBY T. FAMORCAN, JOSE C FORTUNO,
BEVERLY FRANCISCO, JOSE Z. GALLARDO, REYNALDO GANTONG, NILO GARCIA,
LONESTO GENOVEZA, FELIPE HERRERA, FELIPE G. ISIP, JR., RANDY C. MABANA,
CESAR MACAALAY, ROGELIO MANGILIT, EMILIO MANUEL, JOSE MARINAS, JAIME
MATA, DANILO MIANO, JOVITO NAROG, FELISA A. NUESCA, REYNALDO OLAHAY,
ANSELMO PARANAS, JR., RESTITUTO P. PARDINAS, MARIAN G. PASCUAL,
MARCELLANO P. PEREZ, NEIL PIAMONTE, REYNALDO QUIROS, EFREN RAMOS,
CARLOS RAMOS, MAMERTO RESURRECCION, QUINONES RONILO, ARTURO C.
SANTOS, M.C. SANVICTORES, ROMEO G. SUMULONG, AURELIO G. TAN, JUNIFER TAN,
TERESITA B. TOMAS, APOLLO URBANO, VICTORIA B. VALDEZ, CONCESA L. ALDAY,
ELMER Y. CORPUS, ANNIE L. CORPUZ, ZENAIDA M. DE GUZMAN, MERLINDA V. DE
JESUS, ISAURO R. DOROSAN, MA. ELENA D. EBONA, LETICIA C. EUSEBIO,
ALEJANDRO V. FERNANDEZ, EVITA B. GARABILES, NELSON GARCIA, ROWENA M.
HUISCA, JESSE LADISLA, JUVY P. LADISLA, RANDY LAGUNILLA, LANIE A. MABANA,
SAMSON MACOB, ANTONIO MAMMAY, RICARDO PALAGANAS, LUNINGNING C.
PANGILINAN, VILMA PORCADELA, ROGELIO RONQUILLO, MA. VICTORIA P. SOMERA,
MIRASOL R. TUGADE, DOMINADOR ABAD, BRICCIO P. ABAN, KELVIN C. ABARRA,
NESTOR ABENIS, SYLVIA C. ABUNGAN, (ATTY.) ANSELMO ABUNGAN, ELENITA A.
ACUNA, DANILO C. ADINA, PETRONIO C. AGUILA, SYLVIA S. ALCANTARA, MARCELO
ALILIO, ROMEO L. ALMEDA, NORBERTO ALMERINO, LUISITO M. ALMOGELA, DAHLIA R.
ALMOSARA, JOEL P. ALMOSARA, CATER AMBROSIO, EDITHA A. AMISCARAY, MA.
VICTORIA I. AMORES, LEONARDO APIL, ANTONIO N. APOSTOL, JR., NENA T. AQUINO,
PATRICIO M. ARAGON, JR., SYLVIA ARBOLEDA, JOSE P. ARZADON, MARIO ASIS,
ADELAIDA AUAYANG, MARIO A. AURELIO, ROBERTO M. AVELLANA, TERESITA J.
AVENTURADO, EMOLYN E. AZURIN, EDITHA BACHAR, GLORIA M. BACONG, GERONIMO
BADULIS, JR., GLADIOLA M. BAGADIONG, AMELIA G. BALAIS, FEDERICO A. BALANON,
RODRIGO BALILLA, JOFFER L. BALLESTEROS, TERESITA P. BALMES, ANITA B.
BAURA, CRISANTO A. BAURA, JR., SERVIN BAUTISTA, GABINO BELLEZA, FLORENCIA
P. BENOSA, DANNY BERCHES, HERNANI BERNAL, ELVIRA V. BERSABE, ISMAEL C.
BOCO, MARCIAL BENJAMIN BUNGOLAN, FELY A. BOSTON, ANGEL A. BRAVO, RAUL
BRITANICO, LILITA G. BROCES, EDUARDO S. GUTIERREZ, JOSEFA C. CAABAY,
MICHAEL B. CABALDA, SIROLAN B. CABE, CESAR B. CABRERA, BENJAMIN S.
CADAWAN, JR., VERONA J. CALAMANAN, ADELAIDA B. CALOOY, ROBERT F.
CALUGAY, JUANITO CALVEZ, NECITA M. CAMANGONAN, SATURNINO Y.
CAMANGONAN, JUAN G. CANLAS, FRANCISCA D. CANUEL, ARTURO D. CANUELA,
EVELYN CANUELA, JESUS CANUELA, NELIA D. CANUELA, AVELINO C. CAPARAS,
RICARDO R. CARINGAL, MA. LOURDES CASIMIRO, ARCADIO I. CASIS, DANIEL C.
CASIS, ELENA C. CASIS, ROBERTO S. CASTILLO, FEIPE P. CASUNCAD, JUANITO A.
CATOR, RENATO CATOR, JONAS R. CHECA, RENE A. CILINDRO, ELWIN B. CINCO,
ROSALINDA CIPRIANO, JOSE MARIE CLOMA, MARJORIE COLLADO, ELVETA C.
COMSTI, ALLAN ANTONIO C. CONDA, APOLONIO V. CRUZ, FE C. CRUZ, FLORDELIZA

CRUZ, LEODEGARIO CUEVAS, OLIVER CUEVAS, REMEDIOS CUEVAS, GLORIA T.

DACANAY, MARIBEL DAMIAN, MARY ANNE C. DE CASTRO, CESAR S. DE CHAVEZ,
ANICET F. DE GUZMAN, AURELIO DE GUZMAN, JOSE C. DE GUZMAN, RUBY B. DE
GUZMAN, BERNARD DE LARA, ALFONSO S. DE LEON, DANILO DE LEON, RESTITUTO C.
DE LEON, EDWIN L. DEVERA, HAROLD T. DE VERA, CESAR M. DE VEYRA, ANACLETO
C. DEL MUNDO, ALFONSO P. DELA CRUZ, JR., EMERITA M. DELA CRUZ, HELEN T.
DELA CRUZ, RIZALYN C. DELA CRUZ, SERVILLANO R. DELA CRUZ, JOSE DELA
FUENTE, WILFREDO C. DELA FUENTE, ARNOLD DELGADO, JAIME DELOS REYES,
MANUEL T. DEPANES, ANTONIO DEQUINA, ROLANDO D. DESTACAMENTO, MARIETA L.
DETERA, PRESENTACION C. DIEZ, RAUL S. DIMALANTA, WENCESLAO DIZON, EDWIN
G. DOMINGO, MELANIO O. DONES, JR., ESTELITO DOROSAN, ISAURO DOROSAN, JR.,
CHARLIE M. DULAY, ESTEBAN DULAY JR., SATURNINO DULAY, MA. AIDA C. DUROY,
RIZAL P. ECHECHE, GASPAR G. ESCOBAR, GASPAR T. ESCOBAR, ALICIA S.
ESGUERRA, JACKSON I. ESPERO, LILIA ESTOPAGE, DIGNA G. EVANGELISTA,
REYNALDO FALLESGON, ROQUE M. FAMILARA, JERRY FARINAS, NIEVA FARINAS,
NARCELYN FELIPE, ERNESTO H. FELIX, MARIANNE V. FERNANDEZ, ALVIN LUCIO M.
FERNANDO, ALFREDO V. FERRER, NOEL V. FERRER, ELENA G. FETIZA, AUGUSTUS C.
FLORES, SANTIAGO R. FRAGANTE, MA. LUISA FRANCISCO, EDWARD FRANCO,
HELENITA EVELYN FRANCO, NOE FREOLO, EDUARDO VICTORIO FREYRA, EDITHA P.
FRIGILLANA, TEOFILO D. FRONDA, ESTER M. FRONTERAS, HELENA GADDI, ROBERTO
D. GADDI, FELISA C. GALARAGA, ELLEN GRACE R. GALISTE, RESTITUTO G. GALO,
MAXIMO V. GARCIA, JAIME M. GATAN, MARIO GUERRERO, ANTONIO GUINSING, JR.,
ANGELINA P. GUTIERREZ, AURELIO P. GUTIERREZ, HERMINIO O. GUTIERREZ, NELIA C.
HALCON, LOURDES V. HERNANDEZ, DIONISIO S. INCIONG, MARIO Z. JANDUMON,
RICARTE JAVELOSA, ADONIS S. JAVIER, ANGELO JAVIER, LOUELLA G. JIMENEZ,
LYNDA JIMENEZ, NONITA JORDAN, ROLANDO LACANDASO, ELIZABETH C.
LACSAMANA, BERNARD LANUZA, PATRICIO B. LANUZA, SALVIO B. LASERNA,
FLORINIO B. LAZO, RODOLFO M. LEE, BEATRIZ D. LEGASPI, AMOR M. LIM, JAIME D.
LOMABAO, REGINA LOPEZ, REBE M. LOZANO, DANILO N. LUCAS, EDEL LUPOS,
CESAR LUCERO, SL MIRA, PATERNO M. MABASA, RAMON V. MACABUHAY, EDITA M.
MACALALAD, DIGNA V. MACAPAGAL, LOUIE MADRID, POSALITO MAESTRO, ENRIQUE
S. MAGLANQUE, WENCESLAO MAGO, ERNESTO A. MALICAD, MA. SOCORRO A.
MALLARE, CLARO JOSE C. MANIPON, ELEAZAR C. MANDARING, ELVIRA MARANAN,
GERARDO MARCIANO, SALVADOR MARTIN, ELENITA MARTINEZ, CRISOSTOMO V.
MASANGKAY, MAXIMO MATURAN, CONCHITA J. MEDINA, LAMBERTO R. MELAD,
EDUARDO MELEGRITO, (ATTY.) ADORACIO MENDOZA, ARLENE MENDOZA,
BERNARDO N. MENDOZA, LUIS C. MENDOZA, TITA M. MENDOZA, GINA MAY P.
MERCADO, TERESITA L. MIDEL, JULIET M. MIGUEL, VIRGINIA B. MILANO, CONRADO
MIRANDA, LIDA R. MIRANDA, LEOCADIO MOLINA, ALEJANDRO M. MONTERO, JR.,
BENJAMIN J. MONZON, ELSA Y. MULA, PERFECTO NACAR, JOEL A. NATIVIDAD,
RUBEN C. NATIVIDAD, GLENN MARCELO C. NOBLE, NICASIO NOGUERAS, LIWAYWAY
A. NUNEZ, ESTELA V. OSORIO, ELIZA PABELICO, ERNANI BERNAL PADILLA, JESUS M.
PADILLA, GERARD A. PANGILINAN, OLYMPIA V. PARFILES, ELMER PASCUA, ISABEL
PASCUAL, MA. ISABEL M. PASCUAL, MELODIE PASCUAL, SALVADOR L. PATA,
PETRONILA PAZ, JOSEFA B. PELIAS, NESTOR PENA, ROLANDO PENA, RENE
PERALTA, JOSUE L. PEREZ, SIMEON T. PERMEJO, ALFREDO PERUCHO, REY V.
PERUCHO, RENALDO J. POBLETE, RAMON D. QUEBRAL, ROLENDO C. QUEMADO,
EDNA V. RAGILES, ALVIN C. RAMOS, EMERITO RAMOS, MAMERTO RESUBAL, ANGELA
P. REVILLA, ALICE REYES, DAISY M. RICAFORT, WILFREDO RICAFORT, RAMONCITO L.
RIVERA, REYNALDO RODELAS, FLORO RODRIGUEZ, LILIAN A. ROLLAN, ROMUALDO
AGUILOS, ANGELO A. ROMULO, JOSE N. RONAN TIMOSHENKO RONQUILO, NENITA A.

ROQUE, BENJAMIN R. ROSALDO, FIDEL ROVIRA, LIBERTY RUBIN, LIBERTY L. RUBIN,

MA SALLY P. SAGRAGAO, REINHOLD PERFECTO M. SALAS, VIRGILIO SALAS,
ALEJANDRO B. SALONGA EDWIN B. SANTELICES, EMMANUEL A. SANTOS, FELIPE B.
SANTOS, LETICIA C. SANTOS, ADRIANO R. SARIAN, MA. CORAZON E. SERVANDO,
RODOLFO SESPENE, FERNANDO G. SOJANA, EXPEDITO SORIA, NORMA G. SORIANO,
RONALD G. STO. TOMAS, LUCIO R. SUYAT, JOYCELYN F. TAAL, BARBARA BABSI I.
TABACO DELIA S. TALITE, ANUNSACION E. TAN, MARIETTA N. TAN, HERMINIO G.
TAQUIQUI, EDGARDO L. TOLENTINO, MARCELINA M. TONDO ANIANO D. TORRES,
SALVADOR D. TORRES, BEATRIZ L. TRINIDAD RICARDO P. UGALE, ALICIA S. UMEREZ,
VIRGILIO B. URBANO JOSEPHINE R. UYACO, RIZALINO N. UYACO, LOYOLA M. VALDEZ,
JEFFREY VAZQUEZ, RODOLFO L. VELASCO, JR., JOSELITO G. VELASQUEZ, EVELYN A.
VIDAD, VICTORINO M. VILLAGRACIA, ARIEL VILLANUEVA, CLARISSA G. VILLANUEVA,
JOCELYN C. VILLANUEVA, WILFREDO VILLANUEVA, RICARDO VILLARBA, TITO S.
VILLARIN, CARMELITA B. YALONG, ROBERTO A. YAZON, LUCILLE Y. ABAD,
SILVESTRE L. ABAYA, ELIGIO L. ABRIGANA, ANGELINA O. ABRIL, LORENA AFRICA,
INOCENCIO A. AGRON, CRISTINA P. AGUILAR, ARLEAN L. ALAMARES, ADORACION L.
ALEJANDRINO, RUTH B. ALICER, ROSALINA V. ALMONEDA, ALFREDO ALVAREZ,
ISABEL M. AMISCARAY, OSROXSON L. AMPARO, ANGEL B. ANDEN, CAROLINA M.
ANORES, THELMA P. ARTIFICIO, ANTONIO A. ASADA, JR., MA. LUZ M. ASCANO,
APOLINAR B. ASENCION, EDWIN AZANON, ERLINDA M. BAGUE, ANGELINA R.
BALAGTAS, RENATO T. BANAGA, VALENTIN BARCENAL, ADELAIDA C. BARRIDA,
BENJAMIN P. FATOLINA, MARCELO BAUTISTA, SIMPLICIO BAYRON, CORAZON C.
BERNIDO, GLENDA P. BILOG, ALAN M. BORRAS, TERESA L. BORRAS, EVANGELISTA
BORROMEO, BEVERLY R. BRIONES, NESTOR J. BUGADISAN, ADELINA DM. BULOS,
SYLVIA S. BUSINE, EVANGELINE M. CABATUANDO, EDUARDO T. CABILDO, ELIZABETH
P. CABILDO, EMMANUEL P. CAJIPE, JOSE N. CALAYCAY, VIRGINIA S. CALIX, LOPITO
CALUAG, EMMA L. CANCINO, ESPERANZA I. CANCIO, BUENAVENTURA E. CANSINO,
PERCIDITA T. CANSINO, GRACE M. CARLOS, PATRICIA ANDREA V. CARRILLO,
SOLEDAD S. CASTANEDA MARILYN K. CASTILLO, JEAN M. CASYAO, JUSTINA S.
CERBOLLES, MARIA LUCIA C. COBAR, AVELINO COLOMA, ANA ELENA L. CONJARES,
ALVARO CORDERO, ESTRELLA B. CORTEZ, DANILO A. CUYCO, RUBEN DACOCO,
ROSITA R. DAROY, DENIA A DATO-ON, PABLO DE CASTRO, MARIO M. DE GUZMAN,
ROLANDO DE GUZMAN, AZUCENA C. DE VERA, CECILIA M. DE VERA, LOUIE A. DE
VERA, NATHANIEL B. DE VERA, SALVACION O. DEAN, SOLIDAD Z. DEL CASTILLO,
ADELAIDA Q. DEL ROSARIO, ARMANDO DELA CRUZ, FE M. DELA CRUZ, IMELDA S.
DELFIN, DANILO D. DIAZ, FE R. DISCAYA, EMERANCIANA B. DURAN, JAVIER M.
EDUARDO, ELIXA ENRIQUEZ, SOFRONIO ENRIQUEZ, LUZ V. ESGUERRA, JAIME B.
ESTEBAN, MERIAM F. FABRIGAS, LOURDES G. FERNANDEZ, LOURDES R.
FONTANILLA, ROBERTO FONTANILLA, REY M. GABRIEL, RICARDO L. GALLARDO,
CORAZON M. GARCIA, NARDO Q. GARCIA, TEOFILO Y. GARCIA, TEOFILO Y. GARCIA,
IRENEO GERILLA, NOEL B. GERILLA, ALFONSO GRAFIA, JUANA S. GREGORIO,
LEONARDO G. GUMASING, LUZVIMINDA M. IGNACIO, RESTITUTO B. ILAGAN,
ABELARDO A. INOVERO, DOMINGO P. JACINTO, REYNALDO P. JACINTO, GLENDA S.
JAVIER, GLORIA JIMENEZ, REYNALDO S. JIMENEZ, JESULITO B. JUNIO, JULIETA
JUSON, JOCELYN S. LAGARDE, ALICIA F. LAGUNZAD, LUNINGNING M. LANSANGAN,
LUVIMINA G. LANUZA, AVELINA G. LAPADE, DOLORES M. LAZO, RHODORA LEONIN,
TEOFILO V. LEONIN, JR, LEONARDO S. LEOPANDO, LAURA F. LEYVA, CRISANTO
LIMEN, ROEL LOTERINA, PABLITO MAAT, RUBY LIZA J. MAGLALANG, WILFREDO
MAGSAMBOL, HILARION E. MAMARIL, MILA A. MANALO BENJAMIN F, MANDINGUIADO,
AURELIO MANINGAS, ANGELES MARCELO, EDITHA A. MARCELO, VERONICA J.
MARCELO, RONNIE MARCOS, REYNALDO R. MARIANO JOHNNY R. MARIN, BENEDICTO

E. MARISFOSQUE JOHN M. MARQUEZ ALEJANDRO J. MATEO, JOHNYLEN V.

MELENDEZ, JORGE MENDOZA, JULIETA C. MENDOZA, LUCY MENDOZA, QUIRINO M.
MENDOZA, MYLENE M. MOLO, NELIA M. MONTILLA, DEMETRIO A. MOOG, ERLINDA
NATERA, JOSEFINA G. NATERA, NICANOR P. NICOLAS, CARL M. NOHAY, VIDAL T.
OLANDA, JOSEFINA J. OMANDAM, CELIA M. OPRENARIO, NORMA L. PABLO SAMUEL
D. PABLO LAMBERTO E. PALAD, FRANCISCO A. PANCHO, ROMEO PARADERO,
VANGELINE K. PARAMI, RENATO H. PECHO, REYNALDO V. PEDREGOSA, CECILIA T.
PEREZ, MARY AGNES PEREZ, CHRISTINA A. PETRACHE, FEDERICO L. PINEDA, JR.,
LAURA R. PINEDA, MYRNA E. PIQUERO, EDGARDO E. POBLETE, DIOSDADO A.
QUIAMBAO, BERNARDINO H. QUIZON, BOGAR G. RACHO, MANNY G. RAMA, ANGELITO
F RAMOS, AURORA D. RAPADAS, ANTONIO E. REFRE, ROSALINO B. REJAS, ESTRELLA
D. RELUNIA, EDILBERTO A. REMENTILLA, SOTERO RESILVA, ROLANDO Y. REYES,
GERARDO M. ROBLES, MARISSA ROBLES, CRISPINA M. ROSALES, BERNADETTE C.
SABLAN, CESAR M. SALABIT, MA. TERESITA A. SALABIT, ARTURO F. SALIH, VIRGILIO
R. SANTIAGO, FLORA L. SANTOS, GABRIEL SANTOS JR., IBARRA S. SANTOS, JULIETA
E. SEGUIS, ROSALIE SEMANA, ELVIRA SOMBRION, RODRIGO TABIOS, ESTELLITA U.
TABORA, ANGILEO P. TAGUIBAO, CARLITO G. TAMBOOM, MERRIAN DC. TANGONAN,
RICARDO TEMPLONUEVO, ANTONIO E. TIONG, MITOS M. TOLENTINO, LUZ G. USMAN,
FLORANTE M. VALDERAMA BALDOMERO VALENZUELA, ANA MARIA S. VELUZ,
ERNESTO S. VENTURA, CRISOL P. VILLANUEVA, PORTIA T. VILLEGAS, ARMINDA F.
VINAS, MAGNO B. YOSHISAKI, MA. TERESA YULO-NAZAREA, BRAHIM T. ABAS, RAUL
G. ABIQUE, LEZA A. ACORDA, ADELIA F. AGUILAR, REYNALDO P. ALLANCES,
BERNADETTE M. ANGCO, CLARISSA C. ARIDA, LEONITA D. BAETIONG, EDNA R.
BARLIS, SONIA R. BARLIS, BERNA A. BONDOC, NANETTE BORJA, CORAZON S.
BUSTAMANTE, VICTORIA ORMIN R. CABRAL, WILLIE A. CANDELARIO, ARLINA G.A.
CANTADA, ARACELI CANTRE, JERRY CAPULONG, JEANNIE C. CASAURAN, REBERTO
CO, EMERLINDA N. DACARA, TERESITA T. DAVID, ELENIDA DEL ROSARIO, MANUEL
DELA CRUZ, VICENTE DIAZ, LERMA DIMAYUGA, BERNARDITA M. DUNGO, ANTONIO P.
FAJARDO CHARLES C. FORONDA, AURORA V. GALVEZ, DAVINA CLEOFE GONZALES,
NICK D. GUILLERMO, REBECCA P. GUTIERREZ, JOSEFINA P. HIPOLITO, EVELYN R.
INCIONG, IMMACULADA F. LA ROSA, ANABELLA C. LABORTE, NAPOLEON R. LAPUZ,
AMY LECCIONES, SAMUEL LIBOON, DEAN R. LOPEZ, MYLEEN Z. LUZ MERLINA G.
MABUTOL, ALBERT A. MAGALANG, ROMANA B. MAGAT, VICTORIA MALIHAN, JAIME
MALLARE, REMY MAMON, ELVIRA T. MANALO, ANDRES G. MANUELE, EVALINDA
MERCADO, MA. GERARDA MERILO, FATIMA MOLINA, JOSEPHINE L. MONILLA, EDWIN
ROMEL N. NAVALUNA, PERSEVERANDA-FE OTICO, FELIX A. PASCUA JR., MARINELA T.
PASCUA, ALBERTO C. PECHO, TERESITA PERALTA, ELVIRA D. PIMENTEL, CRISTINA S.
PIZARRO, ISAGANI R. POTES, HARRY R. QUIAOIT, LINDA A. QUIOCSON, SOLON C.
RATIVO, MARCELINO R. RIVERA, JANE G. RODRIGO, DAMIAN P. RUBIO, ESPERANZA A.
SAJUL, ELVIRA L. SALVANI, MARICHU SANTIBANEZ, VIRGILIO G. SANTOS, GERI
GERONIMO, R. SANEZ, REBECCA E. SARACHO, MA. CECILIA B. STA INES, PEDE
SUMILDE, JESSIE TANOLA, ROMEO T. TARRAY, DOLORES F. TOLENTINO, GRACIOLO
DS. TORRE, EDGARDO TORRES, ENRICA I. TUMBAGAHAN, MA. LOURDES P. VARGAS,
RENATO VENGCO GRACE L. ALMERO, JUANITA P. ARSOLON, LETECIA M. CENDANA,
ELIZABETH A. CHUA, MABEL C. CRISPARIL, MANUEL T. ESCASURA, JUANITA G.
FERNANDEZ, VIRGILIO O. FERRER, DELIA P. GEDALA, LAURO M. HERMOSURA,
NATIVIDAD V. IGAYA, ROSABEL T. JOSUE, EVELYN V. LLAMAS, ANNIE LOMIBAO,
ARLINE LUNA, BRILLA P. MALAMUG, ADELINDA L. MANALILI, ROMUALDO S.
MERCENE, JANET MIRANDA, LYDIA NUQUE, FRUCTUOSA R. OBAY, CATALINA G.
PRESTOZA, ROLANDO P. RANES, JULIETA RIVERA, LOURDES T. SELLEZA, JESUSA A.
VELASCO, YOLANDA A. VERDIJO, JOSE VIDAL, FLORA ABADIN, ROMMEL D. ABAN,

ALLEN M. ABLANG, NORMA N. AGIR, RODRIGO AGIR III, MARDONIO M. ALCANTARA,

ROSALINDA ANGER, DANILO T. ANONUEVA, REMEDIOS M. ANONUEVO, BONIFACIO
APOLONIO, MARIO G. AQUINO, MA. CHONA ARISTOTELES, DICK G. BACUNO NILDA C.
BALAMONG, ARTHUR M. BALATBAT, FLORANTE G. BONGALON, CEPRIANA S. BORJA,
CRISANTO BRUSAS, RUFINO M. BUSTAMANTE, MELICITA CAPULONG, AMADEO G.
CARDINO, BONIFACIO CARLING, LULU C. CORALES, JIMMY J. CRISOLOGO, CELIA J.
CRUZ, NOEL C. CRUZ NORBERTO G. CRUZ, AMBROSIO DAGUPAN, MA. THERESA M.
DATU, JAIAME C. DE GUZMAN, ROLAND A. DE JESUS, MONA LISA F. DE OCAMPO;
SONIA C. DIMACULANGAN, LAUREANA C. ESTOROQUE, PABLITO ESTOROQUE JR.,
MARIO M. ESTRELLA, ANGEL FERNANDEZ, ZENAIDA P. FERNANDEZ, EVELYN C.
FLORES, VERONICA T. GARCIA, JOSE M. GATONGAY, ARIEL A. HIMOC, BONNIE P.
LISING LOTA S. LIZARDA, RUFINA LOPEZ, EDGARDO K. MAGNO, RODELIO M.
MALICAD, ZENAIDA MALLETE, MARILYN V. MANGUERRA, CONSTANCIO MARIROSQUI,
HIDELISA P. MARQUEZ, ROSARIO J. MENDOZA, ELISA N. MOLA, NILO A. NERA, JUSTO
NEYRA, JR., ANACLETA P. NILLO, RIBOMAJAL A. OBA, RODOLFO N. ORTIZ, MARITES
O. PADOR, MA. VICTORIA P. PAELMO, MA. JANET PASCUA, ROMEO C. PASCUBILLO,
ESTELITO PENA, JOSIE S. PEREZ, ZENAIDA T. RABAYA, JOSEFINA D. RAMOS, JENNIE
P. SALVADOR, RODOLFO S. SANTOS, LORETA C. TABAS, RAMONITO TALABUCON,
PATRICIA N. TALAMISAN, JULIE N. TANGUILIG, NUNILON R. TANGUILIG, DOMINGA D.
TOLENTINO, CLYDIE TORRES, ABRAHAM R. VILLANUEVA, AGNES VINUMA, LUZ
ANACTA, EDUARDO BALLESTEROS, RUBY BAUTISTA, ELIZALDE BERANIA, CHARLITA
BONGALON, ESTER CADANO, ALMA CRISTINA COLLADO, EVELINDA CORONEL,
BRIGIDA CORPUS, HILARIA DEZA, LUCIA DIAGCO, CRISTINA ESGUERRA, EDNA
ESQUILLO, RHODORA ESTRELLA, CECILIA FRANCISCO, EMELLINA GAMBA, MARCELA
GARCIA, DIVINA GATMAITAN, ASUNCION GERVACIO, MA. ASUNCION LAQUINDANUM,
LYLEEN LIBAN, ZAIDA LIBAN, BERNANDINO MANOSO, MARITESS PABLO, ANITA
PANER, EDERLINA RABE, JOSE RABE, ROSALIA REBULLANTE, ROBERTO SABELLA,
JUDITH SADALIA, CIELITA SARMIENTO, LUTHER VILLAMIN, ANITA A. AALA, MARILOU
L. ABARRO, PORFIRIO L. ALCACHUPAS, ISABEL V. ARANZAZU, ROSIE L. ARENAS,
CLARO S. ASTOVEZA, SUSAN C. BONDOC, DOMINGO BRAVO, MARIANITO Z.
CAJUCOM, SOFIA T. CAMPOS, SONI G. CASTILLO, CRISTINA D. COMIE, ADELINA G.
CORTIGUERRA, VIRGINIA DE. SAGUN, DANIEL DELOS SANTOS, NIDA C. DILAN, SELFA
C. FERNANDEZ, LIGAYA G. GARCIA, MARLYN A. GARCIA, SONIA B. IBANEZ,
BONIFACIO S. LABANGCO, SR., JEAN LADIA, PERLA G. LORENZO, VIRGINIA B. LUNA,
EDNA C. MABULAY, MARILI T. MALASAGA, MELE T. MALASAGA, MA. TERESA E.
MAPILI, DAVID P. MARIANO, FRISCA P. MAYAMAYA, MARLENE S. MELARPIS, ROLAND
P. MENDOZA, VENER C. MERANA, LAMBERTA N. MERENA FELISA G. NARCIDA, NORMA
M. NORIEL, FRANCISCO PANGAN, APOLONIO C. SALANGA, JR., CARLOS E. SANCHEZ,
SOFREMEO F. SANTIAGO JR., LUISA L. SANTOS, SOFIA S. SOLACITO, GENOFREDO S.
SOLMARIN, VIOLETA G. SORIANO, JUAN STA ANA, SANNY B. SULIBA, CARMELITA P.
TAMARGO, ANTONIO P. TULLAS, JR., VIOLETA A. VELA, CHONA C. ZAMORA, MA.
THERESA P. EMPAYNADO, MABEL GRASPARIL, EDMUND RAUL KAABAY, JR., MAGIN
LABANGUIS, REY B. SELLEZA, PERCIVAL VALDEZ, NORMA C. VASQUEZ, JUDY ABLAN,
MARIBEL M. ALCANTARA, ANGELITA C. AUKAY, MARLENE M. BADILLA, DOMINADOR
L. BIGSOT, ABRAHAM D. CABALSE, EUFRECINA T. EUSEBIO, MARLON Q. GA,
JOCELYN P. ILUSTRE, PERCIDA G. NORTON, GODOFREDO RAMONES, ELISEO A.
VILLASTIQUI, ELY R. YRA, VIRGINIA D. CADAVIS, CONSOLACION CAYABYAB,
PATROCINIA A. DIMAGUILA, JOLIZA O. ENCISA, LUCILA M. FELIX, SALVACION T.
GALLEGO, ELVIRA GEALON, WILMA T. LAGRIMAS, REMEDIOS B. LIBERATO, JAIME
MADAMBA, BERNICE R. MANALATA, VILMA S. PALMES, EMPERATRIZ R. PIOQUID,
LIGAYA R. SAMSON, ROSALIE M. SANCHEZ, MARCEBENI D. TALABUCON, LILIA C.

TAMAYO, MERCELINA A. TUBALLA, ELDA Y. ZURBITO, ROWENA ANDAYA, JACINTA B.

ANONUEVO, BEATRIZ N. BELEN, TERENCIO CADUYAC, RAMON C. DELA FUENTA,
MIGUEL C. FERNANDEZ, DOLOR MORADA, CLEMENCIO C. PAJARILLO, ELENILA
PASCUAL, TERESITA ADA, MARIO AQUINO, ROLANO BAGUNU, MARGIE I.
BALLESTEROS, ROMULOS BELTRAN, ANTONIO CORIA, EDWIN DELA CRUZ, YOLANDA
DELA CRUZ, ERLINDA ESTRELLA, AURELIO GUERRERO, MANUEL H. HIZOLA, RUBEN
A. MAGTIBAY, NICOLAS MASANGKAY, FRACTUOSA R. OBAY, LIGAYA PASCUAL,
NECETE PASTORFIDE, TRANQUILINO PUNZALAN, MYRNA P. SUNIO, ARMANDO
VILLAFLOR, MARIANO VILLANUEVA, REMEDIOS ANONUEVO, RIBOMAPIL CLOA,
MARINA COLLANTES, ERLINDA DIMAPAWI, HEDELISA MARQUEZ, MA. VICTORIA
PAELMO, ILUMINADA SABORRIDO, DOMINGA D. TOLENTINO, MA. VICTORIA ABRERA,
ALFREDO AGACETA, JR., WILFREDO ANONUEVO, VERGILIO BAGTAS, ROBERTO
BERNAL, LORETO BOQUIREN, RAMIR BUIZA, CELSO BULADO, NOEL CASTELO,
WILLIAM DELA CRUZ, GRACIA DIAZ, ROBERT ENCISO, ANTONIO FAJARDO, ROMEO
GIANAN, JOYCELYN GOCO, JOSE GONZALES, TEMOTEO IDEA, EMMIE IGNACIO, MA.
VICTORIA LANDICHO, MARCIANO MANIEGO, CECILIA MERCADO, REGULO QUEJADA,
ARNEL ROMERO, MANUEL SABATER, NELIA SANTOS, AMELIA DULCE SUPETRAN,
ERNESTO J. ANDRES, LIBRADO S. GESALTA, LORNA JEAN H. PALAD, PABLO
SALIGAN, ZENY DE GUZMAN, LORETO GALLER, EMMALYN C. TRIA, SEVILIO D. DAVID,
PASENCIA A. VOTACION, LEONIDO J. AMANTE, ALMA M. SACOPLA, MARIETA
CABREROS, EUGENIO O. DIAZ, JR., GUENDOLYN C. BAMBALAN, GUYETO CABADING,
MA. THERESA ENRIQUEZ, MA. VICTORIA V. DE CASTRO, BENJAMIN DEVERA, JAIME
OBAR, RAUL VARELA, STEPHEN C. ACEBEDO, ELEUTERIO AGBAY, ALMA G.
ALMONEDA, ANTONIO S. ARELLANO, FILIPINAS G. ATACADOR, MARIA M. ATIENZA,
MAGAMPON Q. BABISTA, HERMINILDA S. BALDEMOR, ANGELITA I. BALIGAD,
EDUARDO J. BANAWA, CARLOS P. BASILIO, ALEJANDRO T. BATUHAN, ROLANDO
BELANO, MARIVIC BERNARDO, ADALIA A. BISCOCHO, NATIVIDAD B. BITOON,
VICTORIA P. BORAC, M. BURCE JR., YOLANDA M. BUSTAMANTE, PACITA C.
CABANSAG, GEMMA P. CAGUA, EDITHA T. CAPISTRANO, LOPE O. CARIO JR.,
EDUARDO M. CARPIO, EDUARDO CAVIZO, ROSALINA C. CERNADILLA, ERNESTO C.
CORPUZ JR., RENAN M. CRUZADO, CRISTINA T. DE MESA, DANIEL C. DIAZ, DIOSDADO
DOCTOR, ADELAIDA C. DUAD, INOCENCIA A. DUMLAO, JAIME D. DYSUANGCO,
BENJAMIN A. EMANUEL, MARIO EPAN, JR., VIRGINIA G. ESCOBAR, JOSEFINA P.
ESPERAS, ERLYN C. EZPELETA, ARNEL F. FERAREZA, AMELIA A. FINO, DOMINGO
FRANCISCO, TIMOTEO GAMIT, CRISTETA GARCIA, MILAGROS GERONIMO, GINALYN
GONZALES, QUINCHITA J. GRICALDA, RAFAEL JARILLA, JR., VALE JOSE EXEQUIEL,
JR., LUZ P. LAGUNERA, ROGELIO M. LAPUS, RODOLFO A. LOPEZ, PATRICIA MALIHAN,
GLORIA MANALANSAN, EVANGELINE MARCELINO, JOYCE J. MARCIANO, ELIZABETH
Y. MATIBAG, CESAR D. MEMORACION, SALVACION R. NOVINO, MARTINO B. OSITE,
ELIZABETH PACUBAS, SATURNINO S. PACUBAS JR., SERAPIO S. PAHIGDANA,
LEMELIE PASCUA, ALMA A. PASCUAL, ARNOLD T. PASIA, JAIME PEDROCHE,
MARILOU L. PERALTA, HOMOBNUS PIDO II, ALFREDO G. PUNO, MARIVIC S. QUIDES,
MYRNA QUIPIT, PAULINO R. RECONDO, NELLIE REGINIO, JOSE V. REYES, CHERRY B.
RIVERA, SUSANA T. ROBOSA, YOLANDA RODRIGUEZ, DIANA A. ROMERO, REY S.
ROSALES, LUCIO G. SANTIAGO, JOBINO S. SEVALLA, ULYSSES J. SIGATON, SUSAN T.
SOLOMON, LUZVIMINDA B. TABLATE, ROWENA R. TESTON, ERLINDA TOLENTINO,
JOSEFINA G. URRUTIA, LILIBETH L. VELOSO, OSCAR VENTURA, JOSE VICTORIA, JR.,
ARNOLD N. VILLADOS, NOE L. ZETA, EUGENIO ESGUERRA, ERNESTO ESPIRITU,
DANIEL GARAS, MA. LEONORA PADILLA, MAXIMIANO RAMOS, VILLELA REYNALDO,
ANGELICA SAJONA, ROSARIO SANTOS, ANGELITA L. CRUZ, EDWIN A. LLAGAS,
LUCILA SEVILLA, MERCEDES D. AGALOOS, VICENTA V. ANONUEVO, DALISAY S.

AVELLANA, GERARDO BERNAL, LILIBETH L. CANDONITA, FLORNIDO P. CASTRO,

WILFREDO CINCO, LINO N. DIMAPILIS, TITA P. DUEAS, WILFREDO C. ECAMINO,
MYRNA D. HABAGA, MARY JUNE F. MAYCA, NENITA G. MONTOYA, EDITHA N. RECTRA,
RICHARD G. SANDI, ROBERTO D. SHEAN, JUSTINA Q. UMALI, VIOLETA B. VALERIO,
TELESFORO R. VILLAMAR, DANILO N. VILLANUEVA, EUGENIO U. VILLANUEVA, EFREN
R. WAKA, MARIO W. ALBAN, EFREN AONUEVO, VICENTA V. AONUEVO, ROSALINDA
C. ANGEL, VIOLETA A. BUAGAN, ELENITA D. CABUEOS, FLORIAN S. CANTOS, LOPE
M. CARIO SR., ROLANDO G. CLEMENTE, AREJOLA P. CORAZON, ANTONIO D. CORIA,
VIRGINIA I. DELOS SANTOS, LILY S. DEROCA, ERLINDA A. DIMAPAWI, RANDOLPH
DISCIPULO, TITA P. DUEAS, ERMIE B. DAGDAGAN, CORAZON Y. FERNANDEZ, NIDA G.
GUARINO, GLENN HERALDO, ESTELA B. HERMOSURA, ADORACION U. HERNANDEZ,
GONZALO IMPERIAL, DOLORES S. LA GUARDIA, PERCIVAL LADUB, AGNES H LAGON,
TERESA M. MAALAC, ISAGANI V. MANALILI, CONSTANCIO F. MARISFOSQUI, VIRGINIA
A. MELCHOR, RONALDO J. MIRANDA, FRANCIS M. MIRTO, EDWIN M. MOJARES, ELISA
D. MOLA, BENJAMIN MORTOS, CLEMENCIO A. PAJARILLO, LAURO J. PANERIO,
ELENITA G. PASCUAL, EXZER R. RABANG, EMILIO RAMOS, VICENTE A. REGODON,
ANDREA H. REYES, MA CORAZON V. STA ANA, ZENAIDA P. STO. DOMINGO,
ILUMINADA S. TALABUCON, ANNIE E. TANTOY, MARLOU D. VAQUILAR, NOEL B.
VELASQUEZ, NANCY V. VILLAPANDO, ELISA B. VILLAR, BELOISIE M. ALMAZAN,
GLADYS B. BOQUIREN, ELIZABETH CARIO, LIZ CARPIO, LORMELYN E. CLAUDIO,
JOSE CORTEZ, ROLANDO DE GUZMAN, NORBERTO A. DEL ROSARIO, VILMA C. ELPA,
OTTO E. ESPILOY, ALLAN L. LEUTERIO, EMMANUELITA D. MENDOZA, NICANOR E.
MENDOZA, CONCEPCION C. OCAMPO, CARMELITA M. PASSE, JOSE SALVADOR PASSE
JR, MORENO M. PENALBA, ELVIRA P. PIMENTEL, VIRGINIA V. QUIMO, NAP ROQUE,
CESAR S. SIADOR JR., ILUMINADA SORIA, JULITO G. TANGALIN, GREGORIO A.
TOMILLOSO, FELICISIMO I. VICENCIO, RICARDO D. VICENTINO, RODOLFO ARELLANO,
MYRNA R. CORTEZ, EMMA N. CRUZ, CONCEPCION C. CUNANAN, NELSON ITLIONG,
RESTITUTO S. MAGPANTAY, CATHERINE F. MANALANSAN, HENRY B. MANDOCDOC,
ISIDORO MONTOYA JR, ANDREA A. RAMOS, ARSENIA E. SAN DIEGO, VILMA
SANTIANO, PETRA T. TABUCOL, BRIGIDA T. TACUBOY, MARILOU A. TIBOR, CORAZON
R. VALDEZ, NESTOR U. VENTURILLO, MARILYN ACOB, EMMA AGOT, DENCIO R. DADIS,
MA. AVA DATA, NORLIE N. DAVID, IRENE S. DELA CRUZ, NESTOR T. GUERREN,
GUILLERMA LAGUMBAY, ANNA LEAH MELEGRITO, EDITO MISTA, BELEN C. NUNEZ,
ESTELA B. SARMIENTO, FRANCISCO TY, CYNTHIA L. AUSTRIA, CORITA M. BARTOLO,
AMELIA L. FLORES, PRISCILA M. MOLINA, CORAZON P. PEREZ, MANOLITA L.
VELASCO, ANTONIO E. VELOIRA, OFELIA B. VELOIRA, MEMORY FABIAN, ROSARIO
MENESES, JULIANA M. ABEN, REMEDIOS F. BONIFACIO, MA. THERESA M. ENRIQUEZ,
OFELIA B. MENDOZA, LILY T. REYES, NARCISA B. SESE, MA. THERESA M. VILLARUEL,
JOHN R. ALMAZAN, DOLORES C. VELASQUEZ, ALFREDO FERRER, ADGARDO CORPUZ,
ANTONIO RODRIGUEZ, CONSOLACION B. CACULITAN, NORA Y. CALIJA, YVONNE V.
CARABEO, AIDA C. CORPUZ, ROSA P. DORADO, MINDA C. DUAD, CECILIA B. HIWATIG,
RITA CRISTINA V. LAPUS, CASILDA C. MAROHOM, CLEMENCIA A. MARQUEZ, MAXIMA
MATIBAG, EMELITA R MENDOZA, CRISNATA S. MONTRESCLAROS, TERESITA L.
OBIAS, CHONA R. PASTORFIDE, MERLY H. PATUNGAN, ALNA U. PINEDA, ANGELITO T.
PINEDA, VILMA G. QUIAMBAO, ESTELITA T. RAGASA, LUZVIMINDA L. RAMOS, NERISSA
B. RAPANUT, CARMENCITA S. SANCHEZ, ELSA M. SIGUE, ROWENA L. TEJADA, MYRNA
M. TORREGOZA, LERMA AQUINO, CORNELIA M. ARANETA, FERDINAND BANGCUA,
REYNALDO BARBADILLO, ALFREDO A. CLAVERIA, DAN JORGE CRUZ, ERLINDA O.
DAQUIGAN, REBECCA C. DE VERA, ERLINDA B. DIZON, MARILYN P. ESTADILLA,
CATALINA G. GARINGARAO, MYRNA MALINAO, SILVESTRE C. MANGAWANG,
FLORENCIO C. NAVALED, NOEL D. OBRA, NELIO T. PAGLINAWAN, ANA MARIE

PASCUAL, ARTURO R. PRENDOL, OTELLA O. SANCHEZ, REYNALDO TEJADA,

CRISANTO BADENHOP, JEAN C. BORROMEO, ANA MARIA C. BUESING, MARIA TERESA
CHAVEZ, GIL F. FERAREZA, MARITES L. GALVEZ, MIGUEL B. JIMENEZ JR., RODANTE
JOCSON, MICHAEL A. JOSE, ARNEL H. LUZ, ARNEL C. MATREO, EDUARDA P.
MERCADO, BENEDICTO P. MURILLO, MINDA A. OSORIO, GLEN Q. PASTORFIDE,
ISMAEL S. RUIZ, FE B. SENDIN, HENRY P. SORIANO, JOYCE SORIANO, FLORENCE V.
VELASQUEZ, PRUDENCIO M. VENTURA, ROY ALAN D. VIANZON, LORETO H VILLAS JR.,
CELESARIA C. ZACARIAS, GEORGE P. ABAYA, ELIZABETH E. AMOR, LORNA ASIS,
IMELDA J. BALLON, LILIA M. BALTAZAR, AURORA I. BELEN, ELSA B. BURGOS,
CORAZON D. CALAMNO, FLORENCIO L. CARANDANG, CYNTHIA V. CARPIO, ADAMELIA
DE ONON, AMPARO L. DE RAMA, LUVIMIN L. DELA CRUZ, VIOLETA R. GARCIA, PERLA
P. MUOZ, PAULINA D. PAGUINTO, JOEL PAJARILLO, ENCARMILA PANGANIBAN,
ERLINDA M. PARRENO, MA. SALVACION M. PEREZ, ALBINA L. PINEDA, RAYMOND
SANTIAGO, BRIGIDO G. SISON, REMEGIO SULLEZA, TRAZON E. TUSCANO, MYRA B.
VILLANUEVA, HENRY ABONETALLA, MARILYN BABAAN, ELISA A. BERE, JUANITO J.
BOLISAY, NORMA S. CABALLA, ELMER CALLOPE, ELPIDIO T. DE LARA, AGNES G. DE
LEON, GERARDO R. ESPIRITU, ONOFRE P. LAXAMANA, ANSELMO LEGASPI,
CONSUELO MAGAYANES, DELEON L. MAROHOM, MARIO MELGAR, CHOLITA R.
ORTEGA, MODESTA S. PADUADA, PATRIA C. PATRICIO, LORETA N. RAMIREZ,
TERESITA C. SAN JUAN, FELICISIMA SUMAGUE, SOLAIMAN TAWA, VICTOR
TOLENTINO, ANGELITO M. VALENZUELA, DIOSDADO VELARDE, ROBERTO M. BASCO,
JESUS B. CRUZ JR., JOSEPHINE ESTRADA, LUCIA L. ESTRADA, LIGAYA C. EULOGIO,
LEONARD FALLER, DANILO J. GALAGNARA, MA. LOURDES P. GOROBIA, JUAN
ILARDE, ISMAEL R. JOSE, RICARDO P. MACALINO JR., ROPERTO MANALO, VIOLETA A.
MARIANO, NOBLEZA C. MERINO, PILAR C. MIGALANG, ALEJANDRO S. MINGOY,
DANILO D. PONZALAN, SERGIO TAMAYO, VIRGILIO V. URGEL, GLORIA VILLAMAR,
JULIETA ACHICO, FREDDIE P. AGAZETA, PEDRO AGONIAS, ALBERTO G. ALBERTO,
CRISTINA ALTOAR, SALVADOR BACANI, LEONIDA BALINGAW, IMELDA BAUZON,
VIRGILIO BELGIRA, GAUDENCIA CABACUNGAN, LEONORA DAVID, VIRGILIO D.
ESTRADA, CORSINO GLORY, PRECIOSO A. LABUGUEN, BENJAMIN LACESTE, ROSITA
MACARANAS, FELIX MAURILLO, JOVENCIO PERALTA, RUBEN R. PRENDOL, CORNELIO
RETUTA, JERRY RETUTA, BENEDICTO P. RIVERA, CORNELIO TABLANTE, LEONILA
VERGARA, LAMBERTO VILLAFUERTE, OFELIA B. AYSON, EDITA M. BALANZA,
ROLANDO M. BAUTISTA, OFELIA L. BUENO, CARMELITA G. CAJIPO, TERESITA C.
CANLAS, ROMEO C. ESTEBAL, IBANA FALLAR, ANASTACIO M. FLORES JR.,
DEMOSTHENES GOTHIS, MENCHELITA M. GUCILA, EDMUNDO C. LAGRIMA, ALLAN C.
LEONCIO, MARVIN M. MORALES, DIGNA Z. OBSTACULO, CORNELIO O. PERALTA,
CARLITO B. POMBO, MARIETA R. RED, TRINIDAD A. TALARO, ADELA T. TONGCO,
REGINA B. VILLADOS, JESSICA R. ALMAZAN PERFECTO U. ALMAZAN, BERARDO
BADERE, GENOVEVA A. BIGORNIA, NATIVIDAD J. BOCAL, LORNA CABADING, EFREN
E. CAWALING, AVELINA T. DURAN, ROMEO A. FELIPE, CORAZON GARAPAN, ANITA B
IBARDOLASA, MARCIAL M. JACOBIA, JOSE V. JARTEL, PIDO LOUISA, BASILIO H.
MORENO, CARONIA L. MURCIA, NONILA T. OMANA, AIDA P. PANGANIBAN, SUSAN
CULANE PAZ, ANITA Q. PEREYRA, MAMERTO C. PESTON JR., ROLANDO S. RABE,
VILMA SANSORONA, VICTOR TOLENTINO, LUZVIMINDA O. YAGAYA, JULIET S.
AYENTO, DIGNO D. AYSON, NORENA R. CIASICO, JOVENCIA L. FERNANDEZ, EMILIANO
P. KEMPIS, EUFROCINA B. QUIJANO, SIXTO E. TOLENTINO JR., AMPARO P. ABAYA,
CRISTINA M. ARINGO, LEONILO WILLOU M. BERANO, JOEY B. CASTILLO, BERNARDO
CLARION, MATIAS V. CRUZ, ERLINDA O. DELGACO, ERLINDA B. DIZON, SENECIO D.
FESTIN, FLORENTINA C. VALENCIA, SARAH ABUNGAN, JUPITER C. ALMAZAN, OFELIA
BIRON, MAMERTO C. BOLIVAR, BIENVENIDO R. CINCO, METEDIO ESTRADA JR.,

GINALYN GONZALES, ANTONIO M. LACHICA, NEMESIO RABAJANTE, NELZON

TENIOSO, HERMENEGILDO URRUTIA JR., VIOLETA C. VALDEZ, CRISANTO VAQUILAR,
JOFRE B. ALTAREJOS, EDGARDO L. BALDEDARA, RAUL SAUDE G. BECARES, RAMON
R. BOADO, MELCHOR R. BORLON, GEMMA CARINO, GEORGE M. CARPIO, CARMELITA
S. CUNANAN, ONESIMO A. DE CASTRO, PURIFICACION R. DE GUZMAN, LEOPOLDO S.
J. DE JESUS, JOCELYN R. DELA CRUZ, DOMINGO U. ESGUERRA, VIRGINIA R.
ESTRELLA, OFELIA A HERNANDEZ, TRINIDAD JAVIER EUGENIA L. LAGMAY, ANGELITA
E. LIBIRAN, ARSENIO R. LIBIRAN, CARLOS M. LOPE, RODOLFO A LOPEZ, CELSO
MAALIW, ROMUALDO E. MENDOZA, CRISPULO A. OCAMPO, ANGELITA OLOG,
EVANGELINE O. OPO, MAXIMO L. PEREZ, JOSE PONPONILLA, SIXTO P. RIVAS, LYDIA
C. ROMERO, CATALINA F. SIGATON, JESUS S. VIJIGA, MYRA K. VILLAPANDO,
GALICANO I. NER, OSCAR R. LAVIN, ESTEBAN S. CARAG, GRACE M. VILLACRUSIS,
JULIETA C. BONDAD, NILDA S. LINING, LUCY GRACE C. BURGOS, MARIFE CHARO N.
DOMINGO, MA. VICTORIA P. DA ROZA, NILDA CATALAN, RAUL T. ORTEGA, EWARDO R.
JOSON, PRUDENCIO M. DELA CRUZ, FRANCISCO L. CONDE, ARNEL M. ZURITA,
EDISON A. CALAOUR, VICTOR C. CANTOR, CARMELITA M. QUIRINO, AMBROSIO
ESTABILLO, ESPERANZA B. DALUSON, ALBERTO M. MADRILEJOS, ROLANDO C.
MANALO, RODOLFO R. RANCES, PHILIP A. PICHAY, REYNALDO C. ALAMPAY, RENE E.
FAJARDO, CELSO A. AGUILAR, REMEDIOS E. ABING, JOSEFINA M. GAWARAN,
FRANCISCO S PANGANIBAN, petitioners, vs. HON. ANGEL C. ALCALA, in his capacity as
the Secretary of the Department of Environment and Natural Resources, and HON.
CARLITO R ALETA, in his capacity as the Director of the Philippine Nuclear Research
Institute, respondents.
[G.R. No. 110642. September 11, 1998.]
BERNARDO BALGOS, NICOMEDES C. AGBADA, EUFRONIO R. ALANO, JR., ERNIE S.
ALINO, CORNELIO A. ARTIENDA, CARY L. ASANA, TRANQUILINO ATIENZA, JR.,
JONATHAN A. AZUCENA, ROY M. BARCERO, CLARITA S. BELONIO, WILFREDO E.
CABEZON, CANDIDO A. CABRIDO, JR., AMELITA B. CALER, DAREF MARCELINO M.
CANET, RONALD CANTONG, ALEJANDRO J. CATIPAY, JR., HERMINIA COLAR,
ELIZABETH A. DAYTO, SALOME G. DE JESUS, JOSEFINA ESTRADA, AURORA M.
FIGUEROA, MA ANGELITA A. GADDI, RIO L. GULAPO, MA. THERESA M. GUMABON,
ANTONIO A. GUNAY, GERARD HURTADO, ARIEL ILAGAN, WILMAR L. INFANTE,
FLORECER M. LEACHON, ANNA MA. VICTORIA LELINA, LIZA NONETTE A. MAIBO,
EUGENIO P. MANUEL, EDUARDO A. MENGUITO, ERIC AGAPITO NATIVIDAD, LEONIDES
N. NAVEA, MA PERPETUA OCAMPO, REDENTOR B. PACANO, ALMOND C. PALABRICA,
ELMER T. PASCUA, CRISTY CRISTETA A. RAMOS, HENRY B. RELLOSA, ROWENA M.
RODANILLA, JOSEPH SALVADOR, CARMELLE GEORGINA SIENA, CRECENCIANO I.
SUAN, CESAR TAN, CECILIA T. VARGAS, GIL NOEL VILLANUEVA, ANALYN S. VISTA,
BENITO YU, JR., EDUARDO AKIATE, EARTHA G. ALINO, TERESITA ANASTACIO,
JOSELITO O. AVERION, ELINO BAGOSO, FERDINAND B. BARBERO, ELSA J. BAUTISTA,
ELMER CALDERON, FRANCIS CAMELLO, RENE CANARES, RODELIO B. CARATING,
JULIETA S. CONSTANTINO, EASTER LIZA CUETO, NANCY V. CUETO, MARIFE DELOS
REYES, JERWYN L. DEMETRIO, EDUARDO DIOKNO, MARGARET T. ESTANISLAO, MA.
ARLENE M. EVANGELISTA, SALVADOR A. FABULA, IRENE P. GERPACIO, ALMA
GONZALES, RICHMOND GONZALES, BENIE E. ILAGAN, OSCAR JALALON, JOSEFINA
JONAS, ELEANOR M. LIGANOR, FLORDELIZA MALLARI, ROSARIO MAACAP, JOSE A.
MANANGHAYA, JULIET R. MANGUERRA, GLENN A. MANILA, ANGELITA C. MARCIA,
CECILIA MARQUESES, GINA MARZAN, RICHARD M. MOJICA, JOSEFINA MORALES,
SANTIAGO MOSQUEDA, MELCHITO B. NOCEDA, SEGUNDO PACARDO, SONNY

PACUNLA, ALEXANDER PANO, MA ENQUITA PANOTES, ROMMEL M. PARCASIO, IAN A.

PEDALIZO, ROSANA PERMALINO, EVELYN PITOGO, LOLITA POLIQUIT, LOURDES
REGALA, MARIBEL REYES, JOVETTE TENORIO, HIDALGO TOLENTINO, LUISITO
TRINIDAD, MA. BLANCA A. VALDEAVILLA, EDGARDO YBURAN, ROWENA ABELLANA,
ARTURO ACOBA, PALMAREN AGACIA, FLORENTINO AGUSTIN, JAIME ALAN, EDUARDO
ALBERTO, MACARIO ANACAN, HENRY APOLINARES, EVELYN AUSAN, REBECCA BACUS,
MARYLOU BARATANG, LORENZO BERMILLO, LIGAYA BOBIS, MA. TERESA BOLOFER,
ERNESTO BRAMPIO, FLORA CABLIN, HENRY CACAYAN, LILIA CALICA, MA. ANA
CASUPANG, CHARITO CAUTON, ARMELYN Y. CLEMENTE, ROOSBELT CREENCIA,
FRANCISCO CRUZ, MARCELO DAYO, MARITES DE LEON, JANE DELA CRUZ, EDGARDO
DELOS SANTOS, IMELDA DELOS SANTOS, RODEL DELOS SANTOS, ELISA DIZON,
SUSAN DUMOT, JOVEN ESPINELI, LEANDRO EVANGELISTA, EVANGELINE FERRER,
NESTOR FRANCISCO, CESARIO GEMINO, LAURO G. HERNANDEZ, RACHEL HILARIO,
MIGUEL IRACTA, OBEN LABONETE, JAIME LADANGA, ISIDRO LEGAN, ELMIE MADRIAGA,
DIOSDADO MANALUS, OSCAR MANOIS, CRISTINA MEDRANO, LILIAN MILLAN, GLICERIO
MONTALLA, MADELEINE NAVARCE, MA. ANA ORQUIZA, PINKY PADILLA, LUZ BRENDA
PAGLINAWAN, PURISIMA PAJARO, JOSEPHINE PASION, JOCELYN RAMOS, DOMINGO
RODULFO, DELIA SADIASA, VIRGINIA SALILI, GETULIO SAN JUAN, FLORFINA SANCHEZ,
LEOLITA SIASI, GLORIA TEJADA, FRANCIS TORRES, ERNESTO VALMEO, WILFREDO
VELASCO, EPIFANIA VILLA JUAN, RAFAEL ACENA, ELMER ADRAQUE, EDITHA AIZON,
RIZALDY ALBERTO, RAMON ALOBBA, ALAN ANIDA, BERTOLIO ARELLANO, VERONICA
AVILA, MAY BABARAN, JOAQUIN BANZALI, MARILYN CAACO, ROSE NELIE CABATLAO,
JUANITA CALONGE, NILDA CAPANPANGAN, CECILIA CAPUNO, TRINIDAD CARLOS,
SALVACION CAS, AMADO CREUS, PEDRO DAILEG, VIRGINIA DAILEG, NELITA DE
GUZMAN, ROWENA DE GUZMAN, ALMA ARRO DEL ROSARIO, AMELYN ANG,
BERNADETTE ESPINOSA, ESTRELITA FIDER, REYNALDO GABALLO, NOEMI GABATO,
ELMER GABAYA, MARIBELLE GAON, LILIA GONZALES, CARISA GOSO, ROMEO
HERNANDEZ, MYRNA JOVELLANA, RONALDO LIM, GREGORIO LLANES, ROBERTO
MABUTI, DANILO MACANSANTOS, CRISOSTOMO MAMORBOR, MA. CONCEPCION
MANZO, ROBERT MARGES, ANDRE JOHN MARTINEZ, EUFRONIO MOJICA, HENRY
MOJICA, LILIAN MONJE, MA. RAYSOLYN NATIVIDAD, LAMBERTO NERI, NICANDRO
OBEDENCIO, LISETTE ORENSE, LEA PARDE, JEFFREY PAYNOR, EVA PUGAY,
GODOFREDO RAMOS, CRISPINA RAYO, CECILIA RITO, SALVACION RITUAL, CRISTINA
SANGALANG, ELVIRA SEGOVIA, RENE STA. MARIA, GENOVEVA TULLAO, GLORIA
URRIZA, RESTITUTO VEJERANO, RAUL VILLACORTE, ZENYBEL VILLEGAS, ZARAH YAP,
PHILIP YASAY, TRINIDAD ACERON, FLORENTINO C. AGUSTIN, CRISOSTOMO ANGUE,
CESAR ATIENZA, CARLOTA AUSTRIA, JOVITA AUSTRIA, VICTORIA BAHALLA, ALLAN
BATUSBATUSAN, ALTAIR BAUTISTA, SONNY BILBAO, GINA BRUGADA, AMELIA
CABRERA, FRANCIA CAMUA, RENATO CARRASCAL, RUSELL CASTRO, EDUARDO
CAUSAREN, NELSON CONCEPCION, MYRNA CORILLA, ROSALIA FLORA COSTALES,
NELSON CUSTODIO, DENNIS DE GUZMAN, EUFRACIO DE LUNA, LUCIANA DELA CRUZ,
JR., VENER DILIG, YOLANDA DINO, REMEGIO DIWA, EDWIN DOGOMEO, MANUEL
ELLANO, MITHI ENCIO, REYNALDO ESPINO, DAVID ESPIRITU, EMILIANA GAMIT, ENRICO
HERNANDEZ, DORIS JAVATE, ALICIA JIMENEZ, ELEAZAR LOPEZ, MA. SUSANA
MARIANO, RONALDO MARAVILLA, PETER MAURICIO, ANITA OBRERO, ARLENE OLEA,
ROEL PARDE, MELCHOR PEREZ, ROGER PRINCIPE, PRIMA PUJANTE, LILIA RAFAEL,
AMELIA RALA, ANTONIO RIVERA, LIWAYWAY RONSARIO, ERLINDA SALCEDO, OFELIA
SANGALANG, LUZVIMINDA SANTOS, EDESIA SEVILLEJA, NANETTE SUSA, NEIL
VALENTON, FILIPINA VENTIGAN, MA. IDA VILLARALVO, ADELINE ABANCE, RAUL
ACOSTA, MA. CECILIA ADAOAG, GLEN BABANTUGAN, REMIGIO BACUS, PANTALEON
BADION, JIMMY BAJADO, ARTHUR BARAOIDAN, JULIE CABALLERO, FRANCISCO

CADAJAS, EDITHA CASIBANG, NORMAN CONDE, MENA CREUS, MARY CRUZ, MACARIO
DE GUZMAN, LUPO DE LUNA, RODOLFO DOMINGO, EMILIA EVANGELISTA, REYNALDO
FAUSTINO, ALICIA DELA CRUZ FERNANDEZ, IAN FEROLINO, GIL GALAN, ANALIZA
GARIBAY, JESUS GARRIDO, FLORENCIO GATCHALIAN, CONSORIO GERONES,
VERONICA GULAFO, ALMA HERMINIA, PAUL RODERICK HOFELINA, IDA JACA, ENRIQUE
JACSON, NENEVEH LAPUZ, ROLANDO LEAL, MILLER MANILA, DESALE MANZANO,
ROLANDO MARAON, MARIANO MARIANO, RODELIO MENORIA, ROMEO MERIDA,
JOSEFINA MONJARDIN, NILO PARDE, EMMANUEL PASCO, NONITA QUITO, GLEN
RANCE, BONIFACIO RENOBLAS, JESUS REYES, JOSE REYES, RIZAL REYLES, JUAN
ROQUE, NENITA SALGADO, GAUDENCIO SALONGA, GALLARDO TOLENTINO, ALBERTO
TRINIDAD, MA. FELISA VARGAS, ROGELIO VAZQUEZ, WILLIAM VEJERANO, ELIZABETH
VILLANUEVA, VIRGINIA VILLARUEL, SERGIO YEBAN, EVELYN M. ALONSO, MIE ARCA,
ARTHUR BARAOIDAN, CATHERINE BATUSBATUSAN, IRENEA CARANDANG, LOURDES
CARLENGGA, MA. ANNA F. CASUPANG, ROSALIA FLORA O. COSTALES, ELSA DIZON,
HENRY ESPINELI, JOVEN ESPINELI, RICHARD FELIX, MA. CRISTINA M. FERNANDEZ,
RENATO C. FERNANDO, LYDIA A. FULGOSINO, RENATO GONZALES, BONIFACIO
JOGNO, OSCAR MANAOIS, JULITA MOJICA, ANGELINA MOYA, LUISITO NACO, MA. ANA
ORQUIZA, SUSAN PRIANES, EDMOND PRINCIPE, TERESA A. RAMOS, ROBERTO REYES,
MARTINET ROBLE, GRETA SALVIEJO, PEPITO SAMSON, SALVADOR SOLIVEN, JOSE F.
SUMINISTRADO, ADELINA TRINIDAD, LUCITO AMISCARAY, FRANK JAIME AQUINO,
MARIO BAISA, ALTAIR BAUTISTA, TEODORO R. BERSABE, MODESTO L. BORJA (DR.),
EUGENIA A. BRIONES, CONRADO S. COMIA, BLESILDA C. CONCEPCION, NELSON
CUSTODIO, DENNIS A. DE GUZMAN, EUFRACIO V. DE LUNA, LUCIANO DELA CRUZ, JR.,
REYNALDO ESPINO, DAVID F. ESPIRITU, EDUARDO FERUELO, JORGE Y. LILLO,
RONALDO I. MARAVILLA, CONRADO A. MERCADO, LEILANI G. NAGA, NOE NAMBATAC,
LARRY P. PINERA, BENEDICTO M. QUITAIN, ERIBERTO L. RODRIGUEZ, FEDERICO
SABADO, JR., OSCAR C. SALONGA, OSCAR C. SANGANBAYAN, FERIOLA M. SERRANO,
ANDRES P. SEVILLEJA, FELICIDAD T. ZAMORA, ARIEL ARENAS, LOUIE CRISMO,
ALBERTO DE GUZMAN, GIDEON DE LUNA, JUNIBERT DE SAGUN, ANGELICA ECITO,
CLARON ESPESO, PORFERIO ESPINA, LEVIN GABUTAN, NORMAN GALLEMIT,
DIOSDADO JOSE, ANSELMA JUNIO, MILA LAGRIMAS, NOEMI LASPINAS, SINFROSA
PASCUA, RENATO POLIDO, ROMY RAGMA, ROEL REYES, MARIBEL SANTOS, EVELYN
SERISOLA, RAIDA V. ALEGRE, MINDA A. AMON, GREGORIO P. ANTOLIN, JR., LUZ B.
ARVIZO, ANDRES F. BAES, JR., ALEJANDRO R. BALOLOY, BERNARDO B. BAYANGOS,
NORA S. BOQUIREN, ELMER B. BORRE, EDUARDO A. BRION, JAIME C. CABANDE, DELIA
A. CALIXTO, REYNALDO CAMACHO, ROSALINA M. CARRION, ROGELIO N. CONCEPCION,
FARLEY O. CONDE, BIENVENIDO L. DE GUZMAN, CONRADO C. DE JESUS, CORAZON T.
DE JESUS, JOSEFINA G. DILOY, ASUNCION A. DIMAGUILA, ONOFRE DOLAR, JR.,
SERGIO S. ENRIQUEZ, CORAZON P. ESPINO, SILVINO M. FELLO, COLITA J. FRANCISCO,
FEDERICO G. GOLDING, RENATO G. GONZALES, ELIZABETH M. HERNANDO, LILIAN T.
HURTADO, GLORIA C. MACASAET, ERIC N. MARASIGAN, MARINA P. MARGES, NORMA
M. MAURICIO, GINA P. NILO, JANET G. OPERARIO, JULIANA J. ORDOA, BERNARDO B.
PASCUA, ELIODORA D. RAMOS, EVELYN C. RAMOS, PERFECTO O. REYES, VICENTE V.
ROBLES, FLORENCIO A. ROJALES, CORAZON B. ROSALES, TEOTIMO L. ROTERSOS,
ELIZABETH C. SADORRA, FE D. SALIWAN, MOISES T. SANCHEZ, ESTER S. SANTOS,
RUFINO L. SANTOS, EMILIANO M. SIBOLBORO, BAYANI V. VILLANUEVA, ERNESTO G.
ALMENDRAL, TERESITA AVISO, CLARITA BACATIO, ALFONSO G. BAUTISTA, NARDA A.
BLASCO, LUNINGNING J. BONDOC, JOSE B. BURA, ODON CAPANGPANGAN, VIRGILIO A.
CASTAEDA, MARIO B. COLLADO, ARSENIO L. CALONGE, LUISITO F. COSTELO, OSCAR
F. COSTELO, NILO A. CRUCENA, ARTURO A. DAYOT, SUNNY A. DE GUZMAN, WILFREDO
B. DELA CRUZ, JULIETA G. ESPENELI, CECILIA C. ESTRADA, PERFECTO P.

EVANGELISTA, MAGDALENA Q. FAVIS, CRISTINA M. FERNANDEZ, RENE D. FERNANDEZ,

LOURDES S. GALANTA, RAYMUNDO G. GALANTA, REDENTOR S. GATUS, JOSE G.
GERPACIO, ARNULFO B. GESITE, CLEOFE C. GONZALES, BELLA V. HERNANDO,
CARMELITA B. INCILLO, LIGAYA H. ISON, AIDA T. LATOZA, DEOGRACIAS R. MAGTALAS,
FLORENCIO G. MANANGHAYA, MAMERTO F. MARTINEZ, NESTOR T. MERJILLA,
ALEJANDRO G. MICOSA, PABLO M. MONTALLA, EDGAR P. NATIVIDAD, QUERUBIN A.
NAVERO, HENRY E. NOCEDA, NOEMI M. PASCUAL, BERNA G. PASTOR, MADONNA H.
PEALBA, CRISTY C. PERLADO, DOMINCIANO D. RAMOS, JR., LEO RETAMAR, TERESITA
V. RETAMAR, ANDRES ARIEL B. REYES, JOSE D. RONDAL, MILAGROS F. ROSALES,
OSCAR C. SALONGA, EDNA L. SAMAR, ANTONIO SAN ANDRES, MANUEL S. SANDOVAL,
SHIRLEY A. SANTOS, MANUEL S. STA ANA, NESTOR M. TICSON, LORENZO M. TOMAS,
REYNALDO R. VILLANUEVA, MARIO E. VINLUAN, LOLITA C. AGUSTIN, CRISOSTOMO B.
ALCALDE, DIGNA R. ALLAG, MERLYNA F. ATIL, ELISA AYO, JULITA M. AYUYAO,
VICTORCITO V. BABIERRA, AMELIA A. BANGALAN, ELVIRA M. BAUTISTA, ERLINDA D.
BAUTISTA, CELSO R. BERSABE, APOLINARIO P. CARANDANG, VIOLETA E. CASTAEDA,
JOSEFINA L. CREENCIA, ROGELIO CREENCIA, ESPERANZA V. DACANAY, LEONARDO M.
DE LEON, LEONORA P. DE LEON, LUCIANO C. DELA CRUZ, AURORA B. DELOS SANTOS,
ROMEO P. DELOS SANTOS, DAISY T. ELICANO, MARCIANA B. ENRIQUEZ, NATIVIDAD P.
ESCOBAR, VIRGINCITO G. ESTOCONING, REDEMCION B. GRIFAL, CELIA C. GROSPE,
LORNA L. GULAFO, VIRGINIA S. HILARIO, ARNIE C. ILAN, ELISA N. LADANGA, IGMIDIO B.
LAPIS, ULYSIS M. LATOZA, BEATRIZ C. MAGNO, JOSE D. MANGUERRA, MA TERESA T.
MANUEL, SERAFIN B. MATAWARAN, CONRADO A. MERCADO, RAFAEL A. MONTE,
VENERANDO F. NABOA, CLEOTILDE M. NICOLAS, ELSIE V. OBRERO, MAXIMINA
OMANITO, EMILIO M. OSALVO, JOEY V. PADILLA, MARCELINA J. PALIS, REYNALDO G.
PALIS, PERLA PANGANIBAN, WILLIE C. PERLATA, IRENEO B. RAMAT, PERLITA M.
RAMOS, EDGARDO R. REYES, JOSEPH B. ROJALES, LEOGARDA T. RUBITE,
JACQUELINE A. SABINO, ANITA M. SALANDANAN, MEDARDO P. SALVADOR, WILFREDO
B. SANIDAD, IMELDA E. SANTOS, LEONARDO A. SEMANA, CARLOS P. SERRANO,
FLORENCIO C. STA. MARIA, RAMON P. ULIBAS, GAVINO ISAGANI P. URRIZA,
PETRONILLA T. VALENZUELA, SALVADOR F. VILLAREY, AMY O. YAMBOT, FELIX N.
ALBANO, RICARDO C. ALEGRID, ARIEL G. ALMEDA, JULITA V. AONUEVO, ULDARICO A.
ANDAL, JAIME S. ANTONIO, REYNALDO P. BAJAR, BERNARDO D. BALGOS, JOSELITO N.
BANGAWAN, LEOVIGILIO R. BANTIQUE, ELVIRA M. BAUTISTA, ERNESTO BELO, LUZ C.
CABAMONGAN, ANDRES B. CALIMUTAN, MARCELO S. CRISOSTOMO, AGNEZ CRUZ,
BERNARDINA I. DAGUIO, ROLANDO DE GUZMAN, MARCELINO P. DE LEON, CARMEN P.
DEL ROSARIO, EDIZA A. DIAZ, TEODORICO C. ERNI, JULIANA M. FAJARDO, TEORODICO
M. FAJARDO, LEOVENILDA A. FERNANDEZ, EDWIN M. GALLARITA, CONSTANCIA R.
GANTIOQUI, EUGENIA G. GARCIA, JOSE G. HAPAN, NORA B. INCIONG, LALAINE
JAVINEZ, GERMAN M. JONAS, BELTHA B. LANDICHO, ERLINDA LOVERIZA, CLARITA J.
MAESTRADO, JOSELITO MAGNO, EDUARDO B. MALAPITAN, EDUARDO A. MANZANO,
NAPTHALI Q. MAYUGA, REMEDIOS B. MILLER, AMELIA R. MORENO, PONCIANO L.
MURILLO, JOSEPHINE L. NANA, ISABEL D. NASIS, MERCEDES V. OCAMPO, GODOFREDO
R. ODEJAR, TERESITA OLMELLA, GERMAN L. OMAA, CECILIA B. ORLANES, BELINA P.
PAJARITO, LUCINDA S. PANGCO, JAIME PASCUAL, TERESITA S. PERLADO, VILMA M.
QUIMSON, CESAR H. RAMOS, ROMEO L. SACDALAN, CRISTINA M. SANDOVAL,
TERESITA S. SANDOVAL, FELICIANA A. SANTIAGO, LORNA F. SANTOS, LUZDIVINA R.
SISON, CRESENCIO O. SOLANO, NELSON B. STA. CLARA, ANSELMA B. STA. CLARA,
ANSELMA B. TAJON, FE P. VADIL, ARTHUR O. ACHA, DANILO E. ADRIATICO, MERLYN
ALDABA, ARNALDO B. ALVAREZ, REYNALDA T. AMADA, NELSON ANGELES, FRANCISCO
A. BAYALAS, TEODORO R. BERSABE, ELSA C. BORJA, MODESTO L. BORJA, EDUARDO
O. BREGANZA, EUGENIA A. BRIONES, EDMUNDO P. BUSTILLO, RENATO S. CABRERA,

MARINA N. CAMACHO, OSCAR O. CARPIO, BLESILDA C. CONCEPCION, SAMUEL M.

CONTRERAS, CORAZON J. CORPUZ, YOLANDA S. COSTELO, RAMON S. ENRIQUEZ,
MERCEDES S. FERNANDO, JOSE ANTONIO GUATLO, MARUJA JARABEJO, RAUL M.
LAURENA, TERESITA D. LIZARDO, RODOLFO L. LUCAS, CESAR M. MAGADIA, RICARTE A.
MELCHOR, JOSIE P. MERCADO, LEILANI G. NAGA, AURORA N. NOROMBABA, WILMA G.
NOTA, REYNALDO O. PEREGRINO, SALVACION L. PLANAS, ROGELIO L. PUMARAS,
NARCISA D. RAMIS, ROSEMELINDA R. REFORMA, ROBERTO R. REYES, LOLITA M.
RONDON, SONIA M. SALGUERO, NORBERTO SALILI, NATIVIDAD M. SALONGA,
ROSEMARIE C. SISON, VICTOR J. VILLANUEVA, ARMANDO ARCAMO, BELINDA CABALLA,
TERESITA DIVAD, PEPITO ESPENILLI, BERCELIZA FAJARDO, NELIA GULAPO, CHRISTINE
MANAGBANAG, REYNALDO MANAGBANAG, LUIS MENDOZA, OSCAR OSTING, EDGARDO
REYES, DINO VELASQUEZ, MA. CECILIA O. DELA PEA, ILUMINADA POJAS, NORA
ABAYA, MARIETTA S. ABCEJO, VICTORIA E. ABELLA, FILOMENA L. ABEN, MA. VICTORIA
D. ABESAMIS, NITA D. ABID, VERONICA ABIERO, RONELLO ABILA, DANILO ABON, EVA
ABON, EVA FE J. ABRAHAM, EDGAR A. ABRIOL, RUBY I. ABRIOL, REMEDIOS ACASIO,
ROMEO L. ACEDO, RIZALINA M ACORDA, SUSAN B. AGAPITO, RODOLFO T. AGONCILLO,
MARGARITA N. AGOOT, MARIA H. AGOOT, ELIZABETH AGPAOA, AVELINO AGUINALDO,
JOSE R. AJON, LOURDES ALAG, LUZVIMINDA ALBAO, LUCITA ALEGRE, EXPEDITA S.
ALEJON, MELENIDA ALMAZAN, MANUEL T. ALMOGUERRA, CAROLINA J. ALVIAR, ELVIRA
D. AMA, JOHN AMARRA, BENEDICTO ARABIT, AURORA M. ANCHETA, RAYMUNDO
ANDAY, ERIC J. ANONAS, ROSEMARIE N. ANTEGRO, CARMENCITA APELO (DR.), ESTER
AQUINO, ALEX AQUITAA, EDUARDO ARCA, NANCY I. ARCANGEL, CRISPINO ARIAS,
GAUDENCIO ARIAS, ESTHERLINA D. ARIFALO, ALICIA C. ARJONA-LAYSON, RODRIGO L.
ARMENIO, ABELARDO E ARNAO, ROSALINDA M. ARVESU, JOSEPHINE B. ASAS, MA.
WYNNE A. ASTUDILLO, VICTOR C. ATIENZA, DAVID AVANTE, LUISITO AVANTE, ANITA C.
AVILLA, HERNANDO F. AVILLA, EUSTAQUIO AWITAN, ERNESTO BACOLOR, EFREN
BACONAWA, MYRNA D. BALDECAAS, JUANA BALOTRO, LORY C. BANGALISAN,
GERMELINA T. BAOY, ELVIRA BARREDA, DOLORES BAUTISTA, NIEVES V. BAUTISTA,
RENATO BAUTISTA, MELINDA A. BAYOT, EDNA T. BEGINO, BELLA C. BELOY, CAROLYN
C. BENIGNO, CALIXTA C. BERBA, JOSE C. BERNAL, LILIA B. BERNAL, CALIXTO
BERNARDO, DANTE C. BERNARDO, ERNESTO BERNARDO, RENATO BERNARDO,
MELENCIO BERNARDO, ONOFRE S. BONIGFACIO, JOCELYN B. BOREJON, EDWARD S.
BRIONES, ROSALINDA R. BUADO, ERNESTO BUENAFLOR, FELIX BUTUHAN, CECILLO
CABUANG, GILDA CABUANG, WILFREDO CABUANG, ROLANDO A. CAMBA, RONNIE
CAPILI, AURORA CAPIRAL, MARILOU CAPUNO, LEONCIO CARAAN, ESTELITA R.
CARANDANG, REMIA B. CARPIO, EDUARDO CASTELLANO, LOLITA A. CASTILLO, BELLA
U. CATACUTAN, CARINA P. CATIMBANG, MAURO CAYETA, CRISANTO P. CEREZO,
FELICIANO CONCEPCION, VIVIAN D. CONCEPCION, RODANTE CONSTANTE, ADELA B.
CONTRERAS, JOSEFINA A. CONTRERAS, ANAMARIE P. CORONEL, CRISOSTOMO A.
CORTEZ, ERLINDA CORTEZ, JOSEPH ALAN D. COSTALES, ROSARIO M. COSTALES,
RUBINA O. CRESENCIO, ANTONIO CRISTOBAL, BALGAMEL C. CROOC, VIRGINIA CRUZ,
LEONILO A. DABBAY, ROGELIO V. DACULLA, AZUCENA DAMANG, LINO I. DANTE,
ERLINDA N. DAUZ, KAREN ROSE C. DAZO, DOLORES T. DE GUZMAN, MARISSA DE
GUZMAN, MYRILOU DE GUZMAN, NATALIA C. DE GUZMAN, REDEDIOS DE JESUS,
EMELINA C. DE LEON, ANGELES DE MAYO, VICTORIA B. DEL PRADO, CESAR M. DELA
CRUZ, ESTENELY M. DELA CRUZ, JOSE K. S. DELA CRUZ, NICANOR S. DELA CRUZ,
EDUARDO DELA TORNE, REYNALDO DELOS SANTOS, VERONICA DELOS SANTOS,
EVELYN DELOS TRINOS, GLICERIA DERROTA, GERMAN DIAZ, AUGUSTO DIMAMENT,
MEDIATRIX DIRECTO, ROMULO S. DIRECTO, JR., STELLA DOCENA, RODOLFO
DOMDOM, JACQUELINE DONESA, ALFREDO DUCUSIN, PETRONILO B. DUMANGAS,
LORNA D. EBIO, GILBERT R. EGAA, ROBERT EGAA, ROMULO ELAMPARO, MARLENE

ENRIQUEZ, NICERATA ERMITA, LOURDES R. ERSANDO, HERMINIO ESCALONA, NESTOR

B. ESCANDOR, PEDRO ESCREZA, MARILOU B. ESCUREL, TERESITA G. ESPOCIA,
MARINA M. ESTACIO, NANETHA ESTANTE, ELSIE ESTOPACE, MALANIE M. ESTOLE,
RODOLFO C. ESTRELLA, RICA EVASCO, LIWANAG C. FELICIANO, EDNA A. FELIPE, EVA
FEMENTIRA, BERNARDINO FERIDO, JR., PURIFICACION C. FERRER, FRANCISCO
FETALBERO, LUCIA FLORES, MA. GRACIA D. FLORES, NILO FRANCISCO (DR.), ZENAIDA
F. FRANCISCO, MANOLITA Z. GAERLAN, EDITHA S. GOLLA, ANTONIO A. GANNABAN,
CARLOS GARCIA, CORAZON A. GARCIA, JULIE G. GARCIA, LIZA S. GAYAS, EVAN R.
GERONIMO, BONIFACIO GODOY, ARLENE GONZALES, HILDENCE B. GONZALES,
ILUMINADA B. GONZALES, GRACE L. GUILLERMO, BENJAMIN C. GUTIERREZ, RODOLFO
GUTIERREZ, ALEJANDRINO HADUCA, MARILYN P. HERNANDEZ, NILDA HERNANDEZ,
FREDERICO HIFE, ERQUITA HORCA, LORETO HUMARANG, REBECCA M. IBAROLA,
MELINDA O. IGNACIO, FRANCIA ILAO, AURORA C. INDICO, DIANA INOCENCIO, ALICIA M.
IRANGA, DEOGRACIAS JAVIER, NELLY A. JIAO, CHARITO GIMENO, DIDETTE M. JOCO,
LOLITA JUNIO, LEWELLIE R. KAMPITAN, ESTRELLITA KARGANILLA, GREGORIO LACSA,
JR., ANTONIO LANDRITO, LETICIA R. LANDRITO, ANDRES LANGIT, MAXIMA R. LAPUZ,
ANICIA LAUREL, FLORENCIA B. LAURENCIANO, MARCELINO E. LEGASPI, MARIO T.
LEGASPI, FIDEL LIBAO, IMELDA LIBERATO, ANITA LIBRADO, LILIA G. LIWANAG, EDEN P.
LLANES, ANTONIO C. LOPEZ, CERELINO LOPEZ, EMELINA A. LOPEZ, VIRGILIO
LORENZO, FLORO MAGO, JR., ZENAIDA MADERA, MELCHOR MAGNAYE, ARLENE B.
MAGPANTAY, FERMINA MAGPANTAY, MAGNO MALABANAN, PABLO B. MALABANAN,
LUISA MALALOAN, MERCIA MALLARI, RICARDO MALLARI, RONALDO MALLARI, RUSTICO
MALLARI, ANGELI MALONZO, PEDRO M. MANAIG, FLORITA S. MANGABAT, NEMESIA C.
MANGABAT, MANOLITO M. AVANTE, BERNARDO S. MANUEL, CECILIA MANUEL,
ROBERTO MANUEL, CLARIBEL MANZANO, PABLO MARASIGAN, PEAFRANCIA H.
MARASIGAN, RHODORA MARASIGAN, ANNABELLE F. MARBELLA, FLORENCIO MARCIAL,
HERMINIO D. MARCIAL, RICARDO F. MARERO, JUANITO R. MARTIN, JR., BALTAZAR
MATEO, ROSALINDA P. MATEO, ESTELA MAYO, SOCORRO G. MERCADO, AVELINO G.
MILLORA, APOLINAR MIMIS, NORMA MIMIS, AL MINAO, CONSUELO MIRANDA,
LEONARDO MIRANDA, REBECCA R. MIRANDA, LILIA B. MOSLARES, MARLYN MULATO,
MA. VICTORIA L. MUNN, SHA KHATAK, LEONCIA N. NABONG, AMELIA A. NACIONAL,
FLORENCIO R. NAGAO, JOEY N. NAPIZA, MARION NAPIZA, ZENAIDA NATIVIDAD,
ABELO NAVARRO, NICETAS S. NICOLAS, VICENTE M. NIM, JUAN NIOLAR, LYDIA E.
NONES, MARILOU W. NUESTRO, CLEOTILDE D. OLAYRES, SUSAN R. OLID, AMELITA A.
OLIVAS, BIENVENIDO L. OPEA, FRANCISCA S. ORELLANO, CONSTANCIA ORLANDA,
GUELLERMO ORTICIO, BONIFACIO ORTILLANO, ANGEL PABLO, EDUARDO PABLO,
GENEROSO PACLITA, RAYMUNDO PADILLA, NANIE L. PALABAY, ANGELINA N. PALOS,
ALAN B. PANCHO, MELITA PANCHO, ESTRELLA C. PANGANIBAN, GINA C. PANGANIBAN,
LERMA V. PANGANIBAN, PEDRO A. PANGANIBAN, RITO PARTOSA, CYNTHIA PASADILLA,
PRISCILLA E. PASCUA, JOCELYN C. PASCUAL, REBECCA PASCUAL, FLORENCIO
PASTULERO, GERMAN PATNONGON, VENANCIO PATRICIO, CARLEEN R. PERALTA,
MARITON T. PEREZ, IMELDA D. PILLAS, RICARDO B. PINAY-AN, JUDITH A. PLATERO,
EMILY J. POLON, BILLYADONA B. PONCE, RAUL R. PONSECA, RAMY PRADO, BERNADEL
M. PRIVADO, FERNANDO S. PRONUEVO, CARMELITA C. PUTOLINO, NORA QUINTOS,
EDNA D. RAGUINDIN, JULIAN D. RAGUINDIN, ANACLETA G. RAMILO, FRUTO RAMOS,
JULIETA RAMOS, ROMEO R. RAMOS, SABINA RAYMUNDO, FE BIEN R. REALON,
ALFREDO RECTRA, IRENEO REGIDOR, RACHEL C. REGIDOR, ALICE REYES, ELIZABETH
L. REYES, FLORDELIZA REYES, DOLORES E. RICAFRANCA, MANUEL RICARDO,
ROBERTA L. RIGUER, GRETEL F. RIVERA, EFREN ROBLES, PROCESO RODRIGUEZ,
REMEDIOS F. RONATO, EDEN ROSON, LEOPOLDO U. ROXAS, MOISES SADURA., SR.,
MOISES A. SADURAL, JR., VALENTIN SADURAL, JOSEFINA A. SAGUN, RUBY F.

SAHAGUN, MAURA M. SALIBA, GERLIE SALVA, LEONCIO SALUDARES, AVELINA M.

SAMIANO, REYNALDO A. SAMIANO, JAIME G. SAN PABLO, VERONIDIA G. SAN PABLO,
BARTOLOME SANCHEZ, JOSEPHINE L. SANDOVAL, EDA SANOPO, ELIZA C. SANTIAGO,
JOEL G. SANTIAGO, TIMOTEO SANTIAGO, CONCEPCION W. SANTOS, FELIXBERTO
SANTOS, JR., JOSEFINA C. SANTOS, MARCELINO SANTOS, RODOLFO SANTOS,
CESARIO SANTOSAN, JUMELLE G. SARABIA, JOSEPHINE SARMIENTO, OFELIA
SARMIENTO, AURORA C. SAVELLANO, SALLY SERRANO, RODOLFO R. SIBALUCA,
MARINA SILVESTRE, BASILISA C. SISON, EDUARDO N. SISON, SYLVANA R. SISON,
ESTER SOBREMONTE, JAIME SOBREMONTE, ALFREDO SORIANO, JR., JULIA PAULA M.
SORIANO, CARMEN STA. AGATA, DOMINGA SUBA, TETERIO SUER, JEROME SUPLIDO,
LINA A. TABUAR, FERMIN TACAZON, LORENZO TALATALA, ADORA V. TAN, NELCY L.
TAEDO, MILAGROSA T. TANALGO, ALBERTO C. TANCHANCO, MELECIO TARIFE,
ROSARIO K. TATLONGHARI, RUFINA B. TAYAG, HERMINIA A. TECSON, PAPA TENGCO,
LOURDES L. TEVES, CRESENCIANA R. TIMBOL, NOLI N. TIONG, VIRGINIA B. TIONG, LILIA
TIONGSON, MA. ASUNCION N. TIONGSON, JOSEPHINE TOLENTINO, BENJAMIN
TORRENTE, OSCAR TORRES, SONIA M. TRINIDAD, RIZALINA TROPA, CRISTINA
TUAZON, HOMER E. TUAZON, RICARDO TUBUNGBAMA, HYDEE N. TUYAY, MERCY
URRUTIA, LARNE VALCARCEL, EMILIANO B. VALDEZ, JR., REMEDIOS S. VALDEZ, JOSIE
VARGAS, FELINO VELASQUEZ, (DR.), PEDRO A. VELASQUEZ, RAFAEL A. VELEZ, SYLVIA
I. VERGARA, BLESILDA VERIN, ADRIANO VICTORIO, JR., DOMINADOR VICTORIO, EMILY
E. VICTORIO, GLORIA VIDA, LOURDES M. VILLAFLOR, ALBERTO A. VILLAFLORES,
LEONIDO Z. VILLAFLORES, ALICE VILLALOBOS, CATHERINE P. VILLANUEVA, EDWIN G.
VILLANUEVA, TERESITA S. VILLARIAZA, FREDERICO G. VILLARTA, EDGAR VINCULADO,
ZENAIDA C. VINCULADO, EDITHA VITALICIA, AVELINO C. VIVO, ARLENE V. VYTIACO,
MILAGROS WABE, RODOLFO WENCESLAO, A. WONGSUWAN, HERMINIA V. YALUNG,
LAARNI ZAMORA, MARY ANN R. ZEPEDA, FERNANDO SQ. LATI, M. SIRIOS, JOEL
BOREJON, CONCHITA PUBLICO, AGRIPINA BRIONES, MILTON SACRO, LOLITA RAZON,
CONSOLACION GUERRA, ANDRES ARAO, MARCELINO JUSTO, ROSALES REGINIO,
PEDRO RUBALA, BENJO BONIFACIO, ANGEL MATEO, EDUARDO QUE, MODESTA M.
ANDAYA, ANTONIETTA M. APALISOK, VIENNA E. BELTRAN, LORENZO N. BRIANA,
CRISELDA L. CASTILLO, JUANITO B. CHAN, JR., ORLANDO S. CUYUGAN, ZORAIDA F. DE
GUZMAN, VITO F. DEL FIERRO, JR., RELITA A. ROSA, HERMINIA S. DELOS REYES,
BEATRIZ C. DIZON, SUSAN A. FORONDA, MARY ANN P. FRANCO, ROMULO M. GARCIA,
JOVITA M. GONZALES, REBECCA O. JOSE, MARCIA B. LANUZA, ALBERTO G. LEGASPI,
ANGELINA A. MABUNGA, CONSUELO B. MANGUBAT, ILUMINADA G. MAPAYE, AMELIA V.
MARCELO, GLENDA S. MARQUEZ, LOURDES IRENE N. MIOZA, EULOGIO M.
MONTEALTO, MARIO P. MUECO, LUCILDA L. PADAUAN, EDGARDO V. SAN JUAN, MA.
FATIMA S. SENGCO, CAROLYN O. TABANGCURA, MARIETA U. TIBAYAN, MARIETA E.
TUGADE, petitioners, vs. HON. GODOFREDO N. ALCASID, JR., in his official capacity as the
Director of the Bureau of Soils and Water Management, HON. ROMEO N. ALCASID, in his
official capacity as the Director of the Bureau of Animal Industry, and HON. PEDRO O.
OCAMPO, in his official capacity as the Executive Director of the Livestock Development
Council, respondents.
[G.R. No. 111494. September 11, 1998.]
DIONELO D. IBABAO, ELVIRA F. SIMON, AURORA M. CRISTOBAL, ONOFRE T. SUBA,
NELITA DIAZ, ERNESTO NUVAL, ENRIQUE LACSA, SABINA DIAZ, MAGTANGGOL
SANTIAGO, VALENTIN TANZUACO, ANGELITO TABORA, LOIDA CAINGLIT, ALBERTO
SANTIAGO III, HOSPICIO C. MAHILUM, FRANCISCO SANTOS, JR., PABLO RABINO,
LORETO GANIR, MODESTO DAYON, GLICERIA TUAZON, HONOLITA ALMONTE, RAQUEL

RAMOS, ADORACION C. JASTILLANA, RICARDO ESGUERRA, JONATHAN DICKSON,

ROBERTO TIONGSON, BIENVENIDO RICAFRENTE, ALFREDO TAYAG, ROLANDO
CAJANDING, AMELITO GOLLOSO, REYNALDO RONQUILLO, LEONCIO LEGASPI,
REYNALDO DELA CRUZ, NICANOR LLAMAS, MARIANO ODHOY, LORETO GANIR,
TERESITA MALLA, ORBETA GUERRERO, HILARION LAGUA, PABLO ABAD, ALBERTO
LAPERAL, JR., CLARITA ULANDAY, TERESITA LOPEZ, CRESENCIA MALONZO,
NATIVIDAD LAGUA, JERICARDO MONDRAGON, FILOMENA GANTE, JESUSA WAJI,
LEONORA SIGNE, MARILOU ROSANA, JOSEFINA FRANCISCO, MARIA AFRICA
MENDIORO, SEVERO BALANE, JR., TEODORO JOCSON, MARISSA ALBALADEJO, FLORA
CASEM, MILAGROS FLORADA, TOMASA CARANDANG, MERLY REPANI, SUSAN GARCIA,
BENJAMIN NUNEZ ANA MARIE ARENAS, ROMUALDO POL, JULITA LAVARO, HERMINIO
MAHILUM, AMIANA ABELLA, ADELAIDA ALCISTO, RIZALINA M. LEGASTO, MILAGROS
LEDESMA, LORNA P. ANACLETO, AUGUSTO T. REGIO, CYNTHIA P. ISAAC, FELIPE
ALBANO, ROSALINA Q. DE LA CRUZ, MITZI C. FERNANDEZ, RUSSEL DIAZ, VALENTINO
MACASAET, SALVADOR DELFINO, MAXIMO ESGUERRA, JR., JUNELITA PACIO, ERNESTO
TUZON, VIOLA MARIANO, LUTGARDA SEBASTIAN, MARCO PEREZ, ISABELO
MACABUGAO, FRANCISCO FABRO, ERLINDA CLAVO, DOMINGO JOCSON, ENECITAS
TABORADA, LUISA TUASON, ROSALIO BAZ, JR., LUZVIMINDA SALDUA, TEODORA
OAMINAL, LEONOR BRINGAS, DAISY LADRA, MERCEDES SANGREO, ZENAIDA MUNON,
ANTONIO AMURAO, PERCIVAL ECITO, SYLVIA MON, LOURDES MANGASI, BENIGNO
MAGNO, ZOILO AQUINO, ROSARIE ARREZA, PILAR FONTELAR, FLOR ABELLA,
MERCEDITA BANTAYA, PACIENCIA FIGUEROA, HILDA BALLO, MAURICIO BALLO,
RODOLFO C. PINTO, CESAR GUERRERO, VIRGINIA DE LOS SANTOS, ALICE CORDERO,
MYRNA ABILAR, ROSA BASSIG, ADORACION OBINQUE, AMELITA MAGBAGO, MACARIA
ANDRADE, CONSUELO BALTAZAR, ELIZABETH VIANA, ROSARIO RAGAZA, JOSEFINO
MONDRAGON, CONRADO GANIR, FILIPINA GOJAR, EMILIA BARRAMEDA, CIRILA LEYVA,
FREDA ROXAS, CORAZON DE LA CRUZ, ROSITA CALVELO, ROSARIO LIZARDO,
CRISTINA NUQUI, FELICISIMA MAXINO, JACINTO ARUCAN, JR., LORETA DE GUZMAN,
LEONORA DE LEON, LYDIA AGUILING, DALISAY MONEDA, LOURDES LIZA, PAZ
LADERAS, EFREN LUNA, EVELYN CABUS, ESTER CONCEPCION, ARIEL BAUTISTA,
FRANCIA AMAQUI, FRANCISCA BIANES, PAZ LUCERO, ERLINDA ESPINOSA, TERESITA
CATACUTAN, REGINO OGSIMER, ESTRELLA ORENSE, MARYLOU VILLAREAL, ALMA
DICKSON, NATIVIDAD RAZO, ALICIA SUALOG, ERLINDA ARALAR, REDENTOR GATUS,
FORTUNATO CABEZAS, CECILIA REYES, AURORA REYES, BARTOLOME SANTIAGO,
JESUS DELA TORRE, CONSOLACION SEVILLA, HENRY LUGAYAN, ANGELES GALERA,
REUBEN A. GANADEN, JULITA ABULON, LINA SANTOS, GLORIA C. BERGADO, ANSELMA
S. LEGASPI, LEONORA RIVERA, EDITHA MALOLOS, JESUS SANCHEZ, ALBERTO
MOLERO, DOMINGO TUAZON, JR., SOFIA S. BASA, SUSANA EDIC, FELIPE ELEDA,
ARMANDO LANDAYAN, RICARDO MAR, JR., AUGUSTO SANTOS, ARSENIA AREVALO,
ERLINDA ABUEVA, VIRGILIO SANTOS, GAUDENCIO BADIOLA, JR., MODESTA ANGELES,
RENATO GUTIERREZ, LUCERNA ICAPIN, MARLENE CALANGIAN, NEMENCIO AREVALO,
NENITA DE GUZMAN, LOURDES PALO, MANUEL CABRERA, BENJAMIN MAGAT,
ERNESTO REYES, EUGENE SANGALANG, ARMANDO ALCAZAR, JOSELITO MAGHIRANG,
ROMEO DIETA, ROFER ESQUIRRES, DONATO ALMARINEZ, MELITA CONSULTA, RENATO
VILLAFRANCA, LEONCIO ALVAREZ, MANUEL SOTOMAYOR, LEOVELITO CATALLA,
APOLINARIO GICOS, FLORIDA ARBOLEDA, ROMEO PORNOBI, CANDIDO SOTOMAYOR,
GREGORIO BARRION, CARMELA EUBION, DANILO NAGPALA, ANGELITO VALDEZ,
LEONARDO SAN JUAN, CLAUDIO RESMA, CESAR GALERA, DANTE AMURAO,
FLORDELIZA DE JESUS, EULENIA FERNANDO, BENEVERT FERNANDO, AQUILINO
RONQUILLO, MONA NARVAZ, VIVIAN NEBRES, ALBERTO NUNEZ, MARINA DUMOL,
ARCADIO ISON, NORMA BORJA REYMUNDO NEBRES, ALEX MOLE, NALDA TANADA,

ARMANDO VILLANUEVA, NIDA BALANE, ROSALIND SANTOS, NILA MITRA MEDRANO,

ELIZABETH BAUN, ALFREDO VILLATUYA, ROY GARCIA, AVELINA BIERNES RODOLFO
ASIS, ARTEMIO GINES, AURITA CASTILLO, HOMERTO RIOMALOS, ALICIA DELOS
SANTOS, GRACE DE VEYRA, SALUD R. GANADEN, LOLITA SUIZO, ERLINDA PICHAY,
NELIA TIEL, DORIS FRIAS, JOSIE SAN PEDRO, JOHNNY ICONAR, AURORA ROCABO,
ALICIA BORROMEO, RAMIR MASAYDA, JUANITA AMURAO, BELINDA SAN DIEGO,
SIMEONA REGIDOR, JOSEFINA GENESERA, PATRICIA AQUINO, EDWYN ALESNA,
HECTOR BAUN, DANILO LUCERO, PURITA DELA PENA, FELIONOR ELESERIO, AUGUSTO
HERNANDEZ, LINA ZULUETA, PHOEBE LAQUINDANUM, ELMER ALBA, MYRNA RAMOS,
EFIPANIO ABAYA, LUZVIMINDA MATIGNAS, GUILLERMO AQUINO, JR., RICARDO
VERSOZA, NELSON FRANCISCO, EDUARDO BUTAC, ADORADO CAINGLIT, ROLANDO
SIKAT, THELMO MAGSUMBOL, ELOISA UZON, JUSTONATO PENIANO, PEDRO
NATIVIDAD, DOMINGO ASUNCION, NARCISO GARCIA, RESTITUTO SANCHEZ, HELEN
IBARRA, ALFREDO DUCANTE, ARMANDO MARTINEZ, GLORIA PASCO, EMMA MARFORI,
RICARDO MENDOZA, ANTONIO MORALES, EDUARDO TOLENTINO, TITO DELA CRUZ,
REGINALD GONZALES, JOSE PACLIBARE, JOSELITO SONGA, VIRGILIO LEOPANDO,
LEVITA ZAPANTA, FELIPA LOPEZ, ELPIDIO MENDOZA, EDMUNDO EDROSO, DOMINGO
CATALLA, VERGEL BIADO, DIEGO BUTAC, PROSPERO PASTORAL, CESAR AMINES,
REGINO OPORTO, JR., ARMANDO LAGUIDAO, REYGALDINE RAMIREZ, SEVERINO
ESCOBAR, JR., BERNABE GONZALES, MAXIMO GATDULA, ALEMAR SABATIN,
BONIFACIO GANDULLAS, MARCELINO TACADAO, SEVERINO BARICANOSA, PACIFICO
FRANCISCO, EDUARDO SALCEDO, RODOLFO SINGH, FLORENCIO SERANILLO, ELPIDIO
MACABALOS, FEDERICO TRINIDAD, JOSE LACTAO, JULITA FADRIQUELA, PERFECTO
GUERRERO, JR., EDITHO DEMDAM, ROMEO B. DE SAGUN, VIOLETA RAMOS, VIRGINIA
LOPEZ, CARMENCITA TOCINO, SALVADOR NIERRAS, MARILYN BERNALDO, CELIA
BUSQUE, JOSE CALDERON, AMADO ANONUEVO, LEODEGARIO CAWALING, CELSO
IGANCIO, MARCIAL CAGUICLA, CRISPIN DELA CRUZ, GIL FERRER, FARIDA BATOLOS,
MARGIE KILAKIL, EMMA BOROMEO, HERMINIO LEYVA, ROGELIO BERNABE, OSCAR
BANDIOLA, MELCHOR TAYAMEN, RUBEN REYES, ANGELITA SALGUET, JOEDOCIEL
DANTING, ALMA MENDOZA, RENATO MENDOZA, FRANK QUIMSON, EVELYN ZAFRA,
MELITONA PENADA, BENICIO SINGQUENCO, NICANOR CRISOSTOMO, ROSEBELLA
JUMARAN, ABNER BUENAVENTURA, ADELAIDA PALMA, MARCELO VALDEZ, LILIBETH
AFAN, JOSE NAVIDAD, JUANITO BACANI, ROGELIO LONGALONG, GLICERIO SANTOS,
AMOR SANTOS, FE DE JESUS, JAIME DE JESUS, JOSE VICTORIO, ENRIQUE MARQUEZ,
EDMUNDO GADUANG, WESLEY ROSARIO, ROLANDO MIRANDA, WILHELMINA
NATIVIDAD, JOSE NATIVIDAD, GUILLERMO OQUENDO, CLETO RAFER, JR., LEDA G.
HANDOG, CORAZON MANUBAY, ELADIO GONZALES, JOY DELA CRUZ, ADAN DIAMANTE,
ELADIO VILLAMATER, GLORIA MATIAS, VIRGINIA S. LUYUN, FIDELITO CALUPIG,
RODOLFO JEREMIAS, JOSEPH BANDALA, CONCEPCION JUICO, PRISCILLA ANGELES,
ALFREDO SANTOS, JR., PROCOPIO MACOLOR, AURELIA RABARA, DANILO
SINGQUENCO, HARRIETO CAMARINES, NAMNAMA JAVELLOSA, AMELIA S. MAALA,
RAFAEL RAMISCAL, FRANCISCO TABORDA, CATALINO REYES, NELSON CALVELO,
JOHN TABAY, BENJAMIN PINEDA, petitioners, vs. HON. ROBERTO SEBASTIAN, In His
Capacity As Secretary Of The Department Of Agriculture and HON. GUILLERMO R. MORALES,
in his capacity as Director, Bureau of Fisheries and Aquatic Resources, respondents.
[G.R. No. 112056. September 11, 1998.]
JUVY CLAVEL P. GACULA, ANDY R. RIVERA, LORENZO T. SUBARIA, LEO J. BERNAL,
CYNTHIA L. DE VEAS, AVELINA L. DIOCES, FE Y. FELICIANO, THELMA A. GECOLEA,
RODOLFO R. PANGAN, MAURA JASMIN A. REYES, PENNY MARIE G. TAN, TERESITA V.

CHAN, NENA A. INOCENCIO, PELAGIA G. ABAYA, FELIX P. BERNARDINO, MA. LUISA M.

CALDITO, EDGARDO F. DE JESUS, PARALUMAN T. DELA PAZ, RENATO F. GILERA,
LEOVIGILDO G. MALZAN, CLARITA O. OLANO, HERNAN Z. PEREZ, MILAGROS S. PILAPIL,
GAUDENCIO L. RAMOS, JR., ADORACION J. SANTIAGO, ANDREA O. TAMINA, TRINIDAD
N. TOLENTINO, CARMELITA F. ZAFRA, CARMELO P. ABADILLA, EMMA L. LOGRONIO,
CARMELITA B. AGPOON, ANTONIO G. ARIZALA, DOHME C ARPON, RENATO A.
BACLAGAN, MANOLITO A. CUETO, REYNALDO G. CUSTODIO, ROBLETO M. GULOY,
OLIMPIO P. MARIBAO, JR., MANUEL V. MIRANDA, JOSE RANADA, JR., JESUS R.
REVIDAD, REX P. SEVILLA, FEDERICO D. SORIANO, BENEDICTO L. STA. ANA, DANIEL S.
TOLENTINO, WILFREDO G. VILLANUEVA, GUILLERMO O. BALURAN, JOSE G. BATTUNG,
MANOLITO J. BERNAL, DELFIN R. BRAVO, PATRICK V. CALDITO, DANILO L. CATIPUNAN,
ANTONIO G. COSTOSA, ROLANDO S. EBERO, BENITO W. GONZAGA, DIVINA S. LEANO,
FREDDIE D. LESTINO, RAUL A. LLAANZANA, JUANITO M. MANSANADEZ, IMELDA M.
MIRANDA, ROGELIO J. ORDONEZ, ESTEBAN M. PAREDES, ROMEO S. CARDOSO,
ROBERTO E. CASAYURAN, RAQUEL V. CATIPUNAN, MARCIANO F. CRUZ, JULIEN C. DE
TORRES, RAYMUNDO N. GABAY, CRISANTA B. MALICDEM, GLENARDO A. MIJARES, EDA
R. NOCON, ERNESTO Q. OBRIQUE, ROMEO D. SISNERO, ANGELITO C. TALAGON,
SOLEDAD S. CRUZ, JOSELITA G. ENCISO, JOSE CARMELO N. LEANO, ROMEO S.
SILORIO, EDGARDO L. VIBAR, LOURDES F. ELARDE, ANGELINA E. RACHO, ROMILDA DE
ASIS, GLYCIDAS P. INIGO, CONCHITA M. LACEDA, AUREA M. LUCAS, JOSE ROLANDO J.
MANLULU, SERGIO R. MANRIQUE, ELVIRA G. NAZARET, JOSELINE P. NIWANE, LYDIA J.
RUIZ, ALFREDO M. TORRES, CESAR A. AQUINO, MANUEL P. BALATINSAYO, MONETTE B.
CADIANG, RODRIGO O. ESTAMO, ADELAIDA Y. FERRER, EDNA L. LOGRONIO,
LEONARDO B. PONFERRADA, SUSANA M. SANTOS, CONCHITINA Y. SEVILLA, LIBERTY Z.
VALLESTERO, LERMA G. VILLANUEVA, ESPERANZA J. MERCADO, MA. BESSIE P.
DIAMANTE, ROSARIO G. MAYRINA, MAXIMINA D. SABINORIO, YOLANDA G. ZALDUA, MA.
VICTORIA B. ANGELES, NOLASCO K BALIBALOS, EDNA C. BAYUGA, MANUELITO C.
BONGABONG, GINA B. CRISOSTOMO, TERESITA N. CUNANAN, FILIPINA G. DE MESA,
LOIDA M. GARCIA, GODREY T. GOLLAYAN, CYNTHIA B. LAGASCA, DIEMMA C. MUNDO,
LEONOR S. PALMA, DELFIN V. PILLE, PATRICIO G. REYES, JR., LOIDA M. VILLANUEVA,
EVA G. ZOSA, FELY C. ARANO, RUEL E. BADINAS, IMELDA F. BARRACA, HELEN GRACE
N. CRUZ, ERNESTO P. GIMAS, ALEX D. GUARDIAN, BEHILDA L. HEZETA, JOCELYN D.
NAGUIT, EDMUNDO A. NUEVO, SOLOMON F. PAZ, LOURDES C. BALING, EMPERATRIZ N.
NEPOMUCENO, ROSAL C. GUARDIAN, REMEDIOS A. ANCHETA, ROSEMARIE L. BOBIER,
MA. ALICIA BONOAN, GEMMA V. BORJA, ANELY BURGO, FINARDO G. CABILAO, ROSALIE
F. DOBLES, EDNA E. FRANCISCO, ANGELINA V. OPLEDA, MARITES K. RANESES,
LIBERTY D. RESTAN, ANNABEL ARRIETA, OSCAR B. BALAYAN, THELMA BALAYAN,
JESUSA A. CABILAO, ELISEO C. COPIAN, FERNANDO C. DELA CRUZ, JESUS S. FAR,
JOSE G. FUERTES, HANNIBAL A. GALANG, RICARDO M. GALING II, ARNEL B. GARCIA,
IRISH B. MANJARES, MARITESS M. MARISTELA, SYLVIA S. RED, ARLENE M. REYES,
DELILAH H. SAMSON, FARAH D. SELGA, ERNESTINA Z. SOLLOSO, HELEN URBANO,
MARIVIC L. UY, OLIVIA A. UY, ROMEO S. ZAFRA, CECILIA G. ALEMAN, JULIETA A.
ALFEREZ, PERPETUA BALIBALOS, MARILOU C. BANCUD, ARABECQUE T. BATILONG,
PORFIRIO R. BATUYONG, TONI BINALLA, AIDA E. BORINES, ELISIA D. CLAVANO, ESTER
R. EGAMINO, RAMIL R. EGAMINO, MARIAN L. LOFRANCO, FLORESA T. MARANAN,
CYMBELINE S. MARTINEZ, LORELIE A. SUELO, MARLYN B. AMIGO, LINA A. ARANETA,
JOSEPHINE G. BANAAG, ROWENA CABANERO, IRENE O. DE OCAMPO, LEAH C.
EDADES, FILOMENA LA CORTE, MILAGROS P. ORTICIO, MERLINDA C. SABIO, ADANIA
SAKALURAN, PRISCILA M. YBERA, DELIA G. CORPUZ, PILAR B. MUSCAT, LIGAYA M.
ORGANO, BARBARA LUZ R. PEREZ, NIMFA MARIA C. VIDAR, CRISTINO G. BABIDA,
NENITA G. CRUZ, MERLITA B. CRUZADO, AMELITA O. DABBAN, EMMA C. DERICO,

EMMANUEL M. LASAC, ARACELI V. MALABANAN, MA. TERESA T. MONTALBO, LOLITA R.

NOBIO, GUILLERMO A. PINGOL, JR., JUDITH R. VILLEGAS, CONSOLACION O. DELA
CRUZ, ROSALINA J. DITAN, CARMEN I. MONARES, DOMINGO O. JAVIER, JESUS B.
REMEGIO, MARILOU S. REMEGIO, ELSA L. MAGAT, RICARDO P. MASINSIN, SANDRA B.
PANAHON, MARIETTA T. FLOTILDES, petitioners, vs. HON. CORAZON ALMA G. DE LEON,
in her capacity as the Secretary of the Dept. of Social Welfare and Development, respondent.
[G.R. No. 119597. September 11, 1998.]
ASSOCIATION OF DEDICATED EMPLOYEES OF THE PHILIPPINE TOURISM AUTHORITY
(ADEPT), petitioner, vs. COMMISSION ON AUDIT (COA), respondent.
Padilla Jimenez Kintanar & Asuncion Law Offices for petitioners.
The Solicitor General for public respondents.
SYNOPSIS
In G.R. Nos. 109406, 111494 and 112056, petitioners are officials and employees of several
government departments and agencies who were paid incentive benefits for the year 1992,
pursuant to Executive Order No. 292, otherwise known as the Administrative Code of 1987, and
the Omnibus Rules Implementing Book V of EO 292. On January 19, 1993, then President
Ramos issued Administrative Order No. 29 authorizing the grant of productivity incentive
benefits for the year 1992 in the maximum amount of P1,000.00 and reiterating the prohibition
under Sec. 7 of Adm. Order No. 268 enjoining the grant of productivity incentive benefits without
prior approval of the President. Sec. 4 of AO 29 directed all departments, offices and agencies
which authorized payment of CY 1992 Productivity Incentive Bonus in excess of the amount
authorized under Sec. 1 hereof to immediately cause the return/refund of the excess within a
period of six months to commence fifteen (15) days after the issuance of the Order. In
compliance therewith, the heads of the departments or agencies of the government concerned
caused the deduction from petitioners' salaries or allowances of the amounts needed to cover
the alleged overpayments; to prevent the respondents from making further deductions from their
salaries or allowances, the petitioners came to this Court for relief. cdasia
In G.R. No. 119597, the petitioner, Association of Dedicated Employees of the Philippine
Tourism Authority (ADEPT), is an association of employees of the Philippine Tourism Authority
who were granted productivity incentive bonus for calendar year 1992 pursuant to RA 6971,
otherwise known as the Productivity Incentives Act of 1990, but the bonus was disallowed by the
Corporate Auditor on the ground that it was prohibited under Administrative Order No. 29. The
disallowance of the bonus was finally brought on appeal to the COA which denied the appeal.
Hence, this petition.
SYLLABUS
1.
ADMINISTRATIVE LAW; GOVERNMENT CORPORATIONS; GOVERNMENTOWNED AND CONTROLLED CORPORATIONS; GOVERNMENTAL FUNCTIONS
DISTINGUISHED FROM PROPRIETARY FUNCTIONS. Government-owned and controlled
corporations may perform governmental or proprietary functions or both, depending on the
purpose for which they have been created. If the purpose is to obtain special corporate benefits
or earn pecuniary profit, the function is proprietary. If it is in the interest of health, safety and for
the advancement of public good and welfare, affecting the public in general, the function is

governmental. Powers classified as "proprietary" are those intended for private advantage and
benefit. aASEcH
2.
ID.; ID.; EMPLOYEES' RIGHT TO BARGAIN; RULE. After a careful study, the
Court is of the view, and so holds, that contrary to petitioner's interpretation, the governmentowned and controlled corporations Mr. Chairman Veloso (Bicameral Conference Committee on
Labor and Employment) had in mind were government-owned and controlled corporations
incorporated under the general corporation law. This is so because only workers in private
corporations and government-owned and controlled corporations, incorporated under the
general corporation law, have the right to bargain (collectively). Those in government
corporations with special charter, which are subject to Civil Service Laws, have no right to
bargain (collectively), except where the terms and conditions of employment are not fixed by
law. Their rights and duties are not comparable with those in the private sector. "Since the terms
and conditions of government employment are fixed by law, government workers cannot use the
same weapons employed by workers in the private sector to secure concessions from their
employers. The principle behind labor unionism in private industry is that industrial peace cannot
be secured through compulsion by law. Relations between private employers and their
employees rest on an essentially voluntary basis. Subject to the minimum requirements of wage
laws and other labor welfare legislation, the terms and conditions of employment in the
unionized private sector are settled through the process of collective bargaining. In government
employment, however, it is the legislature and, where properly given delegated power, the
administrative heads of government which fix the terms and conditions of employment. And this
is effected through statutes or administrative circulars, rules, and regulations, not through
collective bargaining agreements." (Alliance of Government Workers vs. Minister of Labor and
Employment, 124 SCRA 1) (Emphasis Supplied). To repeat, employees of government
corporations created by special charters have neither the right to strike nor the right to bargain
collectively, as defined in the Labor Code. The case of Social Security System Employees
Association indicates the following remedy of government workers not allowed to strike or
bargain collectively, to wit: "Government employees may, therefore, through their unions or
associations, either petition the Congress for the betterment of the terms and conditions of
employment which are within the ambit of legislation or negotiate with the appropriate
government agencies for the improvement of those which are not fixed by law. If there be any
unresolved grievances, the dispute may be referred to the Public Sector Labor-Management
Council for appropriate action. But employees in the civil service may not resort to strikes,
walkouts and other temporary work stoppages, like workers in the private sector, to pressure the
Government to accede to their demands. " (supra, footnote 14, p. 698; emphasis supplied)
3.
ID.; PRODUCTIVITY INCENTIVES ACT OF 1990 (RA 6971); COVERS ONLY
GOVERNMENT-OWNED
AND
CONTROLLED
CORPORATIONS
PERFORMING
PROPRIETARY FUNCTIONS. It is a rule in statutory construction that every part of the
statute must be interpreted with reference to the context, i.e., that every part of the statute must
be considered together with the other parts, and kept subservient to the general intent of the
whole enactment. The provisions of RA 6971, taken together, reveal the legislative intent to
include only government-owned and controlled corporations performing proprietary functions
within its coverage.
4.
ID.; ID.; DOES NOT INCLUDE EMPLOYEES OF PHILIPPINE TOURISM
AUTHORITY; REASON THEREFOR. It is evident that PTA, being a government-owned and
controlled corporation with original charter subject to Civil Service Law, Rules and Regulations,
is already within the scope of an incentives award system under Section 1, Rule X of the
Omnibus Rules Implementing EO 292 issued by the Civil Service Commission ("Commission").

Since government-owned and controlled corporations with original charters do have an incentive
award system, Congress enacted a law that would address the same concern of officials and
employees of government-owned and controlled corporations incorporated under the general
corporation law. All things studiedly considered in proper perspective, the Court finds no
reversible error in the finding by respondent Commission that PTA is not within the purview of
RA 6971. As regards the promulgation of implementing rules and regulations, it bears stressing
that the "power of administrative officials to promulgate rules in the implementation of the statute
is necessarily limited to what is provided for in the legislative enactment." In the case under
scrutiny, the Supplementary Rules Implementing RA 6971 issued by the Secretary of Labor and
Employment and the Secretary of Finance accord with the intendment and provisions of RA
6971. ACEIac
5.
CONSTITUTIONAL LAW; CIVIL SERVICE COMMISSION; FUNCTIONS. In
establishing a Civil Service Commission, the 1987 Constitution delineated its function, as
follows: "The Civil Service Commission, as the central personnel agency of the Government,
shall establish a career service and adopt measures to promote morale, efficiency, integrity,
responsiveness, progressiveness, and courtesy in the civil service. It shall strengthen the merit
and rewards system, integrate all human resources development programs for all levels and
ranks, and institutionalize a management climate conducive to public accountability. It shall
submit to the President and the Congress an annual report on its personnel programs" (Section
3, Article IX, B, 1987 Constitution.) The Commission handles personnel matters of the
government. As the central personnel agency of the Government, it is tasked to formulate and
establish a system of incentives and rewards for official and employees in the public sector,
alike.
6.
POLITICAL LAW; EXECUTIVE DEPARTMENT; PRESIDENT; POWER OF
CONTROL. The President is the head of the government. Governmental power and authority
are exercised and implemented through him. His power includes the control over executive
departments "The president shall have control of all the executive departments, bureaus, and
offices. He shall ensure that the laws be faithfully executed." (Section 17, Article VII, 1987
Constitution). Control means "the power of an officer to alter or modify or set aside what a
subordinate officer had done in the performance of his duties and to substitute the judgment of
the former for that of the latter." It has been held that "[t]he President can, by virtue of his power
of control, review, modify, alter or nullify any action, or decision, of his subordinate in the
executive departments, bureaus, or offices under him. He can exercise this power motu propio
without need of any appeal from any party." AaEDcS
7.
ID.; ID.; ID.; ID.; ID.; INCLUDES THE ISSUANCE OF AO 25 LIMITING THE AMOUNT
OF INCENTIVE BENEFITS; REASONS. When the President issued AO 29 limiting the
amount of incentive benefits, enjoining heads of government agencies from granting incentive
benefits without prior approval from him, and directing the refund of the excess over the
prescribed amount, the President was just exercising his power of control over executive
departments. This is decisively clear from the WHEREAS CLAUSES of AO 268 and AO 29. The
President issued subject Administrative Orders to regulate the grant of productivity incentive
benefits and to prevent discontentment, dissatisfaction and demoralization among government
personnel by committing limited resources of government for the equal payment of incentives
and awards. The President was only exercising his power of control by modifying the acts of the
respondents who granted incentive benefits to their employees without appropriate clearance
from the Office of the President, thereby resulting in the uneven distribution of government
resources. In the view of the President, respondents did a mistake which had to be corrected. In
so acting, the President exercised a constitutionally-protected prerogative.

8.
ID.; ID.; ID.; ID.; ID.; ID.; NOT AN ENCROACHMENT UPON THE AUTHORITY OF
THE CIVIL SERVICE COMMISSION TO GRANT BENEFITS TO GOVERNMENT PERSONNEL.
It cannot be said that the President encroached upon the authority of the Commission on Civil
Service to grant benefits to government personnel. AO 29 and AO 268 did not revoke the
privilege of employees to receive incentive benefits. The same merely regulated the grant and
amount thereof. Sound management and effective utilization of financial resources of
government are basically executive functions, not the Commission's. Conformably, it is "the
President or the head of each department or agency who is authorized to incur the necessary
expenses involved in the honorary recognition of subordinate officers and employees of the
government." It is not the duty of the Commission to fix the amount of the incentives. Such
function belongs to the President or his duly empowered alter ego. Anent petitioners' contention
that the forcible refund of incentive benefits is an unconstitutional impairment of a contractual
obligation, suffice it to state that "[n]ot all contracts entered into by the government will operate
as a waiver of its non-suability; distinction must be made between its sovereign and proprietary
acts (United States of America vs. Ruiz, 136 SCRA 487)." The acts involved in this case are
governmental. Besides, the Court is in agreement with the Solicitor General that the incentive
pay or benefit is in the nature of a bonus which is not a demandable or enforceable obligation.
HAIDcE
DECISION
PURISIMA, J p:
These are cases for certiorari and prohibition, challenging the constitutionality and validity of
Administrative Order Nos. 29 and 268 on various grounds. LLpr
The facts in G.R. Nos. 109406, 110642, 111494, and 112056 are undisputed, to wit:
Petitioners are officials and employees of several government departments and agencies who
were paid incentive benefits for the year 1992, pursuant to Executive Order No. 292 1 ("EO
292"), otherwise known as the Administrative Code of 1987, and the Omnibus Rules
Implementing Book V 2 of EO 292. On January 19, 1993, then President Fidel V. Ramos
("President Ramos") issued Administrative Order No. 29 ("AO 29") authorizing the grant of
productivity incentive benefits for the year 1992 in the maximum amount of P1,000.00 3 and
reiterating the prohibition 4 under Section 7 5 of Administrative Order No. 268 ("AO 268"),
enjoining the grant of productivity incentive benefits without prior approval of the President.
Section 4 of AO 29 directed "[a]ll departments, offices and agencies which authorized payment
of CY 1992 Productivity Incentive Bonus in excess of the amount authorized under Section 1
hereof [are hereby directed] to immediately cause the return/refund of the excess within a period
of six months to commence fifteen (15) days after the issuance of this Order." In compliance
therewith, the heads of the departments or agencies of the government concerned, who are the
herein respondents, caused the deduction from petitioners' salaries or allowances of the
amounts needed to cover the alleged overpayments. To prevent the respondents from making
further deductions from their salaries or allowances, the petitioners have come before this Court
to seek relief.
In G.R. No. 119597, the facts are different but the petition poses a common issue with the other
consolidated cases. The petitioner, Association of Dedicated Employees of the Philippine
Tourism Authority ("ADEPT"), is an association of employees of the Philippine Tourism Authority
("PTA") who were granted productivity incentive bonus for calendar year 1992 pursuant to
Republic Act No. 6971 ("RA 6971"), otherwise known as the Productivity Incentives Act of 1990.

Subject bonus was, however, disallowed by the Corporate Auditor on the ground that it was
"prohibited under Administrative Order No. 29 dated January 19, 1993." 6 The disallowance of
the bonus in question was finally brought on appeal to the Commission on Audit (COA) which
denied the appeal in its Decision 7 of March 6, 1995, ratiocinating, thus:
". . . Firstly, the provisions of RA #6971 insofar as the coverage is concerned, refer to business
enterprises including government owned and/or controlled corporations performing proprietary
functions.
Section 1a of the Supplemental Rules Implementing RA #6971 classified such coverage as:
"All business enterprises, with or without existing duly certified labor organizations, including
government owned and/or controlled corporations performing proprietary functions which are
established solely for business or profit and accordingly excluding those created, maintained or
acquired in pursuance of a policy of the State enunciated in the Constitution, or by law and those
whose officers and employees are covered by the Civil Service. (emphasis supplied)
The PTrA is a GOCC created in pursuance of a policy of the State. Section 9 of Presidential
Decree No. 189 states that "To implement the policies and program of the Department (Dept. of
Tourism), there is hereby created a Philippine Tourism Authority, . . . ." Likewise, Section 21 of
the same decree provides that "All officials and employees of the Authority, . . ., shall be subject
to Civil Service Law, rules and regulations, and the coverage of the Wage and Position
Classification Office."
Furthermore, although Supplemental Rules and Regulations implementing R.A. #6971 was
issued only on December 27, 1991, the law itself is clear that it pertains to private business
enterprises whose employees are covered by the Labor Code of the Philippines, as mentioned
in the following provisions:
"Section 5.
Labor Management Committee. . . . that at the request of any party to the
negotiation, the National Wages and Productivity Commission of the Department of Labor and
Employment shall provide the necessary studies, . . . ."
"Section 8.
Notification. A business enterprise which adopts a productivity incentive
program shall submit copies of the same to the National Wages and Productivity Commission
and to the Bureau of Internal Revenue for their information and record."
"Section 9.
Disputes and Grievances. Whenever disputes, grievances, or other
matters arise from the interpretation or implementation of the productivity incentive program, . . .
may seek the assistance of the National Conciliation and Mediation Board of the Department of
Labor and Employment for such purpose. . . ."
Therefore, considering the foregoing, the PTrA is within the "exclusion" provision of the
Implementing Rules of RA #6971 and so, it (PTrA) does not fall within its coverage as being
entitled to the productivity incentive bonus under RA #6971.
Secondly, Administrative Order No. 29 which is the basis for the grant of the productivity
incentive bonus/benefits for CY 1992 also expressly provides "prohibiting payments of similar
benefits in future years unless duly authorized by the President."

Thirdly, the disallowance of the Auditor, PTrA has already been resolved when this Commission
circularized thru COA Memorandum #92-758 dated April 3, 1992 the Supplemental to Rules
Implementing RA 6971 otherwise known as the "Productivity Incentives Act of 1990." . . .

The PTA was established by Presidential Decree No. 189, as amended by Presidential Decree
No. 564 ("PD 564").
Its general purposes 11 are:

Lastly, considering the title of RA #6971, i.e. "An Act to encourage productivity and maintain
industrial peace by providing incentives to both labor and capital", and its implementing rules
and regulations prepared by the Department of Labor and Employment and the Department of
Finance, this Office concludes that said law/regulation pertains to agencies in the private sector
whose employees are covered by the Labor Code."
With the denial of its appeal, petitioner found its way here via the petition in G.R. No. 119597, to
seek relief from the aforesaid decision of COA.
We will first resolve the issue on the applicability of RA 6971 to petitioner ADEPT in G.R. No.
119597 before passing upon the constitutionality or validity of Administrative Orders 29 and 268.

1.

To implement the policies and programs of the Department of Tourism ("Department");

2.

To develop tourist zones;

3.

To assist private enterprises in undertaking tourism projects;

4.

To operate and maintain tourist facilities;

5.

To assure land availability for private investors in hotels and other tourist facilities;

6.

To coordinate all tourism project plans and operations.

Section 3 of RA 6971, reads:

Its specific functions and powers 12 are:
"SEC. 3. Coverage. This Act shall apply to all business enterprises with or without existing
and duly recognized or certified labor organizations, including government-owned and controlled
corporations performing proprietary functions. It shall cover all employees and workers including
casual, regular, supervisory and managerial employees." (emphasis ours)
Pursuant to Section 10 8 of RA 6971, the Secretary of Labor and Secretary of Finance issued
Supplemental Rules to Implement the said law, as follows:
"Section 1.
Paragraph (a) Section 1, Rule II of the Rules Implementing RA 6971, shall
be amended to read as follows:
Coverage. These Rules shall apply to:

1.

Planning and development of tourism projects

a.
To assist the Department make a comprehensive survey of the physical and natural
tourism resources of the Philippines; to establish the order of priority for development of said
areas; to recommend to the President the proclamation of a tourist zone; and to define and fix
the boundaries of the zone;
b.

To formulate a development plan for each zone;

c.
To submit to the President through the National Economic and Development Authority
for review and approval all development plans before the same are enforced or implemented;

(a)
All business enterprises with or without existing duly certified labor organizations,
including government-owned and controlled corporations performing proprietary functions which
are established solely for business or profit or gain and accordingly excluding those created,
maintained or acquired in pursuance of a policy of the state, enunciated in the Constitution or by
law, and those whose officers and employees are covered by the Civil Service. (emphasis ours)

d.

xxx

f.
To gather, collate and analyze statistical data and other pertinent information for the
effective implementation of PD 564.

xxx

xxx"

Petitioner contends that the PTA is a government-owned and controlled corporation performing
proprietary function, and therefore the Secretary of Labor and Employment and Secretary of
Finance exceeded their authority in issuing the aforestated Supplemental Rules Implementing
RA 6971.
Government-owned and controlled corporations may perform governmental or proprietary
functions or both, depending on the purpose for which they have been created. If the purpose is
to obtain special corporate benefits or earn pecuniary profit, the function is proprietary. If it is in
the interest of health, safety and for the advancement of public good and welfare, affecting the
public in general, the function is governmental. 9 Powers classified as "proprietary" are those
intended for private advantage and benefit. 10

To submit to the President an Annual Progress Report;

e.
To assist the Department to determine the additional capacity requirements for various
tourist facilities and services; to prepare a ten-year Tourism Priorities Plan; to update annually
the ten year Tourism Priorities Plan.

2.

Acquisition and disposition of lands and other assets for tourist zone purposes

a.
To acquire possession and ownership of all lands transferred to it from other
government corporations and institutions and any land having tourism potential and earmarked
in the Tourism Priorities Plans for intensive development into a tourist zone or as a part thereof,
subject to the approval of the President.
b.
To acquire by purchase, by negotiation or by condemnation proceedings any private
land within and without the tourist zones for any of the following reasons: (a) consolidation of
lands for tourist zone development purposes, (b) prevention of land speculation in areas
declared as tourist zones, (c) acquisition of right of way to the zones, (d) protection of water

shed areas and natural assets with tourism value, and (e) for any other purpose expressly
authorized under PD 564.
c.
For the purpose of providing land acquisition assistance to registered tourism
enterprises, to sell, subdivide, resell, lease, sublease, rent out, or otherwise, to said registered
tourism enterprises under sufficiently soft terms for use specifically in the development of hotels,
recreational facilities, and other tourist services.
d.
To develop and/or subdivide any land in its name or undertake condominium projects
thereon, and sell subdivision lots or condominium units to private persons for investment
purposes.
e.
To take over or transfer to a registered tourism enterprise in accordance with law any
lease on foreshore areas within a tourist zone or adjacent thereto, in cases said areas are not
being utilized in accordance with the PTA's approved zone development plan and wherein the
lessee concerned does not agree to conform accordingly.
f.
To arrange for the reclamation of any land adjacent to or adjoining a tourist zone in
coordination with appropriate government agencies.
3.

a.
To identify, develop, invest in, own, manage and operate such projects as it may
deem to be vital for recreation and rest but not sufficiently attractive economically for private
investment.
b.
To construct hotel buildings and other tourist facilities within a tourist zone and in turn
lease such facilities to registered tourism enterprises for operation, management and
maintenance.
c.
To organize, finance, invest in, manage and operate wholly-owned subsidiary
corporations.
6.

Direct assistance to registered enterprises

a.

To administer the tax and other incentives granted to registered enterprises.

b.
To evaluate, approve and register or reject any and all tourism projects or enterprises
established within the tourist zones.
c.
To grant medium and long-term loans and/or re-lend any funds borrowed for the
purpose to duly qualified registered tourism enterprises.

Infrastructure development for tourist zone purposes

a.
To contract, supervise and pay for infrastructure works and civil works within a tourist
zone owned and operated by the PTA..
b.
To coordinate with appropriate government agencies the development of infrastructure
requirements supporting a tourist zone.
c.
To take water from any public stream, river, creek, lake, spring, or waterfall and to
alter, straighten, obstruct or increase the flow of water in streams.

d.

To guarantee local and foreign borrowings of registered enterprises.

e.

To provide equity investments in the form of cash and/or land.

f.

To extend technical, management and financial assistance to tourism projects.

g.
To identify, contact and assist in negotiations of suitable partners for both local and
foreign investors interested in investment or participation in the tourism industry.

4.

Zone administration and control

h.
To assist registered enterprises and prospective investors to have their papers
processed with dispatch by government offices.

a.

To formulate and implement zoning regulations.

7.

b.

To determine and regulate the enterprises to be established within a tourist zone.

a.
To engage or retain the services of financial, management, legal, technical, and/or
project consultants from the private or government sector.

c
To ensure, through the proper authorities concerned, the ecological preservation,
maintenance and/or rehabilitation of the common and the public areas within a tourist zone and
the environment thereof.
d.
To identify and recommend to the President the preservation and/or restoration of
national monuments or preserves; to arrange for the preservation and/or restoration of the same
with appropriate government agencies or with the private sector or with the owners themselves
of said tourist attractions; and to identify and recommend to the appropriate authorities
concerned the declaration of tourist areas and attractions as national monuments and preserves.
5.

Other powers and functions

b.

To have the power to succeed by its corporate name.

c.

To adopt, alter, and use a corporate seal.

d.

To sue and be sued under its corporate name.

e.

To enter into any contracts of any kind and description.

f.

To own or possess personal and/or real property.

Project and investment promotions

g.
To make, adopt and enforce rules and regulations to execute its powers, duties and
functions.
h.

To purchase, hold, and alienate shares of stock or bonds of any corporation.

i.

To collect fees or charges as may be imposed under PD 564.

j.

To contract indebtedness and issue bonds.

k.
To fix and collect rentals for the lease, use or occupancy of lands, buildings, or other
property owned or administered by PTA..
l.
To do any and all acts and things necessary to carry out the purposes for which the
PTA is created.
Categorized in light of the foregoing provisions of law in point, PTA's governmental functions
include the first, third, fourth, and sixth of the aforesaid general purposes. The second 13 and
fifth general purposes fall under its proprietary functions.
With respect to PTA's specific functions and powers, the first and fourth are governmental in
nature while the fifth specific functions and powers are proprietary in character. The second,
third, sixth, and seventh specific functions and powers can be considered partly-governmental
and partly-proprietary, considering that 2(a), 2(b), 2(c), 2(d), 2(e), 3(a), 6(c), 6(d), 6(e), 7(h), 7(j),
and 7(k) are proprietary functions while 2(f), 3(b), 3(c), 6(a), 6(b), 6(f), 6(g), 6(h), 7(a), 7(b), 7(c),
7(d), 7(f), 7(g), and 7(l) are governmental functions. The specific functions and powers treated in
7(e) and 7(i) may be classified either as proprietary or governmental, depending on the
circumstances under which they are exercised or performed.
The aforecited powers and functions of PTA are predominantly governmental, principally geared
towards the development and promotion in the scenic Philippine archipelago. But it is irrefutable
that PTA also performs proprietary functions, as envisaged by its charter.
Reliance on the above analysis of the functions and powers of PTA does not suffice for the
determination of whether or not it is within the coverage of RA 6971. For us to resolve the issues
raised here solely on the basis of the classification of PTA's powers and functions may lead to
the rendition of judgment repugnant to the legislative intent and to established doctrines, as well,
such as on the prohibition against government workers to strike. 14 Under RA 6971, the workers
have the right to strike.
To ascertain whether PTA is within the ambit of RA 6971, there is need to find out the legislative
intent, and to refer to other provisions of RA 6971 and other pertinent laws, that may aid the
Court in ruling on the right of officials and employees of PTA to receive bonuses under RA 6971.
Petitioner cites an entry in the journal of the House of Representatives to buttress its submission
that PTA is within the coverage of RA 6971, to wit:
"Chairman Veloso: The intent of including government-owned and controlled corporations within
the coverage of the Act is the recognition of the principle that when government goes into
business, it (divests) itself of its immunity from suit and goes down to the level of ordinary private
enterprises and subjects itself to the ordinary laws of the land just like ordinary private
enterprises. Now, when people work therefore in government-owned or controlled corporations,
it is as if they are also, just like in the private sector, entitled to all the benefits of all laws that
apply to workers in the private sector. In my view, even including the right to organize, bargain . .
." VELOSO (Bicameral Conference Committee on Labor and Employment, pp. 15-16)

After a careful study, the Court is of the view, and so holds, that contrary to petitioner's
interpretation, the government-owned and controlled corporations Mr. Chairman Veloso had in
mind were government-owned and controlled corporations incorporated under the general
corporation law. This is so because only workers in private corporations and government-owned
and controlled corporations, incorporated under the general corporation law, have the right to
bargain (collectively). Those in government corporations with special charter, which are subject
to Civil Service Laws, have no right to bargain (collectively), except where the terms and
conditions of employment are not fixed by law 15 . Their rights and duties are not comparable
with those in the private sector.
"Since the terms and conditions of government employment are fixed by law, government
workers cannot use the same weapons employed by workers in the private sector to secure
concessions from their employers. The principle behind labor unionism in private industry is that
industrial peace cannot be secured through compulsion by law. Relations between private
employers and their employees rest on an essentially voluntary basis. Subject to the minimum
requirements of wage laws and other labor and welfare legislation, the terms and conditions of
employment in the unionized private sector are settled through the process of collective
bargaining. In government employment, however, it is the legislature and, where properly given
delegated power, the administrative heads of government which fix the terms and conditions of
employment. And this is effected through statutes or administrative circulars, rules, and
regulations, not through collective bargaining agreements." (Alliance of Government Workers v.
Minister of Labor and Employment, 124 SCRA 1) (emphasis ours)
Government corporations may be created by special charters or by incorporation under the
general corporation law. Those created by special charters are governed by the Civil Service
Law while those incorporated under the general corporation law are governed by the Labor
Code. 16
The legislative intent to place only government-owned and controlled corporations performing
proprietary functions under the coverage of RA 6971 is gleanable from the other provisions of
the law. For instance, section 2 17 of said law envisions "industrial peace and harmony" and "to
provide corresponding incentives to both labor and capital;" section 4 18 refers to
"representatives of labor and management;" section 5 19 mentions of "collective bargaining
agent(s) of the bargaining unit(s);" section 6 20 relates to "existing collective bargaining
agreements," and "labor and management;" section 7 21 speaks of "strike or lockout;" and
section 9 22 purports to "seek the assistance of the National Conciliation and Mediation Board of
the Department of Labor and Employment" and "include the name(s) of the voluntary arbitrators
or panel of voluntary arbitrator." All the aforecited provisions of law apply only to private
corporations and government-owned and controlled corporations organized under the general
corporation law. Only they have collective bargaining agents, collective bargaining units,
collective bargaining agreements, and the right to strike or lockout.
To repeat, employees of government corporations created by special charters have neither the
right to strike nor the right to bargain collectively, as defined in the Labor Code. The case of
Social Security System Employees Association indicates the following remedy of government
workers not allowed to strike or bargain collectively, to wit:
"Government employees may, therefore, through their unions or associations, either petition the
Congress for the betterment of the terms and conditions of employment which are within the
ambit of legislation or negotiate with the appropriate government agencies for the improvement
of those which are not fixed by law. If there be any unresolved grievances, the dispute may be

referred to the Public Sector Labor-Management Council for appropriate action. But employees
in the civil service may not resort to strikes, walkouts and other temporary work stoppages, like
workers in the private sector, to pressure the Government to accede to their demands." (supra,
footnote 14, p. 698; emphasis ours)

IV.
ASSUMING, FOR THE SAKE OF ARGUMENT ONLY, THAT THE GRANT OF
PRODUCTIVITY INCENTIVE BENEFITS WAS INVALID, THE SAME SHOULD BE THE
PERSONAL LIABILITY OF OFFICIALS DIRECTLY RESPONSIBLE THEREFOR IN
ACCORDANCE WITH SECTION 9 OF AO 268.

It is a rule in statutory construction that every part of the statute must be interpreted with
reference to the context, i.e., that every part of the statute must be considered together with the
other parts, and kept subservient to the general intent of the whole enactment. 23 The provisions
of RA 6971, taken together, reveal the legislative intent to include only government-owned and
controlled corporations performing proprietary functions within its coverage.

Issued by the then President Corazon Aquino ("President Aquino") on July 25, 1987 in the
exercise of her legislative powers under the 1987 Constitution, 27 EO 292, or the Administrative
Code of 1987, provided for the following incentive award system:

Every statute must be construed and harmonized with other statutes as to form a uniform
system of jurisprudence. 24 We note Section 1, Rule X of the Omnibus Rules Implementing
Book V of EO 292, which reads:
"SEC. 1. Each department or agency of government, whether national or local, including
bureaus and agencies, state colleges and universities, and government owned and controlled
corporations with original charters, shall establish its own Department or Agency Employee
Suggestions and Incentives Award System in accordance with these Rules and shall submit the
same to the Commission for approval. (emphasis ours)
It is thus evident that PTA, being a government-owned and controlled corporation with original
charter subject to Civil Service Law, Rules and Regulations, 25 is already within the scope of an
incentives award system under Section 1, Rule X of the Omnibus Rules Implementing EO 292
issued by the Civil Service Commission ("Commission"). Since government-owned and
controlled corporations with original charters do have an incentive award system, Congress
enacted a law that would address the same concern of officials and employees of governmentowned and controlled corporations incorporated under the general corporation law.
All things studiedly considered in proper perspective, the Court finds no reversible error in the
finding by respondent Commission that PTA is not within the purview of RA 6971. As regards the
promulgation of implementing rules and regulations, it bears stressing that the "power of
administrative officials to promulgate rules in the implementation of the statute is necessarily
limited to what is provided for in the legislative enactment." 26 In the case under scrutiny, the
Supplementary Rules Implementing RA 6971 issued by the Secretary of Labor and Employment
and the Secretary of Finance accord with the intendment and provisions of RA 6971.
Consequently, not being covered by RA 6971, AO 29 applies to the petitioner.
We now tackle the common issue posited by the consolidated petitions on the constitutionality of
AO 29 and AO 268.

"Sec. 31. Career and Personnel Development Plans. Each department or agency shall
prepare a career and personnel development plan which shall be integrated into a national plan
by the Commission. Such career and personnel development plans which shall include
provisions on merit promotions, performance evaluation, in-service training, including overseas
and local scholarships and training grants, job rotation, suggestions and incentive award
systems, and such other provisions for employees' health, welfare, counseling, recreation and
similar services.
Sec. 35. Employee Suggestions and Incentive Award System. There shall be established a
government-wide employee suggestions and incentive awards system which shall be
administered under such rules, regulations, and standards as may be promulgated by the
Commission.
In accordance with rules, regulations, and standards promulgated by the Commission, the
President or the head of each department or agency is authorized to incur whatever necessary
expenses involved in the honorary recognition of subordinate officers and employees of the
government who by their suggestions, inventions, superior accomplishment, and other personal
efforts contribute to the efficiency, economy, or other improvement of government operations, or
who perform such other extraordinary acts or services in the public interest in connection with, or
in relation to, their official employment."
Sec. 36. Personnel Relations. (1) It shall be the concern of the Commission to provide
leadership and assistance in developing employee relations programs in the department or
agencies.
(2)
Every Secretary or head of agency shall take all proper steps toward the creation of
an atmosphere conducive to good supervisor-employee relations and the improvement of
employee morale."
Pursuant to the provision of Section 12(2), 28 Chapter 3, Book V of EO 292, the Commission
adopted and prescribed the Omnibus Rules Implementing Book V of EO 292 which, among
others, provide:

Petitioners contend and argue, that:

I.
AO 29 AND AO 268 ARE VIOLATIVE OF THE PROVISIONS OF EO 292 AND,
HENCE, NULL AND VOID.
II.
AO 29 AND AO 268 UNLAWFULLY USURP THE CONSTITUTIONAL AUTHORITY
GRANTED SOLELY TO THE CIVIL SERVICE COMMISSION.
III.
THE FORCED REFUND OF INCENTIVE PAY IS AN UNCONSTITUTIONAL
IMPAIRMENT OF A CONTRACTUAL OBLIGATION.

"Sec. 1. Each department or agency of government, whether national or local, including

bureaus and agencies, state colleges and universities, and government owned and controlled
corporations with original charters, shall establish its own Department or Agency Employee
Suggestions and Incentives Award System in accordance with these Rules and shall submit the
same to the Commission for approval."
"Sec. 2. The System is designed to encourage creativity, innovativeness, efficiency, integrity
and productivity in the public service by recognizing and rewarding officials and employees,
individually or in groups, for their suggestions, inventions, superior accomplishments, and other

personal efforts which contribute to the efficiency, economy, or other improvement in

government operations, or for other extraordinary acts of services in the public interest.
xxx
"Sec. 7.
xxx

xxx

xxx"

The incentive awards shall consist of, though not limited to, the following:
xxx

xxx

(c)
Productivity Incentive which shall be given to an employee or group of employees who
has exceeded their targets or has incurred incremental improvement over existing targets.
On February 21, 1992, President Aquino issued AO 268 which granted "each official and
employee of the government the productivity incentive benefits in a maximum amount equivalent
to thirty percent (30%) of his one (1) month basic salary but in no case shall such amount be
less than two thousand pesos (P2,000.00)," 29 for those who have rendered at least one year of
service as of December 31, 1991. 30 Said AO carried the prohibition, provided in Section 7
thereof, which reads:
"SEC. 7. The productivity incentive benefits herein authorized shall be granted only for
Calendar Year 1991. Accordingly, all heads of agencies, including the governing boards of
government-owned or -controlled corporations and financial institutions, are hereby strictly
prohibited from authorizing/granting productivity incentive benefits or other allowances of similar
nature for Calendar Year 1992 and future years pending the result of a comprehensive study
being undertaken by the Office of the President in coordination with the Civil Service
Commission and the Department of Budget and Management on the matter.
The formulation of the necessary implementing guidelines for Executive Order No. 486 dated 8
November 1991 establishing a performance-based incentive system for government-owned or controlled corporations shall likewise be included in the comprehensive study referred to in the
preceding paragraph."
On January 19, 1993, President Ramos issued AO 29 which granted productivity incentive
benefits to government employees in the maximum amount of P1,000.00 31 for the calendar
year 1992 but reiterated the proscription under Section 7 of AO 268, thus:
"SEC. 2. The prohibition prescribed under Section 7 of Administrative Order No. 268 is hereby
reiterated. Accordingly, all heads of government offices/agencies, including government-owned
and/or controlled corporations, as well as their respective governing boards are hereby enjoined
and prohibited from authorizing/granting Productivity Incentive Benefits or any and all similar
forms of allowances/benefits without prior approval and authorization via Administrative Order by
the Office of the President. Henceforth, anyone found violating any of the mandates in this
Order, including all officials/employees and the COA Auditor-in-Charge of such government
office/agency found to have taken part thereof, shall be accordingly and severely dealt with in
accordance with the applicable provisions of existing penal laws.
Consequently, all administrative authorizations to grant any form of allowances/benefits and all
forms of additional compensation usually paid outside of the prescribed basic salary under R.A.
No. 6758, the Salary Standardization Law, that are inconsistent with the legislated policy on the
matter or are not covered by any legislative action are hereby revoked.

The implementation of Executive Order No. 486 dated November 8, 1991, as amended by
Executive Order No. 518 dated May 29, 1992, is hereby deferred until a more comprehensive
and equitable scheme for the grant of the benefits that can be applied government-wide is
formulated by the Department of Budget and Management."
Petitioners theorize that AO 29 and AO 268 violate EO 292 and since the latter is a law, it
prevails over executive issuances. Petitioners likewise assert that AO 29 and AO 268 encroach
upon the constitutional authority of the Civil Service Commission to adopt measures to
strengthen the merit and rewards system and to promulgate rules, regulations and standards
governing the incentive awards system of the civil service.
The Court is not impressed with petitioners' submission. AO 29 and AO 268 were issued in the
valid exercise of presidential control over the executive departments.
In establishing a Civil Service Commission, the 1987 Constitution delineated its function, as
follows: cdphil
"The Civil Service Commission, as the central personnel agency of the Government, shall
establish a career service and adopt measures to promote morale, efficiency, integrity,
responsiveness, progressiveness, and courtesy in the civil service. It shall strengthen the merit
and rewards system, integrate all human resources development programs for all levels and
ranks, and institutionalize a management climate conducive to public accountability. It shall
submit to the President and the Congress an annual report on its personnel programs." (Section
3, Article IX, B, 1987 Constitution)
The Commission handles personnel matters of the government. As the central personnel agency
of the Government, it is tasked to formulate and establish a system of incentives and rewards for
officials and employees in the public sector, alike.
The functions of the Commission have been decentralized to the different departments, offices,
and agencies of the government
"SEC. 1. Declaration of Policy. The State shall insure and promote the Constitutional
mandate that appointments in the Civil Service shall be made only according to merit and
fitness, that the Civil Service Commission, as the central personnel agency of the Government
shall establish a career service, adopt measures to promote morale, efficiency, integrity,
responsiveness, and courtesy in the civil service, strengthen the merit and rewards system,
integrate all human resources development programs for all levels and ranks, and institutionalize
a management climate conducive to public accountability; that public office is a public trust and
public officers and employees must at all times be accountable to the people; and that personnel
functions shall be decentralized, delegating the corresponding authority to the departments,
offices and agencies where such functions can be effectively performed." (Section 1, Chapter I,
Subtitle A, Title I, EO 292) (emphasis ours)
Specifically, implementation of the Employee Suggestions and Incentive Award System has
been decentralized to the President or to the head of each department or agency
"Sec. 35. Employee Suggestions and Incentive Award System. There shall be established a
government-wide employee suggestions and incentive awards system which shall be
administered under such rules, and regulations, and standards as may be promulgated by the
Commission.

In accordance with rules, regulations, and standards promulgated by the Commission, the
President or the head of each department or agencies authorized to incur whatever necessary
expenses involved in the honorary recognition of subordinate officers and employees of the
government who by their suggestions, inventions, superior accomplishment, and other personal
efforts contribute to the efficiency, economy, or other improvement of government operations, or
who perform such other extraordinary acts or services in the public interest in connection with, or
in relation to, their official employment." (EO 292) (emphasis ours)

WHEREAS, the Constitutional prerogative includes the determination of the rates, the timing and
schedule of payment, and final authority to commit limited resources of government for the
payment of personnel incentives, cash awards, productivity bonus, and other forms of additional
compensation and fringe benefits;

The President is the head of the government. Governmental power and authority are exercised
and implemented through him. His power includes the control over executive departments

WHEREAS, the Office of the President issued Administrative Order No. 268, dated February 21,
1992, strictly prohibiting the grant of Productivity Incentive Bonus or other allowances of similar
nature for Calendar Year 1992 and future years pending the issuance of the requisite
authorization by the President;

"The president shall have control of all the executive departments, bureaus, and offices. He shall
ensure that the laws be faithfully executed." (Section 17, Article VII, 1987 Constitution)
Control means "the power of an officer to alter or modify or set aside what a subordinate officer
had done in the performance of his duties and to substitute the judgment of the former for that of
the latter." 32 It has been held that "[t]he President can, by virtue of his power of control, review,
modify, alter or nullify any action, or decision, of his subordinate in the executive departments,
bureaus, or offices under him. He can exercise this power motu proprio without need of any
appeal from any party." 33
When the President issued AO 29 limiting the amount of incentive benefits, enjoining heads of
government agencies from granting incentive benefits without prior approval from him, and
directing the refund of the excess over the prescribed amount, the President was just exercising
his power of control over executive departments. This is decisively clear from the WHEREAS
CLAUSES of AO 268 and AO 29, to wit:
ADMINISTRATIVE ORDER NO. 268
"xxx

xxx

xxx

WHEREAS, the productivity incentive benefits granted by the different agencies are of varying
amounts, causing dissension/demoralization on the part of those who had received less and
those who have not yet received any such benefit, thereby defeating the purpose for which the
same should be granted; and
WHEREAS, there exists the need to regulate the grant of the productivity incentive benefits or
other similar allowances in conformity with the policy on standardization of compensation
pursuant to Republic Act No. 6758;
xxx

xxx

xxx

WHEREAS, notwithstanding said prohibition some government offices/agencies and

government-owned and/or controlled corporations and financial institutions have granted
productivity incentive benefits in varying nomenclature and amounts without the proper
authorization/coordination with the Office of the President;
WHEREAS, the unilateral and uncoordinated grant of productivity incentive benefits gave rise to
discontentment, dissatisfaction and demoralization among government personnel who have
received less or have not received at all such benefits;
xxx

xxx

xxx"

The President issued subject Administrative Orders to regulate the grant of productivity incentive
benefits and to prevent discontentment, dissatisfaction and demoralization among government
personnel by committing limited resources of government for the equal payment of incentives
and awards. The President was only exercising his power of control by modifying the acts of the
respondents who granted incentive benefits to their employees without appropriate clearance
from the Office of the President, thereby resulting in the uneven distribution of government
resources. In the view of the President, respondents did a mistake which had to be corrected. In
so acting, the President exercised a constitutionally-protected prerogative
"The President's duty to execute the law is of constitutional origin. So, too, is his control of all
executive departments. Thus it is, that department heads are men of his confidence. His is the
power to appoint them; his, too, is the privilege to dismiss them at pleasure. Naturally, he
controls and directs their acts. Implicit then is his authority to go over, confirm, modify or reverse
the action taken by his department secretaries. In this context, it may not be said that the
President cannot rule on the correctness of a decision of a department secretary. (LacsonMagallanes Co., Inc. v. Pao, 21 SCRA 898)

xxx"

ADMINISTRATIVE ORDER NO. 29

"xxx

WHEREAS, some government agencies have overlooked said Constitutional prerogative and
have unilaterally granted to their respective officials and employees incentive awards;

xxx

WHEREAS, the faithful implementation of statutes, including the Administrative Code of 1987
and all laws governing all forms of additional compensation and personnel benefits is a
Constitutional prerogative vested in the President of the Philippines under Section 17, Article VII
of the 1987 Constitution;

Neither can it be said that the President encroached upon the authority of the Commission on
Civil Service to grant benefits to government personnel. AO 29 and AO 268 did not revoke the
privilege of employees to receive incentive benefits. The same merely regulated the grant and
amount thereof.
Sound management and effective utilization of financial resources of government are basically
executive functions, 34 not the Commission's. Implicit is this recognition in EO 292, which states:
"Sec. 35. Employee Suggestions and Incentive Award System. There shall be established a
government-wide employee suggestions and incentive awards system which shall be

administered under such rules, regulations, and standards as may be promulgated by the
Commission.

constant reminders. We now agree with the petitioners that this grant of autonomy should cease
to be a meaningless provision."

In accordance with rules, regulations, and standards promulgated by the Commission, the
President or the head of each department or agency is authorized to incur whatever necessary
expenses involved in the honorary recognition of subordinate officers and employees of the
government who by their suggestions, inventions, superior accomplishment, and other personal
efforts contribute to the efficiency, economy, or other improvement of government operations, or
who perform such other extraordinary acts or services in the public interest in connection with, or
in relation to, their official employment." (Chapter 5, Subtitle A, Book V) (emphasis ours)

Untenable is petitioners' contention that the herein respondents be held personally liable for the
refund in question. Absent a showing of bad faith or malice, public officers are not personally
liable for damages resulting from the performance of official duties. 36

Conformably, it is "the President or the head of each department or agency who is authorized to
incur the necessary expenses involved in the honorary recognition of subordinate officers and
employees of the government." It is not the duty of the Commission to fix the amount of the
incentives. Such function belongs to the President or his duly empowered alter ego.

In upholding the constitutionality of AO 268 and AO 29, the Court reiterates the well-entrenched
doctrine that "in interpreting statutes, that which will avoid a finding of unconstitutionality is to be
preferred." 39

Anent petitioners' contention that the forcible refund of incentive benefits is an unconstitutional
impairment of a contractual obligation, suffice it to state that "[n]ot all contracts entered into by
the government will operate as a waiver of its non-suability; distinction must be made between
its sovereign and proprietary acts (United States of America v. Ruiz, 136 SCRA 487)" 35 The
acts involved in this case are governmental. Besides, the Court is in agreement with the Solicitor
General that the incentive pay or benefit is in the nature of a bonus which is not a demandable
or enforceable obligation.
It is understood that the Judiciary, Civil Service Commission, Commission on Audit, Commission
on Elections, and Office of the Ombudsman, which enjoy fiscal autonomy, are not covered by
the amount fixed by the President. As explained in Bengzon vs. Drilon (208 SCRA 133):
"As envisioned in the Constitution, the fiscal autonomy enjoyed by the Judiciary, the Civil
Service Commission, the Commission on Audit, the Commission on Elections, and the Office of
the Ombudsman contemplates a guarantee of full flexibility to allocate and utilize their resources
with the wisdom and dispatch that their needs require. It recognizes the power and authority to
levy, assess and collect fees, fix rates of compensation not exceeding the highest rates
authorized by law for compensation and pay plans of the government and allocate and disburse
such sums as may be provided by law or prescribed by them in the course of the discharge of
their functions.
"Fiscal autonomy means freedom from outside control. If the Supreme Court says it needs 100
typewriters but DBM rules we need only 10 typewriters and sends its recommendations to
Congress without even informing us, the autonomy given by the Constitution becomes an empty
and illusory platitude.
"The Judiciary, the Constitutional Commissions, and the Ombudsman must have the
independence and flexibility needed in the discharge of their constitutional duties. The imposition
of restrictions and constraints on the manner the independent constitutional offices allocate and
utilize the funds appropriated for their operations is anathema to fiscal autonomy and violative
not only of the express mandate of the Constitution but especially as regards the Supreme
Court, of the independence and separation of powers upon which the entire fabric of our
constitutional system is based. In the interest of comity and cooperation, the Supreme Court,
Constitutional Commissions, and the Ombudsman have so far limited their objections to

Every public official is entitled to the presumption of good faith in the discharge of official duties.
37 Absent any showing of bad faith or malice, there is likewise a presumption of regularity in the
performance of official duties. 38

Considering, however, that all the parties here acted in good faith, we cannot countenance the
refund of subject incentive benefits for the year 1992, which amounts the petitioners have
already received. Indeed, no indicia of bad faith can be detected under the attendant facts and
circumstances. The officials and chiefs of offices concerned disbursed such incentive benefits in
the honest belief that the amounts given were due to the recipients and the latter accepted the
same with gratitude, confident that they richly deserve such benefits.
WHEREFORE, the Petitions in G.R. Nos. 109406, 110642, 111494, and 112056 are hereby
DISMISSED, and as above ratiocinated, further deductions from the salaries and allowances of
petitioners are hereby ENJOINED.
In G.R. No. 119597, the assailed Decision of respondent Commission on Audit is AFFIRMED.
No pronouncement as to costs.
SO ORDERED.

[G.R. No. 117565. November 18, 1997.]

ARSENIO P. LUMIQUED (deceased), Regional Director, DAR-CAR, Represented by his Heirs,
Francisca A. Lumiqued, May A. Lumiqued, Arlene A. Lumiqued and Richard A. Lumiqued,
petitioners, vs. Honorable APOLONIO G. EXEVEA, ERDOLFO V. BALAJADIA and FELIX T.
CABADING, All Members of Investigating Committee, created by DOJ Order No. 145 on May
30, 1992; HON. FRANKLIN M. DRILON, SECRETARY OF JUSTICE, HON. ANTONIO T.
CARPIO, Chief Presidential Legal Adviser/Counsel; and HON. LEONARDO A. QUISUMBING,
Senior Deputy Executive Secretary of the Office of the President, and JEANNETTE OBARZAMUDIO, Private Respondent, respondents.
Aquino, Galang, Lucas & Associates for petitioners.
Solicitor General for public respondents.
SYNOPSIS

This is a petition for certiorari and mandamus filed by herein petitioners praying for the reversal
of the Investigating Committee's report recommending the dismissal or removal from office of
Former Regional Director, DAR-CAR Arsenio Lumiqued (deceased), without prejudice to the
filing of appropriate criminal charges against him. Records reveal that three complaints were
filed against Arsenio Lumiqued charging him of malversation through falsification of official
documents, violation of Commission on Audit rules and regulations, and for oppression and
harassment. After the investigation, the Committee rendered a report finding him liable for all the
charges. Thereafter, acting on the report and recommendation, President Fidel Ramos issued
Administrative Order No. 52 finding Lumiqued administratively liable for dishonesty and
dismissing him from the service with forfeiture of his retirement and other benefits. Lumiqued
filed a petition for appeal in the Office of the President, but said appeal was subsequently
denied. A second motion for reconsideration was filed, but the same was likewise denied. It was
during the pendency of this motion that Arsenio Lumiqued died. On appeal before the Court,
petitioners, as heirs of the late Arsenio Lumiqued, fault the investigating committee for its failure
to inform Lumiqued of his right to counsel during the hearing. They maintained that his right to
counsel could not be waived unless the waiver was in writing and in the presence of counsel.
The Supreme Court ruled that petitioners' arguments are untenable and misplaced. The right to
counsel is a right afforded to a suspect or accused during custodial investigation. In the case at
bar, Lumiqued was not accused of any crime in the proceedings below. The investigation was
conducted for the purpose of determining if he could be held administratively liable for the
complaints filed against him. Also, such right is not absolute and may, thus, be invoked or
rejected in a criminal proceeding and, with more reason, in an administrative inquiry. Moreover,
Section 32, Article VII of Republic Act No. 2260 (Civil Service Act) and Section 39, paragraph 2,
Rule XIV of the Omnibus Rules Implementing Book V of Executive Order No. 292 explicitly
provide that in an administrative proceeding such as the one in case at bar, a respondent has
the option of engaging the services of counsel or not. Accordingly, the instant petition for
certiorari and mandamus is dismissed and the challenged administrative order is affirmed.
cHDAIS
SYLLABUS
1.
CONSTITUTIONAL LAW; RIGHTS OF THE ACCUSED; THE RIGHT TO COUNSEL
IS A RIGHT AFFORDED TO AN ACCUSED DURING CUSTODIAL INVESTIGATION, BUT NOT
IN AN ADMINISTRATIVE INQUIRY; CASE AT BAR. The right to counsel, which cannot be
waived unless the waiver is in writing and in the presence of counsel, is a right afforded a
suspect or an accused during custodial investigation. It is not an absolute right and may, thus,
be invoked or rejected in a criminal proceeding and, with more reason, in an administrative
inquiry. In the case at bar, petitioners invoke the right of an accused in criminal proceedings to
have competent and independent counsel of his own choice. Lumiqued, however, was not
accused of any crime in the proceedings below. The investigation conducted by the committee
created by Department Order No. 145 was for the purpose of determining if he could be held
administratively liable under the law for the complaints filed against him. aSTECI
2.
ID.; ID.; 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. 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 a body to furnish the
person being investigated with counsel. In an administrative proceeding such as the one that
transpired below, a respondent (such as Lumiqued) 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).
3.
ID.; ID.; THE RIGHT TO COUNSEL IS NOT INDISPENSABLE TO DUE PROCESS
UNLESS REQUIRED BY THE CONSTITUTION OR THE LAW. The right to counsel is not
indispensable to due process unless required by the Constitution or the law. In Nera v. Auditor
General, the Court said: ". . . There is nothing in the Constitution that says that a party in a noncriminal proceeding is entitled to be represented by counsel and that, without such
representation, he shall not be bound by such proceedings. The assistance of lawyers, while
desirable, is not indispensable. The legal profession was not engrafted in the due process
clause such that without the participation of its members, the safeguard is deemed ignored or
violated. The ordinary citizen is not that helpless that he cannot validly act at all except only with
a lawyer at his side."
4.
ADMINISTRATIVE LAW; RESOLUTION No. 94-0521 OF THE CIVIL SERVICE
COMMISSION ON RESPONDENT'S RIGHT TO COUNSEL, APPLICABLE ONLY TO CASES
BROUGHT BEFORE THE CIVIL SERVICE COMMISSION. Petitioners' reliance on
Resolution No. 94-0521 of the Civil Service Commission on the Uniform Procedure in the
Conduct of Administrative Investigation stating that a respondent in an administrative complaint
must be "informed of his right to the assistance of a counsel of his choice," is inappropriate. In
the first place, this resolution is applicable only to cases brought before the Civil Service
Commission. Secondly, said resolution, which is dated January 25, 1994, took effect fifteen days
following its publication in a newspaper of general circulation, much later than the July 1992
hearings of the investigating committee created by Department Order No. 145.
5.
ID.; ADMINISTRATIVE DUE PROCESS, AS LONG AS A PARTY WAS GIVEN THE
OPPORTUNITY TO DEFEND HIS INTERESTS IN DUE COURSE, HE CANNOT BE SAID TO
HAVE BEEN DENIED DUE PROCESS OF LAW. The essence of due process is simply the
opportunity to explain one's side. One may be heard, not solely by verbal presentation but also,
and perhaps even much more creditably as it is more practicable than oral arguments, through
pleadings. An actual hearing is not always an indispensable aspect of due process. As long as a
party was given the opportunity to defend his interests in due course, he cannot be said to have
been denied due process of law, for this opportunity to be heard is the very essence of due
process. Moreover, this constitutional mandate is deemed satisfied if a person is granted an
opportunity to seek reconsideration of the action or ruling complained of. Lumiqued's appeal and
his subsequent filing of motions for reconsideration cured whatever irregularity attended the
proceedings conducted by the committee.
6.
ID.; SECTION 23 OF RULE XIV OF THE OMNIBUS RULES IMPLEMENTING BOOK
V OF THE ADMINISTRATIVE CODE OF 1987; DISHONESTY; PENALTY OF DISMISSAL
CARRIES WITH IT CANCELLATION OF ELIGIBILITY, FORFEITURE OF LEAVE CREDITS
AND RETIREMENT BENEFITS, AND THE DISQUALIFICATION FOR REEMPLOYMENT IN
GOVERNMENT SERVICE. Dishonesty is a grave offense penalized by dismissal under
Section 23 of Rule XIV of the Omnibus Rules Implementing Book of the Administrative Code of
1987. Under Section 9 of the same Rule, the penalty of dismissal carries with it "cancellation of
eligibility, forfeiture of leave credits and retirement benefits and the disqualification for

reemployment in the government service." The instant petition, which is aimed primarily at the
"payment of retirement benefits and other benefits," plus back wages from the time of
Lumiqued's dismissal until his demise, must therefore, fail.

The third affidavit-complaint dated December 15, 1989, 3 charged Lumiqued with oppression
and harassment. According to private respondent, her two previous complaints prompted
Lumiqued to retaliate by relieving her from her post as Regional Cashier without just cause.

7.
REMEDIAL LAW; APPEAL FROM ADMINISTRATIVE AGENCIES; FINDINGS OF
FACT OF ADMINISTRATIVE AGENCIES MUST BE RESPECTED AS LONG AS THEY ARE
SUPPORTED BY SUBSTANTIAL EVIDENCE, EVEN IF SUCH EVIDENCE IS NOT
OVERWHELMING OR PREPONDERANT. The committee's findings pinning culpability for
the charges of dishonesty and grave misconduct upon Lumiqued were not, as shown above,
fraught with procedural mischief. Its conclusions were founded on the evidence presented and
evaluated as facts. Well-settled in our jurisdiction is the doctrine that findings of fact of
administrative agencies must be respected as long as they are supported by substantial
evidence even if such evidence is not overwhelming or preponderant. The quantum of proof
necessary for a finding of guilt in administrative cases is only substantial evidence or such
relevant evidence as a reasonable mind might accept as adequate to support a conclusion.
ESITcH

The three affidavit-complaints were referred in due course to the Department of Justice (DOJ)
for appropriate action. On May 20, 1992, Acting Justice Secretary Eduardo G. Montenegro
issued Department Order No. 145 creating a committee to investigate the complaints against
Lumiqued. The order appointed Regional State Prosecutor Apolinario Exevea as committee
chairman with City Prosecutor Erdolfo Balajadia and Provincial Prosecutor Felix Cabading as
members. They were mandated to conduct an investigation within thirty days from receipt of the
order, and to submit their report and recommendation within fifteen days from its conclusion.

DECISION

In his counter-affidavit dated June 23, 1992, 4 Lumiqued alleged, inter alia, that the cases were
filed against him to extort money from innocent public servants like him, and were initiated by
private respondent in connivance with a certain Benedict Ballug of Tarlac and a certain Benigno
Aquino III. He claimed that the apparent weakness of the charge was bolstered by private
respondent's execution of an affidavit of desistance. 5

ROMERO, J p:
Does the due process clause encompass the right to be assisted by counsel during an
administrative inquiry? cdta
Arsenio P. Lumiqued was the Regional Director of the Department of Agrarian Reform
Cordillera Autonomous Region (DAR-CAR) until President Fidel V. Ramos dismissed him from
that position pursuant to Administrative Order No. 52 dated May 12, 1993. In view of Lumiqued's
death on May 19, 1994, his heirs instituted this petition for certiorari and mandamus, questioning
such order.
The dismissal was the aftermath of three complaints filed by DAR-CAR Regional Cashier and
private respondent Jeannette Obar-Zamudio with the Board of Discipline of the DAR. The first
affidavit-complaint dated November 16, 1989, 1 charged Lumiqued with malversation through
falsification of official documents. From May to September 1989, Lumiqued allegedly committed
at least 93 counts of falsification by padding gasoline receipts. He even submitted a vulcanizing
shop receipt worth P550.00 for gasoline bought from the shop, and another receipt for P660.00
for a single vulcanizing job. With the use of falsified receipts, Lumiqued claimed and was
reimbursed the sum of P44,172.46. Private respondent added that Lumiqued seldom made field
trips and preferred to stay in the office, making it impossible for him to consume the nearly 120
liters of gasoline he claimed everyday.
In her second affidavit-complaint dated November 22, 1989, 2 private respondent accused
Lumiqued with violation of Commission on Audit (COA) rules and regulations, alleging that
during the months of April, May, July, August, September and October 1989, he made
unliquidated cash advances in the total amount of P116,000.00. Lumiqued purportedly
defrauded the government "by deliberately concealing his unliquidated cash advances through
the falsification of accounting entries in order not to reflect on 'Cash advances of other officials'
under code 8-70-600 of accounting rules."

The investigating committee accordingly issued a subpoena directing Lumiqued to submit his
counter-affidavit on or before June 17, 1992. Lumiqued, however, filed instead an urgent motion
to defer submission of his counter-affidavit pending actual receipt of two of private respondent's
complaints. The committee granted the motion and gave him a five-day extension.

Lumiqued admitted that his average daily gasoline consumption was 108.45 liters. He submitted,
however, that such consumption was warranted as it was the aggregate consumption of the five
service vehicles issued under his name and intended for the use of the Office of the Regional
Director of the DAR. He added that the receipts which were issued beyond his region were
made in the course of his travels to Ifugao Province, the DAR Central Office in Diliman, Quezon
City, and Laguna, where he attended a seminar. Because these receipts were merely turned
over to him by drivers for reimbursement, it was not his obligation but that of auditors and
accountants to determine whether they were falsified. He affixed his signature on the receipts
only to signify that the same were validly issued by the establishments concerned in order that
official transactions of the DAR-CAR could be carried out.
Explaining why a vulcanizing shop issued a gasoline receipt, Lumiqued said that he and his
companions were cruising along Santa Fe, Nueva Vizcaya on their way to Ifugao when their
service vehicle ran out of gas. Since it was almost midnight, they sought the help of the owner of
a vulcanizing shop who readily furnished them with the gasoline they needed. The vulcanizing
shop issued its own receipt so that they could reimburse the cost of the gasoline. Domingo
Lucero, the owner of said vulcanizing shop, corroborated this explanation in an affidavit dated
June 25, 1990. 6 With respect to the accusation that he sought reimbursement in the amount of
P660.00 for one vulcanizing job, Lumiqued submitted that the amount was actually only P6.60.
Any error committed in posting the amount in the books of the Regional Office was not his
personal error or accountability.
To refute private respondent's allegation that he violated COA rules and regulations in incurring
unliquidated cash advances in the amount of P116,000.00, Lumiqued presented a certification 7
of DAR-CAR Administrative Officer Deogracias F. Almora that he had no outstanding cash
advances on record as of December 31, 1989.

In disputing the charges of oppression and harassment against him, Lumiqued contended that
private respondent was not terminated from the service but was merely relieved of her duties
due to her prolonged absences. While admitting that private respondent filed the required
applications for leave of absence, Lumiqued claimed that the exigency of the service
necessitated disapproval of her application for leave of absence. He allegedly rejected her
second application for leave of absence in view of her failure to file the same immediately with
the head office or upon her return to work. He also asserted that no medical certificate supported
her application for leave of absence.
In the same counter-affidavit, Lumiqued also claimed that private respondent was corrupt and
dishonest because a COA examination revealed that her cash accountabilities from June 22 to
November 23, 1989, were short by P30,406.87. Although private respondent immediately
returned the amount on January 18, 1990, the day following the completion of the cash
examination, Lumiqued asserted that she should be relieved from her duties and assigned to
jobs that would not require handling of cash and money matters.

That most of the gasoline receipts used by the respondent in claiming for the reimbursement of
his gasoline expenses were falsified is clearly established by the 15 Certified Xerox Copies of
the duplicate receipts (Annexes G-1 to G-15) and the certifications issued by the different
gasoline stations where the respondent purchased gasoline. Annexes 'G-1' to 'G-15' show that
the actual average purchase made by the respondent is about 8.46 liters only at a purchase
price of P50.00, in contrast to the receipts used by the respondent which reflects an average of
108.45 liters at a purchase price of P550.00. Here, the greed of the respondent is made manifest
by his act of claiming reimbursements of more than 10 times the value of what he actually
spends. While only 15 of the gasoline receipts were ascertained to have been falsified, the
motive, the pattern and the scheme employed by the respondent in defrauding the government
has, nevertheless, been established.
That the gasoline receipts have been falsified was not rebutted by the respondent. In fact, he
had in effect admitted that he had been claiming for the payment of an average consumption of
108.45 liters/day by justifying that this was being used by the 4 vehicles issued to his office.
Besides he also admitted having signed the receipts.

Committee hearings on the complaints were conducted on July 3 and 10, 1992, but Lumiqued
was not assisted by counsel. On the second hearing date, he moved for its resetting to July 17,
1992, to enable him to employ the services of counsel. The committee granted the motion, but
neither Lumiqued nor his counsel appeared on the date he himself had chosen, so the
committee deemed the case submitted for resolution.

Respondent's act in defrauding the government of a considerable sum of money by falsifying

receipts constitutes not only Dishonesty of a high degree but also a criminal offense for
Malversation through Falsification of Official Documents.

On August 12, 1992, Lumiqued filed an urgent motion for additional hearing, 8 alleging that he
suffered a stroke on July 10, 1992. The motion was forwarded to the Office of the State
Prosecutor apparently because the investigation had already been terminated. In an order dated
September 7, 1992, 9 State Prosecutor Zoila C. Montero denied the motion, viz.:

This committee likewise finds that the respondent have (sic) unliquidated cash advances in the
year 1989 which is in violation of established office and auditing rules. His cash advances
totaling to about P116,000.00 were properly documented. The requests for obligation of
allotments and the vouchers covering the amounts were all signed by him. The mere certification
issued by the Administrative Officer of the DAR-CAR cannot therefore rebut these concrete
evidences (sic).

"The medical certificate given show(s) that respondent was discharged from the Sacred Heart
Hospital on July 17, 1992, the date of the hearing, which date was upon the request of
respondent (Lumiqued). The records do not disclose that respondent advised the Investigating
committee of his confinement and inability to attend despite his discharge, either by himself or
thru counsel. The records likewise do not show that efforts were exerted to notify the Committee
of respondent's condition on any reasonable date after July 17, 1992. It is herein noted that as
early as June 23, 1992, respondent was already being assisted by counsel.
Moreover an evaluation of the counter-affidavit submitted reveal(s) the sufficiency, completeness
and thoroughness of the counter-affidavit together with the documentary evidence annexed
thereto, such that a judicious determination of the case based on the pleadings submitted is
already possible. cdti
Moreover, considering that the complaint-affidavit was filed as far back as November 16, 1989
yet, justice can not be delayed much longer."
Following the conclusion of the hearings, the investigating committee rendered a report dated
July 31, 1992, 10 finding Lumiqued liable for all the charges against him. It made the following
findings:
"After a thorough evaluation of the evidences (sic) submitted by the parties, this committee finds
the evidence submitted by the complainant sufficient to establish the guilt of the respondent for
Gross Dishonesty and Grave Misconduct.

On the third complaint, this committee likewise believes that the respondent's act in relieving the
complainant of her functions as a Regional Cashier on December 1, 1989 was an act of
harassment. It is noted that this was done barely two weeks after the complainant filed charges
against her (sic). The recommendation of Jose G. Medina of the Commission on Audit came
only on May 11, 1990 or almost six months after the respondent's order relieving the
complainant was issued. His act in harassing a subordinate employee in retaliation to a
complaint she filed constitute(s) Gross Misconduct on the part of the respondent who is a head
of office.
The affidavits of Joseph In-uyay and Josefina Guting are of no help to the respondent. In fact,
this only show(s) that he is capable of giving bribes if only to have the cases against him
dismissed. He could not have given a certain Benigno Aquino III the sum of P10,000.00 for any
other purpose."
Accordingly, the investigating committee recommended Lumiqued's dismissal or removal from
office, without prejudice to the filing of the appropriate criminal charges against him.
Acting on the report and recommendation, former Justice Secretary Franklin M. Drilon adopted
the same in his Memorandum to President Fidel V. Ramos dated October 22, 1992. He added
that the filing of the affidavit of desistance 11 would not prevent the issuance of a resolution on
the matter considering that what was at stake was not only "the violation of complainant's (herein
private respondent's) personal rights" but also "the competence and fitness of the respondent

(Lumiqued) to remain in public office." He opined that, in fact, the evidence on record could call
for "a punitive action against the respondent on the initiative of the DAR."
On December 17, 1992, Lumiqued filed a motion for reconsideration of "the findings of the
Committee" with the DOJ. 12 Undersecretary Ramon S. Esguerra indorsed the motion to the
investigating committee. 13 In a letter dated April 1, 1993, the three-member investigating
committee informed Undersecretary Esguerra that the committee "had no more authority to act
on the same (motion for reconsideration) considering that the matter has already been
forwarded to the Office of the President" and that their authority under Department Order No.
145 ceased when they transmitted their report to the DOJ. 14 Concurring with this view,
Undersecretary Esguerra informed Lumiqued that the investigating committee could no longer
act on his motion for reconsideration. He added that the motion was also prematurely filed
because the Office of the President (OP) had yet to act on Secretary Drilon's recommendation.
15
On May 12, 1993, President Fidel V. Ramos himself issued Administrative Order No. 52 (A.O.
No. 52), 16 finding Lumiqued administratively liable for dishonesty in the alteration of fifteen
gasoline receipts, and dismissing him from the service, with forfeiture of his retirement and other
benefits. Thus:
"That the receipts were merely turned over to him by his drivers and that the auditor and
accountant of the DAR-CAR should be the ones to be held liable is untenable. The receipts in
question were signed by respondent for the purpose of attesting that those receipts were validly
issued by the commercial establishments and were properly disbursed and used in the official
business for which it was intended. LexLib
This Office is not about to shift the blame for all these to the drivers employed by the DAR-CAR
as respondent would want us to do."
The OP, however, found that the charges of oppression and harassment, as well as that of
incurring unliquidated cash advances, were not satisfactorily established.
In a "petition for appeal" 17 addressed to President Ramos, Lumiqued prayed that A.O. No. 52
be reconsidered and that he be reinstated to his former position "with all the benefits accorded to
him by law and existing rules and regulations." This petition was basically premised on the
affidavit dated May 27, 1993, of a certain Dwight L. Lumiqued, a former driver of the DAR-CAR,
who confessed to having authored the falsification of gasoline receipts and attested to petitioner
Lumiqued's being an "honest man" who had no "premonition" that the receipts he (Dwight)
turned over to him were "altered." 18
Treating the "petition for appeal" as a motion for reconsideration of A.O. No. 52, the OP, through
Senior Deputy Executive Secretary Leonardo A. Quisumbing, denied the same on August 31,
1993.
Undaunted, Lumiqued filed a second motion for reconsideration, alleging, among other things,
that he was denied the constitutional right to counsel during the hearing. 19 On May 19, 1994,
20 however, before his motion could be resolved, Lumiqued died. On September 28, 1994, 21
Secretary Quisumbing denied the second motion for reconsideration for lack of merit.
Hence, the instant petition for certiorari and mandamus praying for the reversal of the Report
and Recommendation of the Investigating Committee, the October 22, 1992, Memorandum of

then Justice Secretary Drilon, A.O. No. 52 issued by President Ramos, and the orders of
Secretary Quisumbing. In a nutshell, it prays for the "payment of retirement benefits and other
benefits accorded to deceased Arsenio Lumiqued by law, payable to his heirs; and the
backwages from the period he was dismissed from service up to the time of his death on May
19, 1994." 22
Petitioners fault the investigating committee for its failure to inform Lumiqued of his right to
counsel during the hearing. They maintain that his right to counsel could not be waived unless
the waiver was in writing and in the presence of counsel. They assert that the committee should
have suspended the hearing and granted Lumiqued a reasonable time within which to secure a
counsel of his own. If suspension was not possible, the committee should have appointed a
counsel de oficio to assist him.
These arguments are untenable and misplaced. The right to counsel, which cannot be waived
unless the waiver is in writing and in the presence of counsel, is a right afforded a suspect or an
accused during custodial investigation. 23 It is not an absolute right and may, thus, be invoked
or rejected in a criminal proceeding and, with more reason, in an administrative inquiry. In the
case at bar, petitioners invoke the right of an accused in criminal proceedings to have competent
and independent counsel of his own choice. Lumiqued, however, was not accused of any crime
in the proceedings below. The investigation conducted by the committee created by Department
Order No. 145 was for the purpose of determining if he could be held administratively liable
under the law for the complaints filed against him. The order issued by Acting Secretary of
Justice Montenegro states thus:
"In the interest of the public service and pursuant to the provisions of existing laws, a Committee
to conduct the formal investigation of the administrative complaint for oppression, dishonesty,
disgraceful and immoral conduct, being notoriously undesirable and conduct prejudicial to the
best interest of the service against Mr. ARSENIO P. LUMIQUED, Regional Director, Department
of Agrarian Reform, Cordillera Autonomous Region, is hereby created . . ." 24
As such, the hearing conducted by the investigating committee was not part of a criminal
prosecution. This was even made more pronounced when, after finding Lumiqued
administratively liable, it hinted at the filing of a criminal case for malversation through
falsification of public documents in its report and recommendation.
Petitioners' misconception on the nature of the investigation 25 conducted against Lumiqued
appears to have been engendered by the fact that the DOJ conducted it. While it is true that
under the Administrative Code of 1987, the DOJ shall "administer the criminal justice system in
accordance with the accepted processes thereof consisting in the investigation of the crimes,
prosecution of offenders and administration of the correctional system," 26 conducting criminal
investigations is not its sole function. By its power to "perform such other functions as may be
provided by law," 27 prosecutors may be called upon to conduct administrative investigations.
Accordingly, the investigating committee created by Department Order No. 145 was duty-bound
to conduct the administrative investigation in accordance with the rules therefor.
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 a body to furnish the
person being investigated with counsel. 28 In an administrative proceeding such as the one that
transpired below, a respondent (such as Lumiqued) 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 29 (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 30
(otherwise known as the Administrative Code of 1987). Excerpts from the transcript of
stenographic notes of the hearings attended by Lumiqued 31 clearly show that he was confident
of his capacity and so opted to represent himself . Thus, the right to counsel is not imperative in
administrative investigations because such inquiries are conducted merely to determine whether
there are facts that merit disciplinary measures against erring public officers and employees,
with the purpose of maintaining the dignity of government service. LibLex

"CP BALAJADIA:
Q.
(To Director Lumiqued) You really wish to go through with this even without your
counsel?
DIRECTOR LUMIQUED:
A.

I think so, Sir.

CP BALAJADIA:
Furthermore, petitioners' reliance on Resolution No. 94-0521 of the Civil Service Commission on
the Uniform Procedure in the Conduct of Administrative Investigation stating that a respondent in
an administrative complaint must be "informed of his right to the assistance of a counsel of his
choice," 32 is inappropriate. In the first place, this resolution is applicable only to cases brought
before the Civil Service Commission. 33 Secondly, said resolution, which is dated January 25,
1994, took effect fifteen days following its publication in a newspaper of general circulation, 34
much later than the July 1992 hearings of the investigating committee created by Department
Order No. 145. Thirdly, the same committee was not remiss in the matter of reminding Lumiqued
of his right to counsel. Thus, at the July 3, 1992, hearing, Lumiqued was repeatedly appraised of
his option to secure the services of counsel:
"RSP EXEVEA:
This is an administrative case against Director Lumiqued. Director Lumiqued is
present. The complainant is present, Janet Obar-Zamudio. Complainant has just been furnished
with a copy of the counter-affidavit of the respondent. Do you have a counsel, Director?
DIR. LUMIQUED:
I did not bring anybody, Sir, because when I went to see him, he told me, Sir, that he
has already set a hearing, morning and afternoon today.
RSP EXEVEA:
So, we will proceed with the hearing even without your counsel? You are willing to
proceed with the hearing even without your counsel?
DIR. LUMIQUED:
Yes, I am confident . . .
CP BALAJADIA:
You are confident that you will be able to represent yourself?
DIR. LUMIQUED:
That is my concern." 35 (Emphasis supplied)
In the course of private respondent's damaging testimony, the investigating committee once
again reminded Lumiqued of his need for a counsel. Thus:

Let us make it of record that we have been warning you to proceed with the
assistance of counsel but you said that you can take care of yourself so we have no other
alternative but to proceed." 36 (Emphasis supplied)
Thereafter, the following colloquies transpired:
"CP BALAJADIA:
We will suspend in the meantime that we are waiting for the supplemental affidavit you
are going to present to us. Do you have any request from the panel of investigators, Director
Lumiqued?
DIRECTOR LUMIQUED:
I was not able to bring a lawyer since the lawyer I requested to assist me and was the
one who prepared my counter-affidavit is already engaged for a hearing and according to him he
is engaged for the whole month of July.
RSP EXEVEA:
We cannot wait. . .
CP BALAJADIA:
Why don't you engage the services of another counsel. The charges against you are
quite serious. We are not saying you are guilty already. We are just apprehensive that you will
go through this investigation without a counsel. We would like you to be protected legally in the
course of this investigation. Why don't you get the services of another counsel. There are plenty
here in Baguio. . .
DIRECTOR LUMIQUED:
I will try to see, Sir. . .
CP BALAJADIA:
Please select your date now, we are only given one month to finish the investigation,
Director Lumiqued.
RSP EXEVEA:

We will not entertain any postponement. With or without counsel, we will proceed.
CP BALAJADIA:
Madam Witness, will you please submit the document which we asked for and
Director Lumiqued, if you have other witnesses, please bring them but reduce their testimonies
in affidavit form so that we can expedite with the proceedings." 37
At the hearing scheduled for July 10, 1992, Lumiqued still did not avail of the services of
counsel. Pertinent excerpts from said hearing follow:

entertained during the hearings he was able to attend. In his statement, "That is my concern,"
one could detect that it had been uttered testily, if not exasperatedly, because of the doubt or
skepticism implicit in the question, "You are confident that you will be able to represent
yourself?" despite his having positively asserted earlier, "Yes, I am confident." He was obviously
convinced that he could ably represent himself. Beyond repeatedly reminding him that he could
avail himself of counsel and as often receiving the reply that he is confident of his ability to
defend himself, the investigating committee could not do more. One can lead a horse to water
but cannot make him drink.
The right to counsel is not indispensable to due process unless required by the Constitution or
the law. In Nera v. Auditor General, 40 the Court said:

"FISCAL BALAJADIA:
I notice also Mr. Chairman that the respondent is not being represented by a counsel.
The last time he was asked to invite his lawyer in this investigation. May we know if he has a
lawyer to represent him in this investigation?
DIR. LUMIQUED:
There is none Sir because when I went to my lawyer, he told me that he had set a
case also at 9:30 in the other court and he told me if there is a possibility of having this case
postponed anytime next week, probably Wednesday so we will have good time (sic) of
presenting the affidavit.
FISCAL BALAJADIA:
Are you moving for a postponement Director? May I throw this to the panel. The
charges in this case are quite serious and he should be given a chance to the assistance of a
counsel/lawyer.
RSP EXEVEA:
And is (sic) appearing that the supplemental-affidavit has been furnished him only now
and this has several documents attached to it so I think we could grant him one last
postponement considering that he has already asked for an extension.
DIR. LUMIQUED:
Furthermore Sir, I am now being bothered by my heart ailment." 38
The hearing was reset to July 17, 1992, the date when Lumiqued was released from the
hospital. Prior to said date, however, Lumiqued did not inform the committee of his confinement.
Consequently, because the hearing could not push through on said date, and Lumiqued had
already submitted his counter-affidavit, the committee decided to wind up the proceedings. This
did not mean, however, that Lumiqued was short-changed in his right to due process.
Lumiqued, a Regional Director of a major department in the executive branch of the government,
graduated from the University of the Philippines (Los Baos) with the degree of Bachelor of
Science major in Agriculture, was a recipient of various scholarships and grants, and underwent
training seminars both here and abroad. 39 Hence, he could have defended himself if need be,
without the help of counsel, if truth were on his side. This, apparently, was the thought he

". . . There is nothing in the Constitution that says that a party in a non-criminal proceeding is
entitled to be represented by counsel and that, without such representation, he shall not be
bound by such proceedings. The assistance of lawyers, while desirable, is not indispensable.
The legal profession was not engrafted in the due process clause such that without the
participation of its members, the safeguard is deemed ignored or violated. The ordinary citizen is
not that helpless that he cannot validly act at all except only with a lawyer at his side."
In administrative proceedings, the essence of due process is simply the opportunity to explain
one's side. One may be heard, not solely by verbal presentation but also, and perhaps even
much more creditably as it is more practicable than oral arguments, through pleadings. 41 An
actual hearing is not always an indispensable aspect of due process. 42 As long as a party was
given the opportunity to defend his interests in due course, he cannot be said to have been
denied due process of law, for this opportunity to be heard is the very essence of due process.
43 Moreover, this constitutional mandate is deemed satisfied if a person is granted an
opportunity to seek reconsideration of the action or ruling complained of. 44 Lumiqued's appeal
and his subsequent filing of motions for reconsideration cured whatever irregularity attended the
proceedings conducted by the committee. 45
The constitutional provision on due process safeguards life, liberty and property. 46 In the early
case of Cornejo v. Gabriel and Provincial Board of Rizal 47 the Court held that a public office is
not property within the sense of the constitutional guarantee of due process of law for it is a
public trust or agency. This jurisprudential pronouncement has been enshrined in the 1987
Constitution under Article XI, Section 1, on accountability of public officers, as follows:
"Section 1.
Public office is a public trust. Public officers and employees must at all times
be accountable to the people, serve them with utmost responsibility, integrity, loyalty, and
efficiency, act with patriotism and justice, and lead modest lives."
When the dispute concerns one's constitutional right to security of tenure, however, public office
is deemed analogous to property in a limited sense; hence, the right to due process could
rightfully be invoked. Nonetheless, the right to security of tenure is not absolute. Of equal weight
is the countervailing mandate of the Constitution that all public officers and employees must
serve with responsibility, integrity, loyalty and efficiency. 48 In this case, it has been clearly
shown that Lumiqued did not live up to this constitutional precept.
The committee's findings pinning culpability for the charges of dishonesty and grave misconduct
upon Lumiqued were not, as shown above, fraught with procedural mischief. Its conclusions
were founded on the evidence presented and evaluated as facts. Well-settled in our jurisdiction
is the doctrine that findings of fact of administrative agencies must be respected as long as they

are supported by substantial evidence, even if such evidence is not overwhelming or

preponderant. 49 The quantum of proof necessary for a finding of guilt in administrative cases is
only substantial evidence or such relevant evidence as a reasonable mind might accept as
adequate to support a conclusion. 50

legal documentation, negotiations, counseling or right of way matters. Petitioner, likewise,

insisted that the service contract in question fell outside the ambit of the circular as what is being
curtailed is the payment of retainer fees and not the payment of fees for legal services actually
rendered.

Consequently, the adoption by Secretary Drilon and the OP of the committee's recommendation
of dismissal may not in any way be deemed tainted with arbitrariness amounting to grave abuse
of discretion. Government officials are presumed to perform their functions with regularity.
Strong evidence is not necessary to rebut that presumption, 51 which petitioners have not
successfully disputed in the instant case. LexLib

Under the circular, government agencies and instrumentalities are restricted in their hiring of
private lawyers to render legal services or handle their cases. No public funds will be disbursed
for the payment to private lawyers unless prior to the hiring of said lawyer, there is a written
conformity and acquiescence from the Solicitor General or the Government Corporate Counsel.
Contrary to the view espoused by petitioner, the prohibition covers the hiring of private lawyers
to render any form of legal service. It makes no distinction as to whether or not the legal services
to be performed involve an actual legal controversy or court litigation.

Dishonesty is a grave offense penalized by dismissal under Section 23 of Rule XIV of the
Omnibus Rules Implementing Book V of the Administrative Code of 1987. Under Section 9 of the
same Rule, the penalty of dismissal carries with it "cancellation of eligibility, forfeiture of leave
credits and retirement benefits, and the disqualification for reemployment in the government
service." The instant petition, which is aimed primarily at the "payment of retirement benefits and
other benefits," plus back wages from the time of Lumiqued's dismissal until his demise, must,
therefore, fail.
WHEREFORE, the instant petition for certiorari and mandamus is hereby DISMISSED and
Administrative Order No. 52 of the Office of the President is AFFIRMED. Costs against
petitioners.

While the circular uses the phrase "retainer fees," such should not be given its technical
interpretation but should mean any "fee" paid for any legal service rendered. As pointed out by
the Office of the Solicitor General, any interpretation of subject circular to the contrary would
open the floodgate to future circumvention thereof by the simple expedience of hiring private
lawyers to service the legal needs of the government not on a retainer basis but by way of
service contract akin to that which Atty. Satorre and the NPC entered into. Hence, as the hiring
of Atty. Satorre was clearly done without the prior conformity and acquiescence of the Office of
the Solicitor General or the Government Corporate Counsel, as well as the written concurrence
of the Commission on Audit, the payment of fees to Atty. Satorre was correctly disallowed in
audit by the COA.

SO ORDERED.
SYLLABUS

[G.R. No. 140563. July 14, 2000.]

DANTE M. POLLOSO, petitioner, vs. HON. CELSO D. GANGAN, Chairman, COMMISSION ON
AUDIT, HON. RAUL C. FLORES, COMMISSIONER, COMMISSION ON AUDIT, HON.
EMMANUEL M. DALMAN, COMMISSIONER, COMMISSION ON AUDIT, respondents.
Rosalito R. Castillo and Marianito S. Delos Santos for petitioner.
The Solicitor General for respondents.
SYNOPSIS
Petitioner, Project Manager II of the Leyte-Cebu Interconnection Project of the National Power
Corporation-Visayas Regional Center, filed the instant petition for review assailing the decision
of the Commission on Audit affirming the disallowance by the COA Unit Auditor of the amount of
P283,763.39 representing payment of legal services rendered by Atty. Benemerito A. Satorre to
the National Power Corporation. The Unit Auditor disallowed the payment citing as reason,
among others, that the contract for services did not have the written conformity and
acquiescence of the Solicitor General or the Government Corporate Counsel and concurrence of
the Commission on Audit as required under COA Circular No. 86-255 dated April 2, 1986.
HAECID
Petitioner posited that the phrase "handling of legal cases" should be construed to mean as
conduct of cases or handling of court cases or litigation and not to other legal matters, such as

1.
ADMINISTRATIVE LAW; ADMINISTRATIVE AGENCIES; COMMISSION ON AUDIT;
COA CIRCULAR NO. 86-255; CONSTRUED. What can be gleaned from a reading of the
COA Circular No. 86-855 is that government agencies and instrumentalities are restricted in their
hiring of private lawyers to render legal services or handle their cases. No public funds will be
disbursed for the payment to private lawyers unless prior to the hiring of said lawyer, there is a
written conformity and acquiescence from the Solicitor General or the Government Corporate
Counsel. Contrary to the view espoused by petitioner, the prohibition covers the hiring of private
lawyers to render any form of legal service. It makes no distinction a to whether or not the legal
services to be performed involve an actual legal controversy or court litigation. Petitioner insists
that the prohibition pertains only to "handling of legal cases," perhaps because this is what is
stated in the title of the circular. To rely on the title of the circular would go against a basic rule in
statutory construction that a particular clause should not be studied as a detached and isolated
expression, but the whole and every part of the statute must be considered in fixing the meaning
of any of its part. EHIcaT
2.
ID.; ID.; ID.; ID.; TERM "RETAINER FEES," CONSTRUED; INTENT OF THE LAW
MUST PREVAIL OVER LETTER OF THE STATUTE. A retainer fee has been defined as a
"preliminary fee to an attorney or counsel to insure and secure his future services, and induce
him to act for the client. It is intended to remunerate counsel for being deprived, by being
retained by one party, of the opportunity of rendering services to the other and of receiving pay
from him, and payment of such fee, in the absence of an express understanding to the contrary,
is neither made nor received in payment of the services contemplated; its payment has no
relation to the obligation of the client to pay his attorney for the services for which he has
retained him to perform." To give such a technical interpretation to the term "retainer fees" would
go against the purpose of the circular and render the same ineffectual. While the circular uses

the phrase "retainer fees," such should not be given its technical interpretation but should mean
any "fee" paid for any legal service rendered. As pointed out by the Office of the Solicitor
General, any interpretation of such circular to the contrary would open the floodgate to future
circumventions thereof by the simple expedience of hiring private lawyers to service the legal
needs of the government not on a retainer basis but by way of service contract akin to that which
Atty. Satorre and the NPC entered into. No dictum is more fundamental in statutory
interpretation than that the intent of the law must prevail over the letter thereof, for whatever is
within the spirit of the statute is within the statute, since adherence to the letter would result in an
absurdity, injustice and contractions and would defeat the plain and vital purpose of the statute.
3.
ID.; ID.; ID.; ID.; PURPOSE; THE INTENT OF THE LAW MUST BE GIVEN EFFECT
EVEN IF POLICY GOES BEYOND THE LETTER OF THE STATUTE. It bears repeating that
the purpose of the circular is to curtail the unauthorized and unnecessary disbursement of public
funds to private lawyers for services rendered to the government. This is in line with the
Commission on Audit's constitutional mandate to 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. Having determined the intent of the law, this Court has the imperative duty to give it
effect even if the policy goes beyond the letter or words of the statute. Hence, as the hiring of
Atty. Satorre was clearly done without the prior conformity and acquiescence of the Office of the
Solicitor General or the Government Corporate Counsel, as well as the written concurrence of
the Commission on Audit, the payment of fees to Atty. Satorre was correctly disallowed in audit
by the COA. SCEDAI
4.
ID.; ID.; ID.; ID.; RESTRICTIONS CONTAINED THEREIN CANNOT BE
CONSIDERED AS A CURTAILMENT ON THE PRACTICE OF LEGAL PROFESSION. The
questioned COA circular simply sets forth the prerequisites for a government agency
instrumentality in hiring a private lawyer, which are reasonable safeguards to prevent irregular,
unnecessary, excessive, extravagant or unconscionable expenditures or uses of government
funds and properties. We fail to see how the restrictions contained in the COA circular, can be
considered as a curtailment on the practice of the legal profession.
DECISION
KAPUNAN, J p:
Before this Court is a petition for review from the decision of the Commission on Audit (COA),
dated 28 September 1999 of herein petitioner Dante M. Polloso, from the disallowance by the
COA Unit Auditor of the amount of P283,763.39 representing payment of legal services
rendered by Atty. Benemerito A. Satorre to the National Power Corporation (NPC).

2.
Facilitate, coordinate between the Office of the Project Director and the Project
Manager, and the Office of the Regional Legal Counsel and other NPC Offices, Local
Government Units and Agencies of Government involving administrative cases and legal
problems.
3.
project.

Provide direction, supervision, coordination and control of right-of-way activities in the

4.
Perform other pertinent services as may be assigned him by the Project Director and
Project Manager from time to time. 1
The contract provided that in consideration for services rendered, Satorre would receive a
monthly salary P21,749.00 plus representation and transportation allowance of P5,300. 2
On 12 January 1995, Unit Auditor Alexander A. Tan, NPC-VRC, Cebu City issued Notice of
Disallowance No. 95-0001-135-94 for the payment of the services rendered by Atty. Satorre for
the period covering March to December 1995 in the total amount of P283,763.39. The following
reasons were cited for said disallowance:
1)
The contract for services did not have the written conformity and acquiescence of the
Solicitor General or the Corporate Counsel and concurrence of the Commission on Audit as
required under COA Circular No. 86-255 dated April 2, 1986.
2)
The contract was not supported with Certificate of Availability of Funds as required
under Sec. 86 of P.D. 1445.
3)
The contract was not submitted to the Civil Service Commission for final review and
was not forwarded to the Compensation and Position Confirmation and Classification Bureau,
DBM for appropriate action as required in CSC MC # 5 Series of 1985. 3
Accordingly, the following were held to be personally liable for the amounts due to Atty. Satorre:
Dr. Francisco Viray, NPC contracting party; Manolo C. Marquez, for certifying the claim as
necessary, lawful and authorized; Andrea B. Roa and Romeo Gallego, for verifying the
supporting documents to be complete and proper; Jesus Alio, for reviewing the supporting
documents to be complete and proper; Dante M. Polloso, Project Manager II, Leyte-Cebu
Interconnection Project (LCIP), National Power Corporation-Visayas Regional Center, for
approving the claim; and Benemerito Satorre, as the payee. 4
On 27 January 1995, only petitioner Dante Polloso submitted a letter-explanation refuting the
alleged violation contained in the Notice of Disallowance and sought reconsideration thereof. 5
This was denied by the Unit Auditor in a resolution, dated 30 March 1995. 6

The facts of the case are undisputed. TaDSCA

In 1994, the National Power Corporation (NPC), represented by its President Dr. Francisco L.
Viray entered into a service contract with Atty. Benemerito A. Satorre. Under said contract,
Satorre was to perform the following services for the Leyte-Cebu and Leyte-Luzon
Interconnection Projects of the NPC:
1.

Provide services on administrative and legal matters.

On 10 October 1995, petitioner appealed the denial of the Unit Auditor to the Regional Director,
COA Regional Office No. VII; 7 the latter denied the same. 8
On 29 June 1998, a petition for review was filed before the Commission Proper, Commission on
Audit, Central Office. 9 On 29 October 1999, the COA issued the decision assailed before this
Court. The dispositive portion thereof, reads:

Thus, it is crystal clear from the aforequoted provision of law and regulations that the service
contract entered into by and between the National Power Corporation and Atty. Satorre is in
contravention thereof.
Upon the foregoing considerations, the instant appeal of MR. DANTE M. POLLOSO, has to be,
as it is hereby denied. Accordingly, the disallowance of P283,763.39 is hereby affirmed. 10

It has come to the attention of this Commission that notwithstanding restrictions or prohibitions
on the matter under existing laws, certain government agencies, instrumentalities, and
government-owned and/or controlled corporations, notably government banking and financing
institutions, persist in hiring or employing private lawyers or law practitioners to render legal
services for them and/or to handle their legal cases in consideration of fixed retainer fees, at
times in unreasonable amounts, paid from public funds. In keeping with the retrenchment policy
of the present administration, this Commission frowns upon such a practice.

Hence, this appeal, petitioner raising the following issues: DHETIS

I
DOES THE PROHIBITION UNDER COA CIRCULAR NO. 86-255 DATED APRIL 2, 1986 AND
SEC. 212 OF THE GOVERNMENT ACCOUNTING AND AUDITING MANUAL IMPOSED ON
GOVERNMENT AGENCIES FROM HIRING PRIVATE LAWYERS "TO HANDLE THEIR LEGAL
CASES" APPLY TO A LAWYER HIRED BY VIRTUE OF A SERVICE CONTRACT BUT WHO
ACTUALLY HANDLE PURELY RIGHT-OF-WAY MATTERS (EXCLUDING HANDLING OF
COURT CASES)?
II
WILL COA CIRCULAR NO. 86-255 DATED APRIL 2, 1986 AND SEC. 212, VOLUME I OF THE
GOVERNMENT ACCOUNTING AND AUDITING MANUAL OPERATE TO RESTRICT THE
PRACTICE OF THE LAW PROFESSION AND THEREFORE REPUGNANT TO SEC. 5,
ARTICLE VII OF THE 1987 PHILIPPINE CONSTITUTION?
III
DOES SECTION 38, CHAPTER 9, BOOK I OF EXECUTIVE ORDER NO. 292, OTHERWISE
KNOWN AS THE ADMINISTRATIVE CODE OF 1987 APPLY TO PETITIONER FOR HAVING
ACTED IN GOOD FAITH AND WITHOUT MALICE AND MERELY IMPLEMENTED A VALID
CONTRACT ENTERED INTO BY THE PRESIDENT OF THE NATIONAL POWER
CORPORATION?
IV
DOES THE PRINCIPLE OF "QUANTUM MERUIT" APPLY TO THE SERVICES RENDERED
BY ATTY. SATORRE WHICH BENEFITTED THE NATIONAL POWER CORPORATION? 11
The petition is without merit.
In the main, petitioner posits that the phrase "handling of legal cases" should be construed to
mean as conduct of cases or handling of court cases or litigation and not to other legal matters,
such as legal documentation, negotiations, counseling or right of way matters.
To test the accuracy of such an interpretation, an examination of the subject COA Circular is in
order:
SUBJECT:
Inhibition
against employment
by government agencies
and
instrumentalities, including government-owned or controlled corporations, of private lawyers to
handle their legal cases.

Accordingly, it is hereby directed that, henceforth, the payment out of public funds of retainer
fees to private law practitioners who are so hired or employed without the prior written conformity
and acquiescence of the Office of the Solicitor General or the Government Corporate Counsel,
as the case may be, as well as the written concurrence of the Commission on Audit shall be
disallowed in audit and the same shall be a personal liability of the officials concerned. [italics
supplied]
What can be gleaned from a reading of the above circular is that government agencies and
instrumentalities are restricted in their hiring of private lawyers to render legal services or handle
their cases. No public funds will be disbursed for the payment to private lawyers unless prior to
the hiring of said lawyer, there is a written conformity and acquiescence from the Solicitor
General or the Government Counsel. HTCESI
Contrary to the view espoused by petitioner, the prohibition covers the hiring of private lawyers
to render any form of legal service. It makes no distinction as to whether or not the legal services
to be performed involve an actual legal controversy or court litigation. Petitioner insists that the
prohibition pertains only to "handling of legal cases," perhaps because this is what is stated in
the title of the circular. To rely on the title of the circular would go against a basic rule in statutory
construction that a particular clause should not be studied as a detached and isolated
expression, but the whole and every part of the statute must be considered in fixing the meaning
of any of its part. 12 Petitioner, likewise, insists that the service contract in question falls outside
the ambit of the circular as what is being curtailed is the payment of retainer fees and not the
payment of fees for legal services actually rendered.
A retainer fee has been defined as a "preliminary fee to an attorney or counsel to insure and
secure his future services, and induce him to act for the client. It is intended to remunerate
counsel for being deprived, by being retained by one party, of the opportunity of rendering
services to the other and of receiving pay from him, and payment of such fee, in the absence of
an express understanding to the contrary, is neither made nor received in payment of the
services contemplated; its payment has no relation to the obligation of the client to pay his
attorney for the services for which he has retained him to perform." 13 To give such a technical
interpretation to the term "retainer fees" would go against the purpose of the circular and render
the same ineffectual. In his resolution, Unit Auditor Alexander Tan expounded on the purpose of
the circular, as enunciated therein:
On the claim that COA Circular 86-255 is not applicable in this case because the inhibition
provided for in said Circular relates to the handling of legal cases of a government agency and
that the contractor was not hired in that capacity but to handle legal matters (sic) involving rightof-way, it is maintained that the contracted service falls within the scope of the inhibition which
clearly includes "the hiring or employing private lawyers or law practitioners to render legal
services for them and/or to handle their legal cases. . ." Moreover, it is important to mention that
the intention of said Circular is to curb the observed and persistent violation of existing laws and
regulations, including CSC MC # 5 series of 1985 pertaining to the employment of private

lawyers on a contractual basis in government agencies which involves the disbursement of

public funds by subjecting the same to the conformity and concurrence requirements of said
Circular. Being so, the manner of agreed payment or consideration, whether termed as a fixed
retainer basis or a fixed contract price patterned after existing salary scale of existing and
comparable positions in NPC-VRC is immaterial as both still involve the outlay of public funds
and also the contractual employment/hiring of a private lawyer.
Hence, while the circular uses the phrase "retainer fees," such should not be given its technical
interpretation but should mean any "fee" paid for any legal service rendered. As pointed out by
the Office of the Solicitor General, any interpretation of subject circular to the contrary would
open the floodgate to future circumventions thereof by the simple expedience of hiring private
lawyers to service the legal needs of the government not on a retainer basis but buy way of
service contract akin to that which Atty. Satorre and the NPC entered into. 14 No dictum is more
fundamental in statutory interpretation than that the intent of the law must prevail over the letter
thereof, for whatever is within the spirit of the statute is within the statute, since adherence to the
letter would result in an absurdity, injustice and contradictions and would defeat the plain and
vital purpose of the statute. 15
It bears repeating that the purpose of the circular is to curtail the unauthorized and unnecessary
disbursement of public funds to private lawyers for services rendered to the government. This is
in line with the Commission on Audit's constitutional mandate to 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. 16 Having determined the intent of the law, this Court has the imperative
duty to give it effect even if the policy goes beyond the letter or words of the statute. 17

not to approve the same for payment upon finding that such was irregular and in contravention
of COA Circular No. 86-255, dated 2 April 1986.
We cannot grant the prayer of the petitioner that Atty. Satorre should be compensated based on
the principle of quantum meruit, on the ground that the government will be unjustly enriched at
the expense of another. We do not deny that Atty. Satorre has indeed rendered legal services to
the government. However to allow the disbursement of public funds to pay for his services,
despite the absence of requisite consent to his hiring from the OSG or OGCC would precisely
allow circumvention of COA Circular No. 86-255. In any event, it is not Atty. Satorre who is liable
to return the money already paid him, rather the same shall be the responsibility of the officials
concerned, among whom include herein petitioner.
WHEREFORE, the petition is hereby DENIED for lack of showing that the respondents
committed reversible error. cEAIHa
SO ORDERED.

[G.R. No. 137489. May 29, 2002.]

COOPERATIVE DEVELOPMENT AUTHORITY, petitioner, vs. DOLEFIL AGRARIAN
REFORM BENEFICIARIES COOPERATIVE, INC., ESMERALDO A. DUBLIN, ALICIA
SAVAREZ, EDNA URETA, ET AL., respondents.
Rogelio P. Madriaga for petitioner.

Hence, as the hiring of Atty. Satorre was clearly done without the prior conformity and
acquiescence of the Office of the Solicitor General or the Government Corporate Counsel, as
well as the written concurrence of the Commission on Audit, the payment of fees to Atty. Satorre
was correctly disallowed in audit by the COA.
Thus being said, it is no longer necessary to delve into whether or not the hiring of Atty. Satorre
is in accord with the rules of the Civil Service Commission. CITcSH
Petitioner's claim that the Circular is unconstitutional for being an invalid restriction to the
practice of the law profession, is clearly bereft of any merit. The Government has its own
counsel, which is the Office of the Solicitor General headed by the Solicitor General, 18 while the
Office of the Government Corporate Counsel (OGCC) acts as the principal law office of the
government-owned or controlled corporations. 19 It is only in special cases where these
government entities may engage the services of private lawyers because of their expertise in
certain fields. The questioned COA circular simply sets forth the prerequisites for a government
agency instrumentality in hiring a private lawyer, which are reasonable safeguards to prevent
irregular, unnecessary, excessive, extravagant or unconscionable expenditures or uses of
government funds and properties. We fail to see how the restrictions contained in the COA
circular can be considered as a curtailment on the practice of the legal profession.
Anent petitioner's argument that he cannot be held liable for effecting payment of the disallowed
amount because he is not privy to the service contract, we find the same to be unmeritorious.
This is because petitioner's liability arose from the fact that as project manager, he approved the
said claim. In addition, his assertion that a refusal on his part to certify payment of the same
would subject him to criminal and civil liabilities cannot hold water simply because it was his duty

Dublin & Ariquez Law Firm for respondents.

Veneer Purisima & Associates for Intervenors.
SYNOPSIS
The jurisdiction of petitioner Cooperative Development Authority (CDA) to resolve intercooperative disputes in the Dolefil Agrarian Reform Beneficiaries Cooperative, Inc. (DARBCI)
was challenged by private respondents, who were replaced in the election held during a general
assembly held despite the issuance by the Court of Appeals of restraining orders.
The Cooperative Development Authority created under Republic Act No. 6939 exercises purely
administrative functions which consists of policy-making, registration, fiscal and technical
assistance to cooperatives and implementation of cooperative laws, and is not vested with
quasi-judicial authority to adjudicate cooperative disputes.
SYLLABUS
1.
REMEDIAL LAW; ACTIONS; ONLY THE SOLICITOR GENERAL CAN BRING OR
DEFEND ACTIONS ON BEHALF OF THE REPUBLIC. The general rule is that only the
Solicitor General can bring or defend actions on behalf of the Republic of the Philippines and
that actions filed in the name of the Republic, or its agencies and instrumentalities for that
matter, if not initiated by the Solicitor General, will be summarily dismissed. The authority of the
Office of the Solicitor General to represent the Republic of the Philippines, its agencies and

instrumentalities, is embodied under Section 35(1), Chapter 12, Title III, Book IV of the
Administrative Code of 1987.

by the CDA only in the performance of its administrative functions under R.A. No. 6939.
HEcIDa

2.
ID.; ID.; ID.; IMPORT. The import of the above-quoted provision of the
Administrative Code of 1987 is to impose upon the Office of the Solicitor General the duty to
appear as counsel for the Government, its agencies and instrumentalities and its officials and
agents before the Supreme Court, the Court of Appeals, and all other courts and tribunals in any
litigation, proceeding, investigation or matter requiring the services of a lawyer. Its mandatory
character was emphasized by this Court in the case of Gonzales v. Chavez.

6.
REMEDIAL LAW; ACTIONS; FORUM-SHOPPING; WHEN IT EXISTS. Forumshopping exists where the elements of litis pendentia are present or where a final judgment in
one case will amount to res judicata in the other. EICDSA

3.
ID.; ID.; ID.; EXCEPTION. As an exception to the general rule, the Solicitor
General, in providing legal representation for the government, is empowered under Section
35(8), Chapter 12, Title III, Book IV of the Administrative Code of 1987 to "deputize legal officers
of government departments, bureaus, agencies and offices to assist the Solicitor General and
appear or represent the Government in cases involving their respective offices, brought before
the courts and exercise supervision and control over such legal officers with respect to such
cases." IcHTCS
4.
STATUTORY CONSTRUCTION, STATUTES; THERE IS NO ROOM FOR
INTERPRETATION WHEN THE LAW SPEAKS IN CLEAR AND CATEGORICAL LANGUAGE.
It is a fundamental rule in statutory construction that when the law speaks in clear and
categorical language, there is no room for interpretation, vacillation or equivocation there is
only room for application. CaHAcT
5.
ID.; REPUBLIC ACT NO. 6939 (AN ACT CREATING THE COOPERATIVE
DEVELOPMENT AUTHORITY [CDA]); CDA, WITH PURELY ADMINISTRATIVE FUNCTION
WITH NO AUTHORITY TO ADJUDICATE COOPERATIVE DISPUTES. It can be gleaned
from the above-quoted provision of R.A. No. 6939 that the authority of the CDA is to discharge
purely administrative functions which consist of policy-making, registration, fiscal and technical
assistance to cooperatives and implementation of cooperative laws. Nowhere in the said law can
it be found any express grant to the CDA of authority to adjudicate cooperative disputes. At
most, Section 8 of the same law provides that "upon request of either or both parties, the
Authority shall mediate and conciliate disputes with a cooperative or between cooperatives"
however, with a restriction "that if no mediation or conciliation succeeds within three (3) months
from request thereof, a certificate of non-resolution shall be issued by the commission prior to
the filing of appropriate action before the proper courts." Being an administrative agency, the
CDA has only such powers as are expressly granted to it by law and those which are necessarily
implied in the exercise thereof. Petitioner CDA, however, insists that its authority to conduct
hearings or inquiries and the express grant to it of contempt powers under Section 3, paragraphs
(g) and (o) of R.A. No. 6939, respectively, necessarily vests upon the CDA quasi-judicial
authority to adjudicate cooperative disputes. A review of the records of the deliberations by both
chambers of Congress prior to the enactment of R.A. No. 6939 provides a definitive answer that
the CDA is not vested with quasi-judicial authority to adjudicate cooperative disputes. In like
manner, the deliberations on Senate Bill No. 485, which was the counterpart of House Bill No.
10787, yield the same legislative intent not to grant quasi-judicial authority to the CDA. After
ascertaining the clear legislative intent underlying R.A. No. 6939, effect should be given to it by
the judiciary. Consequently, we hold and rule that the CDA is devoid of any quasi-judicial
authority to adjudicate intra-cooperative disputes and more particularly disputes as regards the
election of the members of the Board of Directors and officers of cooperatives. The authority to
conduct hearings or inquiries and the power to hold any person in contempt may be exercised

7.
ID.; ID.; LITIS PENDENCIA; REQUISITES The requisites for the existence of litis
pendentia, in turn, are (1) identity of parties or at least such representing the same interest in
both actions; (2) identity of rights asserted as prayed for, the relief being founded on the same
facts; and (3) the identity in both cases is such that the judgment that may be rendered in the
pending case, regardless of which party is successful, would amount to res judicata to the other
case.
8.
ID.; ID.; ID.; CASE AT BAR. While there may be identity of parties between SP Civil
Case No. 25 filed with the RTC of Polomolok, South Cotabato, Branch 39, and CA-G.R. SP No.
47933 before the Court of Appeals, 13th Division, the two (2) other requisites are not present.
The Court of Appeals correctly observed that the case filed with the RTC of Polomolok, South
Cotabato was a petition for certiorari assailing the orders of therein respondent CDA for having
been allegedly issued without or in excess of jurisdiction. On the other hand, the case filed with
the Court of Appeals was a petition for prohibition seeking to restrain therein respondent from
further proceeding with the hearing of the case. Besides, the filing of the petition for prohibition
with the Court of Appeals was necessary after the CDA issued the Order dated May 26, 1998
which directed the holding of a special general assembly for purposes of conducting elections of
officers and members of the board of DARBCI after the Court of Appeals, 12th Division, in CAG.R. SP No. 47318 issued a temporary restraining order enjoining the proceedings in Special
Civil Case No. 25 and for the parties therein to maintain the status quo. Under the
circumstances, the private respondents could not seek immediate relief before the trial court and
hence, they had to seek recourse before the Court of Appeals via a petition for prohibition with a
prayer for preliminary injunction to forestall the impending damage and injury to them in view of
the order issued by the petitioner on May 26, 1998. ETHIDa
9.
ID.; ID.; FORUM-SHOPPING; ABSENT IN CASE AT BAR. The filing of Special
Civil Case No. 28 with the RTC of Polomolok, South Cotabato does not also constitute forumshopping on the part of the private respondents. Therein petitioner Investa, which claims to have
a subsisting lease agreement and a joint venture with DARBCI, is an entity whose juridical
personality is separate and distinct from that of private respondent cooperative or herein
individual private respondents and that they have totally different interests in the subject matter
of the case. Moreover, it was incorrect for the petitioner to charge the private respondents with
forum-shopping partly based on its erroneous claim that DARBCI and Investa were both
represented by the same counsel. A charge of forum-shopping may not be anchored simply on
the fact that the counsel for different petitioners in two (2) cases is one and the same. Besides, a
review of the records of this case shows that the counsel of record of Investa in Special Civil
Case No. 28 is a certain Atty. Ignacio D. Debuque, Jr. and not the same counsel representing
the private respondents. DCISAE
10.
CONSTITUTIONAL LAW; BILL OF RIGHTS; DUE PROCESS; DENIAL THEREOF
WHERE COURT RENDERED JUDGMENT WITHOUT FIRST REQUIRING PETITIONER-ININTERVENTION TO FILE COMMENT OR OPPOSITION TO TWIN MOTIONS FOR
CONTEMPT. We find, however, that the action taken by the Court of Appeals, 13th Division,
on the "Twin Motions for Contempt of Court and to Nullify Proceedings" insofar as it nullified the

election of the officers and members of the Board of Directors of DARBCI, violated the
constitutional right of the petitioners-in-intervention to due process. The requirement of due
process is satisfied if the following conditions are present, namely: (1) there must be a court or
tribunal clothed with judicial power to hear and determine the matter before it; (2) jurisdiction
must be lawfully acquired over the person of the defendant or over the property which is the
subject of the proceedings; (3) the defendant must be given an opportunity to be heard; and (4)
judgment must be rendered upon lawful hearing. The appellate court should have first required
the petitioners-in-intervention to file their comment or opposition to the said "Twin Motions for
contempt of court and to nullify Proceedings" which also refers to the elections held during the
general assembly on July 12, 1998. It was precipitate for the appellate court to render judgment
against the petitioners-in-intervention in its Resolution dated February 9, 1999 without due notice
and opportunity to be heard. Besides, the validity of the general assembly held on July 12, 1998
was not raised as an issue in CA-G.R. SP No. 47933.

On February 24, 1998, CDA Chairman Jose C. Medina, Jr. issued an order 6 in CDA-CO Case
No. 97-011 placing the private respondents under preventive suspension, hence, paving the way
for the newly-created management committee 7 to assume office on March 10, 1998.

DECISION

On April 21, 1998, the Court of Appeals, 12th Division, issued a temporary restraining order 9 in
CA-G.R. SP No. 47318 enjoining the RTC of Polomolok, South Cotabato, Branch 39, from
enforcing the restraining order which the latter court issued on March 27, 1998, and ordered that
the proceedings in SP Civil Case No. 25 be held in abeyance.

DE LEON, JR., J p:
At the core of the instant petition for review on certiorari of the Decision 1 of the Court of
Appeals, 13th Division, in CA-G.R. SP. No. 47933 promulgated on September 9, 1998 and its
Resolution 2 dated February 9, 1999 is the issue of whether or not petitioner Cooperative
Development Authority (CDA for brevity) is vested with quasi-judicial authority to adjudicate
intra-cooperative disputes. HCEISc
The record shows that sometime in the later part of 1997, the CDA received from certain
members of the Dolefil Agrarian Reform Beneficiaries Cooperative, Inc. (DARBCI for brevity), an
agrarian reform cooperative that owns 8,860 hectares of land in Polomolok, South Cotabato,
several complaints alleging mismanagement and/or misappropriation of funds of DARBCI by the
then incumbent officers and members of the board of directors of the cooperative, some of
whom are herein private respondents.
Acting on the complaints docketed as CDA-CO Case No. 97-011, CDA Executive Director
Candelario L. Verzosa, Jr. issued an order 3 dated December 8, 1997 directing the private
respondents to file their answer within ten (10) days from receipt thereof.
Before the private respondents could file their answer, however, CDA Administrator Alberto P.
Zingapan issued on December 15, 1997 an order, 4 upon the motion of the complainants in
CDA-CO Case No. 97-011, freezing the funds of DARBCI and creating a management
committee to manage the affairs of the said cooperative.
On December 18, 1991, the private respondents filed a Petition for Certiorari 5 with a prayer for
preliminary injunction, damages and attorney's fees against the CDA and its officers namely:
Candelario L. Verzosa, Jr. and Alberto P. Zingapan, including the DOLE Philippines Inc. before
the Regional Trial Court (RTC for brevity) of Polomolok, South Cotabato, Branch 39. The petition
which was docketed as SP Civil Case No. 25, primarily questioned the jurisdiction of the CDA to
resolve the complaints against the private respondents, specifically with respect to the authority
of the CDA to issue the "freeze order" and to create a management committee that would run
the affairs of DARBCI.

On March 27, 1998, the RTC of Polomolok, South Cotabato, Branch 39, issued a temporary
restraining order 8 (TRO), initially for seventy-two (72) hours and subsequently extended to
twenty (20) days, in an Order dated March 31, 1998. The temporary restraining order, in effect,
directed the parties to restore status quo ante, thereby enabling the private respondents to
reassume the management of DARBCI.
The CDA questioned the propriety of the temporary restraining order issued by the RTC of
Polomolok, South Cotabato on March 27, 1998 through a petition for certiorari before the Court
of Appeals, 12th Division, which was docketed as CA-G.R. SP No. 47318.

Consequently, the CDA continued with the proceedings in CDA-CO Case No. 97-011. On May
26, 1998 CDA Administrator Arcadio S. Lozada issued a resolution 10 which directed the holding
of a special general assembly of the members of DARBCI and the creation of an ad hoc election
committee to supervise the election of officers and members of the board of directors of DARBCI
scheduled on June 14, 1998.
The said resolution of the CDA, issued on May 26, 1998 prompted the private respondents to file
on June 8, 1998 a Petition for Prohibition 11 with a prayer for preliminary mandatory injunction
and temporary restraining order with the Court of Appeals, 13th Division, which was docketed as
CA-G.R. SP No. 47933. On June 10, 1998, the appellate court issued a resolution 12 restraining
the CDA and its administrator, Arcadio S. Lozada, the three (3) members of the ad hoc election
committee or any and all persons acting in their behalf from proceeding with the election of
officers and members of the board of directors of DARBCI scheduled on June 14, 1998.
Incidentally, on the same date that the Court of Appeals issued a temporary restraining order in
CA-G.R. SP No. 47933 on June 10, 1998, a corporation by the name of Investa Land
Corporation (Investa for brevity) which allegedly executed a "Lease Agreement with Joint
Venture" with DARBCI filed a petition 13 with the RTC of Polomolok, South Cotabato, Branch
39, docketed as SP Civil Case No. 28, essentially seeking the annulment of orders and
resolutions issued by the CDA in CDA-CO Case No. 97-011 with a prayer for temporary
restraining order and preliminary injunction. On the following day, June 11, 1998, the trial court
issued a temporary restraining order 14 enjoining the respondents therein from proceeding with
the scheduled special general assembly and the elections of officers and members of the board
of directors of DARBCI on June 14, 1998. Thereafter, it also issued a writ of preliminary
injunction.
With the issuance of the two (2) restraining orders by the Court of Appeals, 13th Division, and
the RTC of Polomolok, South Cotabato, Branch 39, on June 10 and 11, 1998, respectively, the
scheduled special general assembly and the election of officers and members of the board of
directors of DARBCI on June 14, 1998 did not take place.

Nevertheless, on July 12, 1998, the majority of the 7,511 members of DARBCI, on their own
initiative, convened a general assembly and held an election of the members of the board of
directors and officers of the cooperative, thereby effectively replacing the private respondents.
Hence, the private respondents filed a Twin Motions for Contempt of Court and to Nullify
Proceedings 15 with the Court of Appeals in CA-G.R. SP No. 47933.
On September 9, 1998 the Court of Appeals, 13th Division, promulgated its subject appealed
Decision 16 granting the petition in CA-G.R. SP No. 47933, the dispositive portion of which
reads:
Wherefore, the foregoing considered, the Petition is hereby GRANTED. The Orders of the
respondent Cooperative Development Authority in CDA-CO case No. 97-011 dated 08
December 1997, 15 December 1997, 26 January 1998, 24 February 1998, 03 March 1998, and
the Resolution dated 26 May 1998, are hereby declared NULL AND VOID and of no legal force
and effect.
Further, the respondents are hereby ORDERED to perpetually CEASE AND DESIST from taking
any further proceedings in CDA-CO Case No. 97-011.
Lastly, the respondent CDA is hereby ORDERED to REINSTATE the Board of Directors of
DARBCI who were ousted by virtue of the questioned Orders, and to RESTORE the status quo
prior to the filing of CDA-CO Case No. 97-011.
SO ORDERED.
The CDA filed a motion for reconsideration 17 of the Decision in CA-G.R. SP No. 47933 but it
was denied by the Court of Appeals in its assailed Resolution 18 dated February 9, 1999, thus:
WHEREFORE, the Motion for Reconsideration is hereby DENIED for being patently without
merit.
MOREOVER, acting on petitioners' Twin Motion, and in view of the Decision in this case dated
09, September 1998, the tenor of which gives it legal effect nunc pro tunc. We therefore hold the
12 July 1998 election of officers, the resolutions passed during the said assembly, and the
subsequent oath-taking of the officers elected therein, and all actions taken during the said
meeting, being in blatant defiance of a valid restraining order issued by this Court, to be NULL
AND VOID AB INITIO AND OF NO LEGAL FORCE AND EFFECT.
FURTHERMORE, the private respondents are hereby given thirty (30) days from receipt of this
Resolution within which to explain in writing why they should not be held in contempt of this
Court for having openly defied the restraining order dated 10 July 1998. The Hon. Jose C.
Medina of the CDA is given a like period to explain in writing why he should not be cited in
contempt for having administered the oath of the "Board of Officers" pending the effectivity of the
restraining order. The respondent Arcadio S. Lozada, Administrator of the CDA, is likewise given
the same period to explain why he should not be held in contempt for issuing a resolution on 21
July 1998 validating the proceedings of the assembly, and another resolution on 28 August 1998
confirming the election of the officers thereof.

I
THE HONORABLE COURT OF APPEALS, IN NULLIFYING THE ORDERS AND
RESOLUTIONS OF THE COOPERATIVE DEVELOPMENT AUTHORITY IN CDA CO CASE
NO. 97-011, DECIDED A QUESTION OF SUBSTANCE THAT IS NOT IN ACCORD WITH LAW
AND APPLICABLE DECISIONS OF THE SUPREME COURT.
II
THE HONORABLE COURT OF APPEALS ERRED IN NOT APPLYING THE RULE ON
FORUM-SHOPPING.
III
THE HONORABLE COURT OF APPEALS ERRED IN RENDERING A DECISION ON THE
BASIS OF PURE CONJECTURES AND SURMISES AND HAS DEPARTED FROM THE
ACCEPTED AND USUAL COURSE OF JUDICIAL PROCEEDINGS WHICH CALL FOR AN
EXERCISE OF THIS HONORABLE COURT'S SUPERVISION.
Petitioner CDA claims that it is vested with quasi-judicial authority to adjudicate cooperative
disputes in view of its powers, functions and responsibilities under Section 3 of Republic Act No.
6939. 20 The quasi-judicial nature of its powers and functions was confirmed by the Department
of Justice, through the then Acting Secretary of Justice Demetrio G. Demetria, in DOJ Opinion
No. 10, Series of 1995, which was issued in response to a query of the then Chairman Edna E.
Aberina of the CDA, to wit:
Applying the foregoing, the express powers of the CDA to cancel certificates of registration of
cooperatives for non-compliance with administrative requirements or in cases of voluntary
dissolution under Section 3(g), and to mandate and conciliate disputes within a cooperative or
between cooperatives under Section 8 of R.A. No. 6939, may be deemed quasi-judicial in
nature.
The reason is that in the performance of its functions such as cancellation of certificate of
registration, it is necessary to establish non-compliance or violation of administrative
requirement. To do so, there arises an indispensable need to hold hearings, investigate or
ascertain facts that possibly constitute non-compliance or violation and, based on the facts
investigated or ascertained, it becomes incumbent upon the CDA to use its official discretion
whether or not to cancel a cooperative's certificate of registration, thus, clearly revealing the
quasi-judicial nature of the said function. When the CDA acts as a conciliatory body pursuant to
Section 8 of R.A. No. 6939, it in effect performs the functions of an arbitrator. Arbitrators are by
the nature of their functions act in quasi-judicial capacity . . . .
The quasi-judicial nature of the foregoing functions is bolstered by the provisions of Sections
3(o) of R.A. No. 6939 which grants CDA on (sic) the exercise of other functions as may be
necessary to implement the provisions of cooperative laws, the power to summarily punish for
direct contempt any person guilty of misconduct in the presence thereof who seriously interrupts
any hearing or inquiry with a fine or imprisonment prescribed therein, a power usually granted to
make effective the exercise of quasi-judicial functions. 21

SO ORDERED.
Hence, the instant petition 19 for review which raises the following assignments of error:

Likewise, the Office of the President, through the then Deputy Executive Secretary, Hon.
Leonardo A. Quisumbing, espoused the same view in the case of Alberto Ang, et al. v. The

Board of Directors, Metro Valenzuela Transport Services Cooperative, Inc., O.P. Case No.
51111, when it declared and ruled that:

scrap of paper for lack of authority to file the same from the Office of the Solicitor General and
for having been filed without approval from the Board of Administrators of CDA.

Concededly, Section 3(o) of R.A. No. 6939 and Article 35(4) of R.A. 6938, may not be relied
upon by the CDA as authority to resolve internal conflicts of cooperatives, they being general
provisions. Nevertheless, this does not preclude the CDA from resolving the instant case. The
assumption of jurisdiction by the CDA on matters which partake of cooperative disputes is a
logical, necessary and direct consequence of its authority to register cooperatives. Before a
cooperative can acquire juridical personality, registration thereof is a condition sine qua non, and
until and unless the CDA issues a certificate of registration under its official seal, any
cooperative for that matter cannot be considered as having been legally constituted. To our
mind, the grant of this power impliedly carries with it the visitorial power to entertain cooperative
conflicts, a lesser power compared to its authority to cancel registration certificates when, in its
opinion, the cooperative fails to comply with some administrative requirements (Sec. 2(g), R.A.
No. 6939). Evidently, respondents-appellants' claim that the CDA is limited to conciliation and
mediation proceedings is bereft of legal basis. Simply stated, the CDA, in the exercise of 'such
other function' and in keeping with the mandate of the law, could render the decisions and/or
resolutions as long as they pertain to the internal affairs of the public service cooperative, such
as the rights and privileges of its members, the rules and procedures for meetings of the general
assembly, Board of Directors and committees, election and qualifications of officers, directors
and committee members, and allocation and distribution of surpluses. 22

The private respondents also contend that, contrary to the claim of the petitioner, the powers,
functions and responsibilities of the CDA show that it was merely granted regulatory or
supervisory powers over cooperatives in addition to its authority to mediate and conciliate
between parties involving the settlement of cooperative disputes.

The petitioner avers that when an administrative agency is conferred with quasi-judicial powers
and functions, such as the CDA, all controversies relating to the subject matter pertaining to its
specialization are deemed to be covered within the jurisdiction of said administrative agency.
The courts will not interfere in matters which are addressed to the sound discretion of
government agencies entrusted with the regulation of activities undertaken upon their special
technical knowledge and training.
The petitioner added that the decision in the case of CANORECO v. Hon. Ruben D. Torres, 23
affirmed the adjudicatory powers and functions of CDA contrary to the view held by the Court of
Appeals, when the Supreme Court upheld therein the ruling of the CDA annulling the election of
therein respondents Norberto Ochoa, et al. as officers of the Camarines Norte Electric
Cooperative.
Petitioner CDA also claims that herein private respondents are guilty of forum-shopping by filing
cases in three (3) different fora seeking the same relief. Petitioner pointed out that private
respondents originally filed a petition with a prayer for preliminary injunction dated December 17,
1997 before the RTC of Polomolok, South Cotabato which was docketed as SP Civil Case No.
25. Subsequently, the same private respondents filed another petition with a prayer for
preliminary injunction with the Court of Appeals, 13th Division, docketed as CA-G.R. SP No.
47933. Thereafter, Investa, also represented by the same counsel of private respondents, Atty.
Reni Dublin, filed another case with the RTC of Polomolok, South Cotabato, docketed as SP
Civil Case No. 28, likewise praying, among others, for the issuance of preliminary injunction and
an application for a temporary restraining order. In effect, petitioner was confronted with three (3)
TRO's issued in three (3) separate actions enjoining it from enforcing its orders and resolutions
in CDA-CO Case No. 97-011.
In their Comment, 24 private respondents contend that the instant petition for review on certiorari
filed by CDA Administrator Alberto Zingapan should be dismissed and struck down as a mere

Private respondents denied that they are guilty of forum-shopping. They clarified that the case
filed with the RTC of Polomolok, South Cotabato, Branch 39, docketed as SP Civil Case No. 25,
was a petition for certiorari. On the other hand, the case that they filed with the Court of Appeals,
13th Division, docketed therein as CA-G.R. SP No. 47933, was a petition for prohibition to stop
the holding of a special general assembly and the election of a new set of DARBCI officers on
June 14, 1998 as ordered by the petitioner CDA on May 26, 1998, which events have not yet
occurred at the time the petition for certiorari was filed by the private respondents with the RTC
of Polomolok, South Cotabato, Branch 39.
Private respondents also denied that the filing by Investa of the petition for the declaration of
nullity of the orders and resolutions of petitioner CDA, with a prayer for temporary restraining
order with the RTC of Polomolok, South Cotabato, docketed therein as SP Civil Case No. 28,
constituted forum-shopping on their part. They pointed out that Investa has a separate juridical
personality from DARBCI and that, contrary to the claim of petitioner CDA, the former is not
represented by the lawyer of the private respondents.
By way of reply, 25 petitioner claims that Atty. Rogelio P. Madriaga was properly deputized,
among other lawyers, as Special Attorney by the Office of the Solicitor General to represent the
CDA in the instant petition pursuant to the letter 26 of Assistant Solicitor General Carlos N.
Ortega addressed to CDA Chairman Jose C. Medina, Jr. dated April 8, 1999. Likewise, the filing
of the instant petition was an official act of CDA Administrator Alberto P. Zingapan who was duly
appointed by the CDA Board of Administrators as chairman of the Oversight Committee on
Legal Matters per Resolution No. 201, S-1998. 27
Meanwhile, on March 26, 1999, certain persons alleging to be incumbent officers and members
of the board of directors of DARBCI filed a motion to intervene in the instant petition which was
granted by this Court per its Resolution dated July 7, 1999. 28 In the same resolution, this Court
required both petitioner CDA and the private respondents in this case to file their respective
comments to the petition-in-intervention within ten (10) days from notice, but both parties failed
to comply to do so up to the present.
We note that the instant petition for review on certiorari suffers from a basic infirmity for lack of
the requisite imprimatur from the Office of the Solicitor General, hence, it is dismissible on that
ground. The general rule is that only the Solicitor General can bring or defend actions on behalf
of the Republic of the Philippines and that actions filed in the name of the Republic, or its
agencies and instrumentalities for that matter, if not initiated by the Solicitor General, will be
summarily dismissed. 29
The authority of the Office of the Solicitor General to represent the Republic of the Philippines,
its agencies and instrumentalities, is embodied under Section 35(1), Chapter 12, Title III, Book
IV of the Administrative Code of 1987 which provides that:

SEC. 35. Powers and Functions. The Office of the Solicitor General shall represent the
Government of the Philippines, its agencies and instrumentalities and its officials and agents in
any litigation, proceeding, investigation or matter requiring the services of lawyers. When
authorized by the President or head of the office concerned, it shall also represent government
owned or controlled corporations. The Office of the Solicitor General shall constitute the law
office of the Government and, as such, shall discharge duties requiring the services of lawyers. It
shall have the following specific powers and functions:
(1)
Represent the Government in the Supreme Court and the Court of Appeals in all
criminal proceedings; represent the Government and its officers in the Supreme Court, Court of
Appeals, and all other courts or tribunals in all civil actions and special proceedings in which the
Government or any officer thereof in his official capacity is a party.
The import of the above-quoted provision of the Administrative Code of 1987 is to impose upon
the Office of the Solicitor General the duty to appear as counsel for the Government, its
agencies and instrumentalities and its officials and agents before the Supreme Court, the Court
of Appeals, and all other courts and tribunals in any litigation, proceeding, investigation or matter
requiring the services of a lawyer. Its mandatory character was emphasized by this Court in the
case of Gonzales v. Chavez, 30 thus:
It is patent that the intent of the lawmaker was to give the designated official, the Solicitor
General, in this case, the unequivocal mandate to appear for the government in legal
proceedings. Spread out in the laws creating the office is the discernible intent which may be
gathered from the term "shall," which is invariably employed, from Act No. 136 (1901) to the
more recent Executive Order No. 292 (1987).
xxx

xxx

xxx

The decision of this Court as early as 1910 with respect to the duties of the Attorney-General
well applies to the Solicitor General under the facts of the present case. The Court then
declared:
In this jurisdiction, it is the duty of the Attorney General 'to perform the duties imposed upon him
by law' and 'he shall prosecute all causes, civil and criminal, to which the Government of the
Philippine Islands, or any officer thereof, in his official capacity, is a party' . . . .
xxx

xxx

Petitioner claims that its counsel of record, Atty. Rogelio P. Madriaga, was deputized by the
Solicitor General to represent the CDA in the instant petition. To prove its claim, the petitioner
attached to its Reply to the Comment dated January 31, 2000, a photocopy of the alleged
deputation letter 31 from the Office of the Solicitor General signed by Hon. Carlos N. Ortega,
Assistant Solicitor General, addressed to CDA Chairman Jose C. Medina, Jr.
A close scrutiny of the alleged deputation letter from the Office of the Solicitor General shows,
however, that said counsel for the petitioner was only "authorized to appear as counsel in all civil
cases in the lower courts (RTCs and MTCs) wherein the CDA is a party-litigant." Likewise, the
same letter appears to be dated April 8, 1999 while the Petition for Review on Certiorari filed by
the petitioner was dated February 26, 1999. Clearly then, when the petition was filed with this
Court on March 3, 1999, Atty. Rogelio P. Madriaga was not yet deputized by the Office of the
Solicitor General to represent the CDA.
Even on the assumption that the alleged letter from the Office of the Solicitor General was
intended to validate or ratify the authority of counsel to represent the petitioner in this case, the
same contains certain conditions, one of which is that petitioner "shall submit to the Solicitor
General, for review, approval and signature, all important pleadings and motions, including
motions to withdraw complaints or appeals, as well as compromise agreements." Significantly,
one of the major pleadings filed subsequently by the petitioner in this case namely, the Reply to
the Respondent's Comment on the Petition dated January 31, 2000, does not have any
indication that the same was previously submitted to the Office of the Solicitor General for review
or approval, much less bear the requisite signature of the Solicitor General as required in the
alleged deputation letter.
Nonetheless, in view of the novelty of the main issue raised in this petition concerning the nature
and scope of jurisdiction of the CDA in the settlement of cooperative disputes as well as the long
standing legal battle involving the management of DARBCI between two (2) opposing factions
that inevitably threatens the very existence of one of the country's major cooperatives, this Court
has decided to act on and determine the merits of the instant petition.
Section 3 of R.A. No. 6939 enumerates the powers, functions and responsibilities of the CDA,
thus:
SEC. 3. Powers, Functions and Responsibilities. The Authority shall have the following
powers, functions and responsibilities:

xxx

The Court is firmly convinced that considering the spirit and the letter of the law, there can be no
other logical interpretation of Sec. 35 of the Administrative Code than that it is, indeed,
mandatory upon the OSG to "represent the Government of the Philippines, its agencies and
instrumentalities and its officials and agents in any litigation, proceeding, investigation or matter
requiring the services of a lawyer."
As an exception to the general rule, the Solicitor General, in providing legal representation for
the government, is empowered under Section 35(8), Chapter 12, Title III, Book IV of the
Administrative Code of 1987 to "deputize legal officers of government departments, bureaus,
agencies and offices to assist the Solicitor General and appear or represent the Government in
cases involving their respective offices, brought before the courts and exercise supervision and
control over such legal officers with respect to such cases."

(a)
Formulate, adopt and implement integrated and comprehensive plans and programs
on cooperative development consistent with the national policy on cooperatives and the overall
socio-economic development plan of the Government;
(b)
Develop and conduct management and training programs upon request of
cooperatives that will provide members of cooperatives with the entrepreneurial capabilities,
managerial expertise, and technical skills required for the efficient operation of their cooperatives
and inculcate in them the true spirit of cooperativism and provide, when necessary, technical
and professional assistance to ensure the viability and growth of cooperatives with special
concern for agrarian reform, fishery and economically depressed sectors;
(c)
Support the voluntary organization and consensual development of activities that
promote cooperative movements and provide assistance towards upgrading managerial and
technical expertise upon request of the cooperatives concerned;

(d)
Coordinate the effects of the local government units and the private sector in the
promotion, organization, and development of cooperatives;
(e)
Register all cooperatives and their federations and unions, including their division,
merger, consolidation, dissolution or liquidation. It shall also register the transfer of all or
substantially all of their assets and liabilities and such other matters as may be required by the
Authority;
(f)
Require all cooperatives, their federations and unions to submit their annual financial
statements, duly audited by certified public accountants, and general information sheets;
(g)
Order the cancellation after due notice and hearing of the cooperative's certificate of
registration for non-compliance with administrative requirements and in cases of voluntary
dissolution;
(h)
Assist cooperatives in arranging for financial and other forms of assistance under such
terms and conditions as are calculated to strengthen their viability and autonomy;
(i)
Establish extension offices as may be necessary and financially viable to implement
this Act. Initially, there shall be extension offices in the Cities of Dagupan, Manila, Naga, Iloilo,
Cebu, Cagayan de Oro and Davao;
(j)
Impose and collect reasonable fees and charges in connection with the registration of
cooperatives;

provides that "upon request of either or both parties, the Authority shall mediate and conciliate
disputes with a cooperative or between cooperatives" however, with a restriction "that if no
mediation or conciliation succeeds within three (3) months from request thereof, a certificate of
non-resolution shall be issued by the commission prior to the filing of appropriate action before
the proper courts." Being an administrative agency, the CDA has only such powers as are
expressly granted to it by law and those which are necessarily implied in the exercise thereof. 33
Petitioner CDA, however, insists that its authority to conduct hearings or inquiries and the
express grant to it of contempt powers under Section 3, paragraphs (g) and (o) of R.A. No. 6939,
respectively, necessarily vests upon the CDA quasi-judicial authority to adjudicate cooperative
disputes. A review of the records of the deliberations by both chambers of Congress prior to the
enactment of R.A. No. 6939 provides a definitive answer that the CDA is not vested with quasijudicial authority to adjudicate cooperative disputes. During the house deliberations on the then
House Bill No. 10787, the following exchange transpired:
MR. AQUINO (A.). The response of the sponsor is not quite clear to this humble Representation.
Let me just point out other provisions under this particular section, which to the mind of this
humble Representation appear to provide this proposed Authority with certain quasi-judicial
functions. Would I be correct in this interpretation of paragraphs (f) and (g) under this section
which state that among the powers of the Authority are:
To administer the dissolution, disposal of assets and settlement of liabilities of any cooperative
that has been found to be inoperable, inactive or defunct.
To make appropriate action on cooperatives found to be in violation of any provision. . .

(k)
Administer all grants and donations coursed through the Government for cooperative
development, without prejudice to the right of cooperatives to directly receive and administer
such grants and donations upon agreement with the grantors and donors thereof;
(l)
Formulate and adopt continuing policy initiatives consultation with the cooperative
sector through public hearing;
(m)

Adopt rules and regulations for the conduct of its internal operations;

(n)
Submit an annual report to the President and Congress on the state of the cooperative
movement;
(o)
Exercise such other functions as may be necessary to implement the provisions of the
cooperative laws and, in the performance thereof, the Authority may summarily punish for direct
contempt any person guilty of misconduct in the presence of the Authority which seriously
interrupts any hearing or inquiry with a fine of not more than five hundred pesos (P500.00) or
imprisonment of not more than ten (10) days, or both. Acts constituting indirect contempt as
defined under Rule 71 of the Rules of Court shall be punished in accordance with the said Rule.
It is a fundamental rule in statutory construction that when the law speaks in clear and
categorical language, there is no room for interpretation, vacillation or equivocation there is
only room for application. 32 It can be gleaned from the above-quoted provision of R.A. No.
6939 that the authority of the CDA is to discharge purely administrative functions which consist
of policy-making, registration, fiscal and technical assistance to cooperatives and
implementation of cooperative laws. Nowhere in the said law can it be found any express grant
to the CDA of authority to adjudicate cooperative disputes. At most, Section 8 of the same law

It appears to the mind of this humble Representation that the proposed Authority may be called
upon to adjudicate in these particular instances. Is it therefore vested with quasi-judicial
authority?
MR. ROMUALDO. No, Mr. Speaker. We have to resort to the courts, for instance, for the
dissolution of cooperatives. The Authority only administers once a cooperative is dissolved. It is
also the CDA which initiates actions against any group of persons that may use the name of a
cooperative to its advantage, that is, if the word "cooperative" is merely used by it in order to
advance its intentions, Mr. Speaker.
MR. AQUINO (A.). So, is the sponsor telling us that the adjudication will have to be left to the
courts of law?
MR. ROMUALDO. To the courts, Mr. Speaker. 34
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MR. ADASA. One final question, Mr. Speaker. On page 4, line 33, it seems that one of the
functions given to the Cooperative Development Authority is to recommend the filing of legal
charges against any officer or member of a cooperative accused of violating the provisions of
this Act, existing laws and cooperative by-laws and other rules and regulations set forth by the
government. Would this not conflict with the function of the prosecuting fiscal?

MR. ROMUALDO. No, it will be the provincial fiscal that will file the case. The Authority only
recommends the filing of legal charges, that is, of course, after preliminary investigation
conducted by the provincial fiscal or the prosecuting arm of the government.

BY THE AGENCY. THE SHERIFF AND/OR POLICE AGENCIES OF THE PLACE WHERE THE
HEARING OR INVESTIGATION IS CONDUCTED SHALL, UPON REQUEST OF THE
AGENCY, ASSIST IT TO ENFORCE THE PENALTY.

MR. ADASA. Does the Gentleman mean to say that the Cooperative Development Authority can
take the place of the private complainant or the persons who are the offended party if the latter
would not pursue the case?

THE PRESIDENT. That is quite a long amendment. Does the Gentleman have a written copy of
his amendment, so that the Members will have an opportunity to go over it and examine its
implications?

MR. ROMUALDO. Yes, Mr. Speaker. The Authority can initiate even the filing of the charges as
embraced and defined on line 33 of page 4 of this proposed bill. 35

Anyway, why do we not hold in abeyance the proposed amendment? Do we have that?
xxx

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xxx

MR. CHIONGBIAN. . . . Under the same section, line 28, subparagraph (g) says that the
Authority can take appropriate action on cooperatives found to be violating any provision of this
Act, existing laws and cooperative by-laws, and other rules and regulations set forth by the
government by way of withdrawal of Authority assistance, suspension of operation or
cancellation of accreditation.
My question is: If a cooperative, whose officers are liable for wrongdoing, is found violating any
of the provisions of this Act, are we going to sacrifice the existence of that cooperative just
because some of the officers have taken advantage of their positions and misused some of the
funds? It would be very unfair for the Authority to withdraw its assistance at the expense of the
majority. It is not clear as to what the liabilities of the members of these cooperatives are.
xxx

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xxx

xxx

xxx

xxx

MR. ROMUALDO. Mr. Speaker, before this action may be taken by the Authority, there will be
due process. However, this provision is applicable in cases where the cooperative as a whole
violated the provisions of this Act as well as existing laws. In this case, punitive actions may be
taken against the cooperative as a body.
With respect to the officials, if they themselves should be punished, then Section (h) of this
chapter provides that legal charges shall be filed by the Cooperative Development Authority. 36
In like manner, the deliberations on Senate Bill No. 485, which was the counterpart of House Bill
No. 10787, yield the same legislative intent not to grant quasi-judicial authority to the CDA as
shown by the following discussions during the period of amendments:
SEN. ALVAREZ. On page 3, between lines 5 and 6, if I may, insert the following as one of the
powers: CONDUCT INQUIRIES, STUDIES, HEARINGS AND INVESTIGATIONS AND ISSUE
ORDERS, DECISIONS AND CIRCULARS AS MAY BE NECESSARY TO IMPLEMENT ALL
LAWS, RULES AND REGULATIONS RELATING TO COOPERATIVES. THE AGENCY MAY
SUMMARILY PUNISH FOR CONTEMPT BY A FINE OF NOT MORE THAN TWO HUNDRED
PESOS (P200.00) OR IMPRISONMENT NOT EXCEEDING TEN (10) DAYS, OR BOTH, ANY
PERSONS GUILTY OF SUCH MISCONDUCT IN THE PRESENCE OF THE AGENCY WHICH
SERIOUSLY INTERRUPTS ANY HEARING OR INVESTIGATION, INCLUDING WILFULL
FAILURE OR REFUSAL, WITHOUT JUST CAUSE, COMPLY WITH A SUMMONS,
SUBPOENA, SUBPOENA DUCES TECUM, DECISION OR ORDER, RULE OR REGULATION,
OR, BEING PRESENT AT A HEARING OR INVESTIGATION, REFUSES TO BE SWORN IN
AS A WITNESS OR TO ANSWER QUESTIONS OR TO FURNISH INFORMATION REQUIRED

SEN. ALVAREZ. Mr. President, this is almost an inherent power of a registering body. With the
tremendous responsibility that we have assigned to the Authority or the agency for it to be
able to function and discharge its mandate it will need this authority.
SEN. AQUINO. Yes, Mr. President, conceptually, we do not like the agency to have quasijudicial powers. And, we are afraid that if we empower the agency to conduct inquiries, studies,
hearings and investigations, it might interfere in the autonomous character of cooperatives. So, I
am sorry Mr. President, we don't accept the amendment. 37
The decision to withhold quasi-judicial powers from the CDA is in accordance with the policy of
the government granting autonomy to cooperatives. It was noted that in the past 75 years
cooperativism failed to flourish in the Philippines. Of the 23,000 cooperatives organized under
P.D. No. 175, only 10 to 15 percent remained operational while the rest became dormant. The
dismal failure of cooperativism in the Philippines was attributed mainly to the stifling attitude of
the government toward cooperatives. While the government wished to help, it invariably wanted
to control. 38 Also, in its anxious efforts to push cooperativism, it smothered cooperatives with
so much help that they failed to develop self-reliance. As one cooperative expert put it, "The
strong embrace of government ends with a kiss of death for cooperatives." 39
But then, acknowledging the role of cooperatives as instruments of national development, the
framers of the 1987 Constitution directed Congress under Article XII, Section 15 thereof to
create a centralized agency that shall promote the viability and growth of cooperatives. Pursuant
to this constitutional mandate, the Congress approved on March 10, 1990 Republic Act No. 6939
which is the organic law creating the Cooperative Development Authority. Apparently cognizant
of the errors in the past, Congress declared in an unequivocal language that the state shall
"maintain the policy of non-interference in the management and operation of cooperatives." 40
After ascertaining the clear legislative intent underlying R.A. No. 6939, effect should be given to
it by the judiciary. 41 Consequently, we hold and rule that the CDA is devoid of any quasi-judicial
authority to adjudicate intra-cooperative disputes and more particularly disputes as regards the
election of the members of the Board of Directors and officers of cooperatives. The authority to
conduct hearings or inquiries and the power to hold any person in contempt may be exercised
by the CDA only in the performance of its administrative functions under R.A. No. 6939.
The petitioner's reliance on the case of CANORECO is misplaced for the reason that the central
issue raised therein was whether or not the Office of the President has the authority to supplant
or reverse the resolution of an administrative agency, specifically the CDA, that had long
became final and on which issue we ruled in the negative. In fact, this Court declared in the said
case that the CDA has no jurisdiction to adjudicate intra-cooperative disputes thus: 42

xxx

xxx

xxx

Obviously there was a clear case of intra-cooperative dispute. Article 121 of the Cooperative
Code is explicit on how the dispute should be resolved; thus:
ART. 121.
Settlement of Disputes. Disputes among members, officers, directors,
and committee members, and intra-cooperative disputes shall, as far as practicable, be settled
amicably in accordance with the conciliation or mediation mechanisms embodied in the by-laws
of the cooperative, and in applicable laws.
Should such a conciliation/mediation proceeding fail, the matter shall be settled in a court of
competent jurisdiction.
Complementing this Article is Section 8 of R.A. No. 6939, which provides:
SEC. 8. Mediation and Conciliation. Upon request of either or both or both parties, the
[CDA] shall mediate and conciliate disputes with the cooperative or between cooperatives:
Provided, That if no mediation or conciliation succeeds within three (3) months from request
thereof, a certificate of non-resolution shall be issued by the commission prior to the filing of
appropriate action before the proper courts.
Likewise, we do not find any merit in the allegation of forum-shopping against the private
respondents. Forum-shopping exists where the elements of litis pendentia are present or where
a final judgment in one case will amount to res judicata in the other. 43 The requisites for the
existence of litis pendentia, in turn, are (1) identity of parties or at least such representing the
same interest in both actions; (2) identity of rights asserted as prayed for, the relief being
founded on the same facts; and (3) the identity in both cases is such that the judgment that may
be rendered in the pending case, regardless of which party is successful, would amount to res
judicata to the other case. 44
While there may be identity of parties between SP Civil Case No. 25 filed with the RTC of
Polomolok, South Cotabato, Branch 39, and CA-G.R. SP No. 47933 before the Court of
Appeals, 13th Division, the two (2) other requisites are not present. The Court of Appeals
correctly observed that the case filed with the RTC of Polomolok, South Cotabato was a petition
for certiorari assailing the orders of therein respondent CDA for having been allegedly issued
without or in excess of jurisdiction. On the other hand, the case filed with the Court of Appeals
was a petition for prohibition seeking to restrain therein respondent from further proceeding with
the hearing of the case. Besides, the filing of the petition for prohibition with the Court of Appeals
was necessary after the CDA issued the Order dated May 26, 1998 which directed the holding of
a special general assembly for purposes of conducting elections of officers and members of the
board of DARBCI after the Court of Appeals, 12th Division, in CA-G.R. SP No. 47318 issued a
temporary restraining order enjoining the proceedings in Special Civil Case No. 25 and for the
parties therein to maintain the status quo. Under the circumstances, the private respondents
could not seek immediate relief before the trial court and hence, they had to seek recourse
before the Court of Appeals via a petition for prohibition with a prayer for preliminary injunction to
forestall the impending damage and injury to them in view of the order issued by the petitioner
on May 26, 1998.
The filing of Special Civil Case No. 28 with the RTC of Polomolok, South Cotabato does not also
constitute forum-shopping on the part of the private respondents. Therein petitioner Investa,
which claims to have a subsisting lease agreement and a joint venture with DARBCI, is an entity

whose juridical personality is separate and distinct from that of private respondent cooperative or
herein individual private respondents and that they have totally different interests in the subject
matter of the case. Moreover, it was incorrect for the petitioner to charge the private respondents
with forum-shopping partly based on its erroneous claim that DARBCI and Investa were both
represented by the same counsel. A charge of forum-shopping may not be anchored simply on
the fact that the counsel for different petitioners in two (2) cases is one and the same. 45
Besides, a review of the records of this case shows that the counsel of record of Investa in
Special Civil Case No. 28 is a certain Atty. Ignacio D. Debuque, Jr. and not the same counsel
representing the private respondents. 46
Anent the petition-in-intervention, the intervenors aver that the Resolution of the Court of
Appeals dated February 9, 1999 in CA-G.R. SP No. 47933 denying the motion for
reconsideration of herein petitioner CDA also invalidated the election of officers and members of
the board of directors of DARBCI held during the special general assembly on July 12, 1998,
thus adversely affecting their substantial rights including their right to due process. They claim
that the object of the order issued by the appellate court on June 10, 1998 was to restrain the
holding of the general assembly of DARBCI as directed in the order of CDA Administrator
Arcadio Lozada dated May 26, 1998. In compliance with the said order of the Court of Appeals,
no general assembly was held on June 14, 1998. However, due to the grave concern over the
alleged tyrannical administration and unmitigated abuses of herein private respondents, the
majority of the members of DARBCI, on their own initiative and in the exercise of their inherent
right to assembly under the law and the 1987 Constitution, convened a general assembly on
July 12, 1998. On the said occasion, the majority of the members of DARBCI unanimously
elected herein petitioners-in-intervention as new officers and members of the board of directors
of DARBCI, 47 and thereby resulting in the removal of the private respondents from their
positions in DARBCI.
Petitioners-in-intervention pointed out that the validity of the general assembly held on July 12,
1998 was never raised as an issue in CA-G.R. SP No. 47933. The petitioners-in-intervention
were not even ordered by the Court of Appeals to file their comment on the "Twin Motions For
Contempt of Court and to Nullify Proceedings" filed by the private respondents on July 29, 1998.
As earlier noted, the Court of Appeals issued a temporary restraining order 48 in CA-G.R. SP
No. 47933 on June 10, 1998, the pertinent portion of which reads:
Meanwhile, respondents or any and all persons acting in their behalf and stead are temporarily
restrained from proceeding with the election of officers and members of the board of directors of
the Dolefil Agrarian Reform Beneficiaries Cooperative, Inc. scheduled on June 14, 1998 and or
any other date thereafter.
It was also noted that as a consequence of the temporary restraining order issued by the
appellate court, the general assembly and the election of officers and members of the board of
directors of DARBCI, pursuant to the resolution issued by CDA Administrator Arcadio S. Lozada,
did not take place as scheduled on June 14, 1998. However, on July 12, 1998 the majority of the
members of DARBCI, at their own initiative, held a general assembly and elected a new set of
officers and members of the board of directors of the cooperative which resulted in the ouster of
the private respondents from their posts in the said cooperative.
The incident on July 12, 1998 prompted herein private respondents to file their Twin Motions for
Contempt of Court and to Nullify Proceedings on July 26, 1998. The twin motions prayed, among
others, that after due notice and hearing, certain personalities, including the petitioners-in-

intervention, be cited in indirect contempt for their participation in the subject incident and for the
nullification of the election on July 12, 1998 for being illegal, contrary to the by-laws of the
cooperative and in defiance of the injunctive processes of the appellate court.

IN RE: DESIGNATION OF JUDGE RODOLFO U. MANZANO AS MEMBER OF THE ILOCOS

NORTE PROVINCIAL COMMITTEE ON JUSTICE.
SYLLABUS

On September 9, 1998, the Court of Appeals, 13th Division, rendered a Decision in CA-G.R. SP
No. 47933 which declared the CDA devoid of quasi-judicial jurisdiction to settle the dispute in
CDA-CO Case No. 97-011 without however, taking any action on the "Twin Motions for
Contempt of Court and to Nullify Proceedings" filed by the private respondents. As it turned out,
it was only in its Resolution dated February 9, 1999 denying petitioner's motion for
reconsideration of the Decision in CA-G.R. SP No. 47933 that the Court of Appeals, 13th
Division, acted on the "Twin Motions for Contempt of Court and to Nullify Proceedings" by
declaring as null and void the election of the petitioners-in-intervention on July 12, 1998 as
officers and members of the board of directors of DARBCI.
We find, however, that the action taken by the Court of Appeals, 13th Division, on the "Twin
Motions for Contempt of Court and to Nullify Proceedings" insofar as it nullified the election of
the officers and members of the Board of Directors of DARBCI, violated the constitutional right of
the petitioners-in-intervention to due process. The requirement of due process is satisfied if the
following conditions are present, namely: (1) there must be a court or tribunal clothed with
judicial power to hear and determine the matter before it; (2) jurisdiction must be lawfully
acquired over the person of the defendant or over the property which is the subject of the
proceedings; (3) the defendant must be given an opportunity to be heard; and (4) judgment must
be rendered upon lawful hearing. 49 The appellate court should have first required the
petitioners-in-intervention to file their comment or opposition to the said "Twin Motions for
Contempt of Court And to Nullify Proceedings" which also refers to the elections held during the
general assembly on July 12, 1998. It was precipitate for the appellate court to render judgment
against the petitioners-in-intervention in its Resolution dated February 9, 1999 without due notice
and opportunity to be heard. Besides, the validity of the general assembly held on July 12, 1998
was not raised as an issue in CA-G.R. SP No. 47933.

1.
ADMINISTRATIVE LAW; EXECUTIVE ORDER NO. 856, AS AMENDED;
PROVINCIAL/CITY COMMITTEE ON JUSTICE; PERFORMS ADMINISTRATIVE FUNCTIONS.
It is evident that such Provincial/City Committees on Justice perform administrative functions.
Administrative functions are those which involve the regulation and control over the conduct and
affairs of individuals for their own welfare and the promulgation of rules and regulations to better
carry out the policy of the legislature or such as are devolved upon the administrative agency by
the organic law of its existence.
2.
CONSTITUTIONAL LAW; SEC, ART VIII, NEW CONSTITUTION; PROHIBITION TO
MEMBERS OF THE JUDICIARY REGARDING THEIR DISCHARGE OF ADMINISTRATIVE
FUNCTIONS I QUASI-JUDICIAL OR ADMINISTRATIVE AGENCIES. Under the Constitution,
the members of the Supreme Court and other courts established by law shall not be designated
to any agency performing quasi-judicial or administrative functions (Section 12, Art. VIII,
Constitution). Considering that membership of Judge Manzano in the Ilocos Norte Provincial
Committee on Justice, which discharges administrative functions, will be in violation of the
Constitution, the Court is constrained to deny his request. This declaration does not mean that
RTC Judges should adopt an attitude of monastic insensibility or unbecoming indifference to
Province/City Committee on Justice. As incumbent RTC Judges, they form part of the structure
of government. Their integrity and performance in the adjudication of cases contribute to the
solidity of such structure. As public officials, they are trustees of an orderly society. Even as nonmembers of Provincial/City Committees on Justice, RTC judges should render assistance to said
Committees to help promote the landable purposes for which they exist, but only when such
assistance may be reasonably incidental to the fulfillment of their judicial duties.
Gutierrez, Jr., J., dissenting:

WHEREFORE, judgment is hereby rendered as follows:

1.
The petition for review on certiorari is hereby DENIED for lack of merit. The orders,
resolutions, memoranda and any other acts rendered by petitioner Cooperative Development
Authority in CDA-CO Case No. 97-011 are hereby declared null and void ab initio for lack of
quasi-judicial authority of petitioner to adjudicate intra-cooperative disputes; and the petitioner is
hereby ordered to cease and desist from taking any further proceedings therein; and
2.
In the interest of justice, the dispositive portion of the Resolution of the Court of
Appeals, dated February 9, 1999, in CA-G.R. SP No. 47933, insofar as it nullified the elections
of the members of the Board of Directors and Officers of DARBCI held during the general
assembly of the DARBCI members on July 12, 1998, is hereby SET ASIDE. STaHIC
No pronouncement as to costs.
SO ORDERED.

[A.M. No. 88-7-1861-RTC. October 5, 1988.]

1.
ADMINISTRATIVE LAW; EXECUTIVE ORDER NO. 856, AS AMENDED;
"ADMINISTRATIVE FUNCTIONS" HOW CONSTRUED. "Administrative functions" as used in
Section 12 refers to the executive machinery of government and the performance by that
machinery of governmental acts. It refers to the management actions, determinations, and
orders of executive officials as they administer the laws and try to make government effective.
There is an element of positive action, of supervision or control.
2.
ID.; ID.; ID.; PROVINCIAL/CITY COMMITTEE ON JUSTICE; DOES NOT INVOLVE
ANY REGULATION OR CONTROL OVER CONDUCT OF ANY INDIVIDUAL. Membership in
the Provincial or City Committee on Justice would not involve any regulation or control over the
conduct and affairs of individuals. Neither will the Committee on Justice promulgate rules and
regulations nor exercise any quasi-legislative functions. Its work is purely advisory. I do not see
anything wrong in a member of the judiciary joining any study group which concentrates on the
administration of justice as long as the group merely deliberates on problems involving the
speedy disposition of cases particularly those involving the poor and needy litigants or
detainees, pools the expertise and experiences of the members, and limits itself to
recommendations which may be adopted or rejected by those who have the power to legislate or
administer the particular function involved in their implementation.

3.
STATUTORY CONSTRUCTION; THE BASIC PRINCIPLES OF CONSTITUTIONAL
INTERPRETATION APPLY AS WELL TO THE PROVISIONS WHICH DEFINE OR
CIRCUMSCRIBE OUR POWERS AND FUNCTIONS AS THEY DO TO THE PROVISIONS
GOVERNING THE OTHER DEPARTMENTS OF GOVERNMENT. It is well for this Court to
be generally cautious, conservative or restrictive when it interprets provisions of the Constitution
or statutes vesting us with powers or delimiting the exercise of our jurisdiction and functions.
However, we should not overdo it. The basic principles of constitutional interpretation apply as
well to the provisions which define or circumscribe our powers and functions as they do to the
provisions governing the other departments of government. The Court should not adopt a
strained construction which impairs its own efficiency to meet the responsibilities brought about
by the changing times and conditions of society. The familiar quotation is apt in this case
constitutional provisions are interpreted by the spirit which vivifies and not by the letter which
killeth.

By Executive Order RF6-04 issued on June 21, 1988 by the Honorable Provincial Governor of
Ilocos Norte, Hon. Rodolfo C. Farias, I was designated as a member of the Ilocos Norte
Provincial Committee on Justice created pursuant to Presidential Executive Order No. 856 of 12
December 1986, as amended by Executive Order No. 326 of June 1, 1988. In consonance with
Executive Order RF6-04, the Honorable Provincial Governor of Ilocos Norte issued my
appointment as a member of the Committee. For your ready reference, I am enclosing herewith
machine copies of Executive Order RF6-04 and the appointment.
Before I may accept the appointment and enter in the discharge of the powers and duties of the
position as member of the Ilocos (Norte) Provincial Committee on Justice, may I have the honor
to request for the issuance by the Honorable Supreme Court of a Resolution, as follows:
(1)
Authorizing me to accept the appointment and to assume and discharge the powers
and duties attached to the said position;

Melencio-Herrera, J., dissenting:

CONSTITUTIONAL LAW; SEC. 12, ART. VIII, 1987 CONSTITUTION; SHOULD NOT BE GIVEN
RESTRICTIVE INTERPRETATION; COMMITTEE ON JUSTICE, NOT THE AGENCY
CONTEMPLATED BY THE PROHIBITION. Justices Melencio-Herrera hesitates to give such
a restrictive and impractical interpretation to Section 12, Article VIII of the 1987 Constitution, and
thus join the dissent of Justice Gutierrez, Jr. What Justice Melencio-Herrera believes as
contemplated by the Constitutional prohibition is designation, for example, to such quasi-judicial
bodies as the SEC, or administrative agencies like the BIR. Those are full-time positions
involving running the affairs of government, which will interfere with the discharge of judicial
functions or totally remove a Judge/Justice from the performance of his regular functions. The
Committee on Justice cannot be likened to such an administrative agency of government. It is a
study group with recommendatory functions. In fact, membership by members of the Bench in
said committee is called for by reason of the primary functions of their position.

(2)
Considering my membership in the Committee as neither violative of the
Independence of the Judiciary nor a violation of Section 12, Article VIII, or of the second
paragraph of Section 7, Article IX (B), both of the Constitution, and will not in any way amount to
an abandonment of my present position as Executive Judge of Branch XIX, Regional Trial Court,
First Judicial Region, and as a member of the Judiciary; and
(3)
Consider my membership in the said Committee as part of the primary functions of an
Executive Judge.
May I please be favored soon by your action on this request.
Very respectfully yours,
(Sgd) RODOLFO U. MANZANO

RESOLUTION
Judge"
PADILLA, J p:
On 4 July 1988, Judge Rodolfo U. Manzano, Executive Judge, RTC, Bangui, Ilocos Norte,
Branch 19, sent this Court a letter which reads:

An examination of Executive Order No. 856, as amended, reveals that Provincial/City

Committees on Justice are created to insure the speedy disposition of cases of detainees,
particularly those involving the poor and indigent ones, thus alleviating jail congestion and
improving local jail conditions. Among the functions of the Committee are

"Hon. Marcelo Fernan

Chief Justice of the Supreme Court

3.3
Receive complaints against any apprehending officer, jail warden, fiscal or judge who
may be found to have committed abuses in the discharge of his duties and refer the same to
proper authority for appropriate action;

of the Philippines
Manila
Thru channels: Hon. Leo Medialdea
Court Administrator
Supreme Court of the Philippines
Sir:

3.5
Recommend revision of any law or regulation which is believed prejudicial to the
proper administration of criminal justice.
It is evident that such Provincial/City Committees on Justice perform administrative functions.
Administrative functions are those which involve the regulation and control over the conduct and
affairs of individuals for their own welfare and the promulgation of rules and regulations to better
carry out the policy of the legislature or such as are devolved upon the administrative agency by
the organic law of its existence (Nasipit Integrated Arrastre and Stevedoring Services Inc., vs.
Tapucar, SP-07599-R, 29 September 1978, Black's Law Dictionary).

Furthermore, under Executive Order No. 326 amending Executive Order No. 856, it is provided
that
"SECTION 6.
Supervision. The Provincial/City Committees on Justice shall be under
the supervision of the Secretary of Justice. Quarterly accomplishment reports shall be submitted
to the Office of the Secretary of Justice."
Under the Constitution, the members of the Supreme Court and other courts established by law
shall not be designated to any agency performing quasi-judicial or administrative functions
(Section 12, Art. VIII, Constitution).
Considering that membership of Judge Manzano in the Ilocos Norte Provincial Committee on
Justice, which discharges administrative functions, will be in violation of the Constitution, the
Court is constrained to deny his request.
Former Chief Justice Enrique M. Fernando in his concurring opinion in the case of Garcia vs.
Macaraig (39 SCRA 106) ably sets forth:
"2.
While the doctrine of separation of powers is a relative theory not to be enforced with
pedantic rigor, the practical demands of government precluding its doctrinaire application, it
cannot justify a member of the judiciary being required to assume a position or perform a duty
non-judicial in character. That is implicit in the principle. Otherwise there is a plain departure
from its command. The essence of the trust reposed in him is to decide. Only a higher court, as
was emphasized by Justice Barredo, can pass on his actuation. He is not a subordinate of an
executive or legislative official, however eminent. It is indispensable that there be no exception
to the rigidity of such a norm if he is, as expected, to be confined to the task of adjudication.
Fidelity to his sworn responsibility no leas than the maintenance of respect for the judiciary can
be satisfied with nothing less."
This declaration does not mean that RTC Judges should adopt an attitude of monastic
insensibility or unbecoming indifference to Province/City Committee on Justice. As incumbent
RTC Judges, they form part of the structure of government. Their integrity and performance in
the adjudication of cases contribute to the solidity of such structure. As public officials, they are
trustees of an orderly society. Even as non-members of Provincial/City Committees on Justice,
RTC judges should render assistance to said Committees to help promote the laudable
purposes for which they exist, but only when such assistance may be reasonably incidental to
the fulfillment of their judicial duties. cdll

Insofar as the term "quasi-judicial" is concerned, it has a fairly clear meaning and Judges can
confidently refrain from participating in the work of any administrative agency which adjudicates
disputes and controversies involving the rights of parties within its jurisdiction. The issue
involved in this case is where to draw the line insofar as administrative functions are concerned.
"Administrative functions" as used in Section 12 refers to the executive machinery of
government and the performance by that machinery of governmental acts. It refers to the
management actions, determinations, and orders of executive officials as they administer the
laws and try to make government effective. There is an element of positive action, of supervision
or control.
Applying the definition given in the opinion of the majority which reads:
"Administrative functions are those which involve the regulation and control over the conduct
and affairs of individuals for their own welfare and the promulgation of rules and regulations to
better carry out the policy of the legislature or such as are devolved upon the administrative
agency by the organic law of its existence (Nasipit Integrated Arrastre and Stevedoring Services
Inc. v. Tapucar, SP-07599-R, 29 September 1978, Black's Law Dictionary.)"
we can readily see that membership in the Provincial or City Committee on Justice would not
involve any regulation or control over the conduct and affairs of individuals. Neither will the
Committee on Justice promulgate rules and regulations nor exercise any quasi-legislative
functions. Its work is purely advisory. I do not see anything wrong in a member of the judiciary
joining any study group which concentrates on the administration of justice as long as the group
merely deliberates on problems involving the speedy disposition of cases particularly those
involving the poor and needy litigants or detainees, pools the expertise and experiences of the
members, and limits itself to recommendations which may be adopted or rejected by those who
have the power to legislate or administer the particular function involved in their implementation.
We who are Judges cannot operate in a vacuum or in a tight little world of our own. The
administration of justice cannot be pigeonholed into neat compartments with Judges, Fiscals,
Police, Wardens, and various other officials concerned erecting watertight barriers against one
another and limiting our interaction to timidly peeping over these unnecessary and impractical
barriers into one another's work, all the while blaming the Constitution for such a quixotic and
unreal interpretation. As intimated in the majority opinion, we should not be monastically
insensible or indifferent to projects or movements cogitating on possible solutions to our
common problems of justice and afterwards forwarding their findings to the people, public or
private, where their findings would do the most good.

ACCORDINGLY, the aforesaid request of Judge Rodolfo U. Manzano is DENIED.

SO ORDERED.
Cruz, Paras, Feliciano, Gancayco, Bidin, Sarmiento, Cortes, Medialdea and Regalado, JJ.,
concur.

The majority opinion suggests the giving of assistance by Judges to the work of the Committees
on Justice. Assistance is a vague term. Can Judges be designated as observers? Advisers?
Consultants? Is it the act of being "designated" which is proscribed by the Constitution or is it
participation in the prohibited functions? If Judges cannot become members, why should they be
allowed or even encouraged to assist these Committees? The line drawn by the majority is
vague and unrealistic.

Separate Opinions
GUTIERREZ, JR., J., dissenting:
The Constitution prohibits the designation of members of the judiciary to any agency performing
quasi-judicial or administrative functions. (Section 12, Article VIII, Constitution.).

The constitutional provision is intended to shield Judges from participating in activities which
may compromise their independence or hamper their work. Studying problems involving the
administration of justice and arriving at purely recommendatory solutions do not in any way
involve the encroachment of the judiciary into executive or legislative functions or into matters

which are none of its concerns. Much less is it an encroachment of the other departments into
judicial affairs.
As the visible representation of the law and of justice in his community, the Judge should not shy
away from public activities which do not interfere with the prompt and proper performance of his
office, but which, in fact, enhance his effectiveness as a Judge. He cannot stop mingling in civic
intercourse or shut himself into solitary seclusion. The Committees on Justice will also be
immensely benefited by the presence of Judges in the study groups. The work of the
Committees is quite important. Let it not be said that the Judges the officials most concerned
with justice have hesitated to join in such a worthy undertaking because of a strained
interpretation of their functions.
It is well for this Court to be generally cautious, conservative or restrictive when it interprets
provisions of the Constitution or statutes vesting us with powers or delimiting the exercise of our
jurisdiction and functions. However, we should not overdo it. The basic principles of
constitutional interpretation apply as well to the provisions which define or circumscribe our
powers and functions as they do to the provisions governing the other departments of
government. The Court should not adopt a strained construction which impairs its own efficiency
to meet the responsibilities brought about by the changing times and conditions of society. The
familiar quotation is apt in this case constitutional provisions are interpreted by the spirit which
vivifies and not by the letter which killeth. Cdpr
I, therefore, dissent from the majority opinion and vote to allow Judge Rodolfo U. Manzano to
become a member of the Ilocos Norte Provincial Committee on Justice.

EDILLO C. MONTEMAYOR, petitioner, vs. LUIS BUNDALIAN, RONALDO B. ZAMORA,

Executive Secretary, Office of the President, AND GREGORIO R. VIGILAR, Secretary,
Department of Public Works and Highways (DPWH), respondents.
Gancayco Balasbas & Associates for petitioner.
SYNOPSIS
In this petition for review, the petitioner assailed the decision of the Office of the President which
ordered his dismissal as Regional Director of the DPWH for unexplained wealth, as a result of
an investigation conducted by the PCAGC which arrived at the conclusion that the real property
he had acquired in California, U.S. was unlawfully acquired for it was manifestly out of proportion
to his salary.
The Supreme Court dismissed the petition, ruling: that PCAGC had authority to investigate the
case despite the lack of verification of the administrative complaint and the complainant's nonappearance at the investigation; that in administrative proceedings, technical rules of procedure
and evidence are not strictly applied; that petitioner's active participation in every step of the
investigation satisfied the due process requirement; that the findings of facts made by
administrative agencies when supported by substantial evidence are respected on appeal; and
that dismissal of similar charges against him before the Ombudsman does not operate as res
judicata in the PCAGC case because the doctrine of res judicata applies only to judicial or quasijudicial proceedings, not to the exercise of administrative powers.
SYLLABUS

Fernan (C.J.), Narvasa and Grio-Aquino, JJ., concur.

MELENCIO-HERRERA, J., dissenting:
I hesitate to give such a restrictive and impractical interpretation to Section 12, Article VIII of the
1987 Constitution, and thus join the dissent of Justice Gutierrez, Jr.
What I believe is contemplated by the Constitutional prohibition is designation, for example, to
such quasi-judicial bodies as the SEC, or administrative agencies like the BIR. Those are fulltime positions involving running the affairs of government, which will interfere with the discharge
of judicial functions or totally remove a Judge/Justice from the performance of his regular
functions.
The Committee on Justice cannot be likened to such an administrative agency of government. It
is a study group with recommendatory functions. In fact, membership by members of the Bench
in said committee is called for by reason of the primary functions of their position.
The matter of supervision by the Secretary of Justice provided for under EO No. 326 amending
EO No. 856, need not be a cause for concern. That supervision is confined to Committee work
and will by no means extend to the performance of judicial functions per se.

[G.R. No. 149335. July 1, 2003.]

1.
POLITICAL LAW; ADMINISTRATIVE LAW; ADMINISTRATIVE PROCEEDINGS; DUE
PROCESS; ESSENCE THEREOF IS THE OPPORTUNITY TO BE HEARD; ACTIVE
PARTICIPATION IN PROCEEDINGS BEFORE THE PHILIPPINE COMMISSION AGAINST
GRAFT AND CORRUPTION (PCAGC) SATISFIED DUE PROCESS REQUIREMENT; CASE
AT BAR. The essence of due process in administrative proceedings is the opportunity to
explain one's side or seek a reconsideration of the action or ruling complained of. As long as the
parties are given the opportunity to be heard before judgment is rendered, the demands of due
process are sufficiently met. In the case at bar, the PCAGC exerted efforts to notify the
complainant of the proceedings but his Philippine residence could not be located. Be that as it
may, petitioner cannot argue that he was deprived of due process because he failed to confront
and cross-examine the complainant. Petitioner voluntarily submitted to the jurisdiction of the
PCAGC by participating in the proceedings before it. He was duly represented by counsel. He
filed his counter-affidavit, submitted documentary evidence, attended the hearings, moved for a
reconsideration of Administrative Order No. 12 issued by the President and eventually filed his
appeal before the Court of Appeals. His active participation in every step of the investigation
effectively removed any badge of procedural deficiency, if there was any, and satisfied the due
process requirement. He cannot now be allowed to challenge the procedure adopted by the
PCAGC in the investigation.
2.
ID.; ID., ID.; TECHNICAL RULES OF PROCEDURE AND EVIDENCE ARE NOT
STRICTLY APPLIED THEREIN; CASE AT BAR. The lack of verification of the administrative
complaint and the non-appearance of the complainant at the investigation did not divest the
PCAGC of its authority to investigate the charge of unexplained wealth. Under Section 3 of
Executive Order No. 151 creating the PCAGC, complaints involving graft and corruption may be
filed before it in any form or manner against presidential appointees in the executive department.

Indeed, it is not totally uncommon that a government agency is given a wide latitude in the scope
and exercise of its investigative powers. The Ombudsman, under the Constitution, is directed to
act on any complaint likewise filed in any form and manner concerning official acts or omissions.
The Court Administrator of this Court investigates and takes cognizance of, not only unverified,
but even anonymous complaints filed against court employees or officials for violation of the
Code of Ethical Conduct. This policy has been adopted in line with the serious effort of the
government to minimize, if not eradicate, graft and corruption in the service. It is well to
remember that in administrative proceedings, technical rules of procedure and evidence are not
strictly applied. Administrative due process cannot be fully equated with due process in its strict
judicial sense for it is enough that the party is given the chance to be heard before the case
against him is decided. This was afforded to the petitioner in the case at bar.
3.
ID.; ID.; ID.; FINDINGS OF FACTS MADE THEREIN WHEN SUPPORTED BY
SUBSTANTIAL EVIDENCE ARE RESPECTED ON APPEAL. In reviewing administrative
decisions of the executive branch of the government, the findings of facts made therein are to be
respected so long as they are supported by substantial evidence. Hence, it is not for the
reviewing court to weigh the conflicting evidence, determine the credibility of witnesses, or
otherwise substitute its judgment for that of the administrative agency with respect to the
sufficiency of evidence. Also, administrative decisions in matters within the executive jurisdiction
can only be set aside on proof of gross abuse of discretion, fraud, or error of law. These
principles negate the power of the reviewing court to re-examine the sufficiency of the evidence
in an administrative case as if originally instituted therein, and do not authorize the court to
receive additional evidence that was not submitted to the administrative agency concerned.
SICaDA
4.
ID.; ID.; ID.; DOCTRINE OF RES JUDICATA APPLIES ONLY TO JUDICIAL OR
QUASI-JUDICIAL PROCEEDINGS; CASE AT BAR. We cannot sustain petitioner's stance
that the dismissal of similar charges against him before the Ombudsman rendered the
administrative case against him before the PCAGC moot and academic. To be sure, the
decision of the Ombudsman does not operate as res judicata in the PCAGC case subject of this
review. The doctrine of res judicata applies only to judicial or quasi-judicial proceedings, not to
the exercise of administrative powers. Petitioner was investigated by the Ombudsman for his
possible criminal liability for the acquisition of the Burbank property in violation of the Anti-Graft
and Corrupt Practices Act and the Revised Penal Code. For the same alleged misconduct,
petitioner, as a presidential appointee, was investigated by the PCAGC by virtue of the
administrative power and control of the President over him. As the PCAGC's investigation of
petitioner was administrative in nature, the doctrine of res judicata finds no application in the
case at bar.
DECISION
PUNO, J p:
In this petition for review on certiorari, petitioner EDILLO C. MONTEMAYOR assails the
Decision of the Court of Appeals, dated April 18, 2001, affirming the decision of the Office of the
President in Administrative Order No. 12 ordering petitioner's dismissal as Regional Director of
the Department of Public Works and Highways (DPWH) for unexplained wealth.
Petitioner's dismissal originated from an unverified letter-complaint, dated July 15, 1995,
addressed by private respondent LUIS BUNDALIAN to the Philippine Consulate General in San
Francisco, California, U.S.A. Private respondent accused petitioner, then OIC-Regional Director,

Region III, of the DPWH, of accumulating unexplained wealth, in violation of Section 8 of

Republic Act No. 3019. Private respondent charged that in 1993, petitioner and his wife
purchased a house and lot at 907 North Bel Aire Drive, Burbank, Los Angeles, California,
making a down payment of US$100,000.00. He further alleged that petitioner's in-laws who were
living in California had a poor credit standing due to a number of debts and they could not have
purchased such an expensive property for petitioner and his wife. Private respondent accused
petitioner of amassing wealth from lahar funds and other public works projects. EHSADc
Private respondent attached to his letter-complaint the following documents:
a)
a copy of a Grant Deed, dated May 27, 1993, where spouses David and Judith
Tedesco granted the subject property to petitioner and his wife;
b)
a copy of the Special Power of Attorney (SPA) executed by petitioner and his wife in
California appointing petitioner's sister-in-law Estela D. Fajardo as their attorney-in-fact, to
negotiate and execute all documents and requirements to complete the purchase of the subject
property; and,
c)
an excerpt from the newspaper column of Lito A. Catapusan in the Manila Bulletin,
entitled "Beatwatch," where it was reported that a low-ranking, multimillionaire DPWH employee,
traveled to Europe and the U.S. with his family, purchased an expensive house in California,
appointed a woman through an SPA to manage the subject property and had hidden and
unexplained wealth in the Philippines and in the U.S.
Accordingly, the letter-complaint and its attached documents were indorsed by the Philippine
Consulate General of San Francisco, California, to the Philippine Commission Against Graft and
Corruption (PCAGC) 1 for investigation. Petitioner, represented by counsel, submitted his
counter-affidavit before the PCAGC alleging that the real owner of the subject property was his
sister-in-law Estela Fajardo. Petitioner explained that in view of the unstable condition of
government service in 1991, his wife inquired from her family in the U.S. about their possible
emigration to the States. They were advised by an immigration lawyer that it would be an
advantage if they had real property in the U.S. Fajardo intimated to them that she was interested
in buying a house and lot in Burbank, California, but could not do so at that time as there was a
provision in her mortgage contract prohibiting her to purchase another property pending full
payment of a real estate she earlier acquired in Palmdale, Los Angeles. Fajardo offered to buy
the Burbank property and put the title in the names of petitioner and his wife to support their
emigration plans and to enable her at the same time to circumvent the prohibition in her
mortgage contract.
Petitioner likewise pointed out that the charge against him was the subject of similar cases filed
before the Ombudsman. 2 He attached to his counter-affidavit the Consolidated Investigation
Report 3 of the Ombudsman dismissing similar charges for insufficiency of evidence.
From May 29, 1996 until March 13, 1997, the PCAGC conducted its own investigation of the
complaint. While petitioner participated in the proceedings and submitted various pleadings and
documents through his counsel, private respondent-complainant could not be located as his
Philippine address could not be ascertained. In the course of the investigation, the PCAGC
repeatedly required petitioner to submit his Statement of Assets, Liabilities and Net Worth
(SALN), Income Tax Returns (ITRs) and Personal Data Sheet. Petitioner ignored these
directives and submitted only his Service Record. He likewise adduced in evidence the checks
allegedly issued by his sister-in-law to pay for the house and lot in Burbank, California. When the

PCAGC requested the Deputy Ombudsman for Luzon to furnish it with copies of petitioner's
SALN from 1992-1994, it was informed that petitioner failed to file his SALN for those years.

process requirement. He cannot now be allowed to challenge the procedure adopted by the
PCAGC in the investigation. 8

After the investigation, the PCAGC, in its Report to the Office of the President, made the
following findings: Petitioner purchased a house and lot in Burbank, California, for
US$195,000.00 (or P3.9M at the exchange rate prevailing in 1993). The sale was evidenced by
a Grant Deed. The PCAGC concluded that the petitioner could not have been able to afford to
buy the property on his annual income of P168,648.00 in 1993 as appearing on his Service
Record. It likewise found petitioner's explanation as unusual, largely unsubstantiated,
unbelievable and self-serving. The PCAGC noted that instead of adducing evidence, petitioner's
counsel exerted more effort in filing pleadings and motion to dismiss on the ground of forum
shopping. It also took against petitioner his refusal to submit his SALN and ITR despite the
undertaking made by his counsel which raised the presumption that evidence willfully
suppressed would be adverse if produced. The PCAGC concluded that as petitioner's
acquisition of the subject property was manifestly out of proportion to his salary, it has been
unlawfully acquired. Thus, it recommended petitioner's dismissal from service pursuant to
Section 8 of R.A. No. 3019.

Neither can we sustain petitioner's contention that the charge against him was unsupported by
substantial evidence as it was contained in an unverified complaint. The lack of verification of the
administrative complaint and the non-appearance of the complainant at the investigation did not
divest the PCAGC of its authority to investigate the charge of unexplained wealth. Under Section
3 of Executive Order No. 151 creating the PCAGC, complaints involving graft and corruption
may be filed before it in any form or manner against presidential appointees in the executive
department. Indeed, it is not totally uncommon that a government agency is given a wide latitude
in the scope and exercise of its investigative powers. The Ombudsman, under the Constitution,
is directed to act on any complaint likewise filed in any form and manner concerning official acts
or omissions. The Court Administrator of this Court investigates and takes cognizance of, not
only unverified, but even anonymous complaints filed against court employees or officials for
violation of the Code of Ethical Conduct. This policy has been adopted in line with the serious
effort of the government to minimize, if not eradicate, graft and corruption in the service.
ASHEca

On August 24, 1998, the Office of the President, concurring with the findings and adopting the
recommendation of the PCAGC, issued Administrative Order No. 12, 4 ordering petitioner's
dismissal from service with forfeiture of all government benefits.

It is well to remember that in administrative proceedings, technical rules of procedure and

evidence are not strictly applied. Administrative due process cannot be fully equated with due
process in its strict judicial sense for it is enough that the party is given the chance to be heard
before the case against him is decided. 9 This was afforded to the petitioner in the case at bar.

Petitioner's Motion for Reconsideration was denied. His appeal to the Court of Appeals was
likewise dismissed. 5

On the issue of due process, petitioner submits that the PCAGC committed infractions of the
cardinal rules of administrative due process when it relied on Bundalian's unverified lettercomplaint. He gripes that his counter-affidavit should have been given more weight as the
unverified complaint constitutes hearsay evidence. Moreover, petitioner insists that in ruling
against him, the PCAGC failed to respect his right to confront and cross-examine the
complainant as the latter never appeared in any of the hearings before the PCAGC nor did he
send a representative therein.

On the second issue, there is a need to lay down the basic principles in administrative
investigations. First, the burden is on the complainant to prove by substantial evidence the
allegations in his complaint. 10 Substantial evidence is more than a mere scintilla of evidence. It
means such relevant evidence as a reasonable mind might accept as adequate to support a
conclusion, even if other minds equally reasonable might conceivably opine otherwise. 11
Second, in reviewing administrative decisions of the executive branch of the government, the
findings of facts made therein are to be respected so long as they are supported by substantial
evidence. Hence, it is not for the reviewing court to weigh the conflicting evidence, determine the
credibility of witnesses, or otherwise substitute its judgment for that of the administrative agency
with respect to the sufficiency of evidence. Third, administrative decisions in matters within the
executive jurisdiction can only be set aside on proof of gross abuse of discretion, fraud, or error
of law. These principles negate the power of the reviewing court to re-examine the sufficiency of
the evidence in an administrative case as if originally instituted therein, and do not authorize the
court to receive additional evidence that was not submitted to the administrative agency
concerned. 12

We find no merit in his contentions. The essence of due process in administrative proceedings is
the opportunity to explain one's side or seek a reconsideration of the action or ruling complained
of. As long as the parties are given the opportunity to be heard before judgment is rendered, the
demands of due process are sufficiently met. 6 In the case at bar, the PCAGC exerted efforts to
notify the complainant of the proceedings but his Philippine residence could not be located. 7 Be
that as it may, petitioner cannot argue that he was deprived of due process because he failed to
confront and cross-examine the complainant. Petitioner voluntarily submitted to the jurisdiction of
the PCAGC by participating in the proceedings before it. He was duly represented by counsel.
He filed his counter-affidavit, submitted documentary evidence, attended the hearings, moved
for a reconsideration of Administrative Order No. 12 issued by the President and eventually filed
his appeal before the Court of Appeals. His active participation in every step of the investigation
effectively removed any badge of procedural deficiency, if there was any, and satisfied the due

In the case at bar, petitioner admitted that the subject property was in his name. However, he
insisted that it was his sister-in-law Estela Fajardo who paid for the property in installments. He
submitted as proof thereof the checks issued by Fajardo as payment for the amortizations of the
property. His evidence, however, likewise fail to convince us. First, the record is bereft of
evidence to prove the alleged internal arrangement petitioner entered into with Fajardo. He did
not submit her affidavit to the investigating body nor did she testify before it regarding her
ownership of the Burbank property. Second, the checks allegedly issued by Fajardo to pay for
the monthly amortizations on the property have no evidentiary weight as Fajardo's mere
issuance thereof cannot prove petitioner's non-ownership of the property. Fajardo would
naturally issue the checks as she was appointed by petitioner as attorney-in-fact and the latter
would naturally course through her the payments for the Burbank property. Third, petitioner's
own evidence contradict his position. We cannot reconcile petitioner's denial of ownership of the

Hence, this petition for review where petitioner raises the following issues for resolution: first,
whether he was denied due process in the investigation before the PCAGC; second, whether his
guilt was proved by substantial evidence; and, third, whether the earlier dismissal of similar
cases before the Ombudsman rendered the administrative case before the PCAGC moot and
academic.

property with the loan statement 13 he adduced showing that he obtained a loan from the World
Savings and Loan Association for $195,000.00 on June 23, 1993 to finance the acquisition of
the property. Then, three (3) years later, on May 30, 1996, petitioner and his wife executed a
Quitclaim Deed 14 donating the Burbank property to his sisters-in-law Estela and Rose Fajardo
allegedly to prove his non-ownership of the property. It is obvious that the Quitclaim Deed is a
mere afterthought, having been executed only after a complaint for unexplained wealth was
lodged against petitioner. Why the Quitclaim Deed included Rose Fajardo when it was only
Estela Fajardo who allegedly owned the property was not explained on the record. Petitioner's
evidence failed to clarify the issue as it produced, rather than settled, more questions.
Petitioner admitted that the Grant Deed over the property was in his name. He never denied the
existence and due execution of the Grant Deed and the Special Power of Attorney he conferred
to Estela Fajardo with respect to the acquisition of the Burbank property. With these admissions,
the burden of proof was shifted to petitioner to prove non-ownership of the property. He cannot
now ask this Court to remand the case to the PCAGC for reception of additional evidence as, in
the absence of any errors of law, it is not within the Court's power to do so. He had every
opportunity to adduce his evidence before the PCAGC.
Lastly, we cannot sustain petitioner's stance that the dismissal of similar charges against him
before the Ombudsman rendered the administrative case against him before the PCAGC moot
and academic. To be sure, the decision of the Ombudsman does not operate as res judicata in
the PCAGC case subject of this review. The doctrine of res judicata applies only to judicial or
quasi-judicial proceedings, not to the exercise of administrative powers. 15 Petitioner was
investigated by the Ombudsman for his possible criminal liability for the acquisition of the
Burbank property in violation of the Anti-Graft and Corrupt Practices Act and the Revised Penal
Code. For the same alleged misconduct, petitioner, as a presidential appointee, was
investigated by the PCAGC by virtue of the administrative power and control of the President
over him. As the PCAGC's investigation of petitioner was administrative in nature, the doctrine of
res judicata finds no application in the case at bar.
Thus, we find that the Court of Appeals correctly sustained petitioner's dismissal from service as
the complaint and its supporting documents established that he acquired a property whose value
is disproportionate to his income in the government service, unless he has other sources of
income which he failed to reveal. His liability was proved by substantial evidence.
IN VIEW WHEREOF, the petition is DISMISSED, No costs. SHIETa
SO ORDERED.

[G.R. No. 157684. April 27, 2005.]

DEPARTMENT OF HEALTH, petitioner, vs. PRISCILLA G. CAMPOSANO, ENRIQUE L.
PEREZ, and IMELDA Q. AGUSTIN, respondents.
The Solicitor General for petitioner.
Gil D. Genorga, Jr. for respondents.
SYLLABUS

1.
POLITICAL LAW; EXECUTIVE DEPARTMENT; POWER TO INVESTIGATE
ADMINISTRATIVE COMPLAINTS AGAINST GRAFT AND CORRUPTION; WHEN CAN BE
DELEGATED THROUGH EXECUTIVE ORDERS; APPLICATION IN CASE AT BAR.
Executive Order (EO) No. 151 granted the PCAGC the jurisdiction to investigate administrative
complaints against presidential appointees allegedly involved in graft and corruption. From a
cursory reading of its provisions, it is evident that EO 151 authorizes the PCAGC to investigate
charges against presidential, not non-presidential, appointees. In its Preamble, specifically in its
"Whereas" clauses, the EO "specifically tasked [the PCAGC] to . . . investigate presidential
appointees charged with graft and corruption . . . ." More pointedly, Section 3 states that the
"Commission shall have jurisdiction over all administrative complaints involving graft and
corruption filed in any form or manner against presidential appointees . . . ." The Court notes,
however, that respondents were not investigated pursuant to EO 151. The investigation was
authorized under Administrative Order No. 298 dated October 25, 1996, which had created an
Ad Hoc Committee to look into the administrative charges filed against Director Rosalinda U.
Majarais, Priscilla G. Camposano, Horacio D. Cabrera, Imelda Q. Agustin and Enrique L. Perez.
[. . .] The Chief Executive's power to create the Ad Hoc Investigating Committee cannot be
doubted. Having been constitutionally granted full control of the Executive Department, to which
respondents belong, the President has the obligation to ensure that all executive officials and
employees faithfully comply with the law. With AO 298 as mandate, the legality of the
investigation is sustained. Such validity is not affected by the fact that the investigating team and
the PCAGC had the same composition, or that the former used the offices and facilities of the
latter in conducting the inquiry. Parenthetically, the perceived vacuum in EO 151 with regard to
cases involving non-presidential appointees was rectified in Executive Order No. 12, which
created the Presidential Anti-Graft Commission (PAGC). Non-presidential appointees who may
have acted in conspiracy, or who may have been involved with a presidential appointee, may
now be investigated by the PAGC. aETAHD
2.
ID.; ID.; ID.; DISCIPLINARY AUTHORITY OF THE DEPARTMENT SECRETARY,
EXPLAINED. The Administrative Code of 1987 vests department secretaries with the
authority to investigate and decide matters involving disciplinary actions for officers and
employees under the former's jurisdiction. Thus, the health secretary had disciplinary authority
over respondents. Note that being a presidential appointee, Dr. Rosalinda Majarais was under
the jurisdiction of the President, in line with the principle that the "power to remove is inherent in
the power to appoint." While the Chief Executive directly dismissed her from the service, he
nonetheless recognized the health secretary's disciplinary authority over respondents when he
remanded the PCAGC's findings against them for the secretary's "appropriate action." As a
matter of administrative procedure, a department secretary may utilize other officials to
investigate and report the facts from which a decision may be based. In the present case, the
secretary effectively delegated the power to investigate to the PCAGC. Neither the PCAGC
under EO 151 nor the Ad Hoc Investigating Committee created under AO 298 had the power to
impose any administrative sanctions directly. Their authority was limited to conducting
investigations and preparing their findings and recommendations. The power to impose
sanctions belonged to the disciplining authority, who had to observe due process prior to
imposing penalties. [. . .] Concededly, the health secretary has the competence and the authority
to decide what action should be taken against officials and employees who have been
administratively charged and investigated. However, the actual exercise of the disciplining
authority's prerogative requires a prior independent consideration of the law and the facts.
Failure to comply with this requirement results in an invalid decision. The disciplining authority
should not merely and solely rely on an investigator's recommendation, but must personally
weigh and assess the evidence gathered. There can be no shortcuts, because at stake are the
honor, the reputation, and the livelihood of the person administratively charged.

3.
ID.; ADMINISTRATIVE LAW; DUE PROCESS; REQUIREMENTS. Due process in
administrative proceedings requires compliance with the following cardinal principles: (1) the
respondents' right to a hearing, which includes the right to present one's case and submit
supporting evidence, must be observed; (2) the tribunal must consider the evidence presented;
(3) the decision must have some basis to support itself; (4) there must be substantial evidence;
(5) the decision must be rendered on the evidence presented at the hearing, or at least
contained in the record and disclosed to the parties affected; (6) in arriving at a decision, the
tribunal must have acted on its own consideration of the law and the facts of the controversy and
must not have simply accepted the views of a subordinate; and (7) the decision must be
rendered in such manner that respondents would know the reasons for it and the various issues
involved.
4.
ID.; ID.; RIGHT TO DELEGATE THE POWER TO INVESTIGATE IS SUSTAINED BY
THE COURT SO LONG AS ADJUDICATION IS MADE BY THE DECIDING AUTHORITY;
EXEMPLIFIED. The Court [. . .] sustained the right to delegate the power to investigate, as
long as the adjudication would be made by the deciding authority. By the same token, the
Constitution grants the Supreme Court disciplinary authority over all lower court justices and
judges, as well as judicial employees and lawyers. While the investigation of administrative
complaints is delegated usually to the Office of the Court Administrator (OCA) or the Integrated
Bar of the Philippines (IBP), the Court nonetheless makes its own judgments of the cases when
sanctions are imposed. It does not merely adopt or solely rely on the recommendations of the
OCA or the IBP. CcTHaD

"2)
Pay petitioners their back salaries from the time their preventive suspension expired.
Mandatory leave credits shall not be charged against their leave credits." 3
The Facts
The facts are narrated by the CA as follows:
"[Respondents] are former employees of the Department of Health-National Capital Region
(hereinafter DOH-NCR). They held various positions as follows: [Respondent] Priscilla B.
Camposano (hereinafter Camposano) was the Finance and Management Officer II,
[Respondent] Imelda Q. Agusin (hereinafter Agustin) was an Accountant I, and [Respondent]
Enrique L. Perez (hereinafter Perez) was the Acting Supply Officer III. DACcIH
"On May 15, 1996, some concerned [DOH-NCR] employees filed a complaint before the
DOH Resident Ombudsman Rogelio A. Ringpis (hereinafter the Resident Ombudsman)
against Dir. IV Rosalinda U. Majarais, Acting Administrative Officer III Horacio Cabrera,
and [respondents], arising out of an alleged anomalous purchase by DOH-NCR of 1,500
bottles of Ferrous Sulfate 250 mg. with Vitamin B Complex and Folic Acid capsules worth
P330,000.00 from Lumar Pharmaceutical Laboratory on May 13, 1996.
"On August 6, 1996, the Resident Ombudsman submitted an investigation report to the
Secretary of Health recommending the filing of a formal administrative charge of
Dishonesty and Grave Misconduct against [respondents] and their co-respondents.

DECISION
PANGANIBAN, J p:
Administrative due process requires that, prior to imposing disciplinary sanctions, the disciplining
authority must make an independent assessment of the facts and the law. On its face, a decision
imposing administrative sanctions must show the bases for its conclusions. While the
investigation of a case may be delegated to and conducted by another body or group of officials,
the disciplining authority must nevertheless weigh the evidence gathered and indicate the
applicable law. In this manner, the respondents would be informed of the bases for the sanctions
and thus be able to prepare their appeal intelligently. Such procedure is part of the sporting idea
of fair play in a democracy. HcTEaA

"On August 8, 1996, the Secretary of Health filed a formal charge against the [respondents]
and their co-respondents for Grave Misconduct, Dishonesty, and Violation of RA 3019. On
October 25, 1996, then Executive Secretary Ruben D. Torres issued Administrative Order
No. 298 (hereafter AO 298) creating an ad-hoc committee to investigate the administrative
case filed against the DOH-NCR employees. The said AO was indorsed to the Presidential
Commission Against Graft and Corruption (hereafter PCAGC) on October 26, 1996. The same
reads:

The Case

'I have the honor to transmit herewith, for your information and guidance, a certified copy of
Administrative Order No. 298 dated October 25, 1996 entitled 'CREATING AN AD HOC
COMMITTEE TO INVESTIGATE THE ADMINISTRATIVE CASES FILED AGAINST NCR
HEALTH DIRECTOR ROSALINDA U. MAJARAIS AND OTHER OFFICERS AND EMPLOYEES
OF THE DEPARTMENT OF HEALTH, NATIONAL CAPITAL REGION.' HSTCcD

Before us is a Petition for Review 1 under Rule 45 of the Rules of Court, assailing the March 19,
2003 Decision 2 of the Court of Appeals (CA) in CA-GR SP No. 67720. The challenged Decision
disposed as follows:

"On December 2, 1996, the PCAGC took over the investigation from the DOH. After the
investigation, it issued a resolution on January 23, 1998 disposing [respondents]' case as
follows:

"WHEREFORE, based on the foregoing, the petition is GRANTED. The assailed Resolutions of
the CSC are hereby SET ASIDE.

'WHEREFORE, premises considered, this Commission finds Respondents Rosalinda U.

Majarais, Priscilla G. Camposano, Financial Management Chief II, Horacio D. Cabrera, Acting
Administrative Officer V, Imelda Q. Agustin, Accountant I and Enrique L. Perez, Acting Supply
Officer III, all of the Department of Health-National Capital Region (DOH-NCR) guilty as charged
and so recommends to his Excellency President Fidel V. Ramos that the penalty of dismissal
from the government service be imposed thereon.

"The Department of Health is hereby ordered to:

"1)
Reinstate petitioners without loss of seniority rights but without prejudice to an
administrative investigation that may be undertaken against them by the DOH should the
evidence warrant; and

'SO ORDERED.'

"On April 20, 1998, President Ramos issued [Administrative Order No. 390 (hereinafter AO 390)]
that reads:
'WHEREFORE, premises considered, respondent Dr. Rosalinda U. Majarais is hereby found
guilty as charged and, as recommended by the Presidential Commission Against Graft and
Corruption, is meted the Penalty of dismissal from the service. The records of the case with
respect to the other respondents are remanded to Secretary Carmencita N. Reodica,
Department of Health for appropriate action.'
"Thereafter, on May 8, 1998, the Secretary of Health issued an Order disposing of the case
against [respondents] and [Horacio Cabrera]. The dispositive portion reads: TDcHCa

While the herein assailed Decision made no reference to the separate appeal of Horacio
Cabrera, the CA nonetheless used the same legal bases for annulling the CSC's Resolution
against respondents. 5
The appellate court held that the PCAGC's jurisdiction over administrative complaints pertained
only to presidential appointees. Thus, the Commission had no power to investigate the charges
against respondents. 6 Moreover, in simply and completely relying on the PCAGC's findings, the
secretary of health failed to comply with administrative due process. 7
Hence, this Petition. 8
The Issues

'WHEREFORE, pursuant to the Resolution rendered by the Presidential Commission Against

Graft and Corruption (PCAGC) dated 23 January 1998 on the above-captioned case,
respondents Priscilla G. Camposano, Financial Management Chief II, Horacio D. Cabrera,
Acting Administrative Officer V, Imelda Q. Agustin, Accountant I and Enrique L. Perez, Acting
Supply Officer III, all of the Department of Health NCR are hereby DISMISSED from the
service.
'SO ORDERED.'
"On May 28, 1998 [respondents] filed a motion for reconsideration of the said Order. The
Secretary of Health denied the same on June 5, 1998. Thus, [respondents] filed a Notice of
Appeal on June 29, 1998.
"On July 17, 1998, [respondents] filed their appeal with the CSC. The appeal was denied by the
CSC on May 21, 1999. Horacio Cabrera filed a separate appeal with the CSC which was denied
on August 17, 1999. [Respondents]' motion for reconsideration was denied on September 30,
1999. While Cabrera's motion for reconsideration was denied on January 27, 2000.
[Respondents], however, received the resolution denying their motion for reconsideration on
November 2001. Thus, Horacio Cabrera was able to appeal to [the CA] the CSC's resolutions
ahead of [respondents]. The petition of Cabrera was granted [by the CA] in a decision dated
October 15, 2001 with a dispositive portion which reads: DHcEAa

Petitioner raises the following grounds for our consideration: IDAESH

"I
The Court of Appeals erred in finding that the Presidential Commission Against Graft and
Corruption (PCAGC) did not have jurisdiction to investigate the anomalous transaction involving
respondents.
"II
The Court of Appeals erred in concluding that the authority to investigate and decide was
relinquished by the Secretary of Health and that the Secretary of Health merely performed a
mechanical act when she ordered the dismissal of respondents from government service.
"III
The Court of Appeals erred in ignoring the fact that an exhaustive investigation was already
conducted by the Presidential Commission Against Graft and Corruption (PCAGC) which
resulted in the finding that the anomalous contract for the purchase of medicines without the
required public bidding is patently illegal." 9

'WHEREFORE, the instant petition is GRANTED. The Assailed Resolutions of the Civil Service
Commission are hereby SET ASIDE.

The second and the third grounds will be discussed together, as they are necessarily
intertwined.

'Petitioner Horacio D. Cabrera is exonerated of the administrative charges against him. The Civil
Service Commission is hereby ORDERED[:]

The Court's Ruling

The Petition is partly meritorious. CSIcTa

'(1)

To reinstate petitioner immediately, without loss of seniority rights; and

First Issue:

'(2)
To pay petitioner's back salaries from the time his preventive suspension expired.
Mandatory leave credits shall not be charged against his leave credits.
'SO ORDERED.'" 4
Not satisfied with the denial by the CSC (Civil Service Commission) of their appeal, respondents
brought the matter to the CA.
Ruling of the Court of Appeals

Jurisdiction to Investigate
Executive Order (EO) No. 151 10 granted the PCAGC the jurisdiction to investigate
administrative complaints against presidential appointees allegedly involved in graft and
corruption. From a cursory reading of its provisions, it is evident that EO 151 authorizes the
PCAGC to investigate charges against presidential, not non-presidential, appointees. In its
Preamble, specifically in its "Whereas" clauses, the EO "specifically tasked [the PCAGC] to . . .
investigate presidential appointees charged with graft and corruption . . ." More pointedly,
Section 3 states that the "Commission shall have jurisdiction over all administrative complaints

involving graft and corruption filed in any form or manner against presidential appointees . . ."
We quote the pertinent provisions below:
"Section 3.
Jurisdiction. The Commission shall have jurisdiction over all
administrative complaints involving graft and corruption filed in any form or manner against
presidential appointees, including those in government-owned or controlled corporations."
(emphasis supplied)
"Section 4.
Powers, Functions and Duties. The Commission shall have the following
powers, functions and duties:
"(a)
Investigation The Commission shall have the power to investigate administrative
complaints against presidential appointees in the executive department of the government,
including those in government-owned or controlled corporations, charged with graft and
corruption. In the exercise thereof, the Commission is (1) authorized to summon witnesses,
administer oaths, or take testimony or evidence relevant to the investigation by subpoena ad
testificandum and subpoena duces tecum, and do such other acts necessary and incidental to
the discharge of its function and duty to investigate the said administrative complaints; and (2)
empowered to call upon and secure the assistance of any department, bureau, office, agency, or
instrumentality of the government, including government-owned or controlled corporations.
aSIHcT
"The Commission shall confine itself to cases of graft and corruption involving one or a
combination of the following criteria:

The Court notes, however, that respondents were not investigated pursuant to EO 151. The
investigation was authorized under Administrative Order No. 298 dated October 25, 1996, which
had created an Ad Hoc Committee to look into the administrative charges filed against Director
Rosalinda U. Majarais, Priscilla G. Camposano, Horacio D. Cabrera, Imelda Q. Agustin and
Enrique L. Perez.
The Investigating Committee was composed of all the members of the PCAGC: Chairman
Eufemio C. Domingo, Commissioner Dario C. Rama and Commissioner Jaime L. Guerrero. The
Committee was directed by AO 298 to "follow the procedure prescribed under Section 38 to 40
of the Civil Service Law (PD 807), as amended." It was tasked to "forward to the Disciplining
Authority the entire records of the case, together with its findings and recommendations, as well
as the draft decision for the approval of the President."

The Chief Executive's power to create the Ad Hoc Investigating Committee cannot be doubted.
Having been constitutionally granted full control of the Executive Department, to which
respondents belong, the President has the obligation to ensure that all executive officials and
employees faithfully comply with the law. 13 With AO 298 as mandate, the legality of the
investigation is sustained. Such validity is not affected by the fact that the investigating team and
the PCAGC had the same composition, or that the former used the offices and facilities of the
latter in conducting the inquiry. caHASI

"1.
Presidential appointees with the rank equivalent to or higher than an Assistant
Regional Director;

Parenthetically, the perceived vacuum in EO 151 with regard to cases involving non-presidential
appointees was rectified in Executive Order No. 12, 14 which created the Presidential Anti-Graft
Commission (PAGC). Non-presidential appointees who may have acted in conspiracy, or who
may have been involved with a presidential appointee, may now be investigated by the PAGC.
15

"2.

The amount involved is at least Ten Million Pesos (P10,000,000.00);

Second and Third Issues:

"3.

Those which threaten grievous harm or injury to the national interest; and

Validity of Health Secretary's Decision

"4.

Those which may be assigned to it by the President. 11

The Administrative Code of 1987 vests department secretaries with the authority to investigate
and decide matters involving disciplinary actions for officers and employees under the former's
jurisdiction. 16 Thus, the health secretary had disciplinary authority over respondents.

"The Commission may refer to the Office of the Ombudsman, when warranted and necessary,
any case calling for the investigation and/or prosecution of the party or parties concerned for
violation of anti-graft and corruption laws.
"Administrative investigation of complaints against presidential appointees currently undertaken
by various presidential committees or government agencies, including government-owned or
controlled corporations shall continue notwithstanding the creation and organization of the
Commission. This, however, shall be without prejudice to the Commission, in its discretion,
taking over the investigation if the matter under investigation is within its jurisdiction.
"(b)
Coordination The Commission shall coordinate with different government agencies
for the purpose of eradicating opportunities and the climate favorable to the commission of graft
and corruption. . . ." 12 (emphasis supplied)
On the basis of the foregoing verba legis approach, respondents claim that the PCAGC did not
have jurisdiction over them, because they were not presidential appointees. CAIHaE

Note that being a presidential appointee, Dr. Rosalinda Majarais was under the jurisdiction of the
President, in line with the principle that the "power to remove is inherent in the power to appoint."
17 While the Chief Executive directly dismissed her from the service, he nonetheless recognized
the health secretary's disciplinary authority over respondents when he remanded the PCAGC's
findings against them for the secretary's "appropriate action." 18
As a matter of administrative procedure, a department secretary may utilize other officials to
investigate and report the facts from which a decision may be based. 19 In the present case, the
secretary effectively delegated the power to investigate to the PCAGC. EADCHS
Neither the PCAGC under EO 151 nor the Ad Hoc Investigating Committee created under AO
298 had the power to impose any administrative sanctions directly. Their authority was limited to
conducting investigations and preparing their findings and recommendations. The power to
impose sanctions belonged to the disciplining authority, who had to observe due process prior to
imposing penalties.

Due process in administrative proceedings requires compliance with the following cardinal
principles: (1) the respondents' right to a hearing, which includes the right to present one's case
and submit supporting evidence, must be observed; (2) the tribunal must consider the evidence
presented; (3) the decision must have some basis to support itself; (4) there must be substantial
evidence; (5) the decision must be rendered on the evidence presented at the hearing, or at
least contained in the record and disclosed to the parties affected; (6) in arriving at a decision,
the tribunal must have acted on its own consideration of the law and the facts of the controversy
and must not have simply accepted the views of a subordinate; and (7) the decision must be
rendered in such manner that respondents would know the reasons for it and the various issues
involved. 20
The CA correctly ruled that administrative due process had not been observed in the present
factual milieu. Noncompliance with the sixth requisite is equally evident from the health
secretary's Order dismissing the respondents thus:
"ORDER
"This refers to the Resolution of the Presidential Commission Against Graft and Corruption
(PCAG[C]) on the above captioned case dated January 23, 1998, the dispositive portion of
which reads: aDcTHE
"WHEREFORE, premises considered, this Commission finds Respondents Rosalinda U.
Majarais, Priscilla G. Camposano, Financial Management Chief II, [Horacio] D. Cabrera, Acting
Supply Officer III, all of the Department of Health-National Capital Region (DOH-NCR) guilty as
charged and so recommends to his Excellency President Fidel V. Ramos that the penalty of
dismissal from the government be imposed thereon."
"Acting on the aforequoted resolution of the PCAGC[,] His Excellency President Fidel V. Ramos
issued Administrative Order No. 390 dated [A]pril 20, 1998, resolving thus:
"WHEREFORE, premises considered, respondent Dr. Rosalinda U. Majarais is hereby found
guilty as charged and, as recommended by the Presidential Commission Against Graft and
Corruption, is meted the penalty of dismissal from the service. The records of the case with
respect to the other respondents are remanded to Secretary Carmencita N. Reodica,
Department of Health for appropriate action."
WHEREFORE, pursuant to the Resolution rendered by the Presidential Commission Against
Graft and Corruption (PCAGC) dated January 23, 1998 on the above captioned case,
respondents Priscilla G. Camposano, Financial Management Chief II; Horacio D. Cabrera,
Acting Administrative Officer V; Imelda Q. Agustin, Accountant I; and Enrique G. Perez, Acting
Supply Officer III; all of the Department of Health-NCR, are hereby DISMISSED from the
service." 21
Concededly, the health secretary has the competence and the authority to decide what action
should be taken against officials and employees who have been administratively charged and
investigated. However, the actual exercise of the disciplining authority's prerogative requires a
prior independent consideration of the law and the facts. Failure to comply with this requirement
results in an invalid decision. The disciplining authority should not merely and solely rely on an
investigator's recommendation, but must personally weigh and assess the evidence gathered.
There can be no shortcuts, because at stake are the honor, the reputation, and the livelihood of
the person administratively charged. ScaAET

In the present case, the health secretary's two-page Order dismissing respondents pales in
comparison with the presidential action with regard to Dr. Majarais. Prior to the issuance of his
seven-page decision, President Fidel V. Ramos conducted a restudy of the doctor's case. He
even noted a violation that had not been considered by the PCAGC. 22 On the other hand,
Health Secretary Carmencita N. Reodica simply and blindly relied on the dispositive portion of
the Commission's Resolution. She even misquoted it by inadvertently omitting the
recommendation with regard to Respondents Enrique L. Perez and Imelda Q. Agustin.
The Order of Secretary Reodica denying respondents' Motion for Reconsideration also failed to
correct the deficiency in the initial Order. 23 She improperly relied on the President's findings in
AO 390 which, however, pertained only to the administrative charge against Dr. Majarais, not
against respondents. To repeat, the Chief Executive recognized that the disciplinary jurisdiction
over respondents belonged to the health secretary, 24 who should have followed the manner in
which the President had rendered his action on the recommendation.
The President's endorsement of the records of the case for the "appropriate action" of the health
secretary 25 did not constitute a directive for the immediate dismissal of respondents. Like that
of President Ramos, the decision of Secretary Reodica should have contained a factual finding
and a legal assessment of the controversy to enable respondents to know the bases for their
dismissal and thereafter prepare their appeal intelligently, if they so desired. DSAacC
To support its position, petitioner cites American Tobacco Co. v. Director of Patents. 26
However, this case merely authorized the delegation of the power to investigate, but not the
authority to impose sanctions. Verily, in requiring the disciplining authority to exercise its own
judgment and discretion in deciding a case, American Tobacco supports the present
respondents' cause. In that case, the petitioners objected to the appointment of hearing officers
and sought the personal hearing of their case by the disciplining authority. 27 The Court,
however, sustained the right to delegate the power to investigate, as long as the adjudication
would be made by the deciding authority.
By the same token, the Constitution 28 grants the Supreme Court disciplinary authority over all
lower court justices and judges, as well as judicial employees and lawyers. While the
investigation of administrative complaints is delegated usually to the Office of the Court
Administrator (OCA) or the Integrated Bar of the Philippines (IBP), 29 the Court nonetheless
makes its own judgments of the cases when sanctions are imposed. It does not merely adopt or
solely rely on the recommendations of the OCA or the IBP.
Inasmuch as the health secretary's twin Orders were patently void for want of due process, the
CA did not err in refusing to discuss the merit of the PCAGC's (or the Ad Hoc Committee's)
recommendations. Such a discussion should have been made by the health secretary before it
could be passed upon by the CA.
In representation of petitioner, the Office of the Solicitor General insists that respondents are
guilty of the charges and, like Dr. Majarais, deserve dismissal from the service. Suffice it to
stress that the issue in this case is not the guilt of respondents, but solely due process.
SDITAC
In closing, the Court reiterates the oft-quoted aphorism that the end does not justify the means.
Guilt cannot be pronounced nor penalty imposed, unless due process is first observed. This is
the essence of fairness and the rule of law in a democracy.

WHEREFORE, the Petition is PARTLY GRANTED. The assailed Decision of the Court of
Appeals is MODIFIED in the sense that the authority of the Ad Hoc Investigating Committee
created under Administrative Order 298 is SUSTAINED. Being violative of administrative due
process, the May 8, 1998 and the June 5, 1998 Orders of the health secretary are ANNULLED
and SET ASIDE. Let the records of this case be REMANDED to the Department of Health, so
that proper steps can be taken to correct the due-process errors pointed out in this Decision.
No pronouncement as to costs.
SO ORDERED.

[G.R. No. 150178. November 26, 2004.]

FLORIAN R. GAOIRAN, petitioner, vs. HON. ANGEL C. ALCALA, Retired Chairman,
Commission on Higher Education, ESTER ALBANO GARCIA, now Chairman, Commission on
Higher Education, FELIPE S. AMMUGAUAN, SR., Vocation School Superintendent I,
Angadanan Agro-Industrial College, EDMOND M. CASTILLEJO, Administrative Officer I,
Angadanan Agro-Industrial College, and DIOSDADO TELAN, Instructor I & Head Teacher III,
OIC Designate, Angadanan Agro-Industrial College, Angadanan, Isabela, respondents.
Rodolfo T. Lopez for petitioner.
Francisco V. Marallag for private respondents.
SYNOPSIS
A letter-complaint was filed with the Commission on Higher Education (CHED) by respondent
Edmond Castillejo against petitioner which arose from the mauling incident involving the parties.
After due investigation and upon a finding of a prima facie case against petitioner for grave
misconduct and conduct prejudicial to the best interest of the service, a formal charge and order
of suspension were issued by the Legal Affairs Service of the CHED. Thereafter, Joel Voltaire
Mayo, who was later appointed Director of the Legal Affairs Service of the CHED, issued a
Resolution dismissing the administrative complaint against the petitioner on the ground that the
letter-complaint of respondent Castillejo was not under oath. However, respondent Alcala, then
Chairman of the CHED, apparently unaware of the existence of Mayo's resolution, issued
another Resolution finding the petitioner guilty as charged. Subsequently, petitioner filed with the
Regional Trial Court (RTC) of Cauayan, Isabela, a petition for certiorari, prohibition and
injunction, which was decided in his favor. On appeal, the Court of Appeals reversed the
decision of the RTC. Hence, this petition. aIcDCA
In denying the petition, the Supreme Court ruled that the letter-complaint of respondent Castillejo
is not the "complaint" referred to under E.O. No. 292. It was the formal charge and order of
preventive suspension filed by the Legal Affairs Service of the CHED against the petitioner that
constituted the complaint. As the complaint against the petitioner was initiated by the proper
disciplining authority, the same need not be subscribed and sworn to. Neither is it required that
the same contain a verification of non-forum shopping.
The Court likewise ruled that the Resolution issued by Alcala prevails over that of Mayo, as the
latter's Resolution was issued in excess of his authority. Moreover, respondent Alcala, by reason

of his position as then Chairman of the CHED, had the authority to reverse and set aside the
acts and issuances of his subordinates. CAaDTH
SYLLABUS
1.
ADMINISTRATIVE LAW; IN ADMINISTRATIVE PROCEEDINGS, TECHNICAL
RULES OF PROCEDURES AND EVIDENCE ARE NOT STRICTLY APPLIED; CASE AT BAR.
Indeed, it is not totally uncommon that a government agency is given a wide latitude in the
scope and exercise of its investigative powers. After all, in administrative proceedings, technical
rules of procedure and evidence are not strictly applied.
2.
ID.; ID.; COMPLAINT AGAINST CIVIL SERVICE OFFICIALS AND EMPLOYEES
NEED NOT BE SUBSCRIBED AND SWORN TO WHEN INITIATED BY PROPER
DISCIPLINING AUTHORITY; CASE AT BAR. As the complaint against the petitioner was
initiated by the appropriate disciplining authority, under Sections 46(c) and 48(1), Chapter 6,
Subtitle A, Book V of E.O. No. 292, the same need not be subscribed and sworn to. Neither is it
required that the same contain a verification of non-forum shopping. CHaDIT
3.
ID.;
ID.;
ID.;
SECRETARIES
AND
HEADS
OF
AGENCIES
AND
INSTRUMENTALITIES, PROVINCES, CITIES AND MUNICIPALITIES SHALL HAVE
JURISDICTION TO INVESTIGATE AND DECIDE MATTERS INVOLVING DISCIPLINARY
ACTION AGAINST EMPLOYEES UNDER THEIR JURISDICTION; CASE AT BAR. Section
47(2), Chapter 7 of E.O. No. 292 provides, in part, that "the Secretaries and heads of agencies
and instrumentalities, provinces, cities and municipalities shall have jurisdiction to investigate
and decide matters involving disciplinary action against officers and employees under their
jurisdiction." Since it was the CHED, as the disciplining authority, through Atty. Dasig, which filed
the formal charge or complaint against the petitioner, jurisdiction was properly acquired over the
case.
4.
ID.; DUE PROCESS; PRESENT WHEN A PARTY IS AFFORDED THE
OPPORTUNITY TO PRESENT HIS SIDE; CASE AT BAR. What is repugnant to due process
is the denial of the opportunity to be heard. The petitioner was undoubtedly afforded the
opportunity to present his side as he was directed to file his written answer to the formal charge
against him. He opted not to do so. He cannot now feign denial of due process. cHECAS
5.
ID.; OMNIBUS RULES IMPLEMENTING BOOK V OF EXECUTIVE ORDER NO. 292;
GRAVE MISCONDUCT AND CONDUCT GROSSLY PREJUDICIAL TO THE BEST INTEREST
OF THE SERVICE; PENALTY. Under Section 22, Rule XIV of the Omnibus Rules
Implementing Book V of E.O. No. 292, grave misconduct on first offense is punishable by
dismissal. On the other hand, conduct grossly prejudicial to the best interest of the service on
first offense is punishable by suspension for six months and one day to one year.
DECISION
CALLEJO, SR., J p:
Before the Court is a petition for review on certiorari under Rule 45 of the Rules of Court filed by
Florian R. Gaoiran, seeking to reverse and set aside the Decision 1 of the Court of Appeals in
CA-G.R. SP No. 61477. In the assailed decision, the appellate court reversed the Decision dated
February 15, 2000 of the Regional Trial Court (RTC) of Cauayan, Isabela, Branch 20, nullifying
the Resolution dated June 3, 1999 of Hon. Angel C. Alcala, then Chairman of the Commission

on Higher Education (CHED), dismissing petitioner Gaoiran from the service for grave
misconduct and conduct prejudicial to the best interest of the service. TcIAHS

your witnesses and other pertinent documents, if any. In your answer, you are directed to state
whether or not you elect a formal hearing of the charges against you or you waive your rights to
such hearing. You are, likewise, advised of your right to counsel. EHSAaD

The factual antecedents of the case are as follows:

On October 29, 1997, a letter-complaint was filed with the CHED against petitioner Gaoiran,
Head Teacher III in the High School Department of the Angadanan Agro-Industrial College
(AAIC), 2 a state-supervised school in Angadanan, Isabela. In his letter-complaint, respondent
Edmond M. Castillejo, Administrative Officer II, also of the same school, charged the petitioner
with mauling him while he was performing his duties therein. The incident allegedly took place
on August 15, 1997 at 2:30 p.m. inside the school premises. Appended to the letter-complaint
were the verified criminal complaint filed by respondent Castillejo against the petitioner and the
sworn statements of his witnesses. The criminal complaint for assault to a person in authority
was filed with the Municipal Circuit Trial Court of Angadanan-San Guillermo and docketed as
Criminal Case No. 97-42.
The letter-complaint was referred to the Legal Affairs Service of the CHED. Thereafter, Atty.
Felina S. Dasig, then Officer-in-Charge of the Office of the Director III, Legal Affairs Service,
conducted a fact-finding investigation on the mauling incident to determine the existence of a
prima facie case against the petitioner.
During the fact-finding investigation, respondent Castillejo averred that at 2:30 p.m. on August
15, 1997, while he was performing his usual duties as Administrative Officer II, the petitioner
suddenly barged into his (Castillejo's) office and, then and there, assaulted and boxed him. The
petitioner delivered blows on respondent Castillejo's head, left eye, left eyebrow and lower lip.
Not content with the injuries he inflicted on respondent Castillejo, the petitioner tried to throw him
down the stairs but was prevented by the timely intervention of Mr. Ismael Bautista, Accountant I
of the same school. Bautista and other employees of the AAIC corroborated respondent
Castillejo's statements. Moreover, the medical certificate issued by Dr. Belinda L. Miguel showed
that on August 15, 1997, she treated respondent Castillejo for the wounds he sustained on his
left eye, left eyebrow and lower lip.
For his part, the petitioner averred that at around 2:30 p.m. of August 15, 1997, he was about to
leave the school premises. Suddenly, respondent Castillejo shouted to the security guard to
"punch out" the petitioner's attendance card. This irked the petitioner because there were
students and other teachers in the vicinity. The petitioner confronted respondent Castillejo and
asked the latter why he had to embarrass him (petitioner) in front of the students. Respondent
Castillejo just turned his back and proceeded to his office. The petitioner followed him and later
saw that respondent Castillejo was already holding a wrench. Inside respondent Castillejo's
office, the petitioner made a side step and just then, respondent Castillejo slipped and fell flat on
the floor. The petitioner noticed that respondent Castillejo's left eyebrow was bleeding and he
was putting up a struggle (nagpupumiglas), so the petitioner held his feet. While going down the
stairs, the petitioner met Bautista and Henry Rupac, Watchman I of the school.
After the fact-finding investigation was terminated, and upon finding of a prima facie case
against the petitioner for grave misconduct and conduct prejudicial to the best interest of the
service, Atty. Dasig issued the Formal Charge and Order of Preventive Suspension dated July
27, 1998 stating in part:
WHEREFORE, you are hereby directed to answer in writing and under oath the above charges
against you within ten (10) days from receipt thereof, submitting therewith sworn statements of

Considering the gravity of the instant charge against you, pursuant to the provisions of P.D. 807,
as amended, you are hereby PREVENTIVELY SUSPENDED FOR NINETY (90) DAYS
WITHOUT PAY effective upon receipt thereof. 3
The petitioner did not submit his written counter-affidavit or answer to the charges against him.
Instead, he filed with the RTC of Cauayan, Isabela, Branch 20, a petition for certiorari and
prohibition to restrain the enforcement of the said preventive suspension order. However,
considering that the petitioner had already served the suspension, the case was dismissed for
being moot and academic.
The petitioner sought reconsideration of the formal charge and preventive suspension order,
contending that the letter-complaint was not under oath and that he was not informed nor
apprised of the complaint against him before, during and after the preliminary fact-finding
investigation.
Thereafter, Joel Voltaire V. Mayo, who was later appointed Director of the Legal Affairs Service
of the CHED, issued the Resolution dated February 20, 1999, dismissing the administrative
complaint against the petitioner on the ground that the letter-complaint of respondent Castillejo
was not under oath.
However, respondent Hon. Angel C. Alcala, then Chairman of the CHED, apparently unaware of
the existence of Director Mayo's resolution, issued another Resolution dated June 3, 1999,
finding the petitioner guilty of grave misconduct and conduct prejudicial to the best interest of the
service and dismissing him therefrom. The dispositive portion of respondent Alcala's resolution
states:
WHEREFORE, in the light of the foregoing, respondent FLORIAN R. GAOIRAN is hereby meted
the penalty of DISMISSAL FROM THE SERVICE for unlawfully attacking a person in authority
while in the active performance of his duties and responsibilities and, then and there, inflicted
physical injuries on his person. This is without prejudice to the complainant's right to institute the
proper criminal and civil actions against the respondent relative thereto.
The Vocational Schools Superintendent of Angadanan Agro-Industrial College, Angadanan,
Isabela, is hereby directed to effectively implement this Order and to submit a report thereon
within three (3) days upon implementation.
SO ORDERED. 4
The petitioner received a copy of the above resolution on July 12, 1999, which was served on
him by respondent Felipe P. Ammugauan, Sr., School Superintendent I of AAIC.
The petitioner then filed with the RTC of Cauayan, Isabela, Branch 20, a petition for certiorari,
prohibition and injunction. He alleged that respondent Alcala committed grave abuse of
discretion when, in the Resolution dated June 3, 1999, he dismissed the petitioner from the
service despite the fact that the administrative complaint against him had already been
dismissed per the Resolution of February 20, 1999 of Director Mayo of the Legal Affairs Service.

In its Decision dated February 15, 2000, the RTC rendered judgment in favor of the petitioner as
it declared the June 3, 1999 Resolution of respondent Alcala null and void. The RTC found that
after the formal charge was filed against the petitioner and he chose not to file an answer
thereto, a formal investigation was still required to be conducted under the Civil Service Rules.
When Director Mayo of the Legal Affairs Service, in his February 20, 1999 Resolution, dismissed
the administrative complaint against the petitioner on the ground that the letter-complaint was
not under oath, the formal investigation had not, as yet, been terminated. Such dismissal,
according to the RTC, put an end to the litigation. Thus, respondent Alcala acted with grave
abuse of discretion in issuing his June 3, 1999 Resolution, dismissing the petitioner from the
service, for the reason that the administrative complaint against him had already been
dismissed. ACTISE
On appeal by the respondents, the Court of Appeals (CA), in the assailed Decision of September
10, 2001, reversed and set aside the decision of the RTC. The CA declared as valid respondent
Alcala's June 3, 1999 Resolution, dismissing the petitioner from the service. On the other hand,
it declared as "without legal effect" Director Mayo's February 20, 1999 Resolution, dismissing
the administrative complaint against the petitioner.
In so ruling, the CA noted an apparent irregularity in Director Mayo's February 20, 1999
Resolution. The CA pointed out that while the said resolution was ostensibly dated February 20,
1999, a copy thereof was mailed to respondent Castillejo only on July 6, 1999 and received by
the latter only on July 14, 1999. The petitioner, for his part, received a copy thereof only on July
1, 1999. Prior to these dates, the existence of the said resolution had not been established;
hence, the date of its actual issuance remained doubtful. The CA ruled that between the two
conflicting resolutions, Director Mayo's February 20, 1999 Resolution and respondent Alcala's
June 3, 1999 Resolution, the latter was entitled to the presumption of regularity. Moreover,
respondent Alcala, as then Chairman of the CHED, had the authority to reverse and set aside
the acts or issuances of his subordinates, including that of Director Mayo.
The CA further ratiocinated that, even granting that the February 20, 1999 Resolution was
regularly issued, Director Mayo nonetheless overstepped his authority because Atty. Dasig, then
OIC of the Legal Affairs Service, had filed the formal charge and order of preventive suspension
against the petitioner as early as July 27, 1998. The CA also held that, contrary to Director
Mayo's ruling, the fact that the letter-complaint was not under oath was not fatal. Even an
anonymous complaint may be acted upon by the authority concerned provided that the same is
verifiable, since under Section 48 5 of Executive Order (E.O.) No. 292, 6 administrative
proceedings may be commenced against a subordinate officer or employee by the Secretary or
head of office of equivalent rank, or head of local government or chiefs of agencies, or regional
directors.
The CA, likewise, opined that in administrative proceedings, a formal or trial-type hearing is not,
at all times, necessary. In this case, the petitioner was not denied procedural due process as he
was afforded a fair and reasonable opportunity to explain his side. On the other hand, the CA
declared that respondent Ester Albano Garcia, who replaced respondent Alcala as Chairman of
the CHED, was denied procedural due process by the RTC when it rendered its decision without
awaiting her answer to the petition. The dispositive portion of the assailed CA decision reads:
WHEREFORE, premises considered, the appealed decision is hereby REVERSED AND SET
ASIDE. Accordingly, the Resolution dated June 3, 1999 of then Chairman of CHED, Angel C.
Alcala is hereby declared valid while the Resolution dated February 20, 1999 of Director Joel
Voltaire Mayo is hereby declared to be without legal effect.

SO ORDERED. 7
Aggrieved, the petitioner now comes to this Court alleging as follows:
1.
THE HONORABLE COURT OF APPEALS COMMITTED A REVERSIBLE ERROR
OF LAW FOR NOT UPHOLDING THE EXPRESS PROVISIONS OF THE CIVIL SERVICE LAW
ESPECIALLY RULE XIV, SECTION 2 OF THE OMNIBUS RULES IMPLEMENTING BOOK 5
OF EXECUTIVE [ORDER] NO. 292 AND OTHER PERTINENT CIVIL SERVICE LAWS,
SECTION 2, SECTION 4 AND PARAGRAPH D OF SECTION 4; TAaCED
2.
THE HONORABLE COURT OF APPEALS COMMITTED A REVERSIBLE ERROR
OF LAW IN NOT HOLDING THAT A VOID COMPLAINT IS DEEMED INEXISTENT;
3.
THE HONORABLE COURT OF APPEALS COMMITTED A REVERSIBLE ERROR
OF LAW IN NOT ORDERING A FORMAL INVESTIGATION OF THE CHARGES PROFFERED
AGAINST THE PETITIONER THERE BEING NO FORMAL INVESTIGATION CONDUCTED BY
THE COMMISSION;
4.
THE HONORABLE COURT OF APPEALS COMMITTED A REVERSIBLE ERROR
OF LAW IN HOLDING THAT RESPONDENT ESTER ALBANO GARCIA WAS DENIED DUE
PROCESS OF LAW KNOWING THAT THE LATTER, BEING A NOMINAL PARTY, THE
LOWER COURT MAY DISPENSE WITH HER ANSWER TO THE PETITION;
5.
THE HONORABLE COURT OF APPEALS COMMITTED A REVERSIBLE ERROR IN
HOLDING THAT THE FORMAL CHARGE AND ORDER OF PREVENTIVE SUSPENSION IS
LEGAL. 8
As the petitioner himself submits, the foregoing issues are interrelated; hence, they shall be
resolved jointly.
The petitioner vigorously contends that the letter-complaint of respondent Castillejo should be
deemed inexistent as it was not made under oath. Consequently, the formal charge and order of
preventive suspension filed against him, which stemmed from the said letter-complaint, was,
likewise, null and void. The petitioner cites Section 2, 9 Rule XIV of the Omnibus Rules
Implementing Book V of E.O. No. 292, which requires that an administrative complaint against a
civil service official or employee be in writing and under oath. Moreover, the letter-complaint did
not allegedly comply with Section 4(d) 10 of Civil Service Commission (CSC) Resolution No. 940521, 11 also known as the Uniform Rules of Procedure in the Conduct of Administrative
Investigation, and the law then in force at the time, because it did not contain a certification of
non-forum shopping.
Since respondent Castillejo's letter-complaint failed to comply with the formal requirements of
the law, the petitioner maintains that Director Mayo rightfully dismissed the same and that
respondent Alcala abused his discretion when he dismissed the petitioner from the service.
The Court is not persuaded.
The pertinent provisions governing the initiation of administrative complaints against civil service
officials or employees are provided in Book V of E.O. No. 292. Sections 46(c) and 48(1) and (2),
Chapter 6, Subtitle A thereof read:

Sec. 46. Discipline: General provisions.

(c)
Except when initiated by the disciplining authority, no complaint against a civil service
official or employee shall be given due course unless the same is in writing and subscribed and
sworn to by the complainant.
xxx

xxx

xxx

Sec. 48. Procedures in Administrative Cases Against Non-Presidential Appointees. (1)

Administrative proceedings may be commenced against a subordinate officer or employee by
the Secretary or head of office of equivalent rank, or head of local government, or chiefs of
agencies, or regional directors, or upon sworn, written complaint of any other persons. AaCTcI
(2)
In the case of a complaint filed by any other persons, the complainant shall submit
sworn statements covering his testimony and those of his witnesses together with his
documentary evidence. If on the basis of such papers a prima facie case is found not to exist,
the disciplining authority shall dismiss the case. If a prima facie case exists, he shall notify the
respondent in writing, of the charges against the latter, to which shall be attached copies of the
complaint, sworn statements and other documents submitted, and the respondent shall be
allowed not less than seventy-two hours after receipt of the complaint to answer the charges in
writing under oath together with supporting sworn statements and documents, in which he shall
indicate whether or not he elects a formal investigation if his answer is not considered
satisfactory. If the answer is found satisfactory, the disciplining authority shall dismiss the case.
On the other hand, Section 2, Rule XIV of the Omnibus Rules Implementing Book V of E.O. No.
292, cited by the petitioner, reads:
Sec. 2. Any person may file an administrative complaint with the Commission or any of its
proper office. Said complaint shall be in writing and under oath, otherwise, the same shall not be
given due course.
Further, Section 4(d) of CSC Resolution No. 94-0521, likewise, invoked by the petitioner, states:
Sec. 4. Complaint in Writing and Under Oath. No complaint against a civil servant shall be
given due course, unless the same is in writing and under oath.
The complaint should be written in a clear manner, simple and concise language and in a
systematic manner as to apprise the civil servant concerned of the nature and cause of the
accusation against him and to enable him to intelligently prepare his defense or answer.
The complaint shall also contain the following:
xxx

xxx

xxx

(d)
a statement that no other administrative action or complaint against the same party
involving the same acts or omissions and issues has been filed before another agency or
administrative tribunal.
In the absence of any one of the above-mentioned requirements, the complaints shall be
dismissed.

It must be pointed out that, while the letter-complaint of respondent Castillejo was not
concededly verified, appended thereto were the verified criminal complaint that he filed against
the petitioner, as well as the sworn statements of his witnesses. These documents could very
well be considered as constituting the complaint against the petitioner. In fact, this Court,
through the Court Administrator, investigates and takes cognizance of, not only unverified, but
also even anonymous complaints filed against court employees or officials for violations of the
Code of Ethical Conduct. 12 Indeed, it is not totally uncommon that a government agency is
given a wide latitude in the scope and exercise of its investigative powers. 13 After all, in
administrative proceedings, technical rules of procedure and evidence are not strictly applied. 14
In any case, contrary to the petitioner's assertion, the letter-complaint of respondent Castillejo is
not a "complaint" within the purview of the provisions mentioned above. In the fairly recent case
of Civil Service Commission v. Court of Appeals, 15 this Court held that the "complaint" under
E.O. No. 292 and CSC rules on administrative cases "both refer to the actual charge to which
the person complained of is required to answer and indicate whether or not he elects a formal
investigation should his answer be deemed not satisfactory." DTSaIc
In this case, respondent Castillejo's letter-complaint contained the following averments:
The undersigned wish to file his complaint against Mr. Florian R. Gaoiran, Head Teacher III of
Angadanan Agro-Industrial College for mauling him last August 15, 1997 at around 2:30 in the
afternoon for the accused to be disciplined. The case is now filed in the Court of Justice
docketed under Criminal Case No. 97-42 for "Assault to Person in Authority".
I am Mr. Edmond M. Castillejo, Administrative Officer II of Angadanan Agro-Industrial College,
Angadanan, Isabela, furnishing you a copy of my complaint filed in court, all under oath, for you
to determine the gravity of the case administratively. Mr. Florian R. Gaoiran is now intimidating
two of the witnesses against him that's why may I request for an immediate investigation of the
case, by the commission, for him to be suspended or probably removed from the service to
avoid him from threatening the witnesses.
Your preferential attention and favorable action in this request are earnestly requested and will
be highly appreciated. 16
Acting thereon, the CHED referred the matter to its Office of Legal Affairs Service and Atty.
Dasig, as OIC Director thereof, conducted a fact-finding investigation on the incident. The said
letter-complaint did not, by itself, commence the administrative proceedings against the
petitioner, requiring an answer from him, but, as already mentioned, merely triggered a factfinding investigation by the CHED.
The Court cannot, therefore, uphold the petitioner's contention that respondent Castillejo's lettercomplaint was "inexistent" and could not be acted upon by the CHED for to do so, would result
in an absurd and restrictive interpretation of E.O. No. 292 and effectively deprive the
Government of its disciplining power over people who hold a public trust. 17
In this case, it was the formal charge and order of preventive suspension filed by Atty. Dasig
against the petitioner charging him with grave misconduct and conduct prejudicial to the best
interest of the service and directing him to submit his answer in writing and under oath that
constituted the complaint. 18 Notably, Atty. Dasig signed the formal charge and order of
preventive suspension "for the Commission" in her capacity as then OIC of the CHED's Legal
Affairs Service. As the complaint against the petitioner was initiated by the appropriate

disciplining authority, under Sections 46(c) 19 and 48(1), 20 Chapter 6, Subtitle A, Book V of
E.O. No. 292, the same need not be subscribed and sworn to. Neither is it required that the
same contain a verification of non-forum shopping.
Section 47(2), Chapter 7 of E.O. No. 292 provides, in part, that "the Secretaries and heads of
agencies and instrumentalities, provinces, cities and municipalities shall have jurisdiction to
investigate and decide matters involving disciplinary action against officers and employees
under their jurisdiction." Since it was the CHED, 21 as the disciplining authority, through Atty.
Dasig, which filed the formal charge or complaint against the petitioner, jurisdiction was properly
acquired over the case.
Anent the issue on which of the two conflicting resolutions is valid, the Court agrees with the CA
that respondent Alcala's June 3, 1999 Resolution dismissing the petitioner from the service
prevails over that of Director Mayo's February 20, 1999 Resolution dismissing the administrative
complaint. TCIHSa
First, the basis for the dismissal of the administrative complaint stated in Director Mayo's
resolution, i.e., that the letter-complaint was not verified, is, as earlier discussed, patently
erroneous. Second, it was issued by Director Mayo in excess of his authority. It is borne by the
records that Atty. Dasig already filed the formal charge against the petitioner after a fact-finding
investigation had been conducted on the mauling incident and a prima facie case had been
established against him. The formal charge was filed as early as July 27, 1998 and, on
September 21, 1998, Atty. Dasig submitted her memorandum to respondent Alcala
recommending the petitioner's dismissal. It was, thus, highly irregular for Director Mayo to
dismiss the administrative complaint against the petitioner long after the formal charge had
already been filed against him and the matter was already for respondent Alcala's resolution.
Third, respondent Alcala, by reason of his position as then Chairman of the CHED, had the
authority to reverse and set aside the acts or issuances of his subordinates. His June 3, 1999
Resolution dismissing the petitioner from the service, in effect, reversed and set aside the
Resolution dated February 20, 1999 of Director Mayo, his subordinate.

the fact-finding investigation was considered in his (respondent's) favor to enable this office to
determine the veracity of the allegations imputed against the respondent.
After weighing all the evidences [sic] submitted and the testimonies given by the witnesses for
both complainant and the respondent, this office finds substantial evidence to hold the
respondent administratively liable for violation of subparagraphs (2) and (27) of Section 46(b),
Chapter 7, Title I-A, Book V of Executive Order No. 292 otherwise known as the "Administrative
Code of 1987." . . . 22
Significantly, the petitioner cannot rightfully claim that he was denied procedural due process.
What is repugnant to due process is the denial of the opportunity to be heard. 23 The petitioner
was undoubtedly afforded the opportunity to present his side as he was directed to file his
written answer to the formal charge against him. He opted not to do so. He cannot now feign
denial of due process. ADCTac
Under Section 22, Rule XIV of the Omnibus Rules Implementing Book V of E.O. No. 292, grave
misconduct on first offense is punishable by dismissal. On the other hand, conduct grossly
prejudicial to the best interest of the service on first offense is punishable by suspension for six
months and one day to one year.
In fine, the appellate court committed no reversible error in upholding respondent Alcala's
Resolution of June 3, 1999 finding the petitioner guilty of grave misconduct and conduct
prejudicial to the best interest of the service and dismissing him therefrom.
WHEREFORE, premises considered, the petition is DENIED. The Decision dated September
10, 2001 of the Court of Appeals in CA-G.R. SP No. 61477 is AFFIRMED in toto.
SO ORDERED.

Finally, the petitioner insists that no formal investigation was conducted after the formal charge
had been filed against him in violation of Section 22 of CSC Resolution No. 94-0521 which
reads:

[G.R. No. 137473. August 2, 2001.]

Section 22.
Conduct of Formal Investigation. A formal investigation shall be held after
the respondent has filed his answer or after the period for filing an answer has expired. It shall
be completed within thirty (30) days from the date of the service of the formal charge, unless the
period is extended by the Commission in meritorious cases.

Del Prado Diaz & Associates Law Offices for petitioner.

Although the respondent did not elect a formal investigation, one shall nevertheless be
conducted if upon evaluation of the complaint, the answer, and the documents in support
thereof, the merits of the case cannot be judiciously resolved without conducting such formal
investigation.
The petitioner's allegation is, however, belied by respondent Alcala's statement in his resolution,
to wit:
Nevertheless, during the formal investigation of the case, respondent [referring to the petitioner]
failed to submit his written counter-affidavit/answer to the charges filed against him by the
complainant so he was declared in default. This notwithstanding, the oral testimony given during

ESTELITO V. REMOLONA, petitioner, vs. CIVIL SERVICE COMMISSION, respondent.

The Solicitor General for respondent.

SYNOPSIS
Petitioner Estelito V. Remolona is the Postmaster at the Postal Office Service in Infanta,
Quezon. The Civil Service Commission (CSC) ordered the dismissal of Remolona from the
government service for dishonesty in securing a fake civil service eligibility for his wife. On
appeal, the Court of Appeals affirmed the resolution of the CSC ordering the dismissal of
petitioner. Petitioner filed a motion for reconsideration and/or new trial but was denied. Hence,
the present petition for review. Petitioner contended that the appellate court erred in sustaining
his dismissal for an offense not work connected in relation to his official position in the
government service. aHSCcE

The Supreme Court sustained the rulings of the Civil Service Commission and the Court of
Appeals. The Court ruled that dishonesty, as a ground for dismissal, need not be committed in
the course of the performance of duty by the person charged. According to the Court, 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 fellowmen, 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 Court further
stated that 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.
SYLLABUS
1.
CONSTITUTIONAL LAW; BILL OF RIGHTS; 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. The submission of Remolona that his alleged
extrajudicial 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 any 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.
cDHAES
2.
POLITICAL LAW; ADMINISTRATIVE LAW; 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. 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. 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.
3.
ID.; ID.; PUBLIC OFFICERS; IN ORDER TO WARRANT DISMISSAL, THE
DISHONESTY NEED NOT BE COMMITTED IN THE COURSE OF THE PERFORMANCE OF
DUTY BY THE PERSON CHARGED. 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. 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. SIcEHD
4.
ID.; ID.; FINDINGS OF ADMINISTRATIVE BODIES IF SUPPORTED BY
SUBSTANTIAL EVIDENCE ARE ACCORDED NOT ONLY RESPECT BUT ALSO FINALITY,
AND ARE BINDING ON THE COURT. 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. 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. 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. 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.

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:

5.
ID.; ID.; ALTHOUGH NO PECUNIARY DAMAGE WAS INCURRED BY THE
GOVERNMENT, THERE WAS STILL THE FALSIFICATION OF AN OFFICIAL DOCUMENT
THAT CONSTITUTES GROSS DISHONESTY WHICH CANNOT BE COUNTENANCED,
CONSIDERING THAT PETITIONER WAS AN ACCOUNTABLE OFFICER AND OCCUPIED A
SENSITIVE POSITION. 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.
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.

"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;

DECISION
PUNO, J p:
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. acHETI
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

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; ATICcS
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 . . .;
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 CSC 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." aDcHIC
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 IX (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. acCTSE
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

SO ORDERED.

[G.R. No. 173034. October 9, 2007.]

PHARMACEUTICAL and HEALTH CARE ASSOCIATION of the PHILIPPINES, petitioner, vs.
HEALTH SECRETARY FRANCISCO T. DUQUE III; HEALTH UNDERSECRETARIES DR.
ETHELYN P. NIETO, DR. MARGARITA M. GALON, ATTY. ALEXANDER A. PADILLA, & DR.
JADE F. DEL MUNDO; and ASSISTANT SECRETARIES DR. MARIO C. VILLAVERDE, DR.
DAVID J. LOZADA, AND DR. NEMESIO T. GAKO, respondents.
DECISION

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. AEDHST
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.

AUSTRIA-MARTINEZ, J p:
The Court and all parties involved are in agreement that the best nourishment for an infant is
mother's milk. There is nothing greater than for a mother to nurture her beloved child straight
from her bosom. The ideal is, of course, for each and every Filipino child to enjoy the unequaled
benefits of breastmilk. But how should this end be attained?
Before the Court is a petition for certiorari under Rule 65 of the Rules of Court, seeking to nullify
Administrative Order (A.O.) No. 2006-0012 entitled, Revised Implementing Rules and
Regulations of Executive Order No. 51, Otherwise Known as The "Milk Code," Relevant
International Agreements, Penalizing Violations Thereof, and for Other Purposes (RIRR).
Petitioner posits that the RIRR is not valid as it contains provisions that are not constitutional and
go beyond the law it is supposed to implement.
Named as respondents are the Health Secretary, Undersecretaries, and Assistant Secretaries of
the Department of Health (DOH). For purposes of herein petition, the DOH is deemed impleaded
as a co-respondent since respondents issued the questioned RIRR in their capacity as officials
of said executive agency. 1
Executive Order No. 51 (Milk Code) was issued by President Corazon Aquino on October 28,
1986 by virtue of the legislative powers granted to the president under the Freedom Constitution.
One of the preambular clauses of the Milk Code states that the law seeks to give effect to Article
11 2 of the International Code of Marketing of Breastmilk Substitutes (ICMBS), a code adopted
by the World Health Assembly (WHA) in 1981. From 1982 to 2006, the WHA adopted several
Resolutions to the effect that breastfeeding should be supported, promoted and protected,
hence, it should be ensured that nutrition and health claims are not permitted for breastmilk
substitutes.
In 1990, the Philippines ratified the International Convention on the Rights of the Child. Article 24
of said instrument provides that State Parties should take appropriate measures to diminish
infant and child mortality, and ensure that all segments of society, specially parents and children,
are informed of the advantages of breastfeeding.
On May 15, 2006, the DOH issued herein assailed RIRR which was to take effect on July 7,
2006.

However, on June 28, 2006, petitioner, representing its members that are manufacturers of
breastmilk substitutes, filed the present Petition for Certiorari and Prohibition with Prayer for the
Issuance of a Temporary Restraining Order (TRO) or Writ of Preliminary Injunction.

standing to file suit for its workers despite its lack of direct interest if its members are affected by
the action. An organization has standing to assert the concerns of its constituents.
xxx

The main issue raised in the petition is whether respondents officers of the DOH acted without or
in excess of jurisdiction, or with grave abuse of discretion amounting to lack or excess of
jurisdiction, and in violation of the provisions of the Constitution in promulgating the RIRR. 3
On August 15, 2006, the Court issued a Resolution granting a TRO enjoining respondents from
implementing the questioned RIRR.
After the Comment and Reply had been filed, the Court set the case for oral arguments on June
19, 2007. The Court issued an Advisory (Guidance for Oral Arguments) dated June 5, 2007, to
wit:
The Court hereby sets the following issues:
1.

Whether the RIRR is in accord with the provisions of Executive Order No. 51 (Milk

2.2
Whether pertinent international agreements 1 entered into by the Philippines are part
of the law of the land and may be implemented by the DOH through the RIRR; If in the
affirmative, whether the RIRR is in accord with the international agreements;
2.3
Whether Sections 4, 5(w), 22, 32, 47, and 52 of the RIRR violate the due process
clause and are in restraint of trade; and
2.4

xxx

. . . We note that, under its Articles of Incorporation, the respondent was organized . . . to act as
the representative of any individual, company, entity or association on matters related to the
manpower recruitment industry, and to perform other acts and activities necessary to accomplish
the purposes embodied therein. The respondent is, thus, the appropriate party to assert the
rights of its members, because it and its members are in every practical sense identical. . . . The
respondent [association] is but the medium through which its individual members seek to make
more effective the expression of their voices and the redress of their grievances. 5 (Emphasis
supplied)
which was reasserted in Purok Bagong Silang Association, Inc. v. Yuipco, 6 where the Court
ruled that an association has the legal personality to represent its members because the results
of the case will affect their vital interests. 7

Whether or not petitioner is a real party-in-interest;

2.
Whether Administrative Order No. 2006-0012 or the Revised Implementing Rules and
Regulations (RIRR) issued by the Department of Health (DOH) is not constitutional;
2.1
Code);

xxx

Whether Section 13 of the RIRR on Total Effect provides sufficient standards.

1
(1) United Nations Convention on the Rights of the Child; (2) the WHO and Unicef
"2002 Global Strategy on Infant and Young Child Feeding;" and (3) various World Health
Assembly (WHA) Resolutions.
The parties filed their respective memoranda.
The petition is partly imbued with merit.
On the issue of petitioner's standing
With regard to the issue of whether petitioner may prosecute this case as the real party-ininterest, the Court adopts the view enunciated in Executive Secretary v. Court of Appeals, 4 to
wit:
The modern view is that an association has standing to complain of injuries to its members. This
view fuses the legal identity of an association with that of its members. An association has

Herein petitioner's Amended Articles of Incorporation contains a similar provision just like in
Executive Secretary, that the association is formed "to represent directly or through approved
representatives the pharmaceutical and health care industry before the Philippine Government
and any of its agencies, the medical professions and the general public." 8 Thus, as an
organization, petitioner definitely has an interest in fulfilling its avowed purpose of representing
members who are part of the pharmaceutical and health care industry. Petitioner is duly
authorized 9 to take the appropriate course of action to bring to the attention of government
agencies and the courts any grievance suffered by its members which are directly affected by
the RIRR. Petitioner, which is mandated by its Amended Articles of Incorporation to represent
the entire industry, would be remiss in its duties if it fails to act on governmental action that
would affect any of its industry members, no matter how few or numerous they are. Hence,
petitioner, whose legal identity is deemed fused with its members, should be considered as a
real party-in-interest which stands to be benefited or injured by any judgment in the present
action.
On the constitutionality of the provisions of the RIRR
First, the Court will determine if pertinent international instruments adverted to by respondents
are part of the law of the land.
Petitioner assails the RIRR for allegedly going beyond the provisions of the Milk Code, thereby
amending and expanding the coverage of said law. The defense of the DOH is that the RIRR
implements not only the Milk Code but also various international instruments 10 regarding infant
and young child nutrition. It is respondents' position that said international instruments are
deemed part of the law of the land and therefore the DOH may implement them through the
RIRR.
The Court notes that the following international instruments invoked by respondents, namely: (1)
The United Nations Convention on the Rights of the Child; (2) The International Covenant on
Economic, Social and Cultural Rights; and (3) the Convention on the Elimination of All Forms of
Discrimination Against Women, only provide in general terms that steps must be taken by State
Parties to diminish infant and child mortality and inform society of the advantages of
breastfeeding, ensure the health and well-being of families, and ensure that women are provided

with services and nutrition in connection with pregnancy and lactation. Said instruments do not
contain specific provisions regarding the use or marketing of breastmilk substitutes.

practice in question is rendered obligatory by the existence of a rule of law requiring it. 16
(Emphasis supplied)

The international instruments that do have specific provisions regarding breastmilk substitutes
are the ICMBS and various WHA Resolutions.

"Generally accepted principles of international law" refers to norms of general or customary

international law which are binding on all states, 17 i.e., renunciation of war as an instrument of
national policy, the principle of sovereign immunity, 18 a person's right to life, liberty and due
process, 19 and pacta sunt servanda, 20 among others. The concept of "generally accepted
principles of law" has also been depicted in this wise:

Under the 1987 Constitution, international law can become part of the sphere of domestic law
either by transformation or incorporation. 11 The transformation method requires that an
international law be transformed into a domestic law through a constitutional mechanism such as
local legislation. The incorporation method applies when, by mere constitutional declaration,
international law is deemed to have the force of domestic law. 12
Treaties become part of the law of the land through transformation pursuant to Article VII,
Section 21 of the Constitution which provides that "[n]o treaty or international agreement shall be
valid and effective unless concurred in by at least two-thirds of all the members of the Senate."
Thus, treaties or conventional international law must go through a process prescribed by the
Constitution for it to be transformed into municipal law that can be applied to domestic conflicts.
13
The ICMBS and WHA Resolutions are not treaties as they have not been concurred in by at
least two-thirds of all members of the Senate as required under Section 21, Article VII of the
1987 Constitution.
However, the ICMBS which was adopted by the WHA in 1981 had been transformed into
domestic law through local legislation, the Milk Code. Consequently, it is the Milk Code that has
the force and effect of law in this jurisdiction and not the ICMBS per se.

Some legal scholars and judges look upon certain "general principles of law" as a primary
source of international law because they have the "character of jus rationale" and are "valid
through all kinds of human societies." (Judge Tanaka in his dissenting opinion in the 1966 South
West Africa Case, 1966 I.C.J. 296). O'Connell holds that certain priniciples are part of
international law because they are "basic to legal systems generally" and hence part of the jus
gentium. These principles, he believes, are established by a process of reasoning based on the
common identity of all legal systems. If there should be doubt or disagreement, one must look to
state practice and determine whether the municipal law principle provides a just and acceptable
solution. . . . 21 (Emphasis supplied)
Fr. Joaquin G. Bernas defines customary international law as follows:
Custom or customary international law means "a general and consistent practice of states
followed by them from a sense of legal obligation [opinio juris]." (Restatement) This statement
contains the two basic elements of custom: the material factor, that is, how states behave, and
the psychological or subjective factor, that is, why they behave the way they do.
xxx

The Milk Code is almost a verbatim reproduction of the ICMBS, but it is well to emphasize at this
point that the Code did not adopt the provision in the ICMBS absolutely prohibiting advertising or
other forms of promotion to the general public of products within the scope of the ICMBS.
Instead, the Milk Code expressly provides that advertising, promotion, or other marketing
materials may be allowed if such materials are duly authorized and approved by the InterAgency Committee (IAC).

xxx

xxx

The initial factor for determining the existence of custom is the actual behavior of states. This
includes several elements: duration, consistency, and generality of the practice of states.
The required duration can be either short or long. . . .
xxx

xxx

xxx

On the other hand, Section 2, Article II of the 1987 Constitution, to wit:

SECTION 2.
The Philippines renounces war as an instrument of national policy, adopts
the generally accepted principles of international law as part of the law of the land and adheres
to the policy of peace, equality, justice, freedom, cooperation and amity with all nations.
(Emphasis supplied)
embodies the incorporation method. 14
In Mijares v. Ranada, 15 the Court held thus:
[G]enerally accepted principles of international law, by virtue of the incorporation clause of the
Constitution, form part of the laws of the land even if they do not derive from treaty obligations.
The classical formulation in international law sees those customary rules accepted as binding
result from the combination [of] two elements: the established, widespread, and consistent
practice on the part of States; and a psychological element known as the opinion juris sive
necessitates (opinion as to law or necessity). Implicit in the latter element is a belief that the

Duration therefore is not the most important element. More important is the consistency and the
generality of the practice. . . .
xxx

xxx

xxx

Once the existence of state practice has been established, it becomes necessary to determine
why states behave the way they do. Do states behave the way they do because they consider it
obligatory to behave thus or do they do it only as a matter of courtesy? Opinio juris, or the belief
that a certain form of behavior is obligatory, is what makes practice an international rule. Without
it, practice is not law. 22 (Underscoring and Emphasis supplied)
Clearly, customary international law is deemed incorporated into our domestic system. 23
WHA Resolutions have not been embodied in any local legislation. Have they attained the status
of customary law and should they then be deemed incorporated as part of the law of the land?

The World Health Organization (WHO) is one of the international specialized agencies allied with
the United Nations (UN) by virtue of Article 57, 24 in relation to Article 63 25 of the UN Charter.
Under the 1946 WHO Constitution, it is the WHA which determines the policies of the WHO, 26
and has the power to adopt regulations concerning "advertising and labeling of biological,
pharmaceutical and similar products moving in international commerce," 27 and to "make
recommendations to members with respect to any matter within the competence of the
Organization." 28 The legal effect of its regulations, as opposed to recommendations, is quite
different.

on a health issue of the collective membership of the highest international body in the field of
health." 29 Even the ICMBS itself was adopted as a mere recommendation, as WHA Resolution
No. 34.22 states:
"The Thirty-Fourth World Health Assembly . . . adopts, in the sense of Article 23 of the
Constitution, the International Code of Marketing of Breastmilk Substitutes annexed to the
present resolution." (Emphasis supplied)
The Introduction to the ICMBS also reads as follows:

Regulations, along with conventions and agreements, duly adopted by the WHA bind member
states thus:
Article 19. The Health Assembly shall have authority to adopt conventions or agreements with
respect to any matter within the competence of the Organization. A two-thirds vote of the Health
Assembly shall be required for the adoption of such conventions or agreements, which shall
come into force for each Member when accepted by it in accordance with its constitutional
processes.
Article 20. Each Member undertakes that it will, within eighteen months after the adoption by the
Health Assembly of a convention or agreement, take action relative to the acceptance of such
convention or agreement. Each Member shall notify the Director-General of the action taken,
and if it does not accept such convention or agreement within the time limit, it will furnish a
statement of the reasons for non-acceptance. In case of acceptance, each Member agrees to
make an annual report to the Director-General in accordance with Chapter XIV.
Article 21. The Health Assembly shall have authority to adopt regulations concerning: (a) sanitary
and quarantine requirements and other procedures designed to prevent the international spread
of disease; (b) nomenclatures with respect to diseases, causes of death and public health
practices; (c) standards with respect to diagnostic procedures for international use; (d) standards
with respect to the safety, purity and potency of biological, pharmaceutical and similar products
moving in international commerce; (e) advertising and labeling of biological, pharmaceutical and
similar products moving in international commerce.
Article 22. Regulations adopted pursuant to Article 21 shall come into force for all Members after
due notice has been given of their adoption by the Health Assembly except for such Members as
may notify the Director-General of rejection or reservations within the period stated in the notice.
(Emphasis supplied)
On the other hand, under Article 23, recommendations of the WHA do not come into force for
members, in the same way that conventions or agreements under Article 19 and regulations
under Article 21 come into force. Article 23 of the WHO Constitution reads:

In January 1981, the Executive Board of the World Health Organization at its sixty-seventh
session, considered the fourth draft of the code, endorsed it, and unanimously recommended to
the Thirty-fourth World Health Assembly the text of a resolution by which it would adopt the code
in the form of a recommendation rather than a regulation. . . . (Emphasis supplied)
The legal value of WHA Resolutions as recommendations is summarized in Article 62 of the
WHO Constitution, to wit:
Art. 62. Each member shall report annually on the action taken with respect to
recommendations made to it by the Organization, and with respect to conventions, agreements
and regulations.
Apparently, the WHA Resolution adopting the ICMBS and subsequent WHA Resolutions urging
member states to implement the ICMBS are merely recommendatory and legally non-binding.
Thus, unlike what has been done with the ICMBS whereby the legislature enacted most of the
provisions into law which is the Milk Code, the subsequent WHA Resolutions, 30 specifically
providing for exclusive breastfeeding from 0-6 months, continued breastfeeding up to 24 months,
and absolutely prohibiting advertisements and promotions of breastmilk substitutes, have not
been adopted as a domestic law.
It is propounded that WHA Resolutions may constitute "soft law" or non-binding norms,
principles and practices that influence state behavior. 31
"Soft law" does not fall into any of the categories of international law set forth in Article 38,
Chapter III of the 1946 Statute of the International Court of Justice. 32 It is, however, an
expression of non-binding norms, principles, and practices that influence state behavior. 33
Certain declarations and resolutions of the UN General Assembly fall under this category. 34
The most notable is the UN Declaration of Human Rights, which this Court has enforced in
various cases, specifically, Government of Hongkong Special Administrative Region v. Olalia, 35
Mejoff v. Director of Prisons, 36 Mijares v. Raada 37 and Shangri-la International Hotel
Management, Ltd. v. Developers Group of Companies, Inc. 38

The absence of a provision in Article 23 of any mechanism by which the recommendation would
come into force for member states is conspicuous.

The World Intellectual Property Organization (WIPO), a specialized agency attached to the UN
with the mandate to promote and protect intellectual property worldwide, has resorted to soft law
as a rapid means of norm creation, in order "to reflect and respond to the changing needs and
demands of its constituents." 39 Other international organizations which have resorted to soft
law include the International Labor Organization and the Food and Agriculture Organization (in
the form of the Codex Alimentarius). 40

The former Senior Legal Officer of WHO, Sami Shubber, stated that WHA recommendations are
generally not binding, but they "carry moral and political weight, as they constitute the judgment

WHO has resorted to soft law. This was most evident at the time of the Severe Acute
Respiratory Syndrome (SARS) and Avian flu outbreaks.

Article 23. The Health Assembly shall have authority to make recommendations to Members with
respect to any matter within the competence of the Organization. (Emphasis supplied)

Although the IHR Resolution does not create new international law binding on WHO member
states, it provides an excellent example of the power of "soft law" in international relations.
International lawyers typically distinguish binding rules of international law-"hard law"-from nonbinding norms, principles, and practices that influence state behavior-"soft law." WHO has during
its existence generated many soft law norms, creating a "soft law regime" in international
governance for public health.

of the government's general policies and plans, and issue orders and regulations concerning the
implementation of established health policies.

The "soft law" SARS and IHR Resolutions represent significant steps in laying the political
groundwork for improved international cooperation on infectious diseases. These resolutions
clearly define WHO member states' normative duty to cooperate fully with other countries and
with WHO in connection with infectious disease surveillance and response to outbreaks.

Respondents submit that the national policy on infant and young child feeding is embodied in
A.O. No. 2005-0014, dated May 23, 2005. Basically, the Administrative Order declared the
following policy guidelines: (1) ideal breastfeeding practices, such as early initiation of
breastfeeding, exclusive breastfeeding for the first six months, extended breastfeeding up to two
years and beyond; (2) appropriate complementary feeding, which is to start at age six months;
(3) micronutrient supplementation; (4) universal salt iodization; (5) the exercise of other feeding
options; and (6) feeding in exceptionally difficult circumstances. Indeed, the primacy of
breastfeeding for children is emphasized as a national health policy. However, nowhere in A.O.
No. 2005-0014 is it declared that as part of such health policy, the advertisement or promotion of
breastmilk substitutes should be absolutely prohibited.

This duty is neither binding nor enforceable, but, in the wake of the SARS epidemic, the duty is
powerful politically for two reasons. First, the SARS outbreak has taught the lesson that
participating in, and enhancing, international cooperation on infectious disease controls is in a
country's self-interest . . . if this warning is heeded, the "soft law" in the SARS and IHR
Resolution could inform the development of general and consistent state practice on infectious
disease surveillance and outbreak response, perhaps crystallizing eventually into customary
international law on infectious disease prevention and control. 41
In the Philippines, the executive department implemented certain measures recommended by
WHO to address the outbreaks of SARS and Avian flu by issuing Executive Order (E.O.) No.
201 on April 26, 2003 and E.O. No. 280 on February 2, 2004, delegating to various departments
broad powers to close down schools/establishments, conduct health surveillance and
monitoring, and ban importation of poultry and agricultural products.
It must be emphasized that even under such an international emergency, the duty of a state to
implement the IHR Resolution was still considered not binding or enforceable, although said
resolutions had great political influence.
As previously discussed, for an international rule to be considered as customary law, it must be
established that such rule is being followed by states because they consider it obligatory to
comply with such rules (opinio juris). Respondents have not presented any evidence to prove
that the WHA Resolutions, although signed by most of the member states, were in fact enforced
or practiced by at least a majority of the member states; neither have respondents proven that
any compliance by member states with said WHA Resolutions was obligatory in nature.
Respondents failed to establish that the provisions of pertinent WHA Resolutions are customary
international law that may be deemed part of the law of the land.

It is crucial to ascertain whether the absolute prohibition on advertising and other forms of
promotion of breastmilk substitutes provided in some WHA Resolutions has been adopted as
part of the national health policy.

The national policy of protection, promotion and support of breastfeeding cannot automatically
be equated with a total ban on advertising for breastmilk substitutes.
In view of the enactment of the Milk Code which does not contain a total ban on the advertising
and promotion of breastmilk substitutes, but instead, specifically creates an IAC which will
regulate said advertising and promotion, it follows that a total ban policy could be implemented
only pursuant to a law amending the Milk Code passed by the constitutionally authorized branch
of government, the legislature.
Thus, only the provisions of the Milk Code, but not those of subsequent WHA Resolutions, can
be validly implemented by the DOH through the subject RIRR.
Third, the Court will now determine whether the provisions of the RIRR are in accordance with
those of the Milk Code.
In support of its claim that the RIRR is inconsistent with the Milk Code, petitioner alleges the
following:
1.
The Milk Code limits its coverage to children 0-12 months old, but the RIRR extended
its coverage to "young children" or those from ages two years old and beyond:
MILK CODE

Consequently, legislation is necessary to transform the provisions of the WHA Resolutions into
domestic law. The provisions of the WHA Resolutions cannot be considered as part of the law of
the land that can be implemented by executive agencies without the need of a law enacted by
the legislature.

RIRR

WHEREAS, in order to ensure that safe Section 2. Purpose These Revised

and adequate nutrition for infants is

Rules and Regulations are hereby promulgated

Second, the Court will determine whether the DOH may implement the provisions of the WHA
Resolutions by virtue of its powers and functions under the Revised Administrative Code even in
the absence of a domestic law.

provided, there is a need to protect and to ensure the provision of safe and adequate

Section 3, Chapter 1, Title IX of the Revised Administrative Code of 1987 provides that the DOH
shall define the national health policy and implement a national health plan within the framework

public about the proper use of breastmilk

promote breastfeeding and to inform the nutrition for infants and young children by the
promotion, protection and support of

substitutes and supplements and related breastfeeding and by ensuring the proper use of
products through adequate, consistent and
supplements

breastmilk

substitutes,

breastmilk

MILK CODE
SECTION 6.
Mothers.

objective information and appropriate

RIRR

The General Public and

Section 4. Declaration of Principles The

following are the underlying principles from

and related products when these are medically

(a)

regulation of the marketing and distribution

No advertising, promotion or other

which the revised rules and regulations are

indicated and only when necessary, on the

marketing materials, whether written, audio

premised upon:

of the said substitutes, supplements and basis of adequate information and through
or visual, for products within the scope of
related products;

appropriate marketing and distribution.

this Code shall be printed, published,

SECTION 4 (e). "Infant" means a

xxx

xxx

xxx

Section 5 (ff). "Young Child" means a person

distributed, exhibited and broadcast unless

person falling within the age bracket of from the age of more than twelve (12) months
such materials are duly authorized and f.
0-12 months.

Advertising, promotions, or sponsor-ships

up to the age of three (3) years (36 months).

approved by an inter-agency committee of infant formula, breastmilk substitutes and

2.
The Milk Code recognizes that infant formula may be a proper and possible substitute
for breastmilk in certain instances; but the RIRR provides "exclusive breastfeeding for infants
from 0-6 months" and declares that "there is no substitute nor replacement for breastmilk":

created herein pursuant to the applicable

other related products are prohibited.

standards provided for in this Code.

MILK CODE

RIRR
Section 11.

Prohibition No advertising,

WHEREAS, in order to ensure that safe Section 4. Declaration of Principles The

promotions, sponsorships, or marketing
and adequate nutrition for infants is

following are the underlying principles from

materials and activities for breastmilk

provided, there is a need to protect and which the revised rules and regulations are
substitutes intended for infants and young
promote breastfeeding and to inform the premised upon:
children up to twenty-four (24) months, shall
public about the proper use of breastmilk
be allowed, because they tend to convey or give
substitutes and supplements and related a.

Exclusive breastfeeding is for infants

products through adequate, consistent and

from 0 to six (6) months.

objective information and appropriate

There is no substitute or replacement for

subliminal messages or impressions that

undermine breastmilk and breastfeeding or
b.

otherwise exaggerate breastmilk substitutes

regulation of the marketing and distribution

breastmilk.
and/or replacements, as well as related

of the said substitutes, supplements and

products covered within the scope of this Code.
related products;
Section 13.
3.
The Milk Code only regulates and does not impose unreasonable requirements for
advertising and promotion; RIRR imposes an absolute ban on such activities for breastmilk
substitutes intended for infants from 0-24 months old or beyond, and forbids the use of health
and nutritional claims. Section 13 of the RIRR, which provides for a "total effect" in the promotion
of products within the scope of the Code, is vague:

"Total Effect" Promotion of

products within the scope of this Code must be

objective and should not equate or make the

product appear to be as good or equal to

supplements;

breastmilk or breastfeeding in the advertising

c.

concept. It must not in any case undermine

infant and milk formula.

breastmilk or breastfeeding. The "total effect"

Section 16.

should not directly or indirectly suggest that

products within the scope of the Code are

buying their product would produce better

absolutely prohibited. For this purpose, any

individuals, or resulting in greater love,

phrase or words that connotes to increase

intelligence, ability, harmony or in any manner

emotional, intellectual abilities of the infant

bring better health to the baby or other such

and young child and other like phrases

exaggerated and unsubstantiated claim.

shall not be allowed.

Section 15.

Content of Materials. The

4.

following shall not be included in advertising,

Pictures or texts that idealize the use of

All health and nutrition claims for

The RIRR imposes additional labeling requirements not found in the Milk Code:
MILK CODE

RIRR

SECTION 10.
container/label

Containers/Label.

(a)
both Filipino

Containers and/or labels shall be

shall contain such message, in

designed to provide the necessary

and English languages, and which

information about the appropriate

cannot

pictures of babies and children together with

use of the products, and in such a

the following points:

their mothers, fathers, siblings, grandparents,

way as not to discourage

(a)

The words or phrase "Important

other relatives or caregivers (or yayas) shall be

breastfeeding.

Notice" or "Government Warning" or

promotional and marketing materials:

a.

Section 26.

Content

Each

Texts, pictures, illustrations or information

which discourage or tend to undermine the

benefits or superiority of breastfeeding or

message
which idealize the use of breastmilk substitutes
and milk supplements. In this connection, no

used in any advertisements for infant formula

be

readily

separated

therefrom, relative

(b)

and breastmilk supplements;

Each container shall have a clear,

conspicuous and easily readable

their equivalent;
(b)

statement

of

the

superiority of
b.

The term "humanized," "maternalized,"

and understandable message in

breastfeeding;

"close to mother's milk" or similar words in

Pilipino or English printed on it, or
describing breastmilk substitutes or milk

no substitute

(c)

A statement that there is

on a label, which message can not

for breastmilk;
A

statement

(b)

readily become separated from it,

(d)

that

the

and which shall include the

used only on the advice of a health

No facility of the health care system

representatives of products covered by the

shall be used for the purpose of promoting

Code shall be allowed to conduct or be

infant formula or other products within the

involved in any activity on breastfeeding

product shall be

scope of this Code. This Code does not, promotion, education and production of
following points:

worker as to the need for its use and

however, preclude the dissemination of Information, Education and Communication

(i)

the words "Important Notice"

the

proper
information to health professionals as

methods of use;
or their equivalent; (e)
(ii)

provided in Section 8 (b).

Instructions for appropriate

a statement of the superiority

(IEC) materials on breastfeeding, holding of or

participating as speakers in classes or seminars

for women and children activities and to avoid

preparation,

and a warning against

SECTION 8.
of breastfeeding;

(b)
(iii)

Health Workers. the use of these venues to market their brands

the health hazards of inappropriate

a statement that the product

Information provided by manufacturers or company names.

preparation;
and distributors to health professionals

and
shall be used only on the advice

(f)

The

health

of a health worker as to the

improper use of infant

hazards of unnecessary or

regarding products within the scope of this

claims

SECTION 16.

All health and nutrition

Code shall be restricted to scientific and for products within the scope of the Code are

formula and
factual matters and such information shall
need for its use and the proper

other

products including
methods of use; and

information

absolutely prohibited. For this purpose, any

related

that

not imply or create a belief that bottle-

phrase or words that connotes to increase

feeding is equivalent or superior to

emotional, intellectual abilities of the infant

breastfeeding. It shall also include the

and young child and other like phrases shall not

information specified in Section 5 (b).

be allowed.

powdered infant
(iv)

instructions for appropriate

formula

may

contain pathogenic
preparation, and a warning

microorganisms

and

against the health hazards of

and used appropriately.

must be prepared

6.
The Milk Code permits milk manufacturers and distributors to extend assistance in
research and continuing education of health professionals; RIRR absolutely forbids the same.
MILK CODE
SECTION 8.

inappropriate preparation.
5.
The Milk Code allows dissemination of information on infant formula to health
professionals; the RIRR totally prohibits such activity:

(e)

RIRR

Health Workers Section 4. Declaration of Principles

Manufacturers and distributors of

products within the scope of this Code may

MILK CODE

The following are the underlying principles

from which the revised rules and regulations

RIRR
assist in the research, scholarships and are premised upon:

SECTION 7.
distributor, or

Health Care System.

Section 22.

No

manufacturer,
continuing education, of health

i.

Milk companies, and their

professionals, in accordance with the rules

part of
and regulations promulgated by the
Ministry of Health.

representatives, should not form

any policymaking body or entity in relation

SECTION 6.
Scope of

The General Public and

Mothers.
(f)

SECTION 22.

donations from manufacturers and

Code and these implementing rules and

distributors of products within the scope of

Code shall be allowed to conduct or be

this Code upon request by or with the

involved in any activity on breastfeeding

approval of the Ministry of Health.

regulations, shall be strictly prohibited.

Section 52.

Other Donations By Milk

promotion, education and production of

Companies Not Covered by this Code.

Information, Education and Communication

Donations of products, equipments, and the

(IEC) materials on breastfeeding, holding of or

like, not otherwise falling within the scope of

participating as speakers in classes or seminars

this Code or these Rules, given by milk

for women and children activities and to avoid

companies and their agents, representatives,

the use of these venues to market their brands

whether in kind or in cash, may only be

or company names.

coursed through the Inter Agency Committee

Primary Responsibility of

(IAC), which shall determine whether such

Health Workers It is the primary

responsibility of the health workers to promote,
protect and support breastfeeding and

donation be accepted or otherwise.

8.

The RIRR provides for administrative sanctions not imposed by the Milk Code.
MILK CODE

RIRR
Administrative Sanctions.

appropriate infant and young child feeding.

Section 46.

Part of this responsibility is to continuously

The following administrative sanctions shall be

update their knowledge and skills on

imposed upon any person, juridical or natural,

breastfeeding. No assistance, support, logistics

found to have violated the provisions of the

or training from milk companies shall be

Code and its implementing Rules and

permitted.

Regulations:

The Milk Code regulates the giving of donations; RIRR absolutely prohibits it.

a)

1st violation Warning;

MILK CODE

b)

2nd violation Administrative fine

RIRR

Within

the

Nothing herein contained shall prevent materials, defined and covered under the Milk

or representatives of products covered by the

SECTION 32.

7.

Donations

This Code Donations of products,

to the advancement of breasfeeding.

No manufacturer, distributor,

Section 51.

c)

of a minimum of Ten Thousand

violations Administrative Fine of

(P10,000.00) to Fifty Thousand

One Million (P1,000,000.00) Pesos,

(P50,000.00) Pesos, depending on the

the recall of the offending product,

gravity and extent of the violation,

cancellation of the CPR, revocation

including the recall of the offending

of the License to Operate (LTO) of

product;

the company concerned, including the

3rd violation Administrative Fine

blacklisting of the company to be

of a minimum of Sixty Thousand

furnished the Department of Budget

(P60,000.00) to One Hundred Fifty

and Management (DBM) and the

Thousand (P150,000.00) Pesos,

Department of Trade and Industry

depending on the gravity and extent of

(DTI);

the violation, and in addition thereto,

d)

e)

f)

An additional penalty of Two

the recall of the offending product,

Thousand Five Hundred (P2,500.00)

and suspension of the Certificate of

Pesos per day shall be made for every

Product Registration (CPR);

day the violation continues after

4th violation Administrative Fine

having received the order from

of a minimum of Two Hundred

the IAC or other such appropriate

Thousand (P200,000.00) to Five

body, notifying and penalizing the

Hundred (P500,000.00) Thousand

company for the infraction.

Pesos, depending on the gravity and

For purposes of determining whether or not

extent of the violation; and in addition

there is "repeated" violation, each product

thereto, the recall of the product,

violation belonging or owned by a company,

revocation of the CPR, suspension of

including those of their subsidiaries, are

the License to Operate (LTO) for one

deemed to be violations of the concerned milk

year;

company and shall not be based on the specific

5th and succeeding repeated

violating product alone.

9.

The RIRR provides for repeal of existing laws to the contrary.

The Court shall resolve the merits of the allegations of petitioner seriatim.
1.
Petitioner is mistaken in its claim that the Milk Code's coverage is limited only to
children 0-12 months old. Section 3 of the Milk Code states:
SECTION 3. Scope of the Code The Code applies to the marketing, and practices related
thereto, of the following products: breastmilk substitutes, including infant formula; other milk
products, foods and beverages, including bottle-fed complementary foods, when marketed or
otherwise represented to be suitable, with or without modification, for use as a partial or total
replacement of breastmilk; feeding bottles and teats. It also applies to their quality and
availability, and to information concerning their use.
Clearly, the coverage of the Milk Code is not dependent on the age of the child but on the kind of
product being marketed to the public. The law treats infant formula, bottle-fed complementary
food, and breastmilk substitute as separate and distinct product categories.
Section 4 (h) of the Milk Code defines infant formula as "a breastmilk substitute . . . to satisfy the
normal nutritional requirements of infants up to between four to six months of age, and adapted
to their physiological characteristics"; while under Section 4 (b), bottle-fed complementary food
refers to "any food, whether manufactured or locally prepared, suitable as a complement to
breastmilk or infant formula, when either becomes insufficient to satisfy the nutritional
requirements of the infant." An infant under Section 4 (e) is a person falling within the age
bracket 0-12 months. It is the nourishment of this group of infants or children aged 0-12 months
that is sought to be promoted and protected by the Milk Code.
But there is another target group. Breastmilk substitute is defined under Section 4 (a) as "any
food being marketed or otherwise presented as a partial or total replacement for breastmilk,
whether or not suitable for that purpose." This section conspicuously lacks reference to any
particular age-group of children. Hence, the provision of the Milk Code cannot be considered
exclusive for children aged 0-12 months. In other words, breastmilk substitutes may also be
intended for young children more than 12 months of age. Therefore, by regulating breastmilk
substitutes, the Milk Code also intends to protect and promote the nourishment of children more
than 12 months old.
Evidently, as long as what is being marketed falls within the scope of the Milk Code as provided
in Section 3, then it can be subject to regulation pursuant to said law, even if the product is to be
used by children aged over 12 months.
There is, therefore, nothing objectionable with Sections 2 42 and 5 (ff) 43 of the RIRR.
2.
It is also incorrect for petitioner to say that the RIRR, unlike the Milk Code, does not
recognize that breastmilk substitutes may be a proper and possible substitute for breastmilk.

Section 7 of the RIRR provides that "when medically indicated and only when necessary, the
use of breastmilk substitutes is proper if based on complete and updated information." Section 8
of the RIRR also states that information and educational materials should include information on
the proper use of infant formula when the use thereof is needed.
Hence, the RIRR, just like the Milk Code, also recognizes that in certain cases, the use of
breastmilk substitutes may be proper.
3.
The Court shall ascertain the merits of allegations 3 45 and 4 46 together as they are
interlinked with each other.
To resolve the question of whether the labeling requirements and advertising regulations under
the RIRR are valid, it is important to deal first with the nature, purpose, and depth of the
regulatory powers of the DOH, as defined in general under the 1987 Administrative Code, 47
and as delegated in particular under the Milk Code.
Health is a legitimate subject matter for regulation by the DOH (and certain other administrative
agencies) in exercise of police powers delegated to it. The sheer span of jurisprudence on that
matter precludes the need to further discuss it. 48 However, health information, particularly
advertising materials on apparently non-toxic products like breastmilk substitutes and
supplements, is a relatively new area for regulation by the DOH. 49
As early as the 1917 Revised Administrative Code of the Philippine Islands, 50 health
information was already within the ambit of the regulatory powers of the predecessor of DOH. 51
Section 938 thereof charged it with the duty to protect the health of the people, and vested it with
such powers as "(g) the dissemination of hygienic information among the people and especially
the inculcation of knowledge as to the proper care of infants and the methods of preventing and
combating dangerous communicable diseases."
Seventy years later, the 1987 Administrative Code tasked respondent DOH to carry out the state
policy pronounced under Section 15, Article II of the 1987 Constitution, which is "to protect and
promote the right to health of the people and instill health consciousness among them." 52 To
that end, it was granted under Section 3 of the Administrative Code the power to "(6) propagate
health information and educate the population on important health, medical and environmental
matters which have health implications." 53
When it comes to information regarding nutrition of infants and young children, however, the Milk
Code specifically delegated to the Ministry of Health (hereinafter referred to as DOH) the power
to ensure that there is adequate, consistent and objective information on breastfeeding and use
of breastmilk substitutes, supplements and related products; and the power to control such
information. These are expressly provided for in Sections 12 and 5 (a), to wit:

xxx
The entirety of the RIRR, not merely truncated portions thereof, must be considered and
construed together. As held in De Luna v. Pascual, 44 "[t]he particular words, clauses and
phrases in the Rule should not be studied as detached and isolated expressions, but the whole
and every part thereof must be considered in fixing the meaning of any of its parts and in order
to produce a harmonious whole."

Implementation and Monitoring

SECTION 12.
xxx

xxx

(b)
The Ministry of Health shall be principally responsible for the implementation and
enforcement of the provisions of this Code. For this purpose, the Ministry of Health shall have
the following powers and functions:

(1)
To promulgate such rules and regulations as are necessary or proper for the
implementation of this Code and the accomplishment of its purposes and objectives.
xxx

xxx

xxx

(4)
To exercise such other powers and functions as may be necessary for or incidental to
the attainment of the purposes and objectives of this Code.
SECTION 5. Information and Education
(a)
The government shall ensure that objective and consistent information is provided on
infant feeding, for use by families and those involved in the field of infant nutrition. This
responsibility shall cover the planning, provision, design and dissemination of information, and
the control thereof, on infant nutrition. (Emphasis supplied)
Further, DOH is authorized by the Milk Code to control the content of any information on
breastmilk vis--vis breastmilk substitutes, supplement and related products, in the following
manner:
SECTION 5.

...

(b)
Informational and educational materials, whether written, audio, or visual, dealing with
the feeding of infants and intended to reach pregnant women and mothers of infants, shall
include clear information on all the following points: (1) the benefits and superiority of
breastfeeding; (2) maternal nutrition, and the preparation for and maintenance of breastfeeding;
(3) the negative effect on breastfeeding of introducing partial bottlefeeding; (4) the difficulty of
reversing the decision not to breastfeed; and (5) where needed, the proper use of infant formula,
whether manufactured industrially or home-prepared. When such materials contain information
about the use of infant formula, they shall include the social and financial implications of its use;
the health hazards of inappropriate foods or feeding methods; and, in particular, the health
hazards of unnecessary or improper use of infant formula and other breastmilk substitutes. Such
materials shall not use any picture or text which may idealize the use of breastmilk substitutes.
Health Workers

SECTION 8.
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It bears emphasis, however, that the DOH's power under the Milk Code to control information
regarding breastmilk vis-a-vis breastmilk substitutes is not absolute as the power to control does
not encompass the power to absolutely prohibit the advertising, marketing, and promotion of
breastmilk substitutes.
The following are the provisions of the Milk Code that unequivocally indicate that the control over
information given to the DOH is not absolute and that absolute prohibition is not contemplated by
the Code:
a)
Section 2 which requires adequate information and appropriate marketing and
distribution of breastmilk substitutes, to wit:
SECTION 2.
Aim of the Code The aim of the Code is to contribute to the provision of
safe and adequate nutrition for infants by the protection and promotion of breastfeeding and by
ensuring the proper use of breastmilk substitutes and breastmilk supplements when these are
necessary, on the basis of adequate information and through appropriate marketing and
distribution.
b)
Section 3 which specifically states that the Code applies to the marketing of and
practices related to breastmilk substitutes, including infant formula, and to information
concerning their use;
c)
Section 5 (a) which provides that the government shall ensure that objective and
consistent information is provided on infant feeding;
d)
Section 5 (b) which provides that written, audio or visual informational and educational
materials shall not use any picture or text which may idealize the use of breastmilk substitutes
and should include information on the health hazards of unnecessary or improper use of said
product;

xxx

(b)
Information provided by manufacturers and distributors to health professionals
regarding products within the scope of this Code shall be restricted to scientific and factual
matters, and such information shall not imply or create a belief that bottlefeeding is equivalent or
superior to breastfeeding. It shall also include the information specified in Section 5(b).

e)
Section 6 (a) in relation to Section 12 (a) which creates and empowers the IAC to
review and examine advertising, promotion, and other marketing materials;
f)
Section 8 (b) which states that milk companies may provide information to health
professionals but such information should be restricted to factual and scientific matters and shall
not imply or create a belief that bottlefeeding is equivalent or superior to breastfeeding; and

Containers/Label

SECTION 10.

(a)
Containers and/or labels shall be designed to provide the necessary information about
the appropriate use of the products, and in such a way as not to discourage breastfeeding.
xxx

The DOH is also authorized to control the purpose of the information and to whom such
information may be disseminated under Sections 6 through 9 of the Milk Code 54 to ensure that
the information that would reach pregnant women, mothers of infants, and health professionals
and workers in the health care system is restricted to scientific and factual matters and shall not
imply or create a belief that bottlefeeding is equivalent or superior to breastfeeding.

xxx

xxx

(d)
The term "humanized," "maternalized" or similar terms shall not be used. (Emphasis
supplied)

g)
Section 10 which provides that containers or labels should not contain information that
would discourage breastfeeding and idealize the use of infant formula.
It is in this context that the Court now examines the assailed provisions of the RIRR regarding
labeling and advertising.
Sections 13 55 on "total effect" and 26 56 of Rule VII of the RIRR contain some labeling
requirements, specifically: a) that there be a statement that there is no substitute to breastmilk;

and b) that there be a statement that powdered infant formula may contain pathogenic
microorganisms and must be prepared and used appropriately. Section 16 57 of the RIRR
prohibits all health and nutrition claims for products within the scope of the Milk Code, such as
claims of increased emotional and intellectual abilities of the infant and young child.
These requirements and limitations are consistent with the provisions of Section 8 of the Milk
Code, to wit:
Health workers

SECTION 8.
xxx

xxx

contain information about the use of infant formula, they shall include the social and financial
implications of its use; the health hazards of inappropriate foods or feeding methods; and, in
particular, the health hazards of unnecessary or improper use of infant formula and other
breastmilk substitutes. Such materials shall not use any picture or text which may idealize the
use of breastmilk substitutes. (Emphasis supplied)
The label of a product contains information about said product intended for the buyers thereof.
The buyers of breastmilk substitutes are mothers of infants, and Section 26 of the RIRR merely
adds a fair warning about the likelihood of pathogenic microorganisms being present in infant
formula and other related products when these are prepared and used inappropriately.

xxx

(b)
Information provided by manufacturers and distributors to health professionals
regarding products within the scope of this Code shall be restricted to scientific and factual
matters, and such information shall not imply or create a belief that bottlefeeding is equivalent or
superior to breastfeeding. It shall also include the information specified in Section 5. 58
(Emphasis supplied)
and Section 10 (d) 59 which bars the use on containers and labels of the terms "humanized,"
"maternalized," or similar terms.
These provisions of the Milk Code expressly forbid information that would imply or create a belief
that there is any milk product equivalent to breastmilk or which is humanized or maternalized, as
such information would be inconsistent with the superiority of breastfeeding.

Petitioner's counsel has admitted during the hearing on June 19, 2007 that formula milk is prone
to contaminations and there is as yet no technology that allows production of powdered infant
formula that eliminates all forms of contamination. 62
Ineluctably, the requirement under Section 26 (f) of the RIRR for the label to contain the
message regarding health hazards including the possibility of contamination with pathogenic
microorganisms is in accordance with Section 5 (b) of the Milk Code.
The authority of DOH to control information regarding breastmilk vis-a-vis breastmilk substitutes
and supplements and related products cannot be questioned. It is its intervention into the area of
advertising, promotion, and marketing that is being assailed by petitioner.
In furtherance of Section 6 (a) of the Milk Code, to wit:
The General Public and Mothers.

It may be argued that Section 8 of the Milk Code refers only to information given to health
workers regarding breastmilk substitutes, not to containers and labels thereof. However, such
restrictive application of Section 8 (b) will result in the absurd situation in which milk companies
and distributors are forbidden to claim to health workers that their products are substitutes or
equivalents of breastmilk, and yet be allowed to display on the containers and labels of their
products the exact opposite message. That askewed interpretation of the Milk Code is precisely
what Section 5 (a) thereof seeks to avoid by mandating that all information regarding breastmilk
vis-a-vis breastmilk substitutes be consistent, at the same time giving the government control
over planning, provision, design, and dissemination of information on infant feeding.

SECTION 6.

Thus, Section 26 (c) of the RIRR which requires containers and labels to state that the product
offered is not a substitute for breastmilk, is a reasonable means of enforcing Section 8 (b) of the
Milk Code and deterring circumvention of the protection and promotion of breastfeeding as
embodied in Section 2 60 of the Milk Code.

SECTION 12. Implementation and Monitoring

Section 26 (f) 61 of the RIRR is an equally reasonable labeling requirement. It implements

Section 5 (b) of the Milk Code which reads:

Minister of Health

(a)
No advertising, promotion or other marketing materials, whether written, audio or
visual, for products within the scope of this Code shall be printed, published, distributed,
exhibited and broadcast unless such materials are duly authorized and approved by an interagency committee created herein pursuant to the applicable standards provided for in this Code.
the Milk Code invested regulatory authority over advertising, promotional and marketing
materials to an IAC, thus:

(a)
For purposes of Section 6(a) of this Code, an inter-agency committee composed of
the following members is hereby created:
Chairman

Minister of Trade and Industry Member

SECTION 5.

...
Minister of Justice Member

xxx

xxx

xxx
Minister of Social Services and Development

(b)
Informational and educational materials, whether written, audio, or visual, dealing with
the feeding of infants and intended to reach pregnant women and mothers of infants, shall
include clear information on all the following points: . . . (5) where needed, the proper use of
infant formula, whether manufactured industrially or home-prepared. When such materials

Member

The members may designate their duly authorized representative to every meeting of the
Committee.
The Committee shall have the following powers and functions:

(1)
To review and examine all advertising, promotion or other marketing materials,
whether written, audio or visual, on products within the scope of this Code;
(2)
To approve or disapprove, delete objectionable portions from and prohibit the printing,
publication, distribution, exhibition and broadcast of, all advertising promotion or other marketing
materials, whether written, audio or visual, on products within the scope of this Code;
(3)
To prescribe the internal and operational procedure for the exercise of its powers and
functions as well as the performance of its duties and responsibilities; and

it is entitled prohibition it states that no advertising, promotion, sponsorship or marketing

materials and activities for breast milk substitutes intended for infants and young children up to
24 months shall be allowed because this is the standard they tend to convey or give subliminal
messages or impression undermine that breastmilk or breastfeeding . . . .
We have to read Section 11 together with the other Sections because the other Section, Section
12, provides for the inter agency committee that is empowered to process and evaluate all the
advertising and promotion materials.
xxx

(4)
To promulgate such rules and regulations as are necessary or proper for the
implementation of Section 6(a) of this Code. . . . (Emphasis supplied)

xxx

xxx

What AO 2006-12, what it does, it does not prohibit the sale and manufacture, it simply regulates
the advertisement and the promotions of breastfeeding milk substitutes.

However, Section 11 of the RIRR, to wit:

xxx
SECTION 11. Prohibition No advertising, promotions, sponsorships, or marketing materials
and activities for breastmilk substitutes intended for infants and young children up to twenty-four
(24) months, shall be allowed, because they tend to convey or give subliminal messages or
impressions that undermine breastmilk and breastfeeding or otherwise exaggerate breastmilk
substitutes and/or replacements, as well as related products covered within the scope of this
Code.

SECTION 4. Declaration of Principles

xxx

xxx

xxx

(f)
Advertising, promotions, or sponsorships of infant formula, breastmilk substitutes and
other related products are prohibited.

xxx

Now, the prohibition on advertising, Your Honor, must be taken together with the provision on
the Inter-Agency Committee that processes and evaluates because there may be some
information dissemination that are straight forward information dissemination. What the AO 2006
is trying to prevent is any material that will undermine the practice of breastfeeding, Your Honor.
xxx

prohibits advertising, promotions, sponsorships or marketing materials and activities for

breastmilk substitutes in line with the RIRR's declaration of principle under Section 4 (f), to wit:

xxx

xxx

xxx

ASSOCIATE JUSTICE SANTIAGO:

Madam Solicitor General, under the Milk Code, which body has authority or power to promulgate
Rules and Regulations regarding the Advertising, Promotion and Marketing of Breastmilk
Substitutes?
SOLICITOR GENERAL DEVANADERA:
Your Honor, please, it is provided that the Inter-Agency Committee, Your Honor.

The DOH, through its co-respondents, evidently arrogated to itself not only the regulatory
authority given to the IAC but also imposed absolute prohibition on advertising, promotion, and
marketing.

xxx

xxx

xxx

ASSOCIATE JUSTICE SANTIAGO:

Yet, oddly enough, Section 12 of the RIRR reiterated the requirement of the Milk Code in
Section 6 thereof for prior approval by IAC of all advertising, marketing and promotional
materials prior to dissemination.
Even respondents, through the OSG, acknowledged the authority of IAC, and repeatedly
insisted, during the oral arguments on June 19, 2007, that the prohibition under Section 11 is not
actually operational, viz:

. . . Don't you think that the Department of Health overstepped its rule making authority when it
totally banned advertising and promotion under Section 11 prescribed the total effect rule as well
as the content of materials under Section 13 and 15 of the rules and regulations?
SOLICITOR GENERAL DEVANADERA:

SOLICITOR GENERAL DEVANADERA:

Your Honor, please, first we would like to stress that there is no total absolute ban. Second, the
Inter-Agency Committee is under the Department of Health, Your Honor.

xxx

xxx

xxx

xxx

. . . Now, the crux of the matter that is being questioned by Petitioner is whether or not there is
an absolute prohibition on advertising making AO 2006-12 unconstitutional. We maintained that
what AO 2006-12 provides is not an absolute prohibition because Section 11 while it states and

xxx

xxx

ASSOCIATE JUSTICE NAZARIO:

. . . Did I hear you correctly, Madam Solicitor, that there is no absolute ban on advertising of
breastmilk substitutes in the Revised Rules?

SOLICITOR GENERAL DEVANADERA:

Yes, your Honor.
ASSOCIATE JUSTICE NAZARIO:
But, would you nevertheless agree that there is an absolute ban on advertising of breastmilk
substitutes intended for children two (2) years old and younger?

whether manufactured industrially or home-prepared. When such materials contain information

about the use of infant formula, they shall include the social and financial implications of its use;
the health hazards of inappropriate foods of feeding methods; and, in particular, the health
hazards of unnecessary or improper use of infant formula and other breastmilk substitutes. Such
materials shall not use any picture or text which may idealize the use of breastmilk substitutes.
xxx

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SECTION 8. Health Workers.

SOLICITOR GENERAL DEVANADERA:
xxx
It's not an absolute ban, Your Honor, because we have the Inter-Agency Committee that can
evaluate some advertising and promotional materials, subject to the standards that we have
stated earlier, which are they should not undermine breastfeeding, Your Honor.
xxx

xxx

xxx

xxx

xxx

(b)
Information provided by manufacturers and distributors to health professionals
regarding products within the scope of this Code shall be restricted to scientific and factual
matters and such information shall not imply or create a belief that bottle feeding is equivalent or
superior to breastfeeding. It shall also include the information specified in Section 5(b).

. . . Section 11, while it is titled Prohibition, it must be taken in relation with the other Sections,
particularly 12 and 13 and 15, Your Honor, because it is recognized that the Inter-Agency
Committee has that power to evaluate promotional materials, Your Honor.

xxx

ASSOCIATE JUSTICE NAZARIO:

(a)
Containers and/or labels shall be designed to provide the necessary information about
the appropriate use of the products, and in such a way as not to discourage breastfeeding.

So in short, will you please clarify there's no absolute ban on advertisement regarding milk
substitute regarding infants two (2) years below?
SOLICITOR GENERAL DEVANADERA:
We can proudly say that the general rule is that there is a prohibition, however, we take
exceptions and standards have been set. One of which is that, the Inter-Agency Committee can
allow if the advertising and promotions will not undermine breastmilk and breastfeeding, Your
Honor. 63
Sections 11 and 4 (f) of the RIRR are clearly violative of the Milk Code.

xxx

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SECTION 10. Containers/Label

(b)
Each container shall have a clear, conspicuous and easily readable and
understandable message in Pilipino or English printed on it, or on a label, which message can
not readily become separated from it, and which shall include the following points:
(i)

the words "Important Notice" or their equivalent;

(ii)

a statement of the superiority of breastfeeding;

(iii)
a statement that the product shall be used only on the advice of a health worker as to
the need for its use and the proper methods of use; and

However, although it is the IAC which is authorized to promulgate rules and regulations for the
approval or rejection of advertising, promotional, or other marketing materials under Section 12
(a) of the Milk Code, said provision must be related to Section 6 thereof which in turn provides
that the rules and regulations must be "pursuant to the applicable standards provided for in this
Code." Said standards are set forth in Sections 5 (b), 8 (b), and 10 of the Code, which, at the
risk of being repetitious, and for easy reference, are quoted hereunder:

(iv)
instructions for appropriate preparation, and a warning against the health hazards of
inappropriate preparation.

SECTION 5. Information and Education

SECTION 5. Information and Education

xxx

(a)
The government shall ensure that objective and consistent information is provided on
infant feeding, for use by families and those involved in the field of infant nutrition. This
responsibility shall cover the planning, provision, design and dissemination of information, and
the control thereof, on infant nutrition. (Emphasis supplied)

xxx

xxx

(b)
Informational and educational materials, whether written, audio, or visual, dealing with
the feeding of infants and intended to reach pregnant women and mothers of infants, shall
include clear information on all the following points: (1) the benefits and superiority of
breastfeeding; (2) maternal nutrition, and the preparation for and maintenance of breastfeeding;
(3) the negative effect on breastfeeding of introducing partial bottlefeeding; (4) the difficulty of
reversing the decision not to breastfeed; and (5) where needed, the proper use of infant formula,

Section 12 (b) of the Milk Code designates the DOH as the principal implementing agency for
the enforcement of the provisions of the Code. In relation to such responsibility of the DOH,
Section 5 (a) of the Milk Code states that:

Thus, the DOH has the significant responsibility to translate into operational terms the standards
set forth in Sections 5, 8, and 10 of the Milk Code, by which the IAC shall screen advertising,
promotional, or other marketing materials.

It is pursuant to such responsibility that the DOH correctly provided for Section 13 in the RIRR
which reads as follows:
SECTION 13.
"Total Effect" Promotion of products within the scope of this Code must
be objective and should not equate or make the product appear to be as good or equal to
breastmilk or breastfeeding in the advertising concept. It must not in any case undermine
breastmilk or breastfeeding. The "total effect" should not directly or indirectly suggest that buying
their product would produce better individuals, or resulting in greater love, intelligence, ability,
harmony or in any manner bring better health to the baby or other such exaggerated and
unsubstantiated claim.
Such standards bind the IAC in formulating its rules and regulations on advertising, promotion,
and marketing. Through that single provision, the DOH exercises control over the information
content of advertising, promotional and marketing materials on breastmilk vis-a-vis breastmilk
substitutes, supplements and other related products. It also sets a viable standard against which
the IAC may screen such materials before they are made public.
In Equi-Asia Placement, Inc. vs. Department of Foreign Affairs, 64 the Court held:
. . . [T]his Court had, in the past, accepted as sufficient standards the following: "public interest,"
"justice and equity," "public convenience and welfare," and "simplicity, economy and welfare." 65
In this case, correct information as to infant feeding and nutrition is infused with public interest
and welfare.
4.
With regard to activities for dissemination of information to health professionals, the
Court also finds that there is no inconsistency between the provisions of the Milk Code and the
RIRR. Section 7 (b) 66 of the Milk Code, in relation to Section 8 (b) 67 of the same Code, allows
dissemination of information to health professionals but such information is restricted to scientific
and factual matters.
Contrary to petitioner's claim, Section 22 of the RIRR does not prohibit the giving of information
to health professionals on scientific and factual matters. What it prohibits is the involvement of
the manufacturer and distributor of the products covered by the Code in activities for the
promotion, education and production of Information, Education and Communication (IEC)
materials regarding breastfeeding that are intended for women and children. Said provision
cannot be construed to encompass even the dissemination of information to health
professionals, as restricted by the Milk Code.
5.
Next, petitioner alleges that Section 8 (e) 68 of the Milk Code permits milk
manufacturers and distributors to extend assistance in research and in the continuing education
of health professionals, while Sections 22 and 32 of the RIRR absolutely forbid the same.
Petitioner also assails Section 4 (i) 69 of the RIRR prohibiting milk manufacturers' and
distributors' participation in any policymaking body in relation to the advancement of
breastfeeding.
Section 4 (i) of the RIRR provides that milk companies and their representatives should not form
part of any policymaking body or entity in relation to the advancement of breastfeeding. The
Court finds nothing in said provisions which contravenes the Milk Code. Note that under Section
12 (b) of the Milk Code, it is the DOH which shall be principally responsible for the
implementation and enforcement of the provisions of said Code. It is entirely up to the DOH to

decide which entities to call upon or allow to be part of policymaking bodies on breastfeeding.
Therefore, the RIRR's prohibition on milk companies' participation in any policymaking body in
relation to the advancement of breastfeeding is in accord with the Milk Code.
Petitioner is also mistaken in arguing that Section 22 of the RIRR prohibits milk companies from
giving reasearch assistance and continuing education to health professionals. Section 22 70 of
the RIRR does not pertain to research assistance to or the continuing education of health
professionals; rather, it deals with breastfeeding promotion and education for women and
children. Nothing in Section 22 of the RIRR prohibits milk companies from giving assistance for
research or continuing education to health professionals; hence, petitioner's argument against
this particular provision must be struck down.
It is Sections 9 71 and 10 72 of the RIRR which govern research assistance. Said sections of the
RIRR provide that research assistance for health workers and researchers may be allowed upon
approval of an ethics committee, and with certain disclosure requirements imposed on the milk
company and on the recipient of the research award.
The Milk Code endows the DOH with the power to determine how such research or educational
assistance may be given by milk companies or under what conditions health workers may
accept the assistance. Thus, Sections 9 and 10 of the RIRR imposing limitations on the kind of
research done or extent of assistance given by milk companies are completely in accord with the
Milk Code.
Petitioner complains that Section 32 73 of the RIRR prohibits milk companies from giving
assistance, support, logistics or training to health workers. This provision is within the
prerogative given to the DOH under Section 8 (e) 74 of the Milk Code, which provides that
manufacturers and distributors of breastmilk substitutes may assist in researches, scholarships
and the continuing education, of health professionals in accordance with the rules and
regulations promulgated by the Ministry of Health, now DOH.
6.
As to the RIRR's prohibition on donations, said provisions are also consistent with the
Milk Code. Section 6 (f) of the Milk Code provides that donations may be made by
manufacturers and distributors of breastmilk substitutes upon the request or with the approval of
the DOH. The law does not proscribe the refusal of donations. The Milk Code leaves it purely to
the discretion of the DOH whether to request or accept such donations. The DOH then
appropriately exercised its discretion through Section 51 75 of the RIRR which sets forth its
policy not to request or approve donations from manufacturers and distributors of breastmilk
substitutes.
It was within the discretion of the DOH when it provided in Section 52 of the RIRR that any
donation from milk companies not covered by the Code should be coursed through the IAC
which shall determine whether such donation should be accepted or refused. As reasoned out
by respondents, the DOH is not mandated by the Milk Code to accept donations. For that matter,
no person or entity can be forced to accept a donation. There is, therefore, no real inconsistency
between the RIRR and the law because the Milk Code does not prohibit the DOH from refusing
donations.
7.
With regard to Section 46 of the RIRR providing for administrative sanctions that are
not found in the Milk Code, the Court upholds petitioner's objection thereto.

Respondent's reliance on Civil Aeronautics Board v. Philippine Air Lines, Inc. 76 is misplaced.
The glaring difference in said case and the present case before the Court is that, in the Civil
Aeronautics Board, the Civil Aeronautics Administration (CAA) was expressly granted by the law
(R.A. No. 776) the power to impose fines and civil penalties, while the Civil Aeronautics Board
(CAB) was granted by the same law the power to review on appeal the order or decision of the
CAA and to determine whether to impose, remit, mitigate, increase or compromise such fine and
civil penalties. Thus, the Court upheld the CAB's Resolution imposing administrative fines.
In a more recent case, Perez v. LPG Refillers Association of the Philippines, Inc., 77 the Court
upheld the Department of Energy (DOE) Circular No. 2000-06-10 implementing Batas
Pambansa (B.P.) Blg. 33. The circular provided for fines for the commission of prohibited acts.
The Court found that nothing in the circular contravened the law because the DOE was
expressly authorized by B.P. Blg. 33 and R.A. No. 7638 to impose fines or penalties.
In the present case, neither the Milk Code nor the Revised Administrative Code grants the DOH
the authority to fix or impose administrative fines. Thus, without any express grant of power to fix
or impose such fines, the DOH cannot provide for those fines in the RIRR. In this regard, the
DOH again exceeded its authority by providing for such fines or sanctions in Section 46 of the
RIRR. Said provision is, therefore, null and void.
The DOH is not left without any means to enforce its rules and regulations. Section 12 (b) (3) of
the Milk Code authorizes the DOH to "cause the prosecution of the violators of this Code and
other pertinent laws on products covered by this Code." Section 13 of the Milk Code provides for
the penalties to be imposed on violators of the provision of the Milk Code or the rules and
regulations issued pursuant to it, to wit:

Section 57 of the RIRR does not provide for the repeal of laws but only orders, issuances and
rules and regulations. Thus, said provision is valid as it is within the DOH's rule-making power.
An administrative agency like respondent possesses quasi-legislative or rule-making power or
the power to make rules and regulations which results in delegated legislation that is within the
confines of the granting statute and the Constitution, and subject to the doctrine of nondelegability and separability of powers. 78 Such express grant of rule-making power necessarily
includes the power to amend, revise, alter, or repeal the same. 79 This is to allow administrative
agencies flexibility in formulating and adjusting the details and manner by which they are to
implement the provisions of a law, 80 in order to make it more responsive to the times. Hence, it
is a standard provision in administrative rules that prior issuances of administrative agencies that
are inconsistent therewith are declared repealed or modified.
In fine, only Sections 4 (f), 11 and 46 are ultra vires, beyond the authority of the DOH to
promulgate and in contravention of the Milk Code and, therefore, null and void. The rest of the
provisions of the RIRR are in consonance with the Milk Code.
Lastly, petitioner makes a "catch-all" allegation that:
. . . [T]he questioned RIRR sought to be implemented by the Respondents is unnecessary and
oppressive, and is offensive to the due process clause of the Constitution, insofar as the same is
in restraint of trade and because a provision therein is inadequate to provide the public with a
comprehensible basis to determine whether or not they have committed a violation. 81
(Emphasis supplied)

SECTION 13. Sanctions

Petitioner refers to Sections 4 (f), 82 4 (i), 83 5 (w), 84 11, 85 22, 86 32, 87 46, 88 and 52 89 as
the provisions that suppress the trade of milk and, thus, violate the due process clause of the
Constitution.

(a)
Any person who violates the provisions of this Code or the rules and regulations
issued pursuant to this Code shall, upon conviction, be punished by a penalty of two (2) months
to one (1) year imprisonment or a fine of not less than One Thousand Pesos (P1,000.00) nor
more than Thirty Thousand Pesos (P30,000.00) or both. Should the offense be committed by a
juridical person, the chairman of the Board of Directors, the president, general manager, or the
partners and/or the persons directly responsible therefor, shall be penalized.

The framers of the constitution were well aware that trade must be subjected to some form of
regulation for the public good. Public interest must be upheld over business interests. 90 In Pest
Management Association of the Philippines v. Fertilizer and Pesticide Authority, 91 it was held
thus:

(b)
Any license, permit or authority issued by any government agency to any health
worker, distributor, manufacturer, or marketing firm or personnel for the practice of their
profession or occupation, or for the pursuit of their business, may, upon recommendation of the
Ministry of Health, be suspended or revoked in the event of repeated violations of this Code, or
of the rules and regulations issued pursuant to this Code. (Emphasis supplied)
8.
Petitioner's claim that Section 57 of the RIRR repeals existing laws that are contrary to
the RIRR is frivolous.
Section 57 reads:
SECTION 57.
Repealing Clause All orders, issuances, and rules and regulations or
parts thereof inconsistent with these revised rules and implementing regulations are hereby
repealed or modified accordingly.

. . . Furthermore, as held in Association of Philippine Coconut Desiccators v. Philippine Coconut

Authority, despite the fact that "our present Constitution enshrines free enterprise as a policy, it
nonetheless reserves to the government the power to intervene whenever necessary to promote
the general welfare." There can be no question that the unregulated use or proliferation of
pesticides would be hazardous to our environment. Thus, in the aforecited case, the Court
declared that "free enterprise does not call for removal of 'protective regulations'." . . . It must be
clearly explained and proven by competent evidence just exactly how such protective regulation
would result in the restraint of trade. [Emphasis and underscoring supplied]
In this case, petitioner failed to show that the proscription of milk manufacturers' participation in
any policymaking body (Section 4 (i)), classes and seminars for women and children (Section
22); the giving of assistance, support and logistics or training (Section 32); and the giving of
donations (Section 52) would unreasonably hamper the trade of breastmilk substitutes.
Petitioner has not established that the proscribed activities are indispensable to the trade of
breastmilk substitutes. Petitioner failed to demonstrate that the aforementioned provisions of the
RIRR are unreasonable and oppressive for being in restraint of trade.

Petitioner also failed to convince the Court that Section 5 (w) of the RIRR is unreasonable and
oppressive. Said section provides for the definition of the term "milk company," to wit:
SECTION 5 . . . . (w) "Milk Company" shall refer to the owner, manufacturer, distributor of infant
formula, follow-up milk, milk formula, milk supplement, breastmilk substitute or replacement, or
by any other description of such nature, including their representatives who promote or
otherwise advance their commercial interests in marketing those products;

SO ORDERED.
Puno, C.J., Quisumbing, Sandoval-Gutierrez, Carpio, Corona, Carpio-Morales, Tinga, ChicoNazario, Garcia, Velasco, Jr. and Reyes, JJ., concur.
Ynares-Santiago and Azcuna, J., are on official leave.
Nachura, J., took no part.

On the other hand, Section 4 of the Milk Code provides:

Separate Opinions
(d)
"Distributor" means a person, corporation or any other entity in the public or private
sector engaged in the business (whether directly or indirectly) of marketing at the wholesale or
retail level a product within the scope of this Code. A "primary distributor" is a manufacturer's
sales agent, representative, national distributor or broker.
xxx

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(j)
"Manufacturer" means a corporation or other entity in the public or private sector
engaged in the business or function (whether directly or indirectly or through an agent or and
entity controlled by or under contract with it) of manufacturing a products within the scope of this
Code.
Notably, the definition in the RIRR merely merged together under the term "milk company" the
entities defined separately under the Milk Code as "distributor" and "manufacturer." The RIRR
also enumerated in Section 5 (w) the products manufactured or distributed by an entity that
would qualify it as a "milk company," whereas in the Milk Code, what is used is the phrase
"products within the scope of this Code." Those are the only differences between the definitions
given in the Milk Code and the definition as re-stated in the RIRR.
Since all the regulatory provisions under the Milk Code apply equally to both manufacturers and
distributors, the Court sees no harm in the RIRR providing for just one term to encompass both
entities. The definition of "milk company" in the RIRR and the definitions of "distributor" and
"manufacturer" provided for under the Milk Code are practically the same.
The Court is not convinced that the definition of "milk company" provided in the RIRR would
bring about any change in the treatment or regulation of "distributors" and "manufacturers" of
breastmilk substitutes, as defined under the Milk Code.
Except Sections 4 (f), 11 and 46, the rest of the provisions of the RIRR are in consonance with
the objective, purpose and intent of the Milk Code, constituting reasonable regulation of an
industry which affects public health and welfare and, as such, the rest of the RIRR do not
constitute illegal restraint of trade nor are they violative of the due process clause of the
Constitution.
WHEREFORE, the petition is PARTIALLY GRANTED. Sections 4 (f), 11 and 46 of
Administrative Order No. 2006-0012 dated May 12, 2006 are declared NULL and VOID for being
ultra vires. The Department of Health and respondents are PROHIBITED from implementing
said provisions.
The Temporary Restraining Order issued on August 15, 2006 is LIFTED insofar as the rest of
the provisions of Administrative Order No. 2006-0012 is concerned.

PUNO, C.J., concurring:

I fully concur with the well-written and comprehensive ponencia of my esteemed colleague, Ms.
Justice Ma. Alicia Austria-Martinez. I write to elucidate another reason why the absolute ban on
the advertising and promotion of breastmilk substitutes found under Sections 4 (f) and 11 of A.O.
No. 2006-0012 (RIRR) should be struck down.
The advertising and promotion of breastmilk substitutes properly falls within the ambit of the term
commercial speech that is, speech that proposes an economic transaction. This is a separate
category of speech which is not accorded the same level of protection as that given to other
constitutionally guaranteed forms of expression but is nonetheless entitled to protection.
A look at the development of jurisprudence on the subject would show us that initially and for
many years, the United States Supreme Court took the view that commercial speech is not
protected by the First Amendment. 1 It fastened itself to the view that the broad powers of
government to regulate commerce reasonably includes the power to regulate commerce
reasonably includes the power to regulate speech concerning articles of commerce.
This view started to melt down in the 1970s. In Virginia Pharmacy Board v. Virginia Citizens
Consumer Council, 2 the U.S. Supreme Court struck down a law prohibiting the advertising of
prices for prescription drugs. It held that price information was important to consumers, and that
the First Amendment protects the "right to receive information" as well as the right to speak. It
ruled that consumers have a strong First Amendment interest in the free flow of information
about goods and services available in the marketplace and that any state regulation must
support a substantial interest.
Central Hudson Gas & Electric v. Public Service Commission, 3 is the watershed case that
established the primary test for evaluating the constitutionality of commercial speech regulations.
In this landmark decision, the U.S. Supreme Court held that the regulation issued by the Public
Service Commission of the State of New York, which reaches all promotional advertising
regardless of the impact of the touted service on overall energy use, is more extensive than
necessary to further the state's interest in energy conservation. In addition, it ruled that there
must be a showing that a more limited restriction on the content of promotional advertising would
not adequately serve the interest of the State. In applying the First Amendment, the U.S. Court
rejected the highly paternalistic view that the government has complete power to suppress or
regulate commercial speech.
Central Hudson provides a four-part analysis for evaluating the validity of regulations of
commercial speech. To begin with, the commercial speech must "concern lawful activity and not
be misleading" if it is to be protected under the First Amendment. Next, the asserted

governmental interest must be substantial. If both of these requirements are met, it must next be
determined whether the state regulation directly advances the governmental interest asserted,
and whether it is not more extensive than is necessary to serve that interest.

The case at bar involves a land in Aroroy, Masbate, inherited by respondents which has been
devoted exclusively to cow and calf breeding. On October 26, 1987, pursuant to the then
existing agrarian reform program of the government, respondents made a voluntary offer to sell
(VOS) 1 their landholdings to petitioner DAR to avail of certain incentives under the law.

We now apply this four-part test to the case at bar.

First, it is not claimed that the advertisement at issue is an unlawful activity or is inaccurate. In
fact, both the International Code and the Milk Code recognize and concede that there are
instances when breastmilk substitutes may be necessary.
Second, there is no doubt that the government interest in providing safe and adequate nutrition
to infants and young children is substantial. This interest is expressed as a national policy in no
less than the fundamental law of our land and is also embodied in various international
agreements where we are a party. To be sure, the interest of the state in preserving and
promoting the health of its citizens is inextricably linked to its own existence.
Third, there is an undeniable causal relationship between the interest of government and the
advertising ban. Unquestionably, breastfeeding is the tested and proven method of providing
optimal nutrition to infants and young children. The rationale of the absolute ban is to prevent
mothers from succumbing to suggestive and misleading marketing and propaganda which may
be contained in advertisements of breastmilk substitutes.
Fourth and finally, prescinding from these predicates, we now come to the critical inquiry:
whether the complete supression of the advertisement and promotion of breastmilk substitutes is
no more than necessary to further the interest of the state in the protection and promotion of the
right to health of infants and young children.

On June 10, 1988, a new agrarian law, Republic Act (R.A.) No. 6657, also known as the
Comprehensive Agrarian Reform Law (CARL) of 1988, took effect. It included in its coverage
farms used for raising livestock, poultry and swine. CDAEHS
On December 4, 1990, in an en banc decision in the case of Luz Farms v. Secretary of DAR, 2
this Court ruled that lands devoted to livestock and poultry-raising are not included in the
definition of agricultural land. Hence, we declared as unconstitutional certain provisions of the
CARL insofar as they included livestock farms in the coverage of agrarian reform.
In view of the Luz Farms ruling, respondents filed with petitioner DAR a formal request to
withdraw their VOS as their landholding was devoted exclusively to cattle-raising and thus
exempted from the coverage of the CARL. 3
On December 21, 1992, the Municipal Agrarian Reform Officer of Aroroy, Masbate, inspected
respondents' land and found that it was devoted solely to cattle-raising and breeding. He
recommended to the DAR Secretary that it be exempted from the coverage of the CARL.
On April 27, 1993, respondents reiterated to petitioner DAR the withdrawal of their VOS and
requested the return of the supporting papers they submitted in connection therewith. 4
Petitioner ignored their request.

I proffer the humble view that the absolute ban on advertising prescribed under Sections 4 (f)
and 11 of the RIRR is unduly restrictive and is more than necessary to further the avowed
governmental interest of promoting the health of infants and young children. It ought to be
selfevident, for instance, that the advertisement of such products which are strictly informative
cuts too deep on free speech. The laudable concern of the respondent for the promotion of the
health of infants and young children cannot justify the absolute, overarching ban.

On December 27, 1993, DAR issued A.O. No. 9, series of 1993, 5 which provided that only
portions of private agricultural lands used for the raising of livestock, poultry and swine as of
June 15, 1988 shall be excluded from the coverage of the CARL. In determining the area of land
to be excluded, the A.O. fixed the following retention limits, viz: 1:1 animal-land ratio (i.e., 1
hectare of land per 1 head of animal shall be retained by the landowner), and a ratio of 1.7815
hectares for livestock infrastructure for every 21 heads of cattle shall likewise be excluded from
the operations of the CARL.

[G.R. No. 162070. October 19, 2005.]

On February 4, 1994, respondents wrote the DAR Secretary and advised him to consider as
final and irrevocable the withdrawal of their VOS as, under the Luz Farms doctrine, their entire
landholding is exempted from the CARL. 6

DEPARTMENT OF AGRARIAN REFORM, represented by SECRETARY JOSE MARI B.

PONCE (OIC), petitioner, vs. DELIA T. SUTTON, ELLA T. SUTTON-SOLIMAN and HARRY T.
SUTTON, respondents.
DECISION

On September 14, 1995, then DAR Secretary Ernesto D. Garilao issued an Order 7 partially
granting the application of respondents for exemption from the coverage of CARL. Applying the
retention limits outlined in the DAR A.O. No. 9, petitioner exempted 1,209 hectares of
respondents' land for grazing purposes, and a maximum of 102.5635 hectares for infrastructure.
Petitioner ordered the rest of respondents' landholding to be segregated and placed under
Compulsory Acquisition. DTAHEC

PUNO, J p:
This is a petition for review filed by the Department of Agrarian Reform (DAR) of the Decision
and Resolution of the Court of Appeals, dated September 19, 2003 and February 4, 2004,
respectively, which declared DAR Administrative Order (A.O.) No. 9, series of 1993, null and
void for being violative of the Constitution.

Respondents moved for reconsideration. They contend that their entire landholding should be
exempted as it is devoted exclusively to cattle-raising. Their motion was denied. 8 They filed a
notice of appeal 9 with the Office of the President assailing: (1) the reasonableness and validity
of DAR A.O. No. 9, s. 1993, which provided for a ratio between land and livestock in determining
the land area qualified for exclusion from the CARL, and (2) the constitutionality of DAR A.O. No.

9, s. 1993, in view of the Luz Farms case which declared cattle-raising lands excluded from the
coverage of agrarian reform.

provisions control with respect to what rules and regulations may be promulgated by
administrative agencies and the scope of their regulations. 14

On October 9, 2001, the Office of the President affirmed the impugned Order of petitioner DAR.
10 It ruled that DAR A.O. No. 9, s. 1993, does not run counter to the Luz Farms case as the A.O.
provided the guidelines to determine whether a certain parcel of land is being used for cattleraising. However, the issue on the constitutionality of the assailed A.O. was left for the
determination of the courts as the sole arbiters of such issue.

In the case at bar, we find that the impugned A.O. is invalid as it contravenes the Constitution.
The A.O. sought to regulate livestock farms by including them in the coverage of agrarian reform
and prescribing a maximum retention limit for their ownership. However, the deliberations of the
1987 Constitutional Commission show a clear intent to exclude, inter alia, all lands exclusively
devoted to livestock, swine and poultry-raising. The Court clarified in the Luz Farms case that
livestock, swine and poultry-raising are industrial activities and do not fall within the definition of
"agriculture" or "agricultural activity." The raising of livestock, swine and poultry is different from
crop or tree farming. It is an industrial, not an agricultural, activity. A great portion of the
investment in this enterprise is in the form of industrial fixed assets, such as: animal housing
structures and facilities, drainage, waterers and blowers, feedmill with grinders, mixers,
conveyors, exhausts and generators, extensive warehousing facilities for feeds and other
supplies, anti-pollution equipment like bio-gas and digester plants augmented by lagoons and
concrete ponds, deepwells, elevated water tanks, pumphouses, sprayers, and other
technological appurtenances. 15

On appeal, the Court of Appeals ruled in favor of the respondents. It declared DAR A.O. No. 9,
s. 1993, void for being contrary to the intent of the 1987 Constitutional Commission to exclude
livestock farms from the land reform program of the government. The dispositive portion reads:
WHEREFORE, premises considered, DAR Administrative Order No. 09, Series of 1993 is
hereby DECLARED null and void. The assailed order of the Office of the President dated 09
October 2001 in so far as it affirmed the Department of Agrarian Reform's ruling that petitioners'
landholding is covered by the agrarian reform program of the government is REVERSED and
SET ASIDE.
SO ORDERED. 11

Clearly, petitioner DAR has no power to regulate livestock farms which have been exempted by
the Constitution from the coverage of agrarian reform. It has exceeded its power in issuing the
assailed A.O.

Hence, this petition.

The main issue in the case at bar is the constitutionality of DAR A.O. No. 9, series of 1993,
which prescribes a maximum retention limit for owners of lands devoted to livestock raising.
CAcDTI
Invoking its rule-making power under Section 49 of the CARL, petitioner submits that it issued
DAR A.O. No. 9 to limit the area of livestock farm that may be retained by a landowner pursuant
to its mandate to place all public and private agricultural lands under the coverage of agrarian
reform. Petitioner also contends that the A.O. seeks to remedy reports that some unscrupulous
landowners have converted their agricultural farms to livestock farms in order to evade their
coverage in the agrarian reform program.
Petitioner's arguments fail to impress.
Administrative agencies are endowed with powers legislative in nature, i.e., the power to make
rules and regulations. They have been granted by Congress with the authority to issue rules to
regulate the implementation of a law entrusted to them. Delegated rule-making has become a
practical necessity in modern governance due to the increasing complexity and variety of public
functions. However, while administrative rules and regulations have the force and effect of law,
they are not immune from judicial review. 12 They may be properly challenged before the courts
to ensure that they do not violate the Constitution and no grave abuse of administrative
discretion is committed by the administrative body concerned.
The fundamental rule in administrative law is that, to be valid, administrative rules and
regulations must be issued by authority of a law and must not contravene the provisions of the
Constitution. 13 The rule-making power of an administrative agency may not be used to abridge
the authority given to it by Congress or by the Constitution. Nor can it be used to enlarge the
power of the administrative agency beyond the scope intended. Constitutional and statutory

The subsequent case of Natalia Realty, Inc. v. DAR 16 reiterated our ruling in the Luz Farms
case. In Natalia Realty, the Court held that industrial, commercial and residential lands are not
covered by the CARL. 17 We stressed anew that while Section 4 of R.A. No. 6657 provides that
the CARL shall cover all public and private agricultural lands, the term "agricultural land" does
not include lands classified as mineral, forest, residential, commercial or industrial. Thus, in
Natalia Realty, even portions of the Antipolo Hills Subdivision, which are arable yet still
undeveloped, could not be considered as agricultural lands subject to agrarian reform as these
lots were already classified as residential lands.
A similar logical deduction should be followed in the case at bar. Lands devoted to raising of
livestock, poultry and swine have been classified as industrial, not agricultural, lands and thus
exempt from agrarian reform. Petitioner DAR argues that, in issuing the impugned A.O., it was
seeking to address the reports it has received that some unscrupulous landowners have been
converting their agricultural lands to livestock farms to avoid their coverage by the agrarian
reform. Again, we find neither merit nor logic in this contention. The undesirable scenario which
petitioner seeks to prevent with the issuance of the A.O. clearly does not apply in this case.
Respondents' family acquired their landholdings as early as 1948. They have long been in the
business of breeding cattle in Masbate which is popularly known as the cattle-breeding capital of
the Philippines. 18 Petitioner DAR does not dispute this fact. Indeed, there is no evidence on
record that respondents have just recently engaged in or converted to the business of breeding
cattle after the enactment of the CARL that may lead one to suspect that respondents intended
to evade its coverage. It must be stressed that what the CARL prohibits is the conversion of
agricultural lands for non-agricultural purposes after the effectivity of the CARL. There has been
no change of business interest in the case of respondents. DCAEcS
Moreover, it is a fundamental rule of statutory construction that the reenactment of a statute by
Congress without substantial change is an implied legislative approval and adoption of the
previous law. On the other hand, by making a new law, Congress seeks to supersede an earlier
one. 19 In the case at bar, after the passage of the 1988 CARL, Congress enacted R.A. No.

7881 20 which amended certain provisions of the CARL. Specifically, the new law changed the
definition of the terms "agricultural activity" and "commercial farming" by dropping from its
coverage lands that are devoted to commercial livestock, poultry and swine-raising. 21 With this
significant modification, Congress clearly sought to align the provisions of our agrarian laws with
the intent of the 1987 Constitutional Commission to exclude livestock farms from the coverage of
agrarian reform.
In sum, it is doctrinal that rules of administrative bodies must be in harmony with the provisions
of the Constitution. They cannot amend or extend the Constitution. To be valid, they must
conform to and be consistent with the Constitution. In case of conflict between an administrative
order and the provisions of the Constitution, the latter prevails. 22 The assailed A.O. of petitioner
DAR was properly stricken down as unconstitutional as it enlarges the coverage of agrarian
reform beyond the scope intended by the 1987 Constitution.
IN VIEW WHEREOF, the petition is DISMISSED. The assailed Decision and Resolution of the
Court of Appeals, dated September 19, 2003 and February 4, 2004, respectively, are
AFFIRMED. No pronouncement as to costs. ISEHTa
SO ORDERED.

[G.R. No. 135808. October 6, 2008.]

SECURITIES AND EXCHANGE COMMISSION, petitioner, vs. INTERPORT RESOURCES
CORPORATION, MANUEL S. RECTO, RENE S. VILLARICA, PELAGIO RICALDE, ANTONIO
REINA, FRANCISCO ANONUEVO, JOSEPH SY and SANTIAGO TANCHAN, JR.,
respondents.
DECISION
CHICO-NAZARIO, J p:
This is a Petition for Review on Certiorari under Rule 45 of the Rules of Court, assailing the
Decision, 1 dated 20 August 1998, rendered by the Court of Appeals in C.A.-G.R. SP No. 37036,
enjoining petitioner Securities and Exchange Commission (SEC) from taking cognizance of or
initiating any action against the respondent corporation Interport Resources Corporation (IRC)
and members of its board of directors, respondents Manuel S. Recto, Rene S. Villarica, Pelagio
Ricalde, Antonio Reina, Francisco Anonuevo, Joseph Sy and Santiago Tanchan, Jr., with
respect to Sections 8, 30 and 36 of the Revised Securities Act. In the same Decision of the
appellate court, all the proceedings taken against the respondents, including the assailed SEC
Omnibus Orders of 25 January 1995 and 30 March 1995, were declared void. HDCAaS
The antecedent facts of the present case are as follows.
On 6 August 1994, the Board of Directors of IRC approved a Memorandum of Agreement with
Ganda Holdings Berhad (GHB). Under the Memorandum of Agreement, IRC acquired 100% or
the entire capital stock of Ganda Energy Holdings, Inc. (GEHI), 2 which would own and operate
a 102 megawatt (MW) gas turbine power-generating barge. The agreement also stipulates that
GEHI would assume a five-year power purchase contract with National Power Corporation. At
that time, GEHI's power-generating barge was 97% complete and would go on-line by mid-

September of 1994. In exchange, IRC will issue to GHB 55% of the expanded capital stock of
IRC amounting to 40.88 billion shares which had a total par value of P488.44 million. 3
On the side, IRC would acquire 67% of the entire capital stock of Philippine Racing Club, Inc.
(PRCI). PRCI owns 25.724 hectares of real estate property in Makati. Under the Agreement,
GHB, a member of the Westmont Group of Companies in Malaysia, shall extend or arrange a
loan required to pay for the proposed acquisition by IRC of PRCI. 4 IDETCA
IRC alleged that on 8 August 1994, a press release announcing the approval of the agreement
was sent through facsimile transmission to the Philippine Stock Exchange and the SEC, but that
the facsimile machine of the SEC could not receive it. Upon the advice of the SEC, the IRC sent
the press release on the morning of 9 August 1994. 5
The SEC averred that it received reports that IRC failed to make timely public disclosures of its
negotiations with GHB and that some of its directors, respondents herein, heavily traded IRC
shares utilizing this material insider information. On 16 August 1994, the SEC Chairman issued
a directive requiring IRC to submit to the SEC a copy of its aforesaid Memorandum of
Agreement with GHB. The SEC Chairman further directed all principal officers of IRC to appear
at a hearing before the Brokers and Exchanges Department (BED) of the SEC to explain IRC's
failure to immediately disclose the information as required by the Rules on Disclosure of Material
Facts. 6
In compliance with the SEC Chairman's directive, the IRC sent a letter dated 16 August 1994 to
the SEC, attaching thereto copies of the Memorandum of Agreement. Its directors, Manuel
Recto, Rene Villarica and Pelagio Ricalde, also appeared before the SEC on 22 August 1994 to
explain IRC's alleged failure to immediately disclose material information as required under the
Rules on Disclosure of Material Facts. 7 SCaIcA
On 19 September 1994, the SEC Chairman issued an Order finding that IRC violated the Rules
on Disclosure of Material Facts, in connection with the Old Securities Act of 1936, when it failed
to make timely disclosure of its negotiations with GHB. In addition, the SEC pronounced that
some of the officers and directors of IRC entered into transactions involving IRC shares in
violation of Section 30, in relation to Section 36, of the Revised Securities Act. 8
Respondents filed an Omnibus Motion, dated 21 September 1994, which was superseded by an
Amended Omnibus Motion, filed on 18 October 1994, alleging that the SEC had no authority to
investigate the subject matter, since under Section 8 of Presidential Decree No. 902-A, 9 as
amended by Presidential Decree No. 1758, jurisdiction was conferred upon the Prosecution and
Enforcement Department (PED) of the SEC. Respondents also claimed that the SEC violated
their right to due process when it ordered that the respondents appear before the SEC and
"show cause why no administrative, civil or criminal sanctions should be imposed on them", and,
thus, shifted the burden of proof to the respondents. Lastly, they sought to have their cases tried
jointly given the identical factual situations surrounding the alleged violation committed by the
respondents. 10 SDIaCT
Respondents also filed a Motion for Continuance of Proceedings on 24 October 1994, wherein
they moved for discontinuance of the investigations and the proceedings before the SEC until
the undue publicity had abated and the investigating officials had become reasonably free from
prejudice and public pressure. 11

No formal hearings were conducted in connection with the aforementioned motions, but on 25
January 1995, the SEC issued an Omnibus Order which thus disposed of the same in this wise:
12

Before the PED affords a party the right to be present but without the right to cross-examine
witnesses presented against him, in violation of Section 12 (3), Chapter 3, Book VII of the
Administrative Code. 21 TaHIDS

WHEREFORE, premised on the foregoing considerations, the Commission resolves and hereby
rules:

In the dispositive portion of its Decision, dated 20 August 1998, the Court of Appeals ruled that:
22

1.
To create a special investigating panel to hear and decide the instant case in
accordance with the Rules of Practice and Procedure Before the Prosecution and Enforcement
Department (PED), Securities and Exchange Commission, to be composed of Attys. James K.
Abugan, Medardo Devera (Prosecution and Enforcement Department), and Jose Aquino
(Brokers and Exchanges Department), which is hereby directed to expeditiously resolve the
case by conducting continuous hearings, if possible. EIcTAD

WHEREFORE, [herein petitioner SEC's] Motion for Leave to Quash SEC Omnibus Orders is
hereby DENIED. The petition for certiorari, prohibition and mandamus is GRANTED.
Consequently, all proceedings taken against [herein respondents] in this case, including the
Omnibus Orders of January 25, 1995 and March 30, 1995 are declared null and void. The writ of
preliminary injunction is hereby made permanent and, accordingly, [SEC] is hereby prohibited
from taking cognizance or initiating any action, be they civil, criminal, or administrative against
[respondents] with respect to Sections 8 (Procedure for Registration), 30 (Insider's duty to
disclose when trading) and 36 (Directors, Officers and Principal Stockholders) in relation to
Sections 46 (Administrative sanctions) 56 (Penalties) 44 (Liabilities of Controlling persons) and
45 (Investigations, injunctions and prosecution of offenses) of the Revised Securities Act and
Section 144 (Violations of the Code) of the Corporation Code. (Emphasis provided.) DSHcTC

2.
To recall the show cause orders dated September 19, 1994 requiring the respondents
to appear and show cause why no administrative, civil or criminal sanctions should be imposed
on them.
3.

To deny the Motion for Continuance for lack of merit.

Respondents filed an Omnibus Motion for Partial Reconsideration, 13 questioning the creation of
the special investigating panel to hear the case and the denial of the Motion for Continuance.
The SEC denied reconsideration in its Omnibus Order dated 30 March 1995. 14 TEAcCD
The respondents filed a petition before the Court of Appeals docketed as C.A.-G.R. SP No.
37036, questioning the Omnibus Orders dated 25 January 1995 and 30 March 1995. 15 During
the proceedings before the Court of Appeals, respondents filed a Supplemental Motion 16 dated
16 May 1995, wherein they prayed for the issuance of a writ of preliminary injunction enjoining
the SEC and its agents from investigating and proceeding with the hearing of the case against
respondents herein. On 5 May 1995, the Court of Appeals granted their motion and issued a writ
of preliminary injunction, which effectively enjoined the SEC from filing any criminal, civil or
administrative case against the respondents herein. 17
On 23 October 1995, the SEC filed a Motion for Leave to Quash SEC Omnibus Orders so that
the case may be investigated by the PED in accordance with the SEC Rules and Presidential
Decree No. 902-A, and not by the special body whose creation the SEC had earlier ordered. 18
EaTCSA
The Court of Appeals promulgated a Decision 19 on 20 August 1998. It determined that there
were no implementing rules and regulations regarding disclosure, insider trading, or any of the
provisions of the Revised Securities Acts which the respondents allegedly violated. The Court of
Appeals likewise noted that it found no statutory authority for the SEC to initiate and file any suit
for civil liability under Sections 8, 30 and 36 of the Revised Securities Act. Thus, it ruled that no
civil, criminal or administrative proceedings may possibly be held against the respondents
without violating their rights to due process and equal protection. It further resolved that absent
any implementing rules, the SEC cannot be allowed to quash the assailed Omnibus Orders for
the sole purpose of re-filing the same case against the respondents. 20

The SEC filed a Motion for Reconsideration, which the Court of Appeals denied in a Resolution
23 issued on 30 September 1998.
Hence, the present petition, which relies on the following grounds: 24
I
THE COURT OF APPEALS ERRED WHEN IT DENIED PETITIONER'S MOTION FOR LEAVE
TO QUASH THE ASSAILED SEC OMNIBUS ORDERS DATED JANUARY 25 AND MARCH 30,
1995.
II
THE COURT OF APPEALS ERRED WHEN IT RULED THAT THERE IS NO STATUTORY
AUTHORITY WHATSOEVER FOR PETITIONER SEC TO INITIATE AND FILE ANY SUIT BE
THEY CIVIL, CRIMINAL OR ADMINISTRATIVE AGAINST RESPONDENT CORPORATION
AND ITS DIRECTORS WITH RESPECT TO SECTION 30 (INSIDER'S DUTY TO DISCLOSED
[sic] WHEN TRADING) AND 36 (DIRECTORS OFFICERS AND PRINCIPAL STOCKHOLDERS)
OF THE REVISED SECURITIES ACT; AND CSDAIa
III
THE COURT OF APPEALS ERRED WHEN IT RULED THAT RULES OF PRACTICE AND
PROSECUTION BEFORE THE PED AND THE SICD RULES OF PROCEDURE ON
ADMINISTRATIVE ACTIONS/PROCEEDINGS 25 ARE INVALID AS THEY FAIL TO COMPLY
WITH THE STATUTORY REQUIREMENTS CONTAINED IN THE ADMINISTRATIVE CODE OF
1987.
The petition is impressed with merit.

The Court of Appeals further decided that the Rules of Practice and Procedure Before the PED,
which took effect on 14 April 1990, did not comply with the statutory requirements contained in
the Administrative Code of 1997. Section 8, Rule V of the Rules of Practice and Procedure

Before discussing the merits of this case, it should be noted that while this case was pending in
this Court, Republic Act No. 8799, otherwise known as the Securities Regulation Code, took

effect on 8 August 2000. Section 8 of Presidential Decree No. 902-A, as amended, which
created the PED, was already repealed as provided for in Section 76 of the Securities
Regulation Code: cSIADH

departments. The theory is that as the joint act of Congress and the President of the Philippines,
a law has been carefully studied and determined to be in accordance with the fundamental law
before it was finally enacted.

SEC. 76. Repealing Clause. The Revised Securities Act (Batas Pambansa Blg. 178), as
amended, in its entirety, and Sections 2, 4 and 8 of Presidential Decree 902-A, as amended, are
hereby repealed. All other laws, orders, rules and regulations, or parts thereof, inconsistent with
any provision of this Code are hereby repealed or modified accordingly.

The necessity for vesting administrative authorities with power to make rules and regulations is
based on the impracticability of lawmakers' providing general regulations for various and varying
details of management. 30 To rule that the absence of implementing rules can render ineffective
an act of Congress, such as the Revised Securities Act, would empower the administrative
bodies to defeat the legislative will by delaying the implementing rules. To assert that a law is
less than a law, because it is made to depend on a future event or act, is to rob the Legislature
of the power to act wisely for the public welfare whenever a law is passed relating to a state of
affairs not yet developed, or to things future and impossible to fully know. 31 It is well
established that administrative authorities have the power to promulgate rules and regulations to
implement a given statute and to effectuate its policies, provided such rules and regulations
conform to the terms and standards prescribed by the statute as well as purport to carry into
effect its general policies. Nevertheless, it is undisputable that the rules and regulations cannot
assert for themselves a more extensive prerogative or deviate from the mandate of the statute.
32 Moreover, where the statute contains sufficient standards and an unmistakable intent, as in
the case of Sections 30 and 36 of the Revised Securities Act, there should be no impediment to
its implementation. cHSIDa

Thus, under the new law, the PED has been abolished, and the Securities Regulation Code has
taken the place of the Revised Securities Act.
The Court now proceeds with a discussion of the present case.
I.

Sections 8, 30 and 36 of the Revised

Securities Act do not require the

enactment of implementing rules to
make them binding and effective.
The Court of Appeals ruled that absent any implementing rules for Sections 8, 30 and 36 of the
Revised Securities Act, no civil, criminal or administrative actions can possibly be had against
the respondents without violating their right to due process and equal protection, citing as its
basis the case Yick Wo v. Hopkins. 26 This is untenable. cECTaD
In the absence of any constitutional or statutory infirmity, which may concern Sections 30 and 36
of the Revised Securities Act, this Court upholds these provisions as legal and binding. It is well
settled that every law has in its favor the presumption of validity. Unless and until a specific
provision of the law is declared invalid and unconstitutional, the same is valid and binding for all
intents and purposes. 27 The mere absence of implementing rules cannot effectively invalidate
provisions of law, where a reasonable construction that will support the law may be given. In
People v. Rosenthal, 28 this Court ruled that:

The reliance placed by the Court of Appeals in Yick Wo v. Hopkins 33 shows a glaring error. In
the cited case, this Court found unconstitutional an ordinance which gave the board of
supervisors authority to refuse permission to carry on laundries located in buildings that were not
made of brick and stone, because it violated the equal protection clause and was highly
discriminatory and hostile to Chinese residents and not because the standards provided therein
were vague or ambiguous.
This Court does not discern any vagueness or ambiguity in Sections 30 and 36 of the Revised
Securities Act, such that the acts proscribed and/or required would not be understood by a
person of ordinary intelligence. cHCaIE
Section 30 of the Revised Securities Act
Section 30 of the Revised Securities Act reads:

In this connection we cannot pretermit reference to the rule that "legislation should not be held
invalid on the ground of uncertainty if susceptible of any reasonable construction that will support
and give it effect. An Act will not be declared inoperative and ineffectual on the ground that it
furnishes no adequate means to secure the purpose for which it is passed, if men of common
sense and reason can devise and provide the means, and all the instrumentalities necessary for
its execution are within the reach of those intrusted therewith." (25 R.C.L., pp. 810, 811)
HDTSIE
In Garcia v. Executive Secretary, 29 the Court underlined the importance of the presumption of
validity of laws and the careful consideration with which the judiciary strikes down as invalid acts
of the legislature:
The policy of the courts is to avoid ruling on constitutional questions and to presume that the
acts of the political departments are valid in the absence of a clear and unmistakable showing to
the contrary. To doubt is to sustain. This presumption is based on the doctrine of separation of
powers which enjoins upon each department a becoming respect for the acts of the other

Sec. 30. Insider's duty to disclose when trading. (a) It shall be unlawful for an insider to sell
or buy a security of the issuer, if he knows a fact of special significance with respect to the issuer
or the security that is not generally available, unless (1) the insider proves that the fact is
generally available or (2) if the other party to the transaction (or his agent) is identified, (a) the
insider proves that the other party knows it, or (b) that other party in fact knows it from the insider
or otherwise.
(b)
"Insider" means (1) the issuer, (2) a director or officer of, or a person controlling,
controlled by, or under common control with, the issuer, (3) a person whose relationship or
former relationship to the issuer gives or gave him access to a fact of special significance about
the issuer or the security that is not generally available, or (4) a person who learns such a fact
from any of the foregoing insiders as defined in this subsection, with knowledge that the person
from whom he learns the fact is such an insider. HITAEC

(c)
A fact is "of special significance" if (a) in addition to being material it would be likely,
on being made generally available, to affect the market price of a security to a significant extent,
or (b) a reasonable person would consider it especially important under the circumstances in
determining his course of action in the light of such factors as the degree of its specificity, the
extent of its difference from information generally available previously, and its nature and
reliability.
(d)
This section shall apply to an insider as defined in subsection (b) (3) hereof only to the
extent that he knows of a fact of special significance by virtue of his being an insider.
The provision explains in simple terms that the insider's misuse of nonpublic and undisclosed
information is the gravamen of illegal conduct. The intent of the law is the protection of investors
against fraud, committed when an insider, using secret information, takes advantage of an
uninformed investor. Insiders are obligated to disclose material information to the other party or
abstain from trading the shares of his corporation. This duty to disclose or abstain is based on
two factors: first, the existence of a relationship giving access, directly or indirectly, to
information intended to be available only for a corporate purpose and not for the personal benefit
of anyone; and second, the inherent unfairness involved when a party takes advantage of such
information knowing it is unavailable to those with whom he is dealing. 34 CSEHcT
In the United States (U.S.), the obligation to disclose or abstain has been traditionally imposed
on corporate "insiders", particularly officers, directors, or controlling stockholders, but that
definition has since been expanded. 35 The term "insiders" now includes persons whose
relationship or former relationship to the issuer gives or gave them access to a fact of special
significance about the issuer or the security that is not generally available, and one who learns
such a fact from an insider knowing that the person from whom he learns the fact is such an
insider. Insiders have the duty to disclose material facts which are known to them by virtue of
their position but which are not known to persons with whom they deal and which, if known,
would affect their investment judgment. In some cases, however, there may be valid corporate
reasons for the nondisclosure of material information. Where such reasons exist, an issuer's
decision not to make any public disclosures is not ordinarily considered as a violation of insider
trading. At the same time, the undisclosed information should not be improperly used for noncorporate purposes, particularly to disadvantage other persons with whom an insider might
transact, and therefore the insider must abstain from entering into transactions involving such
securities. 36 CSDcTH
Respondents further aver that under Section 30 of the Revised Securities Act, the SEC still
needed to define the following terms: "material fact", "reasonable person", "nature and reliability"
and "generally available". 37 In determining whether or not these terms are vague, these terms
must be evaluated in the context of Section 30 of the Revised Securities Act. To fully understand
how the terms were used in the aforementioned provision, a discussion of what the law
recognizes as a fact of special significance is required, since the duty to disclose such fact or to
abstain from any transaction is imposed on the insider only in connection with a fact of special
significance.
Under the law, what is required to be disclosed is a fact of "special significance" which may be
(a) a material fact which would be likely, on being made generally available, to affect the market
price of a security to a significant extent, or (b) one which a reasonable person would consider
especially important in determining his course of action with regard to the shares of stock.
TCDHaE

(a)
Material Fact The concept of a "material fact" is not a new one. As early as 1973,
the Rules Requiring Disclosure of Material Facts by Corporations Whose Securities Are Listed In
Any Stock Exchange or Registered/Licensed Under the Securities Act, issued by the SEC on 29
January 1973, explained that "[a] fact is material if it induces or tends to induce or otherwise
affect the sale or purchase of its securities." Thus, Section 30 of the Revised Securities Act
provides that if a fact affects the sale or purchase of securities, as well as its price, then the
insider would be required to disclose such information to the other party to the transaction
involving the securities. This is the first definition given to a "fact of special significance".
EcASIC
(b.1)
Reasonable Person The second definition given to a fact of special significance
involves the judgment of a "reasonable person". Contrary to the allegations of the respondents,
a "reasonable person" is not a problematic legal concept that needs to be clarified for the
purpose of giving effect to a statute; rather, it is the standard on which most of our legal
doctrines stand. The doctrine on negligence uses the discretion of the "reasonable man" as the
standard. 38 A purchaser in good faith must also take into account facts which put a "reasonable
man" on his guard. 39 In addition, it is the belief of the reasonable and prudent man that an
offense was committed that sets the criteria for probable cause for a warrant of arrest. 40 This
Court, in such cases, differentiated the reasonable and prudent man from "a person with training
in the law such as a prosecutor or a judge", and identified him as "the average man on the
street", who weighs facts and circumstances without resorting to the calibrations of our technical
rules of evidence of which his knowledge is nil. Rather, he relies on the calculus of common
sense of which all reasonable men have in abundance. 41 In the same vein, the U.S. Supreme
Court similarly determined its standards by the actual significance in the deliberations of a
"reasonable investor", when it ruled in TSC Industries, Inc. v. Northway, Inc., 42 that the
determination of materiality "requires delicate assessments of the inferences a 'reasonable
shareholder' would draw from a given set of facts and the significance of those inferences to
him." EcTDCI
(b.2)
Nature and Reliability The factors affecting the second definition of a "fact of
special significance", which is of such importance that it is expected to affect the judgment of a
reasonable man, were substantially lifted from a test of materiality pronounced in the case In the
Matter of Investors Management Co., Inc.: 43
Among the factors to be considered in determining whether information is material under this
test are the degree of its specificity, the extent to which it differs from information previously
publicly disseminated, and its reliability in light of its nature and source and the circumstances
under which it was received.
It can be deduced from the foregoing that the "nature and reliability" of a significant fact in
determining the course of action a reasonable person takes regarding securities must be clearly
viewed in connection with the particular circumstances of a case. To enumerate all
circumstances that would render the "nature and reliability" of a fact to be of special significance
is close to impossible. Nevertheless, the proper adjudicative body would undoubtedly be able to
determine if facts of a certain "nature and reliability" can influence a reasonable person's
decision to retain, sell or buy securities, and thereafter explain and justify its factual findings in its
decision. DISHEA
(c)
Materiality Concept A discussion of the "materiality concept" would be relevant to
both a material fact which would affect the market price of a security to a significant extent
and/or a fact which a reasonable person would consider in determining his or her cause of action

with regard to the shares of stock. Significantly, what is referred to in our laws as a fact of
special significance is referred to in the U.S. as the "materiality concept" and the latter is
similarly not provided with a precise definition. In Basic v. Levinson, 44 the U.S. Supreme Court
cautioned against confining materiality to a rigid formula, stating thus:
A bright-line rule indeed is easier to follow than a standard that requires the exercise of judgment
in the light of all the circumstances. But ease of application alone is not an excuse for ignoring
the purposes of the Securities Act and Congress' policy decisions. Any approach that designates
a single fact or occurrence as always determinative of an inherently fact-specific finding such as
materiality, must necessarily be overinclusive or underinclusive. DIEACH
Moreover, materiality "will depend at any given time upon a balancing of both the indicated
probability that the event will occur and the anticipated magnitude of the event in light of the
totality of the company activity." 45 In drafting the Securities Act of 1934, the U.S. Congress put
emphasis on the limitations to the definition of materiality:
Although the Committee believes that ideally it would be desirable to have absolute certainty in
the application of the materiality concept, it is its view that such a goal is illusory and unrealistic.
The materiality concept is judgmental in nature and it is not possible to translate this into a
numerical formula. The Committee's advice to the [SEC] is to avoid this quest for certainty and
to continue consideration of materiality on a case-by-case basis as disclosure problems are
identified. House Committee on Interstate and Foreign Commerce, Report of the Advisory
Committee on Corporate Disclosure to the Securities and Exchange Commission, 95th Cong.,
1st Sess., 327 (Comm.Print 1977). (Emphasis provided.) 46 ScCEIA
(d)
Generally Available Section 30 of the Revised Securities Act allows the insider the
defense that in a transaction of securities, where the insider is in possession of facts of special
significance, such information is "generally available" to the public. Whether information found in
a newspaper, a specialized magazine, or any cyberspace media be sufficient for the term
"generally available" is a matter which may be adjudged given the particular circumstances of
the case. The standards cannot remain at a standstill. A medium, which is widely used today
was, at some previous point in time, inaccessible to most. Furthermore, it would be difficult to
approximate how the rules may be applied to the instant case, where investigation has not even
been started. Respondents failed to allege that the negotiations of their agreement with GHB
were made known to the public through any form of media for there to be a proper appreciation
of the issue presented.
Section 36 (a) of the Revised Securities Act
As regards Section 36 (a) of the Revised Securities Act, respondents claim that the term
"beneficial ownership" is vague and that it requires implementing rules to give effect to the law.
Section 36 (a) of the Revised Securities Act is a straightforward provision that imposes upon (1)
a beneficial owner of more than ten percent of any class of any equity security or (2) a director or
any officer of the issuer of such security, the obligation to submit a statement indicating his or
her ownership of the issuer's securities and such changes in his or her ownership thereof. The
said provision reads: EICSDT
Sec. 36. Directors, officers and principal stockholders. (a) Every person who is directly or
indirectly the beneficial owner of more than ten per centum of any [class] of any equity security
which is registered pursuant to this Act, or who is [a] director or an officer of the issuer of such
security, shall file, at the time of the registration of such security on a securities exchange or by

the effective date of a registration statement or within ten days after he becomes such a
beneficial owner, director or officer, a statement with the Commission and, if such security is
registered on a securities exchange, also with the exchange, of the amount of all equity
securities of such issuer of which he is the beneficial owner, and within ten days after the close
of each calendar month thereafter, if there has been a change in such ownership during such
month, shall file with the Commission, and if such security is registered on a securities
exchange, shall also file with the exchange, a statement indicating his ownership at the close of
the calendar month and such changes in his ownership as have occurred during such calendar
month. (Emphasis provided.)
Section 36 (a) refers to the "beneficial owner". Beneficial owner has been defined in the
following manner: AcSHCD
[F]irst, to indicate the interest of a beneficiary in trust property (also called "equitable
ownership"); and second, to refer to the power of a corporate shareholder to buy or sell the
shares, though the shareholder is not registered in the corporation's books as the owner.
Usually, beneficial ownership is distinguished from naked ownership, which is the enjoyment of
all the benefits and privileges of ownership, as against possession of the bare title to property.
47
Even assuming that the term "beneficial ownership" was vague, it would not affect respondents'
case, where the respondents are directors and/or officers of the corporation, who are specifically
required to comply with the reportorial requirements under Section 36 (a) of the Revised
Securities Act. The validity of a statute may be contested only by one who will sustain a direct
injury as a result of its enforcement. 48 IaEHSD
Sections 30 and 36 of the Revised Securities Act were enacted to promote full disclosure in the
securities market and prevent unscrupulous individuals, who by their positions obtain non-public
information, from taking advantage of an uninformed public. No individual would invest in a
market which can be manipulated by a limited number of corporate insiders. Such reaction
would stifle, if not stunt, the growth of the securities market. To avert the occurrence of such an
event, Section 30 of the Revised Securities Act prevented the unfair use of non-public
information in securities transactions, while Section 36 allowed the SEC to monitor the
transactions entered into by corporate officers and directors as regards the securities of their
companies.
In the case In the Matter of Investor's Management Co., 49 it was cautioned that "the broad
language of the anti-fraud provisions", which include the provisions on insider trading, should not
be "circumscribed by fine distinctions and rigid classifications." The ambit of anti-fraud provisions
is necessarily broad so as to embrace the infinite variety of deceptive conduct. 50
In Tatad v. Secretary of Department of Energy, 51 this Court brushed aside a contention, similar
to that made by the respondents in this case, that certain words or phrases used in a statute do
not set determinate standards, declaring that: CTHDcS
Petitioners contend that the words "as far as practicable", "declining" and "stable" should have
been defined in R.A. No. 8180 as they do not set determinate and determinable standards. This
stubborn submission deserves scant consideration. The dictionary meanings of these words are
well settled and cannot confuse men of reasonable intelligence. . . . . The fear of petitioners that
these words will result in the exercise of executive discretion that will run riot is thus groundless.

To be sure, the Court has sustained the validity of similar, if not more general standards in other
cases.
Among the words or phrases that this Court upheld as valid standards were "simplicity and
dignity", 52 "public interest", 53 and "interests of law and order". 54
The Revised Securities Act was approved on 23 February 1982. The fact that the Full Disclosure
Rules were promulgated by the SEC only on 24 July 1996 does not render ineffective in the
meantime Section 36 of the Revised Securities Act. It is already unequivocal that the Revised
Securities Act requires full disclosure and the Full Disclosure Rules were issued to make the
enforcement of the law more consistent, efficient and effective. It is equally reasonable to state
that the disclosure forms later provided by the SEC, do not, in any way imply that no compliance
was required before the forms were provided. The effectivity of a statute which imposes
reportorial requirements cannot be suspended by the issuance of specified forms, especially
where compliance therewith may be made even without such forms. The forms merely made
more efficient the processing of requirements already identified by the statute. cEAIHa
For the same reason, the Court of Appeals made an evident mistake when it ruled that no civil,
criminal or administrative actions can possibly be had against the respondents in connection
with Sections 8, 30 and 36 of the Revised Securities Act due to the absence of implementing
rules. These provisions are sufficiently clear and complete by themselves. Their requirements
are specifically set out, and the acts which are enjoined are determinable. In particular, Section 8
55 of the Revised Securities Act is a straightforward enumeration of the procedure for the
registration of securities and the particular matters which need to be reported in the registration
statement thereof. The Decision, dated 20 August 1998, provides no valid reason to exempt the
respondent IRC from such requirements. The lack of implementing rules cannot suspend the
effectivity of these provisions. Thus, this Court cannot find any cogent reason to prevent the
SEC from exercising its authority to investigate respondents for violation of Section 8 of the
Revised Securities Act. AEHCDa
II.

Rule V of the PED Rules of Practice and Procedure further specified that:
Section 5. Submission of Documents. During the preliminary conference/hearing, or
immediately thereafter, the Hearing Officer may require the parties to simultaneously submit
their respective verified position papers accompanied by all supporting documents and the
affidavits of their witnesses, if any which shall take the place of their direct testimony. The parties
shall furnish each other with copies of the position papers together with the supporting affidavits
and documents submitted by them.
Section 6. Determination of necessity of hearing. Immediately after the submission by the
parties of their position papers and supporting documents, the Hearing Officer shall determine
whether there is a need for a formal hearing. At this stage, he may, in his discretion, and for the
purpose of making such determination, elicit pertinent facts or information, including
documentary evidence, if any, from any party or witness to complete, as far as possible, the
facts of the case. Facts or information so elicited may serve as basis for his clarification or
simplifications of the issues in the case. Admissions and stipulation of facts to abbreviate the
proceedings shall be encouraged. aDHCEA
Section 7. Disposition of Case. If the Hearing Officer finds no necessity of further hearing after
the parties have submitted their position papers and supporting documents, he shall so inform
the parties stating the reasons therefor and shall ask them to acknowledge the fact that they
were so informed by signing the minutes of the hearing and the case shall be deemed submitted
for resolution.
As such, the PED Rules provided that the Hearing Officer may require the parties to submit their
respective verified position papers, together with all supporting documents and affidavits of
witnesses. A formal hearing was not mandatory; it was within the discretion of the Hearing
Officer to determine whether there was a need for a formal hearing. Since, according to the
foregoing rules, the holding of a hearing before the PED is discretionary, then the right to crossexamination could not have been demanded by either party.

The right to cross-examination is not

absolute and cannot be demanded

during investigative proceedings
before the PED.
In its assailed Decision dated 20 August 1998, the Court of Appeals pronounced that the PED
Rules of Practice and Procedure was invalid since Section 8, Rule V 56 thereof failed to provide
for the parties' right to cross-examination, in violation of the Administrative Code of 1987
particularly Section 12 (3), Chapter 3, Book VII thereof. This ruling is incorrect.
Firstly, Section 4, Rule I of the PED Rules of Practice and Procedure, categorically stated that
the proceedings before the PED are summary in nature:
Section 4. Nature of Proceedings. Subject to the requirements of due process, proceedings
before the "PED" shall be summary in nature not necessarily adhering to or following the
technical rules of evidence obtaining in the courts of law. The Rules of Court may apply in said
proceedings in suppletory character whenever practicable. DSEaHT

Secondly, it must be pointed out that Chapter 3, Book VII of the Administrative Code, entitled
"Adjudication", does not affect the investigatory functions of the agencies. The law creating the
PED, Section 8 of Presidential Decree No. 902-A, as amended, defines the authority granted to
the PED, thus: caIDSH
SEC. 8. The Prosecution and Enforcement Department shall have, subject to the
Commission's control and supervision, the exclusive authority to investigate, on complaint or
motu proprio, any act or omission of the Board of Directors/Trustees of corporations, or of
partnerships, or of other associations, or of their stockholders, officers or partners, including any
fraudulent devices, schemes or representations, in violation of any law or rules and regulations
administered and enforced by the Commission; to file and prosecute in accordance with law and
rules and regulations issued by the Commission and in appropriate cases, the corresponding
criminal or civil case before the Commission or the proper court or body upon prima facie finding
of violation of any laws or rules and regulations administered and enforced by the Commission;
and to perform such other powers and functions as may be provided by law or duly delegated to
it by the Commission. (Emphasis provided.)
The law creating PED empowers it to investigate violations of the rules and regulations
promulgated by the SEC and to file and prosecute such cases. It fails to mention any
adjudicatory functions insofar as the PED is concerned. Thus, the PED Rules of Practice and

Procedure need not comply with the provisions of the Administrative Code on adjudication,
particularly Section 12 (3), Chapter 3, Book VII. aIcHSC
In Cario v. Commission on Human Rights, 57 this Court sets out the distinction between
investigative and adjudicative functions, thus:
"Investigate", commonly understood, means to examine, explore, inquire or delve or probe into,
research on, study. The dictionary definition of "investigate" is "to observe or study closely;
inquire into systematically: "to search or inquire into" xx to subject to an official probe xx: to
conduct an official inquiry." The purpose of an investigation, of course is to discover, to find out,
to learn, obtain information. Nowhere included or intimated is the notion of settling, deciding or
resolving a controversy involved in the facts inquired into by application of the law to the facts
established by the inquiry.
The legal meaning of "investigate" is essentially the same: "(t)o follow up step by step by patient
inquiry or observation. To trace or track; to search into; to examine and inquire into with care and
accuracy; to find out by careful inquisition; examination; the taking of evidence; a legal inquiry";
"to inquire; to make an investigation", "investigation" being in turn described as "(a)n
administrative function, the exercise of which ordinarily does not require a hearing. 2 Am J2d
Adm L Sec. 257; xx an inquiry, judicial or otherwise, for the discovery and collection of facts
concerning a certain matter or matters." STECAc
"Adjudicate", commonly or popularly understood, means to adjudge, arbitrate, judge, decide,
determine, resolve, rule on, settle. The dictionary defines the term as "to settle finally (the rights
and duties of parties to a court case) on the merits of issues raised: xx to pass judgment on:
settle judicially: xx act as judge." And "adjudge" means "to decide or rule upon as a judge or with
judicial or quasi-judicial powers: xx to award or grant judicially in a case of controversy . . . ."
In a legal sense, "adjudicate" means: "To settle in the exercise of judicial authority. To determine
finally. Synonymous with adjudge in its strictest sense"; and "adjudge" means: "To pass on
judicially, to decide, settle, or decree, or to sentence or condemn. . . . Implies a judicial
determination of a fact, and the entry of a judgment."
There is no merit to the respondent's averment that the sections under Chapter 3, Book VII of
the Administrative Code, do not distinguish between investigative and adjudicatory functions.
Chapter 3, Book VII of the Administrative Code, is unequivocally entitled "Adjudication".
SEDICa
Respondents insist that the PED performs adjudicative functions, as enumerated under Section
1 (h) and (j), Rule II; and Section 2 (4), Rule VII of the PED Rules of Practice and Procedure:

1.

2.
Serious misrepresentation as to what the corporation can do or is doing to the great
prejudice of or damage to the general public; TAaEIc
3.
Refusal to comply or defiance of any lawful order of the Commission restraining
commission of acts which would amount to a grave violation of its franchise;
xxx
(j)
xxx

xxx

xxx

xxx

xxx

Imposes charges, fines and fees, which by law, it is authorized to collect;

xxx

xxx

Section 2. Powers of the Hearing Officer. The Hearing Officer shall have the following powers:
xxx

xxx

xxx

4.
To cite and/or declare any person in direct or indirect contempt in accordance with
pertinent provisions of the Rules of Court. ACaTIc
Even assuming that these are adjudicative functions, the PED, in the instant case, exercised its
investigative powers; thus, respondents do not have the requisite standing to assail the validity
of the rules on adjudication. A valid source of a statute or a rule can only be contested by one
who will sustain a direct injury as a result of its enforcement. 58 In the instant case, respondents
are only being investigated by the PED for their alleged failure to disclose their negotiations with
GHB and the transactions entered into by its directors involving IRC shares. The respondents
have not shown themselves to be under any imminent danger of sustaining any personal injury
attributable to the exercise of adjudicative functions by the SEC. They are not being or about to
be subjected by the PED to charges, fees or fines; to citations for contempt; or to the
cancellation of their certificate of registration under Section 1 (h), Rule II of the PED Rules of
Practice and Procedure.
To repeat, the only powers which the PED was likely to exercise over the respondents were
investigative in nature, to wit: HcDSaT
Section 1. Authority of the Prosecution and Enforcement Department. Pursuant to Presidential
Decree No. 902-A, as amended by Presidential Decree No. 1758, the Prosecution and
Enforcement Department is primarily charged with the following:
xxx

Section 1. Authority of the Prosecution and Enforcement Department. Pursuant to Presidential

Decree No. 902-A, as amended by Presidential Decree No. 1758, the Prosecution and
Enforcement Department is primarily charged with the following:

Fraud in procuring its certificate of registration;

xxx

xxx

b.
Initiates proper investigation of corporations and partnerships or persons, their books,
records and other properties and assets, involving their business transactions, in coordination
with the operating department involved;

xxx
xxx

(h)
Suspends or revokes, after proper notice and hearing in accordance with these Rules,
the franchise or certificate of registration of corporations, partnerships or associations, upon any
of the following grounds:

xxx

xxx

e.
Files and prosecutes civil or criminal cases before the Commission and other courts of
justice involving violations of laws and decrees enforced by the Commission and the rules and
regulations promulgated thereunder; caAICE

f.
Prosecutes erring directors, officers and stockholders of corporations and
partnerships, commercial paper issuers or persons in accordance with the pertinent rules on
procedures;

the Revised Securities Act since said

The authority granted to the PED under Section 1 (b), (e), and (f), Rule II of the PED Rules of
Practice and Procedure, need not comply with Section 12, Chapter 3, Rule VII of the
Administrative Code, which affects only the adjudicatory functions of administrative bodies.
Thus, the PED would still be able to investigate the respondents under its rules for their alleged
failure to disclose their negotiations with GHB and the transactions entered into by its directors
involving IRC shares.

law.

This is not to say that administrative bodies performing adjudicative functions are required to
strictly comply with the requirements of Chapter 3, Rule VII of the Administrative Code,
particularly, the right to cross-examination. It should be noted that under Section 2.2 of
Executive Order No. 26, issued on 7 October 1992, abbreviated proceedings are prescribed in
the disposition of administrative cases: aTEScI
2.
Abbreviation of Proceedings. All administrative agencies are hereby directed to adopt
and include in their respective Rules of Procedure the following provisions:
xxx

xxx

xxx

2.2
Rules adopting, unless otherwise provided by special laws and without prejudice to
Section 12, Chapter 3, Book VII of the Administrative Code of 1987, the mandatory use of
affidavits in lieu of direct testimonies and the preferred use of depositions whenever practicable
and convenient.
As a consequence, in proceedings before administrative or quasi-judicial bodies, such as the
National Labor Relations Commission and the Philippine Overseas Employment Agency,
created under laws which authorize summary proceedings, decisions may be reached on the
basis of position papers or other documentary evidence only. They are not bound by technical
rules of procedure and evidence. 59 In fact, the hearings before such agencies do not connote
full adversarial proceedings. 60 Thus, it is not necessary for the rules to require affiants to
appear and testify and to be cross-examined by the counsel of the adverse party. To require
otherwise would negate the summary nature of the administrative or quasi-judicial proceedings.
61 In Atlas Consolidated Mining and Development Corporation v. Factoran, Jr., 62 this Court
stated that: ASTcEa
[I]t is sufficient that administrative findings of fact are supported by evidence, or negatively
stated, it is sufficient that findings of fact are not shown to be unsupported by evidence.
Substantial evidence is all that is needed to support an administrative finding of fact, and
substantial evidence is "such relevant evidence as a reasonable mind might accept as adequate
to support a conclusion."
In order to comply with the requirements of due process, what is required, among other things, is
that every litigant be given reasonable opportunity to appear and defend his right and to
introduce relevant evidence in his favor. 63
III.

The Securities Regulations Code did

not repeal Sections 8, 30 and 36 of

provisions were reenacted in the new

The Securities Regulations Code absolutely repealed the Revised Securities Act. While the
absolute repeal of a law generally deprives a court of its authority to penalize the person
charged with the violation of the old law prior to its appeal, an exception to this rule comes about
when the repealing law punishes the act previously penalized under the old law. The Court, in
Benedicto v. Court of Appeals, sets down the rules in such instances: 64 IaDcTC
As a rule, an absolute repeal of a penal law has the effect of depriving the court of its authority to
punish a person charged with violation of the old law prior to its repeal. This is because an
unqualified repeal of a penal law constitutes a legislative act of rendering legal what had been
previously declared as illegal, such that the offense no longer exists and it is as if the person
who committed it never did so. There are, however, exceptions to the rule. One is the inclusion
of a saving clause in the repealing statute that provides that the repeal shall have no effect on
pending actions. Another exception is where the repealing act reenacts the former statute and
punishes the act previously penalized under the old law. In such instance, the act committed
before the reenactment continues to be an offense in the statute books and pending cases are
not affected, regardless of whether the new penalty to be imposed is more favorable to the
accused. (Emphasis provided.)
In the present case, a criminal case may still be filed against the respondents despite the repeal,
since Sections 8, 65 12, 66 26, 67 27 68 and 23 69 of the Securities Regulations Code impose
duties that are substantially similar to Sections 8, 30 and 36 of the repealed Revised Securities
Act. CAcDTI
Section 8 of the Revised Securities Act, which previously provided for the registration of
securities and the information that needs to be included in the registration statements, was
expanded under Section 12, in connection with Section 8 of the Securities Regulations Code.
Further details of the information required to be disclosed by the registrant are explained in the
Amended Implementing Rules and Regulations of the Securities Regulations Code, issued on
30 December 2003, particularly Sections 8 and 12 thereof.
Section 30 of the Revised Securities Act has been reenacted as Section 27 of the Securities
Regulations Code, still penalizing an insider's misuse of material and non-public information
about the issuer, for the purpose of protecting public investors. Section 26 of the Securities
Regulations Code even widens the coverage of punishable acts, which intend to defraud public
investors through various devices, misinformation and omissions.
Section 23 of the Securities Regulations Code was practically lifted from Section 36 (a) of the
Revised Securities Act. Both provisions impose upon (1) a beneficial owner of more than ten
percent of any class of any equity security or (2) a director or any officer of the issuer of such
security, the obligation to submit a statement indicating his or her ownership of the issuer's
securities and such changes in his or her ownership thereof. HDATCc
Clearly, the legislature had not intended to deprive the courts of their authority to punish a
person charged with violation of the old law that was repealed; in this case, the Revised
Securities Act.

IV.

The SEC retained the jurisdiction to

investigate violations of the Revised

Securities Act, reenacted in the
Securities Regulations Code, despite
the abolition of the PED.
Section 53 of the Securities Regulations Code clearly provides that criminal complaints for
violations of rules and regulations enforced or administered by the SEC shall be referred to the
Department of Justice (DOJ) for preliminary investigation, while the SEC nevertheless retains
limited investigatory powers. 70 Additionally, the SEC may still impose the appropriate
administrative sanctions under Section 54 of the aforementioned law. 71 ASHECD
In Morato v. Court of Appeals, 72 the cases therein were still pending before the PED for
investigation and the SEC for resolution when the Securities Regulations Code was enacted.
The case before the SEC involved an intra-corporate dispute, while the subject matter of the
other case investigated by the PED involved the schemes, devices, and violations of pertinent
rules and laws of the company's board of directors. The enactment of the Securities Regulations
Code did not result in the dismissal of the cases; rather, this Court ordered the transfer of one
case to the proper regional trial court and the SEC to continue with the investigation of the other
case.
The case at bar is comparable to the aforecited case. In this case, the SEC already commenced
the investigative proceedings against respondents as early as 1994. Respondents were called to
appear before the SEC and explain their failure to disclose pertinent information on 14 August
1994. Thereafter, the SEC Chairman, having already made initial findings that respondents
failed to make timely disclosures of their negotiations with GHB, ordered a special investigating
panel to hear the case. The investigative proceedings were interrupted only by the writ of
preliminary injunction issued by the Court of Appeals, which became permanent by virtue of the
Decision, dated 20 August 1998, in C.A.-G.R. SP No. 37036. During the pendency of this case,
the Securities Regulations Code repealed the Revised Securities Act. As in Morato v. Court of
Appeals, the repeal cannot deprive SEC of its jurisdiction to continue investigating the case; or
the regional trial court, to hear any case which may later be filed against the respondents.
AcDaEH
V.

The instant case has not yet prescribed.

Respondents have taken the position that this case is moot and academic, since any criminal
complaint that may be filed against them resulting from the SEC's investigation of this case has
already prescribed. 73 They point out that the prescription period applicable to offenses
punished under special laws, such as violations of the Revised Securities Act, is twelve years
under Section 1 of Act No. 3326, as amended by Act No. 3585 and Act No. 3763, entitled "An
Act to Establish Periods of Prescription for Violations Penalized by Special Acts and Municipal
Ordinances and to Provide When Prescription Shall Begin to Act." 74 Since the offense was
committed in 1994, they reasoned that prescription set in as early as 2006 and rendered this
case moot. Such position, however, is incongruent with the factual circumstances of this case,
as well as the applicable laws and jurisprudence. ECTIHa

It is an established doctrine that a preliminary investigation interrupts the prescription period. 75

A preliminary investigation is essentially a determination whether an offense has been
committed, and whether there is probable cause for the accused to have committed an offense:
A preliminary investigation is merely inquisitorial, and it is often the only means of discovering
the persons who may be reasonably charged with a crime, to enable the fiscal to prepare the
complaint or information. It is not a trial of the case on the merits and has no purpose except that
of determining whether a crime has been committed or whether there is probable cause to
believe that the accused is guilty thereof. 76
Under Section 45 of the Revised Securities Act, which is entitled Investigations, Injunctions and
Prosecution of Offenses, the Securities Exchange Commission (SEC) has the authority to "make
such investigations as it deems necessary to determine whether any person has violated or is
about to violate any provision of this Act XXX." After a finding that a person has violated the
Revised Securities Act, the SEC may refer the case to the DOJ for preliminary investigation and
prosecution. HTAIcD
While the SEC investigation serves the same purpose and entails substantially similar duties as
the preliminary investigation conducted by the DOJ, this process cannot simply be disregarded.
In Baviera v. Paglinawan, 77 this Court enunciated that a criminal complaint is first filed with the
SEC, which determines the existence of probable cause, before a preliminary investigation can
be commenced by the DOJ. In the aforecited case, the complaint filed directly with the DOJ was
dismissed on the ground that it should have been filed first with the SEC. Similarly, the offense
was a violation of the Securities Regulations Code, wherein the procedure for criminal
prosecution was reproduced from Section 45 of the Revised Securities Act. 78 This Court
affirmed the dismissal, which it explained thus:
The Court of Appeals held that under the above provision, a criminal complaint for violation of
any law or rule administered by the SEC must first be filed with the latter. If the Commission
finds that there is probable cause, then it should refer the case to the DOJ. Since petitioner
failed to comply with the foregoing procedural requirement, the DOJ did not gravely abuse its
discretion in dismissing his complaint in I.S. No. 2004-229. HAaDTI
A criminal charge for violation of the Securities Regulation Code is a specialized dispute. Hence,
it must first be referred to an administrative agency of special competence, i.e., the SEC. Under
the doctrine of primary jurisdiction, courts will not determine a controversy involving a question
within the jurisdiction of the administrative tribunal, where the question demands the exercise of
sound administrative discretion requiring the specialized knowledge and expertise of said
administrative tribunal to determine technical and intricate matters of fact. The Securities
Regulation Code is a special law. Its enforcement is particularly vested in the SEC. Hence, all
complaints for any violation of the Code and its implementing rules and regulations should be
filed with the SEC. Where the complaint is criminal in nature, the SEC shall indorse the
complaint to the DOJ for preliminary investigation and prosecution as provided in Section 53.1
earlier quoted.
We thus agree with the Court of Appeals that petitioner committed a fatal procedural lapse when
he filed his criminal complaint directly with the DOJ. Verily, no grave abuse of discretion can be
ascribed to the DOJ in dismissing petitioner's complaint. aIAHcE
The said case puts in perspective the nature of the investigation undertaken by the SEC, which
is a requisite before a criminal case may be referred to the DOJ. The Court declared that it is

imperative that the criminal prosecution be initiated before the SEC, the administrative agency
with the special competence.

their control; for even if they avail themselves of the proper remedy, they would still be barred
from investigating and prosecuting the case. TCaEIc

It should be noted that the SEC started investigative proceedings against the respondents as
early as 1994. This investigation effectively interrupted the prescription period. However, said
proceedings were disrupted by a preliminary injunction issued by the Court of Appeals on 5 May
1995, which effectively enjoined the SEC from filing any criminal, civil, or administrative case
against the respondents herein. 79 Thereafter, on 20 August 1998, the appellate court issued
the assailed Decision in C.A. G.R. SP. No. 37036 ordering that the writ of injunction be made
permanent and prohibiting the SEC from taking cognizance of and initiating any action against
herein respondents. The SEC was bound to comply with the aforementioned writ of preliminary
injunction and writ of injunction issued by the Court of Appeals enjoining it from continuing with
the investigation of respondents for 12 years. Any deviation by the SEC from the injunctive writs
would be sufficient ground for contempt. Moreover, any step the SEC takes in defiance of such
orders will be considered void for having been taken against an order issued by a court of
competent jurisdiction. ECTHIA

Indubitably, the prescription period is interrupted by commencing the proceedings for the
prosecution of the accused. In criminal cases, this is accomplished by initiating the preliminary
investigation. The prosecution of offenses punishable under the Revised Securities Act and the
Securities Regulations Code is initiated by the filing of a complaint with the SEC or by an
investigation conducted by the SEC motu proprio. Only after a finding of probable cause is made
by the SEC can the DOJ instigate a preliminary investigation. Thus, the investigation that was
commenced by the SEC in 1995, soon after it discovered the questionable acts of the
respondents, effectively interrupted the prescription period. Given the nature and purpose of the
investigation conducted by the SEC, which is equivalent to the preliminary investigation
conducted by the DOJ in criminal cases, such investigation would surely interrupt the
prescription period. ECSHAD

An investigation of the case by any other administrative or judicial body would likewise be
impossible pending the injunctive writs issued by the Court of Appeals. Given the ruling of this
Court in Baviera v. Paglinawan, 80 the DOJ itself could not have taken cognizance of the case
and conducted its preliminary investigation without a prior determination of probable cause by
the SEC. Thus, even presuming that the DOJ was not enjoined by the Court of Appeals from
conducting a preliminary investigation, any preliminary investigation conducted by the DOJ
would have been a futile effort since the SEC had only started with its investigation when
respondents themselves applied for and were granted an injunction by the Court of Appeals.

denying SEC's Motion for Leave to

Moreover, the DOJ could not have conducted a preliminary investigation or filed a criminal case
against the respondents during the time that issues on the effectivity of Sections 8, 30 and 36 of
the Revised Securities Act and the PED Rules of Practice and Procedure were still pending
before the Court of Appeals. After the Court of Appeals declared the aforementioned statutory
and regulatory provisions invalid and, thus, no civil, criminal or administrative case may be filed
against the respondents for violations thereof, the DOJ would have been at a loss, as there was
no statutory provision which respondents could be accused of violating. DcCEHI
Accordingly, it is only after this Court corrects the erroneous ruling of the Court of Appeals in its
Decision dated 20 August 1998 that either the SEC or DOJ may properly conduct any kind of
investigation against the respondents for violations of Sections 8, 30 and 36 of the Revised
Securities Act. Until then, the prescription period is deemed interrupted.
To reiterate, the SEC must first conduct its investigations and make a finding of probable cause
in accordance with the doctrine pronounced in Baviera v. Paglinawan. 81 In this case, the DOJ
was precluded from initiating a preliminary investigation since the SEC was halted by the Court
of Appeals from continuing with its investigation. Such a situation leaves the prosecution of the
case at a standstill, and neither the SEC nor the DOJ can conduct any investigation against the
respondents, who, in the first place, sought the injunction to prevent their prosecution. All that
the SEC could do in order to break the impasse was to have the Decision of the Court of
Appeals overturned, as it had done at the earliest opportunity in this case. Therefore, the period
during which the SEC was prevented from continuing with its investigation should not be
counted against it. The law on the prescription period was never intended to put the prosecuting
bodies in an impossible bind in which the prosecution of a case would be placed way beyond

VI.

The Court of Appeals was justified in

Quash SEC Omnibus Orders dated

23 October 1995.
The SEC avers that the Court of Appeals erred when it denied its Motion for Leave to Quash
SEC Omnibus Orders, dated 23 October 1995, in the light of its admission that the PED had the
sole authority to investigate the present case. On this matter, this Court cannot agree with the
SEC.
In the assailed decision, the Court of Appeals denied the SEC's Motion for Leave to Quash SEC
Omnibus Orders, since it found other issues that were more important than whether or not the
PED was the proper body to investigate the matter. Its refusal was premised on its earlier finding
that no criminal, civil, or administrative case may be filed against the respondents under
Sections 8, 30 and 36 of the Revised Securities Act, due to the absence of any implementing
rules and regulations. Moreover, the validity of the PED Rules on Practice and Procedure was
also raised as an issue. The Court of Appeals, thus, reasoned that if the quashal of the orders
was granted, then it would be deprived of the opportunity to determine the validity of the
aforementioned rules and statutory provisions. In addition, the SEC would merely pursue the
same case without the Court of Appeals having determined whether or not it may do so in
accordance with due process requirements. Absent a determination of whether the SEC may file
a case against the respondents based on the assailed provisions of the Revised Securities Act,
it would have been improper for the Court of Appeals to grant the SEC's Motion for Leave to
Quash SEC Omnibus Orders. DcHSEa
IN ALL, this Court rules that no implementing rules were needed to render effective Sections 8,
30 and 36 of the Revised Securities Act; nor was the PED Rules of Practice and Procedure
invalid, prior to the enactment of the Securities Regulations Code, for failure to provide parties
with the right to cross-examine the witnesses presented against them. Thus, the respondents
may be investigated by the appropriate authority under the proper rules of procedure of the
Securities Regulations Code for violations of Sections 8, 30, and 36 of the Revised Securities
Act. 82

IN VIEW OF THE FOREGOING, the instant Petition is GRANTED. This Court hereby
REVERSES the assailed Decision of the Court of Appeals promulgated on 20 August 1998 in
CA-G.R. SP No. 37036 and LIFTS the permanent injunction issued pursuant thereto. This Court
further DECLARES that the investigation of the respondents for violations of Sections 8, 30 and
36 of the Revised Securities Act may be undertaken by the proper authorities in accordance with
the Securities Regulations Code. No costs. CIaHDc
SO ORDERED.

. . . This means that the running of the prescriptive period shall be halted on the date the case is
actually filed in court and not on any date before that.
This interpretation is in consonance with the afore-quoted Act No. 3326 which says that the
period of prescription shall be suspended "when proceedings are instituted against the guilty
party." The proceedings referred to in Section 2 thereof are "judicial proceedings", contrary to
the submission of the Solicitor General that they include administrative proceedings. His
contention is that we must not distinguish as the law does not distinguish. As a matter of fact, it
does. (Emphasis and underscoring supplied) SIcCTD

Ynares-Santiago, Velasco, Jr., Reyes and Leonardo-de Castro, JJ., concur.

Quisumbing, J., see dissenting opinion.
Puno, C.J., Austria-Maritnez, Carpio Morales and Azcuna, JJ., join in the Seperate Concurring
Opinion of J. Tinga.

Indeed, Section 2 of Act No. 3326 expressly refers to the "institution of judicial proceedings".
Contrary to the majority opinion's claim that "a preliminary investigation interrupts the
prescriptive period", only the institution of judicial proceedings can interrupt the running of the
prescriptive period. Thus, in the present case, since no criminal case was filed in any court
against respondents since 1994 for violation of the Code, the prescriptive period of twelve years
under Section 1 2 of Act No. 3326 has now expired.

Corana, J., is on official leave.

Nachura, J., took no part.
Separate Opinions
CARPIO, J., dissenting:
I dissent because the majority opinion is patently contrary to the express provision of Section 2
of Act No. 3326.
The majority opinion holds that the administrative investigation by the Securities and Exchange
Commission (SEC) interrupted the running of the prescriptive period for violation of the
Securities Regulation Code (Code). The majority opinion holds: AEaSTC
. . . It should be noted that the SEC started investigative proceedings against the respondents as
early as 1994. This investigation effectively interrupted the prescriptive period.
xxx

xxx

xxx

. . . Thus, the investigation that was commenced by the SEC in 1995 (sic), soon after they
discovered the questionable acts made by the respondents, effectively interrupted the
prescriptive period. (Emphasis supplied)
This ruling of the majority violates Section 2 of Act No. 3326 entitled An Act to Establish Periods
of Prescription for Violations Penalized by Special Acts and Municipal Ordinances and To
Provide When Prescription Shall Begin To Run. Section 2 provides:
Section 2. Prescription shall begin to run from the day of the commission of the violation of the
law, and if the same be not known at the time, from the discovery thereof and the institution of
judicial proceedings for its investigation and punishment. (Emphasis and underscoring supplied)
IEHTaA
In Zaldivia v. Reyes, Jr., 1 the Court ruled that the proceedings referred to in Section 2 of Act
No. 3326 are judicial proceedings and not administrative proceedings. The Court held:

The fact that the Court of Appeals enjoined the SEC from filing any criminal, civil or
administrative case against respondents for violation of the Code is immaterial. The SEC has no
jurisdiction to institute judicial proceedings against respondents for criminal violation of the Code.
Even if the Court of Appeals did not issue the injunction, the SEC could still not have instituted
any judicial proceedings against respondents for criminal violation of the Code. The Code
empowers the SEC to conduct only administrative investigations and to impose fines and other
administrative sanctions 3 against violators of the Code. Section 54.2 of the Code states that the
"imposition of . . . administrative sanctions shall be without prejudice to the filing of criminal
charges against the individuals responsible for the violation." Thus, the criminal charges may
proceed separately and independently of the administrative proceedings. HDTSCc
Under Section 53.1 of the Code, 4 jurisdiction to institute judicial proceedings against
respondents for criminal violation of the Code lies exclusively with the Department of Justice
(DOJ). Section 53.1 of the Code expressly states that "all criminal complaints for violations of
this Code . . . shall be referred to the Department of Justice for preliminary investigation and
prosecution before the proper court." No court ever enjoined the DOJ to institute judicial
proceedings against respondents for criminal violation of the Code. Nothing prevented the DOJ's
National Bureau of Investigation from investigating the alleged criminal violations of the Code by
respondents. Thereafter, the DOJ could have conducted a preliminary investigation and
instituted judicial proceedings against respondents. The DOJ did not and prescription has now
set in. DEHaAS
Accordingly, I vote to DISMISS the petition.
TINGA, J., concurring:
While I fully concur with the ponencia ably penned by Justice Chico-Nazario, I write separately to
highlight the factual and legal background behind the legal proscription against the blight that is
"insider trading". This case is the farthest yet this Court has explored the matter, and it is
heartening that our decision today affirms the viability for prosecutions against insider trading, an
offense that assaults the integrity of our vital securities market. This case bears special
significance, even if it does not dwell on the guilt or innocence of petitioners who are charged
with insider trading, simply because the arguments raised by them essentially assail the validity
of our laws against insider trading. Since we deny certiorari and debunk the challenge, our ruling

will embolden our securities regulators to investigate and prosecute insider trading cases,
thereby ensuring a more stable, mature and investor-friendly stock market. aIEDAC
The securities market, when active and vibrant, is an effective engine of economic growth. It is
more able to channel capital as it tends to favor start-up and venture capital companies. To
remain attractive to investors, however, the stock market should be fair and orderly. All the
regulations, all the requirements, all the procedures and all the people in the industry should
strive to achieve this avowed objective. Manipulative devices and deceptive practices, including
insider trading, throw a monkey wrench right into the heart of the securities industry. When
someone trades in the market with unfair advantage in the form of highly valuable secret inside
information, all other participants are defrauded. All of the mechanisms become worthless.
Given enough of stock market scandals coupled with the related loss of faith in the market, such
abuses could presage a severe drain of capital. And investors would eventually feel more secure
with their money invested elsewhere. 1
The securities market is imbued with public interest and as such it is regulated. Specifically, the
reasons given for securities regulation are (1) to protect investors, (2) to supply the informational
needs of investors, (3) to ensure that stock prices conform to the fundamental value of the
companies traded, (4) to allow shareholders to gain greater control over their corporate
managers, and (5) to foster economic growth, innovation and access to capital. 2 ISTECA
In checking securities fraud, regulation of the stock market assumes quite a few forms, the most
common being disclosure regulation and financial activity regulation.
Disclosure regulation requires issuers of securities to make public a large amount of financial
information to actual and potential investors. The standard justification for disclosure rules is that
the managers of the issuing firm have more information about the financial health and future of
the firm than investors who own or are considering the purchase of the firm's securities.
Financial activity regulation consists of rules about traders of securities and trading on or off the
stock exchange. A prime example of this form of regulation is the set of rules against trading by
insiders. 3 aHIEcS

corporate officers or directors gave rise to liability based on general fraud as understood in
common law, yet such liability would arise only if the defendant actively prevented the plaintiff
from looking into or inquiring upon the affairs or condition of the corporation and its prospects for
dividends. 7 The rule, as understood then, did not encompass a positive duty for public
disclosure of any material information pertinent to a corporation and/or its securities. EHTSCD
The first paradigm shift came with a decision in 1903 of the Georgia Supreme Court in Oliver v.
Oliver, 8 which pronounced that the shareholder had a right to disclosure, and the corporation a
corresponding duty to disclose such material information, based on the principle that "[w]here
the director obtains the information giving added value to the stock by virtue of his official
position, he holds the information in trust for the benefit of [the shareholders]." 9 Subsequent
state jurisprudence affirmed this fiduciary obligation to disclose material nonpublic information to
shareholders before trading with them, otherwise known as the "minority" or the "duty to
disclose" rule. However, the U.S. Supreme Court in 1909 expressed preference for a different
rule in Strong v. Repide, 10 acknowledging that the corporate directors generally owed no duty
to disclose material facts when trading with shareholders, unless there were "special
circumstances" that gave rise to such duty. The "special circumstances", as identified in Strong,
were the concealment of identity by the defendant, and the failure to disclose significant facts
having a dramatic impact on the stock price. ACDIcS
Both the "special circumstances" and "duty to disclose" rules gained adherents in the next
several years. In the meantime, the 1920s saw the unprecedented popularity of the stock market
with the general public, which was widely taken advantage of by corporations and brokers
through unscrupulous practices. The American stock market collapse of October 1929, which
helped trigger the worldwide Great Depression, left fully half of the $25 million worth of securities
floated during the post-First World War period as worthless, to the injury of thousands of
individuals who had invested their life savings in those securities. 11 The consequent wellspring
of concern over the welfare of the investors animated the passage of the first U.S. federal
securities laws, such as the Securities Exchange Act of 1934 which declared that "transactions
in securities as commonly conducted upon securities exchanges and over-the-counter markets
are affected with a national public interest which makes it necessary to provide for regulation
and control of such transactions." 12 cATDIH

I.
Section 10 (b) of the Securities Exchange Act of 1934 provided that:
In its barest essence, insider trading involves the trading of securities based on knowledge of
material information not disclosed to the public at the time. 4 Such activity is generally prohibited
in many jurisdictions, including our own, though the particular scope and definition of "insider
trading" depends on the legislation or case law of each jurisdiction. In the United States, the rule
has been stated as "that anyone who, for trading for his own account in the securities of a
corporation has 'access, directly or indirectly, to information intended to be available only for a
corporate purpose and not for the personal benefit of anyone' may not take 'advantage of such
information knowing it is unavailable to those with whom he is dealing', i.e., the investing public."
5

It shall be unlawful for any person, directly or indirectly, by the use of any means or
instrumentality of interstate commerce or of the mails, or of any facility of the national securities
exchange . . .
(b)
To use or employ, in connection with the purchase or sale of any security registered
on a national securities exchange or any security not so registered, any manipulative or
deceptive device or contrivance in contravention of such rules and regulations as the
Commission may prescribe as necessary or appropriate in the public interest or for the
protection of investors. 13

It would be useful to examine the historical evolution of the rule.

In the United States, legal abhorrence of insider trading preceded the modern securities market.
Prior to 1900, it was treatise law that the doctrine that officers and directors of corporations are
trustees of the stockholders does not extend to their private dealings with stockholders or others,
though in such dealings they take advantage of knowledge gained through their official position.
6 Under that doctrine, the misrepresentation or fraudulent concealment of a material fact by such

It is this provision which stands as the core statutory authority prohibiting insider trading under
U.S. federal law. 14 Yet the provision itself does not utilize the term "insider trading", and indeed
doubts have been expressed whether it was intended at all by the U.S. Congress to impose a
ban on insider trading through the 1934 Securities Exchange Act. 15 At the same time, the
provision did grant to the U.S. Securities and Exchange Commission (U.S. SEC) the authority to
promulgate rules and regulations "as necessary or appropriate in the public interest or for the

protection of investors." This power was exercised by the U.S. SEC in 1942, when it enacted
Rule 10b-5, which has been described as "the foundation on which the modern insider trading
prohibition rests." 16 The Rule reads: CETIDH
It shall be unlawful for any person, directly or indirectly, by the use of any means or
instrumentality of interstate commerce, or of the mails or of any facility of any national securities
exchange,
(a)

To employ any device, scheme, or artifice to defraud,

(b)
To make any untrue statement of a material fact or to omit to state a material fact
necessary in order to make the statements made, in the light of the circumstances under which
they were made, not misleading, or
(c)
To engage in any act, practice, or course of business which operates or would operate
as a fraud or deceipt upon any person, TAacIE
in connection with the purchase or sale of any security. 17
Again, the rule by itself did not provide for an explicit prohibition on insider trading practices, and
commentators have expressed doubts whether the U.S. SEC in 1942 had indeed contemplated
that the rule work to such effect. 18 Yet undoubtedly the Rule created a powerful anti-fraud
weapon, 19 and it would finally be applied by the U.S. SEC as a prohibition against insider
trading in the 1961 case of In re Cady, Roberts & Co. 20
The facts of that case hew closely to our traditional understanding of insider trading. A corporate
director of Curtiss-Wright Corporation had told one of his business partners, Gimpel, that the
board of directors had decided to reduce the company's quarterly dividend. Armed with such
information even before the news was announced, Gimpel sold several thousand shares in the
corporation's stock held in customer accounts over which he had discretionary trading authority.
When the news of the reduced dividend was publicly disclosed, the corporation's share prices
predictably dropped, and the owners of the sold shares were able to avoid injury. The U.S. SEC
ruled that Gimpel had violated Rule 10b-5, even though he was not an insider privy to the
confidential material information, but merely a "tippee" of that insider. In doing so, the U.S. SEC
formulated the "disclose or abstain" rule, requiring that an insider in possession of material
nonpublic information must disclose such information before trading or, if disclosure is
impossible or improper, abstain from trading. 21 HDaACI
Not long after, the American federal courts adopted the principles pronounced by the U.S. SEC
in Cady, Roberts, and the rule evolved that insider trading was deemed a form of securities fraud
within the U.S. SEC's regulatory jurisdiction. 22 Subsequently, jurisprudential limitations were
imposed by the U.S. Supreme Court, ruling for example that an insider bears a duty to disclose
on the basis of a fiduciary relationship of trust and confidence as between him and the
shareholders; 23 or that a tippee is liable for insider trading only if the tipper breached a fiduciary
relationship by disclosing information to the tippee, who knew or had reason to know of the
breach of duty. 24 In response to these decisions, the U.S. SEC promulgated Rule 14e-3, which
specifically prohibited insiders of the bidder and the target company from divulging confidential
information about a tender offer to persons that are likely to violate the rule by trading on the
basis of that information. 25

In the United Kingdom, insider trading is considered as a type of "market abuse" assuming the
form of behavior "based on information which is not generally available to those using the
market but which, if available to a regular user of the market, would or would be likely to be
regarded by him as relevant when deciding the terms on which transactions in investments of
the kind in question should be effected." 26 ScaHDT
The Philippines has adopted statutory regulations in the trading of securities, tracing in fact as
far back as 1936, or just two years after the enactment of the US Securities Exchange Act of
1934. The then National Assembly of the Philippines enacted in 1936 Commonwealth Act No.
83, also known as the Securities Act, 27 designed to regulate the sale of securities and to create
a Securities and Exchange Commission (SEC) for that purpose. Notably, Com. Act No. 83 did
not contain any explicit provision prohibiting insider trading in precise terms, even as it contained
specific provisions prohibiting the manipulation of stock prices 28 or the employment of
manipulative and deceptive devices. 29 This silence is unsurprising, considering that American
federal law had similarly failed to enact so specific a prohibition and that Rule 10b-5 of the U.S.
SEC had not yet come into existence then. CADacT
However, in January of 1973, the SEC would issue a set of rules, 30 which required specific
insiders to "make a reasonably full, fair and accurate disclosure of every material fact relating or
affecting it which is of interest to investors." 31 It was explained therein that a fact is material if it
"induces or tends to induce or otherwise affect the sale or purchase of the securities of the
issuing corporation, such as an acquisition of mining claims, patent or formula, real estate, or
similar capital assets; discovery of mineral ores; declaration of dividends; executing a contract of
merger or consolidation; rights offering; and any other important event or happening." 32
The enactment of the Revised Securities Act in 1980 (Batas Pambansa Blg. 178, as amended)
provided for the first time a specific statutory prohibition in Philippine law against insider trading.
This was embodied in Section 30 of the law, which provides:
Sec. 30. Insider's duty to disclose when trading. (a) It shall be unlawful for an insider to sell
or buy a security of the issuer, if he knows a fact of special signifinace with respest to the issuer
or the security that is not generally available, unless (1) the insider proves that the fact is
generally available or (2) if the other party to the transaction (or his agent ) is identified, (a) the
insider proves that the other party knows it, or (b) that other party in fact knows it from the insider
or otherwise. STECAc
(b)
"Insider" means (1) the issuer, (2) a director or officer of, or a person controlling,
controlled by, or under common control with, the issuer, (3) a person whose relationship or
former relationship to the issuer gives or gave him access to a fact of special significance about
the issuer or the security that is not generally available, or (4) a person who learns such a fact
from any of the foregoing insiders as defined in this subsection, with knowledge that the person
from whom he learns the fact is such an insider.
(c)
A fact is "of special significance" if (a) in addition to being material it would be likely,
on being made generally available, to affect the market price of a security to a significant extent,
or (b) a reasonable person would consider it especially important under the circumstances in
determining his course of action in the light of such factors as the degree of its specificity, the
extent of its difference from information generally available previously, and its nature and
reliability.

(d)
This section shall apply to an insider as defined in subsection (b) (3) hereof only to the
extent that he knows of a fact of special significance by virtue of his being an insider. TcIHDa
Contrary to the claims of respondents, such terms as "material fact", "reasonable person",
"nature and reliability" and "generally available" as utilized in Section 30 do not suffer from the
vice of vagueness and do not necessitate an administrative rule to supply definitions of the terms
either. For example, as the ponente points out, the 1973 Rules already provided for a definition
of a "material fact", a definition that was actually incorporated in Section 30.
Yet there is an underlying dangerous implication to respondents' arguments which makes the
Court's rejection thereof even more laudable. The ability of the SEC to effectively regulate the
securities market depends on the breadth of its discretion to undertake regulatory activities. The
intractable adherents of laissez-faire absolutism may decry the fact that there exists an SEC in
the first place, yet it is that body which assures the protection of interests of ordinary
stockholders and investors in the capital markets, interests which may be overlooked by the
issuers of securities and their corporate overseers whose own interests may not necessarily
align with that of the investing public. A "free market" that is not a "fair market" is not truly free,
even if left unshackled by the State as it would in fact be shackled by the uninhibited greed of
only the largest players. TcEaAS
Respondents essentially contend that the SEC is precluded from enforcing its statutory powers
unless it first translates the statute into a more comprehensive set of rules. Without denigrating
the SEC's delegated rule-making power, each provision of the law already constitutes an
executable command from the legislature. Any refusal on the part of the SEC to enforce the
statute on the premise that it had yet to undergo the gauntlet of administrative interpretation is
derelict to that body's legal mandate. By no means is the Congress impervious to the concern
that certain statutory provisions are best enforced only after an administrative regulation
implementing the same is promulgated. In such cases, the legislature is solicitous enough to
specifically condition the enforcement of the statute upon the promulgation of the relevant
administrative rules. Yet in cases where the legislature does not see fit to impose such a
conditionality, the body tasked with enforcing the law has no choice but to do so. Any quibbling
as to the precise meaning of the statutory language would be duly resolved through the exercise
of judicial review. cHITCS
It bears notice that unlike the American experience where the U.S. Congress has not seen fit to
specifically legislate prohibitions on insider trading, relying instead on the discretion of the U.S.
SEC to penalize such acts, our own legislature has proven to be more pro-active in that regard,
legislating such prohibition, not once, but twice. The Revised Securities Act was later
superseded by the Securities Regulation Code of 2000 (Rep. Act No. 8799), a law which is
admittedly more precise and ambitious in its regulation of such activity. The passage of that law
is praiseworthy insofar as it strengthens the State's commitment to combat insider trading. And
the promulgation of this decision confirms that the judiciary will not hesitate in performing its part
in seeing to it that our securities laws are properly implemented and enforced.

Firstly, this Court, in ruling in Baviera v. Paglinawan 34 that the Department of Justice cannot
conduct a preliminary investigation for the determination of probable cause for offenses under
the Revised Securities Code, without an investigation first had by the SEC, essentially
underscored that the exercise is a two-stage process. The procedure is similar to the two-phase
preliminary investigation prior to the prosecution of a criminal case in court under the old rules.
35 The venerable J.B.L. Reyes in People v. Olarte 36 finally settled a long standing
jurisprudential conflict at the time by holding that the filing of the complaint in the Municipal
Court, even if it be merely for purposes of preliminary examination or investigation, should, and
does, interrupt the period of prescription of the criminal responsibility, even if the court where the
complaint or information is filed cannot try the case on its merits. The court gave three reasons
in support of its decision, thus:
. . . Several reasons buttress this conclusion: first the text of Article 91 of the Revised Penal
Code, in declaring that the period of prescription "shall be interrupted by the filing of the
complaint or information" without distinguishing whether the complaint is filed in the court for
preliminary examination or investigation merely, or for action on the merits. Second, even if the
court where the complaint or information is filed may only proceed to investigate the case its
actuations already represent the initial step of the proceedings against the offender. Third, it is
unjust to deprive the injured party of the right to obtain vindication on account of delays that are
not under his control. All that the victim of the offense may do not on his part to initiate the
prosecution is to file the requisite complaint. 37 aDcETC
The same reasons which moved the Court in 1967 to declare that the mere filing of the
complaint, whether for purposes of preliminary examination or preliminary investigation should
interrupt the prescription of the criminal action inspire the Court's ruling in this case.
It should be emphasized that Sec. 45 of the Revised Securities Act invests the SEC with the
power to "make such investigations as it deems necessary to determine whether any person has
violated or is about to violate any provision of this Act or any rule or regulation thereunder, and
may require or permit any person to file with it a statement in writing, under oath or otherwise, as
the Commission shall determine, as to all facts and circumstances concerning the matter to be
investigated" and to refer criminal complaints for violations of the Act to the Department of
Justice for preliminary investigation and prosecution before the proper court. cCAIDS
The SEC's investigatory powers are obviously akin to the preliminary examination stage
mentioned in People v. Olarte. The SEC's investigation and determination that there was indeed
a violation of the provisions of the Revised Securities Act would set the stage for any further
proceedings, such as preliminary investigation, that may be conducted by the DOJ after the case
is referred to it by the SEC.
Secondly, Sec. 2 of Act No. 3326 38 provides in part:

Now, on the issue of prescription.

Prescription shall begin to run from the day of the commission of the violation of the law, and if
the same be not known at the time, from the discovery thereof and the institution of judicial
proceedings for its investigation and punishment. The prescription shall be interrupted when
proceedings are instituted against the guilty person, and shall begin to run again if the
proceedings are dismissed for reasons not constituting jeopardy. (Emphasis supplied) STaCIA

The issue boils down to the determination of whether the investigation conducted by the SEC
pursuant to Section 45 33 of the Revised Securities Act in 1994 tolled the running of the period
of prescription. I submit it did. TSacCH

Act No. 3326 was approved on 4 December 1926, at a time that the function of conducting the
preliminary investigation of criminal offenses was vested in the justices of the peace. The
prevailing rule at the time, embodied in the early case of U.S. v. Lazada 39 and later affirmed in

III

People v. Joson, 40 is that the prescription of the offense is halted once the complaint is filed
with the justice of the peace for preliminary investigation inasmuch as the filing of the complaint
signifies the institution of criminal proceedings against the accused. 41 People v. Parao 42 a
case which affirmed the power of the then municipal president to conduct preliminary
investigation in the absence of the justice of the peace and of the auxiliary justice of the peace
when the same could not be deferred without prejudice to the interest of justice established
the correlative rule that the first step taken in the investigation or examination of offenses
partakes the nature of a judicial proceedings which suspends the prescription of the offense. 43
But although the second Olarte 44 case made an affirmative ruling that the preliminary
investigation is not part of the action proper, the Court therein nevertheless declared that such
investigation is quasi-judicial in nature and that as such, the mere filing of the complaint with the
justice of the peace should stall the exhaustion of the prescriptive period of the offense charged.
EacHSA
While it may be observed that the term "judicial proceedings" in Sec. 2 of Act No. 3326 appears
before "investigation and punishment" in the old law, with the subsequent change in set-up
whereby the investigation of change for purposes of prosecution has become the exclusive
function of the executive branch, the modifier "judicial" should be taken to refer to the trial and
judgment stage only and not to the earlier investigation phase. With this clarification, any kind of
investigative proceeding instituted against the guilty person which may ultimately lead to his
prosecution as provided by law shall suffice to toll prescription.
Thus, in the case at bar, the initiation of investigative proceedings against respondents, halted
only by the injunctive orders issued by the Court of Appeals upon their application no less,
should and did interrupt the period of prescription.

[G.R. No. 159647. April 15, 2005.]

COMMISSIONER OF INTERNAL REVENUE, petitioner, vs. CENTRAL LUZON DRUG
CORPORATION, respondent.
The Solicitor General for petitioner.
Joy Ann Marie G. Nolasco for respondent.
SYLLABUS
1.
TAXATION; TAX CREDIT; UNDER RA 7432, ESTABLISHMENTS WHICH GIVES
20% DISCOUNT TO SENIOR CITIZENS ON MEDICINE PURCHASES MAY CLAIM THE
DISCOUNT AS A TAX CREDIT. Section 4 (a) of RA 7432 grants to senior citizens the
privilege of obtaining a 20 percent discount on their purchase of medicine from any private
establishment in the country. The latter may then claim the cost of the discount as a tax credit.
But can such credit be claimed, even though an establishment operates at a loss? We answer in
the affirmative. . . . . For to deny such credit, despite the plain mandate of the law and the
regulations carrying out that mandate, is indefensible.
2.
ID.; ID.; ELUCIDATED. Although the term is not specifically defined in our Tax
Code, tax credit generally refers to an amount that is "subtracted directly from one's total tax
liability." It is an "allowance against the tax itself" or "a deduction from what is owed" by a

taxpayer to the government. Examples of tax credits are withheld taxes, payments of estimated
tax, and investment tax credits.
3.
ID.; ID.; TAX CREDIT AND TAX DEDUCTION, DISTINGUISHED. Tax credit
should be understood in relation to other tax concepts. One of these is tax deduction defined
as a subtraction "from income for tax purposes," or an amount that is "allowed by law to reduce
income prior to [the] application of the tax rate to compute the amount of tax which is due." An
example of a tax deduction is any of the allowable deductions enumerated in Section 34 of the
Tax Code. A tax credit differs from a tax deduction. On the one hand, a tax credit reduces the
tax due, including whenever applicable the income tax that is determined after applying the
corresponding tax rates to taxable income. A tax deduction, on the other, reduces the income
that is subject to tax in order to arrive at taxable income. To think of the former as the latter is to
avoid, if not entirely confuse, the issue. A tax credit is used only after the tax has been
computed; a tax deduction, before. ITSacC
4.
ID.; ID.; APPLICATION THEREOF UNDER RA 7432. Since a tax credit is used to
reduce directly the tax that is due, there ought to be a tax liability before the tax credit can be
applied. Without that liability, any tax credit application will be useless. . . . If a net loss is
reported by, and no other taxes are currently due from, a business establishment, there will
obviously be no tax liability against which any tax credit can be applied. For the establishment to
choose the immediate availment of a tax credit will be premature and impracticable.
Nevertheless, the irrefutable fact remains that, under RA 7432, Congress has granted without
conditions a tax credit benefit to all covered establishments. Although this tax credit benefit is
available, it need not be used by losing ventures, since there is no tax liability that calls for its
application. Neither can it be reduced to nil by the quick yet callow stroke of an administrative
pen, simply because no reduction of taxes can instantly be effected. By its nature, the tax credit
may still be deducted from a future, not a present, tax liability, without which it does not have any
use. In the meantime, it need not move. But it breathes. . . . . Further, the word may in the text of
RA 7432 implies that the availability of the tax credit benefit is neither unrestricted nor
mandatory. There is no absolute right conferred upon respondent, or any similar taxpayer, to
avail itself of the tax credit remedy whenever it chooses; "neither does it impose a duty on the
part of the government to sit back and allow an important facet of tax collection to be at the sole
control and discretion of the taxpayer." For the tax authorities to compel respondent to deduct
the 20 percent discount from either its gross income or its gross sales is, therefore, not only to
make an imposition without basis in law, but also to blatantly contravene the law itself. What
Section 4.a of RA 7432 means is that the tax credit benefit is merely permissive, not imperative.
Respondent is given two options either to claim or not to claim the cost of the discounts as a
tax credit. In fact, it may even ignore the credit and simply consider the gesture as an act of
beneficence, an expression of its social conscience. Granting that there is a tax liability and
respondent claims such cost as a tax credit, then the tax credit can easily be applied. If there is
none, the credit cannot be used and will just have to be carried over and revalidated accordingly.
If, however, the business continues to operate at a loss and no other taxes are due, thus
compelling it to close shop, the credit can never be applied and will be lost altogether. In other
words, it is the existence or the lack of a tax liability that determines whether the cost of the
discounts can be used as a tax credit. RA 7432 does not give respondent the unfettered right to
avail itself of the credit whenever it pleases. Neither does it allow our tax administrators to
expand or contract the legislative mandate. "The 'plain meaning rule' or verba legis in statutory
construction is thus applicable . . . . Where the words of a statute are clear, plain and free from
ambiguity, it must be given its literal meaning and applied without attempted interpretation."

5.
ID.; ID.; PRIOR TAX PAYMENTS, NOT A REQUIREMENT. While a tax liability is
essential to the availment or use of any tax credit, prior tax payments are not. On the contrary,
for the existence or grant solely of such credit, neither a tax liability nor a prior tax payment is
needed. The Tax Code is in fact replete with provisions granting or allowing tax credits, even
though no taxes have been previously paid. [T]here are also tax treaties and special laws that
grant or allow tax credits, even though no prior tax payments have been made.
6.
ID.; ID.; KINDS OF DISCOUNTS, ELUCIDATED. By ordinary acceptation, a
discount is an "abatement or reduction made from the gross amount or value of anything." To be
more precise, it is in business parlance "a deduction or lowering of an amount of money;" or "a
reduction from the full amount or value of something, especially a price." In business there are
many kinds of discount, the most common of which is that affecting the income statement or
financial report upon which the income tax is based. A cash discount, for example, is one
granted by business establishments to credit customers for their prompt payment. It is a
"reduction in price offered to the purchaser if payment is made within a shorter period of time
than the maximum time specified." Also referred to as a sales discount on the part of the seller
and a purchase discount on the part of the buyer, it may be expressed in such terms as "5/10,
n/30." A quantity discount, however, is a "reduction in price allowed for purchases made in large
quantities, justified by savings in packaging, shipping, and handling." It is also called a volume or
bulk discount. A "percentage reduction from the list price . . . allowed by manufacturers to
wholesalers and by wholesalers to retailers" is known as a trade discount. No entry for it need
be made in the manual or computerized books of accounts, since the purchase or sale is already
valued at the net price actually charged the buyer. The purpose for the discount is to encourage
trading or increase sales, and the prices at which the purchased goods may be resold are also
suggested. Even a chain discount a series of discounts from one list price is recorded at
net. Finally, akin to a trade discount is a functional discount. It is "a supplier's price discount
given to a purchaser based on the [latter's] role in the [former's] distribution system." This role
usually involves warehousing or advertising. ISHaCD
7.
ID.; ID.; ID.; SALES DISCOUNTS, DISCUSSED. [W]e find that the nature of a
sales discount is peculiar. Applying generally accepted accounting principles (GAAP) in the
country, this type of discount is reflected in the income statement as a line item deducted
along with returns, allowances, rebates and other similar expenses from gross sales to arrive
at net sales. This type of presentation is resorted to, because the accounts receivable and sales
figures that arise from sales discounts, as well as from quantity, volume or bulk discounts
are recorded in the manual and computerized books of accounts and reflected in the financial
statements at the gross amounts of the invoices. This manner of recording credit sales known
as the gross method is most widely used, because it is simple, more convenient to apply than
the net method, and produces no material errors over time. However, under the net method
used in recording trade, chain or functional discounts, only the net amounts of the invoices
after the discounts have been deducted are recorded in the books of accounts and reflected
in the financial statements. A separate line item cannot be shown, because the transactions
themselves involving both accounts receivable and sales have already been entered into, net of
the said discounts. The term sales discounts is not expressly defined in the Tax Code, but one
provision adverts to amounts whose sum along with sales returns, allowances and cost of
goods sold is deducted from gross sales to come up with the gross income, profit or margin
derived from business. In another provision therein, sales discounts that are granted and
indicated in the invoices at the time of sale and that do not depend upon the happening of
any future event may be excluded from the gross sales within the same quarter they were
given. While determinative only of the VAT, the latter provision also appears as a suitable

reference point for income tax purposes already embraced in the former. After all, these two
provisions affirm that sales discounts are amounts that are always deductible from gross sales.
8.
ID.; ID.; RA 7432 ON SENIOR CITIZEN'S DISCOUNT ON MEDICINE PURCHASES,
ELUCIDATED. A distinguishing feature of the implementing rules of RA 7432 is the private
establishment's outright deduction of the discount from the invoice price of the medicine sold to
the senior citizen. It is, therefore, expected that for each retail sale made under this law, the
discount period lasts no more than a day, because such discount is given and the net amount
thereof collected immediately upon perfection of the sale. Although prompt payment is made
for an arm's-length transaction by the senior citizen, the real and compelling reason for the
private establishment giving the discount is that the law itself makes it mandatory. What RA
7432 grants the senior citizen is a mere discount privilege, not a sales discount or any of the
above discounts in particular. Prompt payment is not the reason for (although a necessary
consequence of) such grant. To be sure, the privilege enjoyed by the senior citizen must be
equivalent to the tax credit benefit enjoyed by the private establishment granting the discount.
Yet, under the revenue regulations promulgated by our tax authorities, this benefit has been
erroneously likened and confined to a sales discount. To a senior citizen, the monetary effect of
the privilege may be the same as that resulting from a sales discount. However, to a private
establishment, the effect is different from a simple reduction in price that results from such
discount. In other words, the tax credit benefit is not the same as a sales discount. To repeat
from our earlier discourse, this benefit cannot and should not be treated as a tax deduction.
9.
ID.; ID.; SALES DISCOUNT AND TAX CREDIT, DISCUSSED. To stress, the effect
of a sales discount on the income statement and income tax return of an establishment covered
by RA 7432 is different from that resulting from the availment or use of its tax credit benefit.
While the former is a deduction before, the latter is a deduction after, the income tax is
computed. As mentioned earlier, a discount is not necessarily a sales discount, and a tax credit
for a simple discount privilege should not be automatically treated like a sales discount. Ubi lex
non distinguit, nec nos distinguere debemus. Where the law does not distinguish, we ought not
to distinguish. When the law says that the cost of the discount may be claimed as a tax credit, it
means that the amount when claimed shall be treated as a reduction from any tax liability,
plain and simple. The option to avail of the tax credit benefit depends upon the existence of a tax
liability, but to limit the benefit to a sales discount which is not even identical to the discount
privilege that is granted by law does not define it at all and serves no useful purpose.
10.
STATUTORY CONSTRUCTION; STATUTES; A LAW CANNOT BE AMENDED BY
MERE REGULATION; CASE AT BAR. [T]he law cannot be amended by a mere regulation. In
fact, a regulation that "operates to create a rule out of harmony with the statute is a mere nullity";
it cannot prevail. It is a cardinal rule that courts "will and should respect the contemporaneous
construction placed upon a statute by the executive officers whose duty it is to enforce it . . . ." In
the scheme of judicial tax administration, the need for certainty and predictability in the
implementation of tax laws is crucial. Our tax authorities fill in the details that "Congress may not
have the opportunity or competence to provide." The regulations these authorities issue are
relied upon by taxpayers, who are certain that these will be followed by the courts. Courts,
however, will not uphold these authorities' interpretations when clearly absurd, erroneous or
improper. In the present case, the tax authorities have given the term tax credit in Sections 2.i
and 4 of RR 2-94 a meaning utterly in contrast to what RA 7432 provides. Their interpretation
has muddled up the intent of Congress in granting a mere discount privilege, not a sales
discount. The administrative agency issuing these regulations may not enlarge, alter or restrict
the provisions of the law it administers; it cannot engraft additional requirements not
contemplated by the legislature. In case of conflict, the law must prevail. A "regulation adopted

pursuant to law is law." Conversely, a regulation or any portion thereof not adopted pursuant to
law is no law and has neither the force nor the effect of law. CDAcIT
11.
TAXATION; TAX CREDIT; BENEFIT UNDER RA 7432, DEEMED JUST
COMPENSATION. [T]he privilege enjoyed by senior citizens does not come directly from the
State, but rather from the private establishments concerned. Accordingly, the tax credit benefit
granted to these establishments can be deemed as their just compensation for private property
taken by the State for public use. The concept of public use is no longer confined to the
traditional notion of use by the public, but held synonymous with public interest, public benefit,
public welfare, and public convenience. The discount privilege to which our senior citizens are
entitled is actually a benefit enjoyed by the general public to which these citizens belong. The
discounts given would have entered the coffers and formed part of the gross sales of the private
establishments concerned, were it not for RA 7432. The permanent reduction in their total
revenues is a forced subsidy corresponding to the taking of private property for public use or
benefit. As a result of the 20 percent discount imposed by RA 7432, respondent becomes
entitled to a just compensation. This term refers not only to the issuance of a tax credit certificate
indicating the correct amount of the discounts given, but also to the promptness in its release.
Equivalent to the payment of property taken by the State, such issuance when not done
within a reasonable time from the grant of the discounts cannot be considered as just
compensation. In effect, respondent is made to suffer the consequences of being immediately
deprived of its revenues while awaiting actual receipt, through the certificate, of the equivalent
amount it needs to cope with the reduction in its revenues. Besides, the taxation power can also
be used as an implement for the exercise of the power of eminent domain. Tax measures are
but "enforced contributions exacted on pain of penal sanctions" and "clearly imposed for a public
purpose." In recent years, the power to tax has indeed become a most effective tool to realize
social justice, public welfare, and the equitable distribution of wealth. While it is a declared
commitment under Section 1 of RA 7432, social justice "cannot be invoked to trample on the
rights of property owners who under our Constitution and laws are also entitled to protection.
The social justice consecrated in our [C]onstitution [is] not intended to take away rights from a
person and give them to another who is not entitled thereto." For this reason, a just
compensation for income that is taken away from respondent becomes necessary. It is in the tax
credit that our legislators find support to realize social justice, and no administrative body can
alter that fact. . . . Congress has allowed all private establishments a simple tax credit, not a
deduction. In fact, no cash outlay is required from the government for the availment or use of
such credit. The deliberations on February 5, 1992 of the Bicameral Conference Committee
Meeting on Social Justice, which finalized RA 7432, disclose the true intent of our legislators to
treat the sales discounts as a tax credit, rather than as a deduction from gross income.
12.
STATUTORY CONSTRUCTION; SPECIAL LAW PREVAILS OVER GENERAL LAW;
CASE AT BAR. RA 7432 is a special law that should prevail over the Tax Code a general
law. ". . . [T]he rule is that on a specific matter the special law shall prevail over the general law,
which shall be resorted to only to supply deficiencies in the former." In addition, "[w]here there
are two statutes, the earlier special and the later general the terms of the general broad
enough to include the matter provided for in the special the fact that one is special and the
other is general creates a presumption that the special is to be considered as remaining an
exception to the general, one as a general law of the land, the other as the law of a particular
case." "It is a canon of statutory construction that a later statute, general in its terms and not
expressly repealing a prior special statute, will ordinarily not affect the special provisions of such
earlier statute." RA 7432 is an earlier law not expressly repealed by, and therefore remains an
exception to, the Tax Code a later law. When the former states that a tax credit may be
claimed, then the requirement of prior tax payments under certain provisions of the latter, as

discussed above, cannot be made to apply. Neither can the instances of or references to a tax
deduction under the Tax Code be made to restrict RA 7432. No provision of any revenue
regulation can supplant or modify the acts of Congress. acSECT
DECISION
PANGANIBAN, J p:
The 20 percent discount required by the law to be given to senior citizens is a tax credit, not
merely a tax deduction from the gross income or gross sale of the establishment concerned. A
tax credit is used by a private establishment only after the tax has been computed; a tax
deduction, before the tax is computed. RA 7432 unconditionally grants a tax credit to all covered
entities. Thus, the provisions of the revenue regulation that withdraw or modify such grant are
void. Basic is the rule that administrative regulations cannot amend or revoke the law. DAaHET
The Case
Before us is a Petition for Review 1 under Rule 45 of the Rules of Court, seeking to set aside the
August 29, 2002 Decision 2 and the August 11, 2003 Resolution 3 of the Court of Appeals (CA)
in CA-GR SP No. 67439. The assailed Decision reads as follows:
"WHEREFORE, premises considered, the Resolution appealed from is AFFIRMED in toto. No
costs." 4
The assailed Resolution denied petitioner's Motion for Reconsideration.
The Facts
The CA narrated the antecedent facts as follows:
"Respondent is a domestic corporation primarily engaged in retailing of medicines and other
pharmaceutical products. In 1996, it operated six (6) drugstores under the business name and
style 'Mercury Drug.'
"From January to December 1996, respondent granted twenty (20%) percent sales discount to
qualified senior citizens on their purchases of medicines pursuant to Republic Act No. [R.A.]
7432 and its Implementing Rules and Regulations. For the said period, the amount allegedly
representing the 20% sales discount granted by respondent to qualified senior citizens totaled
P904,769.00.
"On April 15, 1997, respondent filed its Annual Income Tax Return for taxable year 1996
declaring therein that it incurred net losses from its operations.
"On January 16, 1998, respondent filed with petitioner a claim for tax refund/credit in the amount
of P904,769.00 allegedly arising from the 20% sales discount granted by respondent to qualified
senior citizens in compliance with [R.A.] 7432. Unable to obtain affirmative response from
petitioner, respondent elevated its claim to the Court of Tax Appeals [(CTA or Tax Court)] via a
Petition for Review. ACcISa
"On February 12, 2001, the Tax Court rendered a Decision 5 dismissing respondent's Petition
for lack of merit. In said decision, the [CTA] justified its ruling with the following ratiocination:

'. . ., if no tax has been paid to the government, erroneously or illegally, or if no amount is due
and collectible from the taxpayer, tax refund or tax credit is unavailing. Moreover, whether the
recovery of the tax is made by means of a claim for refund or tax credit, before recovery is
allowed[,] it must be first established that there was an actual collection and receipt by the
government of the tax sought to be recovered. . . .

These two issues may be summed up in only one: whether respondent, despite incurring a net
loss, may still claim the 20 percent sales discount as a tax credit.
The Court's Ruling
The Petition is not meritorious.

'xxx

xxx

xxx
Sole Issue:

'Prescinding from the above, it could logically be deduced that tax credit is premised on the
existence of tax liability on the part of taxpayer. In other words, if there is no tax liability, tax
credit is not available.'

Claim of 20 Percent Sales Discount

as Tax Credit Despite Net Loss

"Respondent lodged a Motion for Reconsideration. The [CTA], in its assailed resolution, 6
granted respondent's motion for reconsideration and ordered herein petitioner to issue a Tax
Credit Certificate in favor of respondent citing the decision of the then Special Fourth Division of
[the CA] in CA G.R. SP No. 60057 entitled 'Central [Luzon] Drug Corporation vs. Commissioner
of Internal Revenue' promulgated on May 31, 2001, to wit:
'However, Sec. 229 clearly does not apply in the instant case because the tax sought to be
refunded or credited by petitioner was not erroneously paid or illegally collected. We take
exception to the CTA's sweeping but unfounded statement that both tax refund and tax credit
are modes of recovering taxes which are either erroneously or illegally paid to the government.'
Tax refunds or credits do not exclusively pertain to illegally collected or erroneously paid taxes
as they may be other circumstances where a refund is warranted. The tax refund provided under
Section 229 deals exclusively with illegally collected or erroneously paid taxes but there are
other possible situations, such as the refund of excess estimated corporate quarterly income tax
paid, or that of excess input tax paid by a VAT-registered person, or that of excise tax paid on
goods locally produced or manufactured but actually exported. The standards and mechanics for
the grant of a refund or credit under these situations are different from that under Sec. 229. Sec.
4[.a)] of R.A. 7432, is yet another instance of a tax credit and it does not in any way refer to
illegally collected or erroneously paid taxes, . . .'" 7
Ruling of the Court of Appeals
The CA affirmed in toto the Resolution of the Court of Tax Appeals (CTA) ordering petitioner to
issue a tax credit certificate in favor of respondent in the reduced amount of P903,038.39. It
reasoned that Republic Act No. (RA) 7432 required neither a tax liability nor a payment of taxes
by private establishments prior to the availment of a tax credit. Moreover, such credit is not
tantamount to an unintended benefit from the law, but rather a just compensation for the taking
of private property for public use. ESCDHA
Hence this Petition. 8
The Issues
Petitioner raises the following issues for our consideration:
"Whether the Court of Appeals erred in holding that respondent may claim the 20% sales
discount as a tax credit instead of as a deduction from gross income or gross sales.
"Whether the Court of Appeals erred in holding that respondent is entitled to a refund." 9

Section 4(a) of RA 7432 10 grants to senior citizens the privilege of obtaining a 20 percent
discount on their purchase of medicine from any private establishment in the country. 11 The
latter may then claim the cost of the discount as a tax credit. 12 But can such credit be claimed,
even though an establishment operates at a loss?
We answer in the affirmative. IcAaEH
Tax Credit versus
Tax Deduction
Although the term is not specifically defined in our Tax Code, 13 tax credit generally refers to an
amount that is "subtracted directly from one's total tax liability." 14 It is an "allowance against the
tax itself" 15 or "a deduction from what is owed" 16 by a taxpayer to the government. Examples
of tax credits are withheld taxes, payments of estimated tax, and investment tax credits. 17
Tax credit should be understood in relation to other tax concepts. One of these is tax deduction
defined as a subtraction "from income for tax purposes," 18 or an amount that is "allowed by
law to reduce income prior to [the] application of the tax rate to compute the amount of tax which
is due." 19 An example of a tax deduction is any of the allowable deductions enumerated in
Section 34 20 of the Tax Code.
A tax credit differs from a tax deduction. On the one hand, a tax credit reduces the tax due,
including whenever applicable the income tax that is determined after applying the
corresponding tax rates to taxable income. 21 A tax deduction, on the other, reduces the income
that is subject to tax 22 in order to arrive at taxable income. 23 To think of the former as the
latter is to avoid, if not entirely confuse, the issue. A tax credit is used only after the tax has been
computed; a tax deduction, before.
Tax Liability Required
for Tax Credit
Since a tax credit is used to reduce directly the tax that is due, there ought to be a tax liability
before the tax credit can be applied. Without that liability, any tax credit application will be
useless. There will be no reason for deducting the latter when there is, to begin with, no existing
obligation to the government. However, as will be presented shortly, the existence of a tax credit

or its grant by law is not the same as the availment or use of such credit. While the grant is
mandatory, the availment or use is not. ACSaHc
If a net loss is reported by, and no other taxes are currently due from, a business establishment,
there will obviously be no tax liability against which any tax credit can be applied. 24 For the
establishment to choose the immediate availment of a tax credit will be premature and
impracticable. Nevertheless, the irrefutable fact remains that, under RA 7432, Congress has
granted without conditions a tax credit benefit to all covered establishments.
Although this tax credit benefit is available, it need not be used by losing ventures, since there is
no tax liability that calls for its application. Neither can it be reduced to nil by the quick yet callow
stroke of an administrative pen, simply because no reduction of taxes can instantly be effected.
By its nature, the tax credit may still be deducted from a future, not a present, tax liability, without
which it does not have any use. In the meantime, it need not move. But it breathes.
Prior Tax Payments Not

attributable to such sales, to the extent that the input taxes have not been applied against output
taxes. 26 Where a taxpayer is engaged in zero-rated or effectively zero-rated sales and also in
taxable or exempt sales, the amount of creditable input taxes due that are not directly and
entirely attributable to any one of these transactions shall be proportionately allocated on the
basis of the volume of sales. Indeed, in availing of such tax credit for VAT purposes, this
provision as well as the one earlier mentioned shows that the prior payment of taxes is not
a requisite. IaEASH
It may be argued that Section 28(B)(5)(b) of the Tax Code is another illustration of a tax credit
allowed, even though no prior tax payments are not required. Specifically, in this provision, the
imposition of a final withholding tax rate on cash and/or property dividends received by a
nonresident foreign corporation from a domestic corporation is subjected to the condition that a
foreign tax credit will be given by the domiciliary country in an amount equivalent to taxes that
are merely deemed paid. 27 Although true, this provision actually refers to the tax credit as a
condition only for the imposition of a lower tax rate, not as a deduction from the corresponding
tax liability. Besides, it is not our government but the domiciliary country that credits against the
income tax payable to the latter by the foreign corporation, the tax to be foregone or spared. 28

Required for Tax Credit

While a tax liability is essential to the availment or use of any tax credit, prior tax payments are
not. On the contrary, for the existence or grant solely of such credit, neither a tax liability nor a
prior tax payment is needed. The Tax Code is in fact replete with provisions granting or allowing
tax credits, even though no taxes have been previously paid.
For example, in computing the estate tax due, Section 86(E) allows a tax credit subject to
certain limitations for estate taxes paid to a foreign country. Also found in Section 101(C) is a
similar provision for donor's taxes again when paid to a foreign country in computing for
the donor's tax due. The tax credits in both instances allude to the prior payment of taxes, even
if not made to our government. cISDHE
Under Section 110, a VAT (Value-Added Tax) registered person engaging in transactions
whether or not subject to the VAT is also allowed a tax credit that includes a ratable portion of
any input tax not directly attributable to either activity. This input tax may either be the VAT on
the purchase or importation of goods or services that is merely due from not necessarily paid
by such VAT-registered person in the course of trade or business; or the transitional input tax
determined in accordance with Section 111(A). The latter type may in fact be an amount
equivalent to only eight percent of the value of a VAT-registered person's beginning inventory of
goods, materials and supplies, when such amount as computed is higher than the actual
VAT paid on the said items. 25 Clearly from this provision, the tax credit refers to an input tax
that is either due only or given a value by mere comparison with the VAT actually paid then
later prorated. No tax is actually paid prior to the availment of such credit.
In Section 111(B), a one and a half percent input tax credit that is merely presumptive is allowed.
For the purchase of primary agricultural products used as inputs either in the processing of
sardines, mackerel and milk, or in the manufacture of refined sugar and cooking oil and for
the contract price of public work contracts entered into with the government, again, no prior tax
payments are needed for the use of the tax credit.
More important, a VAT-registered person whose sales are zero-rated or effectively zero-rated
may, under Section 112(A), apply for the issuance of a tax credit certificate for the amount of
creditable input taxes merely due again not necessarily paid to the government and

In contrast, Section 34(C)(3), in relation to Section 34(C)(7)(b), categorically allows as credits,

against the income tax imposable under Title II, the amount of income taxes merely incurred
not necessarily paid by a domestic corporation during a taxable year in any foreign country.
Moreover, Section 34(C)(5) provides that for such taxes incurred but not paid, a tax credit may
be allowed, subject to the condition precedent that the taxpayer shall simply give a bond with
sureties satisfactory to and approved by petitioner, in such sum as may be required; and further
conditioned upon payment by the taxpayer of any tax found due, upon petitioner's
redetermination of it.
In addition to the above-cited provisions in the Tax Code, there are also tax treaties and special
laws that grant or allow tax credits, even though no prior tax payments have been made.
Under the treaties in which the tax credit method is used as a relief to avoid double taxation,
income that is taxed in the state of source is also taxable in the state of residence, but the tax
paid in the former is merely allowed as a credit against the tax levied in the latter. 29 Apparently,
payment is made to the state of source, not the state of residence. No tax, therefore, has been
previously paid to the latter. ScCDET
Under special laws that particularly affect businesses, there can also be tax credit incentives. To
illustrate, the incentives provided for in Article 48 of Presidential Decree No. (PD) 1789, as
amended by Batas Pambansa Blg. (BP) 391, include tax credits equivalent to either five percent
of the net value earned, or five or ten percent of the net local content of exports. 30 In order to
avail of such credits under the said law and still achieve its objectives, no prior tax payments are
necessary.
From all the foregoing instances, it is evident that prior tax payments are not indispensable to
the availment of a tax credit. Thus, the CA correctly held that the availment under RA 7432 did
not require prior tax payments by private establishments concerned. 31 However, we do not
agree with its finding 32 that the carry-over of tax credits under the said special law to
succeeding taxable periods, and even their application against internal revenue taxes, did not
necessitate the existence of a tax liability.

The examples above show that a tax liability is certainly important in the availment or use, not
the existence or grant, of a tax credit. Regarding this matter, a private establishment reporting a
net loss in its financial statements is no different from another that presents a net income. Both
are entitled to the tax credit provided for under RA 7432, since the law itself accords that
unconditional benefit. However, for the losing establishment to immediately apply such credit,
where no tax is due, will be an improvident usance.
Sections 2.i and 4 of Revenue
Regulations No. 2-94 Erroneous
RA 7432 specifically allows private establishments to claim as tax credit the amount of discounts
they grant. 33 In turn, the Implementing Rules and Regulations, issued pursuant thereto, provide
the procedures for its availment. 34 To deny such credit, despite the plain mandate of the law
and the regulations carrying out that mandate, is indefensible. CTAIHc
First, the definition given by petitioner is erroneous. It refers to tax credit as the amount
representing the 20 percent discount that "shall be deducted by the said establishments from
their gross income for income tax purposes and from their gross sales for value-added tax or
other percentage tax purposes." 35 In ordinary business language, the tax credit represents the
amount of such discount. However, the manner by which the discount shall be credited against
taxes has not been clarified by the revenue regulations.

Finally, akin to a trade discount is a functional discount. It is "a supplier's price discount given to
a purchaser based on the [latter's] role in the [former's] distribution system." 49 This role usually
involves warehousing or advertising. TEaADS
Based on this discussion, we find that the nature of a sales discount is peculiar. Applying
generally accepted accounting principles (GAAP) in the country, this type of discount is reflected
in the income statement 50 as a line item deducted along with returns, allowances, rebates
and other similar expenses from gross sales to arrive at net sales. 51 This type of
presentation is resorted to, because the accounts receivable and sales figures that arise from
sales discounts, as well as from quantity, volume or bulk discounts are recorded in the
manual and computerized books of accounts and reflected in the financial statements at the
gross amounts of the invoices. 52 This manner of recording credit sales known as the gross
method is most widely used, because it is simple, more convenient to apply than the net
method, and produces no material errors over time. 53
However, under the net method used in recording trade, chain or functional discounts, only the
net amounts of the invoices after the discounts have been deducted are recorded in the
books of accounts 54 and reflected in the financial statements. A separate line item cannot be
shown, 55 because the transactions themselves involving both accounts receivable and sales
have already been entered into, net of the said discounts.

Business Discounts

The term sales discounts is not expressly defined in the Tax Code, but one provision adverts to
amounts whose sum along with sales returns, allowances and cost of goods sold 56 is
deducted from gross sales to come up with the gross income, profit or margin 57 derived from
business. 58 In another provision therein, sales discounts that are granted and indicated in the
invoices at the time of sale and that do not depend upon the happening of any future event
may be excluded from the gross sales within the same quarter they were given. 59 While
determinative only of the VAT, the latter provision also appears as a suitable reference point for
income tax purposes already embraced in the former. After all, these two provisions affirm that
sales discounts are amounts that are always deductible from gross sales. TcDIEH

Deducted from Gross Sales

Reason for the Senior Citizen Discount:

A cash discount, for example, is one granted by business establishments to credit customers for
their prompt payment. 40 It is a "reduction in price offered to the purchaser if payment is made
within a shorter period of time than the maximum time specified." 41 Also referred to as a sales
discount on the part of the seller and a purchase discount on the part of the buyer, it may be
expressed in such terms as "5/10, n/30." 42

The Law, Not Prompt Payment

By ordinary acceptation, a discount is an "abatement or reduction made from the gross amount
or value of anything." 36 To be more precise, it is in business parlance "a deduction or lowering
of an amount of money;" 37 or "a reduction from the full amount or value of something,
especially a price." 38 In business there are many kinds of discount, the most common of which
is that affecting the income statement 39 or financial report upon which the income tax is based.

A quantity discount, however, is a "reduction in price allowed for purchases made in large
quantities, justified by savings in packaging, shipping, and handling." 43 It is also called a
volume or bulk discount. 44

A distinguishing feature of the implementing rules of RA 7432 is the private establishment's

outright deduction of the discount from the invoice price of the medicine sold to the senior
citizen. 60 It is, therefore, expected that for each retail sale made under this law, the discount
period lasts no more than a day, because such discount is given and the net amount thereof
collected immediately upon perfection of the sale. 61 Although prompt payment is made for
an arm's-length transaction by the senior citizen, the real and compelling reason for the private
establishment giving the discount is that the law itself makes it mandatory.

A "percentage reduction from the list price . . . allowed by manufacturers to wholesalers and by
wholesalers to retailers" 45 is known as a trade discount. No entry for it need be made in the
manual or computerized books of accounts, since the purchase or sale is already valued at the
net price actually charged the buyer. 46 The purpose for the discount is to encourage trading or
increase sales, and the prices at which the purchased goods may be resold are also suggested.
47 Even a chain discount a series of discounts from one list price is recorded at net. 48

What RA 7432 grants the senior citizen is a mere discount privilege, not a sales discount or any
of the above discounts in particular. Prompt payment is not the reason for (although a necessary
consequence of) such grant. To be sure, the privilege enjoyed by the senior citizen must be
equivalent to the tax credit benefit enjoyed by the private establishment granting the discount.
Yet, under the revenue regulations promulgated by our tax authorities, this benefit has been
erroneously likened and confined to a sales discount.

To a senior citizen, the monetary effect of the privilege may be the same as that resulting from a
sales discount. However, to a private establishment, the effect is different from a simple
reduction in price that results from such discount. In other words, the tax credit benefit is not the
same as a sales discount. To repeat from our earlier discourse, this benefit cannot and should
not be treated as a tax deduction.

In case of conflict, the law must prevail. 68 A "regulation adopted pursuant to law is law." 69
Conversely, a regulation or any portion thereof not adopted pursuant to law is no law and has
neither the force nor the effect of law. 70

To stress, the effect of a sales discount on the income statement and income tax return of an
establishment covered by RA 7432 is different from that resulting from the availment or use of its
tax credit benefit. While the former is a deduction before, the latter is a deduction after, the
income tax is computed. As mentioned earlier, a discount is not necessarily a sales discount,
and a tax credit for a simple discount privilege should not be automatically treated like a sales
discount. Ubi lex non distinguit, nec nos distinguere debemus. Where the law does not
distinguish, we ought not to distinguish. TIDHCc

Credit Voluntary

Sections 2.i and 4 of Revenue Regulations No. (RR) 2-94 define tax credit as the 20 percent
discount deductible from gross income for income tax purposes, or from gross sales for VAT or
other percentage tax purposes. In effect, the tax credit benefit under RA 7432 is related to a
sales discount. This contrived definition is improper, considering that the latter has to be
deducted from gross sales in order to compute the gross income in the income statement and
cannot be deducted again, even for purposes of computing the income tax.
When the law says that the cost of the discount may be claimed as a tax credit, it means that the
amount when claimed shall be treated as a reduction from any tax liability, plain and
simple. The option to avail of the tax credit benefit depends upon the existence of a tax liability,
but to limit the benefit to a sales discount which is not even identical to the discount privilege
that is granted by law does not define it at all and serves no useful purpose. The definition
must, therefore, be stricken down.
Laws Not Amended
by Regulations
Second, the law cannot be amended by a mere regulation. In fact, a regulation that "operates to
create a rule out of harmony with the statute is a mere nullity"; 62 it cannot prevail.
It is a cardinal rule that courts "will and should respect the contemporaneous construction placed
upon a statute by the executive officers whose duty it is to enforce it . . ." 63 In the scheme of
judicial tax administration, the need for certainty and predictability in the implementation of tax
laws is crucial. 64 Our tax authorities fill in the details that "Congress may not have the
opportunity or competence to provide." 65 The regulations these authorities issue are relied
upon by taxpayers, who are certain that these will be followed by the courts. 66 Courts, however,
will not uphold these authorities' interpretations when clearly absurd, erroneous or improper.
IcTaAH
In the present case, the tax authorities have given the term tax credit in Sections 2.i and 4 of RR
2-94 a meaning utterly in contrast to what RA 7432 provides. Their interpretation has muddled
up the intent of Congress in granting a mere discount privilege, not a sales discount. The
administrative agency issuing these regulations may not enlarge, alter or restrict the provisions
of the law it administers; it cannot engraft additional requirements not contemplated by the
legislature. 67

Availment of Tax

Third, the word may in the text of the statute 71 implies that the availability of the tax credit
benefit is neither unrestricted nor mandatory. 72 There is no absolute right conferred upon
respondent, or any similar taxpayer, to avail itself of the tax credit remedy whenever it chooses;
"neither does it impose a duty on the part of the government to sit back and allow an important
facet of tax collection to be at the sole control and discretion of the taxpayer." 73 For the tax
authorities to compel respondent to deduct the 20 percent discount from either its gross income
or its gross sales 74 is, therefore, not only to make an imposition without basis in law, but also to
blatantly contravene the law itself.
What Section 4.a of RA 7432 means is that the tax credit benefit is merely permissive, not
imperative. Respondent is given two options either to claim or not to claim the cost of the
discounts as a tax credit. In fact, it may even ignore the credit and simply consider the gesture
as an act of beneficence, an expression of its social conscience. CDHAcI
Granting that there is a tax liability and respondent claims such cost as a tax credit, then the tax
credit can easily be applied. If there is none, the credit cannot be used and will just have to be
carried over and revalidated 75 accordingly. If, however, the business continues to operate at a
loss and no other taxes are due, thus compelling it to close shop, the credit can never be applied
and will be lost altogether.
In other words, it is the existence or the lack of a tax liability that determines whether the cost of
the discounts can be used as a tax credit. RA 7432 does not give respondent the unfettered right
to avail itself of the credit whenever it pleases. Neither does it allow our tax administrators to
expand or contract the legislative mandate. "The 'plain meaning rule' or verba legis in statutory
construction is thus applicable . . . Where the words of a statute are clear, plain and free from
ambiguity, it must be given its literal meaning and applied without attempted interpretation." 76
Tax Credit Benefit
Deemed Just Compensation
Fourth, Sections 2.i and 4 of RR 2-94 deny the exercise by the State of its power of eminent
domain. Be it stressed that the privilege enjoyed by senior citizens does not come directly from
the State, but rather from the private establishments concerned. Accordingly, the tax credit
benefit granted to these establishments can be deemed as their just compensation for private
property taken by the State for public use. 77
The concept of public use is no longer confined to the traditional notion of use by the public, but
held synonymous with public interest, public benefit, public welfare, and public convenience. 78
The discount privilege to which our senior citizens are entitled is actually a benefit enjoyed by
the general public to which these citizens belong. The discounts given would have entered the
coffers and formed part of the gross sales of the private establishments concerned, were it not

for RA 7432. The permanent reduction in their total revenues is a forced subsidy corresponding
to the taking of private property for public use or benefit. SaDICE

treat the sales discounts as a tax credit, rather than as a deduction from gross income. We
quote from those deliberations as follows:

As a result of the 20 percent discount imposed by RA 7432, respondent becomes entitled to a

just compensation. This term refers not only to the issuance of a tax credit certificate indicating
the correct amount of the discounts given, but also to the promptness in its release. Equivalent
to the payment of property taken by the State, such issuance when not done within a
reasonable time from the grant of the discounts cannot be considered as just compensation.
In effect, respondent is made to suffer the consequences of being immediately deprived of its
revenues while awaiting actual receipt, through the certificate, of the equivalent amount it needs
to cope with the reduction in its revenues. 79

"THE CHAIRMAN (Rep. Unico):

By the way, before that ano, about deductions from taxable income. I think we
incorporated there a provision na on the responsibility of the private hospitals and drugstores,
hindi ba?
SEN. ANGARA:
Oo.

Besides, the taxation power can also be used as an implement for the exercise of the power of
eminent domain. 80 Tax measures are but "enforced contributions exacted on pain of penal
sanctions" 81 and "clearly imposed for a public purpose." 82 In recent years, the power to tax
has indeed become a most effective tool to realize social justice, public welfare, and the
equitable distribution of wealth. 83
While it is a declared commitment under Section 1 of RA 7432, social justice "cannot be invoked
to trample on the rights of property owners who under our Constitution and laws are also entitled
to protection. The social justice consecrated in our [C]onstitution [is] not intended to take away
rights from a person and give them to another who is not entitled thereto." 84 For this reason, a
just compensation for income that is taken away from respondent becomes necessary. It is in
the tax credit that our legislators find support to realize social justice, and no administrative body
can alter that fact.
To put it differently, a private establishment that merely breaks even 85 without the discounts
yet will surely start to incur losses because of such discounts. The same effect is expected if
its mark-up is less than 20 percent, and if all its sales come from retail purchases by senior
citizens. Aside from the observation we have already raised earlier, it will also be grossly unfair
to an establishment if the discounts will be treated merely as deductions from either its gross
income or its gross sales. Operating at a loss through no fault of its own, it will realize that the
tax credit limitation under RR 2-94 is inutile, if not improper. Worse, profit-generating businesses
will be put in a better position if they avail themselves of tax credits denied those that are losing,
because no taxes are due from the latter. aDICET
Grant of Tax Credit
Intended by the Legislature
Fifth, RA 7432 itself seeks to adopt measures whereby senior citizens are assisted by the
community as a whole and to establish a program beneficial to them. 86 These objectives are
consonant with the constitutional policy of making "health . . . services available to all the people
at affordable cost" 87 and of giving "priority for the needs of the . . . elderly." 88 Sections 2.i and
4 of RR 2-94, however, contradict these constitutional policies and statutory objectives.
Furthermore, Congress has allowed all private establishments a simple tax credit, not a
deduction. In fact, no cash outlay is required from the government for the availment or use of
such credit. The deliberations on February 5, 1992 of the Bicameral Conference Committee
Meeting on Social Justice, which finalized RA 7432, disclose the true intent of our legislators to

THE CHAIRMAN. (Rep. Unico):

So, I think we have to put in also a provision here about the deductions from taxable
income of that private hospitals, di ba ganon 'yan?
MS. ADVENTO:
Kaya lang po sir, ang mga discounts po nila affecting government and public
institutions, so, puwede na po nating hindi isama yung mga less deductions ng taxable income.
AEIcTD
THE CHAIRMAN. (Rep. Unico):
Puwede na. Yung about the private hospitals. Yung isiningit natin?
MS. ADVENTO:
Singit na po ba yung 15% on credit. (inaudible/did not use the microphone).
SEN. ANGARA:
Hindi pa, hindi pa.
THE CHAIRMAN. (Rep. Unico):
Ah, 'di pa ba naisama natin?
SEN. ANGARA:
Oo. You want to insert that?
THE CHAIRMAN (Rep. Unico):
Yung ang proposal ni Senator Shahani, e.
SEN. ANGARA:
In the case of private hospitals they got the grant of 15% discount, provided that, the
private hospitals can claim the expense as a tax credit.

REP. AQUINO:
Yah could be allowed as deductions in the perpetrations of (inaudible) income.

THE CHAIRMAN. (Rep. Unico):

Tax credit.

cEaDTA
SEN. ANGARA:
SEN. ANGARA:
As a tax credit [rather] than a kuwan deduction, Okay.
I-tax credit na lang natin para walang cash-out ano?
REP. AQUINO:
REP. AQUINO:
Okay.
Oo, tax credit. Tama, Okay. Hospitals ba o lahat ng establishments na covered.
SEN. ANGARA:
THE CHAIRMAN. (Rep. Unico):
Sige Okay. Di subject to style na lang sa Letter A". 89
Sa kuwan lang yon, as private hospitals lang.
Special Law
REP. AQUINO:
Over General Law
Ano ba yung establishments na covered?
SEN. ANGARA:
Restaurant lodging houses, recreation centers.
REP. AQUINO:
All establishments covered siguro?
SEN. ANGARA:
From all establishments. Alisin na natin 'Yung kuwan kung ganon. Can we go back to
Section 4 ha?
REP. AQUINO:
Oho.
SEN. ANGARA:
Letter A. To capture that thought, we'll say the grant of 20% discount from all
establishments et cetera, et cetera, provided that said establishments provided that private
establishments may claim the cost as a tax credit. Ganon ba 'yon? HIEAcC

Sixth and last, RA 7432 is a special law that should prevail over the Tax Code a general law.
". . . [T]he rule is that on a specific matter the special law shall prevail over the general law,
which shall be resorted to only to supply deficiencies in the former." 90 In addition, "[w]here
there are two statutes, the earlier special and the later general the terms of the general broad
enough to include the matter provided for in the special the fact that one is special and the
other is general creates a presumption that the special is to be considered as remaining an
exception to the general, 91 one as a general law of the land, the other as the law of a particular
case." 92 "It is a canon of statutory construction that a later statute, general in its terms and not
expressly repealing a prior special statute, will ordinarily not affect the special provisions of such
earlier statute." 93
RA 7432 is an earlier law not expressly repealed by, and therefore remains an exception to, the
Tax Code a later law. When the former states that a tax credit may be claimed, then the
requirement of prior tax payments under certain provisions of the latter, as discussed above,
cannot be made to apply. Neither can the instances of or references to a tax deduction under the
Tax Code 94 be made to restrict RA 7432. No provision of any revenue regulation can supplant
or modify the acts of Congress.
WHEREFORE, the Petition is hereby DENIED. The assailed Decision and Resolution of the
Court of Appeals AFFIRMED. No pronouncement as to costs. EacHCD
SO ORDERED.

REP. AQUINO:
Yah.
SEN. ANGARA:
Dahil kung government, they don't need to claim it.

[G.R. No. 152688. November 19, 2003.]

PHILIPPINE INTERNATIONAL TRADING CORPORATION, petitioner, vs. COMMISSION ON
AUDIT, respondent.
Ma. Victoria C. Magcase and Ronald Allan B. Juan for petitioner.

The Solicitor General for respondent.

SYNOPSIS
In accordance with Department Order No. 79 (D.O. No. 79) of the Department of Trade and
Industry (DTI), dated December 1, 1998, then Secretary Jose Trinidad Pardo granted, subject to
the availability of savings of the respective bureaus/offices/GOCCs, a Staple Food Incentive
(SFI) in the maximum amount of P7,200.00 each to the officials and employees of DTI bureaus,
attached agencies and government owned and controlled corporations (GOCCs). Petitioner
Philippine International Trading Corporation (PITC), a government owned and controlled
corporation attached to the DTI, issued Resolution No. 98-12-07 dated December 9, 1998,
approving the grant of SFI to its officers and employees. Consequently, PITC released the total
amount of P1,094,400.00 as SFI for the year 1998. The Resident Auditor of PITC issued a
Notice of Suspension disallowing the grant of the SFI and requiring the PITC to submit the
approval of such grant by the Department of Budget and Management (DBM), in accordance
with Section 12 of Republic Act No. 6758, or the Salary Standardization Law. PITC appealed to
the Director, Corporate Audit Office II, who sustained the disallowance of the SFI. PITC elevated
the matter to the COA which affirmed the questioned disallowance. It ruled that the grant of SFI
by PITC was an illegal disbursement of public funds under Section 12 of R.A. No. 6758. Hence,
the present petition for certiorari. cSATEH
The Supreme Court affirmed the decision of the Commission on Audit. According to the Court,
no abuse of discretion was committed by COA in disallowing the disbursement of funds for the
SFI of PITC. The resolution of the question of law in case at bar hinges on the interpretation of
Section 12 of R.A. No. 6758, which was the basis of the COA in denying the grant of SFI to the
officers and employees of PITC. In construing the above provision, the Court applied its
interpretation of the same provision in National Tobacco Administration v. Commission on Audit
where it held that under the first sentence of Section 12, the benefits excluded from the
standardized salary rates are the "allowances," or those which are usually granted to officials
and employees of the government to defray or reimburse the expenses incurred in the
performance of their official functions. It further ruled that the phrase "and such other additional
compensation not otherwise specified [in Section 12] as may be determined by the DBM," in the
first sentence of Section 12, is a "catch-all-proviso" for benefits in the nature of "allowances"
similar to those enumerated. In the present case, the Staple Food Incentives was granted under
D.O. No. 79 to "help the DTI employees cope with the present economic difficulties, boost their
morale and deepen their commitment and dedication to public service." The SFI, therefore, is a
financial assistance or a bonus falling under the second sentence of Section 12, and not a
payment in consideration of the performance of an official duty. It is not a benefit within the ambit
of the first sentence because it was not granted to defray or reimburse the expenses incurred in
the performance of their official functions, like representation and transportation allowances, and
other benefits of similar nature. To justify the SFI, the requisites for the entitlement of benefits
falling under the second sentence of Section 12 must be established. Unfortunately, the Court
found no evidence on record that the recipients of the SFI were incumbents when R.A. No. 6758
took effect on July 1, 1989 and that they were in fact receiving the same at the time. The Court
also held that notwithstanding the validity of the disallowance by the COA, the officers and
employees of PITC can not be obliged to refund the SFI received by them in good faith.
SYLLABUS
1.
REMEDIAL LAW; SPECIAL CIVIL ACTIONS; CERTIORARI; A MOTION FOR
RECONSIDERATION MAY BE DISPENSED WITH NOT ONLY BECAUSE THE ISSUE

PRESENTED IS PURELY OF LAW, BUT ALSO BECAUSE THE QUESTION RAISED HAS
ALREADY BEEN EXTENSIVELY DISCUSSED IN THE DECISIONS OF THE DIRECTOR,
CORPORATE AUDIT OFFICE II AND THE COMMISSION ON AUDIT. As a general rule, a
petition for certiorari before a higher court will not prosper unless the inferior court has been
given, through a motion for reconsideration, a chance to correct the errors imputed to it. This
rule, though, has certain exceptions: (1) when the issue raised is purely of law, (2) when public
interest is involved, or (3) in case of urgency. As a fourth exception, it was also held that the
filing of a motion for reconsideration before availment of the remedy of certiorari is not a
condition sine qua non, when the questions raised are the same as those that have already
been squarely argued and exhaustively passed upon by the lower court. In the case at bar, a
motion for reconsideration may be dispensed with not only because the issue presented is
purely of law, but also because the question raised has already been extensively discussed in
the decisions of the Director, Corporate Audit Office II and the COA. HCSDca
2.
ADMINISTRATIVE LAW; SALARY STANDARDIZATION LAW (REPUBLIC ACT NO.
6758); ALLOWANCES AND COMPENSATION; FINANCIAL ASSISTANCE AND ALLOWANCE;
DISTINGUISHED. The resolution of the question of law in the case at bar hinges on the
interpretation of Section 12 of R.A. No. 6758, which was the basis of the COA in denying the
grant of SFI to the officers and employees of PITC. In construing the above provision, the Court
in National Tobacco Administration v. Commission on Audit, held that under the first sentence of
Section 12, the benefits excluded from the standardized salary rates are the "allowances" or
those which are usually granted to officials and employees of the government to defray or
reimburse the expenses incurred in the performance of their official functions. It further ruled that
the phrase "and such other additional compensation not otherwise specified [in Section 12] as
may be determined by the DBM," in the first sentence of Section 12, is a "catch-all-proviso" for
benefits in the nature of "allowances" similar to those enumerated. Was interpreted as referring
to benefits in the nature of "financial assistance," or "a bonus or other payment made to
employees in addition to guaranteed hourly wages," as contradistinguished from the "allowance"
in the first sentence, which cannot, strictly speaking, be reckoned with as a bonus or additional
income. In "financial assistance," reimbursement is not necessary, while in the case of
"allowance," reimbursement is required.
3.
ID.; ID.; ID.; REQUISITES FOR ENTITLEMENT TO "FINANCIAL ASSISTANCE"
UNDER SECTION 12 OF REPUBLIC ACT NO. 6758. Entitlement to the "financial assistance"
under the second sentence of Section 12 is conditioned upon the following requisites (1) the
recipients were incumbents when R.A. No. 6758 took effect on July 1, 1989; (2) they were in
fact, receiving the same, at the time; and (3) such additional compensation is distinct and
separate from the specific allowances enumerated in the first sentence of Section 12 of R.A. No.
6758. This is in relation to the non-diminution of pay under Section 17 of R.A. No. 6758. Thus, in
National Tobacco Administration (NTA) v. Commission on Audit, the Court ruled that the "social
amelioration or educational assistance benefit" granted by the NTA is of a species belonging to
the genus of "financial assistance" under the second sentence of Section 12. Since the
employees of the NTA have been receiving said benefit before July 1, 1989, when R.A. No.
6758 took effect, it was held therein that the same benefit was not integrated into their
standardized salary rate, and should therefore be continued to be authorized.
4.
ID.; ID.; ID.; NO GRAVE ABUSE OF DISCRETION WAS COMMITTED BY THE
COMMISSION ON AUDIT IN DISALLOWING THE DISBURSEMENT OF FUNDS FOR THE
STAPLE FOOD INCENTIVES OF PETITIONER; IT IS A FINANCIAL ASSISTANCE OR A
BONUS FALLING UNDER THE SECOND SENTENCE OF SECTION 12 AND NOT A
PAYMENT IN CONSIDERATION OF THE PERFORMANCE OF THEIR OFFICIAL

FUNCTIONS. In the instant case, the Staple Food Incentives was granted under D.O. No. 79
to "help the DTI employees cope with the present economic difficulties, boost their morale and
deepen their commitment and dedication to public service." Clearly therefore, the SFI is a
financial assistance or a bonus falling under the second sentence of Section 12 and not a
payment in consideration of the performance of an official duty. It is not a benefit within the ambit
of the first sentence because it was not granted to defray or reimburse the expenses incurred in
the performance of their official functions, like representation and transportation allowances, and
other benefits of similar nature. Accordingly, in order that the SFI may be allowed, the requisites
for the entitlement of benefits falling under the second sentence of Section 12 must be
established. Unfortunately, there is no evidence on record that the recipients of the SFI were
incumbents when R.A. No. 6758 took effect on July 1, 1989 and that they were in fact receiving
the same at the time. Hence, no abuse of discretion was committed by COA in disallowing the
disbursement of funds for the SFI of PITC. TCaAHI

Assailed in this petition for certiorari 1 is the March 5, 2002 decision of the respondent
Commission on Audit (COA) in COA Decision No. 2002-044, 2 which disallowed the grant of
Staple Food Incentive (SFI) in 1998 to the officers and employees of petitioner Philippine
International Trading Corporation (PITC). cDCIHT

5.
ID.; ID.; ID.; NOTWITHSTANDING THE VALIDITY OF THE DISALLOWANCE BY
THE COMMISSION ON AUDIT, THE OFFICERS AND EMPLOYEES OF PETITIONER
CORPORATION CANNOT BE OBLIGED TO REFUND THE STAPLE FOOD INCENTIVE
RECEIVED BY THEM IN GOOD FAITH. Notwithstanding the validity of the disallowance by
the COA, however, the officers and employees of PITC can not be obliged to refund the SFI
received by them in good faith. In the recent case of De Jesus v. Commission on Audit, it was
held that the Members of the Board of the Catbalogan Water District cannot be ordered to refund
the bonuses received by them because they were of the honest belief that they were authorized
to approve and receive said payment. At the time they received the said benefits, the case of
Baybay Water District v. Commission on Audit, which categorically denied the grant of additional
compensation to the Members of the Board of water districts, was not yet decided. It was held
that the language of Section 13 of P.D. No. 198, (the Provincial Water District Act of 1973, as
amended) is clear enough that it needs no interpretation. Local Water District Utilities
Administration Resolution No. 131, series of 1995, cannot justify the disbursement of additional
allowances because Section 13 of P.D. No. 198, expressly prohibits the members of the board
of water districts from receiving compensation other than payment of per diem. Accordingly, the
officers and employees of PITC need not refund the questioned SFI received by them in 1998.
This is so because National Tobacco Administration v. Commission on Audit which made a
definitive interpretation of Section 12 of R.A. No. 6758 was promulgated only on August 5, 1999.
Prior thereto, PITC is presumed to be without knowledge that, absent the requisites under the
second sentence of R.A. No. 6758, the disbursement of funds for the SFI is without legal basis.

Pursuant to D.O. No. 79, petitioner PITC, a government owned and controlled corporation
attached to the DTI, issued Resolution No. 98-12-07 dated December 9, 1998, approving the
grant of SFI to its officers and employees. 4 Consequently, PITC released the total amount of
P1,094,400.00 as SFI for the year 1998.

6.
STATUTORY CONSTRUCTION; STATUTORY PROVISIONS CONTROL THE
RULES AND REGULATIONS WHICH MAY BE ISSUED PURSUANT THERETO. There is no
merit in the claim of PITC that R.A. No. 6758, particularly Section 12 thereof is void because
DBM-Corporate Compensation Circular No. 10, its implementing rules, was nullified in the case
of De Jesus v. Commission on Audit, for lack of publication. The basis of COA in disallowing the
grant of SFI was Section 12 of R.A. No. 6758 and not DBM-CCC No. 10. Moreover, the nullity of
DBM-CCC No. 10, will not affect the validity of R.A. No. 6758. It is a cardinal rule in statutory
construction that statutory provisions control the rules and regulations which may be issued
pursuant thereto. Such rules and regulations must be consistent with and must not defeat the
purpose of the statute. The validity of R.A. No. 6758 should not be made to depend on the
validity of its implementing rules.

DECISION
YNARES-SANTIAGO, J p:

The undisputed facts show that in accordance with Department Order No. 79 (D.O. No. 79) of
the Department of Trade and Industry (DTI), dated December 1, 1998, then Secretary Jose
Trinidad Pardo granted, subject to the availability of savings of the respective
bureaus/offices/GOCCs, a Staple Food Incentive (SFI) in the maximum amount of P7,200.00
each to the officials and employees of DTI bureaus, attached agencies and government owned
and controlled corporations (GOCCs). This was in accordance with Rule X of the Omnibus Civil
Service Rules. D.O. No. 79 further provided that in case of disallowance, the employee shall
refund the incentive through salary deduction. 3

On April 29, 1999, the Resident Auditor of PITC issued a Notice of Suspension 5 disallowing the
grant of the SFI and requiring the PITC to submit the approval of such grant by the Department
of Budget and Management (DBM), in accordance with Section 12 of Republic Act No. 6758, or
the Salary Standardization Law. 6 PITC appealed to the Director, Corporate Audit Office II, who
sustained the disallowance of the SFI. 7 PITC elevated the matter to the COA which, on March
5, 2002, affirmed the questioned disallowance. It ruled that the grant of SFI by PITC was an
illegal disbursement of public funds under Section 12 of R.A. No. 6758. The dispositive portion of
the COA decision, reads
WHEREFORE, premises considered, the instant petition for reversal of CAO II Decision dated
November 9, 2000 cannot be given due course. Accordingly, the disallowance in question
amounting to P1,094,400.00 is hereby affirmed. The Auditor, PITC, is hereby directed to enforce
and monitor the settlement of the disallowance and to advise the Commission of the proper
implementation of this decision. 8
Hence, PITC filed the instant petition for certiorari, contending that

RESPONDENT COA COMMITTED SERIOUS ERROR IN DECIDING A QUESTION OF LAW IN

A WAY PROBABLY NOT IN ACCORD WITH LAW OR JURISPRUDENCE WHEN IT
AFFIRMED THE COA-CAO II's 1st INDORSEMENT DISALLOWING THE GRANT OF SFI FOR
CY 1998 TO PITC OFFICERS AND EMPLOYEES DUE TO THE ABSENCE OF SPECIFIC
APPROVAL FROM THE DBM PURSUANT TO SEC. 12 OF R.A. NO. 6758 (SALARY
STANDARDIZATION LAW) DESPITE THE INEFFECTIVENESS AND UNENFORCEABILITY
OF DBM-CCC NO. 10 WHICH COMPRISED THE IMPLEMENTING RULES AND
REGULATIONS (IRR) OF R.A. 6758.
II
RESPONDENT COA COMMITTED SERIOUS ERROR IN DECIDING A QUESTION OF LAW IN
A WAY PROBABLY NOT IN ACCORD WITH LAW OR JURISPRUDENCE WHEN IT

AFFIRMED THE COA-CAO II's 1st INDORSEMENT DISALLOWING THE GRANT OF SFI FOR
CY 1998 TO PITC OFFICERS AND EMPLOYEES WHILE OTHER RESIDENT AUDITORS OF
THE DTI AND OF ITS ATTACHED BUREAUS, AGENCIES AND GOCCs ALLOWED THE
SAME IN AUDIT, IN CLEAR VIOLATION OF THE RIGHT TO EQUAL PROTECTION OF THE
LAWS GUARANTEED UNDER THE 1987 CONSTITUTION. 9
On August 29, 2002, the Office of the Solicitor General (OSG) manifested that it cannot
represent and maintain a stand consistent with COA because in November 1998, the officials
and employees of the OSG likewise received the same Staple Food Incentive in the amount of
P7,200.00 each. The OSG prayed that it be excused from filing a comment and that the COA be
given a new period within which to file its comment. 10 On September 17, 2002, the Court
issued a Resolution granting the prayer of the OSG. 11
We first address the failure of the PITC to file a motion for reconsideration of the assailed
decision.
As a general rule, a petition for certiorari before a higher court will not prosper unless the inferior
court has been given, through a motion for reconsideration, a chance to correct the errors
imputed to it. This rule, though, has certain exceptions: (1) when the issue raised is purely of
law, (2) when public interest is involved, or (3) in case of urgency. As a fourth exception, it was
also held that the filing of a motion for reconsideration before availment of the remedy of
certiorari is not a condition sine qua non, when the questions raised are the same as those that
have already been squarely argued and exhaustively passed upon by the lower court. 12
In the case at bar, a motion for reconsideration may be dispensed with not only because the
issue presented is purely of law, but also because the question raised has already been
extensively discussed in the decisions of the Director, Corporate Audit Office II and the COA.
The resolution of the question of law in the case at bar hinges on the interpretation of Section 12
of R.A. No. 6758, which was the basis of the COA in denying the grant of SFI to the officers and
employees of PITC. It provides
Sec. 12. Consolidation of Allowances and Compensation. Allowances, except for
representation and transportation allowances; clothing and laundry allowances; subsistence
allowance of marine officers and crew on board government vessels and hospital personnel;
hazard pay; allowances of foreign services personnel stationed abroad; and such other
additional compensation not otherwise specified herein as may be determined by the DBM, shall
be deemed included in the standardized salary rates herein prescribed. Such other additional
compensation, whether in cash or in kind, being received by incumbents as of July 1, 1989 not
integrated into the standardized salary rates shall continue to be authorized. AIECSD
In construing the above provision, the Court in National Tobacco Administration v. Commission
on Audit, 13 held that under the first sentence of Section 12, the benefits excluded from the
standardized salary rates are the "allowances" or those which are usually granted to officials and
employees of the government to defray or reimburse the expenses incurred in the performance
of their official functions. It further ruled that the phrase "and such other additional compensation
not otherwise specified [in Section 12] as may be determined by the DBM," in the first sentence
of Section 12, is a "catch-all-proviso" for benefits in the nature of "allowances" similar to those
enumerated. Thus

Under the first sentence of Section 12, all allowances are integrated into the prescribed salary
rates, except:
(1)

representation and transportation allowances (RATA);

(2)

clothing and laundry allowances;

(3)

subsistence allowances of marine officers and crew on board government vessels;

(4)

subsistence allowance of hospital personnel;

(5)

hazard pay;

(6)

allowance of foreign service personnel stationed abroad; and

(7)
such other additional compensation not otherwise specified in Section 12 as may be
determined by the DBM.
Analyzing No. 7, which is the last clause of the first sentence of Section 12, in relation to the
other benefits therein enumerated, it can be gleaned unerringly that it is a "catch-all proviso."
Further reflection on the nature of subject fringe benefits indicates that all of them have one thing
in common they belong to one category of privilege called allowances which are usually
granted to officials and employees of the government to defray or reimburse the expenses
incurred in the performance of their official functions. In Philippine Ports Authority vs.
Commission on Audit, this Court rationalized that if these allowances are consolidated with the
standardized rate, then the government official or employee will be compelled to spend his
personal funds in attending to his duties.
The conclusion [is] that the enumerated fringe benefits are in the nature of allowance . . . 14
Also in National Tobacco Administration, the second sentence of Section 12, which provides that

Such other additional compensation, whether in cash or in kind, being received by incumbents
as of July 1, 1989 not integrated into the standardized salary rates shall continue to be
authorized.
was interpreted as referring to benefits in the nature of "financial assistance," or "a bonus or
other payment made to employees in addition to guaranteed hourly wages," as
contradistinguished from the "allowance" if the first sentence, which cannot, strictly speaking, be
reckoned with as a bonus or additional income. In "financial assistance," reimbursement is not
necessary, while in the case of "allowance," reimbursement is required. 15
The foregoing interpretation is supported by the deliberations of the representatives of the
Senate and the House of Representatives on the contradictory provisions of House Bill No.
10054 and Senate Bill No. 862, which became R.A. No. 6758, also known as the Salary
Standardization Law. The House Bill's sponsor, Representative Rolando Andaya, explained that
the second sentence of Section 12, R.A. No. 6758, refers to rice allowance and dependent's
allowance. These benefits therefore comprise the category of "financial assistance," or "a bonus
or other payment made to employees in addition to guaranteed hourly wages," and not the
"allowance" referred to in the first sentence of Section 12, R.A. No. 6758 which, to repeat, are

granted to defray or reimburse the expenses incurred in the performance of their official
functions. Thus
MR. LAGMAN. I would like to refer to No. 26, page 3 of the report, where it says:
On page 15, line 13 after period (.) add the sentence "Such other additional compensation
whether in cash or in kind, being received by incumbents as of July 1, 1989 not integrated into
the standardized salary rates shall continue to be authorized."
Is this the particular provision which guarantees that these additional benefits being paid by local
government units shall henceforth be assumed by the national government?
MR. ANDAYA. No, it is not. The provision applies to government corporations, because
government corporations now have rice allowance and dependents allowance. The principle
here is that nobody will suffer diminution in pay; these will continue to be authorized whether
what he is receiving is in kind or in cash. This applies to government corporations. 16
Entitlement to the "financial assistance" under the second sentence of Section 12 is conditioned
upon the following requisites (1) the recipients were incumbents when R.A. No. 6758 took
effect on July 1, 1989; (2) they were in fact, receiving the same, at the time; and (3) such
additional compensation is distinct and separate from the specific allowances enumerated in the
first sentence of Section 12 of R.A. No. 6758. 17 This is in relation to the non-diminution of pay
under Section 17 of R.A. No. 6758, which states:

There is no merit in the claim of PITC that R.A. No. 6758, particularly Section 12 thereof is void
because DBM-Corporate Compensation Circular No. 10, its implementing rules, was nullified in
the case of De Jesus v. Commission on Audit, 19 for lack of publication. 20 The basis of COA in
disallowing the grant of SFI was Section 12 of R.A. No. 6758 and not DBM-CCC No. 10.
Moreover, the nullity of DBM-CCC No. 10, will not affect the validity of R.A. No. 6758. It is a
cardinal rule in statutory construction that statutory provisions control the rules and regulations
which may be issued pursuant thereto. Such rules and regulations must be consistent with and
must not defeat the purpose of the statute. 21 The validity of R.A. No. 6758 should not be made
to depend on the validity of its implementing rules. HICSaD
Likewise, PITC failed to substantiate its allegation that it was singled out by the COA, which act
therefore violated the equal protection clause of the Constitution. The alleged violation by the
COA of PITC's right to equal protection cannot bind the Court to an erroneous interpretation of
R.A. No. 6758. No vested right can be acquired on a wrong construction of the law by
administrative officials and such erroneous interpretation does not place the government in
estoppel to correct or overrule the same. 22

SEC. 17. Salaries of Incumbents. Incumbents of positions presently receiving salaries and
additional compensation/fringe benefits including those absorbed from local government units
and other emoluments, the aggregate of which exceeds the standardized salary rate as herein
prescribed, shall continue to receive such excess compensation, which shall be referred to as
transition allowance. The transition allowance shall be reduced by the amount of salary
adjustment that the incumbent shall receive in the future.

Notwithstanding the validity of the disallowance by the COA, however, the officers and
employees of PITC can not be obliged to refund the SFI received by them in good faith. In the
recent case of De Jesus v. Commission on Audit, 23 it was held that the Members of the Board
of the Catbalogan Water District cannot be ordered to refund the bonuses received by them
because they were of the honest belief that they were authorized to approve and receive said
payment. At the time they received the said benefits, the case of Baybay Water District v.
Commission on Audit, 24 which categorically denied the grant of additional compensation to the
Members of the Board of water districts, was not yet decided. It was held that the language of
Section 13 of P.D. No. 198, (the Provincial Water District Act of 1973, as amended) is clear
enough that it needs no interpretation. Local Water District Utilities Administration Resolution No.
131, series of 1995, cannot justify the disbursement of additional allowances because Section
13 of P.D. No. 198, expressly prohibits the members of the board of water districts from
receiving compensation other than payment of per diem.

Thus, in National Tobacco Administration (NTA) v. Commission on Audit, the Court ruled that the
"social amelioration or educational assistance benefit" granted by the NTA is of a species
belonging to the genus of "financial assistance" under the second sentence of Section 12. Since
the employees of the NTA have been receiving said benefit before July 1, 1989, when R.A. No.
6758 took effect, it was held therein that the same benefit was not integrated into their
standardized salary rate, and should therefore be continued to be authorized. 18

Accordingly, the officers and employees of PITC need not refund the questioned SFI received by
them in 1998. This is so because National Tobacco Administration v. Commission on Audit
which made a definitive interpretation of Section 12 of R.A. No. 6758 was promulgated only on
August 5, 1999. Prior thereto, PITC is presumed to be without knowledge that, absent the
requisites under the second sentence of R.A. No. 6758, the disbursement of funds for the SFI is
without legal basis.

In the instant case, the Staple Food Incentives was granted under D.O. No. 79 to "help the DTI
employees cope with the present economic difficulties, boost their morale and deepen their
commitment and dedication to public service." Clearly therefore, the SFI is a financial assistance
or a bonus falling under the second sentence of Section 12 and not a payment in consideration
of the performance of an official duty. It is not a benefit within the ambit of the first sentence
because it was not granted to defray or reimburse the expenses incurred in the performance of
their official functions, like representation and transportation allowances, and other benefits of
similar nature. Accordingly, in order that the SFI may be allowed, the requisites for the
entitlement of benefits falling under the second sentence of Section 12 must be established.
Unfortunately, there is no evidence on record that the recipients of the SFI were incumbents
when R.A. No. 6758 took effect on July 1, 1989 and that they were in fact receiving the same at
the time. Hence, no abuse of discretion was committed by COA in disallowing the disbursement
of funds for the SFI of PITC.

WHEREFORE, in view of all the foregoing, the March 5, 2002 decision of the Commission on
Audit in COA Decision No. 2002-044, which disallowed the grant of Staple Food Incentive in
1998 to the officers and employees of the Philippine International Trading Corporation, is
AFFIRMED with MODIFICATIONS. The officers and employees of the Philippine International
Trading Corporation need not refund the Staple Food Incentive they received per Resolution No.
98-12-07 dated December 9, 1998.
SO ORDERED.

[G.R. No. 170633. October 17, 2007.]

MCC INDUSTRIAL SALES CORPORATION, petitioner, vs. SSANGYONG CORPORATION,

respondent.
DECISION
NACHURA, J p:
Before the Court is a petition for review on certiorari of the Decision 1 of the Court of Appeals in
CA-G.R. CV No. 82983 and its Resolution 2 denying the motion for reconsideration thereof.
Petitioner MCC Industrial Sales (MCC), a domestic corporation with office at Binondo, Manila, is
engaged in the business of importing and wholesaling stainless steel products. 3 One of its
suppliers is the Ssangyong Corporation (Ssangyong), 4 an international trading company 5 with
head office in Seoul, South Korea and regional headquarters in Makati City, Philippines. 6 The
two corporations conducted business through telephone calls and facsimile or telecopy
transmissions. 7 Ssangyong would send the pro forma invoices containing the details of the
steel product order to MCC; if the latter conforms thereto, its representative affixes his signature
on the faxed copy and sends it back to Ssangyong, again by fax. 8 CHcETA
On April 13, 2000, Ssangyong Manila Office sent, by fax, a letter 9 addressed to Gregory Chan,
MCC Manager [also the President 10 of Sanyo Seiki Stainless Steel Corporation], to confirm
MCC's and Sanyo Seiki's order of 220 metric tons (MT) of hot rolled stainless steel under a
preferential rate of US$1,860.00 per MT. Chan, on behalf of the corporations, assented and
affixed his signature on the conforme portion of the letter. 11
On April 17, 2000, Ssangyong forwarded to MCC Pro Forma Invoice No. ST2-POSTSO401 12
containing the terms and conditions of the transaction. MCC sent back by fax to Ssangyong the
invoice bearing the conformity signature 13 of Chan. As stated in the pro forma invoice, payment
for the ordered steel products would be made through an irrevocable letter of credit (L/C) at sight
in favor of Ssangyong. 14 Following their usual practice, delivery of the goods was to be made
after the L/C had been opened.
In the meantime, because of its confirmed transaction with MCC, Ssangyong placed the order
with its steel manufacturer, Pohang Iron and Steel Corporation (POSCO), in South Korea 15 and
paid the same in full.
Because MCC could open only a partial letter of credit, the order for 220MT of steel was split
into two, 16 one for 110MT covered by Pro Forma Invoice No. ST2-POSTS0401-1 17 and
another for 110MT covered by ST2-POSTS0401-2, 18 both dated April 17, 2000.
On June 20, 2000, Ssangyong, through its Manila Office, informed Sanyo Seiki and Chan, by
way of a fax transmittal, that it was ready to ship 193.597MT of stainless steel from Korea to the
Philippines. It requested that the opening of the L/C be facilitated. 19 Chan affixed his signature
on the fax transmittal and returned the same, by fax, to Ssangyong. 20 DHSEcI
Two days later, on June 22, 2000, Ssangyong Manila Office informed Sanyo Seiki, thru Chan,
that it was able to secure a US$30/MT price adjustment on the contracted price of
US$1,860.00/MT for the 200MT stainless steel, and that the goods were to be shipped in two
tranches, the first 100MT on that day and the second 100MT not later than June 27, 2000.
Ssangyong reiterated its request for the facilitation of the L/C's opening. 21

Ssangyong later, through its Manila Office, sent a letter, on June 26, 2000, to the Treasury
Group of Sanyo Seiki that it was looking forward to receiving the L/C details and a cable copy
thereof that day. 22 Ssangyong sent a separate letter of the same date to Sanyo Seiki
requesting for the opening of the L/C covering payment of the first 100MT not later than June 28,
2000. 23 Similar letters were transmitted by Ssangyong Manila Office on June 27, 2000. 24 On
June 28, 2000, Ssangyong sent another facsimile letter to MCC stating that its principal in Korea
was already in a difficult situation 25 because of the failure of Sanyo Seiki and MCC to open the
L/C's.
The following day, June 29, 2000, Ssangyong received, by fax, a letter signed by Chan,
requesting an extension of time to open the L/C because MCC's credit line with the bank had
been fully availed of in connection with another transaction, and MCC was waiting for an
additional credit line. 26 On the same date, Ssangyong replied, requesting that it be informed of
the date when the L/C would be opened, preferably at the earliest possible time, since its Steel
Team 2 in Korea was having problems and Ssangyong was incurring warehousing costs. 27 To
maintain their good business relationship and to support MCC in its financial predicament,
Ssangyong offered to negotiate with its steel manufacturer, POSCO, another US$20/MT
discount on the price of the stainless steel ordered. This was intimated in Ssangyong's June 30,
2000 letter to MCC. 28 On July 6, 2000, another follow-up letter 29 for the opening of the L/C
was sent by Ssangyong to MCC. HTSIEa
However, despite Ssangyong's letters, MCC failed to open a letter of credit. 30 Consequently, on
August 15, 2000, Ssangyong, through counsel, wrote Sanyo Seiki that if the L/C's were not
opened, Ssangyong would be compelled to cancel the contract and hold MCC liable for
damages for breach thereof amounting to US$96,132.18, inclusive of warehouse expenses,
related interests and charges. 31
Later, Pro Forma Invoice Nos. ST2-POSTS080-1 32 and ST2-POSTS080-2 33 dated August 16,
2000 were issued by Ssangyong and sent via fax to MCC. The invoices slightly varied the terms
of the earlier pro forma invoices (ST2-POSTSO401, ST2-POSTS0401-1 and ST2-POSTS04012), in that the quantity was now officially 100MT per invoice and the price was reduced to
US$1,700.00 per MT. As can be gleaned from the photocopies of the said August 16, 2000
invoices submitted to the court, they both bear the conformity signature of MCC Manager Chan.
On August 17, 2000, MCC finally opened an L/C with PCIBank for US$170,000.00 covering
payment for 100MT of stainless steel coil under Pro Forma Invoice No. ST2-POSTS080-2. 34
The goods covered by the said invoice were then shipped to and received by MCC. 35
MCC then faxed to Ssangyong a letter dated August 22, 2000 signed by Chan, requesting for a
price adjustment of the order stated in Pro Forma Invoice No. ST2-POSTS080-1, considering
that the prevailing price of steel at that time was US$1,500.00/MT, and that MCC lost a lot of
money due to a recent strike. 36 cDTaSH
Ssangyong rejected the request, and, on August 23, 2000, sent a demand letter 37 to Chan for
the opening of the second and last L/C of US$170,000.00 with a warning that, if the said L/C
was not opened by MCC on August 26, 2000, Ssangyong would be constrained to cancel the
contract and hold MCC liable for US$64,066.99 (representing cost difference, warehousing
expenses, interests and charges as of August 15, 2000) and other damages for breach. Chan
failed to reply.

Exasperated, Ssangyong through counsel wrote a letter to MCC, on September 11, 2000,
canceling the sales contract under ST2-POSTS0401-1/ST2-POSTS0401-2, and demanding
payment of US$97,317.37 representing losses, warehousing expenses, interests and charges.
38
Ssangyong then filed, on November 16, 2001, a civil action for damages due to breach of
contract against defendants MCC, Sanyo Seiki and Gregory Chan before the Regional Trial
Court of Makati City. In its complaint, 39 Ssangyong alleged that defendants breached their
contract when they refused to open the L/C in the amount of US$170,000.00 for the remaining
100MT of steel under Pro Forma Invoice Nos. ST2-POSTS0401-1 and ST2-POSTS0401-2.
After Ssangyong rested its case, defendants filed a Demurrer to Evidence 40 alleging that
Ssangyong failed to present the original copies of the pro forma invoices on which the civil action
was based. In an Order dated April 24, 2003, the court denied the demurrer, ruling that the
documentary evidence presented had already been admitted in the December 16, 2002 Order
41 and their admissibility finds support in Republic Act (R.A.) No. 8792, otherwise known as the
Electronic Commerce Act of 2000. Considering that both testimonial and documentary evidence
tended to substantiate the material allegations in the complaint, Ssangyong's evidence sufficed
for purposes of a prima facie case. 42 AHECcT

In their Appeal Brief filed on March 9, 2005, 46 MCC and Chan raised before the CA the
following errors of the RTC:
I.
THE HONORABLE COURT A QUO PLAINLY ERRED IN FINDING THAT
APPELLANTS VIOLATED THEIR CONTRACT WITH APPELLEE
A.
THE HONORABLE COURT A QUO PLAINLY ERRED IN FINDING THAT
APPELLANTS AGREED TO PURCHASE 200 METRIC TONS OF STEEL PRODUCTS FROM
APPELLEE, INSTEAD OF ONLY 100 METRIC TONS.
1.
THE HONORABLE COURT A QUO PLAINLY ERRED IN ADMITTING IN EVIDENCE
THE PRO FORMA INVOICES WITH REFERENCE NOS. ST2-POSTS0401-1 AND ST2POSTS0401-2.
II.
THE HONORABLE COURT A QUO PLAINLY ERRED IN AWARDING ACTUAL
DAMAGES TO APPELLEE. DCcAIS
III.
THE HONORABLE COURT A QUO PLAINLY ERRED IN AWARDING ATTORNEY'S
FEES TO APPELLEE.

After trial on the merits, the RTC rendered its Decision 43 on March 24, 2004, in favor of
Ssangyong. The trial court ruled that when plaintiff agreed to sell and defendants agreed to buy
the 220MT of steel products for the price of US$1,860 per MT, the contract was perfected. The
subject transaction was evidenced by Pro Forma Invoice Nos. ST2-POSTS0401-1 and ST2POSTS0401-2, which were later amended only in terms of reduction of volume as well as the
price per MT, following Pro Forma Invoice Nos. ST2-POSTS080-1 and ST2-POSTS080-2. The
RTC, however, excluded Sanyo Seiki from liability for lack of competent evidence. The fallo of
the decision reads:

IV.
THE HONORABLE COURT A QUO PLAINLY ERRED IN FINDING APPELLANT
GREGORY CHAN JOINTLY AND SEVERALLY LIABLE WITH APPELLANT MCC. 47

WHEREFORE, premises considered, Judgment is hereby rendered ordering defendants MCC

Industrial Sales Corporation and Gregory Chan, to pay plaintiff, jointly and severally the
following:

WHEREFORE, premises considered, the Court holds:

1)
Actual damages of US$93,493.87 representing the outstanding principal claim plus
interest at the rate of 6% per annum from March 30, 2001.

On August 31, 2005, the CA rendered its Decision 48 affirming the ruling of the trial court, but
absolving Chan of any liability. The appellate court ruled, among others, that Pro Forma Invoice
Nos. ST2-POSTS0401-1 and ST2-POSTS0401-2 (Exhibits "E", "E-1" and "F") were admissible
in evidence, although they were mere facsimile printouts of MCC's steel orders. 49 The
dispositive portion of the appellate court's decision reads:

(1)
The award of actual damages, with interest, attorney's fees and costs ordered by the
lower court is hereby AFFIRMED.
(2)

Appellant Gregory Chan is hereby ABSOLVED from any liability.

2)
Attorney's fees in the sum of P50,000.00 plus P2,000.00 per counsel's appearance in
court, the same being deemed just and equitable considering that by reason of defendants'
breach of their obligation under the subject contract, plaintiff was constrained to litigate to
enforce its rights and recover for the damages it sustained, and therefore had to engage the
services of a lawyer.

SO ORDERED. 50

3)

On October 4, 2005, Castillo Zamora & Poblador, on behalf of MCC, filed a motion for
reconsideration of the said decision. 54 Ssangyong opposed the motion contending that the
decision of the CA had become final and executory on account of the failure of MCC to file the
said motion within the reglementary period. The appellate court resolved, on November 22,
2005, to deny the motion on its merits, 55 without, however, ruling on the procedural issue
raised.

Costs of suit.

No award of exemplary damages for lack of sufficient basis.

TcCSIa

SO ORDERED. 44
On April 22, 2004, MCC and Chan, through their counsel of record, Atty. Eladio B. Samson, filed
their Notice of Appeal. 45 On June 8, 2004, the law office of Castillo Zamora & Poblador entered
its appearance as their collaborating counsel.

A copy of the said Decision was received by MCC's and Chan's principal counsel, Atty. Eladio B.
Samson, on September 14, 2005. 51 Their collaborating counsel, Castillo Zamora & Poblador,
52 likewise, received a copy of the CA decision on September 19, 2005. 53 aTcIEH

Aggrieved, MCC filed a petition for review on certiorari 56 before this Court, imputing the
following errors to the Court of Appeals:

THE COURT OF APPEALS DECIDED A LEGAL QUESTION NOT IN ACCORDANCE WITH

JURISPRUDENCE AND SANCTIONED A DEPARTURE FROM THE USUAL AND ACCEPTED
COURSE OF JUDICIAL PROCEEDINGS BY REVERSING THE COURT A QUO'S DISMISSAL
OF THE COMPLAINT IN CIVIL CASE NO. 02-124 CONSIDERING THAT:
I.
THE COURT OF APPEALS ERRED IN SUSTAINING THE ADMISSIBILITY IN
EVIDENCE OF THE PRO-FORMA INVOICES WITH REFERENCE NOS. ST2-POSTSO401-1
AND ST2-POSTSO401-2, DESPITE THE FACT THAT THE SAME WERE MERE
PHOTOCOPIES OF FACSIMILE PRINTOUTS.
II.
THE COURT OF APPEALS FAILED TO APPRECIATE THE OBVIOUS FACT THAT,
EVEN ASSUMING PETITIONER BREACHED THE SUPPOSED CONTRACT, THE FACT IS
THAT PETITIONER FAILED TO PROVE THAT IT SUFFERED ANY DAMAGES AND THE
AMOUNT THEREOF. SIcEHD
III.
THE AWARD OF ACTUAL DAMAGES IN THE AMOUNT OF US$93,493.87 IS
SIMPLY UNCONSCIONABLE AND SHOULD HAVE BEEN AT LEAST REDUCED, IF NOT
DELETED BY THE COURT OF APPEALS. 57
In its Comment, Ssangyong sought the dismissal of the petition, raising the following arguments:
that the CA decision dated 15 August 2005 is already final and executory, because MCC's
motion for reconsideration was filed beyond the reglementary period of 15 days from receipt of a
copy thereof, and that, in any case, it was a pro forma motion; that MCC breached the contract
for the purchase of the steel products when it failed to open the required letter of credit; that the
printout copies and/or photocopies of facsimile or telecopy transmissions were properly admitted
by the trial court because they are considered original documents under R.A. No. 8792; and that
MCC is liable for actual damages and attorney's fees because of its breach, thus, compelling
Ssangyong to litigate.
The principal issues that this Court is called upon to resolve are the following:
I Whether the CA decision dated 15 August 2005 is already final and executory;
II Whether the print-out and/or photocopies of facsimile transmissions are electronic evidence
and admissible as such;
III Whether there was a perfected contract of sale between MCC and Ssangyong, and, if in
the affirmative, whether MCC breached the said contract; and DEacIT
IV Whether the award of actual damages and attorney's fees in favor of Ssangyong is proper
and justified.
-IIt cannot be gainsaid that in Albano v. Court of Appeals, 58 we held that receipt of a copy of the
decision by one of several counsels on record is notice to all, and the period to appeal
commences on such date even if the other counsel has not yet received a copy of the decision.
In this case, when Atty. Samson received a copy of the CA decision on September 14, 2005,
MCC had only fifteen (15) days within which to file a motion for reconsideration conformably with
Section 1, Rule 52 of the Rules of Court, or to file a petition for review on certiorari in accordance
with Section 2, Rule 45. The period should not be reckoned from September 29, 2005 (when

Castillo Zamora & Poblador received their copy of the decision) because notice to Atty. Samson
is deemed notice to collaborating counsel.
We note, however, from the records of the CA, that it was Castillo Zamora & Poblador, not Atty.
Samson, which filed both MCC's and Chan's Brief and Reply Brief. Apparently, the arrangement
between the two counsels was for the collaborating, not the principal, counsel to file the appeal
brief and subsequent pleadings in the CA. This explains why it was Castillo Zamora & Poblador
which filed the motion for the reconsideration of the CA decision, and they did so on October 5,
2005, well within the 15-day period from September 29, 2005, when they received their copy of
the CA decision. This could also be the reason why the CA did not find it necessary to resolve
the question of the timeliness of petitioner's motion for reconsideration, even as the CA denied
the same. SaIACT
Independent of this consideration though, this Court assiduously reviewed the records and found
that strong concerns of substantial justice warrant the relaxation of this rule.
In Philippine Ports Authority v. Sargasso Construction and Development Corporation, 59 we
ruled that:
In Orata v. Intermediate Appellate Court, we held that where strong considerations of
substantive justice are manifest in the petition, this Court may relax the strict application of the
rules of procedure in the exercise of its legal jurisdiction. In addition to the basic merits of the
main case, such a petition usually embodies justifying circumstance which warrants our heeding
to the petitioner's cry for justice in spite of the earlier negligence of counsel. As we held in Obut
v. Court of Appeals:
[W]e cannot look with favor on a course of action which would place the administration of justice
in a straight jacket for then the result would be a poor kind of justice if there would be justice at
all. Verily, judicial orders, such as the one subject of this petition, are issued to be obeyed,
nonetheless a non-compliance is to be dealt with as the circumstances attending the case may
warrant. What should guide judicial action is the principle that a party-litigant is to be given the
fullest opportunity to establish the merits of his complaint or defense rather than for him to lose
life, liberty, honor or property on technicalities.
The rules of procedure are used only to secure and not override or frustrate justice. A six-day
delay in the perfection of the appeal, as in this case, does not warrant the outright dismissal of
the appeal. In Development Bank of the Philippines vs. Court of Appeals, we gave due course to
the petitioner's appeal despite the late filing of its brief in the appellate court because such
appeal involved public interest. We stated in the said case that the Court may exempt a
particular case from a strict application of the rules of procedure where the appellant failed to
perfect its appeal within the reglementary period, resulting in the appellate court's failure to
obtain jurisdiction over the case. In Republic vs. Imperial, Jr., we also held that there is more
leeway to exempt a case from the strictness of procedural rules when the appellate court has
already obtained jurisdiction over the appealed case. We emphasize that: IcHAaS
[T]he rules of procedure are mere tools intended to facilitate the attainment of justice, rather than
frustrate it. A strict and rigid application of the rules must always be eschewed when it would
subvert the rule's primary objective of enhancing fair trials and expediting justice. Technicalities
should never be used to defeat the substantive rights of the other party. Every party-litigant must
be afforded the amplest opportunity for the proper and just determination of his cause, free from
the constraints of technicalities. 60

Moreover, it should be remembered that the Rules were promulgated to set guidelines in the
orderly administration of justice, not to shackle the hand that dispenses it. Otherwise, the courts
would be consigned to being mere slaves to technical rules, deprived of their judicial discretion.
Technicalities must take a backseat to substantive rights. After all, it is circumspect leniency in
this respect that will give the parties the fullest opportunity to ventilate the merits of their
respective causes, rather than have them lose life, liberty, honor or property on sheer
technicalities. 61

by Appellants
Turning first to the appellants' argument against the admissibility of the Pro Forma Invoices with
Reference Nos. ST2-POSTS0401-1 and ST2-POSTS0401-2 (Exhibits "E", "E-1" and "F", pp.
215-218, Records), appellants argue that the said documents are inadmissible (sic) being
violative of the best evidence rule.
The argument is untenable.

The other technical issue posed by respondent is the alleged pro forma nature of MCC's motion
for reconsideration, ostensibly because it merely restated the arguments previously raised and
passed upon by the CA.
In this connection, suffice it to say that the mere restatement of arguments in a motion for
reconsideration does not per se result in a pro forma motion. In Security Bank and Trust
Company, Inc. v. Cuenca, 62 we held that a motion for reconsideration may not be necessarily
pro forma even if it reiterates the arguments earlier passed upon and rejected by the appellate
court. A movant may raise the same arguments precisely to convince the court that its ruling was
erroneous. Furthermore, the pro forma rule will not apply if the arguments were not sufficiently
passed upon and answered in the decision sought to be reconsidered. EASIHa
- II The second issue poses a novel question that the Court welcomes. It provides the occasion for
this Court to pronounce a definitive interpretation of the equally innovative provisions of the
Electronic Commerce Act of 2000 (R.A. No. 8792) vis--vis the Rules on Electronic Evidence.
Although the parties did not raise the question whether the original facsimile transmissions are
"electronic data messages" or "electronic documents" within the context of the Electronic
Commerce Act (the petitioner merely assails as inadmissible evidence the photocopies of the
said facsimile transmissions), we deem it appropriate to determine first whether the said fax
transmissions are indeed within the coverage of R.A. No. 8792 before ruling on whether the
photocopies thereof are covered by the law. In any case, this Court has ample authority to go
beyond the pleadings when, in the interest of justice or for the promotion of public policy, there is
a need to make its own findings in order to support its conclusions. 63
Petitioner contends that the photocopies of the pro forma invoices presented by respondent
Ssangyong to prove the perfection of their supposed contract of sale are inadmissible in
evidence and do not fall within the ambit of R.A. No. 8792, because the law merely admits as the
best evidence the original fax transmittal. On the other hand, respondent posits that, from a
reading of the law and the Rules on Electronic Evidence, the original facsimile transmittal of the
pro forma invoice is admissible in evidence since it is an electronic document and, therefore, the
best evidence under the law and the Rules. Respondent further claims that the photocopies of
these fax transmittals (specifically ST2-POSTS0401-1 and ST2-POSTS0401-2) are admissible
under the Rules on Evidence because the respondent sufficiently explained the non-production
of the original fax transmittals. CIHTac

The copies of the said pro-forma invoices submitted by the appellee are admissible in evidence,
although they are mere electronic facsimile printouts of appellant's orders. Such facsimile
printouts are considered Electronic Documents under the New Rules on Electronic Evidence,
which came into effect on August 1, 2001. (Rule 2, Section 1 [h], A.M. No. 01-7-01-SC).
"(h)
'Electronic document' refers to information or the representation of information, data,
figures, symbols or other modes of written expression, described or however represented, by
which a right is established or an obligation extinguished, or by which a fact may be proved and
affirmed, which is received, recorded, transmitted, stored, processed, retrieved or produced
electronically. It includes digitally signed documents and any printout or output, readable by sight
or other means, which accurately reflects the electronic data message or electronic document.
For purposes of these Rules, the term 'electronic document' may be used interchangeably with
'electronic data message'. CIAcSa
An electronic document shall be regarded as the equivalent of an original document under the
Best Evidence Rule, as long as it is a printout or output readable by sight or other means,
showing to reflect the data accurately. (Rule 4, Section 1, A.M. No. 01-7-01-SC)
The ruling of the Appellate Court is incorrect. R.A. No. 8792, 64 otherwise known as the
Electronic Commerce Act of 2000, considers an electronic data message or an electronic
document as the functional equivalent of a written document for evidentiary purposes. 65 The
Rules on Electronic Evidence 66 regards an electronic document as admissible in evidence if it
complies with the rules on admissibility prescribed by the Rules of Court and related laws, and is
authenticated in the manner prescribed by the said Rules. 67 An electronic document is also the
equivalent of an original document under the Best Evidence Rule, if it is a printout or output
readable by sight or other means, shown to reflect the data accurately. 68
Thus, to be admissible in evidence as an electronic data message or to be considered as the
functional equivalent of an original document under the Best Evidence Rule, the writing must
foremost be an "electronic data message" or an "electronic document."
The Electronic Commerce Act of 2000 defines electronic data message and electronic document
as follows:
Sec. 5.
follows:

Definition of Terms. For the purposes of this Act, the following terms are defined, as

In resolving this issue, the appellate court ruled as follows:

xxx

Admissibility of Pro Forma

c.
"Electronic Data Message" refers to information generated, sent, received or stored by
electronic, optical or similar means. HacADE

Invoices; Breach of Contract

xxx

xxx

xxx

xxx

xxx

f.
"Electronic Document" refers to information or the representation of information, data,
figures, symbols or other modes of written expression, described or however represented, by
which a right is established or an obligation extinguished, or by which a fact may be proved and
affirmed, which is received, recorded, transmitted, stored, processed, retrieved or produced
electronically.
The Implementing Rules and Regulations (IRR) of R.A. No. 8792, 69 which was signed on July
13, 2000 by the then Secretaries of the Department of Trade and Industry, the Department of
Budget and Management, and then Governor of the Bangko Sentral ng Pilipinas, defines the
terms as:
Sec. 6. Definition of Terms. For the purposes of this Act and these Rules, the following terms
are defined, as follows:
xxx

xxx

xxx

(e)
"Electronic Data Message" refers to information generated, sent, received or stored by
electronic, optical or similar means, but not limited to, electronic data interchange (EDI),
electronic mail, telegram, telex or telecopy. Throughout these Rules, the term "electronic data
message" shall be equivalent to and be used interchangeably with "electronic document."
xxx

xxx

xxx

(h)
"Electronic Document" refers to information or the representation of information, data,
figures, symbols or other modes of written expression, described or however represented, by
which a right is established or an obligation extinguished, or by which a fact may be proved and
affirmed, which is received, recorded, transmitted, stored, processed, retrieved or produced
electronically. Throughout these Rules, the term "electronic document" shall be equivalent to
and be used interchangeably with "electronic data message." DHCSTa
The phrase "but not limited to, electronic data interchange (EDI), electronic mail, telegram, telex
or telecopy" in the IRR's definition of "electronic data message" is copied from the Model Law on
Electronic Commerce adopted by the United Nations Commission on International Trade Law
(UNCITRAL), 70 from which majority of the provisions of R.A. No. 8792 were taken. 71 While
Congress deleted this phrase in the Electronic Commerce Act of 2000, the drafters of the IRR
reinstated it. The deletion by Congress of the said phrase is significant and pivotal, as discussed
hereunder.
The clause on the interchangeability of the terms "electronic data message" and "electronic
document" was the result of the Senate of the Philippines' adoption, in Senate Bill 1902, of the
phrase "electronic data message" and the House of Representative's employment, in House Bill
9971, of the term "electronic document." 72 In order to expedite the reconciliation of the two
versions, the technical working group of the Bicameral Conference Committee adopted both
terms and intended them to be the equivalent of each one. 73 Be that as it may, there is a slight
difference between the two terms. While "data message" has reference to information
electronically sent, stored or transmitted, it does not necessarily mean that it will give rise to a
right or extinguish an obligation, 74 unlike an electronic document. Evident from the law,
however, is the legislative intent to give the two terms the same construction.

The Rules on Electronic Evidence promulgated by this Court defines the said terms in the
following manner:
SECTION 1.
Definition of Terms. For purposes of these Rules, the following terms are
defined, as follows: EICSDT
xxx

xxx

xxx

(g)
"Electronic data message" refers to information generated, sent, received or stored by
electronic, optical or similar means.
(h)
"Electronic document" refers to information or the representation of information, data,
figures, symbols or other modes of written expression, described or however represented, by
which a right is established or an obligation extinguished, or by which a fact may be proved and
affirmed, which is received, recorded, transmitted, stored, processed, retrieved or produced
electronically. It includes digitally signed documents and print-out or output, readable by sight or
other means, which accurately reflects the electronic data message or electronic document. For
purposes of these Rules, the term "electronic document" may be used interchangeably with
"electronic data message."
Given these definitions, we go back to the original question: Is an original printout of a facsimile
transmission an electronic data message or electronic document?
The definitions under the Electronic Commerce Act of 2000, its IRR and the Rules on Electronic
Evidence, at first glance, convey the impression that facsimile transmissions are electronic data
messages or electronic documents because they are sent by electronic means. The expanded
definition of an "electronic data message" under the IRR, consistent with the UNCITRAL Model
Law, further supports this theory considering that the enumeration ". . . [is] not limited to,
electronic data interchange (EDI), electronic mail, telegram, telex or telecopy." And to telecopy is
to send a document from one place to another via a fax machine. 75 cIaCTS
As further guide for the Court in its task of statutory construction, Section 37 of the Electronic
Commerce Act of 2000 provides that
Unless otherwise expressly provided for, the interpretation of this Act shall give due regard to its
international origin and the need to promote uniformity in its application and the observance of
good faith in international trade relations. The generally accepted principles of international law
and convention on electronic commerce shall likewise be considered.
Obviously, the "international origin" mentioned in this section can only refer to the UNCITRAL
Model Law, and the UNCITRAL's definition of "data message":
"Data message" means information generated, sent, received or stored by electronic, optical or
similar means including, but not limited to, electronic data interchange (EDI), electronic mail,
telegram, telex or telecopy. 76
is substantially the same as the IRR's characterization of an "electronic data message."
However, Congress deleted the phrase, "but not limited to, electronic data interchange (EDI),
electronic mail, telegram, telex or telecopy," and replaced the term "data message" (as found in
the UNCITRAL Model Law ) with "electronic data message." This legislative divergence from

what is assumed as the term's "international origin" has bred uncertainty and now impels the
Court to make an inquiry into the true intent of the framers of the law. Indeed, in the construction
or interpretation of a legislative measure, the primary rule is to search for and determine the
intent and spirit of the law. 77 A construction should be rejected that gives to the language used
in a statute a meaning that does not accomplish the purpose for which the statute was enacted,
and that tends to defeat the ends which are sought to be attained by the enactment. 78 CTcSAE
Interestingly, when Senator Ramon B. Magsaysay, Jr., the principal author of Senate Bill 1902
(the predecessor of R.A. No. 8792), sponsored the bill on second reading, he proposed to adopt
the term "data message" as formulated and defined in the UNCITRAL Model Law. 79 During the
period of amendments, however, the term evolved into "electronic data message," and the
phrase "but not limited to, electronic data interchange (EDI), electronic mail, telegram, telex or
telecopy" in the UNCITRAL Model Law was deleted. Furthermore, the term "electronic data
message," though maintaining its description under the UNCITRAL Model Law, except for the
aforesaid deleted phrase, conveyed a different meaning, as revealed in the following
proceedings:
xxx

xxx

xxx

Senator Santiago. Yes, Mr. President. I will furnish a copy together with the explanation of this
proposed amendment.
And then finally, before I leave the Floor, may I please be allowed to go back to Section 5; the
Definition of Terms. In light of the acceptance by the good Senator of my proposed
amendments, it will then become necessary to add certain terms in our list of terms to be
defined. I would like to add a definition on what is "data," what is "electronic record" and what is
an "electronic record system."
If the gentleman will give me permission, I will proceed with the proposed amendment on
Definition of Terms, Section 5.
Senator Magsaysay. Please go ahead, Senator Santiago.

EACIcH

Senator Santiago. We are in Part 1, short title on the Declaration of Policy, Section 5, Definition
of Terms.
At the appropriate places in the listing of these terms that have to be defined since these are
arranged alphabetically, Mr. President, I would like to insert the term DATA and its definition. So,
the amendment will read: "DATA" MEANS REPRESENTATION, IN ANY FORM, OF
INFORMATION OR CONCEPTS.
The explanation is this: This definition of "data" or "data" as it is now fashionably pronounced in
America the definition of "data" ensures that our bill applies to any form of information in an
electronic record, whether these are figures, facts or ideas.
So again, the proposed amendment is this: "DATA" MEANS REPRESENTATIONS, IN ANY
FORM, OF INFORMATION OR CONCEPTS.
Senator Magsaysay. May I know how will this affect the definition of "Data Message" which
encompasses electronic records, electronic writings and electronic documents?

Senator Santiago. These are completely congruent with each other. These are compatible.
When we define "data," we are simply reinforcing the definition of what is a data message.
Senator Magsaysay. It is accepted, Mr. President.
Senator Santiago. Thank you. The next term is "ELECTRONIC RECORD." The proposed
amendment is as follows: CITSAc
"ELECTRONIC RECORD" MEANS DATA THAT IS RECORDED OR STORED ON ANY
MEDIUM IN OR BY A COMPUTER SYSTEM OR OTHER SIMILAR DEVICE, THAT CAN BE
READ OR PERCEIVED BY A PERSON OR A COMPUTER SYSTEM OR OTHER SIMILAR
DEVICE. IT INCLUDES A DISPLAY, PRINTOUT OR OTHER OUTPUT OF THAT DATA.
The explanation for this term and its definition is as follows: The term "ELECTRONIC RECORD"
fixes the scope of our bill. The record is the data. The record may be on any medium. It is
electronic because it is recorded or stored in or by a computer system or a similar device.
The amendment is intended to apply, for example, to data on magnetic strips on cards or in
Smart cards. As drafted, it would not apply to telexes or faxes, except computer-generated
faxes, unlike the United Nations model law on electronic commerce. It would also not apply to
regular digital telephone conversations since the information is not recorded. It would apply to
voice mail since the information has been recorded in or by a device similar to a computer.
Likewise, video records are not covered. Though when the video is transferred to a website, it
would be covered because of the involvement of the computer. Music recorded by a computer
system on a compact disc would be covered.
In short, not all data recorded or stored in digital form is covered. A computer or a similar device
has to be involved in its creation or storage. The term "similar device" does not extend to all
devices that create or store data in digital form. Although things that are not recorded or
preserved by or in a computer system are omitted from this bill, these may well be admissible
under other rules of law. This provision focuses on replacing the search for originality proving the
reliability of systems instead of that of individual records and using standards to show systems
reliability. CTaSEI
Paper records that are produced directly by a computer system such as printouts are
themselves electronic records being just the means of intelligible display of the contents of the
record. Photocopies of the printout would be paper record subject to the usual rules about
copies, but the original printout would be subject to the rules of admissibility of this bill.
However, printouts that are used only as paper records and whose computer origin is never
again called on are treated as paper records. In that case, the reliability of the computer system
that produces the record is irrelevant to its reliability.
Senator Magsaysay. Mr. President, if my memory does not fail me, earlier, the lady Senator
accepted that we use the term "Data Message" rather than "ELECTRONIC RECORD" in being
consistent with the UNCITRAL term of "Data Message." So with the new amendment of defining
"ELECTRONIC RECORD," will this affect her accepting of the use of "Data Message" instead of
"ELECTRONIC RECORD"?
Senator Santiago. No, it will not. Thank you for reminding me. The term I would like to insert is
ELECTRONIC DATA MESSAGE in lieu of "ELECTRONIC RECORD."

Senator Magsaysay. Then we are, in effect, amending the term of the definition of "Data
Message" on page 2A, line 31, to which we have no objection.
Senator Santiago. Thank you, Mr. President.
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xxx

AHCaES

Paper records that are produced directly by a computer system, such as printouts, are
themselves electronic records, being just the means of intelligible display of the contents of the
record. Photocopies of the printout would be paper records subject to the usual rules about
copies, but the "original" printout would be subject to the rules of admissibility of this Act.
HCSEcI

xxx

Senator Santiago. Mr. President, I have proposed all the amendments that I desire to, including
the amendment on the effect of error or change. I will provide the language of the amendment
together with the explanation supporting that amendment to the distinguished sponsor and then
he can feel free to take it up in any session without any further intervention.
Senator Magsaysay. Before we end, Mr. President, I understand from the proponent of these
amendments that these are based on the Canadian E-commerce Law of 1998. Is that not right?
Senator Santiago. That is correct. 80
Thus, when the Senate consequently voted to adopt the term "electronic data message," it was
consonant with the explanation of Senator Miriam Defensor-Santiago that it would not apply "to
telexes or faxes, except computer-generated faxes, unlike the United Nations model law on
electronic commerce." In explaining the term "electronic record" patterned after the E-Commerce
Law of Canada, Senator Defensor-Santiago had in mind the term "electronic data message."
This term then, while maintaining part of the UNCITRAL Model Law's terminology of "data
message," has assumed a different context, this time, consonant with the term "electronic
record" in the law of Canada. It accounts for the addition of the word "electronic" and the
deletion of the phrase "but not limited to, electronic data interchange (EDI), electronic mail,
telegram, telex or telecopy." Noteworthy is that the Uniform Law Conference of Canada,
explains the term "electronic record," as drafted in the Uniform Electronic Evidence Act, in a
manner strikingly similar to Sen. Santiago's explanation during the Senate deliberations:
TacSAE
"Electronic record" fixes the scope of the Act. The record is the data. The record may be any
medium. It is "electronic" because it is recorded or stored in or by a computer system or similar
device. The Act is intended to apply, for example, to data on magnetic strips on cards, or in
smart cards. As drafted, it would not apply to telexes or faxes (except computer-generated
faxes), unlike the United Nations Model Law on Electronic Commerce. It would also not apply to
regular digital telephone conversations, since the information is not recorded. It would apply to
voice mail, since the information has been recorded in or by a device similar to a computer.
Likewise video records are not covered, though when the video is transferred to a Web site it
would be, because of the involvement of the computer. Music recorded by a computer system
on a compact disk would be covered.
In short, not all data recorded or stored in "digital" form is covered. A computer or similar device
has to be involved in its creation or storage. The term "similar device" does not extend to all
devices that create or store data in digital form. Although things that are not recorded or
preserved by or in a computer system are omitted from this Act, they may well be admissible
under other rules of law. This Act focuses on replacing the search for originality, proving the
reliability of systems instead of that of individual records, and using standards to show systems
reliability.

However, printouts that are used only as paper records, and whose computer origin is never
again called on, are treated as paper records. See subsection 4(2). In this case the reliability of
the computer system that produced the record is relevant to its reliability. 81
There is no question then that when Congress formulated the term "electronic data message," it
intended the same meaning as the term "electronic record" in the Canada law. This construction
of the term "electronic data message," which excludes telexes or faxes, except computergenerated faxes, is in harmony with the Electronic Commerce Law's focus on "paperless"
communications and the "functional equivalent approach" 82 that it espouses. In fact, the
deliberations of the Legislature are replete with discussions on paperless and digital
transactions.
Facsimile transmissions are not, in this sense, "paperless," but verily are paper-based.
A facsimile machine, which was first patented in 1843 by Alexander Bain, 83 is a device that can
send or receive pictures and text over a telephone line. It works by digitizing an image
dividing it into a grid of dots. Each dot is either on or off, depending on whether it is black or
white. Electronically, each dot is represented by a bit that has a value of either 0 (off) or 1 (on).
In this way, the fax machine translates a picture into a series of zeros and ones (called a bit
map) that can be transmitted like normal computer data. On the receiving side, a fax machine
reads the incoming data, translates the zeros and ones back into dots, and reprints the picture.
84 A fax machine is essentially an image scanner, a modem and a computer printer combined
into a highly specialized package. The scanner converts the content of a physical document into
a digital image, the modem sends the image data over a phone line, and the printer at the other
end makes a duplicate of the original document. 85 Thus, in Garvida v. Sales, Jr., 86 where we
explained the unacceptability of filing pleadings through fax machines, we ruled that: DHTECc
A facsimile or fax transmission is a process involving the transmission and reproduction of
printed and graphic matter by scanning an original copy, one elemental area at a time, and
representing the shade or tone of each area by a specified amount of electric current. The
current is transmitted as a signal over regular telephone lines or via microwave relay and is used
by the receiver to reproduce an image of the elemental area in the proper position and the
correct shade. The receiver is equipped with a stylus or other device that produces a printed
record on paper referred to as a facsimile.
. . . A facsimile is not a genuine and authentic pleading. It is, at best, an exact copy preserving
all the marks of an original. Without the original, there is no way of determining on its face
whether the facsimile pleading is genuine and authentic and was originally signed by the party
and his counsel. It may, in fact, be a sham pleading. 87
Accordingly, in an ordinary facsimile transmission, there exists an original paper-based
information or data that is scanned, sent through a phone line, and re-printed at the receiving
end. Be it noted that in enacting the Electronic Commerce Act of 2000, Congress intended
virtual or paperless writings to be the functional equivalent and to have the same legal function
as paper-based documents. 88 Further, in a virtual or paperless environment, technically, there

is no original copy to speak of, as all direct printouts of the virtual reality are the same, in all
respects, and are considered as originals. 89 Ineluctably, the law's definition of "electronic data
message," which, as aforesaid, is interchangeable with "electronic document," could not have
included facsimile transmissions, which have an original paper-based copy as sent and a paperbased facsimile copy as received. These two copies are distinct from each other, and have
different legal effects. While Congress anticipated future developments in communications and
computer technology 90 when it drafted the law, it excluded the early forms of technology, like
telegraph, telex and telecopy (except computer-generated faxes, which is a newer development
as compared to the ordinary fax machine to fax machine transmission), when it defined the term
"electronic data message." IHaSED
Clearly then, the IRR went beyond the parameters of the law when it adopted verbatim the
UNCITRAL Model Law's definition of "data message," without considering the intention of
Congress when the latter deleted the phrase "but not limited to, electronic data interchange
(EDI), electronic mail, telegram, telex or telecopy." The inclusion of this phrase in the IRR
offends a basic tenet in the exercise of the rule-making power of administrative agencies. After
all, the power of administrative officials to promulgate rules in the implementation of a statute is
necessarily limited to what is found in the legislative enactment itself. The implementing rules
and regulations of a law cannot extend the law or expand its coverage, as the power to amend
or repeal a statute is vested in the Legislature. 91 Thus, if a discrepancy occurs between the
basic law and an implementing rule or regulation, it is the former that prevails, because the law
cannot be broadened by a mere administrative issuance an administrative agency certainly
cannot amend an act of Congress. 92 Had the Legislature really wanted ordinary fax
transmissions to be covered by the mantle of the Electronic Commerce Act of 2000, it could
have easily lifted without a bit of tatter the entire wordings of the UNCITRAL Model Law.
Incidentally, the National Statistical Coordination Board Task Force on the Measurement of ECommerce, 93 on November 22, 2006, recommended a working definition of "electronic
commerce," as "[a]ny commercial transaction conducted through electronic, optical and similar
medium, mode, instrumentality and technology. The transaction includes the sale or purchase of
goods and services, between individuals, households, businesses and governments conducted
over computer-mediated networks through the Internet, mobile phones, electronic data
interchange (EDI) and other channels through open and closed networks." The Task Force's
proposed definition is similar to the Organization of Economic Cooperation and Development's
(OECD's) broad definition as it covers transactions made over any network, and, in addition, it
adopted the following provisions of the OECD definition: (1) for transactions, it covers sale or
purchase of goods and services; (2) for channel/network, it considers any computer-mediated
network and NOT limited to Internet alone; (3) it excludes transactions received/placed using
fax, telephone or non-interactive mail; (4) it considers payments done online or offline; and (5) it
considers delivery made online (like downloading of purchased books, music or software
programs) or offline (deliveries of goods). 94 ADTEaI
We, therefore, conclude that the terms "electronic data message" and "electronic document," as
defined under the Electronic Commerce Act of 2000, do not include a facsimile transmission.
Accordingly, a facsimile transmission cannot be considered as electronic evidence. It is not the
functional equivalent of an original under the Best Evidence Rule and is not admissible as
electronic evidence.
Since a facsimile transmission is not an "electronic data message" or an "electronic document,"
and cannot be considered as electronic evidence by the Court, with greater reason is a
photocopy of such a fax transmission not electronic evidence. In the present case, therefore, Pro

Forma Invoice Nos. ST2-POSTS0401-1 and ST2-POSTS0401-2 (Exhibits "E" and "F"), which
are mere photocopies of the original fax transmittals, are not electronic evidence, contrary to the
position of both the trial and the appellate courts.
- III Nevertheless, despite the pro forma invoices not being electronic evidence, this Court finds that
respondent has proven by preponderance of evidence the existence of a perfected contract of
sale.
In an action for damages due to a breach of a contract, it is essential that the claimant proves (1)
the existence of a perfected contract, (2) the breach thereof by the other contracting party and
(3) the damages which he/she sustained due to such breach. Actori incumbit onus probandi. The
burden of proof rests on the party who advances a proposition affirmatively. 95 In other words, a
plaintiff in a civil action must establish his case by a preponderance of evidence, that is,
evidence that has greater weight, or is more convincing than that which is offered in opposition
to it. 96 IEHSDA
In general, contracts are perfected by mere consent, 97 which is manifested by the meeting of
the offer and the acceptance upon the thing and the cause which are to constitute the contract.
The offer must be certain and the acceptance absolute. 98 They are, moreover, obligatory in
whatever form they may have been entered into, provided all the essential requisites for their
validity are present. 99 Sale, being a consensual contract, follows the general rule that it is
perfected at the moment there is a meeting of the minds upon the thing which is the object of the
contract and upon the price. From that moment, the parties may reciprocally demand
performance, subject to the provisions of the law governing the form of contracts. 100
The essential elements of a contract of sale are (1) consent or meeting of the minds, that is, to
transfer ownership in exchange for the price, (2) object certain which is the subject matter of the
contract, and (3) cause of the obligation which is established. 101
In this case, to establish the existence of a perfected contract of sale between the parties,
respondent Ssangyong formally offered in evidence the testimonies of its witnesses and the
following exhibits:
Exhibit

Description

Purpose

Pro forma Invoice dated 17

To show that defendants

April 2000 with Contract No.

contracted with plaintiff for the

ST2-POSTS0401-1, photocopy

delivery of 110 MT of stainless

steel from Korea payable by way

of an irrevocable letter of credit
E-1

Pro forma Invoice dated 17

in favor of plaintiff, among other

April 2000 with Contract No.

conditions. To show that defen-

ST2-POSTS0401, contained in

dants sent their confirmation of the

G-1

facsimile/thermal paper faxed (i) delivery to it of the specified

Chan, contained in facsimile/

by defendants to plaintiff

thermal paper.

stainless steel products, (ii)

showing the printed defendants' payment thereof by

thereof.

IcSEAH

Letter to defendants dated

To prove that defendants were

22 June 2000, original

informed of the successful price

transmission details on the upper

way of an irrevocable letter of

portion of said paper as coming

credit in favor of plaintiff,

adjustments secured by plaintiff

from defendant MCC on 26 Apr

among other conditions.

in favor of former and were advised

00 08:41AM
E-2

Signature of defendant Gregory

of the schedules of its L/C opening.

Conforme signature of Mr.

To show that defendants sent

Gregory Chan, contained in

their confirmation of the (i) delivery

June 2000, original requested defendants for the agreed

facsimile/thermal paper faxed to it of the total of 220MT specified

by defendants to plaintiff

stainless steel products, (ii) defendants'

showing the printed transmission

Letter to defendants dated 26 opening of the Letters of Credit,

June 2000, original defendants' failure and refusal to

payment thereof by way of an irre-

details on the upper vocable letter of credit in favor

portion of said paper as

Letter to defendants dated 26 To prove that plaintiff repeatedly

Letter to defendants dated 27 comply with their obligations and

June 2000, original the problems of plaintiff is incurring

of plaintiff, among other conditions.

Facsimile message to defendants

by reason of defendants' failure

dated 28 June 2000, photocopy

refusal to open the L/Cs.

Letter from defendants dated 29

To prove that defendants admit

and
coming from defendant MCC
on 26 Apr 00 08:41AM
M
F

Pro forma Invoice dated 17

To show that defendants

April 2000 with Contract No.

contracted with plaintiff for delivery

June 2000, contained in

of their liabilities to plaintiff, that

facsimile/thermal paper faxed by

ST2-POSTSO401-2, photocopy

of another 110 MT of stainless

they

requested

for

"more

extension"

steel
defendants to plaintiff showing of time for the opening of the Letter
from Korea payable by way of an
the printed transmission details

of Credit, and begging for favorable

irrevocable letter of credit in favor

on the upper portion of said
G

Letter to defendant SANYO

of plaintiff, among other conditions.

SEIKE dated 20 June 2000,

To prove that defendants were

understanding and consideration.

paper as coming from defendant

MCC on 29 June 00 11:12 AM
contained in facsimile/thermal informed of the date of L/C opening
M-1
paper

and defendant's conforme/approval

Signature of defendant Gregory

Chan, contained in facsimile/

final L/C on time, and were informed

thermal paper faxed by defendants

that failure to comply will cancel

to plaintiff showing the printed

the contract.

transmission details on the upper

portion of said paper as coming

the cancellation of the contract as

11:12 AM

a consequence thereof, and final

Letter to defendants dated 29 June

demand upon defendants to remit

2000, original

its obligations.

Letter to defendants dated 30 To prove that plaintiff reiterated

its request for defendants to L/C

SSANGYONG to defendant

sale and purchase agreement

SANYO SEIKI dated 13 April between the parties for 220 metric

for extension of time was granted,

2000, with fax back from

defendants' failure and refusal to

defendants SANYO SEIKI/MCC

comply therewith extension of time

to plaintiff SSANGYONG,

notwithstanding.

contained in facsimile/thermal

Letter to defendants dated 06

tons of steel products at the price

of US$1,860/ton.

DHIcET

paper with back-up photocopy

W-1

Conforme signature of defendant

To prove that defendants, acting

Demand letter to defendants To prove that plaintiff was

Gregory Chan, contained in

through Gregory Chan, agreed to

dated 15 Aug 2000, original

facsimile/thermal paper with

the sale and purchase of 220 metric

constrained to engaged services

of a lawyer for collection efforts.

R

Letter from plaintiff To prove that there was a perfected

opening after the latter's request

July 2000, original

Q

dated 11 Sept 2000, original failure to open the final L/C on time,

from defendant MCC on June 00

June 2000, photocopy

Demand letter to defendants To show defendants' refusal and

Demand letter to defendants To prove that defendants opened

dated 23 Aug 2000, original

back-up photocopy tons of steel products at the price

W-2

the first L/C in favor of plaintiff,

Name of sender MCC Industrial

of US$1,860/ton. To prove that

Sales Corporation defendants sent their conformity

requested for further postponement

to the sale and purchase agreement

of the final L/C and for minimal

by facsimile transmission.

amounts, were urged to open the

Pro forma Invoice dated 16

To prove that defendant MCC

August 2000, photocopy

agreed to adjust and split the

by plaintiff SSANGYONG and paid

confirmed purchase order into 2

for by defendant MCC.

shipments at 100 metric tons each

X-1

X-2

DD-1

Ref. No. ST2-POSTS080-1,

To prove that there was a perfected

at the discounted price of US$1,700/

contained in facsimile/thermal sale and purchase agreement between

ton.

paper with back-up photocopy plaintiff SSANGYONG and defendant

Notation "1/2", photocopy

To prove that the present Pro

MCC for the balance of 100 metric tons,

forma Invoice was the first of 2

apart from the other order and shipment

pro forma invoices.

of 100 metric tons which was delivered

Ref. No. ST2-POSTS080-1,

photocopy

To prove that the present Pro

by plaintiff SSANGYONG and paid for

forma Invoice was the first

by defendant MCC.

of 2 pro forma invoices.

DD-2

Signature of defendant Gregory

To prove that defendant MCC,

acting
X-3

Conforme signature of defendant

To prove that defendant MCC,

Chan, contained in facsimile through Gregory Chan, agreed to the

Gregory Chan, photocopy

acting through Gregory Chan,

/thermal paper with back-up

sale and purchase of the balance of 100

agreed to the sale and purchase

photocopy

metric tons, apart from the other order

of the balance of 100 metric tons

and shipment of 100 metric tons which
at the discounted price of US$1,700/
was delivered by plaintiff Ssangyong
ton, apart from the other order and
and paid for by defendant MCC. 102
shipment of 100 metric tons which
was delivered by plaintiff SSANGYONG
and paid for by defendant MCC.
DD

Letter from defendant MCC to To prove that there was a perfected

plaintiff SSANGYONG dated 22

sale

and

purchase

agreement

between
August 2000, contained in

plaintiff SSANGYONG and defendant

facsimile/thermal paper with

MCC for the balance of 100 metric tons,

back-up photocopy

IEHDAT apart from the other order and shipment

of 100 metric tons which was delivered

Significantly, among these documentary evidence presented by respondent, MCC, in its petition
before this Court, assails the admissibility only of Pro Forma Invoice Nos. ST2-POSTS0401-1
and ST2-POSTS0401-2 (Exhibits "E" and "F"). After sifting through the records, the Court found
that these invoices are mere photocopies of their original fax transmittals. Ssangyong avers that
these documents were prepared after MCC asked for the splitting of the original order into two,
so that the latter can apply for an L/C with greater facility. It, however, failed to explain why the
originals of these documents were not presented. EcHTDI
To determine whether these documents are admissible in evidence, we apply the ordinary Rules
on Evidence, for as discussed above we cannot apply the Electronic Commerce Act of 2000 and
the Rules on Electronic Evidence.
Because these documents are mere photocopies, they are simply secondary evidence,
admissible only upon compliance with Rule 130, Section 5, which states, "[w]hen the original
document has been lost or destroyed, or cannot be produced in court, the offeror, upon proof of
its execution or existence and the cause of its unavailability without bad faith on his part, may
prove its contents by a copy, or by a recital of its contents in some authentic document, or by the

testimony of witnesses in the order stated." Furthermore, the offeror of secondary evidence must
prove the predicates thereof, namely: (a) the loss or destruction of the original without bad faith
on the part of the proponent/offeror which can be shown by circumstantial evidence of routine
practices of destruction of documents; (b) the proponent must prove by a fair preponderance of
evidence as to raise a reasonable inference of the loss or destruction of the original copy; and
(c) it must be shown that a diligent and bona fide but unsuccessful search has been made for
the document in the proper place or places. It has been held that where the missing document is
the foundation of the action, more strictness in proof is required than where the document is only
collaterally involved. 103
Given these norms, we find that respondent failed to prove the existence of the original fax
transmissions of Exhibits E and F, and likewise did not sufficiently prove the loss or destruction
of the originals. Thus, Exhibits E and F cannot be admitted in evidence and accorded probative
weight. TcCSIa
It is observed, however, that respondent Ssangyong did not rely merely on Exhibits E and F to
prove the perfected contract. It also introduced in evidence a variety of other documents, as
enumerated above, together with the testimonies of its witnesses. Notable among them are Pro
Forma Invoice Nos. ST2-POSTS080-1 and ST2-POSTS080-2 which were issued by Ssangyong
and sent via fax to MCC. As already mentioned, these invoices slightly varied the terms of the
earlier invoices such that the quantity was now officially 100MT per invoice and the price
reduced to US$1,700.00 per MT. The copies of the said August 16, 2000 invoices submitted to
the court bear the conformity signature of MCC Manager Chan.
Pro Forma Invoice No. ST2-POSTS080-1 (Exhibit "X"), however, is a mere photocopy of its
original. But then again, petitioner MCC does not assail the admissibility of this document in the
instant petition. Verily, evidence not objected to is deemed admitted and may be validly
considered by the court in arriving at its judgment. 104 Issues not raised on appeal are deemed
abandoned.
As to Pro Forma Invoice No. ST2-POSTS080-2 (Exhibits "1-A" and "2-C"), which was certified
by PCIBank as a true copy of its original, 105 it was, in fact, petitioner MCC which introduced
this document in evidence. Petitioner MCC paid for the order stated in this invoice. Its
admissibility, therefore, is not open to question.
These invoices (ST2-POSTS0401, ST2-POSTS080-1 and ST2-POSTS080-2), along with the
other unchallenged documentary evidence of respondent Ssangyong, preponderate in favor of
the claim that a contract of sale was perfected by the parties. CEDScA

Indeed, why would petitioner open an L/C for the second half of the transaction if there was no
first half to speak of?
The logical chain of events, as gleaned from the evidence of both parties, started with the
petitioner and the respondent agreeing on the sale and purchase of 220MT of stainless steel at
US$1,860.00 per MT. This initial contract was perfected. Later, as petitioner asked for several
extensions to pay, adjustments in the delivery dates, and discounts in the price as originally
agreed, the parties slightly varied the terms of their contract, without necessarily novating it, to
the effect that the original order was reduced to 200MT, split into two deliveries, and the price
discounted to US$1,700 per MT. Petitioner, however, paid only half of its obligation and failed to
open an L/C for the other 100MT. Notably, the conduct of both parties sufficiently established the
existence of a contract of sale, even if the writings of the parties, because of their contested
admissibility, were not as explicit in establishing a contract. 107 Appropriate conduct by the
parties may be sufficient to establish an agreement, and while there may be instances where the
exchange of correspondence does not disclose the exact point at which the deal was closed, the
actions of the parties may indicate that a binding obligation has been undertaken. 108 AIHDcC
With our finding that there is a valid contract, it is crystal-clear that when petitioner did not open
the L/C for the first half of the transaction (100MT), despite numerous demands from respondent
Ssangyong, petitioner breached its contractual obligation. It is a well-entrenched rule that the
failure of a buyer to furnish an agreed letter of credit is a breach of the contract between buyer
and seller. Indeed, where the buyer fails to open a letter of credit as stipulated, the seller or
exporter is entitled to claim damages for such breach. Damages for failure to open a commercial
credit may, in appropriate cases, include the loss of profit which the seller would reasonably
have made had the transaction been carried out. 109
- IV This Court, however, finds that the award of actual damages is not in accord with the evidence
on record. It is axiomatic that actual or compensatory damages cannot be presumed, but must
be proven with a reasonable degree of certainty. 110 In Villafuerte v. Court of Appeals, 111 we
explained that:
Actual or compensatory damages are those awarded in order to compensate a party for an
injury or loss he suffered. They arise out of a sense of natural justice and are aimed at repairing
the wrong done. Except as provided by law or by stipulation, a party is entitled to an adequate
compensation only for such pecuniary loss as he has duly proven. It is hornbook doctrine that to
be able to recover actual damages, the claimant bears the onus of presenting before the court
actual proof of the damages alleged to have been suffered, thus:

This Court also finds merit in the following observations of the trial court:
Defendants presented Letter of Credit (Exhibits "1", "1-A" to "1-R") referring to Pro Forma
Invoice for Contract No. ST2POSTS080-2, in the amount of US$170,000.00, and which bears
the signature of Gregory Chan, General Manager of MCC. Plaintiff, on the other hand, presented
Pro Forma Invoice referring to Contract No. ST2-POSTS080-1, in the amount of
US$170,000.00, which likewise bears the signature of Gregory Chan, MCC. Plaintiff accounted
for the notation "1/2" on the right upper portion of the Invoice, that is, that it was the first of two
(2) pro forma invoices covering the subject contract between plaintiff and the defendants.
Defendants, on the other hand, failed to account for the notation "2/2" in its Pro Forma Invoice
(Exhibit "1-A"). Observably further, both Pro Forma Invoices bear the same date and details,
which logically mean that they both apply to one and the same transaction. 106

A party is entitled to an adequate compensation for such pecuniary loss actually suffered by him
as he has duly proved. Such damages, to be recoverable, must not only be capable of proof, but
must actually be proved with a reasonable degree of certainty. We have emphasized that these
damages cannot be presumed and courts, in making an award must point out specific facts
which could afford a basis for measuring whatever compensatory or actual damages are borne.
112 DTCAES
In the instant case, the trial court awarded to respondent Ssangyong US$93,493.87 as actual
damages. On appeal, the same was affirmed by the appellate court. Noticeably, however, the
trial and the appellate courts, in making the said award, relied on the following documents
submitted in evidence by the respondent: (1) Exhibit "U," the Statement of Account dated March

30, 2001; (2) Exhibit "U-1," the details of the said Statement of Account); (3) Exhibit "V," the
contract of the alleged resale of the goods to a Korean corporation; and (4) Exhibit "V-1," the
authentication of the resale contract from the Korean Embassy and certification from the
Philippine Consular Office.

TOTAL: 95.562MT 115

List of commodities as stated in Exhibit "X" (the invoice that was not paid):

The statement of account and the details of the losses sustained by respondent due to the said
breach are, at best, self-serving. It was respondent Ssangyong itself which prepared the said
documents. The items therein are not even substantiated by official receipts. In the absence of
corroborative evidence, the said statement of account is not sufficient basis to award actual
damages. The court cannot simply rely on speculation, conjecture or guesswork as to the fact
and amount of damages, but must depend on competent proof that the claimant had suffered,
and on evidence of, the actual amount thereof. 113
Furthermore, the sales contract and its authentication certificates, Exhibits "V" and "V-1,"
allegedly evidencing the resale at a loss of the stainless steel subject of the parties' breached
contract, fail to convince this Court of the veracity of its contents. The steel items indicated in the
sales contract 114 with a Korean corporation are different in all respects from the items ordered
by petitioner MCC, even in size and quantity. We observed the following discrepancies:
EIaDHS
List of commodities as stated in Exhibit "V":
COMMODITY: Stainless Steel HR Sheet in Coil, Slit Edge

DESCRIPTION: Hot Rolled Stainless Steel Coil SUS 304

SIZE AND QUANTITY:

AHaETS

2.6 MM X 4' X C

10.0MT

3.0 MM X 4' X C

25.0MT

4.0 MM X 4' X C

15.0MT

4.5 MM X 4' X C

15.0MT

5.0 MM X 4' X C

10.0MT

6.0 MM X 4' X C

25.0MT

TOTAL: 100MT 116

SPEC: SUS304 NO. 1

SIZE/Q'TY:
2.8MM X 1,219MM X C

8.193MT

3.0MM X 1,219MM X C

7.736MT

3.0MM X 1,219MM X C

7.885MT

3.0MM X 1,219MM X C

8.629MT

4.0MM X 1,219MM X C

7.307MT

4.0MM X 1,219MM X C

7.247MT

4.5MM X 1,219MM X C

8.450MT

4.5MM X 1,219MM X C

8.870MT

5.0MM X 1,219MM X C

8.391MT

6.0MM X 1,219MM X C

6.589MT

6.0MM X 1,219MM X C

7.878MT

6.0MM X 1,219MM X C

8.397MT

From the foregoing, we find merit in the contention of MCC that Ssangyong did not adequately
prove that the items resold at a loss were the same items ordered by the petitioner. Therefore,
as the claim for actual damages was not proven, the Court cannot sanction the award.
Nonetheless, the Court finds that petitioner knowingly breached its contractual obligation and
obstinately refused to pay despite repeated demands from respondent. Petitioner even asked for
several extensions of time for it to make good its obligation. But in spite of respondent's
continuous accommodation, petitioner completely reneged on its contractual duty. For such
inattention and insensitivity, MCC must be held liable for nominal damages. "Nominal damages
are 'recoverable where a legal right is technically violated and must be vindicated against an
invasion that has produced no actual present loss of any kind or where there has been a breach
of contract and no substantial injury or actual damages whatsoever have been or can be
shown.'" 117 Accordingly, the Court awards nominal damages of P200,000.00 to respondent
Ssangyong.
As to the award of attorney's fees, it is well settled that no premium should be placed on the right
to litigate and not every winning party is entitled to an automatic grant of attorney's fees. The
party must show that he falls under one of the instances enumerated in Article 2208 of the Civil
Code. 118 In the instant case, however, the Court finds the award of attorney's fees proper,
considering that petitioner MCC's unjustified refusal to pay has compelled respondent
Ssangyong to litigate and to incur expenses to protect its rights. HAaDTI
WHEREFORE, PREMISES CONSIDERED, the appeal is PARTIALLY GRANTED. The
Decision of the Court of Appeals in CA-G.R. CV No. 82983 is MODIFIED in that the award of
actual damages is DELETED. However, petitioner is ORDERED to pay respondent NOMINAL

DAMAGES in the amount of P200,000.00, and the ATTORNEY'S FEES as awarded by the trial
court.

hour; on weekends, flat rate of P25.00 per

day

SO ORDERED.
Robinsons

P20.00 for the first three hours and P10.00

for every succeeding hour

[G.R. No. 177056. September 18, 2009.]
Shangri-la
THE OFFICE OF THE SOLICITOR GENERAL, petitioner, vs. AYALA LAND
INCORPORATED,
ROBINSON'S
LAND
CORPORATION,
SHANGRI-LA
PLAZA
CORPORATION and SM PRIME HOLDINGS, INC., respondents.

Flat rate of P30.00 per day

SM Prime P10.00 to P20.00 (depending on whether

the parking space is outdoors or indoors)

DECISION
for the first three hours and 59 minutes,
CHICO-NAZARIO, J p:
and P10.00 for every succeeding hour or
Before this Court is a Petition for Review on Certiorari, 1 under Rule 45 of the Revised Rules of
Court, filed by petitioner Office of the Solicitor General (OSG), seeking the reversal and setting
aside of the Decision 2 dated 25 January 2007 of the Court of Appeals in CA-G.R. CV No.
76298, which affirmed in toto the Joint Decision 3 dated 29 May 2002 of the Regional Trial Court
(RTC) of Makati City, Branch 138, in Civil Cases No. 00-1208 and No. 00-1210; and (2) the
Resolution 4 dated 14 March 2007 of the appellate court in the same case which denied the
Motion for Reconsideration of the OSG. The RTC adjudged that respondents Ayala Land
Incorporated (Ayala Land), Robinsons Land Corporation (Robinsons), Shangri-la Plaza
Corporation (Shangri-la), and SM Prime Holdings, Inc. (SM Prime) could not be obliged to
provide free parking spaces in their malls to their patrons and the general public.
Respondents Ayala Land, Robinsons, and Shangri-la maintain and operate shopping malls in
various locations in Metro Manila. Respondent SM Prime constructs, operates, and leases out
commercial buildings and other structures, among which, are SM City, Manila; SM Centerpoint,
Sta. Mesa, Manila; SM City, North Avenue, Quezon City; and SM Southmall, Las Pias.
The shopping malls operated or leased out by respondents have parking facilities for all kinds of
motor vehicles, either by way of parking spaces inside the mall buildings or in separate buildings
and/or adjacent lots that are solely devoted for use as parking spaces. Respondents Ayala Land,
Robinsons, and SM Prime spent for the construction of their own parking facilities. Respondent
Shangri-la is renting its parking facilities, consisting of land and building specifically used as
parking spaces, which were constructed for the lessor's account.
Respondents expend for the maintenance and administration of their respective parking
facilities. They provide security personnel to protect the vehicles parked in their parking facilities
and maintain order within the area. In turn, they collect the following parking fees from the
persons making use of their parking facilities, regardless of whether said persons are mall
patrons or not:
Respondent
Ayala Land

Parking Fees

On weekdays, P25.00 for the first four

hours and P10.00 for every succeeding

fraction thereof
The parking tickets or cards issued by respondents to vehicle owners contain the stipulation that
respondents shall not be responsible for any loss or damage to the vehicles parked in
respondents' parking facilities.
In 1999, the Senate Committees on Trade and Commerce and on Justice and Human Rights
conducted a joint investigation for the following purposes: (1) to inquire into the legality of the
prevalent practice of shopping malls of charging parking fees; (2) assuming arguendo that the
collection of parking fees was legally authorized, to find out the basis and reasonableness of the
parking rates charged by shopping malls; and (3) to determine the legality of the policy of
shopping malls of denying liability in cases of theft, robbery, or carnapping, by invoking the
waiver clause at the back of the parking tickets. Said Senate Committees invited the top
executives of respondents, who operate the major malls in the country; the officials from the
Department of Trade and Industry (DTI), Department of Public Works and Highways (DPWH),
Metro Manila Development Authority (MMDA), and other local government officials; and the
Philippine Motorists Association (PMA) as representative of the consumers' group.
After three public hearings held on 30 September, 3 November, and 1 December 1999, the
afore-mentioned Senate Committees jointly issued Senate Committee Report No. 225 5 on 2
May 2000, in which they concluded:
In view of the foregoing, the Committees find that the collection of parking fees by shopping
malls is contrary to the National Building Code and is therefor [sic] illegal. While it is true that the
Code merely requires malls to provide parking spaces, without specifying whether it is free or
not, both Committees believe that the reasonable and logical interpretation of the Code is that
the parking spaces are for free. This interpretation is not only reasonable and logical but finds
support in the actual practice in other countries like the United States of America where parking
spaces owned and operated by mall owners are free of charge.
Figuratively speaking, the Code has "expropriated" the land for parking something similar to
the subdivision law which require developers to devote so much of the land area for parks.

Moreover, Article II of R.A. No. 9734 (Consumer Act of the Philippines) provides that "it is the
policy of the State to protect the interest of the consumers, promote the general welfare and
establish standards of conduct for business and industry". Obviously, a contrary interpretation
(i.e., justifying the collection of parking fees) would be going against the declared policy of R.A.
7394.
Section 201 of the National Building Code gives the responsibility for the administration and
enforcement of the provisions of the Code, including the imposition of penalties for
administrative violations thereof to the Secretary of Public Works. This set up, however, is not
being carried out in reality.
In the position paper submitted by the Metropolitan Manila Development Authority (MMDA), its
chairman, Jejomar C. Binay, accurately pointed out that the Secretary of the DPWH is
responsible for the implementation/enforcement of the National Building Code. After the
enactment of the Local Government Code of 1991, the local government units (LGU's) were
tasked to discharge the regulatory powers of the DPWH. Hence, in the local level, the Building
Officials enforce all rules/regulations formulated by the DPWH relative to all building plans,
specifications and designs including parking space requirements. There is, however, no single
national department or agency directly tasked to supervise the enforcement of the provisions of
the Code on parking, notwithstanding the national character of the law. 6
Senate Committee Report No. 225, thus, contained the following recommendations:
In light of the foregoing, the Committees on Trade and Commerce and Justice and Human
Rights hereby recommend the following:
1.
The Office of the Solicitor General should institute the necessary action to enjoin the
collection of parking fees as well as to enforce the penal sanction provisions of the National
Building Code. The Office of the Solicitor General should likewise study how refund can be
exacted from mall owners who continue to collect parking fees.
2.
The Department of Trade and Industry pursuant to the provisions of R.A. No. 7394,
otherwise known as the Consumer Act of the Philippines should enforce the provisions of the
Code relative to parking. Towards this end, the DTI should formulate the necessary
implementing rules and regulations on parking in shopping malls, with prior consultations with
the local government units where these are located. Furthermore, the DTI, in coordination with
the DPWH, should be empowered to regulate and supervise the construction and maintenance
of parking establishments.
3.
Finally, Congress should amend and update the National Building Code to expressly
prohibit shopping malls from collecting parking fees by at the same time, prohibit them from
invoking the waiver of liability. 7
Respondent SM Prime thereafter received information that, pursuant to Senate Committee
Report No. 225, the DPWH Secretary and the local building officials of Manila, Quezon City, and
Las Pias intended to institute, through the OSG, an action to enjoin respondent SM Prime and
similar establishments from collecting parking fees, and to impose upon said establishments
penal sanctions under Presidential Decree No. 1096, otherwise known as the National Building
Code of the Philippines (National Building Code), and its Implementing Rules and Regulations
(IRR). With the threatened action against it, respondent SM Prime filed, on 3 October 2000, a
Petition for Declaratory Relief 8 under Rule 63 of the Revised Rules of Court, against the DPWH

Secretary and local building officials of Manila, Quezon City, and Las Pias. Said Petition was
docketed as Civil Case No. 00-1208 and assigned to the RTC of Makati City, Branch 138,
presided over by Judge Sixto Marella, Jr. (Judge Marella). In its Petition, respondent SM Prime
prayed for judgment:
a)
Declaring Rule XIX of the Implementing Rules and Regulations of the National
Building Code as ultra vires, hence, unconstitutional and void;
b)
Declaring [herein respondent SM Prime]'s clear legal right to lease parking spaces
appurtenant to its department stores, malls, shopping centers and other commercial
establishments; and
c)
Declaring the National Building Code of the Philippines Implementing Rules and
Regulations as ineffective, not having been published once a week for three (3) consecutive
weeks in a newspaper of general circulation, as prescribed by Section 211 of Presidential
Decree No. 1096.
[Respondent SM Prime] further prays for such other reliefs as may be deemed just and equitable
under the premises. 9
The very next day, 4 October 2000, the OSG filed a Petition for Declaratory Relief and Injunction
(with Prayer for Temporary Restraining Order and Writ of Preliminary Injunction) 10 against
respondents. This Petition was docketed as Civil Case No. 00-1210 and raffled to the RTC of
Makati, Branch 135, presided over by Judge Francisco B. Ibay (Judge Ibay). Petitioner prayed
that the RTC:
1.
After summary hearing, a temporary restraining order and a writ of preliminary
injunction be issued restraining respondents from collecting parking fees from their customers;
and
2.
After hearing, judgment be rendered declaring that the practice of respondents in
charging parking fees is violative of the National Building Code and its Implementing Rules and
Regulations and is therefore invalid, and making permanent any injunctive writ issued in this
case.
Other reliefs just and equitable under the premises are likewise prayed for. 11
On 23 October 2000, Judge Ibay of the RTC of Makati City, Branch 135, issued an Order
consolidating Civil Case No. 00-1210 with Civil Case No. 00-1208 pending before Judge Marella
of RTC of Makati, Branch 138.
As a result of the pre-trial conference held on the morning of 8 August 2001, the RTC issued a
Pre-Trial Order 12 of even date which limited the issues to be resolved in Civil Cases No. 001208 and No. 00-1210 to the following:
1.
Capacity of the plaintiff [OSG] in Civil Case No. 00-1210 to institute the present
proceedings and relative thereto whether the controversy in the collection of parking fees by mall
owners is a matter of public welfare.
2.

Whether declaratory relief is proper.

3.
Whether respondent Ayala Land, Robinsons, Shangri-La and SM Prime are obligated
to provide parking spaces in their malls for the use of their patrons or the public in general, free
of charge.
4.

Entitlement of the parties of [sic] award of damages. 13

On 29 May 2002, the RTC rendered its Joint Decision in Civil Cases No. 00-1208 and No. 001210.
The RTC resolved the first two issues affirmatively. It ruled that the OSG can initiate Civil Case
No. 00-1210 under Presidential Decree No. 478 and the Administrative Code of 1987. 14 It also
found that all the requisites for an action for declaratory relief were present, to wit:
The requisites for an action for declaratory relief are: (a) there is a justiciable controversy; (b) the
controversy is between persons whose interests are adverse; (c) the party seeking the relief has
a legal interest in the controversy; and (d) the issue involved is ripe for judicial determination.

The presence of parking spaces can be viewed in another light. They can be looked at as
necessary facilities to entice the public to increase patronage of their malls because without
parking spaces, going to their malls will be inconvenient. These are[,] however[,] business
considerations which mall operators will have to decide for themselves. They are not sufficient to
justify a legal conclusion, as the OSG would like the Court to adopt that it is the obligation of the
mall owners to provide parking spaces for free. 16
The RTC then held that there was no sufficient evidence to justify any award for damages.
The RTC finally decreed in its 29 May 2002 Joint Decision in Civil Cases No. 00-1208 and No.
00-1210 that:
FOR THE REASONS GIVEN, the Court declares that Ayala Land[,] Inc., Robinsons Land
Corporation, Shangri-la Plaza Corporation and SM Prime Holdings[,] Inc. are not obligated to
provide parking spaces in their malls for the use of their patrons or public in general, free of
charge.

SM, the petitioner in Civil Case No. 001-1208 [sic] is a mall operator who stands to be affected
directly by the position taken by the government officials sued namely the Secretary of Public
Highways and the Building Officials of the local government units where it operates shopping
malls. The OSG on the other hand acts on a matter of public interest and has taken a position
adverse to that of the mall owners whom it sued. The construction of new and bigger malls has
been announced, a matter which the Court can take judicial notice and the unsettled issue of
whether mall operators should provide parking facilities, free of charge needs to be resolved. 15

All counterclaims in Civil Case No. 00-1210 are dismissed.

As to the third and most contentious issue, the RTC pronounced that:

THE TRIAL COURT ERRED IN HOLDING THAT THE NATIONAL BUILDING CODE DID NOT
INTEND MALL PARKING SPACES TO BE FREE OF CHARGE[;]20

The Building Code, which is the enabling law and the Implementing Rules and Regulations do
not impose that parking spaces shall be provided by the mall owners free of charge. Absent
such directive[,] Ayala Land, Robinsons, Shangri-la and SM [Prime] are under no obligation to
provide them for free. Article 1158 of the Civil Code is clear:

No pronouncement as to costs. 17
CA-G.R. CV No. 76298 involved the separate appeals of the OSG 18 and respondent SM Prime
19 filed with the Court of Appeals. The sole assignment of error of the OSG in its Appellant's
Brief was:

while the four errors assigned by respondent SM Prime in its Appellant's Brief were:
I

"Obligations derived from law are not presumed. Only those expressly determined in this Code
or in special laws are demandable and shall be regulated by the precepts of the law which
establishes them; and as to what has not been foreseen, by the provisions of this Book (1090).["]

THE TRIAL COURT ERRED IN FAILING TO DECLARE RULE XIX OF THE IMPLEMENTING
RULES AS HAVING BEEN ENACTED ULTRA VIRES, HENCE, UNCONSTITUTIONAL AND
VOID.

xxx

II

xxx

xxx

The provision on ratios of parking slots to several variables, like shopping floor area or customer
area found in Rule XIX of the Implementing Rules and Regulations cannot be construed as a
directive to provide free parking spaces, because the enabling law, the Building Code does not
so provide. . . . .

THE TRIAL COURT ERRED IN FAILING TO DECLARE THE IMPLEMENTING RULES

INEFFECTIVE FOR NOT HAVING BEEN PUBLISHED AS REQUIRED BY LAW.

To compel Ayala Land, Robinsons, Shangri-La and SM [Prime] to provide parking spaces for
free can be considered as an unlawful taking of property right without just compensation.

THE TRIAL COURT ERRED IN FAILING TO DISMISS THE OSG'S PETITION FOR
DECLARATORY RELIEF AND INJUNCTION FOR FAILURE TO EXHAUST ADMINISTRATIVE
REMEDIES.

Parking spaces in shopping malls are privately owned and for their use, the mall operators
collect fees. The legal relationship could be either lease or deposit. In either case[,] the mall
owners have the right to collect money which translates into income. Should parking spaces be
made free, this right of mall owners shall be gone. This, without just compensation. Further, loss
of effective control over their property will ensue which is frowned upon by law.

III

IV
THE TRIAL COURT ERRED IN FAILING TO DECLARE THAT THE OSG HAS NO LEGAL
CAPACITY TO SUE AND/OR THAT IT IS NOT A REAL PARTY-IN-INTEREST IN THE
INSTANT CASE. 21

Respondent Robinsons filed a Motion to Dismiss Appeal of the OSG on the ground that the lone
issue raised therein involved a pure question of law, not reviewable by the Court of Appeals.
The Court of Appeals promulgated its Decision in CA-G.R. CV No. 76298 on 25 January 2007.
The appellate court agreed with respondent Robinsons that the appeal of the OSG should suffer
the fate of dismissal, since "the issue on whether or not the National Building Code and its
implementing rules require shopping mall operators to provide parking facilities to the public for
free" was evidently a question of law. Even so, since CA-G.R. CV No. 76298 also included the
appeal of respondent SM Prime, which raised issues worthy of consideration, and in order to
satisfy the demands of substantial justice, the Court of Appeals proceeded to rule on the merits
of the case.
In its Decision, the Court of Appeals affirmed the capacity of the OSG to initiate Civil Case No.
00-1210 before the RTC as the legal representative of the government, 22 and as the one
deputized by the Senate of the Republic of the Philippines through Senate Committee Report
No. 225.

THE COURT OF APPEALS SERIOUSLY ERRED IN AFFIRMING THE RULING OF THE

LOWER COURT THAT RESPONDENTS ARE NOT OBLIGED TO PROVIDE FREE PARKING
SPACES TO THEIR CUSTOMERS OR THE PUBLIC. 24
The OSG argues that respondents are mandated to provide free parking by Section 803 of the
National Building Code and Rule XIX of the IRR.
According to Section 803 of the National Building Code:
Percentage of Site Occupancy.

SECTION 803.

(a)
Maximum site occupancy shall be governed by the use, type of construction, and
height of the building and the use, area, nature, and location of the site; and subject to the
provisions of the local zoning requirements and in accordance with the rules and regulations
promulgated by the Secretary.
In connection therewith, Rule XIX of the old IRR, 25 provides:

The Court of Appeals rejected the contention of respondent SM Prime that the OSG failed to
exhaust administrative remedies. The appellate court explained that an administrative review is
not a condition precedent to judicial relief where the question in dispute is purely a legal one,
and nothing of an administrative nature is to be or can be done.
The Court of Appeals likewise refused to rule on the validity of the IRR of the National Building
Code, as such issue was not among those the parties had agreed to be resolved by the RTC
during the pre-trial conference for Civil Cases No. 00-1208 and No. 00-1210. Issues cannot be
raised for the first time on appeal. Furthermore, the appellate court found that the controversy
could be settled on other grounds, without touching on the issue of the validity of the IRR. It
referred to the settled rule that courts should refrain from passing upon the constitutionality of a
law or implementing rules, because of the principle that bars judicial inquiry into a constitutional
question, unless the resolution thereof is indispensable to the determination of the case.
Lastly, the Court of Appeals declared that Section 803 of the National Building Code and Rule
XIX of the IRR were clear and needed no further construction. Said provisions were only
intended to control the occupancy or congestion of areas and structures. In the absence of any
express and clear provision of law, respondents could not be obliged and expected to provide
parking slots free of charge.
The fallo of the 25 January 2007 Decision of the Court of Appeals reads:
WHEREFORE, premises considered, the instant appeals are DENIED. Accordingly, appealed
Decision is hereby AFFIRMED in toto. 23
In its Resolution issued on 14 March 2007, the Court of Appeals denied the Motion for
Reconsideration of the OSG, finding that the grounds relied upon by the latter had already been
carefully considered, evaluated, and passed upon by the appellate court, and there was no
strong and cogent reason to modify much less reverse the assailed judgment.
The OSG now comes before this Court, via the instant Petition for Review, with a single
assignment of error:

RULE XIX PARKING AND LOADING SPACE REQUIREMENTS

Pursuant to Section 803 of the National Building Code (PD 1096) providing for maximum site
occupancy, the following provisions on parking and loading space requirements shall be
observed:
1.
The parking space ratings listed below are minimum off-street requirements for
specific uses/occupancies for buildings/structures:
1.1
The size of an average automobile parking slot shall be computed as 2.4 meters by
5.00 meters for perpendicular or diagonal parking, 2.00 meters by 6.00 meters for parallel
parking. A truck or bus parking/loading slot shall be computed at a minimum of 3.60 meters by
12.00 meters. The parking slot shall be drawn to scale and the total number of which shall be
indicated on the plans and specified whether or not parking accommodations, are attendantmanaged. (See Section 2 for computation of parking requirements).
xxx
1.7

xxx

xxx

Neighborhood shopping center 1 slot/100 sq. m. of shopping floor area

The OSG avers that the aforequoted provisions should be read together with Section 102 of the
National Building Code, which declares:
SECTION 102.

Declaration of Policy.

It is hereby declared to be the policy of the State to safeguard life, health, property, and public
welfare, consistent with the principles of sound environmental management and control; and to
this end, make it the purpose of this Code to provide for all buildings and structures, a framework
of minimum standards and requirements to regulate and control their location, site, design,
quality of materials, construction, use, occupancy, and maintenance.
The requirement of free-of-charge parking, the OSG argues, greatly contributes to the aim of
safeguarding "life, health, property, and public welfare, consistent with the principles of sound

environmental management and control". Adequate parking spaces would contribute greatly to
alleviating traffic congestion when complemented by quick and easy access thereto because of
free-charge parking. Moreover, the power to regulate and control the use, occupancy, and
maintenance of buildings and structures carries with it the power to impose fees and,
conversely, to control partially or, as in this case, absolutely the imposition of such fees.
The Court finds no merit in the present Petition.
The explicit directive of the afore-quoted statutory and regulatory provisions, garnered from a
plain reading thereof, is that respondents, as operators/lessors of neighborhood shopping
centers, should provide parking and loading spaces, in accordance with the minimum ratio of
one slot per 100 square meters of shopping floor area. There is nothing therein pertaining to the
collection (or non-collection) of parking fees by respondents. In fact, the term "parking fees"
cannot even be found at all in the entire National Building Code and its IRR.
Statutory construction has it that if a statute is clear and unequivocal, it must be given its literal
meaning and applied without any attempt at interpretation. 26 Since Section 803 of the National
Building Code and Rule XIX of its IRR do not mention parking fees, then simply, said provisions
do not regulate the collection of the same. The RTC and the Court of Appeals correctly applied
Article 1158 of the New Civil Code, which states:
Art. 1158. Obligations derived from law are not presumed. Only those expressly determined in
this Code or in special laws are demandable, and shall be regulated by the precepts of the law
which establishes them; and as to what has not been foreseen, by the provisions of this Book.
(Emphasis ours.)
Hence, in order to bring the matter of parking fees within the ambit of the National Building Code
and its IRR, the OSG had to resort to specious and feeble argumentation, in which the Court
cannot concur.
The OSG cannot rely on Section 102 of the National Building Code to expand the coverage of
Section 803 of the same Code and Rule XIX of the IRR, so as to include the regulation of
parking fees. The OSG limits its citation to the first part of Section 102 of the National Building
Code declaring the policy of the State "to safeguard life, health, property, and public welfare,
consistent with the principles of sound environmental management and control"; but totally
ignores the second part of said provision, which reads, "and to this end, make it the purpose of
this Code to provide for all buildings and structures, a framework of minimum standards and
requirements to regulate and control their location, site, design, quality of materials, construction,
use, occupancy, and maintenance". While the first part of Section 102 of the National Building
Code lays down the State policy, it is the second part thereof that explains how said policy shall
be carried out in the Code. Section 102 of the National Building Code is not an all-encompassing
grant of regulatory power to the DPWH Secretary and local building officials in the name of life,
health, property, and public welfare. On the contrary, it limits the regulatory power of said
officials to ensuring that the minimum standards and requirements for all buildings and
structures, as set forth in the National Building Code, are complied with.
Consequently, the OSG cannot claim that in addition to fixing the minimum requirements for
parking spaces for buildings, Rule XIX of the IRR also mandates that such parking spaces be
provided by building owners free of charge. If Rule XIX is not covered by the enabling law, then
it cannot be added to or included in the implementing rules. The rule-making power of
administrative agencies must be confined to details for regulating the mode or proceedings to

carry into effect the law as it has been enacted, and it cannot be extended to amend or expand
the statutory requirements or to embrace matters not covered by the statute. Administrative
regulations must always be in harmony with the provisions of the law because any resulting
discrepancy between the two will always be resolved in favor of the basic law. 27
From the RTC all the way to this Court, the OSG repeatedly referred to Republic v. Gonzales 28
and City of Ozamis v. Lumapas 29 to support its position that the State has the power to
regulate parking spaces to promote the health, safety, and welfare of the public; and it is by
virtue of said power that respondents may be required to provide free parking facilities. The
OSG, though, failed to consider the substantial differences in the factual and legal backgrounds
of these two cases from those of the Petition at bar.
In Republic, the Municipality of Malabon sought to eject the occupants of two parcels of land of
the public domain to give way to a road-widening project. It was in this context that the Court
pronounced:
Indiscriminate parking along F. Sevilla Boulevard and other main thoroughfares was prevalent;
this, of course, caused the build up of traffic in the surrounding area to the great discomfort and
inconvenience of the public who use the streets. Traffic congestion constitutes a threat to the
health, welfare, safety and convenience of the people and it can only be substantially relieved by
widening streets and providing adequate parking areas.
The Court, in City of Ozamis, declared that the City had been clothed with full power to control
and regulate its streets for the purpose of promoting public health, safety and welfare. The City
can regulate the time, place, and manner of parking in the streets and public places; and charge
minimal fees for the street parking to cover the expenses for supervision, inspection and control,
to ensure the smooth flow of traffic in the environs of the public market, and for the safety and
convenience of the public.
Republic and City of Ozamis involved parking in the local streets; in contrast, the present case
deals with privately owned parking facilities available for use by the general public. In Republic
and City of Ozamis, the concerned local governments regulated parking pursuant to their power
to control and regulate their streets; in the instant case, the DPWH Secretary and local building
officials regulate parking pursuant to their authority to ensure compliance with the minimum
standards and requirements under the National Building Code and its IRR. With the difference in
subject matters and the bases for the regulatory powers being invoked, Republic and City of
Ozamis do not constitute precedents for this case.
Indeed, Republic and City of Ozamis both contain pronouncements that weaken the position of
the OSG in the case at bar. In Republic, the Court, instead of placing the burden on private
persons to provide parking facilities to the general public, mentioned the trend in other
jurisdictions wherein the municipal governments themselves took the initiative to make more
parking spaces available so as to alleviate the traffic problems, thus:
Under the Land Transportation and Traffic Code, parking in designated areas along public
streets or highways is allowed which clearly indicates that provision for parking spaces serves a
useful purpose. In other jurisdictions where traffic is at least as voluminous as here, the provision
by municipal governments of parking space is not limited to parking along public streets or
highways. There has been a marked trend to build off-street parking facilities with the view to
removing parked cars from the streets. While the provision of off-street parking facilities or
carparks has been commonly undertaken by private enterprise, municipal governments have

been constrained to put up carparks in response to public necessity where private enterprise
had failed to keep up with the growing public demand. American courts have upheld the right of
municipal governments to construct off-street parking facilities as clearly redounding to the
public benefit. 30
In City of Ozamis, the Court authorized the collection by the City of minimal fees for the parking
of vehicles along the streets: so why then should the Court now preclude respondents from
collecting from the public a fee for the use of the mall parking facilities? Undoubtedly,
respondents also incur expenses in the maintenance and operation of the mall parking facilities,
such as electric consumption, compensation for parking attendants and security, and upkeep of
the physical structures.
It is not sufficient for the OSG to claim that "the power to regulate and control the use,
occupancy, and maintenance of buildings and structures carries with it the power to impose fees
and, conversely, to control, partially or, as in this case, absolutely, the imposition of such fees".
Firstly, the fees within the power of regulatory agencies to impose are regulatory fees. It has
been settled law in this jurisdiction that this broad and all-compassing governmental competence
to restrict rights of liberty and property carries with it the undeniable power to collect a regulatory
fee. It looks to the enactment of specific measures that govern the relations not only as between
individuals but also as between private parties and the political society. 31 True, if the regulatory
agencies have the power to impose regulatory fees, then conversely, they also have the power
to remove the same. Even so, it is worthy to note that the present case does not involve the
imposition by the DPWH Secretary and local building officials of regulatory fees upon
respondents; but the collection by respondents of parking fees from persons who use the mall
parking facilities. Secondly, assuming arguendo that the DPWH Secretary and local building
officials do have regulatory powers over the collection of parking fees for the use of privately
owned parking facilities, they cannot allow or prohibit such collection arbitrarily or whimsically.
Whether allowing or prohibiting the collection of such parking fees, the action of the DPWH
Secretary and local building officials must pass the test of classic reasonableness and propriety
of the measures or means in the promotion of the ends sought to be accomplished. 32
Keeping in mind the aforementioned test of reasonableness and propriety of measures or
means, the Court notes that Section 803 of the National Building Code falls under Chapter 8 on
Light and Ventilation. Evidently, the Code deems it necessary to regulate site occupancy to
ensure that there is proper lighting and ventilation in every building. Pursuant thereto, Rule XIX
of the IRR requires that a building, depending on its specific use and/or floor area, should
provide a minimum number of parking spaces. The Court, however, fails to see the connection
between regulating site occupancy to ensure proper light and ventilation in every building vis-vis regulating the collection by building owners of fees for the use of their parking spaces.
Contrary to the averment of the OSG, the former does not necessarily include or imply the latter.
It totally escapes this Court how lighting and ventilation conditions at the malls could be affected
by the fact that parking facilities thereat are free or paid for.
The OSG attempts to provide the missing link by arguing that:
Under Section 803 of the National Building Code, complimentary parking spaces are required to
enhance light and ventilation, that is, to avoid traffic congestion in areas surrounding the
building, which certainly affects the ventilation within the building itself, which otherwise, the
annexed parking spaces would have served. Free-of-charge parking avoids traffic congestion by
ensuring quick and easy access of legitimate shoppers to off-street parking spaces annexed to

the malls, and thereby removing the vehicles of these legitimate shoppers off the busy streets
near the commercial establishments. 33
The Court is unconvinced. The National Building Code regulates buildings, by setting the
minimum specifications and requirements for the same. It does not concern itself with traffic
congestion in areas surrounding the building. It is already a stretch to say that the National
Building Code and its IRR also intend to solve the problem of traffic congestion around the
buildings so as to ensure that the said buildings shall have adequate lighting and ventilation.
Moreover, the Court cannot simply assume, as the OSG has apparently done, that the traffic
congestion in areas around the malls is due to the fact that respondents charge for their parking
facilities, thus, forcing vehicle owners to just park in the streets. The Court notes that despite the
fees charged by respondents, vehicle owners still use the mall parking facilities, which are even
fully occupied on some days. Vehicle owners may be parking in the streets only because there
are not enough parking spaces in the malls, and not because they are deterred by the parking
fees charged by respondents. Free parking spaces at the malls may even have the opposite
effect from what the OSG envisioned: more people may be encouraged by the free parking to
bring their own vehicles, instead of taking public transport, to the malls; as a result, the parking
facilities would become full sooner, leaving more vehicles without parking spaces in the malls
and parked in the streets instead, causing even more traffic congestion.
Without using the term outright, the OSG is actually invoking police power to justify the
regulation by the State, through the DPWH Secretary and local building officials, of privately
owned parking facilities, including the collection by the owners/operators of such facilities of
parking fees from the public for the use thereof. The Court finds, however, that in totally
prohibiting respondents from collecting parking fees from the public for the use of the mall
parking facilities, the State would be acting beyond the bounds of police power.
Police power is the power of promoting the public welfare by restraining and regulating the use
of liberty and property. It is usually exerted in order to merely regulate the use and enjoyment of
the property of the owner. The power to regulate, however, does not include the power to
prohibit. A fortiori, the power to regulate does not include the power to confiscate. Police power
does not involve the taking or confiscation of property, with the exception of a few cases where
there is a necessity to confiscate private property in order to destroy it for the purpose of
protecting peace and order and of promoting the general welfare; for instance, the confiscation
of an illegally possessed article, such as opium and firearms. 34
When there is a taking or confiscation of private property for public use, the State is no longer
exercising police power, but another of its inherent powers, namely, eminent domain. Eminent
domain enables the State to forcibly acquire private lands intended for public use upon payment
of just compensation to the owner. 35
Normally, of course, the power of eminent domain results in the taking or appropriation of title to,
and possession of, the expropriated property; but no cogent reason appears why the said power
may not be availed of only to impose a burden upon the owner of condemned property, without
loss of title and possession. 36 It is a settled rule that neither acquisition of title nor total
destruction of value is essential to taking. It is usually in cases where title remains with the
private owner that inquiry should be made to determine whether the impairment of a property is
merely regulated or amounts to a compensable taking. A regulation that deprives any person of
the profitable use of his property constitutes a taking and entitles him to compensation, unless
the invasion of rights is so slight as to permit the regulation to be justified under the police
power. Similarly, a police regulation that unreasonably restricts the right to use business

property for business purposes amounts to a taking of private property, and the owner may
recover therefor. 37
Although in the present case, title to and/or possession of the parking facilities remain/s with
respondents, the prohibition against their collection of parking fees from the public, for the use of
said facilities, is already tantamount to a taking or confiscation of their properties. The State is
not only requiring that respondents devote a portion of the latter's properties for use as parking
spaces, but is also mandating that they give the public access to said parking spaces for free.
Such is already an excessive intrusion into the property rights of respondents. Not only are they
being deprived of the right to use a portion of their properties as they wish, they are further
prohibited from profiting from its use or even just recovering therefrom the expenses for the
maintenance and operation of the required parking facilities.
The ruling of this Court in City Government of Quezon City v. Judge Ericta 38 is edifying.
Therein, the City Government of Quezon City passed an ordinance obliging private cemeteries
within its jurisdiction to set aside at least six percent of their total area for charity, that is, for
burial grounds of deceased paupers. According to the Court, the ordinance in question was null
and void, for it authorized the taking of private property without just compensation:
There is no reasonable relation between the setting aside of at least six (6) percent of the total
area of all private cemeteries for charity burial grounds of deceased paupers and the promotion
of health, morals, good order, safety, or the general welfare of the people. The ordinance is
actually a taking without compensation of a certain area from a private cemetery to benefit
paupers who are charges of the municipal corporation. Instead of building or maintaining a
public cemetery for this purpose, the city passes the burden to private cemeteries.
'The expropriation without compensation of a portion of private cemeteries is not covered by
Section 12(t) of Republic Act 537, the Revised Charter of Quezon City which empowers the city
council to prohibit the burial of the dead within the center of population of the city and to provide
for their burial in a proper place subject to the provisions of general law regulating burial grounds
and cemeteries. When the Local Government Code, Batas Pambansa Blg. 337 provides in
Section 177(q) that a sangguniang panlungsod may "provide for the burial of the dead in such
place and in such manner as prescribed by law or ordinance" it simply authorizes the city to
provide its own city owned land or to buy or expropriate private properties to construct public
cemeteries. This has been the law, and practise in the past. It continues to the present.
Expropriation, however, requires payment of just compensation. The questioned ordinance is
different from laws and regulations requiring owners of subdivisions to set aside certain areas for
streets, parks, playgrounds, and other public facilities from the land they sell to buyers of
subdivision lots. The necessities of public safety, health, and convenience are very clear from
said requirements which are intended to insure the development of communities with salubrious
and wholesome environments. The beneficiaries of the regulation, in turn, are made to pay by
the subdivision developer when individual lots are sold to homeowners.
In conclusion, the total prohibition against the collection by respondents of parking fees from
persons who use the mall parking facilities has no basis in the National Building Code or its IRR.
The State also cannot impose the same prohibition by generally invoking police power, since
said prohibition amounts to a taking of respondents' property without payment of just
compensation.
Given the foregoing, the Court finds no more need to address the issue persistently raised by
respondent SM Prime concerning the unconstitutionality of Rule XIX of the IRR. In addition, the

said issue was not among those that the parties, during the pre-trial conference for Civil Cases
No. 12-08 and No. 00-1210, agreed to submit for resolution of the RTC. It is likewise axiomatic
that the constitutionality of a law, a regulation, an ordinance or an act will not be resolved by
courts if the controversy can be, as in this case it has been, settled on other grounds. 39
WHEREFORE, the instant Petition for Review on Certiorari is hereby DENIED. The Decision
dated 25 January 2007 and Resolution dated 14 March 2007 of the Court of Appeals in CA-G.R.
CV No. 76298, affirming in toto the Joint Decision dated 29 May 2002 of the Regional Trial Court
of Makati City, Branch 138, in Civil Cases No. 00-1208 and No. 00-1210 are hereby AFFIRMED.
No costs.
SO ORDERED.