Carlito C. Encinas v PO1 Alfredo Agustin, Jr and PO1 Joel Caubang GR No.

187317, April 11, 2013

Case Doctrine: There is forum shopping when litis pendencia or res judicata is present.

FACTS:
The petitioner Encinas was the Provincial Fire Marshall of Nueva Ecija. He was charged administratively with
grave misconduct and conduct prejudicial to the best interest of the service in violation of the Administrative
Code of 1987. He was dismissed from the service. The two respondents were holding the positions of Fire
Officer I. He petitioner filed a petition for review on certiorari under rule 45 of the Rules of Court assailing the
decision of the Court of Appeals affirming the decision of the Civil Service Commission to dismiss the
petitioner from the service.

The case arose when the petitioner allegedly required the respondents to pay him P5,000 in order not to relieve
them from their station at the Cabanatuan City and re-assign them to a far flung area. The respondents decided
to pay in fear of the re-assignment, but they manage to come up with P2,000 only causing the petitioner to order
for their re-assignment to Cuyapo and Talugtug.

As a result, the respondents decided to file a complaint for illegal transfer before the Bureau of Fire Protection
and at the same time filed another complaint before the Civil Service Commission Regional Office in Pampanga
and the Civil Service Commission in Cabanatuan. Based on the filed complaints, the petitioner alleges that the
respondents are guilty of forum shopping by filing the two identical complaints. The petitioner claims that the
charges of dishonesty, grave misconduct and conduct prejudicial to public interest that were filed before the
Civil Service Commission and the BFP are in violation of the rules against forum shopping.

ISSUE:
Is there a violation on the rules against forum shopping?

RULING:
The court held the respondents are not guilty of forum shopping. The court enumerated what constitutes a
violation of forum shopping which include the presence of the requisites of litis pendentia and res judicata.
There is litis pendentia when: (1) identity of parties is the same with the same interests in both actions, (2)
identity of rights asserted and reliefs prayed for and founded on the same facts, (3) identity of the two preceding
cases where a judgment rendered in the pending case will amount to res judicata in the other case.

For res judicata to bar the institution of a subsequent action, the following requisites include (1) the former
judgment is final, (2) the court rendering the said decision has jurisdiction over the parties and the subject
matter, (3) judgement is based on the merits, (4) between the two actions, there must be identity of parties,
subject matter and cause of action.
In applying the above requisites, the court held that the dismissal of the petitioner based on the BFP complaint
does not constitute res judicata in relation to the CSC complaint. The dismissal by the BFP is not based on the
merits, but based on the recommendation of the fact finding committee in determining whether a formal charge
of an administrative offense may be filed. There is therefore no rights and liabilities of the parties that were
determined in the said action with finality. The court thereby affirmed the dismissal of the petitioner and denied
the petition.
G.R. No. 178347

DEL CASTILLO, J.:

"The writ of certiorari is an extraordinary remedy that the Court issues only under closely defined grounds and
procedures that litigants and their lawyers must scrupulously observe."[1]

This is a Petition for Review[2] on Certiorari of the May 7, 2007 Order[3] of the Regional Trial Court (RTC) of
Palawan and Puerto Princesa City, Branch 47, which dismissed petitioners' Petition for Certiorari and
Mandamus[4] on the ground of lack of jurisdiction. The fallo of the assailed Order reads:

WHEREFORE, premises considered, finding merit in the motion to dismiss, the same is hereby
granted. Hence, this case is hereby ordered DISMISSED on the ground of lack of jurisdiction, which dismissal
is without prejudice.

SO ORDERED.[5]

Background

On June 19, 1992, Republic Act (RA) No. 7611 or the "Strategic Environment Plan (SEP) for Palawan Act"
was signed into law. It called for the establishment of the Environmentally Critical Areas Network (ECAN),
which is a "graded system of protection and development control over the whole of Palawan."[6] The ECAN
will categorize the terrestrial areas, coastal areas, and tribal lands in Palawan according to the degree of human
disruption that these areas can tolerate. Core zones (consisting of all types of natural forest, mountain peaks,
and habitats of endangered and rare species) are to be strictly protected and maintained free of human
disruption,[7] controlled use areas allow controlled logging and mining,[8] while multiple use areas are open for
development.[9] The law vested the task of creating and implementing the ECAN on the Palawan Council for
Sustainable Development (PCSD).[10]

Pursuant to its rule-making authority under RA 7611,[11] the PCSD promulgated the SEP Clearance
Guidelines,[12] which require all proposed undertakings in the Palawan province to have an SEP Clearance from
PCSD before application for permits, licenses, patents, grants, or concessions with the relevant government
agencies. Generally, the PCSD issues the clearance if the ECAN allows the type of proposed activity in the
proposed site; it denies the clearance if the ECAN prohibits the type of proposed activity in the proposed site.

Factual Antecedents

The controversy in the instant case arose when PCSD issued an SEP Clearance to Patricia Louise Mining and
Development Corporation (PLMDC) for its proposed small-scale nickel mining project to be conducted in a
controlled use area in Barangay Calategas in the Municipality of Narra, Province of Palawan.

The petitioners, who are farmers and residents of Barangay Calategas, sought the recall of the said clearance in
their letter[13] to PCSD Chairman, Abraham Kahlil Mitra. The PCSD, through its Executive Director, Romeo B.
Dorado, denied their request for lack of basis.[14]
On August 7, 2006, petitioners filed a Petition for Certiorari and Mandamus[15] against PCSD and PLMDC with
the RTC of Palawan and Puerto Princesa City. They prayed for the nullification of the said SEP Clearance for
violating various provisions of RA 7611[16] and PCSD Resolution No. 05-250.[17] They alleged that these
provisions prohibit small-scale nickel mining for profit in the proposed site,[18] which, they maintain, is not even
a controlled use zone, but actually a core zone.[19]

PLMDC[20] and PCSD sought the dismissal of the Petition on various grounds, including the impropriety of the
remedy of certiorari. PCSD argued that it did not perform a quasi-judicial function.[21]

The trial court denied the said motions in its Order[22] dated September 20, 2006. It ruled, among others,
that certiorari is proper to assail PCSD's action. PCSD Administrative Order (AO) No. 6 series of 2000 or the
Guidelines in the Implementation of SEP Clearance System states that the PCSD must conduct a public hearing,
and study the supporting documents for sufficiency and accuracy, before it decides whether to issue the
clearance to the project proponent. The trial court concluded that this procedure is an exercise of a quasi-
judicial power.

The trial court denied[23] reconsideration of the above Order.

PLMDC and PCSD again filed Motions to Dismiss but this time on the ground of lack of jurisdiction. They
argued that, under Section 4 of Rule 65 of the Rules of Court, only the Court of Appeals [CA] can take
cognizance of a Petition for Certiorari and Mandamus filed against a quasi-judicial body.[24]

The trial court agreed and issued the assailed Order.[25]

Petitioners appealed directly to this Court.

In their respective memoranda, all the parties submitted that PCSD is exercising quasi-judicial
functions.[26] They only diverge on the issue of which court the CA or the RTC has the jurisdiction to review
the actions of this quasi-judicial body.

Petitioners argue that the RTC has certiorari jurisdiction over PCSD because the latter is a quasi-judicial body
functioning only within the RTC's territorial jurisdiction.[27] Moreover, the RTC is the proper court following
the principle of judicial hierarchy.[28]

On the other hand, respondents argue that, under Section 4 of Rule 65, only the CA can take cognizance
of certiorari petitions against quasi-judicial bodies.[29]

Our Ruling

The following requisites must concur for a Petition for Certiorari to prosper, namely:

"(a) The writ is directed against a tribunal, board, or officer exercising judicial or quasi-judicial functions;
(b) Such tribunal, board, or officer has acted without or in excess of jurisdiction, or with grave abuse of
discretion amounting to lack or excess of jurisdiction; and

(c) There is no appeal or any plain, speedy, and adequate remedy in the ordinary course of law."[30]

In the case at bar, the parties submit that the public respondent PCSD is exercising a quasi-judicial function in
its issuance of the SEP clearance based on the procedure it follows under its own AO 6 or Guidelines in the
Implementation of SEP Clearance System.[31] This procedure includes reviewing the sufficiency and accuracy
of the documents submitted by the project proponent and conducting public hearings or consultations with the
affected community.

The Court disagrees with the parties' reasoning and holds that PCSD did not perform a quasi-judicial function
that is reviewable by petition for certiorari.

There must be an enabling statute or legislative act conferring quasi-judicial power upon the administrative
body.[32] RA 7611, which created the PCSD, does not confer quasi-judicial powers on the said body:

SEC. 19. Powers and Functions. In order to successfully implement the provisions of this Act, the Council is
hereby vested with the following powers and functions:

(1) Formulate plans and policies as may be necessary to carry out the provisions of this Act.

(2) Coordinate with the local governments to ensure that the latter's plans, programs and projects are aligned
with the plans, programs and policies of the SEP.

(3) Call on any department, bureau, office, agency or instrumentality of the Government, and on private entities
and organizations for cooperation and assistance in the performance of its functions.

(4) Arrange, negotiate for, accept donations, grants, gifts, loans, and other fundings from domestic and foreign
sources to carry out the activities and purposes of the SEP.

(5) Recommend to the Congress of the Philippines such matters that may require legislation in support of the
objectives of the SEP.

(6) Delegate any or all of its powers and functions to its support staff, as hereinafter provided, except those
which by provisions of law cannot be delegated;

(7) Establish policies and guidelines for employment on the basis of merit, technical competence and moral
character and prescribe a compensation and staffing pattern;

(8) Adopt, amend and rescind such rules and regulations and impose penalties therefor for the effective
implementation of the SEP and the other provisions of this Act.

(9) Enforce the provisions of this Act and other existing laws, rules and regulations similar to or
complementary with this Act;

(10) Perform related functions which shall promote the development, conservation, management, protection,
and utilization of the natural resources of Palawan; and

(11) Perform such other powers and functions as may be necessary in carrying out its functions, powers, and
the provisions of this Act.
Save possibly for the power to impose penalties[33] under Section 19(8) (which is not involved in PCSD's
issuance of an SEP Clearance), the rest of the conferred powers, and the powers necessarily implied from them,
do not include adjudication or a quasi-judicial function.
Instead of reviewing the powers granted by law to PCSD, the trial court found the following procedure outlined
in PCSD's AO 6, as supposedly descriptive of an adjudicatory process:

1. The project proponent submits a brief description of the processes it seeks to undertake and the location and
description of the proposed project site.[34]

2. The PCSD staff reviews the sufficiency and accuracy of these documents, and conducts a field validation.[35]

3. The PCSD staff may conduct public consultations or public hearings to determine the acceptability of the
project in the community.[36]

4. The evaluation of the project shall be based on the ECAN Zoning of Palawan, ecological sustainability, social
acceptability, and economic viability of the project.[37]

5. The staff makes an evaluation report, stating therein his recommended action, for the consideration of the
PCSD.[38]

6. The PCSD may issue or deny the SEP clearance.[39]

7. In case of approval, the SEP clearance, together with the evaluation reports, shall be transmitted to the DENR
as bases for the latter's subsequent processing of the required permits.[40]

8. In case of denial, the project proponent may seek reconsideration. PCSD's action on the reconsideration is
considered final and executory.[41]

9. The DENR will undertake an independent evaluation of the project and shall not in any way be prejudiced by
the PCSD's actions.[42]

The Court disagrees.

First, PCSD AO 6, cited by the trial court and the parties, cannot confer a quasi-judicial power on PCSD that its
enabling statute clearly withheld. An agency's power to formulate rules for the proper discharge of its functions
is always circumscribed by the enabling statute.[43] Otherwise, any agency conferred with rule-making power,
may circumvent legislative intent by creating new powers for itself through an administrative order.
More importantly, the procedure outlined in PCSD AO 6 does not involve adjudication. A government agency
performs adjudicatory functions when it renders decisions or awards that determine the rights of adversarial
parties, which decisions or awards have the same effect as a judgment of the court.[44] These decisions are
binding, such that when they attain finality, they have the effect of res judicata that even the courts of justice
have to respect.[45] As we have held in one case,[46] "[j]udicial or quasi-judicial function involves the
determination of what the law is, and what the legal rights of the contending parties are, with respect to the
matter in controversy and, on the basis thereof and the facts obtaining, the adjudication of their respective
rights. In other words, the tribunal, board or officer exercising judicial or quasi-judicial function must be
clothed with power and authority to pass judgment or render a decision on the controversy construing and
applying the laws to that end."

In issuing an SEP Clearance, the PCSD does not decide the rights and obligations of adverse parties with
finality. The SEP Clearance is not even a license or permit. All it does is to allow the project proponent to
proceed with its application for permits, licenses, patents, grants, or concessions with the relevant government
agencies. The SEP Clearance allows the project proponent to prove the viability of their project, their capacity
to prevent environmental damage, and other legal requirements, to the other concerned government
agencies.[47] The SEP Clearance in favor of PLMDC does not declare that the project proponent has an
enforceable mining right within the Municipality of Narra; neither does it adjudicate that the concerned citizens
of the said municipality have an obligation to respect PLMDC's right to mining. In fact, as seen in Section 5 of
AO 6, the PCSD bases its actions, not on the legal rights and obligations of the parties (which is necessary in
adjudication), but on policy considerations, such as social acceptability, ecological sustainability, and economic
viability of the project.

Further, PCSD's receipt of documents and ascertainment of their sufficiency and accuracy are not indicative of a
judicial function. It is, at most, an investigatory function to determine the truth behind the claims of the project
proponent. This Court has held that the power to investigate is not the same as adjudication,[48] so long as there
is no final determination of the parties' respective rights and obligations.

Lastly, the fact that the PCSD conducts public consultations or hearings does not mean that it is performing
quasi-judicial functions. AO 6 defines public hearing/public consultation simply as an "activity undertaken by
PCSD to gather facts and thresh out all issues, concerns and apprehensions and at the same time provide the
project proponent with the opportunity to present the project to the affected community."[49] Its purpose is not
to adjudicate the rights of contending parties but only to "ascertain the acceptability of the project in the
community and to ensure that the interests of all stakeholders are considered,"[50] pursuant to RA 7611's policy
of "encourag[ing] the involvement of all sectors of society and maximiz[ing] people participation x x x in
natural resource management, conservation and protection."[51] On the other hand, the purpose of hearings in
judicial bodies is to ascertain the truth of the parties' claims through an adversarial process. Clearly, the purpose
of PCSD's public consultations is not for adversaries to pit their claims against each other. Since the PCSD's
actions cannot be considered quasi-judicial, the same cannot be reviewed via a special civil action
for certiorari. Where an administrative body or officer does not exercise judicial or quasi-judicial
power, certiorari does not lie.[52]

A review of the Petition for Certiorari reveals another flaw. The alleged grounds for the nullity of the SEP
Clearance are its violations of certain provisions of RA 7611 and PCSD Resolution No. 05-250. Clearly, an
ordinary action for the nullification of the SEP Clearance is a plain, speedy, and adequate remedy available to
the petitioners, which precludes resort to a special civil action.[53] This ordinary action will allow the parties to
litigate factual issues, such as petitioners' contention that PLMDC's proposed mining site is in a core zone, it
being in a natural forest and a critical watershed, contrary to PCSD's claim that it is in a controlled use
zone. Certiorari would not have provided the petitioners with such an opportunity because it is limited to
questions of jurisdiction and does not resolve factual matters.[54] Certiorari does not involve a full-blown trial
but is generally restricted to the filing of pleadings (petition, comment, reply, and memoranda), unless the court
opts to hear the case.[55] Since an ordinary action is available and in fact appears to be more appropriate,
petitioners were wrong to resort to the extraordinary remedy of certiorari.

The same fate befalls the Petition for Mandamus. Petitioners prayed that the PCSD be compelled to comply
with the provisions of RA 7611. Clearly, the success of the Petition for Mandamus depends on a prior finding
that the PCSD violated RA 7611 in issuing the SEP Clearance. There can be no such finding with the dismissal
of the Petition for Certiorari.

Given the foregoing, it is no longer necessary to resolve the jurisdictional issue presented by the parties.

WHEREFORE, premises considered, the assailed May 7, 2007 Order of Branch 47 of the Regional Trial Court
of Palawan and Puerto Princesa City dismissing the Petition for Certiorari and Mandamus, docketed as Civil
Case No. 4218, is AFFIRMED but for being an IMPROPER REMEDY.
SO ORDERED.
Carpio, (Chairperson), Perez, Mendoza,* and Perlas-Bernabe, JJ., concur.
Republic of the Philippines vs Drugmaker’s Laboratories Inc.
GR No. 190837 March 5, 2014
Facts: The FDA was created pursuant to RA 3720, otherwise known as the “Food, Drug and Cosmetics Act”
primarily in order to establish safety or efficacy standards and quality measure of foods, drugs and devices and
cosmetics products. On March 15, 1989, the Department of Health, thru then Secretary Alfredo RA Bengzon
issued AO 67 s. 1989, entitled Revised Rules and Regulations on Registration of Pharmaceutical products.
Among others, it required drug manufacturers to register certain drug and medicine products with FDA before
they may release the same to the market for sale. In this relation, a satisfactory bioavailability/bioequivalence
(BA/BE) test is needed for a manufacturer to secure a CPR for these products. However, the implementation of
the BA/BE testing requirement was put on hold because there was no local facility capable of conducting the
same. The issuance of circulars no. 1 s. of 1997 resumed the FDA’s implementation of the BA/BE testing
requirement with the establishment of BA/BE testing facilities in the country. Thereafter, the FDA issued
circular no. 8 s. of 1997 which provided additional implementation details concerning the BA/BE testing
requirement on drug products.
Issue: Whether or not the circular issued by FDA are valid.
Held: Yes. Administrative agencies may exercise quasi-legislative or rule-making power only if there exist a
law which delegates these powers to them. Accordingly, the rules so promulgated must be within the confines
of the granting statutes and must not involve discretion as to what the law shall be, but merely the authority to
fix the details in the execution or enforcement of the policy set out in the law itself, so as to conform with the
doctrine of separation of powers and as an adjunct, the doctrine of non-delegability of legislative powers.
An administrative regulation may be classified as a legislative rule, an interpretative rule or a contingent rule.
Legislative rules are in the nature of subordinate legislation a d designed to implement a primary legislation by
providing the details thereof. They usually implement existing law, imposing general, extra-statutory
obligations pursuant to authority properly delegated by the congress amd effect a change in existing law or
policy which affect individual rights and obligations. Meanwhile, interpretative rules are intended to interpret,
clarify or explain existing statutory regulations under which the administrative body operates. Their purpose or
objective is merely to construe the statue being administered and purpory to do no more than interpret the
statute. Simply, they try to say what the statute means and refer to no single person or party in particular but
concern all those belonging to the same class which may be covered by the said rules. Finally, contingent rules
are those issued by an administrative authority based on the existence of certain facts or things upon which the
enforcement of the law depends.
In general, an administrative regulation needs to comply with the requirements laid down by EO 292 s. of 1988
otherwise known as the administrative code of 1987 on prior notice, hearing and publication in order to be valid
and binding except when the same is merely an interpretative rule. This is because when an administrative rule
is merely intepretative in nature its applicability needs nothing further than its bare issuance, for it gives no real
consequence more than what the law itself has already prescribed. When, on the other hand, the administrative
rule goes beyond merely providing for the means that ca facilitate or render least cumbersome the
implementation of the law but substantially increases the burden of those governed, it behooves the agency to
accord at least to those directly affected a chance to be heard, and thereafter to be duly informed before that new
issuance is given the force and effect of law.
A careful scrutiny of the foregoing issuances would reveal that A0 67 is actually the rule that originally
introduced the BA/BE testing requirement as a component of applications for the issuamce of CPR covering
certain pharmaceutical products as such, it is considered an administrative regulation – a legislative rule to be
exact – issued by the Secretary of Health in consonance with the express authority granted to him by RA 3720
to implement the statutory mandate that all drugs and devices should first be registered with the FDA prior to
their manufacture and sale. Considering that neither party contested the validity of its issuance, the court deems
that AO 67 complied with the requirements of prior hearing, notice and publication pursuant to the presumption
of regularity accorded tl the govt in the exercise of its official duties.
On the other hand, circulars no. 1 and 8 s. of 1997 cannot be considered as administrative regulations because
they do not: a.) implement a primary legislation by providing the details thereof; b.) Interpret, clarify or explain
existing statutory regulation under which FDA operates and/or; c.) Ascertain the existence of certain facts or
things upon which the enforcement of RA 3720 depends. In fact, the only purpose of these is for FDA to
administer and supervise the implementation of the provisions of AO 67 s. of 1989 including those covering the
BA/BE testing requirement consistent with and pursuant to RA 3720. Therefore, the FDA has sufficient
authority to issue the said circulars and since theu would not affect the substantive rights of the parties that they
seek to govern – as they are not, strictly speaking, administrative regulations in the first place – no prior
hearing, consultation and publication are needed for their validity.
A.M. No. P-13-3105 September 11, 2013
(Formerly A.M. No. 10-7-83-MTCC)
OFFICE OF THE COURT ADMINISTRATOR, Complainant,
vs.
DESIDERIO W. MACUSI, JR., Sheriff IV, Regional Trial Court, Branch 25, Tabuk City,
Kalinga, Respondent.
DECISION
LEONARDO-DE CASTRO, J.:
Criselda M. Paligan (Paligan) was the plaintiff in Civil Case No. 429-06, entitled Ms. Criselda M. Paligan v.
Spouses Cornelio and Lermila Tabanganay, an action for collection of sum of money with damages, before the
Municipal Trial Court in Cities (MTCC) of Tabuk City, Kalinga. In A letter dated July 23, 2009,1 addressed to
the Presiding Judge, MTCC,2 Tahuk City, Kalinga, Paligan inquired as to the status of the writ of execution
issued on September 10, 2008 by the MTCC in Civil Case No. 4'29-06, since she had not received any report or
information whether the said writ had already been served. Paligan also furnished the Sheriff of the Regional
Trial Court (RTC), Branch 25, of Tabuk City, Kalinga, a copy of her letter.
Judge Victor A. Dalanao (Dalanao), MTCC, Tabuk City, Kalinga, through a 1st Indorsement dated July 29,
2009,3 referred Paligan's letter to the Office of the Court Administrator (OCA) for appropriate action. Judge
Dalanao reported that the writ of execution, issued in Civil Case No. 429-06 on September 10, 2008, was
received by the Office of the Provincial Sheriff on September 19, 2008. A return was made on October 30, 2008
informing the court that the writ was returned "unserved." Thereafter, no other report on the writ was made.
Judge Dalanao further observed that "a lot of cases are similarly situated, where not even a report has been
submitted as prescribed by the Rules of Court."
In a 2nd Indorsement dated August 17, 2009,4 the OCA referred Judge Dalanao’s 1st Indorsement dated July
29, 2009 and Paligan’s letter dated July 23, 2009 to Atty. Mary Jane A. Andomang (Andomang), Clerk of
Court, RTC, Tabuk City, Kalinga, for comment and appropriate action.
Complying with the 2nd Indorsement, Atty. Andomang sent a Comment and Report on Civil Case No. 429-06
of [MTCC]-Tabuk City, dated September 30, 2009 to the OCA. In her Comment and Report, Atty. Andomang
recounted that she already required the Deputy Sheriff5 to explain why no report was made on the writ in Civil
Case No. 429-06 since October 2008. The Deputy Sheriff explained to her in a letter dated September 14, 2009
that no report was made because Paligan never appeared at the Office to coordinate the implementation of the
said writ. Atty. Andomang claimed that she had always reminded the Deputy Sheriff of his duties and
responsibilities in serving writs and making periodic reports.
Instead of filing a reply to Atty. Andomang’s Comment and Report as directed by the OCA, Judge Dalanao
submitted a letter dated November 6,2009 with an inventory of cases6 "if only to show the acts of the Sheriff."
Judge Dalanao pointed out that the Sheriff7 was inconsistent: making reports in some cases, although some of
said reports were late, and making no reports at all in other cases. Judge Dalanao further noted that five years
has already lapsed without execution in several cases. He has also yet to receive the Sheriff’s estimate of
expenses for approval. Judge Dalanao lastly averred that after receiving complaints from parties, he already
verbally brought up the matter with the Executive Judge, and even personally talked to the Sheriff several times
to remind the Sheriff of his duties and responsibilities.
In his letter dated November 16, 2009,8 Desiderio W. Macusi, Jr. (Macusi), Sheriff IV, RTC-Branch 25, Tabuk
City, Kalinga, defended himself by calling attention to the fact that he was appointed as Sheriff only in 2006,
while some of the writs of execution in Judge Dalanao’s inventory of cases were issued as early as 1997. While
admitting that in some cases, there were late reports or no reports at all on the writs of execution, Macusi argued
that "(t)he rule states that the Sheriff must act with celerity and promptness when they are handed the Writs of
Execution; yet, the rule also states that when party litigants, in whose favor the Writs, have been issued,
frustrate the efforts of the Sheriffs to implement those Writs, the latter are relieved from such duty and incur no
administrative liability therefor."9 Macusi additionally wrote that he did not report regularly despite the
presence of the rules since he "relied on the dictates of practicality so as not to waste supplies. Rules,
accordingly are there to guide but they are not absolute, what matters is what one accomplishes."10 Macusi then
informed the OCA that he had been, in fact, sued before the courts because of his accomplishments as a Sheriff.
As for his failure to submit his estimate of expenses for Judge Dalanao’s approval, Macusi explicated that he
dispensed with the same for the winning parties were already willing to assist him and pay for his expenses.
The OCA, finding that Macusi violated Rule 39, Section 14 and Rule141, Section 9 of the Rules of Court, sent
the latter a letter dated December 2, 200911 directing him to show cause why no disciplinary action should
betaken against him.
In his letter-compliance dated January 4, 2010,12 Macusi provided the following explanation:
1. That I was appointed Court Interpreter on May 24, 2004 and was designated Sheriff in April 2005;
2. That the Writs of Execution issued in the year 1997-2004 were not properly turned over to the undersigned;
hence, I could not make any follow-ups and updated reports;
3. That the Writs of Execution without initial or updated reports could not be blamed on the undersigned
because as early as August 2006 [please see attached reports marked as annex A], I already informed the
Honorable Court of the stand of the plaintiff, Rural Bank of Tabuk [K-A], Inc. regarding the Writs of Execution
issued in its favor – THAT THE WRITS OF EXECUTION WILLONLY BE DELIVERED AND EXPLAINED
TO THELOSING PARTY LITIGANTS – thus; what report could be made in such a scenario. Please see also
attached reports marked as Annex A-1 on the stand of the plaintiff of scheduling the service of the Writs of
Execution, this was reported to the Hon. Court in August 2008. Kindly compare this with the report where
plaintiffs through their counsels who always coordinate with the Office of the Clerk of Court of RTC BR
25where I am serving as the Sheriff resulted to either partial or full satisfaction of the amount of execution [said
report is marked as Annex A-2];
4. That Plantiff Rural Bank of Tabuk [K-A] Inc. does not like to make the necessary deposit for the Sheriff’s
expenses in IMPLEMENTING OR EXECUTING the Writs of Execution because the company [Rural Bank]
had been and is spending thousands of pesos for litigation expenses [please see attached report marked as
Annex B]. Thus; no estimated expenses could be shown, though I AM ACCOMPLISHING THE FORM
FORESTIMATED EXPENSES WHENEVER I SERVED COURTPROCESSES and said form is attached and
marked as Annex C;
5. That I am attaching OCA Circular No. [44-2007] marked as Annex D to show why Cooperatives does (sic)
not need to make the necessary deposits for Sheriff’s expenses; hence, no estimated expenses to be
accomplished and shown;
6. That I have done everything I could to comply with the Rules of Court on Execution and satisfaction of
Judgment; hence, I should not be liable for a disciplinary action because
"…the rule also states that when party litigants, in whose favor the Writs, have been issued, frustrate the efforts
of the Sheriffs to implement those Writs, the latter are relieved from such duty and incur no administrative
liability therefore."
In a Resolution dated August 18, 2010,13 the Court treated the instant matter as an administrative complaint
against Macusi and referred the same to Executive Judge Marcelino K. Wacas (Wacas), RTC-Branch 25, Tabuk
City, Kalinga, for investigation, report, and recommendation. The Court also directed Atty. Andomang to
facilitate, in coordination with all concerned, the immediate implementation of the writs of execution listed in
Judge Dalanao’s inventory and submit a status report thereon within 30 days from notice.
After his investigation, Judge Wacas submitted a Resolution dated April 20, 2012.14 Judge Wacas found
substantial evidence that Macusi violated Rule 39, Section 14 and Rule 141, Section 10 of the Rules of Court.
According to Judge Wacas, Macusi exercised "some degree of discretion," having his own rules and unmindful
of the existing rules and established jurisprudence. Judge Wacas took into account the following:
The attention of this Court was partly focused on the length of service of Mr. Macusi as Deputy Sheriff and that
is for the period of more than 3years and by reason of the same, this Court could say that he wrongly interpreted
some basic rules in the implementation of writs of execution and the disbursement of expenses relative thereto.
Another point to consider, is the principle of first offense which has the effect of mitigating the administrative
liability.15
In the end, Judge Wacas recommended that Macusi be found guilty of simple neglect of duty and meted the
penalty of a fine in the amount of Four Thousand Pesos (₱4,000.00).
The OCA, in its Memorandum dated October 17, 2012,16 agreed with the conclusions of fact of Judge Wacas
and recommended that:
1. The instant administrative complaint be RE-DOCKETED as a regular administrative case;
2. Desiderio W. Macusi, Jr., Sheriff IV, Branch 25, RTC, Tabuk, Kalinga, be found GUILTY of Simple Neglect
of Duty and a penalty of FINE in the amount of Four Thousand Pesos (₱4,000.00) be imposed upon him, with a
STERN WARNING that a repetition of the same or similar offense will be dealt with more severely.17
In a Resolution dated February 6, 2013,18 the Court re-docketed the administrative complaint against Macusi as
a regular administrative matter and required Macusi to manifest within 10 days from notice if he was willing to
submit the matter for decision/resolution based on the records/pleadings filed.
Macusi19 submitted his Manifestation and Motion dated May 30,2013, informing the Court that he was deemed
resigned from government service by operation of law when he filed his Certificate of Candidacy for the
position of City Councilor in Tabuk City, Kalinga for the 2010 Local Elections. He prayed that the Court
dismiss the administrative case against him for being moot and academic.
As found by Judge Wacas and the OCA, Macusi violated Rule 39,Section 14 and Rule 141, Section 10 of the
Rules of Court, which provide:
RULE 39
EXECUTION, SATISFACTION AND
EFFECT OF JUDGMENTS
xxxx
Sec. 14. Return of writ of execution. – The writ of execution shall be returnable to the court issuing it
immediately after the judgment has been satisfied in part or in full. If the judgment cannot be satisfied in full
within thirty (30) days after his receipt of the writ, the officer shall report to the court and state the reason
therefor. Such writ shall continue in effect during the period within which the judgment may be enforced by
motion. The officer shall make a report to the court every (30) days on the proceedings taken thereon until the
judgment is satisfied in full, or its effectivity expires. The returns or the periodic reports shall set forth the
whole of the proceedings taken, and shall be filed with the court and copies thereof promptly furnished the
parties. (Emphasis ours.)
RULE 141
LEGAL FEES
xxxx
Section 10. Sheriffs, PROCESS SERVERS and other persons serving processes. –
xxxx
With regard to sheriff’s expenses in executing writs issued pursuant to court orders or decisions or safeguarding
the property levied upon, attached or seized, including kilometrage for each kilometer of trave, guards’ fees,
warehousing and similar charges, the interested party shall pay said expenses in an amount estimated by the
sheriff, subject to the approval of the court. Upon approval of said estimated expenses, the interested party shall
deposit such amount with the clerk of court and ex-officio sheriff, who shall disburse the same to the deputy
sheriff assigned to effect the process, subject to liquidation within the same period for rending a return on the
process. The liquidation shall be approved by the court. Any unspent amount shall be refunded to the party
making the deposit. A full report shall be submitted by the deputy sheriff assigned with his return, and the
sheriff’s expenses shall be taxed as costs against the judgment debtor.
The raison d’ etre behind the requirement of periodic reports under Rule 39, Section 14 of the Rules of Court is
to update the court on the status of the execution and to take necessary steps to ensure the speedy execution of
decisions.20 Macusi did not deny that he failed to file periodic reports on the Writ of Execution dated September
10, 2008 in Civil Case No. 429-06,as well as on the writs of execution in the other cases in Judge Dalanao’s
inventory. In his defense, however, he asserted that the prevailing party in the cases, including Paligan, failed to
coordinate or refused to cooperate with him in the implementation of their respective writs of execution; and
that the writs of execution were not properly turned over to him when he was appointed Sheriff in April 2005.
Macusi’s excuses cannot exonerate him.
In Mariñas v. Florendo,21 the Court stressed that:
Sheriffs play an important role in the administration of justice and as agents of the law, high standards are
expected of them. They are duty- bound to know and to comply with the very basic rules relative to the
implementation of writs of execution.
It is undisputed that the most difficult phase of any proceeding is the execution of judgment.1âwphi1 The
officer charged with this delicate task is the sheriff. The sheriff, as an officer of the court upon whom the
execution of a final judgment depends, must necessarily be circumspect and proper in his behavior. Execution is
the fruit and end of the suit and is the life of the law. He is to execute the directives of the court therein strictly
in accordance with the letter thereof and without any deviation therefrom. (Citations omitted.)
As observed by Judge Wacas, Macusi exercised excessive discretion in the execution of the writs and in the
filing of reports thereon. He seemed to have entirely overlooked that the nature of a sheriff’s duty in the
execution of a writ issued by a court is purely ministerial. As such, a sheriff has the duty to perform faithfully
and accurately what is incumbent upon him. Conversely, he exercises no discretion as to the manner of
executing a final judgment. Any method of execution falling short of the requirement of the law deserves
reproach and should not be countenanced.22
Moreover, difficulties or obstacles in the satisfaction of a final judgment and execution of a writ do not excuse
Macusi’s total inaction. Neither the Rules nor jurisprudence recognizes any exception from the periodic filing of
reports by sheriffs. If only Macusi submitted such periodic reports, he could have brought his predicament to
the attention of his superiors and the issuing courts and he could have given his superiors and the issuing courts
the opportunity to act and/or move to address the same.23
A sheriff is guilty of violating Rule 141, Section 10 of the Rules of Court if he fails to observe the following:
(1) prepare an estimate of expenses to be incurred in executing the writ; (2) ask for the court’s approval of his
estimates; (3) render an accounting; and (4) issue an official receipt for the total amount he received from the
judgment debtor.24
There is no showing herein that Macusi complied with the foregoing procedure. Macusi even actually admitted
that he did not submit an estimate of expenses because the winning parties in some of the cases willingly spent
for the execution of their writs. Macusi’s explanation only makes matters worse for him as sheriffs are not
allowed to receive any voluntary payments from parties in the course of the performance of their duties.
Corollary, a sheriff cannot just unilaterally demand sums of money from a party-litigant without observing the
proper procedural steps. Even assuming such payments were indeed given and received in good faith, this fact
alone would not dispel the suspicion that such payments were made for less than noble purposes. Neither will
the parties’ acquiescence or consent to such expenses absolve the sheriff for his failure to secure the prior
approval of the court concerning such expense.25
Sheriffs and their deputies are the front-line representatives of the justice system, and if, through their lack of
care and diligence in the implementation of judicial writs, they lose the trust reposed on them, they inevitably
diminish the faith of the people in the Judiciary. It cannot be overstressed that the image of a court of justice is
mirrored in the conduct, official and otherwise, of the personnel who work there, from the judge to the lowest
employee. As such, the Court will not tolerate or condone any conduct of judicial agents or employees which
would tend to or actually diminish the faith of the people in the Judiciary.26
Macusi’s prayer for dismissal of the present case for being moot is baseless. Macusi’s constructive resignation
from service through filing of his Certificate of Candidacy for the 2010 Local Elections does not render the case
against him moot. Resignation is not a way out to evade administrative liability when a court employee is facing
administrative sanction.27 As the Court held in Baquerfo v. Sanchez28:
Cessation from office of respondent by resignation or retirement neither warrants the dismissal of the
administrative complaint filed against him while he was still in the service nor does it render said administrative
case moot and academic. The jurisdiction that was this Court’s at the time of the filing of the administrative
complaint was not lost by the mere fact that the respondent public official had ceased in office during the
pendency of his case. Respondent’s resignation does not preclude the finding of any administrative liability to
which he shall still be answerable.(Citations omitted.)
Considering the grave responsibilities imposed on him, Macusi had been careless and imprudent in discharging
his duties. Neither neglect nor delay should be allowed to stall the expeditious disposition of cases. As such, he
is indeed guilty of simple neglect of duty, which is the failure of an employee to give proper attention to a
required task. Simple neglect of duty signifies "disregard of a duty resulting from carelessness or
indifference."29
Under Section 23, Rule XIV of the Omnibus Civil Service Rules and Regulations, (simple) neglect of duty is
punishable by suspension of one month and one day to six months for the first offense. However, under Sec.19,
Rule XIV of the same Rules, the penalty of fine (instead of suspension) may also be imposed in the
alternative.30 Following the Court’s ruling in several cases involving (simple) neglect of duty, this Court finds
the penalty of a fine in the amount of ₱4,000.00, as recommended by Judge Wacas and the OCA, just and
reasonable.
WHEREFORE, the Court finds Desiderio W. Macusi, Jr., former Sheriff IV, Regional Trial Court, Branch 25,
Tabuk City, Kalinga, GUILTY of Simple Neglect of Duty and imposes upon him the penalty of a FINE in the
amount of ₱4,000.00. Considering Macusi's resignation, the Court directs the Office of Administrative Services
to compute Macusi's terminal leave credits and the Fiscal Management Office to compute the monetary
equivalent thereof, from which his fine of P-4,000.00 shall be deducted.
SO ORDERED.
TERESITA J. LEONARDO-DE CASTRO
Associate Justice
WE CONCUR:
MARIA LOURDES P. A. SERENO
Chief Justice
Chairperson
LUCAS P. BERSAMIN MARTIN S. VILLARAMA, JR.
Associate Justice Associate Justice
MENDOZA v. COMMISSION ON AUDIT G.R. No. 195395, September 10, 2013
Fact: Petitioner Mendoza is the general manager of Talisay Water District in Talisay City, Negros Occidental.
The Water District was formed pursuant to Presidential Decree No. 198, otherwise known as the “Provincial
Water Utilities Act of 1973.” The Commission on Audit disallowed a total amount of P3 80,208.00 which
Mendoza received as part of his salary as the Water District’s general manager from 2005 to 2006. The
Commission found that petitioner Mendoza’s salary as general manager “was not in consonance with the rate
prescribed under the Salary Standardization Law On July 6, 2009, the Commission on Audit issued the “Notice
of Finality of COA Decision” informing petitioner Mendoza of the finality of the Notice of Disallowance/s.
The Commission then instructed the Talisay Water District cashier to withhold petitioner Mendoza’s salaries.
Petitioner Mendoza filed his Motion for Reconsideration of the “Notice of Finality of COA Decision.” He
assailed the finality of the Notice of Disallowance/s, arguing that he had not personally received a copy of this.
This deprived him of the opportunity to answer the Notice immediately. The Commission on Audit denied
petitioner Mendoza’s Motion for Reconsideration for lack of merit. Petitioner Mendoza filed Petition to set
aside the Commission on Audit’s Decision.
Issue: Whether the Petitioner was afforded due process even if he did not personally received the notice of
Disallowance.
Held: The Notice of Disallowance/s became final and executory. Petitioner Mendoza was afforded due process
despite his claim that he had never personally received a copy of the Notice of Disallowance/s. He was able to
file the Motion for Reconsideration. The Commission gave due course to the Motion and ruled on the merits.
Petitioner Mendoza, therefore, has been duly afforded an opportunity to explain his side and seek a
reconsideration of the ruling he assails, which is the “essence of administrative due process.”
BRION, J.:
We resolve the petition for review on certiorari[1] filed by Dr. Raphael C. Fontanilla (Dr. Fontanilla) to
assail the September 18, 2013 ruling[2] of the Commission on Audit (COA) Proper in Decision No. 2013-
137. This COA decision affirmed the June 25, 2009 decision[3] of the Adjudication and Settlement Board
(ASB).

Antecedents

Dr. Fontanilla is the Schools Division Superintendent of the Department of Education (DepEd) in South
Cotobato.[4] Under his supervision was Ms. Luna V. Falcis, the Division's designated Special Disbursing Officer
(Clerk II).[5] Falcis had the duty, among others, to encash checks for the DepEd's expenses and activities.[6]

On August 30, 2007, Falcis, together with a co-worker, went to the Land Bank of the Philippines, Koronadal
City Branch, to encash a check for Php313,024.50.[7] After completing the transaction, they took a public utility
tricycle in going back to their office. On their way, three men blocked their path and at gunpoint grabbed the
envelope containing the money. The robbers then sped away in a motorcycle.[8]

Falcis reported the incident to the police. In their investigation report, the police remarked that Falcis regularly
goes to the bank without a security escort, which emboldened the suspects to commit the robbery.[9]

After the robbery was reported to the COA Resident Auditor of the DepEd South Cotabato Division,[10] Falcis
filed with the COA Audit Team Leader (ATL) a request for relief from money accountability (request for
relief).[11]

The ATL investigated the incident and found that Falcis failed to exert extra care and due diligence in handling
the encashment; she did not request a security escort and the use of a government vehicle. The ATL forwarded
its findings to the Regional Legal and Adjudication Office (COA Regional Office) for further study.[12]

The COA Regional Office concurred with the ATL findings and elevated Falcis's request for relief to the
Adjudication and Settlement Board (ASB) of the COA National Office, for final disposition.[13]

The ASB's Findings

The ASB denied Falcis's request for relief based on the finding that she had been negligent, thus, liable for the
amount of money lost.[14] The ASB cited Section 105 (2) of Presidential Decree No. 1445 or the Government
Auditing Code of the Philippines (Audit Code), which states:

Section 105. Measure of liability of accountable officers.

xxx

Every officer accountable for government funds shall be liable for all losses resulting from the unlawful
(2)
deposit, use, or application thereof and for all losses attributable to negligence in the keeping of the funds.
The ASB also ruled that Dr. Fontanilla is jointly and solidarity liable with Falcis under Section 104 of the Audit
Code which makes the head of the agency accountable because he did not exert the required diligence:

Section 104. Records and reports required by primarily responsible officers. The head of any agency or
instrumentality of the national government or any government-owned or -controlled corporation and any other
self-governing board or commission of the government shall exercise the diligence of a good father of a
family in supervising accountable officers under his control to prevent the incurrence of loss of government
funds or property, otherwise he shall be jointly and solidarily liable with the person primarily
accountable therefor... [emphasis ours]
In the words of the ASB, Dr. Fontanilla did not make any effort to correct the situation by closely supervising
Falcis, providing the needed guidelines, transport, and escort for the lowly clerk to handle big amounts of
money, thus failing to meet the standards required under Section 104. The dispositive portion of the ASB's
decision reads:

WHEREFORE, in view of the foregoing, and considering the recommendation of the COA officials
concerned, the instant request for relief from money accountability is hereby DENIED for lack of merit. Ms.
Falcis and the Schools Division Superintendent at the time of the robbery, Dr. Raphael C. Fontanilla,
are jointly and solidarily liable for the amount lost.[15] [emphasis ours]
Falcis moved for the reconsideration of the ruling.[16] Dr. Fontanilla, on the other hand, moved for intervention,
exclusion, and reconsideration.[17]

In his motion, Dr. Fontanilla claimed that he was denied due process. He explained that there was no notice, he
was not ordered to participate in the proceedings nor was he given a chance to present his side. He asserted
that, effectively, the COA did not acquire jurisdiction over his person; thus, any adjudication against him must
necessarily be without any legal force.[18]

Dr. Fontanilla stressed that he was never a party to the case. He was informed of his liability only when Falcis
gave him a photocopy of the decision. He thus prayed that he should be allowed to intervene to explain his
side.[19]

In sum, Dr. Fontanilla asked the ASB to reconsider its decision and declare void the finding of his liability until
such time that he is allowed to defend himself at a hearing as contemplated by the principles of due process.[20]

The COA Proper's Decision

The COA treated Dr. Fontanilla's motion for intervention, exclusion, and reconsideration as an appeal from the
ASB's decision.[21]

The COA held that Dr. Fontanilla had not been denied administrative due process; Dr. Fontanilla was properly
given the chance to be heard (and was thus accorded due process) when the COA entertained his motion/appeal;
the COA, on the other hand, also had the opportunity to correct the ASB's decision.[22]

On the issue of negligence, the COA held that Dr. Fontanilla failed to observe the diligence of a good father of a
family. He is presumed to be knowledgeable of the transactions made by his subordinates. It is highly
improbable that a large amount of money could be withdrawn without his knowledge. The COA opined that
although robbery can ordinarily be considered a force majeure, its happening can be prevented by complying
with the minimum requirements of prudence.[23]

In sum, the COA found that Falcis and Dr. Fontanilla did not exercise precautionary measures necessary to
safeguard the money withdrawn from the bank.[24] The dispositive portion of the COA decision reads:

WHEREFORE, in view of the foregoing, the instant appeal is hereby DENIED for lack of merit. Accordingly,
ASB Decision No. 2009-075 dated June 25, 2006, is hereby AFFIRMED.[25]
The Petition

Dr. Fontanilla now assails the COA decision on the sole ground that he has been denied due process.[26] He
underscores that the COA proceedings stemmed from Falcis's (and not his) request for relief. He explains that in
the entire length of the proceedings, he was not given the opportunity to explain his side.

Dr. Fontanilla traces the steps that led to the COA's finding that he is solidarity liable for the loss of government
fund:

1. Falcis filed the request for relief with the ATL on August 31, 2007. As Falcis's superior, he "noted" the
request for relief.

2. The ATL took cognizance of the request for relief. The ATL did not require him to comment.

3. On November 26, 2007, the ATL forwarded the request for relief to the COA Regional Office for
further study. The ATL did not rule on his liability nor mention his participation in the incident.

4. On June 10, 2008, the COA Regional Office affirmed the ATL's findings. The COA Regional Office
did not require him to comment. Again; the decision was silent on his liability.

5. The COA Regional Office elevated the request for relief to the ASB - COA National Office. The ASB
denied it on June 25, 2013. Notably, the ASB, without requiring him to comment or explain his side,
held him jointly and solidarity liable with Falcis. This was the first time that the COA touched on his
liability. In fact, this was the first time the COA mentioned him at all.

6. He learned of his liability through Falcis when the latter gave him a photocopy of the ASB decision. He
did not receive an official copy of the ASB decision.

7. He then filed his motion for intervention, exclusion, and reconsideration.

8. The COA denied his motion (that it be treated as an appeal) and affirmed the ASB decision finding him
liable.[27]
Based on this recital, Dr. Fontanilla insists that he was not given the chance to explain his side during the entire
fact-finding process. From August 31, 2007 (the date of filing of the request for relief) to September 18, 2013
(the date of the COA proper decision) - a span of almost six years -the COA did not inform him of the
possibility that he could be held solidarity liable. He therefore did not have the chance to defend himself against
any liability.

From the ASB decision, he filed his motion for intervention (to allow him to participate in the proceedings),
for exclusion (to forestall the imposition of liability until he is allowed to defend himself), and
for reconsideration (of the ASB - COA decisions for denial of due process).[28]

Finally, Dr. Fontanilla argues that the fact that the COA entertained his motion/appeal did not cure the lack of
due process. He explains that he merely asked the COA to first allow him to present his side before it rules on
his liability; he did not ask the COA to rule on the merits based solely on his motion to intervene. That he filed
(and the COA entertained) the motion for intervention, exclusion, and reconsideration did not mean that he had
been given the opportunity to be heard. On the contrary, the COA did not hear him out on the merits of his
defense before finding him liable.[29]

Dr. Fontanilla thus prays that we annul and set aside the COA decision.

The COA's Comment

The COA, through the Office of the Solicitor General, argues that Dr. Fontanilla availed of the wrong remedy.
Sections 1 and 2, Rule 64, in relation to Section 1, Rule 65 of the Rules of Court, provide that decisions and
resolutions of the COA are reviewable by this Court, not via an appeal by certiorari under Rule 45, but through
a petition for certiorari under Rule 65.[30]

In any case, the COA submits that had the petition been filed under Rule 65, it would still fail considering that
Dr. Fontanilla does not allege any grave abuse of discretion on the part of the COA.[31]

On the issue of due process, the COA submits that Dr. Fontanilla's motion for intervention, exclusion, and
reconsideration effectively cured the alleged denial of due process.[32]

Issues

The petition raises the following issues:

1. Did Dr. Fontanilla avail of the wrong remedy? If so, is there basis to liberally apply the Rules of Court?

2. Was Dr. Fontanilla denied due process?

Our Ruling

We grant the petition.

Dr. Fontanilla availed of the wrong remedy but, in a proper case, the Court can liberally apply the Rules of
Court.

Dr. Fontanilla did not use the correct remedy when he filed an appeal by certiorari under Rule 45 of the Rules
of Court.

Article IX-A, Section 7 of the Constitution provides that decisions, orders, or rulings of the COA may be
brought to this Court on certiorari by the aggrieved party. This is echoed by Section 2, Rule 64, of the Rules of
Court, which states that a judgment or final order or resolution of the COA may be brought by the aggrieved
party to this Court on certiorari under Rule 65.[33]

Based on these rules, we could have dismissed the petition outright.

The gravity, however, of Dr. Fontanilla's claim of violation of his right to due process compelled us to examine
the merit of his petition; the Court itself would compound the violation of Dr. Fontanilla's right to due process if
indeed such violation took place and we would brush it aside because of a technical procedural reason. Under
the scales of justice, technical procedural rules pale in comparison and are outweighed by substantive violations
affecting the bill of rights.

In our examination of the petition and the records, we found that although the petition does not expressly use
the technical terms "grave abuse of discretion" and "errors of jurisdiction" Dr. Fontanilla's claim that the COA
did not give him the chance to explain his side, if true, would characterize the COA's act as grave abuse of
discretion.[34] Thus, requiring the COA to comment was the more appropriate course of action to take, rather
than to summarily deny the petition.[35]

Having said these, we stress that the Constitution and the Rules of Court limit the permissible scope of inquiry
in Rules 64 and 65 certiorari petitions only to errors of jurisdiction or grave abuse of discretion. Hence, unless
tainted with grave abuse of discretion, the COA's simple errors of judgment cannot be reviewed even by this
Court.[36]

With this standard as our guide, we now proceed to resolve Dr. Fontanilla's petition on the issue of whether he
had indeed been denied of due process when the COA found him negligent and thus solidarily liable for the
funds the government lost through robbery.

The COA gravely abused its discretion when it denied Dr. Fontanilla of due process.

We highlight the following undisputed facts:

1. Dr. Fontanilla noted and signed Falcis's letter[37] informing the COA Resident Auditor of the robbery.
Thus, as early as August 31, 2007, the COA had already been notified of Dr. Fontanilla's position as
Falcis' superior.

2. The results of the ATL's investigation[38] did not mention Dr. Fontanilla or his supposed role in the
incident. Dr. Fontanilla was mentioned for the first time when the ASB, with the recommendation of the
COA Regional Office,[39] denied the request for relief. Not only did the ASB deny the request for relief,
it also concluded that Dr. Fontanilla was negligent and solidarily liable with Falcis without previously
informing him that he could be held liable.
 3. In his motion for intervention, exclusion, and reconsideration with the COA, Dr. Fontanilla alleged that
the ASB did not give him the chance to defend himself before declaring him solidarily liability for the
amount lost from the robbery. There, he asked permission to intervene in the proceedings and be given
the opportunity to defend himself.

4. The COA treated his motion as an appeal from the ASB decision and brushed aside his claim of
violation of due process. It ruled that the fact that his appeal was entertained meant that he was accorded
due process. Without requiring or allowing Dr. Fontanilla to submit a memorandum or calling the
parties for oral arguments,[40] the COA held Dr. Fontanilla solidarity liable.
Thus, Dr. Fontanilla maintains that his right to due process was violated. The COA counters that his motion for
intervention, exclusion, and reconsideration effectively cured the defect in the proceedings.

We reject the COA's reasoning.

While we have ruled in the past that the filing of a motion for reconsideration cures the defect in procedural due
process because the process of reconsideration is itself an opportunity to be heard,[41] this ruling does not
embody an absolute rule that applies in all circumstances. The mere filing of a motion for reconsideration
cannot cure the due process defect, especially if the motion was filed precisely to raise the issue of violation of
the right to due process and the lack of opportunity to be heard on the merits remained.[42]

In other words, if a person has not been given the opportunity to squarely and intelligently answer the
accusations or rebut the evidence presented against him,[43] or raise substantive defenses through the proper
pleadings before a quasi-judicial body (like the COA) where he or she stands charged, then a due process
problem exists. This problem worsens and the denial of his most basic right continues if, in the first place, he is
found liable without having been charged and this finding is confirmed in the appeal or reconsideration process
without allowing him to rebut or explain his side on the finding against him.

Time and again, we have ruled that the essence of due process is the opportunity to be heard. In administrative
proceedings, one is heard when he is accorded a fair and reasonable opportunity to explain his case or is given
the chance to have the ruling complained of reconsidered.[44]

Contrary to the COA's posturing, it did not pass upon the merit of Dr. Fontanilla's claim That he was denied due
process. Instead of asking Dr. Fontanilla to explain his side (by allowing him to submit his memorandum or
calling for an oral argument as provided under Rule X, Section 3 of the COA Rules of Procedure), the COA
concluded right away that the motion for intervention, exclusion, and reconsideration had effectively cured the
alleged denial of due process. The COA failed or simply refused to realize that Dr. Fontanilla filed the motion
precisely for the purpose of participating in the proceedings to explain his side.

We cannot tolerate this flippant view of administrative due process in this case or in any other case.

We stress that administrative due process also requires the following: 1) A finding or decision by a competent
tribunal that is supported by substantial evidence, either presented at the hearing or at least contained in the
records or disclosed to the parties affected; 2) The tribunal must act on its own independent consideration of the
law and facts of the controversy and not simply accept the view of a subordinate in arriving at a decision; and
3) The tribunal should in all controversial questions, render its decision in such a manner that the parties to the
proceeding can know the various issues involved and the reason for the decision rendered.[45]

In the present case, not only did the COA deny Dr. Fontanilla's plea to be heard, it proceeded to confirm his
liability on reconsideration without hearing his possible defense or defenses.

We cannot overstress that the root of Dr. Fontanilla's liability is his supposed negligence in failing to properly
supervise Francis. The COA arrived at this finding solely because the robbery had taken place. In the words of
the COA, Dr. Fontanilla did not make any effort to correct the situation by closely supervising Falcis,
providing the needed guidelines, transport, and escort for the lowly clerk to handle big amounts of money.

The COA held that[46] Dr. Fontanilla was presumed to be knowledgeable of the transactions entered into by his
subordinates. With such a large amount involved, the COA found it improbable that he did not know about the
transaction. He must have known of the withdrawal, but he failed to exercise the diligence required.[47]

How the COA came to these conclusions without requiring Dr. Fontanilla to explain his side disturbs us. Its
conclusions all the more arouse disquiet since the COA confirmed the ASB's initial and already unilateral
findings.

The records of the case fail to sufficiently provide explanations that would mitigate the harshness of the
unfairness that took place. The stark reality is that Dr. Fontanilla now stands before us without having been
previously allowed to defend himself against the liability unilaterally imposed on him. In response, the OSG
simply presents to us its shallow view of the rule that a motion for reconsideration is sufficient compliance with
a due process deficiency, without bothering to examine the root reason for this jurisprudential ruling and why it
does not apply to Dr. Fontanilla's circumstances. We thus have no recourse but to conclude that the COA's
ruling was attended by grave abuse of discretion.

WHEREFORE, premises considered, we GRANT the petition and SET ASIDE the September 18, 2013
decision of the Commission on Audit Proper in Decision No. 2013-137, insofar as it held Dr. Raphael C.
Fontanilla jointly and solidarity liable for the loss of Php313,024.50 through robbery.

We ORDER the Commission on Audit to direct Dr. Fontanilla to file his memorandum containing his evidence,
or to call for oral arguments that would allow him to present his evidence. In either case, both parties shall be
heard before the COA can proceed to rule on the question of Dr. Fontanilla's liability.

SO ORDERED.

Sereno, C. J., Carpio, Velasco, Jr., Leonardo-De Castro, Peralta, Bersamin, Perez, Mendoza, Reyes, Perlas-
Bernabe, Leonen, and Caguioa, JJ., concur.
Del Castillo, J., on official leave.
Jardeleza, J., no part prior OSG action.
G.R. No. 190566 : December 11, 2013

MARK JEROME S. MAGLALANG, Petitioner, v. PHILIPPINE AMUSEMENT AND GAMING

CORPORATION (PAGCOR), AS REPRESENTED BY ITS INCUMBENT CHAIRMAN EFRAIM
GENUINO, Respondent.

VILLARAMA, JR., J.:

FACTS:

Petitioner was a teller at the Casino Filipino, Angeles City Branch, Angeles City, which was operated by
respondent Philippine Amusement and Gaming Corporation (PAGCOR). While he was performing his
functions as teller, a lady customer identified later as one Cecilia Nakasato (Cecilia) approached him in his
booth and handed to him an undetermined amount of cash consisting of mixed P1,000.00 and P500.00 bills.
There were 45 P1,000.00 and ten P500.00 bills for the total amount of P50,000.00. Following casino procedure,
petitioner laid the bills on the spreading board. However, he erroneously spread the bills into only four clusters
instead of five clusters worth P 10,000.00 per cluster. He then placed markers for P10,000.00 each cluster of
cash and declared the total amount of P40,000.00 to Cecilia. Perplexed, Cecilia asked petitioner why the latter
only dished out P40,000.00. She then pointed to the first cluster of bills and requested petitioner to check the
first cluster which she observed to be thicker than the others. Petitioner performed a recount and found that the
said cluster contained 20 pieces of P1,000.00 bills. Petitioner apologized to Cecilia and rectified the error by
declaring the full and correct amount handed to him by the latter. Petitioner, however, averred that Cecilia
accused him of trying to shortchange her and that petitioner tried to deliberately fool her of her money.
Petitioner tried to explain, but Cecilia allegedly continued to berate and curse him. To ease the tension,
petitioner was asked to take a break. After ten minutes, petitioner returned to his booth. However, Cecilia
allegedly showed up and continued to berate petitioner. As a result, the two of them were invited to the casinos
Internal Security Office in order to air their respective sides. Thereafter, petitioner was required to file an
Incident Report which he submitted on the same day of the incident.

On January 8, 2009, petitioner received a Memorandum issued by the casino informing him that he was being
charged with Discourtesy towards a casino customer and directing him to explain within 72 hours upon receipt
of the memorandum why he should not be sanctioned or dismissed. In compliance therewith, petitioner
submitted a letter-explanation dated January 10, 2009.

On March 31, 2009, petitioner received another Memorandum dated March 19, 2009, stating that the Board of
Directors of PAGCOR found him guilty of Discourtesy towards a casino customer and imposed on him a 30-
day suspension for this first offense. Aggrieved, on April 2, 2009, petitioner filed a Motion for Reconsideration
seeking a reversal of the boards

decision and further prayed in the alternative that if he is indeed found guilty as charged, the penalty be only a
reprimand as it is the appropriate penalty. During the pendency of said motion, petitioner also filed a Motion for
Production dated April 20, 2009, praying that he be furnished with copies of documents relative to the case
including the recommendation of the investigating committee and the Decision/Resolution of the Board
supposedly containing the latter's factual findings.
Subsequently, on June 18, 2009, PAGCOR issued a Memorandum dated June 18, 2009 practically reiterating
the contents of its March 19, 2009 Memorandum. It informed petitioner that the Board of Directors 2009
resolved to deny his appeal for reconsideration for lack of merit.

On August 17, 2009, petitioner filed a petition for certiorari under Rule 65 of the 1997 Rules of Civil Procedure,
as amended, before the CA, averring that there is no evidence, much less factual and legal basis to support the
finding of guilt against him. Moreover, petitioner ascribed grave abuse of discretion amounting to lack or excess
of jurisdiction to the acts of PAGCOR in adjudging him guilty of the charge, in failing to observe the proper
procedure in the rendition of its decision and in imposing the harsh penalty of a 30 -day suspension. Justifying
his recourse to the CA, petitioner explained that he did not appeal to the Civil Service Commission (CSC)
because the penalty imposed on him was only a 30- day suspension which is not within the CSCs appellate
jurisdiction. He also claimed that discourtesy in the performance of official duties is classified as a light offense
which is punishable only by reprimand.

In its assailed Resolution dated September 30, 2009, the CA outrightly dismissed the petition for certiorari for
being premature as petitioner failed to exhaust administrative remedies before seeking recourse from the CA.
Invoking Section 2(1), Article IX-B of the 1987 Constitution, the CA held that the CSC has jurisdiction over
issues involving the employer-employee relationship in all branches, subdivisions, instrumentalities and
agencies of the Government, including government- owned or controlled corporations with original charters
such as PAGCOR. Petitioner filed his Motion for Reconsideration which the CA denied in the assailed
Resolution dated November 26, 2009. In denying the said motion, the CA relied on this Courts ruling in Duty
Free Philippines v. Mojica citing Philippine Amusement and Gaming Corp. v. CA, where this Court held as
follows: It is now settled that, conformably to Article IX-B, Section 2(1), [of the 1987 Constitution]
government-owned or controlled corporations shall be considered part of the Civil Service only if they have
original charters, as distinguished from those created under general law. PAGCOR belongs to the Civil Service
because it was created directly by PD 1869 on July 11, 1983. Consequently, controversies concerning the
relations of the employee with the management of PAGCOR should come under the jurisdiction of the Merit
System Protection Board and the Civil Service Commission, conformably to the Administrative Code of 1987.
Section 16(2) of the said Code vest[s] in the Merit System Protection Board the power inter alia to: a) Hear and
decide on appeal administrative cases involving officials and employees of the Civil Service. Its decision shall
be final except those involving dismissal or separation from the service which may be appealed to the
Commission.

Hence, this petition where petitioner argues that the CA committed grave and substantial error of judgment

ISSUE: Was the CA correct in outrightly dismissing the petition for certiorari filed before it on the
ground of non-exhaustion of administrative remedies?

HELD: Court of Appeals decision reversed.

POLITICAL LAW: prior exhaustion of administrative remedies

Our ruling in Public Hearing Committee of the Laguna Lake Development Authority v. SM Prime Holdings,
Inc.on the doctrine of exhaustion of administrative remedies is instructive, to wit: Under the doctrine of
exhaustion of administrative remedies, before a party is allowed to seek the intervention of the court, he or she
should have availed himself or herself of all the means of administrative processes afforded him or her. Hence,
if resort to a remedy within the administrative machinery can still be made by giving the administrative officer
concerned every opportunity to decide on a matter that comes within his or her jurisdiction, then such remedy
should be exhausted first before the court's judicial power can be sought. The premature invocation of the
intervention of the court is fatal to ones cause of action. The doctrine of exhaustion of administrative remedies
is based on practical and legal reasons. The availment of administrative remedy entails lesser expenses and
provides for a speedier disposition of controversies. Furthermore, the courts of justice, for reasons of comity
and convenience, will shy away from a dispute until the system of administrative redress has been completed
and complied with, so as to give the administrative agency concerned every opportunity to correct its error and
dispose of the case.

POLITICAL LAW: exception to prior exhaustion of administrative remedies

However, the doctrine of exhaustion of administrative remedies is not absolute as it admits of the following
exceptions: (1) when there is a violation of due process; (2) when the issue involved is purely a legal question;
(3) when the administrative action is patently illegal amounting to lack or excess of jurisdiction; (4) when there
is estoppel on the part of the administrative agency concerned; (5) when there is irreparable injury; (6) when the
respondent is a department secretary whose acts as an alter ego of the President bears the implied and assumed
approval of the latter; (7) when to require exhaustion of administrative remedies would be unreasonable; (8)
when it would amount to a nullification of a claim; (9) when the subject matter is a private land in land case
proceedings; (10) when the rule does not provide a plain, speedy and adequate remedy, and (11) when there are
circumstances indicating the urgency of judicial intervention, and unreasonable delay would greatly prejudice
the complainant; (12) where no administrative review is provided by law; (13) where the rule of qualified
political agency applies and (14) where the issue of non-exhaustion of administrative remedies has been
rendered moot.

The case before us falls squarely under exception number 12 since the law per se provides no administrative
review for administrative cases whereby an employee like petitioner is covered by Civil Service law, rules and
regulations and penalized with a suspension for not more than 30 days.

POLITICAL LAW: availability of appeal in administrative disciplinary cases

Section 37 (a) and (b) of P.D. No. 807, otherwise known as the Civil Service Decree of the Philippines,provides
for the unavailability of any appeal: (a) The Commission shall decide upon appeal all administrative
disciplinary cases involving the imposition of a penalty of suspension for more than thirty days , or fine in an
amount exceeding thirty days salary, demotion in rank or salary or transfer, removal or dismissal from Office. A
complaint may be filed directly with the Commission by a private citizen against a government official or
employee in which case it may hear and decide the case or it may deputize any department or agency or official
or group of officials to conduct the investigation. The results of the investigation shall be submitted to the
Commission with recommendation as to the penalty to be imposed or other action to be taken. (b) The heads of
departments, 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. Their decisions shall be final in case the penalty imposed is suspension for not more than thirty
days or fine in an amount not exceeding thirty days salary. In case the decision rendered by a bureau or office
head is appealable to the Commission, the same may be initially appealed to the department and finally to the
Commission and pending appeal, the same shall be executory except when the penalty is removal, in which case
the same shall be executory only after confirmation by the department head.

Similar provisions are reiterated in the aforequoted Section 47 of E.O. No. 292 essentially providing that cases
of this sort are not appealable to the CSC.

POLITICAL LAW: judicial review in administrative cases

Nevertheless, decisions of administrative agencies which are declared final and unappealable by law are still
subject to judicial review. In Republic of the Phils. v. Francisco, we held: Decisions of administrative or quasi-
administrative agencies which are declared by law final and unappealable are subject to judicial review if they
fail the test of arbitrariness, or upon proof of gross abuse of discretion, fraud or error of law. When such
administrative or quasi-judicial bodies grossly misappreciate evidence of such nature as to compel a contrary
conclusion, the Court will not hesitate to reverse the factual findings. Thus, the decision of the Ombudsman
may be reviewed, modified or reversed via petition for certiorari under Rule 65 of the Rules of Court, on a
finding that it had no jurisdiction over the complaint, or of grave abuse of discretion amounting to excess or
lack of jurisdiction.

REMEDIAL LAW: distinction between ordinary appeal and petition for certiorari under Rule 65

It bears stressing that the judicial recourse petitioner availed of in this case before the CA is a special civil
action for certiorari ascribing grave abuse of discretion, amounting to lack or excess of jurisdiction on the part
of PAGCOR, not an appeal. Suffice it to state that an appeal and a special civil action such as certiorari under
Rule 65 are entirely distinct and separate from each other. One cannot file petition for certiorari under Rule 65
of the Rules where appeal is available, even if the ground availed of is grave abuse of discretion. A special civil
action for certiorari under Rule 65 lies only when there is no appeal, or plain, speedy and adequate remedy in
the ordinary course of law. Certiorari cannot be allowed when a party to a case fails to appeal a judgment
despite the availability of that remedy, as the same should not be a substitute for the lost remedy of appeal. The
remedies of appeal and certiorari are mutually exclusive and not alternative or successive.

In sum, there being no appeal or any plain, speedy, and adequate remedy in the ordinary course of law in view
of petitioner's allegation that PAGCOR has acted without or in excess of jurisdiction, or with grave abuse of
discretion amounting to lack or excess of jurisdiction, the CA's outright dismissal of the petition for certiorari
on the basis of non-exhaustion of administrative remedies is bereft of any legal standing and should therefore be
set aside.

Finally, as a rule, a petition for certiorari under Rule 65 is valid only when the question involved is an error of
jurisdiction, or when there is grave abuse of discretion amounting to lack or excess of jurisdiction on the part of
the court or tribunals exercising quasi-judicial functions. Hence, courts exercising certiorari jurisdiction should
refrain from reviewing factual assessments of the respondent court or agency. Occasionally, however, they are
constrained to wade into factual matters when the evidence on record does not support those factual findings; or
when too much is concluded, inferred or deduced from the bare or incomplete facts appearing on
record.Considering the circumstances and since this Court is not a trier of facts, remand of this case to the CA
for its judicious resolution is in order.
G.R. No. 197299 : February 13, 2013
OFFICE OF THE OMBUDSMAN, Petitioner, v. RODRIGO V. MAPOY and DON EMMANUEL R.
REGALARIO, Respondent.
DECISION
PER CURIAM:
This is a Petition for Review on Certiorari under Rule 45 of the Rules of Court assailing the Decision1 dated
February 7, 2011 and Resoluiton2 dated June 7, 2011 of the Court of Appeals (CA) in CA-G.R. SP No. 116179
which reversed and set aside the Review/Recommendation3 dated February 1, 2008 issued by the Office of
Ombudsman finding respondents Rodrigo V. Mapoy (Mapoy) and Don Emmanuel R. Regalario (Regalario)
guilty of grave misconduct and dishonesty, and imposing upon them the penalty of dismissal from the service
with cancellation of eligibility, forfeiture of retirement benefits and perpetual disqualification for reemployment
in the government service.
The Antecedent Facts
Mapoy and Regalario (respondents) are Special Investigators of the National Bureau of Investigation (NBI),
assigned at the Criminal Intelligence Division (CRID).4 On August 26, 2003, they implemented a search
warrant against Pocholo Matias (Matias), owner of Pocholo Matias Grain Center, at his warehouses located in
Valenzuela City and were able to seize 250,000 sacks of imported rice. Matias was then charged with technical
smuggling or violation of Section 3602 of the Tariff and Customs Code before the Office of the City Prosecutor
of Valenzuela. The search warrant, however, was subsequently quashed for "lack of deputization by the Bureau
of Customs."5?r?l1
On October 8, 2003, respondents were arrested by the elements of the Counter Intelligence Special Unit of the
National Capital Regional Police Office (CISU-NCRPO) during an entrapment operation conducted at the
Century Park Hotel, Manila based on the complaint6 of Matias that the respondents extorted money from him in
exchange for not filing any other criminal charges against him. The arresting officers recovered the P300,000.00
marked money from Regalario.7?r?l1
Thus, on October 20, 2003, the NBI, through its then Director, General Reynaldo G. Wycoco, filed a
complaint8 against respondents before the Office of the Ombudsman, docketed as OMB-CA-03-0499-K and
OMB-CA-03-0559-L, for Dishonesty, Grave Misconduct and Corrupt Practices.
In their position paper,9 respondents denied the charges against them and claimed that Matias sent them death
threats and offered money for the settlement of his case. This led them to seek authority from the Chief of the
CRID-Intelligence Services to conduct further investigation on the matter.10 Thus, when Matias called them up
in the morning of October 8, 2003 reiterating his offered consideration, they formed a team to conduct a
legitimate entrapment operation against him for corruption of public officials at the agreed place or the Century
Park Hotel, Manila whereat Matias dropped a white envelope on their table and hurriedly left. They then
followed him to effect his arrest but were prevented from doing so by the CISU-NCRPO operatives.
The Ombudsman Ruling
On February 1, 2008, Medwin S. Dizon, Graft Investigation and Prosecution Officer II, issued a
Review/Recommendation,11 the dispositive portion of which states:cralawlibrary
WHEREFORE, foregoing considered, respondents Rodrigo V. Mapoy, Special Investigator IV and Don
Emmanuel R. Regalario, Special Investigator III, both of the National Bureau of Investigation are hereby found
guilty of Grave Misconduct and Dishonesty, and are hereby meted the penalty of DISMISSAL from the service
with cancellation of eligibility, forfeiture of retirement benefits, and perpetual disqualification for re-
employment in the government service pursuant to the Uniform Rules on Administrative Cases in the Civil
Service.
SO ORDERED. 12?r?l1
It found substantial evidence to support the charges against respondents who were caught in possession of the
marked money inside the hotel. It ruled that as between the claims of entrapment by the parties, the presumption
of regularity in the performance of duty applies in favor of the CISU-NCRPO operatives whose acts were not
impelled by ill-motives, and whose entrapment operation was well-planned and coordinated. It noted that even
the serial numbers of the marked money were duly recorded by the bank. In contrast, the supposed entrapment
operation by the respondents did not have the imprimatur of the NBI Director who even initiated the instant
complaint against them. Not even the Deputy Director for Intelligence Service of the NBI supported
respondents entrapment claim. Neither was the alleged presence of the other members of the NBI team, Jose
Rommel G. Ramirez (Ramirez) and Mark III C. Maure (Maure), at the hotel on that fateful day sufficiently
established. Nor did the Disposition Form relied upon by respondents disclose the purported entrapment
operation against Matias. Moreover, the Investigating Officer noted that: (1) some inconsistencies in the
statements of respondents and their witnesses tend to corroborate the claims of Matias; (2) respondents did not
immediately reveal the supposed purpose of their presence at the crime scene; and (3) it took them one week
after the incident to file their complaint against Matias for corruption of public officials.13 Thus, it was
concluded that respondents defenses were mere afterthought resorted to in order to gain leverage against the
charge of robbery/extortion.14?r?l1
The foregoing resolution was approved by then Acting Ombudsman, Orlando C. Casimiro, on December 8,
2009. 15 Respondents motion for reconsideration therefrom was denied in the Order16 dated September 2, 2010.
Aggrieved, respondents filed a petition for review under Rule 43 of the Rules of Court before the CA.
The CA Ruling
In its assailed Decision,17 the CA reversed and set aside the findings of the Office of the Ombudsman based on
the following grounds: (1) there was no evidence positively confirming the fact that respondents were not
conducting a legitimate entrapment operation; (2) Matias had an axe to grind against respondents who raided his
warehouses and caused the filing of a criminal case against him, thus, his motive is highly suspect; (3) it is
unclear what really transpired at the Century Park Hotel, Manila on October 8, 2003 between the respondents,
Matias and the arresting officers of the CISU-NCRPO. Consequently, applying the equipoise rule, the CA
acquitted respondents of the crimes charged.
The NBI thus sought reconsideration 18 while the Office of the Ombudsman filed an Omnibus Motion to
Intervene and to Admit Attached Motion for Reconsideration of the Decision dated 07 February 2011 (Filed
with Plea for Leave of Court). 19 On June 7, 2011, the CA issued a Resolution 20 where it noted the Office of the
Ombudsmans Motion to Intervene and denied both motions for reconsideration.
Issues Before the Court
Hence, the instant petition filed by the Office of the Ombudsman based on the following ground:cralawlibrary
THE COURT OF APPEALS SERIOUSLY ERRED IN ISSUING THE ASSAILED DECISION DATED
07 FEBRUARY 2011, REVERSING THE OFFICE OF THE OMBUDSMANS
REVIEW/RECOMMENDATION DATED 01 FEBRUARY 2008 WHICH FOUND THE
RESPONDENTS GUILTY OF GRAVE MISCONDUCT AND DISHONESTY AND IMPOSED UPON
THEM THE PENALTY OF DISMISSAL FROM THE SERVICE WITH CANCELLATION OF
ELIGIBILITY, FORFEITURE OF RETIREMENT BENEFITS, AND PERPETUAL
DISQUALIFICATION FOR REEMPLOYMENT IN THE GOVERNMENT SERVICE,
CONSIDERING THAT:cralawlibrary
The findings of facts established by the Office of the Ombudsman in the Review/Recommendation dated
01 February 2008 are supported by substantial evidence, thus, conclusive upon the reviewing
authority.21?r?l1
The Courts Ruling
The petition is meritorious.
It is well-entrenched that in an administrative proceeding, the quantum of proof required for a finding of guilt is
only substantial evidence or such relevant evidence as a reasonable mind might accept as adequate to support a
conclusion and not proof beyond reasonable doubt which requires moral certainty to justify affirmative
findings.22?r?l1
In this case, the Court finds substantial evidence to support the charges against respondents for grave
misconduct and dishonesty. Records show that Matias sought the help of the police to entrap respondents who
were illegally soliciting money from him. Hence, the CISU-NCRPO planned an entrapment operation which
took place at the Century Park Hotel, Manila on October 8, 2003. Prior to the entrapment, Matias withdrew
P300,000.00 from his bank,23 which, in turn, recorded the serial numbers of the bills released. 24 During the
entrapment, Mapoy received the white envelope containing P300,000.00 marked money from Matias and
handed it over to Regalario from whom it was subsequently recovered. After their arrest, respondents were
brought to the police station for investigation 25 and subsequently charged of the crime of robbery/extortion. To
a reasonable mind, the foregoing circumstances are more than adequate to support the conclusion that
respondents extorted money from Matias which complained act amounts to grave misconduct or such corrupt
conduct inspired by an intention to violate the law, or constituting flagrant disregard of well-known legal
rules.26 Similarly, respondents have been dishonest in accepting money from Matias. Dishonesty has been held
to include the disposition to lie, cheat, deceive or defraud, untrustworthiness, lack of integrity, lack of honesty,
probity or integrity in principle, lack of fairness and straightforwardness, among others.27 Hence, their dismissal
from the service with all its accessory penalties was in order.
The Court cannot subscribe to the theory of respondents that they were at the Century Park Hotel, Manila on
that fateful day to entrap Matias for the crime of corruption of public officers. As correctly found by the
Ombudsman, nothing was mentioned in the Disposition Form28 relied upon by respondents with respect to their
planned entrapment of Matias.29 It was only a request to conduct further investigation which was not even
shown to have been approved. Moreover, the respondents' act of letting Matias leave the table after handing the
money to them 30 is inconsistent with their purported intent to arrest him for the crime of corruption of public
officers. No law ot1icer would let an offender walk away from him. Furthermore, as aptly observed by the
Ombudsman, the presence of respondents' witnesses, Ramirez and Maure, at the hotel was not sufficiently
established,31 and no justification was offered to explain their failure to come to the aid of respondents when the
latter were being arrested.
All told, the inculpatory evidence herein point to only one thing: respondents are guilty as charged.
Consequently, the CA committed reversible error in applying the equipoise rule 32 in resolving respondents'
appeal.
WHEREFORE, premises considered, the instant petition is GRANTED. The February 7, 2011 Decision and
June 7, 2011 Resolution of the Court of Appeals in CA-G.R. SP No. 116179 are hereby REVERSED and SET
ASIDE. The Review/Recommendation dated February I, 2008 of the Office of the Ombudsman
is REINSTATED.
SO ORDERED.
REYES, J.:
This is a petition for review on certiorari[1] assailing the Decision[2] dated July 29, 2011 of the Court of Appeals
(CA) in CA-G.R. SP No. 119071, and the Resolution[3] dated April 12, 2012, denying the Office of the
Ombudsman's (Ombudsman) Motion for Reconsideration.

The Facts
The case arose from the Complaint-Affidavit[4] for violation of Section 8[5] of Republic Act (R.A.) No. 6713[6],
Perjury under Article 183 of the Revised Penal Code, and serious dishonesty and grave misconduct under the
Uniform Rules on Administrative Cases in the Civil Service[7], filed on July 27, 2009, before the Ombudsman,
docketed as OMB-C-C-09-0560-J (LSC) and OMB-C-A-09-0570-J (LSC), by Joselito P. Fangon, Acting
Director of the General Investigation Bureau of the Ombudsman, against respondent Jose T. Capulong
(Capulong), Customs Operation Officer V of the Bureau of Customs (BOC).

These charges were based on two particular acts: first, for failure to file the required Statements of Assets,
Liabilities and Net Worth (SALN) for calendar years 1987, 1990, 1991, 1993 and 1998; and second, for failure
to disclose in his SALNs for calendar years 1999 to 2004 his wife's business interest in two corporations,
namely, SYJ Realty Corporation and Radsy Production, Inc. Accordingly, the Ombudsman issued an
Order[8] dated December 7, 2009 directing Capulong to file a counter-affidavit.

In his Counter-Affidavit[9] filed on February 24, 2010, Capulong denied all the allegations against him, asserting
that he had been diligently filing his SALNs since his assumption of office. He claimed that since he had never
received any order from their head office requiring him to submit his SALNs for the aforesaid periods as stated
under Section 3[10] of the Civil Service Commission Resolution No. 060231, a presumption exists that he had
faithfully complied with the annual filing of the SALN. He further asserted that he was not informed by his wife
that she was made an incorporator of the aforementioned corporations; hence there was no willful and deliberate
assertion of falsehood on his part. Besides, the registration of both corporations had already been revoked by the
Securities and Exchange Commission (SEC) as of March 15, 2004.

On March 17, 2010, Capulong filed a Rejoinder[11] arguing that: (1) the submission of photocopies of his
SALNs for calendar years 1991 and 1998 to a responsive pleading is a matter of ordinary procedure; (2) he had
filed his SALNs in accordance with the regular procedure practiced in the Manila International Container Port
(MICP) of the BOC; (3) his 1991 and 1998 SALNs are contained in the records of the BOC, as evidenced by
the MICP-BOC Certification dated March 15, 2010; (4) the complaint against him is barred by prescription; (5)
no legal and factual basis exists to support the complaint; and (6) criminal rules should be strictly construed.

Capulong filed a motion to set the case for hearing for the presentation of certified true copies of his SALNs for
calendar years 1991 and 1998. He also filed, on July 30, 2010, a motion for early resolution of the complaint
considering that the parties have already filed their respective pleadings. However, the Ombudsman did not act
on the said motions.

On March 30, 2011, Capulong received an undated Order[12] issued by the Ombudsman placing him under
preventive suspension without pay which shall continue until the case is terminated but shall not exceed six
months effective from receipt of the Order.
Capulong filed an Urgent Motion to Lift/Reconsider Order of Preventive Suspension with Motion to
Resolve[13] contending that his preventive suspension was not warranted because his continued stay in office
will not prejudice the investigation of the case against him.[14]

Questioning the preventive suspension and wary of the threatening and coercive nature of the Ombudsman's
order, Capulong, on April 19, 2011, filed with the CA a petition for certiorari, docketed as CA-G.R. SP No.
119071, with urgent prayer for the issuance of a temporary restraining order (TRO) and a writ of preliminary
injunction.[15] The CA granted the petition and issued a TRO dated April 26, 2011, enjoining and prohibiting the
Ombudsman and any person representing them or acting under their authority from implementing the
preventive suspension order of the Ombudsman until further orders from the court.[16]

Meanwhile, the Ombudsman issued an Order[17] dated May 13, 2011 lifting Capulong's preventive suspension.
On the same date, in the scheduled hearing, the Ombudsman's representative manifested in open court that the
assailed order of preventive suspension had already been lifted, thus the CA held in abeyance the application for
preliminary injunction.[18]

On May 18, 2011, Capulong filed a Manifestation with Motion for Leave to File and Admit Memorandum
asking the CA to rule on the merits of the petition. On the other hand, the Ombudsman filed a manifestation on
June 9, 2011 declaring that the lifting of Capulong's preventive suspension had rendered the case moot and
academic; hence the petition should be dismissed.

On July 29, 2011, the CA rendered the herein assailed Decision,[19] which granted Capulong's petition and
dismissed the criminal charge docketed as OMB-C-C-09-0560-J (LSC). According to the CA, the petition is not
rendered moot and academic by the subsequent lifting of Capulong's preventive suspension. Thus:

It must be noted that the Petition likewise prays for "other reliefs just and equitable under the premises." This is
sanctioned by Section 1, Rule 65 of the Rules of Court which states that the aggrieved person, that is Petitioner
herein, may, among others, pray for "such incidental reliefs as law and justice may require." Hence, as long as
there is, as can be gleaned from the evidence presented, an indicia of grave abuse of discretion on the part of the
Respondent, even in the absence of a specified prayer in the petition, a ruling on the merits is nevertheless
imperative. x x x. Moreover, it bears emphasis that the prayers in a petition are not determinative of what legal
principles will operate based on the factual allegations thereof.[20] (Citations omitted)

The CA further held that: (a) the Ombudsman has lost its right to prosecute Capulong for non-filing of SALNs
because it had already prescribed in accordance with Act No. 3326;[21] and (b) the simple allegation of non-
disclosure of Capulong's spouse's business interest does not constitute gross misconduct and serious dishonesty
since the complaint-affidavit failed to allege that the said non-disclosure were deliberately done. Hence, there
was absolutely no basis to warrant Capulong's preventive suspension as it is evident on the face of the
complaint that there was nothing to support the same.

The Ombudsman sought reconsideration[22] thereto but the same was denied.[23] Aggrieved by the foregoing
disquisition of the CA, the Ombudsman assails the same before this Court via a Petition for Review
on Certiorari.[24]
The Issue

Essentially, the issue presented to the Court for resolution is whether the CA has jurisdiction over the subject
matter and can grant reliefs, whether primary or incidental, after the Ombudsman has lifted the subject order of
preventive suspension.

The Court's Ruling

The petition has no merit.

As a rule, it is the consistent and general policy of the Court not to interfere with the Ombudsman's exercise of
its investigatory and prosecutory powers. The rule is based not only upon respect for the investigatory and
prosecutory powers granted by the Constitution to the Ombudsman but upon practicality as well. It is within the
context of this well-entrenched policy that the Court proceeds to pass upon the validity of the preventive
suspension order issued by the Ombudsman.[25]

While it is an established rule in administrative law that the courts of justice should respect the findings of fact
of said administrative agencies, the courts may not be bound by such findings of fact when there is absolutely
no evidence in support thereof or such evidence is clearly, manifestly and patently insubstantial; and when there
is a clear showing that the administrative agency acted arbitrarily or with grave abuse of discretion or in a
capricious and whimsical manner, such that its action may amount to an excess or lack of jurisdiction.[26] These
exceptions exist in this case and compel the appellate court to review the findings of fact of the Ombudsman.

In the instant case, the subsequent lifting of the preventive suspension order against Capulong does not render
the petition moot and academic. It does not preclude the courts from passing upon the validity of a preventive
suspension order, it being a manifestation of its constitutionally mandated power and authority to determine
whether or not there has been a grave abuse of discretion amounting to lack or excess of jurisdiction on the part
of any branch or instrumentality of the Government.

The preventive suspension order is interlocutory in character and not a final order on the merits of the case. The
aggrieved party may then seek redress from the courts through a petition for certiorari under Section 1,[27] Rule
65 of the 1997 Rules of Court. While it is true that the primary relief prayed for by Capulong in his petition has
already been voluntarily corrected by the Ombudsman by the issuance of the order lifting his preventive
suspension, we must not lose sight of the fact that Capulong likewise prayed for other remedies. There being a
finding of grave abuse of discretion on the part of the Ombudsman, it was certainly imperative for the CA to
grant incidental reliefs, as sanctioned by Section 1 of Rule 65.

The decision of the appellate court to proceed with the merits of the case is included in Capulong's prayer for
such "other reliefs as may be just and equitable under the premises." Such a prayer in the petition justifies the
grant of a relief not otherwise specifically prayed for.[28] More importantly, we have ruled that it is the
allegations in the pleading which determine the nature of the action and the Court shall grant relief warranted by
the allegations and proof even if no such relief is prayed for.[29]
Significantly, the power of adjudication, vested in the CA is not restricted to the specific relief claimed by the
parties to the dispute, but may include in the order or decision any matter or determination which may be
deemed necessary and expedient for the purpose of settling the dispute or preventing further disputes, provided
said matter for determination has been established by competent evidence during the hearing. The CA is not
bound by technical rules of procedure and evidence, to the end that all disputes and other issues will be
adjudicated in a just, expeditious and inexpensive proceeding.

The requisites for the Ombudsman to issue a preventive suspension order are clearly contained in Section
24[30] of R.A. No. 6770.[31] The rule is that whether the evidence of guilt is strong is left to the determination of
the Ombudsman by taking into account the evidence before him. In the very words of Section 24, the
Ombudsman may preventively suspend a public official pending investigation if "in his judgment" the evidence
presented before him tends to show that the official's guilt is strong and if the further requisites enumerated in
Section 24 are present.[32] The Court, however, can substitute its own judgment for that of the Ombudsman on
this matter, with a clear showing of grave abuse of discretion on the part of the Ombudsman.

Undoubtedly, in this case, the CA aptly ruled that the Ombudsman abused its discretion because it failed to
sufficiently establish any basis to issue the order of preventive suspension. Capulong's non-disclosure of his
wife's business interest does not constitute serious dishonesty or grave misconduct. Nothing in the records
reveals that Capulong deliberately placed "N/A" in his SALN despite knowledge about his wife's business
interest. As explained by Capulong, the SEC already revoked the registration of the corporations where his wife
was an incorporator; hence, he deemed it not necessary to indicate it in his SALN.

Ineluctably, the dismissal of an administrative case does not necessarily bar the filing of a criminal prosecution
for the same or similar acts, which were the subject of the administrative complaint. The Court finds no cogent
reason to depart from this rule. However, the crime of perjury for which Capulong was charged, requires a
willful and deliberate assertion of a falsehood in a statement under oath or in an affidavit, and the statement or
affidavit in question here is Capulong's SALNs. It then becomes necessary to consider the administrative charge
against Capulong to determine whether or not he has committed perjury. Therefore, with the dismissal of
Capulong's administrative case, the CA correctly dismissed its criminal counterpart since the crime of perjury
which stemmed from misrepresentations in his SALNs will no longer have a leg to stand on.

WHEREFORE, in consideration of the foregoing premises, the Decision dated July 29, 2011 and Resolution
dated April 12, 2012 of the Court of Appeals in CA-G.R. SP No. 119071 are AFFIRMED.

SO ORDERED.
REYES, J.:
This is a petition for certiorari and prohibition[1] under Rule 65 of the 1997 Revised Rules of Court filed by
former Governor Luis Raymund F. Villafuerte, Jr. (Villafuerte) and the Province of Camarines Sur (petitioners),
seeking to annul and set aside the following issuances of the late Honorable Jesse M. Robredo (respondent), in
his capacity as then Secretary of the Department of the Interior and Local Government (DILG), to wit:

Memorandum Circular (MC) No. 2010-83 dated August 31, 2010, pertaining to the full disclosure of local
(a)
budget and finances, and bids and public offerings;[2]
MC No. 2010-138 dated December 2, 2010, pertaining to the use of the 20% component of the annual
(b)
internal revenue allotment shares;[3] and
MC No. 2011-08 dated January 13, 2011, pertaining to the strict adherence to Section 90 of Republic Act
(c)
(R.A.) No. 10147 or the General Appropriations Act of 2011.[4]

The petitioners seek the nullification of the foregoing issuances on the ground of unconstitutionality and for
having been issued with grave abuse of discretion amounting to lack or excess of jurisdiction.

The Facts

In 1995, the Commission on Audit (COA) conducted an examination and audit on the manner the local
government units (LGUs) utilized their Internal Revenue Allotment (IRA) for the calendar years 1993-1994.
The examination yielded an official report, showing that a substantial portion of the 20% development fund of
some LGUs was not actually utilized for development projects but was diverted to expenses properly
chargeable against the Maintenance and Other Operating Expenses (MOOE), in stark violation of Section 287
of R.A. No. 7160, otherwise known as the Local Government Code of 1991 (LGC). Thus, on December 14,
1995, the DILG issued MC No. 95-216,[5] enumerating the policies and guidelines on the utilization of the
development fund component of the IRA. It likewise carried a reminder to LGUs of the strict mandate to ensure
that public funds, like the 20% development fund, "shall be spent judiciously and only for the very purpose or
purposes for which such funds are intended."[6]

On September 20, 2005, then DILG Secretary Angelo T. Reyes and Department of Budget and Management
Secretary Romulo L. Neri issued Joint MC No. 1, series of 2005,[7] pertaining to the guidelines on the
appropriation and utilization of the 20% of the IRA for development projects, which aims to enhance
accountability of the LGUs in undertaking development projects. The said memorandum circular underscored
that the 20% of the IRA intended for development projects should be utilized for social development, economic
development and environmental management.[8]

On August 31, 2010, the respondent, in his capacity as DILG Secretary, issued the assailed MC No. 2010-
83,[9] entitled "Full Disclosure of Local Budget and Finances, and Bids and Public Offerings," which aims to
promote good governance through enhanced transparency and accountability of LGUs. The pertinent portion of
the issuance reads:
Legal and Administrative Authority

Section 352 of the Local Government Code of 1991 requires the posting within 30 days from the end of each
fiscal year in at least three (3) publicly accessible and conspicuous places in the local government unit a
summary of all revenues collected and funds received including the appropriations and disbursements of such
funds during the preceding fiscal year.

On the other hand, Republic Act No. 9184, known as the Government Procurement Reform Act, calls for the
posting of the Invitation to Bid, Notice of Award, Notice to Proceed and Approved Contract in the procuring
entity's premises, in newspapers of general circulation, the Philippine Government Electronic Procurement
System (PhilGEPS) and the website of the procuring entity.

The declared policy of the State to promote good local governance also calls for the posting of budgets,
expenditures, contracts and loans, and procurement plans of local government units in conspicuous places
within public buildings in the locality, in the web, and in print media of community or general circulation.

Furthermore, the President, in his first State of the Nation Address, directed all government agencies and
entities to bring to an end luxurious spending and misappropriation of public funds and to expunge mendacious
and erroneous projects, and adhere to the zero-based approach budgetary principle.

Responsibility of the Local Chief Executive

All Provincial Governors, City Mayors and Municipal Mayors, are directed to faithfully comply with the
abovecited [sic] provisions of laws, and existing national policy, by posting in conspicuous places within public
buildings in the locality, or in print media of community or general circulation, and in their websites, the
following:

1. CY 2010 Annual Budget, information detail to the level of particulars of personal services, maintenance
and other operating expenses and capital outlay per individual offices (Source Document - Local Budget
Preparation Form No. 3, titled, Program Appropriation and Obligation by Object of Expenditure,
limited to PS, MOOE and CO. For sample form, please visit www.naga.gov.ph);

2. Quarterly Statement of Cash Flows, information detail to the level of particulars of cash flows from
operating activities (e.g. cash inflows, total cash inflows, total cash outflows), cash flows from investing
activities (e.g. cash outflows), net increase in cash and cash at the beginning of the period (Source
Document - Statement of Cash Flows Form);

3. CY 2009 Statement of Receipts and Expenditures, information detail to the level of particulars of
beginning cash balance, receipts or income on local sources (e.g., tax revenue, non-tax revenue),
external sources, and receipts from loans and borrowings, surplus of prior years, expenditures on
general services, economic services, social services and debt services, and total expenditures (Source
Document - Local Budget Preparation Form No. 2, titled, Statement of Receipts and Expenditures);
 4. CY 2010 Trust Fund (PDAF) Utilization, information detail to the level of particulars of object
expenditures (Source Document - Local Budget Preparation Form No. 3, titled, Program Appropriation
and Obligation by Object of Expenditure, limited to PDAF Utilization);

5. CY 2010 Special Education Fund Utilization, information detail to the level of particulars of object
expenditures (Source Document - Local Budget Preparation Form No. 3, titled, Program Appropriation
and Obligation by Object of Expenditure, limited to Special Education Fund);

6. CY 2010 20% Component of the IRA Utilization, information detail to the level of particulars of objects
of expenditure on social development, economic development and environmental management (Source
Document - Local Budget Preparation Form No. 3, titled, Program Appropriation and Obligation by
Object of Expenditure, limited to 20% Component of the Internal Revenue Allotment);

7. CY 2010 Gender and Development Fund Utilization, information detail to the level of particulars of
object expenditures (Source Document - Local Budget Preparation Form No. 3, titled, Program
Appropriation and Obligation by Object of Expenditure, limited to Gender and Development Fund);

8. CY 2010 Statement of Debt Service, information detail to the level of name of creditor, purpose of loan,
date contracted, term, principal amount, previous payment made on the principal and interest, amount
due for the budget year and balance of the principal (Source Document - Local Budget Preparation
Form No. 6, titled, Statement of Debt Service);

9. CY 2010 Annual Procurement Plan or Procurement List, information detail to the level of name of
project, individual item or article and specification or description of goods and services, procurement
method, procuring office or fund source, unit price or estimated cost or approved budget for the
contract and procurement schedule (Source Document - LGU Form No. 02, Makati City. For sample
form, please visit www.makati.gov.ph.)[;]

10. Items to Bid, information detail to the level of individual Invitation to Bid, containing information as
prescribed in Section 21.1 of Republic Act No. 9184, or The Government Procurement Reform Act, to be
updated quarterly (Source Document - Invitation to Apply for Eligibility and to Bid, as prescribed in
Section 21.1 of R.A. No. 9184. For sample form, please visit www.naga.gov.ph);

11. Bid Results on Civil Works, and Goods and Services, information detail to the level of project reference
number, name and location of project, name (company and proprietor) and address of winning bidder,
bid amount, approved budget for the contract, bidding date, and contract duration, to be updated
quarterly (Source Document Infrastructure Projects/Goods and Services Bid-Out (2010), Naga City.
For sample form, please visit www.naga.gov.ph); and

12. Abstract of Bids as Calculated, information detail to the level of project name, location, implementing
office, approved budget for the contract, quantity and items subject for bidding, and bids of competing
bidders, to be updated quarterly (Source Document - Standard Form No. SF-GOOD-40, Revised May
24, 2004, Naga City. For sample form, please visit www.naga.gov.ph).

The foregoing circular also states that non-compliance will be meted sanctions in accordance with pertinent
laws, rules and regulations.[10]

On December 2, 2010, the respondent issued MC No. 2010-138,[11] reiterating that 20% component of the IRA
shall be utilized for desirable social, economic and environmental outcomes essential to the attainment of the
constitutional objective of a quality of life for all. It also listed the following enumeration of expenses for which
the fund must not be utilized, viz:

1. Administrative expenses such as cash gifts, bonuses, food allowance, medical assistance, uniforms,
supplies, meetings, communication, water and light, petroleum products, and the like;
2. Salaries, wages or overtime pay;
3. Travelling expenses, whether domestic or foreign;
4. Registration or participation fees in training, seminars, conferences or conventions;
5. Construction, repair or refinishing of administrative offices;
6. Purchase of administrative office furniture, fixtures, equipment or appliances; and
7. Purchase, maintenance or repair of motor vehicles or motorcycles, except ambulances.[12]

On January 13, 2011, the respondent issued MC No. 2011-08,[13] directing for the strict adherence to Section 90
of R.A. No. 10147 or the General Appropriations Act of 2011. The pertinent portion of the issuance reads as
follows:

Legal and Administrative Authority

· Section 90 of Republic Act No. 10147 (General Appropriations Act) FY 2011 re "Use and Disbursement
of Internal Revenue Allotment of LGUs", [sic] stipulates: The amount appropriated for the LGU's share in
the Internal Revenue Allotment shall be used in accordance with Sections 17 (g) and 287 of R.A. No 7160. The
annual budgets of LGUs shall be prepared in accordance with the forms, procedures, and schedules prescribed
by the Department of Budget and Management and those jointly issued with the Commission on Audit. Strict
compliance with Sections 288 and 354 of R.A. No. 7160 and DILG Memorandum Circular No. 2010-83,
entitled "Full Disclosure of Local Budget and Finances, and Bids and Public offering" is hereby
mandated; PROVIDED, That in addition to the publication or posting requirement under Section 352 of R.A.
No. 7160 in three (3) publicly accessible and conspicuous places in the local government unit, the LGUs shall
also post the detailed information on the use and disbursement, and status of programs and projects in the
LGUS websites. Failure to comply with these requirements shall subject the responsible officials to disciplinary
actions in accordance with existing laws. x x x[14]

xxxx

Sanctions

Non-compliance with the foregoing shall be dealt with in accordance with pertinent laws, rules and regulations.
In particular, attention is invited to the provision of the Local Government Code of 1991, quoted as follows:
Section 60. Grounds for Disciplinary Actions - An elective local official may be disciplined, suspended, or
removed from office on: (c) Dishonesty, oppression, misconduct in office, gross negligence, or dereliction of
duty. x x x[15] (Emphasis and underscoring in the original)

On February 21, 2011, Villafuerte, then Governor of Camarines Sur, joined by the Provincial Government of
Camarines Sur, filed the instant petition for certiorari, seeking to nullify the assailed issuances of the
respondent for being unconstitutional and having been issued with grave abuse of discretion.

On June 2, 2011, the respondent filed his Comment on the petition.[16] Then, on June 22, 2011, the petitioners
filed their Reply (With Urgent Prayer for the Issuance of a Writ of Preliminary Injunction and/or Temporary
Restraining Order).[17] In the Resolution[18] dated October 11, 2011, the Court gave due course to the petition
and directed the parties to file their respective memorandum. In compliance therewith, the respondent and the
petitioners filed their Memorandum on January 19, 2012[19] and on February 8, 2012[20] respectively.

The petitioners raised the following issues:

Issues

THE HON. SECRETARY OF THE INTERIOR AND LOCAL GOVERNMENT COMMITTED GRAVE
ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION WHEN HE ISSUED
THE ASSAILED MEMORANDUM CIRCULARS IN VIOLATION OF THE PRINCIPLES OF LOCAL
AUTONOMY AND FISCAL AUTONOMY ENSHRINED IN THE 1987 CONSTITUTION AND THE
LOCAL GOVERNMENT CODE OF 1991[.]

II

THE HON. SECRETARY OF THE INTERIOR AND LOCAL GOVERNMENT COMMITTED GRAVE
ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION WHEN HE
INVALIDLY ASSUMED LEGISLATIVE POWERS IN PROMULGATING THE ASSAILED
MEMORANDUM CIRCULARS WHICH WENT BEYOND THE CLEAR AND MANIFEST INTENT OF
THE 1987 CONSTITUTION AND THE LOCAL GOVERNMENT CODE OF 1991[.][21]

Ruling of the Court

The present petition revolves around the main issue: Whether or not the assailed memorandum circulars violate
the principles of local and fiscal autonomy enshrined in the Constitution and the LGC.

The present petition is ripe for

judicial review.
At the outset, the respondent is questioning the propriety of the exercise of the Court's power of judicial review
over the instant case. He argues that the petition is premature since there is yet any actual controversy that is
ripe for judicial determination. He points out the lack of allegation in the petition that the assailed issuances had
been fully implemented and that the petitioners had already exhausted administrative remedies under Section 25
of the Revised Administrative Code before filing the same in court.[22]

It is well-settled that the Court's exercise of the power of judicial review requires the concurrence of the
following elements: (1) there must be an actual case or controversy calling for the exercise of judicial power;
(2) the person challenging the act must have the standing to question the validity of the subject act or issuance;
otherwise stated, he must have a personal and substantial interest in the case such that he has sustained, or will
sustain, direct injury as a result of its enforcement; (3) the question of constitutionality must be raised at the
earliest opportunity; and (4) the issue of constitutionality must be the very lis mota of the case.[23]

The respondent claims that there is yet any actual case or controversy that calls for the exercise of judicial
review. He contends that the mere expectation of an administrative sanction does not give rise to a justiciable
controversy especially, in this case, that the petitioners have yet to exhaust administrative remedies available.[24]

The Court disagrees.

In La Bugal-B'laan Tribal Association, Inc. v. Ramos,[25] the Court characterized an actual case or
controversy, viz:

An actual case or controversy means an existing case or controversy that is appropriate or ripe for
determination, not conjectural or anticipatory, lest the decision of the court would amount to an advisory
opinion. The power does not extend to hypothetical questions since any attempt at abstraction could only lead to
dialectics and barren legal questions and to sterile conclusions unrelated to actualities.[26] (Citations omitted)

The existence of an actual controversy in the instant case cannot be overemphasized. At the time of filing of the
instant petition, the respondent had already implemented the assailed memorandum circulars. In fact, on May
26, 2011, Villafuerte received Audit Observation Memorandum (AOM) No. 2011-009 dated May 10,
2011[27] from the Office of the Provincial Auditor of Camarines Sur, requiring him to comment on the
observation of the audit team, which states:

The Province failed to post the transactions and documents required under Department of Interior and Local
Government (DILG) Memorandum Circular No. 2010-83, thereby violating the mandate of full disclosure of
Local Budget and Finances, and Bids and Public Offering.

xxxx

The local officials concerned are reminded of the sanctions mentioned in the circular which is quoted
hereunder, thus:
"Noncompliance with the foregoing shall be dealt with in accordance with pertinent laws, rules and regulations.
In particular, attention is invited to the provision of Local Government Code of 1991, quoted as follows:

Section 60. Grounds for Disciplinary Actions An elective local official may be disciplined, suspended or
removed from office on: (c) Dishonesty, oppression, misconduct in office, gross negligence or dereliction of
duty."[28]

The issuance of AOM No. 2011-009 to Villafuerte is a clear indication that the assailed issuances of the
respondent are already in the full course of implementation. The audit memorandum specifically mentioned of
Villafuerte's alleged non-compliance with MC No. 2010-83 regarding the posting requirements stated in the
circular and reiterated the sanctions that may be imposed for the omission. The fact that Villafuerte is being
required to comment on the contents of AOM No. 2011-009 signifies that the process of investigation for his
alleged violation has already begun. Ultimately, the investigation is expected to end in a resolution on whether a
violation has indeed been committed, together with the appropriate sanctions that come with it. Clearly,
Villafuerte's apprehension is real and well-founded as he stands to be sanctioned for non-compliance with the
issuances.

There is likewise no merit in the respondent's claim that the petitioners' failure to exhaust administrative
remedies warrants the dismissal of the petition. It bears emphasizing that the assailed issuances were issued
pursuant to the rule-making or quasi-legislative power of the DILG. This pertains to "the power to make rules
and regulations which results in delegated legislation that is within the confines of the granting statute."[29] Not
to be confused with the quasi-legislative or rule-making power of an administrative agency is its quasi-judicial
or administrative adjudicatory power. This is the power to hear and determine questions of fact to which the
legislative policy is to apply and to decide in accordance with the standards laid down by the law itself in
enforcing and administering the same law.[30] In challenging the validity of an administrative issuance carried
out pursuant to the agency's rule-making power, the doctrine of exhaustion of administrative remedies does not
stand as a bar in promptly resorting to the filing of a case in court. This was made clear by the Court in Smart
Communications, Inc. (SMART) v. National Telecommunications Commission (NTC),[31] where it was ruled,
thus:

In questioning the validity or constitutionality of a rule or regulation issued by an administrative agency, a party
need not exhaust administrative remedies before going to court. This principle applies only where the act of the
administrative agency concerned was performed pursuant to its quasi-judicial function, and not when the
assailed act pertained to its rule-making or quasi-legislative power. x x x.[32]

Considering the foregoing clarification, there is thus no bar for the Court to resolve the substantive issues raised
in the petition.

The assailed memorandum circulars

do not transgress the local and fiscal
autonomy granted to LGUs.

The petitioners argue that the assailed issuances of the respondent interfere with the local and fiscal autonomy
of LGUs embodied in the Constitution and the LGC. In particular, they claim that MC No. 2010-138
transgressed these constitutionally-protected liberties when it restricted the meaning of "development" and
enumerated activities which the local government must finance from the 20% development fund component of
the IRA and provided sanctions for local authorities who shall use the said component of the fund for the
excluded purposes stated therein.[33] They argue that the respondent cannot substitute his own discretion with
that of the local legislative council in enacting its annual budget and specifying the development projects that
the 20% component of its IRA should fund.[34]

The argument fails to persuade.

The Constitution has expressly adopted the policy of ensuring the autonomy of LGUs.[35] To highlight its
significance, the entire Article X of the Constitution was devoted to laying down the bedrock upon which this
policy is anchored.

It is also pursuant to the mandate of the Constitution of enhancing local autonomy that the LGC was enacted.
Section 2 thereof was a reiteration of the state policy. It reads, thus:

Sec. 2. Declaration of Policy. (a) It is hereby declared the policy of the State that the territorial and political
subdivisions of the State shall enjoy genuine and meaningful local autonomy to enable them to attain their
fullest development as self-reliant communities and make them more effective partners in the attainment of
national goals. Toward this end, the State shall provide for a more responsive and accountable local government
structure instituted through a system of decentralization whereby local government units shall be given more
powers, authority, responsibilities, and resources. The process of decentralization shall proceed from the
national government to the local government units.

Verily, local autonomy means a more responsive and accountable local government structure instituted through
a system of decentralization.[36] In Limbona v. Mangelin,[37] the Court elaborated on the concept of
decentralization, thus:

[A]utonomy is either decentralization of administration or decentralization of power. There is decentralization

of administration when the central government delegates administrative powers to political subdivisions in
order to broaden the base of government power and in the process to make local governments "more responsive
and accountable," and "ensure their fullest development as self-reliant communities and make them more
effective partners in the pursuit of national development and social progress." At the same time, it relieves the
central government of the burden of managing local affairs and enables it to concentrate on national concerns. x
x x.

Decentralization of power, on the other hand, involves an abdication of political power in the favor of local
governments [sic] units declared to be autonomous. In that case, the autonomous government is free to chart its
own destiny and shape its future with minimum intervention from central authorities. x x x.[38] (Citations
omitted)

To safeguard the state policy on local autonomy, the Constitution confines the power of the President over
LGUs to mere supervision.[39] "The President exercises 'general supervision' over them, but only to 'ensure that
local affairs are administered according to law.' He has no control over their acts in the sense that he can
substitute their judgments with his own."[40] Thus, Section 4, Article X of the Constitution, states:

Section 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.

In Province of Negros Occidental v. Commissioners, Commission on Audit,[41] the Court distinguished general
supervision from executive control in the following manner:

The President's power of general supervision means the power of a superior officer to see to it that subordinates
perform their functions according to law. This is distinguished from the President's power of control which is
the power 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 President over that of the subordinate officer. The power of control gives
the President the power to revise or reverse the acts or decisions of a subordinate officer involving the exercise
of discretion.[42] (Citations omitted)

It is the petitioners' contention that the respondent went beyond the confines of his supervisory powers, as alter
ego of the President, when he issued MC No. 2010-138. They argue that the mandatory nature of the circular,
with the threat of imposition of sanctions for non-compliance, evinces a clear desire to exercise control over
LGUs.[43]

The Court, however, perceives otherwise.

A reading of MC No. 2010-138 shows that it is a mere reiteration of an existing provision in the LGC. It was
plainly intended to remind LGUs to faithfully observe the directive stated in Section 287 of the LGC to utilize
the 20% portion of the IRA for development projects. It was, at best, an advisory to LGUs to examine
themselves if they have been complying with the law. It must be recalled that the assailed circular was issued in
response to the report of the COA that a substantial portion of the 20% development fund of some LGUs was
not actually utilized for development projects but was diverted to expenses more properly categorized as
MOOE, in violation of Section 287 of the LGC. This intention was highlighted in the very first paragraph of
MC No. 2010-138, which reads:

Section 287 of the Local Government Code mandates every local government to appropriate in its annual
budget no less than 20% of its annual revenue allotment for development projects. In common
understanding, development means the realization of desirable social, economic and environmental outcomes
essential in the attainment of the constitutional objective of a desired quality of life for all.[44] (Underscoring in
the original)

That the term development was characterized as the "realization of desirable social, economic and
environmental outcome" does not operate as a restriction of the term so as to exclude some other activities that
may bring about the same result. The definition was a plain characterization of the concept of development as it
is commonly understood. The statement of a general definition was only necessary to illustrate among LGUs
the nature of expenses that are properly chargeable against the development fund component of the IRA. It is
expected to guide them and aid them in rethinking their ways so that they may be able to rectify lapses in
judgment, should there be any, or it may simply stand as a reaffirmation of an already proper administration of
expenses.

The same clarification may be said of the enumeration of expenses in MC No. 2010-138. To begin with, it is
erroneous to call them exclusions because such a term signifies compulsory disallowance of a particular item or
activity. This is not the contemplation of the enumeration. Again, it is helpful to retrace the very reason for the
issuance of the assailed circular for a better understanding. The petitioners should be reminded that the issuance
of MC No. 2010-138 was brought about by the report of the COA that the development fund was not being
utilized accordingly. To curb the alleged misuse of the development fund, the respondent deemed it proper to
remind LGUs of the nature and purpose of the provision for the IRA through MC No. 2010-138. To illustrate
his point, he included the contested enumeration of the items for which the development fund
must generally not be used. The enumerated items comprised the expenses which the COA perceived to have
been improperly earmarked or charged against the development fund based on the audit it conducted.

Contrary to the petitioners' posturing, however, the enumeration was not meant to restrict the discretion of the
LGUs in the utilization of their funds. It was meant to enlighten LGUs as to the nature of the development fund
by delineating it from other types of expenses. It was incorporated in the assailed circular in order to guide them
in the proper disposition of the IRA and avert further misuse of the fund by citing current practices which
seemed to be incompatible with the purpose of the fund. Even then, LGUs remain at liberty to map out their
respective development plans solely on the basis of their own judgment and utilize their IRAs accordingly, with
the only restriction that 20% thereof be expended for development projects. They may even spend their IRAs
for some of the enumerated items should they partake of indirect costs of undertaking development projects. In
such case, however, the concerned LGU must ascertain that applicable rules and regulations on budgetary
allocation have been observed lest it be inviting an administrative probe.

The petitioners likewise misread the issuance by claiming that the provision of sanctions therein is a clear
indication of the President's interference in the fiscal autonomy of LGUs. The relevant portion of the assailed
issuance reads, thus:

All local authorities are further reminded that utilizing the 20% component of the Internal Revenue Allotment,
whether willfully or through negligence, for any purpose beyond those expressly prescribed by law or public
policy shall be subject to the sanctions provided under the Local Government Code and under such other
applicable laws.[45]

Significantly, the issuance itself did not provide for sanctions. It did not particularly establish a new set of acts
or omissions which are deemed violations and provide the corresponding penalties therefor. It simply stated a
reminder to LGUs that there are existing rules to consider in the disbursement of the 20% development fund and
that non-compliance therewith may render them liable to sanctions which are provided in the LGC and other
applicable laws. Nonetheless, this warning for possible imposition of sanctions did not alter the advisory nature
of the issuance.
At any rate, LGUs must be reminded that the local autonomy granted to them does not completely severe them
from the national government or turn them into impenetrable states. Autonomy does not make local
governments sovereign within the state.[46] In Ganzon v. Court of Appeals,[47] the Court reiterated:

Autonomy, however, is not meant to end the relation of partnership and interdependence between the central
administration and local government units, or otherwise, to usher in a regime of federalism. The Charter has not
taken such a radical step. Local governments, under the Constitution, are subject to regulation, however limited,
and for no other purpose than precisely, albeit paradoxically, to enhance self-government.[48]

Thus, notwithstanding the local fiscal autonomy being enjoyed by LGUs, they are still under the supervision of
the President and maybe held accountable for malfeasance or violations of existing laws. "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."[49]

Clearly then, the President's power of supervision is not antithetical to investigation and imposition of sanctions.
In Hon. Joson v. Exec. Sec. Torres,[50] the Court pointed out, 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. x x x."[51] (Emphasis ours and italics in the
original)

As in MC No. 2010-138, the Court finds nothing in two other questioned issuances of the respondent, i.e., MC
Nos. 2010-83 and 2011-08, that can be construed as infringing on the fiscal autonomy of LGUs. The petitioners
claim that the requirement to post other documents in the mentioned issuances went beyond the letter and spirit
of Section 352 of the LGC and R.A. No. 9184, otherwise known as the Government Procurement Reform Act,
by requiring that budgets, expenditures, contracts and loans, and procurement plans of LGUs be publicly posted
as well.[52]

Pertinently, Section 352 of the LGC reads:

Section 352. Posting of the Summary of Income and Expenditures. Local treasurers, accountants, budget
officers, and other accountable officers shall, within thirty (30) days from the end of the fiscal year, post in at
least three (3) publicly accessible and conspicuous places in the local government unit a summary of all
revenues collected and funds received including the appropriations and disbursements of such funds during the
preceding fiscal year.
R.A. No. 9184, on the other hand, requires the posting of the invitation to bid, notice of award, notice to
proceed, and approved contract in the procuring entity's premises, in newspapers of general circulation, and the
website of the procuring entity.[53]

It is well to remember that fiscal autonomy does not leave LGUs with unbridled discretion in the disbursement
of public funds. They remain accountable to their constituency. For, public office was created for the benefit of
the people and not the person who holds office.

The Court strongly enunciated in ABAKADA GURO Party List (formerly AASJS), et al. v. Hon. Purisima, et
al.,[54] thus:

Public office is a public trust. It must be discharged by its holder not for his own personal gain but for the
benefit of the public for whom he holds it in trust. By demanding accountability and service with responsibility,
integrity, loyalty, efficiency, patriotism and justice, all government officials and employees have the duty to be
responsive to the needs of the people they are called upon to serve.[55]

Thus, the Constitution strongly summoned the State to adopt and implement a policy of full disclosure of all
transactions involving public interest and provide the people with the right to access public
information.[56] Section 352 of the LGC is a response to this call for transparency. It is a mechanism of
transparency and accountability of local government officials and is in fact incorporated under Chapter IV of
the LGC which deals with "Expenditures, Disbursements, Accounting and Accountability."

In the same manner, R.A. No. 9184 established a system of transparency in the procurement process and in the
implementation of procurement contracts in government agencies.[57] It is the public monitoring of the
procurement process and the implementation of awarded contracts with the end in view of guaranteeing that
these contracts are awarded pursuant to the provisions of the law and its implementing rules and regulations,
and that all these contracts are performed strictly according to specifications.[58]

The assailed issuances of the respondent, MC Nos. 2010-83 and 2011-08, are but implementation of this
avowed policy of the State to make public officials accountable to the people. They are amalgamations of
existing laws, rules and regulation designed to give teeth to the constitutional mandate of transparency and
accountability.

A scrutiny of the contents of the mentioned issuances shows that they do not, in any manner, violate the fiscal
autonomy of LGUs. To be clear, "[f]iscal autonomy means that local governments have the power to create
their own sources of revenue in addition to their equitable share in the national taxes released by the national
government, as well as the power to allocate their resources in accordance with their own priorities. It extends
to the preparation of their budgets, and local officials in turn have to work within the constraints thereof."[59]

It is inconceivable, however, how the publication of budgets, expenditures, contracts and loans and procurement
plans of LGUs required in the assailed issuances could have infringed on the local fiscal autonomy of
LGUs. Firstly, the issuances do not interfere with the discretion of the LGUs in the specification of their priority
projects and the allocation of their budgets. The posting requirements are mere transparency measures which do
not at all hurt the manner by which LGUs decide the utilization and allocation of their funds.

Secondly, it appears that even Section 352 of the LGC that is being invoked by the petitioners does not exclude
the requirement for the posting of the additional documents stated in MC Nos. 2010-83 and 2011-08.
Apparently, the mentioned provision requires the publication of "a summary of revenues collected and funds
received, including the appropriations and disbursements of such funds." The additional requirement for the
posting of budgets, expenditures, contracts and loans, and procurement plans are well-within the contemplation
of Section 352 of the LGC considering they are documents necessary for an accurate presentation of a summary
of appropriations and disbursements that an LGU is required to publish.

Finally, the Court believes that the supervisory powers of the President are broad enough to embrace the power
to require the publication of certain documents as a mechanism of transparency. In Pimentel, Jr. v. Hon.
Aguirre,[60] the Court reminded that local fiscal autonomy does not rule out any manner of national government
intervention by way of supervision, in order to ensure that local programs, fiscal and otherwise, are consistent
with national goals. The President, by constitutional fiat, is the head of the economic and planning agency of the
government, primarily responsible for formulating and implementing continuing, coordinated and integrated
social and economic policies, plans and programs for the entire country.[61]

Moreover, the Constitution, which was drafted after long years of dictatorship and abuse of power, is now
replete with numerous provisions directing the adoption of measures to uphold transparency and accountability
in government, with a view of protecting the nation from repeating its atrocious past. In particular, the
Constitution commands the strict adherence to full disclosure of information on all matters relating to official
transactions and those involving public interest. Pertinently, Section 28, Article II and Section 7, Article III of
the Constitution, provide:

Article II
Declaration of Principles and State Policies Principles

Section 28. Subject to reasonable conditions prescribed by law, the State adopts and implements a policy of full
public disclosure of all its transactions involving public interest.

Article III
Bill of Rights

Section 7. The right of the people to information on matters of public concern shall be recognized. Access to
official records, and to documents and papers pertaining to official acts, transactions, or decisions, as well as to
government research data used as basis for policy development, shall be afforded the citizen, subject to such
limitations as may be provided by law.

In the instant case, the assailed issuances were issued pursuant to the policy of promoting good governance
through transparency, accountability and participation. The action of the respondent is certainly within the
constitutional bounds of his power as alter ego of the President.
It is needless to say that the power to govern is a delegated authority from the people who hailed the public
official to office through the democratic process of election. His stay in office remains a privilege which may be
withdrawn by the people should he betray his oath of office. Thus, he must not frown upon accountability
checks which aim to show how well he is performing his delegated power. For, it is through these mechanisms
of transparency and accountability that he is able to prove to his constituency that he is worthy of the continued
privilege.

WHEREFORE, in view of the foregoing considerations, the petition is DISMISSED for lack of merit.

SO ORDERED.
G.R. NO. 172551 : JANUARY 15, 2014

LAND BANK OF THE PHILIPPINES, Petitioner, v. YATCO AGRICULTURAL ENTERPRISES,

Respondent.

BRION, J.:

FACTS:

Respondent Yatco Agricultural Enterprises (Yatco) was the registered of owner of a 27-hectare parcel of
agricultural land (property) in Calamba, Laguna. On April 30, 1999, the government placed the property under
the coverage if its Comprehensive Agrarian Reform Program (CARP).

Land Bank of the Philippines (LBP) valued the property at P1,126,132.89. Yatco did not find the valuation
acceptable and thus elevated the matter to the Department of Agrarian Reform (DAR) Provincial Agrarian
Reform Adjudicator (PARAD), which then conducted summary administrative proceedings for the
determination of just compensation.

The PARAD valued the property at P16,543,800.00, using the property current market value. LBP did not move
to reconsider the PARAD ruling. Instead it filed with the RTC-SAC a petition for the judicial determination of
just compensation.

RTC-SAC fixed the just compensation for the property at P200 per square meter based on the RTC branch 35
and 36. RTC-SAC did not give weight to the LBP evidence in justifying its valuation, pointing out that the LBP
failed to prove that it complied with the prescribed procedure and failed to consider the valuation in the
Comprehensive Agrarian Reform Law (CARL).

The CA dismissed LBP appeal.

ISSUE: Whether or not the RTC-SAC determination of just compensation for the property was proper?

HELD: The RTC-SAC determination of just compensation for the property was not proper.

Civil law : determination of just compensation under the DAR

The determination of just compensation is fundamentally a judicial function. Section 57 of R.A. No. 6657
explicitly vests the RTC-SAC the original and exclusive power to determine just compensation for lands under
CARP coverage. To guide the RTC-SAC in the exercise of its function, Section 17 of R.A. No. 6657
enumerates the factors required to be taken into account to correctly determine just compensation.The law
(under Section 49 of R.A. No. 6657) likewise empowers the DAR to issue rules for its implementation.The
DAR thus issued DAR AO 5-98incorporating the law listed factors in determining just compensation into a
basic formula that contains the details that take these factors into account.

That the RTC-SAC must consider the factors mentioned by the law (and consequently the DAR implementing
formula) is not a novel concept. In Land Bank of the Philippines v. Sps. Banal, we said that the RTC-SAC must
consider the factors enumerated under Section 17 of R.A. No. 6657, as translated into a basic formula by the
DAR, in determining just compensation.

In the recent case of Land Bank of the Philippines v. Honeycomb Farms Corporation, we again affirmed the
need to apply Section 17 of R.A. No. 6657 and DAR AO5-98 in just compensation cases.There, we considered
the CA and the RTC in grave error when they opted to come up with their own basis for valuation and
completely disregarded the DAR formula. The need to apply the parameters required by the law cannot be
doubted; the DAR administrative issuances, on the other hand, partake of the nature of statutes and have in their
favor a presumption of legality. Unless administrative orders are declared invalid or unless the cases before
them involve situations these administrative issuances do not cover, the courts must apply them.

The RTC-SAC adopted Branch 36 valuation without any qualification or condition. Yet, in disposing of the
present case, the just compensation that it fixed for the property largely differed from the former.Note that
Branch 36 fixed a valuation of P20.00 per square meter; while the RTC-SAC, in the present case, valued the
property at P200.00 per square meter. Strangely, the RTC-SAC did not offer any explanation nor point to any
evidence, fact or particular that justified the obvious discrepancy between these amounts.

In ascertaining just compensation, the fair market value of the expropriated property is determined as of the
time of taking. The ime of takingrefers to that time when the State deprived the landowner of the use and
benefit of his property, as when the State acquires title to the property or as of the filing of the complaint, per
Section 4, Rule 67 of the Rules of Court.

As a final note and clarificatory reminder, we agree that the LBP is primarily charged with determining land
valuation and compensation for all private lands acquired for agrarian reform purposes. But this determination
is only preliminary.The landowner may still take the matter of just compensation to the court for final
adjudication.

GRANTED.
Share
QUEZON CITY PTCA FEDERATION v. DEPARTMENT OF EDUCATION, GR No. 188720, 2016-02-23
Facts:
Administrative agencies, however, are not given unfettered power to promulgate rules. As noted in Gerochi v.
Department of Energy,[46] two requisites must be satisfied in order that rules issued by administrative agencies
may be considered valid: the completeness test and the sufficient standard test:In the face of the increasing
complexity of modern life, delegation of legislative power to various specialized administrative agencies is
allowed as an exception to this principle. Given the volume and variety of interactions in today's society, it is
doubtful if the legislature can promulgate laws that will deal adequately with and respond promptly to the
minutiae of everyday life. Hence, the need to delegate to administrative bodies - the principal agencies tasked to
execute laws in their specialized fields - the authority to promulgate rules and regulations to implement a given
statute and effectuate its policies. All that is required for the valid exercise of this power of subordinate
legislation is that the regulation be germane to the objects and purposes of the law and that the regulation be not
in contradiction to, but in conformity with, the standards prescribed by the law. These requirements are
denominated as the completeness test and the sufficient standard test.[47] (Emphasis supplied)
Issues:
Whether Department Order is invalid and ineffective as no public consultations were (supposedly) held before
its adoption, and/or as it was not published by the Department of Education; and
Ruling:
VIIContrary to petitioner's contentions, the adoption of the Department Order is not tainted with fatal
procedural defects.Petitioner decries the supposed lack of public consultations as being violative of its right to
due process.Notice and hearing are not essential when an administrative agency acts pursuant to its rule-making
power. In Central Bank of the Philippines v. Cloribel:[65]Previous notice and hearing, as elements of due
process, are constitutionally required for the protection of life or vested property rights, as well as of liberty,
when its limitation or loss takes place in consequence of a judicial or quasi-judicial proceeding, generally
dependent upon a past act or event which has to be established or ascertained. It is not essential to the validity of
general rules or regulations promulgated to govern future conduct of a class of persons or enterprises, unless the
law provides otherwise[:]. . . ."It is also clear from the authorities that where the function of the administrative
body is legislative, notice of hearing is not required by due process of law. See Oppenheimer, Administrative
Law, 2 Md. L.R. 185, 204, supra, where it is said: 'If the nature of the administrative agency is essentially
legislative, the requirements of notice and hearing are not necessary. The validity of a rule of future action
which affects a group, if vested rights of liberty or property are not involved, is not determined according to the
same rules which apply in the case of the direct application of a policy to a specific individual.' . . . It is said in
73 C.J.S. Public Administrative Bodies and Procedure, sec. 130, pages 452 and 453: Aside from statute, the
necessity of notice and hearing in an administrative proceeding depends on the character of the proceeding and
the circumstances involved. In so far as generalization is possible in view of the great variety of administrative
proceedings, it may be stated as a general rule that notice and hearing are not essential to the validity of
administrative action where the administrative body acts in the exercise of executive, administrative, or
legislative functions; but where a public administrative body acts in a judicial or quasi-judicial matter, and its
acts are particular and immediate rather than general and prospective, the person whose rights or property may
be affected by the action is entitled to notice and hearing."[66]In any case, petitioner's claim that no
consultations were held is belied by the Department of Education's detailed recollection of the actions it took
before the adoption of the assailed Department Order:1. On March 1, 2003, pursuant to D.O. No. 14, s. 2004,
respondent DepEd created a task force to review, revise, or modify D.O. No. 23, s. 2003 (the existing
guidelines), in order to address numerous complaints involving PTAs and PTCAs and to resolve disputes
relative to the recognition and administration of said associations. The task force came up with draft guidelines
after consultations with parents, teachers and students;2. On May 3, 2003, pursuant to D.O. No. 28, s. 2007, the
task force was reconstituted to evaluate the draft guidelines prepared by the original task force and to review the
provisions of D.O. No. 23;3. On February 2, 2009, the reconstituted task force, after soliciting comments,
suggestions and recommendations from school heads and presidents of PTAs or PTCAs, submitted a draft of
the "Revised Guidelines governing PTAs/PTCAs at the School Level;"4. The draft was submitted for comments
and suggestions to the participants to the Third National Federation Supreme Student Governments (NFSSG)
Conference held in February 2009. The participants, composed of regional education supervisors, presidents of
regional federations of Supreme Student Governments (SSG), and representatives from the SSG advisers,
submitted another set of revised guidelines;5. The draft was subjected to further review and consultations,
which resulted in the final draft of D.O. No. 54, s. 2009.[67] (Emphasis supplied)Apart from claiming that no
consultations were held, petitioner decries the: non-publication, by the Department of Education itself, of the
assailed Department Order.This does not invalidate the Department Order. As is evident from the previously
quoted provisions of Book VII, Chapter 2 of the Administrative Code, all that is required for the validity of
rules promulgated by administrative agencies is the filing of three (3) certified copies with the University of the
Philippine Law Center. Within 15 days of filing, administrative rules become effective.
Olivia Da Silva Cerafica vs COMELEC

PEREZ, J.:
For the consideration of the Court is the Special Civil Action for Certiorari under Rule 64 of the Revised Rules
of Court, assailing the ruling of respondent Commission on Elections (Comelec) which cancelled the Certificate
of Candidacy (COC) of Kimberly Da Silva Cerafica (Kimberly) and denied the substitution of Kimberly by
petitioner Olivia Da Silva Cerafica (Olivia).

On 1 October 2012, Kimberly filed her COC for Councilor, City of Taguig for the 2013 Elections. Her COC
stated that she was born on 29 October 1992, or that she will be twenty (20) years of age on the day of the
elections,[1] in contravention of the requirement that one must be at least twenty-three (23) years of age on the
day of the elections as set out in Sec. 9 (c) of Republic Act (R.A.) No. 8487 (Charter of the City of
Taguig).[2] As such, Kimberly was summoned to a clarificatory hearing due to the age qualification.

Instead of attending the hearing, Kimberly opted to file a sworn Statement of Withdrawal of COC on 17
December 2012.[3] Simultaneously, Olivia filed her own COC as a substitute of Kimberly. Owing to these
events, the clarificatory hearing no longer pushed through.

In a Memorandum dated 18 December 2012, Director Esmeralda Amora-Ladra (Director Amora-Ladra) of the
Comelec Law Department recommended the cancellation of Kimberly's COC, and consequently, the denial of
the substitution of Kimberly by Olivia. Relying on Comelec Resolution No. 9551,[4] Director Amora-Ladra
opined that it is as if no COC was filed by Kimberly; thus, she cannot be substituted.

In a Special En Banc Meeting of the Comelec on 3 January 2013,[5] the Comelec adopted the recommendation
of Director Amora-Ladra, cancelled Kimberly's COC, and denied the substitution of Kimberly by Olivia as an
effect of the cancellation of Kimberly's COC, viz:[6]

The Commission RESOLVED, as it hereby RESOLVES, to approve the foregoing recommendation of

Director Esmeralda-Amora-Ladra, Law Department, as follows:

1. To cancel the Certificate of Candidacy (COC) of aspirant Kimberly Da Silva Cerafica without prejudice
to any civil, criminal or administrative liability that she may have incurred pursuant to Section 14 of
COMELEC Resolution 9518; and

2. To deny the substitution of Kimberly Da Silva Cerafica by Olivia Da Silva Cerafica as an effect of the
cancellation of the COC of Kimberly.
Let the Law Department implement this resolution.

SO ORDERED.
Olivia then filed the present petition for certiorari with Prayer for the Issuance of a Temporary Restraining
Order, Status Quo Ante Order, and/or Writ of Preliminary Mandatory Injunction, raising the following issues:[7]

I.
WHETHER PUBLIC RESPONDENT COMMISSION ON ELECTIONS ACTED WITH GRAVE ABUSE OF
DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION AND CONTRARY TO LAW
AND JURISPRUDENCE IN ISSUING THE ASSAILED MINUTE RESOLUTION RESULTING IN THE
CANCELLATION OF THE CERTIFICATE OF CANDIDACY (COC) OF ASPIRANT KIMBERLY DA
SILVA CERAFICA AND THE DENIAL OF THE SUBSTITUTION OF KIMBERLY DA SILVA CERAFICA
BY OLIVIA DA SILVA CERAFICA AS AN EFFECT OF THE CANCELLATION OF THE COC OF
KIMBERLY.

II.

WHETHER PUBLIC RESPONDENT COMMISSION ON ELECTIONS ACTED WITH GRAVE ABUSE OF

DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION AND CONTRARY TO LAW
AND JURISPRUDENCE WHEN IT RULED THAT THERE WAS NO VALID SUBSTITUTION BY
PETITIONER FOR KIMBERLY RESULTING IN THE MOTU PROPRIO DENIAL OF PETITIONER'S
CERTIFICATE OF CANDIDACY.

III.

WHETHER PUBLIC RESPONDENT COMMISSION ON ELECTIONS ACTED WITH GRAVE ABUSE OF

DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION AND CONTRARY TO LAW
AND JURISPRUDENCE IN ISSUING THE ASSAILED RESOLUTION WITHOUT GIVING PETITIONER
AN OPPORTUNITY TO BE HEARD, THEREBY RESULTING IN THE MOTU PROPRIO DENIAL OF
THE SUBSTITUTION OF KIMBERLY DA SILVA CERAFICA BY OLIVIA DA SILVA CERAFICA.
In its Comment[8] filed on 22 April 2013, respondent Comelec argued that Olivia cannot substitute Kimberly as
the latter was never an official candidate because she was not eligible for the post by reason of her age, and that,
moreover, the COC that Kimberly filed was invalid because it contained a material misrepresentation relating to
her eligibility for the office she seeks to be elected to.[9] The Comelec further averred that it can cancel
Kimberly's COC motu proprio as it may look into patent defects in the COCs, such as Kimberly's failure to
comply with the age requirement.[10]

In her Reply[11] filed on 10 May 2013, Olivia countered that although Kimberly may not be qualified to run for
election because of her age, it cannot be denied that she still filed a valid COC and was, thus, an official
candidate who may be substituted.[12] Olivia also claimed that there was no ground to cancel or deny Kimberly's
COC on the ground of lack of qualification and material misrepresentation because she did not misrepresent her
birth date to qualify for the position of councilor, and as there was no deliberate attempt to mislead the
electorate, which is precisely why she withdrew her COC upon learning that she was not qualified.[13]

At the outset, we note that a verification with the Comelec database yields the finding that Olivia was not
among the official candidates[14] for the 2013 Elections and, thus, was not voted for.[15] As such, a ruling on the
present petition would no longer be of practical use or value. Even if we were to resolve the petition for the
purpose of determining Olivia's legal status as a legitimate and qualified candidate for public office, such
purpose has been rendered inconsequential as a result of the proclamation of the winning councilors for the
2013 elections.[16]
Be that as it may, the Court deems it opportune to address the merits of the case, if only to caution the Comelec
against the precipitate cancellation of COCs.

In Albaña v. Comelec,[17] we held that where the issues have become moot and academic, there is no justiciable
controversy, thereby rendering the resolution of the same of no practical use or value. Nonetheless, courts will
decide a question otherwise moot and academic if it is capable of repetition, yet evading review. In this case, we
find it necessary to resolve the issues raised in the petition in order to prevent a repetition thereof and, thus,
enhance free, orderly, and peaceful elections.

VALID SUBSTITUTION

In declaring that Kimberly, being under age, could not be considered to have filed a valid COC and, thus, could
not be validly substituted by Olivia, we find that the Comelec gravely abused its discretion.

Firstly, subject to its authority over nuisance candidates[18] and its power to deny due course to or cancel COCs
under Sec. 78, Batas Pambansa (B.P.) Blg. 881, the Comelec has the ministerial duty to receive and
acknowledge receipt of COCs.[19]

In Cipriano v. Comelec,[20] we ruled that the Comelec has no discretion to give or not to give due couse to
COCs. We emphasized that the duty of the Comelec to give due course to COCs filed in due form is ministerial
in character, and that while the Comelec may look into patent defects in the COCs, it may not go into matters
not appearing on their face. The question of eligibility or ineligibility of a candidate is thus beyond the usual
and proper cognizance of the Comelec.

Section 77 of the Omnibus Election Code (B.P. Blg. 881) provides for the procedure of substitution of
candidates, to wit:

Sec. 77. Candidates in case of death, disqualification or withdrawal of another. If after the last day for the
filing of certificates of candidacy, an official candidate of a registered or accredited political party dies,
withdraws or is disqualified for any cause, only a person belonging to, and certified by, the same political party
may file a certificate of candidacy to replace the candidate who died, withdrew or was disqualified. The
substitute candidate nominated by the political party concerned may file his certificate of candidacy for the
office affected in accordance with the preceding sections not later than mid-day of election day of the election.
If the death, withdrawal or disqualification should occur between the day before the election and mid-day of
election day, said certificate may be filed with any board of election inspectors in the political subdivision
where he is candidate or, in case of candidates to be voted for by the entire electorate of the country, with the
Commission.
Under the express provision of Sec. 77 of B. P. Blg. 881, not just any person, but only "an official candidate of
a registered or accredited political party" may be substituted.[21] In the case at bar, Kimberly was an official
nominee of the Liberal Party;[22] thus, she can be validly substituted.

The next question then is whether Olivia complied with all of the requirements for a valid substitution; we
answer in the affirmative. First, there was a valid withdrawal of Kimberly's COC after the last day for the filing
of COCs; second, Olivia belongs to and is certified to by the same political party to which Kimberly
belongs;[23] and third, Olivia filed her COC not later than mid-day of election day.[24]

In Luna v. Comelec,[25] where the candidate, who was also under age, withdrew his COC before election day
and was substituted by a qualified candidate, we declared that such substitution was valid. The Court eloquently
explained:

Substitution of Luna for Hans Roger was Valid

Luna contends that Hans Roger filed a valid certificate of candidacy and, subsequently, upon Hans Roger's
withdrawal of his certificate of candidacy, there was a valid substitution by Luna.

On the other hand, the COMELEC ruled that Hans Roger, being under age, could not be considered to have
filed a valid certificate of candidacy and, therefore, is not a valid candidate who could be substituted by Luna.

When a candidate files his certificate of candidacy, the COMELEC has a ministerial duty to receive and
acknowledge its receipt. Section 76 of the Omnibus Election Code (Election Code) provides:

Sec. 76. Ministerial duty of receiving and acknowledging receipt. The Commission, provincial election
supervisor, election registrar or officer designated by the Commission or the board of election inspectors under
the succeeding section shall have the ministerial duty to receive and acknowledge receipt of the certificate of
candidacy.
In this case, when Hans Roger filed his certificate of candidacy on 5 January 2004, the COMELEC had the
ministerial duty to receive and acknowledge receipt of Hans Roger's certificate of candidacy. Thus, the
COMELEC had the ministerial duty to give due course to Hans Rogers certificate of candidacy.

On 15 January 2004, Hans Roger withdrew his certificate of candidacy. The Election Code allows a person who
has filed a certificate of candidacy to withdraw the same prior to the election by submitting a written declaration
under oath. There is no provision of law which prevents a candidate from withdrawing his certificate of
candidacy before the election.

On the same date, Luna filed her certificate of candidacy as substitute for Hans Roger. Section 77 of the
Election Code prescribes the rules on substitution of an official candidate of a registered political party who
dies, withdraws, or is disqualified for any cause after the last day for the filing of certificate of candidacy.
Section 77 of the Election Code provides:

Sec. 77. Candidates in case of death, disqualification or withdrawal of another. If after the last day for the
filing of certificates of candidacy, an official candidate of a registered or accredited political party dies,
withdraws or is disqualified for any cause, only a person belonging to, and certified by, the same political party
may file a certificate of candidacy to replace the candidate who died, withdrew or was disqualified. The
substitute candidate nominated by the political party concerned may file his certificate of candidacy for the
office affected in accordance with the preceding sections not later than mid-day of election day of the election.
If the death, withdrawal or disqualification should occur between the day before the election and mid-day of
election day, said certificate may be filed with any board of election inspectors in the political subdivision
where he is candidate or, in case of candidates to be voted for by the entire electorate of the country, with the
Commission.
Since Hans Roger withdrew his certificate of candidacy and the COMELEC found that Luna complied with all
the procedural requirements for a valid substitution, Luna can validly substitute for Hans Roger.

The COMELEC acted with grave abuse of discretion amounting to lack or excess of jurisdiction in
declaring that Hans Roger, being under age, could not be considered to have filed a valid certificate of
candidacy and, thus, could not be validly substituted by Luna. The COMELEC may not, by itself,
without the proper proceedings, deny due course to or cancel a certificate of candidacy filed in due
form. In Sanchez vs. Del Rosario, the Court ruled that the question of eligibility or ineligibility of a candidate
for non-age is beyond the usual and proper cognizance of the COMELEC.

Section 74 of the Election Code provides that the certificate of candidacy shall state, among others, the date of
birth of the person filing the certificate. Section 78 of the Election Code provides that in case a person filing a
certificate of candidacy has committed false material representation, a verified petition to deny due course to or
cancel the certificate of candidacy of said person may be filed at any time not later than 25 days from the time
of filing of the certificate of candidacy.

If Hans Roger made a material misrepresentation as to his date of birth or age in his certificate of
candidacy, his eligibility may only be impugned through a verified petition to deny due course to or
cancel such certificate of candidacy under Section 78 of the Election Code.

In this case, there was no petition to deny due course to or cancel the certificate of candidacy of Hans Roger.
The COMELEC only declared that Hans Roger did not file a valid certificate of candidacy and, thus, was not a
valid candidate in the petition to deny due course to or cancel Luna's certificate of candidacy. In effect, the
COMELEC, without the proper proceedings, cancelled Hans Roger's certificate of candidacy and declared the
substitution by Luna invalid.

It would have been different if there was a petition to deny due course to or cancel Hans Roger's certificate of
candidacy. For if the COMELEC cancelled Hans Roger's certificate of candidacy after the proper proceedings,
then he is no candidate at all and there can be no substitution of a person whose certificate of candidacy has
been cancelled and denied due course. However, Hans Roger's certificate of candidacy was never cancelled or
denied due course by the COMELEC.

Moreover, Hans Roger already withdrew his certificate of candidacy before the COMELEC declared
that he was not a valid candidate. Therefore, unless Hans Roger's certificate of candidacy was denied due
course or cancelled in accordance with Section 78 of the Election Code, Hans Roger's certificate of
candidacy was valid and he may be validly substituted by Luna.[26] (Emphases supplied.)
LACK OF DUE PROCESS

Moreover, in simply relying on the Memorandum of Director Amora-Ladra in cancelling Kimberly's COC and
denying the latter's substitution by Olivia, and absent any petition to deny due course to or cancel said COC, the
Court finds that the Comelec once more gravely abused its discretion.

The Court reminds the Comelec that, in the exercise of it adjudicatory or quasi-judicial powers, the
Constitution[27] mandates it to hear and decide cases first by Division and, upon motion for reconsideration, by
the En Banc.
Where a power rests in judgment or discretion, so that it is of judicial nature or character, but does not involve
the exercise of functions of a judge, or is conferred upon an officer other than a judicial officer, it is deemed
quasi-judicial.[28] As cancellation proceedings involve the exercise of quasi-judicial functions of the Comelec,
the Comelec in Division should have first decided this case.

In Bautista v. Comelec, et al.,[29] where the Comelec Law Department recommended the cancellation of a
candidate's COC for lack of qualification, and which recommendation was affirmed by the Comelec En Banc,
the Court held that the Comelec En Banc cannot short cut the proceedings by acting on the case without a prior
action by a division because it denies due process to the candidate. The Court held:

A division of the COMELEC should have first heard this case. The COMELEC en banc can only act on the
case if there is a motion for reconsideration of the decision of the COMELEC division. Hence, the COMELEC
en banc acted without jurisdiction when it ordered the cancellation of Bautista's certificate of candidacy without
first referring the case to a division for summary hearing.

xxxx

Under Section 3, Rule 23 of the 1993 COMELEC Rules of Procedure, a petition for the denial or cancellation of
a certificate of candidacy must be heard summarily after due notice. It is thus clear that cancellation proceedings
involve the exercise of the quasi-judicial functions of the COMELEC which the COMELEC in division should
first decide. More so in this case where the cancellation proceedings originated not from a petition but
from a report of the election officer regarding the lack of qualification of the candidate in
the barangay election. The COMELEC en banc cannot short cut the proceedings by acting on the case
without a prior action by a division because it denies due process to the candidate.[30] (Emphasis supplied.)
The determination of whether a candidate is eligible for the position he is seeking involves a determination of
fact where parties must be allowed to adduce evidence in support of their contentions.[31] We thus caution the
Comelec against its practice of impetuous cancellation of COCs via minute resolutions adopting the
recommendations of its Law Department when the situation properly calls for the case's referral to a Division
for summary hearing.

WHEREFORE, premises considered, with the cautionary counsel that cancellation of certificate of candidacy
is a quasi-judicial process, and accordingly is heard by the Commission on Elections in Division and En
Banc on appeal, we DISMISS the present petition for being moot and academic.

SO ORDERED.

Sereno, C. J., on official leave.

Carpio,** Velasco, Jr., Leonardo-De Castro, Peralta, Bersamin, Del Castillo, Villarama, Jr, Mendoza, Reyes,
Perlas-Bernabe, and Leonen, JJ., concur.
Brion, J., on official leave.
Jardeleza, J., No part, acted as Solicitor General.
TUA

PERALTA, J.:
Before us is a petition for review on certiorari which seeks to annul the Decision[1] dated October 28, 2005 of
the Court of Appeals (CA) issued in CA-G.R. SP No. 89939.

On May 20, 2005, respondent Rossana Honrado-Tua (respondent) filed with the Regional Trial Court (RTC) of
Imus, Cavite a Verified Petition[2] for herself and in behalf of her minor children, Joshua Raphael, Jesse Ruth
Lois, and Jezreel Abigail, for the issuance of a protection order, pursuant to Republic Act (RA) 9262 or the
Anti-Violence Against Women and their Children Act of 2004, against her husband, petitioner Ralph Tua. The
case was docketed as Civil Case No. 0464-05 and raffled-off to Branch 22. Respondent claimed that she and
her children had suffered from petitioner's abusive conduct; that petitioner had threatened to cause her and the
children physical harm for the purpose of controlling her actions or decisions; that she was actually deprived of
custody and access to her minor children; and, that she was threatened to be deprived of her and her children's
financial support.

Respondent and petitioner were married on January 10, 1998 in Makati City. They have three children,
namely, Joshua Raphael born on February 9, 1999, Jesse Ruth Lois, born on June 27, 2000, and Jezreel Abigail,
born on December 25, 2001. In her Affidavit[3] attached to the petition, respondent claimed, among others,
that: there was a time when petitioner went to her room and cocked his gun and pointed the barrel of his gun to
his head as he wanted to convince her not to proceed with the legal separation case she filed; she hid her fears
although she was scared; there was also an instance when petitioner fed her children with the fried chicken that
her youngest daughter had chewed and spat out; in order to stop his child from crying, petitioner would
threaten him with a belt; when she told petitioner that she felt unsafe and insecure with the latter's presence
and asked him to stop coming to the house as often as he wanted or she would apply for a protection order,
petitioner got furious and threatened her of withholding his financial support and even held her by the nape
and pushed her to lie flat on the bed; and, on May 4, 2005, while she was at work, petitioner with companions
went to her new home and forcibly took the children and refused to give them back to her.

On May 23, 2005, the RTC issued a Temporary Protection Order (TPO),[4] which we quote in full:

Pursuant to the provisions of R.A. 9262, otherwise known as the "Anti-Violence Against Women and their
Children Act of 2004, a Temporary Protection Order (TPO) effective for thirty (30) days from date of receipt is
hereby issued against respondent Ralph P. Tua.

For the purpose of the implementation of the Temporary Protection Order, the respondent (herein petitioner
Ralph) is hereby ordered to:

1. Enjoin from committing and threatening to commit personally or through another, physical, verbal and
emotional harm or abuse against the herein petitioner (respondent) and other family and household members;

2. Restrain from harassing, annoying, texting, telephoning, contacting or otherwise communicating with the
petitioner (respondent) whether directly or indirectly or engaged in any psychological form of harassment;
3. Stay away from the petitioner (respondent) and other family and household members at a distance of 100
meters radius from the place of residence of the plaintiff and likewise to stay away from the residence, school,
place of employment and other places frequented by the herein petitioner (respondent), and other family and
household members.

4. Give and deliver the three (3) minor children of the petitioner (respondent) to the [latter] who shall have their
temporary custody pending the determination of whether or not a permanent protection order shall issue.

VIOLATION OF THIS ORDER IS PUNISHABLE BY LAW.

The Sheriff of this Court, the PNP Imus, Cavite, or any Officers of the Law are hereby commanded to effect
this Order immediately and to use necessary force and measures under the law to implement this Order.

Let the hearing for Permanent Protection Order be set on June 9, 2005 at 2:00 o'clock in the afternoon.

SO ORDERED.[5]

In his Comment[6] to respondent's Petition with Urgent Motion to Lift TPO, petitioner denied respondent's
allegations and alleged, among others, that he had been maintaining a separate abode from petitioner since
November 2004; that it was respondent who verbally abused and threatened him whenever their children's
stay with him was extended; that respondent had been staying with a certain Rebendor Zuñiga despite the
impropriety and moral implications of such set-up; that despite their written agreement that their minor children
should stay in their conjugal home, the latter violated the same when she surreptitiously moved out of their
conjugal dwelling with their minor children and stayed with said Zuñiga; and, that respondent is mentally,
psychologically, spiritually and morally unfit to keep the children in her custody. Petitioner contended that the
issuance of the TPO on May 23, 2005 is unconstitutional for being violative of the due process clause of the
Constitution.

Without awaiting for the resolution of his Comment on the petition and motion to lift TPO, petitioner filed
with the CA a petition for certiorari with prayer for the issuance of a writ of preliminary injunction and/or
temporary restraining order and preliminary injunction and hold departure order assailing the May 23, 2005
TPO issued by the RTC.

On June 9, 2005, the CA, in order not to render the petition moot and to avoid grave and irreparable injury,
issued a temporary restraining order to temporarily enjoin the parties and their agents from enforcing the
assailed May 23, 2005 TPO issued in Civil Case No. 0464-05.[7]

Petitioner later filed an Urgent Motion for Issuance of a Writ of Preliminary Injunction with
Manifestation,[8] praying that the enforcement of all orders, decision to be issued by the RTC and all the
proceedings therein be restrained. A hearing[9] was, subsequently, conducted on the motion.

On October 28, 2005, the CA issued its assailed decision, the decretal portion of which reads:
WHEREFORE, based on the foregoing premises, the instant petition is hereby DENIED for lack of
merit. Accordingly, the assailed Temporary Protection Order dated May 23, 2002 (sic) issued by the Regional
Trial Court of Imus, Cavite, Branch 22 in Civil Case No. 0464-05 is UPHELD.[10]

In so ruling, the CA found that the petition filed by respondent under RA 9262 is still pending before the RTC;
thus, the factual matters raised therein could not be passed upon in the petition for certiorari filed with it. The
CA noted that during the pendency of the herein proceedings, petitioner filed an urgent motion to quash warrant
issued by the RTC and which matter could not also be a subject of this petition which assails the TPO dated
May 23, 2005 and that the motion to quash should have been filed with the RTC.

The CA found that the TPO dated May 23, 2005 was validly issued by the RTC and found no grave abuse of
discretion in the issuance thereof as the same were in complete accord with the provision of RA 9262.

As to petitioner's argument that there was no basis for the issuance of the TPO, considering that the provision
authorizing such issuance is unconstitutional, the CA ruled that since the matter raised herein was the
RTC's alleged grave abuse of discretion in issuing the TPO, such matter could be resolved without having to
rule on the constitutionality of RA 9262 and its provisions. And that the requisites that the constitutionality of
the law in question be the very lis mota of the case was absent.

Dissatisfied, petitioner files the instant petition raising the following issues:

THE HONORABLE COURT OF APPEALS WITH DUE RESPECT SERIOUSLY ERRED IN HOLDING
AND FINDING IN A MANNER CONTRARY TO ESTABLISHED RULES AND JURISPRUDENCE THAT
PUBLIC RESPONDENT COMMITTED NO GRAVE ABUSE OF DISCRETION WHEN THE LATTER
ISSUED THE TEMPORARY PROTECTIVE ORDER (TPO) DATED 23 MAY 2005 WITHOUT
OBSERVING DUE PROCESS OF LAW AND CONSIDERATIONS OF JUSTICE AND BASIC HUMAN
RIGHTS.

II

THE HONORABLE COURT OF APPEALS IN REFUSING TO RULE ON THE CONSTITUTIONALITY OF

THE PROVISIONS OF RA 9262 HAS DECIDED THE CASE IN A MANNER NOT IN ACCORD WITH
ESTABLISHED LAWS AND JURISPRUDENCE CONSIDERING THAT CONTRARY TO ITS FINDINGS
THE CONSTITUTIONALITY OF THE SAID LAW IS THE LIS MOTA OF THE CASE.[11]

Petitioner claims that contrary to the stance of the CA in not deciding the issue of the constitutionality
of RA 9262, the issue presented is the very lis mota in the instant case.

The issue of constitutionality of RA 9262 was raised by petitioner in his Comment to respondent's Petition with
Urgent Motion to Lift TPO dated May 23, 2005 filed with the RTC. However, without awaiting for the
resolution of the same, petitioner filed a petition for certiorari with the CA assailing the TPO issued for
violating the due process clause of the Constitution. Contrary to the CA's finding that the matter raised in the
petition filed with it was the RTC's alleged grave abuse of discretion in issuing the TPO which could be
resolved without having to rule on the constitutionality of RA 9262 and its provisions, we find that since
petitioner is assailing the validity of RA 9262 wherein respondent's right to a protection order is based upon, the
constitutionality of the said law must first be decided upon. After all, the alleged unconstitutionality of RA
9262 is, for all intents and purposes, a valid cause for the non-issuance of a protection
order.[12] Notwithstanding, however, we still find no merit to declare RA 9262 unconstitutional.

Petitioner particularly directs his constitutional attack on Section 15 of RA 9262 contending that had there been
no ex parte issuance of the TPO, he would have been afforded due process of law and had properly presented
his side on the matter; that the questioned provision simply encourages arbitrary enforcement repulsive to basic
constitutional rights which affects his life, liberty and property.

We are not impressed.

Section 15 of RA 9262 provides:

SECTION 15. Temporary Protection Orders. Temporary Protection Orders (TPOs) refers to the protection
order issued by the court on the date of filing of the application after ex parte determination that such order
should be issued. A court may grant in a TPO any, some or all of the reliefs mentioned in this Act and shall be
effective for thirty (30) days. The court shall schedule a hearing on the issuance of a [Permanent Protection
Order] PPO prior to or on the date of the expiration of the TPO. The court shall order the immediate personal
service of the TPO on the respondent by the court sheriff who may obtain the assistance of law enforcement
agents for the service. The TPO shall include notice of the date of the hearing on the merits of the issuance of a
PPO.

In Garcia v. Drilon,[13] wherein petitioner therein argued that Section 15 of RA 9262 is a violation of the due
process clause of the Constitution, we struck down the challenge and held:

A protection order is an order issued to prevent further acts of violence against women and their children, their
family or household members, and to grant other necessary reliefs. Its purpose is to safeguard the offended
parties from further harm, minimize any disruption in their daily life and facilitate the opportunity and ability to
regain control of their life.

The scope of reliefs in protection orders is broadened to ensure that the victim or offended party is afforded all
the remedies necessary to curtail access by a perpetrator to the victim. This serves to safeguard the victim from
greater risk of violence; to accord the victim and any designated family or household member safety in the
family residence, and to prevent the perpetrator from committing acts that jeopardize the employment and
support of the victim. It also enables the court to award temporary custody of minor children to protect the
children from violence, to prevent their abduction by the perpetrator and to ensure their financial support.

The rules require that petitions for protection order be in writing, signed and verified by the petitioner thereby
undertaking full responsibility, criminal or civil, for every allegation therein. Since "time is of the essence in
cases of VAWC if further violence is to be prevented," the court is authorized to issue ex parte a TPO after
raffle but before notice and hearing when the life, limb or property of the victim is in jeopardy and there is
reasonable ground to believe that the order is necessary to protect the victim from the immediate and imminent
danger of VAWC or to prevent such violence, which is about to recur.

There need not be any fear that the judge may have no rational basis to issue an ex parte order. The victim is
required not only to verify the allegations in the petition, but also to attach her witnesses' affidavits to the
petition.

The grant of a TPO ex parte cannot, therefore, be challenged as violative of the right to due process. Just like a
writ of preliminary attachment which is issued without notice and hearing because the time in which the hearing
will take could be enough to enable the defendant to abscond or dispose of his property, in the same way, the
victim of VAWC may already have suffered harrowing experiences in the hands of her tormentor, and possibly
even death, if notice and hearing were required before such acts could be prevented. It is a constitutional
commonplace that the ordinary requirements of procedural due process must yield to the necessities of
protecting vital public interests, among which is protection of women and children from violence and threats to
their personal safety and security.

It should be pointed out that when the TPO is issued ex parte, the court shall likewise order that notice be
immediately given to the respondent directing him to file an opposition within five (5) days from service.
Moreover, the court shall order that notice, copies of the petition and TPO be served immediately on the
respondent by the court sheriffs. The TPOs are initially effective for thirty (30) days from service on the
respondent.

Where no TPO is issued ex parte, the court will nonetheless order the immediate issuance and service of the
notice upon the respondent requiring him to file an opposition to the petition within five (5) days from service.
The date of the preliminary conference and hearing on the merits shall likewise be indicated on the notice.

The opposition to the petition which the respondent himself shall verify, must be accompanied by the affidavits
of witnesses and shall show cause why a temporary or permanent protection order should not be issued.

It is clear from the foregoing rules that the respondent of a petition for protection order should be apprised of
the charges imputed to him and afforded an opportunity to present his side. x x x. The essence of due process is
to be found in the reasonable opportunity to be heard and submit any evidence one may have in support of one's
defense. "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.[14]

Petitioner also assails that there is an invalid delegation of legislative power to the court and
to barangay officials to issue protection orders.

Section 2 of Article VIII of the 1987 Constitution provides that "the Congress shall have the power to define,
prescribe, and apportion the jurisdiction of the various courts but may not deprive the Supreme Court of its
jurisdiction over cases enumerated in Section 5 hereof." Hence, the primary judge of the necessity, adequacy,
wisdom, reasonableness and expediency of any law is primarily the function of the legislature.[15] The act of
Congress entrusting us with the issuance of protection orders is in pursuance of our authority to settle
justiciable controversies or disputes involving rights that are enforceable and demandable before the courts of
justice or the redress of wrongs for violations of such rights.[16]

As to the issuance of protection order by the Punong Barangay, Section 14 pertinently provides:

SEC. 14. Barangay Protection Orders (BPOs); Who May Issue and How. Barangay Protection Orders (BPOs)
refer to the protection order issued by the Punong Barangay ordering the perpetrator to desist from committing
acts under Section 5 (a) and (b) of this Act. A Punong Barangay who receives applications for a BPO shall issue
the protection order to the applicant on the date of filing after ex parte determination of the basis of the
application. If the Punong Barangay is unavailable to act on the application for a BPO, the application shall be
acted upon by any available Barangay Kagawad. If the BPO is issued by a Barangay Kagawad, the order must
be accompanied by an attestation by the Barangay Kagawad that the Punong Barangay was unavailable at the
time of the issuance of the BPO. BPOs shall be effective for fifteen (15) days. Immediately after the issuance of
an ex parte BPO, the Punong Barangay or Barangay Kagawad shall personally serve a copy of the same on the
respondent, or direct any barangay official to effect its personal service.

The parties may be accompanied by a non-lawyer advocate in any proceeding before the Punong Barangay.

Hence, the issuance of a BPO by the Punong Barangay or, in his unavailability, by any available Barangay
Kagawad, merely orders the perpetrator to desist from (a) causing physical harm to the woman or her child; and
(2) threatening to cause the woman or her child physical harm. Such function of the Punong Barangay is, thus,
purely executive in nature, in pursuance of his duty under the Local Government Code to "enforce all laws and
ordinances," and to "maintain public order in the barangay."[17]

Petitioner assails that the CA erred in finding that the RTC did not commit grave abuse of discretion in issuing
the TPO dated May 23, 2005 as the petition was bereft of any indication of grounds for the issuance of the
same. Petitioner claims that while the issuance of the TPO is ex parte, there must be a judicial determination of
the basis thereof. He contends that the allegations in respondent's affidavit attached to the petition, and without
admitting the same to be true, are nothing more than normal or usual quarrels between a husband and wife
which are not grave or imminent enough to merit the issuance of a TPO.

We are not persuaded.

We quote again Section 15 of RA 9262 for ready reference, thus:

SECTION 15. Temporary Protection Orders. Temporary Protection Orders (TPOs) refers to the protection
order issued by the court on the date of filing of the application after ex parte determination that such order
should be issued. A court may grant in a TPO any, some or all of the reliefs mentioned in this Act and shall be
effective for thirty (30) days. The court shall schedule a hearing on the issuance of a PPO prior to or on the date
of the expiration of the TPO. The court shall order the immediate personal service of the TPO on the respondent
by the court sheriff who may obtain the assistance of law enforcement agents for the service. The TPO shall
include notice of the date of the hearing on the merits of the issuance of a PPO.
Clearly, the court is authorized to issue a TPO on the date of the filing of the application after ex
parte determination that there is basis for the issuance thereof. Ex parte means that the respondent need not be
notified or be present in the hearing for the issuance of the TPO. Thus, it is within the court's discretion, based
on the petition and the affidavit attached thereto, to determine that the violent acts against women and their
children for the issuance of a TPO have been committed.

And Section 5 of the same law provides:

SECTION 5. Acts of Violence Against Women and Their Children.- The crime of violence against women and
their children is committed through any of the following acts:

(a) Causing physical harm to the woman or her child;

(b) Threatening to cause the woman or her child physical harm;
(c) Attempting to cause the woman or her child physical harm;
(d) Placing the woman or her child in fear of imminent physical harm;
(e) Attempting to compel or compelling the woman or her child to engage in conduct which the woman or her
child has the right to desist from or desist from conduct which the woman or her child has the right to engage in,
or attempting to restrict or restricting the woman's or her child's freedom of movement or conduct by force or
threat of force, physical or other harm or threat of physical or other harm, or intimidation directed against the
woman or child. This shall include, but not limited to, the following acts committed with the purpose or effect
of controlling or restricting the woman's or her child's movement or conduct:
(1) Threatening to deprive or actually depriving the woman or her child of custody to her/his family;

(2) Depriving or threatening to deprive the woman or her children of financial support legally due her or her
family, or deliberately providing the woman's children insufficient financial support;

(3) Depriving or threatening to deprive the woman or her child of a legal right;

(4) Preventing the woman in engaging in any legitimate profession, occupation, business or activity or
controlling the victim's own money or properties, or solely controlling the conjugal or common money, or
properties;
(f) Inflicting or threatening to inflict physical harm on oneself for the purpose of controlling her actions or
decisions;
(g) Causing or attempting to cause the woman or her child to engage in any sexual activity which does not
constitute rape, by force or threat of force, physical harm, or through intimidation directed against the woman or
her child or her/his immediate family;
(h) Engaging in purposeful, knowing, or reckless conduct, personally or through another, that alarms or causes
substantial emotional or psychological distress to the woman or her child. This shall include, but not be limited
to, the following acts:
(1) Stalking or following the woman or her child in public or private places;
(2) Peering in the window or lingering outside the residence of the woman or her child;
(3) Entering or remaining in the dwelling or on the property of the woman or her child against her/his will;
(4) Destroying the property and personal belongings or inflicting harm to animals or pets of the woman or her
child; and
(5) Engaging in any form of harassment or violence;
(i) Causing mental or emotional anguish, public ridicule or humiliation to the woman or her child, including, but
not limited to, repeated verbal and emotional abuse, and denial of financial support or custody of minor children
of access to the woman's child/children.

In this case, the alleged acts of petitioner among others, i.e., he cocked the gun and pointed the same to his head
in order to convince respondent not to proceed with the legal separation case; feeding his other children with the
food which another child spat out; and threatening the crying child with a belt to stop him from crying which
was repeatedly done; and holding respondent by her nape when he got furious that she was asking him not to
come often to their conjugal home and hold office thereat after their agreed separation and threatening her of
withholding half of the financial support for the kids, while not conclusive, are enough bases for the issuance of
a TPO. Petitioner's actions would fall under the enumeration of Section 5, more particularly, paragraphs a, d, e
(2), f, h, and i.

It is settled doctrine that there is grave abuse of discretion when there is a capricious and whimsical exercise of
judgment as is equivalent to lack of jurisdiction, such as where the power is exercised in an arbitrary or despotic
manner by reason of passion or personal hostility, and it must be so patent and gross so as to amount to an
evasion of positive duty or to a virtual refusal to perform the duty enjoined or to act at all in contemplation of
law.[18] We find that the CA did not err when it found no grave abuse of discretion committed by the RTC in
the issuance of the TPO.

The factual matters herein raised by petitioner should be presented during the hearing on the merits on the
issuance of the Permanent Protection Order.

WHEREFORE, the petition is DENIED. The Decision dated October 28, 2005 of the Court of Appeals issued
in CA-G.R. SP No. 89939, upholding the Regional Trial Court's issuance of the Temporary Protection Order
dated May 23, 2005, is AFFIRMED. The Regional Trial Court of Imus, Cavite is hereby ORDERED to
resolve with dispatch respondent's Petition for a Permanent Protection Order.

SO ORDERED.

Velasco, Jr., (Chairperson), Abad, Mendoza, and Leonen, JJ., concur.

First Class Cadet Aldrin Jeff Cudia v. The Superintendent of the Philippine Military Academy
GR Number 211362

Petition: Petition for Mandamus

Petitioner: First Class Cadet Aldrin Jeff P. Cudia
Respondent: The Superintendent of the Philippine Military Academy, The Honor Committee of 2014 of the
PMA and HC members, and the Cadet Review and Appeals Board (CRAB)
Ponente: Peralta, J.
Date: February 24, 2014

Facts:
Petitioner, Cadet First Class Cudia, was a member of the Siklab Diwa Class of 2014 of the Philippine Military
Academy. He was supposed to graduate with honors as the class salutatorian, receive the Philippine Navy Saber
as the top Navy Cadet graduate and be commissioned as an ensign of the Navy.

Petitioner was issued a Delinquency Report (DR) because he was late for two minutes in his ENG 412 class,
other cadets were also reported late for 5 minutes. The DRs reached the Department of Tactical Officers and
were logged and transmitted to the Company of Tactical Officers (TCO) for explanation. Cudia incurred the
penalty of 11 demerits and 13 touring hours.

Several days after, Cudia was reported to the Honor Committee (HC) per violation of the Honor Code. Lying
that is giving statements that perverts the truth in his written appeal stating that his 4th period class ended at
3:00 that made him late for the succeeding class.

Cudia submitted his letter of explanation on the honor report. The HC constituted a team to conduct the
preliminary investigation on the violation, it recommended the case be formalized. Cudia pleaded not guilty.
The result was 8-1 guilty verdict and upon the order of the Chairman, the HC reconvened in the chambers, after,
the Presiding Officer announced a 9-0 guilty verdict.

The HC denied Cudia’s appeal. The Headquarters Tactics Group (HTG) conducted a formal review and
checking of findings. Special orders were issued placing Cudia on indefinite leave of absence and pending
approval of separation from the Armed Forces of the Philippines. Cudia submitted a letter to the Office of the
Commandant of Cadets requesting his re-instatement. The matter was referred to Cadet Review and Appeals
Board (CRAB) and it upheld the decision.

Cudia wrote a letter to President Aquino but the President sustained the findings of the CRAB. CHR-CAR
issued a resolution finding probable cause for Human Rights Violations.

Issue:
1. Whether or not the PMA committed grave abuse of discretion in dismissing Cudia in utter disregard of
his right to due process and in holding that he violated the Honor Code through lying.
2. Whether or not the court can interfere with military affairs

Ruling:
 1. No. The determination of whether the PMA cadet has rights to due process, education, and property
should be placed in the context of the Honor Code. All the administrative remedies were exhausted. A
student of a military academy must be prepared to subordinate his private interest for the proper
functioning of the institution. The PMA may impose disciplinary measures and punishments as it deems
fit and consistent with the peculiar needs of the institution. PMA has regulatory authority to
administratively dismiss erring cadets. PMA has a right to invoke academic freedom in the
enforcement of the internal rules and regulations.
2. Yes. The court is part of the checks-and-balance machinery mandated by Article VIII of the
Constitution. The court’s mandate (according to Section 1, Article 8) is expanded that the duty of the
courts is not only to “settle actual controversies involving rights which are legally demandable and
enforceable” but also “to determine whether or not there has been a grave abuse of discretion on the part
of any branch or instrumentality of the Government” even if the latter does not exercise judicial, quasi-
judicial, or ministerial functions. No one is above the law, including the military, especially in violations
of Constitutionally guaranteed rights.

Dispositive:
The petition is denied. The dismissal of Cudia from PMA is affirmed.
G.R. No. 185544 January 13, 2015
THE LAW FIRM OF LAGUESMA MAGSALIN CONSULTA AND GASTARDO, Petitioner,
vs.
THE COMMISSION ON AUDIT and/or REYNALDO A. VILLAR and JUANITO G. ESPINO, JR. in
their capacities as Chairman and Commissioner, respectively, Respondents.
DECISION
LEONEN, J.:
When a government entity engages the legal services of private counsel, it must do so with the necessary
authorization required by law; otherwise, its officials bind themselves to be personally liable for compensating
private counsel’s services.
This is a petition1 for certiorari filed pursuant to Rule XI, Section 1 of the 1997 Revised Rules of Procedure of
the Commission on Audit. The petition seeks to annul the decision2 dated September 27, 2007 and
resolution3 dated November 5, 2008 of the Commission on Audit, which disallowed the payment of retainer
fees to the law firm of Laguesma Magsalin Consulta and Gastardo for legal services rendered to Clark
Development Corporation.4
Sometime in 2001, officers of Clark Development Corporation,5 a government-owned and controlled
corporation, approached the law firm of Laguesma Magsalin Consulta and Gastardo for its possible assistance
in handling the corporation’s labor cases.6
Clark Development Corporation, through its legal officers and after the law firm’s acquiescence, "sought from
the Office of the Government Corporate Counsel [‘OGCC’] its approval for the engagement of [Laguesma
Magsalin Consulta and Gastardo] as external counsel."7
On December 4, 2001, the Office of the Government Corporate Counsel denied the request.8 Clark
Development Corporation then filed a request for reconsideration.9
On May 20, 2002, the Office of the Government Corporate Counsel, through Government Corporate Counsel
Amado D. Valdez (Government Corporate Counsel Valdez), reconsidered the request and approved the
engagement of Laguesma Magsalin Consulta and Gastardo.10 It also furnished Clark Development Corporation
a copy of a pro-forma retainership contract11 containing the suggested terms and conditions of the
retainership.12 It instructed Clark Development Corporation to submit a copy of the contract to the Office of the
Government Corporate Counsel after all the parties concerned have signed it.13
In the meantime, Laguesma Magsalin Consulta and Gastardo commenced rendering legal services to Clark
Development Corporation. At this point, Clark Development Corporation had yet to secure the authorization
and clearance from the Office of the Government Corporate Counsel or the concurrence of the Commission on
Audit of the retainership contract. According to the law firm, Clark Development Corporation’s officers assured
the law firm that it was in the process of securing the approval of the Commission on Audit.14
On June 28, 2002, Clark Development Corporation, through its Board of Directors, approved Laguesma
Magsalin Consulta and Gastardo’s engagement as private counsel.15 In 2003, it also approved the assignment of
additional labor cases to the law firm.16
On July 13, 2005, Clark Development Corporation requested the Commission on Audit for concurrence of the
retainership contract it executed with Laguesma Magsalin Consulta and Gastardo.17 According to the law firm,
it was only at this pointwhen Clark Development Corporation informed them that the Commission on Audit
required the clearance and approval of the Office of the Government Corporate Counsel before it could approve
the release of Clark Development Corporation’s funds to settle the legal fees due to the law firm.18
On August 5, 2005, State Auditor IVElvira G. Punzalan informed Clark Development Corporation that
itsrequest for clearance could not be acted upon until the Office of the Government Corporate Counsel approves
the retainership contract with finality.19
On August 10, 2005, Clark Development Corporation sent a letterrequest to the Office of the Government
Corporate Counsel for the final approval of the retainership contract, in compliance with the Commission on
Audit’s requirements.20
On December 22, 2005, GovernmentCorporate Counsel Agnes VST Devanadera (Government Corporate
Counsel Devanadera) denied Clark Development Corporation’s request for approval on the ground that the
proforma retainership contract given to them was not "based on the premise that the monthly retainer’s fee and
concomitant charges are reasonable and could pass in audit by COA."21 She found that Clark Development
Corporation adopted instead the law firm’s proposals concerning the payment of a retainer’s fee on a per case
basis without informing the Office of the Government Corporate Counsel. She, however, ruled that the law firm
was entitled to payment under the principle of quantum meruitand subject to Clark Development Corporation
Board’s approval and the usual government auditing rules and regulations.22
On December 27, 2005, Clark Development Corporation relayed Government Corporate Counsel Devanadera’s
letter to the Commission’s Audit Team Leader, highlighting the portion on the approval of payment to
Laguesma Magsalin Consulta and Gastardo on the basis of quantum meruit.23
On November 9, 2006, the Commission on Audit’s Office of the General Counsel, Legal and Adjudication
Sector issued a "Third Indorsement"24 denying Clark Development Corporation’s request for clearance, citing
its failure to secure a prior written concurrence of the Commission on Audit and the approval with finality of
the Office of the Government Corporate Counsel.25 It also stated that its request for concurrence was made three
(3) years after engaging the legal services of the law firm.26
On December 4, 2006, Laguesma Magsalin Consulta and Gastardo appealed the "Third Indorsement"to the
Commission on Audit. On December 12, 2006, Clark Development Corporation also filed a motion for
reconsideration.27
On September 27, 2007, the Commission on Audit rendered the assailed decision denying the appeal and
motion for reconsideration. It ruled that Clark Development Corporation violated Commission on Audit
Circular No. 98-002 dated June 9, 1998 and Office of the President Memorandum Circular No. 9 dated August
27, 1998 whenit engaged the legal services of Laguesma Magsalin Consulta and Gastardo without the final
approval and written concurrence of the Commission on Audit.28 It also ruled that it was not the government’s
responsibility to pay the legal fees already incurred by Clark Development Corporation, but rather by the
government officials who violated the regulations on the matter.29
Clark Development Corporation and Laguesma Magsalin Consulta and Gastardo separately filed motions for
reconsideration,30 which the Commission on Audit denied in the assailed resolution dated November 5, 2008.
The resolution also disallowed the payment of legal fees to the law firm on the basis of quantum meruitsince the
Commission on Audit Circular No. 86-255 mandates that the engagementof private counsel without prior
approval "shall be a personal liability of the officials concerned."31
Laguesma Magsalin Consulta and Gastardo filed this petition for certiorari on December 19,
2008.32 Respondents, through the Office of the Solicitor General, filed their comment33 dated May 7, 2009. The
reply34 was filed on September 1, 2009.
The primordial issue to be resolved by this court is whether the Commission on Audit erred in disallowing the
payment of the legal fees to Laguesma Magsalin Consulta and Gastardo as Clark Development Corporation’s
private counsel.
To resolve this issue, however, several procedural and substantive issues must first be addressed:
Procedural:
1. Whether the petition was filed on time; and
2. Whether petitioner is the real party-in-interest.
Substantive:
1. Whether the Commission on Audit erred in denying Clark Development Corporation’s requestfor clearance
in engaging petitioner as private counsel;
2. Whether the Commission on Audit correctly cited Polloso v. Gangan35 and PHIVIDEC Industrial Authority
v. Capitol Steel Corporation36 in support of its denial; and
3. Whether the Commission on Audit erred in ruling that petitioner should not be paid on the basis of quantum
meruitand that any payment for its legal services should be the personal liability of Clark Development
Corporation’s officials.
Petitioner argues that Pollosoand PHIVIDEC are not applicable to the circumstances at hand because in both
cases, the government agency concerned had failed to secure the approval of both the Office of the Government
Corporate Counsel and the Commission on Audit.37 Petitioner asserts that it was able to secure authorization
from the Office of the Government Corporate Counsel prior to rendering services to Clark Development
Corporation for all but two (2) of the labor cases assigned to it.38 It argues that the May 20, 2002 letter from
Government Corporate Counsel Valdez was tantamount to a grant of authorization since it granted Clark
Development Corporation’s request for reconsideration.39
In their comment,40 respondents argue that petitioner is not a real party-in-interest to the case.41 They argue that
it is Clark Development Corporation, and not petitioner, who isa real party-in-interest since the subject of the
assailed decision was the denial of the corporation’s request for clearance.42
Respondents also allege that it was only on July 13, 2005, or three (3) years after the hiring of petitioner, when
Clark Development Corporation requested the Commission on Audit’s concurrence of the retainership contract
between Clark Development Corporation and petitioner.43 They argue that the retainership contract was not
approved with finality by the Office of the Government Corporate Counsel.44 Further, Polloso and PHIVIDE
Care applicable to this case since both cases involve the "indispensability of [the] prior written concurrence of
both [the Office of the Government Corporate Counsel] and the [Commission on Audit] before any
[government-owned and controlled corporation] can hire an external counsel."45
In its reply,46 petitioner argues that it is a real party-in-interest since "it rendered its services to [Clark
Development Corporation], which ultimately redounded to the benefit of the Republic"47 and that "it deserves to
be paid what is its due as a matter of right."48 Petitioner also reiterates its argument that Polloso and PHIVIDE
Care not applicable to this case since the factual antecedents are not the same.49
The petition is denied.
The petition was filed out of time
Petitioner states that it filed this petition under Rule XI, Section 1 of the 1997 Revised Rules of Procedure of the
Commission on Audit.50 The rule states:
RULE XI
JUDICIAL REVIEW SECTION
1. Petition for Certiorari.— Any decision, order or resolution of the Commission may be brought to the
Supreme Court on certiorari by the aggrieved party within thirty (30) days from receipt of a copy thereof in the
manner provided by law, the Rules of Court51 and these Rules.
This rule is based on Article IX-A, Section 7 of the Constitution, which states:
Section 7. Each Commission shall decide by a majority vote of all its Members, any case or matter brought
before it within sixty days from the date of its submission for decision or resolution. A case or matter is deemed
submitted for decision or resolution upon the filing of the last pleading, brief, or memorandum required by the
rules of the Commission or by the Commission itself. Unless otherwise provided by this Constitution or by law,
any decision, order, or ruling of each Commission may be brought to the Supreme Court on certiorari by the
aggrieved party within thirty days from receipt of a copy thereof. (Emphasis supplied)
Ordinarily, a petition for certiorari under Rule 65 of the Rules of Court has a reglementary period of 60 days
from receipt of denial of the motion for reconsideration. The Constitution, however, specifies that the
reglementary period for assailing the decisions, orders, or rulings of the constitutional commissions is thirty
(30) days from receipt of the decision, order, or ruling. For this reason, a separate rule was enacted in the Rules
of Court.
Rule 64 of the Rules of Civil Procedure provides the guidelines for filing a petition for certiorari under this rule.
Section 2 of the rule specifies that "[a] judgment or final order or resolution of the Commission on Elections
and the Commission on Audit may be brought by the aggrieved party to the Supreme Court on certiorari under
Rule 65, except as hereinafter provided."
The phrase, "except as hereinafter provided," specifies that any petition for certiorari filed under this rule
follows the same requisites as those of Rule 65 except for certain provisions found only in Rule 64. One of
these provisions concerns the time given to file the petition.
Section 3 of Rule 64 of the Rules of Civil Procedure states:
SEC. 3. Time to file petition. — The petition shall be filed within thirty (30) days from notice of the judgment
or final order or resolution sought to be reviewed. The filing of a motion for new trial or reconsideration of said
judgment or final order or resolution, if allowed under the procedural rules of the Commission concerned, shall
interrupt the period herein fixed. If the motion is denied, the aggrieved party may file the petition within the
remaining period, but which shall not be less than five (5) days in any event, reckoned from notice of
denial.(Emphasis supplied)
Under this rule, a party may file a petition for review on certiorari within 30 days from notice of the judgment
being assailed. The reglementary period includes the time taken to file the motion for reconsideration and is
only interrupted once the motion is filed. If the motion is denied, the party may filethe petition only within the
period remaining from the notice of judgment.
The difference between Rule 64 and Rule 65 has already been exhaustively discussed by this court in Pates v.
Commission on Elections:52
Rule 64, however, cannot simply be equated to Rule 65 even if it expressly refers to the latter rule. They exist as
separate rules for substantive reasons as discussed below. Procedurally, the most patent difference between the
two – i.e., the exception that Section 2, Rule 64 refers to – is Section 3 which provides for a special period for
the filing of petitions for certiorari from decisions or rulings of the COMELEC en banc. The period is 30 days
from notice of the decision or ruling (instead of the 60 days that Rule 65 provides), with the intervening period
used for the filing of any motion for reconsideration deductible from the originally granted 30 days (instead of
the fresh period of 60 days that Rule 65 provides).53 (Emphasis supplied)
In this case, petitioner received the decision of the Commission on Audit on October 16, 2007.54 It filed a
motion for reconsideration on November 6, 2007,55 or after 21 days. It received notice of the denial of its
motion on November 20, 2008.56 The receipt of this notice gave petitioner nine (9) days, or until November 29,
2008, to file a petition for certiorari. Since November 29, 2008 fell on a Saturday, petitioner could still have
filed on the next working day, or on December 1, 2008. It, however, filed the petition on December 19,
2008,57 which was well beyond the reglementary period.
This petition could have been dismissed outright for being filed out of time. This court, however, recognizes
that there are certain exceptions that allow a relaxation of the procedural rules. In Barranco v. Commission on
the Settlement of Land Problems:58
The Court is fully aware that procedural rules are not to be belittled or simply disregarded for these prescribed
procedures insure an orderly and speedy administration of justice. However, it is equally true that litigation is
not merely a game of technicalities. Law and jurisprudence grant to courts the prerogative to relax compliance
with procedural rules of even the most mandatory character, mindful of the duty to reconcile both the need to
put an end to litigation speedily and the parties’ right to an opportunity to be heard.
In Sanchez v. Court of Appeals, the Court restated the reasons which may provide justification for a court to
suspend a strict adherence to procedural rules, such as: (a) matters of life, liberty, honor or property[,] (b) the
existence of special or compelling circumstances, (c) the merits of the case, (d) a cause not entirely attributable
to the fault or negligence of the party favored by the suspension of the rules, (e) a lack of any showing that the
review sought is merely frivolous and dilatory, and (f) the other party will not be unjustly prejudiced
thereby.59 (Emphasis supplied)
Considering that the issues in thiscase involve the right of petitioner to receive due compensation on the one
hand and respondents’ duty to prevent the unauthorized disbursement of public funds on the other, a relaxation
of the technical rules is in order.
Petitioner is a real party-in-interest
Respondents argue that it is Clark Development Corporation, and not petitioner, which is the real party-in-
interest since the subject of the assailed decision and resolution was the corporation’s request for clearance to
pay petitioner its legal fees. Respondents argue that any interest petitioner may have in the case is merely
incidental.60 This is erroneous.
Petitioner is a real party-in-interest, as defined in Rule 3, Section 2 of the 1997 Rules of Civil Procedure:
SEC. 2. Parties in interest.— A real party in interest is the party who stands to be benefited or injured by the
judgment in the suit, or the party entitled to the avails of the suit. Unless otherwise authorized by law or these
Rules, every action must be prosecuted or defended in the name of the real party in interest.
Petitioner does not have a "mere incidental interest,"61 and its interest is not "merely
consequential."62 Respondents mistakenly narrow down the issue to whether they erred in denying Clark
Development Corporation’s request for clearance of the retainership contract.63 In doing so, they argue that the
interested parties are limited only to Clark Development Corporation and respondents.64
The issue at hand, however, relates to the assailed decision and resolution of respondents, which disallowed the
disbursement of public funds for the payment of legal fees to petitioner. Respondents admit that legal services
were performed by petitioner for which payment of legal fees are due. The question that they resolved was
which among the parties, the government, or the officials of Clark Development Corporation were liable.
The net effect of upholding or setting aside the assailed Commission on Audit rulings would be to either
disallow or allow the payment of legal fees to petitioner. Petitioner, therefore, stands to either be benefited or
injured by the suit, or entitled to its avails. It is a real party-in-interest. Clark Development Corporation’s Board
of Directors, on the other hand, should have been impleaded inthis case as a necessary party.
A necessary party is defined as "onewho is not indispensable but who ought to be joined as a party if complete
relief is to be accorded as to those already parties, or for a complete determination or settlement of the claim
subject of the action."65
The actions of the Board of Directors precipitated the issues in this case. If the petition is granted, then the
officers are relieved of liability to petitioner. If the rulings of respondents are upheld, then it is the Board of
Directors that will be liable to petitioner. Any relief in this case would be incomplete without joining the
members of the Board of Directors.
The Commission on Audit did not
commit grave abuse of discretion in
denying the corporation’s request
for clearance to engage the services
of petitioner as private counsel
Book IV, Title III, Chapter 3, Section 10 of the Administrative Code of 1987 provides:
Section. 10. Office of the Government Corporate Counsel. - The Office of the Government Corporate Counsel
(OGCC) shall act as the principal law office of all government-owned or controlled corporations, their
subsidiaries, other corporate off-springs and government acquired asset corporations and shall exercise control
and supervision over all legal departments or divisions maintained separately and such powers and functions as
are now or may hereafter be provided by law. In the exercise of such control and supervision, the Government
Corporate Counsel shall promulgate rules and regulations toeffectively implement the objectives of this Office.
(Emphasis supplied)
The Office of the Government Corporate Counsel is mandated by law to provide legal services to government-
owned and controlled corporations such as Clark Development Corporation.
As a general rule, government-owned and controlled corporations are not allowed to engage the legal services
of private counsels. However, both respondent and the Office of the President have made issuances that had the
effect of providing certain exceptions to the general rule, thus: Book IV, Title III, Chapter 3, Section 10 of
Executive Order No. 292, otherwise known as the Administrative Code of 1987, provides that the Office of the
Government Corporate Counsel (OGCC) shall act as the principal law office of all GOCCs, their subsidiaries,
other corporate off-springs, and government acquired asset corporations. Administrative Order No. 130, issued
by the Office of the President on 19 May 1994, delineating the functions and responsibilities of the OSG and the
OGCC, clarifies that all legal matters pertaining to GOCCs, their subsidiaries, other corporate off[-]springs, and
government acquired asset corporations shall be exclusively referred to and handled by the OGCC, unless their
respective charters expressly name the OSG as their legal counsel. Nonetheless, the GOCC may hire the
services of a private counsel in exceptional cases with the written conformity and acquiescence of the
Government Corporate Counsel, and with the concurrence of the Commission on Audit (COA).66 (Emphasis
supplied)
The rules and regulations concerning the engagement of private counsel by government-owned and controlled
corporations is currently provided for by Commission on Audit Circular No. 86-25567 dated April 2, 1986, and
Office of the President Memorandum Circular No. 9 dated August 27, 1998.
Commission on Audit Circular No. 86-255, dated April 2, 1986, as amended, states:
Accordingly and pursuant to this Commission's exclusive authority to promulgate accounting and auditing rules
and regulations, including for the prevention and disallowance of irregular, unnecessary, excessive, extravagant
and/or unconscionable expenditure or uses of public funds and property (Sec. 2-2, Art. IX-D, Constitutional,
public funds shall not be utilized for payment of the services of a private legal counsel or law firm to represent
government agencies and instrumentalities, including government-owned or controlled corporations and local
government units in court or to render legal services for them. In the event that such legal services cannot be
avoided or isjustified under extraordinary or exceptional circumstances for government agencies and
instrumentalities, including government-owned or controlled corporations, the written conformity and
acquiescence of the Solicitor General or the Government Corporate Counsel, as the case maybe, and the written
concurrence of the Commission on Audit shall first be secured before the hiring or employment of a private
lawyer or law firm.(Emphasis supplied)
The Office of the President Memorandum Circular No. 9, on the other hand, states:
SECTION 1.All legal matters pertainingto government-owned or controlled corporations, their subsidiaries,
other corporate offsprings and government acquired asset corporations (GOCCs) shall be exclusively referred to
and handled by the Office of the Government Corporate Counsel (OGCC).
GOCCs are thereby enjoined from referring their cases and legal matters to the Office of the Solicitor General
unless their respective charters expressly name the Office of the Solicitor General as their legal counsel.
However, under exceptional circumstances, the OSG may represent the GOCC concerned, Provided: This is
authorized by the President; or by the head of the office concerned and approved by the President.
SECTION 2. All pending cases of GOCCs being handled by the OSG, and all pending requests for opinions and
contract reviews which have been referred by saidGOCCs to the OSG, may be retained and acted upon by the
OSG; but the latter shall inform the OGCC of the said pending cases, requests for opinions and contract
reviews, if any, to ensure proper monitoring and coordination.
SECTION 3. GOCCs are likewise enjoined to refrain from hiring private lawyers or law firms to handle their
cases and legal matters. But in exceptional cases, the written conformity and acquiescence of the Solicitor
General or the Government Corporate Counsel, as the case may be, and the written concurrence of the
Commission on Audit shall first be secured before the hiring or employment of a private lawyer or law firm.
(Emphasis supplied)
According to these rules and regulations, the general rule is that government-owned and controlled corporations
must refer all their legal matters to the Office of the Government Corporate Counsel. It is only in "extraordinary
or exceptional circumstances" or "exceptional cases" that it is allowed to engage the services of private
counsels.
Petitioner claims that it was hired by Clark Development Corporation due to "numerous labor cases which need
urgent attention[.]"68 In its request for reconsideration to the Office of the Government Corporate Counsel,
Clark Development Corporation claims that it was obtaining the services of petitioner "acting through Atty.
Ariston Vicente R. Quirolgico, known expert in the field of labor law and relations."69
The labor cases petitioner handled were not of a complicated or peculiar nature that could justify the hiring of a
known expert in the field. On the contrary, these appear to be standard labor cases of illegal dismissal and
collective bargaining agreement negotiations,70 which Clark Development Corporation’s lawyers or the Office
of the Government Corporate Counsel could have handled.
Commission on Audit Circular No. 86-255 dated April 2, 1986 and Office of the President Memorandum
Circular No. 9 also require that "before the hiring or employment"of private counsel, the "written conformity
and acquiescence of the [Government Corporate Counsel] and the written concurrence of the Commissionon
Audit shall first be secured. . . ."
In this case, Clark Development Corporation had failed to secure the final approval of the Office of the
Government Corporate Counsel and the written concurrence of respondent before it engaged the services of
petitioner.
When Government Corporate Counsel Valdez granted Clark Development Corporation’s request for
reconsideration, the approval was merely conditional and subject to its submission of the signed pro-forma
retainership contract provided for by the Office of the Government Corporate Counsel. In the letter dated May
20, 2002, Government Corporate Counsel Valdez added:
For the better protection of the interests of CDC, we hereby furnish you with a Pro-Forma Retainership
Agreement containing the suggested terms and conditions of the retainership, which you may adopt for this
purpose.
After the subject Retainership Agreement shall have been executed between your corporation and the retained
counsel, please submit a copy thereof to our Office for our information and file.71
Upon Clark Development Corporation’s failure to submit the retainership contract, the Office of the
Government Corporate Counsel denied Clark Development Corporation’s request for final approval of its legal
services contracts, including that of petitioner. In the letter72 dated December 22, 2005, Government Corporate
Counsel Devanadera informed Clark Development Corporation that:
[i]t appears, though, that our Pro-Forma Retainership Agreement was not followed and CDC merely adopted
the proposal of aforesaid retainers/consultants. Also, this Office was never informed that CDC agreed on
payment of retainer’s fee on a per case basis.73
In view of Clark Development Corporation’s failure to secure the final conformity and acquiescence of the
Office of the Government Corporate Counsel, its retainership contract with petitioner could not have been
considered as authorized.
The concurrence of respondents was also not secured by Clark Development Corporation priorto hiring
petitioner’s services. The corporation only wrote a letter-request to respondents three (3) years after it had
engaged the services of petitioner as private legal counsel.
The cases that the private counsel was asked to manage are not beyond the range of reasonable competence
expected from the Office of the Government Corporate Counsel. Certainly, the issues do not appear to be
complex or of substantial national interest to merit additional counsel. Even so, there was no showing that the
delays in the approval also were due to circumstances not attributable to petitioner nor was there a clear
showing that there was unreasonable delay in any action of the approving authorities. Rather, it appears that the
procurement of the proper authorizations was mere afterthought.
Respondents, therefore, correctly denied Clark Development Corporation’s request for clearance in the
disbursement of funds to pay petitioner its standing legal fees.
Polloso v. Ganganand PHIVIDEC
Industrial Authority v. Capitol Steel
Corporationapply in this case
Petitioner argues that Polloso does not apply since the denial was based on the "absence of a written authority
from the OSG or OGCC[.]"74 It also argues that the PHIVIDEC case does not apply since "the case [was]
represented by a private lawyer whose engagement was secured without the conformity of the OGCC andthe
COA."75 Petitioner argues that, unlike these cases, Clark Development Corporation was able to obtain the
written conformity of the Office of the Government Corporate Counsel to engage petitioner’s services.
In Polloso, the legal services of Atty. Benemerito A. Satorre were engaged by the National Power Corporation
for its Leyte-Cebu and Leyte Luzon Interconnection Projects.76 The Commission on Audit disallowed the
payment of services to Atty. Satore on the basis of quantum meruit, citing Commission on Audit Circular No.
86-255 dated April 2, 1986.77 In upholding the disallowance by the Commission on Audit, this court ruled:
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 fundsand 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.78
In PHIVIDEC, this court found the engagement by PHIVIDEC Industrial Authority, a government-owned and
controlled corporation, of Atty. Cesilo Adaza’s legal services to be unauthorized for the corporation’s failure to
secure the written conformity of the Office of the Government Corporate Counsel and the Commission on
Audit.79 Citing the provisions of Office of the President Memorandum Circular No. 9, this court ruled that:
[i]t was only with the enactment of Memorandum Circular No. 9 in 1998 that an exception to the general
prohibition was allowed for the first time since P.D. No. 1415 was enacted in 1978. However, indispensable
conditions precedent were imposed before any hiring of private lawyer could be effected. First, private counsel
can be hired only in exceptional cases. Second, the GOCC must first secure the written conformity and
acquiescence of the Solicitor General or the Government Corporate Counsel, as the case may be, before any
hiring can be done. And third, the written concurrence of the COA must also be secured prior to the
hiring.80 (Emphasis supplied)
The same ruling was likewise reiterated in Vargas v. Ignes,81 wherein this court stated:
Under Section 10, Chapter 3, Title III, Book IV of the Administrative Code of1987, it is the OGCC which shall
act as the principal law office of all GOCCs. And Section 3 of Memorandum Circular No. 9, issued by President
Estrada on August 27, 1998, enjoins GOCCs to refrain from hiring private lawyers or law firms to handle their
cases and legal matters. But the same Section 3 provides that in exceptional cases, the written conformity and
acquiescence of the Solicitor General or the Government Corporate Counsel, as the case may be, and the written
concurrence of the COA shall first be secured before the hiring or employment of a private lawyer or law firm.
In Phividec Industrial Authority v. Capitol Steel Corporation, we listed three (3) indispensable conditions before
a GOCC can hirea private lawyer: (1) private counsel can only be hired in exceptional cases; (2) the GOCC
must first secure the written conformity and acquiescence of the Solicitor General or the Government Corporate
Counsel, as the case may be; and (3) the written concurrence of the COA must also be secured.82 (Emphasis
supplied) On the basis of Pollosoand PHIVIDEC, petitioner’s arguments are unmeritorious.
Petitioner fails to understand that Commission on Audit Circular No. 86-255 requires not only the conformity
and acquiescence of the Office of the Solicitor General or Office of the Government Corporate Counsel but also
the written conformity of the Commission on Audit. The hiring of private counsel becomes unauthorized if it is
only the Office of the Government Corporate Counsel that gives its conformity. The rules and jurisprudence
expressly require that the government-owned and controlled corporation concerned must also secure the
concurrence of respondents.
It is also erroneous for petitioner to assume that it had the conformity and acquiescence of the Office of the
Government Corporate Counsel since Government Corporate Counsel Valdez’s approval of Clark Development
Corporation’s request was merely conditional on its submission of the retainership contract. Clark Development
Corporation’s failure to submit the retainership contract resulted in itsfailure to securea final approval.
The Commission on Audit did not
commit grave abuse of discretion in
disallowing the payment to
petitioner on the basis of quantum
meruit
When Government Corporate Counsel Devanadera denied Clark Development Corporation’s request for final
approval of its legal services contracts, she, however, allowed the payment to petitioner for legal services
already rendered on a quantum meruitbasis.83
Respondents disallowed Clark Development Corporation from paying petitioner on this basis as the contract
between them was executed "in clear violation of the provisions of COA Circular No. 86-255 and OP
Memorandum Circular No. 9[.]"84 It then ruled that the retainership contract between them should be deemed a
private contract for which the officials of Clark Development Corporation should be liable, citing Section
10385 of Presidential Decree No. 1445, otherwise known as the Government Auditing Code of the Philippines.86
In National Power Corporation v. Heirs of Macabangkit Sangkay, quantum meruit:87
— literally meaning as much as he deserves — is used as basis for determining an attorney’s professional fees
in the absence of an express agreement. The recovery ofattorney’s fees on the basis of quantum meruitis a
device that prevents an unscrupulous client from running away with the fruits of the legal services of counsel
without paying for it and also avoids unjust enrichment on the part of the attorney himself. An attorney must
show that he is entitled to reasonable compensation for the effort in pursuing the client’s cause, taking into
account certain factors in fixing the amount of legal fees.88
Here, the Board of Directors, acting on behalf of Clark Development Corporation, contracted the services of
petitioner, without the necessary prior approvals required by the rules and regulations for the hiring of private
counsel. Their actions were clearly unauthorized.
It was, thus, erroneous for Government Corporate Counsel Devanadera to bind Clark Development Corporation,
a government entity, to pay petitioner on a quantum meruit basis for legal services, which were neither
approved nor authorized by the government. Even granting that petitioner ought to be paid for services
rendered, it should not be the government’s liability, but that of the officials who engaged the services of
petitioner without the required authorization. The amendment of Commission on
Audit Circular No. 86-255 by
Commission on Audit Circular No.
98-002 created a gap in the law
Commission on Audit Circular No. 86-255 dated April 2, 1986 previously stated that: [a]ccordingly, 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 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.
(Emphasis supplied) However, when Commission on Audit Circular No. 86-255 was amended by Commission
on Audit Circular No. 98-002 on June 9, 1998, it failed to retain the liability of the officials who violated the
circular.89 This gap in the law paves the way for both the erring officials of the government owned and
controlled corporations to disclaim any responsibility for the liabilities owing to private practitioners.
It cannot be denied that petitioner rendered legal services to Clark Development Corporation.1âwphi1 It
assisted the corporation in litigating numerous labor cases90 during the period of its engagement. It would be an
injustice for petitioner not to be compensated for services rendered even if the engagement was unauthorized.
The fulfillment of the requirements of the rules and regulations was Clark Development Corporation’s
responsibility, not petitioner’s. The Board of Directors, by its irresponsible actions, unjustly procured for
themselves petitioner’s legal services without compensation.
To fill the gap created by the amendment of Commission on Audit Circular No. 86-255, respondents correctly
held that the officials of Clark, Development Corporation who violated the provisions of Circular No. 98-002
and Circular No. 9 should be personally liable to pay the legal fees of petitioner, as previously provided for in
Circular No. 86-255.
This finds support in Section 103 of the Government Auditing Code of the Philippines,91 which states:
SEC. 103. General liability for unlawful expenditures. -Expenditures of government funds or uses of
government property in violation of law or regulations shall be a personal liability of the official or employee
found to be directly responsible therefor.
This court has also previously held in Gumaru v. Quirino State College92 that:
the fee of the lawyer who rendered legal service to the government in lieu of the OSG or the OGCC is the
personal liability of the government official who hired his services without the prior written conformity of the
OSG or the OGCC, as the case may be.93
WHEREFORE, the petition is DISMISSED without prejudice to petitioner filing another action against the
proper parties.
SO ORDERED.
G.R. No. 185812, January 13, 2015
MARITIME INDUSTRY AUTHORITY, Petitioner, v. COMMISSION ON AUDIT, Respondents.
DECISION
LEONEN, J.:
This case involves the validity of the grant of allowance and incentives to the officers and employees of
petitioner Maritime Industry Authority. We revisit the interpretation and application of Section 12 of the
Compensation and Position Classification Act of 1989.1chanroblesvirtuallawlibrary

The Resident Auditor issued notices of disallowance on the allowances and incentives received by the officers
and employees of Maritime Industry Authority.2 The Legal and Adjudication Office of the Commission on
Audit upheld the notices of disallowance issued.3 The Commission on Audit affirmed the notices of
disallowance.4 Thus, this petition for certiorari was filed by Maritime Industry Authority.

Maritime Industry Authority is an attached agency of the Department of Transportation and Communication
and created under Presidential Decree No. 474.5chanroblesvirtuallawlibrary

On July 1, 1989, Republic Act No. 6758, otherwise known as “An Act Prescribing a Revised Compensation and
Position Classification System in the Government and For Other Purposes” took effect. The law standardizes
the salary rates of government officials and employees.

Section 12 of Republic Act No. 6758 provides:chanRoblesvirtualLawlibrary

Section 12. Consolidation of Allowances and Compensation. - All 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 service 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 only as of July 1, 1989 not integrated
into the standardized salary rates shall continue to be authorized.

Existing additional compensation of any national government official or employee paid from local funds of a
local government unit shall be absorbed into the basic salary of said official or employee and shall be paid by
the National Government.

On September 30, 1989, the Department of Budget and Management issued National Compensation Circular
Nos. 566 and 597 implementing Republic Act No. 6758.

Maritime Industry Authority discontinued the grant of several allowances and incentives to its officials and
employees allegedly due to the issuance of National Compensation Circular Nos. 56 and
59.8chanroblesvirtuallawlibrary

In the memorandum dated February 10, 2000, the Administrator of Maritime Industry Authority recommended
to then President Joseph Ejercito Estrada the approval and/or restoration of financial incentives, benefits, or
allowances to the officers and employees of Maritime Industry Authority.9chanroblesvirtuallawlibrary
The allowances and incentives received by the employees and officers of Maritime Industry Authority as of the
date of the memorandum and needing approval of the President are the following:10chanroblesvirtuallawlibrary
(1) Per diems and commutable allowance received by the members of the Board of Maritime Industry
Authority;11
(2) Rice subsidy allowance;12 and
(3) Medical allowance.13

The allowances and incentives sought to be restored are the following:14chanroblesvirtuallawlibrary

(1) Reimbursable representation allowance for members of the Board of Maritime Industry Authority;15
(2) Performance incentives allowance;16
(3) Economic/efficiency/financial assistance/benefit;17
(4) Hearing allowance;18 and
(5) Birthday month/off month/employment date anniversary allowances.19

The request to restore these benefits or allowances was premised on “inflation-caused difficulties resulting to
[sic] the exodus of technically/specially trained personnel into the private sector or abroad who shall carry on
the delicate and unique functions of the agency and in consideration of the additional functions of the
agency.”20 The request to restore was also made to “further enhance/provide/promote employees’
welfare/productivity and deter graft and corruption activities.”21chanroblesvirtuallawlibrary

The memorandum was then allegedly stamped with “approved” on October 16, 2000 with the signature of the
President of the Philippines below the stamp.22 Relying on the alleged approval of the President of the
Philippines, Maritime Industry Authority granted the allowances and incentives to its officers and employees
starting January 2001.23chanroblesvirtuallawlibrary

The Resident Auditor24 of Maritime Industry Authority then issued the following notices of disallowance with a
total amount of ?5,565,445.02 for the allowances or benefits received by the officers or employees from January
to May 2001:25chanroblesvirtuallawlibrary
Notice of Date Amount Allowance/Benefit
Disallowance Disallowed Disallowed
No.
2002-002-101(01) 26 April 9, 2002 P586,500.00 Rice and Medical Allowance
Allowances of Board Members and
Secretary
27
2002-005-101(01) April 9, 2002 P30,800.00 Rice and Medical Allowance
Representation Allowance of Board
Members and Secretary
28
2002-006-101(01) August 7, 2002 P1,635,376.08 Rice and Medical Allowance
Performance Incentive Allowance for
February
Birthday and Employment Anniversary
Bonus
Representation Allowance of Board
Members and Secretary
2002-007-101(01)29 August 8, 2002
2002-008-101(01)30 August 8, 2002
P1,694,008.14 Rice and Medical Allowance
Performance Incentive Allowance
Birthday and Employment Anniversary
Bonus
P1,618,760.80 Rice and Medical Allowance
Performance Incentive Allowance
Birthday and Employment Anniversary
Bonus
Anniversary Allowance

The Resident Auditor disallowed the grant of the allowances on the ground that it constituted double
compensation to public officers and employees proscribed by Article IX(b) of the 1987 Constitution, in relation
to Section 229 of the Government Accounting and Auditing Manual or GAAM Volume 1.31 Further, the
President’s approval of the memorandum was not the law contemplated by the Constitution as an exception to
the prohibition on double compensation.32chanroblesvirtuallawlibrary

On October 25, 2002, Maritime Industry Authority filed a request for reconsideration on the notices of
disallowance before the Commission on Audit Director of the Legal and Adjudication
Office.33chanroblesvirtuallawlibrary

The request for reconsideration was denied in the decision dated June 23, 2003.34 It was ruled that the
incentives/allowances, except for medical allowance and per diems of the members of the Board, were
integrated in the basic salary pursuant to the Salary Standardization Law and National Compensation Circular
No. 59.35 On the other hand, the grant of medical allowance and per diems to the members of the Board is
proscribed by Article VII, Section 13 of the 1987 Constitution on double
compensation.36chanroblesvirtuallawlibrary

Maritime Industry Authority filed a petition for review before the Commission on
Audit.37chanroblesvirtuallawlibrary

In the decision38 dated March 3, 2005, the Commission on Audit denied the petition for review except as to the
per diem and monthly commutable allowance of the members of the Board of Maritime Industry Authority at
the rate of ?500.00 for each member per month.39chanroblesvirtuallawlibrary

The Commission on Audit held that the disallowed allowances are integrated in the standardized salary rates
under Section 12 of Republic Act No. 6758.40chanroblesvirtuallawlibrary

Further, the alleged approval of the President for the restoration or grant of benefits falls short of a law, as
required by the Constitution for the grant of additional allowance or incentive.41 Even assuming that the
approval of the President is sufficient to grant additional allowance to officers and employees of Maritime
Industry Authority, the authenticity of the memorandum bearing the alleged approval of the President presented
by Maritime Industry Authority was not established.42 Only a photocopy of the memorandum was presented. A
copy of the memorandum was also not on file in the Malacañang Records Office.43chanroblesvirtuallawlibrary
Maritime Industry Authority’s motion for reconsideration was denied in COA Resolution No. 2008-117 dated
December 9, 2008.44chanroblesvirtuallawlibrary

Thus, this petition for certiorari was filed by Maritime Industry Authority assailing the Commission on Audit's
decision and resolution affirming the notices of disallowance.

In compliance with the orders45 of this court, the Commission on Audit filed a comment on the petition for
certiorari on June 22, 2009.46 Maritime Industry Authority filed a reply to the comment on August 24,
2009.47chanroblesvirtuallawlibrary

The sole issue in this case is whether the allowance or incentives granted to the officers and employees of
Maritime Industry Authority have legal basis.

We deny the petition.

I

Commission on Audit did not

commit grave abuse of discretion

The aggrieved party can assail the decision of the Commission on Audit through a petition for certiorari under
Rule 64 before this court. A petition under Rule 64 may prosper only after a finding that the administrative
agency committed grave abuse of discretion amounting to lack or excess of jurisdiction. Not all errors of the
Commission on Audit is reviewable by this court. Thus,
A Rule 65 petition is a unique and special rule because it commands limited review of the question raised. As
an extraordinary remedy, its purpose is simply to keep the public respondent within the bounds of its
jurisdiction or to relieve the petitioner from the public respondent’s arbitrary acts. In this review, the Court is
confined solely to questions of jurisdiction whenever a tribunal, board or officer exercising judicial or quasi-
judicial function acts without jurisdiction or in excess of jurisdiction, or with grave abuse of discretion
amounting to lack or excess of jurisdiction. . . .

The limitation of the Court’s power of review over COA rulings merely complements its nature as
an independent constitutional body that is tasked to safeguard the proper use of the government and, ultimately,
the people’s property by vesting it with power to (i) determine whether the government entities comply with the
law and the rules in disbursing public funds; and (ii) disallow legal disbursements of these funds.48 (Emphasis in
the original)

Reviewing the rationale for this standard of judicial review:chanRoblesvirtualLawlibrary

[t]his court has consistently held that findings of administrative agencies are generally respected, unless found
to have been tainted with unfairness that amounted to grave abuse of discretion:chanRoblesvirtualLawlibrary
It is the general policy of the Court to sustain the decisions of administrative authorities, especially one which is
constitutionally-created not only on the basis of the doctrine of separation of powers but also for their presumed
expertise in the laws that they are entrusted to enforce. Findings of administrative agencies are accorded not
only respect but also finality when the decision and order are not tainted with unfairness or arbitrariness that
would amount to grave abuse of discretion. It is only when the COA has acted without or in excess of
jurisdiction, or with grave abuse of discretion amounting to lack or excess of jurisdiction, that this Court
entertains a petition questioning its rulings. There is grave abuse of discretion when there is an evasion of a
positive duty or a virtual refusal to perform a duty enjoined by law or to act in contemplation of law as when the
judgment rendered is not based on law and evidence but on caprice, whim and despotism.49

We find that no grave abuse of discretion amounting to lack or excess of jurisdiction may be attributed to the
Commission on Audit in this case.
II

Position of the parties

Petitioner Maritime Industry Authority argues that the allowances and incentives granted to its officers and
employees are not integrated in the standardized salary.50 It relies on the last clause of the first sentence of
Section 12 of Republic Act No. 6758:51chanroblesvirtuallawlibrary
Section 12. Consolidation of Allowances and Compensation. - All 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 service 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 only as of July 1, 1989 not integrated
into the standardized salary rates shall continue to be authorized.

Existing additional compensation of any national government official or employee paid from local funds of a
local government unit shall be absorbed into the basic salary of said official or employee and shall be paid by
the National Government. (Emphasis supplied)

Petitioner Maritime Industry Authority understands the clause as requiring a subsequent issuance by the
Department of Budget and Management so that other allowances or benefits not specifically enumerated in the
provision will be excluded. It insists that a circular must be issued by the Department of Budget and
Management for a specific allowance to be deemed integrated in the standardized salary pursuant to Section 12
of Republic Act No. 6758.

Since the National Compensation Circular No. 59, the circular issued by the Department of Budget and
Management implementing Section 12, was not published, there can be no allowance deemed integrated in the
standardized salary rates.52 It relies on Philippine Ports Authority hired after July 1, 1989 v. Commission on
Audit53 where this court held the following:chanRoblesvirtualLawlibrary
However, because of its lack of publication in either the Official Gazette or in a newspaper of general
circulation, DBM-CCC No. 10 was declared ineffective on August 12, 1998, in De Jesus v. COA, which we
quote:chanRoblesvirtualLawlibrary
In the present case under scrutiny, it is decisively clear that D[B]M-CCC No. 10, which completely disallows
payment of allowances and other additional compensation to government officials and employees, starting
November 1, 1989, is not a mere interpretative or internal regulation. It is something more than that. And why
not, when it tends to deprive government workers of their allowances and additional compensation sorely
needed to keep body and soul together. At the very least, before the said circular under attack may be permitted
to substantially reduce their income, the government officials and employees concerned should be apprised and
alerted by the publication of the subject circular in the Official Gazette or in a newspaper of general circulation
in the Philippines – to the end that they be given amplest opportunity to voice out whatever opposition they may
have, and to ventilate their stance on the subject matter. This approach is more in keeping with democratic
precepts and rudiments of fairness and transparency.cralawred
In other words, during the period that DBM-CCC No. 10 was in legal limbo, the COLA and the amelioration
allowance were not effectively integrated into the standardized salaries.

Hence, it would be incorrect to contend that because those allowances were not effectively integrated under the
first sentence, then they were “non-integrated benefits” falling under the second sentence of Section 12 of RA
6758. Their characterization must be deemed to have also been in legal limbo, pending the effectivity of DBM-
CCC No. 10. Consequently, contrary to the ruling of the COA, the second sentence does not apply to the
present case. By the same token, the policy embodied in the provision — the non-diminution of benefits in
favour of incumbents as of July 1, 1989 — is also inapplicable.

The parties fail to cite any law barring the continuation of the grant of the COLA and the amelioration
allowance during the period when DBM-CCC No. 10 was in legal limbo.54

On the other hand, respondent Commission on Audit interprets Section 12 of Republic Act No. 6758
differently. It considers all allowances as deemed included in the standardized salary except those specifically
enumerated in Section 12 of Republic Act No. 6758.55 The issuance of a circular by the Department of Budget
and Management is necessary only for the grant of allowance other than those enumerated under Section 12 of
Republic Act No. 6758 in addition to the standardized salary.56 Respondent Commission on Audit relies on PPA
Employees Hired After 01 July 1989 v. COA57 and NAPOCOR Employees Consolidated Union v. National
Power Corporation.58chanroblesvirtuallawlibrary

In PPA Employees Hired After 01 July 1989 v. COA, et al., 59 this court held that the Department of Budget and
Management’s issuance is only for the purpose of identifying additional non-integrated benefits, over and above
the standardized salary rates.

Then in NAPOCOR Employees Consolidated Union v. National Power Corporation,60 this court
stated:chanRoblesvirtualLawlibrary
Section 12 of Rep. Act No. 6758 lays down the general rule that all allowances of state workers are to be
included in their standardized salary rates. Exempted from integration to the standardized salary rates, as
specified in the aforequoted provision of Section 12 of Rep. Act No. 6758, are only the following
allowances:chanRoblesvirtualLawlibrary
(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 herein as may be determined by the
DBM.

Otherwise stated, the foregoing are the only allowances which government employees can continue to receive in
addition to their standardized salary rates. The employee welfare allowance of NPC personnel is clearly not
among the allowances listed above which State workers can continue to receive under Rep. Act No. 6758 over
and above their standardized salary rates. We must emphasize that Rep. Act No. 6758 does not require that
DBM should first define those allowances that are to be integrated with the standardized salary rates of
government employees before NPC could integrate the employee welfare allowance into its employees’
salaries. Thus, despite our ruling in De Jesus which thwarted the attempt of DBM in DBM-CCC No. 10 to
complete the list of allowances exempted from integration, NPC is allowed under Rep. Act No. 6758 to
integrate employee welfare allowance into the employees’ standardized salary rates.61

Respondent Commission on Audit argues that the alleged lack of publication of National Compensation
Circular No. 59 does not affect the integration of allowances into the standardized salary.62 Section 12 of
Republic Act No. 6758 is in itself executory in that allowances and benefits are deemed integrated in the
standardized salary except those specifically exempted.

Further, the nature of the allowances and incentives in this case is not similar to that of the enumerated
exceptions in Section 12 of Republic Act No. 6758.63 As held in Bureau of Fisheries and Aquatic Resources
Employees Union v. Commission on Audit,64 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.”65chanroblesvirtuallawlibrary

Finally, respondent Commission on Audit points out that there is no law that authorizes the grant of the
allowances and incentives in addition to the salaries of the officers and employees of petitioner Maritime
Industry Authority.66chanroblesvirtuallawlibrary

Respondent Commission on Audit points out that the alleged approval of the President was contained in a mere
photocopy of the memorandum dated February 10, 2000. It purportedly bears the approval and signature of the
President for the grant of the allowances and incentives.67 The original was not presented during the
proceedings.
III

The concept of integration of allowances

The consolidation of allowances in the standardized salary in Section 12 of Republic Act No. 6758 is a new rule
in the Philippine position classification and compensation system. The previous laws68 on standardization of
compensation of government officials and employees do not have this provision.

Presidential Decree No. 985,69 as amended by Presidential Decree No. 1597,70 the law prior to Republic Act No.
6758, repealed all laws, decrees, executive orders, and other issuances or parts thereof that authorize the grant
of allowances of certain positions and employees.71 Under Presidential Decree No. 985, allowances, honoraria,
and other fringe benefits may only be granted to government employees upon approval of the President with the
recommendation of the Commissioner of the Budget Commission.72chanroblesvirtuallawlibrary

Being a new rule, Section 12 of Republic Act No. 6758 raised several questions among government employees.
Petitions were filed before this court involving the Commission on Audit’s disallowance of the grant of
allowances and incentives to government employees. This court already settled the issues and matters raised by
petitioner Maritime Industry Authority.

The clear policy of Section 12 is “to standardize salary rates among government personnel and do away with
multiple allowances and other incentive packages and the resulting differences in compensation among
them.”73 Thus, the general rule is that all allowances are deemed included in the standardized salary.74 However,
there are allowances that may be given in addition to the standardized salary. These non-integrated allowances
are specifically identified in Section 12, to wit:chanRoblesvirtualLawlibrary
1. representation and transportation allowances;
2. clothing and laundry allowances;
3. subsistence allowance of marine officers and crew on board government vessels;
4. subsistence allowance of hospital personnel;
5. hazard pay; and
6. allowances of foreign service personnel stationed abroad.75

In addition to the non-integrated allowances specified in Section 12, the Department of Budget and
Management is delegated the authority to identify other allowances that may be given to government employees
in addition to the standardized salary.76chanroblesvirtuallawlibrary

Action by the Department of Budget and Management is not required to implement Section 12 integrating
allowances into the standardized salary.77 Rather, an issuance by the Department of Budget and Management is
required only if additional non-integrated allowances will be identified. Without this issuance from the
Department of Budget and Management, the enumerated non-integrated allowances in Section 12 remain
exclusive.78chanroblesvirtuallawlibrary

This court has repeatedly clarified the last clause of the first sentence of Section 12: “and such other additional
compensation not otherwise specified herein as may be determined by the DBM.”

In Abellanosa v. Commission on Audit,79 this court held that:chanRoblesvirtualLawlibrary

R.A. 6758 further reinforced this policy by expressly decreeing that all allowances not specifically mentioned
therein, or as may be determined by the DBM, shall be deemed included in the standardized salary rates
prescribed.80

In Napocor Employees Consolidation Union v. The National Power Corporation,81 this court held that Section
12 of Republic Act No. 6758 is self-executing. It is not required that allowances must be listed for these to be
considered integrated in the standardized salary. This court said:chanRoblesvirtualLawlibrary
Otherwise stated, the foregoing are the only allowances which government employees can continue to receive in
addition to their standardized salary rates. The employee welfare allowance of NPC personnel is clearly not
among the allowances listed above which State workers can continue to receive under Rep. Act No. 6758 over
and above their standardized salary rates. We must emphasize that Rep. Act No. 6758 does not require that
DBM should first define those allowances that are to be integrated in the standardized salary rates of
government employees before NPC could integrate the employee welfare allowance into its employees'
salaries. Thus, despite our ruling in De Jesus which thwarted the attempt of DBM-CCC No. 10 to complete the
list of allowances exempted from integration, NPC is allowed under Rep. Act No. 6758 to integrate the
employee welfare allowance into the employees' standardized salary rates.82 (Emphasis supplied)
In Benguet State University v. Commission on Audit,83 this court held that the rice subsidy and health care
allowance “were not among the allowances listed in Section 12 which State workers can continue to receive
under R.A. No. 6758 over and above their standardized salary rates.”84chanroblesvirtuallawlibrary

We cannot subscribe to petitioner Maritime Industry Authority’s contention that due to the non-publication of
the Department of Budget and Management’s National Compensation Circular No. 59, it is considered invalid
that results in the non-integration of allowances in the standardized salary.

The Department of Budget and Management’s National Compensation Circular No. 59 issued on September 30,
1989 enumerates the allowances/additional compensation of government employees that are deemed integrated
into the basic salary. It does not identify an allowance that should not be deemed as integrated in the basic
salary of government employees.

As held in Philippine International Trading Corporation v. Commission on Audit,85 the non-publication of the
Department of Budget and Management’s issuance enumerating allowances that are deemed integrated in the
standardized salary will not affect the execution of Section 12 of Republic Act No. 6758.
Thus:chanRoblesvirtualLawlibrary
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.86

In Gutierrez v. Department of Budget and Management,87 this court held that:chanRoblesvirtualLawlibrary

“all allowances” were deemed integrated into the standardized salary rates except the
following:chanRoblesvirtualLawlibrary
(1) representation and transportation allowances;
(2) clothing and laundry allowances;
(3) subsistence allowances of marine officers and crew on board government vessels;
(4) subsistence allowances of hospital personnel;
(5) hazard pay;
(6) allowances 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.cralawred
But, while the provision enumerated certain exclusions, it also authorized the DBM to identify such other
additional compensation that may be granted over and above the standardized salary rates. In Philippine Ports
Authority Employees Hired After July 1, 1989 v. Commission on Audit, the Court has ruled that while Section
12 could be considered self-executing in regard to items (1) to (6), it was not so in regard to item (7). The DBM
still needed to amplify item (7) since one cannot simply assume what other allowances were excluded from the
standardized salary rates. It was only upon the issuance and effectivity of the corresponding implementing rules
and regulations that item (7) could be deemed legally completed.
....

In this case, the DBM promulgated NCC 59 [and CCC 10]. But, instead of identifying some of the additional
exclusions that Section 12 of R.A. 6758 permits it to make, the DBM made a list of what allowances and
benefits are deemed integrated into the standardized salary rates. More specifically, NCC 59 identified the
following allowances/additional compensation that are deemed integrated:chanRoblesvirtualLawlibrary

....

The drawing up of the above list is consistent with Section 12 above. R.A. 6758 did not prohibit the DBM from
identifying for the purpose of implementation what fell into the class of “all allowances.” With respect to what
employees’ benefits fell outside the term apart from those that the law specified, the DBM, said this Court in a
case, needed to promulgate rules and regulations identifying those excluded benefits. This leads to the
inevitable conclusion that until and unless the DBM issues such rules and regulations, the enumerated
exclusions in items (1) to (6) remain exclusive. Thus so, not being an enumerated exclusion, COLA is deemed
already incorporated in the standardized salary rates of government employees under the general rule of
integration.88

Petitioner Maritime Industry Authority’s reliance on Philippine Ports Authority Employees Hired After July 1,
1989 v. Commission on Audit is misplaced. As this court clarified in Napocor Employees Consolidated Union v.
National Power Corporation,89 the ruling in Philippine Ports Authority Employees Hired After July 1, 1989
was limited to distinguishing the benefits that may be received by government employees who were hired
before and after the effectivity of Republic Act No. 6758. Thus:chanRoblesvirtualLawlibrary
[t]he Court has, to be sure, taken stock of its recent ruling in Philippine Ports Authority (PPA) Employees Hired
After July 1, 1989 vs. Commission on Audit. Sadly, however, our pronouncement therein is not on all fours
applicable owing to the differing factual milieu. There, the Commission on Audit allowed the payment of back
cost of living allowance (COLA) and amelioration allowance previously withheld from PPA employees
pursuant to the heretofore ineffective DBM – CCC No. 10, but limited the back payment only to incumbents as
of July 1, 1989 who were already then receiving both allowances. COA considered the COLA and amelioration
allowance of PPA employees as “not integrated” within the purview of the second sentence of Section 12 of
Rep. Act No. 6758, which, according to COA confines the payment of “not integrated” benefits only to July 1,
1989 incumbents already enjoying the allowances.

In setting aside COA’s ruling, we held in PPA Employees that there was no basis to use the elements of
incumbency and prior receipt as standards to discriminate against the petitioners therein. For, DBM-CCC No.
10, upon which the incumbency and prior receipt requirements are contextually predicated, was in legal limbo
from July 1, 1989 (effective date of the unpublished DBM-CCC No. 10) to March 16, 1999 (date of effectivity
of the heretofore unpublished DBM circular). And being in legal limbo, the benefits otherwise covered by the
circular, if properly published, were likewise in legal limbo as they cannot be classified either as effectively
integrated or not integrated benefits.90

Similar to what was stated in Napocor Employees Consolidated Union, the “element of discrimination between
incumbents as of July 1, 1989 and those joining the force thereafter is not obtaining in this case.” The second
sentence of the first paragraph of Section 12, Republic Act No. 6758 is not in issue.
V

Additional allowances that

may be identified and granted
to government employees

Other than those specifically enumerated in Section 12, non-integrated allowances, incentives, or benefits, may
still be identified and granted to government employees. This is categorically allowed in Republic Act No.
6758. This is also in line with the President’s power of control over executive departments, bureaus, and offices.

These allowances, however, cannot be granted indiscriminately. Otherwise, the purpose and mandate of
Republic Act No. 6758 will be defeated.

Republic Act No. 6758 was enacted to promote “the policy of the State to provide equal pay for substantially
equal work and to base differences in pay upon substantive differences in duties and responsibilities, and
qualification requirements of the positions.”91 The law lists down the factors that should guide the Department
of Budget and Management in preparing the index of occupational services, to wit:chanRoblesvirtualLawlibrary
1. the education and excellence required to perform the duties and responsibilities of the position;
2. the nature and complexity of the work to be performed;
3. the kind of supervision received;
4. mental and/or physical strain required in the completion of the work;
5. nature and extent of internal and external relationships;
6. kind of supervision exercised;
7. decision-making responsibility;
8. responsibility for accuracy of records and reports;
9. accountability for funds, properties, and equipment; and
10. hardship, hazard, and personal risk involved in the job.92

The factors to determine the salary grades corresponding to each position of a government employee do not take
into consideration the peculiar characteristics of each government office where performance of the same work
may entail different necessary expenses for the employee. For instance, some employees in the Bureau of
Customs may require expenses pertaining to security to properly execute their duties as compared to employees
in the Department of Trade and Industry. Republic Act No. 6758 recognizes this when it allowed certain
allowances in addition to the standardized salary due to the nature of the office. Section 12 of the law excludes
from the standardized salary allowances to be given to marine officers and crew on board government vessels
and hospital personnel, and foreign service personnel stationed abroad.93chanroblesvirtuallawlibrary

Thus, it must be shown that additional non-integrated allowances are given to government employees of certain
offices due to the unique nature of the office and of the work performed by the employee.

Further, the non-integrated allowances that may be granted in addition to those specifically enumerated in
Section 12 of Republic Act No. 6758 should be in the nature similar to those enumerated in the provision, that
is, they are amounts needed by the employee in the performance of his or her
duties.94chanroblesvirtuallawlibrary
[T]he 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.

....

In Philippine Ports Authority v. Commission on Audit, we explained that if these allowances were consolidated
with the standardized salary rates, then government officials or employees would be compelled to spend their
personal funds in attending to their duties.95

In National Tobacco Administration v. Commission on Audit,96 this court held that educational assistance is not
an allowance that may be granted in addition to the standardized salary.
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 - that the enumerated fringe benefits are in the nature of allowance - finds support in sub-
paragraphs 5.4 and 5.5 of CCC No. 10.

Sub-paragraph 5.4 enumerates the allowance/fringe benefits which are not integrated into the basic salary and
which may be continued after June 30, 1989 subject to the condition that the grant of such benefit is covered by
statutory authority, to wit:chanRoblesvirtualLawlibrary

(1) RATA;
(2) Uniform and Clothing allowances;
(3) Hazard pay;
(4) Honoraria/additional compensation for employees on detail with special projects or inter-agency
undertakings;
(5) Honoraria for services rendered by researchers, experts and specialists who are of acknowledged authorities
in their fields of specialization;
(6) Honoraria for lectures and resource persons or speakers;
(7) Overtime pay in accordance to Memorandum Order No. 228;
(8) Clothing/laundry allowances and subsistence allowance of marine officers and crew on board GOCCs/GFIs
owned vessels and used in their operations, and of hospital personnel who attend directly to patients and who by
nature of their duties are required to wear uniforms;
(9) Quarters Allowance of officials and employees who are presently entitled to the same;
(10) Overseas, Living Quarters and other allowances presently authorized for personnel stationed abroad;
(11) Night differential of personnel on night duty;
(12) Per Diems of members of the governing Boards of GOCCs/GFIs at the rate as prescribed in their respective
Charters;
(13) Flying pay of personnel undertaking aerial flights;
(14) Per Diems/Allowances of Chairman and Members or Staff of collegial bodies and Committees; and
(15) Per Diems/Allowances of officials and employees on official foreign and local travel outside of their
official station.

In addition, sub-paragraph 5.5 of the same Implementing Rules provides for the other allowances/fringe benefits
not likewise integrated into the basic salary and allowed to be continued only for incumbents as of June 30,
1989 subject to the condition that the grant of the same is with appropriate authorization either from the DBM,
Office of the President or legislative issuances, as follows:chanRoblesvirtualLawlibrary

(1) Rice Subsidy;

(2) Sugar Subsidy;
(3) Death Benefits other than those granted by the GSIS;
(4) Medical/Dental/Optical Allowances/Benefits;
(5) Children’s Allowances;
(6) Special Duty Pay/Allowance;
(7) Meal Subsidy;
(8) Longevity Pay; and
(9) Teller’s Allowance.

On the other hand, the challenged financial incentive is awarded by the government in order to encourage the
beneficiaries to pursue further studies and to help them underwrite the expenses for the education of their
children and dependents. In other words, subject benefit is in the nature of financial assistance and not of
an allowance. For the former, reimbursement is not necessary while for the latter, reimbursement is required.
Not only that, the former is basically an incentive wage which is defined as “a bonus or other payment made to
employees in addition to guaranteed hourly wages” while the latter cannot be reckoned with as a bonus or
additional income, strictly speaking.

It is indeed decisively clear that the benefits mentioned in the first sentence of Section 12 and sub-paragraphs
5.4 and 5.5 of CCC No. 10 are entirely different from the benefit in dispute, denominated as Educational
Assistance. The distinction elucidated upon is material in arriving at the correct interpretation of the two
seemingly contradictory provisions of Section 12.

Cardinal is the rule in statutory construction “that the particular words, clauses and phrases should not be
studied as detached and isolated expressions, but the whole and every part of the statute must be considered in
fixing the meaning of any of its parts and in order to produce a harmonious whole. A statute must so construed
as to harmonize and give effect to all its provisions whenever possible.” And the rule - that statute must be
construed as a whole - requires that apparently conflicting provisions should be reconciled and harmonized, if at
all possible. It is likewise a basic precept in statutory construction that the intent of the legislature is
the controlling factor in the interpretation of the subject statute. With these rules and the foregoing distinction
elaborated upon, it is evident that the two seemingly irreconcilable propositions are susceptible to perfect
harmony. Accordingly, the Court concludes that under the aforesaid “catch-all proviso,” the legislative intent is
just to include the fringe benefits which are in the nature of allowances and since the benefit under controversy
is not in the same category, it is safe to hold that subject educational assistance is not one of the fringe benefits
within the contemplation of the first sentence of Section 12 but rather, of the second sentence of Section 12, in
relation to Section 17 of R.A. No. 6758, considering that (1) the recipients were incumbents when R.A. No.
6758 took effect on July 1, 1989, (2) were, in fact, receiving the same, at the time, and (3) such additional
compensation is distinct and separate from the specific allowances above-listed, as the former is not integrated
into the standardized salary rate. Simply stated, the challenged benefit is covered by the second sentence of
Section 12 of R.A. No. 6758, the application of sub-paragraphs 5.4 and 5.5 of CCC No. 10 being only confined
to the first sentence of Section 12, particularly the last clause thereof which amplifies the “catch-all
proviso.”97 (Citations omitted)

In Bureau of Fisheries and Aquatic Resources Employees Union v. Commission on Audit,98 this court affirmed
the disallowance of the grant of the food basket allowance in the amount of P10,000.00 to employees of the
Bureau of Fisheries and Aquatic Resources. This court held:chanRoblesvirtualLawlibrary
In the instant case, the Food Basket Allowance is definitely not in the nature of an allowance to reimburse
expenses incurred by officials and employees of the government in the performance of their official functions. It
is not payment in consideration of the fulfilment of official duty. It is a form of financial assistance to all
officials and employees of BFAR. Petitioner itself stated that the Food Basket Allowance has the purpose of
alleviating the economic condition of BFAR employees.99

VI

Who identifies and grants

Respondent Commission on Audit argues that the alleged approval by the President is not a law that would
allow the grant of allowances and benefits to the employees of petitioner Maritime Industry Authority.

Section 12 of Republic Act No. 6758 does not require the enactment of a law to exclude benefits or allowances
from the standardized salary. What is required is a determination by the Department of Budget and
Management of the non-integrated benefits or allowances. In Abakada Guro Party List v.
Purisima:100chanroblesvirtuallawlibrary
Congress has two options when enacting legislation to define national policy within the broad horizons of its
legislative competence. It can itself formulate the details or it can assign to the executive branch the
responsibility for making necessary marginal decisions in conformity with those standards. In the latter case, the
law must be complete in all its essential terms and conditions when it leaves the hands of the legislature. Thus,
what is left for the executive branch or the concerned administrative agency when it formulates rules and
regulations implementing the law is to fill up details (supplementary rule-making) or ascertain facts necessary
to bring the law into actual operation (contingent rule-making).101 (Citations omitted)

The law delegated to the executive branch the filling in of other allowances and benefits that should be excluded
from the standardized salary. It specifically identifies the Department of Budget and Management to carry out
the task. However, this does not exclude the President from identifying the excluded allowances or benefits
himself, the Secretary of the Department of Budget and Management being an alter ego of the President. Of
course, the performance of this task must still be in accordance with the parameters laid down in Republic Act
No. 6758.102 As this court held in Chavez v. Romulo:103chanroblesvirtuallawlibrary
at the apex of the entire executive officialdom is the President. Section 17, Article VII of the Constitution
specifies his power as Chief Executive, thus: “The President shall have control of all the executive
departments, bureaus and offices. He shall ensure that the laws be faithfully executed.” As Chief
Executive, President Arroyo holds the steering wheel that controls the course of her government. She lays down
policies in the execution of her plans and programs. Whatever policy she chooses, she has her subordinates to
implement them. In short, she has the power of control. Whenever a specific function is entrusted by law or
regulation to her subordinate, she may act directly or merely direct the performance of a duty. Thus,
when President Arroyo directed respondent Ebdane to suspend the issuance of PTCFOR, she was just directing
a subordinate to perform an assigned duty. Such act is well within the prerogative of her office.104 (Emphasis in
the original)

VII

Constitutional and Fiscal

Autonomy Group

We must, however, differentiate the guidelines for the grant of allowances and benefits to officials and
employees of members of the Constitutional and Fiscal Autonomy Group. The judiciary, Civil Service
Commission, Commission on Audit, Commission on Elections, and the Office of the Ombudsman are granted
fiscal autonomy by the Constitution.105 The fiscal autonomy enjoyed by the Constitutional and Fiscal Autonomy
Group is an aspect of the members’ independence guaranteed by the Constitution.106 Their independence is a
necessary component for their existence and survival in our form of government.

In Bengzon v. Drilon,107 this court said:chanRoblesvirtualLawlibrary

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 loans 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.108

As this court held in Re: COA Opinion on the Computation of the Appraised Value of the Properties Purchased
by the Retired Chief/Associate Justices of the Supreme Court,109 “real fiscal autonomy covers the grant to the
Judiciary of the authority to use and dispose of its funds and properties at will, free from any outside control or
interference.”110 This includes the judgment to use its funds to provide additional allowances and benefits to its
officials and employees deemed to be necessary and relevant in the performance of their functions in the office.
Due to the nature of the functions of the Constitutional and Fiscal Autonomy Group and the constitutional grant
of fiscal autonomy, an issuance by the Department of Budget and Management or any other agency of the
government is not necessary to exclude an allowance or benefit from the standardized salary.

The entity entrusted by Republic Act No. 6758 to determine the benefits and allowances that are not deemed
integrated is the Department of Budget and Management. It studies the necessity and reasonableness of the
grant of the allowance and, more importantly, its practicability, that is, whether the government has enough
budget to grant the allowance. This is in line with our form of government where the “sound management and
effective utilization of financial resources of government are basically executive functions.”111 On the other
hand, the budget of the Constitutional and Fiscal Autonomy Group is constitutionally mandated to be released
regularly. How these constitutional bodies manage and utilize their budget is within their prerogative and
authority to determine. The officials of the Constitutional and Fiscal Autonomy Group can determine whether
the budget allocated and released by the government to them can deliver the allowances and benefits its
employees will receive. The executive cannot interfere with how funds will be used or disbursed without
violating the separation of powers.

Allowing the President or his or her alter ego to dictate the allowances or benefits that may be received by the
officers and employees of the Constitutional and Fiscal Autonomy Group will undermine their independence.
This arrangement is repugnant to their autonomy enshrined by the Constitution. As said in Velasco v.
Commission on Audit,112 the grant or regulation of the grant of productivity incentive allowance or similar
benefits are in the exercise of the President’s power of control over these entities. Not being under the
President’s power of control, the Constitutional and Fiscal Autonomy Group should be able to determine the
allowances or benefits that suit the functions of the office.

Nonetheless, expenditures of government funds by the Constitutional and Fiscal Autonomy Group are still
audited by the Commission on Audit on a post-audit basis.113chanroblesvirtuallawlibrary
VIII

No proof of grant of allowance

by the President or the Department
of Budget and Management

Petitioner Maritime Industry Authority relies on the alleged approval by then President Estrada of its
memorandum dated February 10, 2000. Respondent Commission on Audit counters that the original
memorandum was not presented by petitioner Maritime Industry Authority. Further, the alleged approval is not
a law authorizing the grant of additional compensation or benefits to government employees.

Article VI, Section 29 of the 1987 Constitution provides, “[n]o money shall be paid out of the Treasury except
in pursuance of an appropriation made by law.”

Further, before public funds may be disbursed for salaries and benefits to government officers and employees, it
must be shown that these are commensurate to the services rendered and necessary or relevant to the functions
of the office. “Additional allowances and benefits must be shown to be necessary or relevant to the fulfillment
of the official duties and functions of the government officers and employees.”114chanroblesvirtuallawlibrary

In Yap v. Commission on Audit,115 this court laid down two general requisites before a benefit may be granted to
government officials or employees. First is that the allowances and benefits were authorized by law and second,
that there was a direct and substantial relationship between the performance of public functions and the grant of
the disputed allowances. Thus:chanRoblesvirtualLawlibrary
[t]o reiterate, the public purpose requirement for the disbursement of public funds is a valid limitation on the
types of allowances and benefits that may be granted to public officers. It was incumbent upon petitioner to
show that his allowances and benefits were authorized by law and that there was a direct and substantial
relationship between the performance of his public functions and the grant of the disputed allowances to him.116

The burden of proving the validity or legality of the grant of allowance or benefits is with the government
agency or entity granting the allowance or benefit, or the employee claiming the same. After the Resident
Auditor issues a notice of disallowance, the aggrieved party may appeal the disallowance to the Director within
six (6) months from receipt of the decision.117 At this point, the government agency or employee has the chance
to prove the validity of the grant of allowance or benefit. If the appeal is denied, a petition for review may be
filed before the Commission on Audit Commission Proper.118 Finally, the aggrieved party may file a petition for
certiorari before this court to assail the decision of the Commission on Audit Commission
Proper.119chanroblesvirtuallawlibrary

Our laws and procedure have provided the aggrieved party several chances to prove the validity of the grant of
the allowance or benefit.

To prove the validity of the allowances granted, petitioner Maritime Industry Authority presented a photocopy
of the memorandum with an “approved” stamped on the memorandum. Below the stamp is the signature of then
President Estrada.

We cannot rule on the validity of the alleged approval by the then President Estrada of the grant of additional
allowances and benefits. Petitioner Maritime Industry Authority failed to prove its existence. The alleged
approval of the President was contained in a mere photocopy of the memorandum dated February 10, 2000. The
original was not presented during the proceedings. A copy of the document is not in the Malacañang Records
Office.
IX

The grant of allowances and

benefits amounts to double
compensationproscribed by
Article IX(B), Section 8 of
the 1987 Constitution

Article IX(B), Section 8 of the 1987 Constitution provides:chanRoblesvirtualLawlibrary

Section 8. No elective or appointive public officer or employee shall receive additional, double, or indirect
compensation, unless specifically authorized by law, nor accept without the consent of the Congress, any
present, emolument, office, or title of any kind from any foreign government.

Pensions or gratuities shall not be considered as additional, double, or indirect compensation.

Petitioner Maritime Industry Authority argues that the rule against double compensation does not apply because
National Compensation Circular No. 59 is ineffectual due to its non-publication.120chanroblesvirtuallawlibrary

Respondent Commission on Audit counters that the disallowed allowances is tantamount to additional
compensation proscribed by Article IX(B), Section 8 of the 1987 Constitution.121 This is because these
allowances are not authorized by law.

Republic Act No. 6758 deems all allowances and benefits received by government officials and employees as
incorporated in the standardized salary, unless excluded by law or an issuance by the Department of Budget and
Management. The integration of the benefits and allowances is by legal fiction.122chanroblesvirtuallawlibrary
The disallowed benefits and allowances of petitioner Maritime Industry Authority’s officials and employees
were not excluded by law or an issuance by the Department of Budget and Management. Thus, these were
deemed already given to the officials and employees when they received their basic salaries. Their receipt of the
disallowed benefits and allowances was tantamount to double compensation.
X

Petitioner Maritime Industry

Authority was not denied due
process in the disallowance of
the allowances and benefits

Petitioner Maritime Industry Authority argues that it was denied administrative due process.123 Respondent
Commission on Audit affirmed the notices of disallowance on the basis of provisions of law that are different
from the bases cited in the notices of disallowance.124chanroblesvirtuallawlibrary

Respondent Commission on Audit does not deny that other grounds were relied upon to affirm the disallowance
of the allowances given to the officers and employees of petitioner Maritime Industry Authority. However, it
argues that this is pursuant to its mandate under Article IX(D), Section 2 of the 1987 Constitution125 and is a
necessary incident of its appellate jurisdiction as provided in Rule II, Section 4 of the 1997 COA Revised Rules
of Procedure.126chanroblesvirtuallawlibrary

This court already settled that:chanRoblesvirtualLawlibrary

[the Commission on Audit] is not required to limit its review only to the grounds relied upon by a government
agency's auditor with respect to disallowing certain disbursements of public funds. In consonance with its
general audit power, respondent Commission on Audit is not merely legally permitted, but is also duty-bound to
make its own assessment of the merits of the disallowed disbursement and not simply restrict itself to reviewing
the validity of the ground relied upon by the auditor of the government agency concerned. To hold otherwise
would render COA's vital constitutional power unduly limited and thereby useless and ineffective.127

The disallowance of the grant of benefits and allowances by respondent Commission on Audit is proper. We
proceed to determine whether officers and employees of petitioner Maritime Industry Authority are liable
and/or should refund the disallowed allowances.
XII

Refund of the amounts received

and liability of approving officers

Presidential Decree No. 1445 provides for a general liability for unlawful
expenditures:chanRoblesvirtualLawlibrary
Section 103. General liability for unlawful expenditures. Expenditures of government funds or uses of
government property in violation of law or regulations shall be a personal liability of the official or employee
found to be directly responsible therefor.128

Section 19 of the Manual of Certificate of Settlement and Balances, Commission on Audit Circular No. 94-001
provides:chanRoblesvirtualLawlibrary
19.1. The liability of public officers and other persons for audit disallowances shall be determined on the basis
of: (a) the nature of the disallowance; (b) the duties, responsibilities or obligations of the officers/persons
concerned; (c) the extent of their participation or involvement in the disallowed transaction; and (d) the amount
of losses or damages suffered by the government thereby. The following are illustrative
examples:chanRoblesvirtualLawlibrary

....

19.1.3. Public officers who approve or authorize transactions involving the expenditure of government funds
and uses of government properties shall be liable for all losses arising out of their negligence or failure to
exercise the diligence of a good father of a family.

Generally, the public officer’s good faith does not excuse his or her personal liability over the unauthorized
disbursement. This court said:chanRoblesvirtualLawlibrary
Section 103 of P.D. 1445 declares that expenditures of government funds or uses of government property in
violation of law or regulations shall be a personal liability of the official or employee found to be directly
responsible therefor. The public official’s personal liability arises only if the expenditure of government funds
was made in violation of law. In this case, petitioner’s act of entering into a contract on behalf of the local
government unit without the requisite authority therefor was in violation of the Local Government Code. While
petitioner may have relied on the opinion of the City Legal Officer, such reliance only serves to buttress his
good faith. It does not, however, exculpate him from his personal liability under P.D. 1445.129

However, with regard to the disallowance of salaries, emoluments, benefits, and allowances of government
employees, prevailing jurisprudence130 provides that recipients or payees need not refund these disallowed
amounts when they received these in good faith.131 Government officials and employees who received benefits
or allowances, which were disallowed, may keep the amounts received if there is no finding of bad faith and the
disbursement was made in good faith.132chanroblesvirtuallawlibrary

On the other hand, officers who participated in the approval of the disallowed allowances or benefits are
required to refund only the amounts received when they are found to be in bad faith or grossly negligent
amounting to bad faith.133chanroblesvirtuallawlibrary

In Philippine Economic Zone Authority v. Commission on Audit,134 this court defined good faith relative to the
requirement of refund of disallowed benefits or allowances.
In common usage, the term “good faith” is ordinarily used to describe that state of mind denoting “honesty of
intention, and freedom from knowledge of circumstances which ought to put the holder upon inquiry; an honest
intention to abstain from taking any unconscientious advantage of another, even through technicalities of law,
together with absence of all information, notice, or benefit or belief of facts which render transaction
unconscientious.”135

The assailed notices of disallowance enumerate the following persons as liable for the disallowed
disbursements:chanRoblesvirtualLawlibrary
Elenita Delgado – Approving Officer136
Oscar Sevilla- Approving Officer 137
Yolanda Quiñones – Chief Accountant138
Agrifina Lacson – Certifying Officer139
Erlinda Baltazar - Cashier140
Myrna Colag – Alternative Approving Officer141
Miriam Dimayuga – Alternate Approving Officer142

The recipients of the disallowed allowances under the assailed notices of disallowance are the
following:chanRoblesvirtualLawlibrary
Payee Position Amount Allowance/Benefit
Disallowed Disallowed
Notice of Disallowance No. 2002-002-101(01)143
Erlinda Baltazar Cashier 550,000.00 Rice and Medical
Oscar Sevilla Administrator 5,000.00 Allowance and
Allowances of Board
Pedro Mendoza Director 5,700.00
Members and Secretary
Marietto Enecio Director 5,700.00 (net of allowable
Juan Peña Director 5,700.00 allowance of P500.00/mo
pursuant to Sec. 7 of P.D.
Gloria Bañas [not indicated in rollo] 3,000.00
474) for January 2001.
G. Mendoza Director 5,700.00
Ruben Ciron Director 5,700.00
Notice of Disallowance No. 2002-005-101(01)144
Oscar Sevilla Administrator 5,000.00 Rice and Medical
Pedro Mendoza Director 5,700.00 Allowance, Representation
Allowance of Board
Marietto Enecio Director 5,700.00
Members and Secretary
Alfonso Cusi Director 5,700.00 (net of allowable
Ruben Ciron Director 5,700.00 allowance of P500.00/mo
pursuant to Sec. 7 of P.D.
Gloria Bañas [not indicated in rollo] 3,000.00
474) for February 2001.
Notice of Disallowance No. 2002-006-101(01)145
Erlinda Baltazar Cashier 565,400.00 Rice and Medical
Allowance
Chona [illegible] [not indicated in rollo] 1,591.50 Performance Incentive
[illegible] [not indicated in rollo] 2,508.25 Allowance for Feb. 2001

Erlinda Baltazar Cashier 139,000.00 Birthday and Employment

Anniversary Bonus for
February 2001
Erlinda Baltazar Cashier 835,376.33 Performance Incentive
Allowance for March 2001
Jovino G. Tamayo [not indicated in rollo] 5,000.00 Employment
Anniversary Bonus
Oscar M. Sevilla Administrator 5,000.00 Representation Allowance
Jose T. Tale Director 5,700.00 of Board Members and
Secretary (net of allowable
Pedro V. Mendoza Director 5,700.00
allowance of P500.00/mo
Marietto A. Enecio Director 5,700.00 pursuant to Sec. 7 of P.D.
Ruben Ciron Director 5,700.00 474) for March 2001.
Alfonso Cusi Director 5,700.00
Gloria Bañas [not indicated in rollo] 3,000.00
146
Notice of Disallowance No. 2002-007-101(01)
Erlinda Baltazar Cashier 561,000.00 Rice and Medical
Allowance for April 2001
Renita Bautista [not indicated in rollo] 30,800.00 Rice/Med for March 2001
Chona Verceles [not indicated in rollo] 2,200.00 Rice/Med for March 2001
Alfonso Rulloda [not indicated in rollo] 4,698.00 Performance Incentive
Allowance for Feb. 2001
Renita Bautista [not indicated in rollo] 15,400.00 Rice[/][M]ed for April
2001
Erlinda Baltazar Cashier 893,910.14 Performance Incentive
Allowance for April 2001
Erlinda Baltazar Cashier 186,000.00 Birthday and Employment
Anniversary Bonus for
April 2001
Notice of Disallowance No. 2002-008-101(01)147
Erlinda Baltazar Cashier 552,200.00 Rice and Medical
Allowance for May 2001
Renita Bautista [not indicated in rollo] 30,669.50 Performance Incentive
Allowance for April 2001
Liberato [illegible] [not indicated in rollo] 2,200.00 Rice/Med for April 2001
Emperatriz Aquino [not indicated in rollo] 1,098.75 Performance Incentive
Allowance for Feb. 2001
Alfonso Rulloda [not indicated in rollo] 4,698.00 Performance Incentive
Allowance for March 2001
Chona Verceles [not indicated in rollo] 1,591.50 Performance Incentive
Allowance for March 2001
Emperatriz Aquino [not indicated in rollo] 2,232.75 Performance Incentive
Allowance for March 2001
Jesus Manongdo [not indicated in rollo] 2,200.00 Rice[/][M]ed for May
2001
Erlinda Baltazar Cashier 124,000.00 Birthday and Employment
Anniversary Bonus
for May 2001
Roberto [illegible] [not indicated in rollo] 3,000.00 Anniversary Allowance
Renita Bautista [not indicated in rollo] 11,600.00 Rice/Med for May 2001
Erlinda Baltazar Cashier 877,270.30 Performance Incentive
Allowance for May 2001
Feliciano Tira, Jr. [not indicated in rollo] 4,400.00 Rice/Med For April and
May 2001

The records do not show the reason why Erlinda Baltazar, petitioner Maritime Industry Authority’s cashier,
received high amounts for the allowances as shown in the notices of disallowance.

The amount given to Erlinda Baltazar is exorbitant especially when contrasted with the other officers and
employees of petitioner Maritime Industry Authority receiving the same allowance. The disparity in the
amounts given to Erlinda Baltazar compared to the other officers and employees is too substantial to consider
her and the approving officers to be in good faith when Erlinda Baltazar received the amounts. Thus, Erlinda
Baltazar and the approving officers are solidarily liable to refund all amounts received by Erlinda Baltazar
based on what was disallowed by respondent Commission on Audit. This solidary liability is in accordance with
Book VI, Chapter V, Section 43 of the Administrative Code, which provides:chanRoblesvirtualLawlibrary
Liability for Illegal Expenditures. – Every expenditure or obligation authorized or incurred in violation of the
provisions of this Code or of the general and special provisions contained in the annual General or other
Appropriations Act shall be void. Every payment made in violation of said provisions shall be illegal and every
official or employee authorizing or making such payment, or taking part therein, and every person receiving
such payment shall be jointly and severally liable to the Government for the full amount so paid or received.

The amount Erlinda Baltazar received as allowance for one month should have alerted her and the approving
officers on the validity and legality of the grant of the allowance. Good faith dictates that the approving officers
deny the grant and Erlinda Baltazar refrain from receiving the amount that is clearly and on its face invalid.
Erlinda Baltazar and the approving officers’ positions dictate that they are familiar and knowledgeable of the
usual amounts allowed for allowances and benefits.

As to the directors, officers, and other employees of petitioner Maritime Industry Authority who received the
disallowed benefits, they are presumed to have acted in good faith when they allowed and/or received
them.148chanroblesvirtuallawlibrary

Respondent Commission on Audit failed to show bad faith on the part of the approving officers in disbursing
the disallowed benefits and allowances. Further, the officers of petitioner Maritime Industry Authority relied on
the alleged approval of the President of the Philippines in granting the benefits and allowances.

Respondent Commission on Audit said that there were “exchanges of communications between the auditor and
Atty. Oscar M. Sevilla, [Maritime Industry Authority]’s Administrator, pointing out to the latter, in letter of
April 4, 2001, that continuous grant of the allowances in question would not only contradict the provisions of
Administrative Order no. 5 issued by the Office of the President and Budget Circular No. 2001-1 but would
likewise negate the objective of generating savings.”

However, the checks for the disallowed benefits and allowances were issued prior to April 4, 2001. It does not
appear that petitioner Maritime Industry Authority’s directors and officers were informed prior to the
disbursement of the amounts disallowed that these allowances and benefits were in violation of existing law,
and rules and regulations.

WHEREFORE, the decision of respondent Commission on Audit dated March 3, 2005 and resolution dated
December 9, 2008 are AFFIRMED with MODIFICATION. The approving officers and Erlinda Baltazar are
solidarily liable to refund the disallowed amounts received by Erlinda Baltazar. The other payees need not
refund the amounts received.

SO ORDERED.

Sereno, C.J., Carpio, Velasco, Jr., Leonardo-De Castro, Peralta, Bersamin, Del Castillo, Villarama, Jr., Perez,
Mendoza, Reyes, Perlas-Bernabe, Leonen, and Jardeleza, JJ.
Brion,* J., left his vote, see his concurring opinion.
G.R. No. 208261 December 8, 2014
PHILIPPINE AMUSEMENT AND GAMING CORPORATION, Petitioner,
vs.
LORENIA P. DE GUZMAN, Respondent.
DECISION
PERLAS-BERNABE, J.:
Assailed in this petition for review on certiorari1 filed by petitioner Philippine Amusement and Gaming
Corporation (PAGCOR) are the Decision2 dated March 8, 2013 and the Resolution3 dated July 9, 2013 of the
Court of Appeals (CA) in CA-G.R. SP No. 123506, which affirmed the Decision4 dated September 21, 2011
and the Resolution5 dated February 1, 2012 of the Civil Service Commission (CSC) dismissing the
administrative disciplinary case against respondent Lorenia P. De Guzman (De Guzman), without prejudice to
its re-filing.
The Facts
On December 7, 2001, PAGCOR hired De Guzman as an Evaluation Specialist and assigned her to the Property
and Procurement Department.6 At the time of her employment, De Guzman accomplished a Personal History
Statement (PHS),7 which requires an attestation8 from the employee that the information stated therein are true
and correct to the best of her knowledge and belief, and agreed that any misdeclaration or omission would be
sufficient ground for denial of her application, clearance, or cause for separation. In her PHS, De Guzman
indicated that she had no relatives currently employed with PAGCOR and did not disclose that she has a sister
named Adelina P. See (Adelina).9 In 2008, De Guzman updated her PHS,10 reiterating her statement that she
had no relatives working with PAGCOR,11 but this time, listed Adelina as one of her siblings.12
It was later found out, however, that De Guzman had a nephew named Gerwin P. See, her sister Adelina’s son,
who worked in PAGCOR from July 26, 2001 until his resignation on September 22, 2005.13
Upon discovery of De Guzman’s alleged deceit, Atty. Albert R. Sordan (Atty. Sordan) of PAGCOR’s Corporate
Investigation Unit sent De Guzman a Notice of Charges14 dated August 12, 2010 (Formal Charge) charging her
of "Deception or Fraud in Securing Employee’s Appointment or Promotion" and directed her to show cause
why she should not be subjected to any disciplinary action. In her reply-letter15 dated August 16, 2010, De
Guzman, among other things, maintained that she updated her PHS with all honesty and to the best of her
knowledge. In a Memorandum16 dated November 5, 2010 (Assailed Memorandum) signed by Michael J.
Bailey, Officer-In-Charge of PAGCOR’s Human Resource and Development Department (HRDD-OIC Bailey),
De Guzman was found administratively liable for the charges filed against her and was, thus, dismissed.
De Guzman received a copy of the Assailed Memorandum on November 6, 2010 and appealed her dismissal
before the CSC on December 10, 2010.17 PAGCOR opposed the appeal for having been belatedly filed.18
The CSC Ruling
In a Decision19 dated September 21, 2011, the CSC ruled in favor of De Guzman and dismissed the
administrative disciplinary case against her, without prejudice to its re-filing.20 Despite its finding that De
Guzman indeed filed her appeal 19 days beyond the expiration of the 15-day reglementary period, the CSC
nevertheless took cognizance of the same, holding that technical rules of procedure are not strictly applied in
administrative proceedings, as in this case.21
The CSC found that the Formal Charge and the Assailed Memorandum were not issued by the proper
disciplinary authority – PAGCOR in this case – but merely by its employees, namely Atty. Sordan and HRDD-
OIC Bailey, respectively. As such, no Formal Charge was validly filed against De Guzman, resulting in the
violation of her right to due process.22 Consequently, the CSC ordered PAGCOR to reinstate De Guzman to her
position and to pay her back salaries from date of dismissal to actual reinstatement.23
PAGCOR moved for reconsideration, which was, however, denied in a Resolution24 dated February 1, 2012.
Aggrieved, it appealed25 to the CA.
The CA Ruling
In a Decision26 dated March 8, 2013, the CA affirmed the CSC ruling.27 It held that the CSC correctly relaxed
its procedural rules in giving due course to De Guzman’s appeal, opining that administrative bodies exercising
quasi-judicial powers, suchas the CSC, are unfettered by the rigidity of technical procedural rules.28 On the
merits, the CA agreed with the CSC’s findings that De Guzman was deprived of due process as the Formal
Charge and the Assailed Memorandum against her were not issued by PAGCOR, but merely by its employees
without any authorization. Hence, the dismissal of the case without prejudice.29
Undaunted, PAGCOR moved for reconsideration, which was denied in a Resolution30 dated July 9, 2013,
hence, this petition.
The Issue Before the Court
The primordial issue for the Court’s resolution is whether or not the CA correctly affirmed the CSC’s dismissal
of the administrative disciplinary case against De Guzman on the ground that she was deprived of her right to
due process.
Ruling of the Court
The petition is bereft of merit.
As a general rule, an appeal is not a matter of right but a mere statutory privilege, and as such, may only be
availed in the manner provided by the law and the rules. Thus, a party who seeks to exercise the right to appeal
must comply with the requirements of the rules; otherwise, the privilege is lost.31 Therefore, an appeal must be
perfected within the reglementary period provided by law; otherwise, the decision becomes final and executory.
However, as in all cases, there are exceptions to the strict application of the rules in perfecting an appeal,32 such
as when said appeal is meritorious.33 Verily, strict implementation of the rules on appeals must give way to the
factual and legal reality that is evident from the records of the case. After all, the primary objective of the laws
is to dispense justice and equity, not the contrary.34
In light of the foregoing jurisprudence and after a judicious review of the records, the Court finds no error on
the part of the CA in affirming the CSC’s ruling giving due course to De Guzman’s appeal despite its belated
filing for being meritorious, as will be discussed hereunder.
Section 16 of the Uniform Rules on Administrative Cases in the Civil Service (URACCS) requires in
administrative disciplinary proceedings that the disciplinary authority furnish the employee concerned a formal
charge specifying the latter’s acts and/or omissions complained of, and directing him to answer the charges
stated therein, viz.:
Section 16. Formal Charge. – After a finding of a prima faciecase, the disciplining authority shall formally
charge the person complained of. The formal charge shall contain a specification of charge(s), a brief statement
of materialor relevant facts, accompanied by certified true copies of the documentary evidence, if any, sworn
statements covering the testimony of witnesses, a directive to answer the charge(s) in writing under oath in not
less than seventy-two (72) hours from receipt thereof, an advice for the respondent to indicate in his answer
whether or not he elects a formal investigation of the charge(s), and a notice that he is entitled to be assisted by
a counsel of his choice. (Emphasis and underscoring supplied)
xxxx
In the case at bar, it is undisputed that PAGCOR was the one that appointed De Guzman to her position.
Adhering to the well-settled principle that the power to remove or to discipline is lodged in the same authority
on which the power to appoint is vested,35 only PAGCOR has the power to discipline or remove De Guzman for
any transgressions she may have committed. As a corporate entity,36 PAGCOR may only act through its Board
of Directors as a collective body, which is vested with the power and responsibility to exercise all corporate
powers under the law.37 Simply put, PAGCOR is the proper disciplinary authority of PAGCOR employees, and
as such, formal charges against its employees in administrative disciplinary proceedings should emanate from it,
through its Board of Directors, as in this case.
However, in this instance, the Formal Charge, as well as the Assailed Memorandum, did not come from
PAGCOR through its Board of Directors, but merely from Atty. Sordan and HRDD-OIC Bailey, respectively.
Records are bereft of any showing that the latter were authorized by the PAGCOR Board of Directors to issue
the aforesaid documents. As such, the Formal Charge and the Assailed Memorandum are null and void.
Consequently, De Guzman’s removal from PAGCOR without a valid formal charge was done in violation of
her right to due process, warranting the dismissal of the instant administrative disciplinary case against her,
without prejudice to its re-filing, pursuant to Section 48 of the URACCS, to wit:
Section 48. When to Remand an Appealed Case to Agency of Origin. - If on appeal, the Commission finds that
the disciplining authority violated respondent-appellant's right to due process such as the failure to issue a
formal charge, the Commission shall dismiss the appealed case and order the immediate reinstatement of the
respondent with payment of back salaries and other benefits. However, the dismissal of the case shall be
without prejudice on the part of the disciplining authority to re-file it in accordance with law. (Emphases and
underscoring supplied)
xxxx
WHEREFORE, the petition is DENIED. Accordingly, the Decision dated March 8, 2013 and the Resolution
dated July 9, 2013 of the Court of Appeals in CA-G.R. SP No. 123506 are hereby AFFIRMED.
SO ORDERED.
ESTELA M. PERLAS-BERNABE
Associate Justice
WE CONCUR: