INTERPLEADER

1. Mesina v. IAC, 145 SCRA 497 (1986) the

Facts: Said case (an Interpleader) was filed by Associated Bank against Jose Go and Marcelo A. Mesina
regarding their conflicting claims over Associated Bank Cashier's Check No. 011302 for P800,000.00, dated
December 29, 1983. Jose Go left said check on the top of the desk of the bank manager when he left the
bank. The bank manager entrusted the check for safekeeping to a bank official, a certain Albert Uy, who
had then a visitor in the person of Alexander Lim. Uy had to answer a phone call on a nearby telephone
after which he proceeded to the men's room. When he returned to his desk, his visitor Lim was already
gone. Xxx Several days later, respondent Associated Bank received a letter, dated January 9, 1984, from a
certain Atty. Lorenzo Navarro demanding payment on the cashier's check in question, which was being
held by his client. respondent Associated Bank on February 2, 1984 filed an action for Interpleader naming
as respondent, Jose Go and one John Doe, Atty. Navarro's then unnamed client.

Ruling: In his second assignment of error, petitioner stubbornly insists that there is no showing of
conflicting claims and interpleader is out of the question. There is enough evidence to establish the
contrary. Considering the aforementioned facts and circumstances, respondent bank merely took the
necessary precaution not to make a mistake as to whom to pay and therefore interpleader was its proper
remedy. It has been shown that the interpleader suit was filed by respondent bank because petitioner
and Jose Go were both laying their claims on the check, petitioner asking payment thereon and Jose Go
as the purchaser or owner. The allegation of petitioner that respondent bank had effectively relieved itself
of its primary liability under the check by simply filing a complaint for interpleader is belied by the
willingness of respondent bank to issue a certificate of time deposit in the amount of P800,000
representing the cashier's check in question in the name of the Clerk of Court of Manila to be awarded to
whoever wig be found by the court as validly entitled to it. Said validity will depend on the strength of the
parties' respective rights and titles thereto. Bank filed the interpleader suit not because petitioner sued it
but because petitioner is laying claim to the same check that Go is claiming.

2. Pasricha v. Don Luis Dizon Realty, Inc. 548 SCRA 273 –Interpleader - not to protect a
person against double liability but to protect him against double vexation in respect of one liability.
Facts: Respondent Don Luis Dison Realty, Inc. and petitioners executed two Contracts of Lease.xxx
Because petitioners still refused to comply, a complaint for ejectment was filed by private respondent.
Petitioners admitted their failure to pay the stipulated rent for the leased premises starting July until
November 1992, but claimed that such refusal was justified because of the internal squabble in
respondent company as to the person authorized to receive payment. The evidence of petitioners’ non-
payment of the stipulated rent is overwhelming. Petitioners, however, claim that such non-payment is
justified by the following: 1) the refusal of respondent to allow petitioners to use the leased properties,
except room 35; 2) respondent’s refusal to turn over Rooms 36, 37 and 38; and 3) respondent’s refusal to
accept payment tendered by petitioners. Petitioners’ justifications are belied by the evidence on record.

Ruling: What was, instead, clearly established by the evidence was petitioners’ non-payment of rentals
because ostensibly they did not know to whom payment should be made. However, this did not justify
their failure to pay, because if such were the case, they were not without any remedy. They should have
availed of the provisions of the Civil Code of the Philippines on the consignation of payment and of the
Rules of Court on interpleader.
Otherwise stated, an action for interpleader is proper when the lessee does not know to whom payment
of rentals should be made due to conflicting claims on the property (or on the right to collect).60 The
remedy is afforded not to protect a person against double liability but to protect him against double
vexation in respect of one liability.
(Consignation Art. 1258)

3. Ocampo v. Tirona, 455 SCRA 62

Facts: Ocampo alleged that he is the owner of a parcel of land Xxx Possession and administration of the
subject land are claimed to be already in Ocampo’s management even though the TCT is not yet in his
name. Tirona, on the other hand, is a lessee occupying a portion of the subject land. In view of the fact
that the subject premises was declared under area for priority development, [Tirona] is invoking her right
of first refusal and in connection thereto [Tirona] will temporarily stop paying her monthly rentals until
and unless the National Housing Authority have processed the pertinent papers as regards the amount
due to [Ocampo] by reason of the implementation of the above law (PD 1517 Urban Land Reform Law).
Ocampo file UD; In her amended answer, Tirona maintained that Ocampo is not the owner of the subject
land.

Ruling: We hold that Tirona is estopped from denying her possession under a lease32 and that there was
a violation of the lease agreement.xxx Contrary to Tirona’s position, the issue of ownership is not essential
to an action for unlawful detainer. The fact of the lease and the expiration of its term are the only elements
of the action.
The good faith of Tirona is put in question in her preference for Maria Lourdes Breton-Mendiola. As a
stakeholder, Tirona should have used reasonable diligence in hailing the contending claimants to court.
Tirona need not have awaited actual institution of a suit by Ocampo against her before filing a bill of
interpleader.37 An action for interpleader is proper when the lessee does not know the person to whom
to pay rentals due to conflicting claims on the property.38

The action of interpleader is a remedy whereby a person who has property whether personal or real, in
his possession, or an obligation to render wholly or partially, without claiming any right in both, or claims
an interest which in whole or in part is not disputed by the conflicting claimants, comes to court and
asks that the persons who claim the said property or who consider themselves entitled to demand
compliance with the obligation, be required to litigate among themselves, in order to determine finally
who is entitled to one or the other thing. The remedy is afforded not to protect a person against a double
liability but to protect him against a double vexation in respect of one liability. When the court orders that
the claimants litigate among themselves, there arises in reality a new action and the former are styled
interpleaders, and in such a case the pleading which initiates the action is called a complaint of
interpleader and not a cross-complaint.

4. Vda. De Camilo v. Arcamo, 3 Phil. 146

Facts: Petitioner Petra Carpio Vda. de Camilo, had been by herself and predecessor in interest in peaceful,
open and adverse possession of a parcel of public foreshore land. Xxx Respondent Ong Peng Kee was a
lessee of one of the apartments of said commercial building. On September 1, 1957, the two commercial
buildings were burned down. Two weeks thereafter, respondents Ong Peng Kee and Adelia Ong,
constructed a building of their own, occupying about 120 square meters. The building, however, was so
built that portions of the lands previously occupied by petitioner (De Camilo and the Franciscos) were
encroached upon. Forcible entry case was filed against them Xxx Pending trial of the two cases, the
respondents Ong Peng Kee and Adelia Ong filed a complaint for Interpleader against De Camilo, Severino
Estrada, the Franciscos, Arthur Evert Bannister, the Mayor and Treasurer of Malangas (Civ. Case No. 108),
alleging that the filing of the three cases of forcible entry (Civ. Cases Nos. 64, 78 an 105), indicated that
the defendants (in the Interpleader) had conflicting interests, since they all claimed to be entitled to the
possession of the lot in question and they (Peng Kee and Adelia) could not determine without hazard to
themselves who of defendants was entitled to the possession. Interpleader plaintiffs further alleged that
they had no interest in the property other than as mere lessees.
The only issue raised in the present appeal is whether or not the Justice of the Peace Court has jurisdiction
to take cognizance of the Interpleader case.

Ruling: (Improper Interpleader) where the occupants of two different parcels of land adjoining each
other belonging to two separate plaintiffs, but on which the occupants had constructed a building
encroaching upon both parcels of land, faced two ejectment suits from the plaintiffs, each plaintiff
claiming the right of possession and recovery over his respective portion of the lands encroached
upon, this Court held that the occupants could not properly file an interpleader suit, against the
plaintiffs, to litigate their alleged conflicting claims; for evidently, the two plaintiff did not have any
conflicting claims upon the same subject matter against the occupants, but were enforcing separate
and distinct claims on their respective properties.

The petitioners claimed the possession of the respective portion of the lands belonging to them on which
the respondents had erected their house after the fire which destroyed petitioners' buildings. This being
the case, the contention of petitioners-appellants that the complaint to interplead lacked cause of action,
is correct. Xxx The petitioners did not have conflicting claims against the respondents. Their respective
claim was separate and distinct from the other. Furthermore, it is not true that respondents Ong Peng
Kee and Adelia Ong did not have any interest in the subject matter. Their interest was the prolongation
of their occupancy or possession of the portions encroached upon by them.
Even in the supposition that the complaint presented a cause of action for Interpleader, still We hold that
the JP had no jurisdiction to take cognizance thereof. The complaint asking the petitioners to interplead,
practically took the case out of the jurisdiction of the JP court, because the action would then necessarily
"involve the title to or possession of real property or any interest therein" over which the CFI has original
jurisdiction (par. [b], sec. 44, Judiciary Act, as amended). Then also, the subject matter of the complaint
(interpleader) would come under the original jurisdiction of the CFI, because it would not be capable of
pecuniary estimation (Sec. 44, par. [a], Judiciary Act), there having been no showing that rentals were
asked by the petitioners from respondents.

5. Makati Dev’t. Corp. v. Tanjuatco, 27 SCRA 401 (1969) - jurisdiction

Facts: With his consent, plaintiff withheld said amount from the final payment made to him and, in view
of his subsequent failure to settle the issue thereon with the Supplier, on September 16, 1955, plaintiff
instituted the present action, in the Court of First Instance of Rizal, against Tanjuatco and the Supplier, to
compel them "to interplead their conflicting claims."
On October 4, 1965, Tanjuatco moved to dismiss the case, upon the ground that the court had no
jurisdiction over the subject-matter of the litigation, the amount involved therein being less than
P10,000.00. 1 Finding this motion "to be well-taken", the lower court granted the same, over plaintiffs
opposition thereto, and, accordingly, issued an order, dated November 16, 1965, dismissing the case,
without costs. Hence, this appeal, in which plaintiff maintains that the subject-matter of this litigation is
not the aforementioned sum of P5,198.75, but the right to compel the defendants "to litigate among
themselves" in order to protect the plaintiff "against a double vexation in respect to one liability."
Ruling: We find no merit in this contention. There is no question in this case that plaintiff may compel the
defendants to interplead among themselves, concerning the aforementioned sum of P5,198.75. The only
issue is who among the defendants is entitled to collect the same. This is the object of the action, which
is not within the jurisdiction of the lower court (CFI, but of MTC).
To begin with, the jurisdiction of our courts over the subject-matter of justiciable controversies is
governed by Rep. Act No. 296, as amended, pursuant to which 2 municipal courts shall have exclusive
original jurisdiction in all civil cases "in which the demand, exclusive of interest, or the value of the
property in controversy", amounts to not more than "ten thousand pesos." Secondly, "the power to
define, prescribe, and apportion the jurisdiction of the various courts" belongs to Congress 3 and is beyond
the rule-making power of the Supreme Court, which is limited to matters concerning pleading, practice,
and procedure in all courts, and the admission to the practice of law. 4 Thirdly, the failure of said section
19 of Rule 5 of the present Rules of Court to make its Rule 63, on interpleading, applicable to inferior
courts, merely implies that the same are not bound to follow Rule 63 in dealing with cases of interpleading,
but may apply thereto the general rules on procedure applicable to ordinary civil action in said courts.

6. Beltran v. PHCC, 29 SCRA 145

Facts: Tenants paid to PHCC with entitlement to purchase their units. Tthen, management of the project
transferred to GSIS due to PHCC’s debt to GSIS. xxx Subsequently, however, PHHC through its new
Chairman-General Manager, Esmeraldo Eco, refused to recognize all agreements and undertakings
previously entered into with GSIS, while GSIS insisted on its legal rights to enforce the said agreements

Appeal on purely questions of law from an order of dismissal of the complaint for interpleader, on the
ground that it does not state a cause of action, as certified to this Court by the Court of Appeals. We affirm
the dismissal on the ground that where the defendants sought to be interpleaded as conflicting claimants
have no conflicting claims against plaintiff, as correctly found by the trial court, the special civil action of
interpleader will not lie. This interpleader suit was filed on August 21, 1962, by plaintiffs in their own
behalf and in behalf of all residents of Project 4 in Quezon City, praying that the two defendant-
government corporations (PHCC and GSIS) be compelled to litigate and interplead between themselves
their alleged conflicting claims involving said Project 4.

Ruling: (Improper interpleader) Plaintiffs entirely miss the vital element of an action of interpleader. Rule
63, section 1 of the Revised Rules of Court (formerly Rule 14) requires as an indispensable element that
"conflicting claims upon the same subject matter are or may be made" against the plaintiff-in-interpleader
"who claims no interest whatever in the subject matter or an interest which in whole or in part is not
disputed by the claimants." While the two defendant corporations may have conflicting claims between
themselves with regard to the management, administration and ownership of Project 4, such conflicting
claims are not against the plaintiffs nor do they involve or affect the plaintiffs. No allegation is made in
their complaint that any corporation other than the PHHC which was the only entity privy to their lease-
purchase agreement, ever made on them any claim or demand for payment of the rentals or amortization
payments. The questions of fact raised in their complaint concerning the enforceability, and recognition
or non-enforceability and non-recognition of the turnover agreement of December 27, 1961 between the
two defendant corporations are irrelevant to their action of interpleader, for these conflicting claims,
loosely so-called, are between the two corporations and not against plaintiffs. Both defendant
corporations werein conformity and had no dispute, as pointed out by the trial court that the monthly
payments and amortizations should be made directly to the PHHC alone. Xxx The GSIS' undertaking to
recognize and respect the previous commitments of PHHC towards its tenants is expressly set forth
in Par. III, section M of the turnover agreement, Annex "F" of plaintiffs' complaint, wherein it is provided
that "GSIS shall recognize and respect all awards, contracts of sale, lease agreements and transfer
of rights to lots and housing units made and approved by PHHC,

(It would have been different if GSIS demanded their payments also)

7. Wack-Wack Golf and Country Club v. Won, 70 SCRA 165

Facts: In its amended and supplemental complaint of October 23, 1963, the Wack Wack Golf & Country
Club, Inc., a non-stock, civic and athletic corporation duly organized under the laws of the Philippines,
with principal office in Mandaluyong, Rizal (hereinafter referred to as the Corporation), alleged, for its
first cause of action, that the defendant Lee E. Won claims ownership of its membership fee certificate
201, by virtue of the decision rendered in civil case 26044 of the CFI of Manila, entitled "Lee E. Won alias
Ramon Lee vs. Wack Wack Golf & Country Club, Inc." and also by virtue of membership fee certificate 201-
serial no. 1478 issued on October 17, 1963 by Ponciano B. Jacinto, deputy clerk of court of the said CFI of
Manila, for and in behalf of the president and the secretary of the Corporation and of the People's Bank
& Trust Company as transfer agent of the said Corporation, pursuant to the order of September 23, 1963
in the said case; that the defendant Bienvenido A. Tan, on the other hand, claims to be lawful owner of
its aforesaid membership fee certificate 201 by virtue of membership fee certificate 201-serial no. 1199
issued to him on July 24, 1950 pursuant to an assignment made in his favor by "Swan, Culbertson and
Fritz," the original owner and holder of membership fee certificate 201; that under its articles of
incorporation and by-laws the Corporation is authorized to issue a maximum of 400 membership fee
certificates to persons duly elected or admitted to proprietary membership, all of which have been issued
as early as December 1939; that it claims no interest whatsoever in the said membership fee certificate
201; that it has no means of determining who of the two defendants is the lawful owner thereof; that it
is without power to issue two separate certificates for the same membership fee certificate 201, or to
issue another membership fee certificate to the defendant Lee, without violating its articles of
incorporation and by-laws; and that the membership fee certificate 201-serial no. 1199 held by the
defendant Tan and the membership fee certificate 201-serial No. 1478 issued to the defendant Lee
proceed from the same membership fee certificate 201, originally issued in the name of "Swan, Culbertson
and Fritz".
For its second cause of action. it alleged that the membership fee certificate 201-serial no. 1478 issued by
the deputy clerk of court of court of the CFI of Manila in behalf of the Corporation is null and void because
issued in violation of its by-laws, which require the surrender and cancellation of the outstanding
membership fee certificate 201 before issuance may be made to the transferee of a new certificate duly
signed by its president and secretary, aside from the fact that the decision of the CFI of Manila in civil case
26044 is not binding upon the defendant Tan, holder of membership fee certificate 201-serial no. 1199;
that Tan is made a party because of his refusal to join it in this action or bring a separate action to protect
his rights despite the fact that he has a legal and beneficial interest in the subject matter of this litigation;
and that he is made a part so that complete relief may be accorded herein.
In this appeal, the Corporation contends that the court a quo erred (1) in finding that the allegations in its
amended and supplemental complaint do not constitute a valid ground for an action of interpleader, and
in holding that "the principal motive for the present action is to reopen the Manila Case and collaterally
attack the decision of the said Court"; (2) in finding that the decision in civil case 26044 of the CFI of Manila
constitutes res judicata and bars its present action; and (3) in dismissing its action instead of compelling
the appellees to interplead and litigate between themselves their respective claims.

Ruling: It has been held that a stakeholder's action of interpleader is too late when filed after judgment
has been rendered against him in favor of one of the contending claimants.
The Corporation has not shown any justifiable reason why it did not file an application for interpleader in
civil case 26044 to compel the appellees herein to litigate between themselves their conflicting claims of
ownership. It was only after adverse final judgment was rendered against it that the remedy of
interpleader was invoked by it. By then it was too late, because to be entitled to this remedy the applicant
must be able to show that lie has not been made independently liable to any of the claimants. And since
the Corporation is already liable to Lee under a final judgment, the present interpleader suit is clearly
improper and unavailing.
Besides, a successful litigant cannot later be impleaded by his defeated adversary in an interpleader suit
and compelled to prove his claim anew against other adverse claimants, as that would in effect be a
collateral attack upon the judgment.

8. Vlasons Ent. Corp. v. CA, 155 SCRA 186 (1987)

Facts: Some five months before the filing of the suit, or more precisely on June 21, 1979, those propeller
pieces had been seized by METROCOM agents from Florencio Sosuan on the strength of a search warrant
issued by another branch of the same Manila Court of First Instance, presided over by Judge Maximo
Maceren. The search warrant was issued at the instance of Vlasons, which claimed to be the owner of the
propeller.
In a civil action for the recovery of possession of two (2) pieces of a salvaged bronze propeller of a sunken
vessel, instituted in the Manila Court of First Instance, Judge Alfredo Cruz, Jr., issued an Order dated March
22, 1982 granting the motion of Sosuan ". . . to Repossess Propeller Pieces" pendente lite.

Ruling:
1. It is therefore this Court's holding that where personalty has been seized under a search warrant, and
it appears reasonably definite that the seizure will not be followed by the filing of any criminal action for
the prosecution of the offenses in connection with which the warrant was issued, the public prosecutors
having pronounced the absence of basis therefor, and there are, moreover, conflicting claims asserted
over the seized property, the appropriate remedy is the institution of an ordinary civil action by any
interested party, or of a special civil action of interpleader by the Government itself (who?), that action
being cognizable not exclusively by the court issuing the search warrant but by any other competent court
to which it may be assigned by raffle. In such a case, the seizing court shall transfer custody of the seized
articles to the court having jurisdiction of the civil action at any time, upon due application by an
interested party. But such a transfer, it must be emphasized, is a matter of comity, founded on pragmatic
considerations, not compellable by or resulting from any overriding authority, of a writ or process of the
court having cognizance of the civil action.
2. The theory that the act of one branch of a court of first instance (regional trial court) may be deemed
to be the act of another branch of the same court is, upon its face, absurd. It flies in the teeth of the all
too familiar actuality that each branch is a distinct and separate court, exercising jurisdiction over the
cases assigned to it to the exclusion of all other branches.
DECLARATORY RELIEF

1. Province of Camarines Sur v. CA, 600 SCRA 569

In the instant case, the controversy concerns the construction of the provisions of Republic Act No.
305 or the Charter of the City of Naga. Specifically, the City of Naga seeks an interpretation of Section
2, Article I of its Charter, as well as a declaration of the rights of the parties to this case thereunder.

Facts: The property subject of the instant case is a parcel of land, known as Plaza Rizal,
situated within the territory of herein respondent City of Naga. On 18 June 1948, Republic
Act No. 3055 took effect and, by virtue thereof, the Municipality of Naga was converted
into the City of Naga. Subsequently, on 16 June 1955, Republic Act No. 13366 was
approved, transferring the site of the provincial capitol of Camarines Sur from the City
of Naga to the barrio of Palestina, Municipality of Pili. On 13 January 1997, the City of
Naga filed a Complaint9 for Declaratory Relief and/or Quieting of Title against
Camarines Sur… The City of Naga stressed that it did not intend to acquire ownership of
Plaza Rizal. Being a property of the public domain, Plaza Rizal could not be claimed by
any subdivision of the state, as it belonged to the public in general. Instead, the City of
Naga sought a declaration that the administrative control and management of Plaza Rizal
should be vested in it, given that the said property is situated within its territorial
jurisdiction.

CamSur filed answer with MTD - Furthermore, the remedy of Declaratory Relief was
inappropriate because there was no ju
sticiable controversy, given that the City of Naga did not intend to acquire ownership of
Plaza Rizal; and Camarines Sur, being the owner of Plaza Rizal, had the right to the
management, maintenance, control, and supervision thereof.

RTC: WHEREFORE, premises considered, [Section 2, Article I] of [Republic Act No.] 305
is hereby interpreted and declared in this Court to mean that the administrative control
and management of Plaza Rizal is within the City of Naga and not with the Province of
Camarines Sur.

Ruling: The Court rules that the City of Naga properly resorted to the filing of an action for declaratory
relief. Declaratory relief is defined as an action by any person interested in a deed, will, contract or
other written instrument, executive order or resolution, to determine any question of construction or
validity arising from the instrument, executive order or regulation, or statute; and for a declaration of
his rights and duties thereunder.31The only issue that may be raised in such a petition is the question
of construction or validity of provisions in an instrument or statute. The requisites of an action for
declaratory relief are: (1) there must be a justiciable controversy between persons whose interests are
adverse; (2) the party seeking the relief has a legal interest in the controversy; and (3) the issue is ripe
for judicial determination.
By virtue of the enactment of Republic Act No. 305 and as specified in Section 2, Article I thereof the
local government unit that is the proper agent of the Republic of the Philippines that should administer
and possess Plaza Rizal is the City of Naga.
2. Meralco v. Phil. Consumers Foundation, Inc. 374 SCRA 262
Facts: And finally, as stated by the Solicitor General, if only to put the issue to final rest,
BOE’s decision authorizing Meralco to retain the savings resulting from the reduction of
franchise tax as long as its rate of return falls below the 12% allowable rate is supported
by P.D. No. 551. (And this has been affirmed by the SC in a previous case – so res judicata)

Ruling: Corollarily, let it not be overlooked that the purpose of an action for declaratory relief is to
secure an authoritative statement of the rights and obligations of the parties under a statute, deed,
contract etc. for their guidance in the enforcement thereof, or compliance therewith, and not to settle
issues arising from an alleged breach thereof. It may be entertained only before the breach or violation
of the statute, deed, contract etc., to which it refers.23 The petition gives a practical remedy in ending
controversies which have not reached the stage where other relief is immediately available. It supplies
1âwphi1

the need for a form of action that will set controversies at rest before they lead to repudiation of
obligations, invasion of rights, and the commission of wrongs.24 Here, private respondents brought the
petition for declaratory relief long after the alleged violation of P.D. No. 551.

A lower court cannot reverse or set aside decisions or orders of a superior court, especially of this
Court, for to do so will negate the principle of hierarchy of courts and nullify the essence of review. A
final judgment, albeit erroneous, is binding on the whole world.xxx Although judicial determinations
are not infallible, judicial error should be corrected through appeals, not through repeated suits on the
same claim.

3. Almeda v. Bathala Marketing Industries, Inc. 542 SCRA 470

Construction of lease contract – WON lesee is liable to pay VAT and inflation
Facts: Sometime in May 1997, respondent Bathala Marketing Industries, Inc., as lessee,
represented by its president Ramon H. Garcia, renewed its Contract of Lease4 with
Ponciano L. Almeda (Ponciano), as lessor, husband of petitioner Eufemia and father of
petitioner Romel Almeda. Under the said contract, Ponciano agreed to lease a portion of
the Almeda Compound, located at 2208 Pasong Tamo Street, Makati City, consisting of
7,348.25 square meters, for a monthly rental of P1,107,348.69, for a term of four (4) years
from May 1, 1997 unless sooner terminated as provided in the contract.

Respondent refused to pay the VAT and adjusted rentals as demanded by petitioners but continued to
pay the stipulated amount set forth in their contract. respondent instituted an action for declaratory relief
for purposes of determining the correct interpretation of condition Nos. 6 and 7 of the lease contract to
prevent damage and prejudice.

In fine, the issues for our resolution are as follows: 1) whether the action for declaratory relief is proper;
2) whether respondent is liable to pay 10% VAT pursuant to Republic Act (RA) 7716; and 3) whether
the amount of rentals due the petitioners should be adjusted by reason of extraordinary inflation or
devaluation.

Ruling: Declaratory relief is defined as an action by any person interested in a deed, will, contract or
other written instrument, executive order or resolution, to determine any question of construction or
validity arising from the instrument, executive order or regulation, or statute, and for a declaration of
his rights and duties thereunder. The only issue that may be raised in such a petition is the question
of construction or validity of provisions in an instrument or statute. Corollary is the general rule that
such an action must be justified, as no other adequate relief or remedy is available under the
circumstances. 15

Decisional law enumerates the requisites of an action for declaratory relief, as follows: 1) the subject
matter of the controversy must be a deed, will, contract or other written instrument, statute, executive
order or regulation, or ordinance; 2) the terms of said documents and the validity thereof are doubtful
and require judicial construction; 3) there must have been no breach of the documents in question;
4) there must be an actual justiciable controversy or the "ripening seeds" of one between persons
whose interests are adverse; 5) the issue must be ripe for judicial determination; and 6) adequate
relief is not available through other means or other forms of action or proceeding.

After petitioners demanded payment of adjusted rentals and in the months that followed, respondent
complied with the terms and conditions set forth in their contract of lease by paying the rentals
stipulated therein. Respondent religiously fulfilled its obligations to petitioners even during the
pendency of the present suit. There is no showing that respondent committed an act constituting a
breach of the subject contract of lease. Thus, respondent is not barred from instituting before the trial
court the petition for declaratory relief.

It is true that in Panganiban v. Pilipinas Shell Petroleum Corporation17 we held that the petition for declaratory
relief should be dismissed in view of the pendency of a separate action for unlawful detainer. However, we
cannot apply the same ruling to the instant case. In Panganiban, the unlawful detainer case had already been
resolved by the trial court before the dismissal of the declaratory relief case; and it was petitioner in that case
who insisted that the action for declaratory relief be preferred over the action for unlawful detainer. Conversely,
in the case at bench, the trial court had not yet resolved the rescission/ejectment case during the pendency of
the declaratory relief petition. In fact, the trial court, where the rescission case was on appeal, itself initiated the
suspension of the proceedings pending the resolution of the action for declaratory relief.

We are not unmindful of the doctrine enunciated in Teodoro, Jr. v. Mirasol18 where the declaratory relief action
was dismissed because the issue therein could be threshed out in the unlawful detainer suit. Yet, again, in that
case, there was already a breach of contract at the time of the filing of the declaratory relief petition. This
dissimilar factual milieu proscribes the Court from applying Teodoro to the instant case.

Given all these attendant circumstances, the Court is disposed to entertain the instant declaratory relief action
instead of dismissing it, notwithstanding the pendency of the ejectment/rescission case before the trial court.
The resolution of the present petition would write finis to the parties' dispute, as it would settle once and for all
the question of the proper interpretation of the two contractual stipulations subject of this controversy.

4. Edades v. Edades, 99 Phil 675 (1956)

Facts: Plaintiff brought this action before the Court of First Instance of Pangasinan seeking a declaratory
judgment on his hereditary rights in the property of his alleged father and incidentally the recognition of
his status as an illegitimate son of Emigdio Edades.
Defendants, instead of answering, filed a motion to dismiss on the ground that the complaint does not
state facts sufficient to constitute a cause of action. The court sustained the motion holding that “An
action for declaratory relief just for the purpose of clearing away doubt, uncertainty, or insecurity to
the Plaintiff’s status or rights would seem to be improper and outside the purview of a declaratory relief.
Neither can it be availed of for the purpose of compelling recognition of such rights, if disputed or objected
to.” Consequently, the court dismissed the complaint, without costs. From the order of
dismissal, Plaintiff has appealed and the case was certified to this court because only questions of law are
involved in the appeal.

Ruling: The present case does not come within the purview of the law authorizing an action for declaratory
relief for it neither concerns a deed, will, contract or other written instrument, nor does it affect a statute
or ordinance, the construction or validity of which is involved. Nor is it predicated on any justiciable
controversy for admittedly the alleged rights of inheritance whichPlaintiff desires to assert against
the Defendants as basis of the relief he is seeking for have not yet accrued for the simple reason that his
alleged father Emigdio Edades has not yet died.
This right is impliedly recognized by Article 289 which permits the investigation of the paternity or
maternity of an illegitimate child in the same manner as in the case of a natural child. Considering that
the rules of procedure shall be liberally construed to promote their object and avoid an expensive
litigation (section 2, Rule 1), we hold that the present action may be maintained in the light of the view
herein expressed.

5. Santos v. Aquino, 94 Phil 65 (1953)

Facts: This action purports to obtain a declaratory relief but the prayer of the petition seeks to have Ordinance
No. 61, series of 1946, and Ordinance No. 10, series of 1947, of the Municipality of Malabon, Province of Rizal,
declared null and void xxx. Ordinance No. 61, series of 1946, adopted by the Municipal Council of Malabon on
8 December 1946, imposes a license tax of P1,000 per annum on the said theater in addition to a license tax
on all tickets sold in theaters and cinemas in Malabon, pursuant to Ordinance No. 58, series of 1946, adopted
on the same date as Ordinance No. 61, the same series xxx

Ruling: This is not an action for declaratory relief, because the terms of the ordinances assailed are not
ambiguous or of doubtful meaning which require a construction thereof by the Court. And granting that the
validity or legality of an ordinance may be drawn in question in an action for declaratory relief, such relief
must be asked before a violation of the ordinance be committed. 1 When this action was brought on 12 May
1949, payment of the municipal license taxes imposed by both ordinances, the tax rate of the last having
been reduced by the Department of Finance, was already due, and the prayer of the petition shows that the
petitioner had not paid them. In those circumstances the petitioner cannot bring an action for declaratory
relief.
The rule that actions must be brought in the name of the real party in interest 2 applies to actions brought
under Rule 66 for declaratory relief. 3 The fact that he is the manager of the theater does not make him a
real party in interest.

Side note: REYES, J., dissenting

having in mind the principle of separation of powers which pervades the system of government ordained by
our Constitution, I take it that the veto power thus conferred upon the Secretary of Finance only authorizes
that officer to approve or disapprove an ordinance that is submitted to him in accordance with the above-
quoted provision of the Commonwealth Act, and that it does not empower him to change, alter or modify the
terms of the ordinance, for that would be investing an executive officer with legislative functions. Where a
municipal ordinance, therefore, increases or decreases in certain cases the rate of a license tax on business,
occupation or privilege by more than 50 per cent and the Secretary of Finance increases or decreases the new
rate prescribed in the ordinance, the action of the Secretary of Finance can only be taken as a
recommendation, so that the modified ordinance will have no effect until it is repassed by the municipal council

6. Gomez v. Palomar, 25 SCRA 827 (1968)

Facts: This appeal puts in issue the constitutionality of Republic Act 1635,1 as amended by Republic Act
2631,2 which provides as follows. - To help raise funds for the Philippine Tuberculosis Society, the
Director of Posts shall order for the period from August nineteen to September thirty every year the
printing and issue of semi-postal stamps xxx
petitioner Benjamin P. Gomez mailed a letter at the post officexxx. Because this letter did not bear the
special anti-TB stamp required by the statute, it was returned to the petitioner. (he questioned the
constitutionality of the law) RTC ruled in his favor.

Ruling: While conceding that the mailing by the petitioner of a letter without the additional anti-TB stamp
was a violation of Republic Act 1635, as amended, the trial court nevertheless refused to dismiss the action
on the ground that under section 6 of Rule 64 of the Rules of Court, "If before the final termination of the
case a breach or violation of ... a statute ... should take place, the action may thereupon be converted into
an ordinary action."

The prime specification of an action for declaratory relief is that it must be brought "before breach or
violation" of the statute has been committed. Rule 64, section 1 so provides. Section 6 of the same rule,
which allows the court to treat an action for declaratory relief as an ordinary action, applies only if the
breach or violation occurs after the filing of the action but before the termination thereof.
Hence, if, as the trial court itself admitted, there had been a breach of the statute before the firing of this
action, then indeed the remedy of declaratory relief cannot be availed of, much less can the suit be
converted into an ordinary action.

Nor is there merit in the petitioner's argument that the mailing of the letter in question did not constitute
a breach of the statute because the statute appears to be addressed only to postal authorities.xx the mere
attempt to use the mails without the stamp constitutes a violation of the statute.

Nevertheless, we are of the view that the petitioner's choice of remedy is correct because this suit was
filed not only with respect to the letter which he mailed on September 15, 1963, but also with regard
to any other mail that he might send in the future. Thus, in his complaint, the petitioner prayed that
due course be given to "other mails without the semi-postal stamps which he may deliver for mailing.

7. Lim v. Republic, 37 SCRA 78

Facts: Appeal, taken by the Solicitor General, from a decision of the Court of First Instance of Zamboanga
City, granting repatriation to petitioner. Xxx. upon the ground inter alia, that she had not duly established
either the nationality of her alleged father, Lorenzo, or her alleged relation with him, and u nder our laws,
there can be no action or proceeding for the judicial declaration of the citizenship of an individual’ (Republic
v. Maddela, supra).’Only as an incident of the adjudication of the rights of the parties to a controversy may
the Court pass upon and make a pronouncement relative to their status. Otherwise, such pronouncement is
beyond judicial power’.

Ruling: The appeal taken by the Government is well taken. The procedure for the repatriation of a female
citizen of the Philippines, who has lost her citizenship by reason of marriage to an alien, is as simple as it can
possibly be. All that is required of her, upon termination of her marital status, is for her to take the necessary
oath of allegiance to the Republic of the Philippines and to register said oath in the proper civil registry. 1 In
fact, the allegations and, particularly, the prayer in the petition of appellee herein suggest that she is aware
of the pertinent legal provisions. It is, moreover, apparent that her objective is to settle her political status
prior to marriage. In other words, thru her petition herein, she hopes to establish that she was a citizen of the
Philippines before she contracted marriage. As a consequence, her petition is, in effect, one for a declaratory
relief, which this Court has repeatedly held to be inapplicable to the political status of natural persons.

Declaratory relief in this jurisdiction is a special civil action which may lie only when ‘any person interested
under a deed, will, contract or other written instrument, or whose rights are affected by statute or ordinance,’
demands construction thereof for a declaration of his rights thereunder. None of the above circumstances
exists in the case under consideration. And this Court has already held that there is no proceeding established
by law or the rules by which any person claiming to be a citizen may get a declaration in a court of justice to
that effect or in regard to his citizenship.

"it is now well settled . . . that there is no proceeding established by law, or the rules, for the judicial declaration
of the citizenship of an individual . . . and that citizenship is not a proper subject for declaratory judgment.

In essence, the appellees merely wanted to remove all doubts in their minds as to their citizenship,
but an action for declaratory judgment cannot be invoked solely to determine or try issues or to
determine a moot, abstract or theoretical question, or to decide claims which are uncertain or
hypothetical.
8. CJH Dev’t. Corp. v. BIR, G.R. No. 172457, December 24, 2008
Facts: he RTC dismissed the petition for declaratory relief filed by petitioner CJH Development Corporation
Proclamation No. 420 (the Proclamation) was issued by then President Fidel V. Ramos to create a Special
Economic Zone (SEZ) in a portion of Camp John Hay in Baguio City. Section 34 of the Proclamation granted
to the newly created SEZ the same incentives then already enjoyed by the Subic SEZ. Among these
incentives are the exemption from the payment of taxes, both local and national, for businesses located
inside the SEZ, and the operation of the SEZ as a special customs territory providing for tax and duty free
importations of raw materials, capital and equipment.
In line with the Proclamation, the Bureau of Internal Revenue (BIR) issued Revenue Regulations No. 12-
976 while the Bureau of Customs (BOC) issued Customs Administrative Order No. 2-98.7 The two issuances
provided the rules and regulations to be implemented within the Camp John Hay SEZ. Subsequently,
however, Section 3 of the Proclamation was declared unconstitutional in part by the Court en banc in John
Hay Peoples Alternative Coalition v. Lim. (SO BIR and BOC assessed CJH with taxes)
In an Order16 dated 28 June 2005, the RTC dropped the City of Baguio as a party to the case. The remaining
parties were required to submit their respective memoranda. On 14 October 2005, the RTC rendered its
assailed order.17 It held that the decision in G.R. No. 119775 applies retroactively because the tax
exemption granted by Proclamation No. 420 is null and void from the beginning. The RTC also ruled that
the petition for declaratory relief is not the appropriate remedy. A judgment of the court cannot be the
proper subject of a petition for declaratory relief; the enumeration in Rule 64 is exclusive. Moreover, the
RTC held that Commonwealth Act No. 55 (CA No. 55) which proscribes the use of declaratory relief in
cases where a taxpayer questions his tax liability is still in force and effect.

Ruling: DR not proper. CA No. 55 is still in effect and holds sway. Precisely, it has removed from the courts’
jurisdiction over petitions for declaratory relief involving tax assessments. The Court cannot repeal,
modify or alter an act of the Legislature.
Moreover, the proper subject matter of a declaratory relief is a deed, will, contract, or other written
instrument, or the construction or validity of statute or ordinance.23 CJH hinges its petition on the demand
letter or assessment sent to it by the BOC. However, it is really not the demand letter which is the subject
matter of the petition. Ultimately, this Court is asked to determine whether the decision of the Court en
banc in G.R. No. 119775 has a retroactive effect. This approach cannot be countenanced. A petition for
declaratory relief cannot properly have a court decision as its subject matter.

There are other remedies available to a party who is not agreeable to a decision whether it be a
question of law or fact. If it involves a decision of an appellate court, the party may file a motion for
reconsideration or new trial in order that the defect may be corrected.26 In case of ambiguity of the
decision, a party may file a motion for a clarificatory judgment.27 One of the requisites of a declaratory
relief is that the issue must be ripe for judicial determination. This means that litigation is inevitable 28 or
there is no adequate relief available in any other form or proceeding

9. Social Justice Society v Lina, 574 SCRA 462

Facts: Filed with the trial court on September 12, 2002, by petitioner Social Justice Society, a registered
political party, was a petition for declaratory relief against the then Secretary of the Department of
Interior and Local Government (DILG), respondent Jose D. Lina,[3] praying for the proper construction of
Section 90 of Republic Act (R.A.) No. 7160. Xxx Based on the said provision, specifically paragraph (a)
thereof, petitioner posited that actors who were elected as governors, city and municipal mayors were
disallowed by law to appear in movies and television programs as one of the characters therein, for this
would give them undue advantage over their political opponents, and would considerably reduce the time
that they must devote to their constituents.
Ruling: we find as proper the trial courts dismissal of the petition for declaratory relief in Civil Case No.
02-104585. Readily discernable is that the same is an inappropriate remedy to enforce compliance with
Section 90 of R.A. 7160, and to prevent local chief executives Santos-Recto, Lapid and Marquez from
taking roles in movies and television shows.
or the action to prosper, it must be shown that (1) there is a justiciable controversy; (2) the controversy
is between persons whose interests are adverse; (3) the party seeking the relief has a legal interest in the
controversy; and (4) the issue is ripe for judicial determination.[13] Suffice it to state that, in the petition
filed with the trial court, petitioner failed to allege the ultimate facts which satisfy these requisites. Not
only that, as admitted by the petitioner, the provision the interpretation of which is being sought has
already been breached by the respondents. (since they are already elected) Declaratory relief cannot
thus be availed of.

10. Baguio Citizen’s Action, Inc. v. The City Council, 121 SCRA 368
Facts: In this petition for declaratory relief originally filed in the Court of First Instance of Baguio, Branch
II, what is involved is the validity of Ordinance 386 passed by the City Council of Baguio City
N ORDINANCE CONSIDERING ALL SQUATTERS OF PUBLIC LAND, OTHER THAN THOSE EARMARKED FOR
PUBLIC USE IN THE CITY OF BAGUIO WHO ARE DULY REGISTERED AS SUCH AT THE TIME OF THE
PROMULGATION OF THIS ORDINANCE AS BONAFIDE OCCUPANTS OF THEIR RESPECTIVE LOTS AND WHICH
SHALL HEREAFTER BE EMBRACED AS A CITY GOVERNMENT HOUSING PROJECT AND PROVIDING FOR
OTHER PURPOSES.
n the decision thereafter rendered, the petition was dismissed on the grounds that: 1) another court, the
Court of First Instance of Baguio, Branch I, had declared the Ordinance valid in a criminal case filed against
the squatters for illegal construction, and the Branch II of the same court cannot, in a declaratory
proceeding, review and determine the validity of said judgment pursuant to the policy of judicial respect
and stability; 2) those who come within the protection of the ordinance have not been made parties to
the suit in accordance with Section 2 of Rule 64 and it has been held that the non-joinder of such parties
is a jurisdictional defect; and 3) the court is clothed with discretion to refuse to make any declaration
where the declaration is not necessary and proper at the time under all circumstances, e.g. where the
declaration would be of no practical help in ending the controversy or would not stabilize the disputed
legal relation

Ruling: DR proper, granted. The case before the Court of First Instance of Baguio, Branch 1, dealt with the
criminal liability of the accused for constructing their houses without obtaining building permits xxx Said
court merely confined itself to Sections 2 and 3 of Ordinance 386. It did not make any definite
pronouncement whether or not the City Council has the power to legalize the illegal occupation of public
land which is the issue in the instant case.
The Ordinance in question is a patent nullity.
Being unquestionably a public land, no disposition thereof could be made by the City of Baguio without
prior legislative authority. It is the fundamental principle that the state possesses plenary power in law to
determine who shall be favored recipients of public domain, as well as under what terms such privilege
may be granted not excluding the placing of obstacles in the way of exercising what otherwise would be
ordinary acts of ownership. And the law has laid in the Director of Lands the power of exclusive control,
administrations, disposition and alienation of public land that includes the survey, classification, lease,
sale or any other form of concessions or disposition and management of the lands of public domains.

11. Galicto v. Aquino III, 667 SCRA 150 (2012)

Facts: Before us is a Petition for Certiorari and Prohibition with Application for Writ of
Preliminary Injunction and/or Temporary Restraining Order,1 seeking to nullify and
enjoin the implementation of Executive Order No. (EO) 7 issued by the Office of the
President on September 8, 2010. Petitioner Jelbert B. Galicto asserts that EO 7 is
unconstitutional for having been issued beyond the powers of the President and for being
in breach of existing laws.
Heeding the call of Congress, Pres. Aquino, on September 8, 2010, issued EO 7, entitled
"Directing the Rationalization of the Compensation and Position Classification System in
the [GOCCs] and [GFIs], and for Other Purposes." EO 7 provided for the guiding
principles and framework to establish a fixed compensation and position classification
system for GOCCs and GFIs

Ruling: We resolve to DISMISS the petition for its patent formal and procedural infirmities, and for
having been mooted by subsequent events.
Under the Rules of Court, petitions for Certiorari and Prohibition are availed of to question judicial,
quasi-judicial and mandatory acts. Since the issuance of an EO is not judicial, quasi-judicial or a
mandatory act, a petition for certiorari and prohibition is an incorrect remedy; instead a petition for
declaratory relief under Rule 63 of the Rules of Court, filed with the Regional Trial Court (RTC), is the
proper recourse to assail the validity of EO 7
he respondents neither acted in any judicial or quasi-judicial capacity nor arrogated unto themselves any
judicial or quasi-judicial prerogatives. A petition for certiorari under Rule 65 of the 1997 Rules of Civil
Procedure is a special civil action that may be invoked only against a tribunal, board, or officer exercising
judicial or quasi-judicial functions.

Second, although the instant petition is styled as a petition for certiorari, in essence, it seeks the
declaration by this Court of the unconstitutionality or illegality of the questioned ordinance and
executive order. It, thus, partakes of the nature of a petition for declaratory relief over which this
Court has only appellate, not original, jurisdiction. Section 5, Article VIII of the Constitution provides:

Sec. 5. The Supreme Court shall have the following powers:

(1) Exercise original jurisdiction over cases affecting ambassadors, other public ministers
and consuls, and over petitions for certiorari, prohibition, mandamus, quo warranto, and
habeas corpus.

(2) Review, revise, reverse, modify, or affirm on appeal or certiorari as the law or the Rules
of Court may provide, final judgments and orders of lower courts in:

(a) All cases in which the constitutionality or validity of any treaty, international or
executive agreement, law, presidential decree, proclamation, order,
instruction, ordinance, or regulation is in question. (Italics supplied).

Side note: Moot (This is the present situation here. Congress, thru R.A. No. 10149, has expressly
empowered the President to establish the compensation systems of GOCCs and GFIs. For the Court to still
rule upon the supposed unconstitutionality of EO 7 will merely be an academic exercise.)

12. Reyes v. Ortiz, G.R. No. 137794. August 11, 2010

Facts: The instant cases are consolidated Petitions1 for Declaratory Relief, Certiorari, and Prohibition. The
petitioners in G.R. No. 137794 seek to declare null and void the proceedings in Civil Case No. 23477, an
ejectment case, before the Metropolitan Trial Court (MeTC), Caloocan City, Branch 49, and Civil Case No.
C-17725, a complaint for Recovery of Possession and Ownership, filed with the Regional Trial Court (RTC),
Caloocan City, Branch 124;2 while the petitioners in G.R. No. 149664 pray for the nullity of the following
ejectment proceedings before the different branches of the Caloocan City MeTC: (1) Civil Case No. 99-
25011, Branch 52; (2) Civil Case No. 22559 and Civil Case No. 18575, Branch 49 and its appeal to the RTC,
Branch 131; (3) Civil Case No. 00-25892, Branch 51; and (4) Civil Case No. 00-25889, Branch 51.3 G.R. No.
149664 was considered closed and terminated by the Court’s Resolution dated August 30, 2006.
The parcels of land which are the subject matter of these cases are part of the Tala Estate, situated
between the boundaries of Caloocan City and Quezon City and encompassing an area of 7,007.9515
hectares more or less.

Ruling:

The foregoing section can be dissected into two parts. The first paragraph concerns declaratory
relief, which has been defined as a special civil action by any person interested under a deed, will,
contract or other written instrument or whose rights are affected by a statute, ordinance, executive
order or regulation to determine any question of construction or validity arising under the instrument,
executive order or regulation, or statute and for a declaration of his rights and duties thereunder. The
second paragraph pertains to (1) an action for the reformation of an instrument; (2) an action to quiet
title; and (3) an action to consolidate ownership in a sale with a right to repurchase.43

The first paragraph of Section 1 of Rule 63 enumerates the subject matter to be inquired upon in a
declaratory relief namely, deed, will, contract or other written instrument, a statute, executive order
or regulation, or any government regulation. This Court, in Lerum v. Cruz,44 declared that the subject
matters to be tested in a petition for declaratory relief are exclusive, viz:

Under this rule, only a person who is interested "under a deed, will, contract or other written
instrument, and whose rights are affected by a statute or ordinance, may bring an action to
determine any question of construction or validity arising under the instrument or statute and
for a declaration of his rights or duties thereunder." This means that the subject matter must
refer to a deed, will, contract or other written instrument, or to a statute or ordinance, to
warrant declaratory relief. Any other matter not mentioned therein is deemed excluded. This
is under the principle of expressio unius est exclussio alterius. Xxx court decision cannot be
interpreted as included within the purview of the words "other written instrument,

In the instant case, petitioners Erlinda Reyes and Rosemarie Matienzo assailed via Declaratory Relief
under Rule 63 of the Rules of Court, the orders of the trial courts denying their motions to suspend
proceedings. This recourse by petitioners, unfortunately, cannot be countenanced since a court order is
not one of those subjects to be examined under Rule 63.

Finally, while a petition for declaratory relief may be treated as one for prohibition if it has far reaching
implications and raises questions that need to be resolved, there is no allegation of facts by petitioner
tending to show that she is entitled to such a writ. The judicial policy must thus remain that this Court
will not entertain direct resort to it, except when the redress sought cannot be obtained in the proper
courts or when exceptional and compelling circumstances warrant availment of a remedy within and
calling for the exercise of this Court's primary jurisdiction.
petitioner Matienzo obviously availed of the instant declaratory relief to substitute for a petition
for certiorari, a remedy which she sadly lost by inaction.

REVIEW OF JUDGMENTS AND FINAL ORDERS OR RESOLUTIONS OF THE

COMELEC AND COA

1. Aratuc v. COMELEC, 88 SCRA 251

Facts:
1. OVER THE OBJECTION OF THE KONSENSIYA NG BAYAN (KB) CANDIDATES, THE REGIONAL BOARD OF
CANVASSERS OF REGION XII ISSUED A RESOLUTION DECLARING ALL THE EIGHT KILUSAN NG BAGONG
LIPUNAN (KBL) CANDIDATES ELECTED REPRESENTATIVES TO THE BATASANG PAMBANSA. THE KB
CANDIDATES APPEALED THE RESOLUTION TO THE COMELEC WHICH CONSEQUENTLY ISSUED THE NOW
ASSAILED RESOLUTION DECLARING SEVEN KBL CANDIDATES AND ONE KB CANDIDATES AS HAVING
OBTAIN THE FIRST EIGHT PLACES, AND ORDERING THE REGIONAL BOARD OF CANVASSERS TO PROCLAIM
THE WINNING CANDIDATES. THE ARATUC PETITION ALLEGED THAT THE COMELEC IN ARRIVING AT ITS
CONCLUSION COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF JURISDICTION. THE
MANDANGAN PETITION, ON THE OTHER HAND, CLAIMS THAT IT WAS ERROR OF LAW FOR COMELEC TO
CONSIDER SPURIOUS AND MANUFACTURED THE RETURNS IN VOTING CENTERS SHOWING THAT THE
VOTES OF THE CANDIDATES OBTAINING THE HIGHEST NUMBER OF VOTES EXCEEDED THE HIGHEST
POSSIBLE NUMBER OF VALID VOTES, BECAUSE THE EXCESS WAS NOT MORE THAN 40% AS WAS THE RULE
FOLLOWED IN BASHIER/BASMAN (L-33758, FEBRUARY 24, 1972), AND THAT THE COMELEC EXCEEDED ITS
JURISDICTION AND DENIED DUE PROCESS TO PETITIONER IN EXTENDING ITS INQUIRY BEYOND THE
ELECTION RECORDS OF "THE 878 VOTING CENTERS EXAMINED BY THE KB EXPERTS AND PASSED UPON BY
THE REGIONAL BOARD OF CANVASSERS" AND IN EXCLUDING FROM THE CANVASS THE RETURNS FORM
VOTING CENTERS SHOWING 90% TO 100% VOTING IN PLACES WHERE MILITARY OPERATIONS WERE
CERTIFIED BY THE ARMY TO BE GOING ON, THE SAME BEING UNSUPPORTED BY EVIDENCE.

THE SUPREME COURT FOUND NO GRAVE ABUSE OF DISCRETION IN THE ACTUATIONS OF THE COMELEC
AND IN MANDANGAN HELD (1) THAT CONSIDERING THE HISTORICAL ANTECEDENTS RELATIVE TO THE
HIGHLY QUESTIONABLE MANNER IN WHICH ELECTIONS HAVE BEEN HELD IN THE PAST IN THE PROVINCES
INVOLVED, THE COMELEC MAY DEEM SPURIOUS AND MANUFACTURED THE RETURNS IN VOTING
CENTERS SHOWING THAT THE VOTES OF THE CANDIDATES OBTAINING THE HIGHEST NUMBER OF VALID
VOTES EXCEEDED THE HIGHEST POSSIBLE NUMBER OF VOTES CAST THEREIN EVEN IF THE EXCESS NUMBER
OF VOTES WERE NOT MORE THAN 40%; AND (2) THAT THE COMELEC COULD EXTEND ITS INQUIRY BEYOND
THAT UNDERTAKEN BY THE BOARD OF CANVASSERS AND TAKE COGNIZANCE OF THE FACT THAT VOTING
CENTERS AFFECTED BY MILITARY OPERATIONS HAVE BEEN TRANSFERRED TO THE POBLACIONES,
BECAUSE AS A SUPERIOR BODY HAVING SUPERVISION AND CONTROL OVER THE BOARD OF CANVASSERS,
IT MAY DO DIRECTLY WHAT THE LATTER WAS SUPPOSED OR OUGHT TO HAVE DONE. IN ARATUC ET AL.,
THE SUPREME COURT FOUND THAT THE COMELEC DID CONSIDER THE HIGH PERCENTAGE OF VOTING
COUPLED WITH MASS SUBSTITUTE VOTING AS PROOF THAT THE PERTINENT RETURNS HAD BEEN
MANUFACTURED, AND THAT APART FROM PRESUMING REGULARITY IN THE PERFORMANCE OF ITS
DUTIES, THE COMELEC HAD ADHERED TO THE SUPREME COURT'S GUIDELINES IN EXAMINING AND
PASSING ON THE RETURNS FROM THE VOTING CENTERS AND IN DENYING PETITIONER'S MOTION FOR
THE OPENING OF BALLOT BOXES CONCERNED. FURTHER, THE HIGH COURT STATED, IT MIGHT DISAGREE
WITH THE COMELEC AS TO WHICH VOTING CENTER SHOULD BE EXCLUDED OR INCLUDED, BUT STILL A
CASE OF GRAVE ABUSE OF DISCRETION WOULD NOT COME OUT CONSIDERING THAT COMELEC, WHICH
CONCEDEDLY IS IN A BETTER POSITION TO APPRECIATE AND ASSESS THE VITAL CIRCUMSTANCES
CLEARLY AND ACCURATELY, CANNOT BE SAID TO HAVE ACTED WHIMSICALLY OR CAPRICIOUSLY, OR
WITHOUT BASIS.
PETITION DISMISSED.
SYLLABUS
OF THE RULING OF THE COURT
1. CONSTITUTIONAL LAW; NATURE AND EXTENT OF SUPREME COURT'S POWER OF CERTIORARI
OVER DECISIONS, ORDERS, AND RULINGS OF THE COMELEC UNDER THE 1978 CONSTITUTION. — WHILE
UNDER THE CONSTITUTION OF 1935 "THE DECISIONS, ORDERS, AND RULINGS OF THE COMMISSIONS
SHALL BE SUBJECT TO REVIEW BY THE SUPREME COURT" (SECTION 2, FIRST PAR., ARTICLE X), THE 1973
CONSTITUTION PROVIDES SOMEWHAT DIFFERENTLY THUS: "ANY DECISION, ORDER OR RULING OF THE
COMMISSION MAY BE BROUGHT TO THE SUPREME COURT ON CERTIORARI BY THE AGGRIEVED PARTY
WITHIN 30 DAYS FROM HIS RECEIPT OF A COPY THEREOF" (SECTION II, ARTICLE XII), EVEN AS IT ORDAINS
THAT THE COMMISSION SHALL "BE THE SOLE JUDGE OF ALL CONTESTS RELATING TO THE ELECTION
RETURNS AND QUALIFICATIONS OF ALL MEMBERS OF THE NATIONAL ASSEMBLY AND ELECTIVE
PROVINCIAL AND CITY OFFICIALS" (SECTION 2(2), ARTICLE XII). CORRESPONDINGLY, THE ELECTION CODE
OF 1978, WHICH IS THE FIRST LEGISLATIVE CONSTRUCTION OF THESE PERTINENT CONSTITUTIONAL
PROVISIONS, MAKES THE COMMISSION ALSO THE "SOLE JUDGE OF ALL PRE-PROCLAMATION
CONTROVERSIES" AND FURTHER PROVIDES THAT "ANY OF ITS DECISIONS, ORDERS OR RULINGS (IN SUCH
CONTROVERSIES) SHALL BE FINAL AND EXECUTORY", JUST AS IN ELECTION CONTESTS, "THE DECISIONS
OF THE COMMISSION SHALL BE FINAL AND APPEALABLE" (SECTION 192). THE FRAMERS OF THE NEW
CONSTITUTION MUST BE PRESUMED TO HAVE DEFINITE KNOWLEDGE OF WHAT ITS MEANS TO MAKE
THE DECISIONS, ORDERS AND RULINGS OF THE COMMISSION "SUBJECT TO REVIEW BY THE SUPREME
COURT". AND SINCE INSTEAD OF MAINTAINING THAT PROVISION INTACT, IT ORDAINED THAT THE
COMMISSION'S ACTUATIONS BE INSTEAD BROUGHT TO THE SUPREME COURT ON CERTIORARI", THE
SUPREME COURT CANNOT INSIST THAT THERE WAS NO INTENT TO CHANGE THE NATURE OF THE
REMEDY, CONSIDERING THAT THE LIMITED SCOPE OF CERTIORARI, COMPARED TO A REVIEW, IS WELL
KNOWN IN REMEDIAL LAW. A REVIEW INCLUDES DIGGING INTO THE MERITS OR UNEARTHING ERRORS
OF JUDGMENT, WHILE CERTIORARI DEALS EXCLUSIVELY WITH GRAVE ABUSE OF DISCRETION, WHICH
MAY NOT EXIST EVEN WHEN THE DECISION IS OTHERWISE ERRONEOUS. CERTIORARI IMPLIES
INDIFFERENT DISREGARD OF THE LAW, ARBITRARINESS AND CAPRICE, AN OMISSION TO WEIGH
PERTINENT CONSIDERATIONS, A DECISION ARRIVED AT WITHOUT RATIONAL DELIBERATION. WHILE THE
EFFECTS OF AN ERROR OF JUDGMENT MAY NOT DIFFER FROM THAT OF AN INDISCRETION, AS A MATTER
OF POLICY, THERE ARE MATTERS THAT BY THEIR NATURE OUGHT TO BE LEFT FOR FINAL DETERMINATION
TO THE SOUND DISCRETION OF CERTAIN OFFICERS OR ENTITIES, RESERVING IT TO THE SUPREME COURT
TO INSURE THE FAITHFUL OBSERVANCE OF DUE PROCESS ONLY IN CASES OF PATENT ARBITRARINESS.
2. CERTIORARI; GRAVE ABUSE OF DISCRETION; CONSIDERING AS SPURIOUS VOTES EXCEEDING THE
HIGHEST POSSIBLE NUMBER OF VALID VOTES THAT CAN BE CAST IN A VOTING CENTER, NOT A CASE OF.
— IT IS NOT GRAVE ABUSE OF DISCRETION FOR THE COMELEC TO DEEM AS SPURIOUS AND
MANUFACTURED VOTES EXCEEDING THE HIGHEST POSSIBLE NUMBER OF VALID VOTES THAT CAN BE CAST
IN A VOTING CENTER EVEN IF THE TOTAL NUMBER OF EXCESS VOTES IN THE VOTING CENTER IS NOT
MORE THAN 40%, CONSIDERING THE HISTORICAL ANTECEDENTS RELATIVE TO THE HIGHLY
QUESTIONABLE MANNER IN WHICH ELECTIONS HAVE BEEN HELD IN THE PAST IN THE PROVINCES
INVOLVED IN THIS CASE, OF WHICH THE SUPREME COURT HAS JUDICIAL NOTICE.
3. ID.; ID.; NOT A CASE OF; COMELEC MAY DO DIRECTLY WHAT THE BOARD OF CANVASSERS IS
SUPPOSED TO DO OR OUGHT TO HAVE DONE. — UNDER SECTION 168 OF THE REVISED ELECTION CODE
OF 1978, THE COMELEC SHALL HAVE DIRECT CONTROL AND SUPERVISION OF THE BOARD OF
CANVASSERS, AND THAT RELATEDLY SECTION 175 OF THE SAME CODE PROVIDES THAT IT "SHALL BE THE
SOLE JUDGE OF ALL PRE-PROCLAMATION CONTROVERSIES." THE AUTHORITY OF THE COMMISSION IN
REVIEWING ACTUATIONS OF THE BOARD OF CANVASSERS DOES NOT SPRING FROM ANY APPELLATE
JURISDICTION CONFERRED BY ANY SPECIFIC PROVISION OF LAW, FOR THERE IS NONE SUCH PROVISION
ANY WHERE IN THE ELECTION CODE, BUT FROM THE PLENARY PREROGATIVE OF DIRECT CONTROL AND
SUPERVISION ENDOWED BY SECTION 168 OF THE CODE. AND IN ADMINISTRATIVE LAW, IT IS A TOO WELL
SETTLED POSTULATE TO NEED ANY SUPPORTING CITATION, THAT A SUPERIOR BODY OR OFFICE HAVING
SUPERVISION AND CONTROL OVER ANOTHER MAY DO DIRECTLY WHAT THE LATTER IS SUPPOSED TO DO
OR OUGHT TO HAVE DONE.
4. ID.; ID.; ERRORS OF JUDGMENT NOT REVIEWABLE BY THE SUPREME COURT. — WHERE IT
APPEARS FROM THE RECORDS THAT THE COMELEC HAS TAKEN PAINS TO CONSIDER AS METICULOUSLY
AS THE NATURE OF THE EVIDENCE PRESENTED BY BOTH PARTIES WOULD PERMIT ALL THE CONTENTIONS
OF PETITIONERS RELATIVE TO THE WEIGHT THAT SHOULD BE GIVEN TO SUCH EVIDENCE, THE SUPREME
COURT WILL NOT HOLD THAT THE COMELEC ACTED WANTONLY AND ARBITRARILY IN DRAWING ITS
CONCLUSIONS. IF ERRORS THERE ARE IN ANY OF THOSE CONCLUSIONS, THEY ARE ERRORS OF
JUDGMENT WHICH ARE NOT REVIEWABLE IN CERTIORARI, SO LONG AS THEY ARE FOUNDED ON
SUBSTANTIAL EVIDENCE.
5. ID.; ID.; NOT A CASE OF; WHERE COMELEC PASSED UPON RETURNS USING COMMON SENSE AND
PERCEPTION ONLY; PRESUMPTION OF REGULARITY IN THE PERFORMANCE OF DUTIES. — WHERE THE
COMELEC DID NOT EXAMINE THE QUESTIONED ELECTION RETURNS WITH THE AID OF EXPERTS BUT
"USING COMMON SENSE AND PERCEPTION ONLY", APART FROM PRESUMING REGULARITY IN THE
PERFORMANCE OF ITS DUTIES, A CASE OF GRAVE ABUSE OF DISCRETION WOULD NOT COME OUT,
CONSIDERING THAT COMELEC CANNOT BE SAID TO HAVE ACTED WHIMSICALLY OR CAPRICIOUSLY OR
WITHOUT ANY RATIONAL BASIS, PARTICULARITY IF IT IS CONSIDERED THAT IN MANY RESPECTS AND
FROM THE VERY NATURE OF THE SUPREME COURT'S AND THE COMMISSION'S RESPECTIVE FUNCTIONS,
THE COMMISSION IS IN A BETTER POSITION TO APPRECIATE AND ASSESS THE VITAL CIRCUMSTANCES
CLOSELY AND ACCURATELY.
6. ID.; NON-IDENTIFICATION OF BALLOT BOXES IN DEFECTIVE CONDITIONS DOES NOT CONSTITUTE
GRAVE ABUSE OF DISCRETION WHERE COMELEC HAS EXAMINED, STUDIED AND PASSED UPON THE
RECORDS RELATED THERETO. — NON-IDENTIFICATION OF DEFECTIVE BALLOT BOXES BY THE COMELEC
DOES NOT CONSTITUTE GRAVE ABUSE OF DISCRETION WHERE IT HAS EXAMINED, STUDIED AND PASSED
UPON THE RECORDS RELATED THERETO. IF AT ALL, DEEPER INQUIRY INTO THIS POINT WOULD BE OF
REAL VALUE IN AN ELECTORAL PROTEST.

---------------------------------------------------------------
EN BANC
[G.R. NO. 167219. FEBRUARY 8, 2011.]
RUBEN REYNA AND LLOYD SORIA, PETITIONERS, VS. COMMISSION ON AUDIT, RESPONDENT.
DECISION
PERALTA, J P:
Before this Court is a Petition for certiorari, 1 under Rule 64 of the Rules of Court, seeking to set aside
Resolution No. 2004-046, 2 dated December 7, 2004, of the Commission on Audit (COA). ESTcIA
The facts of the case are as follows:
The Land Bank of the Philippines (Land Bank) was engaged in a cattle-financing program wherein loans
were granted to various cooperatives. Pursuant thereto, Land Bank's Ipil, Zamboanga del Sur Branch (Ipil
Branch) went into a massive information campaign offering the program to cooperatives.
Cooperatives who wish to avail of a loan under the program must fill up a Credit Facility Proposal (CFP)
which will be reviewed by the Ipil Branch. As alleged by Emmanuel B. Bartocillo, Department Manager of
the Ipil Branch, the CFP is a standard and prepared form provided by the Land Bank main office to be used
in the loan application as mandated by the Field Operations Manual. 3 One of the conditions stipulated in
the CFP is that prior to the release of the loan, a Memorandum of Agreement (MOA) between the supplier
of the cattle, Remad Livestock Corporation (REMAD), and the cooperative, shall have been signed
providing the level of inventory of stocks to be delivered, specifications as to breed, condition of health,
age, color, and weight. The MOA shall further provide for a buy-back agreement, technology, transfer,
provisions for biologics requirement and technical visits and replacement of sterile, unproductive stocks.
4 Allegedly contained in the contracts was a stipulation that the release of the loan shall be made sixty
(60) days prior to the delivery of the stocks. 5
The Ipil Branch approved the applications of four cooperatives. R.T. Lim Rubber Marketing Cooperative
(RT Lim RMC) and Buluan Agrarian Reform Beneficiaries MPC (BARBEMCO) were each granted two loans.
Tungawan Paglaum Multi-Purpose Cooperative (Tungawan PFMPC) and Siay Farmers' Multi-Purpose
Cooperative (SIFAMCO) were each granted one loan. Pursuant to the terms of the CFP, the cooperatives
individually entered into a contract with REMAD, denominated as a "Cattle-Breeding and Buy-Back
Marketing Agreement." 6
In December 1993, the Ipil Branch granted six loans to the four cooperative borrowers in the following
amounts: aScIAC
Date Name Amount Amount of Amount Paid
of of of Livestock to Cattle
Release Borrower Loan Insurance Supplier (REMAD)
12-10-93 RTLim RMC P795,305 P62,305 P733,000
12-10-93 BARBEMCO 482,825 37,825 445,000
12-16-93 Tungawan PFMPC 482,825 37,825 445,000
12-22-93 SIFAMCO 983,010 77,010 906,000
12-22-93 RTLim RMC 187,705 14,705 173,000
12-22-93 BARBEMCO 448,105 35,105 413,000
––––––––– ––––––– –––––––––
TOTAL P3,375,775 264,775 3,115,000 7
========= ====== ========
As alleged by petitioners, the terms of the CFP allowed for pre-payments or advancement of the payments
prior to the delivery of the cattle by the supplier REMAD. This Court notes, however, that copies of the
CFPs were not attached to the records of the case at bar. More importantly, the very contract entered
into by the cooperatives and REMAD, or the "Cattle-Breeding and Buy-Back Marketing Agreement" 8 did
not contain a provision authorizing prepayment.
Three checks were issued by the Ipil Branch to REMAD to serve as advanced payment for the cattle.
REMAD, however, failed to supply the cattle on the dates agreed upon.
In post audit, the Land Bank Auditor disallowed the amount of P3,115,000.00 under CSB No. 95-005
dated December 27, 1996 and Notices of Disallowance Nos. 96-014 to 96-019 in view of the non-delivery
of the cattle. 9 Also made as the basis of the disallowance was the fact that advanced payment was made
in violation of bank policies and COA rules and regulations. Specifically, the auditor found deficiencies in
the CFPs, to wit:
The Auditor commented that the failure of such loan projects deprived the farmer-beneficiaries the
opportunity to improve their economic condition.
From the Credit Facilities Proposals (CFP), the Auditor noted the following deficiencies. CcHDSA
xxx xxx xxx
4. No. 1 of the loan terms and conditions allowed prepayments without taking into consideration
the interest of the Bank. Nowhere in the documents reviewed disclosed about prepayment scheme with
REMAD, the supplier/dealer.
There was no justification for the prepayment scheme. Such is a clear deviation from existing procedures
on asset financing under which the Bank will first issue a "letter guarantee" for the account of the
borrower. Payment thereof will only be effected upon delivery of asset, inspection and acceptance of the
same by the borrower.
The prepayment arrangement also violates Section 88 of Presidential Decree (PD) No. 1445, to quote:
Prohibition against advance payment on government — Except with the prior approval of the President
(Prime Minister), the government shall not be obliged to make an advance payment for services not yet
rendered or for supplies and materials not yet delivered under any contract therefor. No payment,
partial or final shall be made on any such contract except upon a certification by the head of the agency
concerned to have effect that the services or supplies and materials have been delivered in accordance
with the terms of the contract and have been duly inspected and accepted.
Moreover, the Manual on FOG Lending Operations (page 35) provides the systems and procedures for
releasing loans, to quote:
Loan Proceeds Released Directly to the Supplier/Dealer — Proceeds of loans granted for the acquisition
of farm machinery equipment; and sub-loan components for the purchase of construction materials, farm
inputs, etc. shall be released directly to the accredited dealers/suppliers. Payment to the dealer shall be
made after presentation of reimbursement documents (delivery/official receipts/purchase orders)
acknowledged by the authorized LBP representative that same has been delivered. STIcaE
In cases where supplier requires Cash on Delivery (COD), the checks may be issued and the cooperative
and a LBP representative shall release the check to the supplier and then take delivery of the object of
financing." 10
The persons found liable by the Auditor for the amount of P3,115,000.00 which was advanced to REMAD
were the following employees of the Ipil Branch:
1. Emmanuel B. Bartocillo — Department Manager II
2. George G. Hebrona — Chief, Loans and Discounts Division
3. Petitioner Ruben A. Reyna — Senior Field Operations Specialist
4. Petitioner Lloyd V. Soria — Loans and Credit Analyst II
5. Mary Jane T. Cunting 11 — Cash Clerk IV
6. Leona O. Cabanatan — Bookkeeper III/Acting Accountant. 12
The same employees, including petitioners, were also made respondents in a Complaint filed by the COA
Regional Office No. IX, Zamboanga City, before the Office of the Ombudsman for Gross Negligence,
Violation of Reasonable Office Rules and Regulations, Conduct Prejudicial to the Interest of the Bank and
Giving Unwarranted Benefits to persons, causing undue injury in violation of Section 3 (e) of Republic Act
(R.A.) No. 3019, otherwise known as the Anti-Graft and Corrupt Practices Act. 13
On January 28, 1997, petitioners filed a Joint Motion for Reconsideration claiming that the issuance of the
Notice of Disallowance was premature in view of the pending case in the Office of the Ombudsman. The
Motion was denied by the Auditor. Unfazed, petitioners filed an appeal with the Director of COA Regional
Office No. IX, Zamboanga City. On August 29, 1997, the COA Regional Office issued Decision No. 97-001
affirming the findings of the Auditor. On February 4, 1998, petitioners filed a Motion for Reconsideration,
which was denied by the Regional Office in Decision No. 98-005 14 issued on February 18, 1998. CTacSE
Petitioners did not file a Petition for Review or a Notice of Appeal from the COA Regional Office Decision
as required under Section 3, Rule VI 15 of the 1997 Revised Rules of Procedure of the COA. Thus, the
Decision of the Director of COA Regional Office No. IX became final and executory pursuant to Section 51
16 of the Government Auditing Code of the Philippines. Consequently, on April 12, 1999, the Director of
the COA Regional Office No. IX issued a Memorandum to the Auditor directing him to require the
accountant of the Ipil Branch to record in their books of account the said disallowance. 17
On July 12, 1999, the Auditor sent a letter to the Land Bank Branch Manager requiring him to record
the disallowance in their books of account. On August 10, 1999, petitioners sent a letter 18 to COA
Regional Office No. IX, seeking to have the booking of the disallowance set aside, on the grounds that
they were absolved by the Ombudsman in a February 23, 1999 Resolution, 19 and that the Bangko
Sentral ng Pilipinas had approved the writing off of the subject loans.
The February 23, 1999 Resolution of the Ombudsman was approved by Margarito P. Gervacio, Jr. the
Deputy Ombudsman for Mindanao, the dispositive portion of which reads:
WHEREFORE, premises considered, the instant complaint is hereby dismissed for lack of sufficient
evidence.
SO ORDERED. 20
COA Regional Office No. IX endorsed to the Commission proper the matter raised by the petitioners in
their August 10, 1999 letter. This is contained in its February 28, 2000 letter/endorsement, 21 wherein
the Director of COA Regional Office No. IX maintained his stand that the time for filing of a petition for
review had already lapsed. The Regional Director affirmed the disallowance of the transactions since the
same were irregular and disadvantageous to the government, notwithstanding the Ombudsman
resolution absolving petitioners from fault.
In a Notice 22 dated June 29, 2000, the COA requested petitioners to submit a reply in response to the
letter/endorsement of the Regional Office Director. On August 10, 2000, petitioners submitted their
Compliance/Reply, 23 wherein they argued that the Ombudsman Resolution is a supervening event and
is a sufficient ground for exemption from the requirement to submit a Petition for Review or a Notice of
Appeal to the Commission proper. Petitioners also argued that by invoking the jurisdiction of the
Commission proper, the Regional Director had waived the fact that the case had already been resolved
for failure to submit the required Petition for Review. cIHCST
On July 17, 2003, the COA rendered Decision No. 2003-107 24 affirming the rulings of the Auditor and the
Regional Office, to wit:
WHEREFORE, foregoing premises considered, this Commission hereby affirms both the subject
disallowance amounting to P3,115,000 and the Order of the Director, COA Regional Office No. IX,
Zamboanga City, directing the recording of subject disallowance in the LBP books of accounts. This is,
however, without prejudice to the right of herein appellants to run after the supplier for reimbursement
of the advance payment for the cattle. 25
In denying petitioners request for the lifting of the booking of the disallowance, the COA ruled that after
a circumspect evaluation of the facts and circumstances, the dismissal by the Office of the Ombudsman
of the complaint did not affect the validity and propriety of the disallowance which had become final and
executory. 26
On August 22, 2003, petitioners filed a Motion for Reconsideration, which was, however, denied by the
COA in a Resolution 27 dated December 7, 2004.
Hence, herein petition, with petitioners raising the following grounds in support of the petition, to wit:
RESPONDENT COA COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF JURISDICTION
IN DECLARING THE PREPAYMENT STIPULATION IN THE CONTRACT BETWEEN THE BANK AND REMAD
PROSCRIBED BY SECTION 103 OF P.D. NO. 1445, OTHERWISE KNOWN AS THE STATE AUDIT CODE OF THE
PHILIPPINES.
RESPONDENT COA COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF JURISDICTION
FOR HOLDING THE PETITIONERS ADMINISTRATIVELY LIABLE FOR HAVING PROCESSED THE LOANS OF THE
BORROWING COOPERATIVES IN ACCORDANCE WITH THE BANK'S MANUAL (FOG) LENDING OPERATIONS.
RESPONDENT COA COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF JURISDICTION
WHEN IT HELD THE PETITIONERS LIABLE AND, THEREFORE, IN EFFECT LIKEWISE OBLIGATED TO REFUND
THE DISALLOWED AMOUNT EVEN AS AMONG OTHER THINGS THEY ACTED IN EVIDENT GOOD FAITH.
MORE SO, AS THE COLLECTIBLES HAVE BEEN ALREADY EFFECTIVELY WRITTEN-OFF. 28 ACaDTH
The petition is not meritorious.
I.
Anent the first issue raised by petitioners, the same is without merit. Petitioners argue said issue on three
points: first, the COA is estopped from declaring the prepayment stipulation as invalid; 29 second, the
prepayment clause in the Land Bank-REMAD contract is valid; 30 and third, it is a matter of judicial
knowledge that is not unusual for winning bidders involving public works to enter into contracts with the
government providing for partial prepayment of the contract price in the form of mobilization funds. 31
As to their contention that the COA is estopped from declaring the prepayment stipulation as invalid,
petitioners argue in the wise:
xxx xxx xxx
The CATTLE BREEDING AND BUY BACK MARKETING AGREEMENT sample of which is attached as Annex "I"
was a Contract prepared by the bank and REMAD, it was agreed to by the cooperatives. It was a standard
Contract used in twenty two (22) Land Bank branches throughout the country. It provided in part:
6.1 That the release of the loan shall be made directly to the supplier 60 days prior to the delivery of
stocks per prepayment term of REMAD LIVESTOCK CORPORATION (supplier). Inspection shall be done
before the 60th day/delivery of the stocks.
Again, these Contracts were standard bank forms from Land Bank head office. None of the Petitioners
participated in the drafting of the same. 32
In the absence of grave abuse of discretion, questions of fact cannot be raised in a petition for certiorari,
under Rule 64 of the Rules of Court. The office of the petition for certiorari is not to correct simple errors
of judgment; any resort to the said petition under Rule 64, in relation to Rule 65, of the 1997 Rules of
Civil Procedure is limited to the resolution of jurisdictional issues. 33 Accordingly, since the validity of
the prepayment scheme is inherently a question of fact, the same should no longer be looked into by this
Court. aHCSTD
In any case, even assuming that factual questions may be entertained, the facts do not help petitioners'
cause for the following reasons: first, the supposed Annex "I" does not contain a stipulation authorizing a
pre-payment scheme; and second, petitioners clearly violated the procedure of releasing loans contained
in the Bank's Manual on Field Office Guidelines on Lending Operations (Manual on Lending Operations).
A perusal of the aforementioned Annex "I," 34 the Cattle-Breeding and Buy-Back Marketing Agreement,
would show that stipulation "6.1" which allegedly authorizes prepayment does not exist. To make matters
problematic is that nowhere in the records of the petition can one find a document which embodies such
a stipulation. It bears stressing that the Auditor noted in his report that, "nowhere in the documents
reviewed disclosed about prepayment scheme with REMAD, the supplier/dealer."
Moreover, it is surprising that one of petitioners' defense is that they processed the cooperatives'
applications in accordance with their individual job descriptions as provided in the Bank's Manual on Field
Office Guidelines on Lending Operations 35 when, on the contrary, petitioners seem to be oblivious of the
fact that they clearly violated the procedure in releasing loans which is embodied in the very same
Manual on Lending Operations, to wit:
Loan Proceeds Released Directly to the Supplier/Dealer — Proceeds of loans granted for the acquisition
of farm machinery equipment; and sub-loan components for the purchase of construction materials, farm
inputs, etc. shall be released directly to the accredited dealers/suppliers. Payment to the dealer shall be
made after presentation of reimbursement documents (delivery/official receipts/purchase orders)
acknowledged by the authorized LBP representative that same has been delivered. 36
However, this Court is not unmindful of the fact that petitioners contend that the Legal Department of
Land Bank supposedly passed upon the issue of application of Section 88 of PD 1445. Petitioners argue
that in an alleged August 22, 1996 Memorandum issued by the Land Bank, it opined that Section 88 of PD
1445 is not applicable. 37 Be that as it may, this Court is again constrained by the fact that petitioners did
not offer in evidence the alleged August 22, 1996 Land Bank Memorandum. Therefore, the supposed
tenor of the said document deserves scant consideration. In any case, even assuming arguendo that
petitioners are correct in their claim, they still cannot hide from the fact that they violated the procedure
in releasing loans embodied in the Manual on Lending Operations as previously discussed. ASaTHc
To emphasize, the Auditor noted that "nowhere in the documents reviewed disclosed about prepayment
scheme with REMAD." It is well settled that findings of fact of quasi-judicial agencies, such as the COA, are
generally accorded respect and even finality by this Court, if supported by substantial evidence, in
recognition of their expertise on the specific matters under their jurisdiction. 38 If the prepayment scheme
was in fact authorized, petitioners should have produced the document to prove such fact as alleged by
them in the present petition. However, as stated before, even this Court is at a loss as to whether the
prepayment scheme was authorized as a review of "Annex I," the document to which petitioners base
their authority to make advance payments, does not contain such a stipulation or provision. Highlighted
also is the fact that petitioners clearly violated the procedure in releasing loans found in the Manual on
Lending Operations which provides that payments to the dealer shall only be made after presentation of
reimbursement documents acknowledged by the authorized LBP representative that the same has been
delivered.
In addition, this Court notes that much reliance is made by petitioners on their allegation that the terms
of the CFP allowed for prepayments or advancement of the payments prior to the delivery of the cattle
by the supplier REMAD. It appears, however, that a CFP, even if admittedly a pro forma contract and
emanating from the Land Bank main office, is merely a facility proposal and not the contract of loan
between Land Bank and the cooperatives. It is in the loan contract that the parties embody the terms
and conditions of a transaction. If there is any agreement to release the loan in advance to REMAD as a
form of prepayment scheme, such a stipulation should exist in the loan contract. There is, nevertheless,
no proof of such stipulation as petitioners had failed to attach the CFPs or the loan contracts relating to
the present petition.
Based on the foregoing, the COA should, therefore, not be faulted for finding that petitioners facilitated
the commission of the irregular transaction. The evidence they presented before the COA was insufficient
to prove their case. So also, even this Court is at a loss as to the truthfulness and veracity of petitioners'
allegations as they did not even present before this Court the documents that would serve as the basis
for their claims. DEHaTC
II.
Anent the second ground raised by petitioners, the same is again without merit. Petitioners impute on
the COA grave abuse of discretion when it held petitioners administratively liable for having processed
the loans of the borrowing cooperatives. This Court stresses, however, that petitioners cannot rely on
their supposed observance of the procedure outlined in the Manual on Lending Operations when clearly
the same provides that "payment to the dealer shall be made after presentation of reimbursement
documents (delivery/official receipts/purchase orders) acknowledged by the authorized LBP
representative that the same has been delivered." Petitioners have not made a case to dispute the COA's
finding that they violated the foregoing provision. Any presumption, therefore, that public officials are in
the regular performance of their public functions must necessarily fail in the presence of an explicit rule
that was violated.
There is no grave abuse of discretion on the part of the COA as petitioners were given all the opportunity
to argue their case and present any supporting evidence with the COA Regional Director. Moreover, it
bears to point out that even if petitioners' period to appeal had already lapsed, the COA Commission
Proper even resolved their August 10, 1999 letter where they raised in issue the favorable ruling of the
Ombudsman.
III.
Anent, the last issue raised by petitioners, the same is without merit. Petitioners contend that
respondent's Order, requiring them to refund the disallowed transaction, is functus officio, the amount
having been legally written-off. 39
A perusal of the records would show that Land Bank Vice-President Conrado B. Roxas sent a Memorandum
40 dated August 5, 1998 to the Head of the Ipil Branch, advising them that the accounts subject of the
present petition have been written-off, to wit:
We are pleased to inform you that Bangko Sentral ng Pilipinas (BSP) in its letter dated July 20, 1998 has
approved the write-off of your recommended Agrarian Reform Loan Accounts and Commercial Loan
Accounts as covered by LBP Board Resolution Nos. 98-291 and 98-292, respectively, both dated June 18,
1998 . . . . 41 CIHAED
The Schedule of Accounts for Write-Off 42 attached to the August 5, 1998 Memorandum shows that the
same covered the two loans given to BARBEMCO, the two loans given to RTLim RMC, and the only loan
given to Tungawan PFPMC. The total amount approved for write-off was P2,209,000.00. 43 Moreover,
petitioners contend that the last loan given to SIFAMCO was also the subject of a write-off in a similar
advice given to the Buug Branch. The total approved write-off in the second Memorandum 44 was for
P906,000.00.
In its Comment, 45 the COA argues that the fact that the audit disallowance was allegedly written-off is
of no moment. Respondent maintains that Section 66 of PD 1445 46 expressly granted unto it the right to
compromise monetary liabilities of the government. 47 The COA, thus, theorizes that without its approval,
the alleged write-off is ineffectual. The same argument was reiterated by the COA in its Memorandum.
48
The COA's argument deserves scant consideration.
A write-off is a financial accounting concept that allows for the reduction in value of an asset or earnings
by the amount of an expense or loss. It is a means of removing bad debts from the financial records of
the business.
In Land Bank of the Philippines v. Commission on Audit, 49 this Court ruled that Land Bank has the power
and authority to write-off loans, to wit:
LBP was created as a body corporate and government instrumentality to provide timely and adequate
financial support in all phases involved in the execution of needed agrarian reform (Rep. Act No. 3844, as
amended, Sec. 74). Section 75 of its Charter vests in LBP specific powers normally exercised by banking
institutions, such as the authority to grant short, medium and long-term loans and advances against
security of real estate and/or other acceptable assets; to guarantee acceptance(s), credits, loans,
transactions or obligations; and to borrow from, or rediscount notes, bills of exchange and other
commercial papers with the Central Bank. In addition to the enumeration of specific powers granted to
LBP, Section 75 of its Charter also authorizes it:
12. To exercise the general powers mentioned in the Corporation Law and the General Banking Act,
as amended, insofar as they are not inconsistent or incompatible with this Decree. cSIACD
One of the general powers mentioned in the General Banking Act is that provided for in Section 84 thereof,
reading:
xxx xxx xxx
Writing-off loans and advances with an outstanding amount of one hundred thousand pesos or more shall
require the prior approval of the Monetary Board (As amended by PD 71).
It will, thus, be seen that LBP is a unique and specialized banking institution, not an ordinary "government
agency" within the scope of Section 36 of Pres. Decree No. 1445. As a bank, it is specifically placed under
the supervision and regulation of the Central Bank of the Philippines pursuant to its Charter (Sec. 97, Rep.
Act No. 3844, as amended by Pres. Decree No. 251). In so far as loans and advances are concerned,
therefore, it should be deemed primarily governed by Central Bank Circular No. 958, Series of 1983, which
vests the determination of the frequency of writing-off loans in the Board of Directors of a bank provided
that the loans written-off do not exceed a certain aggregate amount. The pertinent portion of that Circular
reads:
b. Frequency/ceiling of write-off. The frequency for writing-off loans and advances shall be left to
the discretion of the Board of Directors of the bank concerned. Provided, that the aggregate amount of
loans and advances which may be written-off during the year, shall in no case exceed 3% of total loans
and investments; Provided, further, that charge-offs are made against allowance for possible losses,
earnings during the year and/or retained earnings. 50
While the power to write-off is not expressly granted in the charter of the Land Bank, it can be logically
implied, however, from the Land Bank's authority to exercise the general powers vested in banking
institutions as provided in the General Banking Act (Republic Act 337). The clear intendment of its charter
is for the Land Bank to be clothed not only with the express powers granted to it, but also with those
implied, incidental and necessary for the exercise of those express powers. 51
In the case at bar, it is thus clear that the writing-off of the loans involved was a valid act of the Land Bank.
In writing-off the loans, the only requirement for the Land Bank was that the same be in accordance with
the applicable Bangko Sentral circulars, it being under the supervision and regulation thereof. The Land
Bank recommended for write-off all six loans granted to the cooperatives, and it is worthy to note that
the Bangko Sentral granted the same. The write-offs being clearly in accordance with law, the COA should,
therefore, adhere to the same, unless under its general audit jurisdiction under PD 1445, it finds that
under Section 25 (1) the fiscal responsibility that rests directly with the head of the government agency
has not been properly and effectively discharged. TcDAHS
On this note, the reliance of respondent on Section 66 of PD 1445 is baseless as a reading thereof would
show that the same does not pertain to the COA's power to compromise claims. Probably, what
respondent wanted to refer to was Section 36 which provides:
Section 36. Power to compromise claims. —
1. When the interest of the government so requires, the Commission may compromise or release in
whole or in part, any claim or settled liability to any government agency not exceeding ten thousand pesos
and with the written approval of the Prime Minister, it may likewise compromise or release any similar
claim or liability not exceeding one hundred thousand pesos, the application for relief therefrom shall be
submitted, through the Commission and the Prime Minister, with their recommendations, to the National
Assembly.
2. The respective governing bodies of government-owned or controlled corporations, and self-
governing boards, commissions or agencies of the government shall have the exclusive power to
compromise or release any similar claim or liability when expressly authorized by their charters and if in
their judgment, the interest of their respective corporations or agencies so requires. When the charters
do not so provide, the power to compromise shall be exercised by the Commission in accordance with the
preceding paragraph.
xxx xxx xxx 52
Under Section 36, the use of the word "may" shows that the power of the COA to compromise claims is
only permissive, and not mandatory. Further, the second paragraph of Section 36 clearly states that
respective governing bodies of government-owned or controlled corporations, and self-governing boards,
commissions or agencies of the government shall have the exclusive power to compromise or release any
similar claim or liability when expressly authorized by their charters. Nowhere in Section 36 does it state
that the COA must approve a compromise made by a government agency; the only requirement is that it
be authorized by its charter. It, therefore, bears to stress that the COA does not have the exclusive
prerogative to settle and compromise liabilities to the Government.
The foregoing pronouncements notwithstanding, this Court rules that writing-off a loan does not equate
to a condonation or release of a debt by the creditor. HDIATS
As an accounting strategy, the use of write-off is a task that can help a company maintain a more accurate
inventory of the worth of its current assets. In general banking practice, the write-off method is used
when an account is determined to be uncollectible and an uncollectible expense is recorded in the books
of account. If in the future, the debt appears to be collectible, as when the debtor becomes solvent, then
the books will be adjusted to reflect the amount to be collected as an asset. In turn, income will be credited
by the same amount of increase in the accounts receivable.
Write-off is not one of the legal grounds for extinguishing an obligation under the Civil Code. 53 It is not a
compromise of liability. Neither is it a condonation, since in condonation gratuity on the part of the obligee
and acceptance by the obligor are required. 54 In making the write-off, only the creditor takes action by
removing the uncollectible account from its books even without the approval or participation of the
debtor.
Furthermore, write-off cannot be likened to a novation, since the obligations of both parties have not
been modified. 55 When a write-off occurs, the actual worth of the asset is reflected in the books of
accounts of the creditor, but the legal relationship between the creditor and the debtor still remains the
same — the debtor continues to be liable to the creditor for the full extent of the unpaid debt.
Based on the foregoing, as creditor, Land Bank may write-off in its books of account the advance payment
released to REMAD in the interest of accounting accuracy given that the loans were already uncollectible.
Such write-off, however, as previously discussed, does not equate to a release from liability of petitioners.
Accordingly, the Land Bank Ipil Branch must be required to record in its books of account the
Php3,115,000.00 disallowance, and petitioners, together with their four co-employees, 56 should be
personally liable for the said amount. Such liability, is, however, without prejudice to petitioners' right to
run after REMAD, to whom they illegally disbursed the loan, for the full reimbursement of the advance
payment for the cattle as correctly ruled by the COA in its July 17, 2003 Decision. 57
On a final note, it bears to point out that a cursory reading of the Ombudsman's resolution will show that
the complaint against petitioners was dismissed not because of a finding of good faith but because of a
finding of lack of sufficient evidence. While the evidence presented before the Ombudsman may not have
been sufficient to overcome the burden in criminal cases of proof beyond reasonable doubt, 58 it does
not, however, necessarily follow, that the administrative proceedings will suffer the same fate as only
substantial evidence is required, or that amount of relevant evidence which a reasonable mind might
accept as adequate to justify a conclusion. 59 ACcEHI
An absolution from a criminal charge is not a bar to an administrative prosecution or vice versa. 60 The
criminal case filed before the Office of the Ombudsman is distinct and separate from the proceedings on
the disallowance before the COA. So also, the dismissal by Margarito P. Gervacio, Jr., Deputy Ombudsman
for Mindanao, of the criminal charges against petitioners does not necessarily foreclose the matter of
their possible liability as warranted by the findings of the COA.
In addition, this Court notes that the Ombudsman's Resolution relied on an alleged "April 6, 1992
Memorandum of the Field Loans Review Department" which supposedly authorized the Field Offices to
undertake a prepayment scheme. On the other hand, the same Ombudsman's Resolution also made
reference to a "January 19, 1994 Memorandum of EVP Diaz" and a "May 31, 1994 Memorandum of VP
FSD" which tackled the prohibition on advance payment to suppliers. All these documents, however, were
again not attached to the records of the case at bar. Particularly, the supposed "April 6, 1992
Memorandum of the Field Loans Review Department" was not even mentioned nor raised by petitioners
as a defense in herein petition.
The decisions and resolutions emanating from the COA did not tackle the supposed April 6, 1992
Memorandum of the Field Loans Review Department which allegedly authorized the Field Offices to
undertake a prepayment scheme. While it is possible that such document would have shown that
petitioners were in good faith, the same should have been presented by them in the proceedings before
the Commission proper — an act which they were not able to do because of their own negligence in
allowing the period to file an appeal to lapse. The April 6, 1992 Memorandum of the Field Loans Review
Department would have been the best evidence to free petitioners from their liability. It appears,
however, that they did not present the same before the COA and it is already too late in the day for
them to present such document before this Court.

Petitioners' allegation of grave abuse of discretion by the COA implies such capricious and whimsical
exercise of judgment as is equivalent to lack of jurisdiction or, in other words, the exercise of the power
in an arbitrary manner by reason of passion, prejudice, or personal hostility; and it must be so patent
or gross as to amount to an evasion of a positive duty or to a virtual refusal to perform the duty enjoined
or to act at all in contemplation of law. 61 It is imperative for petitioners to show caprice and
arbitrariness on the part of the COA whose exercise of discretion is being assailed. Proof of such grave
abuse of discretion, however, is wanting in this case. aESIDH
WHEREFORE, premises considered, the petition is DENIED. Decision No. 2003-107 dated July 17, 2003 and
Resolution No. 2004-046 dated December 7, 2004, of the Commission on Audit, are hereby AFFIRMED.
SO ORDERED.
Corona, C.J., Carpio, Carpio Morales, Brion, Bersamin, Villarama, Jr., Perez and Mendoza, JJ., concur.
Velasco, Jr., Leonardo-de Castro, Del Castillo and Sereno, JJ., join the dissent of Justice Abad.
Nachura, J., took no part. Filed pleading as Solicitor General.
Abad, J., see my dissenting opinion.

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NILO T. PATES, petitioner, vs. COMMISSION ON ELECTIONS and EMELITA B. ALMIRANTE, respondents.
RESOLUTION
BRION, J p:
Our Resolution of November 11, 2008 dismissed the petition in caption pursuant to Section 3, Rule 64 of
the Rules of Court which provides: HECTaA
SEC. 3. Time to file petition. — The petition shall be filed within thirty (30) days from notice of the
judgment or final order or resolution sought to be reviewed. The filing of a motion for new trial or
reconsideration of said judgment or final order or resolution, if allowed under the procedural rules of the
Commission concerned, shall interrupt the period herein fixed. If the motion is denied, the aggrieved party
may file the petition within the remaining period, but which shall not be less than five (5) days in any
event, reckoned from notice of denial.
taking into account the following material antecedents:
a. February 1, 2008 — The COMELEC First Division issued its Resolution (assailed in the petition);
b. February 4, 2008 — The counsel for petitioner Nilo T. Pates (petitioner) received a copy of the
February 1, 2008 Resolution; TAEcSC
c. February 8, 2008 — The petitioner filed his motion for reconsideration (MR) of the February 1,
2008 Resolution (4 days from receipt of the February 1, 2008 Resolution)
d. September 18, 2008 — The COMELEC en banc issued a Resolution denying the petitioner's MR
(also assailed in the petition).
e. September 22, 2008 — The petitioner received the COMELEC en banc Resolution of September
18, 2008 AaITCH
Under this chronology, the last day for the filing of a petition for certiorari, i.e., 30 days from notice of the
final COMELEC Resolution, fell on a Saturday (October 18, 2008), as the petitioner only had the remaining
period of 26 days to file his petition, after using up 4 days in preparing and filing his Motion for
Reconsideration. Effectively, the last day for filing was October 20, 2008 — the following Monday or the
first working day after October 18, 2008. The petitioner filed his petition with us on October 22, 2008 or
two days late; hence, our Resolution of dismissal of November 11, 2008.
The Motion for Reconsideration
The petitioner asks us in his "Urgent Motion for Reconsideration with Reiteration for the Issuance of a
Temporary Restraining Order" to reverse the dismissal of his petition, arguing that the petition was
seasonably filed under the fresh period rule enunciated by the Supreme Court in a number of cases
decided beginning the year 2005. The "fresh period" refers to the original period provided under the Rules
of Court counted from notice of the ruling on the motion for reconsideration by the tribunal below,
without deducting the period for the preparation and filing of the motion for reconsideration. SIDTCa
He claims that, historically, the fresh period rule was the prevailing rule in filing petitions for certiorari.
This Court, he continues, changed this rule when it promulgated the 1997 Rules of Civil Procedure and
Circular No. 39-98, which both provided for the filing of petitions within the remainder of the original
period, the "remainder" being the original period less the days used up in preparing and filing a motion
for reconsideration. He then points out that on September 1, 2000 or only three years after, this Court
promulgated A.M. No. 00-02-03-SC bringing back the fresh period rule. According to the petitioner, the
reason for the change, which we supposedly articulated in Narzoles v. National Labor Relations
Commission, 1 was the tremendous confusion generated by Circular No. 39-98.
The fresh period rule, the petitioner further asserts, was subsequently applied by this Court in the
following cases:
(1) Neypes v. Court of Appeals 2 which thenceforth applied the fresh eriod rule to ordinary appeals
of decisions of the Regional Trial Court to the Court of Appeals; SDAcaT
(2) Spouses de los Santos v. Vda. de Mangubat 3 reiterating Neypes;
(3) Active Realty and Development Corporation v. Fernandez 4 which, following Neypes, applied the
fresh period rule to ordinary appeals from the decisions of the Municipal Trial Court to the Regional Trial
Court; and
(4) Romero v. Court of Appeals 5 which emphasized that A.M. No. 00-02-03-SC is a curative statute
that may be applied retroactively.
A reading of the ruling in these cases, the petitioner argues, shows that this Court has consistently held
that the order or resolution denying the motion for reconsideration or new trial is considered as the final
order finally disposing of the case, and the date of its receipt by a party is the correct reckoning point for
counting the period for appellate review. CADSHI
The Respondent's Comment
We asked the respondents to comment on the petitioner's motion for reconsideration. The Office of the
Solicitor General (OSG), citing Section 5, Rule 65 of the Rules of Court and its related cases, asked via a
"Manifestation and Motion" that it be excused from filing a separate comment. We granted the OSG's
manifestation and motion.
For her part, respondent Emelita B. Almirante (respondent Almirante) filed a comment stating that: (1)
we are absolutely correct in concluding that the petition was filed out of time; and (2) the petitioner's
reliance on Section 4, Rule 65 of the Rules of Court (as amended by A.M. No. 00-02-03-SC) is totally
misplaced, as Rule 64, not Rule 65, is the vehicle for review of judgments and final orders or resolutions
of the COMELEC. Respondent Almirante points out that Rule 64 and Rule 65 are different; Rule 65 provides
for a 60-day period for filing petitions for certiorari, while Rule 64 provides for 30 days.
OUR RULING
We do not find the motion for reconsideration meritorious.
A. As a Matter of Law
Section 7, Article IX-A of the Constitution provides that unless otherwise provided by the Constitution or
by law, any decision, order, or ruling of each Commission may be brought to the Court on certiorari by the
aggrieved party within 30 days from receipt of a copy thereof. For this reason, the Rules of Court provide
for a separate rule (Rule 64) specifically applicable only to decisions of the COMELEC and the Commission
on Audit. This Rule expressly refers to the application of Rule 65 in the filing of a petition for certiorari,
subject to the exception clause — "except as hereinafter provided". 6 SaIACT
Even a superficial reading of the motion for reconsideration shows that the petitioner has not challenged
our conclusion that his petition was filed outside the period required by Section 3, Rule 64; he merely
insists that the fresh period rule applicable to a petition for certiorari under Rule 65 should likewise apply
to petitions for certiorari of COMELEC rulings filed under Rule 64.
Rule 64, however, cannot simply be equated to Rule 65 even if it expressly refers to the latter rule. They
exist as separate rules for substantive reasons as discussed below. Procedurally, the most patent
difference between the two — i.e., the exception that Section 2, Rule 64 refers to — is Section 3 which
provides for a special period for the filing of petitions for certiorari from decisions or rulings of the
COMELEC en banc. The period is 30 days from notice of the decision or ruling (instead of the 60 days
that Rule 65 provides), with the intervening period used for the filing of any motion for reconsideration
deductible from the originally-granted 30 days (instead of the fresh period of 60 days that Rule 65
provides). HICATc
Thus, as a matter of law, our ruling of November 11, 2008 to dismiss the petition for late filing cannot but
be correct. This ruling is not without its precedent; we have previously ordered a similar dismissal in the
earlier case of Domingo v. Commission on Elections. 7 The Court, too, has countless times in the past
stressed that the Rules of Court must be followed. Thus, we had this to say in Fortich v. Corona: 8
Procedural rules, we must stress, should be treated with utmost respect and due regard since they are
designed to facilitate the adjudication of cases to remedy the worsening problem of delay in the resolution
of rival claims and in the administration of justice. The requirement is in pursuance to the bill of rights
inscribed in the Constitution which guarantees that "all persons shall have a right to the speedy disposition
of their before all judicial, quasi-judicial and administrative bodies," the adjudicatory bodies and the
parties to a case are thus enjoined to abide strictly by the rules. While it is true that a litigation is not a
game of technicalities, it is equally true that every case must be prosecuted in accordance with the
prescribed procedure to ensure an orderly and speedy administration of justice. There have been some
instances wherein this Court allowed a relaxation in the application of the rules, but this flexibility was
"never intended to forge a bastion for erring litigants to violate the rules with impunity." A liberal
interpretation and application of the rules of procedure can be resorted to only in proper cases and under
justifiable causes and circumstances. (Emphasis supplied) ISCDEA
As emphasized above, exceptional circumstances or compelling reasons may have existed in the past
when we either suspended the operation of the Rules or exempted a particular case from their
application. 9 But, these instances were the exceptions rather than the rule, and we invariably took this
course of action only upon a meritorious plea for the liberal construction of the Rules of Court based on
attendant exceptional circumstances. These uncommon exceptions allowed us to maintain the stability of
our rulings, while allowing for the unusual cases when the dictates of justice demand a correspondingly
different treatment.
Under this unique nature of the exceptions, a party asking for the suspension of the Rules of Court comes
to us with the heavy burden of proving that he deserves to be accorded exceptional treatment. Every plea
for a liberal construction of the Rules must at least be accompanied by an explanation of why the party-
litigant failed to comply with the rules and by a justification for the requested liberal construction. 10
Significantly, the petitioner presented no exceptional circumstance or any compelling reason to warrant
the non-application of Section 3, Rule 64 to his petition. He failed to explain why his filing was late.
Other than his appeal to history, uniformity, and convenience, he did not explain why we should adopt
and apply the fresh period rule to an election case. EHSADc
To us, the petitioner's omissions are fatal, as his motion does not provide us any reason specific to his
case why we should act as he advocates.
B. As a Matter of Policy
In harking back to the history of the fresh period rule, what the petitioner apparently wants — for reasons
of uniformity and convenience — is the simultaneous amendment of Section 3, Rule 64 and the
application of his proposed new rule to his case. To state the obvious, any amendment of this provision is
an exercise in the power of this Court to promulgate rules on practice and procedure as provided by
Section 5 (5), Article VIII of the Constitution. Our rulemaking, as every lawyer should know, is different
from our adjudicatory function. Rulemaking is an act of legislation, directly assigned to us by the
Constitution, that requires the formulation of policies rather than the determination of the legal rights
and obligations of litigants before us. As a rule, rulemaking requires that we consult with our own
constituencies, not necessarily with the parties directly affected in their individual cases, in order to
ensure that the rule and the policy that it enunciates are the most reasonable that we can promulgate
under the circumstances, taking into account the interests of everyone — not the least of which are the
constitutional parameters and guidelines for our actions. We point these out as our adjudicatory powers
should not be confused with our rulemaking prerogative.
We acknowledge that the avoidance of confusion through the use of uniform standards is not without its
merits. We are not unmindful, too, that no less than the Constitution requires that "motions for
reconsideration of [division] decisions shall be decided by the Commission en banc". 11 Thus, the ruling
of the Commission en banc on reconsideration is effectively a new ruling rendered separately and
independently from that made by a division. SEcITC
Counterbalanced against these reasons, however, are other considerations no less weighty, the most
significant of which is the importance the Constitution and this Court, in obedience to the Constitution,
accord to elections and the prompt determination of their results. Section 3, Article IX-C of the
Constitution expressly requires that the COMELEC's rules of procedure should expedite the disposition of
election cases. This Court labors under the same command, as our proceedings are in fact the
constitutional extension of cases that start with the COMELEC.
Based on these considerations, we do not find convenience and uniformity to be reasons sufficiently
compelling to modify the required period for the filing of petitions for certiorari under Rule 64. While
the petitioner is correct in his historical data about the Court's treatment of the periods for the filing of
the different modes of review, he misses out on the reason why the period under Section 3, Rule 64 has
been retained. The reason, as made clear above, is constitutionally-based and is no less than
the importance our Constitution accords to the prompt determination of election results. This reason
far outweighs convenience and uniformity. We significantly note that the present petition itself,
through its plea for the grant of a restraining order, recognizes the need for haste in deciding election
cases.
C. Our Liberal Approach
Largely for the same reason and as discussed below, we are not inclined to suspend the rules to come to
the rescue of a litigant whose counsel has blundered by reading the wrong applicable provision. The Rules
of Court are with us for the prompt and orderly administration of justice; litigants cannot, after resorting
to a wrong remedy, simply cry for the liberal construction of these rules. 12 Our ruling in Lapid v. Laurea
13 succinctly emphasized this point when we said: cIECaS
Members of the bar are reminded that their first duty is to comply with the rules of procedure, rather
than seek exceptions as loopholes. Technical rules of procedure are not designed to frustrate the ends of
justice. These are provided to effect the prompt, proper and orderly disposition of cases and, thus,
effectively prevent the clogging of court dockets. Utter disregard of these rules cannot justly be
rationalized by harking on the policy of liberal construction. [Emphasis supplied.]
We add that even for this Court, liberality does not signify an unbridled exercise of discretion. It has its
limits; to serve its purpose and to preserve its true worth, it must be exercised only in the most
appropriate cases. 14
WHEREFORE, premises considered, we DENY the motion for reconsideration for lack of merit. Our
Resolution of November 11, 2008 is hereby declared FINAL. Let entry of judgment be made in due course.
EcTIDA
SO ORDERED.
Puno, C.J., Quisumbing, Ynares-Santiago, Carpio, Corona, Chico-Nazario, Velasco, Jr., Nachura, Leonardo-
de Castro, Peralta and Bersamin, JJ., concur.
Carpio Morales, J., is on leave.
Footnotes
1. G.R. No. 141959, September 29, 2000, 341 SCRA 533.
2. G.R. No. 141524, September 15, 2005, 469 SCRA 633.
3. G.R. No. 149508, October 10, 2007, 535 SCRA 411.
4. G.R. No. 157186, October 19, 2007, 537 SCRA 116.
5. G.R. No. 142803, November 20, 2007, 537 SCRA 643.
6. RULES OF COURT, Rules 64, Section 2.
7. G.R. No. 136587, August 30, 1999, 313 SCRA 311.
8. G.R. No. 131457, November 17, 1998, 298 SCRA 679, 690-691.
9. See: Ponciano v. Laguna Lake Development Authority, G.R. No. 1745636, October 29, 2008 and
Tagle v. Equitable PCI Bank, G.R. No. 172299, April 22, 2008, 552 SCRA 424.
10. Prudential Guarantee and Assurance, Inc. v. Court of Appeals, G.R. No. 146559, August 13, 2004,
436 SCRA 478, 483.
11. CONSTITUTION, Article IX-C, Section 3.
12. Aguila v. Baldovizo, G.R. No. 163186, February 28, 2007, 517 SCRA 91.
13. G.R. No. 139607, October 28, 2002, 391 SCRA 277.
14. See: Lozano, et al. v. Nograles, G.R. Nos. 187883 and 187910, June 16, 2009, that, from another
perspective, also speaks of the limits of liberality.

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NDRES SANCHEZ, LEONARDO D. REGALA, RAFAEL D. BARATA, NORMA AGBAYANI, and CESAR N. SARINO,
petitioners, vs. COMMISSION ON AUDIT, respondent.
DECISION
TINGA, J p:
The 1987 Constitution has made the Commission on Audit (COA) the guardian of public funds, vesting it
with broad powers over all accounts pertaining to government revenue and expenditures and the uses of
public funds and property, including the exclusive authority to define the scope of its audit and
examination, establish the techniques and methods for such review, and promulgate accounting and
auditing rules and regulations. 1 Its exercise of its general audit power is among the constitutional
mechanisms that give life to the check and balance system inherent in our form of government. 2
The exercise of this power by the Department Auditor of the Department of the Interior and Local
Government (DILG) is the subject of the instant Petition for Review 3 dated 10 February 1997. SAHIaD
A chronicle of the operative incidents is needed.
In 1991, Congress passed Republic Act No. 7180 (R.A. 7180) otherwise known as the General
Appropriations Act of 1992. This law provided an appropriation for the DILG under Title XIII and set aside
the amount of P75,000,000.00 for the DILG's Capability Building Program. TSADaI
The usage of the Capability Building Program Fund (Fund) is provided under the Special Provisions of the
law as follows:
Special Provisions
1. Capability Building Program for Local Personnel. The amount herein appropriated for the
Capability Building Program for local personnel shall be used for local government and community
capability building programs, such as training and technical assistance, with the necessary support for
training materials, supplies and facilities: PROVIDED, That savings from the appropriations may be used
to acquire equipment, except motor vehicles, in further support of the programs. DIETcH
The Capability Building Program shall be implemented nationwide by the Department of the Interior and
Local Government through the Local Government Academy and shall involve local officials and employees,
including barangay officials, elected and appointed.
The appropriations authorized herein shall be administered by the Department of the Interior and Local
Government and shall be released upon submission of a work and financial plan supported by a detailed
breakdown of the projects, activities and objects of expenditures proposed to be funded. AcISTE
Savings generated over and above the requirements prescribed in Section 18 of the General Provisions of
this Act shall be made available for the Capability Building Program of the Department of the Interior and
Local Government for local officials and employees, subject to Section 40 of P.D. 1177 (Sec. 35, Book VI of
E.O. No. 292). aSIAHC
On 11 November 1991, Atty. Hiram C. Mendoza (Atty. Mendoza), Project Director of the Ad Hoc Task Force
for Inter-Agency Coordination to Implement Local Autonomy, informed then Deputy Executive Secretary
Dionisio de la Serna of the proposal to constitute and implement a "shamrock" type task force to
implement local autonomy institutionalized under the Local Government Code of 1991. IHEDAT
The stated purpose for the creation of the task force was to design programs, strategize and prepare
modules for an effective program for local autonomy. The estimated expenses for its operation was
P2,388,000.00 for a period of six months beginning on 1 December 1991 up to 31 May 1992 unless the
above ceiling is sooner expended and/or the project is earlier pre-terminated. cHSIDa
The proposal was accepted by the Deputy Executive Secretary and attested by then DILG Secretary Cesar
N. Sarino, one of the petitioners herein, who consequently issued a memorandum for the transfer and
remittance to the Office of the President of the sum of P300,000.00 for the operational expenses of the
task force. An additional cash advance of P300,000.00 was requested. These amounts were taken from
the Fund. IDAaCc
Two (2) cash advances both in the amount of P300,000.00 were withdrawn from the Fund by the DILG
and transferred to the Cashier of the Office of the President. The "Particulars of Payment" column of the
disbursement voucher states that the transfer of funds was made "to the Office of the President for Ad-
Hoc Task Force for Inter-Agency Coordination to Implement Local Autonomy." 4
The first cash advance in the amount of P300,000.00 was liquidated in the following manner although no
receipts were presented to support the expenditures:
Payroll P226,000.00
Office rentals 60,000.00
Office furnitures 7,500.00
Office supplies 3,682.50
Xerox 300.30
Transportation expense 406.00
Bank charges 75.00
Miscellaneous 60.00
–––––––––
P298,023.80
Balance 31 March 1992 P1,976.00 5
There is no record of the liquidation of the second cash advance in the amount of P300,000.00. SDAcaT
Upon post-audit conducted by Department auditor Iluminada M.V. Fabroa, however, the amounts were
disallowed for the following reasons stated in the 3rd Endorsement dated 25 May 1992:
1. No legal basis for the created Task Force to claim payment thru DILG by way of cash advance.
2. Previous cash advance granted to accountable officer has not yet been liquidated.
3. Expenditures funded from capability building are subject to restrictions/conditions embodied
in the Special Provisions of the DILG Appropriations of R.A. 7180 which should be met.
4. Estimate of expenses covered by the cash advance not specified. 6
The disallowance was reiterated in the Notice of Disallowance dated 29 March 1993, which states:
The transfer of fund from DILG to the Office of the President to defray salaries of personnel, office
supplies, office rentals, foods and meals, etc. of an Ad Hoc Task Force for Inter-Agency Coordination to
Implement Local Autonomy taken from the Capability Building Program Fund is violative of the Special
Provisions of R.A. 7180. 7
A Notice of Disallowance dated 29 March 1993 was then sent to Mr. Sarino, et al. holding the latter jointly
and severally liable for the amount and directing them to immediately settle the disallowance. cdasia
Aggrieved by such action, Mr. Sarino, et al. requested reconsideration of the disallowance on the following
grounds:
1. That the transfer was for the operational expenses of an ad hoc task force for inter-agency
coordination to implement local autonomy; hence, for a public purpose;
2. Legally, the question of whether or not the transfer of funds by the DILG taken from the capability
building program of the Office of the President is violative of R.A. 7180 is exclusively within the
competence and jurisdiction of the courts and not of any other office. As it is, the matter involves a
prejudicial issue that necessitates prior authoritative determination by the courts. Unless there is a
pronouncement to the contrary, the transfer of funds for a public purpose effected by the executive
branch of government thru the department head is presumed legal and regular. Likewise, the DILG
Auditor's conclusion of violation of the law cannot overcome the presumption of legality and regularity of
acts done by public officers in the performance of public duty. At best, such conclusion is gratuitous and
devoid of legal force and effect;
3. That the alleged violation is not specific and stated with particularity so as to apprise the
respondents of the nature and cause of the alleged violation. Legally, therefore, the disallowance is
completely void for being violative of the constitutional guarantee of due process; and
4. In the case of Binamira v. Garrucho, 188 SCRA 155, the Supreme Court held that the acts of
department heads, unless reprobated or disapproved by the Chief Executive, performed and promulgated
in the regular course of business are presumed valid and presumptively considered acts of the President
of the Philippines. 8
Countering the foregoing points raised in the request for reconsideration, the Department Auditor denied
the request, thus:
1. That the expenses was for a public purpose.
Yes, it may be granted that the expenses was for a public purpose, but it was different from the purpose
for which the fund was created. Expenditures, as earlier pointed out, funded from the Capability Building
Program are subject to compliance to the restrictions/conditions embodied in the Special Provisions of
the General Appropriations Act of 1992. aHIEcS
Section 37, P.D. 1177 provides that "All money appropriated for functions, activities, projects and
programs shall be available solely for the specific purpose for which these are appropriated."
(Underscoring supplied)
2. We believe that there is no prejudicial issue involved in this particular case that needs the
pronouncement by the Courts. It is clearly stated in the Special Provisions of the DILG Appropriations of
R.A. No. 7180 that the Capability Building Program Fund shall be used for local government and
community capability building programs. Therefore the transfer and expenditures of the funds in the
Office of the Deputy Executive Secretary has completely abandoned the raison d' etre for which the fund
was established. CDHacE
Every expenditure or obligation authorized or incurred in violation of law shall be the personal liability of
the persons who authorized the expenditure. There is no need for the officer or employee to
misappropriate public funds but merely appropriating public funds for a purpose other than that
authorized by law. (Underscoring supplied)
3. We beg to disagree to the Counsel's claim that the alleged violation was not specific and stated
with particularity so as to apprise the clients of the nature and cause of the alleged violation. ADSTCa
The grounds for our disallowance were specifically enumerated in our 3rd Indorsement dated May 25,
1992, to the FMS Director, this Department. TAacIE
4. The mere transfer of the fund from DILG to the Office of the Deputy Executive Secretary to defray
the salaries of the personnel, office supplies, office rentals, foods and meals, etc. is already in violation of
law. Section 84 (2) of P.D. 1445 provides that "Trust funds shall not be paid out of any public treasury or
depository except in fulfillment of the purpose for which the trust was created or funds received, and
upon authorization of the legislative body or head of any other agency of the government having control
thereof, and subject to pertinent budget law, rules and regulations. (Underscoring supplied) 9
Finding no reason to deviate from the findings of the Department Auditor, the COA affirmed the
disallowance in its assailed COA Decision No. 96-654 10 dated 21 November 1996. TSEHcA

It is worth noting at this juncture that while Commissioner Sofronio B. Ursal (Commissioner Ursal) signed
the assailed Decision, he nonetheless submitted a dissenting opinion stating that the transfer of funds
from the Fund to the Office of the Executive Secretary falls within the authority of the President to
augment any item in the general appropriations law as provided in Sec. 25 (5), Art. VI of the 1987
Constitution. Thus, he concludes that the transfer is deemed an act of the President. Further, the use of
the Fund by the task force to implement local autonomy falls within the purpose for which the Fund was
created. However, he adds that the individual disbursements made by the task force for such expenses as
salaries, allowances, rentals, food and the like should be audited by the Auditor for the Office of the
President in accordance with existing accounting and auditing rules. 11
Petitioners argue that the transfer of the questioned amount from the Fund of the DILG to the Office of
the President was legal and that the Notice of Disallowance dated 29 May 1993 was without basis. They
explain that the Capability Building Program which was financed by the Fund was administered by the
DILG and was intended as a complementary resource to aid the DILG in its task of pursuing an intensified
program of enhancing local government autonomy capabilities. It was pursuant to this goal that a task
force was created to design programs, strategize and prepare modules for an effective program for local
autonomy with the expenses therefor to be charged against the Fund. Thus, petitioners argue that the
purpose of the task force was actually within the framework of the Special Provisions of R.A. No. 7180,
and the transfer of funds to effectuate this purpose was not violative of the said law contrary to the
Department Auditor's conclusion. aEIcHA
Further, petitioners aver that the law did not prohibit the DILG from directly coordinating with the Office
of the President in attaining the objectives of local autonomy. ITSacC
The Office of the Solicitor General (OSG) filed a Manifestation and Motion in Lieu of Comment 12 dated
19 January 1998, which it later disavowed, however, stating that the petition is meritorious. According to
the OSG then, far from being categorically different from the purpose for which the Fund was created,
the transfer of the amount in question complemented, if not enhanced, the DILG's program to promote
local autonomy. The transfer of a portion of the Fund for the operational expenses of the task force to
implement local autonomy did not therefore violate the Special Provisions of R.A. No. 7180. CScTDE
Because of the position initially taken by the OSG, the COA filed its own Comment 13 dated 16 March
1998, maintaining that it acted according to its constitutional mandate when it disallowed the
disbursement considering that the transfer of funds from the DILG to the Office of the President was
violative of the Special Provisions of R.A. No. 7180. The COA considers the Fund a trust fund which may
not be paid out except in fulfillment of the purpose for which it was created and upon authorization of
the head of agency and subject to budget law, rules and regulations. aSCHcA
Petitioners filed their Reply 14 dated 9 March 2001. Thereafter, the parties were required to submit their
respective memoranda in the Resolution 15 dated 12 February 2002. In compliance with this directive,
the parties filed their memoranda 16 in reiteration of their respective positions. cDCSTA
For further elucidation of the issues, the Court set the case for oral argument, crystallizing the decisive
issues in this case as follows:
(1) Whether there is legal basis for the transfer of funds of the Capability Building Program Fund
appropriated in the 1992 General Appropriation Act from the Department of Interior and Local
Government to the Office of the President; aEDCSI
(2) Whether the conditions or requisites for the transfer of funds under the applicable law were
present in this case;
(3) Whether the Capability Building Program Fund is a trust fund, a special fund, a trust receipt or a
regular appropriation; and finally
(4) Whether the questioned disallowance by the Commission on Audit is valid. 17
The parties were required to simultaneously submit their memoranda in amplification of their arguments
on the foregoing issues. SDTcAH
Retracting its previous stance, the OSG avers in its Memorandum 18 dated 6 July 2005 that the transfer
of funds from the DILG to the Office of the President has no legal basis and that COA's disallowance of the
transfer is valid. According to the OSG, the creation of a task force to implement local autonomy, if one
was necessary, should have been done through the Local Government Academy with the approval of its
board of trustees in accordance with R.A. No. 7180. HIaAED
Moreover, Sec. 25 (5), Art. VI of the Constitution authorizes the transfer of funds within the OP if made
by the President for purposes of augmenting an item in the Office of the President. In this case, it was not
the President but the Deputy Executive Secretary who caused the transfers and the latter was not shown
to have been authorized by the President to do so. TcSHaD
The OSG's Memorandum also brings to the surface several facts which had theretofore remained hidden.
For instance, it was disclosed that the disallowed transfers were released without the submission of a
work and financial plan supported by a detailed breakdown of the projects, activities and objects of
expenditures proposed to be funded. 19 There was also no proper liquidation of the P600,000.00 cash
advance made to Atty. Mendoza who, in addition, was not even an employee either of the DILG or the
Office of the President. 20
In the absence of evidence of bad faith, malice or gross negligence, however, the OSG submits that
petitioners may not be held civilly and personally liable for the disallowed expenditure. IADCES
The COA, in its Memorandum 21 dated 18 July 2005, reiterates its position that there is no legal basis for
the transfers in question because the Fund was meant to be implemented by the Local Government
Academy. Further, transfer of funds under Sec. 25 (5), Art. VI of the Constitution may be made only by the
persons mentioned in the section and may not be re-delegated being already a delegated authority.
Additionally, the funds transferred must come only from savings of the office in other items of its
appropriation and must be used for other items in the appropriation of the same office. In this case, there
were no savings from which augmentation can be taken because the releases of funds to the Office of the
President were made at the beginning of the budget year 1992. EcTCAD
The COA also posits that while the Fund is a regular appropriation, it partakes the nature of a trust fund
because it was allocated for a specific purpose. Thus, it may be used only for the specific purpose for
which it was created or the fund received. The COA concludes that petitioners should be held civilly and
criminally liable for the disallowed expenditures. cHaICD
For their part, petitioners maintain in their Memorandum 22 that the transfer of funds was never
repudiated by the President and that operational control over the amount transferred remained with the
DILG as evidenced by the fact that liquidation was done by the latter and not by the Office of the President.
Petitioners also insist that the Fund is a regular item of appropriation and not a trust fund because after
the end of the calendar year, any unexpended amount will be reverted to the General Fund. cTSHaE
We affirm the ruling of the COA.
The COA is endowed with enough latitude to determine, prevent and disallow irregular, unnecessary,
excessive, extravagant or unconscionable expenditures of government funds. 23 It has the power to
ascertain whether public funds were utilized for the purpose for which they had been intended. aACHDS
The Court had therefore previously upheld the authority of the COA to disapprove payments which it finds
excessive and disadvantageous to the Government; to determine the meaning of "public bidding" and
when there is "failure" in the bidding; to disallow expenditures which it finds unnecessary according to its
rules even if disallowance will mean discontinuance of foreign aid; to disallow a contract even after it has
been executed and goods have been delivered. 24 Likewise, we sustained the findings of the COA
disallowing the disbursements of the National Home Mortgage Finance Corporation for failure to submit
certain documentary requirements and for being irregular and excessive. 25
We have also ruled that the final determination of the Department of Finance and the BIR as to a person's
entitlement to an informer's reward is conclusive only upon the executive agencies concerned and not on
the COA, the latter being an independent constitutional commission. 26 The COA is traditionally given free
rein in the exercise of its constitutional duty to examine and audit expenditures of public funds especially
those which are palpably beyond what is allowed by law. TIaCHA

Verily, it is the general policy of the Court to sustain the decisions of administrative authorities,
especially one which is constitutionally-created, not only on the basis of the doctrine of separation of
powers but also for their presumed expertise in the laws they are entrusted to enforce. 27 It is, in fact,
an oft-repeated rule that findings of administrative agencies are accorded not only respect but also finality
when the decision and order are not tainted with unfairness or arbitrariness that would amount to grave
abuse of discretion. 28
It is only when the COA has acted without or in excess of jurisdiction, or with grave abuse of discretion
amounting to lack or excess of jurisdiction, that this Court entertains a petition questioning its rulings.
We find no grave abuse of discretion on the part of the COA in issuing the assailed Decision as will be
discussed hereafter.

Petitioners have flip-flopped on whether an actual transfer of the disallowed amount had taken place. In
response a pointed question during oral argument, counsel for petitioners stated that there was no
transfer of even a centavo of the P600,000.00 to the Office of the President. 30 On the other hand, in their
Memorandum 31 dated 28 August 2005, petitioners aver that "the transfer of funds was made by the
DILG to the Office of the President, through the request of then Deputy Executive Secretary Dionisio de la
Serna. The transfer of funds was never repudiated nor questioned by the President." 32
The OSG, on the other hand, unmistakably confirms the actual transfer in its Memorandum attaching the
disbursement voucher and receipts covering the transfer of funds from the DILG to the Office of the
President. ScHAIT
The resolution of these divergent theories is critical. If, on one hand, there was no actual transfer of funds,
the propriety of the disallowance would be evaluated on the basis of whether the purpose for which the
fund was used was indeed violative of R.A. No. 7180. On the other hand, if there was an actual transfer of
funds, the Court would have to ascertain whether the criteria laid out in Sec. 25 (5), Art. VI of the 1987
Constitution had been met. HDATSI
In the following exchange between then Justice (now Chief Justice) Puno and COA Assistant Commissioner
Raquel Habitan, the latter reiterated that petitioners have always stood pat on their argument that there
was a transfer of funds but that the transfer was valid as it was for a public purpose:
JUSTICE PUNO:
 May I go to the question of transfer, am I correct in assuming that this case was resolved by your
office on the theory that the transfer of funds violated the provision of the Constitution and related laws?
COMMISSIONER HABITAN:
Yes, Your Honor.
JUSTICE PUNO:
Was the question of transfer an issue raised by the petitioners when this case was under litigation
up to the time when it reached your office. In other words, did the petitioners ever raise the issue that
there was no transfer of any funds involved in the case?
COMMISSIONER HABITAN:
Your Honor, in the motion for reconsideration of then Secretary Sarino when he requested
reconsideration of disallowance he relied on the following grounds — that the transfer was for the
operational expenses of an Ad Hoc Task Force for inter agency coordination implement local autonomy
hence for a public purpose that was the number one ground for the motion for reconsideration for the
disallowance, Your Honor.
JUSTICE PUNO:
But did they ever take the position that indeed there was no transfer of funds from the DILG to
the Office of the President and then back, was that position taken by petitioner?
COMMISSIONER HABITAN:
But the records will show Your Honor that there was two (2) separate vouchers one for Three
Hundred Thousand each which was actually disallowed by the COA, Your Honor.
JUSTICE PUNO:
No, I am asking you whether the petitioners ever took that position that there was no transfer of
funds at all from the DILG to the Office of the President. I ask that question because I am confused by the
change of answers of the counsel for the petitioners. So, I am asking that question whether the fact of
transfer was a subject of litigation up to your office.
COMMISSIONER HABITAN:
Yes, Your Honor, I am reading the COA decision itself and in the motion for reconsideration of
Secretary Sarino. It was one of the grounds relied upon, that the transfer was for the operational
expenses. He tried to justify that the operational expenses of the Ad Hoc Task Force was for a public
purpose.
JUSTICE PUNO:
He concedes that there was a transfer, but the defense was the validity of the transfer?
COMMISSIONER HABITAN:
Yes, Your Honor.
JUSTICE PUNO:
What is the test on whether there was a transfer of funds from one agency to another agency?
Let us take for example, a situation where a Task Force is created and the task of that committee is subject
that properly belongs in this case with the DILG and so the task force agreed that disbursements of money
should be undertaken and controlled by the head of the DILG, would the fact of control of disbursement
show that there was no transfer of funds?
COMMISSIONER HABITAN:
But they cannot erase the fact for the record of the case that there were two (2) separate vouchers
as I said.
JUSTICE PUNO:
Exactly, I am asking you that question would the mere fact that disbursements were under the
control of the DILG, would that lead to the conclusion that there was no transfer of funds from the DILG
to the Office of the President?
COMMISSIONER HABITAN:
 But the check, Your Honor, was in the name of the Task Force. So, evidently there was an actual
transfer of the funds from DILG to the Office of the President pursuant to the Memorandum of Agreement
creating the Task Force. 33 [Emphasis supplied]
The theory that there was an actual transfer of funds but the same was for a public purpose has been at
the core of petitioners' arguments since they requested reconsideration of the Notice of Disallowance
dated 29 March 1993. Even their pleadings before the Court reveal an unwavering adherence to their
theory that the transferred funds should not have been disallowed because they were used for a public
purpose. CaSAcH
Commissioner Ursal's dissent, which first brought to fore the opinion that the disallowed transfer was a
valid exercise of the President's power to augment under Sec. 25 (5), Art. VI of the 1987 Constitution, is
therefore clearly just a gratuitous argument because petitioners themselves never justified the transfer
as an exercise of the President's constitutional prerogative. EHSADc
At any rate, in order to finally lay this case to rest, we shall discuss whether the disallowed transfer satisfies
the standard laid down for the augmentation from savings under Sec. 25 (5), Art. VI of the 1987
Constitution. TCacIE
The General Provisions of R.A. No. 7180 provides that "[E]xcept by act of the Congress of the Philippines,
no change or modification shall be made in the expenditure items authorized in this Act and other
appropriations laws unless in cases of augmentations from savings in appropriations as authorized under
Section 25 (5) of Article VI of the Constitution." 34
Sec. 25 (5), Art. VI of the 1987 Constitution, in turn, provides:
Sec. 25 (5) No law shall be passed authorizing any transfer of appropriations; However, the President,
the President of the Senate, The Speaker of the House of Representatives, the Chief Justice of the Supreme
Court, and the heads of Constitutional Commissions may, by law, be authorized to augment any item in
the general appropriations law for their respective offices from savings in other items of their respective
appropriations. AHaDSI
It is important to underscore the fact that the power to transfer savings under Sec. 25 (5), Art. VI of the
1987 Constitution pertains exclusively to the President, the President of the Senate, the Speaker of the
House of Representatives, the Chief Justice of the Supreme Court, and the heads of Constitutional
Commissions and no other. HCTDIS
In Philippine Constitution Association v. Enriquez, 35 the Court declared that individual members of
Congress may only determine the necessity of the realignment of savings in the allotments for their
operating expenses because they are in the best position to know whether there are savings available in
some items and whether there are deficiencies in other items of their operating expenses that need
augmentation. However, it is the Senate President and the Speaker of the House of Representatives who
shall approve the realignment. 36
In the same case, the Court also ruled that the Chief of Staff of the Armed Forces of the Philippines may
not be given authority to transfer funds under this article because the realignment of savings to augment
items in the general appropriations law for the executive branch must and can be exercised only by the
President pursuant to a specific law. 37
Parenthetically, petitioners fail to point out to the Court the specific law and provision thereof which
authorizes the transfer of funds in this case. ACTEHI
Thus, the submission that there was a valid transfer of funds within the Executive Department should be
rejected as it overlooks the fact that the power and authority to transfer in this case was exercised not by
the President but only at the instance of the Deputy Executive Secretary, not the Executive Secretary
himself. Even if the DILG Secretary had corroborated the initiative of the Deputy Executive Secretary, it
does not even appear that the matter was authorized by the President. More fundamentally, as will be
shown later, even the President himself could not have validly authorized the transfer under the
Constitution. IDESTH
The deliberations of the Constitutional Commission are instructive as regards the extent of the President's
power to augment:
MR. SARMENTO:
I have one last question. Section 25, paragraph (5) authorizes the Chief Justice of the Supreme
Court, the Speaker of the House of Representatives, the President, the President of the Senate to augment
any item in the General Appropriations Law. Do we have a limit in terms of percentage as to how much
they should augment any item in the General Appropriations Law?
MR. AZCUNA:
The limit is not in percentage but "from savings". So it is only to the extent of their savings. 38
The 1973 Constitution contained an identical provision:
Sec. 16(5). No law shall be passed authorizing any transfer of appropriations, however, the President,
the Prime Minister, the Speaker, the Chief Justice of the Supreme Court, and the heads of constitutional
commissions may by law be authorized to augment any item in the general appropriations law for their
respective offices from savings in other items of their respective appropriations. cIACaT
Construing this provision, the Court ruled in the pre-eminent case of Demetria v. Alba: 39
The prohibition to transfer an appropriation for one item to another was explicit and categorical under
the 1973 Constitution. However, to afford the heads of the different branches of the government and
those of the constitutional commissions considerable flexibility in the use of public funds and resources,
the constitution allowed the enactment of a law authorizing the transfer of funds for the purpose of
augmenting an item from savings in another item in the appropriation concerned. The leeway granted
was thus limited. The purpose and conditions for which funds may be transferred were specified, i.e.
transfer may be allowed for the purpose of augmenting an item and such transfer may be made only if
there are savings from another item in the appropriation of the government branch or constitutional
body. [Emphasis supplied]
Thus, we declared unconstitutional par. 1, Sec. 44 of Presidential Decree No. 1177 which authorized the
President "to transfer any fund, appropriated for the different departments, bureaus, offices and agencies
of the Executive Department, which are included in the General Appropriations Act, to any program,
project or activity of any department, bureau or office included in the General Appropriations Act or
approved after its enactment" because it unduly overextends the privilege granted under Sec. 16 (5) of
the 1973 Constitution. CDAEHS
We ruled that the President cannot indiscriminately transfer funds from one department, bureau, office
or agency of the Executive Department to any program, project or activity of any department, bureau or
office included in the General Appropriations Act or approved after its enactment, without regard to
whether the funds to be transferred are actually savings in the item from which the same are to be taken,
or whether or not the transfer is for the purpose of augmenting the item to which the transfer is to be
made. 40
R.A. 7180 contains a similar provision on the President's power to augment and provides the meaning of
"savings" and "augmentation", thus:
Sec. 17. Use of Savings. The President of the Philippines, the President of the Senate, the Speaker of the
House of Representatives, the Chief Justice of the Supreme Court, the Heads of Constitutional
Commissions under Article IX of the Constitution, the Ombudsman and the Commission on Human Rights
are hereby authorized to augment any item in this Act for their respective offices from savings in other
items of their respective appropriations. CAHTIS
xxx xxx xxx
Sec. 19. Meaning of Savings and Augmentation. Savings refer to portions or balances of any programmed
appropriation free of any obligation or encumbrance still available after the satisfactory completion or
unavoidable discontinuance or abandonment of the work, activity or purpose for which the appropriation
is authorized, or arising from unpaid compensation and related costs pertaining to vacant positions and
leaves of absence without pay. Augmentation implies the existence in this Act of an item, project, activity
or purpose with an appropriation which upon implementation or subsequent evaluation of needed
resources is determined to be deficient. In no case, therefore, shall a non-existent item, project, activity,
purpose or object of expenditure be funded by augmentation from savings or by the use of appropriations
authorized otherwise in this act. 41
Clearly, there are two essential requisites in order that a transfer of appropriation with the
corresponding funds may legally be effected. First, there must be savings in the programmed
appropriation of the transferring agency. Second, there must be an existing item, project or activity
with an appropriation in the receiving agency to which the savings will be transferred. TcSHaD
Actual savings is a sine qua non to a valid transfer of funds from one government agency to another. The
word "actual" denotes that something is real or substantial, or exists presently in fact as opposed to
something which is merely theoretical, possible, potential or hypothetical. 42
As a case in point, the Chief Justice himself transfers funds only when there are actual savings, e.g., from
unfilled positions in the Judiciary. 43
The thesis that savings may and should be presumed from the mere transfer of funds is plainly anathema
to the doctrine laid down in Demetria v. Alba as it makes the prohibition against transfer of appropriations
the general rule rather than the stringent exception the constitutional framers clearly intended it to be. It
makes a mockery of Demetria v. Alba as it would have the Court allow the mere expectancy of savings to
be transferred. cHaCAS
Contrary to another submission in this case, the President, Chief Justice, Senate President, and the heads
of constitutional commissions need not first prove and declare the existence of savings before transferring
funds, the Court in Philconsa v. Enriquez, supra, categorically declared that the Senate President and the
Speaker of the House of Representatives, as the case may be, shall approve the realignment (of savings).
However, "[B]efore giving their stamp of approval, these two officials will have to see to it that: (1) The
funds to be realigned or transferred are actually savings in the items of expenditures from which the same
are to be taken; and (2) The transfer or realignment is for the purpose of augmenting the items of
expenditure to which said transfer or realignment is to be made." 44
As it is, the fact that the permissible transfers contemplated by Section 25 (5), Article VI of the 1987
Constitution would occur entirely within the framework of the executive, legislative, judiciary, or the
constitutional commissions, already makes wanton and unmitigated malversation of public funds all too
easy, without the Court abetting it by ruling that transfer of funds ipso facto denotes the existence of
savings. SAHaTc
Precisely, the restriction on the transfer of funds, and similar constitutional limitations such as the
specification of purpose for special appropriations bill, 45 the restriction on disbursement of discretionary
funds, 46 the conditions on the release of money from the Treasury, 47 among others, "were all
safeguards designed to forestall abuses in the expenditure of public funds". 48
The following exchange between Mdme. Justice Sandoval-Gutierrez and counsel for petitioners inexorably
reveals that petitioners had known that there were no savings in the DILG at the time of the questioned
transfers, thus:
JUSTICE GUTIERREZ:
All Right, according to the law augmentation implies the existence of an item, project, activity or
purpose with an appropriation upon which implementation or subsequent evaluation of needed
resources is determined to be deficient, my question is — is there a funding in the task force to be
augmented or was there insufficient funds in the task force to be augmented?
ATTY. MADRIAGA:
If Your Honors please, I am not privy to the appropriation for the Office of the President, but we
know, Your Honor, is that these amount of Six Hundred Thousand Pesos was only to augment or to
increase whatever funds perhaps would be under the Office of the President for such a gargantuan task
as the implementation or preparation for the implementation of the Code, Your Honor. So, I am sorry but
I do not have knowledge as to the appropriations of the Office of the President in regard to this type of
activities, Your Honor.
JUSTICE GUTIERREZ:
In that case, Counsel, you cannot say categorically that the transfer is valid because you cannot
inform the Court whether or not there was a need to augment and whether or not there was really a
funding, a sufficient funding for the task force, is that right?
ATTY. MADRIAGA:
Yes, Your Honor.
JUSTICE GUTIERREZ:
Second requirement is that there must be actual savings in the item from which the same are to
be taken, can you tell us now if you know for a fact that there were actual savings before the fund was
transferred?
ATTY. MADRIAGA:
If Your Honor please, the transfer of funds was made at the start of the calendar year 1992. The
General Appropriations Act, Republic Act 7180 took effect that year. So, I would surmise, Your Honors, so
as of that time there was no savings as yet that was accumulated by the department but because of the
exigency of the purpose, Your Honor, considering that the Department of Interior and Local Government
had only two (2) months and twenty (20) days for the preparation of the implementation of the Local
Government Code which was signed, as I said, on October 10, 1991 and which was supposed to become
effective on January 1, 1992, there was the urgent need, Your Honor, to prepare and there was therefore
that transfer of funds, Your Honor.
JUSTICE GUTIERREZ:
What you are saying right now is that actually there were no savings to be transferred?
ATTY. MADRIAGA:
As of that time, Your Honor. [Emphasis supplied] 49
Further, the records of this case unmistakably point to the reality that there were no savings at the time
of the questioned transfer. To begin with, the first disallowed voucher in the amount of P300,000.00 was
paid under Check No. 160404 dated 31 January 1992. The records indicate that the second transfer
occurred on 28 April 1992. 50 Presumably, the disallowed amount was remitted to and spent by the ad
hoc task force within the first two quarters of fiscal year 1992. 51 There could not have been savings from
the Fund on 31 January 1992 because the 1992 GAA took effect only on 1 January 1992 or 30 days before.
52
Obviously, the amount transferred from the Fund did not constitute savings as there were no such savings
at the time of the transfer. It is preposterous to pronounce that savings already existed as early as 31
January 1992. It is even more ridiculous to claim that savings may be presumed from the mere transfer of
funds. 53
The fact that the subsequent years' appropriations acts, i.e., the 1993 and 1994 GAA, 54 provided an
appropriation for the Capability Building Program, moreover, signifies that there were no savings from
the Fund from the prior year's appropriation in the 1992 GAA that could have been validly transferred.
DcIHSa
The appropriation for the Capability Building Program was presented in the 1992 GAA in the following
manner: 55
xxx xxx xxx
B. Locally- Personal Maintenance Capital Total
Funded Services and Other Outlays
Projects Operating
Expenses
xxx xxx xxx
4. Capability 75,000,000 75,000,000
Building
Program
It is worthy of note, therefore, that the 1992 GAA only provided an appropriation for maintenance and
other operating expenses in the appropriation for the Capability Building Program, and not a single
centavo for capital outlay or for personal services. SDHAcI
Maintenance and other operating expenses cover traveling expense; communication services; repair and
maintenance of government facilities; use, repairs and maintenance of government vehicles;
transportation services; supplies and materials; rents; interests; grants, subsidies and contributions;
awards and indemnities; loan repayments and sinking fund contributions; losses/depreciation/depletion;
water, illumination and power service; social security benefits, rewards and other claims; auditing
services; training and seminars; extraordinary and miscellaneous expenses; confidential and intelligence
expenses; anti-insurgency/contingency/emergency expenses; taxes and other duties; trading/production;
advertising and publication expenses; fidelity bond and insurance premiums; loss on foreign exchange;
commitment fees/charges; and other services such as repairs and maintenance; printing and binding;
subscription to periodicals and magazines; radiocast, telecast and documentary films; legal expenses;
security and janitorial services and meal and transportation allowance. 56
Personal services, on the other hand, include the payment of salaries and wages; per diem compensation;
social security insurance premium; overtime pay; and commutable allowances, 57 while capital outlays
refer 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 government, including investments in the capital of government-
owned or controlled corporations and their subsidiaries as well as investments in public utilities such as
public markets and slaughterhouses. 58
Maintenance and operating expenses and personal services are classified as current operating
expenditures or appropriations for the purchase of goods and services for current consumption or for
benefits expected to terminate within the fiscal year. 59
By the nature of maintenance and operating expenses, savings may generally be determined at the end
of the year, or earlier in case of completion, discontinuance or abandonment of the work for which the
appropriation was authorized. In contrast, savings from personal services may generally be determined
even at the opening of the fiscal year in case of unpaid compensation pertaining to vacant positions and
leaves of absence without pay. aTHASC
It should be emphasized that the 1992 GAA did not provide an appropriation for personal services for the
Capability Building Program. Savings from vacant positions which pertain to personal services, therefore,
may not be considered savings from the Fund which may be transferred. TSADaI
It is odd that during oral argument, petitioners did not bother to assert to the Court that there was actual
savings from the Fund which could have been transferred, prompting Justice (later Chief Justice)
Panganiban to point out that petitioners should have ascertained the existence of actual savings lest the
petition be dismissed as it is based on speculation. aHCSTD
JUSTICE PANGANIBAN:
So you still agree with the position of Justice Gutierrez that first, the first requirement is that there
must be an existing item to be augmented. Meaning, there is insufficiency of funds in that item and then
there are savings in another item in another department of government which can be transferred?
ATTY. MADRIAGA:
Yes, Your Honor.
JUSTICE PANGANIBAN:
But you are not aware of any savings, actual saving, it is just projected saving?
ATTY. MADRIAGA:
 At that time, Your Honor, I said.
JUSTICE PANGANIBAN:
How about now?
ATTY. MADRIAGA:
Your Honor?
Now was there an actual saving?
I think the Commission on Audit would be in a better position to answer that, Your Honor, because
they are in possession of the records (interrupted)
JUSTICE PANGANIBAN:
But when you filed your petition here you must have researched on this whether in fact there was
savings to transfer.
ATTY. MADRIAGA:
As a matter of fact, Your Honor, (interrupted)
JUSTICE PANGANIBAN:
Otherwise, your petition would have been based on mere speculation? 60
From the foregoing, there is no question that there were no savings from the Fund at the time of the
transfer. The Court cannot hold on to the disputable presumptions that official duty had been regularly
performed and that the law had been obeyed. HEITAD
Furthermore, the 1992 GAA itself forecloses the use of savings from the Fund for purposes other than
those for which it was established as specified under the law. The Special Provisions plainly state: TEcCHD
Special Provisions
2. Capability Building Program for Local Personnel. The amount herein appropriated for the
Capability Building Program for local personnel shall be used for local government and community
capability building programs, such as training and technical assistance, with the necessary support for
training materials, supplies and facilities: PROVIDED, That savings from the appropriation may be used to
acquire equipment, except motor vehicles, in further support of the programs.
The Capability Building Program shall be implemented nationwide by the Department of the Interior and
Local Government through the Local Government Academy and shall involve local officials and employees,
including barangay officials, elected and appointed. IDEHCa
The appropriations authorized herein shall be administered by the Department of the Interior and Local
Government and shall be released upon submission of a work and financial plan supported by a detailed
breakdown of the projects, activities and objects of expenditures proposed to be funded. cEAaIS
Savings generated over and above the requirements prescribed in Section 18 of the General Provisions of
this Act shall be made available for the Capability Building Program of the Department of the Interior and
Local Government for local officials and employees, subject to Section 40 of P.D. 1177 (Sec. 35, Book VI of
E.O. No. 292). HCTaAS
Thus, assuming that there were savings from the appropriation for the Executive Department, the
Capability Building Program should have been the recipient of any transfer thereof subject only to Section
18 61 of the 1992 GAA. The Fund should have been the beneficiary and not the benefactor. Moreover,
such savings should have first been used to acquire equipment in furtherance of the Capability Building
Program as was the clear intent of the law. TAECaD
As regards the requirement that there be an item to be augmented, which is also a sine qua non like the
first requirement on the existence of savings, there was no item for augmentation in the appropriation
for the Office of the President at the time of the transfers in question. Augmentation denotes that an
appropriation was determined to be deficient after the implementation of the project or activity for which
an appropriation was made, or after an evaluation of the needed resources. To say that the existing items
in the appropriation for the Office of the President already needed augmentation as early as 31 January
1992 is putting the cart before the horse. EDISaA
The task force spent the disallowed amount on behalf of the DILG allegedly to implement an item of
appropriation of the DILG. This evinces the fact that there was no item in the appropriation for the Office
of the President which the disallowed amount could have augmented. AEScHa
The ad hoc 62 nature of the task force whose operations the illegally transferred funds were supposed to
finance precisely underscores the impermanence and transitoriness of the group and its activities. Hence,
the ad hoc body itself is inconsistent with the notion that there was an existing item of appropriation
which needed to be augmented. CHcETA
The absence of any item to be augmented starkly projects the illegality of the diversion of the funds and
the profligate spending thereof. DaTHAc
With the foregoing considerations, it is clear that no valid transfer of the Fund to the Office of the
President could have occurred in this case as there was neither allegation nor proof that the amount
transferred was savings or that the transfer was for the purpose of augmenting the item to which the
transfer was made. SAHIDc
Further, we find that the use of the transferred funds was not in accordance with the purposes laid down
by the Special Provisions of R.A. 7180. aTCADc
The Capability Building Program was established pursuant to the mandate of local autonomy under the
1987 Constitution carried out by the Local Government Code of 1991. It was supposed to guide local
communities to become self-reliant and capable of self-governance. In order to finance the program, R.A.
No. 7180 set up the Fund explicitly declaring that it shall be used for local government and community
capability building programs, such as training and technical assistance, with the necessary support for
training materials, supplies and facilities. The Fund was to be administered by the DILG. ASTIED
Construed flexibly in the context of the general objective of attaining local autonomy, the stated purpose
for the creation of the task force, which was to design programs, strategize and prepare modules for an
effective program for local autonomy, would have fallen within the general intendment of the Fund. It is
not enough, however, for petitioners to loosely claim that the amount was used for a public purpose or
that it was used to advance local autonomy. It is imperative for them to show that the questioned amount
was used directly in fulfillment of the purpose for which the Fund was created. ADEHTS
In this case, there is no evidence on record as to how the task force was created, what its functions were
and who composed it. Atty. Mendoza, the project director of the task force, does not even appear to have
been an officer or employee of or connected in any capacity to either the DILG or the Office of the
President, or at least to have been acting under the authority of either office. The proposal to create the
task force was initiated by Atty. Mendoza in his personal capacity and on his own authority. 63
There is also no evidence to the effect that the amount taken from the Fund was actually spent for the
task force's avowed objectives or that the purpose of the task force came to fruition. There is no indication
at all whether the task force was actually able to design programs, strategize and prepare modules in
furtherance of local autonomy using the Fund. AcCTaD
What is apparent from the records is that the amount in question was spent to "defray salaries of
personnel, office supplies, office rentals, foods and meals, etc." 64 The audit conducted by the DILG
Auditor covered both the invalidity of the transfer of funds and the illegality of the use thereof. The
Department Auditor concluded that the questioned amount was not used for the purposes enumerated
in the Special Provisions of R.A. 7180. CTIEac
This evaluation was upheld by the COA itself also on both points. It said:
Reviewing the grounds of this motion for reconsideration, this Commission finds no legal justification to
deviate from the stand taken by the DILG Auditor. Appellants postulate that the transfer of funds was for
a public purpose. However, it was categorically different from the purpose for which the fund was created.
Expenditures funded from the capability building program are subject to compliance of the
restrictions/conditions embodied in the special provisions of R.A. No. 7180 and Section 37 of P.D. 1177
also provides: cADaIH
All money appropriated for functions, activities, projects and programs shall be available solely for the
specific purpose for which these were appropriated. (Underscoring supplied)
It cannot also be validly argued that this case involves a prejudicial issue that necessitates prior
determination by the courts. Thus, it is clearly stated in the special provisions of the DILG Appropriations
of R.A. 7180 that the capability building program fund shall be used for local government and community
capability building programs. Therefore, the transfer and expenditure of subject fund to the Office of the
Executive Secretary has completely abandoned the reason or purpose for which the fund was established.
It bears stressing that the mere appropriation of public funds for a purpose other than that authorized by
law such as the subject transfer of funds from DILG to the Office of the Executive Secretary to defray the
salaries of office personnel, supplies, rentals, foods and meals, etc. is already a violation of law. Section
84, par. 2, of P.D. 1445 provides, viz:
Trust funds shall not be paid out of any public treasury or depository except in fulfillment of the purpose
for which the trust was created or funds received, and upon authorization of the legislative body or head
of any other agency of the government having control thereof and subject to pertinent budget law, rules
and regulations. (Underscoring supplied)
Appellants cannot dispute the fact that they were duly informed of the nature and cause of the alleged
infraction. The constitutional guarantee of due process of law was strictly observed as the grounds for the
disallowance were specifically enumerated in the 3rd Indorsement dated May 25, 1992 to the FMS
Director, DILG. AaDSTH
Lastly, the case of Binamira vs. Garrucho cited by the appellants refers to a petition for quo warranto filed
by Mr. Ramon P. Binamira against then Secretary of Tourism Peter D. Garrucho for reinstatement to the
Office of the General Manager of the Philippine Tourism Authority from which he claims to have been
removed without cause in violation of his security of tenure. Appellants contend that pursuant to the
aforementioned case, the transfer of funds from the DILG to the Office of the Executive Secretary was
performed and promulgated in the regular course of business and is presumptively the act of the Chief
Executive, unless disapproved or reprobated. This argument cannot prevail because what is disputed in
the instant case is the expenditure of public funds which is subject to audit by this Commission as
constitutionally mandated. Necessarily, for audit purposes, this Commission has the sole jurisdiction to
determine whether or not the disbursement is in the first place legal and proper. 65
The fact that the audit was conducted by the DILG Auditor and not by the Auditor of the Office of the
President is inconsequential because the findings and conclusion of the DILG Auditor were passed upon
and upheld by the COA itself. cDSaEH
In Olaguer v. Domingo, 66 the COA affirmed the ruling of the Resident Auditor for the National Home
Mortgage Finance Corporation disallowing in audit the latter's disbursements for the purchase of a parcel
of land under the Community Mortgage Program. We sustained the COA reiterating that in this
jurisdiction, findings which have been affirmed and reaffirmed along the administrative hierarchy are
generally conclusive on the courts. We held:
With these substantial findings, we affirm the ruling of respondent Commission on Audit. As to the
other claims raised by petitioners, suffice it to state that in this jurisdiction, courts will not interfere in
matters which are addressed to the sound discretion of government agencies which are entrusted with
the regulation of activities coming under the special technical knowledge and training of such agencies.
With all the more reason should this rule hold when, as in the instant case, the findings of respondent
Razon have been affirmed and reaffirmed along the administrative hierarchy. 67
The ineluctable conclusion is that petitioners should be held personally liable for the disallowed
disbursement by virtue of their position as public officials held accountable for public funds. 68 Sec. 103
of P.D. No. 1445 provides: CaEIST
Sec. 103. General liability for unlawful expenditures. — Expenditures of government funds or uses
of government property in violation of law or regulations shall be a personal liability of the official or
employee found to be directly responsible therefor. DTAcIa
Section 19 of the Manual of Certificate of Settlement and Balances states:
19.1 The liability of public officers and other persons for audit disallowances shall be determined on
the basis of: (a) the nature of the disallowance; (b) the duties, responsibilities or obligations of the
officers/persons concerned; (c) the extent of their participation or involvement in the disallowed
transaction; and (d) the amount of losses or damages suffered by the government thereby. The following
are illustrative examples: HScDIC
xxx xxx xxx
19.1.3 Public officers who approve or authorize transactions involving the expenditure of government
funds and uses of government properties shall be liable for all losses arising out of their negligence or
failure to exercise the diligence of a good father of a family. TaDSCA
xxx xxx xxx
19.2 The liability for audit charges shall be measured by the individual participation or involvement of
persons in the charged transaction; i.e. public officers whose duties require the
appraisal/assessment/collection of government revenues and receipts shall be liable for under-appraisal,
under-assessment, and under-collection thereof."
Petitioners Sarino, Sanchez, Regala, Barata and Agbayani, at the time of the disallowed transfers, were all
responsible officers of the DILG being then the Department's Secretary, Undersecretary, Chief
Accountant, Director, and Chief of the Management Division, respectively. Their participation, assent and
approval were indispensable to the consummation of the illegal transfer of funds and render them
accountable therefor. DCcTHa
In view of the foregoing, we find no grave abuse of discretion on the part of the COA in rendering the
assailed Decision. The constitutional body should even be lauded for its commitment in ensuring that
public funds are not spent in a manner not strictly within the intendment of the law. cCHITA
WHEREFORE, the instant petition is DISMISSED and the assailed Decision of the Commission on Audit is
AFFIRMED. No pronouncement as to costs. EDHCSI
SO ORDERED. cCaIET
Puno, C.J., Quisumbing, Ynares-Santiago, Carpio, Austria-Martinez, Corona (I certify that J. Corona voted
in favor of the Decision), Carpio-Morales, Azcuna, Chico-Nazario, Velasco, Jr., Nachura, Reyes, Leonardo-
de Castro and Brion, JJ., concur.
Footnotes
1. Sec. 2 (1) and (2), Art. IX, 1987 CONST.
2. Olaguer v. Domingo, G.R. No. 109666, 20 June 2001, 359 SCRA 78.
3. Rollo, pp. 15-27.
4. Annex "B-1". Memorandum of the OSG dated 6 July 2005; Rollo, p. 208.
5. Id. at 211. Annex "C". TcEaDS
6. Id. at 212, Annex "D".
7. Rollo, p. 22, Annex "A" of the petition.
8. Id. at 23-24.
9. COA Records, 1st Indorsement dated 16 September 1994, signed by Danilo M. Rodriguez, State
Auditor IV, Department Auditor.
10. Supra note 3 at 23-26, Annex "B" of the petition. Chairman Celso D. Gangan wrote the decision
with Commissioners Rogelio B. Espiritu and Sofronio B. Ursal signing. ATCEIc
11. Supra note 6, Dissenting Opinion dated 6 September 1996 signed by Commissioner Sofronio B.
Ursal.
12. Id. at 66-75.
13. Id. at 86-95.
14. Id. at 123-124.
15. Id. at 128-129. aAHTDS
16. Memorandum of the OSG dated 17 May 2002, Rollo, pp. 133-141; Memorandum of the COA dated
22 May 2002, id. at 143-153; Petitioners' Memorandum dated 28 June 2002, id. at 167-175.
17. Rollo (unpaginated).
18. Id. at 184-203.
19. Id. at 197-198.
20. Id. at 198, 189. ESHAcI
21. Id. at 228-240.
22. Id. at 259-274.
23. Sec. 2 (1) The Commission on Audit shall have the power, authority and duty to examine, audit,
and settle all accounts pertaining to the revenue and receipts of, and expenditures or uses of funds and
property, owned or held in trust by, or pertaining to, the government, or any of its subdivisions, agencies,
or instrumentalities, including government-owned and controlled corporations with original charters, and
on a post-audit basis (a) constitutional bodies, commissions and offices that have been granted fiscal
autonomy under this constitution; (b) autonomous state colleges and universities; (c) other government-
owned or controlled corporations and their subsidiaries; and (d) such non-governmental entities receiving
subsidy or equity, directly or indirectly, from or through the government, which are required by law or
the law granting institution to submit to such audit as a condition of subsidy or equity. However, where
the internal control system of the audited agencies is inadequate, the commission may adopt such
measures, including temporary or special pre-audit, as are necessary and appropriate to correct the
deficiencies. It shall keep the general accounts of the government and, for such period as may be provided
by law, preserve the vouchers and other supporting papers pertaining thereto.
(2) The Commission shall have exclusive authority, subject to the limitations in this
article, to define the scope of its audit and examination, establish the techniques and methods required
therefor, and promulgate accounting and auditing rules and regulations, including those for the
prevention and disallowance of irregular, unnecessary, excessive, extravagant or unconscionable
expenditures, or uses of government funds and properties. [Art. IX — Constitutional Commissions] 1987
Constitution.
24. Supra note 1 citing Dingcong v. Guingona, Jr., 162 SCRA 782 (1988); Caltex Philippines v. COA, G.R.
No. 92585, 8 May 1992; Sambeli v. Province of Isabela, G.R. No. 92279, 18 June 1992; Danville Maritime,
Inc. v. COA, 175 SCRA 701 (1989); National Housing Corporation v. COA, 226 SCRA 55 (1993).
25. Supra note 2. cIHCST
26. Commissioner of Internal Revenue v. COA, G.R. No. 101976, 29 January 1993, 218 SCRA 203.
27. Cuerdo v. COA, No. L-84592, October 27, 1988, citing Tagum Doctors Enterprises v. Gregorio
Apsay, et al., G.R. No. 81188, 30 August 1988.
28. Id. citing Mangubat v. de Castro, No. L-33892, 28 July 1988.
29. Reyes v. COA, G.R. No. 125129, 29 March 1999, 305 SCRA 512.
30. TSN, Vol. I, 21 June 2005, p. 118. HCDaAS
31. Rollo, pp. 255-274.
32. Id. at 259.
33. TSN, Vol. II, 21 June 2005, pp. 168-174.
34. Sec. 16, General Provisions, R.A. No. 7180.
35. G.R. No. 113105, 19 August 1994. aCIHAD
36. Id. at 528.
37. Id. at 544.
38. RECORD OF THE CONSTITUTIONAL COMMISSION, Vol. Two, p. 111.
39. No. L-71977, 27 February 1987, 148 SCRA 208.
40. Id. EIaDHS
41. General Provisions, R.A. No. 7180.
42. BLACK'S LAW DICTIONARY, 6th ed.
43. According to Mrs. Corazon M. Ordoñez, Chief, Fiscal Management and Budget Office, Supreme
Court.
44. At p. 528.
45. Sec. 25(4), Art. VI, 1987 CONST. CTaIHE
46. Sec. 25(6), Art. VI, 1987 CONST.
47. Sec. 29(1), Art. VI, 1987 CONST.
48. Demetria v. Alba, supra, p. 215.
49. TSN, 21 June 2005, Vol. I, pp. 25-29.
50. Note that on 17 February 1992, Atty. Hiram Mendoza, Project Director of the ad hoc task force
requested replenishment of the initial transfer in the amount of P300,000.00 allegedly in anticipation of
additional legal and technical personnel. Upon Deputy Executive Secretary Dionisio dela Serna request for
approval, Secretary Cesar Sarino directed the Financial Management Service (FMS) to process progress
payments. Consequently, Mr. Rafael D. Barata, FMS Director, issued a memorandum addressed to
Undersecretary Leonor de Jesus requesting that the additional amount of P300,000.00 be charged to the
Fund. However, there is no proof that Undersecretary de Jesus approved Mr. Barata's proposal. See
Records, 1st Indorsement dated 16 September 1994. EAICTS
51. Each fiscal year is divided into four quarterly allotment periods beginning, respectively, on the
first day of January, April, July and October. [Sec. 146, Title 2, Book III, Government Accounting and
Auditing Manual.
52. Sec. 74, General Provisions, 1992 GAA.
53. The great bulk of the appropriated money is remitted by the DBM to the agencies in March and
April following the collection of income taxes.
54. Republic Act No. 7645 and Republic Act No. 7663, respectively.
55. Title XIII (A), 1992 GAA. HDIaET
56. Title 6, Book III, Government Accounting and Auditing Manual.
57. Title 5, Book III, Government Accounting and Auditing Manual.
58. Sec. 155(b), Art. 1, Title 3, Book III, Government Accounting and Auditing Manual.
59. Sec. 155(a), Art. 1, Title 3, Book III, Government Accounting and Auditing Manual.
60. TSN, Vol. I, 21 June 2005, pp. 34-40. ACcTDS
61. Section 18 of the General Provision of the 1992 GAA referred to provides:
Sec. 18. Priority in the Use of Savings. In the use of savings priority shall be given to the
augmentation of the amounts set aside for salary standardization, bonus and retirement and terminal
leave benefits in the order listed.
62. The Latin words mean "for a particular or special purpose". LATIN WORDS & PHRASES FOR
LAWYERS. Published for Law and Business Publications, Inc., 1006-575 Madison Avenue, New York, N.Y.
10022, USA (1980) p. 23.
63. TSN, Vol. II, 21 June 2005, pp. 197-200; TSN, Vol. 3, 21 June 2005, pp. 281-284.
64. Supra note 4.
65. COA Decision No. 96-654 dated 21 November 1996. DaEATc
66. Supra note 2.
67. Id. at 89-90.
68. Osmeña v. COA, G.R. No. 98355, 2 March 1994.

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SYNOPSIS
Ruperto A. Ambil, Jr. and Jose T. Ramirez were candidates for the position of Governor in Eastern Samar,
during the May 11, 1998 elections. The Provincial Board of Canvassers proclaimed Ruperto A. Ambil, Jr. as
the duly elected Governor. Ramirez filed with the Commission on Elections (Comelec) an election protest
challenging the results of the said election. The case was assigned to the First Division. On January 27,
2000, Commissioner Japal M. Guiani prepared and signed a proposed resolution in the case. To such
proposed ponencia, Commissioner Julio F. Desamito dissented, while Commissioner Luzviminda G.
Tancangco did not indicate her vote at first because she wished to see both positions, if any, before she
will make a final decision. On February 15, 2000, Commissioner Guiani retired from the service. On or
about February 24, 2000, petitioner Ambil and Ramirez received a purported resolution promulgated on
February 14, 2000. The result was in favor of Ramirez who was declared as winner. On February 28, 2000,
the Comelec, First Division, declared the said resolution as a useless scrap of paper which should be
ignored by the parties as there was no promulgation that took place on the said Resolution. On March 31,
2000, the Comelec, First Division, issued an order setting the promulgation of the resolution of their case.
Ambil filed a motion to cancel promulgation challenging the validity of the purported Guiani resolution.
The Comelec, First Division, acting on the said motion, postponed the promulgation. On June 14, 2000,
Commissioner Luzviminda G. Tancangco and the new Commissioner, Rufino S. Javier, recommended the
promulgation of the subject resolution on the ground that the aggrieved party can challenge it through a
Motion for Reconsideration before the Commission en banc or through a certiorari case before the
Supreme Court. On June 15, 2000, the Comelec, First Division, through Commissioner Julio F. Desamito,
issued an order setting the promulgation of the resolution on June 20, 2000. Without waiting for the said
date, Ambil interposed the instant petition.
There is nothing irregular about the order of promulgation of the resolution in the case, except in the
mind of suspicious parties. Perhaps what was wrong in the order was the reference to the memorandum
of the two commissioners that was not necessary and was a superfluity, or excessus in linguae. All the
members of the Division were incumbent Commissioners of the Comelec and had authority to decide the
case in the Division. What appeared to be patently null and void is the so-called Guiani resolution if it is
the one to be promulgated. It cannot be assumed that the Comelec will promulgate a void resolution and
violate the Constitution and the law. It must be assumed that the members of the Commission in Division
or en banc are sworn to uphold and will obey the Constitution.
Moreover, the instant case does not fall under any of the recognized exceptions to the rule in certiorari
cases dispensing with a motion for reconsideration prior to the filing of a petition. The exceptions do not
apply to election cases where a motion for reconsideration is mandatory by Constitutional fiat to
elevate the case to the Comelec en banc, whose final decision is what is reviewable via certiorari before
the Supreme Court. Consequently, the filing of the instant petition before this Court was premature.
Petitioner failed to exhaust adequate administrative remedies available before the COMELEC.
The Court dismissed the petition for prematurity.
SYLLABUS
1. REMEDIAL LAW; SPECIAL CIVIL ACTIONS; CERTIORARI; SUPREME COURT HAS NO POWER TO
REVIEW INTERLOCUTORY ORDER OR EVEN FINAL RESOLUTION OF A DIVISION OF THE COMMISSION ON
ELECTIONS (COMELEC). — [T]he power of the Supreme Court to review decisions of the Comelec is
prescribed in the Constitution, as follows: "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." "We have interpreted this provision to mean final orders, rulings and
decisions of the COMELEC rendered in the exercise of its adjudicatory or quasi-judicial powers." This
decision must be a final decision or resolution of the Comelec en banc, not of a division, certainly not an
interlocutory order of a division. The Supreme Court has no power to review via certiorari, an
interlocutory order or even a final resolution of a Division of the Commission on Elections.
2. ID.; ID.; ID.; MODE BY WHICH A DECISION, ORDER OR RULING OF THE COMELEC EN BANC MAY BE
ELEVATED TO THE SUPREME COURT. — The mode by which a decision, order or ruling of the Comelec en
banc may be elevated to the Supreme Court is by the special civil action of certiorari under Rule 65 of the
1964 Revised Rules of Court, now expressly provided in Rule 64, 1997 Rules of Civil Procedure, as
amended.
3. ID.; ID.; ID.; REQUIRES THAT THERE BE NO APPEAL, OR ANY PLAIN, SPEEDY AND ADEQUATE
REMEDY IN THE ORDINARY COURSE OF LAW. — Rule 65, Section 1, 1997 Rules of Civil Procedure, as
amended, requires that there be no appeal, or any plain, speedy and adequate remedy in the ordinary
course of law. A motion for reconsideration is a plain and adequate remedy provided by law. Failure to
abide by this procedural requirement constitutes a ground for dismissal of the petition.
4. POLITICAL LAW; ELECTION LAW; COMELEC RULES OF PROCEDURE; DECISION, ORDER, OR
RESOLUTION OF THE COMELEC IN DIVISION MUST BE REVIEWED BY THE COMELEC EN BANC BEFORE THE
FINAL EN BANC DECISION MAY BE BROUGHT TO THE SUPREME COURT. — [D]ecision, order or resolution
of a division of the Comelec must be reviewed by the Comelec en banc via a motion for reconsideration
before the final en banc decision may be brought to the Supreme Court on certiorari. The pre-requisite
filing of a motion for reconsideration is mandatory. Article IX-C, Section 3, 1987 Constitution provides as
follows: "Section 3. The Commission on Elections may sit en banc or in two divisions, and shall
promulgate its rules of procedure in order to expedite disposition of election cases, including pre-
proclamation controversies. All such election cases shall be heard and decided in division, provided that
motions for reconsideration of decisions shall be decided by the Commission en banc. Similarly, the
Rules of Procedure of the Comelec provide that a decision of a division may be raised to the en banc via
a motion for reconsideration.
5. ID.; ID.; ID.; ID.; NOT COMPLIED IN CASE AT BAR. — The case at bar is an election protest involving
the position of Governor, Eastern Samar. It is within the original jurisdiction of the Commission on
Elections in division. Admittedly, petitioner did not ask for a reconsideration of the division's resolution
or final decision. In fact, there was really no resolution or decision to speak of because there was yet no
promulgation, which was still scheduled on June 20, 2000 at 2:00 o'clock in the afternoon. Petitioner went
directly to the Supreme Court from an order of "promulgation of the Resolution of this case" by the First
Division of the Comelec. EaIcAS
6. REMEDIAL LAW; SPECIAL CIVIL ACTION; CERTIORARI; MOTION FOR RECONSIDERATION PRIOR TO
THE FILING OF THE PETITION IS MANDATORY IN ELECTION CASES. — Under the existing Constitutional
scheme, a party to an election case within the jurisdiction of the Comelec in division can not dispense with
the filing of a motion for reconsideration of a decision, resolution or final order of the Division of the
Commission on Elections because the case would not reach the Comelec en banc without such motion for
reconsideration having been filed and resolved by the Division. The instant case does not fall under any
of the recognized exceptions to the rule in certiorari cases dispensing with a motion for reconsideration
prior to the filing of a petition. In truth, the exceptions do not apply to election cases where a motion for
reconsideration is mandatory by Constitutional fiat to elevate the case to the Comelec en banc, whose
final decision is what is reviewable via certiorari before the Supreme Court.
7. POLITICAL LAW; ELECTION LAW; COMELEC RULES OF PROCEDURE; KHO VS. COMMISSION ON
ELECTIONS; RESOLUTION OF COMELEC IN DIVISION WHICH DOES NOT FALL UNDER SECTION 2, RULE 3 OF
THE COMELEC RULES OF PROCEDURE CAN BE ELEVATED TO THE SUPREME COURT. — We are aware of
the ruling in Kho v. Commission on Elections, that "in a situation such as this where the Commission on
Elections in division committed grave abuse of discretion or acted without or in excess of jurisdiction in
issuing interlocutory orders relative to an action pending before it and the controversy did not fall under
any of the instances mentioned in Section 2, Rule 3 of the COMELEC Rules of Procedure, the remedy of
the aggrieved party is not to refer the controversy to the Commission en banc as this is not permissible
under its present rules but to elevate it to this Court via a petition for certiorari under Rule 65 of the Rules
of Court."
8. ID.; ID.; ID.; ID.; NOT APPLICABLE IN CASE AT BAR. — [T]he Kho case has no application to the case
at bar. The issue therein is, may the Commission on Elections in division admit an answer with counter-
protest after the period to file the same has expired? The Comelec First Division admitted the answer with
counter-protest of the respondent. The Supreme Court declared such order void for having been issued
with grave abuse of discretion tantamount to lack of jurisdiction. However, an important moiety in the
Kho case was not mentioned in the dissent. It is that the Comelec, First Division, denied the prayer of
petitioner for the elevation of the case to en banc because the orders of admission were mere
interlocutory orders. Hence, the aggrieved party had no choice but to seek recourse in the Supreme Court.
Such important fact is not present in the case at bar. We must emphasize that what is questioned here is
the order dated June 15, 2000, which is a mere notice of the promulgation of the resolution in EPC Case
No. 98-29. . . . There is nothing irregular about the order of promulgation of the resolution in the case,
except in the mind of suspicious parties. Perhaps what was wrong in the order was the reference to the
memorandum of the two commissioners that was not necessary and was a superfluity, or excessus in
linguae. All the members of the Division were incumbent Commissioners of the Commission on Elections
(COMELEC) and had authority to decide the case in the Division. What appears to be patently null and
void is the so-called Guiani resolution if it is the one to be promulgated. We cannot assume that the
Comelec will promulgate a void resolution and violate the Constitution and the law. We must assume that
the members of the Commission in Division or en banc are sworn to uphold and will obey the Constitution.
Consequently, the Guiani resolution is not at issue in the case at bar. No one knows the contents of the
sealed envelope containing the resolution to be promulgated on June 20, 2000, simply because it has not
been promulgated.
9. ID.; ID.; ID.; RESOLUTION NOT PROMULGATED IS DEEMED VACATED UPON RETIREMENT OF THE
COMMISSIONER WHO PREPARED IT; CASE AT BAR. — It may be true that the parties received a copy of
what purports to be the Guiani resolution, declaring respondent Jose T. Ramirez the victor in the case.
Such Guiani resolution is admitted by the parties and considered by the Commission on Elections as void.
The Solicitor General submitted an advice that the same resolution is deemed vacated by the retirement
of Commissioner Guiani on February 15, 2000. It can not be promulgated anymore for all legal intents and
purposes. We rule that the so-called Guiani resolution is void for the following reasons: First: A final
decision or resolution becomes binding only after it is promulgated and not before. Accordingly, one who
is no longer a member of the Commission at the time the final decision or resolution is promulgated
cannot validly take part in that resolution or decision. Much more could he be the ponente of the
resolution or decision. The resolution or decision of the Division must be signed by a majority of its
members and duly promulgated. Commissioner Guiani might have signed a draft ponencia prior to his
retirement from office, but when he vacated his office without the final decision or resolution having been
promulgated, his vote was automatically invalidated. Before that resolution or decision is so signed and
promulgated, there is no valid resolution or decision to speak of. Second: Atty. Zacarias C. Zaragoza, Jr.,
Clerk of the First Division, Commission on Elections, denied the release or promulgation of the Guiani
resolution. . . . Third: By an order dated February 28, 2000, the Comelec, First Division, disclaimed the
"alleged thirteen (13) page resolution" for being "a useless scrap of paper which should be ignored by the
parties" there being no promulgation of the resolution in the case. Fourth: It is unlikely that Commissioner
Tancangco affixed her signature on the Guiani resolution. On the date that it was purportedly
promulgated, which was February 14, 2000, the Division issued an order where Commissioner Tancangco
expressed her reservations and stated that she wished to see both positions, if any, before she made her
final decision.
10. ID.; ID.; ID.; FINAL DECISION OR RESOLUTION OF THE COMELEC IS PROMULGATED ON A DATE
PREVIOUSLY FIXED. — A final decision or resolution of the Comelec, in Division or en banc is promulgated
on a date previously fixed, of which notice shall be served in advance upon the parties or their attorneys
personally or by registered mail or by telegram.
11. ID.; ID.; ID.; ID.; DECISION OR RESOLUTION OF THE COMELEC MAY BE CHANGED ANY TIME BEFORE
PROMULGATION. — It is jurisprudentially recognized that at any time before promulgation of a decision
or resolution, the ponente may change his mind. Moreover, in this case, before a final decision or
resolution could be promulgated, the ponente retired and a new commissioner appointed. And the
incoming commissioner has decided to take part in the resolution of the case. It is presumed that he had
taken the position of his predecessor because he co-signed the request for the promulgation of the Guiani
resolution.
12. POLITICAL LAW; ADMINISTRATIVE LAW; EXHAUSTION OF ADMINISTRATIVE REMEDIES; A PARTY
COULD SEEK RECONSIDERATION OF A PATENTLY VOID RESOLUTION. — If petitioner were afraid that what
would be promulgated by the Division was the Guiani resolution, a copy of which he received by mail,
which, as heretofore stated, was not promulgated and the signature thereon of the clerk of court was a
forgery, petitioner could seek reconsideration of such patently void resolution and thereby the case would
be elevated to the Commission en banc. Considering the factual circumstances, we speculated ex mero
motu that the Comelec would promulgate a void resolution. "The sea of suspicion has no shore, and the
court that embarks upon it is without rudder or compass." We must not speculate that the Comelec would
still promulgate a void resolution despite knowledge that it is invalid or void ab initio. Consequently, the
filing of the instant petition before this Court was premature. Petitioner failed to exhaust adequate
administrative remedies available before the COMELEC.
13. ID.; ID.; ID.; ELUCIDATED. — In a long line of cases, this Court has held consistently that "before a
party is allowed to seek the intervention of the court, it is a pre-condition that he should have availed of
all the means of administrative processes afforded him. Hence, if a remedy within the administrative
machinery can still be resorted to by giving the administrative officer concerned every opportunity to
decide on a matter that comes within his jurisdiction, then such remedy should be exhausted first before
the court's judicial power can be sought. The premature invocation of court's intervention is fatal to one's
cause of action."
14. ID.; ID.; ID.; MOTION FOR RECONSIDERATION IS A PRE-REQUISITE TO THE VIABILITY OF A SPECIAL
CIVIL ACTION FOR CERTIORARI; EXCEPTIONS. — "This is the rule on exhaustion of administrative remedies.
A motion for reconsideration then is a pre-requisite to the viability of a special civil action for certiorari,
unless the party who avails of the latter can convincingly show that his case falls under any of the following
exceptions to the rule: (1) when the question is purely legal, (2) where judicial intervention is urgent, (3)
where its application may cause great and irreparable damage, (4) where the controverted acts violate
due process, (5) failure of a high government official from whom relief is sought to act on the matter, and
(6) when the issue for non-exhaustion of administrative remedies has been rendered moot."
15. ID.; ID.; ID.; RATIONALE. — "This doctrine of exhaustion of administrative remedies was not
without its practical and legal reasons, for one thing, availment of administrative remedy entails lesser
expenses and provides for a speedier disposition of controversies. It is no less true to state that the courts
of justice for reasons of comity and convenience will shy away from a dispute until the system of
administrative redress has been completed and complied with so as to give the administrative agency
concerned every opportunity to correct its error and to dispose of the case. However, we are not amiss
to reiterate that the principle of exhaustion of administrative remedies as tested by a battery of cases is
not an ironclad rule.
16. ID.; ID.; ID.; EXCEPTIONS TO THE APPLICATION THEREOF. — This doctrine is a relative one and its
flexibility is called upon by the peculiarity and uniqueness of the factual and circumstantial settings of a
case. Hence, it is disregarded (1) when there is a violation of due process, (2) when the issue involved is
purely a legal question, (3) when the administrative action is patently illegal amounting to lack or excess
of jurisdiction, (4) when there is estoppel on the part of the administrative agency concerned, (5) when
there is irreparable injury, (6) when the respondent is a department secretary whose acts as an alter ego
of the president bears the implied and assumed approval of the latter, (7) when to require exhaustion of
administrative remedies would be unreasonable, (8) when it would amount to a nullification of a claim,
(9) when the subject matter is a private land in land case proceedings, (10) when the rule does not provide
a plain, speedy and adequate remedy, and (11) when there are circumstances indicating the urgency of
judicial intervention."
17. ID.; ID.; ID.; ID.; DO NOT APPLY TO AN ELECTION CASE WITHIN THE JURISDICTION OF THE
COMELEC IN DIVISION; CASE AT BAR. — The administrative authorities must be given an opportunity to
act and correct the errors committed in the administrative forum. Only after administrative remedies are
exhausted may judicial recourse be allowed. This case does not fall under any of the exceptions and
indeed, as heretofore stated, the exceptions do not apply to an election case within the jurisdiction of the
Comelec in Division. Hence, the petition at bar must be dismissed for prematurity. "Failure to exhaust
administrative remedies is fatal to a party's cause of action and a dismissal based on that ground is
tantamount to a dismissal based on lack of cause of action." TIcEDC
DE LEON, JR., J., dissenting opinion:
1. POLITICAL LAW; ELECTION LAW; COMELEC RULES OF PROCEDURE; KHO VS. COMMISSION ON
ELECTIONS; INTERLOCUTORY ORDERS ISSUED BY THE COMELEC IN DIVISION WHICH DO NOT FALL UNDER
SECTION 2, RULE 3 OF THE COMELEC RULES OF PROCEDURE CAN BE ELEVATED TO THE SUPREME COURT.
— [I]n the 1997 case of Kho v. Commission on Elections, this Court declared that "[I]n a situation where
the Commission on Elections in division commits grave abuse of discretion or acts without or in excess of
jurisdiction in issuing interlocutory orders relative to an action pending before it and the controversy does
not fall under any of the instances mentioned in Section 2, Rule 3 of the COMELEC Rules of Procedure, the
remedy of the aggrieved party is NOT to refer the controversy to the Commission en banc but to elevate
it to the Supreme Court via a petition for certiorari under Rule 65 of the Rules of Court."
2. ID.; ID.; ID.; ID.; ID.; APPLICABLE IN CASE AT BAR. — Like the Kho case, it does not appear that the
case at bench is one of the cases specifically provided under the COMELEC Rules of Procedure in which
the Commission may sit en banc. Neither is it shown that the present controversy is a case where a division
is not authorized to act nor a situation wherein the members of the First Division unanimously voted to
refer the subject case to the Commission en banc. Clearly, the Commission en banc, under the
circumstances shown above, cannot be the proper forum under which the matter concerning the assailed
order can be referred to.
3. REMEDIAL LAW; SPECIAL CIVIL ACTION; CERTIORARI; MOTION FOR RECONSIDERATION MUST
FIRST BE FILED; EXCEPTIONS. — [T]here are settled exceptions to the rule that a motion for
reconsideration must first be filed before a certiorari petition may be instituted. Among these are: (a)
where the order is a patent nullity, as where the court a quo has no jurisdiction; (b) where the questions
raised in the certiorari proceeding have been duly raised and passed upon by the lower court, or are the
same as those raised and passed upon in the lower court; (c) where there is an urgent necessity for the
resolution of the question and any further delay would prejudice the interests of the Government or of
the petitioner or the subject matter of the action is perishable; (d) where, under the circumstances, a
motion for reconsideration would be useless; (e) where the petitioner was deprived of due process and
there is extreme urgency for relief; (f) where, in a criminal case, relief from an order of arrest is urgent
and the granting of such relief by the trial court is improbable; (g) where the proceedings in the lower
court are a nullity for lack of due process; (h) where the proceedings was ex parte or in which the
petitioner had no opportunity to object; and (i) where the issue raised is one purely of law or where public
interest is involved. cIaCTS
4. ID.; ID.; ID.; MOTION FOR RECONSIDERATION IS NOT NECESSARY WHEN THERE IS GREAT
NECESSITY TO RESOLVE AN ELECTION CASE LIKE WHEN ANOTHER ELECTION IS FAST APPROACHING; CASE
AT BAR. — A thorough analysis of the challenged actions of the COMELEC First Division reveals clearly that
the instant petition falls under the exception for not only is there a great necessity to resolve the election
protest case with utmost dispatch inasmuch as another election is fast approaching but, in addition, the
challenged order is a patent nullity.
5. POLITICAL LAW; ELECTION LAW; COMELEC RULES OF PROCEDURE; DUMAYAS VS. BERNAL;
CANNOT BE RELIED UPON SINCE IT IS NOT A FINAL DECISION. — The . . . Joint Memorandum clearly
dictated that the ponencia of retired Commissioner Guiani is the very resolution to be promulgated. To
sustain the promulgation of the Guiani resolution, Commissioners Tancangco and Javier erroneously
contended that "what is controlling is the date the ponente signed the questioned Resolution as what we
did in promulgating the case of Dumayas v. Bernal (SPC 98-137)." The said case of Dumayas v. Bernal
however cannot be relied upon by the Commissioners since the same is not a final decision. It is the subject
of a petition for certiorari pending resolution before this Court.
6. REMEDIAL LAW; JUDGMENT; TO BE VALID, MUST BE SIGNED AND PROMULGATED DURING THE
INCUMBENCY OF THE JUDGE WHO SIGNED IT. — The COMELEC Commissioners . . . can and do commit
errors and in the case at bench they in fact gravely abused their discretion for they violated the elementary
doctrine that for a judgment to be valid, it must be signed and promulgated during the incumbency of the
judge who signed it. Thus, when a judge or a member of the collegiate court, who had signed or registered
his vote, has vacated his office at the time of the promulgation of a decision or resolution, his vote is
automatically withdrawn or cancelled.
7. ID.; ID.; ID.; RATIONALE. — The rationale for this rule is well-elucidated in the landmark case of
Araneta v. Dinglasan, wherein this Court, speaking through Chief Justice Manuel V. Moran, stated:
"Accordingly, one who is no longer a member of this Court at the time a decision is signed and
promulgated, cannot validly take part in that decision. As above indicated, the true decision of the Court
is the decision signed by the Justices and duly promulgated. Before that decision is so signed and
promulgated, there is no decision of the Court to speak of. The vote cast by a member of the Court after
the deliberation is always understood to be subject to confirmation at the time he has to sign the decision
that is to be promulgated. That vote is of no value if it is not thus confirmed by the Justice casting it. The
purpose of this practice is apparent. Members of this Court, even after they have cast their votes, wish to
preserve their freedom of action till the last moment when they have to sign the decision, so that they
may take full advantage of what they may believe to be the best fruit of their most mature reflection and
deliberation. In consonance with this practice, before a decision is signed and promulgated, all opinions
and conclusions stated during and after the deliberation of the Court, remain in the breasts of the Justices,
binding upon no one, not even upon the Justices themselves. Of course, they may serve for determining
what the opinion of the majority provisionally is and for designating a member to prepare the decision of
the Court, but in no way is that decision binding unless and until duly signed and promulgated."
8. ID.; ID.; ID.; APPLICABLE IN CASE AT BAR. — Applying the foregoing principle to the case at bench,
when Commissioner Guiani retired on February 15, 2000, he ceased to be a commissioner of the COMELEC
where he sat in judgment; and thus, also "retired" and terminated are all his authority to decide any case,
i.e., to write, sign and promulgate the decision thereon. Otherwise stated, he had lost entirely his power
and legal authority to act on all cases assigned to him prior to his retirement. cHaDIA
9. ID.; ID.; ANY TIME BEFORE PROMULGATION, THE PONENCIA MAY BE CHANGED BY THE PONENTE;
THE PONENCIA DIED WITH THE PONENTE. — In the case of Consolidated Bank and Trust Corporation v.
Intermediate Appellate Court, this Court further ratiocinated: ". . . [A]t any time before promulgation, the
ponencia may be changed by the ponente. Indeed, if any member of the court who may have already
signed it so desires, he may still withdraw his concurrence and register a qualification or dissent as long
as the decision has not yet been promulgated. A promulgation signifies that on the date it was made the
judge or judges who signed the decision continued to support it. If at the time of the promulgation, a
judge or a member of a collegiate court has already vacated his office, his vote is automatically withdrawn.
This was what happened in the Araneta case, where Justice Gregorio Perfecto's signature on the original
decision was disregarded when he died before it could be promulgated. The decision remained valid,
however, because it was still supported by a majority of the Supreme Court then, and, no less importantly,
Justice Perfecto was not the ponente. The ponente in a collegiate court should remain a member thereof
at the time his ponencia is promulgated because, at any time before that, he has the privilege of changing
his opinion for the consideration of his colleagues. As a rule, his recommendations are accepted in
recognition of the special study he is supposed to have made of the case after his designation as its
ponente. It is important that he be incumbent at the time the decision is promulgated, in the event he
may want to make last-minute changes therein with the approval of the other members. Obviously, he
cannot exercise this privilege if he is no longer in office. It is on this justification that, as a matter of practice
(and of courtesy), this Court defers promulgation of a decision written by a member on official leave until
his return. The author is afforded an opportunity to suggest to the rest of the Court any change he may
want to make in his ponencia before it is officially pronounced. Applying the above rules, we hold that the
questioned ponencia died with the ponente and consequently could not be promulgated thereafter."