EN BANC

[G.R. No. 137718. July 27, 1999]

REYNALDO O. MALONZO, in his capacity as City Mayor of Caloocan City, OSCAR

MALAPITAN, in his capacity as Vice-Mayor of Caloocan City, CHITO ABEL,
BENJAMIN MANLAPIG, EDGAR ERICE, DENNIS PADILLA, ZALDY DOLARTE,
LUIS TITO VARELA, SUSAN PUNZALAN, HENRY CAMAYO, in their capacities
as Members of the Sangguniang Panlungsod of Caloocan City, petitioners,
vs. HON. RONALDO B. ZAMORA, in his capacity as Executive Secretary, HON.
RONALDO V. PUNO, in his capacity as Under-secretary of the Department of
Interior and Local Government, and EDUARDO TIBOR, respondents.
DECISION
ROMERO, J.:
Consistent with the doctrine that local government does not mean the creation
of imperium in imperii or a state within a State, the Constitution has vested the President of
the Philippines the power of general supervision over local government units. [1] Such grant of
power includes the power of discipline over local officials, keeping them accountable to the
public, and seeing to it that their acts are kept within the bounds of law. Needless to say, this
awesome supervisory power, however, must be exercised judiciously and with utmost
circumspection so as not to transgress the avowed constitutional policy of local
autonomy. As the facts unfold, the issue that obtrudes in our minds is: Should the national
government be too strong vis--vis its local counterpart to the point of subverting the
principle of local autonomy enshrined and zealously protected under the Constitution? It is in
this light that the instant case shall now be resolved.
During the incumbency of then Macario A Asistio, Jr., the Sangguniang Panlungsod of
Caloocan City passed Ordinance No. 0168, S. 1994,[2]authorizing the City Mayor to initiate
proceedings for the expropriation of Lot 26 of the Maysilo Estate registered in the name of
CLT Relaty Development Corporation (CLT). The lot, covering an area of 799,955 square
meters, was intended for low-cost housing and the construction of an integrated bus
terminal, parks and playgrounds, and related support facilities and utilities. For this purpose,
the said ordinance appropriated the amount of P35,997,975.00, [3] representing 15% of the
fair market value of Lot 26 that would be required of the city government as a deposit prior
to entry into the premises to be expropriated.
It turned out, however, that the Maysilo Estate straddled the City of Caloocan and the
Municipality of Malabon, prompting CLT to file a special civil action [4] for Interpleader with
Prayer for the Issuance of a Temporary Restraining Order and/or Writ of Preliminary
Injunction on August 6, 1997, before the Caloocan City Regional Trial Court, branch 124. The
complaint specifically sought to restrain the defendants City of Caloocan and Municipality of
Malabon from assessing and collecting real property taxes from CLT and to interplead and
litigate among themselves their conflicting rights to claim such taxes.
On December 11, 1997, the Caloocan City Sangguniang Panlungsod, under the
stewardship of incumbent Mayor Reynaldo O. Malonzo, enacted Ordinance No. 0246,
S. 1997,[5] entitled AN ORDINANCE AMENDING AND SUPPLEMENTING THE PROVISIONS OF
CITY ORDINANCE NO. 0168, SERIES OF 1994 AND FOR OTHER RELATED PURPOSES. [6] Under

this ordinance, certain amendments were introduced, foremost of which was the city
councils decision to increase the appropriated amount of P35,997,975.00 in the previous
ordinance to P39,352,047.75, taking into account the subject propertys current fair market
value.
After failing to conclude a voluntary sale of Lot 26, the city government commenced on
March 23, 1998, a suit for eminent domain [7] against CLT before the Caloocan City Regional
Trial Court, Branch 126, to implement the subject propertys expropriation. Apparently
disturbed by this development, the Caloocan City Legal Officer informed the City Mayor
through a letter-memorandum[8] dated April 7, 1998, of the pending interpleader case
covering Lot 26 and that the same was a Prejudicial Question which must be resolved first by
the proper court in order not to put the expropriation proceedings in question. He therefore
recommended that pending the final determination and resolution of the court on the issue
(territorial jurisdiction) raised in Civil Case No. C-18019 before Branch 124 of the Regional
Trial Court of Caloocan City, the expropriation of the subject property be cancelled and/or
abandoned.
In the meantime, after the successful re-election bid of Malonzo, Vice-Mayor Oscar G.
Malapitan wrote him a letter[9] dated June 4, 1998, requesting the immediate repair and
renovation of the offices of the incoming councilors, as well as the hiring of additional
personnel and the retention of those currently employed in the offices of the councilors.
Malonzo acted on said letter and endorsed the same to the Office of the City
Treasurer. The latter in turn manifested through a memorandum [10]dated June 26, 1998, that
since the expropriation of CLT Property is discontinued, the appropriation for expropriation of
FIFTY MILLION PESOS (P50M)[11]can be reverted for use in a supplemental budget stating
further that he certifies (F)or its reversion since it is not yet obligated, and for its availability
for re-appropriation in a supplemental budget.
Pursuant to the treasurers certification on the availability of funds to accommodate ViceMayor Malapitans request, Malonzo subsequently endorsed to the Sangguniang
Panlungsod Supplemental Budget No. 01, Series of 1998, appropriating the amount of
P39,343,028.00. The city council acted favorably on Malonzos endorsement and, thus,
passed Ordinance No. 0254, S. 1998[12] entitled AN ORDINANCE PROVIDING PAYMENTS
FOR APPROVED ITEMS IN THE SUPPLEMENTAL BUDGET NO. 1 CALENDAR YEAR 1998 AND
APPROPRIATING CORRESPONDING AMOUNT WHICH SHALL BE TAKEN FROM THE GENERAL
FUND (REVERSION OF APPROPRIATION-EXPROPRIATION OF PROPERTIES).
Alleging, however, that petitioners conspired and confederated in willfully violating
certain provisions of the Local Government Code of 1991 (hereinafter the "Code") through
the passage of Ordinance No. 0254, S. 1998, a certain Eduardo Tibor, by himself and as a
taxpayer, filed on July 15, 1998, an administrative complaint for Dishonesty, Misconduct in
Office, and Abuse of Authority against petitioners before the Office of the President (OP). [13]
After the complaint was given due course, petitioners filed on October 15, 1998 their
Consolidated Answer,[14] pointing out, among other things, that said complaint constituted
collateral attack of a validly enacted ordinance whose validity should only be determined in
a judicial forum. They also claimed that the assailed ordinance was enacted strictly in
accordance with Article 417 of the Rules and Regulations Implementing the Local
Government Code of 1991 (hereinafter, the Rules), as amended by Administrative Order No.
47 dated April 12, 1993.
After several exchanges of pleadings, [15] petitioners, citing Section 326 of the Code and
Article 422, Rule XXXIV of the Rules, filed on February 7, 1999, a Motion to Refer the Case to
the Department of Budget and Management (DBM) on the ground that the DBM has been
granted power under the Code to review ordinances authorizing the annual or supplemental
appropriations of, among other things, highly urbanized cities such as Caloocan City.This
motion, however, remained unresolved.

Two days later, after learning that a certain Teotimo de Guzman Gajudo had filed an
action for the Decalaration of Nullity of Ordinance No. 0254, Series of 1998, before the
Caloocan City Regional Trial Court, [16] petitioners filed with the OP a Manifestation and Very
Urgent Motion to Suspend Proceedings on the ground that the determination of the validity
of said ordinance was a prejudicial question. Likewise, this motion was not acted upon by the
OP.
Thus, without resolving the foregoing motions of petitioners, the OP rendered its
assailed judgment[17] on March 15, 1999, the decretal portion of which reads:
WHEREFORE, herein respondents Mayor Reynaldo Malonzo, Vice-mayor Oscar G. Malapitan
and Councilors Chito Abel, Benjamin Manlapig, Edgar Erice, Dennis Padilla, Zaldy Dolatre,
Susana Punzalan, Henry Camayo, and Luis Tito Varela, all of Caloocan City, are hereby
adjudged guilty of misconduct and each is meted the penalty of SUSPENSION [18] from office
for a period of three (3) months without pay to commence upon receipt of this Decision. This
Decision is immediately executory.
SO ORDERED.
On even date, the Department of Interior and Local Government (DILG) administered
Macario E. Asistio IIIs oath of office as Acting Mayor of Caloocan City.
Without moving for reconsideration of the OPs decision, petitioners filed before this
Court on March 22, 1999, the instant Petition for Certiorari and Prohibition With Application
for Preliminary Injunction and Prayer for Restraining Order, With alternative Prayer for
Preliminary Mandatory Injunction.[19]
In a resolution of this Court dated April 5, 1999, we resolved to set the case for oral
argument[20] on April 20, 1999 while at the same time directed the parties to maintain
the status quo before March 15, 1999.
To support their petition, petitioners contend that on account of the filing of an action for
interpleader by CLT, the expropriation proceedings had to be suspended pending final
resolution of the boundary dispute between Malabon and Caloocan City. Due to his dispute,
the P50 million appropriation for the expropriation of properties under current operating
expenses had not been obligated and no security deposit was forthcoming. It was not at the
time a continuing appropriation. This unavoidable discontinuance of the purpose for which
the appropriation was made effectively converted the earlier expropriation of
P39,352,047.75 into savings as defined by law.
They argue further that there is no truth in the allegation that Ordinance No. 0254, S.
1998 was passed without complying with Sections 50 and 52 of the Local Government Code
requiring that on the first regular session following the election of its members and within 90
days thereafter, the Sanggunianconcerned shall adopt or update its existing rules of
procedure. According to them, the minutes of the session held on July 2, 1998 would reveal
that the matter of adoption or updating of the house rules was taken up and that the council
arrived at a decision to create an ad hoc committee to study the rules.[21] Moreover, even if
the Sanggunian failed to approve the new rules of procedure for the ensuing year, the rules
which were applied in the previous year shall be deemed in force and effect until a new ones
are adopted.
With respect to the OPs assumption of jurisdiction, petitioners maintained that the OP
effectively arrogated unto itself judicial power when it entertained a collateral attack on the
validity of Ordinance No. 0254, S. 1998. Furthermore, primary jurisdiction over the
administrative complaint of Tibor should have pertained to the Office of the Ombudsman, as
prescribed by Article XI, Sections 13 and 15 of the Constitution. They also asserted that the
declaration in the OPs decision to the effect that Ordinance No. 0254, S. 1998 was irregularly

passed constituted a usurpation of the DBMs power of review over ordinances authorizing
annual or supplemental appropriations of, among others, highly-urbanized cities like
Caloocan City as provided under Section 326 of the Local Government Code of 1991. In light
of said statutory provision, petitioners opined that respondents should have deferred
passing upon the validity of the subject ordinance until after the DBM shall have made are
view thereof.
Finally, petitioners complained that respondents violated the right to equal protection of
the laws when Vice-Mayor Oscar Malapitan was placed in the same class as the rest of the
councilors when in truth and in fact, as Presiding Officer of the council, he did not even vote
nor participate in the deliberations. The violation of such right, according to petitioners,
made the OPs decision a nullity. They concluded that the administrative complaint was
anathema to the States avowed policy of local autonomy as the threat of harassment suits
could become a sword of Damocles hanging over the heads of local officials.
Contending that the OP decison judiciously applied existing laws and jurisprudence
under the facts obtaining in this case, the Office of the Solicitor General (OSG) [22] disputed
petitioners claims contending that the appropriation of P39,352,047.75 contained in an
earlier ordinance (Ord. NO. 0246 S. 1997) for the expropriation of Lot 26 of the Maysilo
Estate was a capital outlay as defined under Article 306 (d) of the Code and not current
operating expenditures. Since it was a capital outlay, the same shall continue and remain
valid until fully spent or the project is completed, as provided under Section 322 of the Code.
The OSG asserted further that the filing on August 6, 1997 of an interpleader case by
CLT which owns Lot 26 should not be considered as an unavoidable discontinuance that
automatically converted the appropriated amount into savings which could be used for
supplemental budget. Since the said amount was not transformed into savings and, hence,
no funds were actually available, then the passage of Ordinance No. 0254, S. 1998 which
realigned the said amount on a supplemental budget violated Section 321 of the Code
requiring an ordinance providing for a supplemental budget to be supported by funds
actually available as certified by the local treasurer or by new revenue sources.
Petitioners were likewise faulted for violating Sections 50 and 52 of the Code requiring
the Sangguniang Panlungsod to adopt or update its existing rules of procedure within the
first 90 days following the election of its members. The Sanggunian allegedly conducted
three readings of Ordinance No. 0254, S. 1998 in one day and on the first day of its session
(July 2, 1998) without the Sanggunian having first organized itself and adopted its rules of
procedure. It was only on July 23, 1998 that the Sanggunian adopted its internal rules of
procedure.
As regard petitioners contention that the administrative complaint of Tibor should have
been filed with the Office of the Ombudsman instead of the OP, the OSG pointed out that
under Section 60 and 61 of the Code, the OP is vested with jurisdiction to discipline, remove
or suspend a local elective official for, among other things, misconduct in office. The
Ombudsman has never been vested with original and exclusive jurisdiction regarding
administrative complaints involving government officials.
Finally, the OSG sought to dismiss the petition on the grounds of non-exhaustion of
administrative remedies before the OP and for failure to follow Section 4, Rule 65 of the
1997 Rules of Civil Procedure which prescribes that if it [the subject of the petition] involves
the acts or omissions of a quasi-judicial agency, and unless provided by law or these Rules,
the petition shall be filed in and cognizable only by the Court of Appeals.
The petition is impressed with merit.
Preliminarily, we find a need to resolve a couple of procedural issues which have a
bearing on the propriety of this Courts action on the petition, to wit: (1) whether the
Supreme Court is the proper forum which can take cognizance of this instant petition

assailing the decision of the OP, and (2) whether the Supreme Court may entertain the
instant petition despite the absence of a prior motion for reconsideration filed by petitioners
with the OP.
After a very careful and meticulous review of the parties respective positions on these
matters, we find that this Court possesses the requisite power to assume jurisdiction and
rule on the petition.
It is not the first time that similar procedural challenges have been brought before this
Court. Just recently, in the case of Fortich, et al. v. Corona, et al.,[23] we again had an
occasion to clarify our position on these questions. By way of backgrounder, said case
involved the so-called Win-Win Resolution of the OP which modified tha approval of the
conversion to agro-industrial area of a 144-hectare land located in San Vicente, Sumilao,
Bukidnon. As in this case, the OSG opposed said petition on the ground that the same should
have been filed with the Court of Appeals since what was sought to be reviewed was the OPs
decision. Facing said issues squarely, we explained that we did not find any reason why such
petition should not have been filed in this Court, holding that:
But the Supreme Court has the full discretionary power to take cognizance of the petition
filed directly to it if compelling reasons, or the nature and importance of the issues raised,
warrant. This has been the judicial policy to be observed and which has been reiterated in
subsequent cases, namely: Uy vs. Contreras, et al., Torres vs. Arranz, Bercero vs. De
Guzman, and Advincula vs. Legaspi, et al. As we have further stated in Cuaresma:
x x x. A direct invocation of the Supreme Courts original jurisdiction to issue these writs
should be allowed only when there are special and important reasons therefore, clearly and
specifically set out in the petition. This is established policy. It is a policy that is necessary to
prevent inordinate demands upon the Courts time and attention which are better devoted to
those matters within its exclusive jurisdiction, and to prevent further over-crowding of the
Courts docket.
Pursuant to said judicial policy, we resolve to take primary jurisdiction over the present
petition in the interest of speedy justice and to avoid future litigations (sic) so as to promptly
put an end to the present controversy which, as correctly observed by petitioners, has
sparked national interest because of the magnitude of the problem created by the issuance
of the assailed resolution. Moreover, as will be discussed later, we find the assailed
resolution wholly void and requiring the petitioners to file their petition first with the Court of
Appeals would only result in a waste of time and money.
That the Court has the power to set aside its own rules in the higher interests of justice is
well-entrenched in our jurisprudence. We reiterate what we said in Piczon v. Court of
Appeals:
Be it remembered that rules of procedure are but mere tools designed to facilitate the
attainment of justice. Their strict and rigid application, which would result in technicalities
that tend to frustrate rather than promote substantial justice, must always be avoided. Time
and again, this Court has suspended its own rules and excepted a particular case from their
operation whenever the higher interests of justice so require. In the instant petition, we
forego a lengthy disquisition of the proper procedure that should have been taken by the
parties involved and proceed directly to the merits of the case. [Underscoring supplied,
citations omitted].
In like manner, it is our considered view now that the instant petition has been properly
brought before us in light of the importance of the subject matter and the transcendental
nature of the issues raised. Realignment, as explained in the pleadings, is a common

practice borne out of necessity and sanctioned by law. Just how such a common practice
may be carried out within the bounds of law, considering the fact that public funds are at
stake, is, we believe, an issue that is not only one of the first impression, but likewise of
considerable significance as a guide to local governance. Furthermore, as will be discussed
later, the assailed decision of the OP has been tainted with grave abuse of discretion, thus,
requiring the immediate exercise of this Courts corrective power lest public welfare, more
particularly that of the Caloocan City constituents, be jeopardized by a more circumlocutory
procedure which respondents are now insisting upon.
With respect to the alleged non-exhaustion of administrative remedies, we do not see
the same as a fatal procedural lapse that would prevent us from entertaining the more
pressing questions raised in this case. In any event, jurisprudence is replete with instances
instructing us that a motion for reconsideration is neither always a prerequisite nor a hardand-fast rule to be followed where there are particularly exceptional attendant
circumstances such as, in the instant case, patent nullity of the questioned act and the
necessity of resolving the issues without further delay.[24]
Having therefore disposed of the procedural questions, we now turn our attention to the
more crucial substantive issues, namely:
1. Whether the Office of the President gravely abused its discretion when it found
petitioners guilty of misconduct for the reason that Ordinance No. 0254, Series of
1998, was allegedly tainted with irregularity;
2. Whether Ordinance No. 0254, Series of 1998, violated Section 326 of the Local
Government Code of 1991 on reversion of unexpended balances of
appropriations;
3. Whether Ordinance No. 0254, Series of 1998, complied with Section 321 of the
Local Government Code of 1991 requiring that changes in the annual budget
should be supported by funds actually available; and
4. Whether Ordinance No. 0254, Series of 1998, was valid considering that prior to
its passage there was as yet no formal adoption of rules of procedure by the
Caloocan City Sangguniang Panlungsod.
As stated earlier, the OP found petitioners guilty of misconduct on the ground that they
failed to strictly comply with certain provisions of the Code relating to the passage of the
ordinance in question. It justified its position, thus:
By respondents (sic) very own admission --- and these facts are a matter of record --- the
P39,352,047.75 appropriated in Ordinance 0254 to fund the approved items listed therein
was merely a portion of the P50 Million included and appropriated in the 1998 Annual
Budget for expropriation purpose and that the judicial action for expropriation --- earlier filed
by the city and for which an allocation of P39,352,047.75 out of the P50 Million appropriation
for expropriation of properties --- is still pending with the court. This being so, the amount
allocated for the expropriation cannot be reverted or be deemed as savings to serve as
funds actually available for the supplemental budget.
It cannot be argued that the unexpected turn of events mentioned by the respondents --referring to the filing by CLT Realty on August 6, 1997 of a complaint against the Municipality
of Malabon and the City of Caloocan for interpleader amounts to an unavoidable
discontinuance of the expropriation project, and thus effectively converted the earlier
expropriation (sic) of P39,352,047.75 into SAVINGS. For one, it was only on March 23, 1998,
that the City of Caloocan filed an expropriation case against CLT Realty (docketed as Special
Case No. 548 Regional Trial Court, Caloocan City). If, as respondents argue, the August 6,
1997 interpleader suit amounted to the unavoidable discontinuance of the expropriation

project, thus effectively turning the earlier appropriation of P39,352,047.75 into savings,
then how explain the March 23, 1998 expropriation case? For another, the records do not
indicate --- not even an allegation to this effect--- that the City of Caloocan has withdrawn
the expropriation case aforementioned which is, ordinarily, the legal route taken in the event
of abandonment of discontinuance of the expropriation project. On the contrary, the city
government, as indicated in its judicial pleadings that now form part of the records, even
sought the issuance of a writ of possession.
In this light, it is all too clear that Ordinance No. 0254 was enacted without funds actually
available as required by Section 321 of the Local Government Code of 1991, which
pertinently reads --xxxxxxxxx
The words actually available are so clear and certain that interpretation is neither required
nor permitted. The application of this legal standard to the facts of this case compels the
conclusion that, there being no reversion, as above-explained, the supplemental budget was
not supported by funds actually available, by funds really in the custody or possession of the
treasurer.
Stated differently, it may be that the City Treasurer of Caloocan, vis-a-vis Ordinance No.
0254, issued a certificate of availability of funds (Annex 9, answer). The issuance, however
cannot alter the reality that the funds referred to therein are not funds actually available
because they are sourced or are to be sourced from an appropriation for a capital outlay
which cannot be validly reverted or converted into savings, as respondents put it, on ground
ofunavoidable discontinuance of the expropriation project.
Adding significance to the conclusion reached herein is the fact that the enactment by the
respondents of the supplemental budget was clearly tainted with undue haste. The
sangguniang panlungsod conducted the three (3) readings (the 1 st the 2nd and 3rd) on the
same day, July 2, 1998, its first day of session, adopted it on July 7, 1998, and approved by
respondent mayor on the following day, July 8, 1998, without first having itself organized
and its rules of procedure adopted and without first electing its officers and chairmen and
the members of the different committees in accordance with [the] provisions of the LGC (see
Secs. 50 & 52, RA 7162). This undue haste implies willful failure to respond to or comply with
what the law requires which is the essence of bad faith.
xxxxxxxxx
We are thus one with the DILG in finding respondents guilty of violating Section 321 in
relation to Section 332 of the Local Government Code of 1991.This violation constitutes
misconduct, an offense implying a wrongful intent, an unlawful behavior in relation to the
office, one that usually involves a transgression of some established and definite rule of
action, more particularly unlawful behavior by the public officer. [Citations omitted].[25]
We cannot, however, agree with the above disquisition.
The OPs premise, in our opinion, rests upon an erroneous appreciation of the facts on
record. The OP seems to have been confused as to the figures and amounts actually
involved. A meticulous analysis of the records would show that there is really no basis to
support the OPs contention that the amount of P39,352,047.75 was appropriated under
Ordinance No. 0254, S. 1998, since in truth and in fact, what was appropriated in said
ordinance was the amount of P39,343,028.00. The allocation of P39,352,047.75 is to be
found in the earlier Ordinance No. 0246, S. 1997 which is a separate and distinct

ordinance. This point of clarification is indeed very critical and must be emphasized at this
juncture because any further discussion would have to depend upon the accuracy of the
figures and amounts being discussed. As will be explained below, this faulty appreciation of
the facts by the OP caused it to arrive at the wrong conclusion even if it would have correctly
interpreted and applied the pertinent statutory provisions.
Section 322 of the Code upon which the OP anchored its opinion that petitioners
breached a statutory mandate provides:
SEC
322. Reversion
of
Unexpended
Balances
of
Appropriations,
Continuing
Appropriations. Unexepended balances of appropriations authorized in the annual
appropriations ordinance shall revert to the unappropriated surplus of the general funds at
the end of the fiscal year and shall not thereafter be available for expenditure except by
subsequent enactment. However, appropriations for capital outlays shall continue and
remain valid until fully spent, reverted or the project is completed. Reversions of continuing
appropriations shall not be allowed unless obligations therefor have been fully paid or
otherwise settled.
Based on the above provision, the OP reached the determination that Ordinance No.
0254, S. 1998 could not have lawfully realigned the amount of P39,352,047.75 which was
previously appropriated for the expropriation of Lot 26 of the Maysilo Estate since such
appropriation was in the nature of a capital outlay until fully spent, reverted; or the project
for which it is earmarked is completed.
The question, however, is not whether the appropriation of P39,352,047.75 could fall
under the definitions of continuing appropriation [26] and capital outlays,[27] considering that
such amount was not the subject of the realignment made by Ordinance No. 0254, Series of
1998. Rather, the issue is whether petitioners are liable for their actions in regard to said
ordinance which actually realigned a position of the P50 million which was simply
denominated in a general manner as Expropriation of Properties and classified under Current
Operating Expenditures in the 1998 Annual Budget of Caloocan City.Clearly, these are two
distinct amounts separate from each other. That this is the case has likewise been clarified
in the pleadings and during the oral argument where petitioners adequately explained
that the P50 million was NOT appropriated for the purpose of purchasing Lot 26 of the
Maysilo Estate but rather for expenses incidental to expropriation such as relocation of
squatters, appraissal fee, expenses for publication, mobilization fees, and expenses for
preliminary studies.[28] This position appears to us more convincing than that of the
interpretation of respondents. The appropriation of P39,352,047.75 under Ordinance No.
0246, S. 1997 is, we believe, still a subsisting appropriation that has never been lumped
together with other funds to arrive at the sum of P50 million allocated in the 1998 budget. To
be sure, denomination of the P50 million amount as Expropriation of Properties left much to
be desired and would have been confused with the appropriation for expropriation under
Ordinance No. 0246, S, 1997, but had respondents probed deeper into the actual intention
for which said amount was allocated, then they would have reached an accurate
characterization of the P50 million.
Bearing in mind, therefore, the fact that it is the P50 million which is now being
realigned, the next logical question to ask is whether such amount is capable of being
lawfully realigned. To this, we answer in the affirmative.
No less than respondents themselves argued, citing Sections 321 and 322 in relation to
Section 306 (d) and (e) of the Code, that realignment shall not be allowed when what is
involved are continuing appropriations or capital outlays. But this argument becomes clearly
inapplicable in view of our disquisition above that the realignment being complained of had
nothing to do with the P39,352,047.75 appropriation for the purchase of Lot 26 of the
Maysilo Estate which is clearly the one that is classifiable as a capital outlay or a continuing

appropriation. The realignment, as we have earlier discussed, pertained to the P50 million
which was classified as Current Operating Expenditures. Having been determined as such by
the local council upon which legislative discretion is granted, then the statutory proscription
does not, therefore, apply and respondents cannot insist that it should.
Moreover, in view of the fact that what is being realigned is the P50 million
appropriation which is classified, neither as a capital outlay nor a continuing appropriation,
then respondents position that Ordinance No. 0254, S. 1998 was enacted without funds
actually available and in violation of Section 321 of the Code likewise falls flat on its
face. This is notwithstanding respondents assertion that the unaviodable discontinuance of
the expropriation proceedings for Lot 26 could not have automatically converted the
appropriated amount therefor into savings. For one thing, the Code appears silent and
respondents themselves have not shown how unexpected balances of appropriations revert
to the general fund. Likewise, it would be pointless to belabor this matter because it has
been brought out precisely on the assumption that the amount of P39,352,047.75, has no
more leg to stand on, as explained earlier.
As to the alleged violation of Sections 50 and 52 of the Code requiring the adoption of
house rules and the organization of the council, we believe that the same hardly merits even
cursory consideration. We cannot infer the mandate of the Code that no other business may
be transacted on the first regular session except to take up the matter of adopting or
updating rules. All that the law requires is that on the first regular session
the sanggunian concerned shall adopt or update its existing rules or procedure. There is
nothing in the language thereof that restricts the matters to be taken up during the first
regular session merely to the adoption or updating of the house rules. If it were the intent of
Congress to limit the business of the local council to such matters, then it would have done
so in clear and unequivocal terms. But as it is, there is no such intent.
Moreover, adoption or updating of house rules would necessarily entail work beyond the
day of the first regular session. In fact, it took the members of the Sangguniang
Panlungsod of Caloocan City until July 23, 1998 to complete the task of adopting their house
rules. Does this mean that prior thereto, the local councils hands were tied and could not act
on any other matter? That would certainly be absurd for it would result in a hiatus and a
paralysis in the local legislatures work which could not have been intended by the
law. Interpretatio talis in ambiguis semper frienda est, ut evitatur inconveniens et
absurdum. Where there is ambiguity, such interpretation as will avoid inconvenience and
absurdity is to be adopted.[29] We believe that there has been sufficient compliance with the
Code when on the first regular session, the Sanggunian took up the matter of adopting a set
of house rules as duly evidenced by the KATITIKAN NG KARANIWANG PULONG NG
SANGGUNIANG PANLUNGSOD NA GINANAP NOONG IKA-2 NG HULYO, 1998 SA BAGONG
GUSALI NG PAMAHALAANG LUNGSOD NG CALOOCAN [30] where Item No. 3 thereof specifically
mentioned the request for creation of an ad hoc committee to study the existing house
rules.
The foregoing explanation leads us to the ineluctable conclusion that, indeed,
respondents committed grave abuse of discretion. [31] Not only are their reasoning flawed but
are likewise lacking in factual and legal support. Misconduct, being a grave administrative
offense for which petitioners stood charged, cannot be treated cavalierly. There must be
clear and convincing proof on record that petitioners were motivated by wrongful intent,
[32]
committed unlawful behavior in relation to their respective offices, [33] or transgressed
some established and definite rules of action. [34] But as we have stressed above, petitioners
were acting within legal bounds. Respondents seem to have turned a blind eye or simply
refused to consider facts that would have enlightened them and exculpated herein
petitioners to such an extent that they arrived at their erroneous conclusion. In view hereof,
this Court is justified in striking down the impugned act of the Office of the President.

Two motions filed in accordance with procedural rules were ignored by the Office of the
President and left unresolved: first, the February 7, 1999 Motion to Refer the Case to the
DBM and second, the Manifestation and Very Urgent Motion to Suspend Proceedings on the
ground that the determination of the validity of said ordinance was a prejudicial
question. Motions need not necessarily grant what movant is asking for, but they must be
acknowledged and resolved. The Office of the President, being the powerful office that law
and tradition have endowed it, needs no mighty blows on the anvil of authority to ensure
obedience to its pronouncements. It would be more in keeping with its exalted stature if its
actions could safeguard the very freedoms so sedulously nurtured by the people. Even what
it may deem minor lapses, emanating as it does from such an exalted office, should not be
allowed to go unchecked lest our democratic institutions be gradually eroded.
WHEREFORE, the instant petition is hereby GRANTED. The assailed decision of the
Office of the President in O.P. Case No. 98-H-8520 dated March 15, 1999 is ANNULLED and
SET ASIDE for having been rendered with grave abuse of discretion amounting to lack and/or
excess
of
jurisdiction.Consequently,
respondents,
their
subordinates,
agents,
representatives, and successors-in-interest are permanently enjoined from enforcing or
causing the execution in any manner of the aforesaid decision against herein petitioners.
No pronouncement as to costs.
SO ORDERED.
Bellosillo, Melo, Puno, Vitug, Mendoza, Panganiban, Purisima, Buena, and GonzagaReyes, JJ., concur.
Quisumbing, J., in the result.
Kapunan, J., see dissenting opinion.
Pardo, and Ynares-Santiago, JJ., join the dissent of J. Kapunan.
Davide, Jr., C.J., on leave.

[1]

Const. Art. X, Section 4.

[2]

Entitled AN ORDINANCE EXPROPRIATING, WITH AUTHORITY TO THE HONORABLE CITY MAYOR

TO INITIATE EXPROPRIATION PROCEEDINGS, FOR PUBLIC USE, WELFARE AND BENEFIT, LOT 26 OF
THE MAYSILO ESTATE IN THE CITY OF KALOOKAN, REGISTERED IN THE NAME OF CLT REALTY
DEVELOPMENT CORPORATION UNDER TCT NO. T-77013, COVERING AN AREA OF SEVEN HUNDRED
NINETY NINE THOUSAND NINE HUNDRED FIFTY FIVE (799,955) SQUARE METERS, FOR LOW-COST
HOUSING, AN INTEGRATED BUS TERMINAL, PARKS AND PLAYGROUNDS AND RELATED SUPPORT
FACILITIES AND UTILITIES, AND APPROPRIATING FUNDS THEREFOR. This was enacted by
the Sangguniang Panlungsod on March 24, 1994 and approved by the city Mayor on April 18, 1994.
[3]

Rollo, p. 156.

[4]

Docketed as Civil Case No. C-18019. During the Oral Hearing of this case on April 20, 1999, the Court was
informed that this case is still pending in the trial court.
[5]

Rollo, pp. 158-161.

[6]

This was eventually approved by the City Mayor on January 7, 1998.

[7]

Docketed as Special Civil Case No. C-548.

[8]

Rollo, pp. 179-180.

[9]

Ibid., p. 181.

[10]

Ibid., p. 182 The City Budget Department likewise concurred with the city Treasurers recommendation in this
wise: I suggested that a supplemental budget be introduced for the purpose of the next councils session. The funding

source may be the reversion of existing and unobligated P50 million appropriations for the expropriation of
properties, the discontinuance of which was approved by your Office as per recommendation of the City Legal
Officer in his letter to you dated April 7, 1998. Cf. Rollo, p. 183.
[11]

This amount corresponded to the item Expropriation of properties listed on page 235 of the local Budget
Preparation Form No. 152 and under the sub-heading Current Operating Expenditures.
[12]

Approved by the Office of the Mayor on July 8, 1998.

[13]

Docketed as O. P. Case No. 98-H-8520.

[14]

Rollo, pp. 75-100

[15]

Significantly, complainant Tibor expressly admitted in his Reply (Rollo, pp. 104-115) to petitioners Consolidated
Answer that he does not question the wisdom nor legality and validity of the questioned Supplemental Budget
Ordinance. What is being questioned is the precipitate, haste, and the violation of the laws committed by
respondents herein before referred to in the enactment of the said Ordinance which amounts to Dishonesty,
Misconduct in Office and Abuse of Authority, the jurisdiction of which appropriately pertains to this Honorable
Office.
[16]

Docketed as Civil Case No. C-18683.

[17]

Rollo, pp. 56-62.

[18]

The administrative penalty was imposed upon petitioners pursuant to Sections 60 and 61 of the Local
Government Code of 1991. Section 60 specifies the grounds for disciplinary actions against an elective local
officials such as dishonesty, misconduct in office and abuse of authority while Section 61 empowers the OP to act
upon administrative complaints against an erring local elective official.
[19]

Ibid., pp. 3-50.

[20]

The Oral Argument took place on April 20, 1999 in Baguio City.

[21]

A resolution was eventually passed on July 23, 1998 adopting an internal rules of procedure.

[22]

Comment, Rollo, pp. 215-241.

[23]

G.R. No. 131457, April 24, 1998.

[24]

Cf. Paat v. Court of Appeals, 266 SCRA 167 (1997); Carale v. Abarintos, 269 SCRA 132 (1997).

[25]

Rollo, pp. 60-62.

[26]

SEC. 306. Definition of terms. xxx

(e) Continuing appropriation refers to an appropriation available to support obligations for a specified purpose or
project, such as those for the construction of physical structures or for the acquisition of real property or equipment,
even when these obligations are incurred beyond the budget year.
[27]

SEC. 306 Definition of terms. xxx

(d) Capital Outlays refers to appropriations for the purchase of goods and services, the benefits of which extend
beyond the fiscal year and which add to the assets of the local government unit concerned, including investments in
public utilities such as public markets and slaughterhouses.
[28]

Reply to OSGs Comment, Rollo, pp. 267-268.

[29]

Agpalo, STATUTORY CONSTRUCTION 108 (1990)

[30]

Memorandum for Petitioners, pp. 22-23.

[31]
See Kanlaon Construction Enterprises Co., Inc. v. National Labor Relations Commission, 279 SCRA 337 (1997);
Esguerra v. Court of Appeals, 267 SCRA 380 (1997); Taada v. Angara, 272 SCRA 18 (1997).
[32]

Suroza v. Honorado, 110 SCRA 396.

[33]

Guillen v. Constantino, 282 SCRA 583.

[34]

Oyao v. Pabatao, 78 SCRA 90.