Art. 8. Judicial decisions applying or interpreting
There he appeared to have been based on "a
the laws or the Constitution shall form a part of
the legal system of the Philippines. (n)
G.R. No. 100776 October 28, 1993
ALBINO S. CO, Petitioner, vs. COURT OF APPEALS
and PEOPLE OF THE PHILIPPINES, Respondents.
Antonio P. Barredo for petitioner.chanrobles
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The Solicitor General for the people.
NARVASA, C.J.:
In connection with an agreement to salvage and
refloat asunken vessel - and in payment of his
share of the expenses of the salvage operations
therein stipulated - petitioner Albino Co delivered
to the salvaging firm on September 1, 1983 a
check drawn against the Associated Citizens'
Bank, postdated November 30, 1983 in the sum
of P361,528.00. 1 The check was deposited on
January 3, 1984. It was dishonored two days
later, the tersely-stated reason given by the bank
being: "CLOSED ACCOUNT." chanrobles virtual
law library
A criminal complaint for violation of Batas
Pambansa Bilang 22 2 was filed by the salvage
company against Albino Co with the Regional Trial
Court of Pasay City. The case eventuated in Co's
conviction of the crime charged, and his being
sentenced to suffer a term of imprisonment of
sixty (60) days and to indemnify the salvage
company in the sum of
P361,528.00.chanroblesvirtualawlibrarychanroble
s virtual law library
Co appealed to the Court of Appeals.
sought exoneration upon the theory that it was
reversible error for the Regional Trial Court to
have relied, as basis for its verdict of conviction,
on the ruling rendered on September 21, 1987 by
this Court in Que v. People, 154 SCRA 160
(1987) 3 - i.e., that a check issued merely to
guarantee the performance of an obligation is
nevertheless covered by B.P. Blg. 22. This was
because at the time of the issuance of the check
on September 1, 1983, some four (4) years prior
to the promulgation of the judgment in Que
v. People on September 21, 1987, the delivery of
a "rubber" or "bouncing" check as guarantee for
an obligation was not considered a punishable
offense, an official pronouncement made in a
Circular of the Ministry of Justice. That Circular
(No. 4), dated December 15, 1981, pertinently
provided as follows:
2.3.4. Where issuance of bouncing check is
neither estafa nor violation of B.P. Blg.
22.chanroblesvirtualawlibrarychanrobles virtual
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Where the check is issued as part of an
arrangement to guarantee or secure the payment
of an obligation, whether pre-existing or not, the
drawer is not criminally liable for either estafa or
violation of B.P. Blg. 22 (Res. No. 438, s. 1981,
Virginia Montano vs. Josefino Galvez, June 19,
1981; Res. No. 707, s. 1989; Alice Quizon vs.
Lydia Calingo, October 23, 1981, Res. No. 769, s.
1981, Alfredo Guido vs. Miguel A. Mateo, et. al.,
November 17, 1981; Res. No. 589, s. 1981,
Zenaida Lazaro vs. Maria Aquino, August 7,
1981).
This administrative circular was subsequently
reversed by another issued on August 8, 1984
(Ministry Circular No. 12) - almost one (1) year
after Albino Co had delivered the "bouncing"
check to the complainant on September 1, 1983.
Said Circular No. 12, after observing inter
alia that Circular No. 4 of December 15, 1981
misapplication of the deliberation in the Batasang
Pambansa, . . . (or) the explanatory note on the
original bill, i.e. that the intention was not to
penalize the issuance of a check to secure or
guarantee the payment of an obligation," as
follows: 4
Henceforth, conforming with the rule that an
administrative agency having interpreting
authority may reverse its administration
interpretation of a statute, but that its review
interpretation applies only prospectively
(Waterbury Savings Bank vs. Danaher, 128
Conn., 476; 20 a2d 455 (1941), in all cases
involving violation of Batas Pambansa Blg.
22 where the check in question is issued after this
date, the claim that the check is issued as a
guarantee or part of an arrangement to secure an
obligation collection will no longer be considered a
valid defense.
Co's theory was rejected by the Court of Appeals
which affirmed his conviction. Citing Senarillos
v. Hermosisima, 101 Phil. 561, the Appellate
Court opined that the Que doctrine did not
amount to the passage of new law but was
merely a construction or interpretation of a pre-
existing one, i.e., BP 22, enacted on April 3,
1979.chanroblesvirtualawlibrarychanrobles virtual
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From this adverse judgment of the Court of
Appeals, Albino Co appealed to this Court
on certiorari under Rule 45 of the Rules of Court.
By Resolution dated September 9, 1991, the
Court dismissed his appeal. Co moved for
reconsideration under date of October 2, 1991.
The Court required comment thereon by the
Office of the Solicitor General. The latter complied
and, in its comment dated December 13, 1991,
extensively argued against the merits of Albino
Co's theory on appeal, which was substantially
that proffered by him in the Court of Appeals. To
this comment, Albino Co filed a reply dated
February 14, 1992. After deliberating on the
parties' arguments and contentions, the Court
resolved, in the interests of justice, to reinstate
Albino Co's appeal and adjudicate the same on its
merits.
Judicial decisions applying or interpreting the laws
or the Constitution shall form a part of the legal
system of the Philippines," according to Article 8
of the Civil Code. "Laws shall have no retroactive
effect, unless the contrary is provided," declares
Article 4 of the same Code, a declaration that is
echoed by Article 22 of the Revised Penal Code:
"Penal laws shall have, a retroactive effect insofar
as they favor the person guilty of a felony, who is
not a habitual criminal . . . 5chanrobles virtual law
library
The principle of prospectivity of statutes, original
or amendatory, has been applied in many cases.
These include: Buyco v. PNB, 961 2 SCRA 682
(June 30, 1961), holding that Republic Act No.
1576 which divested the Philippine National Bank
of authority to accept back pay certificates in
payment of loans, does not apply to an offer of
payment made before effectivity of the
act; Largado v. Masaganda, et al., 5 SCRA 522
(June 30, 1962), ruling that RA 2613, s amended
by RA 3090 on June, 1961, granting to inferior
courts jurisdiction over guardianship cases, could
not be given retroactive effect, in the absence of
a saving clause; Larga v. Ranada, Jr., 64 SCRA
18, to the effect that Sections 9 and 10 of
Executive Order No. 90, amending Section 4 of
PD 1752, could have no retroactive
application; People v. Que Po Lay, 94 Phil. 640,
holding that a person cannot be convicted of
violating Circular No. 20 of the Central, when the
alleged violation occurred before publication of
the Circular in the Official Gazette; Baltazar
v. C.A., 104 SCRA 619, denying retroactive
application to P.D. No. 27 decreeing the
emancipation of tenants from the bondage of the
soil, and P.D. No. 316 prohibiting ejectment of
tenants from rice and corn farmholdings, pending
the promulgation of rules and regulations
implementing P.D. No. 27; Nilo v. Court of
Appeals, 128 SCRA 519, adjudging that RA 6389
whichremoved "personal cultivation" as a ground
for the ejectment of a tenant cannot be given
retroactive effect in the absence of a statutory
statement for retroactivity; Tac-An v. CA, 129
SCRA 319, ruling that the repeal of the old
Administrative Code by RA 4252 could not be
accorded retroactive effect; Ballardo v. Borromeo,
161 SCRA 500, holding that RA 6389 should have
only prospective application; (see also Bonifacio
v. Dizon, 177 SCRA 294 and Balatbat v. CA, 205
SCRA 419).chanroblesvirtualawlibrarychanrobles
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The prospectivity principle has also been made to
apply to administrative rulings and circulars, to
wit: ABS-CBN Broadcasting Corporation v. CTA,
Oct. 12, 1981, 108 SCRA 142, holding that a
circular or ruling of the Commissioner of Internal
Revenue may not be given retroactive effect
adversely to a taxpayer: Sanchez v. COMELEC,
193 SCRA 317, ruling that Resolution No. 90-
0590 of the Commission on Elections, which
directed the holding of recall proceedings, had no
retroactive application; Romualdez v. CSC, 197
SCRA 168, where it was ruled that CSC
Memorandum Circular No. 29, s. 1989 cannot be
given retrospective effect so as to entitle to
permanent appointment an employee whose
temporary appointment had expired before the
Circular was
issued.chanroblesvirtualawlibrarychanrobles
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The principle of prospectivity has also been
applied to judicial decisions which, "although in
themselves not laws, are nevertheless evidence of
what the laws mean, . . . (this being) the reason
whyunder Article 8 of the New Civil Code, 'Judicial
decisions applying or interpreting the laws or the
Constitution shall form a part of the legal system
. . .'"chanrobles virtual law library
So did this Court hold, for example,
in Peo. v. Jabinal, 55 SCRA 607, 611:
It will be noted that when appellant was
appointed Secret Agent by the Provincial
Government in 1962, and Confidential Agent by
the Provincial commander in 1964, the prevailing
doctrine on the matter was that laid down by Us
in People v. Macarandang (1959) and People
v. Lucero (1958). 6 Our decision in People
v. Mapa, 7reversing the aforesaid doctrine, came
only in 1967. The sole question in this appeal is:
should appellant be acquitted on the basis of Our
rulings in Macarandang and Lucero, or should his
conviction stand in view of the complete reverse
of the Macarandang and Lucero doctrine in Mapa?
. . .chanroblesvirtualawlibrarychanrobles virtual
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Decisions of this Court, although in themselves
not laws, are nevertheless evidence of what the
laws mean, and this is the reason why under
Article 8 of the New Civil Code, "Judicial decisions
applying or interpreting the laws or the
Constitution shall form a part of the legal system
. . ."The interpretation upon a law by this Court
constitutes, in a way, a part of the law as of the
date that law was originally passed, since this
Court's construction merely establishes the
contemporaneous legislative intent that the law
thus construed intends to effectuate. The settled
rule supported by numerous authorities is a
restatement of the legal maxim "legis
interpretation legis vim obtinet" - the
interpretation placed upon the written law by a
competent court has the force of law. The
doctrine laid down
in Lucero and Macarandang was part of the
jurisprudence, hence, of the law, of the land, at
the time appellant was found in possession of the
firearm in question and where he was arraigned
by the trial court. It is true that the doctrine was
overruled in the Mapa case in 1967, but when a
doctrine of this Court is overruled and a different
view is adopted, the new doctrine should be
applied prospectively, and should not apply to
parties who had relied on, the old doctrine and
acted on the faith thereof. This is especially true
in the construction and application of criminal
laws, where it is necessary that the punishment
of an act be reasonably foreseen for the guidance
of society.
So, too, did the Court rule in Spouses Gauvain
and Bernardita Benzonan v. Court of Appeals, et
al. (G.R. No. 97973) and Development Bank of
the Philippines v. Court of Appeals, et al (G.R. No
97998), Jan. 27, 1992, 205 SCRA 515, 527-528: 8
We sustain the petitioners' position, It is
undisputed that the subject lot was mortgaged to
DBP on February 24, 1970. It was acquired by
DBP as the highest bidder at a foreclosure sale on
June 18, 1977, and then sold to the petitioners on
September 29,
1979.chanroblesvirtualawlibrarychanrobles virtual
law library
At that time, the prevailing jurisprudence
interpreting section 119 of R.A. 141 as amended
was that enunciated in Monge and Tupas cited
above. The petitioners Benzonan and respondent
Pe and the DBP are bound by these decisions for
pursuant to Article 8 of the Civil Code "judicial
decisions applying or interpreting the laws or the
Constitution shall form a part of the legal system
of the Philippines." But while our decisions form
part of the law of the land, they are also subject
to Article 4 of the Civil Code which provides that
"laws shall have no retroactive effect unless the
contrary is provided." This is expressed in the
familiar legal maxim lex prospicit, non respicit,
the law looks forward not backward. The rationale
against retroactivity is easy to perceive. The
retroactive application of a law usually divests
rights that have already become vested or
impairs the obligations of contract and hence, is
unconstitutional (Francisco vs. Certeza, 3 SCRA
565 [1061]).chanroblesvirtualawlibrarychanrobles
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The same consideration underlies our rulings
giving only prospective effect to decisions
enunciating new doctrines. Thus, we emphasized
in People v. Jabinal, 55 SCRA 607 [1974]" . . .
when a doctrine of this Court is overruled and a
different view is adopted, the new doctrine should
be applied prospectively and should not apply to
parties who had relied on the old doctrine and
acted on the faith thereof.
A compelling rationalization of the prospectivity
principle of judicial decisions is well set forth in
the oft-cited case of Chicot County Drainage
Dist. v. Baxter States Bank, 308 US 371, 374
[1940]. The Chicot doctrine advocates the
imperative necessity to take account of the actual
existence of a statute prior to its nullification, as
an operative fact negating acceptance of "a
principle of absolute retroactive
invalidity.chanroblesvirtualawlibrarychanrobles
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Thus, in this Court's decision in Tañada
v. Tuvera, 9 promulgated on April 24, 1985 -
which declared "that presidential issuances of
general application, which have not been
published,shall have no force and effect," and as
regards which declaration some members of the
Court appeared "quite apprehensive about the
possible unsettling effect . . . (the) decision might
have on acts done in reliance on the validity of
these presidential decrees . . ." - the Court said:
. . . . The answer is all too familiar. In similar
situation is in the past this Court, had taken the
pragmatic and realistic course set forth in Chicot
County Drainage District vs. Baxter Bank (308
U.S. 371, 374) to wit:chanrobles virtual law
library
The courts below have proceeded on the theory
that the Act of Congress, having found to be
unconstitutional, was not a law; that it was
inoperative, conferring no rights and imposing no
duties, and hence affording no basis for the
challenged decree. Norton vs. Shelby County, 118
US 425, 442; Chicago, I. & L. Ry. Co. v. Hackett,
228 U. S. 559, 566. It is quite clear, however,
that such broad statements as to the effect of a
determination of unconstitutionality must be
taken with qualifications. The actual existence of
a statute, prior to such a determination, is an
operative fact and may have consequences which
cannot justly be ignored. The past cannot always
be erased by a new judicial declaration. The effect
of the subsequent ruling as to invalidity may have
to be considered in various aspects - with respect
to particular conduct, private and official.
Questions of rights claimed to have become
vested, of status, of prior determinations deemed
to have finality and acted upon accordingly, of
public policy in the light of the nature both of the
statute and of its previous application, demand
examination. These questions are among the
most difficult of those who have engaged the
attention of courts, state and federal, and it is
manifest from numerous decisions that an all-
inclusive statement of a principle of absolute
retroactive invalidity cannot be justified.
Much earlier, in De Agbayani v. PNB, 38 SCRA
429 - concerning the effects of the invalidation of
"Republic Act No. 342, the moratorium legislation,
which continued Executive Order No. 32, issued
by the then President Osmeña, suspending the
enforcement of payment of all debts and other
monetary obligations payable by war sufferers,"
and which had been "explicitly held in Rutter v.
Esteban (93 Phil. 68 [1953] 10 . . . (to be) in 1953
'unreasonable and oppressive, and should not be
prolonged a minute longer . . ." - the Court made
substantially the same observations, to wit: 11
. . . . The decision now on appeal reflects the
orthodox view that an unconstitutional act, for
that matter an executive order or a municipal
ordinance likewise suffering from that infirmity,
cannot be the source of any legal rights or duties.
Nor can it justify any official act taken under it.
Its repugnancy to the fundamental law once
judicially declared results in its being to all intents
and purposes amere scrap of paper. . . . It is
understandable why it should be so, the
Constitution being supreme and paramount. Any
legislative or executive act contrary to its terms
cannot
survive.chanroblesvirtualawlibrarychanrobles
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Such a view has support in logic and possesses
the merit of simplicity. lt may not however be
sufficiently realistic. It does not admit of doubt
that prior to the declaration of nullity such
challenged legislative or executive act must have
been in force and had to be compiled with. This is
so as until after the judiciary, in an appropriate
case, declares its invalidity,, it is entitled to
obedience and respect. Parties may have acted
under it and may have changed theirpositions,
what could be more fitting than that in a
subsequent litigation regard be had to what has
been done while such legislative or executive act
was in operation and presumed to be valid in all
respects. It is now accepted as a doctrine that
prior to its being nullified, its existence is a fact
must be reckoned with. This is merely to reflect
awareness that precisely because the judiciary is
the governmental organ which has the final say
on whether or not a legislative or executive
measure is valid, a, period of time may have
elapsed before it can exercise the power of
judicial review that may lead to a declaration of
nullity. It would be to deprive the law of its
quality of fairness and justice then, if there be no
recognition of what had transpired prior to such
adjudication.chanroblesvirtualawlibrarychanrobles
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In the language of an American Supreme Court
decision: 'The actual existence of a statute, prior
to such a determination [of unconstitutionality], is
an operative fact and may have consequences
which cannot justly be ignored. The past cannot
always be erased by a new judicial declaration.
The effect of the subsequent ruling as to invalidity
may have to be considered in various aspects, -
with respect to particular relations, individual and
corporate, and particular conduct, private and
official (Chicot County Drainage Dist. v. Baxter
States Bank, 308 US 371, 374 [1940]). This
language has been quoted with approval in a
resolution in Araneta v. Hill (93 Phil. 1002
[1953]) and the decision in Manila Motor Co. Inc.
v. Flores (99 Phil. 738 [1956]). An even more
recent instance is the opinion of Justice Zaldivar
speaking for the Court in Fernandez v. Cuerva
and Co. (L-21114, Nov. 28, 1967, 21 SCRA
1095).
Again, treating of the effect that should be given
to its decision in Olaguer v. Military Commission
No 34, 12 - declaring invalid criminal proceedings
conducted during the martial law regime against
civilians, which had resulted in the conviction and
incarceration of numerous persons - this Court,
in Tan vs. Barrios, 190 SCRA 686, at p. 700, ruled
as follows:
In the interest of justice and consistently, we hold
that Olaguer should, in principle, be applied
prospectively only to future cases and cases still
ongoing or not yet final when that decision was
promulgated. Hence, there should be no
retroactive nullification of final judgments,
whether of conviction or acquittal, rendered by
military courts against civilians before the
promulgation of the Olaguer decision. Such final
sentences should not be disturbed by the State.
Only in particular cases where the convicted
person or the State shows that there was serious
denial of constitutional rights of the accused,
should the nullity of the sentence be declared and
a retrial be ordered based on the violation of the
constitutional rights of the accused and not on the
Olaguer doctrine. If a retrial is no longer possible,
the accused should be released since judgment
against him is null on account of the violation of
his constitutional rights and denial of due process.
xxx xxx xxxchanrobles virtual law library
The trial of thousands of civilians for common
crimes before the military tribunals and
commissions during the ten-year period of martial
rule (1971-1981) which were created under
general orders issued by President Marcos in the
exercise of his legislative powers is an operative
fact that may not just be ignored. The belated
declaration in 1987 of the unconstitutionality and
invalidity of those proceedings did not erase the
reality of their consequences which occurred long
before our decision in Olaguer was promulgated
and which now prevent us from carrying Olaguer
to the limit of its logic. Thus did this Court rule in
Municipality of Malabang v. Benito, 27 SCRA 533,
where the question arose as to whether the
nullity of creation of a municipality by executive
order wiped out all the acts of the local
government abolished. 13chanrobles virtual law
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It would seem then, that the weight of authority
is decidedly in favor of the proposition that the
Court's decision of September 21, 1987 in Que
v. People, 154 SCRA 160 (1987) 14 that a check
issued merely to guarantee the performance of an
obligation is nevertheless covered by B.P. Blg. 22
- should not be given retrospective effect to the
prejudice of the petitioner and other persons
situated, who relied on the official opinion of the
Minister of Justice that such a check did not fall
within the scope of B.P. Blg.
22.chanroblesvirtualawlibrarychanrobles virtual
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Inveighing against this proposition, the Solicitor
General invokes U.S. v. Go Chico, 14 Phil. 128,
applying the familiar doctrine that in crimes mala
prohibita, the intent or motive of the offender is
inconsequential, the only relevant inquiry being,
"has the law been violated?" The facts in Go
Chico are substantially different from those in the
case at bar. In the former, there was no official
issuance by the Secretary of Justice or other
government officer construing the special law SO ORDERED.
violated; 15 and it was there observed, among
others, that "the defense . . . (of) an honest Padilla, Regalado, Nocon and Puno, JJ., concur.
misconstruction of the law under legal
advice" 16 could not be appreciated as a valid
defense. In the present case on the other hand,
the defense is that reliance was placed, not on
the opinion of a private lawyer but upon an
official pronouncement of no less than the
attorney of the Government, the Secretary of
Justice, whose opinions, though not law, are
entitled to great weight and on which reliance
may be placed by private individuals is reflective
of the correct interpretation of a constitutional or G.R. No. 97973 January 27, 1992
statutory provision; this, particularly in the case
of penal statutes, by the very nature and scope of
SPOUSES GAUVAIN and BERNARDITA
the authority that resides in as regards
BENZONAN, petitioners,
prosecutions for their violation. 17 Senarillos
vs.
vs. Hermosisima, supra, relied upon by the
COURT OF APPEALS, BENITO SALVANI PE
respondent Court of Appeals, is crucially different
and DEVELOPMENT BANK OF THE
in that in said case, as in U.S. v. Go Chico, supra,
PHILIPPINES, respondents.
no administrative interpretation antedated the
contrary construction placed by the Court on the
G.R. No. 97998 January 27, 1992
law invoked.chanroblesvirtualawlibrarychanrobles
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DEVELOPMENT BANK OF THE
PHILIPPINES, petitioner,
This is after all a criminal action all doubts in
vs.
which, pursuant to familiar, fundamental doctrine,
COURT OF APPEALS and BENITO SALVANI
must be resolved in favor of the accused.
PE, respondents.
Everything considered, the Court sees no
compelling reason why the doctrine of mala
prohibita should override the principle of Ruben E. Agpalo for Sps. Gauvain and Bernardita
prospectivity, and its clear implications as herein Benzonan.
above set out and discussed, negating criminal
liability.chanroblesvirtualawlibrarychanrobles Vicente R. Acsay for Benito Salvani Pe.
virtual law library
Thomas T. Jacobo for DBP.
WHEREFORE, the assailed decisions of the Court
of Appeals and of the Regional Trial Court are
reversed and set aside, and the criminal
prosecution against the accused-petitioner is GUTIERREZ, JR., J.:
DISMISSED, with costs de
oficio.chanroblesvirtualawlibrarychanrobles virtual
This is a petition to review the August 31, 1990
law library
decision of the Court of Appeals which sustained
the right of respondent Benito Salvani Pe to
repurchase a parcel of land foreclosed by
petitioner Development Bank of the Philippines
(DBP) and sold to petitioners Gauvain and
Bernardita Benzonan.
Respondent Pe is a businessman in General
Santos City who owns extensive commercial and
agricultural properties. He is the proprietor of the
firm "Dadiangas B.P. Trading." One of the
properties he acquired through free patents and
miscellaneous sales from the Bureau of Lands is a
26,064 square meters parcel covered by Free
Patent No. 46128 issued on October 29, 1969.
OCT No. P-2404 was issued on November 24,
1969.
On February 24, 1970 or barely three months
after he acquired the land, the respondent
mortgaged the lot in question, together with
another lot covered by TCT No. 3614 and some
chattels to secure a commercial loan of
P978,920.00 from the DBP. The lot was
developed into a commercial-industrial complex
with ricemill and warehouse facilities, a solar
drier, an office and residential building, roadway,
garden, depository, and dumping grounds for
various materials.
When the private respondent failed to pay his
loan after more than seven years had passed,
DBP foreclosed the mortgage on June 28, 1977.
On that date, the total obligation amounted to
P1,114,913.34. DBP was the highest bidder.
Certificates of sale were issued in its favor;
P452,995.00 was for the two lots and
P108,450.00 for the chattels. The certificate
covering the disputed lot was registered with the
Registry of Deeds on January 24, 1978.
After the foreclosure sale, respondent Pe leased
the lot and its improvements from DBP for
P1,500.00 a month. Part of the property was also
leased by DBP to the then National Grains
Authority.
The respondent failed to redeem the property
within the one year period. On September 24,
1979 DBP sold the lot to the petitioner for
P1,650,000.00 payable in quarterly amortizations
over a five year period. The petitioners occupied
the purchased lot and introduced further
improvements worth P970,000.00.
On July 12, 1983, claiming that he was acting
within the legal period given to him to
repurchase, respondent Pe offered in writing to
repurchase the lot for P327,995.00. DBP
countered, however, that over the years a total of
P3,056,739.52 had already been incurred in the
preservation, maintenance, and introduction of
improvements.
On October 4, 1983, Pe filed a complaint for
repurchase under Section 119 of Commonwealth
Act No. 141 with the Regional Trial Court (RTC) of
General Santos City.
On November 27, 1986, the trial court rendered
judgment. The dispositive portion reads:
WHEREFORE, in view of the
foregoing, the defendant
Development Bank of the
Philippines is ordered:
1) to reconvey unto the plaintiff
the parcel of land in question
(Lot No. P-2404) for the
repurchase price of P327,995.00
plus legal interest from June 18,
1977 to June 19, 1978 only, and
the expenses of extrajudicial
foreclosure of mortgage;
expenses for registration and ten
percent (10%) attorneys fees;
2) ordering the defendants to
vacate forever the premises of
said property in favor of the
plaintiff upon payment of the
total repurchase price;
3) ordering the defendants,
jointly and solidarily, to pay the
plaintiff attorney's fees in the
amount of P25,000.00;
4) and to set an example to
government banking and lending
institutions not to take borrowers
for granted by making it hard for
them to repurchase by
misleading them, the bank is
hereby ordered to pay the
plaintiff by way of exemplary
damages in the amount of
P50,000.00;
Ordering further the defendant
DBP:
5) to reimburse the co-
defendants spouses Benzonan
the amount they have paid or
advanced the defendant DBP for
the purchase of Lot O.C.T. No. P-
2404;
6) ordering the defendants to
pay the cost of suit. (Rollo of
G.R. No. 97973, pp. 74-75)
On appeal, the Court of Appeals affirmed the
decision with modifications as follows:
xxx xxx xxx
All the foregoing premises
considered, judgment is hereby
rendered AFFIRMING the
 decision rendered by the court a
quo with the modification that
the defendant DBP shall
reimburse to its co-defendant
Benzonan spouses all amounts
that the latter have paid for the
land, minus interest, and that
the Benzonan spouses shall be
allowed to remove the
improvement that they have
made on the property under
litigation, without impairing or
damaging the same. (Rollo of
G.R. No. 97973, p. 105)
A motion for reconsideration was denied on March
19, 1991.
The petitioners-spouses in G.R. No. 97973 raise
the following "legal issues, reasons, or errors"
allegedly committed by the Court of Appeals, to
wit:
1. The Court of Appeals erred in
holding that conversion and use
of the land in question to
industrial or commercial
purposes, as a result of which it
could no longer be used for
cultivation, and the fact that
respondent Pe has vast holdings
whose motive in seeking to
repurchase the property is to
continue the business or for
speculation or greater profits did
not deprive him of the right to
repurchase under Sec. 119 of CA
141, and, as a result, in ignoring
or disregarding Pe's admissions
and undisputed facts establishing
such circumstances, contrary to
what this Court held in Santana
v. Mariñas, 94 SCRA 853
[1979], Vargas v. Court of
Appeals, 91 SCRA 195 [1979]
and Simeon v. Peña, 36 SCRA
610 [1970].
2. Assuming, arguendo, that
respondent Pe still had the right
to repurchase the land under
Sec. 119 of CA 141, the Court of
Appeals erred in not counting the
5-year period from the date of
foreclosure sale on June 18,
1977 or at the very most from its
registration on January 24, 1978,
in accordance with the prevailing
doctrinal law at the time as
enunciated in Monge
v. Angeles, 101 Phil. 561
[1957], Oliva v. Lamadrid, 21
SCRA 737 [1967] and Tupas
v. Damasco, 132 SCRA 593
[1984], pursuant to which Pe's
right to repurchase already
expired.
3. The Court of Appeals erred in
applying retroactively the ruling
in Belisario v. Intermediate
Appellate Court, 165 SCRA 101
[1988], which held that the 5-
year period is counted from the
date after the one-year period to
redeem foreclosed homestead
expired, to the foreclosure of the
land in question in 1977, as its
retroactive application revived
Pe's lost right of repurchase and
defeated petitioners' right of
ownership that already accrued
under the then prevailing
doctrinal law.
4. Assuming, arguendo, that
respondent Pe had the right to
repurchase the land in question
and assuming, further, that the
5-year period is to be counted
from the consolidation of
ownership after the expiration of
the one-year period to redeem,
the Court of Appeals erred in not
holding that the mere filing of an
action for repurchase without
tendering or depositing the
repurchase price did not satisfy
the requirements of repurchase,
Pe's failure to make the tender or
deposit even up to the present
being confirmatory of speculative
motive behind his attempt to
repurchase.
5. Assuming, finally, that
respondent Pe is entitled to
repurchase the property, the
Court of Appeals erred in not
holding that petitioners are
possessors in good faith, similar
to a vendee a retro, entitled (a)
to reimbursement of necessary
and useful expenses under
Article 1616 of the Civil Code as
held in Calagan v. CFI of
Davao, 95 SCRA 498 [1980] and
in Lee v. Court of Appeals, 68
SCRA 196 [1975]; and (b) to
refund of all amounts paid by
them by reason of the sale of the
property in their favor, including
interest payments, in both
instances with right of retention.
(Rollo of G.R. No. 97973, pp. 14-
16)
In G.R No. 97998, DBP limited its petition to the
value of the repurchase price and the nature of
the contract between the parties. It framed the
issues as follows:
1. The Court of Appeals erred in
not holding that Section 31 of
Commonwealth Act No. 459 as
 amended is not applicable in the mill and other businesses, i.e., two warehouse Q. What about
instant case to determine the buildings; administration-residential building; the area
repurchase price contrary to perimeter fence; solar and concrete drier; shed; occupied by the
decisions of the Honorable machine shop; dirty kitchen; and machineries and residence as
Supreme Court in the following equipments such as ricemill (TSN, August 13, well as the
cases: DBP v. Jimenez, et al. (36 1984, pp. 173-174). The entire lot has been roadways?
SCRA 426) and DBP converted to serve commercial and industrial
v. Mirang (66 SCRA 141). purposes. The testimony of petitioners Gauvain A. It covers
Benzonan on this score has not been successfully about another
2. The Court of Appeals erred in challenged, viz: half of a hectare
not holding that the law between again, Sir.
the contracting parties are the Q. Out of this
terms and conditions embodied 2.6 hectares Q. Is any part of
in the contract signed by them. land area, how this two point
(Rollo of G.R. No. 97998, p. 12) much of this is six hectares
devoted to the devoted to
We find merit in the petitions. solar drier agricultural
construction? production or
The determination of the main issues raised by production of
the petitioners calls for the proper application of A. The solar agricultural
Section 119 of CA 141 as amended which drier is about crops?
provides: "Every conveyance of land acquired one thousand
under the free patent or homestead provisions, (1,000) square A. None
when proper, shall be subject to repurchase by meters . . . ah whatsoever
the applicant, his widow, or legal heirs, within a no, about six because the
period of five years from the date of conveyance." thousand other portion is
(6,000) square occupied as a
meters. dumping area
There is no dispute over the fact that the
Government awarded the land to respondent Pe for our waste
so that he could earn a living by farming the land. Q. What about materials. (TSN,
Did respondent Pe lose his right to repurchase the the area PP. 361-362,
subject agricultural lot under the aforequoted law occupied by the Sept. 3, 1985).
considering its conversion for industrial or warehouse and
commercial purposes? The evidence relating to the ricemill The conversion of the lot for commercial purposes
the conversion is sufficiently established and yet complex? is understandable considering that the heart of
was not properly appreciated by the respondent General Santos City developed in that area.
court. A. The
warehouse and The respondent does not deny that, he is using
Only three months after getting the free patent ricemill complex the land for purely commercial and industrial
and the original certificate of title over the subject is occupying purposes. His explanation is that the land may be
lot, it was mortgaged by respondent Pe to get a about one and a converted into agricultural land in the future. He
commercial loan of nearly P1 million from DBP. Pe half (1 1/2) applies the Krivenko v. Register of Deeds of
spent the proceeds of the loan to construct hectares. Manila (79 Phil. 461 [1947]) ruling that lands not
permanent improvements on the lot for his rice- mineral or forest are agricultural in nature and
may be devoted to business purposes without
losing their agricultural classification.
Indeed, the records show that it was never the
intention of respondent Pe to utilize the land,
given to him for free by the Government, for
agricultural purposes. He was not the kind of poor
farmer for whom homesteads and free patents
were intended by the law.
As stated by the petitioners:
1. Respondent Pe acquired by
free patent the land in question
with an area of 2.6064 hectares,
which was issued Original
Certificate of Title No. P-2404 on
November 24, 1969. Instead of
cultivating it for agricultural
purposes, Pe mortgaged the
land, along with another land, on
February 24, 1970, or only three
(3) months from issuance of OCT
No.
P-2404, with the DBP for
P978,920.00. (par. 4, complaint,
Annex "A"). Pe testified that his
purpose was to construct in the
land in question "bodega", an
administration-residential
building, a perimeter fence, a
concrete drier, and for some
machineries and equipment."
(TSN, p. 95, June 22, 1984). He
stated that the improvements
and facilities in the land included
"the warehouse, the ricemill and
a big warehouse housing the
palay of stocks of the National
Grains Authority and an
administration-residential
building, a solar drier and a
perimeter fence and some sheds
or garage . . . a small piggery
pen of several compartments, a
dirty kitchen . . . a machine properties and their market
shop." (TSN, pp. 173-174, value, all situated in General
August 13, 1984). Pe used the Santos City, to wit (Exh. 11-
property for such purposes and Benzonan):
operated the ricemill business for
a period of about nine (9) years (a) 447 sq. m.
until September, 1979 (pars. 7 residential P
and 8, complaint, Annex "A"), 28,720.00
without paying the DBP of his (b) 11.9980
mortgage indebtedness, as a hectares of agri.
result of which DBP foreclosed lot P 23,880.00
the properties. (Annex "F") (c) 2.000
hectares of agri.
2. Respondent Pe testified that lot P 40,000.00
the land in question with its (d) 2.000
improvements has an appraised hectares of agri.
value of P1,347,860.00 in 1974, lot P 40,000.00
and P2,028,030.00 in 1976. (e) 6,064 sq. m.
(TSN, pp. 176, 177, August 13, of industrial lot
1984). Petitioner Gauvain P303,200.00
Benzonan claimed it has a fair (f) Industrial
market value, as of 1985, of building
P5,000,000.00. (p. 8, trial court P434,130.00
decision, Annex "F"). As against (g) Industrial
such value of the land and machinery P
improvements, respondent Pe 96,000.00
insisted that the repurchase price
should only be the principal sum On June 22, 1984, when Pe
of P327,995.00. (par. 10, testified, he said that "I own
complaint, Annex "A") three (3) residential lots," (TSN,
p. 153, June 22, 1984) and that
3. Respondent Pe, when he he and his wife own in Antique
testified in 1984, said he was 60 Province "around twenty (20)
years old; he is now therefore hectares planted to coconut and
over 66 years old. He is a sugarcane" (ibid., p. 145); he
"businessman and resident of used to have 30 hectares of
Dadiangas, General Santos City" agricultural lands and 22
(TSN, p. 3, June 20, 1984), subdivision lots, which he sold to
doing business under the style, Norma Salvani and Carlos
"Dadiangas B.P. Trading" (TSN, Salvani. (TSN, pp. 166-169, June
144, June 22, 1984). In his 22, 1984); Exhs. 1, 1-A, 1-B, 1-
sworn declaration dated July 18, C, 3, 6, 6-A-Benzonan). (Rollo of
1983, filed with the assessor's G.R. No. 97973, pp. 17-19)
office pursuant to P.D. No. 1612,
he listed the following real
In the light of the records of these cases, we rule
that respondent Pe cannot repurchase the
disputed property without doing violence to
everything that CA No. 141 (as amended) stands
for.
We ruled in Simeon v. Peña, 36 SCRA 610, 617
[1970] through Chief Justice Claudio Teehankee,
that:
xxx xxx xxx
These findings of fact of the
Court of Appeals that
"(E)vidently, the reconveyance
sought by the plaintiff
(petitioner) is not in accordance
with the purpose of the law, that
is, "to preserve and keep in the
family of the homesteader that
portion of public land which the
State has gratuitously given to
him"" and expressly found by it
to "find justification from the
evidence of record. . . ."
Under the circumstances, the
Court is constrained to agree
with the Court of Appeals that
and in Santana et al. v. Mariñas, 94
petitioners' proposed repurchase
SCRA 853, 861-862 [1979] to wit:
of the property does not fall
within the purpose, spirit and
meaning of section 119 of the
Public Land Act, authorizing
redemption of the homestead
from any vendee thereof.
We reiterated this ruling in Vargas
v. Court of Tax Appeals, 91 SCRA 195,
200, [1979] viz:
As regards the case of Simeon
v. Peña, petitioners ought to
know that petitioner therein was
not allowed to repurchase
because the lower court found
that his purpose was only
speculative and for profit. In the
present case, the Court of
Appeals found that herein
petitioners' purposes and
motives are also speculative and
for profit.
It might be well to note that the
underlying principle of Section
119 of Commonwealth Act No.
141 is to give the homesteader
or patentee every chance to
preserve for himself and his
family the land that the State
had gratuitously given to him as
a reward for his labor in cleaning
and cultivating it. (Simeon v.
Peña, 36 SCRA 617). As found by
the Court of Appeals, the motive
of the petitioners in repurchasing
the lots in question being one for
speculation and profit, the same
therefore does not fall within the
purpose, spirit and meaning of
said section.
In Simeon v. Peña we analyzed
the various cases previously
decided, and arrived at the
conclusion that the plain intent,
the raison d' etre, of Section
119, C.A. No. 141 ". . . is to give
the homesteader or patentee
every chance to preserve for
himself and his family the land
that the state had gratuitously
given to him as a reward for his
labor in cleaning and cultivating
it." In the same breath, we
agreed with the trial court, in
that case, that "it is in this sense
that the provision of law in
question becomes unqualified
and unconditional. And in
keeping with such reasons
behind the passage of the law,
its basic objective is to promote
public policy, that is, to provide
home and decent living for
destitutes, aimed at promoting a
class of independent small
landholders which is the bulwark
of peace and order.
As it was in Simeon
v. Peña, respondent Mariñas'
intention in exercising the right
of repurchase "is not for the
purpose of preserving the same
within the family fold," but "to
dispose of it again for greater
profit in violation of the law's
policy and spirit." The foregoing
conclusions are supported by the
trial court's findings of fact
already cited, culled from
evidence adduced. Thus
respondent Mariñas was 71 years
old and a widower at the time of
the sale in 1956; that he was 78
when he testified on October 24,
1963 (or over 94 years old today
if still alive); that . . . he was not
living on the property when he
sold the same but was residing in
the poblacion attending to a
hardware store, and that the
property was no longer
agricultural at the time of the
sale, but was a residential and
commercial lot in the midst of
many subdivisions. The profit
motivation behind the effort to
repurchase was conclusively
 shown when the then plaintiff's
counsel, in the case below, Atty.
Loreto Castillo, in his presence,
suggested to herein petitioners'
counsel, Atty. Rafael Dinglasan ".
. . to just add to the original
price so the case would be
settled." Moreover, Atty. Castillo
manifested in court that an
amicable settlement was
possible, for which reason he
asked for time "within which to
settle the terms thereof'" and
that "the plaintiff . . . Mr.
Mariñas, has manifested to the
Court that if the defendants
would be willing to pay the sum
of One Peso and Fifty Centavos
(P1.50) per square meter, he
would be willing to accept the
offer and dismiss the case."
Our decisions were disregarded by the respondent
court which chose to adopt a Court of Appeals
ruling in Lim, et al. v. Cruz, et al., CA-G.R. No.
67422, November 25, 1983 that the motives of
the homesteader in repurchasing the land are
inconsequential" and that it does not matter even
"when the obvious purpose is for selfish gain or
personal aggrandizement."
The other major issue is when to count the five-
year period for the repurchase by respondent Pe
— whether from the date of the foreclosure sale
or from the expiration of the one year period to
redeem the foreclosed property.
The respondent court ruled that the period of
repurchase should be counted from the expiration
of the one year period to redeem the foreclosed
property. Since the one year period to redeem
expired on January 24, 1979 and he filed Case
No. 280 on October 4, 1983 to enforce his right to
repurchase the disputed property, the Court of
Appeals held that Pe exercised his right to
repurchase within the five-year period provided
by Section 119 of CA 141 as amended.
The respondent court cited Belisario, et al.,
v. Intermediate Appellate Court, et al., 165 SCRA
101, 107 [1988] where we held:
. . . In addition, Section 119 of
Commonwealth Act 141 provides
that every conveyance of land
acquired under the free patent or
homestead patent provisions of
the Public Land Act, when
proper, shall be subject to
repurchase by the applicant, his
widow or legal heirs within the
period of five years from the
date of conveyance. The five-
year period of redemption fixed
in Section 119 of the Public Land
Law of homestead sold at
extrajudicial foreclosure begins
to run from the day after the
expiration of the one-year period
of repurchase allowed in an
extrajudicial foreclosure. (Manuel
v. PNB, et al., 101 Phil. 968)
Hence, petitioners still had five
(5) years from July 22, 1972
(the expiration of the redemption
period under Act 3135) within
which to exercise their right to
repurchase under the Public Land
Act.
As noted by the respondent court, the 1988 case
of Belisario reversed the previous rulings of this
Court enunciated in Monge, et al., v. Angeles, et
al., 101 Phil. 563 [1957] and Tupas v. Damasco,
et al., 132 SCRA 593 [1984] to the effect that the
five year period of repurchase should be counted
from the date of conveyance or foreclosure sale.
The petitioners, however, urge
that Belisario should only be applied prospectively
or after 1988 since it established a new doctrine.
We sustain the petitioners' position. It is
undisputed that the subject lot was mortgaged to
DBP on February 24, 1970. It was acquired by
DBP as the highest bidder at a foreclosure sale on
June 18, 1977, and then sold to the petitioners on
September 29, 1979.
At that time, the prevailing jurisprudence
interpreting section 119 of R.A. 141 as amended
was that enunciated in Monge and Tupas cited
above. The petitioners Benzonan and respondent
Pe and the DBP are bound by these decisions for
pursuant to Article 8 of the Civil Code "judicial
decisions applying or interpreting the laws or the
Constitution shall form a part of the legal system
of the Philippines." But while our decisions form
part of the law of the land, they are also subject
to Article 4 of the Civil Code which provides that
"laws shall have no retroactive effect unless the
contrary is provided." This is expressed in the
familiar legal maxim lex prospicit, non
respicit, the law looks forward not backward. The
rationale against retroactivity is easy to perceive.
The retroactive application of a law usually
divests rights that have already become vested or
impairs the obligations of contract and hence, is
unconstitutional (Francisco v. Certeza, 3 SCRA
565 [1961]).
The same consideration underlies our rulings
giving only prospective effect to decisions
enunciating new doctrines. Thus, we emphasized
in People v. Jabinal, 55 SCRA 607 [1974] ". . .
when a doctrine of this Court is overruled and a
different view is adopted, the new doctrine should
be applied prospectively and should not apply to
parties who had relied on the old doctrine and
acted on the faith thereof."
There may be special cases where weighty
considerations of equity and social justice will
warrant a retroactive application of doctrine to
temper the harshness of statutory law as it
applies to poor farmers or their widows and
orphans. In the present petitions, however, we
find no such equitable considerations. Not only
did the private respondent apply for free
agricultural land when he did not need it and he
had no intentions of applying it to the noble
purposes behind the law, he would now
repurchase for only P327,995.00, the property
purchased by the petitioners in good faith for
P1,650,000.00 in 1979 and which, because of
improvements and the appreciating value of land
must be worth more than that amount now.

The buyers in good faith from DBP had a right to

rely on our rulings in Monge and Tupas when they
purchased the property from DBP in 1979 or
thirteen (13) years ago. Under the rulings in
these two cases, the period to repurchase the
disputed lot given to respondent Pe expired on
June 18, 1982. He failed to exercise his right. His
lost right cannot be revived by relying on the
1988 case of Belisario. The right of petitioners
over the subject lot had already become vested
as of that time and cannot be impaired by the
retroactive application of the Belisario ruling. G.R. No. 171815 August 7, 2007

Considering our above findings, we find no need
to resolve the other issues raised by the
petitioners in their petitions.
WHEREFORE, the questioned decision of the
respondent court is hereby REVERSED and SET
ASIDE. The complaint for repurchase under
Section 119 of Commonwealth Act No. 141 as
amended is DISMISSED. No pronouncement as to
costs.
Feliciano, Bidin, Davide, Jr. and Romero, JJ.,
concur.
CEMCO HOLDINGS, INC., Petitioner,
vs.
NATIONAL LIFE INSURANCE COMPANY OF
THE PHILIPPINES, INC., Respondent.
DECISION
CHICO-NAZARIO, J.:
This Petition for Review under Rule 45 of the
Rules of Court seeks to reverse and set aside the
24 October 2005 Decision1 and the 6 March 2006
Resolution2 of the Court of Appeals in CA-G.R. SP
No. 88758 which affirmed the judgment3 dated 14
February 2005 of the Securities and Exchange
Commission (SEC) finding that the acquisition of
petitioner Cemco Holdings, Inc. (Cemco) of the
shares of stock of Bacnotan Consolidated
Industries, Inc. (BCI) and Atlas Cement
Corporation (ACC) in Union Cement Holdings
Corporation (UCHC) was covered by the
Mandatory Offer Rule under Section 19 of
Republic Act No. 8799, otherwise known as the
Securities Regulation Code.
The Facts
Union Cement Corporation (UCC), a publicly-listed
company, has two principal stockholders – UCHC,
a non-listed company, with shares amounting to
60.51%, and petitioner Cemco with 17.03%.
Majority of UCHC’s stocks were owned by BCI
with 21.31% and ACC with 29.69%. Cemco, on
the other hand, owned 9% of UCHC stocks.
In a disclosure letter dated 5 July 2004, BCI
informed the Philippine Stock Exchange (PSE)
that it and its subsidiary ACC had passed
resolutions to sell to Cemco BCI’s stocks in UCHC
equivalent to 21.31% and ACC’s stocks in UCHC
equivalent to 29.69%.
In the PSE Circular for Brokers No. 3146-2004
dated 8 July 2004, it was stated that as a result
of petitioner Cemco’s acquisition of BCI and ACC’s
shares in UCHC, petitioner’s total beneficial
ownership, direct and indirect, in UCC has
increased by 36% and amounted to at least 53%
of the shares of UCC, to wit4 :
Particulars
Existing shares of Cemco in UCHC
Acquisition by Cemco of BCI’s and ACC’s shares in UCHC
Total stocks of Cemco in UCHC
Percentage of UCHC ownership in UCC
Indirect ownership of Cemco in UCC
Direct ownership of Cemco in UCC
Total ownership of Cemco in UCC
As a consequence of this disclosure, the PSE, in a
letter to the SEC dated 15 July 2004, inquired as
to whether the Tender Offer Rule under Rule 19
of the Implementing Rules of the Securities
Regulation Code is not applicable to the purchase
by petitioner of the majority of shares of UCC.
In a letter dated 16 July 2004, Director Justina
Callangan of the SEC’s Corporate Finance
Department responded to the query of the PSE
that while it was the stance of the department
that the tender offer rule was not applicable, the
matter must still have to be confirmed by the SEC
en banc.
Thereafter, in a subsequent letter dated 27 July
2004, Director Callangan confirmed that the SEC
en banc had resolved that the Cemco transaction
was not covered by the tender offer rule.
On 28 July 2004, feeling aggrieved by the
transaction, respondent National Life Insurance
Company of the Philippines, Inc., a minority
stockholder of UCC, sent a letter to Cemco
demanding the latter to comply with the rule on
mandatory tender offer. Cemco, however,
refused.
On 5 August 2004, a Share Purchase Agreement
was executed by ACC and BCI, as sellers, and
Cemco, as buyer.
Percentage
9%
On 12 August 2004, the transaction was
consummated and closed.
51%
On 19 August 2004, respondent
60% National Life
Insurance Company of the Philippines, Inc. filed a
60% it to reverse its 27
complaint with the SEC asking
July 2004 Resolution and to declare the purchase
36%
agreement of Cemco void and praying that the
mandatory tender offer rule17%be applied to its UCC
shares. Impleaded in the complaint were Cemco,
53%
UCC, UCHC, BCI and ACC, which were then
required by the SEC to file their respective
comment on the complaint. In their comments,
they were uniform in arguing that the tender offer
rule applied only to a direct acquisition of the
shares of the listed company and did not extend
to an indirect acquisition arising from the
purchase of the shares of a holding company of
the listed firm.
In a Decision dated 14 February 2005, the SEC
ruled in favor of the respondent by reversing and
setting aside its 27 July 2004 Resolution and
directed petitioner Cemco to make a tender offer
for UCC shares to respondent and other holders
of UCC shares similar to the class held by UCHC
in accordance with Section 9(E), Rule 19 of the
Securities Regulation Code.
Petitioner filed a petition with the Court of
Appeals challenging the SEC’s jurisdiction to take
cognizance of respondent’s complaint and its
authority to require Cemco to make a tender offer
for UCC shares, and arguing that the tender offer
rule does not apply, or that the SEC’s re-
interpretation of the rule could not be made to
retroactively apply to Cemco’s purchase of UCHC
shares.
The Court of Appeals rendered a decision
affirming the ruling of the SEC. It ruled that the
SEC has jurisdiction to render the questioned
decision and, in any event, Cemco was barred by
estoppel from questioning the SEC’s jurisdiction.
It, likewise, held that the tender offer
requirement under the Securities Regulation Code
and its Implementing Rules applies to Cemco’s
purchase of UCHC stocks. The decretal portion of
the said Decision reads:
IN VIEW OF THE FOREGOING, the assailed
decision of the SEC is AFFIRMED, and the
preliminary injunction issued by the Court
LIFTED.5
Cemco filed a motion for reconsideration which
was denied by the Court of Appeals.
Hence, the instant petition.
In its memorandum, petitioner Cemco raises the
following issues:
I.
ASSUMING ARGUENDO THAT THE SEC
HAS JURISDICTION OVER NATIONAL
LIFE’S COMPLAINT AND THAT THE SEC’S
RE-INTERPRETATION OF THE TENDER
OFFER RULE IS CORRECT, WHETHER OR
NOT THAT REINTERPRETATION CAN BE
APPLIED RETROACTIVELY TO CEMCO’S
PREJUDICE.
II.
WHETHER OR NOT THE SEC HAS
JURISDICTION TO ADJUDICATE THE
DISPUTE BETWEEN THE PARTIES A QUO
OR TO RENDER JUDGMENT REQUIRING
CEMCO TO MAKE A TENDER OFFER FOR
UCC SHARES.
III.
WHETHER OR NOT CEMCO’S PURCHASE
OF UCHC SHARES IS SUBJECT TO THE
TENDER OFFER REQUIREMENT.
IV.
WHETHER OR NOT THE SEC DECISION,
AS AFFIRMED BY THE CA DECISION, IS
AN INCOMPLETE JUDGMENT WHICH
PRODUCED NO EFFECT.6
Simply stated, the following are the issues:
1. Whether or not the SEC has
jurisdiction over respondent’s complaint
and to require Cemco to make a tender
offer for respondent’s UCC shares.
2. Whether or not the rule on mandatory
tender offer applies to the indirect
acquisition of shares in a listed company,
in this case, the indirect acquisition by
Cemco of 36% of UCC, a publicly-listed
company, through its purchase of the
shares in UCHC, a non-listed company.
3. Whether or not the questioned ruling
of the SEC can be applied retroactively to
Cemco’s transaction which was
consummated under the authority of the
SEC’s prior resolution.
On the first issue, petitioner Cemco contends that
while the SEC can take cognizance of
respondent’s complaint on the alleged violation by
petitioner Cemco of the mandatory tender offer
requirement under Section 19 of Republic Act No.
8799, the same statute does not vest the SEC
with jurisdiction to adjudicate and determine the
rights and obligations of the parties since, under
the same statute, the SEC’s authority is purely
administrative. Having been vested with purely
administrative authority, the SEC can only impose
administrative sanctions such as the imposition of
administrative fines, the suspension or revocation
of registrations with the SEC, and the like.
Petitioner stresses that there is nothing in the
statute which authorizes the SEC to issue orders
granting affirmative reliefs. Since the SEC’s order
commanding it to make a tender offer is an
affirmative relief fixing the respective rights and
obligations of parties, such order is void.
Petitioner further contends that in the absence of
any specific grant of jurisdiction by Congress, the
SEC cannot, by mere administrative regulation,
confer on itself that jurisdiction.
Petitioner’s stance fails to persuade.
In taking cognizance of respondent’s complaint
against petitioner and eventually rendering a
judgment which ordered the latter to make a
tender offer, the SEC was acting pursuant to Rule
19(13) of the Amended Implementing Rules and
Regulations of the Securities Regulation Code, to
wit:
13. Violation
If there shall be violation of this Rule by pursuing
a purchase of equity shares of a public company
at threshold amounts without the required tender
offer, the Commission, upon complaint, may
nullify the said acquisition and direct the holding
of a tender offer. This shall be without prejudice
to the imposition of other sanctions under the
Code.
The foregoing rule emanates from the SEC’s
power and authority to regulate, investigate or
supervise the activities of persons to ensure
compliance with the Securities Regulation Code,
more specifically the provision on mandatory
tender offer under Section 19 thereof.7
Another provision of the statute, which provides
the basis of Rule 19(13) of the Amended
Implementing Rules and Regulations of the
Securities Regulation Code, is Section 5.1(n), viz:
[T]he Commission shall have, among others, the
following powers and functions:
xxxx
(n) Exercise such other powers as may be
provided by law as well as those which may be
implied from, or which are necessary or incidental
to the carrying out of, the express powers
granted the Commission to achieve the objectives
and purposes of these laws.
The foregoing provision bestows upon the SEC
the general adjudicative power which is implied
from the express powers of the Commission or
which is incidental to, or reasonably necessary to
carry out, the performance of the administrative
duties entrusted to it. As a regulatory agency, it
has the incidental power to conduct hearings and
render decisions fixing the rights and obligations
of the parties. In fact, to deprive the SEC of this
power would render the agency inutile, because it
would become powerless to regulate and
implement the law. As correctly held by the Court
of Appeals:
We are nonetheless convinced that the SEC has
the competence to render the particular decision
it made in this case. A definite inference may be
drawn from the provisions of the SRC that the
SEC has the authority not only to investigate
complaints of violations of the tender offer rule,
but to adjudicate certain rights and obligations of
the contending parties and grant appropriate
reliefs in the exercise of its regulatory functions
under the SRC. Section 5.1 of the SRC allows a
general grant of adjudicative powers to the SEC
which may be implied from or are necessary or
incidental to the carrying out of its express
powers to achieve the objectives and purposes of
the SRC. We must bear in mind in interpreting
the powers and functions of the SEC that the law
has made the SEC primarily a regulatory body
with the incidental power to conduct
administrative hearings and make decisions. A
regulatory body like the SEC may conduct
hearings in the exercise of its regulatory powers,
and if the case involves violations or conflicts in
connection with the performance of its regulatory
functions, it will have the duty and authority to
resolve the dispute for the best interests of the
public.8
For sure, the SEC has the authority to promulgate
rules and regulations, subject to the limitation
that the same are consistent with the declared
policy of the Code. Among them is the protection
of the investors and the minimization, if not total
elimination, of fraudulent and manipulative
devises. Thus, Subsection 5.1(g) of the law
provides:
Prepare, approve, amend or repeal rules,
regulations and orders, and issue opinions and
provide guidance on and supervise compliance
with such rules, regulations and orders.
Also, Section 72 of the Securities Regulation Code
reads:
72.1. x x x To effect the provisions and
purposes of this Code, the Commission
may issue, amend, and rescind such
rules and regulations and orders
necessary or appropriate, x x x.
72.2. The Commission shall promulgate
rules and regulations providing for
reporting, disclosure and the prevention
of fraudulent, deceptive or manipulative
practices in connection with the purchase
by an issuer, by tender offer or
otherwise, of and equity security of a
class issued by it that satisfies the
requirements of Subsection 17.2. Such
rules and regulations may require such
issuer to provide holders of equity
securities of such dates with such
information relating to the reasons for
such purchase, the source of funds, the
number of shares to be purchased, the
price to be paid for such securities, the
method of purchase and such additional
information as the Commission deems
necessary or appropriate in the public
interest or for the protection of investors,
or which the Commission deems to be
material to a determination by holders
whether such security should be sold.
The power conferred upon the SEC to promulgate
rules and regulations is a legislative recognition of
the complexity and the constantly-fluctuating
nature of the market and the impossibility of
foreseeing all the possible contingencies that
cannot be addressed in advance. As enunciated in
Victorias Milling Co., Inc. v. Social Security
Commission9 :
Rules and regulations when promulgated in
pursuance of the procedure or authority conferred
upon the administrative agency by law, partake of
the nature of a statute, and compliance therewith
may be enforced by a penal sanction provided in
the law. This is so because statutes are usually
couched in general terms, after expressing the
policy, purposes, objectives, remedies and
sanctions intended by the legislature. The details
and the manner of carrying out the law are often
times left to the administrative agency entrusted
with its enforcement. In this sense, it has been
said that rules and regulations are the product of
a delegated power to create new or additional
legal provisions that have the effect of law.
Moreover, petitioner is barred from questioning
the jurisdiction of the SEC. It must be pointed out
that petitioner had participated in all the
proceedings before the SEC and had prayed for
affirmative relief. In fact, petitioner defended the
jurisdiction of the SEC in its Comment dated 15
September 2004, filed with the SEC wherein it
asserted:
This Honorable Commission is a highly specialized
body created for the purpose of administering,
overseeing, and managing the corporate industry,
share investment and securities market in the
Philippines. By the very nature of its functions, it
dedicated to the study and administration of the
corporate and securities laws and has necessarily
developed an expertise on the subject. Based on
said functions, the Honorable Commission is
necessarily tasked to issue rulings with respect to
matters involving corporate matters and share
acquisitions. Verily when this Honorable
Commission rendered the Ruling that " … the
acquisition of Cemco Holdings of the majority
shares of Union Cement Holdings, Inc., a
substantial stockholder of a listed company, Union
Cement Corporation, is not covered by the
mandatory tender offer requirement of the SRC
Rule 19," it was well within its powers and
expertise to do so. Such ruling shall be respected,
unless there has been an abuse or improvident
exercise of authority.10
Petitioner did not question the jurisdiction of the
SEC when it rendered an opinion favorable to it,
such as the 27 July 2004 Resolution, where the
SEC opined that the Cemco transaction was not
covered by the mandatory tender offer rule. It
was only when the case was before the Court of
Appeals and after the SEC rendered an
unfavorable judgment against it that petitioner
challenged the SEC’s competence. As articulated
in Ceroferr Realty Corporation v. Court of
Appeals11 :
While the lack of jurisdiction of a court may be
raised at any stage of an action, nevertheless, the
party raising such question may be estopped if he
has actively taken part in the very proceedings
which he questions and he only objects to the
court’s jurisdiction because the judgment or the
order subsequently rendered is adverse to him.
On the second issue, petitioner asserts that the
mandatory tender offer rule applies only to direct
acquisition of shares in the public company.
This contention is not meritorious.
Tender offer is a publicly announced intention by
a person acting alone or in concert with other
persons to acquire equity securities of a public
company.12 A public company is defined as a
corporation which is listed on an exchange, or a
corporation with assets exceeding
₱50,000,000.00 and with 200 or more
stockholders, at least 200 of them holding not
less than 100 shares of such company.13 Stated
differently, a tender offer is an offer by the
acquiring person to stockholders of a public
company for them to tender their shares therein
on the terms specified in the offer.14 Tender offer
is in place to protect minority shareholders
against any scheme that dilutes the share value
of their investments. It gives the minority
shareholders the chance to exit the company
under reasonable terms, giving them the
opportunity to sell their shares at the same price
as those of the majority shareholders.15
Under Section 19 of Republic Act No. 8799, it is
stated:
Tender Offers. 19.1. (a) Any person or group of
persons acting in concert who intends to acquire
at least fifteen percent (15%) of any class of any
equity security of a listed corporation or of any
class of any equity security of a corporation with
assets of at least Fifty million pesos
(₱50,000,000.00) and having two hundred (200)
or more stockholders with at least one hundred
(100) shares each or who intends to acquire at
least thirty percent (30%) of such equity over a
period of twelve (12) months shall make a tender
offer to stockholders by filing with the
Commission a declaration to that effect; and
furnish the issuer, a statement containing such of
the information required in Section 17 of this
Code as the Commission may prescribe. Such
person or group of persons shall publish all
requests or invitations for tender, or materials
making a tender offer or requesting or inviting
letters of such a security. Copies of any additional
material soliciting or requesting such tender
offers subsequent to the initial solicitation or
request shall contain such information as the
Commission may prescribe, and shall be filed with
the Commission and sent to the issuer not later
than the time copies of such materials are first
published or sent or given to security holders.
Under existing SEC Rules,16 the 15% and 30%
threshold acquisition of shares under the
foregoing provision was increased to thirty-five
percent (35%). It is further provided therein that
mandatory tender offer is still applicable even if
the acquisition is less than 35% when the
purchase would result in ownership of over 51%
of the total outstanding equity securities of the
public company.17
The SEC and the Court of Appeals ruled that the
indirect acquisition by petitioner of 36% of UCC
shares through the acquisition of the non-listed
UCHC shares is covered by the mandatory tender
offer rule.
This interpretation given by the SEC and the
Court of Appeals must be sustained.
The rule in this jurisdiction is that the
construction given to a statute by an
administrative agency charged with the
interpretation and application of that statute is
entitled to great weight by the courts, unless such
construction is clearly shown to be in sharp
contrast with the governing law or statute.18 The
rationale for this rule relates not only to the
emergence of the multifarious needs of a modern
or modernizing society and the establishment of
diverse administrative agencies for addressing
and satisfying those needs; it also relates to
accumulation of experience and growth of
specialized capabilities by the administrative
agency charged with implementing a particular
statute.19
The SEC and the Court of Appeals accurately
pointed out that the coverage of the mandatory
tender offer rule covers not only direct acquisition
but also indirect acquisition or "any type of
acquisition." This is clear from the discussions of
the Bicameral Conference Committee on the
Securities Act of 2000, on 17 July 2000.
SEN. S. OSMEÑA. Eto ang mangyayari diyan, eh.
Somebody controls 67% of the Company. Of
course, he will pay a premium for the first 67%.
Control yan, eh. Eh, kawawa yung mga maiiwan,
ang 33% because the value of the stock market
could go down, could go down after that, because
there will (p. 41) be no more market. Wala nang
gustong bumenta. Wala nang… I mean maraming
gustong bumenta, walang gustong bumili kung
hindi yung majority owner. And they will not buy.
They already have 67%. They already have
control. And this protects the minority. And we
have had a case in Cebu wherein Ayala A who
already owned 40% of Ayala B made an offer for
another 40% of Ayala B without offering the 20%.
Kawawa naman yung nakahawak ngayon ng
20%. Ang baba ng share sa market. But we did
not have a law protecting them at that time.
CHAIRMAN ROCO. So what is it that you want to
achieve?
SEN. S. OSMEÑA. That if a certain group achieves
a certain amount of ownership in a corporation,
yeah, he is obligated to buy anybody who wants
to sell.
CHAIRMAN ROCO. Pro-rata lang. (p. 42).
xxxx
REP. TEODORO. As long as it reaches 30, ayan
na. Any type of acquisition just as long as it will
result in 30… (p.50)… reaches 30, ayan na. Any
type of acquisition just as long as it will result in
30, general tender, pro-rata.20 (Emphasis
supplied.)
Petitioner counters that the legislator’s reference
to "any type of acquisition" during the
deliberations on the Securities Regulation Code
does not indicate that congress meant to include
the "indirect" acquisition of shares of a public
corporation to be covered by the tender offer
rule. Petitioner also avers that it did not directly
acquire the shares in UCC and the incidental
benefit of having acquired the control of the said
public company must not be taken against it.
These arguments are not convincing. The
legislative intent of Section 19 of the Code is to
regulate activities relating to acquisition of control
of the listed company and for the purpose of
protecting the minority stockholders of a listed
corporation. Whatever may be the method by
which control of a public company is obtained,
either through the direct purchase of its stocks or
through an indirect means, mandatory tender
offer applies. As appropriately held by the Court
of Appeals:
The petitioner posits that what it acquired were
stocks of UCHC and not UCC. By happenstance,
as a result of the transaction, it became an
indirect owner of UCC. We are constrained,
however, to construe ownership acquisition to
mean both direct and indirect. What is decisive is
the determination of the power of control. The
legislative intent behind the tender offer rule
makes clear that the type of activity intended to
be regulated is the acquisition of control of the
listed company through the purchase of shares.
Control may [be] effected through a direct and
indirect acquisition of stock, and when this takes
place, irrespective of the means, a tender offer
must occur. The bottomline of the law is to give
the shareholder of the listed company the
opportunity to decide whether or not to sell in
connection with a transfer of control. x x x.21
As to the third issue, petitioner stresses that the
ruling on mandatory tender offer rule by the SEC
and the Court of Appeals should not have
retroactive effect or be made to apply to its
purchase of the UCHC shares as it relied in good
faith on the letter dated 27 July 2004 of the SEC
which opined that the proposed acquisition of the
UCHC shares was not covered by the mandatory
offer rule.
The argument is not persuasive.
The action of the SEC on the PSE request for
opinion on the Cemco transaction cannot be
construed as passing merits or giving approval to
the questioned transaction. As aptly pointed out
by the respondent, the letter dated 27 July 2004
of the SEC was nothing but an approval of the
draft letter prepared by Director Callanga. There
was no public hearing where interested parties
could have been heard. Hence, it was not issued
upon a definite and concrete controversy affecting
the legal relations of parties thereby making it a
judgment conclusive on all the parties. Said letter
was merely advisory. Jurisprudence has it that an
advisory opinion of an agency may be stricken
down if it deviates from the provision of the
statute.22 Since the letter dated 27 July 2004 runs
counter to the Securities Regulation Code, the
same may be disregarded as what the SEC has
done in its decision dated 14 February 2005.
Assuming arguendo that the letter dated 27 July
2004 constitutes a ruling, the same cannot be
utilized to determine the rights of the parties.
What is to be applied in the present case is the
subsequent ruling of the SEC dated 14 February
2005 abandoning the opinion embodied in the
letter dated 27 July 2004. In Serrano v. National
Labor Relations Commission,23 an argument was
raised similar to the case under consideration.
Private respondent therein argued that the new
doctrine pronounced by the Court should only be
applied prospectively. Said postulation was
ignored by the Court when it ruled:
While a judicial interpretation becomes a part of
the law as of the date that law was originally
passed, this is subject to the qualification that
when a doctrine of this Court is overruled and a
different view is adopted, and more so when
there is a reversal thereof, the new doctrine
should be applied prospectively and should not
apply to parties who relied on the old doctrine
and acted in good faith. To hold otherwise would
be to deprive the law of its quality of fairness and
justice then, if there is no recognition of what had
transpired prior to such adjudication.
It is apparent that private respondent
misconceived the import of the ruling. The
decision in Columbia Pictures does not mean that
if a new rule is laid down in a case, it should not
be applied in that case but that said rule should
apply prospectively to cases arising afterwards.
Private respondent’s view of the principle of
prospective application of new judicial doctrines
would turn the judicial function into a mere
academic exercise with the result that the
doctrine laid down would be no more than a
dictum and would deprive the holding in the case
of any force.
Indeed, when the Court formulated the Wenphil
doctrine, which we reversed in this case, the
Court did not defer application of the rule laid
down imposing a fine on the employer for failure
to give notice in a case of dismissal for cause. To
the contrary, the new rule was applied right then
and there. x x x.
Lastly, petitioner alleges that the decision of the
SEC dated 14 February 2005 is "incomplete and
produces no effect."
This contention is baseless.
The decretal portion of the SEC decision states:
In view of the foregoing, the letter of the
Commission, signed by Director Justina F.
Callangan, dated July 27, 2004, addressed to the
Philippine Stock Exchange is hereby REVERSED
and SET ASIDE. Respondent Cemco is hereby
directed to make a tender offer for UCC shares to
complainant and other holders of UCC shares
similar to the class held by respondent UCHC, at
the highest price it paid for the beneficial
ownership in respondent UCC, strictly in
accordance with SRC Rule 19, Section 9(E).24
A reading of the above ruling of the SEC reveals
that the same is complete. It orders the conduct
of a mandatory tender offer pursuant to the
procedure provided for under Rule 19(E) of the
Amended Implementing Rules and Regulations of
the Securities Regulation Code for the highest
price paid for the beneficial ownership of UCC
G.R. No. 163586 January 27, 2009
shares. The price, on the basis of the SEC
decision, is determinable. Moreover, the
SHARON CASTRO, Petitioner,
implementing rules and regulations of the Code
vs.
are sufficient to inform and guide the parties on
HON. MERLIN DELORIA, as Presiding Judge,
how to proceed with the mandatory tender offer.
Regional Trial Court, Branch 65, Guimaras;
the COA-Region VI, represented by its
WHEREFORE, the Decision and Resolution of the
Director; and HON. COURT OF
Court of Appeals dated 24 October 2005 and 6
APPEALS, Respondents.
March 2006, respectively, affirming the Decision
dated 14 February 2005 of the Securities and
DECISION
Exchange Commission En Banc, are hereby
AFFIRMED. Costs against petitioner.
AUSTRIA-MARTINEZ, J.:
SO ORDERED.
Before the Court is a Petition for Certiorari under
Rule 65 of the Rules of Court filed by Sharon
Castro (petitioner) to assail the July 22, 2003
Decision1 of the Court of Appeals (CA) which
dismissed CA-G.R. SP No. 69350; and the March
26, 2004 CA Resolution2 which denied the motion
for reconsideration.
The facts are of record.
On May 31, 2000, petitioner was charged by the
Ombudsman before the Regional Trial Court
(RTC), Branch 65, Guimaras, with Malversation of
Public Funds, under an Information which reads,
as follows:
That on or about the 17th day of August 1998,
and for sometime prior thereto, in the
Municipality of Buenavista, Province of Guimaras,
Philippines and within the jurisdiction of the this
Honorable Court, abovenamed accused, a public
officer, being the Revenue Officer I of the Bureau
of Internal Revenue, Buenavista, Guimaras and
as such, was in the custody and possession of
public funds in the amount of P556,681.53,
Philippine Currency, representing the value of her
collections and other accountabilities, for which
she is accountable by reason of the duties of her
office, in such capacity and committing the
offense in relation to office, taking advantage of
her public position, with deliberate intent, and
with intent to gain, did then and there willfully,
unlawfully and feloniously appropriate, take,
misappropriate, embezzle and convert to her own
personal use and benefit said amount of
P556,681.53, and despite notice and demands
made upon her account for said public funds, she
has failed to do so, to the damage and prejudice
of the government.
CONTRARY TO LAW.3
Petitioner pleaded NOT GUILTY when arraigned
on February 16, 2001.
On August 31, 2001, petitioner filed a Motion to
Quash on the grounds of lack of jurisdiction and
lack of authority of the Ombudsman to conduct
the preliminary investigation and file the
Information. Petitioner argued that the
Information failed to allege her salary grade -- a
material fact upon which depends the jurisdiction
of the RTC. Citing Uy v.
Sandiganbayan,4 petitioner further argued that as
she was a public employee with salary grade 27,
the case filed against her was cognizable by the
RTC and may be investigated and prosecuted only
by the public prosecutor, and not by the
Ombudsman whose prosecutorial power was
limited to cases cognizable by
the Sandiganbayan.5
The RTC denied the Motion to Quash in an
Order6 dated September 7, 2001. It held that the
jurisdiction of the RTC over the case did not
depend on the salary grade of petitioner, but on
the penalty imposable upon the latter for the
offense charged.7 Moreover, it sustained the
prosecutorial authority of the Ombudsman in the
case, pointing out that in Uy, upon motion for
clarification filed by the Ombudsman, the Court
set aside its August 9, 1999 Decision and issued a
March 20, 2001 Resolution expressly recognizing
the prosecutorial and investigatory authority of
the Ombudsman in cases cognizable by the RTC.
The RTC further held that the Motion to Quash
was contrary to Sec. 1, Rule 117, for it was filed
after petitioner pleaded not guilty under the
Information.8
Petitioner filed a Motion for
Reconsideration,9 which the RTC denied in its
December 18, 2001 Order.10
Petitioner filed a petition for certiorari11 with the
CA, but the latter dismissed the petition in the
Decision under review.
Petitioner’s motion for reconsideration12 was also
denied.
Hence, the present petition, confining the issues
to the following:
1. Whether or not the Ombudsman, as of
May 31, 2000, when the Information for
Malvesation of Public Funds was
instituted against the Petitioner, had the
authority to file the same in light of this
Supreme Court’s ruling in the First "Uy
vs. Sandiganbayan" case, which declared
that the prosecutorial powers of the
Ombudsman is limited to cases
cognizable by the Sandiganbayan.
2. Whether or not the clarificatory
Resolution issued by the Supreme Court
dated February 22, 2001 in the Uy vs.
Sandiganbayan case can be made
applicable to the Petitioner-Accused,
without violating the constitutional
provision on ex-post facto laws and
denial of the accused to due process.13
Petitioner contends that from the time of the
promulgation on August 9, 1999 of the Decision
of the Court in Uy up to the time of issuance on
March 20, 2001 of the Resolution of the Court in
the same case, the prevailing jurisprudence was
that the Ombudsman had no prosecutorial powers
over cases cognizable by the RTC. As the
investigation and prosecution against petitioner
was conducted by the Ombudsman beginning
April 26, 2000, then the August 9, 1999 Decision
in Uy was applicable, notwithstanding that the
said decision was set aside in the March 20, 2001
Resolution of the Court in said case. Hence, the
Information that was filed against petitioner was
void for at that time the Ombudsman had no
investigatory and prosecutorial powers over the
case.
The petition lacks merit.
The petition calls to mind Office of the
Ombudsman v. Enoc,14 wherein accused Ruben
Enoc, et al. invoked the August 9, 1999 Decision
of the Court in Uy15 in a motion to dismiss the 11
counts of malversation that were filed against
them by the Ombudsman before the RTC. The
RTC granted the motion but upon petition filed by
the Ombudsman, the Court reversed the RTC and
held:
In turn, petitioner filed a Manifestation invoking
the very same resolution promulgated on March
20, 2001 in Uy v. Sandiganbayan reconsidering
the ruling that the prosecutory power of the
Ombudsman extended only to cases cognizable
by the Sandiganbayan.
Indeed, this Court has reconsidered the said
ruling and held that the Ombudsman has powers
to prosecute not only graft cases within the
jurisdiction of the Sandiganbayan but also those
cognizable by the regular courts. It held:
The power to investigate and to prosecute
granted by law to the Ombudsman is plenary and
unqualified. It pertains to any act or omission of
any public officer or employee when such act or
omission appears to be illegal, unjust, improper
or inefficient. The law does not make a distinction
between cases cognizable by the Sandiganbayan
and those cognizable by regular courts. It has
been held that the clause "any illegal act or
omission of any public official" is broad enough to
embrace any crime committed by a public officer
or employee.
The reference made by RA 6770 to cases
cognizable by the Sandiganbayan, particularly in
Section 15(1) giving the Ombudsman primary
jurisdiction over cases cognizable by the
Sandiganbayan, and Section 11(4) granting the
Special Prosecutor the power to conduct
preliminary investigation and prosecute criminal
cases within the jurisdiction of the
Sandiganbayan, should not be construed as
confining the scope of the investigatory and
prosecutory power of the Ombudsman to such
cases.
Section 15 of RA 6770 gives the Ombudsman
primary jurisdiction over cases cognizable by the
Sandiganbayan. The law defines such primary
jurisdiction as authorizing the Ombudsman "to
take over, at any stage, from any investigatory
agency of the government, the investigation of
such cases." The grant of this authority does not
necessarily imply the exclusion from its
jurisdiction of cases involving public officers and
employees cognizable by other courts. The
exercise by the Ombudsman of his primary
jurisdiction over cases cognizable by the
Sandiganbayan is not incompatible with the
discharge of his duty to investigate and prosecute
other offenses committed by public officers and
employees. Indeed, it must be stressed that the
powers granted by the legislature to the
Ombudsman are very broad and encompass all
kinds of malfeasance, misfeasance and non-
feasance committed by public officers and
employees during their tenure of office.
Moreover, the jurisdiction of the Office of the
Ombudsman should not be equated with the
limited authority of the Special Prosecutor under
Section 11 of RA 6770. The Office of the Special
Prosecutor is merely a component of the Office of
the Ombudsman and may only act under the
supervision and control and upon authority of the
Ombudsman. Its power to conduct preliminary
investigation and to prosecute is limited to
criminal cases within the jurisdiction of the
Sandiganbayan. Certainly, the lawmakers did not
intend to confine the investigatory and
prosecutory power of the Ombudsman to these
types of cases. The Ombudsman is mandated by
law to act on all complaints against officers and
employees of the government and to enforce their
administrative, civil and criminal liability in every
case where the evidence warrants. To carry out
this duty, the law allows him to utilize the
personnel of his office and/or designate any fiscal,
state prosecutor or lawyer in the government
service to act as special investigator or prosecutor
to assist in the investigation and prosecution of
certain cases. Those designated or deputized to
assist him work under his supervision and control.
The law likewise allows him to direct the Special
prosecutor to prosecute cases outside the
Sandiganbayan’s jurisdiction in accordance with
Section 11(4c) of RA 6770.
We, therefore, hold that the Ombudsman has
authority to investigate and prosecute Criminal
Case Nos. 374(97) to 385(97) against
respondents in the RTC, Branch 19 of Digos,
Davao Del Sur even as this authority is not
exclusive and is shared by him with the regular
prosecutors.
WHEREFORE, the order, dated October 7, 2000,
of the Regional Trial Court, branch 19 of Digos,
Davao del Sur is SET ASIDE and Criminal Case
Nos. 374(97) to 385(97) are hereby REINSTATED
and the Regional Trial Court is ORDERED to try
and decide the same. (Emphasis supplied)
Similarly relevant is the case of Office of
Ombudsman v. Hon. Breva,16 in which, citing the
August 9, 1999 Decision in Uy, the RTC dismissed
a criminal complaint that was filed before it by
the Ombudsman. The Court reversed the RTC,
for, "given the Court’s Uy ruling under its March
20, 2001 Resolution, the trial court’s assailed
Orders x x x are, in hindsight, without legal
support and must, therefore, be set aside."
It is settled, therefore, that the March 20, 2001
Resolution in Uy, that the Ombudsman has
prosecutorial powers in cases cognizable by the
RTC, extends even to criminal information filed or
pending at the time when its August 9, 1999
Decision was the operative ruling on the issue.
Petitioner would argue, however, that the March
20, 2001 Resolution in Uy cannot have retroactive
effect, for otherwise it would amount to "an ex-
post facto law, which is constitutionally
proscribed."17
Petitioner is grasping at straws.
A judicial interpretation of a statute, such as the
Ombudsman Act, constitutes part of that law as
of the date of its original passage. Such
interpretation does not create a new law but
construes a pre-existing one; it merely casts light
upon the contemporaneous legislative intent of
that law.18 Hence, the March 20, 2001 Resolution
of the Court in Uy interpreting the Ombudsman
Act is deemed part of the law as of the date of its
effectivity on December 7, 1989.

Where a judicial interpretation declares a law

unconstitutional or abandons a doctrinal
interpretation of such law, the Court, recognizing
that acts may have been performed under the
impression of the constitutionality of the law or
the validity of its interpretation, has consistently
held that such operative fact cannot be undone by
the mere subsequent declaration of the nullity of
the law or its interpretation; thus, the declaration
can only have a prospective application.19 But
where no law is invalidated nor doctrine
abandoned, a judicial interpretation of the law
should be deemed incorporated at the moment of
its legislation.20

In the present case, the March 20, 2001

Resolution in Uy made no declaration of
unconstitutionality of any law nor did it vacate a
doctrine long held by the Court and relied upon
by the public. Rather, it set aside an erroneous
pubescent interpretation of the Ombudsman Act
as expressed in the August 9, 1999 Decision in
the same case. Its effect has therefore been held
by the Court to reach back to validate
investigatory and prosecutorial processes
conducted by the Ombudsman, such as the filing
of the Information against petitioner.

With the foregoing disquisition, the second issue

is rendered moot and academic.

WHEREFORE, the petition is DISMISSED for

lack of merit.

No costs.

SO ORDERED.
G.R. Nos. 217126-27, November 10, 2015
CONCHITA CARPIO MORALES, IN HER
CAPACITY AS THE
OMBUDSMAN, Petitioner, v. COURT OF
APPEALS (SIXTH DIVISION) AND JEJOMAR
ERWIN S. BINAY, JR., Respondents.
DECISION
PERLAS-BERNABE, J.:
"All government is a trust, every branch of
government is a trust, and immemorially
acknowledged so to
be[.]"1ChanRoblesVirtualawlibrary
The Case
Before the Court is a petition for certiorari and
prohibition2 filed on March 25, 2015 by petitioner
Conchita Carpio Morales, in her capacity as the
Ombudsman (Ombudsman), through the Office of
the Solicitor General (OSG), assailing: (a) the
Resolution3 dated March 16, 2015 of public
respondent the Court of Appeals (CA) in CA-G.R.
SP No. 139453, which granted private
respondent Jejomar Erwin S. Binay, Jr.'s (Binay,
Jr.) prayer for the issuance of a temporary
restraining order (TRO) against the
implementation of the Joint Order4 dated March
10, 20,15 of the Ombudsman in OMB-C-A-15-
0058 to 0063 (preventive suspension order)
preventively suspending him and several other
public officers and employees of the City
Government of Makati, for six (6) months without
pay; and (b) the Resolution5 dated March 20,
2015 of the CA, ordering the Ombudsman to
comment on Binay, Jr.'s petition for
contempt6 in CA-G.R. SP No. 139504.
Pursuant to the Resolution dated April 6, 2015,
7
the CA issued a writ of preliminary
injunction8 (WPI) in CA-G.R. SP No. 139453 which
further enjoined the implementation of the
preventive suspension order, prompting the
Ombudsman to file a supplemental petition9 on
April 13, 2015.
The Facts
On July 22, 2014, a complaint/affidavit10 was filed
by Atty. Renato L. Bondal and Nicolas "Ching"
Enciso VI before the Office of the Ombudsman
against Binay, Jr. and other public officers and
employees of the City Government of Makati
(Binay, Jr., et al), accusing them of Plunder11 and
violation of Republic Act No. (RA)
3019,12 otherwise known as "The Anti-Graft and
Corrupt Practices Act," in connection with the five
(5) phases of the procurement and construction
of the Makati City Hall Parking Building (Makati
Parking Building).13
On September 9, 2014, the Ombudsman
constituted a Special Panel of Investigators14 to
conduct a fact-finding investigation, submit an
investigation report, and file the necessary
complaint, if warranted (1st Special
Panel).15 Pursuant to the Ombudsman's directive,
on March 5, 2015, the 1st Special Panel filed a
complaint16 (OMB Complaint) against Binay,
Jr., et al, charging them with six (6)
administrative cases17 for Grave Misconduct,
Serious Dishonesty, and Conduct Prejudicial to
the Best Interest of the Service, and six (6)
criminal cases18 for violation of Section 3 (e) of
RA 3019, Malversation of Public Funds, and
Falsification of Public Documents (OMB Cases).19
As to Binay, Jr., the OMB Complaint alleged that
he was involved in anomalous activities attending
the following procurement and construction
phases of the Makati Parking Building project,
committed during his previous and present terms
as City Mayor of Makati:
Binay, Jr.'s First Term (2010 to 2013)20
(a) On September 21, 2010, Binay, Jr. issued
the Notice of Award21 for Phase III of the Makati
Parking Building project to Hilmarc's Construction
Corporation (Hilmarc's), and consequently,
executed the corresponding
contract22 on September 28, 2010,23 without
the required publication and the lack of
architectural design,24 and approved the release
of funds therefor in the following amounts as
follows: (1) P130,518,394.80 on December 15,
2010;25 (2) P134,470,659.64 on January 19,
2011;26 (3) P92,775,202.27 on February 25,
2011;27 (4) P57,148,625.51 on March 28,
2011;28 (5) P40,908,750.61 on May 3,
2011;29 and (6) P106,672,761.90 on July 7,
2011;30
(b) On August 11, 2011, Binay, Jr. issued the
Notice of Award31 for Phase IV of the Makati
Parking Building project to Hilmarc's, and
consequently, executed the corresponding
contract32 on August 18, 2011,33 without the
required publication and the lack of architectural
design,34 and approved the release of funds
therefor in the following amounts as follows: (1)
P182,325,538.97 on October 4, 2O11;35 (2)
P173,132,606.91 on October 28,2011;36 (3)
P80,408,735.20 on December 12, 2011;37 (4)
P62,878,291.81 on February 10, 2012;38 and (5)
P59,639,167.90 on October 1, 2012;39
(c) On September 6, 2012, Binay, Jr. issued the
Notice of Award40 for Phase V of the Makati
Parking Building project to Hilmarc's, and
consequently, executed the corresponding
contract41 on September 13, 2012,42 without the
required publication and the lack of architectural
design,43 and approved the release of the funds
therefor in the amounts of P32,398,220.0544 and
P30,582,629.3045 on December 20, 2012; and
Binay, Jr.'s Second Term (2013 to 2016)46
(d) On July 3, 2013 and July 4, 2013, Binay, Jr.
approved the release of funds for the remaining
balance of the September 13, 2012 contract with Cases in the Civil Service (RRACCS), and (3) that he has a clear and unmistakable right to hold
Hilmarc's for Phase V of the Makati Parking Binay, Jr., et al.'s respective positions give them public office, having won by landslide vote in the
Building project in the amount of access to public records and allow them to 2010 and 2013 elections, and that, in view of the
P27,443,629.97;47 and influence possible witnesses; hence, their condonation doctrine, as well as the lack of
continued stay in office may prejudice the evidence to sustain the charges against him, his
(e) On July 24, 2013, Binay, Jr. approved the investigation relative to the OMB Cases filed suspension from office would undeservedly
release of funds for the remaining balance of the against them.55 Consequently, the Ombudsman deprive the electorate of the services of the
contract48 with MANA Architecture & Interior directed the Department of Interior and Local person they have conscientiously chosen and
Design Co. (MANA) for the design and Government (DILG), through Secretary Manuel A. voted into office.63
architectural services covering the Makati Parking Roxas II (Secretary Roxas), to immediately
Building project in the amount of P429,011.48.49 implement the preventive suspension order On March 16, 2015, at around 8:24 a.m.,
against Binay, Jr., et al., upon receipt of the Secretary Roxas caused the implementation of
same.56 the preventive suspension order through the DILG
On March 6, 2015, the Ombudsman created
National Capital Region - Regional Director,
another Special Panel of Investigators to conduct
On March 11, 2015, a copy of the preventive Renato L. Brion, CESO III (Director Brion), who
a preliminary investigation and administrative
suspension order was sent to the Office of the posted a copy thereof on the wall of the Makati
adjudication on the OMB Cases (2nd Special
City Mayor, and received by Maricon Ausan, a City Hall after failing to personally serve the same
Panel).50 Thereafter, on March 9, 2015, the
member of Binay, Jr.'s staff.57 on Binay, Jr. as the points of entry to the Makati
2nd Special Panel issued separate orders51 for
City Hall were closed. At around 9:47 a.m.,
each of the OMB Cases, requiring Binay, Jr., et
The Proceedings Before the CA Assistant City Prosecutor of Makati Billy C.
al. to file their respective counter-affidavits.52
Evangelista administered the oath of office on
On even date,58 Binay, Jr. filed a petition Makati City Vice Mayor Romulo V. Peña, Jr. (Peña,
Before Binay, Jr., et al.'s filing of their counter-
for certiorari59 before the CA, docketed as CA- Jr.) who thereupon assumed office as Acting
affidavits, the Ombudsman, upon the
G.R. SP No. 139453, seeking the nullification of Mayor.64
recommendation of the 2nd Special Panel, issued
the preventive suspension order, and praying for
on March 10, 2015, the subject preventive
the issuance of a TRO and/or WPI to enjoin its At noon of the same day, the CA issued a
suspension order, placing Binay, Jr., et al. under
implementation.60Primarily, Binay, Jr. argued Resolution65 (dated March 16, 2015), granting
preventive suspension for not more than six (6)
that he could not be held administratively Binay, Jr.'s prayer for a TRO,66 notwithstanding
months without pay, during the pendency of the
liable for any anomalous activity attending any of Pena, Jr.'s assumption of duties as Acting Mayor
OMB Cases.53 The Ombudsman ruled that the
the five (5) phases of the Makati Parking Building earlier that day.67 Citing the case of Governor
requisites for the preventive suspension of a
project since: (a) Phases I and II were Garcia, Jr. v. CA,68 the CA found that it was more
public officer are present,54 finding that: (a) the
undertaken before he was elected Mayor of prudent on its part to issue a TRO in view of the
evidence of Binay, Jr., et al.'s guilt was strong
Makati in 2010; and (b) Phases III to V transpired extreme urgency of the matter and seriousness of
given that (1) the losing bidders and members of
during his first term and that his re-election as the issues raised, considering that if it were
the Bids and Awards Committee of Makati City
City Mayor of Makati for a second term established that the acts subject of the
had attested to the irregularities attending the
effectively condoned his administrative administrative cases against Binay, Jr. were all
Makati Parking Building project; (2) the
liability therefor, if any, thus rendering the committed during his prior term, then, applying
documents on record negated the publication of
administrative cases against him moot and the condonation doctrine, Binay, Jr.'s re-election
bids; and (3) the disbursement vouchers, checks,
academic.61In any event, Binay, Jr. claimed meant that he can no longer be administratively
and official receipts showed the release of funds;
that the Ombudsman's preventive charged.69 The CA then directed the Ombudsman
and (b) (1) Binay, Jr., et al. were administratively
suspension order failed to show that the to comment on Binay, Jr.'s petition
charged with Grave Misconduct, Serious
evidence of guilt presented against him is for certiorari .70
Dishonesty, and Conduct Prejudicial to the Best
strong, maintaining that he did not participate in
Interest of the Service; (2) said charges, if
any of the purported irregularities.62 In support of On March 17, 2015, the Ombudsman
proven to be true, warrant removal from public
his prayer for injunctive relief, Binay, Jr. argued manifested71 that the TRO did not state what act
service under the Revised Rules on Administrative
was being restrained and that since the
preventive suspension order had already been
served and implemented, there was no longer any
act to restrain.72
On the same day, Binay, Jr. filed a petition for
contempt,73 docketed as CA-G.R. SP No.
139504, accusing Secretary Roxas, Director
Brion, the officials of the Philippine National
Police, and Pena, Jr. of deliberately refusing to
obey the CA, thereby allegedly impeding,
obstructing, or degrading the administration of
justice.74 The Ombudsman and Department of
Justice Secretary Leila M. De Lima were
subsequently impleaded as additional
respondents upon Binay, Jr.'s filing of the
amended and supplemental petition for
contempt75 (petition for contempt) on March 19,
2015.76 Among others, Binay, Jr. accused the
Ombudsman and other respondents therein for
willfully and maliciously ignoring the TRO issued
by the CA against the preventive suspension
order.77
In a Resolution78dated March 20, 2015, the
CA ordered the consolidation of CA-G.R. SP No.
139453 and CA-G.R. SP No. 139504,
and, without necessarily giving due course to
Binay, Jr.'s petition for contempt, directed the
Ombudsman to file her comment thereto.79 The
cases were set for hearing of oral arguments on
March 30 and 31, 2015.80
The Proceedings Before the Court
Prior to the hearing of the oral arguments before
the CA, or on March 25, 2015, the Ombudsman
filed the present petition before this Court,
assailing the CA's March 16, 2015 Resolution,
which granted Binay, Jr.'s prayer for TRO in CA-
G.R. SP No. 139453, and the March 20, 2015
Resolution directing her to file a comment on
Binay, Jr.'s petition for contempt in CA-G.R. SP
No. 139504.81 The Ombudsman claims that: (a)
the CA had no jurisdiction to grant Binay, Jr.'s
prayer for a TRO, citing Section 14 of RA
6770,82 or "The Ombudsman Act of 1989," which
states that no injunctive writ could be issued to
delay the Ombudsman's investigation unless
there is prima facie evidence that the subject
matter thereof is outside the latter's
jurisdiction;83 and (b) the CA's directive for the
Ombudsman to comment on Binay, Jr.'s petition
for contempt is illegal and improper, considering
that the Ombudsman is an impeachable officer,
and therefore, cannot be subjected to contempt
proceedings.84
In his comment85 filed on April 6, 2015, Binay, Jr.
argues that Section 1, Article VIII of the 1987
Constitution specifically grants the CA judicial
power to review acts of any branch or
instrumentality of government, including the
Office of the Ombudsman, in case of grave abuse
of discretion amounting to lack or excess of
jurisdiction, which he asserts was committed in
this case when said office issued the preventive
suspension order against him.86 Binay, Jr. posits
that it was incumbent upon the Ombudsman to1
have been apprised of the condonation doctrine
as this would have weighed heavily in
determining whether there was strong evidence
to warrant the issuance of the preventive
suspension order.87 In this relation, Binay, Jr.
maintains that the CA correctly enjoined the
implementation of the preventive suspension
order given his clear and unmistakable right to
public office, and that it is clear that he could not
be held administratively liable for any of the
charges against him since his subsequent re-
election in 2013 operated as a condonation of any
administrative offenses he may have committed
during his previous term.88 As regards the CA's
order for the Ombudsman to comment on his
petition for contempt, Binay, Jr. submits that
while the Ombudsman is indeed an impeachable
officer and, hence, cannot be removed from office
except by way of impeachment, an action for
contempt imposes the penalty of fine and
imprisonment, without necessarily resulting in
removal from office. Thus, the fact that the
Ombudsman is an impeachable officer should not
deprive the CA of its inherent power to punish
contempt.89
Meanwhile, the CA issued a Resolution90 dated
April 6, 2015, after the oral arguments before it
were held,91 granting Binay, Jr.'s prayer for a
WPI, which further enjoined the implementation
of the preventive suspension order. In so ruling,
the CA found that Binay, Jr. has an ostensible
right to the final relief prayed for, namely, the
nullification of the preventive suspension order, in
view of the condonation doctrine,
citing Aguinaldo v. Santos.92 Particularly, it
found that the Ombudsman can hardly impose
preventive suspension against Binay, Jr. given
that his re-election in 2013 as City Mayor of
Makati condoned any administrative liability
arising from anomalous activities relative to the
Makati Parking Building project from 2007 to
2013.93 In this regard, the CA added that,
although there were acts which were apparently
committed by Binay, Jr. beyond his first term —
namely, the alleged payments on July 3, July 4,
and July 24, 2013,94 corresponding to the
services of Hillmarc's and MANA - still, Binay, Jr.
cannot be held administratively liable therefor
based on the cases of Salalima v. Guingona,
Jr.,95 and Mayor Garcia v. Mojica96 wherein the
condonation doctrine was still applied by the
Court although the payments were made after the
official's re-election, reasoning that the payments
were merely effected pursuant to contracts
executed before said re-election.97 To this, the CA
added that there was no concrete evidence of
Binay, Jr.'s participation for the alleged payments
made on July 3, 4, and 24, 2013.98
In view of the CA's supervening issuance of a WPI
pursuant to its April 6, 2015 Resolution, the
Ombudsman filed a supplemental petition99 before
this Court, arguing that the condonation doctrine
is irrelevant to the determination of whether the
evidence of guilt is strong for purposes of issuing
preventive suspension orders. The Ombudsman
also maintained that a reliance on the
condonation doctrine is a matter of defense,
which should have been raised by Binay, Jr.
before it during the administrative proceedings,
and that, at any rate, there is no condonation
because Binay, Jr. committed acts subject of the
OMB Complaint after his re-election in 2013.100
On April 14 and 21, 2015,101 the Court conducted
hearings for the oral arguments of the parties.
Thereafter, they were required to file their
respective memoranda.102 In compliance thereto,
the Ombudsman filed her Memorandum103 on May
20, 2015, while Binay, Jr. submitted his
Memorandum the following day.104
Pursuant to a Resolution105 dated June 16, 2015,
the Court directed the parties to comment on
each other's memoranda, and the OSG to
comment on the Ombudsman's Memorandum, all
within ten (10) days from receipt of the notice.
On July 15, 2015, both parties filed their
respective comments to each other's
memoranda.106 Meanwhile, on July 16, 2015, the
OSG filed its Manifestation In Lieu of
Comment,107 simply stating that it was mutually
agreed upon that the Office of the Ombudsman
would file its Memorandum, consistent with its
desire to state its "institutional position."108 In her
Memorandum and Comment to Binay, Jr.'s
Memorandum, the Ombudsman pleaded, among
others, that this Court abandon the condonation
doctrine.109 In view of the foregoing, the case was
deemed submitted for resolution.chanrobleslaw
The Issues Before the Court
Based on the parties' respective pleadings, and as
raised during the oral arguments conducted
before this Court, the main issues to be
resolved in seriatim are as follows:
I. Whether or not the present petition, and
not motions for reconsideration of the
assailed CA issuances in CA-G.R. SP No.
139453 and CA-G.R. SP No. 139504, is
the Ombudsman's plain, speedy, and
adequate remedy;cralawlawlibrary
II. Whether or not the CA has subject matter
jurisdiction over the main petition
for certiorari in CA-G.R. SP No.
139453;cralawlawlibrary
III. Whether or not the CA has subject matter
jurisdiction to issue a TRO and/or WPI
enjoining the implementation of a
preventive suspension order issued by
the Ombudsman;cralawlawlibrary
IV. Whether or not the CA gravely abused its
discretion in issuing the TRO and
eventually, the WPI in CA-G.R. SP No.
139453 enjoining the implementation of
the preventive suspension order against
Binay, Jr. based on the condonation
doctrine; and
V. Whether or not the CA's directive for the
Ombudsman to ' comment on Binay, Jr.'s
petition for contempt in CA- G.R. SP No.
139504 is improper and illegal.
The Ruling of the Court
The petition is partly meritorious.chanrobleslaw
I.
A common requirement to both a petition
for certiorari and a petition for prohibition taken
under Rule 65 of the 1997 Rules of Civil
Procedure is that the petitioner has no other
plain, speedy, and adequate remedy in the
ordinary course of law. Sections 1 and 2 thereof
provide:
Section 1. Petition for certiorari. - When any
tribunal, board or officer exercising judicial or
quasi-judicial functions has acted without or in
excess of its or his jurisdiction, or with grave
abuse of discretion amounting to lack or excess of
jurisdiction, and there is no appeal, nor any
plain, speedy, and adequate remedy in the
ordinary course of law, a person aggrieved
thereby may file a verified petition in the proper
court, alleging the facts with certainty and
praying that judgment be rendered annulling or
modifying the proceedings of such tribunal, board
or officer, and granting such incidental reliefs as
law and justice may require.
xxxx
Section 2. Petition for prohibition. - When the
proceedings of any tribunal, corporation, board,
officer or person, whether exercising judicial,
quasi-judicial or ministerial functions, are without
or in excess of its or his jurisdiction, or with grave
abuse of discretion amounting to lack or excess of
jurisdiction, and there is no appeal, or any other
plain, speedy, and adequate remedy in the
ordinary course of law, a person aggrieved
thereby may file a verified petition in the proper
court, alleging the facts r with certainty and
praying that judgment be rendered commanding
the respondent to desist from further proceedings
in the action or matter specified therein, or
otherwise granting such incidental reliefs as law
and justice may require.
x x x x (Emphases supplied)
Hence, as a general rule, a motion for
reconsideration must first be filed with the lower
court prior to resorting to the extraordinary
remedy of certiorari or prohibition since a motion
for reconsideration may still be considered as a
plain, speedy, and adequate remedy in the
ordinary course of law. The rationale for the pre-
requisite is to grant an opportunity for the lower
court or agency to correct any actual or perceived
error attributed to it by the re-examination of the
legal and factual circumstances of the case.110

Jurisprudence states that "[i]t is [the]
inadequacy, [and] not the mere absence of all
other legal remedies and the danger of failure of
justice without the writ, that must usually
determine the propriety of certiorari [or
prohibition]. A remedy is plain, speedy[,] and
adequate if it will promptly relieve the petitioner
from the injurious effects of the judgment, order,
or resolution of the lower court or agency, x x
x."111
In this light, certain exceptions were crafted to
the general rule requiring a prior motion for
reconsideration before the filing of a petition
for certiorari, which exceptions also apply to a
petition for prohibition.112 These are: (a) where
the order is a patent nullity, as where the court a
quo has no jurisdiction; (b) where the questions
raised in the certiorari proceedings have been
duly raised and passed upon by the lower court,
or are the same as those raised and passed upon
in the lower court; (c) where there is an urgent
necessity for the resolution of the question and
any further delay would prejudice the interests of
the Government or of the petitioner or the subject
matter of the action is perishable; (d) where,
under the circumstances, a motion for
reconsideration would be useless; (e) where
petitioner was deprived of due process and there
is extreme urgency for relief; (f) where, in a
criminal case, relief from an order of arrest is
urgent and the granting of such relief by the trial
court is improbable; (g) where the proceedings in
the lower court are a nullity for lack of due
process; (h) where the proceedings were ex
parte or in which the petitioner had no
opportunity to object; and (i) where the issue
raised is one purely of law or where public
interest is involved.113
In this case, it is ineluctably clear that the above-
highlighted exceptions attend since, for the first
time, the question on the authority of the CA -
and of this Court, for that matter - to enjoin the
implementation of a preventive suspension order
issued by the Office of the Ombudsman is put to
the fore. This case tests the constitutional and
statutory limits of the fundamental powers of key
government institutions - namely, the Office of
the Ombudsman, the Legislature, and the
Judiciary - and hence, involves an issue of
transcendental public importance that demands
no less than a careful but expeditious resolution.
Also raised is the equally important issue on the
propriety of the continuous application of the
condonation doctrine as invoked by a public
officer who desires exculpation from
administrative liability. As such, the
Ombudsman's direct resort to certiorari and
prohibition before this Court, notwithstanding her
failure to move for the prior reconsideration of
the assailed issuances in CA-G.R. SP No. 139453
and CA-G.R. SP No. 139504 before the CA, is
justified.chanrobleslaw
II.
Albeit raised for the first time by the Ombudsman
in her Memorandum,114 it is nonetheless proper to
resolve the issue on the CA's lack of subject
matter jurisdiction over the main petition
for certiorari in CA-G.R. SP No. 139453, in view of
the well-established rule that a court's jurisdiction
over the subject matter may be raised at any
stage of the proceedings. The rationale is that
subject matter jurisdiction is conferred by law,
and the lack of it affects the very authority of the
court to take cognizance of and to render
judgment on the action.115 Hence, it should be
preliminarily determined if the CA indeed had
subject matter jurisdiction over the main CA-G.R.
SP No. 139453 petition, as the same determines
the validity of all subsequent proceedings relative
thereto. It is noteworthy to point out that Binay,
Jr. was given the opportunity by this Court to be
heard on this issue,116 as he, in fact, duly
submitted his opposition through his comment to
the Ombudsman's Memorandum.117 That being
said, the Court perceives no reasonable objection
against ruling on this issue.
The Ombudsman's argument against the CA's
lack of subject matter jurisdiction over the main
petition, and her corollary prayer for its dismissal,
is based on her interpretation of Section 14, RA
6770, or the Ombudsman Act,118 which reads in
full:
Section 14. Restrictions. - No writ of injunction
shall be issued by any court to delay an
investigation being conducted by the Ombudsman
under this Act, unless there is a prima
facie evidence that the subject matter of the
investigation is outside the jurisdiction of the
Office of the Ombudsman.
No court shall hear any appeal or application for
remedy against the decision or findings of the
Ombudsman, except the Supreme Court, on pure
question of law.
The subject provision may be dissected into two
(2) parts.
The first paragraph of Section 14, RA 6770 is
a prohibition against any court (except the
Supreme Court119) from issuing a writ of
injunction to delay an investigation being
conducted by the Office of the Ombudsman.
Generally speaking, "[injunction is a judicial writ,
process or proceeding whereby a party is ordered
to do or refrain from doing a certain act. It may
be the main action or merely a provisional
remedy for and as an incident in the main
action."120 Considering the textual qualifier "to
delay," which connotes a suspension of an action
while the main case remains pending, the "writ of
injunction" mentioned in this paragraph could
only refer to injunctions of the provisional kind,
consistent with the nature of a provisional
injunctive relief.
The exception to the no injunction policy is when
there is prima facie evidence that the subject
matter of the investigation is outside the office's
jurisdiction. The Office of the Ombudsman has
disciplinary authority over all elective and
appointive officials of the government and its
subdivisions, instrumentalities, and agencies, with
the exception only of impeachable officers,
Members of Congress, and the
Judiciary.121 Nonetheless, the Ombudsman retains
the power to investigate any serious misconduct
in office allegedly committed by officials
removable by impeachment, for the purpose of
filing a verified complaint for impeachment, if
warranted.122 Note that the Ombudsman has
concurrent jurisdiction over certain administrative
cases which are within the jurisdiction of the
regular courts or administrative agencies, but has
primary jurisdiction to investigate any act or
omission of a public officer or employee who is
under the jurisdiction of the Sandiganbayan.123
On the other hand, the second paragraph of
Section 14, RA 6770 provides that no appeal or
application for remedy may be heard against the
decision or findings of the Ombudsman, with the
exception of the Supreme Court on pure
questions of law. This paragraph, which the
Ombudsman particularly relies on in arguing that
the CA had no jurisdiction over the main CA-G.R.
SP No. 139453 petition, as it is supposedly this
Court which has the sole jurisdiction to conduct a
judicial review of its decisions or findings, is
vague for two (2) reasons: (1) it is unclear what
the phrase "application for remedy" or the word
"findings" refers to; and (2) it does not specify
what procedural remedy is solely allowable to this
Court, save that the same be taken only against a
pure question of law. The task then, is to apply
the relevant principles of statutory construction to
resolve the ambiguity.
"The underlying principle of all construction is that
the intent of the legislature should be sought in
the words employed to express it, and that when
found[,] it should be made to govern, x x x. If the
words of the law seem to be of doubtful import, it
may then perhaps become necessary to look
beyond them in order to ascertain what was in
the legislative mind at the time the law was
enacted; what the circumstances were, under
which the action was taken; what evil, if any, was
meant to be redressed; x x x [a]nd where the law
has contemporaneously been put into operation,
and in doing so a construction has necessarily
been put upon it, this construction, especially if
followed for some considerable period, is entitled
to great respect, as being very probably a true
expression of the legislative purpose, and is not
lightly to be overruled, although it is not
conclusive."124
As an aid to construction, courts may avail
themselves of the actual proceedings of the
legislative body in interpreting a statute of
doubtful meaning. In case of doubt as to what a
provision of a statute means, the meaning put to
the provision during the legislative deliberations
may be adopted,125 albeit not controlling in the
interpretation of the law.126
A. The Senate deliberations cited by the
Ombudsman do not pertain to the second
paragraph of Section 14, RA 6770.
The Ombudsman submits that the legislative
intent behind Section 14, RA 6770, particularly on
the matter of judicial review of her office's
decisions or findings, is supposedly clear from the
following Senate deliberations:127
Senator [Edgardo J.] Angara, x x x. On page
15, Mr. President, line 14, after the phrase
"petition for" delete the word "review" and in lieu
thereof, insert the word CERTIORARI. So that,
review or appeal from the decision of the
Ombudsman would only be taken not on a
petition for review, but on certiorari.
The President [Jovito R. Salonga]. What is
the practical effect of that? Will it be more
difficult to reverse the decision under
review?
Senator Angara. It has two practical effect
ways, Mr. President. First is that the findings
of facts of the Ombudsman would be almost
conclusive if supported by substantial
evidence. Second, we would not
unnecessarily clog the docket of the
Supreme Court. So, it in effect will be a very
strict appeal procedure.
xxxx
Senator [Teofisto T.] Guingona, [Jr.]. Does
this mean that, for example, if there are
exhaustive remedies available to a respondent,
the respondent himself has the right to exhaust
the administrative remedies available to him?
Senator Angara. Yes, Mr. President, that is
correct.
Senator Guingona. And he himself may cut the
proceeding short by appealing to the Supreme
Court only on certiorari ?
Senator Angara. On question of law, yes.
Senator Guingona. And no other remedy is
available to him?
Senator Angara. Going to the Supreme
Court, Mr. President?
Senator Guingona. Yes. What I mean to say is,
at what stage, for example, if he is a presidential
appointee who is the respondent, if there is f
no certiorari available, is the respondent given
the right to exhaust his administrative remedies
first before the Ombudsman can take the
appropriate action?
Senator Angara. Yes, Mr. President, because we
do not intend to change the administrative law
principle that before one can go to court, he must
exhaust all administrative remedies xxx available
to him before he goes and seeks judicial review.
xxxx
Senator [Neptali A.] Gonzales. What is the
purpose of the Committee in changing the
method of appeal from one of a petition for
review to a petition for certiorari ?
Senator Angara. To make it consistent, Mr.
President, with the provision here in the bill
to the effect that the finding of facts of the
Ombudsman is conclusive if supported by
substantial evidence.
Senator Gonzales. A statement has been made
by the Honorable Presiding Officer to which I
concur, that in an appeal by certiorari , the
appeal is more difficult. Because
in certiorari it is a matter of discretion on
the part of the court, whether to give due
course to the petition or dismiss it
outright. Is that not correct, Mr. President?
Senator Angara. That is absolutely correct,
Mr. President
Senator Gonzales. And in a petition
for certiorari , the issue is limited to whether
or not the Ombudsman here has acted
without jurisdiction and has committed a
grave abuse of discretion amounting to lack
of jurisdiction. Is that not the consequence, Mr.
President.
Senator Angara. That is correct, Mr.
President.
Senator Gonzales. And it is, therefore, in this
sense that the intention of the Committee is
to make it harder to have a judicial review,
but should be limited only to cases that I have
enumerated.
Senator Angara. Yes, Mr. President.
Senator Gonzales. I think, Mr. President, our
Supreme Court has made a distinction between a
petition for review and a petition for certiorari ;
because before, under the 1935 Constitution
appeal from any order, ruling or decision of the
COMELEC shall be by means of review. But under
the Constitution it is now by certiorari and the
Supreme Court said that by this change, the court
exercising judicial review will not inquire into the
facts, into the evidence, because we will not go
deeply by way of review into the evidence on
record but its authority will be limited to a
determination of whether the administrative
agency acted without, or in excess of, jurisdiction,
or committed a grave abuse of discretion. So, I
assume that that is the purpose of this
amendment, Mr. President.
Senator Angara. The distinguished Gentleman
has stated it so well.
Senator Gonzales. I just want to put that in the
Record. Senator Angara. It is very well stated,
Mr. President.
xxxx
The President. It is evident that there must
be some final authority to render decisions.
Should it be the Ombudsman or should it be
the Supreme Court?
Senator Angara. As I understand it, under our
scheme of government, Mr. President, it is and
has to be the Supreme Court to make the
final determination.
The President. Then if that is so, we have to
modify Section 17.
Senator Angara. That is why, Mr. President,
some of our Colleagues have made a reservation
to introduce an appropriate change during the
period of Individual Amendments.
xxxx
The President. All right. Is there any objection
to the amendment inserting the
word CERTIORARI instead of "review"? [Silence]
Hearing none, the same is approved.128
Upon an assiduous scrutiny of these deliberations,
the Court is, however, unconvinced that the
provision debated on was Section 14, RA 6770, as
the Ombudsman invokes. Note that the exchange
begins with the suggestion of Senator Angara to
delete the word "review" that comes after the
phrase "petition for review" and, in its stead,
insert the word "certiorari" so that the "review or
appeal from the decision of the Ombudsman
would not only be taken on a petition for review,
but on certiorari" The ensuing exchange between
Senators Gonzales and Angara then dwells on the
purpose of changing the method of review from
one of a petition for review to a petition
for certiorari - that is, to make "the appeal x x x
more difficult." Ultimately, the amendment to the
change in wording, from "petition for review" to
"petition for certiorari" was approved.
Noticeably, these references to a "petition for
review" and the proposed "petition for certiorari"
are nowhere to be found in the text of Section 14,
RA 6770. In fact, it was earlier mentioned that
this provision, particularly its second paragraph,
does not indicate what specific procedural remedy
one should take in assailing a decision or finding
of the Ombudsman; it only reveals that the
remedy be taken to this Court based on pure
questions of law. More so, it was even
commented upon during the oral arguments of
this case129 that there was no debate or
clarification made on the current formulation of
the second paragraph of Section 14, RA 6770 per
the available excerpts of the Senate deliberations.
In any case, at least for the above-cited
deliberations, the Court finds no adequate
support to sustain the Ombudsman's entreaty
that the CA had no subject matter jurisdiction
over the main CA-G.R. SP No. 139453 petition.
On the contrary, it actually makes greater sense
to posit that these deliberations refer to another
Ombudsman Act provision, namely Section 27, RA
6770. This is because the latter textually reflects
the approval of Senator Angara's suggested
amendment, i.e., that the Ombudsman's decision
or finding may be assailed in a petition
for certiorari to this Court (fourth paragraph), and
further, his comment on the conclusive nature of
the factual findings of the Ombudsman, if
supported by substantial evidence (third
paragraph):
Section 27. Effectivity and Finality of Decisions.—
(1) All provisionary orders of the Office of the
Ombudsman are immediately effective and
executory.
A motion for reconsideration of any order,
directive or decision of the Office of the
Ombudsman must be filed within five (5) days
after receipt of written notice and shall be
entertained only on any of the following
grounds:chanRoblesvirtualLawlibrary
(1) New evidence has been discovered which
materially affects the order, directive or
decision;cralawlawlibrary
(2) Errors of law or irregularities have been
committed prejudicial to the interest of the
movant. The motion for reconsideration shall be
resolved within three (3) days from
filing: Provided, That only one motion for
reconsideration shall be
entertained.ChanRoblesVirtualawlibrary
Findings of fact by the Office of the Ombudsman
when supported by substantial evidence are
conclusive. Any order, directive or decision
imposing the penalty of public censure or
reprimand, suspension of not more than one (1)
month's salary shall be final and unappealable.
In all administrative disciplinary cases,
orders, directives, or decisions of the Office
of the Ombudsman may be appealed to the
Supreme Court by filing a petition
for certiorari within ten (10) days from
receipt of the written notice of the order,
directive or decision or denial of the motion
for reconsideration in accordance with Rule
45 of the Rules of Court.
The above rules may be amended or modified by
the Office of the ' Ombudsman as the interest of
justice may require. (Emphasis and underscoring
supplied)
At first blush, it appears that Section 27, RA 6770
is equally ambiguous in stating that a "petition
for certiorari" should be taken in accordance with
Rule 45 of the Rules of Court, as it is well-known
that under the present 1997 Rules of Civil
Procedure, petitions for certiorari are governed by
Rule 65 of the said Rules. However, it should be
discerned that the Ombudsman Act was passed
way back in 1989130 and, hence, before the
advent of the 1997 Rules of Civil Procedure.131 At
that time, the governing 1964 Rules of
Court,132 consistent with Section 27, RA 6770,
referred to the appeal taken thereunder as a
petition for certiorari , thus possibly explaining
the remedy's textual denomination, at least in the
provision's final approved version:
RULE 45
Appeal from Court of Appeals to Supreme Court
SECTION 1. Filing of Petition with Supreme Court.
- A party may appeal by certiorari , from a
judgment of the Court of Appeals, by filing with
the Supreme Court a petition for certiorari ,
within fifteen (15) days from notice of judgment
or of the denial of his motion for reconsideration
filed in due time, and paying at the same time, to
the clerk of said court the corresponding
docketing fee. The petition shall not be acted
upon without proof of service of a copy thereof to
the Court of Appeals. (Emphasis supplied)
B. Construing the second paragraph of
Section 14, RA 6770.
The Senate deliberations' lack of discussion on
the second paragraph of Section 14, RA 6770
notwithstanding, the other principles of statutory
construction can apply to ascertain the meaning
of the provision.
To recount, the second paragraph of Section 14,
RA 6770 states that "[n]o court shall hear any
appeal or application for remedy against the
decision or findings of the Ombudsman,
except the Supreme Court, on pure question
of law." ;cralawlawlibrary
As a general rule, the second paragraph of
Section 14, RA 6770 bans the whole range of
remedies against issuances of the
Ombudsman, by prohibiting: (a) an appeal
against any decision or finding of the
Ombudsman, and (b) "any application of
remedy" (subject to the exception below) against
the same. To clarify, the phrase "application for
remedy," being a generally worded provision, and
being separated from the term "appeal" by the
disjunctive "or",133 refers to any remedy (whether
taken mainly or provisionally), except an appeal,
following the maxim generalia verba sunt
generaliter intelligenda: general words are to be
understood in a general sense.134 By the same
principle, the word "findings," which is also
separated from the word "decision" by the
disjunctive "or", would therefore refer to any
finding made by the Ombudsman (whether final
or provisional), except a decision.
The subject provision, however, crafts
an exception to the foregoing general rule. While
the specific procedural vehicle is not explicit from
its text, it is fairly deducible that the second
paragraph of Section 14, RA 6770 excepts, as the
only allowable remedy against "the decision or
findings of the Ombudsman," a Rule 45 appeal,
for the reason that it is the only remedy
taken to the Supreme Court on "pure
questions of law," whether under the 1964
Rules of Court or the 1997 Rules of Civil
Procedure:
Rule 45, 1964 Rules of Court
RULE 45
Appeal from Court of Appeals to Supreme Court
xxxx
Section 2. Contents of Petition. — The petition
shall contain a concise statement of the matters
involved, the assignment of errors made in the
court below, and the reasons relied on for the
allowance of the petition, and it should be
accompanied with a true copy of the judgment
sought to be reviewed, together with twelve (12)
copies of the record on appeal, if any, and of the
petitioner's brief as filed in the Court of Appeals.
A verified statement of the date when notice of
judgment and denial of the motion for
reconsideration, if any, were received shall
accompany the petition.
Only questions of law may be raised in the
petition and must be distinctly set forth. If no
record on appeal has been filed in the Court of
Appeals, the clerk of the Supreme Court, upon
admission of the petition, shall demand from the
Court of Appeals the elevation of the whole record
of the case. (Emphasis and underscoring
supplied)
Rule 45, 1997 Rules of Civil Procedure
RULE 45
Appeal by Certiorari to the Supreme Court
Section 1. Filing of petition with Supreme Court. -
A party desiring to appeal by certiorari from a
judgment, final order or resolution of the Court of
Appeals, the Sandiganbayan, the Court of Tax
Appeals, the Regional Trial Court or other courts,
whenever authorized by law, may file with the
Supreme Court a verified petition for review
on certiorari. The petition may include an
application for a writ of preliminary injunction or
other provisional remedies and shall raise only
questions of law, which must be distinctly
set forth. The petitioner may seek the same
provisional remedies by verified motion filed in
the same action or proceeding at any time during
its pendency. (Emphasis and underscoring
supplied)
That the remedy excepted in the second
paragraph of Section 14, RA 6770 could be a
petition for certiorari under Rule 65 of the 1964
Rules of Court or the 1997 Rules of Procedure is a
suggestion that defies traditional norms of
procedure. It is basic procedural law that a Rule
65 petition is based on errors of jurisdiction, and
not errors of judgment to which the classifications
of (a) questions of fact, (b) questions of law, or
(c) questions of mixed fact and law, relate to. In
fact, there is no procedural rule, whether in the
old or new Rules, which grounds a Rule 65
petition on pure questions of law. Indeed, it is
also a statutory construction principle that the
lawmaking body cannot be said to have intended
the establishment of conflicting and hostile
systems on the same subject. Such a result would
render legislation a useless and idle ceremony,
and subject the laws to uncertainty and
unintelligibility.135 There should then be no
confusion that the second paragraph of Section
14, RA 6770 refers to a Rule 45 appeal to this
Court, and no other. In sum, the appropriate
construction of this Ombudsman Act provision is
that all remedies against issuances of the Office
of the Ombudsman are prohibited, except the
above-stated Rule 45 remedy to the Court on
pure questions of law.
C. Validity of the second paragraph of
Section 14, RA 6770.
Of course, the second paragraph of Section 14,
RA 6770's extremely limited restriction on
remedies is inappropriate since a Rule 45 appeal -
which is within the sphere of the rules of
procedure promulgated by this Court - can only
be taken against final decisions or orders of lower
courts,136 and not against "findings" of quasi-
judicial agencies. As will be later elaborated upon,
Congress cannot interfere with matters of
procedure; hence, it cannot alter the scope of a
Rule 45 appeal so as to apply to interlocutory
"findings" issued by the Ombudsman. More
significantly, by confining the remedy to a
Rule 45 appeal, the provision takes away the
remedy of certiorari, grounded on errors of
jurisdiction, in denigration of the judicial power
constitutionally vested in courts. In this light, the
second paragraph of Section 14, RA 6770 also
increased this Court's appellate jurisdiction,
without a showing, however, that it gave its
consent to the same. The provision is, in fact,
very similar to the fourth paragraph of Section
27, RA 6770 (as above-cited), which was
invalidated in the case of Fabian v.
Desiertoni137 (Fabian).138
In Fabian, the Court struck down the fourth
paragraph of Section 27, RA 6770 as
unconstitutional since it had the effect of
increasing the appellate jurisdiction of the Court
without its advice and concurrence in violation of
Section 30, Article VI of the 1987
Constitution.139 Moreover, this provision was
found to be inconsistent with Section 1, Rule 45
of the present 1997 Rules of Procedure which, as
above-intimated, applies only to a review of
"judgments or final orders of the Court of
Appeals, the Sandiganbayan, the Court of Tax
Appeals, the Regional Trial Court, or other courts
authorized by law;" and not of quasi-judicial
agencies, such as the Office of the
Ombudsman, the remedy now being a Rule 43
appeal to the Court of Appeals. In Ruivivar v.
Office of the Ombudsman,140 the Court's
ratiocinations and ruling in Fabian were
recounted:
The case of Fabian v. Desierto arose from the
doubt created in the application of Section 27 of
R.A. No. 6770 (The Ombudsman's Act) and
Section 7, Rule III of A.O. No. 7 (Rules of
Procedure of the Office of the Ombudsman) on
the availability of appeal before the Supreme
Court to assail a decision or order of the
Ombudsman in administrative cases. In Fabian,
we invalidated Section 27 of R.A. No. 6770
(and Section 7, Rule III of A.O. No. 7 and the
other rules implementing the Act) insofar as
it provided for appeal by certiorari under
Rule 45 from the decisions or orders of the
Ombudsman in administrative cases. We
held that Section 27 of R.A. No. 6770 had the
effect, not only of increasing the appellate
jurisdiction of this Court without its advice
and concurrence in violation of Section 30,
Article VI of the Constitution; it was also
inconsistent with Section 1, Rule 45 of the
Rules of Court which provides that a petition
for review on certiorari shall apply only to a
review of "judgments or final orders of the
Court of Appeals, the Sandiganbayan, the
Court of Tax Appeals, the Regional Trial
Court, or other courts authorized by
law." We pointedly
said:chanRoblesvirtualLawlibrary
As a consequence of our ratiocination that Section
27 of Republic Act No. 6770 should be struck
down as unconstitutional, and in line with the
regulatory philosophy adopted in appeals from
quasi-judicial agencies in the 1997 Revised Rules
of Civil Procedure, appeals from decisions of the
Office of the Ombudsman in administrative
disciplinary cases should be taken to the CA
under the provisions of Rule 43.141 (Emphasis
supplied)
Since the second paragraph of Section 14, RA
6770 limits the remedy against "decision or
findings" of the Ombudsman to a Rule 45 appeal
and thus - similar to the fourth paragraph of
Section 27, RA 6770142 - attempts to effectively
increase the Supreme Court's appellate
jurisdiction without its advice and
concurrence,143 it is therefore concluded that the
former provision is also unconstitutional and
perforce, invalid. Contrary to the Ombudsman's
posturing,144Fabian should squarely apply since
the above-stated Ombudsman Act provisions
are in part materia in that they "cover the same
specific or particular subject matter,"145 that is,
the manner of judicial review over issuances of
the Ombudsman.
Note that since the second paragraph of Section
14, RA 6770 is clearly determinative of the
existence of the CA's subject matter jurisdiction
over the main CA-G.R. SP No. 139453 petition,
including all subsequent proceedings relative
thereto, as the Ombudsman herself has
developed, the Court deems it proper to resolve
this issue ex mero motu (on its own motion146).
This procedure, as was similarly adopted
in Fabian, finds its bearings in settled case law:
The conventional rule, however, is that a
challenge on constitutional grounds must be
raised by a party to the case, neither of whom did
so in this case, but that is not an inflexible rule,
as we shall explain.
Since the constitution is intended for the
observance of the judiciary and other
departments of the government and the judges
are sworn to support its provisions, the courts are
not at liberty to overlook or disregard its
commands or countenance evasions thereof.
When it is clear , that a statute transgresses the
authority vested in a legislative body, it is the
duty of the courts to declare that the constitution,
and not the statute, governs in a case before
them for judgment.
Thus, while courts will not ordinarily pass upon
constitutional questions which are not raised in
the pleadings, the rule has been recognized to
admit of certain exceptions. It does not preclude
a court from inquiring into its own jurisdiction or
compel it to enter a judgment that it lacks
jurisdiction to enter. If a statute on which a
court's jurisdiction in a proceeding depends is
unconstitutional, the court has no jurisdiction in
the proceeding, and since it may determine
whether or not it has jurisdiction, it necessarily
follows that it may inquire into the
constitutionality of the statute.
Constitutional questions, not raised in the
regular and orderly procedure in the trial are
ordinarily rejected unless the jurisdiction of
the court below or that of the appellate
court is involved in which case it may be
raised at any time or on the court's own
motion. The Court ex mero motu may take
cognizance of lack of jurisdiction at any point in
the case where that fact is developed. The court
has a clearly recognized right to determine its
own jurisdiction in any proceeding.147 (Emphasis
supplied)
D. Consequence of invalidity.
In this case, the Rule 65 petition for certiorari in
CA-G.R. SP No. 139453 was filed by Binay, Jr.
before the CA in order to nullify the preventive
suspension order issued by the Ombudsman, an
interlocutory order,148 hence, unappealable.149
In several cases decided after Fabian, the Court
has ruled that Rule 65 petitions
for certiorari against unappelable issuances150 of
the Ombudsman should be filed before the CA,
and not directly before this Court:
In Office of the Ombudsman v.
Capulong151 (March 12, 2014), wherein a
preventive suspension order issued by the Office
of the Ombudsman was - similar to this case -
assailed through a Rule 65 petition
for certiorari filed by the public officer before the
CA, the Court held that "[t]here 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."152
In Dagan v. Office of the
Ombudsman153 (November 19, 2013), involving a
Rule 65 petition for certiorari assailing a final and
unappealable order of the Office of the
Ombudsman in an administrative case, the Court
remarked that "petitioner employed the correct
mode of review in this case, i.e., a special civil
action for certiorari before the Court of
Appeals."154 In this relation, it stated that while "a
special civil action for Certiorari is within the
concurrent original jurisdiction of the Supreme
Court and the Court of Appeals, such petition
should be initially filed with the Court of Appeals
in observance of the doctrine of hierarchy of
courts." Further, the Court upheld Barata v.
Abalos, Jr.155 (June 6, 2001), wherein it was ruled
that the remedy against final and unappealable
orders of the Office of the Ombudsman in an
administrative case was a Rule 65 petition to the
CA. The same verdict was reached
in Ruivivar156 (September 16, 2008).
Thus, with the unconstitutionality of the second
paragraph of Section 14, RA 6770, the Court,
consistent with existing jurisprudence, concludes
that the CA has subject matter jurisdiction over
the main CA-G.R. SP No. 139453 petition. That
being said, the Court now examines the
objections of the Ombudsman, this time against
the CA's authority to issue the assailed TRO and
WPI against the implementation of the preventive
suspension order, incidental to that main case.
III.
From the inception of these proceedings, the
Ombudsman has been adamant that the CA has
no jurisdiction to issue any provisional injunctive
writ against her office to enjoin its preventive
suspension orders. As basis, she invokes the first
paragraph of Section 14, RA 6770 in
conjunction with her office's independence under
the 1987 Constitution. She advances the idea that
"[i]n order to further ensure [her office's]
independence, [RA 6770] likewise insulated it
from judicial intervention,"157 particularly, "from
injunctive reliefs traditionally obtainable from the
courts,"158 claiming that said writs may work "just
as effectively as direct harassment or political
pressure would."159
A. The concept of Ombudsman
independence.
Section 5, Article XI of the 1987 Constitution
guarantees the independence of the Office of the
Ombudsman:
Section 5. There is hereby created
the independent Office of the Ombudsman,
composed of the Ombudsman to be known as
Tanodbayan, one overall Deputy and at least one
Deputy each for Luzon, Visayas[,] and Mindanao.
A separate Deputy for the military establishment
may likewise be appointed. (Emphasis supplied)
In Gonzales III v. Office of the
President160 (Gonzales III), the Court traced the
historical underpinnings of the Office of the
Ombudsman:
Prior to the 1973 Constitution, past presidents
established several Ombudsman-like agencies to
serve as the people's medium for airing
grievances and for direct redress against abuses
and misconduct in the government. Ultimately,
however, these agencies failed to fully realize
their objective for lack of the political
independence necessary for the effective
performance of their function as government
critic.
It was under the 1973 Constitution that the Office
of the Ombudsman became a constitutionally-
mandated office to give it political independence
and adequate powers to enforce its mandate.
Pursuant to the ( 1973 Constitution, President
Ferdinand Marcos enacted Presidential Decree
(PD) No. 1487, as amended by PD No. 1607 and
PD No. 1630, creating the Office of the
Ombudsman to be known as Tanodbayan. It was
tasked principally to investigate, on complaint
or motu proprio, any administrative act of any
administrative agency, including any government-
owned or controlled corporation. When the Office
of the Tanodbayan was reorganized in 1979, the
powers previously vested in the Special
Prosecutor were transferred to the Tanodbayan
himself. He was given the exclusive authority to
conduct preliminary investigation of all cases
cognizable by the Sandiganbayan, file the
corresponding information, and control the
prosecution of these cases.
With the advent of the 1987 Constitution, a new
Office of the Ombudsman was created by
constitutional fiat. Unlike in the 1973
Constitution, its independence was
expressly and constitutionally
guaranteed. Its objectives are to enforce the
state policy in Section 27, Article II and the
standard of accountability in public service under
Section 1, Article XI of the 1987 Constitution.
These provisions
read:chanRoblesvirtualLawlibrary
Section 27. The State shall maintain honesty and
integrity in the public service and take positive
and effective measures against graft and
corruption.
Section 1. Public office is a public trust. Public
officers and employees must, at all times, be
accountable to the people, serve them with
utmost responsibility, integrity, loyalty, and
efficiency; act with patriotism and justice, and
lead modest lives.161 (Emphasis supplied)

More significantly, Gonzales III explained the
broad scope of the office's mandate, and in
correlation, the impetus behind its independence:
Under Section 12, Article XI of the 1987
Constitution, the Office of the Ombudsman is
envisioned to be the "protector of the people"
against the inept, abusive, and corrupt in the
Government, to function essentially as a
complaints and action bureau. This constitutional
vision of a Philippine Ombudsman practically
intends to make the Ombudsman an authority to
directly check and guard against the ills, abuses
and excesses , of the bureaucracy. Pursuant to
Section 13 (8), Article XI of the 1987
Constitution, Congress enacted RA No. 6770 to
enable it to further realize the vision of the
Constitution. Section 21 of RA No. 6770
provides:chanRoblesvirtualLawlibrary
Section 21. Official Subject to Disciplinary
Authority; Exceptions. - The Office of the
Ombudsman shall have disciplinary authority over
all elective and appointive officials of the
Government and its subdivisions,
instrumentalities, and agencies, including
Members of the Cabinet, local government,
government-owned or controlled corporations and
their subsidiaries, except over officials who may
be removed only by impeachment or over
Members of Congress, and the
Judiciary.ChanRoblesVirtualawlibrary
As the Ombudsman is expected to be an "activist
watchman," the < Court has upheld its actions,
although not squarely falling under the broad
powers granted [to] it by the Constitution and by
RA No. 6770, if these actions are reasonably in
line with its official function and consistent with
the law and the Constitution.
The Ombudsman's broad investigative and
disciplinary powers include all acts of
malfeasance, misfeasance, and nonfeasance of all
public officials, including Members of the Cabinet
and key Executive officers, during their tenure. To
support these broad powers, the Constitution
saw it fit to insulate the Office of the
Ombudsman from the pressures and
influence of officialdom and partisan politics
and from fear of external reprisal by making
it an "independent" office, x x x.
xxxx
Given the scope of its disciplinary authority, the
Office of the Ombudsman is a very powerful
government constitutional agency that is
considered "a notch above other grievance-
handling investigative bodies." It has powers,
both constitutional and statutory, that are
commensurate , with its daunting task of
enforcing accountability of public
officers.162 (Emphasis and underscoring supplied)
Gonzales III is the first case which grappled with
the meaning of the Ombudsman's independence
vis-a-vis the independence of the other
constitutional bodies. Pertinently, the Court
observed:
(1) "[T]he independence enjoyed by the Office of
the Ombudsman and by the Constitutional
Commissions shares certain characteristics - they
do not owe their existence to any act of
Congress, but are created by the
Constitution itself; additionally, they all enjoy
fiscal autonomy. In general terms, the framers
of the Constitution intended that these
'independent' bodies be insulated from
political pressure to the extent that the absence
of 'independence' would result in the impairment
of their core functions"163;cralawlawlibrary
(2) "[T]he Judiciary, the Constitutional
Commissions, and the Ombudsman must have
the independence and flexibility needed in the
discharge of their constitutional duties. The
imposition of restrictions and constraints on the
manner the independent constitutional
offices allocate and utilize the funds
appropriated for their operations is
anathema to fiscal autonomy and violative not
only [of] the express mandate of the Constitution,
but especially as regards the Supreme Court, of
the independence and separation of powers upon
which the entire fabric of our constitutional
system is based";164 and
(3) "[T]he constitutional deliberations explain the
Constitutional Commissions' need for
independence. In the deliberations of the 1973
Constitution, the delegates amended the 1935
Constitution by providing for a constitutionally-
created Civil Service Commission, instead of one
created by law, on the premise that the
effectivity of this body is dependent on its
freedom from the tentacles of politics. In a
similar manner, the deliberations of the 1987
Constitution on the Commission on Audit
highlighted the developments in the past
Constitutions geared towards insulating the
Commission on Audit from political
pressure."165
At bottom, the decisive ruling in Gonzales III,
however, was that the independence of the Office
of the Ombudsman, as well as that of the
foregoing independent bodies, meant freedom
from control or supervision of the Executive
Department:
[T]he independent constitutional commissions
have been consistently intended by the framers to
be independent from executive control or
supervision or any form of political
influence. At least insofar as these bodies are
concerned, jurisprudence is not scarce on how the
"independence" granted to these
bodies prevents presidential interference.
In Brillantes, Jr. v. Yorac (G.R. No. 93867,
December 18, 1990, 192 SCRA 358), we
emphasized that the Constitutional Commissions,
which have been characterized under the
Constitution as "independent," are not under the
control of the President, even if they discharge
functions that are executive in nature. The Court
declared as unconstitutional the President's act of
temporarily appointing the respondent in that
case as Acting Chairman of the [Commission on
Elections] "however well-meaning" it might have
been.
In Bautista v. Senator Salonga (254 Phil. 156,
179 [1989]), the Court categorically stated that
the tenure of the commissioners of the
independent Commission on Human Rights could
not be placed under the discretionary power
of the President.
xxxx
The kind of independence enjoyed by the Office of
the Ombudsman certainly cannot be inferior - but
is similar in degree and kind - to the
independence similarly guaranteed by the
Constitution to the Constitutional Commissions
since all these offices fill the political interstices of
a republican democracy that are crucial to its
existence and proper functioning.166 (Emphases
and underscoring supplied)
Thus, in Gonzales III, the Court declared Section
8 (2), RA 6770, which provides that "[a] Deputy
or the Special Prosecutor, may be removed from
office by the President for any of the grounds
provided for the removal of the Ombudsman, and
after due process," partially unconstitutional
insofar as it subjected the Deputy Ombudsman to
the disciplinary authority of the President for
violating the principle of independence.
Meanwhile, the validity of Section 8 (2), RA 6770
was maintained insofar as the Office of the
Special Prosecutor was concerned since said office
was not considered to be constitutionally within
the Office of the Ombudsman and is, hence, not
entitled to the independence the latter enjoys
under the Constitution.167
As may be deduced from the various discourses
in Gonzales III, the concept of Ombudsman's
independence covers three (3) things:
First: creation by the Constitution, which
means that the office cannot be abolished, nor its
constitutionally specified functions and privileges,
be removed, altered, or modified by law, unless
the Constitution itself allows, or an amendment
thereto is made;cralawlawlibrary
Second: fiscal autonomy, which means that the
office "may not be obstructed from [its] freedom
to use or dispose of [its] funds for purposes
germane to [its] functions;168hence, its budget
cannot be strategically decreased by officials of
the political branches of government so as to
impair said functions; and
Third: insulation from executive supervision
and control, which means that those within the
ranks of the office can only be disciplined by an
internal authority.
Evidently, all three aspects of independence
intend to protect the Office of the Ombudsman
from political harassment and pressure, so as
to free it from the "insidious tentacles of
politics."169
That being the case, the concept of Ombudsman
independence cannot be invoked as basis to
insulate the Ombudsman from judicial power
constitutionally vested unto the courts. Courts are
apolitical bodies, which are ordained to act as
impartial tribunals and apply even justice to all.
Hence, the Ombudsman's notion that it can be
exempt from an incident of judicial power - that
is, a provisional writ of injunction against a
preventive suspension order - clearly strays from
the concept's rationale of insulating the office
from political harassment or pressure.
B. The first paragraph of Section 14, RA
6770 in light of the powers of Congress and
the
Court under the 1987 Constitution.
The Ombudsman's erroneous abstraction of her
office's independence notwithstanding, it remains
that the first paragraph of Section 14, RA 6770
textually prohibits courts from extending
provisional injunctive relief to delay any
investigation conducted by her office. Despite the
usage of the general phrase "[n]o writ of
injunction shall be issued by any court," the
Ombudsman herself concedes that the prohibition
does not cover the Supreme Court.170 As support,
she cites the following Senate deliberations:
Senator [Ernesto M.] Maceda. Mr. President, I
do not know if an amendment is necessary. I
would just like to inquire for the record
whether below the Supreme Court, it is
understood that there is no injunction policy
against the Ombudsman by lower courts. Or,
is it necessary to have a special paragraph
for that?
Senator Angara. Well, there is no provision
here, Mr. President, that will prevent an
injunction against the Ombudsman being issued.
Senator Maceda. In which case, I think that
the intention, this being one of the highest
constitutional bodies, is to subject this only
to certiorari to the Supreme Court. I think an
injunction from the Supreme Court is, of
course, in order but no lower courts should
be allowed to interfere. We had a very bad
experience with even, let us say, the Forestry
Code where no injunction is supposed to be
issued against the Department of Natural
Resources. Injunctions are issued right and
left by RTC judges all over the country.
The President. Why do we not make an
express provision to that effect?
Senator Angara. We would welcome that,
Mr. President.

The President. No [writs of injunction] from
the trial courts other than the Supreme
Court.
Senator Maceda. I so move, Mr. President, for
that amendment.
The President. Is there any objection? [Silence]
Hearing none, the same is approved.171
Further, she acknowledges that by virtue of
Sections 1 and 5 (1), Article VIII of the 1987
Constitution, acts of the Ombudsman, including
interlocutory orders, are subject to the Supreme
Court's power of judicial review As a corollary, the
Supreme Court may issue ancillary mjunctive
writs or provisional remedies in the exercise of its
power of judicial review over matters pertaining
to ongoing investigations by the Office of the
Ombudsman. Respecting the CA, however, the
Ombudsman begs to differ.172
With these submissions, it is therefore apt to
examine the validity of the first paragraph of
Section 14, RA 6770 insofar as it prohibits all
courts, except this Court, from issuing provisional
writs of injunction to enjoin an Ombudsman
investigation. That the constitutionality of this
provision is the lis mota of this case has not been
seriously disputed. In fact, the issue anent its
constitutionality was properly raised and
presented during the course of these
proceedings.173 More importantly, its resolution is
clearly necessary to the complete disposition of
this case.174
In the enduring words of Justice Laurel in Angara
v. The Electoral Commission (Angara),175 the
"Constitution has blocked out with deft strokes
and in bold lines, allotment of power to the
executive, the legislative[,] and the judicial
departments of the government."176 The
constitutional demarcation of the three
fundamental powers of government is more
commonly known as the principle of separation of
powers. In the landmark case of Belgica v. Ochoa,
Jr. (Belgica),177 the Court held that "there is a
violation of the separation of powers principle
when one branch of government unduly
encroaches on the domain of another."178 In
particular, "there is a violation of the principle
when there is impermissible (a) interference with
and/or (b) assumption of another department's
functions."179
Under Section 1, Article VIII of the 1987
Constitution, judicial power is allocated to the
Supreme Court and all such lower courts:
Section 1. The judicial power shall be vested in
one Supreme Court and in such lower courts as
may be established by law.
Judicial power includes the duty of the courts of
justice to settle actual controversies involving
rights which are legally demandable and
enforceable, and to determine whether or not
there has been a grave abuse of discretion
amounting to lack or excess of jurisdiction on the
part of any branch or instrumentality of the
Government.
This Court is the only court established by the
Constitution, while all other lower courts may
be established by laws passed by Congress.
Thus, through the passage of Batas Pambansa
Bilang (BP) 129,180 known as "The Judiciary
Reorganization Act of 1980," the Court of
Appeals,181 the Regional Trial Courts,182 and the
Metropolitan Trial Courts, Municipal Trial Courts,
and Municipal Circuit Trial Courts183 were
established. Later, through the passage of RA
1125,184 and Presidential Decree No. (PD)
1486,185 the Court of Tax Appeals, and the
Sandiganbayan were respectively established.
In addition to the authority to establish lower
courts, Section 2, Article VIII of the 1987
Constitution empowers Congress to define,
prescribe, and apportion the
jurisdiction of all courts, except that it may
not deprive the Supreme Court of its
jurisdiction over cases enumerated in
Section 5186 of the same Article:
Section 2. 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.
x x x xChanRoblesVirtualawlibrary
Jurisdiction, as hereinabove used, more
accurately pertains to jurisdiction over the subject
matter of an action. In The Diocese ofBacolod v.
Commission on Elections,187 subject matter
jurisdiction was defined as "the authority 'to
hear and determine cases of the general
class to which the proceedings in question
belong and is conferred by the sovereign
authority which organizes the court and
defines its powers.'"
Among others, Congress defined, prescribed, and
apportioned the subject matter jurisdiction of this
Court (subject to the aforementioned
constitutional limitations), the Court of Appeals,
and the trial courts, through the passage of BP
129, as amended.
In this case, the basis for the CA's subject
matter jurisdiction over Binay, Jr.'s main
petition for certiorari in CA-G.R. SP No. 139453
is Section 9(1), Chapter I of BP 129, as amended:
Section 9. Jurisdiction. - The Court of Appeals
shall exercise:
1. Original jurisdiction to issue writs
of mandamus, prohibition, certiorari,
habeas corpus, and quo warranto, and
auxiliary writs or processes, whether or
not in aid of its appellate jurisdiction[.]

Note that the CA's certiorari jurisdiction, as
above-stated, is not only original but
also concurrent with the Regional Trial Courts
(under Section 21 (1), Chapter II of BP 129), and
the Supreme Court (under Section 5, Article VIII
of the 1987 Philippine Constitution). In view of
the concurrence of these courts' jurisdiction over
petitions for certiorari, the doctrine of hierarchy
of courts should be followed. In People v.
Cuaresma,188 the doctrine was explained as
follows:
[T]his concurrence of jurisdiction is not x x x
to be taken as according to parties seeking any of
the writs an absolute, unrestrained freedom of
choice of the court to which application therefor
will be directed. There is after all a hierarchy of
courts. That hierarchy is determinative of the
venue of appeals, and should also serve as a
general determinant of the appropriate forum for
petitions for the extraordinary writs. A becoming
regard for that judicial hierarchy most certainly
indicates that petitions for the issuance of
extraordinary writs against first level ("inferior")
courts should be filed with the Regional Trial
Court, and those against the latter, with the Court
of Appeals.189
When a court has subject matter
jurisdiction over a particular case, as conferred
unto it by law, said court may then exercise its
jurisdiction acquired over that case, which is
called judicial power.
Judicial power, as vested in the Supreme Court
and all other courts established by law, has been
defined as the "totality of powers a court
exercises when it assumes jurisdiction and
hears and decides a case."190 Under Section 1,
Article VIII of the 1987 Constitution, it includes
"the duty of the courts of justice to settle actual
controversies involving rights which are
legally demandable and enforceable, and to
determine whether or not there has been a
grave abuse of discretion amounting to lack
or excess of jurisdiction on the part of any
branch or instrumentality of the
Government."
In Oposa v. Factoran, Jr.191 the Court explained
the expanded scope of judicial power under the
1987 Constitution:
The first part of the authority represents the
traditional concept of judicial power, involving the
settlement of conflicting rights as conferred by
law. The second part of the authority represents a
broadening of f judicial power to enable the
courts of justice to review what was before
forbidden territory, to wit, the discretion of the
political departments of the government.
As worded, the new provision vests in the
judiciary, and particularly the Supreme Court, the
power to rule upon even the wisdom of the
decisions of the executive and the legislature and
to declare their acts invalid for lack or excess of
jurisdiction because they are tainted with grave
abuse of discretion. The catch, of course, is the
meaning of "grave abuse of discretion," which is a
very elastic phrase that can expand or contract
according to the disposition of the judiciary.192
Judicial power is never exercised in a vacuum. A
court's exercise of the jurisdiction it has
acquired over a particular case conforms to
the limits and parameters of the rules of
procedure duly promulgated by this Court. In
other words, procedure is the framework within
which judicial power is exercised. In Manila
Railroad Co. v. Attorney-General,193 the Court
elucidated that "[t]he power or authority of the
court over the subject matter existed and was
fixed before procedure in a given cause
began. Procedure does not alter or change
that power or authority; it simply directs the
manner in which it shall be fully and justly
exercised. To be sure, in certain cases, if that
power is not exercised in conformity with the
provisions of the procedural law, purely, the court
attempting to exercise it loses the power to
exercise it legally. This does not mean that it
loses jurisdiction of the subject matter."194
While the power to define, prescribe, and
apportion the jurisdiction of the various courts is,
by constitutional design, vested unto
Congress, the power to promulgate rules
concerning the protection and enforcement
of constitutional rights, pleading, practice,
and procedure in all courts belongs
exclusively to this Court. Section 5 (5), Article
VIII of the 1987 Constitution reads:
Section 5. The Supreme Court shall have the
following powers:
xxxx
(5) Promulgate rules concerning the
protection and enforcement of constitutional
rights, pleading, practice, and procedure in
all courts, the admission to the practice of law,
the Integrated Bar, and legal assistance to the
underprivileged. Such rules shall provide a
simplified and inexpensive procedure for the
speedy disposition of cases, shall be uniform for
all courts of the same grade, and shall not
diminish, increase, or modify substantive rights.
Rules of procedure of special courts and quasi-
judicial bodies shall remain effective unless
disapproved by the Supreme Court. (Emphases
and underscoring supplied)
In Echegaray v. Secretary of
Justice195 (Echegaray), the Court traced the
evolution of its rule-making authority, which,
under the 1935196 and 1973 Constitutions,197 had
been priorly subjected to a power-sharing scheme
with Congress.198 As it now stands, the 1987
Constitution textually altered the old
provisions by deleting the concurrent power
of Congress to amend the rules, thus
solidifying in one body the Court's rule-
making powers, in line with the Framers' vision
of institutionalizing a "[s]tronger and more
independent judiciary."199
The records of the deliberations of the
Constitutional Commission would show200 that the
Framers debated on whether or not the Court's
rule-making powers should be shared with
Congress. There was an initial suggestion to
insert the sentence "The National Assembly may
repeal, alter, or supplement the said rules with
the advice and concurrence of the Supreme
Court", right after the phrase "Promulgate rules
concerning the protection and enforcement of
constitutional rights, pleading, practice, and
procedure in all courts, the admission to the
practice of law, the integrated bar, and legal
assistance to the underprivileged^" in the
enumeration of powers of the Supreme Court.
Later, Commissioner Felicitas S. Aquino proposed
to delete the former sentence and, instead, after
the word "[underprivileged," place a comma (,) to
be followed by "the phrase with the concurrence
of the National Assembly." Eventually, a
compromise formulation was reached wherein (a)
the Committee members agreed to Commissioner
Aquino's proposal to delete the phrase "the
National Assembly may repeal, alter, or
supplement the said rules with the advice and
concurrence of the Supreme Court" and (b) in
turn, Commissioner Aquino agreed to
withdraw his proposal to add "the phrase with
the concurrence of the National Assembly." The
changes were approved, thereby leading to
the present lack of textual reference to any
form of Congressional participation in
Section 5 (5), Article VIII, supra. The
prevailing consideration was that "both
bodies, the Supreme Court and the
Legislature, have their inherent powers."201
Thus, as it now stands, Congress has no authority
to repeal, alter, or supplement rules concerning
pleading, practice, and procedure. As pronounced
in Echegaray:
The rule making power of this Court was
expanded. This Court for the first time was given
the power to promulgate rules concerning the
protection and enforcement of constitutional
rights. The Court was also r granted for the first
time the power to disapprove rules of procedure
of special courts and quasi-judicial bodies. But
most importantly, the 1987 Constitution
took away the power of Congress to repeal,
alter, or supplement rules concerning
pleading, practice and procedure. In fine,
the power to promulgate rules of pleading,
practice and procedure is no longer shared
by this Court with Congress, more so with
the Executive.202 (Emphasis and underscoring
supplied)
Under its rule-making authority, the Court has
periodically passed various rules of procedure,
among others, the current 1997 Rules of Civil
Procedure. Identifying the appropriate
procedural remedies needed for the
reasonable exercise of every court's judicial
power, the provisional remedies of
temporary restraining orders and writs of
preliminary injunction were thus provided.
A temporary restraining order and a writ of
preliminary injunction both constitute temporary
measures availed of during the pendency of the
action. They are, by nature, ancillary because
they are mere incidents in and are dependent
upon the result of the main action. It is well-
settled that the sole object of a temporary
restraining order or a writ of preliminary
injunction, whether prohibitory or
mandatory, is to preserve the status
quo203 until the merits of the case can be heard.
They are usually granted when it is made to
appear that there is a substantial controversy
between the parties and one of them is
committing an act or threatening the immediate
commission of an act that will cause irreparable
injury or destroy the status quo of the
controversy before a full hearing can be had on
the merits of the case. In other words, they are
preservative remedies for the protection of
substantive rights or interests, and, hence, not a
cause of action in itself, but merely adjunct to a
main suit.204 In a sense, they are regulatory
processes meant to prevent a case from being
mooted by the interim acts of the parties.
Rule 58 of the 1997 Rules of Civil Procedure
generally governs the provisional remedies of a
TRO and a WPI. A preliminary injunction is
defined under Section 1,205 Rule 58, while Section
3206 of the same Rule enumerates the grounds for
its issuance. Meanwhile, under Section
5207 thereof, a TRO may be issued as a precursor
to the issuance of a writ of preliminary injunction
under certain procedural parameters.
The power of a court to issue these provisional
injunctive reliefs coincides with its inherent
power to issue all auxiliary writs, processes,
and other means necessary to carry its
acquired jurisdiction into effect under
Section 6, Rule 135 of the Rules of
Court which reads:
Section 6. Means to carry jurisdiction into effect. -
When by law jurisdiction is conferred on a court
or judicial officer, all auxiliary writs, f processes
and other means necessary to carry it into effect
may be employed by such court or officer; and if
the procedure to be followed in the exercise of
such jurisdiction is not specifically pointed out by
law208 or by these rules, any suitable process or
mode of proceeding may be adopted which
appears comfortable to the spirit of the said law
or rules.ChanRoblesVirtualawlibrary
In City of Manila v. Grecia-Cuerdo,209 which is a
case involving "[t]he supervisory power or
jurisdiction of the [Court of Tax Appeals] to issue
a writ of certiorari in aid of its appellate
jurisdiction"210 over "decisions, orders or
resolutions of the RTCs in local tax cases
originally decided or resolved by them in the
exercise of their original or appellate
jurisdiction,"211 the Court ruled that said power
"should coexist with, and be a complement to, its
appellate jurisdiction to review, by appeal, the
final orders and decisions of the RTC, in order to
have complete supervision over the acts of the
latter:"212
A grant of appellate jurisdiction implies that there
is included in it the power necessary to
exercise it effectively, to make all orders
that ; will preserve the subject of the action,
and to give effect to the final
determination of the appeal. It carries with it
the power to protect that jurisdiction and to make
the decisions of the court thereunder effective.
The court, in aid of its appellate jurisdiction, has
authority to control all auxiliary and incidental
matters necessary to the efficient and proper
exercise of that jurisdiction. For this purpose, it
may, when necessary, prohibit or restrain the
performance of any act which might interfere with
the proper exercise of its rightful jurisdiction in
cases pending before it.213 (Emphasis supplied)
In this light, the Court expounded on the inherent
powers of a court endowed with subject matter
jurisdiction:
[A] court which is endowed with a particular
jurisdiction should have powers which are
necessary to enable it to act effectively within
such jurisdiction. These should be regarded as
powers which are inherent in its jurisdiction
and the court must possess them in order to
enforce its rules of practice and to suppress
any abuses of its process and to t defeat any
attempted thwarting of such process.
x x x x cralawlawlibrary
Indeed, courts possess certain inherent
powers which may be said to be implied from a
general grant of jurisdiction, in addition to those
expressly conferred on them. These inherent
powers are such powers as are necessary for
the ordinary and efficient exercise of
jurisdiction; or are essential to the
existence, dignity and functions of the
courts, as well as to the due administration
of justice; or are directly appropriate,
convenient and suitable to the execution of
their granted powers; and include the power
to maintain the court's jurisdiction and
render it effective in behalf of the
litigants.214 (Emphases and underscoring
supplied)
Broadly speaking, the inherent powers of the
courts resonates the long-entrenched
constitutional principle, articulated way back in
the 1936 case of Angara, that "where a general
power is conferred or duty enjoined, every
particular power necessary for the exercise of the
one or the performance of the other is also
conferred."215
In the United States, the "inherent powers
doctrine refers to the principle, by which the
courts deal with diverse matters over which they
are thought to have intrinsic authority like
procedural [rule-making] and general judicial
housekeeping. To justify the invocation or
exercise of inherent powers, a court must show
that the powers are reasonably necessary to
achieve the specific purpose for which the
exercise is sought. Inherent powers enable
the judiciary to accomplish its
constitutionally mandated functions."216
In Smothers v. Lewis217 (Smothers), a case
involving the constitutionality of a statute which
prohibited courts from enjoining the enforcement
of a revocation order of an alcohol beverage
license pending appeal,218 the Supreme Court of
Kentucky held:
[T]he Court is x x x vested with certain
"inherent" powers to do that which is
reasonably necessary for the administration
of justice within the scope of their
jurisdiction. x x x [W]e said while considering
the rule making power and the judicial power to
be one and the same that ". . . the grant of
judicial power [rule making power] to the
courts by the constitution carries with it, as
a necessary incident, the right to make that
power effective in the administration of
justice." (Emphases supplied)
Significantly, Smothers characterized a court's
issuance of provisional injunctive relief as an
exercise of the court's inherent power, and to this
end, stated that any attempt on the part of
Congress to interfere with the same was
constitutionally impermissible:
It is a result of this foregoing line of thinking that
we now adopt the language framework of 28
Am.Jur.2d, Injunctions, Section 15, and once and
for all make clear that a court, once having
obtained jurisdiction of a cause of action, has, as
an incidental to its constitutional grant of power,
inherent power to do all things reasonably
necessary to the administration of justice in the
case before it. In the exercise of this power, a
court, when necessary in order to protect or
preserve the subject matter of the litigation,
to protect its jurisdiction and to make its
judgment effective, may grant or issue a
temporary injunction in aid of or ancillary to
the principal action.
The control over this inherent judicial
power, in this particular instance the
injunction, is exclusively within the
constitutional realm of the courts. As such, it
is not within the purview of the legislature
to grant or deny the power nor is it within
the purview of the legislature to shape or
fashion circumstances under which this
inherently judicial power may be or may not
be granted or denied.
This Court has historically recognized
constitutional limitations upon the power of the
legislature to interfere with or to inhibit the
performance of constitutionally granted and
inherently provided judicial functions, x x x
xxxx
We reiterate our previously adopted language, ". .
. a court, once having obtained jurisdiction of a
cause of action, has, as incidental to its general
jurisdiction, inherent power to do all things
reasonably necessary f to the administration of
justice in the case before it. . ." This includes
the inherent power to issue
injunctions. (Emphases supplied)
Smothers also pointed out that the legislature's
authority to provide a right to appeal in the
statute does not necessarily mean that it could
control the appellate judicial proceeding:
However, the fact that the legislature statutorily
provided for this appeal does not give it the right
to encroach upon the constitutionally granted
powers of the judiciary. Once the
administrative action has ended and the
right to appeal arises the legislature is void
of any right to control a subsequent
appellate judicial proceeding. The judicial
rules have come into play and have
preempted the field.219 (Emphasis supplied)
With these considerations in mind, the Court rules
that when Congress passed the first paragraph of
Section 14, RA 6770 and, in so doing, took away
from the courts their power to issue a TRO and/or
WPI to enjoin an investigation conducted by the
Ombudsman, it encroached upon this Court's
constitutional rule-making authority. Clearly,
these issuances, which are, by nature, provisional
reliefs and auxiliary writs created under the
provisions of the Rules of Court, are matters of
procedure which belong exclusively within the
province of this Court. Rule 58 of the Rules of
Court did not create, define, and regulate a right
but merely prescribed the means of implementing
an existing right220 since it only provided for
temporary reliefs to preserve the applicant's right
in esse which is threatened to be violated during
the course of a pending litigation. In the case
of Fabian,211 it was stated that:
If the rule takes away a vested right, it is not
procedural. If the rule creates a right such as the
right to appeal, it may be classified as a
substantive matter; but if it operates as a means
of implementing an existing right then the rule
deals merely with
procedure.ChanRoblesVirtualawlibrary
Notably, there have been similar attempts on the
part of Congress, in the exercise of its legislative
power, to amend the Rules of Court, as in the
cases of: (a) In Re: Exemption of The National
Power Corporation from Payment of Filing/ Docket
Fees;222 (b) Re: Petition for Recognition of the
Exemption of the Government Service Insurance
System (GSIS) from Payment of Legal
Fees;223 and (c) Baguio Market Vendors Multi-
Purpose Cooperative (BAMARVEMPCO) v. Cabato-
Cortes224 While these cases involved legislative
enactments exempting government owned and
controlled corporations and cooperatives from
paying filing fees, thus, effectively modifying Rule
141 of the Rules of Court (Rule on Legal Fees), it
was, nonetheless, ruled that the prerogative to
amend, repeal or even establish new rules of
procedure225 solely belongs to the Court, to
the exclusion of the legislative and executive
branches of government. On this score, the
Court described its authority to promulgate rules
on pleading, practice, and procedure as exclusive
and "[o]ne of the safeguards of [its]
institutional independence."226
That Congress has been vested with the authority
to define, prescribe, and apportion the jurisdiction
of the various courts under Section 2, Article
VIII supra, as well as to create statutory courts
under Section 1, Article VIII supra, does not
result in an abnegation of the Court's own power
to promulgate rules of pleading, practice, and
procedure under Section 5 (5), Article VIII supra.
Albeit operatively interrelated, these powers are
nonetheless institutionally separate and distinct,
each to be preserved under its own sphere of
authority. When Congress creates a court and
delimits its jurisdiction, the procedure for
which its jurisdiction is exercised is fixed by
the Court through the rules it promulgates.
The first paragraph of Section 14, RA 6770
is not a jurisdiction-vesting provision, as the
Ombudsman misconceives,227 because it does not
define, prescribe, and apportion the subject
matter jurisdiction of courts to act
on certiorari cases; the certiorari jurisdiction of
courts, particularly the CA, stands under the
relevant sections of BP 129 which were not shown
to have been repealed. Instead, through this
provision, Congress interfered with a
provisional remedy that was created by this
Court under its duly promulgated rules of
procedure, which utility is both integral and
inherent to every court's exercise of judicial
power. Without the Court's consent to the
proscription, as may be manifested by an
adoption of the same as part of the rules of
procedure through an administrative circular
issued therefor, there thus, stands to be a
violation of the separation of powers
principle.
In addition, it should be pointed out that the
breach of Congress in prohibiting provisional
injunctions, such as in the first paragraph of
Section 14, RA 6770, does not only undermine
the constitutional allocation of powers; it also
practically dilutes a court's ability to carry
out its functions. This is so since a particular
case can easily be mooted by supervening
events if no provisional injunctive relief is
extended while the court is hearing the
same. Accordingly, the court's acquired
jurisdiction, through which it exercises its judicial
power, is rendered nugatory. Indeed, the force of
judicial power, especially under the present
Constitution, cannot be enervated due to a court's
inability to regulate what occurs during a
proceeding's course. As earlier intimated, when
jurisdiction over the subject matter is accorded by
law and has been acquired by a court, its exercise
thereof should be undipped. To give true meaning
to the judicial power contemplated by the
Framers of our Constitution, the Court's duly
promulgated rules of procedure should therefore
remain unabridged, this, even by statute. Truth
be told, the policy against provisional injunctive
writs in whatever variant should only subsist
under rules of procedure duly promulgated by the
Court given its sole prerogative over the same.
The following exchange between Associate Justice
Marvic Mario Victor F. Leonen (Justice Leonen)
and the Acting Solicitor General Florin T. Hilbay
(Acting Solicitor General Hilbay) mirrors the
foregoing observations:
JUSTICE LEONEN:
Okay. Now, would you know what rule covers
injunction in the Rules of Court?
ACTING SOLICITOR GENERAL HILBAY:
Rule 58, Your Honor.
JUSTICE LEONEN:
58, that is under the general rubric if Justice
Bersamin will correct me if I will be mistaken
under the rubric of what is called provisional
remedies, our resident expert because Justice
Peralta is not here so Justice Bersamin for a
while. So provisional remedy you have injunction,
x x x.
xxxx
JUSTICE LEONEN:
Okay, Now, we go to the Constitution. Section 5,
subparagraph 5 of Article VIII of the Constitution,
if you have a copy of the Constitution, can you
please read that provision? Section 5, Article VIII
the Judiciary subparagraph 5, would you kindly
read that provision?
ACTING SOLICTOR GENERAL HILBAY.
"Promulgate rules concerning the protection and
enforcement of constitutional rights, pleading,
practice and procedure in all courts..."
JUSTICE LEONEN:
Okay, we can stop with that, promulgate rules
concerning pleading, practice and procedure in all
courts. This is the power, the competence, the
jurisdiction of what constitutional organ?
ACTING SOLICITOR GENERAL HILBAY:
The Supreme Court, Your Honor.
JUSTICE LEONEN:
The Supreme Court. This is different from Article
VIII Sections 1 and 2 which we've already been
discussed with you by my other colleagues, is
that not correct?
ACTING SOLICITOR GENERAL HILBAY:
Correct, Your Honor.
JUSTICE LEONEN:
Okay, so in Section 2, [apportion] jurisdiction that
is the power of Congress, is that not correct?
ACTING SOLICITOR GENERAL HILBAY:
Correct, Your Honor.
JUSTICE LEONEN:
On the other hand, the power to promulgate rules
is with the Court, is that not correct?
ACTING SOLICITOR GENERAL HILBAY:
Correct, Your Honor.
JUSTICE LEONEN:
A TRO and a writ of preliminary injunction, would
it be a separate case or is it part of litigation in an
ordinary case?
ACTING SOLICITOR GENERAL HILBAY:
It is an ancillary remedy, Your Honor.
JUSTICE LEONEN:
In fact, it originated as an equitable remedy, is
that not correct?
ACTING SOLICITOR GENERAL HILBAY:
Correct, Your Honor.
JUSTICE LEONEN:
In order to preserve the power of a court so
that at the end of litigation, it will not be
rendered moot and academic, is that not
correct?
ACTING SOLICITOR GENERAL HILBAY:
Correct, Your Honor.
JUSTICE LEONEN:
In that view, isn't Section 14, first paragraph,
unconstitutional?
ACTING SOLICITOR GENERAL HILBAY:
No, Your Honor.
xxxx
JUSTICE LEONEN.
Can Congress say that a Court cannot prescribe
Motions to Dismiss under Rule 16?
ACTING SOLICITOR GENERAL HILBAY:
Your Honor, Congress cannot impair the power of
the Court to create remedies, x x x.
JUSTICE LEONEN.
What about bill [of] particulars, can Congress say,
no Court shall have the power to issue the
supplemental pleading called the bill of t
particular [s]? It cannot, because that's part of
procedure...
ACTING SOLICITOR GENERAL HILBAY:
That is true.

JUSTICE LEONEN
...or for that matter, no Court shall act on a
Motion to Quash, is that not correct?
ACTING SOLICITOR GENERAL HILBAY:
Correct.
JUSTICE LEONEN:
So what's different with the writ of injunction?
ACTING SOLICITOR GENERAL HILBAY:
Writ of injunction, Your Honor, requires the
existence of jurisdiction on the part of a court
that was created by Congress. In the absence of
jurisdiction... (interrupted)
JUSTICE LEONEN:
No, writ of injunction does not attach to a court.
In other words, when they create a special
agrarian court it has all procedures with it but it
does not attach particularly to that particular
court, is that not correct?
ACTING SOLICTOR GENERAL HILBAY:
When Congress, Your Honor, creates a special
court...
JUSTICE LEONEN:
Again, Counsel, what statute provides for a TRO,
created the concept of a TRO? It was a Rule. A
rule of procedure and the Rules of Court, is that
not correct?
ACTING SOLICITOR GENERAL HILBAY:
Yes, Your Honor.
JUSTICE LEONEN:
And a TRO and a writ of preliminary injunction
does not exist unless it is [an] ancillary to a
particular injunction in a court, is that not
correct?
ACTING SOLICITOR GENERAL HILBAY:
Correct, Your Honor.
xxxx228 (Emphasis supplied)
In Biraogo v. The Philippine Truth Commission of
2010,229 the Court instructed that "[i]t is through
the Constitution that the fundamental powers of
government are established, limited and defined,
and by which these powers are distributed among
the several departments. The Constitution is the
basic and paramount law to which all other laws
must conform and to which all persons, including
the highest officials of the land, must defer." It
would then follow that laws that do not conform
to the Constitution shall be stricken down for
being unconstitutional.230
However, despite the ostensible breach of the
separation of powers principle, the Court is not
oblivious to the policy considerations behind the
first paragraph of Section 14, RA 6770, as well as
other statutory provisions of similar import. Thus,
pending deliberation on whether or not to adopt
the same, the Court, under its sole prerogative
and authority over all matters of procedure,
deems it proper to declare as ineffective the
prohibition against courts other than the Supreme
Court from issuing provisional injunctive writs to
enjoin investigations conducted by the Office of
the Ombudsman, until it is adopted as part of the
rules of procedure through an administrative
circular duly issued therefor.
Hence, with Congress interfering with matters of
procedure (through passing the first paragraph of
Section 14, RA 6770) without the Court's consent
thereto, it remains that the CA had the authority
to issue the questioned injunctive writs enjoining
the implementation of the preventive suspension
order against Binay, Jr. At the risk of belaboring
the point, these issuances were merely ancillary
to the exercise of the CA's certiorari jurisdiction
conferred to it under Section 9 (1), Chapter I of
BP 129, as amended, and which it had already
acquired over the main CA-G.R. SP No. 139453
case.
IV.
The foregoing notwithstanding, the issue of
whether or not the CA gravely abused its
jurisdiction in issuing the TRO and WPI in CA-G.R.
SP No. 139453 against the preventive suspension
order is a persisting objection to the validity of
said injunctive writs. For its proper analysis, the
Court first provides the context of the assailed
injunctive writs.
A. Subject matter of the CA's iniunctive writs
is the preventive suspension order.
By nature, a preventive suspension order is
not a penalty but only a preventive measure.
In Quimbo v. Acting Ombudsman Gervacio,231 the
Court explained the distinction, stating that its
purpose is to prevent the official to be
suspended from using his position and the
powers and prerogatives of his office to
influence potential witnesses or tamper with
records which may be vital in the
prosecution of the case against him:
Jurisprudential law establishes a clear-cut
distinction between suspension as preventive
measure and suspension as penalty. The
distinction, by considering the purpose aspect of
the suspensions, is readily cognizable as they
have different ends sought to be achieved.
Preventive suspension is merely a
preventive measure, a preliminary step in an
administrative investigation. The purpose of
the suspension order is to prevent the
accused from using his position and the
powers and prerogatives of his office to
influence potential witnesses or tamper with
records which may be vital in the
prosecution of the case against him. If after
such investigation, the charge is established and
the person investigated is found guilty of acts
warranting his suspension or removal, then he is
suspended, removed or dismissed. This is the
penalty.
That preventive suspension is not a penalty is in
fact explicitly provided by Section 24 of Rule XIV
of the Omnibus Rules Implementing Book V of the
Administrative Code of 1987 (Executive Order No.
292) and other Pertinent Civil Service Laws.
Section. 24. Preventive suspension is not a
punishment or penalty for misconduct in office
but is considered to be a preventive measure.
(Emphasis supplied)ChanRoblesVirtualawlibrary
Not being a penalty, the period within which one
is under preventive suspension is not considered
part of the actual penalty of suspension. So
Section 25 of the same Rule XIV
provides:chanRoblesvirtualLawlibrary
Section 25. The period within which a public
officer or employee charged is placed under
preventive suspension shall not be considered
part of the actual penalty of
suspension imposed upon the employee found
guilty.232 (Emphases
supplied)ChanRoblesVirtualawlibrary
The requisites for issuing a preventive suspension
order are explicitly stated in Section 24, RA 6770:
Section 24. Preventive Suspension. - The
Ombudsman or his Deputy may preventively
suspend any officer or employee under his
authority pending an investigation, if in his
judgment the evidence of guilt is
strong, and (a) the charge against such
officer or employee involves dishonesty,
oppression or grave misconduct or neglect in
the performance of duty; (b) the charges
would warrant removal from the
service; or (c) the respondent's continued
stay in office may prejudice the case filed
against him.
The preventive suspension shall continue until the
case is terminated by the Office of the
Ombudsman but not more than six (6) months,
without pay, except when the delay in the
disposition of the case by the Office of the
Ombudsman is due to the fault, negligence or
petition of the respondent, in which case the
period of such delay shall not be counted in
computing the period of suspension herein
provided. (Emphasis and underscoring supplied)
In other words, the law sets forth two (2)
conditions that must be satisfied to justify the
issuance of an order of preventive suspension
pending an investigation, namely:
(1) The evidence of guilt is strong; and
(2) Either of the following circumstances co-exist
with the first
requirement:chanRoblesvirtualLawlibrary
(a) The charge involves dishonesty, oppression or
grave misconduct or neglect in the performance
of duty;cralawlawlibrary
(b) The charge would warrant removal from the
service; or
(c) The respondent's continued stay in office may
prejudice the case filed against
him.233ChanRoblesVirtualawlibrary
B. The basis of the CA's injunctive writs is
the condonation doctrine.
Examining the CA's Resolutions in CA-G.R. SP No.
139453 would, however, show that the
Ombudsman's non-compliance with the requisites
provided in Section 24, RA 6770 was not the
basis for the issuance of the assailed injunctive
writs.
The CA's March 16, 2015 Resolution which
directed the issuance of the assailed TRO was
based on the case of Governor Garcia, Jr. v.
CA234 (Governor Garcia, Jr.), wherein the Court
emphasized that "if it were established in the CA
that the acts subject of the administrative
complaint were indeed committed during
petitioner [Garcia's] prior term, then, following
settled jurisprudence, he can no longer be
administratively charged."235 Thus, the Court,
contemplating the application of the condonation
doctrine, among others, cautioned, in the said
case, that "it would have been more prudent for
[the appellate court] to have, at the very least,
on account of the extreme urgency of the matter
and the seriousness of the issues raised in
the certiorari petition, issued a TRO x x
x"236 during the pendency of the proceedings.
Similarly, the CA's April 6, 2015 Resolution which
directed the issuance of the assailed WPI was
based on the condonation doctrine, citing the
case of Aguinaldo v. Santos237 The CA held that
Binay, Jr. has an ostensible right to the final relief
prayed for, i.e., the nullification of the preventive
suspension order, finding that the Ombudsman
can hardly impose preventive suspension against
Binay, Jr. given that his re-election in 2013 as
City Mayor of Makati condoned any administrative
liability arising from anomalous activities relative
to the Makati Parking Building project from 2007
to 2013.238 Moreover, the CA observed that
although there were acts which were apparently
committed by Binay, Jr. beyond his first term
, i.e., the alleged payments on July 3, 4, and 24,
2013,239 corresponding to the services of
Hillmarc's and MANA - still, Binay, Jr. cannot be
held administratively liable therefor based on the
cases of Salalima v. Guingona,
Jr.,240 and Mayor Garcia v. Mojica,241 wherein
the condonation dobtrine was applied by the
Court although the payments were made after the
official's election, reasoning that the payments
were merely effected pursuant to contracts
executed before said re-election.242
The Ombudsman contends that it was
inappropriate for the CA to have considered the
condonation doctrine since it was a matter of
defense which should have been raised and
passed upon by her office during the
administrative disciplinary
proceedings.243 However, the Court agrees with
the CA that it was not precluded from considering
the same given that it was material to the
propriety of according provisional injunctive relief
in conformity with the ruling in Governor Garcia,
Jr., which was the subsisting jurisprudence at that
time. Thus, since condonation was duly raised by
Binay, Jr. in his petition in CA-G.R. SP No.
139453,244 the CA did not err in passing upon the
same. Note that although Binay, Jr. secondarily
argued that the evidence of guilt against him was
not strong in his petition in CA-G.R. SP No.
139453,245 it appears that the CA found that the
application of the condonation doctrine was
already sufficient to enjoin the implementation of
the preventive suspension order. Again, there is
nothing aberrant with this since, as remarked in
the same case of Governor Garcia, Jr., if it was
established that the acts subject of the
administrative complaint were indeed committed
during Binay, Jr.'s prior term, then, following the
condonation doctrine, he can no longer be
administratively charged. In other words, with
condonation having been invoked by Binay, Jr. as
an exculpatory affirmative defense at the onset,
the CA deemed it unnecessary to determine if the
evidence of guilt against him was strong, at least
for the purpose of issuing the subject injunctive
writs.
With the preliminary objection resolved and the
basis of the assailed writs herein laid down, the
Court now proceeds to determine if the CA
gravely abused its discretion in applying the
condonation doctrine.
C. The origin of the condonation doctrine.
Generally speaking, condonation has been defined
as "[a] victim's express or implied forgiveness of
an offense, [especially] by treating the
offender as if there had been no offense."246
The condonation doctrine - which connotes this
same sense of complete extinguishment of
liability as will be herein elaborated upon - is not
based on statutory law. It is a jurisprudential
creation that originated from the 1959
case of Pascual v. Hon. Provincial Board
ofNueva Ecija,247 (Pascual), which was therefore
decided under the 1935 Constitution.
In Pascual, therein petitioner, Arturo Pascual, was
elected Mayor of San Jose, Nueva Ecija, sometime
in November 1951, and was later re-elected to
the same position in 1955. During his second
term, or on October 6, 1956, the Acting
Provincial Governor filed administrative
charges before the Provincial Board of Nueva
Ecija against him for grave abuse of authority and
usurpation of judicial functions for acting on a
criminal complaint in Criminal Case No. 3556 on
December 18 and 20, 1954. In defense, Arturo
Pascual argued that he cannot be made liable for
the acts charged against him since they were
committed during his previous term of office, and
therefore, invalid grounds for disciplining him
during his second term. The Provincial Board, as
well as the Court of First Instance of Nueva Ecija,
later decided against Arturo Pascual, and when
the case reached this Court on appeal, it
recognized that the controversy posed a novel
issue - that is, whether or not an elective official
may be disciplined for a wrongful act committed
by him during his immediately preceding term of
office.
As there was no legal precedent on the issue
at that time, the Court, in Pascual, resorted to
American authorities and "found that cases on
the matter are conflicting due in part, probably,
to differences in statutes and constitutional
provisions, and also, in part, to a divergence of
views with respect to the question of whether the
subsequent election or appointment condones the
prior misconduct."248Without going into the
variables of these conflicting views and
cases, it proceeded to state that:
The weight of authorities x x x seems to
incline toward the rule denying the right to
remove one from office because of
misconduct during a prior term, to which we
fully subscribe.249 (Emphasis and underscoring
supplied)
The conclusion is at once problematic since this
Court has now uncovered that there is really no
established weight of authority in the United
States (US) favoring the doctrine of condonation,
which, in the words of Pascual, theorizes that an
official's re-election denies the right to remove
him from office due to a misconduct during a
prior term. In fact, as pointed out during the oral
arguments of this case, at least seventeen (17)
states in the US have abandoned the condonation
doctrine.250 The Ombudsman aptly cites several
rulings of various US State courts, as well as
literature published on the matter, to
demonstrate the fact that the doctrine is not
uniformly applied across all state jurisdictions.
Indeed, the treatment is nuanced:
(1) For one, it has been widely recognized that
the propriety of removing a public officer from his
current term or office for misconduct which he
allegedly committed in a prior term of office is
governed by the language of the statute or
constitutional provision applicable to the facts of a
particular case (see In Re Removal of Member of
Council Coppola).251 As an example, a Texas
statute, on the one hand, expressly allows
removal only for an act committed during a
present term: "no officer shall be prosecuted or
removed from office for any act he may have
committed prior to his election to office"
(see State ex rel. Rowlings v. Loomis).252 On the
other hand, the Supreme Court of Oklahoma
allows removal from office for "acts of
commission, omission, or neglect committed,
done or omitted during a previous or preceding
term of office" (see State v. Bailey)253 Meanwhile,
in some states where the removal statute is silent
or unclear, the case's resolution was contingent
upon the interpretation of the phrase "in office."
On one end, the Supreme Court of Ohio strictly
construed a removal statute containing the
phrase "misfeasance of malfeasance in office" and
thereby declared that, in the absence of clear
legislative language making, the word "office"
must be limited to the single term during which
the offense charged against the public officer
occurred (see State ex rel. Stokes v. Probate
Court of Cuyahoga County)254 Similarly, the
Common Pleas Court of Allegheny County,
Pennsylvania decided that the phrase "in office" in
its state constitution was a time limitation with
regard to the grounds of removal, so that an
officer could not be removed for misbehaviour
which occurred; prior to the taking of the office
(see Commonwealth v. Rudman)255 The opposite
was construed in the Supreme Court of Louisiana
which took the view that an officer's inability to
hold an office resulted from the commission of
certain offenses, and at once rendered him unfit
to continue in office, adding the fact that the
officer had been re-elected did not condone or
purge the offense (see State ex rel. Billon v.
Bourgeois).256 Also, in the Supreme Court of New
York, Apellate Division, Fourth Department, the
court construed the words "in office" to refer not
to a particular term of office but to an entire
tenure; it stated that the whole purpose of the
legislature in enacting the statute in question
could easily be lost sight of, and the intent of the
law-making body be thwarted, if an unworthy
official could not be removed during one term for
misconduct for a previous one (Newman v.
Strobel).257
(2) For another, condonation depended on
whether or not the public officer was a successor
in the same office for which he has been
administratively charged. The "own-successor
theory," which is recognized in numerous States
as an exception to condonation doctrine, is
premised on the idea that each term of a re-
elected incumbent is not taken as separate and
distinct, but rather, regarded as one continuous
term of office. Thus, infractions committed in a
previous term are grounds for removal because a
re-elected incumbent has no prior term to speak
of258 (see Attorney-General v. Tufts;259State v.
Welsh;260Hawkins v. Common Council of Grand
Rapids;261Territory v. Sanches;262 and Tibbs v.
City of Atlanta).263
(3) Furthermore, some State courts took into
consideration the continuing nature of an offense
in cases where the condonation doctrine was
invoked. In State ex rel. Douglas v.
Megaarden,264 the public officer charged with
malversation of public funds was denied the
defense of condonation by the Supreme Court of
Minnesota, observing that "the large sums of
money illegally collected during the previous
years are still retained by him." In State ex rel.
Beck v. Harvey265 the Supreme Court of Kansas
ruled that "there is no necessity" of applying the
condonation doctrine since "the misconduct
continued in the present term of office[;] [thus]
there was a duty upon defendant to restore this
money on demand of the county commissioners."
Moreover, in State ex rel. Londerholm v.
Schroeder,266 the Supreme Court of Kansas held
that "insofar as nondelivery and excessive prices
are concerned, x x x there remains a continuing
duty on the part of the defendant to make
restitution to the country x x x, this duty extends
into the present term, and neglect to discharge it
constitutes misconduct."
Overall, the foregoing data clearly contravenes
the preliminary conclusion in Pascual that there is
a "weight of authority" in the US on the
condonation doctrine. In fact, without any cogent
exegesis to show that Pascual had accounted for
the numerous factors relevant to the debate on
condonation, an outright adoption of the doctrine
in this jurisdiction would not have been proper.
At any rate, these US cases are only of
persuasive value in the process of this Court's
decision-making. "[They] are not relied upon as
precedents, but as guides of
interpretation."267 Therefore, the ultimate analysis
is on whether or not the condonation doctrine, as
espoused in Pascual, and carried over in
numerous cases after, can be held up against
prevailing legal norms. Note that the doctrine
of stare decisis does not preclude this Court from
revisiting existing doctrine. As adjudged in the
case of Belgica, the stare decisis rule should not
operate when there are powerful countervailing
considerations against its application.268 In other
words, stare decisis becomes an intractable rule
only when circumstances exist to preclude
reversal of standing precedent.269 As the
Ombudsman correctly points out, jurisprudence,
after all, is not a rigid, atemporal abstraction; it is
an organic creature that develops and devolves
along with the society within which it
thrives.270 In the words of a recent US Supreme
Court Decision, "[w]hat we can decide, we can
undecide."271
In this case, the Court agrees with the
Ombudsman that since the time Pascual was
decided, the legal landscape has radically shifted.
Again, Pascual was a 1959 case decided under
the 1935 Constitution, which dated provisions do
not reflect the experience of the Filipino People
under the 1973 and 1987 Constitutions.
Therefore, the plain difference in setting,
including, of course, the sheer impact of the
condonation doctrine on public accountability,
calls for Pascual's judicious re-examination.
D. Testing the Condonation Doctrine.
Pascual's ratio decidendi may be dissected into
three (3) parts:
First, the penalty of removal may not be
extended beyond the term in which the public
officer was elected for each term is separate and
distinct:
Offenses committed, or acts done, during
previous term are generally held not to
furnish cause for removal and this is especially
true where the constitution provides that the
penalty in proceedings for removal shall not
extend beyond the removal from office, and
disqualification from holding office for the
term for which the officer was elected or
appointed. (67 C.J.S. p. 248, citing Rice vs.
State, 161 S.W. 2d. 401; Montgomery vs. Nowell,
40 S.W. 2d. 418; People ex rel. Bagshaw vs.
Thompson, 130 P. 2d. 237; Board of Com'rs of
Kingfisher County vs. Shutter, 281 P. 222; State
vs. Blake, 280 P. 388; In re Fudula, 147 A.
67; State vs. Ward, 43 S.W. 2d. 217).
The underlying theory is that each term is
separate from other terms x x x.272
Second, an elective official's re-election serves as
a condonation of previous misconduct, thereby
cutting the right to remove him therefor; and
[T]hat the reelection to office operates as a
condonation of the officer's previous misconduct
to the extent of cutting off the right to remove
him therefor. (43 Am. Jur. p. 45, citing Atty. Gen.
vs. Hasty, 184 Ala. 121, 63 So. 559, 50 L.R.A.
(NS) 553.273 (emphasis supplied)
Third, courts may not deprive the electorate, who
are assumed to have known the life and character
of candidates, of their right to elect officers:
As held in Conant vs. Grogan (1887) 6 N.Y.S.R.
322, cited in 17 A.I.R. 281, 63 So. 559, 50 LRA
(NS) 553 —
The Court should never remove a public officer for
acts done prior to his present term of office. To
do otherwise would be to deprive the people of
their right to elect their officers. When the
people have elected a man to office, it must
be assumed that they did this with
knowledge of his life and character, and that
they disregarded or forgave his faults or
misconduct, if he had been guilty of any. It is
not for the court, by reason of such faults or
misconduct to practically overrule the will of the
people.274 (Emphases supplied)
The notable cases on condonation following
Pascual are as follows:
(1) Lizares v. Hechanova275 (May 17, 1966) -
wherein the Court first applied the condonation
doctrine, thereby quoting the above-stated
passages from Pascual in verbatim.
(2) Insco v. Sanchez, et al.276 (December 18,
1967) - wherein the Court clarified that the
condonation doctrine does not apply to a
criminal case. It was explained that a criminal
case is different from an administrative case in
that the former involves the People of the
Philippines as a community, and is a public wrong
to the State at large; whereas, in the latter, only
the populace of the constituency he serves is
affected. In addition, the Court noted that it is
only the President who may pardon a criminal
offense.
(3) Aguinaldo v. Santos277 (Aguinaldo; August
21, 1992) - a case decided under the 1987
Constitution wherein the condonation doctrine
was applied in favor of then Cagayan Governor
Rodolfo E. Aguinaldo although his re-election
merely supervened the pendency of, the
proceedings.
(4) Salalima v. Guinsona, Jr.278 (Salalima; May
22, 1996) -wherein the Court reinforced the
condonation doctrine by stating that the
same is justified by "sound public policy."
According to the Court, condonation prevented
the elective official from being "hounded" by
administrative cases filed by his "political
enemies" during a new term, for which he has to
defend himself "to the detriment of public
service." Also, the Court mentioned that the
administrative liability condoned by re-election
covered the execution of the contract and the
incidents related therewith.279
(5) Mayor Garcia v. Mojica280 (Mayor Garcia;
September 10, 1999) - wherein the benefit of the
doctrine was extended to then Cebu City Mayor
Alvin B. Garcia who was administratively charged
for his involvement in an anomalous contract for
the supply of asphalt for Cebu City, executed only
four (4) days before the upcoming elections. The
Court ruled that notwithstanding the timing of the
contract's execution, the electorate is presumed
to have known the petitioner's background and
character, including his past misconduct; hence,
his subsequent re-election was deemed a
condonation of his prior transgressions. More
importantly, the Court held that the determinative
time element in applying the condonation doctrine
should be the time when the contract was
perfected; this meant that as long as the
contract was entered into during a prior
term, acts which were done to implement
the same, even if done during a succeeding
term, do not negate the application of the
condonation doctrine in favor of the elective
official.
(6) Salumbides, Jr. v. Office of the
Ombudsman281 (Salumbides, Jr.; April 23, 2010)
- wherein the Court explained the doctrinal
innovations in the Salalima and Mayor
Garcia rulings, to wit:
Salalima v. Guingona, Jr. and Mayor Garcia v.
Hon. Mojica reinforced the doctrine. The
condonation rule was applied even if the
administrative complaint was not filed
before the reelection of the public official,
and even if the alleged misconduct occurred
four days before the elections,
respectively. Salalima did not distinguish as to
the date of filing of the administrative complaint,
as long as the alleged misconduct was committed
during the prior term, the precise timing or period
of which Garcia did not further distinguish, as
long as the wrongdoing that gave rise to the
public official's culpability was committed prior to
the date of reelection.282 (Emphasis
supplied)ChanRoblesVirtualawlibrary
The Court, citing Civil Service Commission v.
Sojor,283 also clarified that the condonation
doctrine would not apply to appointive
officials since, as to them, there is no sovereign
will to disenfranchise.
(7) And finally, the above discussed case
of Governor Garcia, Jr. -wherein the Court
remarked that it would have been prudent for the
appellate court therein to have issued a
temporary restraining order against the
implementation of a preventive suspension order
issued by the Ombudsman in view of the
condonation doctrine.
A thorough review of the cases post-1987,
among others, Aguinaldo, Salalima, Mayor Garcia,
and Governor Garcia, Jr. - all cited by the CA to
justify its March 16, 2015 and April 6, 2015
Resolutions directing the issuance of the assailed
injunctive writs - would show that the basis for
condonation under the prevailing constitutional
and statutory framework was never accounted
for. What remains apparent from the text of these
cases is that the basis for condonation, as
jurisprudential doctrine, was - and still remains -
the above-cited postulates of Pascual, which was
lifted from rulings of US courts where condonation
was amply supported by their own state laws.
With respect to its applicability to administrative
cases, the core premise of condonation - that is,
an elective official's re-election cuts qff the right
to remove him for an administrative offense
committed during a prior term - was adopted
hook, line, and sinker in our jurisprudence largely
because the legality of that doctrine was never
tested against existing legal norms. As in the US,
the propriety of condonation is - as it should be -
dependent on the legal foundation of the
adjudicating jurisdiction. Hence, the Court
undertakes an examination of our current laws in
order to determine if there is legal basis for the
continued application of the doctrine of
condonation.
The foundation of our entire legal system is the
Constitution. It is the supreme law of the
land;284 thus, the unbending rule is that every
statute should be read in light of the
Constitution.285 Likewise, the Constitution is a
framework of a workable government; hence, its
interpretation must take into account the
complexities, realities, and politics attendant to
the operation of the political branches of
government.286
As earlier intimated, Pascual was a decision
promulgated in 1959. Therefore, it was decided
within the context of the 1935 Constitution which
was silent with respect to public accountability, or
of the nature of public office being a public trust.
The provision in the 1935 Constitution that comes
closest in dealing with public office is Section 2,
Article II which states that "[t]he defense of the
State is a prime duty of government, and in the
fulfillment of this duty all citizens may be required
by law to render personal military or civil
service."287 Perhaps owing to the 1935
Constitution's silence on public accountability, and
considering the dearth of jurisprudential rulings
on the matter, as well as the variance in the
policy considerations, there was no glaring
objection confronting the Pascual Court in
adopting the condonation doctrine that originated
from select US cases existing at that time.
With the advent of the 1973 Constitution, the
approach in dealing with public officers underwent
a significant change. The new charter introduced
an entire article on accountability of public
officers, found in Article XIII. Section 1 thereof
positively recognized, acknowledged, and
declared that "[p]ublic office is a public trust."
Accordingly, "[p]ublic officers and employees
shall serve with the highest degree of
responsibility, integrity, loyalty and
efficiency, and shall remain accountable to
the people."
After the turbulent decades of Martial Law rule,
the Filipino People have framed and adopted the
1987 Constitution, which sets forth in the
Declaration of Principles and State Policies in
Article II that "[t]he State shall maintain
honesty and integrity in the public service
and take positive and effective measures
against graft and corruption."288 Learning how
unbridled power could corrupt public servants
under the regime of a dictator, the Framers put
primacy on the integrity of the public service by
declaring it as a constitutional principle and a
State policy. More significantly, the 1987
Constitution strengthened and solidified what has
been first proclaimed in the 1973 Constitution by
commanding public officers to be accountable to
the people at all times:
Section 1. Public office is a public trust. Public
officers and employees must at all times be
accountable to the people, serve them
with utmost responsibility, integrity, loyalty,
and efficiency and act with patriotism and
justice, and lead modest
lives.ChanRoblesVirtualawlibrary
In Belgica, it was explained that:
[t]he aphorism forged under Section 1, Article XI
of the 1987 Constitution, which states that "public
office is a public trust," is an overarching
reminder that every instrumentality of
government should exercise their official functions
only in accordance with the principles of the
Constitution which embodies the parameters of
the people's trust. The notion of a public trust
connotes accountability x x x.289 (Emphasis
supplied)ChanRoblesVirtualawlibrary
The same mandate is found in the Revised
Administrative Code under the section of the Civil
Service Commission,290 and also, in the Code of
Conduct and Ethical Standards for Public Officials
and Employees.291
For local elective officials like Binay, Jr.,
the grounds to discipline, suspend or remove
an elective local official from office are stated
in Section 60 of Republic Act No.
7160,292 otherwise known as the "Local
Government Code of 1991" (LGC), which was
approved on October 10 1991, and took effect on
January 1, 1992:
Section 60. Grounds for Disciplinary Action. - An
elective local official may be disciplined,
suspended, or removed from office on any of the
r following grounds:chanRoblesvirtualLawlibrary
(a) Disloyalty to the Republic of the
Philippines;cralawlawlibrary
(b) Culpable violation of the
Constitution;cralawlawlibrary
(c) Dishonesty, oppression, misconduct in office,
gross negligence, or dereliction of
duty;cralawlawlibrary
(d) Commission of any offense involving moral
turpitude or an offense punishable by at least
prision mayor;cralawlawlibrary
(e) Abuse of authority;cralawlawlibrary
(f) Unauthorized absence for fifteen (15)
consecutive working days, except in the case of
members of the sangguniang panlalawigan,
sangguniang panlunsod, sanggunian bayan,
and sangguniang barangay;cralawlawlibrary
(g) Application for, or acquisition of, foreign
citizenship or residence or the status of an
immigrant of another country; and
(h) Such other grounds as may be provided in
this Code and other laws.
An elective local official may be removed from
office on the grounds enumerated above by order
of the proper court.
Related to this provision is Section 40 (b) of the
LGC which states that those removed from
office as a result of an administrative
case shall be disqualified from running for
any elective local position:
Section 40. Disqualifications. - The following
persons are disqualified from running for any
elective local position:
xxxx
(b) Those removed from office as a result of
an administrative case;
x x x x (Emphasis
supplied)ChanRoblesVirtualawlibrary
In the same sense, Section 52 (a) of the RRACCS
provides that the penalty of dismissal from
service carries the accessory penalty of
perpetual disqualification from holding
public office:
Section 52. - Administrative Disabilities Inherent
in Certain Penalties. -
a. The penalty of dismissal shall carry with
it cancellation of eligibility, forfeiture of
retirement benefits, perpetual
disqualification from holding public office,
and bar from taking the civil service
examinations.
In contrast, Section 66 (b) of the LGC states that
the penalty of suspension shall not exceed the
unexpired term of the elective local official nor
constitute a bar to his candidacy for as long as he
meets the qualifications required for the office.
Note, however, that the provision only pertains to
the duration of the penalty and its effect on the
official's candidacy. Nothing therein states that
the administrative liability therefor is
extinguished by the fact of re-election:
Section 66. Form and Notice of Decision. - x x x.
xxxx
(b) The penalty of suspension shall not exceed
the unexpired term of the respondent or a period
of six (6) months for every administrative
offense, nor shall said penalty be a bar to the
candidacy of the respondent so suspended as
long as he meets the qualifications required for
the office.
Reading the 1987 Constitution together with the
above-cited legal provisions now leads this Court
to the conclusion that the doctrine of condonation
is actually bereft of legal bases.
To begin with, the concept of public office is a
public trust and the corollary requirement of
accountability to the people at all times, as
mandated under the 1987 Constitution, is plainly
inconsistent with the idea that an elective local
official's administrative liability for a misconduct
committed during a prior term can be wiped off
by the fact that he was elected to a second term
of office, or even another elective post. Election
is not a mode of condoning an
administrative offense, and there is simply no
constitutional or statutory basis in our jurisdiction
to support the notion that an official elected for a
different term is fully absolved of any
administrative liability arising from an offense
done during a prior term. In this
jurisdiction, liability arising from
administrative offenses may be condoned bv
the President in light of Section 19, Article VII of
the 1987 Constitution which was interpreted
in Llamas v. Orbos293 to apply to administrative
offenses:
The Constitution does not distinguish between
which cases executive clemency may be exercised
by the President, with the sole exclusion of
impeachment cases. By the same token, if
executive clemency may be exercised only in
criminal cases, it would indeed be unnecessary to
provide for the exclusion of impeachment cases
from the coverage of Article VII, Section 19 of the
Constitution. Following petitioner's proposed
interpretation, cases of impeachment are
automatically excluded inasmuch as the same do
not necessarily involve criminal offenses.
In the same vein, We do not clearly see any valid
and convincing , reason why the President cannot
grant executive clemency in administrative cases.
It is Our considered view that if the President can
grant reprieves, commutations and pardons, and
remit fines and forfeitures in criminal cases, with
much more reason can she grant executive
clemency in administrative cases, which are
clearly less serious than criminal offenses.
Also, it cannot be inferred from Section 60 of the
LGC that the grounds for discipline enumerated
therein cannot anymore be invoked against an
elective local official to hold him administratively
liable once he is re-elected to office. In fact,
Section 40 (b) of the LGC precludes condonation
since in the first place, an elective local official
who is meted with the penalty of removal could
not be re-elected to an elective local position due
to a direct disqualification from running for such
post. In similar regard, Section 52 (a) of the
RRACCS imposes a penalty of perpetual
disqualification from holding public office as an
accessory to the penalty of dismissal from
service.
To compare, some of the cases adopted
in Pascual were decided by US State jurisdictions
wherein the doctrine of condonation of
administrative liability was supported by either a
constitutional or statutory provision stating, in
effect, that an officer cannot be removed by a
misconduct committed during a previous
term,294 or that the disqualification to hold the
office does not extend beyond the term in
which the official's delinquency
occurred.295 In one case,296 the absence of a
provision against the re-election of an officer
removed - unlike Section 40 (b) of the LGC-was
the justification behind condonation. In another
case,297 it was deemed that condonation through
re-election was a policy under their
constitution - which adoption in this jurisdiction
runs counter to our present Constitution's
requirements on public accountability. There was
even one case where the doctrine of condonation
was not adjudicated upon but only invoked by a
party as a ground;298 while in another case, which
was not reported in full in the official series, the
crux of the disposition was that the evidence of a
prior irregularity in no way pertained to the
charge at issue and therefore, was deemed to be
incompetent.299 Hence, owing to either their
variance or inapplicability, none of these cases
can be used as basis for the continued adoption
of the condonation doctrine under our existing
laws.
At best, Section 66 (b) of the LGC prohibits the
enforcement of the penalty of
suspension beyond the unexpired portion of the
elective local official's prior term, and likewise
allows said official to still run for re-election This
treatment is similar to People ex rel Bagshaw v.
Thompson300 and Montgomery v. Novell301 both
cited in Pascual, wherein it was ruled that an
officer cannot be suspended for a misconduct
committed during a prior term. However, as
previously stated, nothing in Section 66 (b) states
that the elective local official's administrative
liability is extinguished by the fact of re-election.
Thus, at all events, no legal provision actually
supports the theory that the liability is condoned.
Relatedly it should be clarified that there is no
truth in Pascual's postulation that the courts
would be depriving the electorate of their right to
elect their officers if condonation were not to be
sanctioned. In political law, election pertains to
the process by which a particular constituency
chooses an individual to hold a public office. In
this jurisdiction, there is, again, no legal basis to
conclude that election automatically implies
condonation. Neither is there any legal basis to
say that every democratic and republican state
has an inherent regime of condonation. If
condonation of an elective official's administrative
liability would perhaps, be allowed in this
jurisdiction, then the same should have been
provided by law under our governing legal
mechanisms. May it be at the time of Pascual or
at present, by no means has it been shown that
such a law, whether in a constitutional or
statutory provision, exists. Therefore, inferring
from this manifest absence, it cannot be said that
the electorate's will has been abdicated.
Equally infirm is Pascual's proposition that the
electorate, when re-electing a local official, are
assumed to have done so with knowledge of his
life and character, and that they disregarded or
forgave his faults or misconduct, if he had been
guilty of any. Suffice it to state that no such
presumption exists in any statute or
procedural rule.302 Besides, it is contrary to
human experience that the electorate would have
full knowledge of a public official's misdeeds. The
Ombudsman correctly points out the reality that
most corrupt acts by public officers are shrouded
in secrecy, and concealed from the
public. Misconduct committed by an elective
official is easily covered up, and is almost
always unknown to the electorate when they
cast their votes.303 At a conceptual level,
condonation presupposes that the condoner has
actual knowledge of what is to be
condoned. Thus, there could be no
condonation of an act that is unknown. As
observed in Walsh v. City Council of
Trenton304 decided by the New Jersey Supreme
Court:
Many of the cases holding that re-election of a
public official prevents his removal for acts done
in a preceding term of office are reasoned out on
the theory of condonation. We cannot subscribe
to that theory because condonation, implying as it
does forgiveness, connotes knowledge and in the
absence of knowledge there can be no
condonation. One cannot forgive something of
which one has no knowledge.
That being said, this Court simply finds no legal
authority to sustain the condonation doctrine in
this jurisdiction. As can be seen from this
discourse, it was a doctrine adopted from one
class of US rulings way back in 1959 and thus,
out of touch from - and now rendered obsolete by
- the current legal regime. In consequence, it is
high time for this Court to abandon the
condonation doctrine that originated from
Pascual, and affirmed in the cases following the
same, such as Aguinaldo, Salalima, Mayor
Garcia, and Governor Garcia, Jr. which were all
relied upon by the CA.
It should, however, be clarified that this Court's
abandonment of the condonation doctrine should
be prospective in application for the reason that
judicial decisions applying or interpreting the laws
or the Constitution, until reversed, shall form part
of the legal system of the Philippines.305 Unto this
Court devolves the sole authority to interpret
what the Constitution means, and all persons are
bound to follow its interpretation. As explained
in De Castro v. Judicial Bar Council.306
Judicial decisions assume the same authority as a
statute itself and, until authoritatively abandoned,
necessarily become, to the extent that they are
applicable, the criteria that must control the
actuations, not only of those called upon to abide
by them, but also of those duty-bound to enforce
obedience to them.307
Hence, while the future may ultimately uncover a
doctrine's error, it should be, as a general rule,
recognized as "good law" prior to its
abandonment. Consequently, the people's
reliance thereupon should be respected. The
landmark case on this matter is People v.
Jabinal,308 wherein it was ruled:
[W]hen a doctrine of this Court is overruled and a
different view is adopted, the new doctrine should
be applied prospectively, and should not apply to
parties who had relied on the old doctrine and
acted on the faith thereof.
Later, in Spouses Benzonan v. CA,309 it was
further elaborated:
[Pursuant to Article 8 of the Civil Code "judicial
decisions applying or interpreting the laws or the
Constitution shall form a part of the legal system
of the Philippines." But while our decisions form
part of the law of the land, they are also subject
to Article 4 of the Civil Code which provides that
"laws shall have no retroactive effect unless the
contrary is provided." This is expressed in the
familiar legal maxim lex prospicit, non respicit,
the law looks forward not backward. The rationale
against retroactivity is easy to perceive. The
retroactive application of a law usually divests
rights that have already become vested or
impairs the obligations of contract and hence, is
unconstitutional.310ChanRoblesVirtualawlibrary
Indeed, the lessons of history teach us that
institutions can greatly benefit from hindsight and
rectify its ensuing course. Thus, while it is truly
perplexing to think that a doctrine which is barren
of legal anchorage was able to endure in our
jurisprudence for a considerable length of time,
this Court, under a new membership, takes up
the cudgels and now abandons the condonation
doctrine.
E. Consequence of ruling.
As for this section of the Decision, the issue to be
resolved is whether or not the CA committed
grave abuse of discretion amounting to lack
or excess of jurisdiction in issuing the
assailed injunctive writs.
It is well-settled that an act of a court or tribunal
can only be considered as with grave abuse of
discretion when such act is done in a
capricious or whimsical exercise of
judgment as is equivalent to lack of
jurisdiction. The abuse of discretion must be so
patent and gross as to amount to an evasion of a
positive duty or to a virtual refusal to perform a
duty enjoined by law, or to act at all in
contemplation of law, as where the power is
exercised in an arbitrary and despotic manner by
reason of passion and hostility.311 It has also been
held that "grave abuse of discretion arises
when a lower court or tribunal patently
violates the Constitution, the law or existing
jurisprudence."312
As earlier established, records disclose that the
CA's resolutions directing the issuance of the
assailed injunctive writs were all hinged on cases
enunciating the condonation doctrine. To recount,
the March 16, 2015 Resolution directing the
issuance of the subject TRO was based on the
case of Governor Garcia, Jr., while the April 6,
2015 Resolution directing the issuance of the
subject WPI was based on the cases of Aguinaldo,
Salalima, Mayor Garcia, and again, Governor
Garcia, Jr. Thus, by merely following settled
precedents on the condonation doctrine, which at
that time, unwittingly remained "good law," it
cannot be concluded that the CA committed a
grave abuse of discretion based on its legal
attribution above. Accordingly, the WPI against
the Ombudsman's preventive suspension order
was correctly issued.
With this, the ensuing course of action should
have been for the CA to resolve the main petition
for certiorari in CA-G.R. SP No. 139453 on the
merits. However, considering that the
Ombudsman, on October 9, 2015, had already
found Binay, Jr. administratively liable and
imposed upon him the penalty of dismissal, which
carries the accessory penalty of perpetual
disqualification from holding public office, for the
present administrative charges against him, the
said CA petition appears to have been
mooted.313 As initially intimated, the preventive
suspension order is only an ancillary issuance
that, at its core, serves the purpose of assisting
the Office of the Ombudsman in its investigation.
It therefore has no more purpose - and perforce,
dissolves - upon the termination of the office's
process of investigation in the instant
administrative case.
F. Exceptions to the mootness principle.
This notwithstanding, this Court deems it apt to
clarify that the mootness of the issue regarding
the validity of the preventive suspension order
subject of this case does not preclude any of its
foregoing determinations, particularly, its
abandonment of the condonation doctrine. As
explained in Belgica, '"the moot and academic
principle' is not a magical formula that can
automatically dissuade the Court in resolving a
case. The Court will decide cases, otherwise
moot, if: first, there is a grave violation of the
Constitution; second, the exceptional character
of the situation and the paramount public interest
is involved; third, when the constitutional issue
raised requires formulation of controlling
principles to guide the bench, the bar, and the
public; and fourth, the case is capable of
repetition yet evading review."314 All of these
scenarios obtain in this case:
First, it would be a violation of the Court's own
duty to uphold and defend the Constitution if it
were not to abandon the condonation doctrine
now that its infirmities have become apparent. As
extensively discussed, the continued application
of the condonation doctrine is simply
impermissible under the auspices of the present
Constitution which explicitly mandates that public
office is a public trust and that public officials
shall be accountable to the people at all times.
Second, the condonation doctrine is a peculiar
jurisprudential creation that has persisted as a
defense of elective officials to escape
administrative liability. It is the first time that the
legal intricacies of this doctrine have been
brought to light; thus, this is a situation of
exceptional character which this Court must
ultimately resolve. Further, since the doctrine has
served as a perennial obstacle against exacting
public accountability from the multitude of
elective local officials throughout the years, it is
indubitable that paramount public interest is
involved.
Third, the issue on the validity of the
condonation doctrine clearly requires the
formulation of controlling principles to guide the
bench, the bar, and the public. The issue does not
only involve an in-depth exegesis of
administrative law principles, but also puts to the
forefront of legal discourse the potency of the
accountability provisions of the 1987 Constitution.
The Court owes it to the bench, the bar, and the
public to explain how this controversial doctrine
came about, and now, its reasons for abandoning
the same in view of its relevance on the
parameters of public office.
And fourth, the defense of condonation has been
consistently invoked by elective local officials
against the administrative charges filed against
them. To provide a sample size, the Ombudsman
has informed the Court that "for the period of July
2013 to December 2014 alone, 85 cases from the
Luzon Office and 24 cases from the Central Office
were dismissed on the ground of condonation.
Thus, in just one and a half years, over a hundred
cases of alleged misconduct - involving infractions
such as dishonesty, oppression, gross neglect of
duty and grave misconduct - were placed beyond
the reach of the Ombudsman's investigatory and
prosecutorial powers."315 Evidently, this fortifies
the finding that the case is capable of repetition
and must therefore, not evade review.
In any event, the abandonment of a doctrine is
wholly within the prerogative of the Court. As
mentioned, it is its own jurisprudential creation
and may therefore, pursuant to its mandate to
uphold and defend the Constitution, revoke it
notwithstanding supervening events that render
the subject of discussion moot.chanrobleslaw
V.
With all matters pertaining to CA-G.R. SP No.
139453 passed upon, the Court now rules on the
final issue on whether or not the CA's
Resolution316 dated March 20, 2015 directing the
Ombudsman to comment on Binay, Jr.'s petition
for contempt in CA-G.R. SP No. 139504 is
improper and illegal.
The sole premise of the Ombudsman's contention
is that, as an impeachable officer, she cannot be
the subject of a charge for indirect
contempt317 because this action is criminal in
nature and the penalty therefor would result in
her effective removal from office.318 However, a
reading of the aforesaid March 20, 2015
Resolution does not show that she has already
been subjected to contempt proceedings. This
issuance, in? fact, makes it clear that
notwithstanding the directive for the Ombudsman
to comment, the CA has not necessarily given
due course to Binay, Jr.'s contempt petition:
Without necessarily giving due course to the
Petition for Contempt respondents [Hon.
Conchita Carpio Morales, in her capacity as the
Ombudsman, and the Department of Interior and
Local Government] are hereby DIRECTED to file
Comment on the Petition/Amended and
Supplemental Petition for Contempt (CA-G.R. SP
No. 139504) within an inextendible period of
three (3) days from receipt hereof. (Emphasis
and underscoring
supplied)ChanRoblesVirtualawlibrary
Thus, even if the Ombudsman accedes to the CA's
directive by filing a comment, wherein she may
properly raise her objections to the contempt
proceedings by virtue of her being an
impeachable officer, the CA, in the exercise of its contempt in CA-G.R. SP No. 139504 with utmost
sound judicial discretion, may still opt not to give dispatch.
due course to Binay, Jr.'s contempt petition and
accordingly, dismiss the same. Sjmply put, SO ORDERED.chanroblesvirtuallawlibrary
absent any indication that the contempt petition
has been given due course by the CA, it would
then be premature for this Court to rule on the
issue. The submission of the Ombudsman on this
score is perforce denied.

WHEREFORE, the petition is PARTLY

GRANTED. Under the premises of this Decision,
the Court resolves as follows:

(a) the second paragraph of Section 14 of

Republic Act No. 6770 is
declared UNCONSTITUTIONAL, while the policy
against the issuance of provisional injunctive writs
by courts other than the Supreme Court to enjoin
an investigation conducted by the Office of the
Ombudsman under the first paragraph of the said
provision is DECLARED ineffective until the Court
adopts the same as part of the rules of procedure
G.R. No. 198583, June 28, 2017
through an administrative circular duly issued
therefor;cralawlawlibrary
ARLYN ALMARIO-
TEMPLONUEVO, Petitioner, v. OFFICE OF THE
(b) The condonation doctrine is ABANDONED,
OMBUDSMAN, THE HONORABLE SECRETARY,
but the abandonment is PROSPECTIVE in
DEPARTMENT OF INTERIOR AND LOCAL
effect;cralawlawlibrary
GOVERNMENT AND CHITO M.
OYARDO, Respondents.
(c) The Court of Appeals (CA) is DIRECTED to
act on respondent Jejomar Erwin S. Binay, Jr.'s
(Binay, Jr.) petition for certiorari in CA-G.R. SP DECISION
No. 139453 in light of the Office of the
Ombudsman's supervening issuance of its Joint MENDOZA, J.:
Decision dated October 9, 2015 finding Binay, Jr.
administratively liable in the six (6) This petition for review on certiorari under Rule
administrative complamts, docketed as OMB-C-A- 45 of the Rules of Court seeks the review of the
15-0058, OMB-C-A-15-0059, OMB-C-A-15-0060, February 17, 20111 and the September 8,
OMB-C-A-15-0061, OMB-C-A-15-0062, and OMB- 20112 Resolutions of the Court of Appeals (CA) in
C-A-15-0063; and CA-G.R. SP No. 116229. The CA issuances
dismissed the petition for certiorari and
(d) After the filing of petitioner Ombudsman prohibition filed by petitioner Arlyn Almario-
Conchita Carpio Morales's comment, the CA Templonuevo (Templonuevo), thus, affirming the
is DIRECTED to resolve Binay, Jr.'s petition for January 6, 2010 Decision3 of Office of the Deputy
Ombudsman for Luzon (Ombudsman) in OMB-L-
A-08-0097-B, finding her administratively liable
for simple misconduct. The complaint against her
was filed by respondent Chito M. Oyardo
(Oyardo).
Factual Antecedents
Templonuevo was elected as Sangguniang Bayan
Member of the Municipality of Caramoan, Province
of Catanduanes, during the May 2007 elections.
She served from July 1, 2007 to June 30, 2010.
In the elections of May 2010, she was elected as
Municipal Vice Mayor of the same municipality.
In a complaint, docketed as OMB-L-A-08-0097-B,
Oyardo administratively charged Templonuevo
before the Ombudsman for violation of Sec. 2,
par. 1 of Republic Act No. 9287.
In its January 6, 2010 Decision, the Deputy
Ombudsman for Luzon found petitioner guilty of
simple misconduct and imposed upon her the
penalty of one month suspension without pay.
The dispositive portion of said decision reads:
WHEREFORE, premises considered, it is
hereby respectfully recommended that ARLYN
ALMARIO-TEMPLONUEVO be adjudged guilty of
violation of simple misconduct and is hereby
imposed a penalty of one (1) month suspension
from office without pay pursuant to Section 7
Rule III of the Administrative Order No. 07 as
amended by Administrative Order No. 17 in
relation to Republic Act No. 6770.
The Honorable Secretary Ronaldo V. Puno,
Department of Interior and Local Government, is
hereby directed to implement this DECISION
immediately upon receipt thereof pursuant to
Section 7, Rule III of Administrative Order No.
07, as amended by Administrative Order No. 17
(Ombudsman Rules of Procedure) in relation to
Memorandum Circular No. 1, Series of 2006 dated
11 April 2006 and to promptly inform this office of
the action taken hereon. executory and unappealable. She cites, as
support, Section 7, Rule III of Administrative
SO DECIDED.4 Order No. 07, otherwise known as the Rules of
Procedure of the Ombudsman, as amended by
At the time Templonuevo received her copy of the
A.O. No. 17, which
January 6, 2010 Decision on September 27,
provides:chanRoblesvirtualLawlibrary
2010, her term as Sangguniang Bayan Member
Section 7. Finality and execution of decision. -
had expired. She, however, was elected as Vice
Where the respondent is absolved of the charge,
Mayor of the same municipality.
and in case of conviction where the penalty
imposed is public censure or reprimand,
Without filing a motion for reconsideration,
suspension of not more than one month, or a fine
Templonuevo directly filed before the CA an
equivalent to one month salary, the decision shall
original petition for certiorari and prohibition
be final, executory and unappealable. In all other
under Rule 65 of the Rules of Court. She claimed
cases, the decision may be appealed to the Court
that the Ombudsman acted with grave abuse of
of Appeals in a verified petition for review under
discretion in ordering her suspension at a time
the requirements and conditions set forth in Rule
when her term of office as Sangguniang Bayan
43 of the Rules of Court, within fifteen (15) days
Member had already expired and she had been
from the receipt of the written Notice of the
elected as Vice Mayor in the May 2010 elections.
Decision or Order denying the Motion for
Reconsideration.
In its February 17, 2011 Resolution,5 the CA
dismissed outright the petition on the ground of
An appeal shall not stop the decision from being
Templonuevo's failure to file a motion for
executory. In case the penalty is suspension or
reconsideration. According to the CA, the remedy
removal and the respondent wins such appeal, he
of certiorari will not lie if other plain and speedy
shall be considered as having been under
remedies in the ordinary course of law such as a
preventive suspension and shall be paid the
motion for reconsideration are available, which, in
salary and such other emoluments that he did not
this case, was not sought after by Templonuevo.
receive by reason of the suspension or removal.
Templonuevo moved for reconsideration, but her
A decision of the Office of the Ombudsman in
motion was denied by the CA in its September 8,
administrative cases shall be executed as a
2011 Resolution.
matter of course. The Office of the Ombudsman
shall ensure that the decision shall be strictly
Aggrieved, Templonuevo elevated the case to this
enforced and properly implemented. The refusal
Court via Rule 45 of the Rules of Court.
or failure by any officer without just cause to
comply with an order of the Office of the
Hence, this petition.
Ombudsman to remove, suspend, demote, fine or
censure shall be ground for disciplinary action
Templonuevo asserts that the CA decided
against said officer.
questions of substance contrary to law and the
To Templonuevo, said AO makes a motion for
applicable decisions of this Court when her
reconsideration unavailable in cases where a
petition was dismissed outright on the ground of
respondent is absolved of the charge or in cases
failure to file a motion for reconsideration. She
of conviction where the penalty imposed is public
claims that there was no need to file for
censure or reprimand, suspension of not more
reconsideration considering that the
than one month, or a fine of equivalent to one
Ombudsman's decision has become final,
month salary. Considering that she was given the
penalty of one-month suspension only, her only
remedy then was to file a petition
for certiorari under Rule 65 of the Rules of Court.
In furtherance of her position, Templonuevo
cites Office of the Ombudsman v. Alano,6 wherein
the Court ruled that a resolution or order of the
Ombudsman becomes final and unappealable in
the instances mentioned by her. The effect of
such finality, in her view, is simple - that the
motion for reconsideration is not required before
resorting to the extraordinary remedy
of certiorari. This was, according to her, the same
conclusion reached by the Court in Reyes, Jr. v.
Belisario.7 There, it was held that the complainant
therein was not entitled to any corrective
recourse, whether by motion for reconsideration,
or by appeal to the courts, to effect a reversal of
the exoneration. The Court further held that
despite such a fact, courts are still empowered by
the Constitution to determine whether there has
been grave abuse of discretion amounting to lack
or excess of jurisdiction on the part of any branch
or instrumentality of the Government.
Templonuevo, thus, believes that because the
decision of the Ombudsman in her case was
immediately final, executory and unappealable,
the same could no longer be reviewed by the said
office and as such a motion for reconsideration
would be an exercise in futility. The CA should
have taken note of that fact and such a failure
amounts to an error, says petitioner.
Templonuevo likewise calls the Court's attention
to the fact that the misconduct for which she was
penalized was committed when she was still a
Sangguniang Bayan Member. As she was elected
Vice Mayor of the same municipality in 2010, she
claims that such election resulted in the
condonation of her administrative liability on acts
committed during her previous post. She cites the
case of Pascual v. Hon. Provincial Board of Nueva
Ecija,8 where this Court held that the re-election
to office operates as a condonation of the officer's
previous misconduct to the extent of cutting off
the right to remove him therefrom. Consequently,
the decision of the Ombudsman is in her view a
patent nullity.
On November 16, 2011, the Court resolved to
require the respondents to comment on the
petition and also issued a Temporary Restraining
Order enjoining the respondents from
implementing the Decision of the Office of the
Ombudsman.9
On December 2, 2011, the Office of the Solicitor
General (OSG) filed a Manifestation and Motion
(in Lieu of Comment),10 stating that the
arguments raised by it in its Manifestation and
Motion (in Lieu of Comment), dated April 26,
2011 and filed on April 28, 2011 with the CA, was
exhaustive enough to serve as its comment on
the present petition. The OSG in the pleadings it
filed with the CA took the side of Templonuevo.
It, thus, asserts that by virtue of AO No. 7, as
amended, a decision of Ombudsman imposing a
penalty of not more than one (1) month is final,
executory and unappealable and, as such, a
motion for reconsideration or appeal is not an
available remedy. It also claimed that the
subsequent reelection of Templonuevo precludes
the imposition and execution of the penalty by
virtue of the long standing doctrine of
condonation.
In its Comment on the Petition For Review
on Certiorari with Leave of Court (With Motion to
Recall the Temporary Restraining Order with
Opposition to the Issuance of a Writ of
Preliminary Injunction),11 the Ombudsman
submits that Section 7, Rule III, Administrative
Order No. 07, as amended, allows the filing of
motions for reconsideration on its decisions that
impose one month suspension; that a plethora of
jurisprudence reveals that the Condonation
Doctrine was applied by the Supreme Court only
in cases where there was re-election to the same
position; and that, the issuance of a temporary
restraining order was erroneous and the error
should not be extended with the issuance of a
writ of preliminary injunction which the law
proscribes.
In the meantime, Templonuevo filed a
Manifestation in Lieu of Compliance12 with the
January 25, 2012 Resolution which ordered her to
furnish this Court with the current address of
Oyardo. She stated therein that she did not know
the present address of Oyardo, who was not a
permanent resident of Caramoan, and that no
forwarding address was left behind.
In its July 18, 2012 Resolution,13 the Court noted
the manifestation and required the Ombudsman
to furnish the address of Oyardo. This was
complied with.14
Oyardo still failed to file his Comment on the
petition. As such, in the Court's September 14,
2015 Resolution,15 Oyardo's right to file his
comment was deemed waived. In the same
Resolution, the Court required Templonuevo to
file her Reply to the manifestation and motion of
the OSG, dated December 1, 2011, and to the
Comment on the Petition for Review
on Certiorari with Leave of Court filed by the
Ombudsman.
Until now, no reply has been filed by
Templonuevo. She is deemed to have waived her
right to file it.
Issues
A reading of the pleadings filed by the parties
reveals that the issues are as
follows:chanRoblesvirtualLawlibrary
1. Whether the CA committed an error in
dismissing outright the petition filed by
Templonuevo on the ground of failure to
file a motion for reconsideration from the
 decision of the Ombudsman finding her
administratively liable and imposing upon
her a penalty of one month suspension.
2. Whether the CA committed an error in
not treating the election of Templonuevo
as Vice Mayor of the same municipality
as an event that precludes the imposition
of the one month suspension penalty
following the doctrine of condonation.
The Ruling of the Court
The Court grants the petition.
A motion for reconsideration is not required
where the penalty imposed by the Ombudsman is
one month suspension before a petition under
Rule 65 can be filed.
The settled rule is that a motion for
reconsideration is a condition sine qua non for the
filing of a petition for certiorari.16 Its purpose is to
grant an opportunity for the court to correct any
actual or perceived error attributed to it by re-
examination of the legal and factual
circumstances of the case.17
This rule, however, admits well-defined
exceptions, such as (a) where the order is a
patent nullity, as where the court a quo has no
jurisdiction; (b) where the questions raised in
the certiorari proceedings have been duly raised
and passed upon by the lower court, or are the
same as those raised and passed upon in the
lower court; (c) where there is an urgent
necessity for the resolution of the question and
any further delay would prejudice the interests of
the Government or of the petitioner or the subject
matter of the action is perishable; (d) where,
under the circumstances, a motion for
reconsideration would be useless; (e) where
petitioner was deprived of due process and there
is extreme urgency for relief; (f) where, in a
criminal case, relief from an order of arrest is
urgent and the granting of such relief by the trial
court is improbable; (g) where the proceedings in
the lower court are a nullity for lack of due
process; (h) where the proceeding were ex parte
or in which the petitioner had no opportunity to
object; and (i) where the issue raised is one
purely of law or where public interest is
involved.18
Templonuevo contended that her non-filing of a
motion for reconsideration of the assailed
Ombudsman decision was justified because it
would be useless. She claims that the assailed
decision was final, executory and unappealable,
hence, beyond the ambit of a motion for
reconsideration following Section 7, Rule III of
Administrative Order No. 07. She also argued that
the Ombudsman's decision was a patent nullity
considering that her election as Vice Mayor of the
same municipality precluded the attachment to
her of any administrative liability arising from the
acts done while she was a Sangguniang Bayan
Member.
The Court agrees with Templonuevo on her first
position.
In Ombudsman v. Alano,19 the Court stressed
that Section 13(8), Article XI of the 1987
Constitution empowers the Office of the
Ombudsman to, among others, "promulgate its
rules of procedure and exercise such other
powers or perform such functions or duties as
may be provided by law." Pursuant to such
constitutional authority, Administrative Order No.
07 (otherwise known as the "Rules of Procedure
of the Office of the Ombudsman"), dated April 10,
1990, was issued. Section 7, Rule III thereof
provides:chanRoblesvirtualLawlibrary
SEC. 7. Finality of decision. - Where the
respondent is absolved of the charge, and in case
of conviction where the penalty imposed is public
censure or reprimand, suspension of not more
than one month, or a fine equivalent to one
month salary, the decision shall be final and
unappealable. In all other cases, the decision
shall become final after the expiration of ten (10)
days from receipt thereof by the respondent,
unless a motion for reconsideration or petition
for certiorari shall have been filed by him as
prescribed in Section 27 of RA 6770.
The Court, in interpreting the above constitutional
and statutory provisions, recognizes only two
instances where a decision of the Ombudsman is
considered as final and unappealable and, thus,
immediately executory. The first is when the
respondent is absolved of the charge; and second
is, in case of conviction, where the penalty
imposed is public censure or reprimand,
suspension of not more than one month, or a fine
equivalent to one month salary.
In this case, Templonuevo was meted with a
penalty of one month suspension. Accordingly,
the decision of the Ombudsman is final,
unappealable and immediately executory.
Being the case, the Ombudsman's decision was
beyond the reach of an appeal or even of a
motion for reconsideration. This was the same
ruling in Reyes v. Belisario,20 where the Court
explained that a complainant was not entitled to
any corrective recourse by motion for
reconsideration in the Ombudsman, or by appeal
to the courts if the penalty imposed was higher
than public censure, reprimand, one-month
suspension or a fine equivalent to a one month
salary. It was further
written:chanRoblesvirtualLawlibrary
The clear import of Section 7, Rule III of the
Ombudsman Rules is to deny the complainant in
an administrative complaint the right to appeal
where the Ombudsman has exonerated the
respondent of the administrative charge. The
complainant, therefore, is not entitled to any
corrective recourse, whether by motion for
reconsideration in the Office of the Ombudsman,
or by appeal to the courts, to effect a reversal of
the exoneration. Only the respondent is granted
the right to appeal but only in case he is found
liable and the penalty imposed is higher than
public censure, reprimand, one-month suspension
or fine equivalent to one month salary.21
Left without any remedy in the ordinary course of
law, Templonuevo was justified in resorting
directly to the CA via a Rule 65 petition. Indeed,
an independent action for certiorari may be
availed of only when there is no appeal or any
plain, speedy and adequate remedy in the
ordinary course of law and certiorari is not a
substitute for the lapsed remedy of appeal.22 In
other words, because petitioner could not avail a
motion for reconsideration or an appeal, her
choice of a Rule 65 petition was proper.
The decision of the Ombudsman was not a patent
nullity; Condonation doctrine applies.
Templonuevo claimed that the decision of the
Ombudsman was null and void as the penalty
imposed could no longer be imposed on account
of her election as Vice Mayor of the same
municipality, which to her, operated as
forgiveness by her constituents for the acts done
while she was still a Sangguniang Bayan Member.
This "theory of nullity," in a sense, does not hold
water. The Ombudsman decided the case prior to
the May 2010 elections. At that
time,Templonuevo remained an incumbent and
no event had transpired yet which would have
had an effect on her liability for the acts done
during her previous term. As the elections for
2010 did not happen yet, nothing could have
substantially changed the course of action of the
Ombudsman.
The election of 2010, however, became material
only when the Ombudsman's decision was on
appeal. It is at this stage that the CA, should
have considered Templonuevo's election as Vice
Mayor as rendering the imposition of
administrative sanctions moot and academic on
the basis of the condonation doctrine. Said
doctrine, despite its abandonment in Conchita
Carpio-Morales v. Court of Appeals and Jejomar
Erwin S. Binay, Jr.,(Carpio-Morales),23 still applies No. 116229 are hereby REVERSED and SET
in this case as the effect of the abandonment was ASIDE. The act committed by petitioner Arlyn
made prospective in application. Almario-Templonuevo is deemed CONDONED.
In Giron v. Ochoa,24 the Court recognized that the SO ORDERED.
doctrine can be applied to a public officer who
was elected to a different position provided that it
is shown that the body politic electing the person
to another office is the same. Thus, the Court
ruled:chanRoblesvirtualLawlibrary
On this issue, considering the ratio
decidendi behind the doctrine, the Court agrees
with the interpretation of the administrative
tribunals below that the condonation doctrine
applies to a public official elected to another
office. The underlying theory is that each term is
separate from other terms. Thus, in Carpio-
Morales, the basic considerations are the
following: first, the penalty of removal may not
be extended beyond the term in which the public
officer was elected for each term is separate and
distinct; second, an elective official's re-election
serves as a condonation of previous misconduct,
thereby cutting the right to remove him therefor;
and third, courts may not deprive the electorate,
who are assumed to have known the life and
character of candidates, of their right to elect
officers. In this case, it is a given fact that the
body politic, who elected him to another
office, was the same. [Emphasis supplied]
In this case, those who elected Templonuevo into
office as Sangguniang Bayan member and Vice
Mayor were essentially the same. Stated
otherwise, the electorate for the Vice Mayor of a
municipality embraces wholly those voting for a
member of the Sangguniang Bayan. Logically, the
condonation doctrine is applicable in her case.
The Court is, thus, precluded from imposing the
administrative penalties of one month suspension
on account of the same people's decision to elect
her again to office.
WHEREFORE, the petition is GRANTED. The
February 17, 2011 and September 8, 2011
Resolutions of the Court of Appeals in CA-G.R. SP
G.R. No. 199802
CONGRESSMAN HERMILANDO I. MANDANAS;
MAYOR EFREN B. DIONA; MAYOR ANTONINO
A. AURELIO; KAGA WAD
MARIOILAGAN;BARANGAY CHAIR PERLITO
MANALO; BARANGA Y CHAIR MEDEL
MEDRANO;BARANGAY KAGA WAD CRIS
RAMOS; BARANGA Y KAGA WAD ELISA D.
BALBAGO, and ATTY. JOSE MALVAR
VILLEGAS, Petitioners
vs.
EXECUTIVE SECRETARY PAQUITO N. OCHOA,
JR.; SECRETARY CESAR PURISIMA,
Department of Finance; SECRETARY
FLORENCIO H. ABAD, Department of Budget
and Management; COMMISSIONER KIM
JACINTO-HENARES, Bureau of Internal
Revenue; and NATIONAL TREASURER
ROBERTO TAN, Bureau of the Treasury,
Respondents
G.R. No. 208488
HONORABLE ENRIQUE T. GARCIA, JR., in his
personal and official capacity as
Representative of the 2nd District of the
Province of Bataan, Petitioner
vs.
HONORABLE [PAQUITO) N. OCHOA, JR.,
Executive Secretary; HONORABLE CESAR V.
PURISIMA, Secretary, Department of
Finance; HONORABLE FLORENCIO H. ABAD,
Secretary, Department of Budget and
Management; HONORABLE KIM S. JACINTO-
HENARES, Commissioner, Bureau of Internal
Revenue; and HONORABLE ROZZANO
RUFINO B. BIAZON, Commissioner, Bureau
of Customs, Respondents
DECISION
BERSAMIN, J.:
The petitioners hereby challenge the manner in
which the just share in the national taxes of the
local government units (LGUs) has been
computed.
Antecedents
One of the key features of the 1987 Constitution
is its push towards decentralization of
government and local autonomy. Local autonomy
has two facets, the administrative and the fiscal.
Fiscal 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.1 Such autonomy is as indispensable to
the viability of the policy of decentralization as
the other.
Implementing the constitutional mandate for
decentralization and local autonomy, Congress
enacted Republic Act No. 7160, otherwise known
as the Local Government Code (LGC), in order to
guarantee the fiscal autonomy of the LGUs by
specifically providing that:
SECTION 284. Allotment of Internal Revenue
Taxes. - Local government units shall have a
share in the national internal revenue taxes based
on the collection of the third fiscal year preceding
the current fiscal year as follows:
(a) On the first year of the effectivity of this
Code, thirty percent (30%); (b) On the second
year, thirty-five percent (35%); and
(c) On the third year and thereafter, forty percent
(40%).
Provided, That in the event that the National
Government incurs an unmanageable public
sector deficit, the President of the Philippines is
hereby authorized, upon the recommendation of
Secretary of Finance, Secretary of Interior and
Local Government, and Secretary of Budget and
Management, and subject to consultation with the
presiding officers of both Houses of Congress and
the presidents of the "liga", to make the
necessary adjustments in the internal revenue
allotment of local government units but in no case
shall the allotment be less than thirty percent
(30%) of the collection of national internal
revenue taxes of the third fiscal year preceding
the current fiscal year: Provided, further, That in
the first year of the effectivity of this Code, the
local government units shall, in addition to the
thirty percent (30%) internal revenue allotment
which shall include the cost of devolved functions
for essential public services, be entitled to receive
the amount equivalent to the cost of devolved
personal services.
The share of the LGUs, heretofore known as the
Internal Revenue Allotment (IRA), has been
regularly released to the LGUs. According to the
implementing rules and regulations of the LGC,
the IRA is determined on the basis of the actual
collections of the National Internal Revenue Taxes
(NIRTs) as certified by the Bureau of Internal
Revenue (BIR).2
G.R. No. 199802 (Mandanas, et al.) is a special
civil action for certiorari, prohibition
and mandamus assailing the manner the General
Appropriations Act (GAA) for FY 2012 computed
the IRA for the LGUs.
Mandanas, et al. allege herein that certain
collections of NIR Ts by the Bureau of Customs
(BOC) - specifically: excise taxes, value added
taxes (VATs) and documentary stamp taxes
(DSTs) - have not been included in the base
amounts for the computation of the IRA; that
such taxes, albeit collected by the BOC, should
form part of the base from which the IRA should
be computed because they constituted NIRTs;
that, consequently, the release of the additional
amount of ₱60,750,000,000.00 to the LGUs as
their IRA for FY 2012 should be ordered; and that
for the same reason the LGUs should also be
released their unpaid IRA for FY 1992 to FY 2011,
inclusive, totaling ₱438,103,906,675.73.
In G.R. No. 208488, Congressman Enrique
Garcia, Jr., the lone petitioner, seeks the writ
of mandamus to compel the respondents thereat
to compute the just share of the LGUs on the
basis of all national taxes. His petition insists on a
literal reading of Section 6, Article X of the 1987
Constitution. He avers that the insertion by
Congress of the words internal revenue in the
phrase national taxes found in Section 284 of the
LGC caused the diminution of the base for
determining the just share of the LGUs, and
should be declared unconstitutional; that,
moreover, the exclusion of certain taxes and
accounts pursuant to or in accordance with
special laws was similarly constitutionally
untenable; that the VA Ts and excise taxes
collected by the BOC should be included in the
computation of the IRA; and that the respondents
should compute the IRA on the basis of all
national tax collections, and thereafter distribute
any shortfall to the LGUs.
It is noted that named as common respondents
were the then incumbent Executive Secretary,
Secretary of Finance, the Secretary of the
Department of Budget and Management (DBM),
and the Commissioner of Internal Revenue. In
addition, Mandanas, et al. impleaded the National
Treasurer, while Garcia added the Commissioner
of Customs.
The cases were consolidated on October 22,
2013. 3 In the meanwhile, Congressman Garcia,
Jr. passed away. Jose Enrique Garcia III, who was
subsequently elected to the same congressional
post, was substituted for Congressman Garcia, Jr.
as the petitioner in G.R. No. 208488 under the
resolution promulgated on August 23, 2016.4
In response to the petitions, the several
respondents, represented by the Office of the
Solicitor General (OSG), urged the dismissal of
the petitions upon procedural and substantive
considerations.
Anent the procedural considerations, the OSG
argues that the petitions are procedurally
defective because, firstly, mandamus does not lie
in order to achieve the reliefs sought because
Congress may not be compelled to appropriate
the sums allegedly illegally withheld for to do so
will violate the doctrine of separation of powers;
and, secondly, mandamus does not also lie to
compel the DBM to release the amounts to the
LGUs because such disbursements will be
contrary to the purposes specified in the GAA;
that Garcia has no clear legal right to sustain his
suit for mandamus; that the filing of Garcia's suit
violates the doctrine of hierarchy of courts; and
that Garcia's petition seeks declaratory relief but
the Court cannot grant such relief in the exercise
of its original jurisdiction.
On the substantive considerations, the OSG avers
that Article 284 of the LGC is consistent with the
mandate of Section 6, Article X of the 1987
Constitution to the effect that the LGUs shall have
a just share in the national taxes; that the
determination of the just share is within the
discretion of Congress; that the limitation under
the LGC of the basis for the just share in the
NIRTs was within the powers granted to Congress
by the 1987 Constitution; that the LGUs have
been receiving their just share in the national
taxes based on the correct base amount; that
Congress has the authority to exclude certain
taxes from the base amount in computing the
IRA; that there is a distinction between the VA Ts,
excise taxes and DSTs collected by the BIR, on
one hand, and the VA Ts, excise taxes and DSTs
collected by the BOC, on the other, thereby
warranting their different treatment; and that
Development Budget Coordination Committee
(DBCC) Resolution No. 2003-02 dated September
4, 2003 has limited the base amount for the
computation of the IRA to the "cash collections
based on the BIR data as reconciled with the
Bureau of Treasury;" and that the collection of
such national taxes by the BOC should be
excluded.
Issues
The issues for resolution are limited to the
following, namely:
I.
Whether or not Mandamus is the proper vehicle to
assail the constitutionality of the relevant
provisions of the GAA and the LGC;
II.
Whether or not Section 284 of the LGC is
unconstitutional for being repugnant to Section 6,
Article X of the 1987 Constitution;
III.
Whether or not the existing shares given to the
LGUs by virtue of the GAA is consistent with the
constitutional mandate to give LGUs a 'just share"
to national taxes following Article X, Section 6 of
the 1987 Constitution;
IV.
Whether or not the petitioners are entitled to the
reliefs prayed for.
Simply stated, the petitioners raise the novel
question of whether or not the exclusion of
certain national taxes from the base amount for
the computation of the just share of the LGUs in
the national taxes is constitutional.
Ruling of the Court
The petitions are partly meritorious.
I
Mandamus is an improper remedy
Mandanas, et al. seek the writs
of certiorari, prohibition and mandamus, while
Garcia prays for the writ of mandamus. Both
groups of petitioners impugn the validity of
Section 284 of the LGC.
The remedy of mandamus is defined in Section 3,
Rule 65 of the Rules of Court, which provides:
Section 3. Petition for mandamus. - When any
tribunal, corporation, board, officer or person
unlawfully neglects the performance of an act
which the law specifically enjoins as a duty
resulting from an office, trust, or station, or
unlawfully excludes another from the use and
enjoyment of a right or office to which such other
is entitled, and there is no other plain, speedy
and adequate remedy in the ordinary course of
law, the person aggrieved thereby may file a
verified petition in the proper court, alleging the
facts with certainty and praying that judgment be
rendered commanding the respondent,
immediately or at some other time to be specified
by the court, to do the act required to be done to
protect the rights of the petitioner, and to pay the
damages sustained by the petitioner by reason of
the wrongful acts of the respondent.
The petition shall also contain a sworn
certification of non-forum shopping as provided in
the third paragraph of section 3, Rule 46.
For the writ of mandamus to issue, the petitioner
must show that the act sought to be performed or
compelled is ministerial on the part of the
respondent. An act is ministerial when it does not
require the exercise of judgment and the act is
performed pursuant to a legal mandate. The
burden of proof is on the mandamus petitioner to
show that he is entitled to the performance of a
legal right, and that the respondent has a
corresponding duty to perform the act. The writ
of mandamus may not issue to compel an official
to do anything that is not his duty to do, or that is
his duty not to do, or to obtain for the petitioner
anything to which he is not entitled by law. 5
Considering that its determination of what
constitutes the just share of the LGUs in the
national taxes under the 1987 Constitution is an
entirely discretionary power, Congress cannot be
compelled by writ of mandamus to act either way.
The discretion of Congress thereon, being
exclusive, is not subject to external direction;
otherwise, the delicate balance underlying our
system of government may be unduly disturbed.
This conclusion should at once then demand the
dismissal of the Garcia petition in G.R. No.
208488, but we do not dismiss it. Garcia has
attributed the non-release of some portions of
their IRA balances to an alleged congressional
indiscretion - the diminution of the base amount
for computing the LGU's just share. He has
asserted that Congress altered the constitutional
base not only by limiting the base to the NIRTs
instead of including therein all national taxes, but
also by excluding some national taxes and
revenues that only benefitted a few LGUs to the
detriment of the rest of the LGUs.
Garcia's petition, while dubbed as a petition
for mandamus, is also a petition
for certiorari because it alleges that Congress
thereby committed grave abuse of discretion
amounting to lack or excess of jurisdiction. It is
worth reminding that the actual nature of every
action is determined by the allegations in the
body of the pleading or the complaint itself, not
by the nomenclature used to designate the
same. 6 Moreover, neither should the prayer for
relief be controlling; hence, the courts may still
grant the proper relief as the facts alleged in the
pleadings and the evidence introduced may
warrant even without a prayer for specific
remedy.7
In this regard, Garcia's allegation of the
unconstitutionality of the insertion by Congress of
the words internal revenue in the phrase national
taxes justifies treating his petition as one
for certiorari. It becomes our duty, then, to
assume jurisdiction over his petition. In Araullo v.
Aquino III,8 the Court has emphatically opined
that the Court's certiorari jurisdiction under the
expanded judicial power as stated in the second
paragraph of Section 1, Article VIII of the
Constitution can be asserted:
xxxx to set right and undo any act of grave abuse
of discretion amounting to lack or excess of
jurisdiction by any branch or instrumentality of
the Government, the Court is not at all precluded
from making the inquiry provided the challenge
was properly brought by interested or affected
parties. The Court has been thereby entrusted
expressly or by necessary implication with both
the duty and the obligation of determining, in
appropriate cases, the validity of any assailed
legislative or executive action. This entrustment is
consistent with the republican system of checks
and balances. 9
Further, observing that one of the reliefs being
sought by Garcia is identical to the main relief
sought by Mandanas, et al., the Court should
rightly dwell on the substantive arguments
posited by Garcia to the extent that they are
relevant to the ultimate resolution of these
consolidated suits.
II.
Municipal corporations and their relationship
with Congress
The correct resolution and fair disposition of the
issues interposed for our consideration require a
review of the basic principles underlying our
system of local governments, and of the extent of
the autonomy granted to the LGUs by the 1987
Constitution.
Municipal corporations are now commonly known
as local governments. They are the bodies politic
established by law partly as agencies of the State
to assist in the civil governance of the country.
Their chief purpose has been to regulate and
administer the local and internal affairs of the
cities, municipalities or districts. They are legal
institutions formed by charters from the
sovereign power, whereby the populations within
communities living within prescribed areas have
formed themselves into bodies politic and
corporate, and assumed their corporate names
with the right of continuous succession and for
the purposes and with the authority of
subordinate self-government and improvement
and the local administration of the affairs of the
State. 10
Municipal corporations, being the mere creatures
of the State, are subject to the will of Congress,
their creator. Their continued existence and the
grant of their powers are dependent on the
discretion of Congress. On this matter, Judge
John F. Dillon of the State of Iowa in the United
States of America enunciated in Merriam v.
Moody's Executors11 the rule of statutory
construction that came to be oft-mentioned as
Dillon's Rule, to wit:
[A] municipal corporation possesses and can
exercise the following powers and no others:
First, those granted in express words; second,
those necessarily implied or necessarily incident
to the powers expressly granted; third, those
absolutely essential to the declared objects and
purposes of the corporation-not simply
convenient but indispensible; fourth, any fair
doubt as to the existence of a power is resolved
by the courts against the corporation-against the
existence of the powers. 12
The formulation of Dillon's Rule has since
undergone slight modifications. Judge Dillon
himself introduced some of the modifications
through his post-Merriam writings with the
objective of alleviating the original formulation's
harshness. The word fairly was added to the
second proviso; the word absolutely was deleted
from the third proviso; and the
words reasonable and substantial were added to
the fourth proviso, thusly:
x x x second, those necessarily or fairly implied in
or incident to the powers expressly granted;
third, those essential to x x x. Any fair,
reasonable, doubt. 13
The modified Dillon's Rule has been followed in
this jurisdiction, and has remained despite both
the 1973 Constitution and the 1987 Constitution
mandating autonomy for local governments. This
has been made evident in several rulings of the
Court, one of which was that handed down
in Magtajas v. Pryce Properties Corporation,
lnc.: 14
In light of all the above considerations, we see no
way of arriving at the conclusion urged on us by
the petitioners that the ordinances in question are
valid. On the contrary, we find that the
ordinances violate P.D. 1869, which has the
character and force of a statute, as well as the
public policy expressed in the decree allowing the
playing of certain games of chance despite the
prohibition of gambling in general.
The rationale of the requirement that the
ordinances should not contravene a statute is
obvious. Municipal governments are only
agents of the national government. Local
councils exercise only delegated legislative
powers conferred on them by Congress as
the national lawmaking body. The delegate
cannot be superior to the principal or
exercise powers higher than those of the
latter. It is a heresy to suggest that the local
government units can undo the acts of
Congress, from which they have derived
their power in the first place, and negate by
mere ordinance the mandate of the statute.
Municipal corporations owe their origin to,
and derive their powers and rights wholly
from the legislature. It breathes into them
the breath of life, without which they cannot
exist. As it creates, so it may destroy. As it
may destroy, it may abridge and control.
Unless there is some constitutional
limitation on the right, the legislature might,
by a single act, and if we can suppose it
capable of so great a folly and so great a
wrong, sweep from existence all of the
municipal corporations in the State, and the
corporation could not prevent it. We know of
no limitation on the right so far as to the
corporation themselves are concerned. They
are, so to phrase it, the mere tenants at will
of the legislature.
This basic relationship between the national
legislature and the local government units
has not been enfeebled by the new
provisions in the Constitution strengthening
the policy of local autonomy. Without
meaning to detract from that policy, we here
confirm that Congress retains control of the
local government units although in
significantly reduced degree now than under
our previous Constitutions. The power to
create still includes the power to destroy.
The power to grant still includes the power
to withhold or recall.
True, there are certain notable innovations
in the Constitution, like the direct
conferment on the local government units of
the power to tax, which cannot now be
withdrawn by mere statute. By and large,
however, the national legislature is still the
principal of the local government units,
which cannot defy its will or modify or
violate it. [Bold underscoring supplied for
emphasis]
Also, in the earlier ruling in Ganzon v. Court of
Appeals, 15 the Court has pointed out that the
1987 Constitution, in mandating autonomy for the
LGUs, did not intend to deprive Congress of its
authority and prerogatives over the LGUs.
Nonetheless, the LGC has tempered the
application of Dillon's Rule in the Philippines by
providing a norm of interpretation in favor of the
LGUs in its Section 5(a), to wit:
xxxx
(a) Any provision on a power of a local
government unit shall be liberally interpreted in
its favor, and in case of doubt, any question
thereon shall be resolved in favor of devolution of
powers and of the local government unit. Any
fair and reasonable doubt as to the
existence of the power shall be interpreted
in favor of the local government unit
concerned; [Bold underscoring supplied for
emphasis]
xxxx
III.
The extent of local autonomy in the
Philippines
Regardless, there remains no question that
Congress possesses and wields plenary power to
control and direct the destiny of the LGUs, subject
only to the Constitution itself, for Congress, just
like any branch of the Government, should bow
down to the majesty of the Constitution, which is
always supreme.
The 1987 Constitution limits Congress' control
over the LGUs by ordaining in Section 25 of its
Article II that: "The State shall ensure the
autonomy of local governments." The autonomy
of the LGUs as thereby ensured does not
contemplate the fragmentation of the Philippines
into a collection of mini-states, 16 or the creation
of imperium in imperio. 17 The grant of autonomy
simply means that Congress will allow the LGUs
to perform certain functions and exercise certain
powers in order not for them to be overly
dependent on the National Government subject to
the limitations that the 1987 Constitution or
Congress may impose. 18 Local autonomy
recognizes the wholeness of the Philippine society
in its ethnolinguistic, cultural, and even religious
diversities.19
The constitutional mandate to ensure local
autonomy refers to decentralization.20 In its broad
or general sense, decentralization has two forms
in the Philippine setting, namely: the
decentralization of power and the decentralization
of administration. The decentralization of power
involves the abdication of political power in favor
of the autonomous LGUs as to grant them the
freedom to chart their own destinies and to shape
their futures with minimum intervention from the
central government. This amounts to self-
immolation because the autonomous LGUs
thereby become accountable not to the central
authorities but to their constituencies. On the
other hand, the decentralization of administration
occurs when the central government delegates
administrative powers to the LGUs as the means
of broadening the base of governmental powers
and of making the LGUs more responsive and
accountable in the process, and thereby ensure
their fullest development as self-reliant
communities and more effective partners in the
pursuit of the goals of national development and
social progress. This form of decentralization
further relieves the central government of the
burden of managing local affairs so that it can
concentrate on national concerns.21
Two groups of LGUs enjoy decentralization in
distinct ways. The decentralization of power has
been given to the regional units (namely, the
Autonomous Region for Muslim Mindanao [ARMM]
and the constitutionally-mandated Cordillera
Autonomous Region [CAR]). The other group of
LGUs (i.e., provinces, cities, municipalities and
barangays) enjoy the decentralization of
administration.22 The distinction can be
reasonably understood. The provinces, cities,
municipalities and barangays are given
decentralized administration to make governance
at the local levels more directly responsive and
effective. In turn, the economic, political and
social developments of the smaller political units
are expected to propel social and economic
growth and development. 23 In contrast, the
regional autonomy of the ARMM and the CAR
aims to permit determinate groups with common
traditions and shared social-cultural
characteristics to freely develop their ways of life
and heritage, to exercise their rights, and to be in
charge of their own affairs through the
establishment of a special governance regime for
certain member communities who choose their
own authorities from within themselves, and
exercise the jurisdictional authority legally
accorded to them to decide their internal
community affairs. 24
It is to be underscored, however, that the
decentralization of power in favor of the regional
units is not unlimited but involves only the
powers enumerated by Section 20, Article X of
the 1987 Constitution and by the acts of
Congress. For, with various powers being
devolved to the regional units, the grant and
exercise of such powers should always be
consistent with and limited by the 1987
Constitution and the national laws. 25 In other
words, the powers are guardedly, not absolutely,
abdicated by the National Government.
Illustrative of the limitation is what transpired
in Serna v. Commission on Elections,26 where the
Court struck down Section 19, Article VI of
Republic Act No. 9054 (An Act to Strengthen and
Expand the Organic Act for the Autonomous
Region in Muslim Mindanao, Amending for the
Purpose Republic Act No. 6734, entitled "An Act
Providing for the Autonomous Region in Muslim
Mindanao," as Amended) insofar as the provision
granted to the ARMM the power to create
provinces and cities, and consequently declared
as void Muslim Mindanao Autonomy Act No. 201
creating the Province of Shariff Kabunsuan for
being contrary to Section 5, Article VI and Section
20, Article X of the 1987 Constitution, as well as
Section 3 of the Ordinance appended to the 1987
Constitution. The Court clarified therein that only
Congress could create provinces and cities. This
was because the creation of provinces and cities
necessarily entailed the creation of legislative
districts, a power that only Congress could
exercise pursuant to Section 5, Article VI of the
1987 Constitution and Section 3 of the Ordinance
appended to the Constitution; as such, the ARMM
would be thereby usurping the power of Congress
to create legislative districts and national
offices.27
The 1987 Constitution has surely encouraged
decentralization by mandating that a system of
decentralization be instituted through the LGC in
order to enable a more responsive and
accountable local government structure.28 It has
also delegated the power to tax to the LGUs by
authorizing them to create their own sources of
income that would make them self-reliant.29 It
further ensures that each and every LGU will have
a just share in national taxes as well in the
development of the national wealth.30
The LGC has further delineated in its Section 3
the different operative principles of
decentralization to be adhered to consistently
with the constitutional policy on local
autonomy, viz.:
Sec. 3. Operative Principles of Decentralization-
The formulation and implementation of policies
and measures on local autonomy shall be guided
by the following operative principles:
(a) There shall be an effective allocation
among the different local government
units of their respective powers,
functions, responsibilities, and resources;
(b) There shall be established in every
local government unit an accountable,
efficient, and dynamic organizational
structure and operating mechanism that
will meet the priority needs and service
requirements of its communities;
(c) Subject to civil service law, rules and
regulations, local officials and employees
paid wholly or mainly from local funds
shall be appointed or removed, according
to merit and fitness, by the appropriate
appointing authority;
(d) The vesting of duty, responsibility,
and accountability in local government
units shall be accompanied with provision
for reasonably adequate resources to
discharge their powers and effectively
carry out their functions: hence, they
shall have the power to create and
broaden their own sources of revenue
and the right to a just share in national
taxes and an equitable share in the
proceeds of the utilization and
development of the national wealth
within their respective areas;
(e) 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;
(f) Local government units may group
themselves, consolidate or coordinate
their efforts, services, and resources
commonly beneficial to them;
(g) The capabilities of local government
units, especially the municipalities and
barangays, shall be enhanced by
providing them with opportunities to
participate actively in the implementation
of national programs and projects;
(h) There shall be a continuing
mechanism to enhance local autonomy
not only by legislative enabling acts but
also by administrative and organizational
reforms;
(i) Local government units shall share
with the national government the
responsibility in the management and
maintenance of ecological balance within
their territorial jurisdiction, subject to the
provisions of this Code and national
policies;
(j) Effective mechanisms for ensuring the
accountability of local government units
to their respective constituents shall be
strengthened in order to upgrade
continually the quality of local leadership;
(k) The realization of local autonomy
shall be facilitated through improved
coordination of national government
policies and programs an extension of
adequate technical and material
assistance to less developed and
deserving local government units;
(l) The participation of the private sector
in local governance, particularly in the
delivery of basic services, shall be
encouraged to ensure the viability of local
autonomy as an alternative strategy for
sustainable development; and
(m) The national government shall
ensure that decentralization contributes
to the continuing improvement of the
performance of local government units
and the quality of community life.
Based on the foregoing delineation,
decentralization can be considered as the decision
by the central government to empower its
subordinates, whether geographically or
functionally constituted, to exercise authority in
certain areas. It involves decision-making by
subnational units, and is typically a delegated
power, whereby a larger government chooses to
delegate authority to more local
governments.31 It is also a process, being the set
of policies, electoral or constitutional reforms that
transfer responsibilities, resources or authority
from the higher to the lower levels of
government.32 It is often viewed as a shift of
authority towards local governments and away
from the central government, with total
government authority over society and economy
imagined as fixed.33
As a system of transferring authority and power
from the National Government to the LGUs,
decentralization in the Philippines may be
categorized into four, namely: (1) political
decentralization or devolution; (2) administrative
decentralization or deconcentration; (3) fiscal
decentralization; and (4) policy or decision-
making decentralization.
Political decentralization or devolution occurs
when there is a transfer of powers,
responsibilities, and resources from the central
government to the LOU s for the performance of
certain functions. It is a more liberal form of
decentralization because there is an actual
transfer of powers and responsibilities. It aims to
grant greater autonomy to the LGUs in
cognizance of their right to self-government, to
make them self-reliant, and to improve their
administrative and technical capabilities.34 It is an
act by which the National Government confers
power and authority upon the various LGUs to
perform specific functions and responsibilities.35 It
encompasses reforms to open sub-national
representation and policies to "devolve political
authority or electoral capacities to sub-national
actors. "36 Section 16 to Section 19 of the LGC
characterize political decentralization in the LGC
as different LGUs empowered to address the
different needs of their constituents. In contrast,
devolution in favor of the regional units is more
expansive because they are given the authority to
regulate a wider array of subjects, including
personal, family and property relations.
Administrative decentralization or deconcentration
involves the transfer of functions or the
delegation of authority and responsibility from the
national office to the regional and local
offices. 37 Consistent with this concept, the LGC
has created the Local School Boards,38 the Local
Health Boards39 and the Local Development
Councils,40 and has transferred some of the
authority from the agencies of the National
Government, like the Department of Education
and the Department of Health, to such bodies to
better cope up with the needs of particular
localities.
Fiscal decentralization means that the LGUs have
the power to create their own sources of revenue
in addition to their just share in the national taxes
released by the National Government. It includes
the power to allocate their resources in
accordance with their own priorities. It thus
extends to the preparation of their budgets, so
that the local officials have to work within the
constraints of their budgets. The budgets are not
formulated at the national level and imposed on
local governments, without regard as to whether
or not they are relevant to local needs and
resources. Hence, the necessity of a balancing of
viewpoints and the harmonization of proposals
from both local and national officials, who in any
case are partners in the attainment of national
goals, is recognized and addressed.41
Fiscal decentralization emanates from a specific
constitutional mandate that is expressed in
several provisions of Article X (Local
Government) of the 1987 Constitution,
specifically: Section 5;42 Section 6;43 and Section
7.44
The constitutional authority extended to each and
every LGU to create its own sources of income
and revenue has been formalized from Section
128 to Section 133 of the LGC. To implement the
LGUs' entitlement to the just share in the national
taxes, Congress has enacted Section 284 to
Section 288 of the LGC. Congress has further
enacted Section 289 to Section 294 of the LGC to
define the share of the LGUs in the national
wealth. Indeed, the requirement for the
automatic release to the LGUs of their just share
in the national taxes is but the consequence of
the constitutional mandate for fiscal
decentralization. 45
For sure, fiscal decentralization does not signify
the absolute freedom of the LGUs to create their
own sources of revenue and to spend their
revenues unrestrictedly or upon their individual
whims and caprices. Congress has subjected the
LGUs' power to tax to the guidelines set in
Section 130 of the LGC and to the limitations
stated in Section 133 of the LGC. The concept of
local fiscal autonomy does not exclude any
manner of intervention by the National
Government in the form of supervision if only to
ensure that the local programs, fiscal and
otherwise, are consistent with the national
goals.46
Lastly, policy- or decision-making decentralization
exists if at least one sub-national tier of
government has exclusive authority to make
decisions on at least one policy issue.47
In fine, certain limitations are and can be
imposed by Congress in all the forms of
decentralization, for local autonomy, whether as
to power or as to administration, is not absolute.
The LGUs remain to be the tenants of the will of
Congress subject to the guarantees that the
Constitution itself imposes.
IV.
Section 284 of the LGC deviates from the
plain language
of Section 6 of Article X of the 1987
Constitution
Section 6, Article X the 1987 Constitution
textually commands the allocation to the LGUs of
a just share in the national taxes, viz.:
Section 6. Local government units shall have a
just share, as determined by law, in the national
taxes which shall be automatically released to
them.
Section 6, when parsed, embodies three
mandates, namely: (1) the LGUs shall have a just
share in the national taxes; (2) the just
share shall be determined by law; and (3)
the just share shall be automatically released to
the LGUs.48
Congress has sought to carry out the second
mandate of Section 6 by enacting Section 284,
Title III (Shares of Local Government Units in the
Proceeds of National Taxes), of the LGC, which is
again quoted for ready reference:
Section 284. Allotment of Internal Revenue
Taxes. - Local government units shall have a
share in the national internal revenue taxes based
on the collection of the third fiscal year preceding
the current fiscal year as follows:
(a) On the first year of the effectivity of
this Code, thirty percent (30%);
(b) On the second year, thirty-five
percent (35%); and
(c) On the third year and thereafter, forty
percent (40%).
Provided, That in the event that the national
government incurs an unmanageable public
sector deficit, the President of the Philippines is
hereby authorized, upon the recommendation of
Secretary of Finance, Secretary of Interior and
Local Government and Secretary of Budget and
Management, and subject to consultation with the
presiding officers of both Houses of Congress and
the presidents of the "liga", to make the
necessary adjustments in the internal. revenue
allotment of local government units but in no case
shall the allotment be less than thirty percent
(30%) of the collection of national internal
revenue taxes of the third fiscal year preceding
the current fiscal year: Provided, further, That in
the first year of the effectivity of this Code, the
local government units shall, in addition to the
thirty percent (30%) internal revenue allotment
which shall include the cost of devolved functions
for essential public services, be entitled to receive
the amount equivalent to the cost of devolved
personal services.
There is no issue as to what constitutes the
LGUs' just share expressed in percentages of the
national taxes (i.e., 30%, 35% and 40%
stipulated in subparagraphs (a), (b), and (c) of
Section 284 ). Yet, Section
6, supra, mentions national taxes as the source of
the just share of the LGUs while Section 284
ordains that the share of the LG Us be taken
from national internal revenue taxes instead.
Has not Congress thereby infringed the
constitutional provision?
Garcia contends that Congress has exceeded its
constitutional boundary by limiting to the NIRTs
the base from which to compute the just share of
the LGUs.
We agree with Garcia's contention.
Although the power of Congress to make laws is
plenary in nature, congressional lawmaking
remains subject to the limitations stated in the
1987 Constitution.49 The phrase national internal
revenue taxes engrafted in Section 284 is
undoubtedly more restrictive than the
term national taxes written in Section 6. As such,
Congress has actually departed from the letter of
the 1987 Constitution stating that national
taxes should be the base from which the just
share of the LGU comes. Such departure is
impermissible. Verba legis non est
recedendum (from the words of a statute there
should be no departure). 50 Equally impermissible
is that Congress has also thereby curtailed the
guarantee of fiscal autonomy in favor of the LGUs
under the 1987 Constitution.
Taxes are the enforced proportional contributions
exacted by the State from persons and properties
pursuant to its sovereignty in order to support the
Gove1nment and to defray all the public needs.
Every tax has three elements, namely: (a) it is an
enforced proportional contribution from persons
and properties; (b) it is imposed by the State by
virtue of its sovereignty; and (c) it is levied for
the support of the Government.51 Taxes are
classified into national and local. National taxes
are those levied by the National Government,
while local taxes are those levied by the LGUs.52
What the phrase national internal revenue
taxes as used in Section 284 included are all the
taxes enumerated in Section 21 of the National
Internal Revenue Code (NIRC), as amended by
R.A. No. 8424, viz.:
Section 21. Sources of Revenue. - The following
taxes, fees and charges are deemed to be
national internal revenue taxes:
(a) Income tax;
(b) Estate and donor's taxes;
(c) Value-added tax;
(d) Other percentage taxes;
(e) Excise taxes;
(f) Documentary stan1p taxes; and
(g) Such other taxes as arc or hereafter
may be imposed and collected by the
Bureau of Internal Revenue.
In view of the foregoing enumeration of what are
the national internal revenue taxes, Section 284
has effectively deprived the LGUs from deriving
their just share from other national taxes, like the
customs duties.
Strictly speaking, customs duties are also taxes
because they are exactions whose proceeds
become public funds. According to Garcia v.
Executive Secretary,53 customs duties is the
nomenclature given to taxes imposed on the
importation and exportation of commodities and
merchandise to or from a foreign country.
Although customs duties have either or both the
generation of revenue and the regulation of
economic or social activity as their moving
purposes, it is often difficult to say which of the
two is the principal objective in a particular
instance, for, verily, customs duties, much like
internal revenue taxes, are rarely designed to
achieve only one policy objective.54 We further
note that Section 102(00) of R.A. No.
10863 (Customs Modernization and Tariff
Act) expressly includes all fees and charges
imposed under the Act under the blanket term
of taxes.
It is clear from the foregoing clarification that the
exclusion of other national taxes like customs
duties from the base for determining the just
share of the LG Us contravened the express
constitutional edict in Section 6, Article X the
1987 Constitution.
Still, the OSG posits that Congress can
manipulate, by law, the base of the allocation of
the just share in the national taxes of the LGUs.
The position of the OSG cannot be sustained.
Although it has the primary discretion to
determine and fix the just share of the LGUs in
the national taxes (e.g., Section 284 of the LGC),
Congress cannot disobey the express mandate of
Section 6, Article X of the 1987 Constitution for
the just share of the LGUs to be derived from
the national taxes. The phrase as determined by
law in Section 6 follows and qualifies the
phrase just share, and cannot be construed as
qualifying the succeeding phrase in the national
taxes. The intent of the people in respect of
Section 6 is really that the base for reckoning the
just share of the LGUs should includes all national
taxes. To read Section 6 differently as requiring
that the just share of LGUs in the national taxes
shall be determined by law is tantamount to the
unauthorized revision of the 1987 Constitution.
V.
Congress can validly exclude taxes that will
constitute the base amount for
the computation of the IRA only if a
Constitutional provision allows such
exclusion
Garcia submits that even assuming that the
present version of Section 284 of the LGC is
constitutionally valid, the implementation thereof
has been erroneous because Section 284 does not
authorize any exclusion or deduction from the
collections of the NIRTs for purposes of the
computation of the allocations to the LGUs. He
further submits that the exclusion of certain
NIRTs diminishes the fiscal autonomy granted to
the LGUs. He claims that the following NIRTs
have been illegally excluded from the base for
determining the fair share of the LGUs in the IRA,
to wit:
(1) NIRTs collected by the cities and
provinces and divided exclusively among
the LGUs of the Autonomous Region for
Muslim Mindanao (ARMM), the regional
government and the central government,
pursuant to Section 1555 in relation to
Section 9,56 Article IX of R.A. No.
9054 (An Act to Strengthen and Expand
the Organic Act for the Autonomous
Region in Muslim Mindanao, amending for
the purpose Republic Act No. 6734,
entitled An Act providing for an Organic
Act for the Autonomous Region in Muslim
Mindanao);
(2) The shares in the excise taxes on
mineral products of the different LG Us,
as provided in Section 287 of the
NIRC57 in relation to Section 290 of the
LGC;58
(3) The shares of the relevant LGUs in
the franchise taxes paid by Manila Jockey
Club, Inc.59 and Philippine Racing Club,
Inc.;60
(4) The shares of various municipalities
in VAT collections under R.A. No.
7643 (An Act to Empower the
Commissioner of Internal Revenue to
Require the Payment of the Value Added
Tax Every Month and to Allow Local
Government Units to Share in VAT
Revenue, Amending for this Purpose
Certain Sections of the National Internal
Revenue Code) as embodied in Section
283 of the NIRC;61
(5) The shares of relevant LGUs in the
proceeds of the sale and conversion of
former military bases in accordance with
R.A. No. 7227 (Bases Conversion and
Development Act of 1992);62
(6) The shares of different LGUs in the
excise taxes imposed on locally
manufactured Virginia tobacco products
as provided in Section 3 of R.A. No.
7171 (An Act to Promote the
Development of the Farmers in the
Virginia Tobacco Producing
Provinces), and as now provided in
Section 289 of the NIRC;63
(7) The shares of different LGUs in the
incremental revenues from Burley and
native tobacco products under Section 8
of R.A. No. 8240 (An Act Amending
Sections 138, 140 and 142 of the
National Internal Revenue Code as
Amended and for Other Purposes) and as
now provided in Section 288 of the
NIRC;64 and
(8) The share of the Commission of Audit
(COA) in the NIRTs as provided in Section
24p) of P.D. No. 1445 (Government
Auditing Code of the Philippines) 65 in
relation to Section 284 of the NIRC.66
Garcia insists that the foregoing taxes and
revenues should have been included by Congress
and, by extension, the BIR in the base for
computing the IRA on the strength of the cited
provisions; that the LGC did not authorize such
exclusion; and that the continued exclusion has
undermined the fiscal autonomy guaranteed by
the 1987 Constitution.
The insistence of Garcia is valid to an extent.
An examination of the above-enumerated laws
confirms that the following have been excluded
from the base for reckoning the just share of the
LGUs as required by Section 6, Article X of the
1987 Constitution, namely:
(a) The share of the affected LGUs in the
proceeds of the sale and conversion of former
military bases in accordance with R.A. No. 7227;
(b) The share of the different LGUs in the excise
taxes imposed on locally manufactured Virginia
tobacco products as provided for in Section 3,
R.A. No. 7171, and as now provided in Section
289 of the NIRC;
(c) The share of the different LGU s in
incremental revenues from Burley and native
tobacco products under Section 8 of R.A. No.
8240, and as now provided for in Section 288 of
the NIRC;
(d) The share of the COA in the NIRTs as
provided in Section 24(3) of P.D. No. 144567 in
relation to Section 284 of the NIRC;
(e) The shares of the different LGUs in the excise
taxes on mineral products, as provided in Section
287 of the NIRC in relation to Section 290 of the
LGC;
(f) The NIRTs collected by the cities and provinces
and divided exclusively among the LGUs of the
ARMM, the regional government and the central
government, pursuant to Section 1568 in relation
to Section 9,69 Article IX of R. A. No. 9054; and
(g) The shares of the relevant LG Us in the
franchise taxes paid by Manila Jockey Club, Inc.,
and the Philippine Racing Club, Inc.
Anent the share of the affected LG Us in the
proceeds of the sale and conversion of the former
military bases pursuant to R.A. No. 7227, the
exclusion is warranted for the reason that such
proceeds do not come from a tax, fee or exaction
imposed on the sale and conversion.
As to the share of the affected LGUs in the excise
taxes imposed on locally manufactured Virginia
tobacco products under R.A. No. 7171 (now
Section 289 of the NIRC); the share of the
affected LGUs in incremental revenues from
Burley and native tobacco products under Section
8, R.A. No. 8240 (now Section 288 of the NIRC);
the share of the COA in the NIRTs pursuant to
Section 24(3) of P.D. No. 1445 in relation to
Section 284 of the NIRC; and the share of the
host LGUs in the franchise taxes paid by the
Manila Jockey Club, Inc., and Philippine Racing
Club, Inc., under Section 6 of R.A. No. 6631 and
Section 8 of R:A. No. 6632, respectively, the
exclusion is also justified. Although such shares
involved national taxes as defined under the
NIRC, Congress had the authority to exclude
them by virtue of their being taxes imposed for
special purposes. A reading of Section 288 and
Section 289 of the NIRC and Section 24(3) of P.D.
No. 1445 in relation to Section 284 of the NIRC
reveals that all such taxes are levied and
collected for a special purpose. 70 The same is
true for the franchise taxes paid under Section 6
of R.A. No. 6631 and Section 8 of R.A. No. 6632,
inasmuch as certain percentages of the franchise
taxes go to different beneficiaries. The exclusion
conforms to Section 29(3), Article VI of the 1987
Constitution, which states:
Section 29. x x x
xxxx
(3) All money collected on any tax levied for
a special purpose shall be treated as a
special fund and paid out for such purpose
only. If the purpose for which a special fund was
created has been fulfilled or abandoned, the
balance, if any, shall be transferred to the general
funds of the Government. [Bold emphasis
supplied]
The exclusion of the share of the different LGUs in
the excise taxes imposed on mineral products
pursuant to Section 287 of the NIRC in relation to
Section 290 of the LGC is premised on a different
constitutional provision. Section 7, Article X of the
1987 Constitution allows affected LGUs to have
an equitable share in the proceeds of the
utilization of the nation's national wealth "within
their respective areas," to wit:
Section 7. Local governments shall be entitled to
an equitable share in the proceeds of the
utilization and development of the national wealth
within their respective areas, in the manner
provided by law, including sharing the same with
the inhabitants by way of direct benefits.
This constitutional provision is implemented by
Section 287 of the NIRC and Section 290 of the
LGC thusly:
SEC. 287. Shares of Local Government Units in
the Proceeds from the Development and
Utilization of the National Wealth. - Local
Government units shall have an equitable share in
the proceeds derived from the utilization and
development of the national wealth, within their
respective areas, including sharing the same with
the inhabitants by way of direct benefits.
(A) Amount of Share of Local Government Units. -
Local government units shall, in addition to the
internal revenue allotment, have a share of forty
percent (40'Yo) of the gross collection derived by
the national government from the preceding fiscal
year from excise taxes on mineral products,
royalties, and such other taxes, fees or charges,
including related surcharges, interests or fines,
and from its share in any co-production, joint
venture or production sharing agreement in the
utilization and development of the national wealth
within their territorial jurisdiction.
(B) Share of the Local Governments from Any
Government Agency or Government-owned or -
Controlled Corporation. - Local Government Units
shall have a share, based on the preceding fiscal
year, from the proceeds derived by any
government agency or government-owned or
controlled corporation engaged in the utilization
and development of the national wealth based on
the following formula, whichever will produce a
higher share for the local government unit:
(1) One percent (l %) of the gross sales or
receipts of the preceding calendar year, or
(2) Forty percent (40%) of the excise taxes on
mineral products, royalties, and such other taxes,
fees or charges, including related surcharges,
interests or fines the government agency or
government-owned or -controlled corporations
would have paid if it were not otherwise exempt.
[Bold emphasis supplied]
SEC. 290. Amount of Share of Local Government
Units. - Local government units shall, in addition
to the internal revenue allotment, have a share of
forty percent ( 40%) of the gross collection
derived by the national government from the
preceding fiscal year from mining taxes, royalties,
forestry and fishery charges, and such other
taxes, fees, or charges, including related
surcharges, interests, or fines, and from its share
in any co-production, joint venture or production
sharing agreement in the utilization and
development of the national wealth within their
territorial jurisdiction. [Bold emphasis supplied]
Lastly, the NIRTs collected by the provinces and
cities within the ARMM whose portions are
distributed to the ARMM's provincial, city and
regional governments are also properly excluded
for such taxes are intended to truly enable a
sustainable and feasible autonomous region as
guaranteed by the 1987 Constitution. The
mandate under Section 15 to Section 21, Article X
of the 1987 Constitution is to allow the separate
development of peoples with distinctive cultures
and traditions in the autonomous areas.71 The
grant of autonomy to the autonomous regions
includes the right of self-determination-which in
turn ensures the right of the peoples residing
therein to the necessary level of autonomy that
will guarantee the support of their own cultural
identities, the establishment of priorities by their
respective communities' internal decision-making
processes and the management of collective
matters by themselves.72 As such, the NIRTs
collected by the provinces and cities within the
ARMM will ensure local autonomy and their very
existence with a continuous supply of funding
sourced from their very own areas. The ARMM will
become self-reliant and dynamic consistent with
the dictates of the 1987 Constitution.
The shares of the municipalities in the VATs
collected pursuant to R.A. No. 7643 should be
included in determining the base for computing
the just share because such VATs are national
taxes, and nothing can validly justify their
exclusion.
In recapitulation, the national taxes to be
included in the base for computing the just share
the LGUs shall henceforth be, but shall not be
limited to, the following:
1. The NIRTs enumerated in Section 21 of the
NIRC, as amended, to be inclusive of the VA Ts,
excise taxes, and DSTs collected by the BIR and
the BOC, and their deputized agents;
2. Tariff and customs duties collected by the BOC;
3. 50% of the VATs collected in the ARMM, and
30% of all other national taxes collected in the
ARMM; the remaining 50% of the VA Ts and 70%
of the collections of the other national taxes in
the ARMM shall be the exclusive share of the
ARMM pursuant to Section 9 and Section 15 of
R.A. No. 9054;
4. 60% of the national taxes collected from the
exploitation and development of the national
wealth; the remaining 40% will exclusively accrue
to the host LGUs pursuant to Section 290 of the
LGC;
5. 85% of the excise taxes collected from locally
manufactured Virginia and other tobacco
products; the remaining 15% shall accrue to the
special purpose funds pursuant created in R.A.
No. 7171 and R.A. No. 7227;
6. The entire 50% of the national taxes collected
under Section 106, Section 108 and Section 116
of the NIRC in excess of the increase in
collections for the immediately preceding year;
and
7. 5% of the franchise taxes in favor of the
national government paid by franchise holders in
accordance with Section 6 of R.A. No. 6631 and
Section 8 of R.A. No. 6632.
VI.
Entitlement to the reliefs sought
The petitioners' prayer for the payment of the
arrears of the LGUs' just share on the theory that
the computation of the base amount had been
unconstitutional all along cannot be granted.
It is true that with our declaration today that the
IRA is not in accordance with the constitutional
determination of the just share of the LGUs in the
national taxes, logic demands that the LGUs
should receive the difference between the just
share they should have received had the LGC
properly reckoned such just share from all
national taxes, on the one hand, and the share -
represented by the IRA- the LGUs have actually
received since the effectivity of the IRA under the
LGC, on the other. This puts the National
Government in arrears as to the just share of the
LGUs. A legislative or executive act declared void
for being unconstitutional cannot give rise to any
right or obligation. 73
Yet, the Court has conceded in Arau/lo v. Aquino
III74that:
x x x the generality of the rule makes us
ponder whether rigidly applying the rule
may at times be impracticable or wasteful.
Should we not recognize the need to except
from the rigid application of the rule the
instances in which the void law or executive
act produced an almost irreversible result?
The need is answered by the doctrine of operative
fact. The doctrine, definitely not a novel one, has
been exhaustively explained in De Agbayani v.
Philippine National Bank:
The decision now on appeal reflects the orthodox
view that an unconstitutional act, for that matter
an executive order or a municipal ordinance
likewise suffering from that infirmity, cannot be
the source of any legal rights or duties. Nor can it
justify any official act taken under it. Its
repugnancy to the fundamental law once judicially
declared results in its being to all intents and
purposes a mere scrap of paper. As the new Civil
Code puts it: 'When the courts declare a law to be
inconsistent with the Constitution, the former
shall be void and the latter shall govern.'
Administrative or executive acts, orders and
regulations shall be valid only when they are not
contrary to the laws of the Constitution. It is
understandable why it should be so, the
Constitution being supreme and paramount. Any
legislative or executive act contrary to its terms
cannot survive.
Such a view has support in logic and
possesses the merit of simplicity. It may not
however be sufficiently realistic. It does not
admit of doubt that prior to the declaration
of nullity such challenged legislative or
executive act must have been in force and
had to be complied with. This is so as until
after the judiciary, in an appropriate case,
declares its invalidity, it is entitled to
obedience and respect. Parties may have
acted under it and may have changed their
positions. What could be more fitting than
that in a subsequent litigation regard be had
to what has been done while such legislative
or executive act was in operation and
presumed to be valid in all respects. It is
now accepted as a doctrine that prior to its
being nullified, its existence as a fact must
be reckoned with. This is merely to reflect
awareness that precisely because the
judiciary is the governmental organ which
has the final say on whether or not a
legislative or executive measure is valid, a
period of time may have elapsed before it
can exercise the power of judicial review
that may lead to a declaration of nullity. It
would be to deprive the law of its quality of
fairness and justice then, if there be no
recognition of what had transpired prior to
such adjudication.
In the language of an American Supreme Court
decision: ‘The actual existence of a statute, prior
to such a determination [of unconstitutionality], is
an operative fact and may have consequences
which cannot justly be ignored. The past cannot
always be erased by a new judicial declaration.
The effect of the subsequent ruling as to invalidity
may have to be considered in various aspects,
with respect to particular relations, individual and
corporate, and particular conduct, private and
official.'
The doctrine of operative fact recognizes the
existence of the law or executive act prior to the
determination of its unconstitutionality as an
operative fact that produced consequences that
cannot always be erased, ignored or disregarded.
In short, it nullifies the void law or executive act
but sustains its effects. It provides an exception
to the general rule that a void or unconstitutional
law produces no effect.75 But its use must be
subjected to great scrutiny and circumspection,
and it cannot be invoked to validate an
unconstitutional law or executive act, but is
resorted to only as a matter of equity and fair
play. 76 It applies only to cases where
extraordinary circumstances exist, and only when
the extraordinary circumstances have met the
stringent conditions that will permit its
application.
Conformably with the foregoing pronouncements
in Araullo v. Aquino III, the effect of our
declaration through this decision of the
unconstitutionality of Section 284 of the LGC and
its related laws as far as they limited the source
of the just share of the LGUs to the NIRTs is
prospective. It cannot be otherwise.
VII.
Automatic release of the LGUs' just share in
the National Taxes
Section 6, Article X of the 1987 Constitution
commands that the just share of the LGUs in
national taxes shall be automatically released to
them. The term automatic connotes something
mechanical, spontaneous and perfunctory; and, in
the context of this case, the LGUs are not
required to perform any act or thing in order to
receive their just share in the national taxes.77
Before anything, we must highlight that the 1987
Constitution includes several provisions that
actually deal with and authorize the automatic
release of funds by the National Government.
To begin with, Section 3 of Article VIII favors the
Judiciary with the automatic and regular release
of its appropriations:
Section 3. The Judiciary shall enjoy fiscal
autonomy. Appropriations for the Judiciary may
not be reduced by the legislature below the
amount appropriated for the previous year and,
after approval, shall be automatically and
regularly released.
Then there is Section 5 of Article IX(A), which
contains the common provision in favor of the
Constitutional Commissions:
Section 5. The Commission shall enjoy fiscal
autonomy. Their approved annual appropriations
shall be automatically and regularly released.
Section 14 of Article XI extends to the Office of
the Ombudsman a similar privilege:
Section 14. The Office of the Ombudsman shall
enjoy fiscal autonomy. Its approved annual
appropriations shall be automatically and
regularly released.
Section 17(4) of Article XIII replicates the
privilege in favour of the Commission on Human
Rights:
Section 17(4) The approved annual
appropriations of the Commission shall be
automatically and regularly released.
The foregoing constitutional provisions share two
aspects. The first relates to the grant of fiscal
autonomy, and the second concerns
the automatic release of funds. 78 The common
denominator of the provisions is that the
automatic release of the appropriated amounts is
predicated on the approval of the annual
appropriations of the offices or agencies
concerned.
Directly contrasting with the foregoing provisions
is Section 6, Article X of the 1987 Constitution
because the latter provision forthrightly ordains
that the "(l)ocal government units shall have a
just share, as determined by law, in the national
taxes which shall be automatically released
to them." Section 6 does not mention of
appropriation as a condition for the automatic
release of the just share to the LGUs. This is
because Congress not only already determined
the just share through the LGC's fixing the
percentage of the collections of the NIRTs to
constitute such fair share subject to the power of
the President to adjust the same in order to
manage public sector deficits subject to
limitations on the adjustments, but also explicitly
authorized such just share to be "automatically
released" to the LGUs in the proportions and
regularity set under Section 28579 of the LGC
without need of annual appropriation. To
operationalize the automatic release without need
of appropriation, Section 286 of the LGC clearly
provides that the automatic release of the just
share directly to the provincial, city, municipal or
barangay treasurer, as the case may be, shall
be "without need of any further action," viz.:
Section 286. Automatic Release of Shares. -
(a) The share of each local government unit
shall be released, without need of any
further action; directly to the provincial, city,
municipal or barangay treasurer, as the case
may be, on a quarterly basis within five (5)
days after the end of each quarter, and
which shall not be subject to any lien or
holdback that may be imposed by the
National Government for whatever
purpose. x x x (Bold emphasis supplied)
The 1987 Constitution is forthright and
unequivocal in ordering that the just share of the
LGUs in the national taxes shall be automatically
released to them. With Congress having
established the just share through the LGC, it
seems to be beyond debate that the inclusion of
the just share of the LGUs in the annual GAAs is
unnecessary, if not superfluous. Hence, the just
share of the LGUs in the national taxes shall be
released to them without need of yearly
appropriation.
1. DECLARES the phrase "internal revenue"
appearing in Section 284 of Republic Act No.
7160 (Local Government
Code) UNCONSTITUTIONAL, and DELETES the
phrase from Section 284.
Section 284, as hereby modified, shall henceforth
read as follows:
Section 284. Allotment of Taxes. - Local
government units shall have a share in the
national taxes based on the collection of the third
fiscal year preceding the current fiscal year as
follows:
(a) On the first year of the effectivity of
this Code, thirty percent (30%);
(b) On the second year, thirty-five
percent (35%); and
(c) On the third year and thereafter, forty
percent (40%).
Provided, That in the event that the national
government incurs an unmanageable public
sector deficit, the President of the Philippines is
hereby authorized, upon the recommendation of
Secretary of Finance, Secretary of Interior and
Local Government and Secretary of Budget and
Management, and subject to consultation with the
presiding officers of both Houses of Congress and
the presidents of the "liga", to make the
necessary adjustments in the allotment of local
government units but in no case shall the
allotment be less than thirty percent (30%) of the
collection of national taxes of the third fiscal year
preceding the current fiscal year; Provided,
further, That in the first year of the effectivity of
this Code, the local government units shall, in
addition to the thirty percent (30%) allotment
which shall include the cost of devolved functions
for essential public services, be entitled to receive
the amount equivalent to the cost of devolved
personal services.
The phrase "internal revenue" is likewise
hereby DELETED from the related sections of
Republic Act No. 7160 (Local Government
Code), specifically Section 285, Section 287, and
Section 290, which provisions shall henceforth
read as follows:
Section 285. Allocation to Local Government
Units. - The share of local government units in
the allotment shall be collected in the following
manner:
(a) Provinces - Twenty-three percent
(23%);
(b) Cities - Twenty-three percent (23%);
(c) Municipalities - Thirty-four percent
(34%); and
(d) Barangays - Twenty percent (20%)
Provided, however, That the share of each
province, city, and municipality shall be
determined on the basis of the following formula:
(a) Population -- Fifty percent (50%);
(b) Land Area-· Twenty-five percent
(25%); and
(c) Equal sharing--Twenty-five percent
(25%)
Provided, further. That the share of each
barangay with a population of not less than one
hundred (100) inhabitants shall not be less than
Eighty thousand (₱80,000.00) per
annum chargeable against the twenty percent
(20%) share of the barangay from the allotment,
and the balance to be allocated on the basis of
the following formula:
(a) On the first year of the effoctivity of
this Code:
(1) Population - Forty percent
(40%); and
(2) Equal sharing - Sixty percent
(50%)
(b) On the second year:
(1) Population - Fifty percent
(50%); and
(2) Equal sharing - Fifty percent
(50%)
(c) On the third year and thereafter.
(1) Population - Sixty percent
(60%); and
(2) Equal sharing - Forty
percent (40%).
Provided, finally, That the financial requirements
of barangays created by local government units
after the effectivity of this Code shall be the
responsibility of the local government unit
concerned.
xxxx
Sectfon 287. Local Development Projects. - Each
local government unit shall appropriate in its
annual budget no less than twenty percent (20%)
of its annual allotment for development projects.
Copies of the development plans of local
government units shall be furnished the
Department of Interior and Local Government.
xxxx
Section 290. Amount of Share of Local
Government Units. - Local government units
shall, in addition to the allotment, have a share of
forty percent (40%) of the gross collection
derived by the national government from the
preceding fiscal year from mining taxes, royalties,
forestry and fishery charges, and such other
taxes, fees, or charges, including related
surcharges, interests, or fines, and from its share
in any co-production, joint venture or production
sharing agreement in the utilization and
development of the national wealth within their
territorial jurisdiction.
Article 378, Article 379, Article 380, Article 382,
Article 409, Article 461, and related provisions of
the Implementing Rules and Regulations of R.A.
No. 7160 are hereby MODIFIED to reflect the
deletion of the phrase "internal revenue" as
directed herein.
Henceforth, any mention of "Internal Revenue
Allotment" or "IRA" in Republic Act No.
7160 (Local Government Code) and its
Implementing Rules and Regulations shall be
understood as pertaining to the allotment of the
Local Government Units derived from the national
taxes;
2. ORDERS the SECRETARY OF THE
DEPARTMENT OF FINANCE; the SECRETARY
OF THE DEPARTMENT OF BUDGET AND
MANAGEMENT; the COMMISSIONER OF
INTERNAL REVENUE; the COMMISSIONER OF
CUSTOMS; and the NATIONAL TREASURER to
include ALL COLLECTIONS OF NATIONAL
TAXES in the computation of the base of the just
share of the Local Government Units according to
the ratio provided in the now-modified Section
284 of Republic Act No. 7160 (Local Government
Code) except those accruing to special purpose
funds and special allotments for the utilization
and development of the national wealth.
For this purpose, the collections of national taxes
for inclusion in the base of the just share the
Local Government Units shall include, but shall
not be limited to, the following:
(a) The national internal revenue taxes
enumerated in Section 21 of the National
Internal Revenue Code, as amended,
collected by the Bureau of Internal
Revenue and the Bureau of Customs;
 (b) Tariff and customs duties collected by
the Bureau of Customs;
(c) 50% of the value-added taxes
collected in the Autonomous Region in
Muslim Mindanao, and 30% of all other
national tax collected in the Autonomous
Region in Muslim Mindanao.
The remaining 50% of the collections of
value-added taxes and 70% of the
collections of the other national taxes in
the Autonomous Region in Muslim
Mindanao shall be the exclusive share of
the Autonomous Region in Muslim
Mindanao pursuant to Section 9 and
Section 15 of Republic Act No. 9054.
(d) 60% of the national taxes collected
from the exploitation and development of
the national wealth.
The remaining 401% of the national
taxes collected from the exploitation and
development of the national wealth shall
exclusively accrue to the host Local
Government Units pursuant to Section
290 of Republic Act No. 7160 (Local
Government Code);
(e) 85% of the excise taxes collected
from locally manufactured Virginia and
other tobacco products.
The remaining 15% shall accrue to the
special purpose funds created by Republic
Act No. 7171 and Republic Act No. 7227;
(f) The entire 50% of the national taxes
collected under Sections 106, 108 and
116 of the NIRC as provided under
Section 283 of the NIRC; and
(g) 5% of the 25% franchise taxes given
to the National Government under
Section 6 of Republic Act No. 6631 and
Section 8 of Republic Act No. 6632.
3. DECLARES that:
(a) The apportionment of the 25% of the treasurers, as the case may be, on a quarterly
franchise taxes collected from the Manila basis but not beyond five (5) days from the end
Jockey Club and Philippine Racing Club, of each quarter, as directed in Section 6, Article X
Inc. - that is, five percent (5%) to the of the 1987 Constitution and Section 286 of
National Government; five percent (5%) Republic Act No. 7160 (Local Government
to the host municipality or city; seven Code), and operationalized by Article 383 of the
percent (7%) to the Philippine Charity Implementing Rules and Regulations of RA 7160.
Sweepstakes Office; six percent (6%) to
the Anti-Tuberculosis Society; and two Let a copy of this decision be furnished to the
percent (2%) to the White Cross President of the Republic of the Philippines, the
pursuant to Section 6 of Republic Act No.
President of the Senate, and the Speaker of the
6631 and Section 8 of Republic Act No. House of Representatives for their information
6632 - is VALID;
and guidance.
(b) Section 8 and Section 12 of Republic SO ORDERED.
Act No. 7227
are VALID; and, ACCORDINGLY, the
proceeds from the sale of the former LUCAS P. BERSAMIN
military bases converted to alienable Associate Justice
lands thereunder are EXCLUDED from
the computation of the national tax WE CONCUR:
allocations of the Local Government
Units; and
(c) Section 24(3) of Presidential Decree
No. 1445, in relation to Section 284 of
the National Internal Revenue Code,
apportioning one-half of one percent
(1/2of1%) of national tax collections as
the auditing fee of the Commission on
Audit is VALID;
4. DIRECTS the Bureau of Internal Revenue and
the Bureau of Customs and their deputized
collecting agents to certify all national tax
collections, pursuant to Article 3 78 of the
Implementing Rules and Regulations of R.A. No.
7160;
5. DISMISSES the claims of the Local
Government Units for the settlement by the
National Government of arrears in the just share
on the ground that this decision shall
have PROSPECTIVE APPLICATION; and
6. COMMANDS the AUTOMATIC RELEASE
WITHOUT NEED OF FURTHER ACTION of the
just shares of the Local Government Units in the
national taxes, through their respective
provincial, city, municipal, or barangay