BUREAU OF CUSTOMS EMPLOYEES ASSOCIATION
(BOCEA), represented by its National President (BOCEA
National Executive Council) Mr. Romulo A.
Pagulayan, Petitioner,
vs.
HON. MARGARITO B. TEVES, in his capacity as Secretary
of the Department of Finance, HON. NAPOLEON L.
MORALES, in his capacity as Commissioner of the Bureau
of Customs, HON. LILIAN B. HEFTI, in her capacity as
Commissioner of the Bureau of Internal
Revenue, Respondents.
DECISION
VILLARAMA, JR., J.:
Before this Court is a petition1 for certiorari and prohibition with
prayer for injunctive relief/s under Rule 65 of the 1997 Rules of
Civil Procedure, as amended, to declare Republic Act (R.A.) No.
9335,2 otherwise known as the Attrition Act of 2005, and its
Implementing Rules and Regulations3 (IRR) unconstitutional,
and the implementation thereof be enjoined permanently.
The Facts
On January 25, 2005, former President Gloria Macapagal-
Arroyo signed into law R.A. No. 9335 which took effect on
February 11, 2005.
In Abakada Guro Party List v. Purisima4 (Abakada), we said of
R.A. No. 9335:
RA [No.] 9335 was enacted to optimize the revenue-generation
capability and collection of the Bureau of Internal Revenue (BIR)
and the Bureau of Customs (BOC). The law intends to
encourage BIR and BOC officials and employees to exceed their
revenue targets by providing a system of rewards and sanctions
through the creation of a Rewards and Incentives Fund (Fund)
and a Revenue Performance Evaluation Board (Board). It
covers all officials and employees of the BIR and the BOC with
at least six months of service, regardless of employment status.
The Fund is sourced from the collection of the BIR and the BOC
in excess of their revenue targets for the year, as determined by
the Development Budget and Coordinating Committee (DBCC).
Any incentive or reward is taken from the fund and allocated to
the BIR and the BOC in proportion to their contribution in the
excess collection of the targeted amount of tax revenue.
The Boards in the BIR and the BOC are composed of the
Secretary of the Department of Finance (DOF) or his/her
Undersecretary, the Secretary of the Department of Budget and
Management (DBM) or his/her Undersecretary, the Director
General of the National Economic Development Authority
(NEDA) or his/her Deputy Director General, the Commissioners
of the BIR and the BOC or their Deputy Commissioners, two
representatives from the rank-and-file employees and a
representative from the officials nominated by their recognized
organization.
Each Board has the duty to (1) prescribe the rules and
guidelines for the allocation, distribution and release of the
Fund; (2) set criteria and procedures for removing from the
service officials and employees whose revenue collection falls
short of the target; (3) terminate personnel in accordance with
the criteria adopted by the Board; (4) prescribe a system for
performance evaluation; (5) perform other functions, including
the issuance of rules and regulations and (6) submit an annual
report to Congress.
The DOF, DBM, NEDA, BIR, BOC and the Civil Service
Commission (CSC) were tasked to promulgate and issue the
implementing rules and regulations of RA [No.] 9335, to be
approved by a Joint Congressional Oversight Committee
created for such purpose.5
The Joint Congressional Oversight Committee approved the
assailed IRR on May 22, 2006. Subsequently, the IRR was
published on May 30, 2006 in two newspapers of general
circulation, the Philippine Star and the Manila Standard, and
became effective fifteen (15) days later.6
Contending that the enactment and implementation of R.A. No.
9335 are tainted with constitutional infirmities in violation of the
fundamental rights of its members, petitioner Bureau of
Customs Employees Association (BOCEA), an association of
rank-and-file employees of the Bureau of Customs (BOC), duly
registered with the Department of Labor and Employment
(DOLE) and the Civil Service Commission (CSC), and
represented by its National President, Mr. Romulo A. Pagulayan
(Pagulayan), directly filed the present petition before this Court
against respondents Margarito B. Teves, in his capacity as
Secretary of the Department of Finance (DOF), Commissioner
Napoleon L. Morales (Commissioner Morales), in his capacity
as BOC Commissioner, and Lilian B. Hefti, in her capacity as
Commissioner of the Bureau of Internal Revenue (BIR). In its
petition, BOCEA made the following averments:
Sometime in 2008, high-ranking officials of the BOC pursuant to
the mandate of R.A. No. 9335 and its IRR, and in order to
comply with the stringent deadlines thereof, started to
disseminate Collection District Performance
Contracts7 (Performance Contracts) for the lower ranking
officials and rank-and-file employees to sign. The Performance
Contract pertinently provided:
xxxx
WHEREAS, pursuant to the provisions of Sec. 25 (b) of the
Implementing Rules and Regulations (IRR) of the Attrition Act of
2005, that provides for the setting of criteria and procedures for
removing from the service Officials and Employees whose
revenue collection fall short of the target in accordance with
Section 7 of Republic Act 9335.
xxxx
NOW, THEREFORE, for and in consideration of the foregoing
premises, parties unto this Agreement hereby agree and so
agreed to perform the following:
xxxx
2. The "Section 2, PA/PE" hereby accepts the allocated
Revenue Collection Target and further accepts/commits to meet
the said target under the following conditions:
a.) That he/she will meet the allocated Revenue
Collection Target and thereby undertakes and binds
himself/herself that in the event the revenue collection
falls short of the target with due consideration of all
 relevant factors affecting the level of collection as
provided in the rules and regulations promulgated
under the Act and its IRR, he/she will voluntarily submit
to the provisions of Sec. 25 (b) of the IRR and Sec. 7
of the Act; and
b.) That he/she will cascade and/or allocate to
respective Appraisers/Examiners or Employees under
his/her section the said Revenue Collection Target and
require them to execute a Performance Contract, and
direct them to accept their individual target. The
Performance Contract executed by the respective
Examiners/Appraisers/Employees shall be submitted
to the Office of the Commissioner through the LAIC on
or before March 31, 2008.
x x x x8
BOCEA opined that the revenue target was impossible to meet
due to the Government’s own policies on reduced tariff rates and
tax breaks to big businesses, the occurrence of natural
calamities and because of other economic factors. BOCEA
claimed that some BOC employees were coerced and forced to
sign the Performance Contract. The majority of them, however,
did not sign. In particular, officers of BOCEA were summoned
and required to sign the Performance Contracts but they also
refused. To ease the brewing tension, BOCEA claimed that its
officers sent letters, and sought several dialogues with BOC
officials but the latter refused to heed them.
In addition, BOCEA alleged that Commissioner Morales exerted
heavy pressure on the District Collectors, Chiefs of Formal Entry
Divisions, Principal Customs Appraisers and Principal Customs
Examiners of the BOC during command conferences to make
them sign their Performance Contracts. Likewise, BOC Deputy
Commissioner Reynaldo Umali (Deputy Commissioner Umali)
individually spoke to said personnel to convince them to sign
said contracts. Said personnel were threatened that if they do
not sign their respective Performance Contracts, they would
face possible reassignment, reshuffling, or worse, be placed on
floating status. Thus, all the District Collectors, except a certain
Atty. Carlos So of the Collection District III of the Ninoy Aquino
International Airport (NAIA), signed the Performance Contracts.
BOCEA further claimed that Pagulayan was constantly
harassed and threatened with lawsuits. Pagulayan approached
Deputy Commissioner Umali to ask the BOC officials to stop all
forms of harassment, but the latter merely said that he would
look into the matter. On February 5, 2008, BOCEA through
counsel wrote the Revenue Performance Evaluation Board
(Board) to desist from implementing R.A. No. 9335 and its IRR
and from requiring rank-and-file employees of the BOC and BIR
to sign Performance Contracts.9 In his letter-reply10 dated
February 12, 2008, Deputy Commissioner Umali denied having
coerced any BOC employee to sign a Performance Contract. He
also defended the BOC, invoking its mandate of merely
implementing the law. Finally, Pagulayan and BOCEA’s
counsel, on separate occasions, requested for a certified true
copy of the Performance Contract from Deputy Commissioner
Umali but the latter failed to furnish them a copy.11
This petition was filed directly with this Court on March 3, 2008.
BOCEA asserted that in view of the unconstitutionality of R.A.
No. 9335 and its IRR, and their adverse effects on the
constitutional rights of BOC officials and employees, direct
resort to this Court is justified. BOCEA argued, among others,
that its members and other BOC employees are in great danger
of losing their jobs should they fail to meet the required quota
provided under the law, in clear violation of their constitutional
right to security of tenure, and at their and their respective
families’ prejudice.
In their Comment,12 respondents, through the Office of the
Solicitor General (OSG), countered that R.A. No. 9335 and its
IRR do not violate the right to due process and right to security
of tenure of BIR and BOC employees. The OSG stressed that
the guarantee of security of tenure under the 1987
Constitution is not a guarantee of perpetual employment. R.A.
No. 9335 and its IRR provided a reasonable and valid ground
for the dismissal of an employee which is germane to the
purpose of the law. Likewise, R.A. No. 9335 and its IRR provided
that an employee may only be separated from the service upon
compliance with substantive and procedural due process. The
OSG added that R.A. No. 9335 and its IRR must enjoy the
presumption of constitutionality.
In its Reply,13 BOCEA claimed that R.A. No. 9335 employs
means that are unreasonable to achieve its stated objectives;
that the law is unduly oppressive of BIR and BOC employees as
it shifts the extreme burden upon their shoulders when the
Government itself has adopted measures that make collection
difficult such as reduced tariff rates to almost zero percent and
tax exemption of big businesses; and that the law is
discriminatory of BIR and BOC employees. BOCEA manifested
that only the high-ranking officials of the BOC benefited largely
from the reward system under R.A. No. 9335 despite the fact
that they were not the ones directly toiling to collect revenue.
Moreover, despite the BOCEA’s numerous requests,14 BOC
continually refused to provide BOCEA the Expenditure Plan on
how such reward was distributed.
Since BOCEA was seeking similar reliefs as that of the
petitioners in Abakada Guro Party List v. Purisima, BOCEA filed
a Motion to Consolidate15 the present case with Abakada on
April 16, 2008. However, pending action on said motion, the
Court rendered its decision in Abakada on August 14, 2008.
Thus, the consolidation of this case with Abakada was rendered
no longer possible.16
In Abakada, this Court, through then Associate Justice, now
Chief Justice Renato C. Corona, declared Section 12 17of R.A.
No. 9335 creating a Joint Congressional Oversight Committee
to approve the IRR as unconstitutional and violative of the
principle of separation of powers. However, the constitutionality
of the remaining provisions of R.A. No. 9335 was upheld
pursuant to Section 1318 of R.A. No. 9335. The Court also held
that until the contrary is shown, the IRR of R.A. No. 9335 is
presumed valid and effective even without the approval of the
Joint Congressional Oversight Committee.19
Notwithstanding our ruling in Abakada, both parties complied
with our Resolution20 dated February 10, 2009, requiring them
to submit their respective Memoranda.
The Issues
BOCEA raises the following issues:
I.
WHETHER OR NOT THE ATTRITION LAW, REPUBLIC ACT
[NO.] 9335, AND ITS IMPLEMENTING RULES AND
REGULATIONS ARE UNCONSTITUTIONAL AS THESE
VIOLATE THE RIGHT TO DUE PROCESS OF THE COVERED
BIR AND BOC OFFICIALS AND EMPLOYEES[;]
II.
WHETHER OR NOT THE ATTRITION LAW, REPUBLIC ACT
[NO.] 9335, AND ITS IMPLEMENTING RULES AND
REGULATIONS ARE UNCONSTITUTIONAL AS THESE
VIOLATE THE RIGHT OF BIR AND BOC OFFICIALS AND
EMPLOYEES TO THE EQUAL PROTECTION OF THE
LAWS[;]
III.
WHETHER OR NOT REPUBLIC ACT [NO.] 9335 AND ITS
IMPLEMENTING RULES AND REGULATIONS VIOLATE THE
RIGHT TO SECURITY OF TENURE OF BIR AND BOC
OFFICIALS AND EMPLOYEES AS ENSHRINED UNDER
SECTION 2 (3), ARTICLE IX (B) OF THE CONSTITUTION[;]
IV.
WHETHER OR NOT REPUBLIC ACT [NO.] 9335 AND ITS
IMPLEMENTING RULES AND REGULATIONS ARE
UNCONSTITUTIONAL AS THEY CONSTITUTE UNDUE
DELEGATION OF LEGISLATIVE POWERS TO THE
REVENUE PERFORMANCE EVALUATION BOARD IN
VIOLATION OF THE PRINCIPLE OF SEPARATION OF
POWERS ENSHRINED IN THE CONSTITUTION[; AND]
V.
WHETHER OR NOT REPUBLIC ACT [NO.] 9335 IS A BILL OF
ATTAINDER AND HENCE[,] UNCONSTITUTIONAL BECAUSE
IT INFLICTS PUNISHMENT THROUGH LEGISLATIVE FIAT
UPON A PARTICULAR GROUP OR CLASS OF OFFICIALS
AND EMPLOYEES WITHOUT TRIAL.21
BOCEA manifested that while waiting for the Court to give due
course to its petition, events unfolded showing the patent
unconstitutionality of R.A. No. 9335. It narrated that during the
first year of the implementation of R.A. No. 9335, BOC
employees exerted commendable efforts to attain their revenue
target of ₱196 billion which they surpassed by as much as ₱2
billion for that year alone. However, this was attained only
because oil companies made advance tax payments to BOC.
Moreover, BOC employees were given their "reward" for
surpassing said target only in 2008, the distribution of which they
described as unjust, unfair, dubious and fraudulent because
only top officials of BOC got the huge sum of reward while the
employees, who did the hard task of collecting, received a mere
pittance of around ₱8,500.00. In the same manner, the Bonds
Division of BOC-NAIA collected 400+% of its designated target
but the higher management gave out to the employees a measly
sum of ₱8,500.00 while the top level officials partook of millions
of the excess collections. BOCEA relies on a piece of
information revealed by a newspaper showing the list of BOC
officials who apparently earned huge amounts of money by way
of reward.22 It claims that the recipients thereof included
lawyers, support personnel and other employees, including a
dentist, who performed no collection functions at all. These
alleged anomalous selection, distribution and allocation of
rewards was due to the failure of R.A. No. 9335 to set out clear
guidelines.23
In addition, BOCEA avers that the Board initiated the first few
cases of attrition for the Fiscal Year 2007 by subjecting five BOC
officials from the Port of Manila to attrition despite the fact that
the Port of Manila substantially complied with the provisions of
R.A. No. 9335. It is thus submitted that the selection of these
officials for attrition without proper investigation was nothing less
than arbitrary. Further, the legislative and executive
departments’ promulgation of issuances and the Government’s
accession to regional trade agreements have caused a
significant diminution of the tariff rates, thus, decreasing over-all
collection. These unrealistic settings of revenue targets
seriously affect BIR and BOC employees tasked with the burden
of collection, and worse, subjected them to attrition.24
BOCEA assails the constitutionality of R.A. No. 9335 and its IRR
on the following grounds:
1. R.A. No. 9335 and its IRR violate the BIR and BOC
employees’ right to due process because the
termination of employees who had not attained their
revenue targets for the year is peremptory and done
without any form of hearing to allow said employees to
ventilate their side. Moreover, R.A. No. 9335 and its
IRR do not comply with the requirements under CSC
rules and regulations as the dismissal in this case is
immediately executory. Such immediately executory
nature of the Board’s decision negates the remedies
available to an employee as provided under the CSC
rules.
2. R.A. No. 9335 and its IRR violate the BIR and BOC
employees’ right to equal protection of the law because
R.A. No. 9335 and its IRR unduly discriminates against
BIR and BOC employees as compared to employees
of other revenue generating government agencies like
the Philippine Amusement and Gaming Corporation,
Department of Transportation and Communication, the
Air Transportation Office, the Land Transportation
Office, and the Philippine Charity Sweepstakes Office,
among others, which are not subject to attrition.
3. R.A. No. 9335 and its IRR violate the BIR and BOC
employees’ right to security of tenure because R.A. No.
9335 and its IRR effectively removed remedies
provided in the ordinary course of administrative
procedure afforded to government employees. The law
likewise created another ground for dismissal, i.e., non-
attainment of revenue collection target, which is not
provided under CSC rules and which is, by its nature,
unpredictable and therefore arbitrary and
unreasonable.
4. R.A. No. 9335 and its IRR violate the 1987
Constitution because Congress granted to the
Revenue Performance Evaluation Board (Board) the
unbridled discretion of formulating the criteria for
termination, the manner of allocating targets, the
distribution of rewards and the determination of
relevant factors affecting the targets of collection,
which is tantamount to undue delegation of legislative
power.
5. R.A. No. 9335 is a bill of attainder because it inflicts
punishment upon a particular group or class of officials
and employees without trial. This is evident from the
fact that the law confers upon the Board the power to
impose the penalty of removal upon employees who do
 not meet their revenue targets; that the same is without
the benefit of hearing; and that the removal from
service is immediately executory. Lastly, it disregards
the presumption of regularity in the performance of the
official functions of a public officer.25
On the other hand, respondents through the OSG stress that
except for Section 12 of R.A. No. 9335, R.A. No. 9335 and its
IRR are constitutional, as per our ruling in Abakada.
Nevertheless, the OSG argues that the classification of BIR and
BOC employees as public officers under R.A. No. 9335 is based
on a valid and substantial distinction since the revenue
generated by the BIR and BOC is essentially in the form of
taxes, which is the lifeblood of the State, while the revenue
produced by other agencies is merely incidental or secondary to
their governmental functions; that in view of their mandate, and
for purposes of tax collection, the BIR and BOC are sui generis;
that R.A. No. 9335 complies with the "completeness" and
"sufficient standard" tests for the permissive delegation of
legislative power to the Board; that the Board exercises its
delegated power consistent with the policy laid down in the law,
that is, to optimize the revenue generation capability and
collection of the BIR and the BOC; that parameters were set in
order that the Board may identify the officials and employees
subject to attrition, and the proper procedure for their removal in
case they fail to meet the targets set in the Performance
Contract were provided; and that the rights of BIR and BOC
employees to due process of law and security of tenure are duly
accorded by R.A. No. 9335. The OSG likewise maintains that
there was no encroachment of judicial power in the enactment
of R.A. No. 9335 amounting to a bill of attainder since R.A. No.
9335 and its IRR merely defined the offense and provided for
the penalty that may be imposed. Finally, the OSG reiterates
that the separation from the service of any BIR or BOC
employee under R.A. No. 9335 and its IRR shall be done only
upon due consideration of all relevant factors affecting the level
of collection, subject to Civil Service laws, rules and regulations,
and in compliance with substantive and procedural due process.
The OSG opines that the Performance Contract, far from
violating the BIR and BOC employees’ right to due process,
actually serves as a notice of the revenue target they have to
meet and the possible consequences of failing to meet the
same. More, there is nothing in the law which prevents the
aggrieved party from appealing the unfavorable decision of
dismissal.26
In essence, the issues for our resolution are:
1. Whether there is undue delegation of legislative
power to the Board;
2. Whether R.A. No. 9335 and its IRR violate the rights
of BOCEA’s members to: (a) equal protection of laws,
(b) security of tenure and (c) due process; and
3. Whether R.A. No. 9335 is a bill of attainder.
Our Ruling
Prefatorily, we note that it is clear, and in fact uncontroverted,
that BOCEA has locus standi. BOCEA impugns the
constitutionality of R.A. No. 9335 and its IRR because its
members, who are rank-and-file employees of the BOC, are
actually covered by the law and its IRR. BOCEA’s members
have a personal and substantial interest in the case, such that
they have sustained or will sustain, direct injury as a result of the
enforcement of R.A. No. 9335 and its IRR.27
However, we find no merit in the petition and perforce dismiss
the same.
It must be noted that this is not the first time the constitutionality
of R.A. No. 9335 and its IRR are being challenged. The Court
already settled the majority of the same issues raised by BOCEA
in our decision in Abakada, which attained finality on September
17, 2008. As such, our ruling therein is worthy of reiteration in
this case.
We resolve the first issue in the negative.
The principle of separation of powers ordains that each of the
three great branches of government has exclusive cognizance
of and is supreme in matters falling within its own constitutionally
allocated sphere.28 Necessarily imbedded in this doctrine is the
principle of non-delegation of powers, as expressed in the Latin
maxim potestas delegata non delegari potest, which means
"what has been delegated, cannot be delegated." This doctrine
is based on the ethical principle that such delegated power
constitutes not only a right but a duty to be performed by the
delegate through the instrumentality of his own judgment and
not through the intervening mind of another.29However, this
principle of non-delegation of powers admits of numerous
exceptions,30 one of which is the delegation of legislative power
to various specialized administrative agencies like the Board in
this case.
The rationale for the aforementioned exception was clearly
explained in our ruling in Gerochi v. Department of Energy, 31 to
wit:
In the face of the increasing complexity of modern life,
delegation of legislative power to various specialized
administrative agencies is allowed as an exception to this
principle. Given the volume and variety of interactions in today’s
society, it is doubtful if the legislature can promulgate laws that
will deal adequately with and respond promptly to the minutiae
of everyday life. Hence, the need to delegate to administrative
bodies — the principal agencies tasked to execute laws in their
specialized fields — the authority to promulgate rules and
regulations to implement a given statute and effectuate its
policies. All that is required for the valid exercise of this power
of subordinate legislation is that the regulation be germane to
the objects and purposes of the law and that the regulation be
not in contradiction to, but in conformity with, the standards
prescribed by the law. These requirements are denominated as
the completeness test and the sufficient standard test. 32
Thus, in Abakada, we held,
Two tests determine the validity of delegation of legislative
power: (1) the completeness test and (2) the sufficient standard
test. A law is complete when it sets forth therein the policy to be
executed, carried out or implemented by the delegate. It lays
down a sufficient standard when it provides adequate guidelines
or limitations in the law to map out the boundaries of the
delegate’s authority and prevent the delegation from running
riot. To be sufficient, the standard must specify the limits of the
delegate’s authority, announce the legislative policy and identify
the conditions under which it is to be implemented.
RA [No.] 9335 adequately states the policy and standards to
guide the President in fixing revenue targets and the
implementing agencies in carrying out the provisions of the law.
Section 2 spells out the policy of the law:
"SEC. 2. Declaration of Policy. — It is the policy of the State to
optimize the revenue-generation capability and collection of the
Bureau of Internal Revenue (BIR) and the Bureau of Customs
(BOC) by providing for a system of rewards and sanctions
through the creation of a Rewards and Incentives Fund and a
Revenue Performance Evaluation Board in the above agencies
for the purpose of encouraging their officials and employees to
exceed their revenue targets."
Section 4 "canalized within banks that keep it from overflowing"
the delegated power to the President to fix revenue targets:
"SEC. 4. Rewards and Incentives Fund. — A Rewards and
Incentives Fund, hereinafter referred to as the Fund, is hereby
created, to be sourced from the collection of the BIR and the
BOC in excess of their respective revenue targets of the
year, as determined by the Development Budget and
Coordinating Committee (DBCC), in the following
percentages:
Excess of Collection Percent (%) of the
[Over] the Revenue Excess Collection to
Targets Accrue to the Fund
30% or below — 15%
More than 30% — 15% of the first 30%
plus 20% of the
remaining excess
The Fund shall be deemed automatically appropriated the year
immediately following the year when the revenue collection
target was exceeded and shall be released on the same fiscal
year.
Revenue targets shall refer to the original estimated revenue
collection expected of the BIR and the BOC for a given fiscal
year as stated in the Budget of Expenditures and Sources of
Financing (BESF) submitted by the President to Congress. The
BIR and the BOC shall submit to the DBCC the distribution of
the agencies’ revenue targets as allocated among its revenue
districts in the case of the BIR, and the collection districts in the
case of the BOC.
xxx xxx x x x"
Revenue targets are based on the original estimated revenue
collection expected respectively of the BIR and the BOC for a
given fiscal year as approved by the DBCC and stated in the
BESF submitted by the President to Congress. Thus, the
determination of revenue targets does not rest solely on the
President as it also undergoes the scrutiny of the DBCC.
On the other hand, Section 7 specifies the limits of the Board’s
authority and identifies the conditions under which officials and
employees whose revenue collection falls short of the target by
at least 7.5% may be removed from the service:
"SEC. 7. Powers and Functions of the Board. — The Board in
the agency shall have the following powers and functions:
xxx xxx xxx
(b) To set the criteria and procedures for removing from service
officials and employees whose revenue collection falls short of
the target by at least seven and a half percent (7.5%), with due
consideration of all relevant factors affecting the level of
collection as provided in the rules and regulations promulgated
under this Act, subject to civil service laws, rules and regulations
and compliance with substantive and procedural due process:
Provided, That the following exemptions shall apply:
1. Where the district or area of responsibility is newly-
created, not exceeding two years in operation, and has
no historical record of collection performance that can
be used as basis for evaluation; and
2. Where the revenue or customs official or employee
is a recent transferee in the middle of the period under
consideration unless the transfer was due to
nonperformance of revenue targets or potential
nonperformance of revenue targets: Provided,
however, That when the district or area of responsibility
covered by revenue or customs officials or employees
has suffered from economic difficulties brought about
by natural calamities or force majeure or economic
causes as may be determined by the Board,
termination shall be considered only after careful and
proper review by the Board.
(c) To terminate personnel in accordance with the criteria
adopted in the preceding paragraph: Provided, That such
decision shall be immediately executory: Provided, further, That
the application of the criteria for the separation of an official or
employee from service under this Act shall be without prejudice
to the application of other relevant laws on accountability of
public officers and employees, such as the Code of Conduct and
Ethical Standards of Public Officers and Employees and the
Anti-Graft and Corrupt Practices Act;
xxx xxx x x x"
At any rate, this Court has recognized the following as sufficient
standards: "public interest", "justice and equity", "public
convenience and welfare" and "simplicity, economy and
welfare". In this case, the declared policy of optimization of the
revenue-generation capability and collection of the BIR and the
BOC is infused with public interest.33
We could not but deduce that the completeness test and the
sufficient standard test were fully satisfied by R.A. No. 9335, as
evident from the aforementioned Sections 2, 4 and 7 thereof.
Moreover, Section 534 of R.A. No. 9335 also provides for the
incentives due to District Collection Offices. While it is apparent
that the last paragraph of Section 5 provides that "[t]he
allocation, distribution and release of the district reward shall
likewise be prescribed by the rules and regulations of the
Revenue Performance and Evaluation Board," Section 7 (a)35 of
R.A. No. 9335 clearly mandates and sets the parameters for the
Board by providing that such rules and guidelines for the
allocation, distribution and release of the fund shall be in
accordance with Sections 4 and 5 of R.A. No. 9335. In sum, the
Court finds that R.A. No. 9335, read and appreciated in its
entirety, is complete in all its essential terms and conditions, and
that it contains sufficient standards as to negate BOCEA’s
supposition of undue delegation of legislative power to the
Board.
Similarly, we resolve the second issue in the negative.
Equal protection simply provides that all persons or things
similarly situated should be treated in a similar manner, both as
to rights conferred and responsibilities imposed. The purpose of
the equal protection clause is to secure every person within a
state’s jurisdiction against intentional and arbitrary
discrimination, whether occasioned by the express terms of a
statute or by its improper execution through the state’s duly
constituted authorities. In other words, the concept of equal
justice under the law requires the state to govern impartially, and
it may not draw distinctions between individuals solely on
differences that are irrelevant to a legitimate governmental
objective.361awphil
Thus, on the issue on equal protection of the laws, we held in
Abakada:
The equal protection clause recognizes a valid classification,
that is, a classification that has a reasonable foundation or
rational basis and not arbitrary. With respect to RA [No.] 9335,
its expressed public policy is the optimization of the revenue-
generation capability and collection of the BIR and the
BOC. Since the subject of the law is the revenue-generation
capability and collection of the BIR and the BOC, the incentives
and/or sanctions provided in the law should logically pertain to
the said agencies. Moreover, the law concerns only the BIR and
the BOC because they have the common distinct primary
function of generating revenues for the national government
through the collection of taxes, customs duties, fees and
charges.
The BIR performs the following functions:
"Sec. 18. The Bureau of Internal Revenue. — The Bureau of
Internal Revenue, which shall be headed by and subject to the
supervision and control of the Commissioner of Internal
Revenue, who shall be appointed by the President upon the
recommendation of the Secretary [of the DOF], shall have the
following functions:
(1) Assess and collect all taxes, fees and charges and
account for all revenues collected;
(2) Exercise duly delegated police powers for the
proper performance of its functions and duties;
(3) Prevent and prosecute tax evasions and all other
illegal economic activities;
(4) Exercise supervision and control over its
constituent and subordinate units; and
(5) Perform such other functions as may be provided
by law.
xxx xxx x x x"
On the other hand, the BOC has the following functions:
"Sec. 23. The Bureau of Customs. — The Bureau of Customs
which shall be headed and subject to the management and
control of the Commissioner of Customs, who shall be appointed
by the President upon the recommendation of the Secretary [of
the DOF] and hereinafter referred to as Commissioner, shall
have the following functions:
(1) Collect custom duties, taxes and the corresponding
fees, charges and penalties;
(2) Account for all customs revenues collected;
(3) Exercise police authority for the enforcement of
tariff and customs laws;
(4) Prevent and suppress smuggling, pilferage and all
other economic frauds within all ports of entry;
(5) Supervise and control exports, imports, foreign
mails and the clearance of vessels and aircrafts in all
ports of entry;
(6) Administer all legal requirements that are
appropriate;
(7) Prevent and prosecute smuggling and other illegal
activities in all ports under its jurisdiction;
(8) Exercise supervision and control over its
constituent units;
(9) Perform such other functions as may be provided
by law.
xxx xxx x x x"
Both the BIR and the BOC are bureaus under the DOF. They
principally perform the special function of being the
instrumentalities through which the State exercises one of its
great inherent functions — taxation. Indubitably, such
substantial distinction is germane and intimately related to the
purpose of the law. Hence, the classification and treatment
accorded to the BIR and the BOC under RA [No.] 9335 fully
satisfy the demands of equal protection.37
As it was imperatively correlated to the issue on equal
protection, the issues on the security of tenure of affected BIR
and BOC officials and employees and their entitlement to due
process were also settled in Abakada:
Clearly, RA [No.] 9335 in no way violates the security of tenure
of officials and employees of the BIR and the BOC. The
guarantee of security of tenure only means that an employee
cannot be dismissed from the service for causes other than
those provided by law and only after due process is accorded
the employee. In the case of RA [No.] 9335, it lays down a
reasonable yardstick for removal (when the revenue collection
falls short of the target by at least 7.5%) with due consideration
of all relevant factors affecting the level of collection. This
standard is analogous to inefficiency and incompetence in the
performance of official duties, a ground for disciplinary action
under civil service laws. The action for removal is also subject
to civil service laws, rules and regulations and compliance with
substantive and procedural due process.38
In addition, the essence of due process is simply an opportunity
to be heard, or as applied to administrative proceedings, a fair
and reasonable opportunity to explain one’s side. 39 BOCEA’s
apprehension of deprivation of due process finds its answer in
Section 7 (b) and (c) of R.A. No. 9335.40 The concerned BIR or
BOC official or employee is not simply given a target revenue
collection and capriciously left without any quarter. R.A. No.
9335 and its IRR clearly give due consideration to all relevant
factors41 that may affect the level of collection. In the same
manner, exemptions42 were set, contravening BOCEA’s claim
that its members may be removed for unattained target
collection even due to causes which are beyond their control.
Moreover, an employee’s right to be heard is not at all prevented
and his right to appeal is not deprived of him. 43 In fine, a BIR or
BOC official or employee in this case cannot be arbitrarily
removed from the service without according him his
constitutional right to due process. No less than R.A. No. 9335
in accordance with the 1987 Constitution guarantees this.
We have spoken, and these issues were finally laid to rest. Now,
the Court proceeds to resolve the last, but new issue raised by
BOCEA, that is, whether R.A. No. 9335 is a bill of attainder
proscribed under Section 22,44 Article III of the 1987
Constitution.
9335 itself does not tolerate these pernicious acts of graft and
corruption.48 As the Court is not a trier of facts, the investigation
on the veracity of, and the proper action on these anomalies are
in the hands of the Executive branch. Correlatively, the wisdom
for the enactment of this law remains within the domain of the
Legislative branch. We merely interpret the law as it is. The
Court has no discretion to give statutes a meaning detached
from the manifest intendment and language thereof.49 Just like
any other law, R.A. No. 9335 has in its favor the presumption of
constitutionality, and to justify its nullification, there must be a
clear and unequivocal breach of the Constitution and not one
that is doubtful, speculative, or argumentative.50 We have so
declared in Abakada, and we now reiterate that R.A. No. 9335
and its IRR are constitutional.

On this score, we hold that R.A. No. 9335 is not a bill of attainder. WHEREFORE, the present petition for certiorari and prohibition
A bill of attainder is a legislative act which inflicts punishment on with prayer for injunctive relief/s is DISMISSED.
individuals or members of a particular group without a judicial
trial. Essential to a bill of attainder are a specification of certain No costs.
individuals or a group of individuals, the imposition of a
punishment, penal or otherwise, and the lack of judicial
trial.451avvphi1

In his Concurring Opinion in Tuason v. Register of Deeds,

Caloocan City,46 Justice Florentino P. Feliciano traces the roots
of a Bill of Attainder, to wit:

Bills of attainder are an ancient instrument of tyranny. In England

a few centuries back, Parliament would at times enact bills or
statutes which declared certain persons attainted and their
blood corrupted so that it lost all heritable quality (Ex Parte
Garland, 4 Wall. 333, 18 L.Ed. 366 [1867]). In more modern
terms, a bill of attainder is essentially a usurpation of judicial
power by a legislative body. It envisages and effects the
imposition of a penalty — the deprivation of life or liberty or
property — not by the ordinary processes of judicial trial, but by
legislative fiat. While cast in the form of special legislation, a bill
of attainder (or bill of pains and penalties, if it prescribed a
penalty other than death) is in intent and effect a penal judgment
visited upon an identified person or group of persons (and not
upon the general community) without a prior charge or demand,
without notice and hearing, without an opportunity to defend,
without any of the civilized forms and safeguards of the judicial
process as we know it (People v. Ferrer, 48 SCRA 382 [1972];
Cummings and Missouri, 4 Wall. 277, 18 L. Ed. 356 [1867]; U.S.
v. Lovett, 328, U.S. 303, 90 L.Ed. 1252 [1945]; U.S. v. Brown,
381 U.S. 437, 14 L.Ed. 2d. 484 [1965]. Such is the archetypal
bill of attainder wielded as a means of legislative oppression. x
x x47

R.A. No. 9335 does not possess the elements of a bill of

attainder. It does not seek to inflict punishment without a judicial
trial. R.A. No. 9335 merely lays down the grounds for the
termination of a BIR or BOC official or employee and provides
for the consequences thereof. The democratic processes are
still followed and the constitutional rights of the concerned
employee are amply protected.

A final note.

We find that BOCEA’s petition is replete with allegations of

defects and anomalies in allocation, distribution and receipt of
rewards. While BOCEA intimates that it intends to curb graft and
corruption in the BOC in particular and in the government in
general which is nothing but noble, these intentions do not
actually pertain to the constitutionality of R.A. No. 9335 and its
IRR, but rather in the faithful implementation thereof. R.A. No.

GEMMA P. CABALIT, Petitioner,
vs.
COMMISSION ON AUDIT-REGION VII, Respondent.
x - - - - - - - - - - - - - - - - - - - - - - -x
G.R. No. 180341
FILADELFO S. APIT, Petitioner,
vs.
COMMISSION ON AUDIT (COA) Legal and Adjudication,
Region VII, Respondent.
x - - - - - - - - - - - - - - - - - - - - - - -x
G.R. No. 180342
LEONARDO G. OLAIVAR, in his capacity as Transportation
Regulation Officer and Officer-In-Charge of Land
Transportation Office, Jagna, Province of Bohol, Petitioner,
vs.
HON. PRIMO C. MIRO, in his official capacity as Deputy
Ombudsman for Visayas, EDGARDO G. CANTON, in his
capacity as Graft Investigator Officer, ATTY. ROY L.
URSAL, in his capacity as Regional Cluster Director,
Commission on Audit, Cebu City, Respondents.
DECISION
VILLARAMA, JR., J.:
Three employees from the Land Transportation Office (LTO) in
Jagna, Bohol were found by the Ombudsman to have
perpetrated a scheme to defraud the government of proper
motor vehicle registration fees. They now seek in the present
consolidated petitions a judgment from this Court annulling the
January 18, 2006 Decision1 and September 21, 2007
Resolution2 of the Court of Appeals (CA) which affirmed with
modification the Decision3 of the Office of the Ombudsman-
Visayas dismissing them from government service.
The facts follow:
On September 4, 2001, the Philippine Star News, a local
newspaper in Cebu City, reported that employees of the LTO in
Jagna, Bohol, are shortchanging the government by tampering
with their income reports.4 Accordingly, Regional Director
Ildefonso T. Deloria of the Commission on Audit (COA) directed
State Auditors Teodocio D. Cabalit and Emmanuel L. Coloma of
the Provincial Revenue Audit Group to conduct a fact-finding
investigation. A widespread tampering of official receipts of
Motor Vehicle Registration during the years 1998, 1999, 2000
and 2001 was then discovered by the investigators.
According to the investigators, a total of 106 receipts were
tampered. The scheme was done by detaching the Plate
Release and Owner’s copy from the set of official receipts then
typing thereon the correct details corresponding to the vehicle
registered, the owner’s name and address, and the correct
amount of registration fees. The other copies, consisting of the
copies for the Collector, EDP, Record, Auditor, and Regional
Office, meanwhile, were typed on to make it appear that the
receipts were issued mostly for the registration of motorcycles
with much lower registration charges. Incorrect names and/or
addresses were also used on said file copies. The difference
between the amounts paid by the vehicle owners and the
amounts appearing on the file copies were then pocketed by the
perpetrators, and only the lower amounts appearing on the
retained duplicate file copies were reported in the Report of
Collections.5 According to State Auditors Cabalit and Coloma in
their Joint-Affidavit, the scheme was perpetrated by LTO
employees Leonardo G. Olaivar, Gemma P. Cabalit, Filadelfo S.
Apit and Samuel T. Alabat, and resulted in an unreported
income totaling ₱169,642.50.6
On August 8, 2002, COA Regional Cluster Director Atty. Roy L.
Ursal reported the tampering of official receipts to Deputy
Ombudsman Primo C. Miro.7 According to Atty. Ursal, the
irregularity is penalized under Article 217, in relation to Article
171 of the Revised Penal Code;8 Section 3(e)9 of the Anti-Graft
and Corrupt Practices Act, and likewise violates Republic Act
(R.A.) No. 6713.10
In a Joint Evaluation Report, Graft Investigators Pio R.
Dargantes and Virginia Palanca-Santiago found grounds to
conduct a preliminary investigation.11 Hence, a formal charge for
dishonesty was filed against Olaivar, Cabalit, Apit and Alabat
before the Office of the Ombudsman-Visayas, and the parties
were required to submit their counter-affidavits.
In compliance, Olaivar, Cabalit, Apit and Alabat submitted
separate counter-affidavits, all essentially denying knowledge
and responsibility for the anomalies. As to Olaivar, he
maintained that the receipts were typed outside his office by
regular and casual employees. He claimed that the receipts
were presented to him only for signature and he does not
receive the payment when he signs the receipts.12 Cabalit, for
her part, claimed that her duty as cashier was to receive
collections turned over to her and to deposit them in the Land
Bank of the Philippines in Tagbilaran City. She claimed that she
was not even aware of any anomaly in the collection of fees prior
to the investigation.13As to Apit, he admitted that he
countersigned the official receipts, but he too denied being
aware of any illegal activity in their office. He claimed that upon
being informed of the charge, he verified the photocopies of the
tampered receipts and was surprised to find that the signatures
above his name were falsified.14 Alabat, meanwhile, claimed he
did not tamper, alter or falsify any public document in the
performance of his duties. He insisted that the initial above his
name on Official Receipt No. 64056082 was Apit’s, while the
initial on Official Receipt No. 64056813 was that of Olaivar.15
During the hearing before Graft Investigator Pio R. Dargantes,
State Auditor Cabalit testified on the investigation he conducted
in the LTO in Jagna, Bohol. He testified that he was furnished
with the owner’s and duplicate copies of the tampered receipts.
Upon comparison of the Owner’s copy with the Collector or
Record’s copy, he noticed that the amounts shown in the original
copies were much bigger than those appearing in the file copies.
State Auditor Cabalit also declared that the basis for implicating
Olaivar is the fact that his signature appears in all the 106
tampered official receipts and he signed as verified correct the
Report of Collections, which included the tampered receipts. As
to Apit and Cabalit, they are the other signatories of the official
receipts.16 In some official receipts, the Owner’s copy is signed
by F.S. Apit as Computer Evaluator, G.P. Cabalit as Cashier,
and Leonardo Olaivar as District Head, but their signatures do
not appear on the file copies.17
On February 12, 2004, the Office of the Ombudsman-Visayas
directed18 the parties to submit their position papers pursuant to
Administrative Order (A.O.) No. 17, dated September 7, 2003,
amending the Rules of Procedure of the Office of the
Ombudsman.19 No cross-examination of State Auditor Cabalit
was therefore conducted.
Complying with the above Order, the COA submitted its position
paper on March 18, 2004. Olaivar, Cabalit and Apit, for their part,
respectively submitted their position papers on April 29, 2004,
March 18, 2004 and March 15, 2004.
In its position paper,20 the COA pointed out that the signatures
of Cabalit, Apit and Olaivar were indispensable to the issuance
of the receipts. As to Olaivar, the original receipts bear his
signature, thereby showing that he approved of the amounts
collected for the registration charges. However, when the
receipts were reported in the Report of Collections, the data
therein were already tampered reflecting a much lesser amount.
By affixing his signature on the Report of Collections and
thereby attesting that the entries therein were verified by him as
correct, he allowed the scheme to be perpetrated. As to Cabalit,
the COA pointed out that as cashier, Cabalit’s signature on the
receipts signified that she received the registration fees. The
correct amounts should have therefore appeared in the Report
of Collections, but as already stated, lesser amounts appeared
on the Report of Collections, which she prepares. In the same
manner, Apit, as computer evaluator, also signed the subject
receipts allowing the irregularities to be perpetuated.1avvphi1
In his position paper,21 Olaivar meanwhile insisted that he had
no participation in the anomalies. He stressed that his only role
in the issuance of the official receipts was to review and approve
the applications, and that he was the last one to sign the official
receipts. He argued that based on the standard procedure for
the processing of applications for registration of motor vehicles,
it could be deduced that there was a concerted effort or
conspiracy among the evaluator, typist and cashier, while he
was kept blind of their modus operandi.
Cabalit, for her part, questioned the findings of the investigators.
She stressed in her position paper22 that had there been a
thorough investigation of the questioned official receipts, the
auditors would have discovered that the signatures appearing
above her name were actually that of Olaivar. She outlined the
standard paper flow of a regular transaction at the LTO. It begins
when the registrant goes to the computer evaluator for the
computation of applicable fees and proceeds to the cashier for
payment. After paying, the typist will prepare the official receipts
consisting of seven (7) copies, which will be routed to the
computer evaluator, to the district head, and to the cashier for
signature. The cashier retains the copies for the EDP, Regional
Office, Collector and Auditor, while the remaining copies
(Owner, Plate Release and Record’s copy) will be forwarded to
the Releasing Section for distribution and release.
Cabalit insisted that on several occasions Olaivar disregarded
the standard procedure and directly accommodated some
registrants who were either his friends or referred to him by
friends. For such transactions, Olaivar assumes the functions of
computer evaluator, typist and cashier, as he is the one who
computes the fees, receives the payment and prepares the
official receipts. Olaivar would then remit the payment to her. As
the cashier, she has to accept the payment as a matter of
ministerial duty.
Apit, meanwhile, stressed in his position paper23 that the strokes
of the signatures appearing above his typewritten name on the
official receipts are different, indicating that the same are
falsified. He also explained that considering that the LTO in
Jagna issues around 20 to 25 receipts a day, he signed the
receipts relying on the faith that his co-employees had properly
accomplished the forms. He also pointed out that Engr. Dano
admitted signing accomplished official receipts when the regular
computer encoder is out, which just shows that other personnel
could have signed above the name of F.S. Apit.lawphil
On May 3, 2004, the Office of the Ombudsman-Visayas
rendered judgment finding petitioners liable for dishonesty for
tampering the official receipts to make it appear that they
collected lesser amounts than they actually collected. The OMB-
Visayas ruled:
WHEREFORE, premises considered, it is hereby resolved that
the following respondents be found guilty of the administrative
infraction of DISHONESTY and accordingly be meted out the
penalty of DISMISSAL FROM THE SERVICE with the
accessory penalties of cancellation of civil service eligibility,
forfeiture of retirement benefits and disqualification from re-
employment in the government service:
1. Leonardo G. Olaivar -Transportation Regulation
Officer II/ Office[r]-In-Charge
LTO Jagna District Office
Jagna, Bohol;
2. Gemma P. Cabalit - Cashier II, LTO Jagna District
Office Jagna, Bohol;
3. Filadelpo S. Apit - Clerk II, LTO Jagna District Office
Jagna, Bohol;
The complaint against respondent Samuel T. Alabat, presently
the Head of Apprehension Unit of the Tagbilaran City LTO, is
hereby DISMISSED for insufficiency of evidence.
The complaint regarding the LTO official receipts/MVRRs issued
by the LTO Jagna District Office, which are not covered by
original copies are hereby DISMISSED without prejudice to the
filing of the appropriate charges upon the recovery of the original
copies thereof.
SO DECIDED.24
Petitioners sought reconsideration of the decision, but their
motions were denied by the Ombudsman.25 Thus, they
separately sought recourse from the CA.
On January 18, 2006, the CA promulgated the assailed Decision
in CA-G.R. SP. Nos. 86256, 86394 and 00047. The dispositive
portion of the CA decision reads,
WHEREFORE, premises considered, judgment is hereby
rendered by US DISMISSING the instant consolidated petitions.
The assailed decision of the Office of the Ombudsman-Visayas
dated May 3, 2004 in OMB-V-A-02-0415-H is hereby
AFFIRMED with a modification that petitioner Olaivar be held
administratively liable for gross neglect of duty which carries the
same penalty as provided for dishonesty. No pronouncement as
to costs.
SO ORDERED.26
According to the CA, it was unbelievable that from 1998 to 2001,
Cabalit and Apit performed vital functions by routinely signing
LTO official receipts but did not have any knowledge of the
irregularity in their office. With regard to Olaivar, the CA believed
that the tampering of the receipts could have been avoided had
he exercised the required diligence in the performance of his
duties. Thus, the CA held him liable merely for gross neglect of
duty.
Petitioners sought reconsideration of the CA decision, but the
CA denied their motions.27 Hence, they filed the instant petitions
before the Court.
In her petition, petitioner Cabalit argues that
I. THE HONORABLE COURT OF APPEALS
GRAVELY ERRED IN AFFIRMING THE
OMBUDSMAN'S DECISION WHICH GAVE
RETROACTIVE EFFECT TO THE NEW
ADMINISTRATIVE ORDER NO. 17 IN THE
PROCEEDINGS BELOW THAT WAS ALREADY ON
TRIAL IN ACCORDANCE WITH ADMINISTRATIVE
ORDER NO. 07.
II. THE HONORABLE COURT OF APPEALS
GRAVELY ERRED IN HOLDING THAT ALTHOUGH
THE TRIAL TYPE HEARING UNDER
ADMINISTRATIVE ORDER NO. 07 DID NOT PUSH
THRU, PETITIONER WAS STILL ACCORDED HER
RIGHT TO DUE PROCESS UNDER THE SUMMARY
PROCEEDINGS PURSUANT TO ADMINISTRATIVE
ORDER NO. 17.
III. THE HONORABLE COURT OF APPEALS
COMMITTED A REVERSIBLE ERROR WHEN IT
AFFIRMED THE DECISION OF RESPONDENT
OMBUDSMAN DESPITE HAVING FAILED TO MAKE
A CATEGORICAL RULING ON THE ISSUE OF
WHETHER THE QUESTIONED AND/OR FORGED
SIGNATURES BELONG TO PETITIONER GEMMA
CABALIT.
IV. THE HONORABLE COURT OF APPEALS
COMMITTED A REVERSIBLE ERROR WHEN IT
FAILED TO RULE ON THE DOCTRINAL VALUE
AND/OR APPLICABILITY OF THE TAPIADOR VS.
OFFICE OF THE OMBUDSMAN (G.R. [129124],
MARCH 15, 2002) RULING HERE IN THE INSTANT
CASE.28
Meanwhile, Apit interposes the following arguments in his
petition:
I. THE COURT OF APPEALS ERRED IN LIMITING
ADMINISTRATIVE DUE PROCESS AS AN
OPPORTUNITY TO BE HEARD ONLY.
II. THE COURT OF APPEALS ERRED IN
CONCLUDING THE DEFENSE OF PETITIONER
APIT AS MERE DENIAL.
III. THE COURT OF APPEALS ERRED IN ITS
FAILURE TO RECONSIDER THE EVIDENCE THAT
CLEARLY PROVED THAT THE SIGNATURES
ABOVE THE NAME OF PETITIONER APIT IN THE
QUESTIONED RECEIPTS ARE ALL FORGED AND
FALSIFIED.29
As for Olaivar, he assails the CA Decision raising the following
issues:
I. WHETHER THE HONORABLE COURT OF
APPEALS ERRED IN FINDING THAT PETITIONER
LEONARDO G. OLAIVAR IS ADMINISTRATIVELY
LIABLE FOR GROSS NEGLIGENCE.
II. WHETHER THE HONORABLE COURT OF
APPEALS ERRED WHEN IT HELD THAT
PETITIONER LEONARDO G. OLAIVAR WAS NOT
DENIED DUE PROCESS WHEN THE OFFICE OF
THE OMBUDSMAN VISAYAS FOUND HIM GUILTY
FOR DISHONESTY AND METED OUT THE
PENALTY OF DISMISSAL FROM SERVICE.30
On January 15, 2008, said petitions were consolidated. 31
Essentially, the issues for our resolution are: (1) whether there
was a violation of the right to due process when the hearing
officer at the Office of the Ombudsman-Visayas adopted the
procedure under A.O. No. 17 notwithstanding the fact that the
said amendatory order took effect after the hearings had started;
and (2) whether Cabalit, Apit and Olaivar are administratively
liable.
As regards the first issue, petitioners claim that they were denied
due process of law when the investigating lawyer proceeded to
resolve the case based only on the affidavits and other evidence
on record without conducting a formal hearing. They lament that
the case was submitted for decision without giving them
opportunity to present witnesses and cross-examine the
witnesses against them. Petitioner Cabalit also argues that the
Office of the Ombudsman erred in applying the amendments
under A.O. No. 17 to the trial of the case, which was already in
progress under the old procedures under A.O. No. 07. She
stressed that under A.O. No. 07, she had the right to choose
whether to avail of a formal investigation or to submit the case
for resolution on the basis of the evidence on record. Here, she
was not given such option and was merely required to submit
her position paper.
Petitioners’ arguments deserve scant consideration.
Suffice to say, petitioners were not denied due process of law
when the investigating lawyer proceeded to resolve the case
based on the affidavits and other evidence on record. Section
5(b)(1)32 Rule 3, of the Rules of Procedure of the Office of the
Ombudsman, as amended by A.O. No. 17, plainly provides that
the hearing officer may issue an order directing the parties to
file, within ten days from receipt of the order, their respective
verified position papers on the basis of which, along with the
attachments thereto, the hearing officer may consider the case
submitted for decision. It is only when the hearing officer
determines that based on the evidence, there is a need to
conduct clarificatory hearings or formal investigations under
Section 5(b)(2) and Section 5(b)(3) that such further
proceedings will be conducted. But the determination of the
necessity for further proceedings rests on the sound discretion
of the hearing officer. As the petitioners have utterly failed to
show any cogent reason why the hearing officer’s determination
should be overturned, the determination will not be disturbed by
this Court. We likewise find no merit in their contention that the
new procedures under A.O. No. 17, which took effect while the
case was already undergoing trial before the hearing officer,
should not have been applied.
The rule in this jurisdiction is that one does not have a vested
right in procedural rules. In Tan, Jr. v. Court of Appeals,33 the
Court elucidated:
Statutes regulating the procedure of the courts will be construed
as applicable to actions pending and undetermined at the time
of their passage. Procedural laws are retroactive in that sense
and to that extent. The fact that procedural statutes may
somehow affect the litigants’ rights may not preclude their
retroactive application to pending actions. The retroactive
application of procedural laws is not violative of any right of a
person who may feel that he is adversely affected. Nor is the
retroactive application of procedural statutes constitutionally
objectionable. The reason is that as a general rule no vested
right may attach to, nor arise from, procedural laws. It has been
held that "a person has no vested right in any particular
remedy, and a litigant cannot insist on the application to the
trial of his case, whether civil or criminal, of any other than
the existing rules of procedure. (Emphasis supplied.)
While the rule admits of certain exceptions, such as when the
statute itself expressly or by necessary implication provides that
pending actions are excepted from its operation, or where to
apply it would impair vested rights, petitioners failed to show that
application of A.O. No. 17 to their case would cause injustice to
them. Indeed, in this case, the Office of the Ombudsman
afforded petitioners every opportunity to defend themselves by
allowing them to submit counter-affidavits, position papers,
memoranda and other evidence in their defense. Since
petitioners have been afforded the right to be heard and to
defend themselves, they cannot rightfully complain that they
were denied due process of law. Well to remember, due
process, as a constitutional precept, does not always and in all
situations require a trial-type proceeding. It is satisfied when a
person is notified of the charge against him and given an
opportunity to explain or defend himself. In administrative
proceedings, the filing of charges and giving reasonable
opportunity for the person so charged to answer the accusations
against him constitute the minimum requirements of due
process. More often, this opportunity is conferred through
written pleadings that the parties submit to present their charges
and defenses.34 But as long as a party is given the opportunity
to defend his or her interests in due course, said party is not
denied due process.35
Neither is there merit to Cabalit’s assertion that she should have
been investigated under the "old rules of procedure" of the Office
of the Ombudsman, and not under the "new rules."
In Marohomsalic v. Cole,36 we clarified that the Office of the
Ombudsman has only one set of rules of procedure and that is
A.O. No. 07, series of 1990, as amended. There have been
various amendments made thereto but it has remained, to date,
the only set of rules of procedure governing cases filed in the
Office of the Ombudsman. Hence, the phrase "as amended" is
correctly appended to A.O. No. 7 every time it is invoked. A.O.
No. 17 is just one example of these amendments.
But did the CA correctly rule that petitioners Cabalit and Apit are
liable for dishonesty while petitioner Olaivar is liable for gross
neglect of duty?
Cabalit argues that the CA erred in affirming the decision of the
Ombudsman finding her liable for dishonesty. She asserts that
it was not established by substantial evidence that the forged
signatures belong to her. Meanwhile, Apit contends that the CA
erred in not considering evidence which proves that the
signatures appearing above his name are falsified. However, we
note that both Cabalit and Apit raise essentially factual issues
which are not proper in petitions filed under Rule 45. Settled
jurisprudence dictates that subject to a few exceptions, only
questions of law may be brought before the Court via a petition
for review on certiorari. In Diokno v. Cacdac,37 the Court held:
x x x [T]he scope of this Court’s judicial review of decisions of
the Court of Appeals is generally confined only to errors of law,
and questions of fact are not entertained. We elucidated on our
fidelity to this rule, and we said:
Thus, only questions of law may be brought by the parties
and passed upon by this Court in the exercise of its power
to review. Also, judicial review by this Court does not
extend to a reevaluation of the sufficiency of the
evidence upon which the proper x x x tribunal has based its
determination. (Emphasis supplied.)
It is aphoristic that a re-examination of factual findings cannot
be done through a petition for review on certiorari under Rule 45
of the Rules of Court because this Court is not a trier of facts; it
reviews only questions of law. The Supreme Court is not duty-
bound to analyze and weigh again the evidence considered in
the proceedings below. 38
Here, the CA affirmed the findings of fact of the Office of the
Ombudsman-Visayas which are supported by substantial
evidence such as affidavits of witnesses and copies of the
tampered official receipts.39 The CA found that a perusal of the
questioned receipts would easily reveal the discrepancies
between the date, name and vehicle in the Owner's or Plate
Release copies and the File, Auditor, and Regional Office
copies. It upheld the factual findings of the Ombudsman that
petitioners Cabalit and Apit tampered with the duplicates of the
official receipts to make it appear that they collected a lesser
amount. Their participation was found to have been
indispensable as the irregularities could not have been
committed without their participation. They also concealed the
misappropriation of public funds by falsifying the receipts.
Now, superior courts are not triers of facts. When the findings of
fact of the Ombudsman are supported by substantial evidence,
it should be considered as conclusive.40 This Court recognizes
the expertise and independence of the Ombudsman and will
avoid interfering with its findings absent a finding of grave abuse
of discretion.41 Hence, being supported by substantial evidence,
we find no reason to disturb the factual findings of the
Ombudsman which are affirmed by the CA.
As for Olaivar, he insists that the CA erred in holding him
administratively liable for gross negligence when he relied to a
reasonable extent and in good faith on the actions of his
subordinates in the preparation of the applications for
registration. He questions the appellate court’s finding that he
failed to exercise the required diligence in the performance of
his duties.1avvphi1
While as stated above, the general rule is that factual findings of
the CA are not reviewable by this Court, we find that Olaivar’s
case falls in one of the recognized exceptions laid down
in jurisprudence since the CA’s findings regarding his liability are
premised on the supposed absence of evidence but
contradicted by the evidence on record.42
The Office of the Ombudsman-Visayas found Olaivar
administratively liable for dishonesty while the CA ruled that he
may not be held liable for dishonesty supposedly for lack of
sufficient evidence. The CA ruled that there was no substantial
evidence to show that Olaivar participated in the scheme, but
the tampering of the official receipts could have been avoided
had he exercised the required diligence in the performance of
his duties as officer-in-charge of the Jagna District Office. Thus,
the CA found him liable only for gross neglect of duty. This,
however, is clear error on the part of the CA.
For one, there is clear evidence that Olaivar was involved in the
anomalies. Witness Joselito Taladua categorically declared in
his affidavit43 that he personally paid Olaivar the sum of ₱2,675
for the renewal of registration of a jeep for which he was issued
Official Receipt No. 47699853. Much to his dismay, Taladua
later found out that his payment was not reflected correctly in
the Report of Collections, and that the vehicle was deemed
unregistered for the year 2000.
More, Cabalit pointed to Olaivar as the person behind the
anomaly in the LTO-Jagna District Office. She narrated in her
position paper that on several times, Olaivar directly
accommodated some registrants and assumed the functions of
computer evaluator, typist and cashier, and computed the fees,
received payment and prepared the official receipts for those
transactions. She also revealed that Olaivar would ask her for
unused official receipts and would later return the duplicate
copies to her with the cash collections. Later, he would verify the
Report of Collections as correct.44
Likewise, Motor Vehicle Inspector Engr. Lowell A. Dano
confirmed that in several instances, he witnessed Olaivar type
the data himself in the official receipts even if they have a typist
in the office to do the job. Engr. Dano added that after typing,
Olaivar personally brought the accomplished official receipts for
him (Engr. Dano) to sign.45
Moreover, Jacinto Jalop, the records officer of the LTO in Jagna,
Bohol, illustrated how the official receipts were tampered. He
disclosed that the correct charges were typed in the Owner’s
copy and the Plate Release copy of the official receipts, but a
much lower charge and an incorrect address were indicated in
the other copies. He asserted that Olaivar was responsible for
tampering the official receipts.46
Neglect of duty implies only the failure to give proper attention
to a task expected of an employee arising from either
carelessness or indifference.47 However, the facts of this case
show more than a failure to mind one’s task. Rather, they
manifest that Olaivar committed acts of dishonesty, which is
defined as the concealment or distortion of truth in a matter of
fact relevant to one’s office or connected with the performance
of his duty. It implies a disposition to lie, cheat, deceive, or
defraud; untrustworthiness; lack of integrity; lack of honesty,
probity, or integrity in principle.48Hence, the CA should have
found Olaivar liable for dishonesty.
But be that as it may, still, the CA correctly imposed the proper
penalty upon Olaivar. Under Section 52, Rule IV of the Uniform
Rules on Administrative Cases in the Civil Service, dishonesty,
like gross neglect of duty, is classified as a grave offense
punishable by dismissal even if committed for the first
time.49 Under Section 58,50 such penalty likewise carries with it
the accessory penalties of cancellation of civil service eligibility,
forfeiture of retirement benefits and disqualification from re-
employment in the government service.
One final note. Cabalit contends that pursuant to the obiter in
Tapiador v. Office of the Ombudsman,51 the Office of the
Ombudsman can only recommend administrative sanctions and
not directly impose them. However, in Office of the Ombudsman
v. Masing,52 this Court has already settled the issue when we
ruled that the power of the Ombudsman to determine and
impose administrative liability is not merely recommendatory but
actually mandatory. We held,
We reiterated this ruling in Office of the Ombudsman v. Laja,
where we emphasized that "the Ombudsman’s order to remove,
suspend, demote, fine, censure, or prosecute an officer or
employee is not merely advisory or recommendatory but is
actually mandatory." Implementation of the order imposing the
penalty is, however, to be coursed through the proper officer.
Recently, in Office of the Ombudsman v. Court of Appeals, we
also held—
‘While Section 15(3) of RA 6770 states that the Ombudsman
has the power to "recommend x x x removal, suspension,
demotion x x x" of government officials and employees, the
same Section 15(3) also states that the Ombudsman in the
alternative may "enforce its disciplinary authority as
provided in Section 21" of RA 6770.’ (emphasis supplied.)53
Subsequently, in Ledesma v. Court of Appeals,54 and Office of
the Ombudsman v. Court of Appeals,55 the Court upheld the
Ombudsman’s power to impose the penalty of removal,
suspension, demotion, fine, censure, or prosecution of a public
officer or employee found to be at fault in the exercise of its
administrative disciplinary authority. In Office of the
Ombudsman v. Court of Appeals, we held that the exercise of
such power is well founded in the Constitution and R.A. No.
6770, otherwise known as The Ombudsman Act of 1989, thus:
The Court further explained in Ledesma that the mandatory
character of the Ombudsman’s order imposing a sanction
should not be interpreted as usurpation of the authority of the
head of office or any officer concerned. This is because the
power of the Ombudsman to investigate and prosecute any
illegal act or omission of any public official is not an exclusive
authority but a shared or concurrent authority in respect of the
offense charged. By stating therefore that the Ombudsman
"recommends" the action to be taken against an erring officer or
employee, the provisions in the Constitution and in Republic Act
No. 6770 intended that the implementation of the order be
coursed through the proper officer.
Consequently in Ledesma, the Court affirmed the appellate
court’s decision which had, in turn, affirmed an order of the
Office of the Ombudsman imposing the penalty of suspension
on the erring public official.56
The duty and privilege of the Ombudsman to act as protector of
the people against the illegal and unjust acts of those who are
in the public service emanate from no less than the 1987
Constitution. Section 12 of Article XI thereof states:
Section 12. The Ombudsman and his Deputies, as protectors of
the people, shall act promptly on complaints filed in any form or
manner against public officials or employees of the Government,
or any subdivision, agency or instrumentality thereof, including
government-owned or controlled corporations, and shall, in
appropriate cases, notify the complainants of the action taken
and the result thereof.
In addition, Section 15 (3) of R.A. No. 6770, provides:
SEC. 15. Powers, Functions and Duties. – The Office of the
Ombudsman shall have the following powers, functions and
duties:
which entails the authority to, inter alia, receive complaints,
conduct investigations, hold hearings in accordance with its
rules of procedure, summon witnesses and require the
production of documents, place under preventive suspension
public officers and employees pending an investigation,
determine the appropriate penalty imposable on erring public
officers or employees as warranted by the evidence, and,
necessarily, impose the said penalty.58 Thus, it is settled that the
Office of the Ombudsman can directly impose administrative
sanctions.

xxxx
(3) Direct the officer concerned to take appropriate action
against a public officer or employee at fault or who neglects to
perform an act or discharge a duty required by law, and
recommend his removal, suspension, demotion, fine, censure,
or prosecution, and ensure compliance therewith; or enforce its
disciplinary authority as provided in Section 21 of this
Act: Provided, That the refusal by any officer without just cause
to comply with an order of the Ombudsman to remove, suspend,
demote, fine, censure or prosecute an officer or employee who
is at fault or who neglects to perform an act or discharge a duty
required by law shall be a ground for disciplinary action against
said officer.
xxxx
Section 19 of R.A. No. 6770 grants to the Ombudsman the
authority to act on all administrative complaints:
SEC. 19. Administrative Complaints. – The Ombudsman shall
act on all complaints relating, but not limited to acts or omissions
which:
We find it worthy to state at this point that public service requires
integrity and discipline.1avvphi1 For this reason, public servants
must exhibit at all times the highest sense of honesty and
dedication to duty. By the very nature of their duties and
responsibilities, public officers and employees must faithfully
adhere to hold sacred and render inviolate the constitutional
principle that a public office is a public trust; and must at all times
be accountable to the people, serve them with utmost
responsibility, integrity, loyalty and efficiency.59
WHEREFORE, the petitions for review on certiorari
are DENIED. The assailed Decision dated January 18, 2006
and Resolution dated September 21, 2007 of the Court of
Appeals in CA-G.R. SP. Nos. 86256, 86394 and 00047
are AFFIRMED with MODIFICATION. Petitioner Leonardo G.
Olaivar is held administratively liable for DISHONESTY and
meted the penalty of dismissal from the service as well as the
accessory penalties inherent to said penalty.
With costs against petitioners.
SO ORDERED.

(1) Are contrary to law or regulation;

(2) Are unreasonable, unfair, oppressive or

discriminatory;

(3) Are inconsistent with the general course of an

agency’s functions, though in accordance with law;

(4) Proceed from a mistake of law or an arbitrary

ascertainment of facts;

(5) Are in the exercise of discretionary powers but for

an improper purpose; or

(6) Are otherwise irregular, immoral or devoid of

justification.

In the exercise of his duties, the Ombudsman is given full

administrative disciplinary authority. His power is not limited
merely to receiving, processing complaints, or recommending
penalties. He is to conduct investigations, hold hearings,
summon witnesses and require production of evidence and
place respondents under preventive suspension. This includes
the power to impose the penalty of removal, suspension,
demotion, fine, or censure of a public officer or employee. 57

The provisions in R.A. No. 6770 taken together reveal the

manifest intent of the lawmakers to bestow on the Office of the
Ombudsman full administrative disciplinary authority. These
provisions cover the entire gamut of administrative adjudication

FE A. YLAYA, Complainant,
vs.
ATTY. GLENN CARLOS GACOTT, Respondent.
DECISION
BRION, J.:
For the Court's consideration is the disbarment complaint1 tiled
by Fe A. Ylaya (complainant) against Atty. Glenn Carlos Gacott
(respondent) who allegedly deceived the complainant and her
late husband, Laurentino L. Ylaya, into signing a "preparatory"
Deed of Sale that the respondent converted into a Deed of
Absolute Sale in favor of his relatives.
After the submission of the respondent's comment to the
complaint, the Court referred the complaint to the Commission
on Bar Discipline ofthe Integrated Bar of the Philippines (IBP) for
investigation, evaluation and recommendation.
The complainant alleged that she and her late husband are the
registered owners of two (2) parcels of land covered by Transfer
Certificate of Title ( TCT) Nos. 162632 and 162633 located at
Barangay Sta. Lourdes, Puerto Princesa City. Prior to the
acquisition of these properties, TCT No. 162632 (property) was
already the subject of expropriation proceedings filed by the City
Government of Puerto Princesa (City Government) on May 23,
1996 against its former registered owner, Cirilo Arellano. The
expropriation case was filed with the Regional Trial Court (RTC)
of Palawan and Puerto Princesa, Branch 95, and was docketed
as Civil Case No. 2902. The RTC already fixed the price and
issued an order for the City Government to deposit
₱6,000,000.00 as just compensation for the property.2
The respondent briefly represented the complainant and her late
husband in the expropriation case as intervenors for being the
new registered owners of the property. The complainant alleged
that the respondent convinced them to sign a "preparatory deed
of sale" for the sale of the property, but he left blank the space
for the name of the buyer and for the amount of consideration.
The respondent further alleged that the deed would be used in
the sale to the City Government when the RTC issues the order
to transfer the titles.3 The respondent then fraudulently – without
their knowledge and consent, and contrary to their
understanding – converted the "preparatory deed of sale" into a
Deed of Absolute Sale dated June 4, 2001, 4 selling the subject
property to Reynold So and Sylvia Carlos So for ₱200,000.00.5
The complainant denied that she and Laurentino were paid the
₱200,000.00 purchase price or that they would sell the property
"for such a measly sum" when they stood to get at least
₱6,000,000.00 as just compensation.6
The complainant also claimed that the respondent notarized the
Deed of Absolute Sale dated June 4, 2001 even though Reynold
and Sylvia (his mother’s sister) are his uncle and his aunt,
respectively.7
The respondent denied all the allegations in the complaint.8
The respondent argued that the complainant’s greed to get the
just Compensation9 caused her to file this "baseless, unfounded
and malicious" disbarment case.10 He claimed that the sale was
their voluntary transaction and that he "simply ratified the
document."11 He also claimed that Reynold and Laurentino had
originally jointly purchased the properties from Cirilo Arellano on
July 10, 2000; that they were co-owners for some time; and that
Laurentino subsequently sold his share to Reynold under a
Deed of Absolute Sale dated June 4, 2001.12
The respondent specifically denied asking the complainant and
her late husband to execute any "preparatory deed of sale" in
favor of the City Government.13 He also denied that the Deed of
Absolute Sale contained blanks when they signed it. 14 That he
filed for the spouses Ylaya and Reynold an opposition to the just
compensation the RTC fixed proved that there was no
agreement to use the document for the expropriation case.15 He
also argued that it was clear from the document that the
intended buyer was a natural person, not a juridical person,
because there were spaces for the buyer’s legal age, marital
status, and citizenship,16 and he was even constrained to file a
subsequent Motion to Intervene on behalf of Reynold because
the complainant "maliciously retained" the TCTs to the subject
properties after borrowing them from his office. 17 Lastly, he
denied violating the Rules on Notarial Practice.18
On September 4, 2006, the respondent filed a Motion to Resolve
or Decide the Case dated August 24, 2006 praying for the early
resolution of the complaint.19
On December 5, 2006, the complainant filed an Ex Parte Motion
to Withdraw the Verified Complaint and To Dismiss the Case
dated November 14, 2006.20
On February 28, 2008, the complainant executed an
Affidavit21 affirming and confirming the existence, genuineness
and due execution of the Deed of Absolute Sale notarized on
March 6, 2000;22 the Memorandum of Agreement (MOA) dated
April 19, 2000;23 and the Deed of Absolute Sale notarized in
2001.24 The respondent submitted this Affidavit to the IBP as an
attachment to his Motion for Reconsideration of April 21, 2008.25
The IBP’s Findings
In her Report and Recommendation dated November 19, 2007,
IBP Commissioner Anna Caridad Sazon-Dupaya found the
respondent administratively liable for violating Canon 1, Rule
1.01 (A lawyer shall not engage in unlawful, dishonest, immoral
or deceitful conduct) and Canon 16 ("A lawyer shall hold in trust
all moneys and properties of his client that may come into his
possession) of the Code of Professional Responsibility, and
Section 3(c), Rule IV of A.M. No. 02-8-13-SC (2004 Rules on
Notarial Practice).26 She recommended his suspension from the
practice of law for a period of six (6) months.27
In its Resolution No. XVIII-2007-30228 dated December 14,
2007, the IBP Board of Governors adopted the IBP
Commissioner’s finding, but increased the penalty imposed to
two (2) years suspension and a warning:
RESOLVED to ADOPT and APPROVE, as it is hereby
unanimously ADOPTED and APPROVED, with modification, the
Report and Recommendation of the Investigating Commissioner
[in] the above-entitled case, herein made part of this Resolution
as Annex "A"; and, finding the recommendation fully supported
by the evidence on record and the applicable laws and rules,
and considering respondent’s violations of Canon 1, [Rule] 1.01
and Canon 16 of the Code of Professional Responsibility and
Rule IV, Sec. 39(c) of A.M. No. 02-8-13-SC (2004 Rules on
Notarial Practice), Atty. Glenn Carlos Gacott is hereby
SUSPENDED from practice of law for two (2) years with a
Warning that commission of a similar offense will be dealt with
more severely. [emphases supplied]
On May 8, 2008, the respondent filed a Motion for
Reconsideration dated April 21, 2008, attaching, among others,
a copy of the complainant’s Affidavit dated February 27, 2008,
admitting the existence, genuineness and due execution of the
Deed of Absolute Sale between Cirilo and Laurentino; the MOA
between Laurentino and Reynold; the Deed of Absolute Sale
between Laurentino and Reynold; and the Compromise
Agreement between Reynold and the complainant dated
November 14, 2006 for the expropriation case.29
On September 4, 2008, the respondent filed a Manifestation with
the Supreme Court, requesting that the IBP be directed to
resolve his Motion for Reconsideration.30
By Resolution No. XIX-2010-545 dated October 8, 2010,31 the
IBP Board of Governors denied the respondent’s Motion for
Reconsideration for failing to raise any new substantial matter
or any cogent reason to warrant a reversal or even a
modification of its Resolution No. XVIII-2007-302.32
On March 14, 2012, the respondent filed a Petition for Review
(on appeal) assailing the IBP’s findings, as follows: 33
a) In conveniently concluding that the Deed of Absolute
Sale was pre-signed and fraudulently notarized without
requiring Fe Ylaya to adduce evidence in a formal
hearing thus, violated the respondent’s right to due
process as he was not able to cross-examine her. This
is not to mention that the complainant failed to offer
corroborative proof to prove her bare allegations;
b) In sweepingly and arbitrarily disregarded/skirted
(sic) the public documents (MOA and 2 other DOAS)
duly executed by the parties therein and notarized by
the respondent;
c) In totally ignoring the complainant’s Affidavit
admitting the genuineness and due execution of the
Deed of Absolute Sale in issue;
d) In arbitrarily concluding the absence of co-
ownership by Reynold So and Fe Ylaya of the subject
lots despite the existence of a notarized MOA clearly
showing the co-ownership of Ylaya and So; and
e) In finding the respondent/appellant’s act of
notarizing the DOAS as contrary to the notarial rules.
The Issues
From the assigned errors, the complainant poses the following
issues:
(1) whether the IBP violated the respondent’s right to
due process; and
(2) whether the evidence presented supports a finding
that the respondent is administratively liable for
violating Canon 1, Rule 1.01 and Canon 16 of the Code
of Professional Responsibility, and Section 3(c), Rule
IV of A.M. No. 02-8-13-SC.
The Court’s Ruling
We set aside the findings and recommendations of the IBP
Commissioner and those of the IBP Board of Governors finding
the respondent liable for violating Canon 1, Rules 1.01 and
Section 3(c), Rule IV of A.M. No. 02-8-13-SC.34
We however hold the respondent liable for violating Canon 16
of the Code of Professional Responsibility for being remiss in his
obligation to hold in trust his client’s properties. We likewise find
him liable for violation of (1) Canon 15, Rule 15.03 for
representing conflicting interests without the written consent of
the represented parties, thus, violating the rule on conflict of
interests; and (2) Canon 18, Rule 18.03 for neglecting a legal
matter entrusted to him.
a. Due process violation
The most basic tenet of due process is the right to be heard.
Denial of due process means the total lack of opportunity to be
heard or to have one’s day in court. As a rule, no denial of due
process takes place where a party has been given an
opportunity to be heard and to present his case; 35 what is
prohibited is the absolute lack of opportunity to be heard.
The respondent claims that the IBP violated his right to due
process because he was not given the "amplest opportunity to
defend himself, to cross examine the witness complainant, to
object to the admissibility of documents or present controverting
evidence"36 when the IBP rendered its conclusion without
requiring the complainant to adduce evidence in a formal
hearing and despite the absence of corroborative proof. He
insists that these defects rendered the complainant’s allegations
as hearsay, and the IBP’s report, recommendation or resolution
null and void.
Although the respondent failed to have a face-to-face
confrontation with the complainant when she failed to appear at
the required mandatory conference on October 6, 2005, 37 the
records reveal that the respondent fully participated during the
entire proceedings and submitted numerous pleadings,
including evidence, before the IBP. He was even allowed to file
a motion for reconsideration supported by his submitted
evidence, which motion the IBP considered and ruled upon in its
Resolution No. XIX-2010-545 dated October 8, 2010.38
In Alliance of Democratic Free Labor Organization v.
Laguesma,39 we held that due process, as applied to
administrative proceedings, is the opportunity to explain one’s
side. In Samalio v. Court of Appeals,40 due process in an
administrative context does not require trial-type proceedings
similar to those in courts of justice. Where the opportunity to be
heard, either through oral arguments or through pleadings, is
accorded, no denial of procedural due process takes place. The
requirements of due process are satisfied where the parties are
afforded a fair and reasonable opportunity to explain their side
of the controversy at hand.
Similarly, in A.Z. Arnaiz Realty, Inc. v. Office of the
President,41 we held that "due process, as a constitutional
precept, does not always, and in all situations, require a trial-
type proceeding. Litigants may be heard through pleadings,
written explanations, position papers, memoranda or oral
arguments. The standard of due process that must be met in
administrative tribunals allows a certain degree of latitude[,
provided that] fairness is not ignored. It is, therefore, not legally
objectionable for being violative of due process, for an
administrative agency to resolve a case based solely on position
papers, affidavits or documentary evidence submitted by the
parties."42
In this case, the respondent’s failure to cross-examine the
complainant is not a sufficient ground to support the claim that
he had not been afforded due process. The respondent was
heard through his pleadings, his submission of alleged
controverting evidence, and his oral testimony during the
October 6, 2005 mandatory conference. These pleadings,
evidence and testimony were received and considered by the
IBP Commissioner when she arrived at her findings and
recommendation, and were the bases for the IBP Board’s
Resolution.
Moreover, "any seeming defect in the observance of due
process is cured by the filing of a motion for reconsideration. A
denia of due process cannot be successfully invoked by a party
who has had the opportunity to be heard on his motion for
reconsideration. Undoubtedly in this case, the requirement of
the law was afforded to the respondent."43
We also note that the respondent, on a Motion to Resolve or
Decide the Case dated August 24, 2006, submitted his case to
the IBP for its resolution without any further hearings. The
motion, filed almost one year after the mandatory conference on
October 6, 2005, significantly did not contain any statement
regarding a denial of due process. In effect, the respondent
himself waived his cross-examination of the complainant when
he asked the IBP Board of Governors to resolve the case based
on the pleadings and the evidence on record. To quote his own
submission:
1. On June 30, 2004, a complaint was filed in this case;
2. On October 19, 2004, the respondent filed his
comment with all its attachments denying all the
allegations in the complaint;
3. On June 23, 2005, the respondent filed his position
paper. On April 28, 2006, the respondent also filed his
supplemental position paper. By contrast, up to this
date, the complainant/petitioner has not filed her
verified position paper thus, waived her right to file the
same;
4. There being no other genuine issues to be heard in
this case as all the defenses and counter-arguments
are supported by documentary evidence, it is most
respectfully prayed that the instant case be resolved on
its merits or be ordered dismissed for lack of merit
without further hearing;
5. Further, considering that there is an on-going case
in Branch 52 of the Regional Trial Court of Palawan in
Civil Case No. 2902 for Expropriation involving the
same property, and such fact was deliberately omitted
by the complainant in her Verified Complaint as shown
in the certification of non-forum shopping, the outright
dismissal of this case is warranted, hence, this motion;
and
6. This is meant to expedite the termination of this
case.44 (underscore ours; italics supplied)
Finally, we note Section 11, Rule 139-B of the Rules of Court
which provides that:
No defect in a complaint, notice, answer, or in the proceeding or
the Investigator’s Report shall be considered as substantial
unless the Board of Governors, upon considering the whole
record, finds that such defect has resulted or may result in a
miscarriage of justice, in which event the
Board shall take such remedial action as the circumstances may
warrant, including invalidation of the entire proceedings.
In this case, the IBP Commissioner’s findings were twice
reviewed by the IBP Board of Governors – the first review
resulted in Resolution No. XVIII-2007-30245 dated December
14, 2007, affirming the IBP Commissioner’s findings, but
modifying the penalty; the second review resulted in Resolution
No. XIX-2010-545 dated October 8, 2010,46denying the
respondent’s motion for reconsideration. In both instances, the
IBP Board of Governors found no defect or miscarriage of justice
warranting a remedial action or the invalidation of the
proceedings.
We emphasize that disciplinary proceedings against lawyers are
sui generis in that they are neither purely civil nor purely criminal;
they involve investigations by the Court into the conduct of one
of its officers,47 not the trial of an action or a suit.
Disciplinary proceedings against lawyers are sui generis.
Neither purely civil nor purely criminal, they do not involve a trial
of an action or a suit, but is rather an investigation by the Court
into the conduct of one of its officers. Not being intended to inflict
punishment, it is in no sense a criminal prosecution. Accordingly,
there is neither a plaintiff nor a prosecutor therein. It may be
initiated by the Court motu proprio. Public interest is its primary
objective, and the real question for determination is whether or
not the attorney is still a fit person to be allowed the privileges
as such. Hence, in the exercise of its disciplinary powers, the
Court merely calls upon a member of the Bar to account for his
actuations as an officer of the Court with the end in view of
preserving the purity of the legal profession and the proper and
honest administration of justice by purging the profession of
members who by their misconduct have proved themselves no
longer worthy to be entrusted with the duties and responsibilities
pertaining to the office of an attorney. In such posture, there can
thus be no occasion to speak of a complainant or a prosecutor.
[emphases deleted]
The complainant in disbarment cases is not a direct party to the
case but a witness who brought the matter to the attention of the
Court.48 Flowing from its sui generis character, it is not
mandatory to have a formal hearing in which the complainant
must adduce evidence.
From all these, we find it clear that the complainant is not
indispensable to the disciplinary proceedings and her failure to
appear for cross-examination or to provide corroborative
evidence of her allegations is of no merit. What is important is
whether, upon due investigation, the IBP
Board of Governors finds sufficient evidence of the respondent’s
misconduct to warrant the exercise of its disciplinary powers.
b. Merits of the Complaint
"In administrative cases against lawyers, the quantum of proof
required is preponderance of evidence which the complainant
has the burden to discharge."49 Preponderance of evidence
means that the evidence adduced by one side is, as a whole,
superior to or has a greater weight than that of the other. It
means evidence which is more convincing to the court as worthy
of belief compared to the presented contrary evidence.
Under Section 1, Rule 133 of the Rules of Court, in determining
whether preponderance of evidence exists, the court may
consider the following: (a) all the facts and circumstances of the
case; (b) the witnesses’ manner of testifying, their intelligence,
their means and opportunity of knowing the facts to which they
are testifying, the nature of the facts to which they testify, and
the probability or improbability of their testimony; (c) the
witnesses’ interest or want of interest, and also their personal
credibility so far as the same may ultimately appear in the trial;
and (d) the number of witnesses, although it does not mean that
preponderance is necessarily with the greater number. 50 By law,
a lawyer enjoys the legal presumption that he is innocent of the
charges against him until the contrary is proven, and that as an
officer of the court, he is presumed to have performed his duties
in accordance with his oath.51
The IBP Commissioner set out her findings as follows:
The undersigned, after a careful evaluation of the evidence
presented by both parties, finds that the charges of the
complainant against the respondent are worthy of belief based
on the following:
First, the allegation of the respondent that Reynold So was
actually co-owner of spouses Ylanas (sic) in the properties
subject of the Deed of Sale between Felix Arellano and Spouses
Ylanas (sic) is hard to believe despite the presentation of the
Memorandum of Agreement.
It is elementary in Rules of Evidence that when the contents of
a written document are put in issue, the best evidence would be
the document itself. In the Deed of Sale between Felix Arellano
and Spouses Ylanas (sic), the buyer of the subject properties is
only Laurentino L. Ylaya married to Fe A. Ylaya. The document
does not state that Reynold So was likewise a buyer together
with Laurentino Ylaya, or that the former paid half of the
purchase price.
Also, it is hard for this Commission to believe that Reynold So,
assisted by a lawyer at that and who allegedly paid half of the
purchase price, would not insist for the inclusion of his name in
the Deed of Sale as well as the Transfer Certificate of Title
subsequently issued.
The Memorandum of Agreement between the spouses Ylaya
and Reynold So produced by the respondent cannot overturn
the belief of this Commission considering that the Memorandum
of Agreement was executed more than a month AFTER the
Deed of Sale between Felix Arellano and the Ylayas was
notarized. This is not to mention the fact that the complainant
denied ever having executed the Memorandum of Agreement.
A close examination of the signatories in the said Memorandum
of Agreement would reveal that indeed, the alleged signatures
of the complainant and her husband are not the same with their
signatures in other documents.
Assuming, for the sake of argument, that the Memorandum of
Agreement is valid, thereby making Laurentino Ylaya and co-
owner Reynold So co-owners of the subject properties (Please
see Annex "B" of respondent’s Comment), this Commission
finds it hard to believe Laurentino Ylaya would sell it to Reynold
So for ₱200,000 x x x when his minimum expenses for the
purchase thereof is already ₱225,000.00 and he was expecting
to receive ₱7,000,000.00, more or less. That would mean that if
Reynold So and the complainant were co-owners, the
₱7,000,000.00 would then be equally divided among them at
₱3,500,000.00 each, far above the ₱200,000.00 selling price
reflected in the pre-signed Deed of Sale.
As to the second issue, this Commission believes that the
respondent committed serious error in notarizing the Deed of
Sale and the Memorandum of Agreement between his uncle
Reynold So and Laurentino Ylaya based on Rule IV, Section 3
(c) of A.M. No. 02-8-13-SC which provides as follows:
"Sec. 3. Disqualifications – a notary public is disqualified from
performing a notarial act if he:
(a) x x x.
(b) x x x.
(c) is a spouse, common-law partner, ancestor,
descendant, or relative by affinity or consanguinity of
the principal within the fourth civil degree."
The defense therefore of the respondent that he did not violate
the aforementioned Rule becausehis uncle Reynold So, the
buyer is not the principal in the Subject Deed of Sale but the
seller Laurentino Ylaya (please see page 3 of the respondent’s
Supplemental Position Paper) is misplaced. Clearly, both the
buyer and the seller in the instant case are considered principals
in the contract entered into.
Furthermore, if we are to consider the argument of the
respondent that his uncle was not a principal so as to apply the
afore-quoted provision of the Rules, the respondent still violated
the Rules when he notarized the subject Memorandum of
Agreement between Laurentino Ylaya and his uncle Reynold
So. Clearly, both complainant and Reynold So were principal
parties in the said Memorandum of Agreement.52
The respondent argues that the IBP Commissioner’s findings
are contrary to the presented evidence, specifically to the MOA
executed by Laurentino and Reynold acknowledging the
existence of a co-ownership;53 to the complainant’s Ex Parte
Motion to Withdraw the Verified Complaint and To Dismiss the
Case dated November 14, 2006 where she stated that the
parties have entered into a compromise agreement in Civil Case
No. 2902, and that the disbarment complaint arose from a
misunderstanding, miscommunication and improper
appreciation of facts;54to her Affidavit dated February 27,
200855 affirming and confirming the existence, genuineness and
due execution of the Deed of Absolute Sale notarized on March
6, 2000;56 and to the Deed of Absolute Sale notarized in 2001.57
In all, the respondent claims that these cited pieces of evidence
prove that this administrative complaint against him is
fabricated, false and untrue. He also points to Atty. Robert
Peneyra, the complainant’s counsel in this administrative case,
as the hand behind the complaint.58 According to the
respondent, Atty. Peneyra harbors ill-will against him and his
family after his father filed several administrative cases against
Atty. Peneyra, one of which resulted in the imposition of a
warning and a reprimand on Atty. Peneyra.59
Reynold, in his Affidavit dated October 11, 2004, confirms that
there was a co-ownership between him and Laurentino; that
Laurentino decided to sell his half of the property to Reynold
because he (Laurentino) had been sickly and in dire need of
money to pay for his medical bills; that Laurentino agreed to the
price of ₱200,000.00 as this was almost the same value of his
investment when he and Reynold jointly acquired the property;
and that the sale to Reynold was with the agreement and
consent of the complainant who voluntarily signed the Deed of
Sale.60
After examining the whole record of the case, we agree with the
respondent and find the evidence insufficient to prove the
charge that he violated Canon 1, Rule 1.01 of the Code of
Professional Responsibility and Section 3(c), Rule IV of A.M. No.
02-8-13-SC. Specifically, (1) the evidence against the
respondent fails to show the alleged fraudulent and deceitful
acts he has taken to mislead the complainant and her husband
into signing a "preparatory deed of sale" and the conversion into
a Deed of Absolute Sale dated June 4, 2001 in favor of Reynold;
and (2) no prohibition exists against the notarization of a
document in which any of the parties interested is the notary’s
relative within the 4th civil degree, by affinity or consanguinity,
at that time the respondent notarized the documents.
In her Report and Recommendation,61 the IBP Commissioner
concluded that the respondent is liable for deceit and fraud
because he failed to prove the existence of a co-ownership
between Laurentino and Reynold; in her opinion, the signatures
of the complainant and of her husband on the MOA "are not the
same with their signatures in other documents."62
We do not agree with this finding. While the facts of this case
may raise some questions regarding the respondent’s legal
practice, we nevertheless found nothing constituting clear
evidence of the respondent’s specific acts of fraud and deceit.
His failure to prove the existence of a co-ownership does not
lead us to the conclusion that the MOA and the Deed of Absolute
Sale dated June 4, 2001 are spurious and that the respondent
was responsible for creating these spurious documents. We are
further persuaded, after noting that in disregarding the MOA, the
IBP Commissioner failed to specify what differences she
observed in the spouses Ylaya’s signatures in the MOA and
what documents were used in comparison.
Apart from her allegations, the complainant’s pieces of evidence
consist of TCT Nos. 162632 and 162633;63 her Motion for Leave
to Intervene in Civil Case No. 2902 dated May 17, 2000; 64 the
RTC order in Civil Case No. 2902 dated November 6, 2000 fixing
the price of just compensation;65 the Deed of Absolute Sale
dated June 4, 2001;66the spouses Ylaya’s Verified Manifestation
dated September 2, 2002, filed with the RTC in Civil Case No.
2902, assailing the Motion to Deposit Just Compensation filed
by the respondent on behalf of Reynold and manifesting the sale
between Laurentino and Reynold;67 the Provincial Prosecutor’s
Subpoena to the complainant in connection with the
respondent’s complaint for libel;68 the respondent’s complaint
for libel against the complainant dated August 27, 2003; 69 the
complainant’s Counter Affidavit dated March 26, 2004 against
the charge of libel;70 and the respondent’s letter to the Provincial
Attorney of Palawan dated April 5, 2004, requesting for "official
information regarding the actual attendance of Atty. ROBERT Y.
PENEYRA" at an MCLE seminar.71
We do not see these documentary pieces of evidence as proof
of specific acts constituting deceit or fraud on the respondent’s
part. The documents by themselves are neutral and, at the most,
show the breakdown of the attorney-client relationship between
the respondent and the complainant. It is one thing to allege
deceit and misconduct, and it is another to demonstrate by
evidence the specific acts constituting these allegations. 72
We reiterate that in disbarment proceedings, the burden of proof
is on the complainant; the Court exercises its disciplinary power
only if the complainant establishes her case by clear,
convincing, and satisfactory evidence.73Preponderance of
evidence means that the evidence adduced by one side is, as a
whole, superior to or has a greater weight than that of the other
party. When the pieces of evidence of the parties are evenly
balanced or when doubt exists on the preponderance of
evidence, the equipoise rule dictates that the decision be
against the party carrying the burden of proof.74
In this case, we find that the complainant’s evidence and the
records of the case do not show the respondent’s deliberate
fraudulent and deceitful acts. In the absence of such proof, the
complaint for fraud and deceit under Canon 1, Rule 1.01 of the
Code of Professional Responsibility must perforce be
dismissed.
We note that the respondent has not squarely addressed the
issue of his relationship with Reynold, whom the complainant
alleges to be the respondent’s uncle because Reynold is
married to the respondent’s maternal aunt.75However, this is of
no moment as the respondent cannot be held liable for violating
Section 3(c), Rule IV of A.M. No. 02-8-13-SC because the Deed
of Absolute Sale dated June 4, 200176 and the MOA dated April
19, 200077 were notarized by the respondent prior to the
effectivity of A.M. No. 02-8-13-SC on July 6, 2004. The notarial
law in force in the years 2000 - 2001 was Chapter 11 of Act No.
2711 (the Revised Administrative Code of 1917) which did not
contain the present prohibition against notarizing documents
where the parties are related to the notary public within the 4th
civil degree, by affinity or consanguinity. Thus, we must likewise
dismiss the charge for violation of A.M. No. 02-8-13-SC.
c. Liability under Canons 15, 16 and 18 We find the respondent
liable under Canon 15, Rule 15.03 for representing conflicting
interests without the written consent of all concerned,
particularly the complainant; under Canon 16 for being remiss in
his obligation to hold in trust his client’s properties; and under
Canon 18, Rule 18.03 for neglecting a legal matter entrusted to
him.
Canon 15, Rule 15.03 states:
A lawyer shall not represent conflicting interests except by
written consent of all concerned given after a full disclosure of
the facts. [emphasis ours]
The relationship between a lawyer and his client should ideally
be imbued with the highest level of trust and confidence.
Necessity and public interest require that this be so. Part of the
lawyer’s duty to his client is to avoid representing conflicting
interests. He is duty bound to decline professional employment,
no matter how attractive the fee offered may be, if its acceptance
involves a violation of the proscription against conflict of interest,
or any of the rules of professional conduct. Thus, a lawyer may
not accept a retainer from a defendant after he has given
professional advice to the plaintiff concerning his claim; nor can
he accept employment from another in a matter adversely
affecting any interest of his former client. It is his duty to decline
employment in any of these and similar circumstances in view
of the rule prohibiting representation of conflicting interests. 78
The proscription against representation of conflicting interest
applies "even if the lawyer would not be called upon to contend
for one client that which the lawyer has to oppose for the other,
or that there would be no occasion to use the confidential
information acquired from one to the disadvantage of the other
as the two actions are wholly unrelated."79 The sole exception is
provided in Canon 15, Rule 15.03 of the Code of Professional
Responsibility – if there is a written consent from all the parties
after full disclosure.
Based on the records, we find substantial evidence to hold the
respondent liable for violating Canon 15, Rule 15.03 of the Code
of Professional Responsibility. The facts of this case show that
the respondent retained clients who had close dealings with
each other. The respondent admits to acting as legal counsel for
Cirilo Arellano, the spouses Ylaya and Reynold at one point
during the proceedings in Civil Case No. 2902.80 Subsequently,
he represented only Reynold in the same
proceedings,81 asserting Reynold’s ownership over the property
against all other claims, including that of the spouses Ylaya. 82
We find no record of any written consent from any of the parties
involved and we cannot give the respondent the benefit of the
doubt in this regard. We find it clear from the facts of this case
that the respondent retained Reynold as his client and actively
opposed the interests of his former client, the complainant. He
thus violated Canon 15, Rule 15.03 of the Code of Professional
Responsibility.
We affirm the IBP Commissioner’s finding that the respondent
violated Canon 16. The respondent admits to losing certificates
of land titles that were entrusted to his care by
Reynold.83 According to the respondent, the complainant
"maliciously retained" the TCTs over the properties sold by
Laurentino to Reynold after she borrowed them from his
office.84 Reynold confirms that the TCTs were taken by the
complainant from the respondent’s law office.85
The respondent is reminded that his duty under Canon 16 is to
"hold in trust all moneys and properties of his client that may
come into his possession." Allowing a party to take the original
TCTs of properties owned by another – an act that could result
in damage – should merit a finding of legal malpractice. While
we note that it was his legal staff who allowed the complainant
to borrow the TCTs and it does not appear that the respondent
was aware or present when the complainant borrowed the
TCTs,86 we nevertheless hold the respondent liable, as the
TCTs were entrusted to his care and custody; he failed to
exercise due diligence in caring for his client’s properties that
were in his custody.
We likewise find the respondent liable for violating Canon 18,
Rule 18.03 for neglecting a legal matter entrusted to him.
Despite the respondent’s admission that he represented the
complainant and her late husband in Civil Case No. 2902 and
that he purportedly filed a Motion for Leave to Intervene in their
behalf, the records show that he never filed such a motion for
the spouses Ylaya. The complainant herself states that she and
her late husband were forced to file the Motion for Leave to
Intervene on their own behalf. The records of the case, which
include the Motion for Leave to Intervene filed by the spouses
Ylaya, support this conclusion.87
Canon 18, Rule 18.03 requires that a lawyer "shall not neglect a
legal matter entrusted to him, and his negligence in connection
[therewith] shall render him liable." What amounts to
carelessness or negligence in a lawyer’s discharge of his duty
to his client is incapable of an exact formulation, but the Court
has consistently held that the mere failure of a lawyer to perform
the obligations due his client is per se a violation.88
In Canoy v. Ortiz,89 we held that a lawyer’s failure to file a
position paper was per se a violation of Rule 18.03 of the Code
of Professional Responsibility. Similar to Canoy, the respondent
clearly failed in this case in his duty to his client when, without
any explanation, he failed to file the Motion for Leave to
Intervene on behalf of the spouses Ylaya. Under the
circumstances, we find that there was want of diligence; without
sufficient justification, this is sufficient to hold the respondent
liable for violating Canon 18, Rule 18.03 of the Code of
Professional Responsibility.
d. The Complainant’s Ex Parte Motion to Withdraw the Verified
Complaint and to Dismiss the Case and her Affidavit
We are aware of the complainant’s Ex Parte Motion to Withdraw
the Verified Complaint and To Dismiss the Case dated
November 14, 200690 and her Affidavit91 affirming and
confirming the existence, genuineness and due execution of the
Deed of Absolute Sale notarized on March 6, 2000.92 The
complainant explains that the parties have entered into a
compromise agreement in Civil Case No. 2902, and that this
disbarment complaint was filed because of a "misunderstanding,
miscommunication and improper appreciation of facts";93 she
erroneously accused the respondent of ill motives and bad
intentions, but after being enlightened, she is convinced that he
has no personal or pecuniary interests over the properties in
Civil Case No. 2902; that such misunderstanding was due to her
unfamiliarity with the transactions of her late husband during his
lifetime.94 The complainant now pleads for the respondent’s
forgiveness, stating that he has been her and her late husband’s
lawyer for over a decade and affirms her trust and confidence in
him.95 We take note that under their Compromise Agreement
dated November 14, 2006 for the expropriation case,96 the
complainant and Reynold equally share the just compensation,
which have since increased to ₱10,000,000.00.
While the submitted Ex Parte Motion to Withdraw the Verified
Complaint and to Dismiss the Case and the Affidavit appear to
exonerate the respondent, complete exoneration is not the
necessary legal effect as the submitted motion and affidavit are
immaterial for purposes of the present proceedings. Section 5,
Rule 139-B of the Rules of Court states that, "No investigation
shall be interrupted or terminated by reason of the desistance,
settlement, compromise, restitution, withdrawal of charges, or
failure of the complainant to prosecute the same."
In Angalan v. Delante,97 despite the Affidavit of Desistance, we
disbarred the respondent therein for taking advantage of his
clients and for transferring the title of their property to his name.
In Bautista v. Bernabe,98 we revoked the lawyer’s notarial
commission, disqualified him from reappointment as a notary
public for two years, and suspended him from the practice of law
for one year for notarizing a document without requiring the
affiant to personally appear before him. In this cited case, we
said:
Complainant’s desistance or withdrawal of the complaint does
not exonerate respondent or put an end to the administrative
proceedings. A case of suspension or disbarment may proceed
regardless of interest or lack of interest of the complainant. What Sabitsana, Jr.,104 we suspended the respondent therein from the
matters is whether, on the basis of the facts borne out by the practice of law for one (1) year, for violating Canon 15, Rule
record, the charge of deceit and grossly immoral conduct has 15.03 of the Code of Professional Responsibility. Under the
been proven. This rule is premised on the nature of disciplinary circumstances, we find a one (1) year suspension to be a
proceedings. A proceeding for suspension or disbarment is not sufficient and appropriate sanction against the respondent.
a civil action where the complainant is a plaintiff and the
respondent lawyer is a defendant. Disciplinary proceedings WHEREFORE, premises considered, we set aside Resolution
involve no private interest and afford no redress for private No. XVIII-.2007-302 dated December 14, 2007 and Resolution
grievance. They are undertaken and prosecuted solely for the No. XIX-2010-545 dated October 8, 2010 of the IBP Board of
public welfare. They are undertaken for the purpose of Governors, and find respondent Atty. Glenn Carlos Gacott
preserving courts of justice from the official ministration of GUILTY of violating Rule 15.03 of Canon 15, Canon 16, and
persons unfit to practice in them. The attorney is called to Rule 18.03 of Canon 18 of the Code of Professional
answer to the court for his conduct as an officer of the court. The Responsibility. As a penalty, he is SUSPENDED from the
complainant or the person who called the attention of the court practice of law for one (1) year, with a WARNING that a
to the attorney’s alleged misconduct is in no sense a party, and repetition of the same or similar act will be dealt with more
has generally no interest in the outcome except as all good severely.
citizens may have in the proper administration of justice. 99
SO ORDERED.
In sum, in administrative proceedings against lawyers, the
complainant’s desistance or withdrawal does not terminate the
proceedings. This is particularly true in the present case where
pecuniary consideration has been given to the complainant as a
consideration for her desistance. We note in this regard that she
would receive ₱5,000,000.00, or half of the just compensation
under the Compromise Agreement,100 and thus agreed to
withdraw all charges against the respondent. 101 From this
perspective, we consider the complainant’s desistance to be
suspect; it is not grounded on the fact that the respondent did
not commit any actual misconduct; rather, because of the
consideration, the complainant is now amenable to the position
of the respondent and/or Reynold.

e. Procedural aspect

We remind all parties that resolutions from the IBP Board of

Governors are merely recommendatory and do not attain finality
without a final action from this Court. Section 12, Rule 139-B is
clear on this point that:

Section 12. Review and decision by the Board of Governors. –

xxxx

(b) If the Board, by the vote of a majority of its total membership,

determines that the respondent should be suspended from the
practice of law or disbarred, it shall issue a resolution setting
forth its findings and recommendations which, together with the
whole record of the case, shall forthwith be transmitted to the
Supreme Court for final action.1âwphi1

The Supreme Court exercises exclusive jurisdiction to regulate

the practice of law.102 It exercises such disciplinary functions
through the IBP, but it does not relinquish its duty to form its own
judgment. Disbarment proceedings are exercised under the sole
jurisdiction of the Supreme Court, and the IBP’s
recommendations imposing the penalty of suspension from the
practice of law or disbarment are always subject to this Court’s
review and approval.

The Penalty

In Solidon v. Macalalad,103 we imposed the penalty of

suspension of six ( 6) months from the practice of law on the
respondent therein for his violation of Canon 18, Rule 18.03 and
Canon 16, Rule 16.01 of the Code of Professional
Responsibility. In Josefina M. Aniñon v. Atty. Clemencio

SATURNINO C. OCAMPO, Petitioner,
vs.
HON. EPHREM S. ABANDO, in his capacity as Presiding
Judge of the Regional Trial Court of Hilongos, Leyte,
Branch 18, CESAR M. MERIN, in. his capacity as Approving
Prosecutor and Officer-in-Charge, ROSULO U. VIVERO, in
his capacity as Investigating Prosecutor, RAUL M.
GONZALEZ, in his capacity as Secretary of the Department
of Justice, Respondents.
x-----------------------x
G.R. No. 185587
RANDALL B. ECHANIS, Petitioner,
vs.
HON. THELMA BUNYl-MEDINA, in her capacity as Presiding
Judge of the Regional Trial Court of Manila, Branch 32,
HON. EPHREM S. ABANDO, in his capacity as Presiding
Judge of the Regional Trial Court of Hilongos, Leyte,
Branch 18, CESAR M. MERIN, in his capacity as Approving
Prosecutor and Officer-in-Charge, ROSULO U. VIVERO, in
his capacity as Investigating Prosecutor, RAUL M.
GONZALEZ, in his capacity as Secretary of the Department
of Justice, Respondents.
x-----------------------x
G.R. No. 185636
RAFAEL G. BAYLOSIS, Petitioner,
vs.
HON. THELMA BUNYI-MEDINA, in her capacity as Presiding
Judge of the Regional Trial Court of Manila, Branch 32,
HON. EPHREM S. ABANDO, in his capacity as Presiding
Judge of the Regional Trial Court of Hilongos, Leyte,
Branch 18, CESAR M. MERIN, in his capacity as Approving
Prosecutor and Officer-in-Charge, ROSULO U. VIVERO, in
his capacity as Investigating Prosecutor, RAUL M.
GONZALEZ, in his capacity as Secretary of the Department
of Justice, Respondents.
x-----------------------x
G.R. No. 190005
VICENTE P. LADLAD, Petitioner,
vs.
HON. THELMA BUNYI-MEDINA, in her capacity as Presiding
Judge of the Regional Trial Court of Manila, Branch 32, and
the PEOPLE OF THE PHILIPPINES, Respondents.
DECISION
SERENO, CJ.:
On 26 August 2006, a mass grave was discovered by elements
of the 43rd Infantry Brigade of the Philippine Army at Sitio
Sapang Daco, Barangay Kaulisihan, Inopacan, Leyte.1 The
mass grave contained skeletal remains of individuals believed
to be victims of "Operation Venereal Disease" (Operation VD)
launched by members of the Communist Party of the
Philippines/New People’s Army/National Democratic Front of
the Philippines (CPP/NPA/NDFP) to purge their ranks of
suspected military informers.
While the doctrine of hierarchy of courts normally precludes a
direct invocation of this Court’s jurisdiction, we take cognizance
of these petitions considering that petitioners have chosen to
take recourse directly before us and that the cases are of
significant national interest.
Petitioners have raised several issues, but most are too
insubstantial to require consideration. Accordingly, in the
exercise of sound judicial discretion and economy, this Court will
pass primarily upon the following:
1. Whether petitioners were denied due process during
preliminary investigation and in the issuance of the
warrants of arrest.
2. Whether the murder charges against petitioners
should be dismissed under the political offense
doctrine.
ANTECEDENT FACTS
These are petitions for certiorari and prohibition 2 seeking the
annulment of the orders and resolutions of public respondents
with regard to the indictment and issuance of warrants of arrest
against petitioners for the crime of multiple murder.
Police Chief Inspector George L. Almaden (P C/Insp. Almaden)
of the Philippine National Police (PNP) Regional Office 8 and
Staff Judge Advocate Captain Allan Tiu (Army Captain Tiu) of
the 8th Infantry Division of the Philippine Army sent 12 undated
letters to the Provincial Prosecutor of Leyte through Assistant
Provincial Prosecutor Rosulo U. Vivero (Prosecutor
Vivero).3 The letters requested appropriate legal action on 12
complaint-affidavits attached therewith accusing 71 named
members of the Communist Party of the Philippines/New
People’s Army/National Democratic Front of the Philippines
(CPP/NPA/NDFP) of murder, including petitioners herein along
with several other unnamed members.
The letters narrated that on 26 August 2006, elements of the
43rd Infantry Brigade of the Philippine Army discovered a mass
grave site of the CPP/NPA/NDFP at Sitio Sapang Daco,
Barangay Kaulisihan, Inopacan, Leyte.4Recovered from the
grave site were 67 severely deteriorated skeletal remains
believed to be victims of Operation VD.5
The PNP Scene of the Crime Operation (SOCO) Team based in
Regional Office 8 was immediately dispatched to the mass
grave site to conduct crime investigation, and to collect,
preserve and analyze the skeletal remains.6 Also, from 11-17
September 2006, an investigation team composed of
intelligence officers, and medico-legal and DNA experts,
conducted forensic crime analysis and collected from alleged
relatives of the victims DNA samples for matching.7
The Initial Specialist Report8 dated 18 September 2006 issued
by the PNP Crime Laboratory in Camp Crame, Quezon City,
was inconclusive with regard to the identities of the skeletal
remains and even the length of time that they had been buried.
The report recommended the conduct of further tests to confirm
the identities of the remains and the time window of death. 9
However, in a Special Report10 dated 2 October 2006, the Case
Secretariat of the Regional and National Inter-Agency Legal
Action Group (IALAG) came up with the names of ten (10)
possible victims after comparison and examination based on
testimonies of relatives and witnesses.11
The 12 complaint-affidavits were from relatives of the alleged
victims of Operation VD. All of them swore that their relatives
had been abducted or last seen with members of the
CPP/NPA/NDFP and were never seen again.
They also expressed belief that their relatives’ remains were
among those discovered at the mass grave site.
Also attached to the letters were the affidavits of Zacarias
Piedad,12 Leonardo C. Tanaid, Floro M. Tanaid, Numeriano
Beringuel, Glecerio Roluna and Veronica P. Tabara. They
narrated that they were former members of the
CPP/NPA/NDFP.13 According to them, Operation VD was
ordered in 1985 by the CPP/NPA/NDFP Central
Committee.14 Allegedly, petitioners Saturnino C. Ocampo
(Ocampo),15 Randall B. Echanis (Echanis),16 Rafael G. Baylosis
(Baylosis),17 and Vicente P. Ladlad (Ladlad)18 were then
members of the Central Committee.
According to these former members, four sub-groups were
formed to implement Operation VD, namely, (1) the Intel Group
responsible for gathering information on suspected military
spies and civilians who would not support the movement; (2) the
Arresting Group charged with their arrests; (3) the Investigation
Group which would subject those arrested to questioning; and
(4) the Execution Group or the "cleaners" of those confirmed to
be military spies and civilians who would not support the
movement.19
From 1985 to 1992, at least 100 people had been abducted,
hog-tied, tortured and executed by members of the
CPP/NPA/NDF20 pursuant to Operation VD.21
On the basis of the 12 letters and their attachments, Prosecutor
Vivero issued a subpoena requiring, among others, petitioners
to submit their counter-affidavits and those of their
witnesses.22 Petitioner Ocampo submitted his counter-
affidavit.23 Petitioners Echanis24 and Baylosis25 did not file
counter-affidavits because they were allegedly not served the
copy of the complaint and the attached documents or evidence.
Counsel of petitioner Ladlad made a formal entry of appearance
on 8 December 2006 during the preliminary
investigation.26 However, petitioner Ladlad did not file a counter-
affidavit because he was allegedly not served a subpoena. 27
In a Resolution28 dated 16 February 2007, Prosecutor Vivero
recommended the filing of an Information for 15 counts of
multiple murder against 54 named members of the
CPP/NPA/NDFP, including petitioners herein, for the death of
the following: 1) Juanita Aviola, 2) Concepcion Aragon, 3)
Gregorio Eras, 4) Teodoro Recones, Jr., 5) Restituto Ejoc, 6)
Rolando Vasquez, 7) Junior Milyapis, 8) Crispin Dalmacio, 9)
Zacarias Casil, 10) Pablo Daniel, 11) Romeo Tayabas, 12)
Domingo Napoles, 13) Ciriaco Daniel, 14) Crispin Prado, and
15) Ereberto Prado.29
Prosecutor Vivero also recommended that Zacarias Piedad,
Leonardo Tanaid, Numeriano Beringuel and Glecerio Roluna be
dropped as respondents and utilized as state witnesses, as their
testimonies were vital to the success of the prosecution.30 The
Resolution was silent with regard to Veronica Tabara.
The Information was filed before the Regional Trial Court (RTC)
Hilongos, Leyte, Branch 18 (RTC Hilongos, Leyte) presided by
Judge Ephrem S. Abando (Judge Abando) on 28 February
2007, and docketed as Criminal Case No. H-1581.31 Petitioner
Ocampo filed an Ex Parte Motion to Set Case for Clarificatory
Hearing dated 5 March 2007 prior to receiving a copy of the
Resolution recommending the filing of the Information.32
On 6 March 2007, Judge Abando issued an Order finding
probable cause "in the commission by all mentioned accused of
the crime charged."33 He ordered the issuance of warrants of
arrest against them with no recommended bail for their
temporary liberty.34
On 16 March 2007, petitioner Ocampo filed before us this
special civil action for certiorari and prohibition under Rule 65 of
the Rules of Court and docketed as G.R. No. 176830 seeking
the annulment of the 6 March 2007 Order of Judge Abando and
the 16 February 2007 Resolution of Prosecutor Vivero. 35 The
petition prayed for the unconditional release of petitioner
Ocampo from PNP custody, as well as the issuance of a
temporary restraining order/ writ of preliminary injunction to
restrain the conduct of further proceedings during the pendency
of the petition.36
Petitioner Ocampo argued that a case for rebellion against him
and 44 others (including petitioners Echanis and Baylosis37 and
Ladlad38) docketed as Criminal Case No. 06-944 was then
pending before the RTC Makati, Branch 150 (RTC
Makati).39 Putting forward the political offense doctrine,
petitioner Ocampo argues that common crimes, such as murder
in this case, are already absorbed by the crime of rebellion when
committed as a necessary means, in connection with and in
furtherance of rebellion.40
We required41 the Office of the Solicitor General (OSG) to
comment on the petition and the prayer for the issuance of a
temporary restraining order/ writ of preliminary injunction, and
set42 the case for oral arguments on 30 March 2007. The OSG
filed its Comment on 27 March 2007.43
The following were the legal issues discussed by the parties
during the oral arguments:
1. Whether the present petition for certiorari and
prohibition is the proper remedy of petitioner Ocampo;
2. Assuming it is the proper remedy, whether he was
denied due process during preliminary investigation
and in the issuance of the warrant of arrest;
3. Whether the murder charges against him are already
included in the rebellion charge against him in the
RTC.44
Afterwards, the parties were ordered to submit their memoranda
within 10 days.45 On 3 April 2007, the Court ordered the
provisional release of petitioner Ocampo under a ₱100,000 cash
bond.46
Acting on the observation of the Court during the oral arguments
that the single Information filed before the RTC Hilongos, Leyte
was defective for charging 15 counts of murder, the prosecution
filed a Motion to Admit Amended Information and New
Informations on 11 April 2007.47 In an Order dated 27 July 2007,
Judge Abando held in abeyance the resolution thereof and
effectively suspended the proceedings during the pendency of
G.R. No. 176830 before this Court.48
While the proceedings were suspended, petitioner Echanis was
arrested on 28 January 2008 by virtue of the warrant of arrest
issued by Judge Abando on 6 March 2007. 49 On 1 February
2008, petitioners Echanis and Baylosis filed a Motion for Judicial
Reinvestigation/ Determination of Probable Cause with Prayer
to Dismiss the Case Outright and Alternative Prayer to Recall/
Suspend Service of Warrant.50
On 30 April 2008, Judge Abando issued an Order denying the
motion.51 Petitioners Echanis and Baylosis filed a Motion for
Reconsideration52 dated 30 May 2008, but before being able to
rule thereon, Judge Abando issued an Order dated 12 June
2008 transmitting the records of Criminal Case No. H-1581 to
the Office of the Clerk of Court, RTC Manila.53 The Order was
issued in compliance with the Resolution dated 23 April 2008 of
this Court granting the request of then Secretary of Justice Raul
Gonzales to transfer the venue of the case.
The case was re-raffled to RTC Manila, Branch 32 (RTC Manila)
presided by Judge Thelma Bunyi-Medina (Judge Medina) and
re-docketed as Criminal Case No. 08-262163.54 Petitioner
Echanis was transferred to the PNP Custodial Center in Camp
Crame, Quezon City. On 12 August 2008, petitioners Echanis
and Baylosis filed their Supplemental Arguments to Motion for
Reconsideration.55
In an Order56 dated 27 October 2008, Judge Medina suspended
the proceedings of the case pending the resolution of G.R. No.
176830 by this Court.
On 18 December 2008, petitioner Ladlad filed with the RTC
Manila a Motion to Quash and/or Dismiss.57
On 23 December 2008, petitioner Echanis filed before us a
special civil action for certiorari and prohibition under Rule 65 of
the Rules of Court seeking the annulment of the 30 April 2008
Order of Judge Abando and the 27 October 2008 Order of Judge
Medina.58 The petition, docketed as G.R. No. 185587, prayed
for the unconditional and immediate release of petitioner
Echanis, as well as the issuance of a temporary restraining
order/writ of preliminary injunction to restrain his further
incarceration.59
On 5 January 2009, petitioner Baylosis filed before us a special
civil action for certiorari and prohibition under Rule 65 of the
Rules of Court also seeking the annulment of the 30 April 2008
Order of Judge Abando and the 27 October 2008 Order of Judge
Medina.60 The petition, docketed as G.R. No. 185636, prayed
for the issuance of a temporary restraining order/ writ of
preliminary injunction to restrain the implementation of the
warrant of arrest against petitioner Baylosis.61
The Court consolidated G.R. Nos. 185587 and 185636 on 12
January 2009.62
On 3 March 2009, the Court ordered the further consolidation of
these two cases with G.R. No. 176830.63 We required64 the
OSG to comment on the prayer for petitioner Echanis’s
immediate release, to which the OSG did not interpose any
objection on these conditions: that the temporary release shall
only be for the purpose of his attendance and participation in the
formal peace negotiations between the Government of the
Republic of the Philippines (GRP) and the CPP/NPA/NDFP, set
to begin in August 2009; and that his temporary release shall not
exceed six (6) months.65 The latter condition was later modified,
such that his temporary liberty shall continue for the duration of
his actual participation in the peace negotiations.66
On 11 August 2009, the Court ordered the provisional release
of petitioner Echanis under a ₱100,000 cash bond, for the
purpose of his participation in the formal peace negotiations. 67
Meanwhile, the Department of Justice (DOJ) filed its
Opposition68 to petitioner Ladlad’s motion to quash before the
RTC Manila. The trial court conducted a hearing on the motion
on 13 February 2009.69
On 6 May 2009, Judge Medina issued an Order 70 denying the
motion to quash. The motion for reconsideration filed by
petitioner Ladlad was also denied on 27 August 2009.71
On 9 November 2009, petitioner Ladlad filed before us a special
civil action for certiorari under Rule 65 of the Rules of Court
seeking the annulment of the 6 May 2009 and 27 August 2009
Orders of Judge Medina.72 The petition was docketed as G.R.
No. 190005.
On 11 January 2010, we ordered the consolidation of G.R. No.
190005 with G.R. Nos. 176830, 185587 and 185636.73 We also
required the OSG to file its comment thereon. The OSG
submitted its Comment74 on 7 May 2010.
On 27 July 2010, we likewise required the OSG to file its
Comment in G.R. Nos. 185636 and 185587.75 These Comments
were filed by the OSG on 13 December 2010 76 and on 21
January 2011,77 respectively. Petitioners Echanis and Baylosis
filed their Consolidated Reply78 on 7 June 2011.
On 2 May 2011, petitioner Ladlad filed an Urgent Motion to Fix
Bail.79 On 21 July 2011, petitioner Baylosis filed A Motion to
Allow Petitioner to Post Bail.80 The OSG interposed no objection
to the grant of a ₱100,000 cash bail to them considering that
they were consultants of the NDFP negotiating team, which was
then holding negotiations with the GRP peace panel for the
signing of a peace accord.81
On 17 January 2012, we granted the motions of petitioners
Ladlad and Baylosis and fixed their bail in the amount of
₱100,000, subject to the condition that their temporary release
shall be limited to the period of their actual participation in the
peace negotiations.82
Petitioner Ladlad filed his Reply83 to the OSG Comment on 18
January 2013.
OUR RULING
Petitioners were accorded due
process during preliminary
investigation and in the issuance of
the warrants of arrest.
A. Preliminary Investigation
A preliminary investigation is "not a casual affair." 84 It is
conducted to protect the innocent from the embarrassment,
expense and anxiety of a public trial.85 While the right to have a
preliminary investigation before trial is statutory rather than
constitutional, it is a substantive right and a component of due
process in the administration of criminal justice.86
In the context of a preliminary investigation, the right to due
process of law entails the opportunity to be heard.87 It serves to
accord an opportunity for the presentation of the respondent’s
side with regard to the accusation. Afterwards, the investigating
officer shall decide whether the allegations and defenses lead
to a reasonable belief that a crime has been committed, and that
it was the respondent who committed it. Otherwise, the
investigating officer is bound to dismiss the complaint.
"The essence of due process is reasonable opportunity to be
heard and submit evidence in support of one's defense."88 What
is proscribed is lack of opportunity to be heard. 89 Thus, one who
has been afforded a chance to present one’s own side of the
story cannot claim denial of due process.90
Petitioners Echanis and Baylosis allege that they did not receive
a copy of the complaint and the attached documents or
evidence.91 Petitioner Ladlad claims that he was not served a
subpoena due to the false address indicated in the 12 undated
letters of P C/Insp. Almaden and Army Captain Tiu to Prosecutor
Vivero.92 Furthermore, even though his counsels filed their
formal entry of appearance before the Office of the Prosecutor,
petitioner Ladlad was still not sent a subpoena through his
counsels’ addresses.93 Thus, they were deprived of the right to
file counter-affidavits.
Petitioner Ocampo claims that Prosecutor Vivero, in collusion
with P C/Insp. Almaden and Army Captain Tiu, surreptitiously
inserted the Supplemental Affidavit of Zacarias Piedad in the
records of the case without furnishing petitioner Ocampo a
copy.94 The original affidavit of Zacarias Piedad dated 14
September 2006 stated that a meeting presided by petitioner
Ocampo was held in 1984, when the launching of Operation VD
was agreed upon.95Petitioner Ocampo refuted this claim in his
Counter-affidavit dated 22 December 2006 stating that he was
in military custody from October 1976 until his escape in May
1985.96 Thereafter, the Supplemental Affidavit of Zacarias
Piedad dated 12 January 2007 admitted that he made a mistake
in his original affidavit, and that the meeting actually took place
in June 1985.97 Petitioner Ocampo argues that he was denied
the opportunity to reply to the Supplemental Affidavit by not
being furnished a copy thereof.
Petitioner Ocampo also claims that he was denied the right to
file a motion for reconsideration or to appeal the Resolution of
Prosecutor Vivero, because the latter deliberately delayed the
service of the Resolution by 19 days, effectively denying
petitioner Ocampo his right to due process.98
As to the claim of petitioners Echanis and Baylosis, we quote
the pertinent portion of Prosecutor Vivero’s Resolution, which
states:
In connection with the foregoing and pursuant to the Revised
Rules of Criminal Procedure[,] the respondents were issued and
served with Subpoena at their last known address for them to
submit their counter-affidavits and that of their witnesses.
Majority of the respondents did not submit their counter-
affidavits because they could no longer be found in their last
known address, per return of the subpoenas. On the other hand,
Saturnino Ocampo @ Satur, Fides Lim, Maureen Palejaro and
Ruben Manatad submitted their Counter-Affidavits. However,
Vicente Ladlad and Jasmin Jerusalem failed to submit the
required Counter Affidavits in spite entry of appearance by their
respective counsels.99
Section 3(d), Rule 112 of the Rules of Court, allows Prosecutor
Vivero to resolve the complaint based on the evidence before
him if a respondent could not be subpoenaed. As long as efforts
to reach a respondent were made, and he was given an
opportunity to present countervailing evidence, the preliminary
investigation remains valid.100The rule was put in place in order
to foil underhanded attempts of a respondent to delay the
prosecution of offenses.101
In this case, the Resolution stated that efforts were undertaken
to serve subpoenas on the named respondents at their last
known addresses. This is sufficient for due process. It was only
because a majority of them could no longer be found at their last
known addresses that they were not served copies of the
complaint and the attached documents or evidence.
Petitioner Ladlad claims that his subpoena was sent to the
nonexistent address "53 Sct. Rallos St., QC," 102 which had
never been his address at any time.103 In connection with this
claim, we take note of the fact that the subpoena to Fides Lim,
petitioner Ladlad’s wife,104 was sent to the same address, and
that she was among those mentioned in the Resolution as
having timely submitted their counter-affidavits.
Despite supposedly never receiving a subpoena, petitioner
Ladlad’s counsel filed a formal entry of appearance on 8
December 2006.105 Prosecutor Vivero had a reason to believe
that petitioner Ladlad had received the subpoena and
accordingly instructed his counsel to prepare his defense.
Petitioner Ladlad, through his counsel, had every opportunity to
secure copies of the complaint after his counsel’s formal entry
of appearance and, thereafter, to participate fully in the
preliminary investigation. Instead, he refused to participate.
We have previously cautioned that "litigants represented by
counsel should not expect that all they need to do is sit back,
relax and await the outcome of their case." 106 Having opted to
remain passive during the preliminary investigation, petitioner
Ladlad and his counsel cannot now claim a denial of due
process, since their failure to file a counter-affidavit was of their
own doing.
Neither do we find any merit in petitioner Ocampo’s allegation of
collusion to surreptitiously insert the Supplemental Affidavit of
Zacarias Piedad in the records. There was nothing surreptitious
about the Supplemental Affidavit since it clearly alludes to an
earlier affidavit and admits the mistake committed regarding the
date of the alleged meeting. The date of the execution of the
Supplemental Affidavit was also clearly stated. Thus, it was clear
that it was executed after petitioner Ocampo had submitted his
counter-affidavit. Should the case go to trial, that will provide
petitioner Ocampo with the opportunity to question the execution
of Zacarias Piedad’s Supplemental Affidavit.
Neither can we uphold petitioner Ocampo’s contention that he
was denied the right to be heard. For him to claim that he was
denied due process by not being furnished a copy of the
Supplemental Affidavit of Zacarias Piedad would imply that the
entire case of the prosecution rested on the Supplemental
Affidavit. The OSG has asserted that the indictment of petitioner
Ocampo was based on the collective affidavits of several other
witnesses107 attesting to the allegation that he was a member of
the CPP/NPA/NDFP Central Committee, which had ordered the
launch of Operation VD.
As to his claim that he was denied the right to file a motion for
reconsideration or to appeal the Resolution of Prosecutor Vivero
due to the 19-day delay in the service of the Resolution, it must
be pointed out that the period for filing a motion for
reconsideration or an appeal to the Secretary of Justice is
reckoned from the date of receipt of the resolution of the
prosecutor, not from the date of the resolution. This is clear from
Section 3 of the 2000 National Prosecution Service Rule on
Appeal:
Sec. 3. Period to appeal. – The appeal shall be taken within
fifteen (15) days from receipt of the resolution, or of the denial
of the motion for reconsideration/ reinvestigation if one has been
filed within fifteen (15) days from receipt of the assailed
resolution. Only one motion for reconsideration shall be allowed.
(Emphasis supplied)
Thus, when petitioner Ocampo received the Resolution of
Prosecutor Vivero on 12 March 2007,108 the former had until 27
March 2007 within which to file either a motion for
reconsideration before the latter or an appeal before the
Secretary of Justice. Instead, petitioner Ocampo chose to file
the instant petition for certiorari directly before this Court on 16
March 2007.
B. Issuance of the Warrants of Arrest
Article III, Section 2 of the Constitution provides that "no search
warrant or warrant of arrest shall issue except upon probable
cause to be determined personally by the judge after
examination under oath or affirmation of the complainant and
the witnesses he may produce."
Petitioner Ocampo alleges that Judge Abando did not comply
with the requirements of the Constitution in finding the existence
of probable cause for the issuance of warrants of arrest against
petitioners.109
Probable cause for the issuance of a warrant of arrest has been
defined as "such facts and circumstances which would lead a
reasonably discreet and prudent man to believe that an offense
has been committed by the person sought to be
arrested."110 Although the Constitution provides that probable
cause shall be determined by the judge after an examination
under oath or an affirmation of the complainant and the
witnesses, we have ruled that a hearing is not necessary for the
determination thereof.111 In fact, the judge’s personal
examination of the complainant and the witnesses is not
mandatory and indispensable for determining the aptness of
issuing a warrant of arrest.112
It is enough that the judge personally evaluates the prosecutor’s
report and supporting documents showing the existence of
probable cause for the indictment and, on the basis thereof,
issue a warrant of arrest; or if, on the basis of his evaluation, he
finds no probable cause, to disregard the prosecutor's resolution
and require the submission of additional affidavits of witnesses
to aid him in determining its existence.113
Petitioners Echanis and Baylosis claim that, had Judge Abando
painstakingly examined the records submitted by Prosecutor
Vivero, the judge would have inevitably dismissed the charge
against them.114 Additionally, petitioner Ocampo alleges that
Judge Abando did not point out facts and evidence in the record
that were used as bases for his finding of probable cause to
issue a warrant of arrest.115
The determination of probable cause for the issuance of
warrants of arrest against petitioners is addressed to the sound
discretion of Judge Abando as the trial judge.116 Further
elucidating on the wide latitude given to trial judges in the
issuance of warrants of arrest, this Court stated in Sarigumba v.
Sandiganbayan117 as follows:
x x x. The trial court's exercise of its judicial discretion should
not, as a general rule, be interfered with in the absence of grave
abuse of discretion. Indeed, certiorari will not lie to cure errors in
the trial court's appreciation of the evidence of the parties, the
conclusion of facts it reached based on the said findings, as well
as the conclusions of law. x x x.
Whether or not there is probable cause for the issuance of
warrants for the arrest of the accused is a question of fact based
on the allegations in the Informations, the Resolution of the
Investigating Prosecutor, including other documents and/or
evidence appended to the Information.
Here, the allegations of petitioners point to factual matters
indicated in the affidavits of the complainants and witnesses as
bases for the contention that there was no probable cause for
petitioners’ indictment for multiple murder or for the issuance of
warrants for their arrest. As stated above, the trial judge’s
appreciation of the evidence and conclusion of facts based
thereon are not interfered with in the absence of grave abuse of
discretion. Again, "he sufficiently complies with the requirement
of personal determination if he reviews the [I]nformation and the
documents attached thereto, and on the basis thereof forms a
belief that the accused is probably guilty of the crime with which
he is being charged."118
Judge Abando’s review of the Information and the supporting
documents is shown by the following portion of the judge’s 6
March 2007 Order:
On the evaluation of the Resolution and its Information as
submitted and filed by the Provincial Prosecution of Leyte
Province supported by the following documents: Affidavits of
Complainants, Sworn Statements of Witnesses and other
pertinent documents issued by the Regional Crime Laboratory
Office, PNP, Region VIII and Camp Crame, Quezon City,
pictures of the grave site and skeletal remains, this court has the
findings [sic] of probable cause in the commission by all
mentioned accused of the crime charged.119
At bottom, issues involving the finding of probable cause for an
indictment and issuance of a warrant of arrest, as petitioners are
doubtless aware, are primarily questions of fact that are normally
not within the purview of a petition for certiorari,120 such as the
petitions filed in the instant consolidated cases.
The political offense doctrine is not a
ground to dismiss the charge against
petitioners prior to a determination
by the trial court that the murders
were committed in furtherance of
rebellion.
Under the political offense doctrine, "common crimes,
perpetrated in furtherance of a political offense, are divested of
their character as "common" offenses and assume the political
complexion of the main crime of which they are mere
ingredients, and, consequently, cannot be punished separately
from the principal offense, or complexed with the same, to justify
the imposition of a graver penalty."121
Any ordinary act assumes a different nature by being absorbed
in the crime of rebellion.122 Thus, when a killing is committed in
furtherance of rebellion, the killing is not homicide or murder.
Rather, the killing assumes the political complexion of rebellion
as its mere ingredient and must be prosecuted and punished as
rebellion alone.
However, this is not to say that public prosecutors are obliged to
consistently charge respondents with simple rebellion instead of
common crimes. No one disputes the well-entrenched principle
in criminal procedure that the institution of criminal charges,
including whom and what to charge, is addressed to the sound
discretion of the public prosecutor.123
But when the political offense doctrine is asserted as a defense
in the trial court, it becomes crucial for the court to determine
whether the act of killing was done in furtherance of a political
end, and for the political motive of the act to be conclusively
demonstrated.124
Petitioners aver that the records show that the alleged murders
were committed in furtherance of the CPP/NPA/NDFP rebellion,
and that the political motivation behind the alleged murders can
be clearly seen from the charge against the alleged top leaders
of the CPP/NPA/NDFP as co-conspirators.
We had already ruled that the burden of demonstrating political
motivation must be discharged by the defense, since motive is
a state of mind which only the accused knows. 125 The proof
showing political motivation is adduced during trial where the
accused is assured an opportunity to present evidence
supporting his defense. It is not for this Court to determine this
factual matter in the instant petitions.
As held in the case of Office of the Provincial Prosecutor of
Zamboanga Del Norte v. CA,126 if during trial, petitioners are
able to show that the alleged murders were indeed committed in
furtherance of rebellion, Section 14, Rule 110 of the Rules of
Court provides the remedy, to wit:
SECTION 14. Amendment or substitution. — A complaint or
information may be amended, in form or in substance, without
leave of court, at any time before the accused enters his plea.
After the plea and during the trial, a formal amendment may only
be made with leave of court and when it can be done without
causing prejudice to the rights of the accused.
However, any amendment before plea, which downgrades the
nature of the offense charged in or excludes any accused from
the complaint or information, can be made only upon motion by
the prosecutor, with notice to the offended party and with leave
of court. The court shall state its reasons in resolving the motion
and copies of its order shall be furnished all parties, especially
the offended party. (n)
If it appears at any time before judgment that a mistake has been
made in charging the proper offense, the court shall dismiss the
original complaint or information upon the filing of a new one
charging the proper offense in accordance with Section 19, Rule
119, provided the accused shall not be placed in double
jeopardy. The court may require the witnesses to give bail for
their appearance at the trial. (Emphasis supplied)
Thus, if it is shown that the proper charge against petitioners
should have been simple rebellion, the trial court shall dismiss
the murder charges upon the filing of the Information for simple
rebellion, as long as petitioners would not be placed in double
jeopardy.
Section 7, Rule 117 of the Rules of Court, states:
SEC. 7. Former conviction or acquittal; double jeopardy. —
When an accused has been convicted or acquitted, or the case
against him dismissed or otherwise terminated without his
express consent by a court of competent jurisdiction, upon a
valid complaint or information or other formal charge sufficient
in form and substance to sustain a conviction and after the
accused had pleaded to the charge, the conviction or acquittal
of the accused or the dismissal of the case shall be a bar to
another prosecution for the offense charged, or for any attempt
to commit the same or frustration thereof, or for any offense
which necessarily includes or is necessarily included in the
offense charged in the former complaint or information.
Based on the above provision, double jeopardy only applies
when: (1) a first jeopardy attached; (2) it has been validly
terminated; and (3) a second jeopardy is for the same offense
as in the first.127
A first jeopardy attaches only after the accused has been
acquitted or convicted, or the case has been dismissed or
otherwise terminated without his express consent, by a
competent court in a valid indictment for which the accused has
entered a valid plea during arraignment.128
To recall, on 12 May 2006, an Information for the crime of
rebellion, as defined and penalized under Article 134 in relation
to Article 135 of the Revised Penal Code, docketed as Criminal
Case No. 06-944 was filed before the RTC Makati against
petitioners and several others.129
However, petitioners were never arraigned in Criminal Case No.
06-944.1awp++i1 Even before the indictment for rebellion was
filed before the RTC Makati, petitioners Ocampo, Echanis and
Ladlad had already filed a petition before this Court to seek the
nullification of the Orders of the DOJ denying their motion for the
inhibition of the members of the prosecution panel due to lack of
impartiality and independence.130 When the indictment was
filed, petitioners Ocampo, Echanis and Ladlad filed
supplemental petitions to enjoin the prosecution of Criminal
Case No. 06-944.131We eventually ordered the dismissal of the
rebellion case. It is clear then that a first jeopardy never had a
chance to attach.
Petitioner Ocampo shall remain on provisional liberty under the
₱100,000 cash bond posted before the Office of the Clerk of
Court. He shall remain on provisional liberty until the termination
of the proceedings before the RTC Manila.1âwphi1
The OSG has given its conformity to the provisional liberty of
petitioners Echanis, Baylosis and Ladlad in view of the ongoing
peace negotiations. Their provisional release from detention
under the cash bond of ₱100,000 each shall continue under the
condition that their temporary release shall be limited to the
period of their actual participation as CPP-NDF consultants in
the peace negotiations with the government or until the
termination of the proceedings before the RTC Manila,
whichever is sooner. It shall be the duty of the government to
inform this Court the moment that peace negotiations are
concluded.

WHEREFORE, the instant consolidated petitions are

DISMISSED. The RTC of Manila, Branch 32, is hereby
ORDERED to proceed with dispatch with the hearing of Criminal
Case No. 08-262163. Petitioner Saturnino C. Ocampo shall
remain on temporary liberty under the same bail granted by this
Court until the termination of the proceedings before the RTC
Manila. Petitioners Randall B. Echanis, Rafael G. Baylosis and
Vicente P. Ladlad shall remain on temporary liberty under the
same bail granted by this Court until their actual participation as
CPP-NDF consultants in the peace negotiations with the
government are concluded or terminated, or until the termination
of the proceedings before the RTC Manila, whichever is sooner.

SO ORDERED.

MARIA THERESA G.
GUTIERREZ, Petitioner, v. COMMISSION ON AUDIT AND
AUDITOR NARCISA DJ JOAQUIN, Respondents.
DECISION
LEONEN, J.:
A cashier who is found to have been negligent in keeping the
funds in his or her custody cannot be relieved from his or her
accountability for amounts lost through robbery.
This is a Petition for Certiorari under Rule 65 of the Rules of
Court assailing the June 5, 2008 withholding order and the
Commission on Audit's January 31, 2012 decision holding Maria
Theresa G. Gutierrez (Gutierrez) liable for the P10,105,687.25
that was lost through robbery.
Gutierrez is a Cash Collecting Officer, with the designation of
Cashier III at National Food Authority-National Capital Region,
National District Office (NFA-NCR, NDO).1 On May 30, 2008,
she had collections amounting to F9,390,834.00, covered by
Official Receipt Nos. 0420975 to 0421246.2 On that day, she
placed the collections in a wooden cabinet. 3
The next day,.Gutierrez's collections amounted to
P1,505,625.00.4 Of that amount, P714,852.75 and an
undeposited amount of P0.50 from March 2008 were placed in
a wooden cabinet.5 The rest was placed in the safety vault. 6
The total undeposited collection as of March 31, 2008 was
P10,896,459.50. Of that amount, P10,105,687.25 was placed in
the "pearless" boxes7 in a wooden cabinet and P790,772.25
was placed in the safety vault. 8
On June 1, 2008, at about 1:35 a.m., armed men in military
uniforms with Philippine National Police-Security Agencies and
Guards Supervision Division (PNP-SAGSD) identifications
entered the NFA-NCR, NDO.9 The armed men disarmed NFA-
NCR, NDO's security guards and took Gutierrez's undeposited
collections.10 Lockheed Detective and Watchman Agency, Inc.
was NFA-NCR, NDO's contracted security agency.11
The security guards on duty executed their respective affidavits.
Based on their affidavits, armed men entered the NFA-NCR,
NDO compound after they had been disarmed, threatened, and
tied up.12 The security guards immediately reported the incident
to the Valenzuela Police Station,13 where an investigation
report14 was issued consistent with the security guards'
narrations in their affidavits.15
On June 3, 2008, the Commission on Audit, National Food
Authority-NCR, North District Office, Malanday, Valenzuela City,
through State Auditor Narcisa DJ Joaquin (State Auditor
Joaquin), issued a demand letter to Gutierrez. 16 Gutierrez was
informed that she must immediately produce the missing funds
amounting to P10,105,686.75.17 She was also ordered to submit
within 72 hours a written explanation why such shortage
occurred.18
On June 5, 2008, the Commission on Audit, through State
Auditor Joaquin, issued a withholding order, addressed to
Roberto S. Musngi (Musngi), Manager of National Food
Authority, North District Office.19Musngi was informed that upon
examination of Gutierrez's account on June 1, 2008, it was
established that there was a P10,105,686.75 shortage in
Gutierrez's accountabilities.20 Pursuant to Section 37 of
Presidential Decree No. 1445, Musngi was directed to withhold
Gutierrez's salaries and other emoluments so these could be
applied to the satisfaction of the shortage. 21
In response to the June 3, 2008 demand letter of the
Commission on Audit, Gutierrez executed an affidavit dated
June 6, 2008 wherein she narrated that she had been serving
as National Food Authority's Cash Collecting Officer since
1985.22 Her office was located at the far end of the National
Food Authority building.23 That was where the "pearless" boxes
and the cabinet where she kept her collections could be
found.24 Quoted below is her explanation for using "pearless"
boxes to keep her collections:chanroblesvirtuallawlibrary
6. That because of the volume of money I accept every day,
which averages from 4 to 6 million pesos every day depending
on the seasons, most of my time inside the office is spent to
counting, bundling by different denominations the money. To
emphasize the point, the money that I am accepting from
remittances and payments are of different denominations, from
twenty five centavo (Php0.25) coins to one thousand peso
(Php1,000.00) bills. The coins alone would amount in the
average of Twelve thousand pesos (Php12,000.00). I could
literally say that from the time I timed in the office at about 6:30
a.m. up to the time I timed out at about 6:30 p.m., my only rest
from my work is to [be] going to the ladies room and the break
during lunch time.
....
8. That when the rice crises came up on April 2008, volume of
work including the amount of money that comes into my office
almost doubled. That because of the heavy operations in our
office I had an average collection starting April 2008 of 6 to 9
Million Pesos every day of every denomination, with coins
averaging from 12 to 16 thousand pesos that needs to be
counted, receipted, bundled, balanced, reported and kept.
9. That it is almost automatic that when I enter my office what
comes to my mind is to count the money and bundle them by
the hundreds and prepare receipts for the payments and
remittances until the time to leave at about 6:30 p.m. I would
also cause the deposit of the money collected the day before to
Land Bank. But there were even times that because of the
volume of the money, bank representatives could not sort out all
the smaller bills (P20s and P50s) being picked up from our office
as the Armor van should be in the bank at 3:00 p.m. Thus, there
would be arrangements in the bank that the counting would
continue inside their office, which oftentimes lasts until late
night.
10. That since April 2008 or the start of the heavy operations, I
have been putting some of the money in the "pearless" box,
because of the volume, which I have to carry and keep safe at
the cabinet inside. I have six (6) pearless boxes in the office.
....
13. That since May 30, 2008 is a Friday, banks are closed the
following day and the money collected on said date would have
remained in my office until the next banking day.
....
18. It was very unfortunate that the money accepted on May 30,
2008 and the collection in the night before the robbery were left
in the pearless box inside the cabinet and not inside the vault.
But with the volume of money, the vault has not enough space
to accommodate all of it.

19. And with the amount of work that I am doing every day from
6:30 in the morning up to 6:30 p.m., more or less, where my only
rest is literally going to the ladies room, and with the safe
location of my office, it did not come to my mind that this incident
would come.
20. That I have nothing to do with what happened in the incident
of June 1, 2008 at 1:30 in the morning and I am not in control
now to produce those missing funds taken by the
robbers.25cralawlawlibrary
On June 10, 2008, Gutierrez requested relief from money
accountability for the loss of the collections.26The letter was
addressed to State Auditor Joaquin.
In the letter dated June 26, 2008 addressed to State Auditor
Joaquin, Gutierrez appealed the withholding order issued on
June 5, 2008.27 She prayed that her salaries and emoluments
be given to her while the robbery incident was still under
investigation.28 She was a widow who had three (3) dependents
and an 85-year-old mother residing with her in need of medical
attention.29 She had no other source of income to support
herself, her dependents, and her mother.30
On June 26, 2008, State Auditor Joaquin denied Gutierrez's
appeal of the withholding order.31 State Auditor Joaquin
informed Gutierrez that there was already a prima facie case for
malversation against her under Article 217 of the Revised Penal
Code.32
On July 11, 2008, Gutierrez filed a notice of appeal of State
Auditor Joaquin's withholding order dated June 5, 2008. 33
On July 21, 2008, Atty. Saturnino R. Rola, Jr., Director of the
National Food Authority, Enforcement, Investigation and
Prosecution Department, submitted a memorandum addressed
to the Administrator, Jessup P. Navarro.34 He found that the
security agency was solidarity liable with security guard Romeo
Casta for the amount lost.35 He also found that Gutierrez, by
keeping her collections in unsecured "pearless" boxes and not
in a vault, was grossly negligent in safekeeping her
collections.36 He recommended that Gutierrez be
administratively charged with dishonesty, gross neglect of duty,
conduct prejudicial to the best interest of the service, and
violation of reasonable office rules and regulations without
prejudice to the filing of appropriate criminal charges. 37 He also
recommended the restitution of the amount lost from Lockheed
Detective and Watchman Agency, Inc. Further, he
recommended the ban of security guard Romeo Casta from
deployment in any National Food Authority installations. 38
Similar incidents of robbery at different National Food Authority
offices involving Lockheed Detective and Watchman Agency,
Inc. were reported between 2006 and 2008.39
On September 11, 2008, Commission on Audit Director IV Tito
S. Nabua (Director Nabua) issued a decision denying
Gutierrez's appeal40 and expressing his agreement with the
issuance of the withholding order.41 The robbery incident was
acknowledged in the decision.42 However, Gutierrez's alleged
act of negligence in the performance of her duties could not be
set aside.43 Her failure to follow safekeeping procedures
showed lack of due care on her part.44 Aside from Article 217 of
the Revised Penal Code, the liabilities of an accountable officer
are found in Section 105 of Presidential Decree No. 1445. 45
Gutierrez filed a motion for reconsideration of the September 11,
2008 decision of Director Nabua on the ground that he did not
give her a chance to file a memorandum of appeal before
submission of the case for resolution.46 According to Gutierrez,
this was a violation of the rules and of her right to due
process.47She also cited reversible error in upholding State
Auditor Joaquin's order despite lack of factual and legal bases
as ground for her motion.48
On January 31, 2012, the Commission on Audit denied her
request for relief from money accountability. 49Its ruling is
reproduced as follows:chanroblesvirtuallawlibrary
WHEREFORE, premises considered, this
Commission DENIES the herein request for relief from money
accountability, there being positive showing of fault or
negligence on the part of Ms. Maria Theresa G. Gutierrez in the
safekeeping and custody of subject government funds.
Accordingly, Ms. Gutierrez shall be liable to pay to1 the NFA the
missing amount of P10,105,687.25. This is without prejudice to
the right of the NFA-NCR, NDO to proceed against Lockheed
Detective and Watchman Agency, Inc. for the indemnification of
the loss as security services provider to the NFA-NCR, NDO,
Valenzuela City.50cralawlawlibrary
The Commission on Audit found that Gutierrez was negligent in
safekeeping her collections.51 Placement of collections in a
"pearless" box instead of in the safety vault, especially given the
volume of collections, constituted gross negligence on her
part.52 Her 20-year service aggravated her negligence.53 It
should have made her more "security-conscious."54
The Commission on Audit also found that the security guards'
failure to secure National Food Authority's premises was a
violation of the contract between National Food Authority and
Lockheed Detective and Watchman Agency, Inc. 55
We decide whether Gutierrez's due process rights were violated
when the Commission on Audit decided her appeal without
requiring her to file an appeal memorandum. We also decide
whether Gutierrez is liable for the amounts lost through a
robbery.
Petitioner emphasizes that she was first assisted by counsel
only when she filed a notice of appeal. Respondent auditor had
already issued the withholding order dated June 5, 2008 and
.letter dated June 26, 2008 before petitioner was assisted by
counsel.
Petitioner argues that her right to due process was violated
when a decision was rendered against her without giving her a
chance to file an appeal memorandum in accordance with
Section 5 of Rule V of the Revised Rules of Procedure of the
Commission on Audit. The appeal memorandum was her
chance to raise issues against respondent auditor's orders to
prove her case and to submit evidence to support her defense.56
Petitioner's right to due process was further violated when her
motion for reconsideration was resolved by the Commission on
Audit instead of by Director Nabua. This prevented her from
filing a petition for review of Director Nabua's decision before the
Commission on Audit.57
Petitioner cites Article IX(A), Section 7 of the Constitution to
support her argument that she has a right to present her side in
a memorandum.58 It provides:chanroblesvirtuallawlibrary
Section 7. Each Commission shall decide by a majority vote of
all its Members, any case or matter brought before it within sixty
days from the date of its submission for decision or resolution. A
case or matter is deemed submitted for decision or
resolution upon the filing of the last pleading, brief, or
memorandum required by the rules of the Commission or
by the Commission itself. Unless otherwise provided by this
Constitution or by law, any decision, order, or ruling of each
Commission may be brought to the Supreme Court on certiorari
by the aggrieved party within thirty days from receipt of a copy
thereof. (Emphasis supplied)
Petitioner argues that aside from the right to be heard,
administrative due process also requires the right to present
evidence and for such evidence to be considered by the
deciding tribunal.59
Lastly, petitioner points out that the cause of the shortage was
the robbery incident, which was a result of the negligence of the
security guards and not her negligence.60 The vault that was
assigned to her did not have enough space to accommodate her
collections.61
On the other hand, respondents argue that petitioner was not
deprived of due process when she was not given the opportunity
to file an appeal memorandum. Her affidavit was a sufficient
platform to raise her defenses.62 Moreover, the presence of a
counsel is not required in administrative proceedings. 63
Respondents also argue that petitioner cannot ask the Director
or the Auditor to allow her to file an appeal memorandum since
it is the Commission on Audit that has the exclusive jurisdiction
over requests for relief from accountability in excess of
P500,000.00.64 This, according to respondent, is based on
Commission on Audit Resolution No. 93-605 dated August 3,
1993.65
Finally, respondents argue that the circumstances show that
petitioner fell short of the demands of her position as
cashier.66 What she could have done was to request additional
vaults if the vaults in her possession were not enough to
accommodate all her collections.67
We rule for respondents.chanRoblesvirtualLawlibrary
I Procedure of the Commission on Audit73requires that she be
Petitioner's due process rights were not violated
Petitioner argues that she was assisted by counsel only after a
withholding order had already been issued. She also argued that
the Commission on Audit Director's issuance of a decision on
her appeal without requiring her to file an appeal memorandum
was a violation of her due process rights.
Petitioner's arguments are not tenable.
The right to counsel under Section 12(1) of Article III of the
Constitution applies in criminal proceedings, but not in
administrative proceedings. It is a right given to persons
accused of an offense during criminal investigation. 68 Any
proceeding conducted by an administrative body is not part of
the criminal investigation or prosecution.69
Thus, this court said in Remolona v. Civil Service
Commission:70ChanRoblesVirtualawlibrary
While investigations conducted by an administrative body may
at times be akin to a criminal proceeding, the fact remains that
under existing laws, a party in an administrative inquiry may or
may not be assisted by counsel, irrespective of the nature of the
charges and of the respondent's capacity to represent himself,
and no duty rests on such body to furnish the person being
investigated with counsel. In an administrative proceeding, a
respondent has the option of engaging the services of counsel
or not. This is clear from the provisions of Section 32, Article VII
of Republic Act No. 2260 (otherwise known as the Civil Service
Act) and Section 39, paragraph 2, Rule XIV (on discipline) of the
Omnibus Rules Implementing Book V of Executive Order No.
292 (otherwise known as the Administrative Code of 1987).
Thus, the right to counsel is not always imperative in
administrative investigations because such inquiries are
conducted merely to determine whether there are facts that
merit disciplinary measure against erring public officers and
employees, with the purpose of maintaining the dignity of
government service. As such, the hearing conducted by the
investigating authority is not part of a criminal
prosecution.71cralawlawlibrary
While the purpose of criminal proceedings is to determine if a
person suspected of committing an offense has indeed
committed an offense, the purpose of an administrative
proceeding is to determine if a person in public office has
violated the trust reposed in him or her by the public. In a
criminal proceeding, if a person is found guilty of an offense, the
corresponding punishment is imposed primarily to protect the
public from being exposed to and correct his or her deviant
behavior. In an administrative proceeding, if a person is found
administratively liable, the corresponding penalty is imposed
primarily to preserve public trust and protect the integrity of
public service.72
Petitioner is not being accused of or investigated for a crime.
The Commission on Audit's withholding order and its denial of
petitioner's request for relief from shortage were issued after it
had made a finding that the money entrusted to petitioner was
lost. A finding of criminal liability was not the reason for the
Commission on Audit's issuances. The Commission on Audit
has no jurisdiction to investigate a crime or to make a finding of
criminal liability. Any proceeding conducted prior to these
issuances was for the purpose of determining if petitioner's
salaries should be withheld or if petitioner should be relieved
from her liability as a cashier.
Petitioner argues that Rule V, Section 5 of the Revised Rules of
given an opportunity to file an appeal memorandum before the
case is submitted for decision. Section 5 is cited as
follows:chanroblesvirtuallawlibrary
Section 5. APPEAL MEMORANDUM AND REPLY - Upon
receipt of the records of the case, the Director shall issue an
Order requiring the appellant to file an appeal memorandum
within twenty (20) days from receipt of the order. The appellant
shall serve a copy of his appeal memorandum to the Auditor or
appellee who may reply thereto within the same period of time.
With the filing of the appeal memorandum and reply or lapse of
the period within which to file them, the appeal shall be deemed
submitted for decision.
Petitioner also argues that her due process rights were violated
when the Commission on Audit decided her motion for
reconsideration of the Commission on Audit Director's decision
dated September 11, 2008, and denied her request for relief
from accountability without her filing a memorandum or a petition
for review. She cites Article IX(A), Section 7 of the
Constitution:chanroblesvirtuallawlibrary
Section 7. Each Commission shall decide by a majority vote of
all its Members, any case or matter brought before it within sixty
days from the date of its submission for decision or resolution. A
case or matter is deemed submitted for decision or resolution
upon the filing of the last pleading, brief, or memorandum
required by the rules of the Commission or by the Commission
itself. Unless otherwise provided by this Constitution or by law,
any decision, order, or ruling of each Commission may be
brought to the Supreme Court on certiorari by the aggrieved
party within thirty days from receipt of a copy thereof. (Emphasis
supplied)
Petitioner's due process rights were not violated when the
Commission on Audit Director had failed to require her to submit
an appeal memorandum before he decided her appeal of the
State Auditor's issuance of a withholding order. There was also
no violation of due process rights when the Commission on Audit
issued its January 31, 2012 decision denying her request for
relief from accountability, without a petition for review of the
Commission on Audit Director's decision. The right to appeal is
not part of due process.74 Neither is it a natural right.75
Moreover, petitioner's relief from accountability may be decided
by the Commission on Audit at the first instance. Based on
Commission on Audit Resolution No. 93-605,76 only the
Commission on Audit may approve requests for relief from
accountabilities amounting to more than P500,000.00.
Thus:chanroblesvirtuallawlibrary
Now, therefore, pursuant to Article IX-D, Section 2(2) of the
Constitution, Section 73 of PD 1445 and in conformity with
Section 378 of the Local Government Code, the Commission
Proper hereby resolves, as it does hereby resolve, to authorize
the following COA Officials to act on requests for relief from
property and/or money accountability in the amounts indicated
hereunder, except in cases of questions of law, without
prejudice to the usual appeal that may be taken therefrom to the
Commission Proper, pursuant to Section 48 of PD 1445.
Total Amount of Money or
Approving COA Official
Cost of Property Involved
Corporate and National Unit
Auditor Provincial and Citynot exceeding P5 0,000
Auditor
Director/Officer-in-Charge ofin excess of P50,000 up to
Central and Regional Offices P100,000
in excess of P100,000 up to
Assistant Commissioner
P200,000
in excess of P200,000 up to
COA Chairman
P500,000
Commission Proper above P500,000
The lost accountability involved in this case amounts to
10,105,687.75.
In any case, we determine if petitioner's due process rights were
violated in the course of the proceedings before the Commission
on Audit.
This court in Ang Tibay v. Court of Industrial Relations77 ruled
that administrative due process requires only the
following:chanroblesvirtuallawlibrary
(a) The party should be allowed to present his or her own case
and submit supporting evidence;
(b) The deciding tribunal must consider the party's evidence;
(c) There is evidence to support the tribunal's decision;
(d) The evidence supporting the tribunal's decision must be
substantial or such "relevant evidence as a reasonable mind
might accept as adequate to support a conclusion";78
(e) The tribunal's decision was based on the evidence presented
or the records of the case disclosed to the parties;
(f) The tribunal's decision must be based on the judges'
independent consideration of the facts and law governing the
case; and
(g) The tribunal's decision must be rendered such that the issues
of the case and the reasons for the decisions are known to
the parties.79
In sum, due process in administrative proceedings does not
necessarily require a trial type of hearing. Neither does it require
an exchange of pleadings between or among the parties. Due
process is satisfied if the party who is properly notified of
allegations against him or her is given an opportunity to defend
himself or herself against those allegations, and such defense
was considered by the tribunal in arriving at its own independent
conclusions. This court explained in Ledesma v. Court of
Appeals:80ChanRoblesVirtualawlibrary
Due process is satisfied when a person is notified of the charge
against him and given an opportunity to explain or defend
himself. In administrative proceedings, the filing of charges and
giving reasonable opportunity for the person so charged to
answer the accusations against him constitute the minimum
requirements of due process. The essence of due process is
simply to be heard, or as applied to administrative proceedings,
an opportunity to explain one's side, or an opportunity to seek a
reconsideration of the action or ruling complained of.
....
Administrative due process cannot be fully equated with due
process in its strict judicial sense for it is enough that the party
is given the chance to be heard before the case against him is
decided.81cralawlawlibrary
Petitioner's arguments and the issues she raised are sufficiently
expressed in her affidavit submitted to the Commission on Audit,
her motion for reconsideration of the Commission on Audit
Director's decision, and her petition and memorandum
submitted to this court. Even though petitioner was not able to
file an appeal memorandum, she was able to state her
substantive defenses in the pleadings she filed before the
Commission on Audit and this court. According to petitioner, the
money that was lost through robbery was not a result of her
negligence. She kept the money in "pearless" boxes for practical
and not for malicious reasons.
The decisions of the State Auditor, the Commission on Audit
Director, and the Commission on Audit had considered these
facts and defenses before they made conclusions' against
petitioner. Therefore, petitioner cannot say that her due process
rights were violated for the lack of order to file an appeal
memorandum.chanRoblesvirtualLawlibrary
II
Relief from cashier's liability cannot be granted if the
cashier was negligent in keeping funds under his or her
custody
As a cashier for the National Food Authority, petitioner qualified
as an accountable officer under Presidential Decree No. 1445.
Accountable officers are government officers whose duties
require them to possess or be in custody of government funds
or properties.82 They are in charge of the safekeeping of the
funds or properties under their custody.83
Presidential Decree No. 1445 makes cashiers liable for the
value of the money or property in their custody in case they were
lost because of negligence or unlawful deposit, use, or
application. Thus:chanroblesvirtuallawlibrary
Section 105. Measure of liability of accountable officers.
(1) Every officer accountable for government property shall be
liable for its money value in case of improper or unauthorized
use or misapplication thereof, by himself or any person for
whose acts he may be responsible. We shall likewise be liable
for all losses, damages, or deterioration occasioned by
negligence in the keeping or use of the property, whether or not
it be at the time in his actual custody.
(2) Every officer accountable for government funds shall be
liable for all losses resulting from the unlawful deposit, use, or
application thereof and for all losses attributable to negligence
in the keeping of the funds.
Imposing liability on cashiers for lost money or property in their
custody means that the value of the money or property becomes
their debt.
The Commission on Audit has the power to withhold payment of
money due to persons indebted to the government. Section 37
of Presidential Decree No. 1445
provides:chanroblesvirtuallawlibrary
Section 37. Retention of money for satisfaction of indebtedness
to government. When any person is indebted to any government
agency, the Commission may direct the proper officer to
withhold the payment of any money due such person or his
estate to be applied in satisfaction of the indebtedness.
Petitioner does not deny that the money for which she was
accountable as a cashier was lost through robbery. She also did
not deny that she kept the greater portion of the amount lost, not
in the vault, but in boxes, for practical reasons. She was not
motivated by malice when she kept the money that was in her
possession in the boxes.
Without going to the issue of the existence of negligence, the
Commission on Audit may already issue a withholding order for
petitioner's salaries and emoluments because of this.
Petitioner's act of keeping the money in boxes instead of in the
vault can be subsumed under "unlawful deposit" that may cause
a cashier to incur liability in case the unlawfully deposited money
was lost.
A similar case, Leano v. Domingo,84 showed that the safety of
money cannot be ensured when it is deposited in enclosures
other than the safety vault. Leano also involves a government
cashier whose money accountability was lost through robbery.
As in this case, the cashier did not keep her money
accountabilities in the vault. Requesting this court to review the
Commission on Audit's denial of her request for accountability,
Leano argued that she had no other choice but to use a steel
cabinet to keep her money accountabilities because the former
cashier did not entrust to her the safety vault's combination. This
court upheld the Commission on Audit's decision to deny
Leano's request for relief from accountabilities and found her to
be negligent in handling her money
accountabilities:chanroblesvirtuallawlibrary
[I]t is evident that petitioner fell short of the demands inherent in
her position. As aptly argued by the Solicitor General, an
exercise of proper diligence expected of her position would have
compelled petitioner to request an immediate change of the
combination of the safe. However, the record is bare of any
showing that petitioner had, at least, exerted any effort to have
the combination changed, content with the fact that, according
to her, the former cashier also used the steel cabinet as
depository of the funds.
In addition, it was found that the use of the steel cabinet was not
a wise and prudent decision. The steel cabinet, even when
locked, at times could be pulled open, thus it can be surmised
that even without the use of a key, the robbery could be
committed once the culprits succeed in entering the room
(Progress Report of the Police dated February 28, 1985).
Moreover, the original key of the steel cabinet was left inside a
small wooden box placed near the steel cabinet; it is therefore
highly possible that the said steel cabinet was opened with the
use of its original key (Police Alarm Report).85cralawlawlibrary
Hence, keeping National Food Authority collections outside the
vault constituted negligence on the part of petitioner.
The test of negligence is stated in Picart v. Smith,
Jr.:86ChanRoblesVirtualawlibrary
The test by which to determine the existence of negligence in a
particular case may be stated as follows: Did the defendant in
doing the alleged negligent act use that reasonable care and
caution which an ordinarily prudent person would have used in
the same situation? If not, then he is guilty of
negligence.87cralawlawlibrary
"The existence of negligence in a given case is not determined
by reference to the personal judgment of the actor in the
situation before him. The Law considers what would be reckless,
blameworthy, or negligent in the man of ordinary intelligence
and prudence and determines liability by that." 88
Petitioner is negligent because she failed to use "that
reasonable care and caution which an ordinarily prudent person
would have used in the same situation." 89 A cashier in her
position would have used the vault to keep her collections.
Petitioner failed to do this. Her negligence is made more
pronounced by the fact that the collections kept in the vault were
not taken by the robbers.
Petitioner insists that the space in the vault was not enough to
accommodate all her collections. However, she admitted that
she had been receiving relatively large collections in the past
three (3) months prior to the robbery. She should have
requested an additional vault wherein she could safely keep her
collections. She could also have set aside time to deposit her
collections for the day considering the. amount of cash she had
been collecting, in order to prevent its accumulation. This could
have ensured that the vault's space would be sufficient to keep
any remaining collection after the deposit. This could also have
prevented her collections from accumulating to an amount that
rendered any loss through untoward incidents such as robbery
significant. Petitioner failed to even allege that she exerted effort
to obtain additional vaults or to set aside time to deposit her
collections to the bank.
For these reasons, petitioner cannot be relieved from liability. A
person who is negligent in keeping the funds cannot be relieved
from liability.90
WHEREFORE, the petition is DENIED.
SO ORDERED.chanroblesvirtuallawlibrary

SECURITIES and EXCHANGE COMMISSION, Petitioner,
vs.
UNIVERSAL RIGHTFIELD PROPERTY HOLDINGS,
INC., Respondent.
DECISION
PERALTA, J.:
Before the Court is a petition for review under Rule 45 of the
Rules of Court, which seeks to reverse and set aside the
Decision1 dated January 21, 2008 of the Court of Appeals (CA)
in CA-G.R. SP No. 93337, the dispositive portion of which reads:
WHEREFORE, in view of the foregoing, the petition is
GRANTED. The assailed Resolution, dated December 15,
2005, of the Securities and Exchange Commission, as well as
its Order of Revocation dated December 8, 2004, are hereby
SET ASIDE.
SO ORDERED.2
The facts are as follows:
Respondent Universal Rightfield Property Holdings, Inc.
(URPHI) is a corporation duly registered and existing under the
Philippine Laws, and is engaged in the business of providing
residential and leisure-related needs and wants of the middle
and upper middle-income market.
On May 29, 2003, petitioner Securities and Exchange
Commission (SEC), through its Corporate Finance Department,
issued an Order revoking URPHI's Registration of Securities
and Permit to Sell Securities to the Public for its failure to timely
file its Year 2001 Annual Report and Year 2002 1st, 2nd and 3rd
Quarterly Reports pursuant to Section 173 of the Securities
Regulation Code (SRC), Republic Act No. 8799.
On October 16, 2003, URPHI filed with the SEC a
Manifestation/Urgent Motion to Set Aside Revocation Order and
Reinstate Registration after complying with its reportorial
requirements.
On October 24, 2003, the SEC granted URPHI's motion to lift
the revocation order, considering the current economic situation,
URPHI's belated filing of the required annual and quarterly
reports, and its payment of the reduced fine of ₱82,000.00.
Thereafter, URPHI failed again to comply with the same
reportorial requirements.
In a Notice of Hearing dated June 25, 2004, the SEC directed
URPHI to show cause why its Registration of Securities and
Certificate of Permit to Sell Securities to the Public should not
be suspended for failure to submit the said requirements.
Pertinent portion of the notice reads: Records show that the
corporation has failed to submit the following reports in violation
of SRC Rule 17.1:
(1) 2003 Annual Report (SEC Form 17-A); and
(2) 2004 1st Quarter Report (SEC Form 17-Q)
The company has been allowed a non-extendible period until
May 31, 2004 within which to file its 2003 Annual Report but to
date the said report has not been submitted.
In view of the foregoing and considering the inadequate
information available to the public, the corporation is hereby
directed to show cause why the Registration of its Securities and
Certificate of Permit to Sell Securities should not be suspended,
in a hearing scheduled before Atty. Francia A. Tiuseco-
Manlapaz on July 6, 2004, at the Securities Registration
Division, Corporation Finance Department of the Commission,
6th Floor, SEC Building, EDA, Greenhills, Mandaluyong, Metro
Manila at 10:00 o'clock in the morning. Failure of the company
to appear, through its representative, at the said hearing shall
be deemed a waiver on its part to be heard with regard to the
suspension of its Certificate of Permit to Sell Securities to the
Public.
SO ORDERED.4
During the scheduled hearing on July 6, 2004, URPHI, through
its Chief Accountant, Rhodora Lahaylahay, informed the SEC
why it failed to submit the reportorial requirements, viz.: (1) it
was constrained to reduce its accounting staff due to cost-
cutting measures; thus, some of the audit requirements were not
completed within the original timetable; and (2) its audited
financial statements for the period ending December 31, 2003
could not be finalized by reason of the delay in the completion
of some of its audit requirements.
In an Order dated July 27, 2004, the SEC suspended URPHI's
Registration of Securities and Permit to Sell Securities to the
Public for failure to submit its reportorial requirements despite
the lapse of the extension period, and due to lack of sufficient
justification for its inability to comply with the said requirements.
On August 23, 2004, the SEC, through its Corporation Finance
Department, informed URPHI that it failed to submit its 2004 2nd
Quarter Report (SEC Form 17-Q) in violation of the Amended
Implementing Rules and Regulations of the SRC Rule 17
.1(1)(A)(ii).5 It also directed URPHI to file the said report, and to
show cause why it should not be held liable for violation of the
said rule.
In a letter dated September 28, 2004, URPHI requested for a
final extension, or until November 15, 2004, within which to
submit its reportorial requirements. Pertinent portions of the
letter read:
We refer to your Order dated 27 July 2004, wherein the
Commission resolved to SUSPEND the Corporation's
Registration of Securities and Permit to Sell Securities to the
Public due to non-filing of the Corporation's reportorial
requirements under SRC Rule 17 effective for sixty (60) days or
until the reporting requirements are complied [with]; otherwise,
the Commission shall proceed with the revocation of the
Corporation's registration [of] securities. To date, the
Corporation has not filed with the Commission its 2003 Annual
Report in SEC Form 17-A and 2004 1st and 2°d Quarterly
reports in SEC Form 17-Q. The non-submission of these
reportorial requirements, as we have already disclosed to you
per our letter dated 13 September 2004, was due to the non-
finalization of the Corporation's audited financial statement for
the fiscal year ended December 31, 2003.
During our meeting with our external auditor, SGV & Co. last 8
September 2004, SGV agreed to facilitate the finalization of our
financial statements within two (2) weeks. Notwithstanding the
same, the Corporation foresees the impossibility of complying
with its submission until the end of the month, as the partners of
SGV are still reviewing the final draft of the financial statements.
The Corporation intends to comply with its reportorial
requirements. However, due to the foregoing circumstances, the
finalization of our financial statement has again been delayed.
In this regard, may we request for the last time until November
15, 2004 within which to submit said reportorial requirements.6
On December 1, 2004, URPHI filed with the SEC its 2003
Annual Report.
In an Order of Revocation7 dated December 8, 2004, the SEC
revoked URPHI's Registration of Securities and Permit to Sell
Securities to the Public for its failure to submit its reportorial
requirements within the final extension period.
On December 9, 10, and 14, 2004, URPHI finally submitted to
the SEC its 1st Quarterly Report for 2004, 2nd Quarterly Report
for 2004, and 3rd Quarterly Report for 2004, respectively.
Meantime, URPHI appealed the SEC Order of Revocation dated
December 8, 2004 by filing a Notice of Appeal and a
Memorandum both dated January 3, 2005.
In a Resolution dated December 15, 2005, the SEC denied
URPHI's appeal, thus: WHEREFORE, premises considered, the
Memorandum dated 03 January 2005 of Universal Rightfield
Property Holdings, Inc. praying for the reversal of the Order of
Revocation dated 08 December 2004 is DENIED for lack of
merit.
SO ORDERED.8
Aggrieved, URPHI filed a petition for review with the CA.
In a Decision dated January 21, 2008, the CA granted the
petition and set aside the SEC Order of Revocation after finding
that URPHI was not afforded due process because no due
notice was given and no hearing was conducted before its
registration of securities and permit to sell them to the public was
revoked. The CA noted that the hearing conducted on July 6,
2004 was only for the purpose of determining whether URPHI's
registration and permit to sell should be suspended and not
whether said registration should be revoked.
The CA ruled that based on how Sections 5.1 (m)9 and 13.110 of
the SRC are worded, suspension and revocation of URPHI's
registration of securities each requires separate notices and
hearings. It also held that the Ruling11 in Globe Telecom, Inc. v.
The National Telecommunications Commission12 (Globe
Telecom, Inc.) applies squarely to this case since the Section
13.1 of the SRC itself provides that due notice and hearing are
required before revocation may be ordered by the SEC. In view
of such specific mandate of the SRC in cases of revocation, the
CA rejected the SEC's argument that the hearing conducted for
the suspension of URPHI's registration can already be
considered as the hearing for revocation.
The CA also held that the SEC cannot brush aside the specific
mandate of Section 13 .1 of the SRC by merely invoking the
doctrine that administrative due process is satisfied when the
party is given the opportunity to explain one's side or the
opportunity to seek a reconsideration of the action or ruling
taken. Citing Globe Telecom, Inc.13 the CA explained that while
such doctrine remains valid and has been applied in numerous
instances, it must give way in instances when the statute itself,
such as Section 13 .1, demands prior notice and hearing. It
added that the imperativeness for a hearing in cases of
revocation of registration of securities assumes greater
significance, considering that revocation is a measure punitive
in character undertaken by an administrative agency in the
exercise of its quasi-judicial functions. Dissatisfied with the CA
Decision, the SEC filed the instant petition for review on
certiorari, raising the sole issue that:
THE COURT OF APPEALS DECIDED A QUESTION OF
SUBSTANCE WHICH IS NOT IN ACCORD WITH THE LAW
AND PREVAILING JURISPRUDENCE.14
On the one hand, the SEC contends that URPHI was accorded
all the opportunity to be heard and comply with all the reportorial
requirements before the Order of Revocation was issued.
Specifically, in the Order dated July 27, 2004 suspending
URPHI's registration of securities for 60 days, the SEC
expressly warned that such registration would be revoked
should it persistently fail to comply with the said requirements.
Still, URPHI continuously failed to submit the required reports.
On August 23, 2004, the SEC directed again URPHI to submit
the required report and to show cause why it should not be held
liable for violation of the law. Instead of submitting the required
reports, URPHI requested for a final extension, or until
November 15, 2004, within which to comply with its reportorial
requirements. For URPHI's failure to submit the said reports, the
SEC issued the Order of Revocation dated December 8, 2004.
URPHI immediately filed a motion for reconsideration thereof
through a Notice of Appeal and a Memorandum both dated
January 3, 2005, which the SEC later denied in the Resolution
dated December 15, 2005. Hence, URPHI was amply accorded
its guaranteed right to due process.
The SEC also submits that the factual milieu of Globe Telecom,
Inc.15 cited by the CA in its Decision is starkly different from this
case. Unlike in the former case where the Court ruled that the
fine imposed by the National Telecommunications Commission
without notice and hearing, was null and void due to the denial
of petitioner's right to due process, the SEC points out that
URPHI was duly notified of its violations and the corresponding
penalty that may be imposed should it fail to submit the required
reports, and was given more than enough time to comply before
the Order of Revocation was issued. The SEC adds that a
hearing was conducted on July 6, 2004 as to URPHI's repeated
failure to submit the reportorial requirements as mandated by
the SRC and its implementing rules and regulations, which was
the basis in issuing the said Order.
On the other hand, URPHI insists that the CA was correct in
ruling that the SRC requires separate notices and hearings for
revocation and suspension of registration of securities and
permit to sell them to the public. It then asserts that the warning
contained in the SEC's suspension Order dated July 27, 2004
does not meet the requirement of notice under the SRC. It
stresses that while the SEC issued a separate notice of hearing
for such suspension, no similar notice was issued as regards
such revocation. It also notes that the July 6, 2004 hearing was
with regard to the suspension of its registration of securities, and
that no hearing was ever conducted for purposes of revocation
of such registration.
On the SEC's claim that URPHI was afforded due process
because it was already given the opportunity to seek a
reconsideration of the Order of Revocation by filing its Notice of
Appeal and Memorandum, URPHI argues that the filing of such
appeal did not cure the violation of its right to due process. In
support of its argument, URPHI cites the Globe Telecom,
Inc.16 ruling that notice and hearing are indispensable when an
administrative agency exercises quasi-judicial functions and that
such requirements become even more imperative if the statute
itself demands it.
URPHI further cites the ruling17 in BLTB, Co. v. Cadiao, et
al.,18 to support its view that a motion for reconsideration is
curative of a defect in procedural due process only if a party is
given sufficient opportunity to explain his side of the controversy.
It claims that the controversy referred to is the underlying
substantive controversy of which the procedural due process
controversy is but an offshoot. Noting that the only issue raised
in its appeal was procedural, i.e., whether it was denied prior
notice and hearing under the SRC, URPHI contends that it
cannot be said that by appealing to the SEC, it had the
opportunity to explain its side on substantive controversy which
pertains to its alleged violation of the SRC and failure to comply
with the reportorial requirements that prompted the SEC to issue
the Order of Revocation. Hence, such appeal cannot be
considered curative of the defect in procedural due process
which attended the issuance of the said Order.
URPHI further submits that the prior revocation of its registration
on May 29, 2003 did not cure the lack of due process which
attended the revocation of its registration on December 8, 2004.
Since the SEC deemed it proper to lift the prior revocation, such
can no longer be used to sustain another revocation order, much
less one issued without prior notice and hearing. Granted that it
was accorded due process, URPHI asserts that the revocation
of its registration of securities and permit to sell them to the
public is inequitable under the circumstances. It calls attention
to the severe and certain consequences of such revocation, i.e.,
termination of the public offering of its securities, return of
payments received from purchasers thereof, and its delisting
from the PSE, which will cause financial ruin and jeopardize its
efforts to recover from its current financial distress. Claiming that
it exerted best effort and exercised good faith in complying with
the reportorial requirements, URPHI avers that the interest of
the investing public will be better served if, instead of revoking
its registration of securities, the SEC will merely impose
penalties and allow it to continue as a going concern in the hope
that it may later return to profitability.
The petition is meritorious.
There is no dispute that violation of the reportorial requirements
under Section 17.119 of the Amended Implementing Rules and
Regulation20 of the SRC is a ground for suspension or
revocation of registration of securities pursuant to Sections 13.1
and 54.1 of the SRC. However, contrary to the CA ruling that
separate notices and hearings for suspension and revocation of
registration of securities and permit to sell them to the public are
required, Sections 13 .1 and 54.1 of the SRC expressly provide
that the SEC may suspend or revoke such registration only after
due notice and hearing, to wit:
13.1. The Commission may reject a registration statement and
refuse registration of the security thereunder, or revoke the
effectivity of a registration statement and the registration of the
security thereunder after due notice and hearing by issuing an
order to such effect, setting forth its findings in respect thereto,
if it finds that:
a) The issuer:
xxxx
(ii) Has violated any of the provisions of this Code, the rules
promulgated pursuant thereto, or any order of the Commission
of which the issuer has notice in connection with the offering for
which a registration statement has been filed;21
xxxx
54.1. If, after due notice and hearing, the Commission finds that:
(a) There is a violation of this Code, its rules, or its orders; (b)
Any registered broker or dealer, associated person thereof has
failed reasonably to supervise, with a view to preventing
violations, another person subject to supervision who commits
any such violation; ( c) Any registrant or other person has, in a
registration statement or in other reports, applications, accounts,
records or documents required by law or rules to be filed with
the Commission, made any untrue statement of a material fact,
or omitted to state any material fact required to be stated therein
or necessary to make the statements therein not misleading; or,
in the case of an underwriter, has failed to conduct an inquiry
with reasonable diligence to insure that a registration statement
is accurate and complete in all material respects; or ( d) Any
person has refused to permit any lawful examinations into its
affairs, it shall, in its discretion, and subject only to the limitations
hereinafter prescribed, impose any or all of the following
sanctions as may be appropriate in light of the facts and
circumstances:
(i) Suspension, or revocation of any registration for the offering
of securities;22
The Court has consistently held that the essence of due process
is simply an opportunity to be heard, or as applied to
administrative proceedings, an opportunity to explain one's side
or an opportunity to seek a reconsideration of the action or ruling
complained of.23 Any seeming defect in its observance is cured
by the filing of a motion for reconsideration, and denial of due
process cannot be successfully invoked by a party who has had
the opportunity to be heard on such motion. 24 What the law
prohibits is not the absence of previous notice, but the absolute
absence thereof and the lack of opportunity to be heard.25
In the present case, due notice of revocation was given to
URPHI through the SEC Order dated July 27, 2004 which reads:
Considering that the company is under rehabilitation, the
request was granted and it was given a non-extendible period
until May 31, 2004 within which to comply.
Despite the extension[,] however, it failed to submit said reports.
Hence, a hearing was held on July 6, 2004 wherein the
company's representative, its Chief Accountant and a
Researcher appeared. No sufficient reason or justification for
the company's inability to comply with its reporting obligation
was presented.
In view thereof, the Commission[,] in its meeting held on July 22,
2004, resolved to SUSPEND the Registration of Securities and
Permit to Sell Securities to the Public issued to UNIVERSAL
RIGHTFIELD PROPERTY HOLDINGS, INC., in accordance
with Section 54 of the Securities Regulation Code.
This said Suspension shall be effective for sixty (60) days or until
the reporting requirements are complied [with,] otherwise the
Commission shall proceed with the revocation of the company's
registration of securities.
Let this Order be published in a newspaper of general circulation
in the Philippines or on the Commission's web page.
SO ORDERED.26
Contrary to the view that a separate notice of hearing to revoke
is necessary to initiate the revocation proceeding, the Court
holds that such notice would be a superfluity since the Order
dated July 27, 2004 already states that such proceeding shall
ensue if URPHI would still fail to submit the reportorial
requirements after the lapse of the 60-day suspension period.
After all, "due notice" simply means the information that must be
given or made to a particular person or to the public within a
legally mandated period of time so that its recipient will have the
opportunity to respond to a situation or to allegations that affect
the individual's or public's legal rights or duties.27
Granted that no formal hearing was held before the issuance of
the Order of Revocation, the Court finds that there was
substantial compliance with the requirements of due process
when URPHI was given opportunity to be heard. Upon receipt
of the SEC Order dated July 27, 2004, URPHI filed the letters
dated September 13 and 28, 2004, seeking a final extension to
submit the reportorial requirements, and admitting that its failure
to submit its 2nd Quarterly Report for 2004 was due to the same
reasons that it was unable to submit its 2003 Annual Report and
1st Quarterly Report for 2004. Notably, in its Order of
Revocation, the SEC considered URPHI's letters and stated that
it still failed to submit the required reports, despite the lapse of
the final extension requested.
In A.Z. Arnaiz, Realty, Inc. v. Office of the President,28 the Court
held that due process, as a constitutional precept, does not
always, and in all situations, require a trial-type proceeding.
Litigants may be heard through pleadings, written explanations,
position papers, memoranda or oral arguments. The standard of
due process that must be met in administrative tribunals allows
a certain degree of latitude as long as fairness is not ignored. It
is, therefore, not legally objectionable for being violative of due
process for an administrative agency to resolve a case based
solely on position papers, affidavits or documentary evidence
submitted by the parties. Guided by the foregoing principle, the
Court rules that URPHI was afforded opportunity to be heard
when the SEC took into account in its Order of Revocation
URPHI's September 13 and 28, 2004 letters, explaining its
failure to submit the reportorial requirements, as well as its
request for final extension within which to comply. Pertinent
portions of the said Order read:
The Commission in its meeting held on July 22, 2004 resolved
to suspend its Registration of Securities and Permit to Sell
Securities to the Public. The Order of Suspension stated that it
was to be effective for sixty (60) days or until the reporting
requirements were complied with by the company; otherwise,
the Commission shall proceed with the revocation of the
company's registration of securities.
The sixty (60)-day period had elapsed on September 25, 2004
but the Commission received a letter on September 29, 2004
from the President of the company, Mr. Jose L. Merin. In the said
letter, it was admitted that the corporation had failed to submit
its 2003 Annual Report (SEC Form 17-A) and its 2004 1st and
2nd Quarterly Reports (SEC Form 17-Q) but explained that the
reason for its inability to submit said reports was due to the non-
finalization of the company's audited financial statements for the
fiscal year ended December 31, 2003. It further stated that
during its meeting with its external auditor, SGV & Co., last
September 8, 2004, SGV agreed to facilitate the finalization of
its financial statements within two (2) weeks. The corporation
foresaw the impossibility of complying with its submission until
the end of the month as the partners of SGV were still reviewing
the final draft of the financial statements, thus, the request for
extension FOR THE LAST TIME until November 15, 2004 within
which to comply.
SEC Form 17-A (for 2003) was finally submitted on December
1, 2004.
IN VIEW THEREOF, the Commission, in its meeting held on
December 2, 2004, resolved to REVOKE the Registration of
Securities and Permit to Sell Securities to the Public issued to
UNIVERSAL RIGHTFIELD PROPERTY HOLDINGS, INC.29
Aside from having been given the opportunity to be heard before
the SEC issued the Order of Revocation, URPHI was likewise
able to seek reconsideration of such action complained of. After
the issuance of the said Order, URPHI filed a Notice of Appeal
and a Memorandum, asserting that it was issued without due
notice and hearing, and that the revocation is inequitable under
the circumstances. In the Resolution dated December 15, 2004,
the SEC denied URPHI's appeal in this wise:
In the instant case, URPHI was accorded due process when its
Chief Financial Officer gave its side on the imputed violation and
informed the Commission that it will not be able to submit its
Annual Report (SEC Form 17-A) for the fiscal year ending on 31
December 2003 and requested for additional time to comply with
the said requirements. The Commission granted URPHI a non-
extendible period of forty-seven (47) calendar days or until 15
November 2004 within which to comply.
In spite of the extension of time given, URPHI still failed to
submit the said reports. During the 06 July 2004 hearing where
the Chief Accountant and researcher of URPHI were present,
both failed to present sufficient justifications for URPHI's inability
to comply with its reporting obligations.
It is also noteworthy to mention that URPHI's Registration of
Securities and Permit to Sell Securities to the Public had been
revoked on several occasions on account of the same
deficiency. URPHI is aware of the SRC Rules and must suffer
the consequences of its reported violations.30
Verily, URPHI was given the opportunity to be heard before the
Order of Revocation was issued, as well as the opportunity to
seek the reconsideration of such order.
Meanwhile, the Court disagrees with URPHI's claim that the
Globe Telecom, Inc.31 ruling - that notice and hearing are
indispensable when an administrative agency exercises quasi-
judicial functions and that such requirements become even
more imperative if the statute itself demands it -is applicable to
the present case.
In Gamboa v. Finance Secretary,32 the Court has held that the
SEC has both regulatory and adjudicative functions, thus:
Under its regulatory responsibilities, the SEC may pass upon
applications for, or may suspend or revoke (after due notice and
hearing), certificates of registration of corporations, partnerships
and associations (excluding cooperatives, homeowners
associations, and labor unions); compel legal and regulatory
compliances; conduct inspections; and impose fines or other
penalties for violations of the Revised Securities Act, as well as
implementing rules and directives of the SEC, such as may be
warranted.
Relative to its adjudicative authority, the SEC has original and
exclusive jurisdiction to hear and decide controversies and
SRC/IRR Description First Offense Second
Provisions Offense
Section Late Filing Reprimand/Warning ₱50,000.00
17.1; of plus
SRC Rule Quarterly ₱300.00 per
17.1 Report day of delay
(SEC Form
17-Q)
Late Filing Reprimand/Warning ₱100,000.00
of Annual plus
Report ₱500.00 per
(SEC Form day of delay
17-A)
cases involving
– It bears emphasis that URPHI had committed several offenses
a. Intra-corporate and partnership relations between or
among the corporation, officers and stockholders and
partners, including their elections or appointments;
b. State and corporate affairs in relation to the legal
existence of corporations, partnerships and
associations or to their franchises; and
c. Investors and corporate affairs particularly in respect
of devices and schemes, such as fraudulent practices,
employed by directors, officers, business associates,
and/or other stockholders, partners, or members of
registered firms; x x x
As can be gleaned from the aforequoted ruling, the revocation
of registration of securities and permit to sell them to the public
is not an exercise of the SEC's quasi-judicial power, but of its
regulatory power. A "quasi-judicial function" is a term which
applies to the action, discretion, etc., of public administrative
officers or bodies, who are required to investigate facts, or
ascertain the existence of facts, hold hearings, and draw
conclusions from them, as a basis for their official action and to
exercise discretion of a judicial nature.33 Although Section 13.1
of the SRC requires due notice and hearing before issuing an
order of revocation, the SEC does not perform such quasi-
judicial functions and exercise discretion of a judicial nature in
the exercise of such regulatory power. It neither settles actual
controversies involving rights which are legally demandable and
enforceable, nor adjudicates private rights and obligations in
cases of adversarial nature. Rather, when the SEC exercises its
incidental power to conduct administrative hearings and make
decisions, it does so in the course of the performance of its
regulatory and law enforcement function.
Significantly, unlike in Globe Telecom, Inc.34 where the Court
ruled that the fine imposed by the NTC without notice and
hearing, was null and void due to the denial of petitioner's right
to due process, the revocation of URPHI's registration of
securities and permit to sell them to the public cannot be
considered a penalty but a withdrawal of a privilege, which
regulatory power the SEC validly exercised after giving it due
notice and opportunity to be heard.
While URPHI correctly relied in BLTB Co., Inc. v. Cadiao 35 to
support its view that a motion for reconsideration is curative of a
defect in procedural due process only if a party is given sufficient
opportunity to explain his side of the controversy, the
Third Court rejects URPHI's claim that it did not have the
Offense opportunity to explain the substantive controversy of its
violation of the SRC reportorial
₱60,000.00
requirements.36 Contrary to the claim that only the
plus
issue of procedural due process was raised in its
₱600.00 per
appeal with the SEC, URPHI also raised in its
day of delay
Memorandum dated January 3, 2005 the reasons why
it failed to comply with the said requirements, and why
revocation is inequitable under the circumstances.37
₱200,000.00
plus For the late filing of annual report and quarterly report,
₱1000.00 SEC Memorandum Circular No. 6, Series of 2005, the
per day of Consolidated Scale of Fines in effect at the time the
delay offenses were committed, provides for the following
administrative penalties:
for failure to comply with the reportorial requirements for which
it was fined and its registration of securities revoked. On May
29, 2003, the SEC issued an Order revoking URPHI's
Registration of Securities and Permit to Sell Securities to the
Public for its failure to timely file its Year 2001 Annual Report
and Year 2002 1st, 2nd and 3rd Quarterly Reports. Then, on
October 24, 2003, the SEC granted URPHI's petition to lift the
revocation, considering the current economic situation, its
belated filing of the required annual and quarterly reports, and
its payment of the reduced fine of ₱82,000.00. Despite the
foregoing, URPHI failed again to submit its 2003 Annual Report,
and Year 2004 1st, 2nd and 3rd Quarterly Reports within the
requested extension periods.
Therefore, notwithstanding the belated filing of the said reports,
as well as the claim that public interest would be better served if
the SEC will merely impose penalties and allow it to continue in
order to become profitable again, the SEC cannot be faulted for
revoking once again URPHI's registration of securities and
permit to sell them to the public due to its repeated failure to
timely submit such reports. Needless to state, such continuing
reportorial requirements are pursuant to the state policies
declared in Section 238 of the SRC of protecting investors and
ensuring full and fair disclosure of information about securities
and their issuer.
All told, the CA erred in ruling that the SEC revoked URPHI's
registration of securities and permit to sell them to the public
without due process of law.1âwphi1 Quite the contrary, the
requirements of due notice and hearing under Sections 13 .1
and 54.1 of the SRC were substantially complied with. Due
notice was made through the Order dated July 27, 2004 stating
that revocation proceeding shall ensue if URPHI would still fail
to submit the reportorial requirements after the lapse of the 60-
day suspension period. Though no formal hearing was held,
URPHI was still given an opportunity to be heard through the
letters dated September 13 and 18, 2004 before the Order of
Revocation was issued, as well as through its Notice of Appeal
and Memorandum when it moved to reconsider the said order.

WHEREFORE, the petition is GRANTED and the Decision

dated January 21, 2008 of the Court of Appeals in CA-G.R. SP
No. 93337, is REVERSED and SET ASIDE. In lieu thereof, the
Resolution dated December 15, 2005 of the Securities and
Exchange Commission and its Order of Revocation dated
December 8, 2004 are REINSTATED.

SO ORDERED.
SAN MIGUEL PROPERTIES, INC., Petitioner, v. BF HOMES,
INC., Respondent. 4. (S-41277) 123518-A 380 sq. m.

DECISION 5. (S-41275) 123516-A 364 sq. m.

6. (S-41271) 123512-A 364 sq. m.

LEONARDO-DE CASTRO, J.:
7. (S-41273) 123514-A 364 sq. m.
Assailed in this Petition for Review on Certiorari under Rule 45
of the Revised Rules of Court filed by San Miguel Properties,
8. (S-41269) 123510-A 364 sq. m.
Inc. (SMPI) are: 1) the Decision1 dated January 31, 2005 of the
Court of Appeals in CA-G.R. SP No. 83631, which affirmed with
modification the Decision dated January 27, 2004 of the Office 9. (S-41267)123508-A 364 sq. m.
of the President (OP), in O.P. Case No. 03-E-203, and
remanded the case to the Housing and Land Use Regulatory 10. (S-41265) 123506-A 429 sq. m.
Board (HLURB) for further proceedings; and 2) the
Resolution2 dated August 9, 2005 of the appellate court in the 11. (S-41263) 123505-A 329 sq. m.
same case, which denied the Motion for Reconsideration of
SMPI.
12. (S-41261) 19477-A 329 sq. m.
The antecedents of the case are as follows:
13.(S-41258)19476-A 280 sq. m.
BF Homes, Inc. (BF Homes) is the owner of several parcels of
land located in the northern portion of BF Homes Parañaque 14. (S-41257) 23504-A 308 sq. m.
Subdivision, particularly identified as Italia II lots.
15.(S-41256)23503-A 280 sq. m.
BF Homes, represented by Florencio B. Orendain (Orendain),
as rehabilitation receiver appointed by the Securities and 16. (S-41255) 23502-A 308 sq. m.
Exchange Commission (SEC); and SMPI, represented by
Federico C. Gonzales, President, entered into three successive
Deeds of Absolute Sale whereby the former sold to the latter a 17. (S-41254)23501-A 280 sq. m.
total of 130 Italia II lots with a combined area of 44,345 square
meters for the aggregate consideration of P106,247,701.00, 8. (S-41253) 123500-A 308 sq. m.
broken down as follows:
19. (S-41557)28372-A 502 sq. m.
Deed of Date of No. Total Consideration
Absolute Execution of Area 20. (S-41279) 123520-A 665 sq. m.
Sale Lots (square
meters)
Despite receipt of the afore-mentioned letter, BF Homes failed
First Deed3 In 1992 76 22,816 P52,134,560.00 or refused to heed the demand of SMPI. Consequently, SMPI
Second In 1993 13 5,964 P14,990,514.00 filed a Complaint8 for specific performance with damages before
Deed4 the HLURB on August 24, 2000 to compel BF Homes to deliver
the remaining 20 TCTs to SMPI. The case was docketed as
Third Deed5 April 1993 41 15,565 P39,122,627.00 HLURB Case No. REM-082400-11183.
(Third Sale)
Total 130 44,345 P106,247,701.00 In its Answer (With Counterclaim),9 BF Homes alleged that the
Deeds of Absolute Sale executed in 1992 to 1993 were entered
into by Orendain in his personal capacity and without authority,
SMPI completed the payments for the 130 Italia II lots in as his appointment as rehabilitation receiver was revoked by the
December 1995.6 In compliance with Section 37 of all the three SEC in an Order dated May 17, 1989. In support of its
Deeds of Absolute Sale, BF Homes delivered the Transfer counterclaims, BF Homes averred that the consideration paid by
Certificates of Title (TCTs) to SMPI but only for 110 of the 130 SMPI for the 130 Italia II lots was grossly inadequate and
Italia II lots purchased by SMPI. disadvantageous to BF Homes; and that the Deeds of Absolute
Sale were undated and not notarized. Hence, BF Homes prayed
SMPI, thru counsel, sent BF Homes a letter on May 20, 1996 that the HLURB render judgment: 1) dismissing the complaint of
demanding the delivery of the remaining 20 TCTs, specifically: SMPI; 2) declaring the sale of the 130 Italia II lots null and void;
3) ordering SMPI to reconvey to BF Homes the titles for the [110]
Italia II lots; and 4) ordering SMPI to pay BF Homes exemplary
TCT No. Area damages, attorney's fees, and cost of suit.

SMPI, in its Reply (Answer with Counterclaim dated October 16,

1. (S-41285) 123526-A 538 sq. m. 2000),10 countered that the validity of the three Deeds of
Absolute Sale was already upheld by the SEC in its Omnibus
2. (S-41261) 123522-A 329 sq. m. Order dated November 7, 1994, and the motion for
reconsideration of BF Homes of said Omnibus Order was denied
3. (S-41279) 123520-A 384 sq. m. by the SEC in its subsequent Order dated August 22, 1995. Both
Orders were deemed final, executory, and unappealable by the
SEC in another Omnibus Order dated July 31, 1996. As a result,
the Deeds of Absolute Sale were binding on BF Homes. SMPI
further maintained that Orendain was authorized to sign the
Deeds of Absolute Sale for and in behalf of FBO Networks
Management, Inc. - the receiver which the SEC appointed to
replace Orendain, upon the latter's motion to convert his
involvement in the receivership from an individual to a corporate
capacity. SMPI additionally asserted that absent substantiation,
the allegation of BF Homes of inadequate consideration for the
sale of the Italia II lots was self-serving; and that despite being
undated and not notarized, the Deeds of Absolute Sale were
valid since they contained the essential elements of a contract.
And even assuming that the Deeds of Absolute Sale may be
rescinded, SMPI argued that BF Homes did not offer and was
not prepared to return the consideration paid by SMPI, plus
interest.
BF Homes filed a Rejoinder (To Complainant's
Reply)11 contending that the SEC Omnibus Order dated July 31,
1996 has not yet become final as BF Homes assailed the said
Order in a Petition for Certioraribefore the SEC. In its Decision
dated May 8, 1997, the SEC neither confirmed the authority of
Orendain nor cleared Orendain/FBO Networks Management,
Inc. from any liability for his/its unauthorized acts, but clarified
that the final report of the rehabilitation receiver was not yet
approved and was merely admitted as part of the records. BF
Homes also stated that although the SEC Order dated
September 12, 2000 already terminated the rehabilitation
proceedings because of the improvement in the solvency status
of BF Homes, BF Homes filed a Motion for Clarification and/or
Partial Reconsideration of said SEC Order and sought a
resolution of the issues relating to the receiver's irregular acts,
including the sale of the Italia II lots to SMPI. BiF Homes insisted
that the transactions entered into by Orendain were anomalous
as the latter sold the 130 Italia II lots to SMPI at a price that was
inadequate and disadvantageous to BF Homes.
Housing and Land Use Arbiter Rowena C. Balasolla (Arbiter
Balasolla) issued an Order dated January 22, 2001 12 directing
the parties to submit their respective position papers and
supporting evidence, as well as their draft decisions. Thereafter,
the case was deemed submitted for resolution.
In her Decision13 dated January 25, 2002, Arbiter Balasolla
suspended the proceedings in HLURB Case No. REM-082400-
11183 for the following reasons:
What clearly is the issue to be resolved is whether or not [BF
Homes] is obligated to deliver the title of the remaining twenty
(20) lots to [SMPI] notwithstanding that the latter had fully paid
the same.
Were this is a simple case of non-delivery of title of the lot or unit
to the buyer upon full payment, sans the attendant problems, the
answer would readily be in the affirmative. But this is not so in
the instant case. This is a case of non-delivery of titles of a sale
of 20 lots between two developers, and the lots sold are from an
existing subdivision, which was under rehabilitation and made
by a receiver which authority had been continuously questioned
by the controlling stockholders of a corporation under
rehabilitation.
In the light thereof, it becomes imperative to discuss the
antecedent facts that would help in arriving at a judicious
resolution of the instant complaint.
Sometime in September 1984, respondent [BF Homes] filed with
the SEC a petition for rehabilitation and for declaration of
suspension of payments. In February 1988, the SEC appointed
Florencio Orendain as [BF Homes'] rehabilitation receiver. In
May 1989, the SEC revoked the appointment of Mr. Orendain
and appointed FBO Networks Management, Inc. (FBO) as
receiver of the [BF Homes].
It was during the time 1992-1993 that [SMPI] bought from [BF
Homes] the 130 parcels of land located in the northern portion
of BF Homes, Paranaque City.
In June 1994, Mr. Orendain, on behalf of FBO, submitted to the
SEC the Closing Report on [BF Homes] I of the receivership
program covering the period from March 1988 to January 1994.
[BF Homes] protested and questioned the said report by filing
the corresponding pleadings with the SEC praying that the
receivership of FBO represented by Mr. Orendain be suspended
due to violations of trust and breach of fiduciary obligation and
sought the nullification of the transaction entered into by Mr.
Orendain. In November 1994, FBO was relieved of its duties and
responsibilities as rehabilitation receiver and a Committee of
Receivers was appointed in lieu thereof, to undertake and
continue the rehabilitation program of [BF Homes].
In July 1996, the SEC issued an Omnibus Order in regard to
rehabilitation case. Subsequently, however, [BF Homes] filed a
petition for review for which the SEC rendered a decision in May
1997. In the said decision, the SEC held that the admission of
the Receiver's Closing Report is merely for the purpose of
receiving and noting them for inclusion in the records of the case
and not an admittance (sic) and acceptance of the merits and
veracity of the contents thereof.
In September 2000, the SEC issued another Order terminating
the rehabilitation proceedings without, however, deciding on the
merits and veracity of the contents of the Receiver's Closing
Report. Hence, [BF Homes] filed in October 2000 a Motion for
Clarification and/or Partial Reconsideration of the said Order
which remains pending with the SEC until the present.
Apparently, it is in the context of the foregoing issues that [BF
Homes] refused to deliver the remaining twenty (20) titles of the
lots sold to [SMPI] as the former claimed, among others, that Mr.
Orendain did not have the authority to sell the 130 parcels of
land in the first place.
As the peculiar background of this case would tell, it is inevitable
that the resolution of the issues raised in the instant complaint
would be largely influenced by the outcome of the cases pending
in other tribunals which are directly and ineluctably related to the
issues brought before this Board.
This Board is cognizant of the fact that respondent had
questioned the action of its rehabilitation receiver before the
SEC, raising several issues against him, including but not
limited, to his authority to sell the subject lots to the complainant
the resolution of which is still pending the said body.
Thus, while this Board may have jurisdiction over the instant
complaint, the issue on whether or not Mr. Orendain has
overstepped his authority which is pending resolution by the
SEC, is to our mind a condition sine qua non, the final resolution
of which by said body is a logical antecedent to the issue
involved in the instant complaint and which only the SEC has
exclusive jurisdiction to decide.
Under the circumstances, we are inclined to suspend the
proceedings before the Board until the SEC shall have resolved
with finality on the issue of the authority of Mr. Orendain/FBO
Networks Management to enter into such transactions on behalf
of [BF Homes].
WHEREFORE, PREMISES CONSIDERED, this Office hereby
suspends the proceedings of the instant complaint until the final
resolution of the pending incidents before the Securities and
Exchange Commission.14
SMPI filed a Petition for Review (Re: Decision dated January 25,
2002)15 with the HLURB Board of Commissioners, asseverating
that: 1) the SEC, in its Orders dated November 7, 1994 and
August 22, 1995, had upheld the validity of the Deeds of
Absolute Sale and confirmed the authority of the receiver to sell
the 130 Italia II lots to SMPI, and said Orders already became
final after BF Homes failed to appeal the same before the Court
of Appeals, as provided for in Section 3, 16 Republic Act No.
5434, the law in force at that time; 2) Orendain and/or FBO
Networks Management, Inc. were immune from suit pursuant to
Section 9, Rule 917 of the Interim Rules of Procedure Governing
Intra-corporate Controversies and Section 17, Rule 418 of the
Interim Rules of Procedure on Corporate Rehabilitation; 3) BF
Homes was estopped from refusing to deliver the remaining 20
titles since it had already received the consideration and
benefits from the sale of the Italia II lots to SMPI and delivered
110 out of 130 TCTs to SMPI; 4) the principle of suspending a
case due to a prejudicial question only applies to criminal cases;
5) BF Homes was mandated, under pain of criminal sanction
under Section 25,19 in relation to Section 3920 of Presidential
Decree No. 957,21 also known as "The Subdivision and
Condominium Buyer's Protection Decree," to deliver the TCTs
of the remaining 20 Italia II lots, which had already been fully
paid for by SMPI; 6) assuming that Orendain exceeded his
authority as receiver of BF Homes in selling the 130 Italia II lots
to SMPI, then Orendain could be held liable for damages but the
titles to said lots acquired by SMPI by reason of the sale would
be unaffected, absent any action for reconveyance instituted by
BF Homes; and 7) the issue regarding Orendain's authority to
undertake the sale of the Italia II lots to SMPI was rendered moot
and academic by the issuance of SEC Order dated September
12, 2000, terminating the receivership of BF Homes.
After a further exchange of pleadings by the parties, the HLURB
Board of Commissioners22 rendered its Decision23 dated March
28, 2003, ruling thus:
We find no evidence to support the argument that the SEC had
upheld with finality on the sales transaction entered into by
Orendain with [SMPI]. On the contrary the order of the SEC
stated that the closing report of the receiver is being accepted
for inclusion of the records and not an admittance (sic) or
acceptance of the merits and veracity of the contents thereof.
The issue of whether Orendain had authority to sell the lots is
still unresolved.
While this board may have the competence to rule on the validity
of the sales transaction entered into by Orendain ostensibly in
behalf of BF Homes, we decline to rule on the said issue in
deference to the SEC or its successor-in-interest, which has first
taken cognizance of the issue, applying the doctrine of primary
jurisdiction. Thus, in Vidad vs. RTC of Negros Oriental, it was
held:
While no prejudicial question strictly arises where one is a civil
case and the other is an administrative proceeding, in the
interest of good order, it behooves the court to suspend its action
on the cases before it pending the final outcome of the
administrative proceedings. The doctrine of primary jurisdiction
does not warrant a court to arrogate unto itself the authority to
resolve a controversy the jurisdiction over which is initially
lodged with an administrative body [of special competence].
Wherefore, the petition for review is denied and the decision of
the office below is affirmed.24ChanRoblesVirtualawlibrary
SMPI appealed the foregoing Decision of the HLURB Board of
Commissioners before the OP. The appeal was docketed as
O.P. Case No. 03-E-203. The OP, in its Decision25 dated
January 27, 2004, adjudged that the HLURB should have
resolved HLURB Case No. REM-082400-11183:
The basic complaint in this case is one for specific performance
under Section 25 of Presidential Decree (PD) 957 - "The
Subdivision and Condominium Buyers' Protective", infra.
As early as August 1987, the Supreme Court already recognized
the authority of the HLURB, as successor agency of the National
Housing Authority (NHA), to regulate, pursuant to PD 957 in
relation to PD 1344, the real estate trade, with exclusive
jurisdiction to hear and decide cases "involving specific
performance of contractual and statutory obligations filed by
buyers of subdivision lots . . . against the owner, developer,
dealer, broker or salesman" (Antipolo Realty Corp. vs. National
Housing Authority (153 SCRA). Then came the reiterative
rulings in Solid Homes vs. Pavawal (177 SCRA 72
[1989]), United Housing Corp. vs. Dayrit (181 SCRA 295
[1990]), and Realty Exchange Venture Corp. vs. Sendino, 233
SCRA 665 [1994]. And as stressed in Realty Exchange,
citing C.T. Torres Enterprises, Inc. vs. Hibionada (191 SCRA
268 [1990], the HLURB, in the exercise of its adjudicatory
powers and functions, "must interpret and apply contracts,
determine the rights of the parties under these contracts and
award damages whenever appropriate."
Given its clear statutory mandate, the HLURB's decision to await
for some other forum to decide - if ever one is forthcoming - the
issue on the authority of Orendain to dispose of subject lots
before it peremptorily resolves the basic complaint is
unwarranted, the issues thereon having been joined and the
respective position papers and the evidence of the parties
having been submitted. To us, it behooved the HLURB to
adjudicate, with usual dispatch, the right and obligations of the
parties in line with its appreciation of the obtaining facts and
applicable law. To borrow from Mabuhay Textile Mills Corp. vs.
Ongpin(141 SCRA 437), it does not have to rely on the findings
of others to discharge this adjudicatory functions.26
The OP then proceeded to resolve the question of whether or
not SMPI was entitled to the delivery of the 20 TCTs:
There can be no quibbling about the following postulates: 1) The
existence of a perfected deed of absolute sale covering the said
lots; 2) SMPI appears to be an innocent purchaser for value; 3)
Full payment and receipt by [BF Homes] of the stipulated
purchase price; 4) Admission by the SEC of FBO's audited
Closing Report; 5). Termination of the rehabilitation
proceedings, and 6) The obligation of the owner or developer
under Sec. 25 of PD 957 to "deliver the title of the lot or units to
the buyer upon [full] payment of the lot or unit."
Given the foregoing perspective, the question thus formulated
should be answered in the affirmative. [BF Homes'] challenge
against the validity of the conveying deed on the ground of
inadequacy of the purchase price cannot be given cogency. As
a matter of law, lesion or inadequacy of cause shall not
invalidate a contract, save in cases specified by law or unless
there has been fraud, mistake or undue influence (Art. 1355,
Civil Code). Thus, [BF Homes'] allegation about the inadequacy
of price for the twenty (20) lots, even if true, cannot invalidate
the sale in question, absent a showing that such sale is a case
exempted by law from the operation of said article or that fraud,
mistake or undue influence attended the sale (Auyong Hian vs.
CTA, 59 SCRA 110).
[BF Homes'] posture regarding the invalidity of the same sales
transaction owing to Orendain's alleged lack of authority to
execute the corresponding deed may be accorded serious
consideration were it not for its acceptance and retention of the
purchase price for the covered lots. As aptly argued in this
appeal, citing jurisprudence, estoppel attached to [BF Homes]
when it accepted the benefits arising from the performance of
SMPI of its undertaking under the contract of sale. By the
doctrine of estoppel, a party is barred from repudiating or
canceling an otherwise defective or rescissible contract by his
receipt of payments due thereunder (Republic v. Acoje Mining
Co., Inc., 7 SCRA 361; Angeles v. Calasanz, 135 SCRA 332);
the bar of estoppel also precludes one who, by his conduct, had
induced another to act in a particular manner, from adopting an
inconsistent position that thereby causes prejudice to another
(Cruz vs. CA, 293 SCRA 239).
Significantly, Orendain signed the three deeds of sale adverted
to covering 130 lots in 1992 and 1993, or during FBO's watch as
receiver. Yet, [BF Homes] opted to fully implement the
transactions covered by two of these deeds and partially
implement the third by delivering the titles to 110 lots. In net
effect, [BF Homes] did recognize the authority of Orendain to
execute those contracts. But if Orendain was indeed bereft of
authority during the time material, as [BF Homes] would have
this Office believe, how explain (sic) its inaction to recover
damages against one it veritably depicts as an impostor?
x x x x
Much has been made about the sale of the 130 lots not having
been approved by the SEC. It bears to stress in this regard that
the Closing Report which, doubtless includes the said sale, had
been confirmed and admitted by the SEC Hearing Panel. It may
be that the Commission en banc did not specifically confirm and
approve the sale. But neither did it interpose objection thereto,
let alone disapprove the same. Be that as it may, the
presumptive validity and enforceability of such sale must be
posited.27ChanRoblesVirtualawlibrary
The OP denied the claims for damages of both parties for
insufficiency of evidence but awarded attorney's fees in the
amount of PI00,000.00 to SMPI, which was compelled to litigate.
In the end, the OP decreed:
IN VIEW OF ALL THE FOREGOING, judgment is hereby
entered ordering BF Homes, Inc., to deliver to San Miguel
Properties, Inc., the corresponding titles to the lots subject of the
instant case, free from all liens aind encumbrances, except to
the subdivision restrictions referred to in the conveying deed of
sale, and to pay the latter the sum of P100,000.00 as and. by
way of attorneys' fees. All other claims and counterclaims are
hereby DISMISSED. The decision of the HLURB dated 28
March 2003 is accordingly REVERSED and SET ASIDE.28
BF Homes filed a Motion for Reconsideration but it was denied
by the OP in a Resolution29 dated March 26, 2004.
Aggrieved, BF Homes sought recourse from the Court of
Appeals by way of a Petition for Review30 under Rule 43 of the
Revised Rules of Court, which was docketed as CA-G.R. SP No.
83631. In its Decision31dated January 31, 2005, the Court of
Appeals agreed with the OP that the HLURB had the primary
and exclusive jurisdiction to resolve the complaint for specific
performance and damages of SMPI and should not have
suspended the proceedings until the SEC had ruled with finality
on the issue of Orendain's authority to sell the 130 Italia II lots to
SMPI:
Presidential Decree No. 957 was issued on 12 July 1976. It was
promulgated to cover questions that relate to subdivisions and
condominiums. Its object is to provide for an appropriate
government agency, the HLURB, to which all parties aggrieved
in the enforcement of contractual rights with respect to said
category of real estate may take course.
In the case of JESUS LIM ARRANZA vs. B.F. HOMES, INC.,
the Supreme Court said:
Section 3 ofP.D. No. 957 empowered the National Housing
Authority (NHA) with the "exclusive jurisdiction to regulate
the real estate trade and business." On 2 April
1978, P.D. No. 1344 was issued to expand the jurisdiction of the
NHA to include the following:
SECTION 1. In the exercise of its functions to regulate the
real estate trade and business and in addition to its powers
provided for in Presidential Decree No. 957, the National
Housing Authority shall have exclusive jurisdiction to hear
and decide cases of the following nature:
A. Unsound real estate business practices;cralawlawlibrary
B. Claims involving refund and any other claims filed by
subdivision lot or condominium unit buyer against the
project owner, developer, dealer, broker or salesman; and
C. Cases involving specific performance of contractual and
statutory obligations filed by buyers of subdivision lot or
condominium unit asainst the owner, developer, dealer,
broker or salesman. (Emphasis supplied)
Thereafter, the regulatory and quasi-judicial functions of
the NHA were transferred to the Human Settlements
Regulatory Commission (HSRC) by virtue of Executive
Order No. 648 dated 7 February 1981. Section 8 thereof
specifies the functions of the NHA that were transferred to
the HSRC including the authority to hear and decide "cases
on unsound real estate business practices; claims
involving refund filed against project owners, developers,
dealers, brokers or salesmen and cases of specific
performance." Executive Order No. 90 dated 17 December
1986 renamed the HSRC as the Housing and Land Use
Resulatory Board (HLURB). (Underscoring supplied.)
Certainly, in the instant case, [SMPI] is a buyer within the
contemplation of P.D. 957. Clearly, the acquisition of the one
hundred thirty (130) lots was for a valuable consideration.
The jurisdiction of the SEC, on the other hand, is defined by P.D.
No. 902-A, as amended, as
follows:chanRoblesvirtualLawlibrary
Sec. 5. In addition to the regulatory and adjudicative
functions of the Securities and Exchange Commission over
corporations, partnerships and other forms of associations
registered with it as expressly granted under existing laws
and decrees, it shall have original and exclusive jurisdiction
to hear and decide cases involving.
(a) Devices or schemes employed by or any acts, of the
board of directors, business associates, its officers or
partnership, amounting to fraud and misrepresentation
which may be detrimental to the interest of the public and/or
of the stockholder, partners, members of associations or
organizations registered with the
Commission;cralawlawlibrary
(b) Controversies arising out of intra-corporate or
partnership relations, between and among stockholders,
members, or associates; between any or all of them and the
corporation, partnership or association of which they are
stockholders, members or associates, respectively; and
between such corporation, partnership or association and
the state insofar as it concerns their individual franchise or
right to exist as such entity; and
(c) Controversies in the election or appointments of
directors, trustees, officers or managers of such
corporations, partnerships or
associations.ChanRoblesVirtualawlibrary
In the ARRANZA case, the Supreme Court said
that:chanRoblesvirtualLawlibrary
For the SEC to acquire jurisdiction over any controversy
under these provisions, two elements must be considered:
(1) the status or relationship of the parties; and (2) the
nature of the Question that is the subject of their
controversy.
The first element requires that the controversy must arise
"out of intra-corporate or partnership relations between and
among stockholders, members or associates; between any
or all of them and the corporation, partnership or
association of which they are stockholders, members or
associates, respectively; and between such corporation,
partnership or association and the State in so far as it
concerns their individual franchises.
In the instant case, [SMPI] is not a stockholder, member or
associate of [BF Homes]. It is a lot buyer in the subdivision
developed by [BF Homes.]
The second element requires that the dispute among the parties
be intrinsically connected with the regulation or the internal
affairs of the corporation, partnership or association.
In the case at hand, [SMPI's] complaint before the HLURB is for
specific performance to enforce its rights as purchaser of
subdivision lots as regards the delivery of twenty (20) TCTs.
Certainly, the issue in this case is not related to the "regulation"
of [BF Homes] or to [BF Homes'] "internal affairs."
As a matter of fact, Section 25 of PD
957 provides:chanRoblesvirtualLawlibrary
Section 25. Issuance of Title. The owner or developer shall
deliver the title of the lot or unit to the buyer upon full
payment of the lot or unit. No fee, except those required for
the registration of the deed of sale in the Registry of Deeds,
shall be collected for the issuance of such title. In the event
a mortgage over the lot or unit is outstanding at the time of
the issuance of the title to the buyer, the owner or developer
shall redeem the mortgage or the corresponding portion
thereof within six months from such issuance in order that
the title over any fully paid lot or unit may be secured and
delivered to the buyer in accordance herewith,
(underscoring supplied.)
In the above-mentioned case of Arranza, the Supreme Court
also said:chanRoblesvirtualLawlibrary
P.D. No. 902-A, as amended, defines the jurisdiction of the SEC;
while P.D. No. 957, as amended, delineates that of the HLURB.
These two quasi-judicial agencies exercise functions that are
distinct from each other. The SEC has authority over the
operation of all kinds of corporations, partnerships or
associations with the end in view of protecting the interests of
the investing public and creditors. On the other hand, the
HLURB has jurisdiction over matters relating to observance of
laws governing corporations engaged in the specific business of
development of subdivisions and condominiums. The HLURB
and the SEC being bestowed with distinct powers and functions,
the exercise of those functions by one shall not abate the
performance by the other of its own functions. As respondent
puts it, "there is no contradiction between P.D. No. 902-A and
P.D. No. 957."
Hence, the powers of the HLURB can not be in derogation of the
SEC's authority. P.D. Nos. 902-A and 957 are laws in pari
materia. This is because P.D. No. 902-A relates to all
corporations, while P.D. No. 957 pertains to corporations
engaged in the particular business of developing subdivisions
and condominiums.
Next, this brings us to the collateral issue of whether or not
HLURB properly suspended the proceeding until SEC shall
have resolved with finality the issue of authority of Mr. Orendain.
Given the foregoing perspective, the collateral issue thus
formulated should be answered in the negative. Furthermore, in
several cases decided by the Supreme Court, the High Court
has consistently ruled that the NHA or the HLURB has
jurisdiction over complaints arising from contracts between the
subdivision developer and the lot buyer or those aimed at
compelling the subdivision developer to comply with its
contractual and statutory obligations.
Hence, the HLURB should take jurisdiction over respondent's
complaint because it pertains to matters within the HLURB's
competence and expertise. The proceedings before the HLURB
should not be suspended.32
The Court of Appeals, however, differed from the OP Decision
by ordering the; remand of the case to the HLURB in recognition
of the doctrine of primary jurisdiction. The dispositive portion of
the Decision of the appellate court reads:
WHEREFORE, the questioned Decision of the Office of the
President [is] AFFIRMED with modification. The case is
REMANDED to the Housing and Land Use Regulatory Board for
continuation of proceedings with dispatch.33
SMPI filed a Motion for Partial Reconsideration (Re: Decision
dated January 31, 2005)34 insofar as the Court of Appeals
remanded the case to the HLURB for further proceedings. The
appellate court denied said Motion in a Resolution35 dated
August 9, 2005.
SMPI now comes before this Court,. through the instant Petition,
assailing the aforementioned Decision and Resolution of the
Court of Appeals based on the following assignment of errors:
I.
THE COURT OF APPEALS' DECISION DATED 31 JANUARY
2005 REMANDING THE CASE TO THE HLURB IS
CONSTITUTIONALLY FLAWED AND A PATENT NULLITY
CONSIDERING THAT:
1. IT MISERABLY FAILED TO DISCUSS
CLEARLY AND DISTINCTLY THE LEGAL
BASIS AND/OR JUSTIFICATION FOR
REMANDING THE CASE TO THE HLURB
 AS MANDATED BY SECTION 14, ARTICLE
VIII, 1987 CONSTITUTION.
2. WORSE, THE COURT OF APPEALS
FAILED TO IDENTIFY THE FACTUAL
MATTERS THAT IT CLAIMS NEED STILL
BE TRIED OR DETERMINED BY THE
HLURB THAT WOULD HAVE JUSTIFIED
THE REMAND OF THE CASE.
3. IN ANY EVENT, [BF HOMES] AND THE
COURT OF APPEALS' CLAIMED
DOCTRINE OF PRIMARY JURISDICTION IS
FOREVER BARRED AS IT COULD NOT BE
INVOKED FOR THE FIRST TIME ON
APPEAL.
4. EVEN ASSUMING ARGUENDO THAT THE
DOCTRINE OF PRIMARY JURISDICTION IS
STILL INVOCABLE, IT IS NONETHELESS
INAPPLICABLE SINCE THE PARTIES HAD
DULY AMPLIFIED THEIR RESPECTIVE
CAUSES OF ACTION AND DEFENSES VIA
THEIR SUBMISSION OF PLEADINGS AND
POSITION PAPERS BEFORE THE HLURB,
AND UPON WHICH THE OFFICE OF THE
PRESIDENT DECIDED ON THE MERITS.
II.
EVEN THEN, THE COURT OF APPEALS COMMITTED
GRAVE, SERIOUS AND REVERSIBLE ERROR WHEN IT
REMANDED THE CASE TO THE HLURB FOR FURTHER
"PRESENTATION OF EVIDENCE" DESPITE THE DECISION
ON THE MERITS OF THE OFFICE OF THE PRESIDENT IN
THAT:
1. THE ISSUE HERE BEING A SIMPLE
QUESTION OF LAW ON WHETHER OR
NOT SMPI WAS ENTITLED TO THE
DELIVERY OF THE BALANCE OF 130
FULLY PAID LOTS/TITLES OR
EQUIVALENT TO TWENTY (20) TITLES,
THE COURT OF APPEALS SHOULD HAVE
AFFIRMED THE DECISION ON THE
MERITS OF THE OFFICE OF THE
PRESIDENT.
2. IN FACT, THE RELEVANT FACTS OF THE
CASE, E.G. FULL PAYMENT OF THE
PURCHASE PRICE OF THE SUBJECT
LOTS IN FAVOR OF [BF HOMES] AND
NON-DELIVERY TO SMPI OF THE TITLES
OVER THE SUBJECT LOTS BY [BF
HOMES], WERE UNDISPUTED AND MORE
SO ADMITTED BY THE PARTIES IN THEIR
RESPECTIVE HLURB POSITION PAPERS
AND OTHER PLEADINGS FOR WHICH NO
TRIABLE EVIDENTIARY MATTER IS LEFT
TO BE RESOLVED BY THE HLURB.
3. INDEED, THE OFFICE OF THE
PRESIDENT, PER ITS DECISION DATED 27
JANUARY 2004, CORRECTLY RESOLVED
THIS SIMPLE ISSUE, AND FORTUNATELY
IN FAVOR OF SMPI, BASED ON THE
PLEADINGS AND POSITION PAPERS
FILED BY THE PARTIES IN ACCORDANCE
WITH SECTION 5, RULE VI, HLURB RULES.
THE COURT OF APPEALS OUGHT TO
HAVE SIMILARLY ENFORCED THIS
HLURB RULE.
4. FURTHER PROCEEDINGS BEFORE THE
HLURB IS DILATORY, UNNECESSARY,
SUPERFLUOUS AND CIRCUITOUS.
HIERARCHICALLY (sic), THE HLURB IS
PRECLUDED AND BARRED FROM
REOPENING, MUCH LESS REVERSING
THE DECISION OF THE OFFICE OF THE
PRESIDENT.
5. THE COURT OF APPEALS' STANCE IS
TANTAMOUNT TO A RE-OPENING OF THE
OFFICE OF THE PRESIDENT'S DECISION,
HENCE WOULD WREAK HAVOC TO THE
DOCTRINE OF SUBSTANTIAL RES
JUDICATA.
6. IF AT ALL, THE HLURB NEED ONLY BE
DIRECTED TO RESOLVE SMPI'S PENDING
MOTION FOR EXECUTION, AND NOT
CONDUCT FURTHER PROCEEDINGS FOR
RECEPTION OF THE PARTIES' EVIDENCE
THAT ARE UNSPECIFIED.
III.
THE COURT OF APPEALS COMMITTED GRAVE, SERIOUS
AND REVERSIBLE ERROR WHEN IT FAILED AND/OR
REFUSED TO AFFIRM THE OFFICE OF THE PRESIDENT'S
DECISION DATED 27 JANUARY 2004 IN THAT:
1. THE SUBJECT SALE TRANSACTIONS,
DULY APPROVED AND CONFIRMED BY
THE SEC PER ITS ORDERS DATED 07
NOVEMBER 1994 AND 31 JULY-1996, ARE
PRESUMED VALID AND REGULAR SINCE
THESE WERE OFFICIAL ACTS OF SEC-
APPOINTED RECEIVER MR. FLORENCIO
B. ORENDAIN.
2. IN FACT, SEC RECEIVER ORENDAIN'S
ACTS CANNOT BE IMPUGNED BY [BF
HOMES] SINCE UNDER SECTION 9, RULE
9, INTERIM RULES OF PROCEDURE
GOVERNING INTRA- CORPORATE
CONTROVERSIES AND SECTION 17,
RULE 4, INTERIM RULES OF
PROCEDURE ON CORPORATE
REHABILITATION, WHICH OPERATES
RETROACTIVELY BEING A PROCEDURAL
RULE, RECEIVERS ENJOY IMMUNITY
FROM SUITS ARISING FROM THE
EXERCISE OF THEIR FUNCTIONS AND
DUTIES.
3. NONETHELESS, [BF HOMES] IS
ESTOPPED FROM REFUSING TO
DELIVER THE REMAINING 20 TCTs SINCE
IT HAD PREVIOUSLY DELIVERED TO SMPI
110 TCTs OUT OF 130 TCTs FOR WHICH
[BF HOMES] HAD DULY .RECEIVED FULL
PAYMENT THEREFOR IN THE TOTAL
 AMOUNT
PHP104,600,402.47.36 CONSEQUENTLY,
[BF HOMES] IS OBLIGED TO DELIVER THE
TITLES TO SMPI PURSUANT TO SECTION
25, P.D. 957.
4. THE MATTER OF THE PURCHASE PRICE
IS IRRELEVANT CONSIDERING THE BIG
VOLUME INVOLVED. IN FACT, THE
AVERAGE PURCHASE PRICE OF THE
LOTS IN THE AMOUNT OF PHP2,500.00
PER SQ. M. IS VALID AND REASONABLE
SINCE THE SALE INVOLVED A TOTAL OF
130 LOTS AMOUNTING TO PHP
104,600,402.47.
5. EVEN ASSUMING ARGUENDO THAT
THERE MAY BE SUBSTANTIAL DISPARITY
BETWEEN THE AVERAGE PURCHASE
PRICE OF PHP2.500/SQ.M. AND THE
MARKET VALUE AT PHP3,500/SQ.M. AS
[BF HOMES] CLAIMS, MERE INADEQUACY
OF THE PURCHASE PRICE, STANDING
ALONE AND WITHOUT PROOF OF
ACTUAL FRAUD, CANNOT INVALIDATE
THE PARTIES' SALES CONTRACT PER
ARTICLE 1355, NEW CIVIL CODE.
6. IF AT ALL, [BF HOMES'] REMEDY IS TO
FILE THE APPROPRIATE ACTION FOR
RECONVEYANCE WITH THE REGULAR
COURT, ABSENT WHICH, IT IS LEGALLY
BOUND TO DELIVER TO SMPI THE
SUBJECT TITLES.
7. ACCORDINGLY, SINCE SMPI WAS
CONSTRAINED TO LITIGATE DUE TO [BF
HOMES'] UNJUSTIFIED REFUSAL TO
DELIVER THE SUBJECT TITLES, SMPI IS
ENTITLED TO THE PAYMENT OF
ATTORNEY'S FEES.37
The Petition is meritorious.
Presidential Decree No. 95738 dated July 12, 1976 conferred
exclusive jurisdiction to regulate the real estate trade and
business upon the National Housing Authority
(NHA).39 Presidential Decree No. 134440dated April 2, 1978
expanded the quasi-judicial powers of NHA by providing as
follows:
Section 1. In the exercise of its functions to regulate the real
estate trade and business and in addition to its powers provided
for in Presidential Decree No. 957, the National Housing
Authority shall have exclusive jurisdiction to hear and decide
cases of the following nature:
A. Unsound real estate business
practices;cralawlawlibrary
B. Claims involving refund and any other claims
filed by subdivision lot or condominium unit
buyer against the project owner, developer,
dealer, broker or salesman; and
C. Cases involving specific performance of
contractual and statutory obligations filed
by buyers of subdivision lot or
condominium unit against the owner,
developer, dealer, broker or salesman."
(Emphases ours.)
Per Executive Order No. 64841 dated February 7, 1981, the
powers of the NHA were transferred to the Human Settlements
Regulatory Commission, which, pursuant to Executive Order
No. 90 dated December 17, 1986, was subsequently renamed
as HLURB.42 In Siasoco v. Narvaja,43 the Court highlighted the
exclusive jurisdiction of the HLURB over complaints for specific
performance in certain real estate transactions:
Under the Executive Order creating it, the HLURB
has exclusive jurisdiction to "hear and decide cases of
unsound real estate business practices; claims involving refund
filed against project owners, developers, dealers, brokers, or
salesmen; and cases of specific performance." Accordingly,
in United Housing Corporation v. Dayrit, we ruled that it is the
HLURB, not the trial court, which has jurisdiction
over complaints for specific performance filed against
subdivision developers to compel the latter to execute
deeds of absolute sale and to deliver the certificates of title
to buyers. (Emphases supplied.)
The Court reiterated in Bank of the Philippines Islands v. ALS
Management and Development Corporation44 that:
[T]he jurisdiction of the HLURB over cases enumerated in
Section 1 of PD No. 1344 is exclusive. Thus, we have ruled that
the board has sole jurisdiction in a complaint of specific
performance for the delivery of a certificate of title to a
buyer of a subdivision lot; for claims of refund regardless of
whether the sale is perfected or not; and for determining whether
there is a perfected contract of sale. (Emphases
supplied.)ChanRoblesVirtualawlibrary
It is clear from the plain language of Section 1 of Presidential
Decree No. 1344 and aforecited jurisprudence that the HLURB
had exclusive jurisdiction over the complaint for specific
performance filed by SMPI against BF Homes for the delivery of
the remaining 20 TCTs.
In fact, in the instant case, the HLURB did exercise jurisdiction
over and did take cognizance of the complaint of SMPI. Arbiter
Balasolla received pleadings and evidences from the parties,
and after the period for filing position papers and draft decisions
by the parties had lapsed, deemed the case submitted for
decision. However, at this stage, Arbiter Balasolla demurred,
and instead of deciding the case, suspended the proceedings
until the SEC ruled on the issue of whether or not Orendain, the
receiver of BF Homes, had authority to execute the Deeds of
Absolute Sale over the 130 Italia II lots in favor of SMPI. On
appeal, the HLURB Board of Commissioners affirmed the
suspension of proceedings.
When the case was appealed to the OP by SMPI, and then to
the Court of Appeals by BF Homes, both the OP and the Court
of Appeals sustained the jurisdiction of HLURB over the
complaint for specific performance filed by SMPI, the only
difference being that the OP proceeded to resolve the case on
the merits based on the evidence on record while the appellate
court remanded the case to the HLURB for further proceedings.
The OP and the Court of Appeals are correct that the HLURB,
in the exercise of its exclusive jurisdiction, did not have to
suspend the proceedings and should have went ahead to
resolve the complaint for specific performance filed by SMPI
given its statutory mandate under Section 1 of Presidential
Decree No. 1344 and its technical competence and expertise
over the subject matter. The HLURB was called upon to
determine the contractual obligations of BF Homes and SMPI,
as seller and buyer of subdivision lots, respectively, under the
terms and conditions of the Deeds of Absolute Sale in relation
to the provisions of Presidential Decree No. 957. In contrast, the
proceedings before the SEC involved the receivership of BF
Homes, an intra-corporate matter, as pointed out by the Court
of Appeals. While the HLURB and SEC proceedings may be
related (i.e., Orendain executed the Deeds of Absolute Sale of
the 130 Italia II lots as receiver of BF Homes), the two cases
could proceed independently of one another. A ruling by the
SEC that Orendain did not have or had exceeded his authority
as receiver in executing the Deeds of Absolute Sale is not
absolutely determinative of the fate of the complaint for specific
performance of SMPI before the HLURB. It would not
automatically result in the nullification or rescission of the said
Deeds or justify the refusal of BF Homes to deliver the 20 TCTs
to SMPI as there would be other issues which need to be
considered, such as the good faith or bad faith of SMPI as buyer,
ratification by BF Homes of the Deeds, etc., and the HLURB is
not obliged to suspend its proceedings until all of these issues
are resolved or decided by other courts/tribunals. HLURB could
already make a preliminary finding on the validity of the Deeds
of Absolute Sale executed by Orendain for the purpose of
ascertaining the right of SMPI to the delivery of the 20 TCTs.
The HLURB is behooved to settle the controversy brought
before it with dispatch if only to achieve the purpose of
Presidential Decree No. 957, to wit:
The provisions of P.D No. 957 were intended to encompass all
questions regarding subdivisions and condominiums. The
intention was to provide for an appropriate government agency,
the HLURB, to which all parties - buyers and sellers of
subdivision and condominium units - may seek remedial
recourse. The law recognized, too, that subdivision and
condominium development involves public interest and welfare
and should be brought to a body, like the HLURB, that has
technical expertise. In the exercise of its powers, the HLURB,
on the other hand, is empowered to interpret and apply
contracts, and determine the rights of private parties under
these contracts. This ancillary power, generally judicial, is now
no longer with the regular courts to the extent that the pertinent
HLURB laws provide.45ChanRoblesVirtualawlibrary
Nonetheless, the Court disagrees with the Court of Appeals and
finds no more need to remand the case to the HLURB.
To recall, the parties were able to file pleadings and submit
evidence before Arbiter Balasolla. The case was already
deemed submitted for resolution with Arbiter Balasolla stopping
short only of actually rendering a decision. Taking into account
that the necessary pleadings and evidence of the parties are
already on record, returning the instant case to the HLURB for
further proceedings will simply be circuitous and inconsistent
with the summary nature of HLURB proceedings.46 The Court
keeps in mind the shared objective of Rule 1, Section 2 of the
1996 Rules of Procedure of the HLURB, as amended, and Rule
1, Section 6 of the Revised Rules of Court to promote a just,
speedy, and inexpensive disposition/determination of every
action.47
Pursuant to the doctrine of primary jurisdiction, "the courts
cannot or will not determine a controversy involving a question
which is within the jurisdiction of an administrative tribunal,
where the question demands the exercise of sound
administrative discretion requiring the special knowledge,
experience, and services of the administrative tribunal to
determine technical and intricate matters of fact, and a
uniformity of ruling is essential to comply with the purposes of
the regulatory statute administered."48However, said doctrine is
not an absolute or inflexible rule. The Court recognized several
exceptions in Republic v. Lacap,49viz.:
[T]he doctrine of exhaustion of administrative remedies and the
corollary doctrine of primary jurisdiction, which are based on
sound public policy and practical considerations, are not
inflexible rules. There are many accepted exceptions, such as:
(a) where there is estoppel on the part of the party invoking the
doctrine; (b) where the challenged administrative act is patently
illegal, amounting to lack of jurisdiction; (c) where there is
unreasonable delay or official inaction that will irretrievably
prejudice the complainant; (d) where the amount involved is
relatively small so as to make the rule impractical and
oppressive; (e) where the question involved is purely legal and
will ultimately have to be decided by the courts of justice;
(f) where judicial intervention is urgent; (g) when its
application may cause great and irreparable damage; (h) where
the controverted acts violate due process; (i) when the issue of
non-exhaustion of administrative remedies has been rendered
moot; (j) when there is no other plain, speedy and adequate
remedy; (k)when strong public interest is involved; and, (1)
in quo warranto proceedings, x x x. (Emphases supplied.)
The contractual relationship between BF Homes as owner and
SMPI as buyer of subdivision lots is governed by Presidential
Decree No. 957 and is undeniably imbued with public interest.
Hence, it is crucial that the dispute between them be resolved
as swiftly as possible. In Spouses Chua v. Ang,50 the Court
declared that "public interest and welfare are involved in
subdivision and condominium development, as the terms of
Presidential Decree Nos. 957 and 1344 expressly reflect, x x x
Shelter is a basic human need whose fulfillment cannot afford
any kind of delay."
Even if the case is no longer remanded, BF Homes cannot claim
denial of due process. "The essence of due process is to be
heard, and, as applied to administrative proceedings, this
means a fair and reasonable opportunity to explain one's side,
or an opportunity to seek a reconsideration of the action or ruling
complained of. Administrative due process cannot be fully
equated with due process in its strict judicial sense, for in the
former a formal or trial-type hearing is not always necessary,
and technical rules of procedure are not strictly applied."51 In
the instant case, SMPI and BF Homes were afforded the
opportunity to present and address each other's arguments
through an exchange of pleadings, as well as to submit their
respective evidence before Arbiter Balasolla. To recall, the case
was already submitted for decision before Arbiter Balasolla,
meaning, there is nothing more left for the parties to submit or
do. To remand the case and repeat the entire process once
again before the HLURB Arbiter will not only be impractical, but
also unreasonable and oppressive for SMPI.
Relevant herein are the following pronouncements of the Court
in Ching v. Court of Appeals52:
[T]he Supreme Court may, on certain exceptional instances,
resolve the merit:? of a case on the basis of the records and
other evidence before it, most especially when the resolution of
these issues would best serve the ends of justice and promote
the speedy disposition of cases.
Thus, considering the peculiar circumstances attendant in the
instant case, this Court sees the cogency to exercise its plenary
power:chanRoblesvirtualLawlibrary
"It is a rule of procedure for the Supreme Court to strive to settle
the entire controversy in a single proceeding leaving no root or
branch to bear the seeds of future litigation. No useful purpose
will be served if a case or the determination of an issue in a case
is remanded to the trial court only to have its decision raised
again to the Court of Appeals and from there to the Supreme
Court (citing Board of Commissioners vs. Judge Joselito de la
Rosa and Judge Capulong, G.R. Nos. 95122-23).
"We have laid down the rule that the remand of the case or of
an issue to the lower court for further reception of evidence is
not necessary where the Court is in position to resolve the
dispute based on the records before it and particularly where the
ends of justice would not be subserved by the remand thereof
(Escudem vs. Dulay, 158 SCRA 69). Moreover, the Supreme
Court is clothed with ample authority to review matters, even
those not raised on appeal if it finds that their consideration is
necessary in arriving at a just disposition of the case."
On many occasions, the Court, in the public interest and for the
expeditious administration of justice, has resolved actions on the
merits instead of remanding them to the trial court for further
proceedings, such as where the ends of justice would not be
subserved by the remand of the
case.ChanRoblesVirtualawlibrary
Consequently, the Court proceeds to resolve the primary issue
in this case: Whether or not SMPI is entitled to the delivery of
the remaining 20 TCTs for the lots it purchased from BF Homes.
The Court answers affirmatively.
Section 25 of Presidential Decree No. 957 explicitly mandates
that "[t]he owner or developer shall deliver the title of the
[subdivision] lot or [condominium] unit to the buyer upon full
payment of the lot or unit."
Section 3 of all the three Deeds of Absolute Sale also reads:
3. [BF Homes] likewise covenants to deliver to [SMPI] the
properties free and clear of tenants, if any, and shall submit any
and all titles, documents and/or papers which may be required
to effect the transfer of the properties to [SMPI][.]53
In the case at bench, SMPI submitted adequate proof showing
full payment to and receipt by BF Homes of the purchase price
for the 130 Italia II lots as fixed in the Deeds of Absolute
Sale.54 BF Homes expressly admitted receipt of some
payments, while it remained silent as to the others without
presenting controverting evidence.
Upon full payment by SMPI of the purchase price for the 130
Italia II lots to BF Homes, it became mandatory upon BF Homes
to deliver the TCTs for said lots to SMPI. As the Court held
in G.O.A.L., Inc. v. Court of Appeals55:
Upon full payment of the agreed price, petitioner is
mandated by law to deliver the title of the lot or unit to the
buyer. Both the "Contract to Sell" of petitioner and private
respondents, and Sec. 25 of P.D. 957 state -
Sec. III (Contract to Sell). - Title and Ownership of Unit. Upon
full payment by the vendees of the full amount of the purchase
price stipulated under Sec. Ill hereof, the assessments and
expenses under Sec. IV and otherwise upon compliance by the
VENDEES of all obligations therein, the VENDOR will convey to
the VENDEE all rights and interests of the former and to the Unit,
subject hereof together with the interest in the common area and
in the Condominium Corporation appurtenant to such unit x x x."
Sec. 25, P.D. 957 - Issuance of Title. - The owner or developer
shall deliver the title of the lot or unit to the buyer upon full
payment of the lot or unit x x x. In the event a mortgage over
the lot or unit is outstanding at the time of the issuance of the
title to the buyer, the owner or developer shall redeem the
mortgage or the corresponding portion thereof within six months
from such issuance in order that the title over any paid lot or unit
may be secured and delivered to the buyer in accordance
herewith."
Petitioner also attempts to justify its failure to deliver the
certificate of title of private respondent Teng by claiming that it
used the title as part collateral for the additional loan NHA had
extended for the construction of the fifth floor.
The Court observes the frequent allusion of petitioner to its
predicament brought about by the abandonment of the project
by the first contractor. But such is irrelevant in light of Sec.
25 of P.D. 957 as well as of the Contract to Sell of the parties.
While we empathize with petitioner in its financial dilemma
we cannot make innocent parties suffer the consequences
of the former's lack of business acumen. Upon full payment
of a unit, petitioner loses all its rights and interests to the
unit in favor of the buyer, x x x. (Emphases supplied.)
To justify its refusal to deliver the remaining 20 TCTs to SMPI,
BF Homes asserts that 1) the Deeds of Absolute Sale were
undated and not notarized; 2) Orendain did not have or
exceeded his authority as receiver in entering into the contracts
of sale of the Italia II lots with SMPI; and 3) the consideration for
the said Italia II lots were grossly inadequate and
disadvantageous for BF Homes.
The Court is not persuaded.
Article 1358(1) of the Civil Code requires that "[a]cts and
contracts which have for their object the creation, transmission,
modification or extinguishment of real rights over immovable
property" must appear in a public document; and sales of real
property or of an interest therein shall be governed by Article
1403(2) and 1405 of the same Code. Pertinent portions of
Articles 1403(2) and 1405 of the Civil Code are reproduced
below:
Art. 1403. The following contracts are unenforceable, unless
they are ratified:
x x x x
(2) Those that do not comply with the Statute of Frauds as set
forth in this number. In the following cases an agreement
hereafter made shall be unenforceable by action, unless the
same, or some note or memorandum, thereof, be in writing, and
subscribed by the party charged, or by his agent; evidence,
therefore, of the agreement cannot be received without the
writing, or a secondary evidence of its
contents:chanRoblesvirtualLawlibrary
x x x x
(e) An agreement of the leasing for a longer period than one
year, or for the sale of real property or of an interest
therein;cralawlawlibrary

xxxx
Art. 1405. Contracts infringing the Statute of Frauds, referred to
in No. 2 of Article 1403, are ratified by the failure to object to the
presentation of oral evidence to prove the same, or by the
acceptance of benefit under them.
The contracts of sale of the 130 Italia II lots between BF Homes
and SMPI were actually reduced into writing into the three
Deeds of Absolute Sale which were signed by the
representatives of the two corporations. The only defect was
that the Deeds were not notarized and, therefore, were not
public documents as required by Article 1358(1) of the Civil
Code. Cenido v. Spouses Apacionado56 involved a closely
similar situation and the Court adjudged therein that:
The sale of real property should be in writing and subscribed by
the party charged for it to be enforceable. The "Pagpapatunay"
is in writing and subscribed by Bonifacio Aparato, the
vendor; hence, it is enforceable under the Statute of Frauds.
Not having been subscribed and sworn to before a notary public,
however, the "Pagpapatunay" is not a public document, and
therefore does not comply with Article 1358, Paragraph 1 of the
Civil Code.
The requirement of a public document in Article 1358 is not
for the validity of the instrument but for its efficacy.
Although a conveyance of land is not made in a public
document, it does not affect the validity of such
conveyance. Article 1358 does not require the accomplishment
of the acts or contracts in a public instrument in order to validate
the act or contract but only to insure its efficacy, so that after the
existence of said contract has been admitted, the party bound
may be compelled to execute the proper document, x x x.
x x x x
The private conveyance of the house and lot is therefore valid
between Bonifacio Aparato and respondent spouses, x x x For
greater efficacy of the contract, convenience of the parties and
to bind third persons, respondent spouses have the right to
compel the vendor or his heirs; to execute the necessary
document to properly convey the property.
Also instructive is the following discussion of the Court
in Swedish Match v. Court of Appeals,57 on the Statute of
Frauds:
The Statute of Frauds embodied in Article 1403, paragraph (2),
of the Civil Code requires certain contracts enumerated therein
to be evidenced by some note or memorandum in order to be
enforceable. The term "Statute of Frauds" is descriptive of
statutes which require certain classes of contracts to be in
writing. The Statute does not deprive the parties of the right
to contract with respect to the matters therein involved, but
merely regulates the formalities of the contract necessary
to render it enforceable. Evidence of the agreement cannot
be received without the writing or a secondary evidence of
its contents.
The Statute, however, simply provides the method by which
the contracts enumerated therein may be proved but does
not declare them invalid because they are not reduced to
writing. By law, contracts are obligatory in whatever form they
may have been entered into, provided all the essential requisites
for their validity are present. However, when the law requires
that a contract be in some form in order that it may be valid
or enforceable, or that a contract be proved in a certain way,
that requirement is absolute and indispensable.
Consequently, the effect of non-compliance with the
requirement of the Statute is simply that no action can be
enforced unless the requirement is complied with. Clearly,
the form required is for evidentiary purposes only. Hence, if the
parties permit a contract to be proved, without any objection, it
is then just as binding as if the Statute has been complied with.
The purpose of the Statute is to prevent fraud and perjury in the
enforcement of obligations depending for their evidence on the
unassisted memory of witnesses, by requiring certain
enumerated contracts and transactions to be evidenced by a
writing signed by the party to be charged.
However, for a note or memorandum to satisfy the Statute, it
must be complete in itself and cannot rest partly in writing and
partly in parol. The note or memorandum must contain the
names of the parties, the terms and conditions of the contract,
and a description of the property sufficient to render it capable
of identification. Such note or memorandum must contain the
essential elements of the contract expressed with certainty that
may be ascertained from the note or memorandum itself, or
some other writing to which it refers or within which it is
connected, without resorting to parol evidence.
x x x x
The Statute of Frauds is applicable only to contracts which
are executory and not to those which have been
consummated either totally or partially. If a contract has
been totally or partially performed, the exclusion of parol
evidence would promote fraud or bad faith, for it would
enable the defendant to keep the benefits already derived
by him from the transaction in litigation, and at the same
time, evade the obligations, responsibilities or liabilities
assumed or contracted by him thereby. This rule, however,
is predicated on the fact of ratification of the contract within
the meaning of Article 1405 of the Civil Code either (1) by
failure to object to the presentation of oral evidence to
prove the same, or (2) by the acceptance of benefits under
them. x x x. (Emphases supplied.)
Based on the afore-quoted jurisprudence, the Deeds of Absolute
Sale are enforceable. First, the Deeds are already in writing and
signed by the parties, and only lack notarization, a formality
which SMPI could compel BF Homes to comply with. As private
documents, the Deeds are still binding between the parties and
the conveyance of the 130 Italia II lots by BF Homes to SMPI by
virtue of said Deeds is valid. And second, the Deeds were
already ratified as BF Homes had accepted the benefits from
said contracts when it received full payment from SMPI of the
purchase price for the 130 Italia II lots. The Deeds were also
substantially performed considering that BF Homes had
previously delivered to SMPI the TCTs for 110 out of the 130
lots, only refusing to deliver the TCTs for the remaining 20 lots.
BF Homes cannot insist on the lack of authority of Orendain as
receiver to sign the Deeds of Absolute Sale for the 130 Italia II
lots. While it is true the SEC revoked the appointment of
Orendain as rehabilitation receiver of BF Homes in 1989, the
SEC thereafter immediately appointed FBO Networks
Management, Inc., in replacement as receiver. Orendain was
the Chairman of FBO Networks Management, Inc. Hence, when
Orendain signed the Deeds of Absolute Sale for the 130 Italia II
lots, he did so as Chairman of FBO Networks Management, Inc.,
the appointed receiver of BF Homes.
Under Section 6(d) of Presidential Decree No. 902-A, otherwise
known as the SEC Reorganization Act, the management premium on fraud or misrepresentation, which this Court will not
committee or rehabilitation receiver is empowered to take sanction.
custody and control of all existing assets and properties of such
corporations under management; to evaluate the existing assets
Furthermore, the averment of BF Homes of inadequacy of the
and liabilities, earnings and operations of such corporations; to
purchase price for the 130 Italia II lots deserves scant
determine the best way to salvage and protect the interest of
consideration. Section 3(p), Rule 131 of the Revised Rules of
investors and creditors; to study, review and evaluate the
Court presumes that private transactions have been fair and
feasibility of continuing operations, and restructure and
regular. The only evidence submitted by BF Homes in support
rehabilitate such entities if determined to be feasible by the
of its claim is the appraisal report which valued the lots at
SEC.58 The acts of the receiver, being an appointed officer of
P3,500.00 and P3,000.00 per square meter. The appraisal
the SEC,59 enjoy the presumption of regularity.60
report, however, does not necessarily prove that the purchase
price for the lots agreed upon in the Deeds of Absolute Sale,
In the instant case, the acts of FBO Networks Management, Inc.,
averaged at P2,500.00 per square meter, is grossly inadequate
as receiver of BF Homes, undertaken through Orendain,
and disadvantageous to BF Homes. There are considerations
including the sale of the 130 Italia II lots to SMPI in 1992 and
for which sellers may agree to sell their property for less than
1993, are so far presumed to have been regularly performed
the market value, such as the urgent financial need of the seller,
absent evidence to the contrary. While BF Homes questioned
cash or immediate payment, and/or the high number of
the acts of Orendain/FBO Networks Management, Inc. as
properties purchased at the same time. In this case, SMPI
receiver before the SEC, the SEC terminated the rehabilitation
explained that it was granted a lower purchase price because it
proceedings without definitively ruling on the same and
bought the Italia II lots in volume, and BF Homes was unable to
recognized the transfer of jurisdiction over such subject matter
repudiate said explanation.
to the Regional Trial Courts (RTC) with the passage of Republic
Act No. 8799, otherwise known as the Securities Regulation
Finally, as to the award of attorney's fees, Article 2208 of the
Code. There is no showing herein whether BF Homes pursued
Civil Code allows the recovery of attorney's fees and expenses
before the RTC any case to nullify or invalidate the alleged
of litigation, other than judicial costs, even in the absence of
unauthorized or irregular acts of Orendain/FBO Networks
stipulation, "[w]here the defendant acted in gross and evident
Management, Inc. as receiver.
bad faith in refusing to satisfy the plaintiffs plainly valid, just and
demandable claim." SMPI obviously had a valid and
Moreover, even assuming for the sake of argument that
demandable claim against BF Homes, which unjustifiably and
Orendain/FBO Networks Management, Inc. did act without or
inexcusably refused to comply with the mandate in Presidential
beyond his/its authority as receiver in entering into the contracts
Decree No. 957 and undertaking in the Deeds of Absolute Sale
of sale of the 130 Italia II lots with SMPI, then the said contracts
to deliver the titles to the subdivision lots upon complete
were merely unenforceable and could be ratified, Article 1403(1)
payment for said properties. The sudden refusal of BF Homes
of the Civil Code provides:
to deliver the last 20 TCTs, after having previously delivered the
other 110 TCTs, constitutes bad faith and justifies the award of
ARTICLE 1403. The following contracts are unenforceable, attorney's fees in favor of SMPI, which was forced to litigate to
unless they are ratified: enforce its rights. The amount of P100,000.00 awarded by the
OP as attorney's fees is just and reasonable under the
(1) Those entered into in the name of another person by one circumstances.
who has been given no authority or legal representation, or who
has acted beyond his powers[.] WHEREFORE, premises considered, the Petition for Review
on Certiorari of San Miguel Properties, Inc. is GRANTED. The
As the OP observed, BF Homes ratified the Deeds of Absolute Decision dated January 31, 2005 and Resolution dated August
Sale with SMPI by accepting full payment from SMPI of the 9, 2005 of the Court of Appeals in CA-G.R. SP No. 83631
purchase price for the 130 Italia II lots, and fully implementing ordering the remand of the case to the Housing and Land Use
the transaction covered by the first two Deeds and partially Regulatory Board is REVERSED and SET ASIDE; and the
implementing the third by delivering the TCTs for 110 of the 130 Decision dated January 27, 2004 of the Office of the President
lots. in O.P. Case No. 03-E-203 is REINSTATED.

Receiving full payment for the 130 Italia II lots from SMPI also SO ORDERED.chanroblesvirtuallawlibrary
estops BF Homes from denying the authority of Orendain/FBO
Networks Management, Inc. to enter into the Deeds of Absolute
Sale. The Court applies by analogy its declarations in Bisaya
Land Transportation, Inc. v. Sanchez,61 which involved the acts
of a court-appointed receiver for an estate:

Furthermore, it is clear that BISTRANCO received material

benefits from the contracts of agency of Sanchez, based upon
the monthly statements of income of BISTRANCO, upon which
the commissions of Sanchez were based, x x x.

x x x x

[I]n our considered opinion, the doctrine of estoppel precludes

BISTRANCO from repudiating an obligation voluntarily assumed
by it, after having accepted benefits therefrom.' To countenance
such repudiation would be contrary to equity and would put a
GIL G. CAWAD, MARIO BENEDICT P. GALON, DOMINGO E.
LUSAYA, JEAN V. APOLINARES, MA. LUISA S. OREZCA,
JULIO R. GARCIA, NESTOR M. INTIA, RUBEN C.
CALIWATAN, ADOLFO Q. ROSALES, MA. LUISA
NAVARRO, and the PHILIPPINE PUBLIC HEALTH
ASSOCIATION, INC., Petitioners,
vs.
FLORENCIO B. ABAD, in his capacity as Secretary of the
Department of Budget and Management (DBM); ENRIQUE
T. ONA, in his capacity as Secretary of the Department of
Health (DOH); and FRANCISCO T. DUQUE III, in his capacity
as Chairman of the Civil Service Commission
(CSC), Respondents.
DECISION
PERALTA, J.:
Before the Court is a petition for certiorari and prohibition under
Rule 65 of the Rules of Court filed by the officers and members
of the Philippine Public Health Association, Inc. (PPHAI)
assailing the validity of Joint Circular No. 11dated November 29,
2012 of the Department of Budget and Management (DBM) and
the Department of Health (DOH) as well as Item 6.5 of the Joint
Circular2 dated September 3, 2012 of the DBM and the Civil
Service Commission (CSC).
The antecedent facts are as follows:
On March 26, 1992, Republic Act (RA) No. 7305, otherwise
known as The Magna Carta of Public Health Workerswas
signed into law in order to promote the social and economic well-
being of health workers, their living and working conditions and
terms of employment, to develop their skills and capabilities to
be better equipped to deliver health projects and programs, and
to encourage those with proper qualifications and excellent
abilities to join and remain in government service.3 Accordingly,
public health workers (PHWs) were granted the following
allowances and benefits, among others:
Section 20. Additional Compensation. - Notwithstanding Section
12 of Republic Act No. 6758, public health workers shall receive
the following allowances: hazard allowance, subsistence
allowance, longevity pay, laundry allowance and remote
assignment allowance.
Section 21. Hazard Allowance. - Public health workers in
hospitals, sanitaria, rural health units, main health centers,
health infirmaries, barangay health stations, clinics and other
health-related establishments located in difficult areas, strife-
torn or embattled areas, distressed or isolated stations, prisons
camps, mental hospitals, radiation exposed clinics, laboratories
or disease-infested areas or in areas declared under state of
calamity or emergency for the duration thereof which expose
them to great danger, contagion, radiation, volcanic
activity/eruption, occupational risks or perils to life as
determined by the Secretary of Health or the Head of the unit
with the approval of the Secretary of Health, shall be
compensated hazard allowances equivalent to at least twenty-
five percent (25%) of the monthly basic salary of health workers
receiving salary grade 19 and below, and five percent
(5%) for health workers with<="" b="">
Section 22. Subsistence Allowance. - Public health workers
who are required to render service within the premises of
hospitals, sanitaria, health infirmaries, main health centers, rural
health units and barangay health stations, or clinics, and other
health-related establishments in order to make their services
available at any and all times, shall be entitled to full subsistence
allowance of three (3) meals which may be computed in
accordance with prevailing circumstances as determined
by the Secretary of Health in consultation with the
Management-Health Worker's Consultative Councils, as
established under Section 33 of this Act: Provided, That
representation and travel allowance shall be given to rural health
physicians as enjoyed by municipal agriculturists, municipal
planning and development officers and budget officers.
Section 23. Longevity Pay.- A monthly longevity pay equivalent
to five percent (5%)of the monthly basic pay shall be paid to a
health worker for every five (5) years of continuous, efficient
and meritorious services rendered as certified by the chief of
office concerned, commencing with the service after the
approval of this Act.4
Pursuant to Section 355 of the Magna Carta, the Secretary of
Health promulgated its Implementing Rules and Regulations
(IRR) in July 1992. Thereafter, in November 1999, the DOH, in
collaboration with various government agencies and health
workers' organizations, promulgated a Revised IRR
consolidating all additional and clarificatory rules issued by the
former Secretaries of Health dating back from the effectivity of
the Magna Carta. The pertinent provisions of said Revised IRR
provide:
6.3. Longevity Pay.- A monthly longevity pay equivalent to five
percent (5%)of the present monthly basic pay shall be paid to
public health workers for every five (5) years of continuous,
efficient and meritorious services rendered as certified by the
Head of Agency/Local Chief Executives commencing after the
approval of the Act. (April 17, 1992)
xxxx
7.1.1. Eligibility to Receive Hazard Pay.- All public health
workers covered under RA 7305 are eligible to receive hazard
pay when the nature of their work exposes them to high risk/low
risk hazards for at least fifty percent (50%) of their working hours
as determined and approved by the Secretary of Health or his
authorized representatives.
xxxx
7.2.1. Eligibility for Subsistence Allowance
a. All public health workers covered under RA
7305 are eligible to receive full subsistence
allowance as long as they render actual duty.
b. Public Health Workers shall be entitled to
full Subsistence Allowance of three (3) meals
which may be computed in accordance with
prevailing circumstances as determined by
the Secretary of Health in consultation with
the Management-Health Workers
Consultative Council, as established under
Section 33 of the Act.
c. Those public health workers who are out of
station shall be entitled to per diems in place
of Subsistence Allowance. Subsistence
Allowance may also be commuted.
 xxxx meritorious services rendered as PHW. The grant thereof is
based on the following criteria:
7.2.3 Rates of Subsistence Allowance
9.1.1 The PHW holds a position in the agency plantilla of regular
a. Subsistence allowance shall be positions; and
implemented at not less than Ph₱50.00 per
day or Ph₱1,500.00 per month as certified by 9.1.2 He/She has rendered at least satisfactory performance
head of agency. and has not been found guilty of any administrative or criminal
case within all rating periods covered by the 5-year period.
xxxx
In a letter9 dated January 23, 2013 addressed to respondents
d. Part-time public health workers/consultants Secretary of Budget and Management and Secretary of Health,
are entitled to one-half (1/2)of the prescribed petitioners expressed their opposition to the Joint Circular cited
rates received by full-time public health above on the ground that the same diminishes the benefits
workers.6 granted by the Magna Carta to PHWs.

On July 28, 2008, the Fourteenth Congress issued Joint Unsatisfied, petitioners, on May 30, 2013, filed the instant
Resolution No. 4, entitled Joint Resolution Authorizing the petition raising the following issues:
President of the Philippines to Modify the Compensation and
Position Classification System of Civilian Personnel and the I.
Base Pay Schedule of Military and Uniformed Personnel in the
Government, and for other Purposes, approved by then WHETHER RESPONDENTS ENRIQUE T. ONA AND
President Gloria Macapagal-Arroyo on June 17,2009, which FLORENCIO B. ABAD ACTED WITH GRAVE ABUSE OF
provided for certain amendments in the Magna Carta and its DISCRETION AND VIOLATED SUBSTANTIVE DUE
IRR. PROCESS WHEN THEY ISSUED DBM-DOH JOINT
CIRCULAR NO. 1, S. 2012 WHICH:
On September 3, 2012, respondents DBM and CSC issued one
of the two assailed issuances, DBM-CSC Joint Circular No. 1, A) MADE THE PAYMENT OF HAZARD PAY
Series of 2012, to prescribe the rules on the grant of Step DEPENDENT ON THE ACTUAL DAYS OF
Increments due to meritorious performance and Step Increment EXPOSURE TO THE RISK INVOLVED;
due to length of service.7 Specifically, it provided that "an official
or employee authorized to be granted Longevity Pay under an
existing law is not eligible for the grant of Step Increment due to B) ALLOWED PAYMENT OF
length of service."8 Shortly thereafter, on November29, 2012, SUBSISTENCE ALLOWANCE AT ₱50 FOR
respondents DBM and DOH then circulated the other assailed EACH DAY OF ACTUAL FULL-TIME
issuance, DBM-DOH Joint Circular No. 1, Series of 2012, the SERVICE OR ₱25 FOR EACH DAY OF
relevant provisions of which state: ACTUAL PART-TIME SERVICE WITHOUT
CONSIDERATION OF THE PREVAILING
CIRCUMSTANCES AS DETERMINED BY
7.0. Hazard Pay. - Hazard pay is an additional compensation for THE SECRETARY OF HEALTH IN
performing hazardous duties and for enduring physical CONSULTATION WITH THE
hardships in the course of performance of duties. MANAGEMENT HEALTH WORKERS'
CONSULTATIVE COUNCILS;
As a general compensation policy, and in line with Section 21 of
R. A. No. 7305, Hazard Pay may be granted to PHWs only if the C) REQUIRED THAT LONGEVITY PAY BE
nature of the duties and responsibilities of their positions, their GRANTED ONLY TO PHWs WHO HOLD
actual services, and location of work expose them to great PLANTILLA AND REGULAR POSITIONS;
danger, occupational risks, perils of life, and physical hardships; AND
and only during periods of actual exposure to hazards and
hardships.
D) MADE THE JOINT CIRCULAR
EFFECTIVE ON JANUARY 1, 2013, BARELY
xxxx THREE (3) DAYS AFTER IT WAS
PUBLISHED IN A NEWSPAPER OF
8.3 The Subsistence Allowance shall be ₱50for each day of GENERAL CIRCULATION ON DECEMBER
actual full-time service, or ₱25for each day of actual part-time 29, 2012, IN VIOLATION OF THE RULES ON
service. PUBLICATION.

xxxx II.

9.0 Longevity Pay (LP) WHETHER RESPONDENTS FRANCISCO T. DUQUE AND

9.1 Pursuant to Section 23 of R.A. No. 7305, a PHW may be
granted LP at 5% of his/her current monthly basic salary, in
recognition of every 5 years of continuous, efficient, and
FLORENCIO B. ABAD ACTED WITH GRAVE ABUSE OF
DISCRETION WHEN THEY ISSUED DBM-CSC JOINT
CIRCULAR NO. 1, S. 2012 DATED SEPTEMBER 2, 2012
WHICH PROVIDED THAT AN OFFICIAL OR EMPLOYEE
ENTITLED TO LONGEVITY PAY UNDER EXISTING LAW
SHALL NO LONGER BE GRANTED STEP INCREMENT DUE
TO LENGTH OF SERVICE.
III.
WHETHER RESPONDENTS' ISSUANCE OF DBM-DOH
JOINT CIRCULAR NO. 1, S. 2012 IS NULL AND VOID FOR
BEING AN UNDUE EXERCISE OF LEGISLATIVE POWER BY
ADMINISTRATIVE BODIES WHEN RESPONDENT ONA
ALLOWED RESPONDENT ABAD TOSIGNIFICANTLY SHARE
THE POWER TO FORMULATE AND PREPARE THE
NECESSARY RULES AND REGULATIONS TO IMPLEMENT
THE PROVISIONS OF THE MAGNA CARTA.
IV.
WHETHER RESPONDENT ONA WAS REMISS IN
IMPLEMENTING THE MANDATE OF THE MAGNA CARTA
WHEN HE DID NOT INCLUDE THE MAGNA CARTA
BENEFITS IN THE DEPARTMENT'S YEARLY BUDGET.
V.
WHETHER RESPONDENTS' ISSUANCE OF DBM-DOH
JOINT CIRCULAR NO. 1, S. 2012 IS NULL AND VOID FOR
BEING AN UNDUE EXERCISE OF LEGISLATIVE POWER BY
ADMINISTRATIVE BODIES WHEN THE SAME WAS ISSUED
SANS CONSULTATION WITH PROFESSIONAL AND HEALTH
WORKERS' ORGANZATIONS AND UNIONS.
Petitioners contend that respondents acted with grave abuse of
discretion when they issued DBM-DOH Joint Circular No. 1,
Series of 2012 and DBM-CSC Joint Circular No. 1, Series of
2012 which prescribe certain requirements on the grant of
benefits that are not otherwise required by RA No. 7305.
Specifically, petitioners assert that the DBM-DOH Joint Circular
grants the payment of Hazard Pay only if the nature of the
PHWs' duties expose them to danger when RA No. 7305 does
not make any qualification. They likewise claim that said circular
unduly fixes Subsistence Allowance at ₱50 for each day of full-
time service and ₱25 for part-time service which are not in
accordance with prevailing circumstances determined by the
Secretary of Health as required by RA No. 7305. Moreover,
petitioners fault respondents for the premature effectivity of the
DBM-DOH Joint Circular which they believe should have been
on January 29, 2012 and not on January 1, 2012. As to the grant
of Longevity Pay, petitioners posit that the same was wrongfully
granted only to PHWs holding regular plantilla positions.
Petitioners likewise criticize the DBM-CSC Joint Circular insofar
as it withheld the Step Increment due to length of service from
those who are already being granted Longevity Pay. As a result,
petitioners claim that the subject circulars are void for being an
undue exercise of legislative power by administrative bodies.
In their Comment, respondents, through the Solicitor General,
refute petitioners' allegations in stating that the assailed circulars
were issued within the scope of their authority, and are therefore
valid and binding. They also assert the authority of Joint
Resolution No. 4, Series of 2009, approved by the President, in
accordance with the prescribed procedure. Moreover,
respondents question the remedies of Certiorari and Prohibition
used by petitioners for the assailed circulars were done in the
exercise of their quasi-legislative, and not of their judicial or
quasi-judicial functions.
The petition is partly meritorious.
At the outset, the petition for certiorari and prohibition filed by
petitioners is not the appropriate remedy to assail the validity of
respondents' circulars. Sections 1 and 2 of Rule 65 of the Rules
of Court provide:
RULE 65
CERTIORARI, PROHIBITION AND MANDAMUS
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, or 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
Sec. 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 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 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.10
Thus, on the one hand, certiorari as a special civil action is
available only if: (1) it is directed against a tribunal, board, or
officer exercising judicial or quasi-judicial functions; (2) the
tribunal, board, or officer acted without or in excess of
jurisdiction or with grave abuse of discretion amounting to lack
or excess of jurisdiction; and (3) there is no appeal nor any plain,
speedy, and adequate remedy in the ordinary course of law.11
On the other hand, prohibition is available only if: (1) it is directed
against a tribunal, corporation, board, officer, or person
exercising functions, judicial, quasi-judicial, or ministerial; (2) the
tribunal, corporation, board or person acted without or in excess
of its jurisdiction, or with grave abuse of discretion amounting to
lack or excess of jurisdiction; and (3) there is no appeal or any
other plain, speedy, and adequate remedy in the ordinary
course of law.12 Based on the foregoing, this Court has
consistently reiterated that petitions for certiorari and prohibition
may be invoked only against tribunals, corporations, boards,
officers, or persons exercising judicial, quasi-judicial or
ministerial functions, and not against their exercise of legislative
or quasi-legislative functions.13
Judicial functions involve the power to determine what the law is
and what the legal rights of the parties are, and then undertaking
to determine these questions and adjudicate upon the rights of
the parties.14 Quasi judicial functions apply to the actions and
discretion of public administrative officers or bodies required to
investigate facts, hold hearings, and draw conclusions from
them as a basis for their official action, in their exercise of
discretion of a judicial nature.15 Ministerial functions are those
which an officer or tribunal performs in the context of a given set
of facts, in a prescribed manner and without regard to the
exercise of his own judgment upon the propriety or impropriety
of the act done.16
Before a tribunal, board, or officer may exercise judicial or quasi-
judicial acts, it is necessary that there be a law that gives rise to
some specific rights under which adverse claims are made, and
the controversy ensuing therefrom is brought before a tribunal,
board, or officer clothed with authority to determine the law and
adjudicate the respective rights of the contending parties. 17 In
this case, respondents did not act in any judicial, quasi-judicial,
or ministerial capacity in their issuance of the assailed joint
circulars. In issuing and implementing the subject circulars,
respondents were not called upon to adjudicate the rights of
contending parties to exercise, in any manner, discretion of a
judicial nature. The issuance and enforcement by the
Secretaries of the DBM, CSC and DOH of the questioned joint
circulars were done in the exercise of their quasi-legislative and
administrative functions. It was in the nature of subordinate
legislation, promulgated by them in their exercise of delegated
power. Quasi-legislative power is exercised by administrative
agencies through the promulgation of rules and regulations
within the confines of the granting statute and the doctrine of
non-delegation of powers from the separation of the branches
of the government.18
Based on the foregoing, certiorari and prohibition do not lie
against herein respondents' issuances. It is beyond the province
of certiorari to declare the aforesaid administrative issuances
illegal because petitions for certiorari seek solely to correct
defects in jurisdiction, and not to correct just any error committed
by a court, board, or officer exercising judicial or quasi-judicial
functions unless such court, board, or officer thereby acts
without or in excess of jurisdiction or with such grave abuse of
discretion amounting to lack of jurisdiction.19
It is likewise beyond the territory of a writ of prohibition since
generally, the purpose of the same is to keep a lower court within
the limits of its jurisdiction in order to maintain the administration
of justice in orderly channels. It affords relief against usurpation
of jurisdiction by an inferior court, or when, in the exercise of
jurisdiction, the inferior court transgresses the bounds
prescribed by the law, or where there is no adequate remedy
available in the ordinary course of law.20
Be that as it may, We proceed to discuss the substantive issues
raised in the petition in order to finally resolve the doubt over the
Joint Circulars' validity. For proper guidance, the pressing issue
of whether or not the joint circulars regulating the salaries and
benefits relied upon by public health workers were tainted with
grave abuse of discretion rightly deserves its prompt resolution.
With respect to the infirmities of the DBM-DOH Joint Circular
raised in the petition, they cannot be said to have been issued
with grave abuse of discretion for not only are they reasonable,
they were likewise issued well within the scope of authority
granted to the respondents. In fact, as may be gathered from
prior issuances on the matter, the circular did not make any
substantial deviation therefrom, but actually remained
consistent with, and germane to, the purposes of the law.
First, the qualification imposed by the DBM-DOH Joint Circular
granting the payment of Hazard Pay only if the nature of PHWs'
duties expose them to danger and depending on whether the
risk involved is high or low was merely derived from Section
7.1.1 of the Revised IRR of RA No. 7305, duly promulgated by
the DOH in collaboration with various government health
agencies and health workers' organizations in November 1999,
to wit:
SECTION 7.1.1. Eligibility to Receive Hazard Pay. - All public
health workers covered under RA 7305 are eligible to receive
hazard pay when the nature of their work exposes them to high
risk/low risk hazards for at least fifty percent (50%) of their
working hours as determined and approved by the Secretary of
Health or his authorized representatives.21
Second, fixing the Subsistence Allowance at ₱50 for each day
of full-time service and ₱25 for part-time service was also merely
a reiteration of the limits prescribed by the Revised IRR, validly
issued by the Secretary of Health pursuant to Section 3522 of RA
No. 7305, the pertinent portions of which states:
Section 7.2.3 Rates of Subsistence Allowance
a. Subsistence allowance shall be implemented at not less than
Ph₱50.00 per day or Ph₱1,500.00 per month as certified by
head of agency.
xxxx
d. Part-time public health workers/consultants are entitled to
one-half (1/2)of the prescribed rates received by full-time public
health workers.
Third, the condition imposed by the DBM-DOH Joint Circular
granting longevity pay only to those PHWs holding regular
plantilla positions merely implements the qualification imposed
by the Revised IRR which provides:
6.3. Longevity Pay. - A monthly longevity pay equivalent to five
percent (5%) of the present monthly basic pay shall be paid to
public health workers for every five (5) years of continuous,
efficient and meritorious services rendered as certified by the
Head of Agency/Local Chief Executives commencing after the
approval of the Act. (April 17, 1992)
6.3.1. Criteria for Efficient and Meritorious Service A Public
Worker shall have:
a. At least a satisfactory performance rating within the rating
period.
b. Not been found guilty of any administrative or criminal case
within the rating period.
As can be gleaned from the aforequoted provision, petitioners
failed to show any real inconsistency in granting longevity pay
to PHWs holding regular plantilla positions. Not only are they
based on the same premise, but the intent of longevity pay,
which is paid to workers for every five (5) years of continuous,
efficient and meritorious services, necessarily coincides with
that of regularization. Thus, the assailed circular cannot be
invalidated for its issuance is consistent with, and germane to,
the purposes of the law.
Anent petitioners' contention that the DBM-DOH Joint Circular
is null and void for its failure to comply with Section 35 23 of RA
No. 7305 providing that its implementing rules shall take effect
thirty (30) days after publication in a newspaper of general
circulation, as well as its failure to file a copy of the same with
the University of the Philippines Law Center-Office of the
National Administrative Register (UP Law Center-ONAR),
jurisprudence as well as the circumstances of this case dictate
otherwise.
Indeed, publication, as a basic postulate of procedural due
process, is required by law in order for administrative rules and
regulations to be effective.24 There are, however, several
exceptions, one of which are interpretative regulations which
"need nothing further than their bare issuance for they give no
real consequence more than what the law itself has already
prescribed."25 These regulations need not be published for they
add nothing to the law and do not affect substantial rights of any
person.26
Thus, in Association of Southern Tagalog Electric Cooperatives,
et. al. v. Energy Regulatory Commission (ERC),27wherein
several orders issued by the ERC were sought to be invalidated
for lack of publication and non-submission of copies thereof to
the UP Law Center - ONAR, it has been held that since they
merely interpret RA No. 7832 and its IRR, particularly on the
computation of the cost of purchased power, without modifying,
amending or supplanting the same, they cannot be rendered
ineffective, to wit:
When the policy guidelines of the ERC directed the exclusion of
discounts extended by power suppliers in the computation of the
cost of purchased power, the guidelines merely affirmed the
plain and unambiguous meaning of "cost" in Section 5, Rule IX
of the IRR of R.A. No. 7832."Cost" is an item of outlay, and must
therefore exclude discounts since these are "not amounts paid
or charged for the sale of electricity, but are reductions in rates.
xxxx
Thus, the policy guidelines of the ERC on the treatment of
discounts extended by power suppliers "give no real
consequence more than what the law itself has already
prescribed." Publication is not necessary for the effectivity of the
policy guidelines.
As interpretative regulations, the policy guidelines of the ERC
on the treatment of discounts extended by power suppliers are
also not required to be filed with the U.P. Law Center in order to
be effective. Section 4, Chapter 2, Book VII of the Administrative
Code of 1987 requires every rule adopted by an agency to be
filed with the U.P. Law Center to be effective. However, in Board
of Trustees of the Government Service Insurance System v.
Velasco, this Court pronounced that "not all rules and
regulations adopted by every government agency are to be filed
with the UP Law Center." Interpretative regulations and those
merely internal in nature are not required to be filed with the U.P.
Law Center. Paragraph 9 (a) of the Guidelines for Receiving and
Publication of Rules and Regulations Filed with the U.P. Law
Center states:
9. Rules and Regulations which need not be filed with the U.P.
Law Center, shall, among others, include but not be limited to,
the following:
a. Those which are interpretative regulations and those merely
internal in nature, that is, regulating only the personnel of the
Administrative agency and not the public.
xxxx
Furthermore, the policy guidelines of the ERC did not create
a new obligation and impose a new duty, nor did it attach a
new disability. As previously discussed, the policy
guidelines merely interpret R.A. No. 7832 and its IRR,
particularly on the computation of the cost of purchased
power. The policy guidelines did not modify, amend or
supplant the IRR.
Similarly, in Republic v. Drugmaker's Laboratories, Inc., 28 the
validity of circulars issued by the Food and Drug Administration
(FDA) was upheld in spite of the non-compliance with the
publication, prior hearing, and consultation requirements for
they merely implemented the provisions of Administrative Order
No. 67, entitled "Revised Rules and Regulations on Registration
of Pharmaceutical Products" issued by the DOH, in the following
wise:
A careful scrutiny of the foregoing issuances would reveal
that AO 67, s. 1989 is actually the rule that originally
introduced the BA/BE testing requirement as a component
of applications for the issuance of CPRs covering certain
pharmaceutical products. As such, it is considered an
administrative regulation - a legislative rule to be exact - issued
by the Secretary of Health in consonance with the express
authority granted to him by RA 3720 to implement the statutory
mandate that all drugs and devices should first be registered
with the FDA prior to their manufacture and sale. Considering
that neither party contested the validity of its issuance, the Court
deems that AO 67, s. 1989 complied with the requirements of
prior hearing, notice, and publication pursuant to the
presumption of regularity accorded to the government in the
exercise of its official duties.42
On the other hand, Circular Nos. 1 and 8, s. 1997 cannot be
considered as administrative regulations because they do
not: (a) implement a primary legislation by providing the
details thereof; (b) interpret, clarify, or explain existing
statutory regulations under which the FDA operates; and/or
(c) ascertain the existence of certain facts or things upon
which the enforcement of RA 3720 depends. In fact, the only
purpose of these circulars is for the FDA to administer and
supervise the implementation of the provisions of AO 67, s.
1989, including those covering the BA/BE testing
requirement, consistent with and pursuant to RA 3720.43
Therefore, the FDA has sufficient authority to issue the said
circulars and since they would not affect the substantive
rights of the parties that they seek to govern - as they are
not, strictly speaking, administrative regulations in the first
place - no prior hearing, consultation, and publication are
needed for their validity.
In this case, the DBM-DOH Joint Circular in question gives no
real consequence more than what the law itself had already
prescribed. As previously discussed, the qualification of actual
exposure to danger for the PHW's entitlement to hazard pay, the
rates of ₱50 and ₱25 subsistence allowance, and the
entitlement to longevity pay on the basis of PHW's status in the
plantilla of regular positions were already prescribed and
authorized by pre-existing law. There is really no new obligation
or duty imposed by the subject circular for it merely reiterated
those embodied in RA No. 7305 and its Revised IRR. The Joint
Circular did not modify, amend nor supplant the Revised IRR,
the validity of which is undisputed. Consequently, whether it was
duly published and filed with the UP Law Center - ONAR is
necessarily immaterial to its validity because in view of the
pronouncements above, interpretative regulations, such as the
DBM-DOH circular herein, need not be published nor filed with
the UP Law Center - ONAR in order to be effective. Neither is
prior hearing or consultation mandatory.
Nevertheless, it bears stressing that in spite of the immateriality
of the publication requirement in this case, and even assuming
the necessity of the same, its basic objective in informing the
public of the contents of the law was sufficiently accomplished
when the DBM-DOH Joint Circular was published in the
Philippine Star, a newspaper of general circulation, on
December 29, 2012.29
As to petitioners' allegation of grave abuse of discretion on the
part of respondent DOH Secretary in failing to include the Magna
Carta benefits in his department's yearly budget, the same is
belied by the fact that petitioners themselves specifically
provided in their petition an account of the amounts allocated for
the same in the years 2012 and 2013.30
Based on the foregoing, it must be recalled that administrative
regulations, such as the DBM-DOH Joint Circular herein,
enacted by administrative agencies to implement and interpret
the law they are entrusted to enforce are entitled to great
respect.31 They partake of the nature of a statute and are just as
binding as if they have been written in the statute itself. As such,
administrative regulations have the force and effect of law and
enjoy the presumption of legality. Unless and until they are
overcome by sufficient evidence showing that they exceeded
the bounds of the law,32 their validity and legality must be
upheld.
Thus, notwithstanding the contention that the Joint Resolution
No. 4 promulgated by Congress cannot be a proper source of
delegated power, the subject Circular was nevertheless issued
well within the scope of authority granted to the respondents.
The issue in this case is not whether the Joint Resolution No. 4
can become law and, consequently, authorize the issuance of
the regulation in question, but whether the circular can be struck
down as invalid for being tainted with grave abuse of discretion.
Regardless, therefore, of the validity or invalidity of Joint
Resolution No. 4, the DBMDOH Joint Circular assailed herein
cannot be said to have been arbitrarily or capriciously issued for
being consistent with prior issuances duly promulgated pursuant
to valid and binding law.
Distinction must be made, however, with respect to the DBM-
CSC Joint Circular, the contested provision of which states:
6.5 An official or employee authorized to be granted Longevity
Pay under an existing law is not eligible for the grant of Step
Increment Due to Length of Service.
A review of RA No. 7305 and its Revised IRR reveals that the
law does not similarly impose such condition on the grant of
longevity pay to PHWs in the government service. As such, the
DBM-CSC Joint Circular effectively created a new imposition
which was not otherwise stipulated in the law it sought to
interpret. Consequently, the same exception granted to the
DBM-DOH Joint Circular cannot be applied to the DBM-CSC
Joint Circular insofar as the requirements on publication and
submission with the UP Law Center - ONAR are concerned.
Thus, while it was well within the authority of the respondents to
issue rules regulating the grant of step increments as provided
by RA No. 6758, otherwise known as the Compensation and
Position Classification Act of 1989, which pertinently states:
Section 13. Pay Adjustments. - Paragraphs (b) and (c), Section
15 of Presidential Decree No. 985 are hereby amended to read
as follows:
xxxx
(c) Step Increments- Effective January 1, 1990 step increments
shall be granted based on merit and/or length of service in
accordance with rules and regulations that will be promulgated
jointly by the DBM and the Civil Service Commission,
and while it was duly published in the Philippine Star, a
newspaper of general circulation, on September 15, 2012, 33the
DBM-CSC Joint Circular remains unenforceable for the failure
of respondents to file the same with the UP Law Center -
ONAR.34 Moreover, insofar as the DBM-DOH Joint Circular
similarly withholds the Step Increment due to length of service
from those who are already being granted Longevity Pay, the
same must likewise be declared unenforceable.[35
Note also that the DBM-DOH Joint Circular must further be
invalidated insofar as it lowers the hazard pay at rates below the
minimum prescribed by Section 21 of RA No. 7305 and Section
7.1.5 (a) of its Revised IRR as follows:
SEC. 21. Hazard Allowance. - Public health worker in hospitals,
sanitaria, rural health units, main centers, health infirmaries,
barangay health stations, clinics and other health-related
establishments located in difficult areas, strife-torn or embattled
areas, distresses or isolated stations, prisons camps, mental
hospitals, radiation-exposed clinics, laboratories or disease-
infested areas or in areas declared under state of calamity or
emergency for the duration thereof which expose them to great
danger, contagion, radiation, volcanic activity/eruption
occupational risks or perils to life as determined by the Secretary
of Health or the Head of the unit with the approval of the
Secretary of Health, shall be compensated hazard allowance
equivalent to at least twenty-five percent (25%)of the monthly
basic salary of health workers receiving salary grade 19 and
below, and five percent (5%) for health workers with salary
grade 20 and above.
xxxx
7.1.5. Rates of Hazard Pay
a. Public health workers shall be compensated hazard
allowances equivalent to at least twenty five (25%)of the
monthly basic salary of health workers, receiving salary grade
19 and below, and five percent (5%)for health workers with
salary grade 20 and above. This may be granted on a monthly,
quarterly or annual basis.
It is evident from the foregoing provisions that the rates of
hazard pay must be at least25% of the basic monthly salary of
PWHs receiving salary grade 19 and below, and 5% receiving
salary grade 20 and above. As such, RA No. 7305 and its
implementing rules noticeably prescribe the minimum rates of
hazard pay due all PHWs in the government, as is clear in the
self-explanatory phrase "at least" used in both the law and the
rules.36 Thus, the following rates embodied in Section 7.2 of
DBM-DOH Joint Circular must be struck down as invalid for
being contrary to the mandate of RA No. 7305 and its Revised
IRR:
7.2.1 For PHWs whose positions are at SG-19 and below,
Hazard Pay shall be based on the degree of exposure to high
risk or low risk hazards, as specified in sub-items 7 .1.1 and 7
.1.2 above, and the number of workdays of actual exposure over
22 workdays in a month, at rates not to exceed 25% of monthly
basic salary. In case of exposure to both high risk and low risk
 hazards, the Hazard Pay for the month shall be based on only
one risk level, whichever is more advantageous to the PHW.

7.2.2 PHWs whose positions are at SG-20 and above may be

entitled to Hazard Pay at 5% of their monthly basic salaries for
all days of exposure to high risk and/or low risk hazards.
However, those exposed to high risk hazards for 12 or more
days in a month may be entitled to a fixed amount of ₱4,989.75
per month.

Rates of Hazard Pay

Actual High Risk Low Risk

Exposure/
Level of Risk
12 or more 25% of monthly basic 14% of monthly basic
days salary salary
6 to 11 days 14% of monthly basic 8% of monthly basic
salary salary
Less than 6 8% monthly basic 5% of monthly basic
days salary salary

WHEREFORE, premises considered, the instant petition is

PARTLY GRANTED. The DBM-DOH Joint Circular, insofar as it
lowers the hazard pay at rates below the minimum prescribed
by Section 21 of RA No. 7305 and Section 7.1.5 (a) of its
Revised IRR, is declared INVALID. The DBM-CSC Joint
Circular, insofar as it provides that an official or employee
authorized to be granted Longevity Pay under an existing law is
not eligible for the grant of Step Increment Due to Length of
Service, is declared UNENFORCEABLE. The validity, however,
of the DBM-DOH Joint Circular as to the qualification of actual
exposure to danger for the PHW's entitlement to hazard pay, the
rates of ₱50 and ₱25 subsistence allowance, and the
entitlement to longevity pay on the basis of the PHW' s status in
the plantilla of regular positions, is UPHELD.

SO ORDERED.
OFFICE OF THE COURT existent in the dockets of RTC Branch 15.
ADMINISTRATOR, Complainant, v. UMAIMA L. SILONGAN,
ABIE M. AMILIL, AND SALICK U. PANDA, JR., Respondent. On 3 January 2011, the Employees Welfare Benefit Division of
the Office of Administrative Services (OAS) received from
DECISION Silongan an Application for Separation Benefit 5 effective 31
December 2010.
CARPIO, J.: (2) On 24 January 2008, Amilil issued a Certificate of
Finality6 and certified as true copy Judge Indar's decision in
The Case Special Civil Case No. 508, entitled Caroline Flor Buenafe v.
Roberto R. Buenafe, Jr., which case does not appear in the
This administrative case originated from the Decision of the court docket per letter of the current OIC Clerk of Court Atty.
Supreme Court in Office of the Court Administrator, Dennis U. Relayson (Atty. Relayson).
Complainant, v. Judge Cader P. Indar, Presiding Judge and
Acting Presiding Judge of the Regional Trial Amilil also certified as true copy an Order issued by Judge Indar
Court, Branch 14, Cotabato City and Branch 15, Sha in Special Civil Case No. 1049, involving a petition for
riff Aguak, Maguindanao, respectively, Respondent1 docketed cancellation of certificates of live birth of two children, which
as A.M. No. RTJ-10-2232, ordering the Office of the Court case is not docketed in the trial court.
Administrator (OCA) to investigate Atty. Umaima L. Silongan
(Silongan) on her alleged authentication of decisions issued by (3) On 15 April 2005, then RTC Branch 15 Clerk of Court Salick
Judge Cader P. Indar (Judge Indar). U. Panda, Jr. (Panda) issued a Certificate of Finality7 for Civil
Case No. 517, a case supposedly involving declaration of nullity
The Facts of marriage. The docket of RTC Branch 15, however, reveals
that Civil Case No. 517 is actually a case for foreclosure of
The facts, as culled from the records, are as follows: mortgage.

chanRoblesvirtualLawlibraryIn Office of the Court Administrator,
Complainant, v. Judge Cader P. Indar, Presiding Judge and
Acting Presiding Judge of the Regional Trial Court, Branch 14,
Cotabato City and Branch 15, Shariff Aguak, Maguindanao,
respectively, Respondent,2 this Court issued a Resolution dated
28 September 2010 directing Justice Angelita A. Gacutan
(Justice Gacutan) to conduct a fact-finding investigation to
determine the authenticity of decisions on numerous annulment
of marriage cases rendered by Judge Indar and to ascertain who
are the parties responsible for the issuance of the questioned
decisions.
The fact-finding investigation revealed that the questioned
decisions do not exist in the records of the Office of the Clerk of
Court of the Regional Trial Court, Branch 14 in Cotabato City
(RTC Branch 14) or the Regional Trial Court, Branch 15 in
Shariff Aguak, Maguindanao (RTC Branch 15). These decisions
were also accompanied by Certificates of Finality issued by
Silongan and in one case, by Abie M. Amilil (Amilil), Officer-in-
Charge (OIC) Branch Clerk of Court. At the time Justice Gacutan
conducted the fact-finding investigation, Silongan and Amilil
were employees of the Judiciary.
In a Decision dated 10 April 2012, this Court dismissed Judge
Indar from the service for gross misconduct and dishonesty in
issuing the spurious decisions on numerous annulment of
marriage cases. The Court likewise directed the OCA to
investigate Silongan, Acting Clerk of Court of RTC Branch 14,
on her alleged participation in the authentication of the said
decisions.
Upon investigation, the OCA found that:
chanRoblesvirtualLawlibrary(1) Silongan certified as true copy
27 decisions3 issued by Judge Indar in RTC Branch 14. These
cases cannot be found in the docket books. Neither have these
cases been filed before RTC Branch 14, per
Certification4 issued by Clerk of Court Atty. Janis Rohaniah
G. Dumama-Kadatuan (Atty. Kadatuan).
Silongan also certified as true copy an Order in Special
Proceeding Case No. 08-1163, entitled Carmelita Balagtas v.
The Local Civil Registrar of the City of Manila, which is also non-
Based on OAS's records, Panda was temporarily appointed as
Clerk of Court VI on 11 April 2005 and his appointment expired
on 5 April 2006.
Thus, in its Memorandum dated 29 October 2012 addressed to
the Office of the Chief Justice,8 the OCA recommended that
Silongan, Amilil, and Panda be investigated.
In a Resolution dated 15 January 2013,9 the Court En Banc,
upon recommendation of the OCA, resolved to: (a) docket
separately the matter involving Silongan, Amilil, and Panda as
OCA IPI No. 13-4035-P; (b) refer the remaining matter to the
Executive Justice of the Court of Appeals (CA), stationed in
Cagayan de Oro City, for raffle among the members of the said
court; and (c) direct the CA Justice to whom this case will be
assigned to investigate and submit his/her report and
recommendation within 60 days from notice.
The case was raffled to Justice Henri Jean-Paul B. Inting
(Investigating Justice) of the CA Cagayan de Oro City.
In an Order dated 22 March 2013,10 the Investigating Justice set
the hearing on 23, 24, and 25 April 2013, and required Silongan,
Amilil, and Panda to appear and submit their counter-affidavit/s
and affidavit/s of their witnesses, if any.
In a Return of Service dated 27 March 2013,11 Atty. Kadatuan
stated that Amilil and Panda received the notice of hearing as
evidenced by their signatures in the Order, while Silongan's
copy of the notice was forwarded to her brother, who refused to
acknowledge its receipt.
Thereafter, Panda requested for a copy of the formal charge
against him to enable him to prepare his counter-affidavit.
On 23 April 2013, Silongan and Amilil failed to appear before the
Investigating Justice. Only Panda appeared during the hearing.
Panda informed the Investigating Justice that he is no longer a
Clerk of Court, but an administrative officer in the Provincial
Prosecution Office of Maguindanao. He was then informed of
the nature of the investigation against him, furnished a copy of
the certificate of finality he issued, and given ten days to file his
responsive pleading. The Investigating Justice then directed the
Clerks of Court of RTC Branches 14 and 15 to submit the
employment status of Silongan and Amilil.
In an Order dated 25 April 2013,12 the Investigating Justice set
the continuation of the hearing on 21 May 2013, considering that
Silongan and Amilil failed to appear on the 24 and 25 April 2013
hearings.
In his Affidavit dated 2 May 2013,13 Panda alleged that the copy
of the certificate of finality he signed was one of the voluminous
documents presented to him during the period of transition; he
was barely a week in office when he signed the document. He
alleged that he unceremoniously affixed his signature upon
Silongan's assurance and based on the judgment attached. He
further contended that he only performed his duties as Acting
Clerk of Court and he did not act with malice when he signed the
document.
In a Return of Service dated 17 May 2013,14 Atty. Kadatuan
stated that: (1) Panda affixed his signature on the Order dated
25 April 2013; (2) Amilil acknowledged the receipt of the Order
and subpoena but refused to sign; and (3) Silongan's copy was
again forwarded to her brother, who refused to sign in the
subpoena. On 21 May 2013, Panda, Amilil, and Silongan failed
to appear in the hearing.
In an Order dated 30 May 2013,15 the Investigating Justice
directed Silongan and Amilil to show cause why they should not
be cited in contempt of court for their failure to attend the
hearings. The Investigating Justice likewise directed the Clerks
of Court of RTC Branches 14 and 15 to issue a certification
regarding the employment status of Silongan and Amilil. Further
hearings were set on 25 and 26 June 2013.
On 10 June 2013, the OIC Designate Sheriff of RTC Branch 14
filed a Return of Service16 stating that the Order dated 30 May
2013 and subpoenas were duly served to: (1) Panda; (2) Atty.
Lalaine T. Mastura (Atty. Mastura), Clerk of Court of RTC
Branch 15; (3) Atty. Relayson, OIC Clerk of Court of RTC Branch
14; (4) Aileen M. Burahan of RTC Branch 14, who received
AmiliPs subpoena; and (5) the brother of Silongan, who again
refused to sign in the subpoena.
In the meantime, Atty. Relayson filed a Certification stating that
Amilil resigned as Sheriff IV effective 17 September
2012.17 Atty. Mastura also filed a Certification stating that
Silongan applied for early retirement, which is still pending due
to the present administrative case.18chanrobleslaw
In an Order dated 11 July 2013,19 the Investigating Justice
stated that since they failed to appear during the 25 and 26 June
2013 hearings, Silongan's and Amilil's rights to be heard and
defend themselves are deemed waived.
In his Report dated 19 August 2013,20 the Investigating Justice
found that Silongan and Amilil were given due process, since
they were aware of the administrative matter against them and
they chose not to attend the hearings and be heard.
The Investigating Justice held Silongan and Amilil liable for
grave misconduct and dishonesty for certifying as true and
correct bogus decisions in their capacity as court personnel.
According to the Investigating Justice, their acts of certifying
several bogus decisions indicate a pattern of willful intention to
violate and disregard established rules. On the other hand, since
Panda certified one decision only and acted without malice, the
Investigating Justice held him liable for simple neglect of duty.
The Investigating Justice then recommended the imposition of
fines, instead of dismissal and suspension from office, after
finding that Silongan, Amilil, and Panda are no longer connected
with the Judiciary, to wit:ChanRoblesVirtualawlibrary
WHEREFORE, the undersigned investigating justice
respectfully recommends to the Honorable Supreme Court the
following:
1. The case be Re-docketed as a regular
administrative matter;
2. Atty. Silongan and Mr. Amilil be held liable for
Grave Misconduct and Dishonesty;
3. Mr. Panda be held liable for Simple [Neglect
of Duty];
4. Considering that Atty. Silongan had already
retired and Mr. Amilil resigned from Office,
they be Fined in the amount of P40,000 with
forfeiture of retirement benefits and perpetual
disqualification [from] re-employment in any
government service;
5. Considering that this is Mr. Panda's first
administrative complaint and absent any
showing that he acted with malice, he be
Fined the amount of P5,000.
Respectfully submitted, August 19, 2013, Cagayan de Oro
City.21chanroblesvirtuallawlibrary
In a Resolution dated 19 November 2013,22 the Court directed
the Presiding Judge of RTC Branch 14 to furnish the Court with
the present and correct address of Silongan, considering that a
resolution addressed to Silongan was returned unserved with
notation on the letter-envelope: "RTS-No Longer Connected."
Both the Executive Judge of RTC Branch 13 and Acting
Presiding Judge of RTC Branch 15 sent letters to the Court
informing it of the present address of Silongan. 23 Thereafter, all
court processes were delivered to Silongan's present address.
The Ruling of the Court
We adopt the recommendations of the Investigating Justice for
Silongan and Amilil, but modify it for Panda.
The Revised Rules on Administrative Cases in the Civil Service,
which govern the conduct of disciplinary and non-disciplinary
proceedings in administrative cases, clearly provide that
"[administrative investigations shall be conducted without strict
recourse to the technical rules of procedure and evidence
applicable to judicial proceedings."24 Thus, administrative due
process cannot be fully equated with due process in its strict
judicial sense.25cralawredchanrobleslaw
In administrative proceedings, the essence of due process is
simply an opportunity to explain one's side or an opportunity to
seek a reconsideration of the action or ruling complained of.26 It
is enough that the party is given the chance to be heard before
the case is decided.27 Due process is not violated when a
person is not heard because he or she has chosen, for whatever
reason, not to be heard.28 If one opts to be silent when one has
a right to speak, one cannot later be heard to complain that he
or she was unduly silenced.29chanrobleslaw
In the present case, the Investigating Justice set six hearings,
and both Silongan and Amilil were duly notified of the hearings
and the administrative case against them. As aptly found by the
Investigating Justice:ChanRoblesVirtualawlibrary
Silongan was furnished a copy of the Decision of the Supreme duties properly and with diligence. They shall commit
Court ordering the OCA to investigate her alleged participation themselves exclusively to the business and responsibilities of
in the authentication of questioned Decisions by the Judge their office during working hours."
Indar. Moreover, the benefits due her from her early retirement
were put on hold because of the pending investigation. These In Atty. Alcantara-Aquino v. Dela Cruz,37 we held respondent
notices in addition to the Subpoenas issued to her and received therein liable for gross misconduct and dishonesty for
by her brother clearly show that she is aware of the pending authenticating documents despite lack of authority to do so and
investigation. Thus, there can be no doubt that Silongan is lack of records that could have served as basis for issuance of
aware of the administrative matter against her. Yet she chose the certificate. In Balanza v. Criste,38 we found respondent guilty
not to attend the hearings and to be heard. of serious dishonesty for certifying a spurious decision and
certificate of finality without authority.
Amilil on the other hand resigned from office. Despite No less than the Constitution mandates that all public officers
Subpoenas received by him, he did not attend the hearings and and employees should serve with responsibility, integrity and
did not submit his counter-affidavit.30chanroblesvirtuallawlibrary efficiency, for public office is a public trust. 39 No other office in
the government service exacts a greater demand for moral
Thus, Silongan and Amilil cannot feign ignorance of the
righteousness and uprightness from an employee than the
administrative investigation against them. They were given
Judiciary.40 Thus, this Court has often stated that the conduct of
ample opportunity to controvert the charges against them; yet,
court personnel, from the presiding judge to the lowliest clerk,
they chose not to appear in any of the hearings or file any
must always be beyond reproach and must be circumscribed
explanation. Unlike Panda, both Silongan and Amilil chose not
with the heavy burden of responsibility as to let them be free
to be heard despite the opportunity given to them.
from any suspicion that may taint the Judiciary. 41 The Court
condemns any conduct, act, or omission on the part of all those
Having found that Silongan and Amilil were accorded due
involved in the administration of justice which would violate the
process, we resolve the issue of whether Silongan, Amilil, and
norm of public accountability and diminish the faith of the people
Panda are administratively liable in this case.
in the Judiciary.42chanrobleslaw
The Court defines misconduct as a transgression of some
Silongan and Amilil should have known that when they certified
established and definite rule of action, more particularly,
the questioned decisions, they did so under the seal of the court.
unlawful behavior or gross negligence by a public officer.31 As
Thus, by their actions, they undoubtedly jeopardized the
distinguished from simple misconduct, the element of
integrity of the court. Their acts betray their complicity, if not
corruption, clear intent to violate the law, or flagrant disregard of
participation, in acts that were irregular and violative of ethics
established rule, must be manifest in a charge of grave
and procedure, causing damage not only to the complainant but
misconduct.32chanrobleslaw
also to the public.43chanrobleslaw
In the present case, both the OCA and the Investigating Justice
The Revised Rules on Administrative Cases in the Civil Service
found that Silongan and Amilil certified as true copies spurious
provide that gross misconduct and dishonesty are grave
annulment decisions issued by Judge Indar. There is no
offenses punishable by dismissal even for the first
question as to their guilt as the records speak for itself. The
offense.44 The Court notes that this is not Silongan's and Amilil's
records clearly show that the 27 cases, which were certified as
first offense. In A.M. No. P-06-2267,45 the Court fined Silongan
true copies by Silongan, were not in the court dockets nor have
with PI,000 for neglect of duty because she failed to produce
they been filed before the trial court. Amilil also certified as true
303 cases for examination by the audit team, make a report on
copies two decisions, which did not appear in the court dockets.
the actual status of these 303 cases, and take action on 22 civil
As custodians of court records in RTC Branches 14 and 15,
cases. On the other hand, in A.M. No. RTJ-07-2069,46 Amilil was
Silongan and Amilil should have known that there were no
found guilty of neglect of duty and was suspended for two
existing records that could have served as basis for the issuance
months without pay because he: (1) failed to inform Judge Indar
of the certificates.
of the existence of Court decisions which nullified and set aside
Judge Indar's Order; (2) failed to inform and send the parties
A certificate is a written assurance, or official representation, that
notices and court orders; and (3) issued a Certificate of Finality
some act has or has not been done, or some event occurred, or
without verifying if indeed a motion for reconsideration was filed
some legal formality has been complied with. 33 To certify is to
in connection with the case.
attest to the truthfulness of the document.34 Without the records
to verify the truthfulness and authenticity of a document, no
Considering that the penalty of dismissal can no longer be
certification should be issued.35chanrobleslaw
imposed due to Silongan's retirement and Amilil's resignation,
we find the recommendation of the Investigating Justice to be
Thus, Silongan and Amilil. should not have attested to the
appropriate under the circumstances and impose on both
truthfulness of the decisions issued by Judge Indar knowing that
Silongan and Amilil the penalty of fine in the amount of P40,000
there were no records to verify its truthfulness, as the decisions
each with forfeiture of all benefits, except accrued leave credits,
were not even in the court dockets. Their acts of authenticating
if any. They are further declared disqualified from any future
and certifying as true and correct spurious decisions issued by
government employment.
Judge Indar undoubtedly constitute grave misconduct as those
acts manifest clear intention to violate the law or to flagrantly
As for Panda, we dismiss the administrative case against him.
disregard established rule.
It is well-settled that in order for the Court to acquire jurisdiction
Their acts also amount to dishonesty, which is defined as
over an administrative case, the complaint must be filed during
"disposition to lie, cheat, deceive, or defraud; untrustworthiness;
the incumbency of the respondent public official or
lack of integrity; lack of honesty, probity or integrity in principle;
employee.47 In Re: Missing Exhibits and Court Properties in
lack of fairness and straightforwardness; disposition to defraud,
Regional Trial Court, Branch 4, Panabo City, Davao del
deceive or betray."36 Their acts further amount to a breach of
Norte,48we dismissed the complaint against a respondent judge
Canon IV of the Code of Conduct for Court Personnel which
since the Memorandum recommending the filing of an
states that: "Court personnel shall at all times perform official
administrative case against the judge was submitted by the OCA
to the Court on 10 July 2012, or more than two years after the
judge retired. In the similar case of Office of the Court
Administrator v. Grageda,49 the Court held that the respondent
judge's retirement effectively barred the Court from pursuing the
administrative proceeding that was instituted after his tenure in
office, and divested the Court of any jurisdiction to still subject
him to administrative investigation and to penalize him
administratively for the infractions committed while he was still
in the service. In Office of the Court Administrator v. Judge
Andaya,50 we likewise dismissed the administrative case
against the respondent judge upon finding that the
administrative complaint was docketed only on 29 April 2009, or
after his compulsory retirement on 27 March 2009. The Court
also dismissed an administrative case filed against a retired
court stenographer for having been initiated over a month after
her retirement from the service.51chanrobleslaw

In the present case, Panda's temporary appointment in the

Judiciary expired on 5 April 2006, while the OCA submitted its
Memorandum dated 29 October 2012 to the Court
recommending his investigation on 7 January 2013 or more than
six years after he left the Judiciary. Accordingly, we no longer
have jurisdiction to impose an administrative penalty on him.

WHEREFORE, we find respondent Umaima L.

Silongan GUILTY of GRAVE
MISCONDUCT andDISHONESTY. Since she had retired from
the service, she is, instead of being dismissed from the service,
ordered to pay a FINE in the amount of P40,000 with forfeiture
of all retirement benefits and privileges, except accrued leave
credits, if any, and with prejudice to re-employment in any
branch or instrumentality of the government, including
government-owned or controlled corporations.

We likewise find respondent Abie M. Amilil GUILTY of GRAVE

MISCONDUCT and DISHONESTY. Since he had resigned from
the service, he is, instead of being dismissed from the service,
ordered to pay a FINE in the amount of P40,000 with forfeiture
of all retirement benefits and privileges, except accrued leave
credits, if any, and with prejudice to re-employment in any
branch or instrumentality of the government, including
government-owned or controlled corporations.

We DISMISS the administrative case against respondent Salick

U. Panda, Jr. for lack of jurisdiction.

Let a copy of this Decision be furnished the Office of the

Ombudsman for whatever appropriate action the Ombudsman
may wish to take with respect to the possible criminal liability of
respondents Umaima L. Silongan and Abie M. Amilil.

SO ORDERED.chanRoblesvirtualLawlibrary
GLORIA S. DY, Petitioner, v. PEOPLE OF THE PHILIPPINES,
MANDY COMMODITIES CO., INC., REPRESENTED BY ITS
PRESIDENT, WILLIAM MANDY, Respondent.
DECISION
JARDELEZA, J.:
Our law states that every person criminally liable for a felony is
also civilly liable. This civil liability ex delicto may be recovered
through a civil action which, under our Rules of Court, is deemed
instituted with the criminal action. While they are actions
mandatorily fused,1 they are, in truth, separate actions whose
existences are not dependent on each other. Thus, civil
liability ex delicto survives an acquittal in a criminal case for
failure to prove guilt beyond reasonable doubt. However, the
Rules of Court limits this mandatory fusion to a civil action for
the recovery of civil liability ex delicto. It, by no means, includes
a civil liability arising from a different source of obligation, as in
the case of a contract. Where the civil liability is ex contractu,
the court hearing the criminal case has no authority to award
damages.
The Case
This is a Petition for Review on Certiorari under Rule 45 of the
Rules of Court. Petitioner Gloria S. Dy (petitioner) seeks the
reversal of the decision of the Court of Appeals (CA) dated
February 25, 2009 (Assailed Decision)2 ordering her to pay
Mandy Commodities Company, Inc. (MCCI) in the amount of
P21,706,281.00.3chanrobleslaw
The Facts
Petitioner was the former General Manager of MCCL. In the
course of her employment, petitioner assisted MCCI in its
business involving several properties. One such business
pertained to the construction of warehouses over a property
(Numancia Property) that MCCI leased from the Philippine
National Bank (PNB). Sometime in May 1996, in pursuit of
MCCI's business, petitioner proposed to William Mandy
(Mandy), President of MCCI, the purchase of a property owned
by Pantranco. As the transaction involved a large amount of
money, Mandy agreed to obtain a loan from the International
China Bank of Commerce (ICBC). Petitioner represented that
she could facilitate the approval of the loan. True enough, ICBC
granted a loan to MCCI in the amount of P20,000,000.00,
evidenced by a promissory note. As security, MCCI also
executed a chattel mortgage over the warehouses in the
Numancia Property. Mandy entrusted petitioner with the
obligation to manage the payment of the loan. 4chanrobleslaw
In February 1999, MCCI received a notice of foreclosure over
the mortgaged property due to its default in paying the loan
obligation.5 In order to prevent the foreclosure, Mandy instructed
petitioner to facilitate the payment of the loan. MCCI, through
Mandy, issued 13 Allied Bank checks and 12 Asia Trust Bank
checks in varying amounts and in different dates covering the
period from May 18, 1999 to April 4, 2000.6 The total amount of
the checks, which were all payable to cash, was
P21,706,281.00. Mandy delivered the checks to petitioner.
Mandy claims that he delivered the checks with the instruction
that petitioner use the checks to pay the loan.7 Petitioner, on the
other hand, testified that she encashed the checks and returned
the money to Mandy.8 ICBC eventually foreclosed the
mortgaged property as MCCI continued to default in its
obligation to pay. Mandy claims that it was only at this point in
time that he discovered that not a check was paid to
ICBC.9chanrobleslaw
Thus, on October 7, 2002, MCCI, represented by Mandy, filed a
Compiamt-Affidavit for Estafa10 before the Office of the City
Prosecutor of Manila. On March 3, 2004, an Information 11 was
filed against petitioner before the Regional Trial Court (RTC)
Manila.
After a full-blown trial, the RTC Manila rendered a
decision12 dated November 11, 2005 (RTC Decision) acquitting
petitioner. The RTC Manila found that while petitioner admitted
that she received the checks, the prosecution failed to establish
that she was under any obligation to deliver them to ICBC in
payment of MCCFs loan. The trial court made this finding on the
strength of Mandy's admission that he gave the checks to
petitioner with the agreement that she would encash them.
Petitioner would then pay ICBC using her own checks. The trial
court further made a finding that Mandy and petitioner entered
into a contract of loan.13 Thus, it held that the prosecution failed
to establish an important element of the crime of estafa—
misappropriation or conversion. However, while the RTC Manila
acquitted petitioner, it ordered her to pay the amount of the
checks. The dispositive portion of the RTC Decision states —
WHEREFORE, the prosecution having failed to establish the
guilt of the accused beyond reasonable doubt, judgment is
hereby rendered ACQUITTING the accused of the offense
charged. With costs de officio.
The accused is however civilly liable to the complainant for the
amount of P21,706,281.00.
SO ORDERED.14chanroblesvirtuallawlibrary
Petitioner filed an appeal15 of the civil aspect of the RTC
Decision with the CA. In the Assailed Decision,16the CA found
the appeal without merit. It held that the acquittal of petitioner
does not necessarily absolve her of civil liability. The CA said
that it is settled that when an accused is acquitted on the basis
of reasonable doubt, courts may still find him or her civilly liable
if the evidence so warrant. The CA explained that the evidence
on record adequately prove that petitioner received the checks
as a loan from MCCI. Thus, preventing the latter from recovering
the amount of the checks would constitute unjust enrichment.
Hence, the Assailed Decision ruled
WHEREFORE, in view of the foregoing, the appeal is DENIED.
The Decision dated November 11, 2005 of the Regional Trial
Court, Manila, Branch 33 in Criminal Case No. 04-224294 which
found Gloria Dy civilly liable to William Mandy is AFFIRMED.
SO ORDERED.17chanroblesvirtuallawlibrary
The CA also denied petitioner's motion for reconsideration in a
resolution18 dated August 3, 2009.
Hence, this Petition for Review on Certiorari (Petition).
Petitioner argues that since she was acquitted for failure of the
prosecution to prove all the elements of the crime charged, there
was therefore no crime committed.19 As there was no crime, any
civil liability ex delicto cannot be awarded.
The Issues
The central issue is the propriety of making a finding of civil
liability in a criminal case for estafa when the accused is
acquitted for failure of the prosecution to prove all the elements
of the crime charged.
The Ruling of the Court
We grant the petition.

Civil Liability Arising From Crime
Our laws recognize a bright line distinction between criminal and
civil liabilities. A crime is a liability against the state. It is
prosecuted by and for the state. Acts considered criminal are
penalized by law as a means to protect the society from
dangerous transgressions. As criminal liability involves a penalty
affecting a person's liberty, acts are only treated criminal when
the law clearly says so. On the other hand, civil liabilities take a
less public and more private nature. Civil liabilities are claimed
through civil actions as a means to enforce or protect a right or
prevent or redress a wrong.20 They do not carry with them the
imposition of imprisonment as a penalty. Instead, civil liabilities
are compensated in the form of damages.
Nevertheless, our jurisdiction recognizes that a crime has a
private civil component. Thus, while an act considered criminal
is a breach of law against the State, our legal system allows for
the recovery of civil damages where there is a private person
injured by a criminal act. It is in recognition of this dual nature of
a criminal act that our Revised Penal Code provides that every
person criminally liable is also civilly liable.21 This is the concept
of civil liability ex delicto.
This is echoed by the New Civil Code when it recognizes acts or
omissions punished by law as a separate source of
obligation.22 This is reinforced by Article 30 of the same code
which refers to the filing of a separate civil action to demand civil
liability arising from a criminal offense.23chanrobleslaw
The Revised Penal Code fleshes out this civil liability in Article
10424 which states that it includes restitution, reparation of
damage caused and indemnification for consequential
damages.
Rules of procedure for criminal and civil actions involving the
same act or omission
The law and the rules of procedure provide for a precise
mechanism in instituting a civil action pertaining to an act or
omission which is also subject of a criminal case. Our Rules of
Court prescribes a kind of fusion such that, subject to certain
defined qualifications, when a criminal action is instituted, the
civil action for the recovery of the civil liability arising from the
offense is deemed instituted as well.25cralawredchanrobleslaw
However, there is an important difference between civil and
criminal proceedings that require a fine distinction as to how
these twin actions shall proceed. These two proceedings involve
two different standards of proof. A criminal action requires proof
of guilt beyond reasonable doubt while a civil action requires a
lesser quantum of proof, that of preponderance of evidence.
This distinction also agrees with the essential principle in our
legal system that while a criminal liability carries with it a
corresponding civil liability, they are nevertheless separate and
distinct. In other words, these two liabilities may co-exist but their
existence is not dependent on each other.26chanrobleslaw
The Civil Code states that when an accused in a criminal
prosecution is acquitted on the ground that his guilt has not been
proven beyond reasonable doubt, a civil action for damages for
the same act or omission may be filed. In the latter case, only
preponderance of evidence is required. 27 This is supported by
the Rules of Court which provides that the extinction of the
criminal action does not result in the extinction of the
corresponding civil action.28 The latter may only be extinguished
when there is a "finding in a final judgment in the criminal action
that the act or omission from which the civil liability may arise did
not exist."29 Consistent with this, the Rules of Court requires that
in judgments of acquittal the court must state whether "the
evidence of the prosecution absolutely failed to prove the guilt
of the accused or merely failed to prove his guilt beyond
reasonable doubt. In either case, the judgment shall determine
if the act or omission from which the civil liability might arise did
not exist."30chanrobleslaw
Thus, whether an exoneration from the criminal action should
affect the corresponding civil action depends on the varying
kinds of acquittal. In Manantan v. Court of Appeals,31 we
explained —
Our law recognizes two kinds of acquittal, with different effects
on the civil liability of the accused. First is an acquittal on the
ground that the accused is not the author of the act or omission
complained of. This instance closes the door to civil liability, for
a person who has been found to be not the perpetrator of any
act or omission cannot and can never be held liable for such act
or omission. There being no delict civil liability ex delicto is out
of the question, and the civil action, if any, which may be
instituted must be based on grounds other than
the delict complained of. This is the situation contemplated in
Rule 111 of the Rules of Court. The second instance is an
acquittal based on reasonable doubt on the guilt of the accused.
In this case, even if the guilt of the accused has not been
satisfactorily established, he is not exempt from civil liability
which may be proved by preponderance of evidence only. This
is the situation contemplated in Article 29 of the Civil Code,
where the civil action for damages is "for the same act or
omission." Although the two actions have different purposes, the
matters discussed in the civil case are similar to those discussed
in the criminal case. However, the judgment In the criminal
proceeding cannot be read in evidence In the civil action to
establish any fact there determined, even though both actions
involve the same act or omission. The reason for this rule is that
the parties are not the same and secondarily, different rules of
evidence are applicable. Hence, notwithstanding herein
petitioner's acquittal, the Court of Appeals in determining
whether Article 29 applied, was not precluded from looking into
the question of petitioner's negligence or reckless
imprudence.32chanroblesvirtuallawlibrary
In Dayap v. Sendiong,33 we further said —
The acquittal of the accused does not automatically preclude a
judgment against him on the civil aspect of the case. The
extinction of the penal action does not carry with it the extinction
of the civil liability where: (a) the acquittal is based on
reasonable doubt as only preponderance of evidence is
required; (b) the court declares that the liability of the accused is
only civil; and (c) the civil liability of the accused does not arise
from or is not based upon the crime of which the accused is
acquitted. However, the civil action based on delict may be
deemed extinguished if mere is a finding on the final judgment
in the criminal action that the act or omission from which the civil
liability may arise did not exist or where the accused did not
commit the acts or omission imputed to
him.34chanroblesvirtuallawlibrary
Hence, a civil action filed for the purpose of enforcing civil
liability ex delicto, even if mandatorily instituted with the
corresponding criminal action, survives an acquittal when it is
based on the presence of reasonable doubt. In these instances,
while the evidence presented does not establish the fact of the
crime with moral certainty, the civil action still prevails for as long
as the greater weight of evidence tilts in favor of a finding of
liability. This means that while the mind of the court cannot rest
easy in penalizing the accused for the commission of a crime, it
nevertheless finds that he or she committed or omitted to
perform acts which serve as a separate source of obligation.
There is no sufficient proof that the act or omission is criminal
beyond reasonable doubt, but there is a preponderance of
evidence to show that the act or omission caused injury which
demands compensation.
Civil Liability Ex Delicto in Estafa Cases
Our laws penalize criminal fraud which causes damage capable
of pecuniary estimation through estafaunder Article 315 of the
Revised Penal Code. In general, the elements
of estafa are:ChanRoblesVirtualawlibrary
(1) That the accused defrauded another (a) by abuse of
confidence, or (b) by means of deceit; and
(2) That damage or prejudice capable of pecuniary
estimation is caused to the offended party or third
person.
The essence of the crime is the unlawful abuse of confidence or
deceit in order to cause damage. As this Court previously held,
"the element of fraud or bad faith is indispensable." 35 Our law
abhors the act of defrauding another person by abusing his trust
or deceiving him, such that, it criminalizes this kind of fraud.
Article 315 of the Revised Penal Code identifies the
circumstances which constitute estafa. Article 315, paragraph 1
(b) states that estafa is committed by abuse of confidence —
Art. 315. Swindling (estafa) - x x x (b) By misappropriating or
converting, to the prejudice of another, money, goods, or any
other personal property received by the offender in trust or on
commission, or for administration, or under any other obligation
involving the duty to make delivery of or to return the same, even
though such obligation be totally or partially guaranteed by a
bond; or by denying having received such money, goods, or
other property.
In this kind of estafa, the fraud which the law considers as
criminal is the act of misappropriation or conversion. When the
element of misappropriation or conversion is missing, there can
be no estafa. In such case, applying the foregoing discussions
on civil liability ex delicto, there can be no civil liability as there
is no act or omission from which any civil liability may be
sourced. However, when an accused is acquitted because a
reasonable doubt exists as to the existence of misappropriation
or conversion, then civil liability may still be awarded. This
means that, while there is evidence to prove fraud, such
evidence does not suffice to convince the court to the point of
moral certainty that the act of fraud amounts to estafa. As the
act was nevertheless proven, albeit without sufficient proof
justifying the imposition of any criminal penalty, civil liability
exists.
In this case, the RTC Manila acquitted petitioner because the
prosecution failed to establish by sufficient evidence the element
of misappropriation or conversion. There was no adequate
evidence to prove that Mandy gave the checks to petitioner with
the instruction that she will use them to pay the ICBC loan. Citing
Mandy's own testimony in open court, the RTC Manila held that
when Mandy delivered the checks to petitioner, their agreement
was that it was a "sort of loan."36 In the dispositive portion of the
RTC Decision, the RTC Manila ruled that the prosecution "failed
to establish the guilt of the accused beyond reasonable
doubt."37 It then proceeded to order petitioner to pay the amount
of the loan.
The ruling of the RTC Manila was affirmed by the CA. It said that
"[t]he acquittal of Gloria Dy is anchored on the ground that her
guilt was not proved beyond reasonable doubt - not because
she is not the author of the act or omission complained of. x x x
The trial court found no trickery nor deceit in obtaining money
from the private complainant; instead, it concluded that the
money obtained was undoubtedly a loan." 38
Our jurisprudence on this matter diverges.
Earlier cases ordered the dismissal of the civil action for
recovery of civil liability ex delicto whenever there is a finding
that there was no estafa but rather an obligation to pay under a
contract. In People v. Pantig,39 this Court affirmed the ruling of
the lower court acquitting Pantig, but revoked the portion
sentencing him to pay the offended party the amount of money
alleged to have been obtained through false and fraudulent
representations, thus —
The trial court found as a fact that the sum of P1,200, ordered
to be paid in the judgment of acquittal, was received by the
defendant-appellant as loan. This finding is inconsistent with the
existence of the criminal act charged in the information. The
liability of the defendant for the return of the amount so
received arises from a civil contract, not from a criminal act,
and may not be enforced in the criminal case.
The portion of the judgment appealed from, which orders the
defendant-appellant to pay the sum of Pi ,200 to the offended
party, is hereby revoked, without prejudice to the filing of a civil
action for the recovery of the said
amount.40chanroblesvirtuallawlibrary
This was also the import of the ruling in People v. Singson.41 In
that case, this Court found that "the evidence [was] not sufficient
to establish the existence of fraud or deceit on the part of the
accused. x x x And when there is no proven deceit or fraud, there
is no crime of estafa."42 While we also said that the established
facts may prove Singson's civil liability (obligation to pay under
a contract of sale), we nevertheless made no finding of civil
liability because "our mind cannot rest easy on the certainty of
guilt"43 considering the above finding. The dispositive portion
stated that Singson is acquitted "without prejudice to any civil
liability which may be established in a civil case against
her."44chanrobleslaw
However, our jurisprudence on the matter appears to have
changed in later years.
In Eusebio-Calderon v. People,45 this Court affirmed the finding
of the CA that Calderon "did not employ trickery or deceit in
obtaining money from the private complainants, instead, it
concluded that the money obtained was undoubtedly loans for
which [Calderon] paid interest."46 Thus, this Court upheld
Calderon's acquittal of estafa, but found her civilly liable for the
principal amount borrowed from the private
complainants.47chanrobleslaw
The ruling was similar in People v. Cuyugan.48 In that case, we
acquitted Cuyugan of estafa for failure of the prosecution to
prove fraud. We held that the transaction between Cuyugan and
private complainants was a loan to be used by Cuyugan in her
business. Thus, this Court ruled that Cuyugan has the
obligation, which is civil in character, to pay the amount
borrowed.49chanrobleslaw
We hold that the better rule in ascertaining civil liability
in estafa cases is that pronounced in Pantig and Singson. The
rulings in these cases are more in accord with the relevant
provisions of the Civil Code, and the Rules of Court. They are
also logically consistent with this Court's pronouncement
in Manantan.
Under Pantig and Singson, whenever the elements
of estafa are not established, and that the delivery of any
personal property was made pursuant to a contract, any civil
liability arising from the estafa cannot be awarded in the criminal
case. This is because the civil liability arising from the contract
is not civil liability ex delicto, which arises from the same act or
omission constituting the crime. Civil liability ex delicto is the
liability sought to be recovered in a civil action deemed instituted
with the criminal case.
The situation envisioned in the foregoing cases, as in this case,
is civil liability ex contractu where the civil liability arises from an
entirely different source of obligation. Therefore, it is not the type
of civil action deemed instituted in the criminal case, and
consequently must be filed separately. This is necessarily so
because whenever the court makes a finding that the elements
of estafa do not exist, it effectively says that there is no crime.
There is no act or omission that constitutes criminal fraud. Civil
liability ex delicto cannot be awarded as it cannot be sourced
from something that does not exist.
When the court finds that the source of obligation is in fact, a
contract, as in a contract of loan, it takes a position completely
inconsistent with the presence of estafa. In estafa, a person
parts with his money because of abuse of confidence or deceit.
In a contract, a person willingly binds himself or herself to give
something or to render some service.50 In estafa, the accused's
failure to account for the property received amounts to criminal
fraud. In a contract, a party's failure to comply with his obligation
is only a contractual breach. Thus, any finding that the source of
obligation is a contract negates estafa. The finding, in turn,
means that there is no civil liability ex delicto. Thus, the rulings
in the foregoing cases are consistent with the concept of fused
civil and criminal actions, and the different sources of obligations
under our laws.
We apply this doctrine to the facts of this case. Petitioner was
acquitted by the RTC Manila because of the absence of the
element of misappropriation or conversion. The RTC Manila, as
affirmed by the CA, found that Mandy delivered the checks to
petitioner pursuant to a loan agreement. Clearly, there is no
crime of estafa. There is no proof of the presence of any act or
omission constituting criminal fraud. Thus, civil liability ex
delicto cannot be awarded because there is no act or omission
punished by law which can serve as the source of obligation.
Any civil liability arising from the loan takes the nature of a civil
liability ex contractu. It does not pertain to the civil action
deemed instituted with the criminal case.
In Manantan, this Court explained the effects of this result on the
civil liability deemed instituted with the criminal case. At the risk
of repetition, Manantan held that when there is no delict, "civil
liability ex delicto is out of the question, and the civil action, if
any, which may be instituted must be based on grounds other
than the delict complained of."51 In Dy's case, the civil liability
arises out of contract—a different source of obligation apart from
an act or omission punished by law—and must be claimed in a
separate civil action.
Violation of Due Process
We further note that the evidence on record never fully
established the terms of this loan contract. As the trial before the
RTC Manila was focused on proving estafa, the loan contract
was, as a consequence, only tangentially considered. This
provides another compelling reason why the civil liability arising
from the loan should be instituted in a separate civil case. A civil
action for collection of sum of money filed before the proper
court will provide for a better venue where the terms of the loan
and other relevant details may be received. While this may
postpone a warranted recovery of the civil liability, this Court
deems it more important to uphold the principles underlying the
inherent differences in the various sources of obligations under
our law, and the rule that fused actions only refer to criminal and
civil actions involving the same act or omission. These legal
tenets play a central role in this legal system. A confusion of
these principles will ultimately jeopardize the interests of the
parties involved. Actions focused on proving estafa is not the
proper vehicle to thresh out civil liability arising from a
contract.52 The Due Process Clause of the Constitution dictates
that a civil liability arising from a contract must be litigated in a
separate civil action.
Section 1 of the Bill of Rights states that no person shall be
deprived of property without due process of law. This provision
protects a person's right to both substantive and procedural due
process. Substantive due process looks into the validity of a law
and protects against arbitrariness.53 Procedural due process, on
the other hand, guarantees procedural fairness. 54 It requires an
ascertainment of "what process is due, when it is due, and the
degree of what is due."55 This aspect of due process is at the
heart of this case.
In general terms, procedural due process means the right to
notice and hearing.56 More specifically, our Rules of Court
provides for a set of procedures through which a person may be
notified of the claims against him or her as well as methods
through which he or she may be given the adequate opportunity
to be heard.
The Rules of Court requires that any person invoking the power
of the judiciary to protect or enforce a right or prevent or redress
a wrong57 must file an initiatory pleading which embodies a
cause of action,58which is defined as the act or omission by
which a party violates a right of another.59 The contents of an
initiatory pleading alleging a cause of action will vary depending
on the source of the obligation involved. In the case of an
obligation arising from a contract, as in this case, the cause of
action in an initiatory pleading will involve the duties of the
parties to the contract, and what particular obligation was
breached. On the other hand, when the obligation arises from
an act or omission constituting a crime, the cause of action must
necessarily be different. In such a case, the initiatory pleading
will assert as a cause of action the act or omission of
respondent, and the specific criminal statute he or she violated.
Where the initiatory pleading fails to state a cause of action, the
respondent may file a motion to dismiss even before
trial.60 These rules embody the fundamental right to notice under
the Due Process Clause of the Constitution.
In a situation where a court (in a fused action for the
enforcement of criminal and civil liability) may validly order an
accused-respondent to pay an obligation arising from a contract,
a person's right to be notified of the complaint, and the right to
have the complaint dismissed if there is no cause of action, are
completely defeated. In this event, the accused-respondent is
completely unaware of the nature of the liability claimed against
him or her at the onset of the case. The accused-respondent will
not have read any complaint stating the cause of action of an
obligation arising from a contract. All throughout the trial, the
accused-respondent is made to believe that should there be any
civil liability awarded against him or her, this liability is rooted
from the act or omission constituting the crime. The accused-
respondent is also deprived of the remedy of having the
complaint dismissed through a motion to dismiss before trial. In
a fused action, the accused-respondent could not have availed
of this remedy because he or she was not even given an
opportunity to ascertain what cause of action to look for in the
initiatory pleading. In such a case, the accused-respondent is
blindsided. He or she could not even have prepared the Art. 1150. The time for prescription for all kinds of actions, when
appropriate defenses and evidence to protect his or her interest. there is no special provision which ordains otherwise, shall be
This is not the concept of fair play embodied in the Due Process counted from the day they may be brought.
Clause. It is a clear violation of a person's right to due process.
We held in numerous cases that it is the legal possibility of
bringing the action that determines the starting point for the
The Rules of Court also allows a party to a civil action certain
computation of the period of prescription.67 We highlight the
remedies that enable him or her to effectively present his or her
unique circumstances surrounding this case. As discussed in
case. A party may file a cross-claim, a counterclaim or a third-
this decision, there has been diverse jurisprudence as to the
party complaint.61 The Rules of Court prohibits these remedies
propriety of ordering an accused to pay an obligation arising
in a fused civil and criminal case.62 The Rules of Court requires
from a contract in the criminal case where the accused was
that any cross-claim, counterclaim or third-party complaint must
acquitted on the ground that there is no crime. Litigants, such as
be instituted in a separate civil action.63 In a legal regime where
MCCI, cannot be blamed for relying on prior rulings where the
a court may order an accused in a fused action to pay civil
recovery on a contract of loan in a criminal case for estafawas
liability arising from a contract, the accused-respondent is
allowed. We have found the opportunity to clarify this matter
completely deprived of the remedy to file a cross-claim, a
through this decision. As it is only now that we delineate the
counterclaim or a third-party complaint. This—coupled with an
rules governing the fusion of criminal and civil actions pertaining
accused-respondent's inability to adequately prepare his or her
to estafa, it is only upon the promulgation of this judgment that
defense because of lack of adequate notice of the claims against
litigants have a clear understanding of the proper recourse in
him or her—prevents the accused-respondent from having any
similar cases. We therefore rule that insofar as MCCI is
right to a meaningful hearing. The right to be heard under the
concerned, the filing of an action, if any (that may be sourced
Due Process Clause requires not just any kind of an opportunity
from the contract of loan), becomes a legal possibility only upon
to be heard. It mandates that a party to a case must have the
the finality of this decision which definitively ruled upon the
chance to be heard in a real and meaningful sense. It does not
principles on fused actions.
require a perfunctory hearing, but a court proceeding where the
party may adequately avail of the procedural remedies granted
We add, however, that upon finality of this decision, prospective
to him or her. A court decision resulting from this falls short of
litigants should become more circumspect in ascertaining their
the mandate of the Due Process Clause.
course of action in similar cases. Whenever a litigant
erroneously pursues an estafa case, and the accused is
Indeed, the language of the Constitution is clear. No person shall
subsequently acquitted because the obligation arose out of a
be deprived of property without due process of law. Due
contract, the prescriptive period will still be counted from the time
Process, in its procedural sense, requires, in essence, the right
the cause of action arose. In this eventuality, it is probable that
to notice and hearing. These rights are further fleshed out in the
the action has already prescribed by the time the criminal case
Rules of Court. The Rules of Court enforces procedural due
shall have been completed. This possibility demands that
process because, to repeat the words of this Court in Secretary
prospective litigants do not haphazardly pursue the filing of
of Justice v. Lantion, it provides for "what process is due, when
an estafa case in order to force an obligor to pay his or her
it is due, and the degree of what is due." 64 A court ordering an
obligation with the threat of criminal conviction. It compels
accused in a fused action to pay his or her contractual liability
litigants to be honest and fair in their judgment as to the proper
deprives him or her of his or her property without the right to
action to be filed. This ruling should deter litigants from turning
notice and hearing as expressed in the procedures and
to criminal courts as their collection agents, and should provide
remedies under the Rules of Court. Thus, any court ruling
a disincentive to the practice of filing of criminal cases based on
directing an accused in a fused action to pay civil liability arising
unfounded grounds in order to provide a litigant a bargaining
from a contract is one that completely disregards the Due
chip in enforcing contracts.
Process Clause. This ruling must be reversed and the
Constitution upheld.
WHEREFORE, in view of the foregoing, the Petition
is GRANTED. The Decision of the CA dated February 25, 2009
Conclusion
is REVERSED. This is however, without prejudice to any civil
action which may be filed to claim civil liability arising from the
The lower courts erred when they ordered petitioner to pay her
contract.
civil obligation arising from a contract of loan in the same
criminal case where she was acquitted on the ground that there
SO ORDERED.
was no crime. Any contractual obligation she may have must be
litigated in a separate civil action involving the contract of loan.
We clarify that in cases where the accused is acquitted on the
ground that there is no crime, the civil action deemed instituted
with the criminal case cannot prosper precisely because there is
no delict from which any civil obligation may be sourced. The
peculiarity of this case is the finding that petitioner, in fact, has
an obligation arising from a contract. This civil action arising from
the contract is not necessarily extinguished. It can be instituted
in the proper court through the proper civil action.

We note that while there is no written contract of loan in this

case, there is an oral contract of loan which must be brought
within six years.65 Under the facts of the case, it appears that
any breach in the obligation to pay the loan may have happened
between 1996 and 1999, or more than six years since this case
has been instituted. This notwithstanding, we find that the civil
action arising from the contract of loan has not yet prescribed.
Article 1150 of the Civil Code states —
ALLIANCE FOR THE FAMILY FOUNDATION, PHILIPPINES,
INC. (ALFI) and ATTY. MARIA CONCEPCION S. NOCHE, in
her own behalf and as President of ALFI, JOSE S.
SANDEJAS, ROSIE B. LUISTRO, ELENITA S.A. SANDEJAS,
EMILY R. LAWS, EILEEN Z. ARANETA, SALV ACION C.
MONTEIRO, MARIETTA C. GORREZ, ROLANDO M.
BAUTISTA, RUBEN T. UMALI, and MILDRED C. CASTOR
, Petitioners
vs.
HON. JANETTE L. GARIN, Secretary-Designate of the
Department of Health; NICOLAS B.LUTERO III, Assistant
Secretary of Health, Officer-in-Charge, Food and Drug
Administration; and MARIA LOURDES C. SANTIAGO,
Officer in-Charge, Center for Drug Regulation and
Research, Respondents
x-----------------------x
G.R. No. 221866
MARIA CONCEPCION S. NOCHE, in her own behalf and as
counsel of Petitioners, JOSE S. SANDEJAS, ROSIE B.
LUISTRO, ELENITA S.A. SANDEJAS, EMILY R. LAWS
EILEEN Z. ARANETA, SALVACION C. MONTEIRO
MARIETTA C. GORREZ, ROLANDO M. BAUTISTA, RUBEN
T. UMALI, and MILDRED C. CASTOR,Petitioners
vs.
HON. JANETTE L. GARIN, Secretary-Designate of the
Department of Health; NICOLAS B. LUTERO III, Assistant
Secretary of Health; NICOLAS B. LUTERO III, Assistant
Secretary of Health, Officer-in-Charge, Food and Drug
Administration; and MARIA LOURDES C. SANTIAGO,
Officer-in-Charge, Center for Drug Regulation and
Research, Respondents.
RESOLUTION
MENDOZA, J.:
Subject of this resolution is the Omnibus Motion 1 filed by the
respondents, thru the Office of the Solicitor General (OSG),
seeking partial reconsideration of the August 24, 2016 Decision
(Decision),2 where the Court resolved the: [1] Petition
for Certiorari, Prohibition, Mandamus with Prayer for Issuance
of a Temporary Restraining Order and/or Writ of Preliminary
Prohibitory and Mandatory Injunction (G.R. No. 217872); and
the [2] Petition for Contempt of Court (G.R. No. 221866), in the
following manner:
WHEREFORE, the case docketed as G.R No. 217872 is hereby
REMANDED to the Food and Drugs Administration which is
hereby ordered to observe the basic requirements of due
process by conducting a hearing, and allowing the petitioners to
be heard, on the re-certified, procured and administered
contraceptive drugs and devices, including Implanon and
lmplanon NXT, and to determine whether they are abortifacients
or non-abortifacients.
Pursuant to the expanded jurisdiction of this Court and its power
to issue rules for the protection and enforcement of
constitutional rights, the Court hereby:
1. DIRECTS the Food and Drug
Administration to formulate the rules of
procedure in the screening, evaluation and
approval of all contraceptive drugs and
devices that will be used under Republic Act
No. 10354. The rules of procedure shall
contain the following minimum requirements
of due process: (a) publication, notice and
hearing, (b) interested parties shall be
allowed to intervene, (c) the standard laid
down in the Constitution, as adopted under
Republic Act No. 10354, as to what
constitutes allowable contraceptives shall be
strictly followed, that is, those which do not
harm or destroy the life of the unborn from
conception/fertilization, (d) in weighing the
evidence, all reasonable doubts shall be
resolved in favor of the protection and
preservation of the right to life of the unborn
from conception/fertilization, and (e) the other
requirements of administrative due process,
as summarized in Ang Tibay v. CIR, shall be
complied with.
2. DIRECTS the Department of Health in
coordination with other concerned agencies
to formulate the rules and regulations or
guidelines which will govern the purchase and
distribution/ dispensation of the products or
supplies under Section 9 of Republic Act No.
10354 covered by the certification from the
Food and Drug Administration that said
product and supply is made available on the
condition that it will not be used as an
abortifacient subject to the following minimum
due process requirements: (a) publication,
notice and hearing, and (b) interested parties
shall be allowed to intervene. The rules and
regulations or guidelines shall provide
sufficient detail as to the manner by which
said product and supply shall be strictly
regulated in order that they will not be used as
an abortifacient and in order to sufficiently
safeguard the right to life of the unborn.
3. DIRECTS the Department of Health to
generate the complete and correct list of the
government's reproductive health programs
and services under Republic Act No. 10354
which will serve as the template for the
complete and correct information standard
and, hence, the duty to inform under Section
23(a)(l) of Republic Act No. 10354. The
Department of Health is DIRECTED to
distribute copies of this template to all health
care service providers covered by Republic
Act No. 10354.
The respondents are hereby also ordered to amend the
Implementing Rules and Regulations to conform to the rulings
and guidelines in G.R. No. 204819 and related cases.
The above foregoing directives notwithstanding, within 30 days
from receipt of this disposition, the Food and Drugs
Administration should commence to conduct the necessary
hearing guided by the cardinal rights of the parties laid down
in CIR v. Ang Tibay.
Pending the resolution of the controversy, the motion to lift the
Temporary Restraining Order is DENIED.
With respect to the contempt petition, docketed as G.R No. competence to review the findings of the FDA on the non-
221866, it is hereby DENIED for lack of concrete basis. abortifacient character of contraceptive drugs or devices; 15 c)
the FDA was not bound by the rules of admissibility and
SO ORDERED.3 presentation of evidence under the Rules of Court; 16 and d) the
findings of the FDA could not be subject of the rule on res
judicata and stare-decisis. 17
Arguments of the Respondents
The respondents then insisted that Implanon and Implanon NXT
Part 1: Due Process need not be were not abortifacients and lamented that the continued
complied with as the questioned injunction of the Court had hampered the efforts of the FDA to
acts of the Food and Drug provide for the reproductive health needs of Filipino women. For
Administration (FDA) were in the respondents, to require them to afford the parties like the
the exercise of its Regulatory Powers petitioners an opportunity to question their findings would cause
inordinate delay in the distribution of the subject contraceptive
In the subject Omnibus Motion, the respondents argued that drugs and devices which would have a dire impact on the
their actions should be sustained, even if the petitioners were effective implementation of the RH Law.
not afforded notice and hearing, because the contested acts of
registering, re-certifying, procuring, and administering The Court's Ruling
contraceptive drugs and devices were all done in the exercise
of its regulatory power.4 They contended that considering that
the issuance of the certificate of product registration (CPR) by After an assiduous assessment of the arguments of the parties,
the FDA under Section 7.04, Rule5 of the Implementing Rules the Court denies the Omnibus Motion, but deems that a
and Regulations of Republic Act (R.A.) No. 10354 (RH-IRR) did clarification on some points is in order.
not involve the adjudication of the parties' opposing rights and
liabilities through an adversarial proceeding, the due process Judicial Review
requirements of notice and hearing need not be complied with. 6
The powers of an administrative body are classified into two
Stated differently, the respondents assert that as long as the act fundamental powers: quasi-legislative and quasi-
of the FDA is exercised pursuant to its regulatory power, it need judicial. Quasi-legislative power, otherwise known as the
not comply with the due process requirements of notice and power of subordinate legislation, has been defined as the
hearing. authority delegated by the lawmaking body to the administrative
body to adopt rules and regulations intended to carry out the
Corollary to this, the respondents wanted the Court to consider provisions of law and implement legislative policy. 18 "[A]
that the FDA had delineated its functions among different legislative rule is in the nature of subordinate legislation,
persons and bodies in its organization. Thus, they asked the designed to implement a primary legislation by providing the
Court to make a distinction between the "quasi-judicial details thereof." 19 The exercise by the administrative body of its
powers" exercised by the Director-General of the FDA under quasi-legislative power through the promulgation of regulations
Section 2(b)7 of Article 3, Book I of the Implementing Rules and of general application does not, as a rule, require notice and
Regulations (IRR) of R.A. No. 9711,8 and hearing. The only exception being where the Legislature itself
the "regulatory/administrative powers"exercised by the requires it and mandates that the regulation shall be based on
FDA under Section 2(c )(1) 9 of the same. For the respondents, certain facts as determined at an appropriate investigation. 20
the distinction given in the above-cited provisions was all but
proof that the issuance of CPR did not require notice and Quasi-judicial power, on the other hand, is known as the power
hearing. of the administrative agency to determine questions of fact to
which the legislative policy is to apply, in accordance with the
After detailing the process by which the FDA's Center for Drug standards laid down by the law itself.21 As it involves the
Regulation and Research (CDRR) examined and tested the exercise of discretion in determining the rights and liabilities of
contraceptives for non-abortifacience, 10 the respondents the parties, the proper exercise of quasi-judicial power requires
stressed that the Decision wreaked havoc on the organizational the concurrence of two elements: one, jurisdiction which must
structure of the FDA, whose myriad of functions had been be acquired by the administrative body and two, the
carefully delineated in the IRR of R.A. No. 9711. 11 The observance of the requirements of due process, that is,
respondents, thus, prayed for the lifting of the Temporary the right to notice and hearing.22
Restraining Order (TR0). 12
On the argument that the certification proceedings were
Part 2: The requirements of due conducted by the FDA in the exercise of its "regulatory powers"
process need not be complied with as and, therefore, beyond judicial review, the Court holds that it has
the elements of procedural due the power to review all acts and decisions where there is a
process laid down in Ang Tibay v. commission of grave abuse of discretion. No less than the
CIR are not applicable Constitution decrees that the Court must exercise its duty to
ensure that no grave abuse of discretion amounting to lack or
excess of jurisdiction is committed by any branch or
The respondents further claimed in their omnibus motion that instrumentality of the Government. Such is committed when
the requirements of due process need not be complied with there is a violation of the constitutional mandate that "no person
because the standards of procedural due process laid down is deprived of life, liberty, and property without due process of
in Ang Tibay v. CIR 13 were inapplicable considering that: a) law." The Court's power cannot be curtailed by the FDA's
substantial evidence could not be used as a measure in invocation of its regulatory power.
determining whether a contraceptive drug or device was
abortifacient; 14 b) the courts had neither jurisdiction nor
In so arguing, the respondents cited Atty. Carlo L. Cruz in his
book, Philippine Administrative Law.
Lest there be any inaccuracy, the relevant portions of the book
cited by the respondents are hereby quoted as follows:
xxx.
B. The Quasi-Judicial Power
xxx
2. Determinative Powers
To better enable the administrative body to exercise its quasi
judicial authority, it is also vested with what is known
as determinative powers and functions.
Professor Freund classifies them generally into
the enabling powers and the directing powers. The latter
includes the dispensing, the examining, and
the summary powers.
The enabling vowers are those that permit the doing of an
act which the law undertakes to regulate and which would
be unlawful with government approval. The most common
example is the issuance of licenses to engage in a particular
business or occupation, like the operation of a liquor store or
restaurant. x x x. 23 [Emphases and underscoring supplied]
From the above, two things are apparent: one, the "enabling
powers" cover "regulatory powers" as defined by the
respondents; and two, they refer to a subcategory of a quasi-
judicial power which, as explained in the Decision, requires the
compliance with the twin requirements of notice and hearing.
Nowhere from the above-quoted texts can it be inferred that the
exercise of "regulatory power" places an administrative agency
beyond the reach of judicial review. When there is grave abuse
of discretion, such as denying a party of his constitutional right
to due process, the Court can come in and exercise its power of
judicial review. It can review the challenged acts, whether
exercised by the FDA in its ministerial, quasi-judicial or
regulatory power. In the past, the Court exercised its power of
judicial review over acts and decisions of agencies exercising
their regulatory powers, such as DPWH, 24 TRB, 25 NEA, 26and
the SEC,27 among others. In Diocese of Bacolod v. Commission
on Elections,28 the Court properly exercised its power of judicial
review over a Comelec resolution issued in the exercise of its
regulatory power.
Clearly, the argument of the FDA is flawed.
Petitioners were Denied their
Right to Due Process
Due process of law has two aspects: substantive and
procedural. In order that a particular act may not be impugned
as violative of the due process clause, there must be compliance
with both the substantive and the procedural requirements
thereof. 29 Substantive due process refers to the intrinsic validity
of a law that interferes with the rights of a person to his
property.30 Procedural due process, on the other hand, means
compliance with the procedures or steps, even periods,
prescribed by the statute, in conformity with the standard of fair
play and without arbitrariness on the part of those who are called
upon to administer it.31
The undisputed fact is that the petitioners were deprived of their
constitutional right to due process of law.
As expounded by the Court, what it found to be primarily
deplorable is the failure of the respondents to act upon, much
less address, the various oppositions filed by the petitioners
against the product registration, recertification, procurement,
and distribution of the questioned contraceptive drugs and
devices. Instead of addressing the petitioners' assertion that the
questioned contraceptive drugs and devices fell within the
definition of an "abortifacient" under Section 4(a) of the RH Law
because of their "secondary mechanism of action which induces
abortion or destruction of the fetus inside the mother's womb or
the prevention of the fertilized ovum to reach and be implanted
in the mother's womb,"32 the respondents chose to ignore them
and proceeded with the registration, recertification,
procurement, and distribution of several contraceptive drugs
and devices.
A cursory reading of the subject Omnibus Motion shows that the
respondents proffer no cogent explanation as to why they did
not act on the petitioners' opposition. As stated by the Court in
the Decision, rather than provide concrete action to meet the
petitioners' opposition, the respondents simply relied on their
challenge questioning the propriety of the subject petition on
technical and procedural grounds. 33 The Court, thus, finds the
subject motion to be simply a rehash of the earlier arguments
presented before, with the respondents still harping on the
peculiarity of the FDA's functions to exempt it from compliance
with the constitutional mandate that "no person shall be deprived
oflife, liberty and property without due process of law."
The law and the rules demand
compliance with due process
requirements
A reading of the various provisions, cited by the respondents in
support of their assertion that due process need not be complied
with in the approval of contraceptive drugs or devices, all the
more reinforces the Court's conclusion that the FDA did fail to
afford the petitioners a genuine opportunity to be heard.
As outlined by the respondents themselves, the steps by which
the FDA approves contraceptive drugs or devices, demand
compliance with the requirements of due process viz:
Step 1. Identify contraceptive products in the database. Create
another database containing the following details of
contraceptive products: generic name, dosage strength and
form, brand name (if any), registration number, manufacturer,
MAH, and the period of validity of the CPR.
Step 2. Identify contraceptive products which are classified as
essential medicines in the Philippine Drug Formulary.
Step 3. Retrieve the contraceptive product's file and the CPR
duplicate of all registered contraceptive products. Create a
database of the contraceptive product's history, including its
initial, renewal, amendment, and/or variation applications.
Step 4. Conduct a preliminary review of the following:
 a. general physiology of female reproductive
system, including hormones involved, female
reproductive cycle, and conditions of the
female reproductive system during
pregnancy.
b. classification of hormonal contraceptives;
c. regulatory status of the products in
benchmark countries; and
d. mechanism of action of hormonal
contraceptives based on reputable journals,
meta-analyses, systemic reviews, evaluation
of regulatory authorities in other countries,
textbooks, among others.
Step 5. Issue a notice to all concerned MAHs, requiring
them to submit scientific evidence that their product is non-
abortifacient, as defined in the RH Law and Imbong.
Step 6. Post a list of contraceptive products which were
applied for re-certification for public comments in the FDA
website.
Step 7. Evaluate contraceptive products for re-certification.
A. Part I (Review of Chemistry, Manufacture and Controls)
1. Unit Dose and Finished Product
Formulation
2. Technical Finished Product
Specifications
3. Certificate of Analysis
B. Part II (Evaluation of Whether the Contraceptive Product is
Abortifacient)
1. Evaluation of the scientific
evidence submitted by the applicant
and the public.
2. Review and evaluation of
extraneous evidence, e.g., scientific
journals, meta-analyses, etc.
Step 8. Assess and review the documentary requirements
submitted by the applicant. Technical reviewers considered
scientific evidence such as meta-analyses, systemic reviews,
national and clinical practice guidelines and recommendations
of international medical organizations submitted by the
companies, organizations and individuals, to be part of the
review.34 [Emphases and Underlining supplied]
The Court notes that the above-outlined procedure is deficient
insofar as it only allows public comments to cases of re-
certification. It fails to allow the public to comment in cases
where a reproductive drug or device is being subject to the
certification process for the first time. This is clearly in
contravention of the mandate of the Court in lmbong that
the IRR should be amended to conform to it.
More importantly, the Court notes that Step 5 requires the FDA
to issue a notice to all concerned MAHs and require them to
submit scientific evidence that their product is non-abortifacient;
and that Step 6 requires the posting of the list of contraceptive
products which were applied for re-certification for public
comments in the FDA website.
If an opposition or adverse comment is filed on the ground
that the drug or devise has abortifacient features or violative
of the RH Law, based on the pronouncements of the Court in Im
bong or any other law or rule, the FDA is duty-bound to take into
account and consider the basis of the opposition.
To conclude that product registration, recertification,
procurement, and distribution of the questioned contraceptive
drugs and devices by the FDA in the exercise of its regulatory
power need not comply with the requirements of due process
would render the issuance of notices to concerned MAHs and
the posting of a list of contraceptives for public comment a
meaningless exercise. Concerned MAHs and the public in
general will be deprived of any significant participation if what
they will submit will not be considered.
Section 7.04, Rule 7 of the IRR of the RH Law (RH-IRR),35 relied
upon by the respondents in support of their claims, expressly
allows the consideration of conflicting evidence, such as
that supplied by the petitioners in support of their opposition to
the approval of certain contraceptive drugs and devices. In fact,
the said provision mandates that the FDA utilize the "best
evidence available" to ensure that no bortifacient is approved as
a family planning drug or device. It bears mentioning that the
same provision even allows an independent evidence review
group (ERG) to ensure that evidence for or against the
certification of a contraceptive drug or device is duly considered.
Structure of the FDA
As earlier mentioned, the respondents argue that the Decision
"wreaked havoc on the organizational structure of the FDA,
whose myriad of functions have been carefully delineated under
R.A. No. 9711 IRR."36 Citing Section 7.04, Rule 7 of the RH-IRR,
the FDA insists that the function it exercises in certifying family
planning supplies is in the exercise of its regulatory
power, which cannot be the subject of judicial review, and that
it is the Director-General of the FDA who exercises quasi-
judicial powers, citing Section 2(b) of Article 3, Book I of the
RH-IRR.37
The FDA wants the Court to consider that, as a body, it has a
distinct and separate personality from the Director-General, who
exercises quasi-judicial power. The Court cannot accommodate
the position of the respondents. Section 6(a) of R.A. No. 3720,
as amended by Section 7 of R.A. No. 9711,38 provides that
"(a) The FDA shall be headed by a director-general with the
rank of undersecretary, xxx." How can the head be separated
from the body?
For the record, Section 4 of R.A. No. 3720, as amended by
Section 5 of R.A. No. 9711, also recognizes compliance with the
requirements of due process, although the proceedings are not
adversarial. Thus:
Section 5. Section 4 of Republic Act No. 3720, as amended, is
hereby further amended to read as follows:
"SEC. 4. To carry out the provisions of this Act, there is hereby
created an office to be called the Food and Drug Administration
(FDA) in the Department of Health (DOH). Said Administration
shall be under the Office of the Secretary and shall have the
following functions, powers and duties:
"(a) To administer the effective implementation of this Act and of
the rules and regulations issued pursuant to the same;
"(b) To assume primary jurisdiction in the collection of samples
of health products;
"(c) To analyze and inspect health products in connection with
the implementation of this Act;
"(d) To establish analytical data to serve as basis for the
preparation of health products standards, and to recommend
standards of identity, purity, safety, efficacy, quality and fill of
container;
"(e) To issue certificates of compliance with technical
requirements to serve as basis for the issuance of appropriate
authorization and spot-check for compliance with regulations
regarding operation of manufacturers, importers, exporters,
distributors, wholesalers, drug outlets, and other establishments
and facilities of health products, as determined by the FDA;
"xxx
"(h) To conduct appropriate tests on all applicable health
products prior to the issuance of appropriate authorizations to
ensure safety, efficacy, purity, and quality;
"(i) To require all manufacturers, traders, distributors, importers,
exporters, wholesalers, retailers, consumers, and non-
consumer users of health products to report to the FDA any
incident that reasonably indicates that said product has caused
or contributed to the death, serious illness or serious injury to a
consumer, a patient, or any person;
"G) To issue cease and desist orders motu propio or upon
verified com plaint for health products, whether or not registered
with the FDA Provided, That for registered health products, the
cease and desist order is valid for thirty (30) days and may be
extended for sixty (60) days only after due process has been
observed;
"(k) After due process, to order the ban, recall, and/or
withdrawal of any health product found to have caused the
death, serious illness or serious injury to a consumer or patient,
or is found to be imminently injurious, unsafe, dangerous, or
grossly deceptive, and to require all concerned to implement the
risk management plan which is a requirement for the issuance
of the appropriate authorization;
"(l) To strengthen the post market surveillance system in
monitoring health products as defined in this Act and incidents
of adverse events involving such products;
"(m) To develop and issue standards and appropriate
authorizations that would cover establishments, facilities and
health products;
"(n) To conduct, supervise, monitor and audit research studies
on health and safety issues of health products undertaken by
entities duly approved by the FDA;
"(o) To prescribe standards, guidelines, and regulations with
respect to information, advertisements and other marketing
instruments and promotion, sponsorship, and other marketing
activities about the health products as covered in this Act;
"(p) To maintain bonded warehouses and/or establish the same,
whenever necessary or appropriate, as determined by the
director-general for confiscated goods in strategic areas of the
country especially at major ports of entry; and
"(q) To exercise such other powers and perform such other
functions as may be necessary to carry out its duties and
responsibilities under this Act. [Emphases supplied]
The Cardinal Rights of Parties in
Administrative Proceedings as
laid down in Ang Tibay v. CIR
In Ang Tibay v. CJR,39 the Court laid down the cardinal rights of
parties in administrative proceedings, as follows:
1) The right to a hearing, which includes the right to present
one's case and submit evidence in support thereof;
2) The tribunal must consider the evidence presented;
3) The decision must have something to support itself;
4) The evidence must be substantial;
5) The decision must be rendered on the evidence presented at
the hearing, or at least contained in the record and disclosed to
the parties affected;
6) The tribunal or body or any of its judges must act on its or his
own independent consideration of the law and facts of the
controversy and not simply accept the views of a subordinate in
arriving at a decision; and
7) The board or body should, in all controversial questions,
render its decision in such a manner that the parties to the
proceeding can know the various issues involved, and the
reason for the decision rendered. 40
In the Decision, the Court found that the FDA certified, procured
and administered contraceptive drugs and devices, without the
observance of the basic tenets of due process, that is, without
notice and without public hearing. It appeared that, other than
the notice inviting stakeholders to apply for
certification/recertification of their reproductive health products,
there was no showing that the respondents considered the
opposition of the petitioners. Thus, the Court wrote:
Rather than provide concrete evidence to meet the petitioners'
opposition, the respondents simply relied on their challenge
questioning the propriety of the subject petition on technical and
procedural grounds. The Court notes that even the letters
submitted by the petitioners to the FDA and the DOH seeking
information on the actions taken by the agencies regarding their
opposition were left unanswered as if they did not exist at all.
The mere fact that the RH Law was declared as not
unconstitutional does not permit the respondents to run
roughshod over the constitutional rights, substantive and
procedural, of the petitioners.
Indeed, although the law tasks the FDA as the primary agency
to determine whether a contraceptive drug or certain device has
no abortifacient effects, its findings and conclusion should be
allowed to be questioned and those who oppose the same must
be given a genuine opportunity to be heard in their stance. After
all, under Section 4(k) of R.A. No. 3720, as amended by R.A.
No. 9711, the FDA is mandated to order the ban, recall and/ or
withdrawal of any health product found to have caused death,
serious illness or serious injury to a consumer or patient, or
found to be imminently injurious, unsafe, dangerous, or grossly
deceptive, after due process.
Due to the failure of the respondents to observe and comply with
the basic requirements of due process, the Court is of the view
that the certifications/re-certifications and the distribution of the
questioned contraceptive drugs by the respondents should be
struck down as violative of the constitutional right to due
process.
Verily, it is a cardinal precept that where there is a violation of
basic constitutional rights, the courts are ousted from their
jurisdiction. The violation of a party's right to due process raises
a serious jurisdictional issue which cannot be glossed over or
disregarded at will. Where the denial of the fundamental right to
due process is apparent, a decision rendered in disregard of that
right is void for lack of jurisdiction. This rule is equally true in
quasi-judicial and administrative proceedings, for the
constitutional guarantee that no man shall be deprived of life,
liberty, or property without due process is unqualified by the type
of proceedings (whether judicial or administrative) where he
stands to lose the same.41
The Court stands by that finding and, accordingly, reiterates its
order of remand of the case to the FDA.
Procedure in the FDA; No Trial-Type Hearing
The Court is of the view that the FDA need not conduct a trial-
type hearing. Indeed, due process does not require the conduct
of a trial-type hearing to satisfy its requirements. All that the
Constitution requires is that the FDA afford the people their right
to due process of law and decide on the applications submitted
by MAHs after affording the oppositors like the petitioners a
genuine opportunity to present their science-based evidence. As
earlier pointed out, this the FDA failed to do. It simply ignored
the opposition of the petitioners. In the case of Perez, et
al. v. Philippine Telegraph and Telephone Company, et al., 42 it
was stated that:
A formal trial-type hearing is not even essential to due process.
It is enough that the parties are given a fair and reasonable
opportunity to explain their respective sides of the controversy
and to present supporting evidence on which a fair decision can
be based.
In the fairly recent case of Vivo v. Pagcor,43 the Court explained:
The observance of fairness in the conduct of any investigation
is at the very heart of procedural due process. The essence of
due process is to be heard, and, as applied to administrative
proceedings, this means a fair and reasonable opportunity to
explain one's side, or an opportunity to seek a reconsideration
of the action or ruling complained of. Administrative due
process cannot be fully equated with due process in its
strict judicial sense, for in the former a formal or trial-type
hearing is not always necessary, and technical rules of
procedure are not strictly applied. Ledesma v. Court of
Appeals elaborates on the well-established meaning of due
process in administrative proceedings in this wise:
x x x Due process, as a constitutional precept, does not always
and in all situations require a trial-type proceeding. Due process
is satisfied when a person is notified of the charge against him
and given an opportunity to explain or defend himself. In
administrative proceedings, the filing of charges and giving
reasonable opportunity for the person so charged to answer the
accusations against him constitute the minimum requirements
of due process. The essence of due process is simply to be
heard, or as applied to administrative proceedings, an
opportunity to explain one's side, or an opportunity to seek a
reconsideration of the action or ruling complained of. [Emphasis
supplied; citations omitted]
Best Evidence Available
Section 5, Rule 133 of the Rules of Court provides:
Section 5. In all cases filed before administrative or quasi-
judicialbodies, a fact may be deemed established if it is
supported by substantialevidence, or the amount of relevant
evidence which a reasonable mind might accept as adequate to
justify a conclusion.
As applied to certification proceedings at the FDA, "substantial
evidence" refers to the best scientific evidence
available,44 "including but not limited to: meta analyses,
systematic reviews, national clinical practice guidelines where
available, and recommendations of international medical
organizations," needed to support a conclusion whether a
contraceptive drug or device is an abortifacient or not. The FDA
need not be bound or limited by the evidence adduced by the
parties, but it can conduct its own search for related scientific
data. It can also consult other technical scientific experts known
in their fields. It is also not bound by the principle of stare
decisis or res judicata, but may update itself and cancel
certifications motu proprio when new contrary scientific findings
become available or there arise manifest risks which have not
been earlier predicted.
On the Competence of the Court
to review the Findings of the FDA
The fact that any appeal to the courts will involve scientific
matters will neither place the actions of the respondents beyond
the need to comply with the requirements of Ang Tibay nor place
the actions of the FDA in certification proceedings beyond
judicial review.
It should be pointed out that nowhere in Batas Pambansa Blg.
129, as amended, are the courts ousted of their jurisdiction
whenever the issues involve questions of scientific nature. A
court is not considered incompetent either in reviewing the
findings of the FDA simply because it will be weighing the
scientific evidence presented by both the FDA and its oppositors
in determining whether the contraceptive drug or device has
complied with the requirements of the law.
Although the FDA is not strictly bound by the technical rules on
evidence, as stated in the Rules of Court, or it cannot be bound
by the principle of stare decisis or res judicata, it is not excused
from complying with the requirements of due process. To
reiterate for emphasis, due process does not require that the
FDA conduct trial-type hearing to satisfy its requirements. All
that the Constitution requires is that the FDA afford the people
their right to due process of law and decide on the applications
submitted by the MAHs after affording the oppositors, like the
petitioners, a genuine opportunity to present their sciencebased
evidence.
The Appellate Procedure;
Appeal to the Office of the President
Incidentally, Section 32 of R.A. No. 3720 and Section 9 of
Executive Order (E.O.) No. 247 provide that any decision by the
FDA would then be appealable to the Secretary of Health,
whose decision, in tum, may be appealed to the Office of the
President (OP). Thus:
Sec. 32. The orders, rulings or decisions of the FDA shall be
appealable to the Secretary of Health. - An appeal shall be
deemed perfected upon filing of the notice of appeal and posting
of the corresponding appeal bond.
An appeal shall not stay the decision appealed from unless an
order from the Secretary of Health is issued to stay the execution
thereof.
Sec. 9. Appeals. - Decisions of the Secretary (DENR,
DA, DOH or DOST) may be appealed to the Office of the
President. Recourse to the courts shall be allowed after
exhaustion of all administrative remedies.
In view thereof, the Court should modify that part of the Decision
which allows direct appeal of the FDA decision to the Court of
Appeals.1âwphi1 As stated in the said decision, the FDA
decision need not be appealed to the Secretary of Health
because she herself is a party herein. Considering that the
Executive
Secretary is not a party herein, the appeal should be to the OP
as provided in Section 9.
On the Prayer to Lift the TRO
The respondents lament that the assailed decision undermines
the functions of the FDA as the specialized agency tasked to
determine whether a contraceptive drug or device is safe,
effective and non-abortifacient. They also claim that the assailed
decision requiring notice and hearing would unduly delay the
issuance of CPR thereby affecting public access to State-funded
contraceptives. Finally, in a veritable attempt to sow panic, the
respondents claim that the TRO issued by the Court would result
in "a nationwide stockout of family planning supplies in
accredited public health facilities and the commercial market. "45
On this score, it should be clarified that the Decision simply
enjoined the respondents from registering, recertifying,
procuring, and administering only those contraceptive drugs and
devices which were the subjects of the petitioners' opposition,
specifically Implanon and Implanon NXT. It never meant to
enjoin the processing of the entire gamut of family planning
supplies that have been declared as unquestionably non-
abortifacient. Moreover, the injunction issued by the Court was
only subject to the condition that the respondents afford the
petitioners a genuine opportunity to their right to due process.
As the Decision explained, the Court cannot lift the TRO prior to
the summary hearing to be conducted by the FDA. To do so
would render the summary hearing an exercise in futility.
Specifically, the respondents would want the Court to consider
their argument that Implanon and Implanon NXT have no
abortifacient effects. According to them, "the FDA tested these
devices for safety, efficacy, purity, quality, and non-abortiveness
prior to the issuance of certificates of registration and
recertification, and after the promulgation of Imbong." 46 The
Court, however, cannot make such determination or
pronouncement at this time. To grant its prayer to lift the TRO
would be premature and presumptuous. Any declaration by
the Court at this time would have no basis because the FDA,
which has the mandate and expertise on the matter, has to first
resolve the controversy pending before its office.
This Court also explained in the Decision that the issuance of
the TRO did not mean that the FDA should stop fulfilling its
mandate to test, analyze, scrutinize, and inspect other drugs
and devices. Thus:
Nothing in this resolution, however, should be construed as
restraining or stopping the FDA from carrying on its mandate
and duty to test, analyze, scrutinize, and inspect drugs and
devices. What are being enjoined are the grant of
certifications/re-certifications of contraceptive drugs without
affording the petitioners due process, and the distribution and
administration of the questioned contraceptive drugs and
devices including Implanon and Implanon NXT until they are
determined to be safe and non-abortifacient.47
On Delay
The respondents claim that this judicial review of the
administrative decision of the FDA in certifying and recertifying
drugs has caused much delay in the distribution of the subject
drugs with a dire impact on the effective implementation of the
RH Law.
In this regard, the respondents have only themselves to blame.
Instead of complying with the orders of the Court as stated in the
Decision to conduct a summary hearing, the respondents have
returned to this Court, asking the Court to reconsider the said
decision claiming that it has wreaked havoc on the
organizational structure of the FDA.
Had the FDA immediately conducted a summary hearing, by this
time it would have finished it and resolved the opposition of the
petitioners.1âwphi1 Note that there was already a finding by the
FDA, which was its basis in registering, certifying and
recertifying the questioned drugs and devices. The
pharmaceutical companies or the MAHs need not present the
same evidence it earlier adduced to convince the FDA unless
they want to present additional evidence to fortify their positions.
The only entities that would present evidence would be the
petitioners to make their point by proving with relevant scientific
evidence that the contraceptives have abortifacient effects.
Thereafter, the FDA can resolve the controversy.
Indeed, in addition to guaranteeing that no person shall be
deprived of life, liberty and property without due process of
law,48 the Constitution commands that "all persons shall have
the right to a speedy disposition of their cases before all judicial,
quasi-judicial and administrative bodies."49

WHEREFORE, the August 24, 2016 Decision

is MODIFIED. Accordingly, the Food and Drug Administration is
ordered to consider the oppositions filed by the petitioners with
respect to the listed drugs, including Implanon and Implanon
NXT, based on the standards of the Reproductive Health Law,
as construed in lmbong v. Ochoa, and to decide the case within
sixty (60) days from the date it will be deemed submitted for
resolution.

After compliance with due process and upon promulgation of the

decision of the Food and Drug Administration, the Temporary
Restraining Order would be deemed lifted if the questioned
drugs and devices are found not abortifacients.

After the final resolution by the Food and Drug Administration,

any appeal should be to the Office of the President pursuant to
Section 9 of E.O. No. 247.

As ordered in the August 24, 2016 Decision, the Food and Drug
Administration is directed to amend the Implementing Rules and
Regulations of R.A. No. 10354 so that it would be strictly
compliant with the mandates of the Court in lmbong v. Ochoa.

SO ORDERED.