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Republic of the Philippines 263-269, 271-273, 275-283, 285-289, 291, 293, 297-299,

SUPREME COURT 301-303, 309, 312-315, 325, 327, 343, 346, 349, 357,
Manila 358, 362, 367, 370, 382, 385, 386, 396-397, 405, 438-
440, 444- 445, 473, 486, 488, 498, 501, 399, 527, 561,
EN BANC 576, 587, 594, 599, 600, 602, 609, 610, 611, 612, 615,
641, 642, 665, 702, 712-713, 726, 837-839, 878-879,
G.R. No. L-63915 April 24, 1985 881, 882, 939-940, 964,997,1149-1178,1180-1278.

LORENZO M. TAÑADA, ABRAHAM F. c] General Orders Nos.: 14, 52, 58, 59, 60, 62, 63, 64 &
SARMIENTO, and MOVEMENT OF ATTORNEYS 65.
FOR BROTHERHOOD, INTEGRITY AND
NATIONALISM, INC. [MABINI], petitioners, d] Proclamation Nos.: 1126, 1144, 1147, 1151, 1196,
vs. 1270, 1281, 1319-1526, 1529, 1532, 1535, 1538, 1540-
HON. JUAN C. TUVERA, in his capacity as 1547, 1550-1558, 1561-1588, 1590-1595, 1594-1600,
Executive Assistant to the President, HON. JOAQUIN 1606-1609, 1612-1628, 1630-1649, 1694-1695, 1697-
VENUS, in his capacity as Deputy Executive Assistant 1701, 1705-1723, 1731-1734, 1737-1742, 1744, 1746-
to the President , MELQUIADES P. DE LA CRUZ, in 1751, 1752, 1754, 1762, 1764-1787, 1789-1795, 1797,
his capacity as Director, Malacañang Records Office, 1800, 1802-1804, 1806-1807, 1812-1814, 1816, 1825-
and FLORENDO S. PABLO, in his capacity as 1826, 1829, 1831-1832, 1835-1836, 1839-1840, 1843-
Director, Bureau of Printing, respondents. 1844, 1846-1847, 1849, 1853-1858, 1860, 1866, 1868,
1870, 1876-1889, 1892, 1900, 1918, 1923, 1933, 1952,
1963, 1965-1966, 1968-1984, 1986-2028, 2030-2044,
2046-2145, 2147-2161, 2163-2244.
ESCOLIN, J.:
e] Executive Orders Nos.: 411, 413, 414, 427, 429-454,
Invoking the people's right to be informed on matters of 457- 471, 474-492, 494-507, 509-510, 522, 524-528,
public concern, a right recognized in Section 6, Article 531-532, 536, 538, 543-544, 549, 551-553, 560, 563,
IV of the 1973 Philippine Constitution, 1 as well as the 567-568, 570, 574, 593, 594, 598-604, 609, 611- 647,
principle that laws to be valid and enforceable must be 649-677, 679-703, 705-707, 712-786, 788-852, 854-857.
published in the Official Gazette or otherwise effectively
promulgated, petitioners seek a writ of mandamus to f] Letters of Implementation Nos.: 7, 8, 9, 10, 11-22, 25-
compel respondent public officials to publish, and/or 27, 39, 50, 51, 59, 76, 80-81, 92, 94, 95, 107, 120, 122,
cause the publication in the Official Gazette of various 123.
presidential decrees, letters of instructions, general
orders, proclamations, executive orders, letter of g] Administrative Orders Nos.: 347, 348, 352-354, 360-
implementation and administrative orders. 378, 380-433, 436-439.

Specifically, the publication of the following presidential The respondents, through the Solicitor General, would
issuances is sought: have this case dismissed outright on the ground that
petitioners have no legal personality or standing to bring
a] Presidential Decrees Nos. 12, 22, 37, 38, 59, 64, 103, the instant petition. The view is submitted that in the
171, 179, 184, 197, 200, 234, 265, 286, 298, 303, 312, absence of any showing that petitioners are personally
324, 325, 326, 337, 355, 358, 359, 360, 361, 368, 404, and directly affected or prejudiced by the alleged non-
406, 415, 427, 429, 445, 447, 473, 486, 491, 503, 504, publication of the presidential issuances in question 2 said
521, 528, 551, 566, 573, 574, 594, 599, 644, 658, 661, petitioners are without the requisite legal personality to
718, 731, 733, 793, 800, 802, 835, 836, 923, 935, 961, institute this mandamus proceeding, they are not being
1017-1030, 1050, 1060-1061, 1085, 1143, 1165, 1166, "aggrieved parties" within the meaning of Section 3,
1242, 1246, 1250, 1278, 1279, 1300, 1644, 1772, 1808, Rule 65 of the Rules of Court, which we quote:
1810, 1813-1817, 1819-1826, 1829-1840, 1842-1847.
SEC. 3. Petition for Mandamus.—When any tribunal,
b] Letter of Instructions Nos.: 10, 39, 49, 72, 107, 108, corporation, board or person unlawfully neglects the
116, 130, 136, 141, 150, 153, 155, 161, 173, 180, 187, performance of an act which the law specifically enjoins
188, 192, 193, 199, 202, 204, 205, 209, 211-213, 215- as a duty resulting from an office, trust, or station, or
224, 226-228, 231-239, 241-245, 248, 251, 253-261,
unlawfully excludes another from the use a rd enjoyment case without keeping in mind the reason for the rule,
of a right or office to which such other is entitled, and because, if under the particular circumstances the reason
there is no other plain, speedy and adequate remedy in for the rule does not exist, the rule itself is not applicable
the ordinary course of law, the person aggrieved thereby and reliance upon the rule may well lead to error'
may file a verified petition in the proper court alleging
the facts with certainty and praying that judgment be No reason exists in the case at bar for applying the
rendered commanding the defendant, immediately or at general rule insisted upon by counsel for the respondent.
some other specified time, to do the act required to be The circumstances which surround this case are different
done to Protect the rights of the petitioner, and to pay the from those in the United States, inasmuch as if the relator
damages sustained by the petitioner by reason of the is not a proper party to these proceedings no other person
wrongful acts of the defendant. could be, as we have seen that it is not the duty of the
law officer of the Government to appear and represent
Upon the other hand, petitioners maintain that since the the people in cases of this character.
subject of the petition concerns a public right and its
object is to compel the performance of a public duty, they The reasons given by the Court in recognizing a private
need not show any specific interest for their petition to be citizen's legal personality in the aforementioned case
given due course. apply squarely to the present petition. Clearly, the right
sought to be enforced by petitioners herein is a public
The issue posed is not one of first impression. As early as right recognized by no less than the fundamental law of
the 1910 case of Severino vs. Governor General, 3 this the land. If petitioners were not allowed to institute this
Court held that while the general rule is that "a writ of proceeding, it would indeed be difficult to conceive of
mandamus would be granted to a private individual only any other person to initiate the same, considering that the
in those cases where he has some private or particular Solicitor General, the government officer generally
interest to be subserved, or some particular right to be empowered to represent the people, has entered his
protected, independent of that which he holds with the appearance for respondents in this case.
public at large," and "it is for the public officers
exclusively to apply for the writ when public rights are to Respondents further contend that publication in the
be subserved [Mithchell vs. Boardmen, 79 M.e., 469]," Official Gazette is not a sine qua non requirement for the
nevertheless, "when the question is one of public right effectivity of laws where the laws themselves provide for
and the object of the mandamus is to procure the their own effectivity dates. It is thus submitted that since
enforcement of a public duty, the people are regarded as the presidential issuances in question contain special
the real party in interest and the relator at whose provisions as to the date they are to take effect,
instigation the proceedings are instituted need not show publication in the Official Gazette is not indispensable
that he has any legal or special interest in the result, it for their effectivity. The point stressed is anchored on
being sufficient to show that he is a citizen and as such Article 2 of the Civil Code:
interested in the execution of the laws [High,
Extraordinary Legal Remedies, 3rd ed., sec. 431]. Art. 2. Laws shall take effect after fifteen days following
the completion of their publication in the Official
Thus, in said case, this Court recognized the relator Lope Gazette, unless it is otherwise provided, ...
Severino, a private individual, as a proper party to the
mandamus proceedings brought to compel the Governor The interpretation given by respondent is in accord with
General to call a special election for the position of this Court's construction of said article. In a long line of
municipal president in the town of Silay, Negros decisions,4 this Court has ruled that publication in the
Occidental. Speaking for this Court, Mr. Justice Grant T. Official Gazette is necessary in those cases where the
Trent said: legislation itself does not provide for its effectivity date-
for then the date of publication is material for
We are therefore of the opinion that the weight of determining its date of effectivity, which is the fifteenth
authority supports the proposition that the relator is a day following its publication-but not when the law itself
proper party to proceedings of this character when a provides for the date when it goes into effect.
public right is sought to be enforced. If the general rule in
America were otherwise, we think that it would not be Respondents' argument, however, is logically correct
applicable to the case at bar for the reason 'that it is only insofar as it equates the effectivity of laws with the
always dangerous to apply a general rule to a particular fact of publication. Considered in the light of other
statutes applicable to the issue at hand, the conclusion is Gazette ... ." The word "shall" used therein imposes upon
easily reached that said Article 2 does not preclude the respondent officials an imperative duty. That duty must
requirement of publication in the Official Gazette, even if be enforced if the Constitutional right of the people to be
the law itself provides for the date of its effectivity. Thus, informed on matters of public concern is to be given
Section 1 of Commonwealth Act 638 provides as substance and reality. The law itself makes a list of what
follows: should be published in the Official Gazette. Such listing,
to our mind, leaves respondents with no discretion
Section 1. There shall be published in the Official whatsoever as to what must be included or excluded
Gazette [1] all important legisiative acts and resolutions from such publication.
of a public nature of the, Congress of the Philippines; [2]
all executive and administrative orders and The publication of all presidential issuances "of a public
proclamations, except such as have no general nature" or "of general applicability" is mandated by law.
applicability; [3] decisions or abstracts of decisions of the Obviously, presidential decrees that provide for fines,
Supreme Court and the Court of Appeals as may be forfeitures or penalties for their violation or otherwise
deemed by said courts of sufficient importance to be so impose a burden or. the people, such as tax and revenue
published; [4] such documents or classes of documents as measures, fall within this category. Other presidential
may be required so to be published by law; and [5] such issuances which apply only to particular persons or class
documents or classes of documents as the President of of persons such as administrative and executive orders
the Philippines shall determine from time to time to have need not be published on the assumption that they have
general applicability and legal effect, or which he may been circularized to all concerned. 6
authorize so to be published. ...
It is needless to add that the publication of presidential
The clear object of the above-quoted provision is to give issuances "of a public nature" or "of general
the general public adequate notice of the various laws applicability" is a requirement of due process. It is a rule
which are to regulate their actions and conduct as of law that before a person may be bound by law, he
citizens. Without such notice and publication, there must first be officially and specifically informed of its
would be no basis for the application of the maxim contents. As Justice Claudio Teehankee said in Peralta
"ignorantia legis non excusat." It would be the height of vs. COMELEC 7:
injustice to punish or otherwise burden a citizen for the
transgression of a law of which he had no notice In a time of proliferating decrees, orders and letters of
whatsoever, not even a constructive one. instructions which all form part of the law of the land,
the requirement of due process and the Rule of Law
Perhaps at no time since the establishment of the demand that the Official Gazette as the official
Philippine Republic has the publication of laws taken so government repository promulgate and publish the texts
vital significance that at this time when the people have of all such decrees, orders and instructions so that the
bestowed upon the President a power heretofore enjoyed people may know where to obtain their official and
solely by the legislature. While the people are kept specific contents.
abreast by the mass media of the debates and
deliberations in the Batasan Pambansa—and for the The Court therefore declares that presidential issuances
diligent ones, ready access to the legislative records—no of general application, which have not been published,
such publicity accompanies the law-making process of shall have no force and effect. Some members of the
the President. Thus, without publication, the people have Court, quite apprehensive about the possible unsettling
no means of knowing what presidential decrees have effect this decision might have on acts done in reliance of
actually been promulgated, much less a definite way of the validity of those presidential decrees which were
informing themselves of the specific contents and texts of published only during the pendency of this petition, have
such decrees. As the Supreme Court of Spain ruled: put the question as to whether the Court's declaration of
"Bajo la denominacion generica de leyes, se comprenden invalidity apply to P.D.s which had been enforced or
tambien los reglamentos, Reales decretos, Instrucciones, implemented prior to their publication. The answer is all
Circulares y Reales ordines dictadas de conformidad con too familiar. In similar situations in the past this Court
las mismas por el Gobierno en uso de su potestad.5 had taken the pragmatic and realistic course set forth
in Chicot County Drainage District vs. Baxter Bank 8 to
The very first clause of Section I of Commonwealth Act wit:
638 reads: "There shall be published in the Official
The courts below have proceeded on the theory that the apprise the public of the contents of [penal] regulations
Act of Congress, having been found to be and make the said penalties binding on the persons
unconstitutional, was not a law; that it was inoperative, affected thereby. " The cogency of this holding is
conferring no rights and imposing no duties, and hence apparently recognized by respondent officials
affording no basis for the challenged decree. Norton v. considering the manifestation in their comment that "the
Shelby County, 118 U.S. 425, 442; Chicago, 1. & L. Ry. government, as a matter of policy, refrains from
Co. v. Hackett, 228 U.S. 559, 566. It is quite clear, prosecuting violations of criminal laws until the same
however, that such broad statements as to the effect of a shall have been published in the Official Gazette or in
determination of unconstitutionality must be taken with some other publication, even though some criminal laws
qualifications. The actual existence of a statute, prior to provide that they shall take effect immediately.
such a determination, is an operative fact and may have
consequences which cannot justly be ignored. The past WHEREFORE, the Court hereby orders respondents to
cannot always be erased by a new judicial declaration. publish in the Official Gazette all unpublished
The effect of the subsequent ruling as to invalidity may presidential issuances which are of general application,
have to be considered in various aspects-with respect to and unless so published, they shall have no binding force
particular conduct, private and official. Questions of and effect.
rights claimed to have become vested, of status, of prior
determinations deemed to have finality and acted upon SO ORDERED.
accordingly, of public policy in the light of the nature
both of the statute and of its previous application,
demand examination. These questions are among the
most difficult of those which have engaged the attention G.R. No. 176830 February 11, 2014
of courts, state and federal and it is manifest from
numerous decisions that an all-inclusive statement of a SATURNINO C. OCAMPO, Petitioner,
principle of absolute retroactive invalidity cannot be vs.
justified. HON. EPHREM S. ABANDO, in his capacity as
Presiding Judge of the Regional Trial Court of
Consistently with the above principle, this Court Hilongos, Leyte, Branch 18, CESAR M. MERIN, in.
in Rutter vs. Esteban 9 sustained the right of a party under his capacity as Approving Prosecutor and Officer-in-
the Moratorium Law, albeit said right had accrued in his Charge, ROSULO U. VIVERO, in his capacity as
favor before said law was declared unconstitutional by Investigating Prosecutor, RAUL M. GONZALEZ, in
this Court. his capacity as Secretary of the Department of
Justice, Respondents.
Similarly, the implementation/enforcement of
presidential decrees prior to their publication in the x-----------------------x
Official Gazette is "an operative fact which may have
consequences which cannot be justly ignored. The past G.R. No. 185587
cannot always be erased by a new judicial declaration ...
that an all-inclusive statement of a principle of absolute RANDALL B. ECHANIS, Petitioner,
retroactive invalidity cannot be justified." vs.
HON. THELMA BUNYl-MEDINA, in her capacity as
From the report submitted to the Court by the Clerk of Presiding Judge of the Regional Trial Court of
Court, it appears that of the presidential decrees sought Manila, Branch 32, HON. EPHREM S. ABANDO, in
by petitioners to be published in the Official Gazette, his capacity as Presiding Judge of the Regional Trial
only Presidential Decrees Nos. 1019 to 1030, inclusive, Court of Hilongos, Leyte, Branch 18, CESAR M.
1278, and 1937 to 1939, inclusive, have not been so MERIN, in his capacity as Approving Prosecutor and
published. 10 Neither the subject matters nor the texts of Officer-in-Charge, ROSULO U. VIVERO, in his
these PDs can be ascertained since no copies thereof are capacity as Investigating Prosecutor, RAUL M.
available. But whatever their subject matter may be, it is GONZALEZ, in his capacity as Secretary of the
undisputed that none of these unpublished PDs has ever Department of Justice, Respondents.
been implemented or enforced by the government.
In Pesigan vs. Angeles, 11 the Court, through Justice x-----------------------x
Ramon Aquino, ruled that "publication is necessary to
G.R. No. 185636 1. Whether petitioners were denied due process during
preliminary investigation and in the issuance of the
RAFAEL G. BAYLOSIS, Petitioner, warrants of arrest.
vs.
HON. THELMA BUNYI-MEDINA, in her capacity as 2. Whether the murder charges against petitioners should
Presiding Judge of the Regional Trial Court of be dismissed under the political offense doctrine.
Manila, Branch 32, HON. EPHREM S. ABANDO, in
his capacity as Presiding Judge of the Regional Trial ANTECEDENT FACTS
Court of Hilongos, Leyte, Branch 18, CESAR M.
MERIN, in his capacity as Approving Prosecutor and These are petitions for certiorari and prohibition2 seeking
Officer-in-Charge, ROSULO U. VIVERO, in his the annulment of the orders and resolutions of public
capacity as Investigating Prosecutor, RAUL M. respondents with regard to the indictment and issuance of
GONZALEZ, in his capacity as Secretary of the warrants of arrest against petitioners for the crime of
Department of Justice, Respondents. multiple murder.

x-----------------------x Police Chief Inspector George L. Almaden (P C/Insp.


Almaden) of the Philippine National Police (PNP)
G.R. No. 190005 Regional Office 8 and Staff Judge Advocate Captain
Allan Tiu (Army Captain Tiu) of the 8th Infantry
VICENTE P. LADLAD, Petitioner, Division of the Philippine Army sent 12 undated letters
vs. to the Provincial Prosecutor of Leyte through Assistant
HON. THELMA BUNYI-MEDINA, in her capacity as Provincial Prosecutor Rosulo U. Vivero (Prosecutor
Presiding Judge of the Regional Trial Court of Vivero).3 The letters requested appropriate legal action
Manila, Branch 32, and the PEOPLE OF THE on 12 complaint-affidavits attached therewith accusing
PHILIPPINES, Respondents. 71 named members of the Communist Party of the
Philippines/New People’s Army/National Democratic
DECISION Front of the Philippines (CPP/NPA/NDFP) of murder,
including petitioners herein along with several other
SERENO, CJ.: unnamed members.

On 26 August 2006, a mass grave was discovered by The letters narrated that on 26 August 2006, elements of
elements of the 43rd Infantry Brigade of the Philippine the 43rd Infantry Brigade of the Philippine Army
Army at Sitio Sapang Daco, Barangay Kaulisihan, discovered a mass grave site of the CPP/NPA/NDFP at
Inopacan, Leyte.1 The mass grave contained skeletal Sitio Sapang Daco, Barangay Kaulisihan, Inopacan,
remains of individuals believed to be victims of Leyte.4Recovered from the grave site were 67 severely
"Operation Venereal Disease" (Operation VD) launched deteriorated skeletal remains believed to be victims of
by members of the Communist Party of the Operation VD.5
Philippines/New People’s Army/National Democratic
Front of the Philippines (CPP/NPA/NDFP) to purge their The PNP Scene of the Crime Operation (SOCO) Team
ranks of suspected military informers. based in Regional Office 8 was immediately dispatched
to the mass grave site to conduct crime investigation, and
While the doctrine of hierarchy of courts normally to collect, preserve and analyze the skeletal
precludes a direct invocation of this Court’s jurisdiction, remains.6 Also, from 11-17 September 2006, an
we take cognizance of these petitions considering that investigation team composed of intelligence officers, and
petitioners have chosen to take recourse directly before medico-legal and DNA experts, conducted forensic crime
us and that the cases are of significant national interest. analysis and collected from alleged relatives of the
victims DNA samples for matching.7
Petitioners have raised several issues, but most are too
insubstantial to require consideration. Accordingly, in the The Initial Specialist Report8 dated 18 September 2006
exercise of sound judicial discretion and economy, this issued by the PNP Crime Laboratory in Camp Crame,
Court will pass primarily upon the following: Quezon City, was inconclusive with regard to the
identities of the skeletal remains and even the length of
time that they had been buried. The report recommended
the conduct of further tests to confirm the identities of the petitioner Ladlad made a formal entry of appearance on 8
remains and the time window of death.9 December 2006 during the preliminary
investigation.26 However, petitioner Ladlad did not file a
However, in a Special Report10 dated 2 October 2006, the counter-affidavit because he was allegedly not served a
Case Secretariat of the Regional and National Inter- subpoena.27
Agency Legal Action Group (IALAG) came up with the
names of ten (10) possible victims after comparison and In a Resolution28 dated 16 February 2007, Prosecutor
examination based on testimonies of relatives and Vivero recommended the filing of an Information for 15
witnesses.11 counts of multiple murder against 54 named members of
the CPP/NPA/NDFP, including petitioners herein, for the
The 12 complaint-affidavits were from relatives of the death of the following: 1) Juanita Aviola, 2) Concepcion
alleged victims of Operation VD. All of them swore that Aragon, 3) Gregorio Eras, 4) Teodoro Recones, Jr., 5)
their relatives had been abducted or last seen with Restituto Ejoc, 6) Rolando Vasquez, 7) Junior Milyapis,
members of the CPP/NPA/NDFP and were never seen 8) Crispin Dalmacio, 9) Zacarias Casil, 10) Pablo Daniel,
again. 11) Romeo Tayabas, 12) Domingo Napoles, 13) Ciriaco
Daniel, 14) Crispin Prado, and 15) Ereberto Prado.29
They also expressed belief that their relatives’ remains
were among those discovered at the mass grave site. Prosecutor Vivero also recommended that Zacarias
Piedad, Leonardo Tanaid, Numeriano Beringuel and
Also attached to the letters were the affidavits of Zacarias Glecerio Roluna be dropped as respondents and utilized
Piedad,12 Leonardo C. Tanaid, Floro M. Tanaid, as state witnesses, as their testimonies were vital to the
Numeriano Beringuel, Glecerio Roluna and Veronica P. success of the prosecution.30 The Resolution was silent
Tabara. They narrated that they were former members of with regard to Veronica Tabara.
the CPP/NPA/NDFP.13 According to them, Operation VD
was ordered in 1985 by the CPP/NPA/NDFP Central The Information was filed before the Regional Trial
Committee.14 Allegedly, petitioners Saturnino C. Ocampo Court (RTC) Hilongos, Leyte, Branch 18 (RTC Hilongos,
(Ocampo),15 Randall B. Echanis (Echanis),16 Rafael G. Leyte) presided by Judge Ephrem S. Abando (Judge
Baylosis (Baylosis),17 and Vicente P. Ladlad Abando) on 28 February 2007, and docketed as Criminal
(Ladlad)18 were then members of the Central Committee. Case No. H-1581.31 Petitioner Ocampo filed an Ex Parte
Motion to Set Case for Clarificatory Hearing dated 5
According to these former members, four sub-groups March 2007 prior to receiving a copy of the Resolution
were formed to implement Operation VD, namely, (1) the recommending the filing of the Information.32
Intel Group responsible for gathering information on
suspected military spies and civilians who would not On 6 March 2007, Judge Abando issued an Order finding
support the movement; (2) the Arresting Group charged probable cause "in the commission by all mentioned
with their arrests; (3) the Investigation Group which accused of the crime charged."33 He ordered the issuance
would subject those arrested to questioning; and (4) the of warrants of arrest against them with no recommended
Execution Group or the "cleaners" of those confirmed to bail for their temporary liberty.34
be military spies and civilians who would not support the
movement.19 On 16 March 2007, petitioner Ocampo filed before us
this special civil action for certiorari and prohibition
From 1985 to 1992, at least 100 people had been under Rule 65 of the Rules of Court and docketed as
abducted, hog-tied, tortured and executed by members of G.R. No. 176830 seeking the annulment of the 6 March
the CPP/NPA/NDF20 pursuant to Operation VD.21 2007 Order of Judge Abando and the 16 February 2007
Resolution of Prosecutor Vivero.35 The petition prayed
On the basis of the 12 letters and their attachments, for the unconditional release of petitioner Ocampo from
Prosecutor Vivero issued a subpoena requiring, among PNP custody, as well as the issuance of a temporary
others, petitioners to submit their counter-affidavits and restraining order/ writ of preliminary injunction to
those of their witnesses.22 Petitioner Ocampo submitted restrain the conduct of further proceedings during the
his counter-affidavit.23 Petitioners Echanis24 and pendency of the petition.36
25
Baylosis did not file counter-affidavits because they
were allegedly not served the copy of the complaint and Petitioner Ocampo argued that a case for rebellion
the attached documents or evidence. Counsel of against him and 44 others (including petitioners Echanis
and Baylosis37 and Ladlad38) docketed as Criminal Case On 30 April 2008, Judge Abando issued an Order
No. 06-944 was then pending before the RTC Makati, denying the motion.51 Petitioners Echanis and Baylosis
Branch 150 (RTC Makati).39 Putting forward the political filed a Motion for Reconsideration52 dated 30 May 2008,
offense doctrine, petitioner Ocampo argues that common but before being able to rule thereon, Judge Abando
crimes, such as murder in this case, are already absorbed issued an Order dated 12 June 2008 transmitting the
by the crime of rebellion when committed as a necessary records of Criminal Case No. H-1581 to the Office of the
means, in connection with and in furtherance of Clerk of Court, RTC Manila.53 The Order was issued in
rebellion.40 compliance with the Resolution dated 23 April 2008 of
this Court granting the request of then Secretary of
We required41 the Office of the Solicitor General (OSG) Justice Raul Gonzales to transfer the venue of the case.
to comment on the petition and the prayer for the
issuance of a temporary restraining order/ writ of The case was re-raffled to RTC Manila, Branch 32 (RTC
preliminary injunction, and set42 the case for oral Manila) presided by Judge Thelma Bunyi-Medina (Judge
arguments on 30 March 2007. The OSG filed its Medina) and re-docketed as Criminal Case No. 08-
Comment on 27 March 2007.43 262163.54 Petitioner Echanis was transferred to the PNP
Custodial Center in Camp Crame, Quezon City. On 12
The following were the legal issues discussed by the August 2008, petitioners Echanis and Baylosis filed their
parties during the oral arguments: Supplemental Arguments to Motion for
Reconsideration.55
1. Whether the present petition for certiorari and
prohibition is the proper remedy of petitioner Ocampo; In an Order56 dated 27 October 2008, Judge Medina
suspended the proceedings of the case pending the
2. Assuming it is the proper remedy, whether he was resolution of G.R. No. 176830 by this Court.
denied due process during preliminary investigation and
in the issuance of the warrant of arrest; On 18 December 2008, petitioner Ladlad filed with the
RTC Manila a Motion to Quash and/or Dismiss.57
3. Whether the murder charges against him are already
included in the rebellion charge against him in the RTC.44 On 23 December 2008, petitioner Echanis filed before us
a special civil action for certiorari and prohibition under
Afterwards, the parties were ordered to submit their Rule 65 of the Rules of Court seeking the annulment of
memoranda within 10 days.45 On 3 April 2007, the Court the 30 April 2008 Order of Judge Abando and the 27
ordered the provisional release of petitioner Ocampo October 2008 Order of Judge Medina.58 The petition,
under a ₱100,000 cash bond.46 docketed as G.R. No. 185587, prayed for the
Acting on the observation of the Court during the oral unconditional and immediate release of petitioner
arguments that the single Information filed before the Echanis, as well as the issuance of a temporary
RTC Hilongos, Leyte was defective for charging 15 restraining order/writ of preliminary injunction to
counts of murder, the prosecution filed a Motion to restrain his further incarceration.59
Admit Amended Information and New Informations on
11 April 2007.47 In an Order dated 27 July 2007, Judge On 5 January 2009, petitioner Baylosis filed before us a
Abando held in abeyance the resolution thereof and special civil action for certiorari and prohibition under
effectively suspended the proceedings during the Rule 65 of the Rules of Court also seeking the annulment
pendency of G.R. No. 176830 before this Court.48 of the 30 April 2008 Order of Judge Abando and the 27
October 2008 Order of Judge Medina.60 The petition,
While the proceedings were suspended, petitioner docketed as G.R. No. 185636, prayed for the issuance of
Echanis was arrested on 28 January 2008 by virtue of the a temporary restraining order/ writ of preliminary
warrant of arrest issued by Judge Abando on 6 March injunction to restrain the implementation of the warrant
2007.49 On 1 February 2008, petitioners Echanis and of arrest against petitioner Baylosis.61
Baylosis filed a Motion for Judicial Reinvestigation/
Determination of Probable Cause with Prayer to Dismiss The Court consolidated G.R. Nos. 185587 and 185636
the Case Outright and Alternative Prayer to Recall/ on 12 January 2009.62
Suspend Service of Warrant.50
On 3 March 2009, the Court ordered the further
consolidation of these two cases with G.R. No.
176830.63 We required64 the OSG to comment on the negotiations with the GRP peace panel for the signing of
prayer for petitioner Echanis’s immediate release, to a peace accord.81
which the OSG did not interpose any objection on these
conditions: that the temporary release shall only be for On 17 January 2012, we granted the motions of
the purpose of his attendance and participation in the petitioners Ladlad and Baylosis and fixed their bail in the
formal peace negotiations between the Government of amount of ₱100,000, subject to the condition that their
the Republic of the Philippines (GRP) and the temporary release shall be limited to the period of their
CPP/NPA/NDFP, set to begin in August 2009; and that actual participation in the peace negotiations.82
his temporary release shall not exceed six (6)
months.65 The latter condition was later modified, such Petitioner Ladlad filed his Reply83 to the OSG Comment
that his temporary liberty shall continue for the duration on 18 January 2013.
of his actual participation in the peace negotiations.66
OUR RULING
On 11 August 2009, the Court ordered the provisional
release of petitioner Echanis under a ₱100,000 cash Petitioners were accorded due
bond, for the purpose of his participation in the formal process during preliminary
peace negotiations.67 investigation and in the issuance of
the warrants of arrest.
Meanwhile, the Department of Justice (DOJ) filed its
Opposition68 to petitioner Ladlad’s motion to quash A. Preliminary Investigation
before the RTC Manila. The trial court conducted a
hearing on the motion on 13 February 2009.69 A preliminary investigation is "not a casual affair." 84 It is
conducted to protect the innocent from the
On 6 May 2009, Judge Medina issued an Order 70 denying embarrassment, expense and anxiety of a public
the motion to quash. The motion for reconsideration filed trial.85 While the right to have a preliminary investigation
by petitioner Ladlad was also denied on 27 August before trial is statutory rather than constitutional, it is a
2009.71 substantive right and a component of due process in the
administration of criminal justice.86
On 9 November 2009, petitioner Ladlad filed before us a
special civil action for certiorari under Rule 65 of the In the context of a preliminary investigation, the right to
Rules of Court seeking the annulment of the 6 May 2009 due process of law entails the opportunity to be
and 27 August 2009 Orders of Judge Medina.72 The heard.87 It serves to accord an opportunity for the
petition was docketed as G.R. No. 190005. presentation of the respondent’s side with regard to the
accusation. Afterwards, the investigating officer shall
On 11 January 2010, we ordered the consolidation of decide whether the allegations and defenses lead to a
G.R. No. 190005 with G.R. Nos. 176830, 185587 and reasonable belief that a crime has been committed, and
185636.73 We also required the OSG to file its comment that it was the respondent who committed it. Otherwise,
thereon. The OSG submitted its Comment74 on 7 May the investigating officer is bound to dismiss the
2010. complaint.

On 27 July 2010, we likewise required the OSG to file its "The essence of due process is reasonable opportunity to
Comment in G.R. Nos. 185636 and 185587.75 These be heard and submit evidence in support of one's
Comments were filed by the OSG on 13 December defense."88 What is proscribed is lack of opportunity to
201076 and on 21 January 2011,77 respectively. Petitioners be heard.89 Thus, one who has been afforded a chance to
Echanis and Baylosis filed their Consolidated Reply78 on present one’s own side of the story cannot claim denial of
7 June 2011. due process.90

On 2 May 2011, petitioner Ladlad filed an Urgent Motion Petitioners Echanis and Baylosis allege that they did not
to Fix Bail.79 On 21 July 2011, petitioner Baylosis filed A receive a copy of the complaint and the attached
Motion to Allow Petitioner to Post Bail.80 The OSG documents or evidence.91 Petitioner Ladlad claims that he
interposed no objection to the grant of a ₱100,000 cash was not served a subpoena due to the false address
bail to them considering that they were consultants of the indicated in the 12 undated letters of P C/Insp. Almaden
NDFP negotiating team, which was then holding and Army Captain Tiu to Prosecutor
Vivero.92 Furthermore, even though his counsels filed Section 3(d), Rule 112 of the Rules of Court, allows
their formal entry of appearance before the Office of the Prosecutor Vivero to resolve the complaint based on the
Prosecutor, petitioner Ladlad was still not sent a evidence before him if a respondent could not be
subpoena through his counsels’ addresses.93 Thus, they subpoenaed. As long as efforts to reach a respondent
were deprived of the right to file counter-affidavits. were made, and he was given an opportunity to present
countervailing evidence, the preliminary investigation
Petitioner Ocampo claims that Prosecutor Vivero, in remains valid.100The rule was put in place in order to foil
collusion with P C/Insp. Almaden and Army Captain Tiu, underhanded attempts of a respondent to delay the
surreptitiously inserted the Supplemental Affidavit of prosecution of offenses.101
Zacarias Piedad in the records of the case without
furnishing petitioner Ocampo a copy.94 The original In this case, the Resolution stated that efforts were
affidavit of Zacarias Piedad dated 14 September 2006 undertaken to serve subpoenas on the named respondents
stated that a meeting presided by petitioner Ocampo was at their last known addresses. This is sufficient for due
held in 1984, when the launching of Operation VD was process. It was only because a majority of them could no
agreed upon.95Petitioner Ocampo refuted this claim in his longer be found at their last known addresses that they
Counter-affidavit dated 22 December 2006 stating that he were not served copies of the complaint and the attached
was in military custody from October 1976 until his documents or evidence.
escape in May 1985.96 Thereafter, the Supplemental
Affidavit of Zacarias Piedad dated 12 January 2007 Petitioner Ladlad claims that his subpoena was sent to
admitted that he made a mistake in his original affidavit, the nonexistent address "53 Sct. Rallos St., QC,"102 which
and that the meeting actually took place in June had never been his address at any time.103 In connection
1985.97 Petitioner Ocampo argues that he was denied the with this claim, we take note of the fact that the subpoena
opportunity to reply to the Supplemental Affidavit by not to Fides Lim, petitioner Ladlad’s wife,104 was sent to the
being furnished a copy thereof. same address, and that she was among those mentioned
in the Resolution as having timely submitted their
Petitioner Ocampo also claims that he was denied the counter-affidavits.
right to file a motion for reconsideration or to appeal the
Resolution of Prosecutor Vivero, because the latter Despite supposedly never receiving a subpoena,
deliberately delayed the service of the Resolution by 19 petitioner Ladlad’s counsel filed a formal entry of
days, effectively denying petitioner Ocampo his right to appearance on 8 December 2006.105 Prosecutor Vivero
due process.98 had a reason to believe that petitioner Ladlad had
received the subpoena and accordingly instructed his
As to the claim of petitioners Echanis and Baylosis, we counsel to prepare his defense.
quote the pertinent portion of Prosecutor Vivero’s
Resolution, which states: Petitioner Ladlad, through his counsel, had every
opportunity to secure copies of the complaint after his
In connection with the foregoing and pursuant to the counsel’s formal entry of appearance and, thereafter, to
Revised Rules of Criminal Procedure[,] the respondents participate fully in the preliminary investigation. Instead,
were issued and served with Subpoena at their last known he refused to participate.
address for them to submit their counter-affidavits and
that of their witnesses. We have previously cautioned that "litigants represented
by counsel should not expect that all they need to do is
Majority of the respondents did not submit their counter- sit back, relax and await the outcome of their
affidavits because they could no longer be found in their case."106 Having opted to remain passive during the
last known address, per return of the subpoenas. On the preliminary investigation, petitioner Ladlad and his
other hand, Saturnino Ocampo @ Satur, Fides Lim, counsel cannot now claim a denial of due process, since
Maureen Palejaro and Ruben Manatad submitted their their failure to file a counter-affidavit was of their own
Counter-Affidavits. However, Vicente Ladlad and Jasmin doing.
Jerusalem failed to submit the required Counter
Affidavits in spite entry of appearance by their respective Neither do we find any merit in petitioner Ocampo’s
counsels.99 allegation of collusion to surreptitiously insert the
Supplemental Affidavit of Zacarias Piedad in the records.
There was nothing surreptitious about the Supplemental
Affidavit since it clearly alludes to an earlier affidavit judge after examination under oath or affirmation of the
and admits the mistake committed regarding the date of complainant and the witnesses he may produce."
the alleged meeting. The date of the execution of the
Supplemental Affidavit was also clearly stated. Thus, it Petitioner Ocampo alleges that Judge Abando did not
was clear that it was executed after petitioner Ocampo comply with the requirements of the Constitution in
had submitted his counter-affidavit. Should the case go to finding the existence of probable cause for the issuance
trial, that will provide petitioner Ocampo with the of warrants of arrest against petitioners.109
opportunity to question the execution of Zacarias
Piedad’s Supplemental Affidavit. Probable cause for the issuance of a warrant of arrest has
been defined as "such facts and circumstances which
Neither can we uphold petitioner Ocampo’s contention would lead a reasonably discreet and prudent man to
that he was denied the right to be heard. For him to claim believe that an offense has been committed by the person
that he was denied due process by not being furnished a sought to be arrested."110 Although the Constitution
copy of the Supplemental Affidavit of Zacarias Piedad provides that probable cause shall be determined by the
would imply that the entire case of the prosecution rested judge after an examination under oath or an affirmation
on the Supplemental Affidavit. The OSG has asserted of the complainant and the witnesses, we have ruled that
that the indictment of petitioner Ocampo was based on a hearing is not necessary for the determination
the collective affidavits of several other thereof.111 In fact, the judge’s personal examination of the
witnesses107 attesting to the allegation that he was a complainant and the witnesses is not mandatory and
member of the CPP/NPA/NDFP Central Committee, indispensable for determining the aptness of issuing a
which had ordered the launch of Operation VD. warrant of arrest.112

As to his claim that he was denied the right to file a It is enough that the judge personally evaluates the
motion for reconsideration or to appeal the Resolution of prosecutor’s report and supporting documents showing
Prosecutor Vivero due to the 19-day delay in the service the existence of probable cause for the indictment and,
of the Resolution, it must be pointed out that the period on the basis thereof, issue a warrant of arrest; or if, on the
for filing a motion for reconsideration or an appeal to the basis of his evaluation, he finds no probable cause, to
Secretary of Justice is reckoned from the date of receipt disregard the prosecutor's resolution and require the
of the resolution of the prosecutor, not from the date of submission of additional affidavits of witnesses to aid
the resolution. This is clear from Section 3 of the 2000 him in determining its existence.113
National Prosecution Service Rule on Appeal:
Petitioners Echanis and Baylosis claim that, had Judge
Sec. 3. Period to appeal. – The appeal shall be taken Abando painstakingly examined the records submitted by
within fifteen (15) days from receipt of the resolution, or Prosecutor Vivero, the judge would have inevitably
of the denial of the motion for reconsideration/ dismissed the charge against them.114 Additionally,
reinvestigation if one has been filed within fifteen (15) petitioner Ocampo alleges that Judge Abando did not
days from receipt of the assailed resolution. Only one point out facts and evidence in the record that were used
motion for reconsideration shall be allowed. (Emphasis as bases for his finding of probable cause to issue a
supplied) warrant of arrest.115

Thus, when petitioner Ocampo received the Resolution The determination of probable cause for the issuance of
of Prosecutor Vivero on 12 March 2007,108 the former warrants of arrest against petitioners is addressed to the
had until 27 March 2007 within which to file either a sound discretion of Judge Abando as the trial
motion for reconsideration before the latter or an appeal judge.116 Further elucidating on the wide latitude given to
before the Secretary of Justice. Instead, petitioner trial judges in the issuance of warrants of arrest, this
Ocampo chose to file the instant petition for certiorari Court stated in Sarigumba v. Sandiganbayan117 as
directly before this Court on 16 March 2007. follows:

B. Issuance of the Warrants of Arrest x x x. The trial court's exercise of its judicial discretion
should not, as a general rule, be interfered with in the
Article III, Section 2 of the Constitution provides that "no absence of grave abuse of discretion. Indeed, certiorari
search warrant or warrant of arrest shall issue except will not lie to cure errors in the trial court's appreciation
upon probable cause to be determined personally by the of the evidence of the parties, the conclusion of facts it
reached based on the said findings, as well as the Under the political offense doctrine, "common crimes,
conclusions of law. x x x. perpetrated in furtherance of a political offense, are
divested of their character as "common" offenses and
Whether or not there is probable cause for the issuance of assume the political complexion of the main crime of
warrants for the arrest of the accused is a question of fact which they are mere ingredients, and, consequently,
based on the allegations in the Informations, the cannot be punished separately from the principal offense,
Resolution of the Investigating Prosecutor, including or complexed with the same, to justify the imposition of
other documents and/or evidence appended to the a graver penalty."121
Information.
Any ordinary act assumes a different nature by being
Here, the allegations of petitioners point to factual absorbed in the crime of rebellion.122 Thus, when a
matters indicated in the affidavits of the complainants killing is committed in furtherance of rebellion, the
and witnesses as bases for the contention that there was killing is not homicide or murder. Rather, the killing
no probable cause for petitioners’ indictment for multiple assumes the political complexion of rebellion as its mere
murder or for the issuance of warrants for their arrest. As ingredient and must be prosecuted and punished as
stated above, the trial judge’s appreciation of the rebellion alone.
evidence and conclusion of facts based thereon are not
interfered with in the absence of grave abuse of However, this is not to say that public prosecutors are
discretion. Again, "he sufficiently complies with the obliged to consistently charge respondents with simple
requirement of personal determination if he reviews the rebellion instead of common crimes. No one disputes the
[I]nformation and the documents attached thereto, and on well-entrenched principle in criminal procedure that the
the basis thereof forms a belief that the accused is institution of criminal charges, including whom and what
probably guilty of the crime with which he is being to charge, is addressed to the sound discretion of the
charged."118 public prosecutor.123

Judge Abando’s review of the Information and the But when the political offense doctrine is asserted as a
supporting documents is shown by the following portion defense in the trial court, it becomes crucial for the court
of the judge’s 6 March 2007 Order: to determine whether the act of killing was done in
furtherance of a political end, and for the political motive
On the evaluation of the Resolution and its Information of the act to be conclusively demonstrated.124
as submitted and filed by the Provincial Prosecution of
Leyte Province supported by the following documents: Petitioners aver that the records show that the alleged
Affidavits of Complainants, Sworn Statements of murders were committed in furtherance of the
Witnesses and other pertinent documents issued by the CPP/NPA/NDFP rebellion, and that the political
Regional Crime Laboratory Office, PNP, Region VIII and motivation behind the alleged murders can be clearly
Camp Crame, Quezon City, pictures of the grave site and seen from the charge against the alleged top leaders of
skeletal remains, this court has the findings [sic] of the CPP/NPA/NDFP as co-conspirators.
probable cause in the commission by all mentioned
accused of the crime charged.119 We had already ruled that the burden of demonstrating
political motivation must be discharged by the defense,
At bottom, issues involving the finding of probable cause since motive is a state of mind which only the accused
for an indictment and issuance of a warrant of arrest, as knows.125 The proof showing political motivation is
petitioners are doubtless aware, are primarily questions adduced during trial where the accused is assured an
of fact that are normally not within the purview of a opportunity to present evidence supporting his defense. It
petition for certiorari,120 such as the petitions filed in the is not for this Court to determine this factual matter in
instant consolidated cases. the instant petitions.

The political offense doctrine is not a As held in the case of Office of the Provincial Prosecutor
ground to dismiss the charge against of Zamboanga Del Norte v. CA,126 if during trial,
petitioners prior to a determination petitioners are able to show that the alleged murders
by the trial court that the murders were indeed committed in furtherance of rebellion,
were committed in furtherance of Section 14, Rule 110 of the Rules of Court provides the
rebellion. remedy, to wit:
SECTION 14. Amendment or substitution. — A A first jeopardy attaches only after the accused has been
complaint or information may be amended, in form or in acquitted or convicted, or the case has been dismissed or
substance, without leave of court, at any time before the otherwise terminated without his express consent, by a
accused enters his plea. After the plea and during the competent court in a valid indictment for which the
trial, a formal amendment may only be made with leave accused has entered a valid plea during arraignment.128
of court and when it can be done without causing
prejudice to the rights of the accused. To recall, on 12 May 2006, an Information for the crime
of rebellion, as defined and penalized under Article 134
However, any amendment before plea, which in relation to Article 135 of the Revised Penal Code,
downgrades the nature of the offense charged in or docketed as Criminal Case No. 06-944 was filed before
excludes any accused from the complaint or information, the RTC Makati against petitioners and several others.129
can be made only upon motion by the prosecutor, with
notice to the offended party and with leave of court. The However, petitioners were never arraigned in Criminal
court shall state its reasons in resolving the motion and Case No. 06-944.1awp++i1 Even before the indictment
copies of its order shall be furnished all parties, for rebellion was filed before the RTC Makati,
especially the offended party. (n) petitioners Ocampo, Echanis and Ladlad had already
filed a petition before this Court to seek the nullification
If it appears at any time before judgment that a mistake of the Orders of the DOJ denying their motion for the
has been made in charging the proper offense, the court inhibition of the members of the prosecution panel due to
shall dismiss the original complaint or information upon lack of impartiality and independence.130 When the
the filing of a new one charging the proper offense in indictment was filed, petitioners Ocampo, Echanis and
accordance with Section 19, Rule 119, provided the Ladlad filed supplemental petitions to enjoin the
accused shall not be placed in double jeopardy. The court prosecution of Criminal Case No. 06-944.131We
may require the witnesses to give bail for their eventually ordered the dismissal of the rebellion case. It
appearance at the trial. (Emphasis supplied) is clear then that a first jeopardy never had a chance to
attach.
Thus, if it is shown that the proper charge against
petitioners should have been simple rebellion, the trial Petitioner Ocampo shall remain on provisional liberty
court shall dismiss the murder charges upon the filing of under the ₱100,000 cash bond posted before the Office
the Information for simple rebellion, as long as of the Clerk of Court. He shall remain on provisional
petitioners would not be placed in double jeopardy. liberty until the termination of the proceedings before the
RTC Manila.1âwphi1
Section 7, Rule 117 of the Rules of Court, states:
The OSG has given its conformity to the provisional
SEC. 7. Former conviction or acquittal; double jeopardy. liberty of petitioners Echanis, Baylosis and Ladlad in
— When an accused has been convicted or acquitted, or view of the ongoing peace negotiations. Their
the case against him dismissed or otherwise terminated provisional release from detention under the cash bond of
without his express consent by a court of competent ₱100,000 each shall continue under the condition that
jurisdiction, upon a valid complaint or information or their temporary release shall be limited to the period of
other formal charge sufficient in form and substance to their actual participation as CPP-NDF consultants in the
sustain a conviction and after the accused had pleaded to peace negotiations with the government or until the
the charge, the conviction or acquittal of the accused or termination of the proceedings before the RTC Manila,
the dismissal of the case shall be a bar to another whichever is sooner. It shall be the duty of the
prosecution for the offense charged, or for any attempt to government to inform this Court the moment that peace
commit the same or frustration thereof, or for any offense negotiations are concluded.
which necessarily includes or is necessarily included in
the offense charged in the former complaint or WHEREFORE, the instant consolidated petitions are
information. DISMISSED. The RTC of Manila, Branch 32, is hereby
ORDERED to proceed with dispatch with the hearing of
Based on the above provision, double jeopardy only Criminal Case No. 08-262163. Petitioner Saturnino C.
applies when: (1) a first jeopardy attached; (2) it has been Ocampo shall remain on temporary liberty under the
validly terminated; and (3) a second jeopardy is for the same bail granted by this Court until the termination of
same offense as in the first.127 the proceedings before the RTC Manila. Petitioners
Randall B. Echanis, Rafael G. Baylosis and Vicente P. military uniforms with Philippine National Police-
Ladlad shall remain on temporary liberty under the same Security Agencies and Guards Supervision Division
bail granted by this Court until their actual participation (PNP-SAGSD) identifications entered the NFA-NCR,
as CPP-NDF consultants in the peace negotiations with NDO.9 The armed men disarmed NFA-NCR, NDO's
the government are concluded or terminated, or until the security guards and took Gutierrez's undeposited
termination of the proceedings before the RTC Manila, collections.10 Lockheed Detective and Watchman
whichever is sooner. Agency, Inc. was NFA-NCR, NDO's contracted security
agency.11
SO ORDERED.
The security guards on duty executed their respective
G.R. No. 200628, January 13, 2015 affidavits. Based on their affidavits, armed men entered
the NFA-NCR, NDO compound after they had been
MARIA THERESA G. disarmed, threatened, and tied up.12 The security guards
GUTIERREZ, Petitioner, v. COMMISSION ON immediately reported the incident to the Valenzuela
AUDIT AND AUDITOR NARCISA DJ Police Station,13 where an investigation report14 was
JOAQUIN, Respondents. issued consistent with the security guards' narrations in
their affidavits.15
DECISION
On June 3, 2008, the Commission on Audit, National
LEONEN, J.: Food Authority-NCR, North District Office, Malanday,
Valenzuela City, through State Auditor Narcisa DJ
A cashier who is found to have been negligent in keeping Joaquin (State Auditor Joaquin), issued a demand letter
the funds in his or her custody cannot be relieved from to Gutierrez.16 Gutierrez was informed that she must
his or her accountability for amounts lost through immediately produce the missing funds amounting to
robbery. P10,105,686.75.17 She was also ordered to submit within
72 hours a written explanation why such shortage
This is a Petition for Certiorari under Rule 65 of the occurred.18
Rules of Court assailing the June 5, 2008 withholding
order and the Commission on Audit's January 31, 2012 On June 5, 2008, the Commission on Audit, through
decision holding Maria Theresa G. Gutierrez (Gutierrez) State Auditor Joaquin, issued a withholding order,
liable for the P10,105,687.25 that was lost through addressed to Roberto S. Musngi (Musngi), Manager of
robbery. National Food Authority, North District Office.19Musngi
was informed that upon examination of Gutierrez's
Gutierrez is a Cash Collecting Officer, with the account on June 1, 2008, it was established that there was
designation of Cashier III at National Food Authority- a P10,105,686.75 shortage in Gutierrez's
National Capital Region, National District Office (NFA- accountabilities.20 Pursuant to Section 37 of Presidential
NCR, NDO).1 On May 30, 2008, she had collections Decree No. 1445, Musngi was directed to withhold
amounting to F9,390,834.00, covered by Official Receipt Gutierrez's salaries and other emoluments so these could
Nos. 0420975 to 0421246.2 On that day, she placed the be applied to the satisfaction of the shortage. 21
collections in a wooden cabinet.3
In response to the June 3, 2008 demand letter of the
The next day,.Gutierrez's collections amounted to Commission on Audit, Gutierrez executed an affidavit
P1,505,625.00.4 Of that amount, P714,852.75 and an dated June 6, 2008 wherein she narrated that she had
undeposited amount of P0.50 from March 2008 were been serving as National Food Authority's Cash
placed in a wooden cabinet.5 The rest was placed in the Collecting Officer since 1985.22 Her office was located at
safety vault.6 the far end of the National Food Authority
building.23 That was where the "pearless" boxes and the
The total undeposited collection as of March 31, 2008 cabinet where she kept her collections could be
was P10,896,459.50. Of that amount, P10,105,687.25 found.24 Quoted below is her explanation for using
was placed in the "pearless" boxes7 in a wooden cabinet "pearless" boxes to keep her
and P790,772.25 was placed in the safety vault. 8 collections:chanroblesvirtuallawlibrary

On June 1, 2008, at about 1:35 a.m., armed men in


6. That because of the volume of money I accept every ....
day, which averages from 4 to 6 million pesos every day
depending on the seasons, most of my time inside the 18. It was very unfortunate that the money accepted on
office is spent to counting, bundling by different May 30, 2008 and the collection in the night before the
denominations the money. To emphasize the point, the robbery were left in the pearless box inside the cabinet
money that I am accepting from remittances and and not inside the vault. But with the volume of money,
payments are of different denominations, from twenty the vault has not enough space to accommodate all of it.
five centavo (Php0.25) coins to one thousand peso
(Php1,000.00) bills. The coins alone would amount in the 19. And with the amount of work that I am doing every
average of Twelve thousand pesos (Php12,000.00). I day from 6:30 in the morning up to 6:30 p.m., more or
could literally say that from the time I timed in the office less, where my only rest is literally going to the ladies
at about 6:30 a.m. up to the time I timed out at about 6:30 room, and with the safe location of my office, it did not
p.m., my only rest from my work is to [be] going to the come to my mind that this incident would come.
ladies room and the break during lunch time.
20. That I have nothing to do with what happened in the
.... incident of June 1, 2008 at 1:30 in the morning and I am
not in control now to produce those missing funds taken
8. That when the rice crises came up on April 2008, by the robbers.25cralawlawlibrary
volume of work including the amount of money that On June 10, 2008, Gutierrez requested relief from money
comes into my office almost doubled. That because of the accountability for the loss of the collections.26The letter
heavy operations in our office I had an average collection was addressed to State Auditor Joaquin.
starting April 2008 of 6 to 9 Million Pesos every day of
every denomination, with coins averaging from 12 to 16 In the letter dated June 26, 2008 addressed to State
thousand pesos that needs to be counted, receipted, Auditor Joaquin, Gutierrez appealed the withholding
bundled, balanced, reported and kept. order issued on June 5, 2008.27 She prayed that her
salaries and emoluments be given to her while the
9. That it is almost automatic that when I enter my office robbery incident was still under investigation.28 She was
what comes to my mind is to count the money and bundle a widow who had three (3) dependents and an 85-year-
them by the hundreds and prepare receipts for the old mother residing with her in need of medical
payments and remittances until the time to leave at about attention.29 She had no other source of income to support
6:30 p.m. I would also cause the deposit of the money herself, her dependents, and her mother.30
collected the day before to Land Bank. But there were
even times that because of the volume of the money, On June 26, 2008, State Auditor Joaquin denied
bank representatives could not sort out all the smaller Gutierrez's appeal of the withholding order.31 State
bills (P20s and P50s) being picked up from our office as Auditor Joaquin informed Gutierrez that there was
the Armor van should be in the bank at 3:00 p.m. Thus, already a prima facie case for malversation against her
there would be arrangements in the bank that the under Article 217 of the Revised Penal Code.32
counting would continue inside their office, which
oftentimes lasts until late night. On July 11, 2008, Gutierrez filed a notice of appeal of
State Auditor Joaquin's withholding order dated June 5,
10. That since April 2008 or the start of the heavy 2008.33
operations, I have been putting some of the money in the
"pearless" box, because of the volume, which I have to On July 21, 2008, Atty. Saturnino R. Rola, Jr., Director
carry and keep safe at the cabinet inside. I have six (6) of the National Food Authority, Enforcement,
pearless boxes in the office. Investigation and Prosecution Department, submitted a
memorandum addressed to the Administrator, Jessup P.
.... Navarro.34 He found that the security agency was
solidarity liable with security guard Romeo Casta for the
13. That since May 30, 2008 is a Friday, banks are closed amount lost.35 He also found that Gutierrez, by keeping
the following day and the money collected on said date her collections in unsecured "pearless" boxes and not in a
would have remained in my office until the next banking vault, was grossly negligent in safekeeping her
day. collections.36 He recommended that Gutierrez be
administratively charged with dishonesty, gross neglect
of duty, conduct prejudicial to the best interest of the security services provider to the NFA-NCR, NDO,
service, and violation of reasonable office rules and Valenzuela City.50cralawlawlibrary
regulations without prejudice to the filing of appropriate The Commission on Audit found that Gutierrez was
criminal charges.37 He also recommended the restitution negligent in safekeeping her collections.51 Placement of
of the amount lost from Lockheed Detective and collections in a "pearless" box instead of in the safety
Watchman Agency, Inc. Further, he recommended the vault, especially given the volume of collections,
ban of security guard Romeo Casta from deployment in constituted gross negligence on her part.52 Her 20-year
any National Food Authority installations.38 service aggravated her negligence.53 It should have made
her more "security-conscious."54
Similar incidents of robbery at different National Food
Authority offices involving Lockheed Detective and The Commission on Audit also found that the security
Watchman Agency, Inc. were reported between 2006 and guards' failure to secure National Food Authority's
2008.39 premises was a violation of the contract between
National Food Authority and Lockheed Detective and
On September 11, 2008, Commission on Audit Director Watchman Agency, Inc.55
IV Tito S. Nabua (Director Nabua) issued a decision
denying Gutierrez's appeal40 and expressing his We decide whether Gutierrez's due process rights were
agreement with the issuance of the withholding violated when the Commission on Audit decided her
order.41 The robbery incident was acknowledged in the appeal without requiring her to file an appeal
decision.42 However, Gutierrez's alleged act of negligence memorandum. We also decide whether Gutierrez is liable
in the performance of her duties could not be set for the amounts lost through a robbery.
aside.43 Her failure to follow safekeeping procedures
showed lack of due care on her part.44 Aside from Article Petitioner emphasizes that she was first assisted by
217 of the Revised Penal Code, the liabilities of an counsel only when she filed a notice of appeal.
accountable officer are found in Section 105 of Respondent auditor had already issued the withholding
Presidential Decree No. 1445.45 order dated June 5, 2008 and .letter dated June 26, 2008
before petitioner was assisted by counsel.
Gutierrez filed a motion for reconsideration of the
September 11, 2008 decision of Director Nabua on the Petitioner argues that her right to due process was
ground that he did not give her a chance to file a violated when a decision was rendered against her
memorandum of appeal before submission of the case for without giving her a chance to file an appeal
resolution.46 According to Gutierrez, this was a violation memorandum in accordance with Section 5 of Rule V of
of the rules and of her right to due process.47She also the Revised Rules of Procedure of the Commission on
cited reversible error in upholding State Auditor Audit. The appeal memorandum was her chance to raise
Joaquin's order despite lack of factual and legal bases as issues against respondent auditor's orders to prove her
ground for her motion.48 case and to submit evidence to support her defense.56

On January 31, 2012, the Commission on Audit denied Petitioner's right to due process was further violated
her request for relief from money accountability. 49Its when her motion for reconsideration was resolved by the
ruling is reproduced as Commission on Audit instead of by Director Nabua. This
follows:chanroblesvirtuallawlibrary prevented her from filing a petition for review of
WHEREFORE, premises considered, this Director Nabua's decision before the Commission on
Commission DENIES the herein request for relief from Audit.57
money accountability, there being positive showing of
fault or negligence on the part of Ms. Maria Theresa G. Petitioner cites Article IX(A), Section 7 of the
Gutierrez in the safekeeping and custody of subject Constitution to support her argument that she has a right
government funds. to present her side in a memorandum.58 It
provides:chanroblesvirtuallawlibrary
Accordingly, Ms. Gutierrez shall be liable to pay to1 the Section 7. Each Commission shall decide by a majority
NFA the missing amount of P10,105,687.25. This is vote of all its Members, any case or matter brought
without prejudice to the right of the NFA-NCR, NDO to before it within sixty days from the date of its submission
proceed against Lockheed Detective and Watchman for decision or resolution. A case or matter is deemed
Agency, Inc. for the indemnification of the loss as submitted for decision or resolution upon the filing of
the last pleading, brief, or memorandum required by The right to counsel under Section 12(1) of Article III of
the rules of the Commission or by the Commission the Constitution applies in criminal proceedings, but not
itself. Unless otherwise provided by this Constitution or in administrative proceedings. It is a right given to
by law, any decision, order, or ruling of each persons accused of an offense during criminal
Commission may be brought to the Supreme Court on investigation.68 Any proceeding conducted by an
certiorari by the aggrieved party within thirty days from administrative body is not part of the criminal
receipt of a copy thereof. (Emphasis supplied) investigation or prosecution.69
Petitioner argues that aside from the right to be heard,
administrative due process also requires the right to Thus, this court said in Remolona v. Civil Service
present evidence and for such evidence to be considered Commission:70ChanRoblesVirtualawlibrary
by the deciding tribunal.59 While investigations conducted by an administrative
body may at times be akin to a criminal proceeding, the
Lastly, petitioner points out that the cause of the shortage fact remains that under existing laws, a party in an
was the robbery incident, which was a result of the administrative inquiry may or may not be assisted by
negligence of the security guards and not her counsel, irrespective of the nature of the charges and of
negligence.60 The vault that was assigned to her did not the respondent's capacity to represent himself, and no
have enough space to accommodate her collections.61 duty rests on such body to furnish the person being
investigated with counsel. In an administrative
On the other hand, respondents argue that petitioner was proceeding, a respondent has the option of engaging the
not deprived of due process when she was not given the services of counsel or not. This is clear from the
opportunity to file an appeal memorandum. Her affidavit provisions of Section 32, Article VII of Republic Act No.
was a sufficient platform to raise her 2260 (otherwise known as the Civil Service Act) and
defenses.62 Moreover, the presence of a counsel is not Section 39, paragraph 2, Rule XIV (on discipline) of the
required in administrative proceedings.63 Omnibus Rules Implementing Book V of Executive
Order No. 292 (otherwise known as the Administrative
Respondents also argue that petitioner cannot ask the Code of 1987). Thus, the right to counsel is not always
Director or the Auditor to allow her to file an appeal imperative in administrative investigations because such
memorandum since it is the Commission on Audit that inquiries are conducted merely to determine whether
has the exclusive jurisdiction over requests for relief there are facts that merit disciplinary measure against
from accountability in excess of P500,000.00.64 This, erring public officers and employees, with the purpose of
according to respondent, is based on Commission on maintaining the dignity of government service. As such,
Audit Resolution No. 93-605 dated August 3, 1993.65 the hearing conducted by the investigating authority is
not part of a criminal prosecution.71cralawlawlibrary
Finally, respondents argue that the circumstances show While the purpose of criminal proceedings is to
that petitioner fell short of the demands of her position as determine if a person suspected of committing an offense
cashier.66 What she could have done was to request has indeed committed an offense, the purpose of an
additional vaults if the vaults in her possession were not administrative proceeding is to determine if a person in
enough to accommodate all her collections.67 public office has violated the trust reposed in him or her
by the public. In a criminal proceeding, if a person is
We rule for respondents.chanRoblesvirtualLawlibrary found guilty of an offense, the corresponding punishment
is imposed primarily to protect the public from being
I exposed to and correct his or her deviant behavior. In an
administrative proceeding, if a person is found
Petitioner's due process rights were not violated administratively liable, the corresponding penalty is
imposed primarily to preserve public trust and protect the
Petitioner argues that she was assisted by counsel only integrity of public service.72
after a withholding order had already been issued. She
also argued that the Commission on Audit Director's Petitioner is not being accused of or investigated for a
issuance of a decision on her appeal without requiring her crime. The Commission on Audit's withholding order and
to file an appeal memorandum was a violation of her due its denial of petitioner's request for relief from shortage
process rights. were issued after it had made a finding that the money
entrusted to petitioner was lost. A finding of criminal
Petitioner's arguments are not tenable. liability was not the reason for the Commission on
Audit's issuances. The Commission on Audit has no
jurisdiction to investigate a crime or to make a finding of Moreover, petitioner's relief from accountability may be
criminal liability. Any proceeding conducted prior to decided by the Commission on Audit at the first instance.
these issuances was for the purpose of determining if Based on Commission on Audit Resolution No. 93-
petitioner's salaries should be withheld or if petitioner 605,76 only the Commission on Audit may approve
should be relieved from her liability as a cashier. requests for relief from accountabilities amounting to
more than P500,000.00.
Petitioner argues that Rule V, Section 5 of the Revised Thus:chanroblesvirtuallawlibrary
Rules of Procedure of the Commission on Audit73requires Now, therefore, pursuant to Article IX-D, Section 2(2) of the
Constitution, Section 73 of PD 1445 and in conformity with Section
that she be given an opportunity to file an appeal 378 of the Local Government Code, the Commission Proper hereby
memorandum before the case is submitted for decision. resolves, as it does hereby resolve, to authorize the following COA
Officials to act on requests for relief from property and/or money
Section 5 is cited as follows:chanroblesvirtuallawlibrary accountability in the amounts indicated hereunder, except in cases
Section 5. APPEAL MEMORANDUM AND REPLY - of questions of law, without prejudice to the usual appeal that may
Upon receipt of the records of the case, the Director shall be taken therefrom to the Commission Proper, pursuant to Section
48 of PD 1445.
issue an Order requiring the appellant to file an appeal
memorandum within twenty (20) days from receipt of the Total Amount of Money or
order. The appellant shall serve a copy of his appeal Approving COA Official
Cost of Property Involved
memorandum to the Auditor or appellee who may reply
thereto within the same period of time. With the filing of Corporate and National Unit
the appeal memorandum and reply or lapse of the period Auditor Provincial and City not exceeding P5 0,000
within which to file them, the appeal shall be deemed Auditor
submitted for decision.
Petitioner also argues that her due process rights were Director/Officer-in-Charge
violated when the Commission on Audit decided her in excess of P50,000 up to
of Central and Regional
motion for reconsideration of the Commission on Audit P100,000
Offices
Director's decision dated September 11, 2008, and denied
her request for relief from accountability without her in excess of P100,000 up to
filing a memorandum or a petition for review. She cites Assistant Commissioner
P200,000
Article IX(A), Section 7 of the
Constitution:chanroblesvirtuallawlibrary in excess of P200,000 up to
Section 7. Each Commission shall decide by a majority COA Chairman
P500,000
vote of all its Members, any case or matter brought
before it within sixty days from the date of its submission Commission Proper above P500,000
for decision or resolution. A case or matter is deemed The lost accountability involved in this case amounts to
10,105,687.75.
submitted for decision or resolution upon the filing of the
last pleading, brief, or memorandum required by the rules In any case, we determine if petitioner's due process rights were
of the Commission or by the Commission itself. Unless violated in the course of the proceedings before the Commission on
Audit.
otherwise provided by this Constitution or by law, any
decision, order, or ruling of each Commission may be This court in Ang Tibay v. Court of Industrial Relations77 ruled that
administrative due process requires only the
brought to the Supreme Court on certiorari by the following:chanroblesvirtuallawlibrary
aggrieved party within thirty days from receipt of a copy The party should be allowed to present his or her own
thereof. (Emphasis supplied) (a)
case and submit supporting evidence;
Petitioner's due process rights were not violated when the (b The deciding tribunal must consider the party's
Commission on Audit Director had failed to require her ) evidence;
to submit an appeal memorandum before he decided her (c)There is evidence to support the tribunal's decision;
appeal of the State Auditor's issuance of a withholding The evidence supporting the tribunal's decision must
order. There was also no violation of due process rights (d be substantial or such "relevant evidence as a
when the Commission on Audit issued its January 31, ) reasonable mind might accept as adequate to support a
2012 decision denying her request for relief from conclusion";78
accountability, without a petition for review of the The tribunal's decision was based on the evidence
Commission on Audit Director's decision. The right to (e) presented or the records of the case disclosed to the
appeal is not part of due process.74 Neither is it a natural parties;
right.75 (f) The tribunal's decision must be based on the judges'
independent consideration of the facts and law the lack of order to file an appeal
governing the case; and memorandum.chanRoblesvirtualLawlibrary
The tribunal's decision must be rendered such that the
(g II
issues of the case and the reasons for the decisions are
)
known to the parties.79
In sum, due process in administrative proceedings does Relief from cashier's liability cannot be granted if the
not necessarily require a trial type of hearing. Neither cashier was negligent in keeping funds under his or
does it require an exchange of pleadings between or her custody
among the parties. Due process is satisfied if the party
who is properly notified of allegations against him or her As a cashier for the National Food Authority, petitioner
is given an opportunity to defend himself or herself qualified as an accountable officer under Presidential
against those allegations, and such defense was Decree No. 1445. Accountable officers are government
considered by the tribunal in arriving at its own officers whose duties require them to possess or be in
independent conclusions. This court explained custody of government funds or properties.82 They are in
in Ledesma v. Court of charge of the safekeeping of the funds or properties
Appeals:80ChanRoblesVirtualawlibrary under their custody.83
Due process is satisfied when a person is notified of the
charge against him and given an opportunity to explain or Presidential Decree No. 1445 makes cashiers liable for
defend himself. In administrative proceedings, the filing the value of the money or property in their custody in
of charges and giving reasonable opportunity for the case they were lost because of negligence or unlawful
person so charged to answer the accusations against him deposit, use, or application.
constitute the minimum requirements of due process. The Thus:chanroblesvirtuallawlibrary
essence of due process is simply to be heard, or as Section 105. Measure of liability of accountable officers.
applied to administrative proceedings, an opportunity to
explain one's side, or an opportunity to seek a (1) Every officer accountable for government property
reconsideration of the action or ruling complained of. shall be liable for its money value in case of improper or
unauthorized use or misapplication thereof, by himself or
.... any person for whose acts he may be responsible. We
shall likewise be liable for all losses, damages, or
Administrative due process cannot be fully equated with deterioration occasioned by negligence in the keeping or
due process in its strict judicial sense for it is enough that use of the property, whether or not it be at the time in his
the party is given the chance to be heard before the case actual custody.
against him is decided.81cralawlawlibrary
Petitioner's arguments and the issues she raised are (2) Every officer accountable for government funds shall
sufficiently expressed in her affidavit submitted to the be liable for all losses resulting from the unlawful
Commission on Audit, her motion for reconsideration of deposit, use, or application thereof and for all losses
the Commission on Audit Director's decision, and her attributable to negligence in the keeping of the funds.
petition and memorandum submitted to this court. Even Imposing liability on cashiers for lost money or property
though petitioner was not able to file an appeal in their custody means that the value of the money or
memorandum, she was able to state her substantive property becomes their debt.
defenses in the pleadings she filed before the
Commission on Audit and this court. According to The Commission on Audit has the power to withhold
petitioner, the money that was lost through robbery was payment of money due to persons indebted to the
not a result of her negligence. She kept the money in government. Section 37 of Presidential Decree No. 1445
"pearless" boxes for practical and not for malicious provides:chanroblesvirtuallawlibrary
reasons. Section 37. Retention of money for satisfaction of
indebtedness to government. When any person is
The decisions of the State Auditor, the Commission on indebted to any government agency, the Commission
Audit Director, and the Commission on Audit had may direct the proper officer to withhold the payment of
considered these facts and defenses before they made any money due such person or his estate to be applied in
conclusions' against petitioner. Therefore, petitioner satisfaction of the indebtedness.
cannot say that her due process rights were violated for Petitioner does not deny that the money for which she
was accountable as a cashier was lost through robbery.
She also did not deny that she kept the greater portion of
the amount lost, not in the vault, but in boxes, for petitioner.
practical reasons. She was not motivated by malice when
she kept the money that was in her possession in the The test of negligence is stated in Picart v. Smith,
boxes. Jr.:86ChanRoblesVirtualawlibrary
The test by which to determine the existence of
Without going to the issue of the existence of negligence, negligence in a particular case may be stated as follows:
the Commission on Audit may already issue a Did the defendant in doing the alleged negligent act use
withholding order for petitioner's salaries and that reasonable care and caution which an ordinarily
emoluments because of this. Petitioner's act of keeping prudent person would have used in the same situation? If
the money in boxes instead of in the vault can be not, then he is guilty of negligence.87cralawlawlibrary
subsumed under "unlawful deposit" that may cause a
cashier to incur liability in case the unlawfully deposited "The existence of negligence in a given case is not
money was lost. determined by reference to the personal judgment of the
actor in the situation before him. The Law considers
A similar case, Leano v. Domingo,84 showed that the what would be reckless, blameworthy, or negligent in the
safety of money cannot be ensured when it is deposited man of ordinary intelligence and prudence and
in enclosures other than the safety vault. Leano also determines liability by that."88
involves a government cashier whose money
accountability was lost through robbery. As in this case, Petitioner is negligent because she failed to use "that
the cashier did not keep her money accountabilities in the reasonable care and caution which an ordinarily prudent
vault. Requesting this court to review the Commission on person would have used in the same situation."89 A
Audit's denial of her request for accountability, Leano cashier in her position would have used the vault to keep
argued that she had no other choice but to use a steel her collections. Petitioner failed to do this. Her
cabinet to keep her money accountabilities because the negligence is made more pronounced by the fact that the
former cashier did not entrust to her the safety vault's collections kept in the vault were not taken by the
combination. This court upheld the Commission on robbers.
Audit's decision to deny Leano's request for relief from
accountabilities and found her to be negligent in handling Petitioner insists that the space in the vault was not
her money accountabilities:chanroblesvirtuallawlibrary enough to accommodate all her collections. However,
[I]t is evident that petitioner fell short of the demands she admitted that she had been receiving relatively large
inherent in her position. As aptly argued by the Solicitor collections in the past three (3) months prior to the
General, an exercise of proper diligence expected of her robbery. She should have requested an additional vault
position would have compelled petitioner to request an wherein she could safely keep her collections. She could
immediate change of the combination of the safe. also have set aside time to deposit her collections for the
However, the record is bare of any showing that day considering the. amount of cash she had been
petitioner had, at least, exerted any effort to have the collecting, in order to prevent its accumulation. This
combination changed, content with the fact that, could have ensured that the vault's space would be
according to her, the former cashier also used the steel sufficient to keep any remaining collection after the
cabinet as depository of the funds. deposit. This could also have prevented her collections
from accumulating to an amount that rendered any loss
In addition, it was found that the use of the steel cabinet through untoward incidents such as robbery significant.
was not a wise and prudent decision. The steel cabinet, Petitioner failed to even allege that she exerted effort to
even when locked, at times could be pulled open, thus it obtain additional vaults or to set aside time to deposit her
can be surmised that even without the use of a key, the collections to the bank.
robbery could be committed once the culprits succeed in
entering the room (Progress Report of the Police dated For these reasons, petitioner cannot be relieved from
February 28, 1985). Moreover, the original key of the liability. A person who is negligent in keeping the funds
steel cabinet was left inside a small wooden box placed cannot be relieved from liability.90
near the steel cabinet; it is therefore highly possible that
the said steel cabinet was opened with the use of its WHEREFORE, the petition is DENIED.
original key (Police Alarm Report).85cralawlawlibrary
Hence, keeping National Food Authority collections SO ORDERED.chanroblesvirtualla
outside the vault constituted negligence on the part of
G.R. No. 181381, July 20, 2015
Thereafter, URPHI failed again to comply with the same
SECURITIES AND EXCHANGE reportorial requirements.
COMMISSION, Petitioner, v. UNIVERSAL
RIGHTFIELD PROPERTY HOLDINGS, In a Notice of Hearing dated June 25, 2004, the SEC
INC., Respondent. directed URPHI to show cause why its Registration of
Securities and Certificate of Permit to Sell Securities to
DECISION the Public should not be suspended for failure to submit
the said requirements. Pertinent portion of the notice
PERALTA, J.: reads:
chanRoblesvirtualLawlibrary
Before the Court is a petition for review under Rule 45 of Records show that the corporation has failed to submit
the Rules of Court, which seeks to reverse and set aside the following reports in violation of SRC Rule 17.1:
the Decision1 dated January 21, 2008 of the Court of
Appeals (CA) in CA-G.R. SP No. 93337, the dispositive (1) 2003 Annual Report (SEC Form 17-A); and
portion of which reads: (2) 2004 1st Quarter Report (SEC Form 17-Q)
chanRoblesvirtualLawlibrary
The company has been allowed a non-extendible period
WHEREFORE, in view of the foregoing, the petition until May 31, 2004 within which to file its 2003 Annual
is GRANTED. The assailed Resolution, dated December Report but to date the said report has not been submitted.
15, 2005, of the Securities and Exchange Commission, as
well as its Order of Revocation dated December 8, 2004, In view of the foregoing and considering the inadequate
are hereby SET ASIDE. information available to the public, the corporation is
hereby directed to show cause why the Registration of its
SO ORDERED.2 Securities and Certificate of Permit to Sell Securities
chanroblesvirtuallawlibrary should not be suspended, in a hearing scheduled before
The facts are as follows: Atty. Francia A. Tiuseco-Manlapaz on July 6, 2004, at
the Securities Registration Division, Corporation Finance
Respondent Universal Rightfield Property Holdings, Inc. Department of the Commission, 6th Floor, SEC
(URPHI) is a corporation duly registered and existing Building, EDA, Greenhills, Mandaluyong, Metro Manila
under the Philippine Laws, and is engaged in the business at 10:00 o'clock in the morning. Failure of the company
of providing residential and leisure-related needs and to appear, through its representative, at the said hearing
wants of the middle and upper middle-income market. shall be deemed a waiver on its part to be heard with
regard to the suspension of its Certificate of Permit to
On May 29, 2003, petitioner Securities and Exchange Sell Securities to the Public.
Commission (SEC), through its Corporate Finance
Department, issued an Order revoking URPHI's SO ORDERED.4
Registration of Securities and Permit to Sell Securities to chanroblesvirtuallawlibrary
the Public for its failure to timely file its Year 2001 During the scheduled hearing on July 6, 2004, URPHI,
Annual Report and Year 2002 1st, 2nd and 3rdQuarterly through its Chief Accountant, Rhodora Lahaylahay,
Reports pursuant to Section 173 of the Securities informed the SEC why it failed to submit the reportorial
Regulation Code (SRC), Republic Act No. 8799. requirements, viz.: (1) it was constrained to reduce its
accounting staff due to cost-cutting measures; thus, some
On October 16, 2003, URPHI filed with the SEC a of the audit requirements were not completed within the
Manifestation/Urgent Motion to Set Aside Revocation original timetable; and (2) its audited financial
Order and Reinstate Registration after complying with its statements for the period ending December 31, 2003
reportorial requirements. could not be finalized by reason of the delay in the
completion of some of its audit requirements.
On October 24, 2003, the SEC granted URPHI's motion
to lift the revocation order, considering the current In an Order dated July 27, 2004, the SEC suspended
economic situation, URPHI's belated filing of the URPHI's Registration of Securities and Permit to Sell
required annual and quarterly reports, and its payment of Securities to the Public for failure to submit its
the reduced fine of P82,000.00. reportorial requirements despite the lapse of the
extension period, and due to lack of sufficient
justification for its inability to comply with the said In an Order of Revocation7 dated December 8, 2004, the
requirements. SEC revoked URPHI's Registration of Securities and
Permit to Sell Securities to the Public for its failure to
On August 23, 2004, the SEC, through its Corporation submit its reportorial requirements within the final
Finance Department, informed URPHI that it failed to extension period.
submit its 2004 2nd Quarter Report (SEC Form 17-Q) in
violation of the Amended Implementing Rules and On December 9, 10, and 14, 2004, URPHI finally
Regulations of the SRC Rule 17.1(1)(A)(ii).5 It also submitted to the SEC its 1st Quarterly Report for 2004,
directed URPHI to file the said report, and to show cause 2nd Quarterly Report for 2004, and 3rd Quarterly Report
why it should not be held liable for violation of the said for 2004, respectively.
rule.
Meantime, URPHI appealed the SEC Order of
In a letter dated September 28, 2004, URPHI requested Revocation dated December 8, 2004 by filing a Notice of
for a final extension, or until November 15, 2004, within Appeal and a Memorandum both dated January 3, 2005.
which to submit its reportorial requirements. Pertinent
portions of the letter read: In a Resolution dated December 15, 2005, the SEC
chanRoblesvirtualLawlibrary denied URPHI's appeal, thus:
We refer to your Order dated 27 July 2004, wherein the chanRoblesvirtualLawlibrary
Commission resolved to SUSPEND the Corporation's WHEREFORE, premises considered, the Memorandum
Registration of Securities and Permit to Sell Securities to dated 03 January 2005 of Universal Rightfield Property
the Public due to non-filing of the Corporation's Holdings, Inc. praying for the reversal of the Order of
reportorial requirements under SRC Rule 17 effective for Revocation dated 08 December 2004 is DENIED for
sixty (60) days or until the reporting requirements are lack of merit.
complied [with]; otherwise, the Commission shall
proceed with the revocation of the Corporation's SO ORDERED.8
registration [of] securities. To date, the Corporation has chanroblesvirtuallawlibrary
not filed with the Commission its 2003 Annual Report in Aggrieved, URPHI filed a petition for review with the
SEC Form 17-A and 2004 1st and 2nd Quarterly reports in CA.
SEC Form 17-Q. The non-submission of these reportorial
requirements, as we have already disclosed to you per In a Decision dated January 21, 2008, the CA granted the
our letter dated 13 September 2004, was due to the non- petition and set aside the SEC Order of Revocation after
finalization of the Corporation's audited financial finding that URPHI was not afforded due process
statement for the fiscal year ended December 31, 2003. because no due notice was given and no hearing was
conducted before its registration of securities and permit
During our meeting with our external auditor, SGV & to sell them to the public was revoked. The CA noted that
Co. last 8 September 2004, SGV agreed to facilitate the the hearing conducted on July 6, 2004 was only for the
finalization of our financial statements within two (2) purpose of determining whether URPHI's registration
weeks. Notwithstanding the same, the Corporation and permit to sell should be suspended and not whether
foresees the impossibility of complying with its said registration should be revoked.
submission until the end of the month, as the partners of
SGV are still reviewing the final draft of the financial The CA ruled that based on how Sections 5.1 (m)9 and
statements. 13.110 of the SRC are worded, suspension and revocation
of URPHI's registration of securities each requires
The Corporation intends to comply with its reportorial separate notices and hearings. It also held that the
requirements. However, due to the foregoing ruling11 in Globe Telecom, Inc. v. The National
circumstances, the finalization of our financial statement Telecommunications Commission12 (Globe Telecom,
has again been delayed. In this regard, may we request Inc.) applies squarely to this case since the Section 13.1
for the last time until November 15, 2004 within which to of the SRC itself provides that due notice and hearing are
submit said reportorial requirements.6 required before revocation may be ordered by the SEC.
chanroblesvirtuallawlibrary In view of such specific mandate of the SRC in cases of
On December 1, 2004, URPHI filed with the SEC its revocation, the CA rejected the SEC's argument that the
2003 Annual Report. hearing conducted for the suspension of URPHI's
registration can already be considered as the hearing for The SEC also submits that the factual milieu of Globe
revocation. Telecom, Inc.15 cited by the CA in its Decision is starkly
different from this case. Unlike in the former case where
The CA also held that the SEC cannot brush aside the the Court ruled that the fine imposed by the National
specific mandate of Section 13.1 of the SRC by merely Telecommunications Commission without notice and
invoking the doctrine that administrative due process is hearing, was null and void due to the denial of
satisfied when the party is given the opportunity to petitioner's right to due process, the SEC points out that
explain one's side or the opportunity to seek a URPHI was duly notified of its violations and the
reconsideration of the action or ruling taken. corresponding penalty that may be imposed should it fail
Citing Globe Telecom, Inc.13 the CA explained that while to submit the required reports, and was given more than
such doctrine remains valid and has been applied in enough time to comply before the Order of Revocation
numerous instances, it must give way in instances when was issued. The SEC adds that a hearing was conducted
the statute itself, such as Section 13.1, demands prior on July 6, 2004 as to URPHI's repeated failure to submit
notice and hearing. It added that the imperativeness for a the reportorial requirements as mandated by the SRC and
hearing in cases of revocation of registration of securities its implementing rules and regulations, which was the
assumes greater significance, considering that revocation basis in issuing the said Order.
is a measure punitive in character undertaken by an
administrative agency in the exercise of its quasi-judicial On the other hand, URPHI insists that the CA was
functions. correct in ruling that the SRC requires separate notices
and hearings for revocation and suspension of
Dissatisfied with the CA Decision, the SEC filed the registration of securities and permit to sell them to the
instant petition for review on certiorari, raising the sole public. It then asserts that the warning contained in the
issue that: SEC's suspension Order dated July 27, 2004 does not
chanRoblesvirtualLawlibrary meet the requirement of notice under the SRC. It stresses
THE COURT OF APPEALS DECIDED A QUESTION that while the SEC issued a separate notice of hearing for
OF SUBSTANCE WHICH IS NOT IN ACCORD WITH such suspension, no similar notice was issued as regards
THE LAW AND PREVAILING JURISPRUDENCE.14 such revocation. It also notes that the July 6, 2004
chanroblesvirtuallawlibrary hearing was with regard to the suspension of its
On the one hand, the SEC contends that URPHI was registration of securities, and that no hearing was ever
accorded all the opportunity to be heard and comply with conducted for purposes of revocation of such
all the reportorial requirements before the Order of registration.
Revocation was issued.
On the SEC's claim that URPHI was afforded due
Specifically, in the Order dated July 27, 2004 suspending process because it was already given the opportunity to
URPHI's registration of securities for 60 days, the SEC seek a reconsideration of the Order of Revocation by
expressly warned that such registration would be revoked filing its Notice of Appeal and Memorandum, URPHI
should it persistently fail to comply with the said argues that the filing of such appeal did not cure the
requirements. Still, URPHI continuously failed to submit violation of its right to due process. In support of its
the required reports. On August 23, 2004, the SEC argument, URPHI cites the Globe Telecom, Inc.16 ruling
directed again URPHI to submit the required report and that notice and hearing are indispensable when an
to show cause why it should not be held liable for administrative agency exercises quasi-judicial functions
violation of the law. Instead of submitting the required and that such requirements become even more
reports, URPHI requested for a final extension, or until imperative if the statute itself demands it.
November 15, 2004, within which to comply with its
reportorial requirements. For URPHI's failure to submit URPHI further cites the ruling17 in BLTB, Co. v. Cadiao,
the said reports, the SEC issued the Order of Revocation et al.,18 to support its view that a motion for
dated December 8, 2004. URPHI immediately filed a reconsideration is curative of a defect in procedural due
motion for reconsideration thereof through a Notice of process only if a party is given sufficient opportunity to
Appeal and a Memorandum both dated January 3, 2005, explain his side of the controversy. It claims that the
which the SEC later denied in the Resolution dated controversy referred to is the underlying substantive
December 15, 2005. Hence, URPHI was amply accorded controversy of which the procedural due process
its guaranteed right to due process. controversy is but an offshoot. Noting that the only issue
raised in its appeal was procedural, i.e., whether it was
denied prior notice and hearing under the SRC, URPHI statement and the registration of the
contends that it cannot be said that by appealing to the security thereunder after due notice and hearing by
SEC, it had the opportunity to explain its side on issuing an order to such effect, setting forth its findings
substantive controversy which pertains to its alleged in respect thereto, if it finds that:
violation of the SRC and failure to comply with the
reportorial requirements that prompted the SEC to issue a) The issuer:
the Order of Revocation. Hence, such appeal cannot be
considered curative of the defect in procedural due x x x x
process which attended the issuance of the said Order.
(ii) Has violated any of the provisions of this Code,
URPHI further submits that the prior revocation of its the rules promulgated pursuant thereto, or any order
registration on May 29, 2003 did not cure the lack of due of the Commission of which the issuer has notice in
process which attended the revocation of its registration connection with the offering for which a registration
on December 8, 2004. Since the SEC deemed it proper to statement has been filed;21ChanRoblesVirtualawlibrary
lift the prior revocation, such can no longer be used to
sustain another revocation order, much less one issued x x x x
without prior notice and hearing.
54.1. If, after due notice and hearing, the Commission
Granted that it was accorded due process, URPHI asserts finds that: (a) There is a violation of this Code, its
that the revocation of its registration of securities and rules, or its orders; (b) Any registered broker or dealer,
permit to sell them to the public is inequitable under the associated person thereof has failed reasonably to
circumstances. It calls attention to the severe and certain supervise, with a view to preventing violations, another
consequences of such revocation, i.e., termination of the person subject to supervision who commits any such
public offering of its securities, return of payments violation; (c) Any registrant or other person has, in a
received from purchasers thereof, and its delisting from registration statement or in other reports, applications,
the PSE, which will cause financial ruin and jeopardize accounts, records or documents required by law or rules
its efforts to recover from its current financial distress. to be filed with the Commission, made any untrue
Claiming that it exerted best effort and exercised good statement of a material fact, or omitted to state any
faith in complying with the reportorial requirements, material fact required to be stated therein or necessary to
URPHI avers that the interest of the investing public will make the statements therein not misleading; or, in the
be better served if, instead of revoking its registration of case of an underwriter, has failed to conduct an inquiry
securities, the SEC will merely impose penalties and with reasonable diligence to insure that a registration
allow it to continue as a going concern in the hope that it statement is accurate and complete in all material
may later return to profitability. respects; or (d) Any person has refused to permit any
lawful examinations into its affairs, it shall, in its
The petition is meritorious. discretion, and subject only to the limitations hereinafter
prescribed, impose any or all of the following sanctions
There is no dispute that violation of the reportorial as may be appropriate in light of the facts and
requirements under Section 17.119 of the Amended circumstances:
Implementing Rules and Regulation20 of the SRC is a
ground for suspension or revocation of registration of (i) Suspension, or revocation of any registration for
securities pursuant to Sections 13.1 and 54.1 of the SRC. the offering of securities;22
However, contrary to the CA ruling that separate notices chanroblesvirtuallawlibrary
and hearings for suspension and revocation of The Court has consistently held that the essence of due
registration of securities and permit to sell them to the process is simply an opportunity to be heard, or as
public are required, Sections 13.1 and 54.1 of the SRC applied to administrative proceedings, an opportunity to
expressly provide that the SEC may suspend or revoke explain one's side or an opportunity to seek a
such registration only after due notice and hearing, to reconsideration of the action or ruling complained
wit: of.23 Any seeming defect in its observance is cured by the
chanRoblesvirtualLawlibrary filing of a motion for reconsideration, and denial of due
13.1. The Commission may reject a registration process cannot be successfully invoked by a party who
statement and refuse registration of the security has had the opportunity to be heard on such
thereunder, or revoke the effectivity of a registration motion.24 What the law prohibits is not the absence of
previous notice, but the absolute absence thereof and the issuance of the Order of Revocation, the Court finds that
lack of opportunity to be there was substantial compliance with the requirements
heard.25ChanRoblesVirtualawlibrary of due process when URPHI was given opportunity to be
heard. Upon receipt of the SEC Order dated July 27,
In the present case, due notice of revocation was given to 2004, URPHI filed the letters dated September 13 and
URPHI through the SEC Order dated July 27, 2004 28, 2004, seeking a final extension to submit the
which reads: reportorial requirements, and admitting that its failure to
chanRoblesvirtualLawlibrary submit its 2nd Quarterly Report for 2004 was due to the
Considering that the company is under rehabilitation, the same reasons that it was unable to submit its 2003
request was granted and it was given a non-extendible Annual Report and 1st Quarterly Report for 2004.
period until May 31, 2004 within which to comply. Notably, in its Order of Revocation, the SEC considered
URPHI's letters and stated that it still failed to submit the
Despite the extension[,] however, it failed to submit said required reports, despite the lapse of the final extension
reports. Hence, a hearing was held on July 6, 2004 requested.
wherein the company's representative, its Chief
Accountant and a Researcher appeared. No sufficient In A.Z. Arnaiz, Realty, Inc. v. Office of the
reason or justification for the company's inability to President,28 the Court held that due process, as a
comply with its reporting obligation was presented. constitutional precept, does not always, and in all
situations, require a trial-type proceeding. Litigants may
In view thereof, the Commission[,] in its meeting held on be heard through pleadings, written explanations,
July 22, 2004, resolved to SUSPEND the Registration of position papers, memoranda or oral arguments. The
Securities and Permit to Sell Securities to the Public standard of due process that must be met in
issued to UNIVERSAL RIGHTFIELD PROPERTY administrative tribunals allows a certain degree of
HOLDINGS, INC., in accordance with Section 54 of the latitude as long as fairness is not ignored. It is, therefore,
Securities Regulation Code. not legally objectionable for being violative of due
process for an administrative agency to resolve a case
This said Suspension shall be effective for sixty (60) based solely on position papers, affidavits or
days or until the reporting requirements are complied documentary evidence submitted by the parties. Guided
[with,] otherwise the Commission shall proceed with by the foregoing principle, the Court rules that URPHI
the revocation of the company's registration of was afforded opportunity to be heard when the SEC took
securities. into account in its Order of Revocation URPHI's
September 13 and 28, 2004 letters, explaining its failure
Let this Order be published in a newspaper of general to submit the reportorial requirements, as well as its
circulation in the Philippines or on the Commission's web request for final extension within which to comply.
page. Pertinent portions of the said Order read:
chanRoblesvirtualLawlibrary
SO ORDERED.26 The Commission in its meeting held on July 22, 2004
chanroblesvirtuallawlibrary resolved to suspend its Registration of Securities and
Contrary to the view that a separate notice of hearing to Permit to Sell Securities to the Public. The Order of
revoke is necessary to initiate the revocation proceeding, Suspension stated that it was to be effective for sixty (60)
the Court holds that such notice would be a superfluity days or until the reporting requirements were complied
since the Order dated July 27, 2004 already states that with by the company; otherwise, the Commission shall
such proceeding shall ensue if URPHI would still fail to proceed with the revocation of the company's registration
submit the reportorial requirements after the lapse of the of securities.
60-day suspension period. After all, “due notice” simply
means the information that must be given or made to a The sixty (60)-day period had elapsed on September 25,
particular person or to the public within a legally 2004 but the Commission received a letter on September
mandated period of time so that its recipient will have the 29, 2004 from the President of the company, Mr. Jose L.
opportunity to respond to a situation or to allegations that Merin. In the said letter, it was admitted that the
affect the individual’s or public’s legal rights or corporation had failed to submit its 2003 Annual Report
duties.27ChanRoblesVirtualawlibrary (SEC Form 17-A) and its 2004 1st and 2nd Quarterly
Reports (SEC Form 17-Q) but explained that the reason
Granted that no formal hearing was held before the for its inability to submit said reports was due to the non-
finalization of the company's audited financial statements SRC Rules and must suffer the consequences of its
for the fiscal year ended December 31, 2003. It further reported violations.30
stated that during its meeting with its external auditor, chanroblesvirtuallawlibrary
SGV & Co., last September 8, 2004, SGV agreed to Verily, URPHI was given the opportunity to be heard
facilitate the finalization of its financial statements within before the Order of Revocation was issued, as well as the
two (2) weeks. The corporation foresaw the impossibility opportunity to seek the reconsideration of such order.
of complying with its submission until the end of the
month as the partners of SGV were still reviewing the Meanwhile, the Court disagrees with URPHI's claim that
final draft of the financial statements, thus, the request the Globe Telecom, Inc.31 ruling – that notice and hearing
for extension FOR THE LAST TIME until November 15, are indispensable when an administrative agency
2004 within which to comply. exercises quasi-judicial functions and that such
requirements become even more imperative if the statute
SEC Form 17-A (for 2003) was finally submitted on itself demands it – is applicable to the present case.
December 1, 2004.
In Gamboa v. Finance Secretary,32 the Court has held that
IN VIEW THEREOF, the Commission, in its meeting the SEC has both regulatory and adjudicative functions,
held on December 2, 2004, resolved to REVOKE the thus:
Registration of Securities and Permit to Sell Securities to chanRoblesvirtualLawlibrary
the Public issued to UNIVERSAL RIGHTFIELD Under its regulatory responsibilities, the SEC may
PROPERTY HOLDINGS, INC.29 pass upon applications for, or may suspend or revoke
chanroblesvirtuallawlibrary (after due notice and hearing), certificates of
Aside from having been given the opportunity to be registration of corporations, partnerships and
heard before the SEC issued the Order of Revocation, associations (excluding cooperatives, homeowners
URPHI was likewise able to seek reconsideration of such associations, and labor unions); compel legal and
action complained of. After the issuance of the said regulatory compliances; conduct inspections; and impose
Order, URPHI filed a Notice of Appeal and a fines or other penalties for violations of the Revised
Memorandum, asserting that it was issued without due Securities Act, as well as implementing rules and
notice and hearing, and that the revocation is inequitable directives of the SEC, such as may be warranted.
under the circumstances. In the Resolution dated
December 15, 2004, the SEC denied URPHI's appeal in Relative to its adjudicative authority, the SEC has
this wise: original and exclusive jurisdiction to hear and decide
chanRoblesvirtualLawlibrary controversies and cases involving –
In the instant case, URPHI was accorded due process
when its Chief Financial Officer gave its side on the 1. Intra-corporate and partnership relations between
imputed violation and informed the Commission that it or among the corporation, officers and
will not be able to submit its Annual Report (SEC Form stockholders and partners, including their
17-A) for the fiscal year ending on 31 December 2003 elections or appointments;
and requested for additional time to comply with the said
requirements. The Commission granted URPHI a non- 2. State and corporate affairs in relation to the legal
extendible period of forty-seven (47) calendar days or existence of corporations, partnerships and
until 15 November 2004 within which to comply. associations or to their franchises; and
3. Investors and corporate affairs particularly in
In spite of the extension of time given, URPHI still failed respect of devices and schemes, such as
to submit the said reports. During the 06 July 2004 fraudulent practices, employed by directors,
hearing where the Chief Accountant and researcher of officers, business associates, and/or other
URPHI were present, both failed to present sufficient stockholders, partners, or members of registered
justifications for URPHI's inability to comply with its firms; x x x
reporting obligations.
As can be gleaned from the aforequoted ruling, the revocation of
registration of securities and permit to sell them to the public is not
It is also noteworthy to mention that URPHI's an exercise of the SEC's quasi-judicial power, but of its regulatory
Registration of Securities and Permit to Sell Securities to power. A "quasi-judicial function" is a term which applies to the
action, discretion, etc., of public administrative officers or bodies,
the Public had been revoked on several occasions on who are required to investigate facts, or ascertain the existence of
account of the same deficiency. URPHI is aware of the facts, hold hearings, and draw conclusions from them, as a basis for
their official action and to exercise discretion of a judicial
nature.33 Although Section 13.1 of the SRC requires due notice and 2nd and 3rd Quarterly Reports. Then, on October 24, 2003,
hearing before issuing an order of revocation, the SEC does not
perform such quasi-judicial functions and exercise discretion of a the SEC granted URPHI's petition to lift the revocation,
judicial nature in the exercise of such regulatory power. It neither considering the current economic situation, its belated
settles actual controversies involving rights which are legally
demandable and enforceable, nor adjudicates private rights and
filing of the required annual and quarterly reports, and its
obligations in cases of adversarial nature. Rather, when the SEC payment of the reduced fine of P82,000.00. Despite the
exercises its incidental power to conduct administrative hearings foregoing, URPHI failed again to submit its 2003 Annual
and make decisions, it does so in the course of the performance of
its regulatory and law enforcement function. Report, and Year 2004 1st, 2nd and 3rd Quarterly Reports
within the requested extension periods.
Significantly, unlike in Globe Telecom, Inc.34 where the Court ruled
that the fine imposed by the NTC without notice and hearing, was
null and void due to the denial of petitioner's right to due process, Therefore, notwithstanding the belated filing of the said
the revocation of URPHI's registration of securities and permit to sell
them to the public cannot be considered a penalty but a withdrawal
reports, as well as the claim that public interest would be
of a privilege, which regulatory power the SEC validly exercised better served if the SEC will merely impose penalties and
after giving it due notice and opportunity to be heard. allow it to continue in order to become profitable again,
While URPHI correctly relied in BLTB Co., Inc. v. Cadiao35 to support the SEC cannot be faulted for revoking once again
its view that a motion for reconsideration is curative of a defect in URPHI's registration of securities and permit to sell them
procedural due process only if a party is given sufficient opportunity
to explain his side of the controversy, the Court rejects URPHI's
to the public due to its repeated failure to timely submit
claim that it did not have the opportunity to explain the substantive such reports. Needless to state, such continuing
controversy of its violation of the SRC reportorial reportorial requirements are pursuant to the state policies
requirements.36Contrary to the claim that only the issue of
procedural due process was raised in its appeal with the SEC, URPHI declared in Section 238 of the SRC of protecting investors
also raised in its Memorandum dated January 3, 2005 the reasons and ensuring full and fair disclosure of information about
why it failed to comply with the said requirements, and why
revocation is inequitable under the securities and their issuer.
circumstances.37ChanRoblesVirtualawlibrary

For the late filing of annual report and quarterly report, SEC
All told, the CA erred in ruling that the SEC revoked
Memorandum Circular No. 6, Series of 2005, the Consolidated Scale URPHI's registration of securities and permit to sell them
of Fines in effect at the time the offenses were committed, provides to the public without due process of law. Quite the
for the following administrative penalties:
chanRoblesvirtualLawlibrary contrary, the requirements of due notice and hearing
SRC/IR under Sections 13.1 and 54.1 of the SRC were
R Descripti Second Third substantially complied with. Due notice was made
First Offense through the Order dated July 27, 2004 stating that
Provisio on Offense Offense
ns revocation proceeding shall ensue if URPHI would still
fail to submit the reportorial requirements after the lapse
Late of the 60-day suspension period. Though no formal
Section Filing of P50,000.0 P60,000.0 hearing was held, URPHI was still given an opportunity
17.1; Quarterly 0 plus 0 plus to be heard through the letters dated September 13 and
Reprimand/War
SRC Report P300.00 P600.00 18, 2004 before the Order of Revocation was issued, as
ning
Rule (SEC per day of per day of well as through its Notice of Appeal and Memorandum
17.1 Form 17- delay delay when it moved to reconsider the said order.
Q)
Late WHEREFORE, the petition is GRANTED and the
Filing of P100,000. P200,000. Decision dated January 21, 2008 of the Court of Appeals
Annual 00 plus 00 plus in CA-G.R. SP No. 93337, is REVERSED and SET
Reprimand/War
Report P500.00 P1,000.00 ASIDE. In lieu thereof, the Resolution dated December
ning
(SEC per day of per day of 15, 2005 of the Securities and Exchange Commission
Form 17- delay delay and its Order of Revocation dated December 8, 2004
A) are REINSTATED.

It bears emphasis that URPHI had committed several SO ORDERED.cralawlawlibrary


offenses for failure to comply with the reportorial
requirements for which it was fined and its registration of
securities revoked. On May 29, 2003, the SEC issued an
Order revoking URPHI's Registration of Securities and G.R. No. 169343, August 05, 2015
Permit to Sell Securities to the Public for its failure to
timely file its Year 2001 Annual Report and Year 2002 1st,
SAN MIGUEL PROPERTIES, INC., Petitioner, v. BF TCT No. Area
HOMES, INC., Respondent. 1. (S-41285) 538 sq.
123526-A m.
DECISION
2. (S-41261) 329 sq.
LEONARDO-DE CASTRO, J.: 123522-A m.
3. (S-41279) 384 sq.
Assailed in this Petition for Review on Certiorari under Rule 45 of the 123520-A m.
Revised Rules of Court filed by San Miguel Properties, Inc. (SMPI)
are: 1) the Decision 1 dated January 31, 2005 of the Court of 4. (S-41277) 380 sq.
Appeals in CA-G.R. SP No. 83631, which affirmed with modification 123518-A m.
the Decision dated January 27, 2004 of the Office of the President
(OP), in O.P. Case No. 03-E-203, and remanded the case to the 5. (S-41275) 364 sq.
Housing and Land Use Regulatory Board (HLURB) for further 123516-A m.
proceedings; and 2) the Resolution2 dated August 9, 2005 of the
appellate court in the same case, which denied the Motion for 6. (S-41271) 364 sq.
Reconsideration of SMPI.
123512-A m.
The antecedents of the case are as 7. (S-41273) 364 sq.
follows:chanRoblesvirtualLawlibrary
123514-A m.
BF Homes, Inc. (BF Homes) is the owner of several parcels of land 8. (S-41269) 364 sq.
located in the northern portion of BF Homes Parañaque Subdivision,
particularly identified as Italia II lots. 123510-A m.
BF Homes, represented by Florencio B. Orendain (Orendain), as
9. (S-41267)123508- 364 sq.
rehabilitation receiver appointed by the Securities and Exchange A m.
Commission (SEC); and SMPI, represented by Federico C. Gonzales,
President, entered into three successive Deeds of Absolute Sale 10. (S-41265) 429 sq.
whereby the former sold to the latter a total of 130 Italia II lots with 123506-A m.
a combined area of 44,345 square meters for the aggregate
consideration of P106,247,701.00, broken down as 11. (S-41263) 329 sq.
follows:chanRoblesvirtualLawlibrary 123505-A m.
12. (S-41261) 329 sq.
Total 19477-A m.
Deed of No.
Date of Area Consideratio
Absolute of 13.(S-41258)19476- 280 sq.
Execution (square n
Sale Lots A m.
meters)
14. (S-41257) 308 sq.
P52,134,560.0 23504-A m.
First Deed3 In 1992 76 22,816
0 15.(S-41256)23503- 280 sq.
A m.
P14,990,514.0
Second In 1993 13 5,964 16. (S-41255) 308 sq.
0
Deed4 23502-A m.
Third Deed5 P39,122,627.0 17. (S-41254)23501- 280 sq.
April 1993 15,565
(Third Sale) 41 0 A m.
P106,247,701. 8. (S-41253) 308 sq.
Total 130 44,345 123500-A m.
00
19. (S-41557)28372- 502 sq.
A m.
SMPI completed the payments for the 130 Italia II lots in 20. (S-41279) 665 sq.
December 1995.6 In compliance with Section 37 of all the 123520-A m.
three Deeds of Absolute Sale, BF Homes delivered the
Transfer Certificates of Title (TCTs) to SMPI but only for Despite receipt of the afore-mentioned letter, BF Homes
110 of the 130 Italia II lots purchased by SMPI. failed or refused to heed the demand of SMPI.
Consequently, SMPI filed a Complaint8 for specific
SMPI, thru counsel, sent BF Homes a letter on May 20, performance with damages before the HLURB on
1996 demanding the delivery of the remaining 20 TCTs, August 24, 2000 to compel BF Homes to deliver the
specifically:chanRoblesvirtualLawlibrary remaining 20 TCTs to SMPI. The case was docketed as
HLURB Case No. REM-082400-11183.
final report of the rehabilitation receiver was not yet
9
In its Answer (With Counterclaim), BF Homes alleged approved and was merely admitted as part of the records.
that the Deeds of Absolute Sale executed in 1992 to 1993 BF Homes also stated that although the SEC Order dated
were entered into by Orendain in his personal capacity September 12, 2000 already terminated the rehabilitation
and without authority, as his appointment as proceedings because of the improvement in the solvency
rehabilitation receiver was revoked by the SEC in an status of BF Homes, BF Homes filed a Motion for
Order dated May 17, 1989. In support of its Clarification and/or Partial Reconsideration of said SEC
counterclaims, BF Homes averred that the consideration Order and sought a resolution of the issues relating to the
paid by SMPI for the 130 Italia II lots was grossly receiver's irregular acts, including the sale of the Italia II
inadequate and disadvantageous to BF Homes; and that lots to SMPI. BiF Homes insisted that the transactions
the Deeds of Absolute Sale were undated and not entered into by Orendain were anomalous as the latter
notarized. Hence, BF Homes prayed that the HLURB sold the 130 Italia II lots to SMPI at a price that was
render judgment: 1) dismissing the complaint of SMPI; inadequate and disadvantageous to BF Homes.
2) declaring the sale of the 130 Italia II lots null and void;
3) ordering SMPI to reconvey to BF Homes the titles for Housing and Land Use Arbiter Rowena C. Balasolla
the [110] Italia II lots; and 4) ordering SMPI to pay BF (Arbiter Balasolla) issued an Order dated January 22,
Homes exemplary damages, attorney's fees, and cost of 200112 directing the parties to submit their respective
suit. position papers and supporting evidence, as well as their
draft decisions. Thereafter, the case was deemed
SMPI, in its Reply (Answer with Counterclaim dated submitted for resolution.
October 16, 2000),10 countered that the validity of the
three Deeds of Absolute Sale was already upheld by the In her Decision13 dated January 25, 2002, Arbiter
SEC in its Omnibus Order dated November 7, 1994, and Balasolla suspended the proceedings in HLURB Case
the motion for reconsideration of BF Homes of said No. REM-082400-11183 for the following
Omnibus Order was denied by the SEC in its subsequent reasons:cralawlawlibrary
Order dated August 22, 1995. Both Orders were deemed
final, executory, and unappealable by the SEC in another What clearly is the issue to be resolved is whether or not
Omnibus Order dated July 31, 1996. As a result, the [BF Homes] is obligated to deliver the title of the
Deeds of Absolute Sale were binding on BF Homes. remaining twenty (20) lots to [SMPI] notwithstanding
SMPI further maintained that Orendain was authorized to that the latter had fully paid the same.
sign the Deeds of Absolute Sale for and in behalf of FBO
Networks Management, Inc. - the receiver which the Were this is a simple case of non-delivery of title of the
SEC appointed to replace Orendain, upon the latter's lot or unit to the buyer upon full payment, sans the
motion to convert his involvement in the receivership attendant problems, the answer would readily be in the
from an individual to a corporate capacity. SMPI affirmative. But this is not so in the instant case. This is a
additionally asserted that absent substantiation, the case of non-delivery of titles of a sale of 20 lots between
allegation of BF Homes of inadequate consideration for two developers, and the lots sold are from an existing
the sale of the Italia II lots was self-serving; and that subdivision, which was under rehabilitation and made by
despite being undated and not notarized, the Deeds of a receiver which authority had been continuously
Absolute Sale were valid since they contained the questioned by the controlling stockholders of a
essential elements of a contract. And even assuming that corporation under rehabilitation.
the Deeds of Absolute Sale may be rescinded, SMPI
argued that BF Homes did not offer and was not prepared In the light thereof, it becomes imperative to discuss the
to return the consideration paid by SMPI, plus interest. antecedent facts that would help in arriving at a judicious
resolution of the instant complaint.
BF Homes filed a Rejoinder (To Complainant's
Reply)11 contending that the SEC Omnibus Order dated Sometime in September 1984, respondent [BF Homes]
July 31, 1996 has not yet become final as BF Homes filed with the SEC a petition for rehabilitation and for
assailed the said Order in a Petition for Certioraribefore declaration of suspension of payments. In February 1988,
the SEC. In its Decision dated May 8, 1997, the SEC the SEC appointed Florencio Orendain as [BF Homes']
neither confirmed the authority of Orendain nor cleared rehabilitation receiver. In May 1989, the SEC revoked
Orendain/FBO Networks Management, Inc. from any the appointment of Mr. Orendain and appointed FBO
liability for his/its unauthorized acts, but clarified that the Networks Management, Inc. (FBO) as receiver of the
[BF Homes].
questioned the action of its rehabilitation receiver before
It was during the time 1992-1993 that [SMPI] bought the SEC, raising several issues against him, including but
from [BF Homes] the 130 parcels of land located in the not limited, to his authority to sell the subject lots to the
northern portion of BF Homes, Paranaque City. complainant the resolution of which is still pending the
said body.
In June 1994, Mr. Orendain, on behalf of FBO, submitted
to the SEC the Closing Report on [BF Homes] I of the Thus, while this Board may have jurisdiction over the
receivership program covering the period from March instant complaint, the issue on whether or not Mr.
1988 to January 1994. [BF Homes] protested and Orendain has overstepped his authority which is pending
questioned the said report by filing the corresponding resolution by the SEC, is to our mind a condition sine
pleadings with the SEC praying that the receivership of qua non, the final resolution of which by said body is a
FBO represented by Mr. Orendain be suspended due to logical antecedent to the issue involved in the instant
violations of trust and breach of fiduciary obligation and complaint and which only the SEC has exclusive
sought the nullification of the transaction entered into by jurisdiction to decide.
Mr. Orendain. In November 1994, FBO was relieved of
its duties and responsibilities as rehabilitation receiver Under the circumstances, we are inclined to suspend the
and a Committee of Receivers was appointed in lieu proceedings before the Board until the SEC shall have
thereof, to undertake and continue the rehabilitation resolved with finality on the issue of the authority of Mr.
program of [BF Homes]. Orendain/FBO Networks Management to enter into such
transactions on behalf of [BF Homes].
In July 1996, the SEC issued an Omnibus Order in regard
to rehabilitation case. Subsequently, however, [BF WHEREFORE, PREMISES CONSIDERED, this Office
Homes] filed a petition for review for which the SEC hereby suspends the proceedings of the instant complaint
rendered a decision in May 1997. In the said decision, the until the final resolution of the pending incidents before
SEC held that the admission of the Receiver's Closing the Securities and Exchange
14
Report is merely for the purpose of receiving and noting Commission. chanrobleslaw
them for inclusion in the records of the case and not an
admittance (sic) and acceptance of the merits and SMPI filed a Petition for Review (Re: Decision dated
veracity of the contents thereof. January 25, 2002)15 with the HLURB Board of
Commissioners, asseverating that: 1) the SEC, in its
In September 2000, the SEC issued another Order Orders dated November 7, 1994 and August 22, 1995,
terminating the rehabilitation proceedings without, had upheld the validity of the Deeds of Absolute Sale and
however, deciding on the merits and veracity of the confirmed the authority of the receiver to sell the 130
contents of the Receiver's Closing Report. Hence, [BF Italia II lots to SMPI, and said Orders already became
Homes] filed in October 2000 a Motion for Clarification final after BF Homes failed to appeal the same before the
and/or Partial Reconsideration of the said Order which Court of Appeals, as provided for in Section
remains pending with the SEC until the present. 3,16 Republic Act No. 5434, the law in force at that time;
2) Orendain and/or FBO Networks Management, Inc.
Apparently, it is in the context of the foregoing issues were immune from suit pursuant to Section 9, Rule 917 of
that [BF Homes] refused to deliver the remaining twenty the Interim Rules of Procedure Governing Intra-
(20) titles of the lots sold to [SMPI] as the former corporate Controversies and Section 17, Rule 418 of the
claimed, among others, that Mr. Orendain did not have Interim Rules of Procedure on Corporate Rehabilitation;
the authority to sell the 130 parcels of land in the first 3) BF Homes was estopped from refusing to deliver the
place. remaining 20 titles since it had already received the
consideration and benefits from the sale of the Italia II
As the peculiar background of this case would tell, it is lots to SMPI and delivered 110 out of 130 TCTs to
inevitable that the resolution of the issues raised in the SMPI; 4) the principle of suspending a case due to a
instant complaint would be largely influenced by the prejudicial question only applies to criminal cases; 5) BF
outcome of the cases pending in other tribunals which are Homes was mandated, under pain of criminal sanction
directly and ineluctably related to the issues brought under Section 25,19 in relation to Section 3920 of
before this Board. Presidential Decree No. 957,21 also known as "The
Subdivision and Condominium Buyer's Protection
This Board is cognizant of the fact that respondent had Decree," to deliver the TCTs of the remaining 20 Italia II
lots, which had already been fully paid for by SMPI; 6) HLURB should have resolved HLURB Case No. REM-
assuming that Orendain exceeded his authority as 082400-11183:cralawlawlibrary
receiver of BF Homes in selling the 130 Italia II lots to
SMPI, then Orendain could be held liable for damages The basic complaint in this case is one for specific
but the titles to said lots acquired by SMPI by reason of performance under Section 25 of Presidential Decree
the sale would be unaffected, absent any action for (PD) 957 - "The Subdivision and Condominium Buyers'
reconveyance instituted by BF Homes; and 7) the issue Protective", infra.
regarding Orendain's authority to undertake the sale of
the Italia II lots to SMPI was rendered moot and As early as August 1987, the Supreme Court already
academic by the issuance of SEC Order dated September recognized the authority of the HLURB, as successor
12, 2000, terminating the receivership of BF Homes. agency of the National Housing Authority (NHA), to
regulate, pursuant to PD 957 in relation to PD 1344, the
After a further exchange of pleadings by the parties, the real estate trade, with exclusive jurisdiction to hear and
HLURB Board of Commissioners22 rendered its decide cases "involving specific performance of
Decision23 dated March 28, 2003, ruling contractual and statutory obligations filed by buyers of
thus:cralawlawlibrary subdivision lots . . . against the owner, developer, dealer,
broker or salesman" (Antipolo Realty Corp. vs. National
We find no evidence to support the argument that the Housing Authority (153 SCRA). Then came the
SEC had upheld with finality on the sales transaction reiterative rulings in Solid Homes vs. Pavawal (177
entered into by Orendain with [SMPI]. On the contrary SCRA 72 [1989]), United Housing Corp. vs. Dayrit (181
the order of the SEC stated that the closing report of the SCRA 295 [1990]), and Realty Exchange Venture Corp.
receiver is being accepted for inclusion of the records and vs. Sendino, 233 SCRA 665 [1994]. And as stressed in
not an admittance (sic) or acceptance of the merits and Realty Exchange, citing C.T. Torres Enterprises, Inc. vs.
veracity of the contents thereof. The issue of whether Hibionada (191 SCRA 268 [1990], the HLURB, in the
Orendain had authority to sell the lots is still unresolved. exercise of its adjudicatory powers and functions, "must
interpret and apply contracts, determine the rights of the
While this board may have the competence to rule on the parties under these contracts and award damages
validity of the sales transaction entered into by Orendain whenever appropriate."
ostensibly in behalf of BF Homes, we decline to rule on
the said issue in deference to the SEC or its successor-in- Given its clear statutory mandate, the HLURB's decision
interest, which has first taken cognizance of the issue, to await for some other forum to decide - if ever one is
applying the doctrine of primary jurisdiction. Thus, forthcoming - the issue on the authority of Orendain to
in Vidad vs. RTC of Negros Oriental, it was dispose of subject lots before it peremptorily resolves the
held:chanRoblesvirtualLawlibrary basic complaint is unwarranted, the issues thereon having
been joined and the respective position papers and the
While no prejudicial question strictly arises where one is evidence of the parties having been submitted. To us, it
a civil case and the other is an administrative proceeding, behooved the HLURB to adjudicate, with usual dispatch,
in the interest of good order, it behooves the court to the right and obligations of the parties in line with its
suspend its action on the cases before it pending the final appreciation of the obtaining facts and applicable law. To
outcome of the administrative proceedings. The doctrine borrow from Mabuhay Textile Mills Corp. vs.
of primary jurisdiction does not warrant a court to Ongpin(141 SCRA 437), it does not have to rely on the
arrogate unto itself the authority to resolve a controversy findings of others to discharge this adjudicatory
the jurisdiction over which is initially lodged with an functions.26chanrobleslaw
administrative body [of special competence].
The OP then proceeded to resolve the question of
Wherefore, the petition for review is denied and the whether or not SMPI was entitled to the delivery of the
decision of the office below is affirmed.24 20 TCTs:cralawlawlibrary
chanrobleslaw
There can be no quibbling about the following
SMPI appealed the foregoing Decision of the HLURB postulates: 1) The existence of a perfected deed of
Board of Commissioners before the OP. The appeal was absolute sale covering the said lots; 2) SMPI appears to
docketed as O.P. Case No. 03-E-203. The OP, in its be an innocent purchaser for value; 3) Full payment and
Decision25 dated January 27, 2004, adjudged that the receipt by [BF Homes] of the stipulated purchase price;
4) Admission by the SEC of FBO's audited Closing
Report; 5). Termination of the rehabilitation proceedings, Much has been made about the sale of the 130 lots not
and 6) The obligation of the owner or developer under having been approved by the SEC. It bears to stress in
Sec. 25 of PD 957 to "deliver the title of the lot or units this regard that the Closing Report which, doubtless
to the buyer upon [full] payment of the lot or unit." includes the said sale, had been confirmed and admitted
by the SEC Hearing Panel. It may be that the
Given the foregoing perspective, the question thus Commission en banc did not specifically confirm and
formulated should be answered in the affirmative. [BF approve the sale. But neither did it interpose objection
Homes'] challenge against the validity of the conveying thereto, let alone disapprove the same. Be that as it may,
deed on the ground of inadequacy of the purchase price the presumptive validity and enforceability of such sale
cannot be given cogency. As a matter of law, lesion or must be posited.27
inadequacy of cause shall not invalidate a contract, save chanrobleslaw
in cases specified by law or unless there has been fraud,
mistake or undue influence (Art. 1355, Civil Code). The OP denied the claims for damages of both parties for
Thus, [BF Homes'] allegation about the inadequacy of insufficiency of evidence but awarded attorney's fees in
price for the twenty (20) lots, even if true, cannot the amount of PI00,000.00 to SMPI, which was
invalidate the sale in question, absent a showing that such compelled to litigate. In the end, the OP
sale is a case exempted by law from the operation of said decreed:cralawlawlibrary
article or that fraud, mistake or undue influence attended
the sale (Auyong Hian vs. CTA, 59 SCRA 110). IN VIEW OF ALL THE FOREGOING, judgment is
hereby entered ordering BF Homes, Inc., to deliver to
[BF Homes'] posture regarding the invalidity of the same San Miguel Properties, Inc., the corresponding titles to
sales transaction owing to Orendain's alleged lack of the lots subject of the instant case, free from all liens aind
authority to execute the corresponding deed may be encumbrances, except to the subdivision restrictions
accorded serious consideration were it not for its referred to in the conveying deed of sale, and to pay the
acceptance and retention of the purchase price for the latter the sum of P100,000.00 as and. by way of
covered lots. As aptly argued in this appeal, citing attorneys' fees. All other claims and counterclaims are
jurisprudence, estoppel attached to [BF Homes] when it hereby DISMISSED. The decision of the HLURB dated
accepted the benefits arising from the performance of 28 March 2003 is accordingly REVERSED and SET
SMPI of its undertaking under the contract of sale. By the ASIDE.28chanrobleslaw
doctrine of estoppel, a party is barred from repudiating or
canceling an otherwise defective or rescissible contract BF Homes filed a Motion for Reconsideration but it was
by his receipt of payments due thereunder (Republic v. denied by the OP in a Resolution29 dated March 26, 2004.
Acoje Mining Co., Inc., 7 SCRA 361; Angeles v.
Calasanz, 135 SCRA 332); the bar of estoppel also Aggrieved, BF Homes sought recourse from the Court of
precludes one who, by his conduct, had induced another Appeals by way of a Petition for Review30 under Rule 43
to act in a particular manner, from adopting an of the Revised Rules of Court, which was docketed as
inconsistent position that thereby causes prejudice to CA-G.R. SP No. 83631. In its Decision31dated January
another (Cruz vs. CA, 293 SCRA 239). 31, 2005, the Court of Appeals agreed with the OP that
the HLURB had the primary and exclusive jurisdiction to
Significantly, Orendain signed the three deeds of sale resolve the complaint for specific performance and
adverted to covering 130 lots in 1992 and 1993, or during damages of SMPI and should not have suspended the
FBO's watch as receiver. Yet, [BF Homes] opted to fully proceedings until the SEC had ruled with finality on the
implement the transactions covered by two of these deeds issue of Orendain's authority to sell the 130 Italia II lots
and partially implement the third by delivering the titles to SMPI:cralawlawlibrary
to 110 lots. In net effect, [BF Homes] did recognize the
authority of Orendain to execute those contracts. But if Presidential Decree No. 957 was issued on 12 July 1976.
Orendain was indeed bereft of authority during the time It was promulgated to cover questions that relate to
material, as [BF Homes] would have this Office believe, subdivisions and condominiums. Its object is to provide
how explain (sic) its inaction to recover damages against for an appropriate government agency, the HLURB, to
one it veritably depicts as an impostor? which all parties aggrieved in the enforcement of
contractual rights with respect to said category of real
x x x x estate may take course.

In the case of JESUS LIM ARRANZA vs. B.F.


HOMES, INC., the Supreme Court Sec. 5. In addition to the regulatory and adjudicative
said:cralawlawlibrary functions of the Securities and Exchange Commission
over corporations, partnerships and other forms of
Section 3 ofP.D. No. 957 empowered the National associations registered with it as expressly granted
Housing Authority (NHA) with the "exclusive under existing laws and decrees, it shall have original
jurisdiction to regulate the real estate trade and and exclusive jurisdiction to hear and decide cases
business." On 2 April involving.

1978, P.D. No. 1344 was issued to expand the jurisdiction (a) Devices or schemes employed by or any acts, of the
of the NHA to include the board of directors, business associates, its officers or
following:chanRoblesvirtualLawlibrary partnership, amounting to fraud and
misrepresentation which may be detrimental to the
SECTION 1. In the exercise of its functions to interest of the public and/or of the stockholder,
regulate the real estate trade and business and in partners, members of associations or organizations
addition to its powers provided for in Presidential registered with the
Decree No. 957, the National Housing Authority shall Commission;ChanRoblesVirtualawlibrary
have exclusive jurisdiction to hear and decide cases of
the following nature:chanRoblesvirtualLawlibrary (b) Controversies arising out of intra-corporate or
partnership relations, between and among
A. Unsound real estate business stockholders, members, or associates; between any or
practices;ChanRoblesVirtualawlibrary all of them and the corporation, partnership or
association of which they are stockholders, members
B. Claims involving refund and any other claims filed or associates, respectively; and between such
by subdivision lot or condominium unit buyer against corporation, partnership or association and the state
the project owner, developer, dealer, broker or insofar as it concerns their individual franchise or
salesman; and right to exist as such entity; and

C. Cases involving specific performance of (c) Controversies in the election or appointments of


contractual and statutory obligations filed by buyers directors, trustees, officers or managers of such
of subdivision lot or condominium unit asainst the corporations, partnerships or associations.
owner, developer, dealer, broker or In the ARRANZA case, the Supreme Court said that:
salesman. (Emphasis supplied.) For the SEC to acquire jurisdiction over any
controversy under these provisions, two elements
Thereafter, the regulatory and quasi-judicial must be considered: (1) the status or relationship of
functions of the NHA were transferred to the Human the parties; and (2) the nature of the Question that is
Settlements Regulatory Commission (HSRC) by the subject of their controversy.
virtue of Executive Order No. 648 dated 7 February
1981. Section 8 thereof specifies the functions of the The first element requires that the controversy must
NHA that were transferred to the HSRC including the arise "out of intra-corporate or partnership relations
authority to hear and decide "cases on unsound real between and among stockholders, members or
estate business practices; claims involving refund filed associates; between any or all of them and the
against project owners, developers, dealers, brokers corporation, partnership or association of which they
or salesmen and cases of specific are stockholders, members or associates, respectively;
performance." Executive Order No. 90 dated 17 and between such corporation, partnership or
December 1986 renamed the HSRC as the Housing association and the State in so far as it concerns their
and Land Use Resulatory individual franchises.
Board (HLURB). (Underscoring supplied.) In the instant case, [SMPI] is not a stockholder, member
Certainly, in the instant case, [SMPI] is a buyer within or associate of [BF Homes]. It is a lot buyer in the
the contemplation of P.D. 957. Clearly, the acquisition of subdivision developed by [BF Homes.]
the one hundred thirty (130) lots was for a valuable
consideration. The second element requires that the dispute among the
parties be intrinsically connected with the regulation or
The jurisdiction of the SEC, on the other hand, is defined the internal affairs of the corporation, partnership or
by P.D. No. 902-A, as amended, as follows:
association. Given the foregoing perspective, the collateral issue thus
formulated should be answered in the negative.
In the case at hand, [SMPI's] complaint before the Furthermore, in several cases decided by the Supreme
HLURB is for specific performance to enforce its rights Court, the High Court has consistently ruled that the
as purchaser of subdivision lots as regards the delivery of NHA or the HLURB has jurisdiction over complaints
twenty (20) TCTs. Certainly, the issue in this case is not arising from contracts between the subdivision developer
related to the "regulation" of [BF Homes] or to [BF and the lot buyer or those aimed at compelling the
Homes'] "internal affairs." subdivision developer to comply with its contractual and
statutory obligations.
As a matter of fact, Section 25 of PD 957 provides:
Section 25. Issuance of Title. The owner or developer Hence, the HLURB should take jurisdiction over
shall deliver the title of the lot or unit to the buyer respondent's complaint because it pertains to matters
upon full payment of the lot or unit. No fee, except within the HLURB's competence and expertise. The
those required for the registration of the deed of sale proceedings before the HLURB should not be
in the Registry of Deeds, shall be collected for the suspended.32chanrobleslaw
issuance of such title. In the event a mortgage over the
lot or unit is outstanding at the time of the issuance of The Court of Appeals, however, differed from the OP
the title to the buyer, the owner or developer shall Decision by ordering the; remand of the case to the
redeem the mortgage or the corresponding portion HLURB in recognition of the doctrine of primary
thereof within six months from such issuance in order jurisdiction. The dispositive portion of the Decision of
that the title over any fully paid lot or unit may be the appellate court reads:cralawlawlibrary
secured and delivered to the buyer in accordance
herewith, (underscoring supplied.) WHEREFORE, the questioned Decision of the Office of
In the above-mentioned case of Arranza, the Supreme the President [is] AFFIRMED with modification. The
Court also said: case is REMANDED to the Housing and Land Use
P.D. No. 902-A, as amended, defines the jurisdiction of Regulatory Board for continuation of proceedings with
the SEC; while P.D. No. 957, as amended, delineates that dispatch.33
of the HLURB. These two quasi-judicial agencies SMPI filed a Motion for Partial Reconsideration (Re:
exercise functions that are distinct from each other. The Decision dated January 31, 2005)34 insofar as the Court
SEC has authority over the operation of all kinds of of Appeals remanded the case to the HLURB for further
corporations, partnerships or associations with the end in proceedings. The appellate court denied said Motion in a
view of protecting the interests of the investing public Resolution35 dated August 9, 2005.
and creditors. On the other hand, the HLURB has
jurisdiction over matters relating to observance of laws SMPI now comes before this Court,. through the instant
governing corporations engaged in the specific business Petition, assailing the aforementioned Decision and
of development of subdivisions and condominiums. The Resolution of the Court of Appeals based on the
HLURB and the SEC being bestowed with distinct following assignment of errors:cralawlawlibrary
powers and functions, the exercise of those functions by
one shall not abate the performance by the other of its I.
own functions. As respondent puts it, "there is no
contradiction between P.D. No. 902-A and P.D. No. 957." THE COURT OF APPEALS' DECISION DATED 31
Hence, the powers of the HLURB can not be in JANUARY 2005 REMANDING THE CASE TO THE
derogation of the SEC's authority. P.D. Nos. 902-A and HLURB IS CONSTITUTIONALLY FLAWED AND A
957 are laws in pari materia. This is because P.D. No. PATENT NULLITY CONSIDERING
902-A relates to all corporations, while P.D. No. 957 THAT:chanRoblesvirtualLawlibrary
pertains to corporations engaged in the particular
business of developing subdivisions and condominiums. 1. IT MISERABLY FAILED TO DISCUSS
CLEARLY AND DISTINCTLY THE LEGAL
Next, this brings us to the collateral issue of whether or BASIS AND/OR JUSTIFICATION FOR
not HLURB properly suspended the proceeding until REMANDING THE CASE TO THE HLURB AS
SEC shall have resolved with finality the issue of MANDATED BY SECTION 14, ARTICLE VIII,
authority of Mr. Orendain. 1987 CONSTITUTION.
2. WORSE, THE COURT OF APPEALS FAILED EVIDENTIARY MATTER IS LEFT TO BE
TO IDENTIFY THE FACTUAL MATTERS RESOLVED BY THE HLURB.
THAT IT CLAIMS NEED STILL BE TRIED OR 3. INDEED, THE OFFICE OF THE PRESIDENT,
DETERMINED BY THE HLURB THAT PER ITS DECISION DATED 27 JANUARY
WOULD HAVE JUSTIFIED THE REMAND OF 2004, CORRECTLY RESOLVED THIS SIMPLE
THE CASE. ISSUE, AND FORTUNATELY IN FAVOR OF
3. IN ANY EVENT, [BF HOMES] AND THE SMPI, BASED ON THE PLEADINGS AND
COURT OF APPEALS' CLAIMED DOCTRINE POSITION PAPERS FILED BY THE PARTIES
OF PRIMARY JURISDICTION IS FOREVER IN ACCORDANCE WITH SECTION 5, RULE
BARRED AS IT COULD NOT BE INVOKED VI, HLURB RULES. THE COURT OF
FOR THE FIRST TIME ON APPEAL. APPEALS OUGHT TO HAVE SIMILARLY
4. EVEN ASSUMING ARGUENDO THAT THE ENFORCED THIS HLURB RULE.
DOCTRINE OF PRIMARY JURISDICTION IS 4. FURTHER PROCEEDINGS BEFORE THE
STILL INVOCABLE, IT IS NONETHELESS HLURB IS DILATORY, UNNECESSARY,
INAPPLICABLE SINCE THE PARTIES HAD SUPERFLUOUS AND CIRCUITOUS.
DULY AMPLIFIED THEIR RESPECTIVE HIERARCHICALLY (sic), THE HLURB IS
CAUSES OF ACTION AND DEFENSES VIA PRECLUDED AND BARRED FROM
THEIR SUBMISSION OF PLEADINGS AND REOPENING, MUCH LESS REVERSING THE
POSITION PAPERS BEFORE THE HLURB, DECISION OF THE OFFICE OF THE
AND UPON WHICH THE OFFICE OF THE PRESIDENT.
PRESIDENT DECIDED ON THE MERITS. 5. THE COURT OF APPEALS' STANCE IS
TANTAMOUNT TO A RE-OPENING OF THE
OFFICE OF THE PRESIDENT'S DECISION,
II. HENCE WOULD WREAK HAVOC TO THE
DOCTRINE OF SUBSTANTIAL RES
EVEN THEN, THE COURT OF APPEALS JUDICATA.
COMMITTED GRAVE, SERIOUS AND REVERSIBLE 6. IF AT ALL, THE HLURB NEED ONLY BE
ERROR WHEN IT REMANDED THE CASE TO THE DIRECTED TO RESOLVE SMPI'S PENDING
HLURB FOR FURTHER "PRESENTATION OF MOTION FOR EXECUTION, AND NOT
EVIDENCE" DESPITE THE DECISION ON THE CONDUCT FURTHER PROCEEDINGS FOR
MERITS OF THE OFFICE OF THE PRESIDENT IN RECEPTION OF THE PARTIES' EVIDENCE
THAT:chanRoblesvirtualLawlibrary THAT ARE UNSPECIFIED.

1. THE ISSUE HERE BEING A SIMPLE


QUESTION OF LAW ON WHETHER OR NOT III.
SMPI WAS ENTITLED TO THE DELIVERY
OF THE BALANCE OF 130 FULLY PAID THE COURT OF APPEALS COMMITTED GRAVE,
LOTS/TITLES OR EQUIVALENT TO SERIOUS AND REVERSIBLE ERROR WHEN IT
TWENTY (20) TITLES, THE COURT OF FAILED AND/OR REFUSED TO AFFIRM THE
APPEALS SHOULD HAVE AFFIRMED THE OFFICE OF THE PRESIDENT'S DECISION DATED
DECISION ON THE MERITS OF THE OFFICE 27 JANUARY 2004 IN
OF THE PRESIDENT. THAT:chanRoblesvirtualLawlibrary

2. IN FACT, THE RELEVANT FACTS OF THE 1. THE SUBJECT SALE TRANSACTIONS,


CASE, E.G. FULL PAYMENT OF THE DULY APPROVED AND CONFIRMED BY
PURCHASE PRICE OF THE SUBJECT LOTS THE SEC PER ITS ORDERS DATED 07
IN FAVOR OF [BF HOMES] AND NON- NOVEMBER 1994 AND 31 JULY-1996, ARE
DELIVERY TO SMPI OF THE TITLES OVER PRESUMED VALID AND REGULAR SINCE
THE SUBJECT LOTS BY [BF HOMES], WERE THESE WERE OFFICIAL ACTS OF SEC-
UNDISPUTED AND MORE SO ADMITTED APPOINTED RECEIVER MR. FLORENCIO B.
BY THE PARTIES IN THEIR RESPECTIVE ORENDAIN.
HLURB POSITION PAPERS AND OTHER
PLEADINGS FOR WHICH NO TRIABLE 2. IN FACT, SEC RECEIVER ORENDAIN'S
ACTS CANNOT BE IMPUGNED BY [BF
HOMES] SINCE UNDER SECTION 9, RULE 9, ENTITLED TO THE PAYMENT OF
37
INTERIM RULES OF PROCEDURE ATTORNEY'S FEES.
GOVERNING INTRA- CORPORATE
CONTROVERSIES AND SECTION 17, RULE chanrobleslaw
4, INTERIM RULES OF PROCEDURE ON
CORPORATE REHABILITATION, WHICH The Petition is meritorious.
OPERATES RETROACTIVELY BEING A
PROCEDURAL RULE, RECEIVERS ENJOY Presidential Decree No. 95738 dated July 12, 1976
IMMUNITY FROM SUITS ARISING FROM conferred exclusive jurisdiction to regulate the real estate
THE EXERCISE OF THEIR FUNCTIONS AND trade and business upon the National Housing Authority
DUTIES. (NHA).39 Presidential Decree No. 134440dated April 2,
3. NONETHELESS, [BF HOMES] IS ESTOPPED 1978 expanded the quasi-judicial powers of NHA by
FROM REFUSING TO DELIVER THE providing as follows:cralawlawlibrary
REMAINING 20 TCTs SINCE IT HAD
PREVIOUSLY DELIVERED TO SMPI 110 Section 1. In the exercise of its functions to regulate the
TCTs OUT OF 130 TCTs FOR WHICH [BF real estate trade and business and in addition to its
HOMES] HAD DULY .RECEIVED FULL powers provided for in Presidential Decree No. 957, the
PAYMENT THEREFOR IN THE TOTAL National Housing Authority shall have exclusive
AMOUNT jurisdiction to hear and decide cases of the following
PHP104,600,402.47.36 CONSEQUENTLY, [BF nature:chanRoblesvirtualLawlibrary
HOMES] IS OBLIGED TO DELIVER THE
TITLES TO SMPI PURSUANT TO SECTION 1. Unsound real estate business
25, P.D. 957. practices;ChanRoblesVirtualawlibrary
4. THE MATTER OF THE PURCHASE PRICE IS
IRRELEVANT CONSIDERING THE BIG 2. Claims involving refund and any other claims
VOLUME INVOLVED. IN FACT, THE filed by subdivision lot or condominium unit
AVERAGE PURCHASE PRICE OF THE LOTS buyer against the project owner, developer,
IN THE AMOUNT OF PHP2,500.00 PER SQ. dealer, broker or salesman; and
M. IS VALID AND REASONABLE SINCE THE 3. Cases involving specific performance of
SALE INVOLVED A TOTAL OF 130 LOTS contractual and statutory obligations filed by
AMOUNTING TO PHP 104,600,402.47. buyers of subdivision lot or condominium unit
5. EVEN ASSUMING ARGUENDO THAT THERE against the owner, developer, dealer, broker or
MAY BE SUBSTANTIAL DISPARITY salesman." (Emphases ours.)
BETWEEN THE AVERAGE PURCHASE
PRICE OF PHP2.500/SQ.M. AND THE chanrobleslaw
MARKET VALUE AT PHP3,500/SQ.M. AS [BF
HOMES] CLAIMS, MERE INADEQUACY OF Per Executive Order No. 64841 dated February 7, 1981,
THE PURCHASE PRICE, STANDING ALONE the powers of the NHA were transferred to the Human
AND WITHOUT PROOF OF ACTUAL Settlements Regulatory Commission, which, pursuant to
FRAUD, CANNOT INVALIDATE THE Executive Order No. 90 dated December 17, 1986, was
PARTIES' SALES CONTRACT PER ARTICLE subsequently renamed as HLURB.42 In Siasoco v.
1355, NEW CIVIL CODE. Narvaja,43 the Court highlighted the exclusive
6. IF AT ALL, [BF HOMES'] REMEDY IS TO jurisdiction of the HLURB over complaints for specific
FILE THE APPROPRIATE ACTION FOR performance in certain real estate
RECONVEYANCE WITH THE REGULAR transactions:cralawlawlibrary
COURT, ABSENT WHICH, IT IS LEGALLY
BOUND TO DELIVER TO SMPI THE Under the Executive Order creating it, the HLURB
SUBJECT TITLES. has exclusive jurisdiction to "hear and decide cases of
7. ACCORDINGLY, SINCE SMPI WAS unsound real estate business practices; claims involving
CONSTRAINED TO LITIGATE DUE TO [BF refund filed against project owners, developers, dealers,
HOMES'] UNJUSTIFIED REFUSAL TO brokers, or salesmen; and cases of specific
DELIVER THE SUBJECT TITLES, SMPI IS performance." Accordingly, in United Housing
Corporation v. Dayrit, we ruled that it is the HLURB, not
the trial court, which has jurisdiction over complaints
for specific performance filed against subdivision under Section 1 of Presidential Decree No. 1344 and its
developers to compel the latter to execute deeds of technical competence and expertise over the subject
absolute sale and to deliver the certificates of title to matter. The HLURB was called upon to determine the
buyers. (Emphases supplied.)chanrobleslaw contractual obligations of BF Homes and SMPI, as seller
and buyer of subdivision lots, respectively, under the
The Court reiterated in Bank of the Philippines Islands v. terms and conditions of the Deeds of Absolute Sale in
ALS Management and Development relation to the provisions of Presidential Decree No. 957.
Corporation44 that:cralawlawlibrary In contrast, the proceedings before the SEC involved the
receivership of BF Homes, an intra-corporate matter, as
[T]he jurisdiction of the HLURB over cases enumerated pointed out by the Court of Appeals. While the HLURB
in Section 1 of PD No. 1344 is exclusive. Thus, we have and SEC proceedings may be related (i.e., Orendain
ruled that the board has sole jurisdiction in a complaint executed the Deeds of Absolute Sale of the 130 Italia II
of specific performance for the delivery of a certificate lots as receiver of BF Homes), the two cases could
of title to a buyer of a subdivision lot; for claims of proceed independently of one another. A ruling by the
refund regardless of whether the sale is perfected or not; SEC that Orendain did not have or had exceeded his
and for determining whether there is a perfected contract authority as receiver in executing the Deeds of Absolute
of sale. (Emphases supplied.) Sale is not absolutely determinative of the fate of the
chanrobleslaw complaint for specific performance of SMPI before the
HLURB. It would not automatically result in the
It is clear from the plain language of Section 1 of nullification or rescission of the said Deeds or justify the
Presidential Decree No. 1344 and aforecited refusal of BF Homes to deliver the 20 TCTs to SMPI as
jurisprudence that the HLURB had exclusive jurisdiction there would be other issues which need to be considered,
over the complaint for specific performance filed by such as the good faith or bad faith of SMPI as buyer,
SMPI against BF Homes for the delivery of the ratification by BF Homes of the Deeds, etc., and the
remaining 20 TCTs. HLURB is not obliged to suspend its proceedings until
all of these issues are resolved or decided by other
In fact, in the instant case, the HLURB did exercise courts/tribunals. HLURB could already make a
jurisdiction over and did take cognizance of the preliminary finding on the validity of the Deeds of
complaint of SMPI. Arbiter Balasolla received pleadings Absolute Sale executed by Orendain for the purpose of
and evidences from the parties, and after the period for ascertaining the right of SMPI to the delivery of the 20
filing position papers and draft decisions by the parties TCTs. The HLURB is behooved to settle the controversy
had lapsed, deemed the case submitted for decision. brought before it with dispatch if only to achieve the
However, at this stage, Arbiter Balasolla demurred, and purpose of Presidential Decree No. 957, to
instead of deciding the case, suspended the proceedings wit:cralawlawlibrary
until the SEC ruled on the issue of whether or not
Orendain, the receiver of BF Homes, had authority to The provisions of P.D No. 957 were intended to
execute the Deeds of Absolute Sale over the 130 Italia II encompass all questions regarding subdivisions and
lots in favor of SMPI. On appeal, the HLURB Board of condominiums. The intention was to provide for an
Commissioners affirmed the suspension of proceedings. appropriate government agency, the HLURB, to which
all parties - buyers and sellers of subdivision and
When the case was appealed to the OP by SMPI, and condominium units - may seek remedial recourse. The
then to the Court of Appeals by BF Homes, both the OP law recognized, too, that subdivision and condominium
and the Court of Appeals sustained the jurisdiction of development involves public interest and welfare and
HLURB over the complaint for specific performance should be brought to a body, like the HLURB, that has
filed by SMPI, the only difference being that the OP technical expertise. In the exercise of its powers, the
proceeded to resolve the case on the merits based on the HLURB, on the other hand, is empowered to interpret
evidence on record while the appellate court remanded and apply contracts, and determine the rights of private
the case to the HLURB for further proceedings. parties under these contracts. This ancillary power,
generally judicial, is now no longer with the regular
The OP and the Court of Appeals are correct that the courts to the extent that the pertinent HLURB laws
HLURB, in the exercise of its exclusive jurisdiction, did provide.45
not have to suspend the proceedings and should have chanrobleslaw
went ahead to resolve the complaint for specific
performance filed by SMPI given its statutory mandate Nonetheless, the Court disagrees with the Court of
Appeals and finds no more need to remand the case to the
HLURB. The contractual relationship between BF Homes as
owner and SMPI as buyer of subdivision lots is governed
To recall, the parties were able to file pleadings and by Presidential Decree No. 957 and is undeniably
submit evidence before Arbiter Balasolla. The case was imbued with public interest. Hence, it is crucial that the
already deemed submitted for resolution with Arbiter dispute between them be resolved as swiftly as possible.
Balasolla stopping short only of actually rendering a In Spouses Chua v. Ang,50 the Court declared that "public
decision. Taking into account that the necessary interest and welfare are involved in subdivision and
pleadings and evidence of the parties are already on condominium development, as the terms of Presidential
record, returning the instant case to the HLURB for Decree Nos. 957 and 1344 expressly reflect, x x x Shelter
further proceedings will simply be circuitous and is a basic human need whose fulfillment cannot afford
inconsistent with the summary nature of HLURB any kind of delay."
proceedings.46 The Court keeps in mind the shared
objective of Rule 1, Section 2 of the 1996 Rules of Even if the case is no longer remanded, BF Homes
Procedure of the HLURB, as amended, and Rule 1, cannot claim denial of due process. "The essence of due
Section 6 of the Revised Rules of Court to promote a process is to be heard, and, as applied to administrative
just, speedy, and inexpensive disposition/determination proceedings, this means a fair and reasonable opportunity
of every action.47 to explain one's side, or an opportunity to seek a
reconsideration of the action or ruling complained of.
Pursuant to the doctrine of primary jurisdiction, "the Administrative due process cannot be fully equated with
courts cannot or will not determine a controversy due process in its strict judicial sense, for in the former a
involving a question which is within the jurisdiction of an formal or trial-type hearing is not always necessary, and
administrative tribunal, where the question demands the technical rules of procedure are not strictly applied."51
exercise of sound administrative discretion requiring the In the instant case, SMPI and BF Homes were afforded
special knowledge, experience, and services of the the opportunity to present and address each other's
administrative tribunal to determine technical and arguments through an exchange of pleadings, as well as
intricate matters of fact, and a uniformity of ruling is to submit their respective evidence before Arbiter
essential to comply with the purposes of the regulatory Balasolla. To recall, the case was already submitted for
statute administered."48However, said doctrine is not an decision before Arbiter Balasolla, meaning, there is
absolute or inflexible rule. The Court recognized several nothing more left for the parties to submit or do. To
exceptions in Republic v. Lacap,49viz.:cralawlawlibrary remand the case and repeat the entire process once again
before the HLURB Arbiter will not only be impractical,
[T]he doctrine of exhaustion of administrative remedies but also unreasonable and oppressive for SMPI.
and the corollary doctrine of primary jurisdiction, which
are based on sound public policy and practical Relevant herein are the following pronouncements of the
considerations, are not inflexible rules. There are many Court in Ching v. Court of Appeals52:cralawlawlibrary
accepted exceptions, such as: (a) where there is estoppel
on the part of the party invoking the doctrine; (b) where [T]he Supreme Court may, on certain exceptional
the challenged administrative act is patently illegal, instances, resolve the merit:? of a case on the basis of the
amounting to lack of jurisdiction; (c) where there is records and other evidence before it, most especially
unreasonable delay or official inaction that will when the resolution of these issues would best serve the
irretrievably prejudice the complainant; (d) where the ends of justice and promote the speedy disposition of
amount involved is relatively small so as to make the rule cases.
impractical and oppressive; (e) where the question
involved is purely legal and will ultimately have to be Thus, considering the peculiar circumstances attendant in
decided by the courts of justice; (f) where judicial the instant case, this Court sees the cogency to exercise
intervention is urgent; (g) when its application may its plenary power:
cause great and irreparable damage; (h) where the "It is a rule of procedure for the Supreme Court to strive
controverted acts violate due process; (i) when the issue to settle the entire controversy in a single proceeding
of non-exhaustion of administrative remedies has been leaving no root or branch to bear the seeds of future
rendered moot; (j) when there is no other plain, speedy litigation. No useful purpose will be served if a case or
and adequate remedy; (k)when strong public interest is the determination of an issue in a case is remanded to the
involved; and, (1) in quo warranto proceedings, x x x. trial court only to have its decision raised again to the
(Emphases supplied.)chanrobleslaw Court of Appeals and from there to the Supreme Court
(citing Board of Commissioners vs. Judge Joselito de la the Court held in G.O.A.L., Inc. v. Court of
Rosa and Judge Capulong, G.R. Nos. 95122-23). Appeals55:cralawlawlibrary

"We have laid down the rule that the remand of the case Upon full payment of the agreed price, petitioner is
or of an issue to the lower court for further reception of mandated by law to deliver the title of the lot or unit
evidence is not necessary where the Court is in position to the buyer. Both the "Contract to Sell" of petitioner
to resolve the dispute based on the records before it and and private respondents, and Sec. 25 of P.D. 957 state -
particularly where the ends of justice would not be Sec. III (Contract to Sell). - Title and Ownership of
subserved by the remand thereof (Escudem vs. Unit. Upon full payment by the vendees of the full
Dulay, 158 SCRA 69). Moreover, the Supreme Court is amount of the purchase price stipulated under Sec. Ill
clothed with ample authority to review matters, even hereof, the assessments and expenses under Sec. IV and
those not raised on appeal if it finds that their otherwise upon compliance by the VENDEES of all
consideration is necessary in arriving at a just disposition obligations therein, the VENDOR will convey to the
of the case." VENDEE all rights and interests of the former and to the
On many occasions, the Court, in the public interest and Unit, subject hereof together with the interest in the
for the expeditious administration of justice, has resolved common area and in the Condominium Corporation
actions on the merits instead of remanding them to the appurtenant to such unit x x x."
trial court for further proceedings, such as where the ends
of justice would not be subserved by the remand of the Sec. 25, P.D. 957 - Issuance of Title. - The owner or
case. developer shall deliver the title of the lot or unit to the
chanrobleslaw buyer upon full payment of the lot or unit x x x. In the
event a mortgage over the lot or unit is outstanding at the
Consequently, the Court proceeds to resolve the primary time of the issuance of the title to the buyer, the owner or
issue in this case: Whether or not SMPI is entitled to the developer shall redeem the mortgage or the
delivery of the remaining 20 TCTs for the lots it corresponding portion thereof within six months from
purchased from BF Homes. such issuance in order that the title over any paid lot or
unit may be secured and delivered to the buyer in
The Court answers affirmatively. accordance herewith."
Petitioner also attempts to justify its failure to deliver the
Section 25 of Presidential Decree No. 957 explicitly certificate of title of private respondent Teng by claiming
mandates that "[t]he owner or developer shall deliver the that it used the title as part collateral for the additional
title of the [subdivision] lot or [condominium] unit to the loan NHA had extended for the construction of the fifth
buyer upon full payment of the lot or unit." floor.

Section 3 of all the three Deeds of Absolute Sale also The Court observes the frequent allusion of petitioner to
reads:cralawlawlibrary its predicament brought about by the abandonment of the
project by the first contractor. But such is irrelevant in
3. [BF Homes] likewise covenants to deliver to [SMPI] light of Sec. 25 of P.D. 957 as well as of the Contract
the properties free and clear of tenants, if any, and shall to Sell of the parties. While we empathize with
submit any and all titles, documents and/or papers which petitioner in its financial dilemma we cannot make
may be required to effect the transfer of the properties to innocent parties suffer the consequences of the
[SMPI][.]53chanrobleslaw former's lack of business acumen. Upon full payment
of a unit, petitioner loses all its rights and interests to
In the case at bench, SMPI submitted adequate proof the unit in favor of the buyer, x x x. (Emphases
showing full payment to and receipt by BF Homes of the supplied.)chanrobleslaw
purchase price for the 130 Italia II lots as fixed in the
Deeds of Absolute Sale.54 BF Homes expressly admitted To justify its refusal to deliver the remaining 20 TCTs to
receipt of some payments, while it remained silent as to SMPI, BF Homes asserts that 1) the Deeds of Absolute
the others without presenting controverting evidence. Sale were undated and not notarized; 2) Orendain did not
have or exceeded his authority as receiver in entering
Upon full payment by SMPI of the purchase price for the into the contracts of sale of the Italia II lots with SMPI;
130 Italia II lots to BF Homes, it became mandatory upon and 3) the consideration for the said Italia II lots were
BF Homes to deliver the TCTs for said lots to SMPI. As grossly inadequate and disadvantageous for BF Homes.
The Court is not persuaded. public, however, the "Pagpapatunay" is not a public
document, and therefore does not comply with Article
Article 1358(1) of the Civil Code requires that "[a]cts 1358, Paragraph 1 of the Civil Code.
and contracts which have for their object the creation,
transmission, modification or extinguishment of real The requirement of a public document in Article 1358
rights over immovable property" must appear in a public is not for the validity of the instrument but for its
document; and sales of real property or of an interest efficacy. Although a conveyance of land is not made in
therein shall be governed by Article 1403(2) and 1405 of a public document, it does not affect the validity of
the same Code. Pertinent portions of Articles 1403(2) and such conveyance. Article 1358 does not require the
1405 of the Civil Code are reproduced accomplishment of the acts or contracts in a public
below:cralawlawlibrary instrument in order to validate the act or contract but
only to insure its efficacy, so that after the existence of
Art. 1403. The following contracts are unenforceable, said contract has been admitted, the party bound may be
unless they are ratified:chanRoblesvirtualLawlibrary compelled to execute the proper document, x x x.

x x x x x x x x

(2) Those that do not comply with the Statute of Frauds The private conveyance of the house and lot is therefore
as set forth in this number. In the following cases an valid between Bonifacio Aparato and respondent
agreement hereafter made shall be unenforceable by spouses, x x x For greater efficacy of the contract,
action, unless the same, or some note or memorandum, convenience of the parties and to bind third persons,
thereof, be in writing, and subscribed by the party respondent spouses have the right to compel the vendor
charged, or by his agent; evidence, therefore, of the or his heirs; to execute the necessary document to
agreement cannot be received without the writing, or a properly convey the property.chanrobleslaw
secondary evidence of its contents:
x x x x Also instructive is the following discussion of the Court
in Swedish Match v. Court of Appeals,57 on the Statute
(e) An agreement of the leasing for a longer period than of Frauds:cralawlawlibrary
one year, or for the sale of real property or of an interest
therein;ChanRoblesVirtualawlibrary The Statute of Frauds embodied in Article 1403,
paragraph (2), of the Civil Code requires certain
xxxx contracts enumerated therein to be evidenced by some
Art. 1405. Contracts infringing the Statute of Frauds, note or memorandum in order to be enforceable. The
referred to in No. 2 of Article 1403, are ratified by the term "Statute of Frauds" is descriptive of statutes which
failure to object to the presentation of oral evidence to require certain classes of contracts to be in writing. The
prove the same, or by the acceptance of benefit under Statute does not deprive the parties of the right to
them.chanrobleslaw contract with respect to the matters therein involved,
but merely regulates the formalities of the contract
The contracts of sale of the 130 Italia II lots between BF necessary to render it enforceable. Evidence of the
Homes and SMPI were actually reduced into writing into agreement cannot be received without the writing or a
the three Deeds of Absolute Sale which were signed by secondary evidence of its contents.
the representatives of the two corporations. The only
defect was that the Deeds were not notarized and, The Statute, however, simply provides the method by
therefore, were not public documents as required by which the contracts enumerated therein may be
Article 1358(1) of the Civil Code. Cenido v. Spouses proved but does not declare them invalid because
Apacionado56 involved a closely similar situation and the they are not reduced to writing. By law, contracts are
Court adjudged therein that:cralawlawlibrary obligatory in whatever form they may have been entered
into, provided all the essential requisites for their validity
The sale of real property should be in writing and are present. However, when the law requires that a
subscribed by the party charged for it to be contract be in some form in order that it may be valid
enforceable. The "Pagpapatunay" is in writing and or enforceable, or that a contract be proved in a
subscribed by Bonifacio Aparato, the vendor; hence, certain way, that requirement is absolute and
it is enforceable under the Statute of Frauds. Not indispensable. Consequently, the effect of non-
having been subscribed and sworn to before a notary compliance with the requirement of the Statute is
simply that no action can be enforced unless the Deeds were already ratified as BF Homes had accepted
requirement is complied with. Clearly, the form the benefits from said contracts when it received full
required is for evidentiary purposes only. Hence, if the payment from SMPI of the purchase price for the 130
parties permit a contract to be proved, without any Italia II lots. The Deeds were also substantially
objection, it is then just as binding as if the Statute has performed considering that BF Homes had previously
been complied with. delivered to SMPI the TCTs for 110 out of the 130 lots,
only refusing to deliver the TCTs for the remaining 20
The purpose of the Statute is to prevent fraud and perjury lots.
in the enforcement of obligations depending for their
evidence on the unassisted memory of witnesses, by BF Homes cannot insist on the lack of authority of
requiring certain enumerated contracts and transactions Orendain as receiver to sign the Deeds of Absolute Sale
to be evidenced by a writing signed by the party to be for the 130 Italia II lots. While it is true the SEC revoked
charged. the appointment of Orendain as rehabilitation receiver of
BF Homes in 1989, the SEC thereafter immediately
However, for a note or memorandum to satisfy the appointed FBO Networks Management, Inc., in
Statute, it must be complete in itself and cannot rest replacement as receiver. Orendain was the Chairman of
partly in writing and partly in parol. The note or FBO Networks Management, Inc. Hence, when Orendain
memorandum must contain the names of the parties, the signed the Deeds of Absolute Sale for the 130 Italia II
terms and conditions of the contract, and a description of lots, he did so as Chairman of FBO Networks
the property sufficient to render it capable of Management, Inc., the appointed receiver of BF Homes.
identification. Such note or memorandum must contain
the essential elements of the contract expressed with Under Section 6(d) of Presidential Decree No. 902-A,
certainty that may be ascertained from the note or otherwise known as the SEC Reorganization Act, the
memorandum itself, or some other writing to which it management committee or rehabilitation receiver is
refers or within which it is connected, without resorting empowered to take custody and control of all existing
to parol evidence. assets and properties of such corporations under
management; to evaluate the existing assets and
x x x x liabilities, earnings and operations of such corporations;
to determine the best way to salvage and protect the
The Statute of Frauds is applicable only to contracts interest of investors and creditors; to study, review and
which are executory and not to those which have been evaluate the feasibility of continuing operations, and
consummated either totally or partially. If a contract restructure and rehabilitate such entities if determined to
has been totally or partially performed, the exclusion be feasible by the SEC.58 The acts of the receiver, being
of parol evidence would promote fraud or bad faith, an appointed officer of the SEC,59 enjoy the presumption
for it would enable the defendant to keep the benefits of regularity.60
already derived by him from the transaction in
litigation, and at the same time, evade the obligations, In the instant case, the acts of FBO Networks
responsibilities or liabilities assumed or contracted by Management, Inc., as receiver of BF Homes, undertaken
him thereby. This rule, however, is predicated on the through Orendain, including the sale of the 130 Italia II
fact of ratification of the contract within the meaning lots to SMPI in 1992 and 1993, are so far presumed to
of Article 1405 of the Civil Code either (1) by failure have been regularly performed absent evidence to the
to object to the presentation of oral evidence to prove contrary. While BF Homes questioned the acts of
the same, or (2) by the acceptance of benefits under Orendain/FBO Networks Management, Inc. as receiver
them. x x x. (Emphases supplied.)chanrobleslaw before the SEC, the SEC terminated the rehabilitation
proceedings without definitively ruling on the same and
Based on the afore-quoted jurisprudence, the Deeds of recognized the transfer of jurisdiction over such subject
Absolute Sale are enforceable. First, the Deeds are matter to the Regional Trial Courts (RTC) with the
already in writing and signed by the parties, and only passage of Republic Act No. 8799, otherwise known as
lack notarization, a formality which SMPI could compel the Securities Regulation Code. There is no showing
BF Homes to comply with. As private documents, the herein whether BF Homes pursued before the RTC any
Deeds are still binding between the parties and the case to nullify or invalidate the alleged unauthorized or
conveyance of the 130 Italia II lots by BF Homes to irregular acts of Orendain/FBO Networks Management,
SMPI by virtue of said Deeds is valid. And second, the Inc. as receiver.
evidence submitted by BF Homes in support of its claim
Moreover, even assuming for the sake of argument that is the appraisal report which valued the lots at P3,500.00
Orendain/FBO Networks Management, Inc. did act and P3,000.00 per square meter. The appraisal report,
without or beyond his/its authority as receiver in entering however, does not necessarily prove that the purchase
into the contracts of sale of the 130 Italia II lots with price for the lots agreed upon in the Deeds of Absolute
SMPI, then the said contracts were merely unenforceable Sale, averaged at P2,500.00 per square meter, is grossly
and could be ratified, Article 1403(1) of the Civil Code inadequate and disadvantageous to BF Homes. There are
provides:cralawlawlibrary considerations for which sellers may agree to sell their
property for less than the market value, such as the
ARTICLE 1403. The following contracts are urgent financial need of the seller, cash or immediate
unenforceable, unless they are payment, and/or the high number of properties purchased
ratified:chanRoblesvirtualLawlibrary at the same time. In this case, SMPI explained that it was
granted a lower purchase price because it bought the
(1) Those entered into in the name of another person by Italia II lots in volume, and BF Homes was unable to
one who has been given no authority or legal repudiate said explanation.
representation, or who has acted beyond his
powers[.]chanrobleslaw Finally, as to the award of attorney's fees, Article 2208 of
the Civil Code allows the recovery of attorney's fees and
As the OP observed, BF Homes ratified the Deeds of expenses of litigation, other than judicial costs, even in
Absolute Sale with SMPI by accepting full payment from the absence of stipulation, "[w]here the defendant acted
SMPI of the purchase price for the 130 Italia II lots, and in gross and evident bad faith in refusing to satisfy the
fully implementing the transaction covered by the first plaintiffs plainly valid, just and demandable claim."
two Deeds and partially implementing the third by SMPI obviously had a valid and demandable claim
delivering the TCTs for 110 of the 130 lots. against BF Homes, which unjustifiably and inexcusably
refused to comply with the mandate in Presidential
Receiving full payment for the 130 Italia II lots from Decree No. 957 and undertaking in the Deeds of
SMPI also estops BF Homes from denying the authority Absolute Sale to deliver the titles to the subdivision lots
of Orendain/FBO Networks Management, Inc. to enter upon complete payment for said properties. The sudden
into the Deeds of Absolute Sale. The Court applies by refusal of BF Homes to deliver the last 20 TCTs, after
analogy its declarations in Bisaya Land Transportation, having previously delivered the other 110 TCTs,
Inc. v. Sanchez,61 which involved the acts of a court- constitutes bad faith and justifies the award of attorney's
appointed receiver for an estate:cralawlawlibrary fees in favor of SMPI, which was forced to litigate to
enforce its rights. The amount of P100,000.00 awarded
Furthermore, it is clear that BISTRANCO received by the OP as attorney's fees is just and reasonable under
material benefits from the contracts of agency of the circumstances.
Sanchez, based upon the monthly statements of income
of BISTRANCO, upon which the commissions of WHEREFORE, premises considered, the Petition for
Sanchez were based, x x x. Review on Certiorari of San Miguel Properties, Inc.
is GRANTED. The Decision dated January 31, 2005 and
x x x x Resolution dated August 9, 2005 of the Court of Appeals
in CA-G.R. SP No. 83631 ordering the remand of the
[I]n our considered opinion, the doctrine of estoppel case to the Housing and Land Use Regulatory Board
precludes BISTRANCO from repudiating an obligation is REVERSED and SET ASIDE; and the Decision
voluntarily assumed by it, after having accepted benefits dated January 27, 2004 of the Office of the President in
therefrom.' To countenance such repudiation would be O.P. Case No. 03-E-203 is REINSTATED.
contrary to equity and would put a premium on fraud or
misrepresentation, which this Court will not SO ORDERED.chanroblesvirtuallawlibrary
sanction.chanrobleslaw

Furthermore, the averment of BF Homes of inadequacy


of the purchase price for the 130 Italia II lots deserves G.R. No. 207145 July 28, 2015
scant consideration. Section 3(p), Rule 131 of the
Revised Rules of Court presumes that private GIL G. CAWAD, MARIO BENEDICT P. GALON,
transactions have been fair and regular. The only DOMINGO E. LUSAYA, JEAN V. APOLINARES,
MA. LUISA S. OREZCA, JULIO R. GARCIA, difficult areas, strife-torn or embattled areas, distressed
NESTOR M. INTIA, RUBEN C. CALIWATAN, or isolated stations, prisons camps, mental hospitals,
ADOLFO Q. ROSALES, MA. LUISA NAVARRO, radiation exposed clinics, laboratories or disease-infested
and the PHILIPPINE PUBLIC HEALTH areas or in areas declared under state of calamity or
ASSOCIATION, INC., Petitioners, emergency for the duration thereof which expose them to
vs. great danger, contagion, radiation, volcanic
FLORENCIO B. ABAD, in his capacity as Secretary activity/eruption, occupational risks or perils to life as
of the Department of Budget and Management determined by the Secretary of Health or the Head of the
(DBM); ENRIQUE T. ONA, in his capacity as unit with the approval of the Secretary of Health, shall be
Secretary of the Department of Health (DOH); and compensated hazard allowances equivalent to at
FRANCISCO T. DUQUE III, in his capacity as least twenty-five percent (25%) of the monthly basic
Chairman of the Civil Service Commission salary of health workers receiving salary grade 19 and
(CSC), Respondents. below, and five percent (5%) for health workers
with<="" b="">
DECISION
Section 22. Subsistence Allowance. - Public health
PERALTA, J.: workers who are required to render service within the
premises of hospitals, sanitaria, health infirmaries, main
Before the Court is a petition for certiorari and health centers, rural health units and barangay health
prohibition under Rule 65 of the Rules of Court filed by stations, or clinics, and other health-related
the officers and members of the Philippine Public Health establishments in order to make their services available
Association, Inc. (PPHAI) assailing the validity of Joint at any and all times, shall be entitled to full subsistence
Circular No. 11dated November 29, 2012 of the allowance of three (3) meals which may be computed
Department of Budget and Management (DBM) and the in accordance with prevailing circumstances as
Department of Health (DOH) as well as Item 6.5 of the determined by the Secretary of Health in consultation
Joint Circular2 dated September 3, 2012 of the DBM and with the Management-Health Worker's Consultative
the Civil Service Commission (CSC). Councils, as established under Section 33 of this Act:
Provided, That representation and travel allowance shall
The antecedent facts are as follows: be given to rural health physicians as enjoyed by
municipal agriculturists, municipal planning and
On March 26, 1992, Republic Act (RA) No. 7305, development officers and budget officers.
otherwise known as The Magna Carta of Public Health
Workerswas signed into law in order to promote the Section 23. Longevity Pay.- A monthly longevity pay
social and economic well-being of health workers, their equivalent to five percent (5%)of the monthly basic pay
living and working conditions and terms of employment, shall be paid to a health worker for every five (5) years
to develop their skills and capabilities to be better of continuous, efficient and meritorious
equipped to deliver health projects and programs, and to services rendered as certified by the chief of office
encourage those with proper qualifications and excellent concerned, commencing with the service after the
abilities to join and remain in government approval of this Act.4
service.3 Accordingly, public health workers (PHWs)
were granted the following allowances and benefits, Pursuant to Section 355 of the Magna Carta, the
among others: Secretary of Health promulgated its Implementing Rules
and Regulations (IRR) in July 1992. Thereafter, in
Section 20. Additional Compensation. - Notwithstanding November 1999, the DOH, in collaboration with various
Section 12 of Republic Act No. 6758, public health government agencies and health workers' organizations,
workers shall receive the following allowances: hazard promulgated a Revised IRR consolidating all additional
allowance, subsistence allowance, longevity pay, laundry and clarificatory rules issued by the former Secretaries of
allowance and remote assignment allowance. Health dating back from the effectivity of the Magna
Carta. The pertinent provisions of said Revised IRR
Section 21. Hazard Allowance. - Public health workers provide:
in hospitals, sanitaria, rural health units, main health
centers, health infirmaries, barangay health stations, 6.3. Longevity Pay.- A monthly longevity pay equivalent
clinics and other health-related establishments located in to five percent (5%)of the present monthly basic pay
shall be paid to public health workers for every five (5) Compensation and Position Classification System of
years of continuous, efficient and meritorious services Civilian Personnel and the Base Pay Schedule of Military
rendered as certified by the Head of Agency/Local Chief and Uniformed Personnel in the Government, and for
Executives commencing after the approval of the Act. other Purposes, approved by then President Gloria
(April 17, 1992) Macapagal-Arroyo on June 17,2009, which provided for
certain amendments in the Magna Carta and its IRR.
xxxx
On September 3, 2012, respondents DBM and CSC
7.1.1. Eligibility to Receive Hazard Pay.- All public issued one of the two assailed issuances, DBM-CSC
health workers covered under RA 7305 are eligible to Joint Circular No. 1, Series of 2012, to prescribe the
receive hazard pay when the nature of their work exposes rules on the grant of Step Increments due to meritorious
them to high risk/low risk hazards for at least fifty performance and Step Increment due to length of
percent (50%) of their working hours as determined and service.7 Specifically, it provided that "an official or
approved by the Secretary of Health or his authorized employee authorized to be granted Longevity Pay under
representatives. an existing law is not eligible for the grant of Step
Increment due to length of service." 8 Shortly thereafter,
xxxx on November29, 2012, respondents DBM and DOH then
circulated the other assailed issuance, DBM-DOH Joint
7.2.1. Eligibility for Subsistence Allowance Circular No. 1, Series of 2012, the relevant provisions of
which state:
a. All public health workers covered under RA 7305 are
eligible to receive full subsistence allowance as long as 7.0. Hazard Pay. - Hazard pay is an additional
they render actual duty. compensation for performing hazardous duties and for
enduring physical hardships in the course of performance
b. Public Health Workers shall be entitled to full of duties.
Subsistence Allowance of three (3) meals which may be
computed in accordance with prevailing circumstances as As a general compensation policy, and in line with
determined by the Secretary of Health in consultation Section 21 of R. A. No. 7305, Hazard Pay may be
with the Management-Health Workers Consultative granted to PHWs only if the nature of the duties and
Council, as established under Section 33 of the Act. responsibilities of their positions, their actual services,
and location of work expose them to great danger,
c. Those public health workers who are out of station occupational risks, perils of life, and physical hardships;
shall be entitled to per diems in place of Subsistence and only during periods of actual exposure to hazards
Allowance. Subsistence Allowance may also be and hardships.
commuted.
xxxx
xxxx
8.3 The Subsistence Allowance shall be ₱50for each day
7.2.3 Rates of Subsistence Allowance of actual full-time service, or ₱25for each day of actual
part-time service.
a. Subsistence allowance shall be implemented at not less
than Ph₱50.00 per day or Ph₱1,500.00 per month as xxxx
certified by head of agency.
9.0 Longevity Pay (LP)
xxxx
9.1 Pursuant to Section 23 of R.A. No. 7305, a PHW
d. Part-time public health workers/consultants are entitled may be granted LP at 5% of his/her current monthly
to one-half (1/2)of the prescribed rates received by full- basic salary, in recognition of every 5 years of
time public health workers.6 continuous, efficient, and meritorious services rendered
as PHW. The grant thereof is based on the following
On July 28, 2008, the Fourteenth Congress issued Joint criteria:
Resolution No. 4, entitled Joint Resolution Authorizing
the President of the Philippines to Modify the
9.1.1 The PHW holds a position in the agency plantilla of WHETHER RESPONDENTS FRANCISCO T. DUQUE
regular positions; and AND FLORENCIO B. ABAD ACTED WITH GRAVE
ABUSE OF DISCRETION WHEN THEY ISSUED
9.1.2 He/She has rendered at least satisfactory DBM-CSC JOINT CIRCULAR NO. 1, S. 2012 DATED
performance and has not been found guilty of any SEPTEMBER 2, 2012 WHICH PROVIDED THAT AN
administrative or criminal case within all rating periods OFFICIAL OR EMPLOYEE ENTITLED TO
covered by the 5-year period. LONGEVITY PAY UNDER EXISTING LAW SHALL
NO LONGER BE GRANTED STEP INCREMENT
In a letter9 dated January 23, 2013 addressed to DUE TO LENGTH OF SERVICE.
respondents Secretary of Budget and Management and
Secretary of Health, petitioners expressed their III.
opposition to the Joint Circular cited above on the ground
that the same diminishes the benefits granted by the WHETHER RESPONDENTS' ISSUANCE OF DBM-
Magna Carta to PHWs. DOH JOINT CIRCULAR NO. 1, S. 2012 IS NULL
AND VOID FOR BEING AN UNDUE EXERCISE OF
Unsatisfied, petitioners, on May 30, 2013, filed the LEGISLATIVE POWER BY ADMINISTRATIVE
instant petition raising the following issues: BODIES WHEN RESPONDENT ONA ALLOWED
RESPONDENT ABAD TOSIGNIFICANTLY SHARE
I. THE POWER TO FORMULATE AND PREPARE THE
NECESSARY RULES AND REGULATIONS TO
WHETHER RESPONDENTS ENRIQUE T. ONA AND IMPLEMENT THE PROVISIONS OF THE MAGNA
FLORENCIO B. ABAD ACTED WITH GRAVE CARTA.
ABUSE OF DISCRETION AND VIOLATED
SUBSTANTIVE DUE PROCESS WHEN THEY IV.
ISSUED DBM-DOH JOINT CIRCULAR NO. 1, S. 2012
WHICH: WHETHER RESPONDENT ONA WAS REMISS IN
IMPLEMENTING THE MANDATE OF THE MAGNA
A) MADE THE PAYMENT OF HAZARD PAY CARTA WHEN HE DID NOT INCLUDE THE
DEPENDENT ON THE ACTUAL DAYS OF MAGNA CARTA BENEFITS IN THE
EXPOSURE TO THE RISK INVOLVED; DEPARTMENT'S YEARLY BUDGET.

B) ALLOWED PAYMENT OF SUBSISTENCE V.


ALLOWANCE AT ₱50 FOR EACH DAY OF ACTUAL
FULL-TIME SERVICE OR ₱25 FOR EACH DAY OF WHETHER RESPONDENTS' ISSUANCE OF DBM-
ACTUAL PART-TIME SERVICE WITHOUT DOH JOINT CIRCULAR NO. 1, S. 2012 IS NULL
CONSIDERATION OF THE PREVAILING AND VOID FOR BEING AN UNDUE EXERCISE OF
CIRCUMSTANCES AS DETERMINED BY THE LEGISLATIVE POWER BY ADMINISTRATIVE
SECRETARY OF HEALTH IN CONSULTATION BODIES WHEN THE SAME WAS ISSUED SANS
WITH THE MANAGEMENT HEALTH WORKERS' CONSULTATION WITH PROFESSIONAL AND
CONSULTATIVE COUNCILS; HEALTH WORKERS' ORGANZATIONS AND
UNIONS.
C) REQUIRED THAT LONGEVITY PAY BE
GRANTED ONLY TO PHWs WHO HOLD Petitioners contend that respondents acted with grave
PLANTILLA AND REGULAR POSITIONS; AND abuse of discretion when they issued DBM-DOH Joint
Circular No. 1, Series of 2012 and DBM-CSC Joint
D) MADE THE JOINT CIRCULAR EFFECTIVE ON Circular No. 1, Series of 2012 which prescribe certain
JANUARY 1, 2013, BARELY THREE (3) DAYS requirements on the grant of benefits that are not
AFTER IT WAS PUBLISHED IN A NEWSPAPER OF otherwise required by RA No. 7305. Specifically,
GENERAL CIRCULATION ON DECEMBER 29, 2012, petitioners assert that the DBM-DOH Joint Circular
IN VIOLATION OF THE RULES ON PUBLICATION. grants the payment of Hazard Pay only if the nature of
the PHWs' duties expose them to danger when RA No.
II. 7305 does not make any qualification. They likewise
claim that said circular unduly fixes Subsistence
Allowance at ₱50 for each day of full-time service and Sec. 2. Petition for Prohibition. - When the proceedings
₱25 for part-time service which are not in accordance of any tribunal, corporation, board, officer or person,
with prevailing circumstances determined by the whether exercising judicial, quasi-judicial or ministerial
Secretary of Health as required by RA No. 7305. functions, are without or in excess of its jurisdiction, or
Moreover, petitioners fault respondents for the premature with grave abuse of discretion amounting to lack or
effectivity of the DBM-DOH Joint Circular which they excess of jurisdiction, and there is no appeal or any other
believe should have been on January 29, 2012 and not on plain, speedy, and adequate remedy in the ordinary
January 1, 2012. As to the grant of Longevity Pay, course of law, a person aggrieved thereby may file a
petitioners posit that the same was wrongfully granted verified petition in the proper court, alleging the facts
only to PHWs holding regular plantilla positions. with certainty and praying that judgment be rendered
Petitioners likewise criticize the DBM-CSC Joint commanding the respondent to desist from further
Circular insofar as it withheld the Step Increment due to proceedings in the action or matter specified therein, or
length of service from those who are already being otherwise granting such incidental reliefs as law and
granted Longevity Pay. As a result, petitioners claim that justice may require.10
the subject circulars are void for being an undue exercise
of legislative power by administrative bodies. Thus, on the one hand, certiorari as a special civil action
is available only if: (1) it is directed against a tribunal,
In their Comment, respondents, through the Solicitor board, or officer exercising judicial or quasi-judicial
General, refute petitioners' allegations in stating that the functions; (2) the tribunal, board, or officer acted without
assailed circulars were issued within the scope of their or in excess of jurisdiction or with grave abuse of
authority, and are therefore valid and binding. They also discretion amounting to lack or excess of jurisdiction;
assert the authority of Joint Resolution No. 4, Series of and (3) there is no appeal nor any plain, speedy, and
2009, approved by the President, in accordance with the adequate remedy in the ordinary course of law.11
prescribed procedure. Moreover, respondents question
the remedies of Certiorari and Prohibition used by On the other hand, prohibition is available only if: (1) it
petitioners for the assailed circulars were done in the is directed against a tribunal, corporation, board, officer,
exercise of their quasi-legislative, and not of their judicial or person exercising functions, judicial, quasi-judicial, or
or quasi-judicial functions. ministerial; (2) the tribunal, corporation, board or person
acted without or in excess of its jurisdiction, or with
The petition is partly meritorious. grave abuse of discretion amounting to lack or excess of
jurisdiction; and (3) there is no appeal or any other plain,
At the outset, the petition for certiorari and prohibition speedy, and adequate remedy in the ordinary course of
filed by petitioners is not the appropriate remedy to assail law.12 Based on the foregoing, this Court has consistently
the validity of respondents' circulars. Sections 1 and 2 of reiterated that petitions for certiorari and prohibition may
Rule 65 of the Rules of Court provide: be invoked only against tribunals, corporations, boards,
officers, or persons exercising judicial, quasi-judicial or
RULE 65 ministerial functions, and not against their exercise of
CERTIORARI, PROHIBITION AND MANDAMUS legislative or quasi-legislative functions.13

Section 1. Petition for certiorari. - When any tribunal, Judicial functions involve the power to determine what
board or officer exercising judicial or quasi-judicial the law is and what the legal rights of the parties are, and
functions has acted without or in excess of its or his then undertaking to determine these questions and
jurisdiction, or with grave abuse of discretion amounting adjudicate upon the rights of the parties.14 Quasi judicial
to lack or excess of jurisdiction, and there is no appeal, or functions apply to the actions and discretion of public
any plain, speedy, and adequate remedy in the ordinary administrative officers or bodies required to investigate
course of law, a person aggrieved thereby may file a facts, hold hearings, and draw conclusions from them as
verified petition in the proper court, alleging the facts a basis for their official action, in their exercise of
with certainty and praying that judgment be rendered discretion of a judicial nature.15 Ministerial functions are
annulling or modifying the proceedings of such tribunal, those which an officer or tribunal performs in the context
board or officer, and granting such incidental reliefs as of a given set of facts, in a prescribed manner and
law and justice may require. without regard to the exercise of his own judgment upon
the propriety or impropriety of the act done.16
xxxx
Before a tribunal, board, or officer may exercise judicial respect to the infirmities of the DBM-DOH Joint Circular
or quasi-judicial acts, it is necessary that there be a law raised in the petition, they cannot be said to have been
that gives rise to some specific rights under which issued with grave abuse of discretion for not only are
adverse claims are made, and the controversy ensuing they reasonable, they were likewise issued well within
therefrom is brought before a tribunal, board, or officer the scope of authority granted to the respondents. In fact,
clothed with authority to determine the law and as may be gathered from prior issuances on the matter,
adjudicate the respective rights of the contending the circular did not make any substantial deviation
parties.17 In this case, respondents did not act in any therefrom, but actually remained consistent with, and
judicial, quasi-judicial, or ministerial capacity in their germane to, the purposes of the law.
issuance of the assailed joint circulars. In issuing and
implementing the subject circulars, respondents were not First, the qualification imposed by the DBM-DOH Joint
called upon to adjudicate the rights of contending parties Circular granting the payment of Hazard Pay only if the
to exercise, in any manner, discretion of a judicial nature. nature of PHWs' duties expose them to danger and
The issuance and enforcement by the Secretaries of the depending on whether the risk involved is high or low
DBM, CSC and DOH of the questioned joint circulars was merely derived from Section 7.1.1 of the Revised
were done in the exercise of their quasi-legislative and IRR of RA No. 7305, duly promulgated by the DOH in
administrative functions. It was in the nature of collaboration with various government health agencies
subordinate legislation, promulgated by them in their and health workers' organizations in November 1999, to
exercise of delegated power. Quasi-legislative power is wit:
exercised by administrative agencies through the
promulgation of rules and regulations within the confines SECTION 7.1.1. Eligibility to Receive Hazard Pay. - All
of the granting statute and the doctrine of non-delegation public health workers covered under RA 7305 are
of powers from the separation of the branches of the eligible to receive hazard pay when the nature of their
government.18 work exposes them to high risk/low risk hazards for at
least fifty percent (50%) of their working hours as
Based on the foregoing, certiorari and prohibition do not determined and approved by the Secretary of Health or
lie against herein respondents' issuances. It is beyond the his authorized representatives.21
province of certiorari to declare the aforesaid
administrative issuances illegal because petitions for Second, fixing the Subsistence Allowance at ₱50 for
certiorari seek solely to correct defects in jurisdiction, each day of full-time service and ₱25 for part-time
and not to correct just any error committed by a court, service was also merely a reiteration of the limits
board, or officer exercising judicial or quasi-judicial prescribed by the Revised IRR, validly issued by the
functions unless such court, board, or officer thereby acts Secretary of Health pursuant to Section 3522 of RA No.
without or in excess of jurisdiction or with such grave 7305, the pertinent portions of which states:
abuse of discretion amounting to lack of jurisdiction.19
Section 7.2.3 Rates of Subsistence Allowance
It is likewise beyond the territory of a writ of prohibition
since generally, the purpose of the same is to keep a a. Subsistence allowance shall be implemented at not less
lower court within the limits of its jurisdiction in order to than Ph₱50.00 per day or Ph₱1,500.00 per month as
maintain the administration of justice in orderly channels. certified by head of agency.
It affords relief against usurpation of jurisdiction by an
inferior court, or when, in the exercise of jurisdiction, the xxxx
inferior court transgresses the bounds prescribed by the
law, or where there is no adequate remedy available in d. Part-time public health workers/consultants are
the ordinary course of law.20 entitled to one-half (1/2)of the prescribed rates received
by full-time public health workers.
Be that as it may, We proceed to discuss the substantive
issues raised in the petition in order to finally resolve the Third, the condition imposed by the DBM-DOH Joint
doubt over the Joint Circulars' validity. For proper Circular granting longevity pay only to those PHWs
guidance, the pressing issue of whether or not the joint holding regular plantilla positions merely implements the
circulars regulating the salaries and benefits relied upon qualification imposed by the Revised IRR which
by public health workers were tainted with grave abuse provides:
of discretion rightly deserves its prompt resolution. With
6.3. Longevity Pay. - A monthly longevity pay equivalent sought to be invalidated for lack of publication and non-
to five percent (5%) of the present monthly basic pay submission of copies thereof to the UP Law Center -
shall be paid to public health workers for every five (5) ONAR, it has been held that since they merely interpret
years of continuous, efficient and meritorious services RA No. 7832 and its IRR, particularly on the
rendered as certified by the Head of Agency/Local Chief computation of the cost of purchased power, without
Executives commencing after the approval of the Act. modifying, amending or supplanting the same, they
(April 17, 1992) cannot be rendered ineffective, to wit:

6.3.1. Criteria for Efficient and Meritorious Service A When the policy guidelines of the ERC directed the
Public Worker shall have: exclusion of discounts extended by power suppliers in
the computation of the cost of purchased power, the
a. At least a satisfactory performance rating within the guidelines merely affirmed the plain and unambiguous
rating period. meaning of "cost" in Section 5, Rule IX of the IRR of
R.A. No. 7832."Cost" is an item of outlay, and must
b. Not been found guilty of any administrative or therefore exclude discounts since these are "not amounts
criminal case within the rating period. paid or charged for the sale of electricity, but are
reductions in rates.
As can be gleaned from the aforequoted provision,
petitioners failed to show any real inconsistency in xxxx
granting longevity pay to PHWs holding regular plantilla
positions. Not only are they based on the same premise, Thus, the policy guidelines of the ERC on the treatment
but the intent of longevity pay, which is paid to workers of discounts extended by power suppliers "give no real
for every five (5) years of continuous, efficient and consequence more than what the law itself has already
meritorious services, necessarily coincides with that of prescribed." Publication is not necessary for the
regularization. Thus, the assailed circular cannot be effectivity of the policy guidelines.
invalidated for its issuance is consistent with, and
germane to, the purposes of the law. As interpretative regulations, the policy guidelines of the
ERC on the treatment of discounts extended by power
Anent petitioners' contention that the DBM-DOH Joint suppliers are also not required to be filed with the U.P.
Circular is null and void for its failure to comply with Law Center in order to be effective. Section 4, Chapter 2,
Section 3523 of RA No. 7305 providing that its Book VII of the Administrative Code of 1987 requires
implementing rules shall take effect thirty (30) days after every rule adopted by an agency to be filed with the U.P.
publication in a newspaper of general circulation, as well Law Center to be effective. However, in Board of
as its failure to file a copy of the same with the Trustees of the Government Service Insurance System v.
University of the Philippines Law Center-Office of the Velasco, this Court pronounced that "not all rules and
National Administrative Register (UP Law Center- regulations adopted by every government agency are to
ONAR), jurisprudence as well as the circumstances of be filed with the UP Law Center." Interpretative
this case dictate otherwise. regulations and those merely internal in nature are not
required to be filed with the U.P. Law Center. Paragraph
Indeed, publication, as a basic postulate of procedural 9 (a) of the Guidelines for Receiving and Publication of
due process, is required by law in order for Rules and Regulations Filed with the U.P. Law Center
administrative rules and regulations to be states:
24
effective. There are, however, several exceptions, one
of which are interpretative regulations which "need 9. Rules and Regulations which need not be filed with
nothing further than their bare issuance for they give no the U.P. Law Center, shall, among others, include but not
real consequence more than what the law itself has be limited to, the following:
already prescribed."25 These regulations need not be
published for they add nothing to the law and do not a. Those which are interpretative regulations and those
affect substantial rights of any person.26 merely internal in nature, that is, regulating only the
personnel of the Administrative agency and not the
Thus, in Association of Southern Tagalog Electric public.
Cooperatives, et. al. v. Energy Regulatory Commission
(ERC),27wherein several orders issued by the ERC were xxxx
Furthermore, the policy guidelines of the ERC did not first place - no prior hearing, consultation, and
create a new obligation and impose a new duty, nor publication are needed for their validity.
did it attach a new disability. As previously discussed,
the policy guidelines merely interpret R.A. No. 7832 In this case, the DBM-DOH Joint Circular in question
and its IRR, particularly on the computation of the gives no real consequence more than what the law itself
cost of purchased power. The policy guidelines did not had already prescribed. As previously discussed, the
modify, amend or supplant the IRR. qualification of actual exposure to danger for the PHW's
entitlement to hazard pay, the rates of ₱50 and ₱25
Similarly, in Republic v. Drugmaker's Laboratories, subsistence allowance, and the entitlement to longevity
Inc.,28 the validity of circulars issued by the Food and pay on the basis of PHW's status in the plantilla of
Drug Administration (FDA) was upheld in spite of the regular positions were already prescribed and authorized
non-compliance with the publication, prior hearing, and by pre-existing law. There is really no new obligation or
consultation requirements for they merely implemented duty imposed by the subject circular for it merely
the provisions of Administrative Order No. 67, entitled reiterated those embodied in RA No. 7305 and its
"Revised Rules and Regulations on Registration of Revised IRR. The Joint Circular did not modify, amend
Pharmaceutical Products" issued by the DOH, in the nor supplant the Revised IRR, the validity of which is
following wise: undisputed. Consequently, whether it was duly published
and filed with the UP Law Center - ONAR is necessarily
A careful scrutiny of the foregoing issuances would immaterial to its validity because in view of the
reveal that AO 67, s. 1989 is actually the rule that pronouncements above, interpretative regulations, such
originally introduced the BA/BE testing requirement as the DBM-DOH circular herein, need not be published
as a component of applications for the issuance of nor filed with the UP Law Center - ONAR in order to be
CPRs covering certain pharmaceutical products. As effective. Neither is prior hearing or consultation
such, it is considered an administrative regulation - a mandatory.
legislative rule to be exact - issued by the Secretary of
Health in consonance with the express authority granted Nevertheless, it bears stressing that in spite of the
to him by RA 3720 to implement the statutory mandate immateriality of the publication requirement in this case,
that all drugs and devices should first be registered with and even assuming the necessity of the same, its basic
the FDA prior to their manufacture and sale. Considering objective in informing the public of the contents of the
that neither party contested the validity of its issuance, law was sufficiently accomplished when the DBM-DOH
the Court deems that AO 67, s. 1989 complied with the Joint Circular was published in the Philippine Star, a
requirements of prior hearing, notice, and publication newspaper of general circulation, on December 29,
pursuant to the presumption of regularity accorded to the 2012.29
government in the exercise of its official duties.42
As to petitioners' allegation of grave abuse of discretion
On the other hand, Circular Nos. 1 and 8, s. 1997 on the part of respondent DOH Secretary in failing to
cannot be considered as administrative regulations include the Magna Carta benefits in his department's
because they do not: (a) implement a primary yearly budget, the same is belied by the fact that
legislation by providing the details thereof; (b) petitioners themselves specifically provided in their
interpret, clarify, or explain existing statutory petition an account of the amounts allocated for the same
regulations under which the FDA operates; and/or (c) in the years 2012 and 2013.30
ascertain the existence of certain facts or things upon
which the enforcement of RA 3720 depends. In fact, Based on the foregoing, it must be recalled that
the only purpose of these circulars is for the FDA to administrative regulations, such as the DBM-DOH Joint
administer and supervise the implementation of the Circular herein, enacted by administrative agencies to
provisions of AO 67, s. 1989, including those covering implement and interpret the law they are entrusted to
the BA/BE testing requirement, consistent with and enforce are entitled to great respect.31 They partake of the
pursuant to RA 3720.43 Therefore, the FDA has nature of a statute and are just as binding as if they have
sufficient authority to issue the said circulars and been written in the statute itself. As such, administrative
since they would not affect the substantive rights of regulations have the force and effect of law and enjoy the
the parties that they seek to govern - as they are not, presumption of legality. Unless and until they are
strictly speaking, administrative regulations in the overcome by sufficient evidence showing that they
exceeded the bounds of the law,32 their validity and will be promulgated jointly by the DBM and the Civil
legality must be upheld. Service Commission,

Thus, notwithstanding the contention that the Joint and while it was duly published in the Philippine Star, a
Resolution No. 4 promulgated by Congress cannot be a newspaper of general circulation, on September 15,
proper source of delegated power, the subject Circular 2012,33the DBM-CSC Joint Circular remains
was nevertheless issued well within the scope of unenforceable for the failure of respondents to file the
authority granted to the respondents. The issue in this same with the UP Law Center - ONAR. 34 Moreover,
case is not whether the Joint Resolution No. 4 can insofar as the DBM-DOH Joint Circular similarly
become law and, consequently, authorize the issuance of withholds the Step Increment due to length of service
the regulation in question, but whether the circular can be from those who are already being granted Longevity Pay,
struck down as invalid for being tainted with grave abuse the same must likewise be declared unenforceable.[35
of discretion. Regardless, therefore, of the validity or
invalidity of Joint Resolution No. 4, the DBMDOH Joint Note also that the DBM-DOH Joint Circular must further
Circular assailed herein cannot be said to have been be invalidated insofar as it lowers the hazard pay at rates
arbitrarily or capriciously issued for being consistent with below the minimum prescribed by Section 21 of RA No.
prior issuances duly promulgated pursuant to valid and 7305 and Section 7.1.5 (a) of its Revised IRR as follows:
binding law.
SEC. 21. Hazard Allowance. - Public health worker in
Distinction must be made, however, with respect to the hospitals, sanitaria, rural health units, main centers,
DBM-CSC Joint Circular, the contested provision of health infirmaries, barangay health stations, clinics and
which states: other health-related establishments located in difficult
areas, strife-torn or embattled areas, distresses or isolated
6.5 An official or employee authorized to be granted stations, prisons camps, mental hospitals, radiation-
Longevity Pay under an existing law is not eligible for exposed clinics, laboratories or disease-infested areas or
the grant of Step Increment Due to Length of Service. in areas declared under state of calamity or emergency
for the duration thereof which expose them to great
A review of RA No. 7305 and its Revised IRR reveals danger, contagion, radiation, volcanic activity/eruption
that the law does not similarly impose such condition on occupational risks or perils to life as determined by the
the grant of longevity pay to PHWs in the government Secretary of Health or the Head of the unit with the
service. As such, the DBM-CSC Joint Circular approval of the Secretary of Health, shall be
effectively created a new imposition which was not compensated hazard allowance equivalent to at least
otherwise stipulated in the law it sought to interpret. twenty-five percent (25%)of the monthly basic salary of
Consequently, the same exception granted to the DBM- health workers receiving salary grade 19 and below, and
DOH Joint Circular cannot be applied to the DBM-CSC five percent (5%) for health workers with salary grade 20
Joint Circular insofar as the requirements on publication and above.
and submission with the UP Law Center - ONAR are
concerned. Thus, while it was well within the authority of xxxx
the respondents to issue rules regulating the grant of step
increments as provided by RA No. 6758, otherwise 7.1.5. Rates of Hazard Pay
known as the Compensation and Position Classification
Act of 1989, which pertinently states: a. Public health workers shall be compensated hazard
allowances equivalent to at least twenty five (25%)of the
Section 13. Pay Adjustments. - Paragraphs (b) and (c), monthly basic salary of health workers, receiving salary
Section 15 of Presidential Decree No. 985 are hereby grade 19 and below, and five percent (5%)for health
amended to read as follows: workers with salary grade 20 and above. This may be
granted on a monthly, quarterly or annual basis.
xxxx
It is evident from the foregoing provisions that the rates
(c) Step Increments- Effective January 1, 1990 step of hazard pay must be at least25% of the basic monthly
increments shall be granted based on merit and/or length salary of PWHs receiving salary grade 19 and below, and
of service in accordance with rules and regulations that 5% receiving salary grade 20 and above. As such, RA
No. 7305 and its implementing rules noticeably prescribe
the minimum rates of hazard pay due all PHWs in the
government, as is clear in the self-explanatory phrase "at
least" used in both the law and the rules.36 Thus, the G.R. No. 189081, August 10, 2016
following rates embodied in Section 7.2 of DBM-DOH
Joint Circular must be struck down as invalid for being GLORIA S. DY, Petitioner, v. PEOPLE OF THE
contrary to the mandate of RA No. 7305 and its Revised PHILIPPINES, MANDY COMMODITIES CO.,
IRR: INC., REPRESENTED BY ITS PRESIDENT,
WILLIAM MANDY, Respondent.
7.2.1 For PHWs whose positions are at SG-19 and below,
Hazard Pay shall be based on the degree of exposure to DECISION
high risk or low risk hazards, as specified in sub-items 7 .
1.1 and 7 .1.2 above, and the number of workdays of JARDELEZA, J.:
actual exposure over 22 workdays in a month, at rates not
to exceed 25% of monthly basic salary. In case of Our law states that every person criminally liable for a
exposure to both high risk and low risk hazards, the felony is also civilly liable. This civil liability ex
Hazard Pay for the month shall be based on only one risk delicto may be recovered through a civil action which,
level, whichever is more advantageous to the PHW. under our Rules of Court, is deemed instituted with the
criminal action. While they are actions mandatorily
7.2.2 PHWs whose positions are at SG-20 and above may fused,1 they are, in truth, separate actions whose
be entitled to Hazard Pay at 5% of their monthly basic existences are not dependent on each other. Thus, civil
salaries for all days of exposure to high risk and/or low liability ex delicto survives an acquittal in a criminal case
risk hazards. However, those exposed to high risk for failure to prove guilt beyond reasonable doubt.
hazards for 12 or more days in a month may be entitled However, the Rules of Court limits this mandatory fusion
to a fixed amount of ₱4,989.75 per month. to a civil action for the recovery of civil liability ex
delicto. It, by no means, includes a civil liability arising
Rates of Hazard Pay from a different source of obligation, as in the case of a
contract. Where the civil liability is ex contractu, the
osure/ court hearing the criminal case has no authority to award
High Risk Low Riskdamages.
Risk
days 25% of monthly basic salary 14% of monthly basic salary The Case
ays 14% of monthly basic salary 8% of monthly basic salary
This is a Petition for Review on Certiorari under Rule 45
days 8% monthly basic salary of the
5% of monthly basic Rules of Court. Petitioner Gloria S. Dy (petitioner)
salary
seeks the reversal of the decision of the Court of Appeals
WHEREFORE, premises considered, the instant petition (CA) dated February 25, 2009 (Assailed
2
is PARTLY GRANTED. The DBM-DOH Joint Circular, Decision) ordering her to pay Mandy Commodities
insofar as it lowers the hazard pay at rates below the Company, Inc. (MCCI) in the amount of
minimum prescribed by Section 21 of RA No. 7305 and P21,706,281.00.3chanrobleslaw
Section 7.1.5 (a) of its Revised IRR, is declared The Facts
INVALID. The DBM-CSC Joint Circular, insofar as it
provides that an official or employee authorized to be Petitioner was the former General Manager of MCCL. In
granted Longevity Pay under an existing law is not the course of her employment, petitioner assisted MCCI
eligible for the grant of Step Increment Due to Length of in its business involving several properties. One such
Service, is declared UNENFORCEABLE. The validity, business pertained to the construction of warehouses
however, of the DBM-DOH Joint Circular as to the over a property (Numancia Property) that MCCI leased
qualification of actual exposure to danger for the PHW's from the Philippine National Bank (PNB). Sometime in
entitlement to hazard pay, the rates of ₱50 and ₱25 May 1996, in pursuit of MCCI's business, petitioner
subsistence allowance, and the entitlement to longevity proposed to William Mandy (Mandy), President of
pay on the basis of the PHW' s status in the plantilla of MCCI, the purchase of a property owned by Pantranco.
regular positions, is UPHELD. As the transaction involved a large amount of money,
Mandy agreed to obtain a loan from the International
SO ORDERED. China Bank of Commerce (ICBC). Petitioner represented
that she could facilitate the approval of the loan. True judgment is hereby rendered ACQUITTING the accused
enough, ICBC granted a loan to MCCI in the amount of of the offense charged. With costs de officio.
P20,000,000.00, evidenced by a promissory note. As
security, MCCI also executed a chattel mortgage over the The accused is however civilly liable to the complainant
warehouses in the Numancia Property. Mandy entrusted for the amount of P21,706,281.00.
petitioner with the obligation to manage the payment of
the loan.4chanrobleslaw SO ORDERED.14chanroblesvirtuallawlibrary
Petitioner filed an appeal15 of the civil aspect of the RTC
In February 1999, MCCI received a notice of foreclosure Decision with the CA. In the Assailed Decision,16the CA
over the mortgaged property due to its default in paying found the appeal without merit. It held that the acquittal
the loan obligation.5 In order to prevent the foreclosure, of petitioner does not necessarily absolve her of civil
Mandy instructed petitioner to facilitate the payment of liability. The CA said that it is settled that when an
the loan. MCCI, through Mandy, issued 13 Allied Bank accused is acquitted on the basis of reasonable doubt,
checks and 12 Asia Trust Bank checks in varying courts may still find him or her civilly liable if the
amounts and in different dates covering the period from evidence so warrant. The CA explained that the evidence
May 18, 1999 to April 4, 2000.6 The total amount of the on record adequately prove that petitioner received the
checks, which were all payable to cash, was checks as a loan from MCCI. Thus, preventing the latter
P21,706,281.00. Mandy delivered the checks to from recovering the amount of the checks would
petitioner. Mandy claims that he delivered the checks constitute unjust enrichment. Hence, the Assailed
with the instruction that petitioner use the checks to pay Decision ruled
the loan.7 Petitioner, on the other hand, testified that she WHEREFORE, in view of the foregoing, the appeal is
encashed the checks and returned the money to DENIED. The Decision dated November 11, 2005 of the
Mandy.8 ICBC eventually foreclosed the mortgaged Regional Trial Court, Manila, Branch 33 in Criminal
property as MCCI continued to default in its obligation to Case No. 04-224294 which found Gloria Dy civilly
pay. Mandy claims that it was only at this point in time liable to William Mandy is AFFIRMED.
that he discovered that not a check was paid to
ICBC.9chanrobleslaw SO ORDERED.17chanroblesvirtuallawlibrary
The CA also denied petitioner's motion for
Thus, on October 7, 2002, MCCI, represented by Mandy, reconsideration in a resolution18 dated August 3, 2009.
filed a Compiamt-Affidavit for Estafa10 before the Office
of the City Prosecutor of Manila. On March 3, 2004, an Hence, this Petition for Review on Certiorari (Petition).
Information11 was filed against petitioner before the Petitioner argues that since she was acquitted for failure
Regional Trial Court (RTC) Manila. of the prosecution to prove all the elements of the crime
charged, there was therefore no crime committed.19 As
After a full-blown trial, the RTC Manila rendered a there was no crime, any civil liability ex delicto cannot
decision12 dated November 11, 2005 (RTC Decision) be awarded.
acquitting petitioner. The RTC Manila found that while
petitioner admitted that she received the checks, the The Issues
prosecution failed to establish that she was under any
obligation to deliver them to ICBC in payment of The central issue is the propriety of making a finding of
MCCFs loan. The trial court made this finding on the civil liability in a criminal case for estafa when the
strength of Mandy's admission that he gave the checks to accused is acquitted for failure of the prosecution to
petitioner with the agreement that she would encash prove all the elements of the crime charged.
them. Petitioner would then pay ICBC using her own
checks. The trial court further made a finding that Mandy The Ruling of the Court
and petitioner entered into a contract of loan.13 Thus, it
held that the prosecution failed to establish an important We grant the petition.
element of the crime of estafa—misappropriation or
conversion. However, while the RTC Manila acquitted Civil Liability Arising From Crime
petitioner, it ordered her to pay the amount of the checks.
The dispositive portion of the RTC Decision states — Our laws recognize a bright line distinction between
WHEREFORE, the prosecution having failed to establish criminal and civil liabilities. A crime is a liability against
the guilt of the accused beyond reasonable doubt, the state. It is prosecuted by and for the state. Acts
considered criminal are penalized by law as a means to
protect the society from dangerous transgressions. As system that while a criminal liability carries with it a
criminal liability involves a penalty affecting a person's corresponding civil liability, they are nevertheless
liberty, acts are only treated criminal when the law separate and distinct. In other words, these two liabilities
clearly says so. On the other hand, civil liabilities take a may co-exist but their existence is not dependent on each
less public and more private nature. Civil liabilities are other.26chanrobleslaw
claimed through civil actions as a means to enforce or
protect a right or prevent or redress a wrong.20 They do The Civil Code states that when an accused in a criminal
not carry with them the imposition of imprisonment as a prosecution is acquitted on the ground that his guilt has
penalty. Instead, civil liabilities are compensated in the not been proven beyond reasonable doubt, a civil action
form of damages. for damages for the same act or omission may be filed. In
the latter case, only preponderance of evidence is
Nevertheless, our jurisdiction recognizes that a crime has required.27 This is supported by the Rules of Court which
a private civil component. Thus, while an act considered provides that the extinction of the criminal action does
criminal is a breach of law against the State, our legal not result in the extinction of the corresponding civil
system allows for the recovery of civil damages where action.28 The latter may only be extinguished when there
there is a private person injured by a criminal act. It is in is a "finding in a final judgment in the criminal action
recognition of this dual nature of a criminal act that our that the act or omission from which the civil liability may
Revised Penal Code provides that every person arise did not exist."29 Consistent with this, the Rules of
criminally liable is also civilly liable.21 This is the Court requires that in judgments of acquittal the court
concept of civil liability ex delicto. must state whether "the evidence of the prosecution
absolutely failed to prove the guilt of the accused or
This is echoed by the New Civil Code when it recognizes merely failed to prove his guilt beyond reasonable doubt.
acts or omissions punished by law as a separate source of In either case, the judgment shall determine if the act or
obligation.22 This is reinforced by Article 30 of the same omission from which the civil liability might arise did
code which refers to the filing of a separate civil action to not exist."30chanrobleslaw
demand civil liability arising from a criminal
offense.23chanrobleslaw Thus, whether an exoneration from the criminal action
should affect the corresponding civil action depends on
The Revised Penal Code fleshes out this civil liability in the varying kinds of acquittal. In Manantan v. Court of
Article 10424 which states that it includes restitution, Appeals,31 we explained —
reparation of damage caused and indemnification for Our law recognizes two kinds of acquittal, with different
consequential damages. effects on the civil liability of the accused. First is an
acquittal on the ground that the accused is not the author
Rules of procedure for criminal and civil actions of the act or omission complained of. This instance
involving the same act or omission closes the door to civil liability, for a person who has
been found to be not the perpetrator of any act or
The law and the rules of procedure provide for a precise omission cannot and can never be held liable for such act
mechanism in instituting a civil action pertaining to an or omission. There being no delict civil liability ex
act or omission which is also subject of a criminal case. delicto is out of the question, and the civil action, if any,
Our Rules of Court prescribes a kind of fusion such that, which may be instituted must be based on grounds other
subject to certain defined qualifications, when a criminal than the delict complained of. This is the situation
action is instituted, the civil action for the recovery of the contemplated in Rule 111 of the Rules of Court. The
civil liability arising from the offense is deemed second instance is an acquittal based on reasonable doubt
instituted as well.25cralawredchanrobleslaw on the guilt of the accused. In this case, even if the guilt
of the accused has not been satisfactorily established, he
However, there is an important difference between civil is not exempt from civil liability which may be proved
and criminal proceedings that require a fine distinction as by preponderance of evidence only. This is the situation
to how these twin actions shall proceed. These two contemplated in Article 29 of the Civil Code, where the
proceedings involve two different standards of proof. A civil action for damages is "for the same act or
criminal action requires proof of guilt beyond reasonable omission." Although the two actions have different
doubt while a civil action requires a lesser quantum of purposes, the matters discussed in the civil case are
proof, that of preponderance of evidence. This distinction similar to those discussed in the criminal case. However,
also agrees with the essential principle in our legal the judgment In the criminal proceeding cannot be read
in evidence In the civil action to establish any fact there such that, it criminalizes this kind of fraud.
determined, even though both actions involve the same
act or omission. The reason for this rule is that the parties Article 315 of the Revised Penal Code identifies the
are not the same and secondarily, different rules of circumstances which constitute estafa. Article 315,
evidence are applicable. Hence, notwithstanding herein paragraph 1 (b) states that estafa is committed by abuse
petitioner's acquittal, the Court of Appeals in determining of confidence —
whether Article 29 applied, was not precluded from Art. 315. Swindling (estafa) - x x x (b) By
looking into the question of petitioner's negligence or misappropriating or converting, to the prejudice of
reckless imprudence.32chanroblesvirtuallawlibrary another, money, goods, or any other personal property
In Dayap v. Sendiong,33 we further said — received by the offender in trust or on commission, or for
The acquittal of the accused does not automatically administration, or under any other obligation involving
preclude a judgment against him on the civil aspect of the the duty to make delivery of or to return the same, even
case. The extinction of the penal action does not carry though such obligation be totally or partially guaranteed
with it the extinction of the civil liability where: (a) the by a bond; or by denying having received such money,
acquittal is based on reasonable doubt as only goods, or other property.
preponderance of evidence is required; (b) the court In this kind of estafa, the fraud which the law considers
declares that the liability of the accused is only civil; and as criminal is the act of misappropriation or conversion.
(c) the civil liability of the accused does not arise from or When the element of misappropriation or conversion is
is not based upon the crime of which the accused is missing, there can be no estafa. In such case, applying
acquitted. However, the civil action based on delict may the foregoing discussions on civil liability ex delicto,
be deemed extinguished if mere is a finding on the final there can be no civil liability as there is no act or
judgment in the criminal action that the act or omission omission from which any civil liability may be sourced.
from which the civil liability may arise did not exist or However, when an accused is acquitted because a
where the accused did not commit the acts or omission reasonable doubt exists as to the existence of
imputed to him.34chanroblesvirtuallawlibrary misappropriation or conversion, then civil liability may
Hence, a civil action filed for the purpose of enforcing civil still be awarded. This means that, while there is evidence
liability ex delicto, even if mandatorily instituted with the
corresponding criminal action, survives an acquittal when it is based to prove fraud, such evidence does not suffice to
on the presence of reasonable doubt. In these instances, while the convince the court to the point of moral certainty that the
evidence presented does not establish the fact of the crime with
moral certainty, the civil action still prevails for as long as the
act of fraud amounts to estafa. As the act was
greater weight of evidence tilts in favor of a finding of liability. This nevertheless proven, albeit without sufficient proof
means that while the mind of the court cannot rest easy in justifying the imposition of any criminal penalty, civil
penalizing the accused for the commission of a crime, it
nevertheless finds that he or she committed or omitted to perform liability exists.
acts which serve as a separate source of obligation. There is no
sufficient proof that the act or omission is criminal beyond
reasonable doubt, but there is a preponderance of evidence to show In this case, the RTC Manila acquitted petitioner because
that the act or omission caused injury which demands the prosecution failed to establish by sufficient evidence
compensation.
the element of misappropriation or conversion. There
Civil Liability Ex Delicto in Estafa Cases was no adequate evidence to prove that Mandy gave the
checks to petitioner with the instruction that she will use
Our laws penalize criminal fraud which causes damage capable of
pecuniary estimation through estafaunder Article 315 of the Revised them to pay the ICBC loan. Citing Mandy's own
Penal Code. In general, the elements testimony in open court, the RTC Manila held that when
of estafa are:ChanRoblesVirtualawlibrary
Mandy delivered the checks to petitioner, their agreement
That the accused defrauded another (a) by abuse of was that it was a "sort of loan."36 In the dispositive
(1)
confidence, or (b) by means of deceit; and portion of the RTC Decision, the RTC Manila ruled that
the prosecution "failed to establish the guilt of the
accused beyond reasonable doubt."37 It then proceeded to
That damage or prejudice capable of pecuniary order petitioner to pay the amount of the loan.
(2) estimation is caused to the offended party or third
person. The ruling of the RTC Manila was affirmed by the CA. It
The essence of the crime is the unlawful abuse of said that "[t]he acquittal of Gloria Dy is anchored on the
confidence or deceit in order to cause damage. As this ground that her guilt was not proved beyond reasonable
Court previously held, "the element of fraud or bad faith doubt - not because she is not the author of the act or
is indispensable."35 Our law abhors the act of defrauding omission complained of. x x x The trial court found no
another person by abusing his trust or deceiving him, trickery nor deceit in obtaining money from the private
complainant; instead, it concluded that the money principal amount borrowed from the private
obtained was undoubtedly a loan."38 complainants.47chanrobleslaw

Our jurisprudence on this matter diverges. The ruling was similar in People v. Cuyugan.48 In that
case, we acquitted Cuyugan of estafa for failure of the
Earlier cases ordered the dismissal of the civil action for prosecution to prove fraud. We held that the transaction
recovery of civil liability ex delicto whenever there is a between Cuyugan and private complainants was a loan to
finding that there was no estafa but rather an obligation be used by Cuyugan in her business. Thus, this Court
to pay under a contract. In People v. Pantig,39 this Court ruled that Cuyugan has the obligation, which is civil in
affirmed the ruling of the lower court acquitting Pantig, character, to pay the amount borrowed.49chanrobleslaw
but revoked the portion sentencing him to pay the
offended party the amount of money alleged to have been We hold that the better rule in ascertaining civil liability
obtained through false and fraudulent representations, in estafa cases is that pronounced in Pantig and Singson.
thus — The rulings in these cases are more in accord with the
The trial court found as a fact that the sum of P1,200, relevant provisions of the Civil Code, and the Rules of
ordered to be paid in the judgment of acquittal, was Court. They are also logically consistent with this Court's
received by the defendant-appellant as loan. This finding pronouncement in Manantan.
is inconsistent with the existence of the criminal act
charged in the information. The liability of the Under Pantig and Singson, whenever the elements
defendant for the return of the amount so received of estafa are not established, and that the delivery of any
arises from a civil contract, not from a criminal act, personal property was made pursuant to a contract, any
and may not be enforced in the criminal case. civil liability arising from the estafa cannot be awarded
in the criminal case. This is because the civil liability
The portion of the judgment appealed from, which orders arising from the contract is not civil liability ex delicto,
the defendant-appellant to pay the sum of Pi ,200 to the which arises from the same act or omission constituting
offended party, is hereby revoked, without prejudice to the crime. Civil liability ex delicto is the liability sought
the filing of a civil action for the recovery of the said to be recovered in a civil action deemed instituted with
amount.40chanroblesvirtuallawlibrary the criminal case.
This was also the import of the ruling in People v.
Singson.41 In that case, this Court found that "the The situation envisioned in the foregoing cases, as in this
evidence [was] not sufficient to establish the existence of case, is civil liability ex contractu where the civil liability
fraud or deceit on the part of the accused. x x x And arises from an entirely different source of obligation.
when there is no proven deceit or fraud, there is no crime Therefore, it is not the type of civil action deemed
of estafa."42 While we also said that the established facts instituted in the criminal case, and consequently must be
may prove Singson's civil liability (obligation to pay filed separately. This is necessarily so because whenever
under a contract of sale), we nevertheless made no the court makes a finding that the elements of estafa do
finding of civil liability because "our mind cannot rest not exist, it effectively says that there is no crime. There
easy on the certainty of guilt"43 considering the above is no act or omission that constitutes criminal fraud. Civil
finding. The dispositive portion stated that Singson is liability ex delicto cannot be awarded as it cannot be
acquitted "without prejudice to any civil liability which sourced from something that does not exist.
may be established in a civil case against
her."44chanrobleslaw When the court finds that the source of obligation is in
fact, a contract, as in a contract of loan, it takes a position
However, our jurisprudence on the matter appears to completely inconsistent with the presence of estafa.
have changed in later years. In estafa, a person parts with his money because of abuse
of confidence or deceit. In a contract, a person willingly
In Eusebio-Calderon v. People,45 this Court affirmed the binds himself or herself to give something or to render
finding of the CA that Calderon "did not employ trickery some service.50 In estafa, the accused's failure to account
or deceit in obtaining money from the private for the property received amounts to criminal fraud. In a
complainants, instead, it concluded that the money contract, a party's failure to comply with his obligation is
obtained was undoubtedly loans for which [Calderon] only a contractual breach. Thus, any finding that the
paid interest."46 Thus, this Court upheld Calderon's source of obligation is a contract negates estafa. The
acquittal of estafa, but found her civilly liable for the finding, in turn, means that there is no civil liability ex
delicto. Thus, the rulings in the foregoing cases are from a contract.52 The Due Process Clause of the
consistent with the concept of fused civil and criminal Constitution dictates that a civil liability arising from a
actions, and the different sources of obligations under our contract must be litigated in a separate civil action.
laws.
Section 1 of the Bill of Rights states that no person shall
We apply this doctrine to the facts of this case. Petitioner be deprived of property without due process of law. This
was acquitted by the RTC Manila because of the absence provision protects a person's right to both substantive and
of the element of misappropriation or conversion. The procedural due process. Substantive due process looks
RTC Manila, as affirmed by the CA, found that Mandy into the validity of a law and protects against
delivered the checks to petitioner pursuant to a loan arbitrariness.53 Procedural due process, on the other hand,
agreement. Clearly, there is no crime of estafa. There is guarantees procedural fairness.54 It requires an
no proof of the presence of any act or omission ascertainment of "what process is due, when it is due,
constituting criminal fraud. Thus, civil liability ex and the degree of what is due."55 This aspect of due
delicto cannot be awarded because there is no act or process is at the heart of this case.
omission punished by law which can serve as the source
of obligation. Any civil liability arising from the loan In general terms, procedural due process means the right
takes the nature of a civil liability ex contractu. It does to notice and hearing.56 More specifically, our Rules of
not pertain to the civil action deemed instituted with the Court provides for a set of procedures through which a
criminal case. person may be notified of the claims against him or her
as well as methods through which he or she may be
In Manantan, this Court explained the effects of this given the adequate opportunity to be heard.
result on the civil liability deemed instituted with the
criminal case. At the risk of repetition, Manantan held The Rules of Court requires that any person invoking the
that when there is no delict, "civil liability ex delicto is power of the judiciary to protect or enforce a right or
out of the question, and the civil action, if any, which prevent or redress a wrong57 must file an initiatory
may be instituted must be based on grounds other than pleading which embodies a cause of action,58which is
the delict complained of."51 In Dy's case, the civil liability defined as the act or omission by which a party violates a
arises out of contract—a different source of obligation right of another.59 The contents of an initiatory pleading
apart from an act or omission punished by law—and alleging a cause of action will vary depending on the
must be claimed in a separate civil action. source of the obligation involved. In the case of an
obligation arising from a contract, as in this case, the
Violation of Due Process cause of action in an initiatory pleading will involve the
duties of the parties to the contract, and what particular
We further note that the evidence on record never fully obligation was breached. On the other hand, when the
established the terms of this loan contract. As the trial obligation arises from an act or omission constituting a
before the RTC Manila was focused on proving estafa, crime, the cause of action must necessarily be different.
the loan contract was, as a consequence, only tangentially In such a case, the initiatory pleading will assert as a
considered. This provides another compelling reason why cause of action the act or omission of respondent, and the
the civil liability arising from the loan should be specific criminal statute he or she violated. Where the
instituted in a separate civil case. A civil action for initiatory pleading fails to state a cause of action, the
collection of sum of money filed before the proper court respondent may file a motion to dismiss even before
will provide for a better venue where the terms of the trial.60 These rules embody the fundamental right to
loan and other relevant details may be received. While notice under the Due Process Clause of the Constitution.
this may postpone a warranted recovery of the civil
liability, this Court deems it more important to uphold the In a situation where a court (in a fused action for the
principles underlying the inherent differences in the enforcement of criminal and civil liability) may validly
various sources of obligations under our law, and the rule order an accused-respondent to pay an obligation arising
that fused actions only refer to criminal and civil actions from a contract, a person's right to be notified of the
involving the same act or omission. These legal tenets complaint, and the right to have the complaint dismissed
play a central role in this legal system. A confusion of if there is no cause of action, are completely defeated. In
these principles will ultimately jeopardize the interests of this event, the accused-respondent is completely unaware
the parties involved. Actions focused on proving estafa is of the nature of the liability claimed against him or her at
not the proper vehicle to thresh out civil liability arising the onset of the case. The accused-respondent will not
have read any complaint stating the cause of action of an in a fused action to pay his or her contractual liability
obligation arising from a contract. All throughout the deprives him or her of his or her property without the
trial, the accused-respondent is made to believe that right to notice and hearing as expressed in the procedures
should there be any civil liability awarded against him or and remedies under the Rules of Court. Thus, any court
her, this liability is rooted from the act or omission ruling directing an accused in a fused action to pay civil
constituting the crime. The accused-respondent is also liability arising from a contract is one that completely
deprived of the remedy of having the complaint disregards the Due Process Clause. This ruling must be
dismissed through a motion to dismiss before trial. In a reversed and the Constitution upheld.
fused action, the accused-respondent could not have
availed of this remedy because he or she was not even Conclusion
given an opportunity to ascertain what cause of action to
look for in the initiatory pleading. In such a case, the The lower courts erred when they ordered petitioner to
accused-respondent is blindsided. He or she could not pay her civil obligation arising from a contract of loan in
even have prepared the appropriate defenses and the same criminal case where she was acquitted on the
evidence to protect his or her interest. This is not the ground that there was no crime. Any contractual
concept of fair play embodied in the Due Process Clause. obligation she may have must be litigated in a separate
It is a clear violation of a person's right to due process. civil action involving the contract of loan. We clarify that
in cases where the accused is acquitted on the ground
The Rules of Court also allows a party to a civil action that there is no crime, the civil action deemed instituted
certain remedies that enable him or her to effectively with the criminal case cannot prosper precisely because
present his or her case. A party may file a cross-claim, a there is no delict from which any civil obligation may be
counterclaim or a third-party complaint.61 The Rules of sourced. The peculiarity of this case is the finding that
Court prohibits these remedies in a fused civil and petitioner, in fact, has an obligation arising from a
criminal case.62 The Rules of Court requires that any contract. This civil action arising from the contract is not
cross-claim, counterclaim or third-party complaint must necessarily extinguished. It can be instituted in the
be instituted in a separate civil action.63 In a legal regime proper court through the proper civil action.
where a court may order an accused in a fused action to
pay civil liability arising from a contract, the accused- We note that while there is no written contract of loan in
respondent is completely deprived of the remedy to file a this case, there is an oral contract of loan which must be
cross-claim, a counterclaim or a third-party complaint. brought within six years.65 Under the facts of the case, it
This—coupled with an accused-respondent's inability to appears that any breach in the obligation to pay the loan
adequately prepare his or her defense because of lack of may have happened between 1996 and 1999, or more
adequate notice of the claims against him or her— than six years since this case has been instituted. This
prevents the accused-respondent from having any right to notwithstanding, we find that the civil action arising
a meaningful hearing. The right to be heard under the from the contract of loan has not yet prescribed. Article
Due Process Clause requires not just any kind of an 1150 of the Civil Code states —
opportunity to be heard. It mandates that a party to a case Art. 1150. The time for prescription for all kinds of
must have the chance to be heard in a real and actions, when there is no special provision which ordains
meaningful sense. It does not require a perfunctory otherwise, shall be counted from the day they may be
hearing, but a court proceeding where the party may brought.
adequately avail of the procedural remedies granted to We held in numerous cases that it is the legal possibility
him or her. A court decision resulting from this falls short of bringing the action that determines the starting point
of the mandate of the Due Process Clause. for the computation of the period of prescription.67 We
highlight the unique circumstances surrounding this case.
Indeed, the language of the Constitution is clear. No As discussed in this decision, there has been diverse
person shall be deprived of property without due process jurisprudence as to the propriety of ordering an accused
of law. Due Process, in its procedural sense, requires, in to pay an obligation arising from a contract in the
essence, the right to notice and hearing. These rights are criminal case where the accused was acquitted on the
further fleshed out in the Rules of Court. The Rules of ground that there is no crime. Litigants, such as MCCI,
Court enforces procedural due process because, to repeat cannot be blamed for relying on prior rulings where the
the words of this Court in Secretary of Justice v. Lantion, recovery on a contract of loan in a criminal case
it provides for "what process is due, when it is due, and for estafawas allowed. We have found the opportunity to
the degree of what is due."64 A court ordering an accused clarify this matter through this decision. As it is only now
that we delineate the rules governing the fusion of vs.
criminal and civil actions pertaining to estafa, it is only HON. JANETTE L. GARIN, Secretary-Designate of
upon the promulgation of this judgment that litigants the Department of Health; NICOLAS B.LUTERO
have a clear understanding of the proper recourse in III, Assistant Secretary of Health, Officer-in-Charge,
similar cases. We therefore rule that insofar as MCCI is Food and Drug Administration; and MARIA
concerned, the filing of an action, if any (that may be LOURDES C. SANTIAGO, Officer in-Charge,
sourced from the contract of loan), becomes a legal Center for Drug Regulation and
possibility only upon the finality of this decision which Research, Respondents
definitively ruled upon the principles on fused actions.
x-----------------------x
We add, however, that upon finality of this decision,
prospective litigants should become more circumspect in G.R. No. 221866
ascertaining their course of action in similar cases.
Whenever a litigant erroneously pursues an estafa case, MARIA CONCEPCION S. NOCHE, in her own
and the accused is subsequently acquitted because the behalf and as counsel of Petitioners, JOSE S.
obligation arose out of a contract, the prescriptive period SANDEJAS, ROSIE B. LUISTRO, ELENITA S.A.
will still be counted from the time the cause of action SANDEJAS, EMILY R. LAWS EILEEN Z.
arose. In this eventuality, it is probable that the action has ARANETA, SALVACION C. MONTEIRO
already prescribed by the time the criminal case shall MARIETTA C. GORREZ, ROLANDO M.
have been completed. This possibility demands that BAUTISTA, RUBEN T. UMALI, and MILDRED C.
prospective litigants do not haphazardly pursue the filing CASTOR,Petitioners
of an estafa case in order to force an obligor to pay his or vs.
her obligation with the threat of criminal conviction. It HON. JANETTE L. GARIN, Secretary-Designate of
compels litigants to be honest and fair in their judgment the Department of Health; NICOLAS B. LUTERO
as to the proper action to be filed. This ruling should III, Assistant Secretary of Health; NICOLAS B.
deter litigants from turning to criminal courts as their LUTERO III, Assistant Secretary of Health, Officer-
collection agents, and should provide a disincentive to in-Charge, Food and Drug Administration; and
the practice of filing of criminal cases based on MARIA LOURDES C. SANTIAGO, Officer-in-
unfounded grounds in order to provide a litigant a Charge, Center for Drug Regulation and
bargaining chip in enforcing contracts. Research, Respondents.

WHEREFORE, in view of the foregoing, the Petition R E S OLUTIO N


is GRANTED. The Decision of the CA dated February
25, 2009 is REVERSED. This is however, without MENDOZA, J.:
prejudice to any civil action which may be filed to claim
civil liability arising from the contract. Subject of this resolution is the Omnibus Motion1 filed
by the respondents, thru the Office of the Solicitor
SO ORDERED. General (OSG), seeking partial reconsideration of the
August 24, 2016 Decision (Decision),2 where the Court
resolved the: [1] Petition for Certiorari, Prohibition,
Mandamus with Prayer for Issuance of a Temporary
April 26, 2017 Restraining Order and/or Writ of Preliminary Prohibitory
and Mandatory Injunction (G.R. No. 217872); and the
G.R. No. 217872 [2] Petition for Contempt of Court (G.R. No. 221866), in
the following manner:
ALLIANCE FOR THE FAMILY FOUNDATION,
PHILIPPINES, INC. (ALFI) and ATTY. MARIA WHEREFORE, the case docketed as G.R No. 217872 is
CONCEPCION S. NOCHE, in her own behalf and as hereby REMANDED to the Food and Drugs
President of ALFI, JOSE S. SANDEJAS, ROSIE B. Administration which is hereby ordered to observe the
LUISTRO, ELENITA S.A. SANDEJAS, EMILY R. basic requirements of due process by conducting a
LAWS, EILEEN Z. ARANETA, SALV ACION C. hearing, and allowing the petitioners to be heard, on the
MONTEIRO, MARIETTA C. GORREZ, ROLANDO re-certified, procured and administered contraceptive
M. BAUTISTA, RUBEN T. UMALI, and MILDRED drugs and devices, including Implanon and lmplanon
C. CASTOR , Petitioners
NXT, and to determine whether they are abortifacients or The respondents are hereby also ordered to amend the
non-abortifacients. Implementing Rules and Regulations to conform to the
rulings and guidelines in G.R. No. 204819 and related
Pursuant to the expanded jurisdiction of this Court and its cases.
power to issue rules for the protection and enforcement
of constitutional rights, the Court hereby: The above foregoing directives notwithstanding, within
30 days from receipt of this disposition, the Food and
1. DIRECTS the Food and Drug Administration to Drugs Administration should commence to conduct the
formulate the rules of procedure in the screening, necessary hearing guided by the cardinal rights of the
evaluation and approval of all contraceptive drugs and parties laid down in CIR v. Ang Tibay.
devices that will be used under Republic Act No. 10354.
The rules of procedure shall contain the following Pending the resolution of the controversy, the motion to
minimum requirements of due process: (a) publication, lift the Temporary Restraining Order is DENIED.
notice and hearing, (b) interested parties shall be allowed
to intervene, (c) the standard laid down in the With respect to the contempt petition, docketed as G.R
Constitution, as adopted under Republic Act No. 10354, No. 221866, it is hereby DENIED for lack of concrete
as to what constitutes allowable contraceptives shall be basis.
strictly followed, that is, those which do not harm or
destroy the life of the unborn from SO ORDERED.3
conception/fertilization, (d) in weighing the evidence, all
reasonable doubts shall be resolved in favor of the Arguments of the Respondents
protection and preservation of the right to life of the
unborn from conception/fertilization, and (e) the other Part 1: Due Process need not be
requirements of administrative due process, as complied with as the questioned
summarized in Ang Tibay v. CIR, shall be complied with. acts of the Food and Drug
Administration (FDA) were in
2. DIRECTS the Department of Health in coordination the exercise of its Regulatory Powers
with other concerned agencies to formulate the rules and
regulations or guidelines which will govern the purchase In the subject Omnibus Motion, the respondents argued
and distribution/ dispensation of the products or supplies that their actions should be sustained, even if the
under Section 9 of Republic Act No. 10354 covered by petitioners were not afforded notice and hearing, because
the certification from the Food and Drug Administration the contested acts of registering, re-certifying, procuring,
that said product and supply is made available on the and administering contraceptive drugs and devices were
condition that it will not be used as an abortifacient all done in the exercise of its regulatory power.4 They
subject to the following minimum due process contended that considering that the issuance of the
requirements: (a) publication, notice and hearing, and (b) certificate of product registration (CPR) by the FDA
interested parties shall be allowed to intervene. The rules under Section 7.04, Rule5 of the Implementing Rules and
and regulations or guidelines shall provide sufficient Regulations of Republic Act (R.A.) No. 10354 (RH-IRR)
detail as to the manner by which said product and supply did not involve the adjudication of the parties' opposing
shall be strictly regulated in order that they will not be rights and liabilities through an adversarial proceeding,
used as an abortifacient and in order to sufficiently the due process requirements of notice and hearing need
safeguard the right to life of the unborn. not be complied with.6

3. DIRECTS the Department of Health to generate the Stated differently, the respondents assert that as long as
complete and correct list of the government's the act of the FDA is exercised pursuant to its regulatory
reproductive health programs and services under power, it need not comply with the due process
Republic Act No. 10354 which will serve as the template requirements of notice and hearing.
for the complete and correct information standard and,
hence, the duty to inform under Section 23(a)(l) of Corollary to this, the respondents wanted the Court to
Republic Act No. 10354. The Department of Health is consider that the FDA had delineated its functions among
DIRECTED to distribute copies of this template to all different persons and bodies in its organization. Thus,
health care service providers covered by Republic Act they asked the Court to make a distinction between
No. 10354. the "quasi-judicial powers" exercised by the Director-
General of the FDA under Section 2(b)7 of Article 3, After an assiduous assessment of the arguments of the
Book I of the Implementing Rules and Regulations (IRR) parties, the Court denies the Omnibus Motion, but deems
of R.A. No. 9711,8 and the "regulatory/administrative that a clarification on some points is in order.
powers"exercised by the FDA under Section 2(c )(1) 9 of
the same. For the respondents, the distinction given in the Judicial Review
above-cited provisions was all but proof that the issuance
of CPR did not require notice and hearing. The powers of an administrative body are classified into
two fundamental powers: quasi-legislative and quasi-
After detailing the process by which the FDA's Center judicial. Quasi-legislative power, otherwise known as
for Drug Regulation and Research (CDRR) examined and the power of subordinate legislation, has been defined as
tested the contraceptives for non-abortifacience, 10 the the authority delegated by the lawmaking body to the
respondents stressed that the Decision wreaked havoc on administrative body to adopt rules and regulations
the organizational structure of the FDA, whose myriad of intended to carry out the provisions of law and
functions had been carefully delineated in the IRR of implement legislative policy. 18 "[A] legislative rule is in
R.A. No. 9711. 11 The respondents, thus, prayed for the the nature of subordinate legislation, designed to
lifting of the Temporary Restraining Order (TR0). 12 implement a primary legislation by providing the details
thereof." 19 The exercise by the administrative body of its
Part 2: The requirements of due quasi-legislative power through the promulgation of
process need not be complied with as regulations of general application does not, as a rule,
the elements of procedural due require notice and hearing. The only exception being
process laid down in Ang Tibay v. where the Legislature itself requires it and mandates that
CIR are not applicable the regulation shall be based on certain facts as
determined at an appropriate investigation.20
The respondents further claimed in their omnibus motion
that the requirements of due process need not be Quasi-judicial power, on the other hand, is known as the
complied with because the standards of procedural due power of the administrative agency to determine
process laid down in Ang Tibay v. CIR 13 were questions of fact to which the legislative policy is to
inapplicable considering that: a) substantial evidence apply, in accordance with the standards laid down by the
could not be used as a measure in determining whether a law itself.21 As it involves the exercise of discretion in
contraceptive drug or device was abortifacient; 14 b) the determining the rights and liabilities of the parties, the
courts had neither jurisdiction nor competence to review proper exercise of quasi-judicial power requires the
the findings of the FDA on the non-abortifacient concurrence of two elements: one, jurisdiction which
character of contraceptive drugs or devices; 15 c) the FDA must be acquired by the administrative body and two, the
was not bound by the rules of admissibility and observance of the requirements of due process, that is,
presentation of evidence under the Rules of Court; 16 and the right to notice and hearing.22
d) the findings of the FDA could not be subject of the
rule on res judicata and stare-decisis. 17 On the argument that the certification proceedings were
conducted by the FDA in the exercise of its "regulatory
The respondents then insisted that Implanon and powers" and, therefore, beyond judicial review, the Court
Implanon NXT were not abortifacients and lamented that holds that it has the power to review all acts and
the continued injunction of the Court had hampered the decisions where there is a commission of grave abuse of
efforts of the FDA to provide for the reproductive health discretion. No less than the Constitution decrees that the
needs of Filipino women. For the respondents, to require Court must exercise its duty to ensure that no grave
them to afford the parties like the petitioners an abuse of discretion amounting to lack or excess of
opportunity to question their findings would cause jurisdiction is committed by any branch or
inordinate delay in the distribution of the subject instrumentality of the Government. Such is committed
contraceptive drugs and devices which would have a dire when there is a violation of the constitutional mandate
impact on the effective implementation of the RH Law. that "no person is deprived of life, liberty, and property
without due process of law." The Court's power cannot
The Court's Ruling be curtailed by the FDA's invocation of its regulatory
power.
In so arguing, the respondents cited Atty. Carlo L. Cruz Clearly, the argument of the FDA is flawed.
in his book, Philippine Administrative Law.
Petitioners were Denied their
Lest there be any inaccuracy, the relevant portions of the Right to Due Process
book cited by the respondents are hereby quoted as
follows: Due process of law has two aspects: substantive and
procedural. In order that a particular act may not be
xxx. impugned as violative of the due process clause, there
must be compliance with both the substantive and the
B. The Quasi-Judicial Power procedural requirements thereof. 29 Substantive due
process refers to the intrinsic validity of a law that
xxx interferes with the rights of a person to his
property.30 Procedural due process, on the other hand,
2. Determinative Powers means compliance with the procedures or steps, even
periods, prescribed by the statute, in conformity with the
To better enable the administrative body to exercise its standard of fair play and without arbitrariness on the part
quasi judicial authority, it is also vested with what is of those who are called upon to administer it.31
known as determinative powers and functions.
The undisputed fact is that the petitioners were deprived
Professor Freund classifies them generally into of their constitutional right to due process of law.
the enabling powers and the directing powers. The latter
includes the dispensing, the examining, and As expounded by the Court, what it found to be primarily
the summary powers. deplorable is the failure of the respondents to act upon,
much less address, the various oppositions filed by the
The enabling vowers are those that permit the doing of petitioners against the product registration,
an act which the law undertakes to regulate and which recertification, procurement, and distribution of the
would be unlawful with government approval. The questioned contraceptive drugs and devices. Instead of
most common example is the issuance of licenses to addressing the petitioners' assertion that the questioned
engage in a particular business or occupation, like the contraceptive drugs and devices fell within the definition
operation of a liquor store or restaurant. x x of an "abortifacient" under Section 4(a) of the RH Law
x. 23 [Emphases and underscoring supplied] because of their "secondary mechanism of action which
induces abortion or destruction of the fetus inside the
From the above, two things are apparent: one, the mother's womb or the prevention of the fertilized ovum
"enabling powers" cover "regulatory powers" as defined to reach and be implanted in the mother's womb,"32 the
by the respondents; and two, they refer to a subcategory respondents chose to ignore them and proceeded with the
of a quasi-judicial power which, as explained in the registration, recertification, procurement, and distribution
Decision, requires the compliance with the twin of several contraceptive drugs and devices.
requirements of notice and hearing. Nowhere from the
above-quoted texts can it be inferred that the exercise of A cursory reading of the subject Omnibus Motion shows
"regulatory power" places an administrative agency that the respondents proffer no cogent explanation as to
beyond the reach of judicial review. When there is grave why they did not act on the petitioners' opposition. As
abuse of discretion, such as denying a party of his stated by the Court in the Decision, rather than provide
constitutional right to due process, the Court can come in concrete action to meet the petitioners' opposition, the
and exercise its power of judicial review. It can review respondents simply relied on their challenge questioning
the challenged acts, whether exercised by the FDA in its the propriety of the subject petition on technical and
ministerial, quasi-judicial or regulatory power. In the procedural grounds. 33 The Court, thus, finds the subject
past, the Court exercised its power of judicial review motion to be simply a rehash of the earlier arguments
over acts and decisions of agencies exercising their presented before, with the respondents still harping on
regulatory powers, such as DPWH, 24 TRB, 25 NEA, 26and the peculiarity of the FDA's functions to exempt it from
the SEC,27 among others. In Diocese of Bacolod v. compliance with the constitutional mandate that "no
Commission on Elections,28 the Court properly exercised person shall be deprived oflife, liberty and property
its power of judicial review over a Comelec resolution without due process of law."
issued in the exercise of its regulatory power.
The law and the rules demand product is non-abortifacient, as defined in the RH
compliance with due process Law and Imbong.
requirements
Step 6. Post a list of contraceptive products which
A reading of the various provisions, cited by the were applied for re-certification for public
respondents in support of their assertion that due process comments in the FDA website.
need not be complied with in the approval of
contraceptive drugs or devices, all the more reinforces Step 7. Evaluate contraceptive products for re-
the Court's conclusion that the FDA did fail to afford the certification.
petitioners a genuine opportunity to be heard.
A. Part I (Review of Chemistry, Manufacture and
As outlined by the respondents themselves, the steps by Controls)
which the FDA approves contraceptive drugs or devices,
demand compliance with the requirements of due 1. Unit Dose and Finished Product Formulation
process viz:
2. Technical Finished Product Specifications
Step 1. Identify contraceptive products in the database.
Create another database containing the following details 3. Certificate of Analysis
of contraceptive products: generic name, dosage strength
and form, brand name (if any), registration number, B. Part II (Evaluation of Whether the Contraceptive
manufacturer, MAH, and the period of validity of the Product is Abortifacient)
CPR.
1. Evaluation of the scientific evidence submitted by the
Step 2. Identify contraceptive products which are applicant and the public.
classified as essential medicines in the Philippine Drug
Formulary. 2. Review and evaluation of extraneous evidence, e.g.,
scientific journals, meta-analyses, etc.
Step 3. Retrieve the contraceptive product's file and the
CPR duplicate of all registered contraceptive products. Step 8. Assess and review the documentary requirements
Create a database of the contraceptive product's history, submitted by the applicant. Technical reviewers
including its initial, renewal, amendment, and/or considered scientific evidence such as meta-analyses,
variation applications. systemic reviews, national and clinical practice
guidelines and recommendations of international medical
Step 4. Conduct a preliminary review of the following: organizations submitted by the companies, organizations
and individuals, to be part of the review. 34 [Emphases and
a. general physiology of female reproductive system, Underlining supplied]
including hormones involved, female reproductive cycle,
and conditions of the female reproductive system during The Court notes that the above-outlined procedure is
pregnancy. deficient insofar as it only allows public comments to
cases of re-certification. It fails to allow the public to
b. classification of hormonal contraceptives; comment in cases where a reproductive drug or device is
being subject to the certification process for the first
c. regulatory status of the products in benchmark time. This is clearly in contravention of the mandate of
countries; and the Court in lmbong that the IRR should be amended
to conform to it.
d. mechanism of action of hormonal contraceptives based
on reputable journals, meta-analyses, systemic reviews, More importantly, the Court notes that Step 5 requires
evaluation of regulatory authorities in other countries, the FDA to issue a notice to all concerned MAHs and
textbooks, among others. require them to submit scientific evidence that their
product is non-abortifacient; and that Step 6 requires the
Step 5. Issue a notice to all concerned MAHs, posting of the list of contraceptive products which were
requiring them to submit scientific evidence that their applied for re-certification for public comments in the
FDA website.
If an opposition or adverse comment is filed on the undersecretary, xxx." How can the head be separated
ground that the drug or devise has abortifacient from the body?
features or violative of the RH Law, based on the
pronouncements of the Court in Im bong or any other law For the record, Section 4 of R.A. No. 3720, as amended
or rule, the FDA is duty-bound to take into account and by Section 5 of R.A. No. 9711, also recognizes
consider the basis of the opposition. compliance with the requirements of due process,
although the proceedings are not adversarial. Thus:
To conclude that product registration, recertification,
procurement, and distribution of the questioned Section 5. Section 4 of Republic Act No. 3720, as
contraceptive drugs and devices by the FDA in the amended, is hereby further amended to read as follows:
exercise of its regulatory power need not comply with the
requirements of due process would render the issuance of "SEC. 4. To carry out the provisions of this Act, there is
notices to concerned MAHs and the posting of a list of hereby created an office to be called the Food and Drug
contraceptives for public comment a meaningless Administration (FDA) in the Department of Health
exercise. Concerned MAHs and the public in general will (DOH). Said Administration shall be under the Office of
be deprived of any significant participation if what they the Secretary and shall have the following functions,
will submit will not be considered. powers and duties:

Section 7.04, Rule 7 of the IRR of the RH Law (RH- "(a) To administer the effective implementation of this
IRR),35 relied upon by the respondents in support of their Act and of the rules and regulations issued pursuant to
claims, expressly allows the consideration of the same;
conflicting evidence, such as that supplied by the
petitioners in support of their opposition to the approval "(b) To assume primary jurisdiction in the collection of
of certain contraceptive drugs and devices. In fact, the samples of health products;
said provision mandates that the FDA utilize the "best
evidence available" to ensure that no bortifacient is "(c) To analyze and inspect health products in connection
approved as a family planning drug or device. It bears with the implementation of this Act;
mentioning that the same provision even allows an
independent evidence review group (ERG) to ensure that "(d) To establish analytical data to serve as basis for the
evidence for or against the certification of a contraceptive preparation of health products standards, and to
drug or device is duly considered. recommend standards of identity, purity, safety, efficacy,
quality and fill of container;
Structure of the FDA
"(e) To issue certificates of compliance with technical
As earlier mentioned, the respondents argue that the requirements to serve as basis for the issuance of
Decision "wreaked havoc on the organizational structure appropriate authorization and spot-check for compliance
of the FDA, whose myriad of functions have been with regulations regarding operation of manufacturers,
carefully delineated under R.A. No. 9711 IRR."36 Citing importers, exporters, distributors, wholesalers, drug
Section 7.04, Rule 7 of the RH-IRR, the FDA insists that outlets, and other establishments and facilities of health
the function it exercises in certifying family planning products, as determined by the FDA;
supplies is in the exercise of its regulatory power, which
cannot be the subject of judicial review, and that it is "xxx
the Director-General of the FDA who exercises quasi-
judicial powers, citing Section 2(b) of Article 3, Book I "(h) To conduct appropriate tests on all applicable health
of the RH-IRR.37 products prior to the issuance of appropriate
authorizations to ensure safety, efficacy, purity, and
The FDA wants the Court to consider that, as a body, it quality;
has a distinct and separate personality from the Director-
General, who exercises quasi-judicial power. The Court "(i) To require all manufacturers, traders, distributors,
cannot accommodate the position of the respondents. importers, exporters, wholesalers, retailers, consumers,
Section 6(a) of R.A. No. 3720, as amended by Section 7 and non-consumer users of health products to report to
of R.A. No. 9711,38 provides that "(a) The FDA shall be the FDA any incident that reasonably indicates that said
headed by a director-general with the rank of product has caused or contributed to the death, serious
illness or serious injury to a consumer, a patient, or any In Ang Tibay v. CJR,39 the Court laid down the cardinal
person; rights of parties in administrative proceedings, as
follows:
"G) To issue cease and desist orders motu propio or upon
verified com plaint for health products, whether or not 1) The right to a hearing, which includes the right to
registered with the FDA Provided, That for registered present one's case and submit evidence in support
health products, the cease and desist order is valid for thereof;
thirty (30) days and may be extended for sixty (60) days
only after due process has been observed; 2) The tribunal must consider the evidence presented;

"(k) After due process, to order the ban, recall, and/or 3) The decision must have something to support itself;
withdrawal of any health product found to have caused
the death, serious illness or serious injury to a consumer 4) The evidence must be substantial;
or patient, or is found to be imminently injurious, unsafe,
dangerous, or grossly deceptive, and to require all 5) The decision must be rendered on the evidence
concerned to implement the risk management plan which presented at the hearing, or at least contained in the
is a requirement for the issuance of the appropriate record and disclosed to the parties affected;
authorization;
6) The tribunal or body or any of its judges must act on
"(l) To strengthen the post market surveillance system in its or his own independent consideration of the law and
monitoring health products as defined in this Act and facts of the controversy and not simply accept the views
incidents of adverse events involving such products; of a subordinate in arriving at a decision; and

"(m) To develop and issue standards and appropriate 7) The board or body should, in all controversial
authorizations that would cover establishments, facilities questions, render its decision in such a manner that the
and health products; parties to the proceeding can know the various issues
involved, and the reason for the decision rendered. 40
"(n) To conduct, supervise, monitor and audit research
studies on health and safety issues of health products In the Decision, the Court found that the FDA certified,
undertaken by entities duly approved by the FDA; procured and administered contraceptive drugs and
devices, without the observance of the basic tenets of due
"(o) To prescribe standards, guidelines, and regulations process, that is, without notice and without public
with respect to information, advertisements and other hearing. It appeared that, other than the notice inviting
marketing instruments and promotion, sponsorship, and stakeholders to apply for certification/recertification of
other marketing activities about the health products as their reproductive health products, there was no showing
covered in this Act; that the respondents considered the opposition of the
petitioners. Thus, the Court wrote:
"(p) To maintain bonded warehouses and/or establish the
same, whenever necessary or appropriate, as determined Rather than provide concrete evidence to meet the
by the director-general for confiscated goods in strategic petitioners' opposition, the respondents simply relied on
areas of the country especially at major ports of entry; their challenge questioning the propriety of the subject
and petition on technical and procedural grounds. The Court
notes that even the letters submitted by the petitioners to
"(q) To exercise such other powers and perform such the FDA and the DOH seeking information on the
other functions as may be necessary to carry out its duties actions taken by the agencies regarding their opposition
and responsibilities under this Act. [Emphases supplied] were left unanswered as if they did not exist at all. The
mere fact that the RH Law was declared as not
The Cardinal Rights of Parties in unconstitutional does not permit the respondents to run
Administrative Proceedings as roughshod over the constitutional rights, substantive and
laid down in Ang Tibay v. CIR procedural, of the petitioners.

Indeed, although the law tasks the FDA as the primary


agency to determine whether a contraceptive drug or
certain device has no abortifacient effects, its findings reasonable opportunity to explain their respective sides
and conclusion should be allowed to be questioned and of the controversy and to present supporting evidence on
those who oppose the same must be given a genuine which a fair decision can be based.
opportunity to be heard in their stance. After all, under
Section 4(k) of R.A. No. 3720, as amended by R.A. No. In the fairly recent case of Vivo v. Pagcor,43 the Court
9711, the FDA is mandated to order the ban, recall and/ explained:
or withdrawal of any health product found to have caused
death, serious illness or serious injury to a consumer or The observance of fairness in the conduct of any
patient, or found to be imminently injurious, unsafe, investigation is at the very heart of procedural due
dangerous, or grossly deceptive, after due process. process. The essence of due process is to be heard, and,
as applied to administrative proceedings, this means a
Due to the failure of the respondents to observe and fair and reasonable opportunity to explain one's side, or
comply with the basic requirements of due process, the an opportunity to seek a reconsideration of the action or
Court is of the view that the certifications/re- ruling complained of. Administrative due process
certifications and the distribution of the questioned cannot be fully equated with due process in its strict
contraceptive drugs by the respondents should be struck judicial sense, for in the former a formal or trial-type
down as violative of the constitutional right to due hearing is not always necessary, and technical rules of
process. procedure are not strictly applied. Ledesma v. Court of
Appeals elaborates on the well-established meaning of
Verily, it is a cardinal precept that where there is a due process in administrative proceedings in this wise:
violation of basic constitutional rights, the courts are
ousted from their jurisdiction. The violation of a party's x x x Due process, as a constitutional precept, does not
right to due process raises a serious jurisdictional issue always and in all situations require a trial-type
which cannot be glossed over or disregarded at will. proceeding. Due process is satisfied when a person is
Where the denial of the fundamental right to due process notified of the charge against him and given an
is apparent, a decision rendered in disregard of that right opportunity to explain or defend himself. In
is void for lack of jurisdiction. This rule is equally true in administrative proceedings, the filing of charges and
quasi-judicial and administrative proceedings, for the giving reasonable opportunity for the person so charged
constitutional guarantee that no man shall be deprived of to answer the accusations against him constitute the
life, liberty, or property without due process is minimum requirements of due process. The essence of
unqualified by the type of proceedings (whether judicial due process is simply to be heard, or as applied to
or administrative) where he stands to lose the same.41 administrative proceedings, an opportunity to explain
one's side, or an opportunity to seek a reconsideration of
The Court stands by that finding and, accordingly, the action or ruling complained of. [Emphasis supplied;
reiterates its order of remand of the case to the FDA. citations omitted]

Procedure in the FDA; No Trial-Type Hearing Best Evidence Available

The Court is of the view that the FDA need not conduct a Section 5, Rule 133 of the Rules of Court provides:
trial-type hearing. Indeed, due process does not require
the conduct of a trial-type hearing to satisfy its Section 5. In all cases filed
requirements. All that the Constitution requires is that the before administrative or quasi-judicialbodies, a fact
FDA afford the people their right to due process of law may be deemed established if it is supported
and decide on the applications submitted by MAHs after by substantialevidence, or the amount of relevant
affording the oppositors like the petitioners a genuine evidence which a reasonable mind might accept as
opportunity to present their science-based evidence. As adequate to justify a conclusion.
earlier pointed out, this the FDA failed to do. It simply
ignored the opposition of the petitioners. In the case As applied to certification proceedings at the FDA,
of Perez, et al. v. Philippine Telegraph and Telephone "substantial evidence" refers to the best scientific
Company, et al., 42 it was stated that: evidence available,44 "including but not limited to: meta
analyses, systematic reviews, national clinical practice
A formal trial-type hearing is not even essential to due guidelines where available, and recommendations of
process. It is enough that the parties are given a fair and international medical organizations," needed to support a
conclusion whether a contraceptive drug or device is an Sec. 32. The orders, rulings or decisions of the FDA
abortifacient or not. The FDA need not be bound or shall be appealable to the Secretary of Health. - An
limited by the evidence adduced by the parties, but it can appeal shall be deemed perfected upon filing of the
conduct its own search for related scientific data. It can notice of appeal and posting of the corresponding appeal
also consult other technical scientific experts known in bond.
their fields. It is also not bound by the principle of stare
decisis or res judicata, but may update itself and cancel An appeal shall not stay the decision appealed from
certifications motu proprio when new contrary scientific unless an order from the Secretary of Health is issued to
findings become available or there arise manifest risks stay the execution thereof.
which have not been earlier predicted.
Sec. 9. Appeals. - Decisions of the Secretary (DENR,
On the Competence of the Court DA, DOH or DOST) may be appealed to the Office of
to review the Findings of the FDA the President. Recourse to the courts shall be allowed
after exhaustion of all administrative remedies.
The fact that any appeal to the courts will involve
scientific matters will neither place the actions of the In view thereof, the Court should modify that part of the
respondents beyond the need to comply with the Decision which allows direct appeal of the FDA decision
requirements of Ang Tibay nor place the actions of the to the Court of Appeals.1âwphi1 As stated in the said
FDA in certification proceedings beyond judicial review. decision, the FDA decision need not be appealed to the
Secretary of Health because she herself is a party herein.
It should be pointed out that nowhere in Batas Pambansa Considering that the Executive
Blg. 129, as amended, are the courts ousted of their
jurisdiction whenever the issues involve questions of Secretary is not a party herein, the appeal should be to
scientific nature. A court is not considered incompetent the OP as provided in Section 9.
either in reviewing the findings of the FDA simply
because it will be weighing the scientific evidence On the Prayer to Lift the TRO
presented by both the FDA and its oppositors in
determining whether the contraceptive drug or device has The respondents lament that the assailed decision
complied with the requirements of the law. undermines the functions of the FDA as the specialized
agency tasked to determine whether a contraceptive drug
Although the FDA is not strictly bound by the technical or device is safe, effective and non-abortifacient. They
rules on evidence, as stated in the Rules of Court, or it also claim that the assailed decision requiring notice and
cannot be bound by the principle of stare decisis or res hearing would unduly delay the issuance of CPR thereby
judicata, it is not excused from complying with the affecting public access to State-funded contraceptives.
requirements of due process. To reiterate for emphasis, Finally, in a veritable attempt to sow panic, the
due process does not require that the FDA conduct trial- respondents claim that the TRO issued by the Court
type hearing to satisfy its requirements. All that the would result in "a nationwide stockout of family
Constitution requires is that the FDA afford the people planning supplies in accredited public health
their right to due process of law and decide on the facilities and the commercial market. "45
applications submitted by the MAHs after affording the
oppositors, like the petitioners, a genuine opportunity to On this score, it should be clarified that the Decision
present their sciencebased evidence. simply enjoined the respondents from registering,
recertifying, procuring, and administering only those
The Appellate Procedure; contraceptive drugs and devices which were the subjects
Appeal to the Office of the President of the petitioners' opposition, specifically Implanon and
Implanon NXT. It never meant to enjoin the processing
Incidentally, Section 32 of R.A. No. 3720 and Section 9 of the entire gamut of family planning supplies that have
of Executive Order (E.O.) No. 247 provide that any been declared as unquestionably non-abortifacient.
decision by the FDA would then be appealable to the Moreover, the injunction issued by the Court was only
Secretary of Health, whose decision, in tum, may be subject to the condition that the respondents afford the
appealed to the Office of the President (OP). Thus: petitioners a genuine opportunity to their right to due
process.
As the Decision explained, the Court cannot lift the TRO opposition of the petitioners.1âwphi1 Note that there was
prior to the summary hearing to be conducted by the already a finding by the FDA, which was its basis in
FDA. To do so would render the summary hearing an registering, certifying and recertifying the questioned
exercise in futility. Specifically, the respondents would drugs and devices. The pharmaceutical companies or the
want the Court to consider their argument that Implanon MAHs need not present the same evidence it earlier
and Implanon NXT have no abortifacient effects. adduced to convince the FDA unless they want to present
According to them, "the FDA tested these devices for additional evidence to fortify their positions. The only
safety, efficacy, purity, quality, and non-abortiveness entities that would present evidence would be the
prior to the issuance of certificates of registration and petitioners to make their point by proving with relevant
recertification, and after the promulgation of scientific evidence that the contraceptives have
Imbong." 46 The Court, however, cannot make such abortifacient effects. Thereafter, the FDA can resolve the
determination or pronouncement at this time. To grant controversy.
its prayer to lift the TRO would
be premature and presumptuous. Any declaration by Indeed, in addition to guaranteeing that no person shall
the Court at this time would have no basis because the be deprived of life, liberty and property without due
FDA, which has the mandate and expertise on the matter, process of law,48 the Constitution commands that "all
has to first resolve the controversy pending before its persons shall have the right to a speedy disposition of
office. their cases before all judicial, quasi-judicial and
administrative bodies."49
This Court also explained in the Decision that the
issuance of the TRO did not mean that the FDA should WHEREFORE, the August 24, 2016 Decision
stop fulfilling its mandate to test, analyze, scrutinize, and is MODIFIED. Accordingly, the Food and Drug
inspect other drugs and devices. Thus: Administration is ordered to consider the oppositions
filed by the petitioners with respect to the listed drugs,
Nothing in this resolution, however, should be construed including Implanon and Implanon NXT, based on the
as restraining or stopping the FDA from carrying on its standards of the Reproductive Health Law, as construed
mandate and duty to test, analyze, scrutinize, and inspect in lmbong v. Ochoa, and to decide the case within sixty
drugs and devices. What are being enjoined are the grant (60) days from the date it will be deemed submitted for
of certifications/re-certifications of contraceptive drugs resolution.
without affording the petitioners due process, and the
distribution and administration of the questioned After compliance with due process and upon
contraceptive drugs and devices including Implanon and promulgation of the decision of the Food and Drug
Implanon NXT until they are determined to be safe and Administration, the Temporary Restraining Order would
non-abortifacient.47 be deemed lifted if the questioned drugs and devices are
found not abortifacients.
On Delay
After the final resolution by the Food and Drug
The respondents claim that this judicial review of the Administration, any appeal should be to the Office of the
administrative decision of the FDA in certifying and President pursuant to Section 9 of E.O. No. 247.
recertifying drugs has caused much delay in the
distribution of the subject drugs with a dire impact on the As ordered in the August 24, 2016 Decision, the Food
effective implementation of the RH Law. and Drug Administration is directed to amend the
Implementing Rules and Regulations of R.A. No. 10354
In this regard, the respondents have only themselves to so that it would be strictly compliant with the mandates
blame. Instead of complying with the orders of the Court of the Court in lmbong v. Ochoa.
as stated in the Decision to conduct a summary hearing,
the respondents have returned to this Court, asking the SO ORDERED.
Court to reconsider the said decision claiming that it has
wreaked havoc on the organizational structure of the
FDA.

Had the FDA immediately conducted a summary hearing,


by this time it would have finished it and resolved the CARPIO, J.:
The Case
(1) Silongan certified as true copy 27
This administrative case originated from the Decision of decisions[3] issued by Judge Indar in RTC Branch 14.
the Supreme Court in Office of the Court Administrator, These cases cannot be found in the docket books. Neither
Complainant, v. Judge Cader P. Indar, Presiding Judge have these cases been filed before RTC Branch 14, per
and Acting Presiding Judge of the Regional Trial Court, Certification[4] issued by Clerk of Court Atty. Janis
Branch 14, Cotabato City and Branch 15, Rohaniah G. Dumama-Kadatuan (Atty. Kadatuan).
Shariff Aguak, Maguindanao, respectively,
Respondent[1] docketed as A.M. No. RTJ-10-2232, Silongan also certified as true copy an Order in Special
ordering the Office of the Court Administrator (OCA) to Proceeding Case No. 08-1163, entitled Carmelita
investigate Atty. Umaima L. Silongan (Silongan) on her Balagtas v. The Local Civil Registrar of the City of
alleged authentication of decisions issued by Judge Cader Manila, which is also non-existent in the dockets of RTC
P. Indar (Judge Indar). Branch 15.

The Facts On 3 January 2011, the Employees Welfare Benefit


Division of the Office of Administrative Services (OAS)
The facts, as culled from the records, are as follows: received from Silongan an Application for Separation
Benefit[5] effective 31 December 2010.
In Office of the Court Administrator, Complainant, v.
Judge Cader P. Indar, Presiding Judge and Acting (2) On 24 January 2008, Amilil issued a Certificate of
Presiding Judge of the Regional Trial Court, Branch 14, Finality[6] and certified as true copy Judge Indar's
Cotabato City and Branch 15, Shariff Aguak, decision in Special Civil Case No. 508, entitled Caroline
Maguindanao, respectively, Respondent,[2] this Court Flor Buenafe v. Roberto R. Buenafe, Jr., which case does
issued a Resolution dated 28 September 2010 directing not appear in the court docket per letter of the current
Justice Angelita A. Gacutan (Justice Gacutan) to conduct OIC Clerk of Court Atty. Dennis U. Relayson (Atty.
a fact-finding investigation to determine the authenticity Relayson).
of decisions on numerous annulment of marriage cases
rendered by Judge Indar and to ascertain who are the Amilil also certified as true copy an Order issued by
parties responsible for the issuance of the questioned Judge Indar in Special Civil Case No. 1049, involving a
decisions. petition for cancellation of certificates of live birth of
two children, which case is not docketed in the trial
The fact-finding investigation revealed that the court.
questioned decisions do not exist in the records of the
Office of the Clerk of Court of the Regional Trial Court, (3) On 15 April 2005, then RTC Branch 15 Clerk of
Branch 14 in Cotabato City (RTC Branch 14) or the Court Salick U. Panda, Jr. (Panda) issued a Certificate of
Regional Trial Court, Branch 15 in Shariff Aguak, Finality[7] for Civil Case No. 517, a case supposedly
Maguindanao (RTC Branch 15). These decisions were involving declaration of nullity of marriage. The docket
also accompanied by Certificates of Finality issued by of RTC Branch 15, however, reveals that Civil Case No.
Silongan and in one case, by Abie M. Amilil (Amilil), 517 is actually a case for foreclosure of mortgage.
Officer-in-Charge (OIC) Branch Clerk of Court. At the
time Justice Gacutan conducted the fact-finding Based on OAS's records, Panda was temporarily
investigation, Silongan and Amilil were employees of the appointed as Clerk of Court VI on 11 April 2005 and his
Judiciary. appointment expired on 5 April 2006.

In a Decision dated 10 April 2012, this Court dismissed Thus, in its Memorandum dated 29 October 2012
Judge Indar from the service for gross misconduct and addressed to the Office of the Chief Justice,[8] the OCA
dishonesty in issuing the spurious decisions on numerous recommended that Silongan, Amilil, and Panda be
annulment of marriage cases. The Court likewise directed investigated.
the OCA to investigate Silongan, Acting Clerk of Court
of RTC Branch 14, on her alleged participation in the In a Resolution dated 15 January 2013,[9] the Court En
authentication of the said decisions. Banc, upon recommendation of the OCA, resolved to: (a)
docket separately the matter involving Silongan, Amilil,
Upon investigation, the OCA found that: and Panda as OCA IPI No. 13-4035-P; (b) refer the
remaining matter to the Executive Justice of the Court of
Appeals (CA), stationed in Cagayan de Oro City, for In a Return of Service dated 17 May 2013,[14] Atty.
raffle among the members of the said court; and (c) direct Kadatuan stated that: (1) Panda affixed his signature on
the CA Justice to whom this case will be assigned to the Order dated 25 April 2013; (2) Amilil acknowledged
investigate and submit his/her report and the receipt of the Order and subpoena but refused to sign;
recommendation within 60 days from notice. and (3) Silongan's copy was again forwarded to her
brother, who refused to sign in the subpoena. On 21 May
The case was raffled to Justice Henri Jean-Paul B. Inting 2013, Panda, Amilil, and Silongan failed to appear in the
(Investigating Justice) of the CA Cagayan de Oro City. hearing.

In an Order dated 22 March 2013,[10] the Investigating In an Order dated 30 May 2013,[15] the Investigating
Justice set the hearing on 23, 24, and 25 April 2013, and Justice directed Silongan and Amilil to show cause why
required Silongan, Amilil, and Panda to appear and they should not be cited in contempt of court for their
submit their counter-affidavit/s and affidavit/s of their failure to attend the hearings. The Investigating Justice
witnesses, if any. likewise directed the Clerks of Court of RTC Branches
14 and 15 to issue a certification regarding the
In a Return of Service dated 27 March 2013,[11] Atty. employment status of Silongan and Amilil. Further
Kadatuan stated that Amilil and Panda received the hearings were set on 25 and 26 June 2013.
notice of hearing as evidenced by their signatures in the
Order, while Silongan's copy of the notice was forwarded On 10 June 2013, the OIC Designate Sheriff of RTC
to her brother, who refused to acknowledge its receipt. Branch 14 filed a Return of Service[16] stating that the
Thereafter, Panda requested for a copy of the formal Order dated 30 May 2013 and subpoenas were duly
charge against him to enable him to prepare his counter- served to: (1) Panda; (2) Atty. Lalaine T. Mastura (Atty.
affidavit. Mastura), Clerk of Court of RTC Branch 15; (3) Atty.
Relayson, OIC Clerk of Court of RTC Branch 14; (4)
On 23 April 2013, Silongan and Amilil failed to appear Aileen M. Burahan of RTC Branch 14, who received
before the Investigating Justice. Only Panda appeared AmiliPs subpoena; and (5) the brother of Silongan, who
during the hearing. Panda informed the Investigating again refused to sign in the subpoena.
Justice that he is no longer a Clerk of Court, but an
administrative officer in the Provincial Prosecution In the meantime, Atty. Relayson filed a Certification
Office of Maguindanao. He was then informed of the stating that Amilil resigned as Sheriff IV effective 17
nature of the investigation against him, furnished a copy September 2012.[17] Atty. Mastura also filed a
of the certificate of finality he issued, and given ten days Certification stating that Silongan applied for early
to file his responsive pleading. The Investigating Justice retirement, which is still pending due to the present
then directed the Clerks of Court of RTC Branches 14 administrative case.[18]
and 15 to submit the employment status of Silongan and
Amilil. In an Order dated 11 July 2013,[19] the Investigating
Justice stated that since they failed to appear during the
In an Order dated 25 April 2013,[12] the Investigating 25 and 26 June 2013 hearings, Silongan's and Amilil's
Justice set the continuation of the hearing on 21 May rights to be heard and defend themselves are deemed
2013, considering that Silongan and Amilil failed to waived.
appear on the 24 and 25 April 2013 hearings.
In his Report dated 19 August 2013,[20] the
In his Affidavit dated 2 May 2013,[13] Panda alleged that Investigating Justice found that Silongan and Amilil were
the copy of the certificate of finality he signed was one of given due process, since they were aware of the
the voluminous documents presented to him during the administrative matter against them and they chose not to
period of transition; he was barely a week in office when attend the hearings and be heard.
he signed the document. He alleged that he
unceremoniously affixed his signature upon Silongan's The Investigating Justice held Silongan and Amilil liable
assurance and based on the judgment attached. He further for grave misconduct and dishonesty for certifying as
contended that he only performed his duties as Acting true and correct bogus decisions in their capacity as court
Clerk of Court and he did not act with malice when he personnel. According to the Investigating Justice, their
signed the document. acts of certifying several bogus decisions indicate a
pattern of willful intention to violate and disregard Service, which govern the conduct of disciplinary and
established rules. On the other hand, since Panda non-disciplinary proceedings in administrative cases,
certified one decision only and acted without malice, the clearly provide that "[administrative investigations shall
Investigating Justice held him liable for simple neglect of be conducted without strict recourse to the technical rules
duty. of procedure and evidence applicable to judicial
proceedings."[24] Thus, administrative due process
The Investigating Justice then recommended the cannot be fully equated with due process in its strict
imposition of fines, instead of dismissal and suspension judicial sense.[25]
from office, after finding that Silongan, Amilil, and
Panda are no longer connected with the Judiciary, to wit: In administrative proceedings, the essence of due process
WHEREFORE, the undersigned investigating justice is simply an opportunity to explain one's side or an
respectfully recommends to the Honorable Supreme opportunity to seek a reconsideration of the action or
Court the following: ruling complained of.[26] It is enough that the party is
given the chance to be heard before the case is decided.
1. The case be Re-docketed as a regular [27] Due process is not violated when a person is not
administrative matter; heard because he or she has chosen, for whatever reason,
not to be heard.[28] If one opts to be silent when one has
2. Atty. Silongan and Mr. Amilil be held liable for a right to speak, one cannot later be heard to complain
Grave Misconduct and Dishonesty; that he or she was unduly silenced.[29]
3. Mr. Panda be held liable for Simple [Neglect of
Duty]; In the present case, the Investigating Justice set six
4. Considering that Atty. Silongan had already hearings, and both Silongan and Amilil were duly
retired and Mr. Amilil resigned from Office, they notified of the hearings and the administrative case
be Fined in the amount of P40,000 with forfeiture against them. As aptly found by the Investigating Justice:
of retirement benefits and perpetual Silongan was furnished a copy of the Decision of the
disqualification [from] re-employment in any Supreme Court ordering the OCA to investigate her
government service; alleged participation in the authentication of questioned
5. Considering that this is Mr. Panda's first Decisions by the Judge Indar. Moreover, the benefits due
administrative complaint and absent any showing her from her early retirement were put on hold because
that he acted with malice, he be Fined the amount of the pending investigation. These notices in addition to
of P5,000. the Subpoenas issued to her and received by her brother
clearly show that she is aware of the pending
Respectfully submitted, August 19, 2013, Cagayan de investigation. Thus, there can be no doubt that Silongan
Oro City.[21] is aware of the administrative matter against her. Yet she
chose not to attend the hearings and to be heard.
In a Resolution dated 19 November 2013,[22] the Court
directed the Presiding Judge of RTC Branch 14 to furnish Amilil on the other hand resigned from office. Despite
the Court with the present and correct address of Subpoenas received by him, he did not attend the
Silongan, considering that a resolution addressed to hearings and did not submit his counter-affidavit.[30]
Silongan was returned unserved with notation on the
letter-envelope: "RTS-No Longer Connected." Both the Thus, Silongan and Amilil cannot feign ignorance of the
Executive Judge of RTC Branch 13 and Acting Presiding administrative investigation against them. They were
Judge of RTC Branch 15 sent letters to the Court given ample opportunity to controvert the charges against
informing it of the present address of Silongan. them; yet, they chose not to appear in any of the hearings
[23] Thereafter, all court processes were delivered to or file any explanation. Unlike Panda, both Silongan and
Silongan's present address. Amilil chose not to be heard despite the opportunity
given to them.
The Ruling of the Court
Having found that Silongan and Amilil were accorded
We adopt the recommendations of the Investigating due process, we resolve the issue of whether Silongan,
Justice for Silongan and Amilil, but modify it for Panda. Amilil, and Panda are administratively liable in this case.

The Revised Rules on Administrative Cases in the Civil The Court defines misconduct as a transgression of some
established and definite rule of action, more particularly, dishonesty for authenticating documents despite lack of
unlawful behavior or gross negligence by a public officer. authority to do so and lack of records that could have
[31] As distinguished from simple misconduct, the served as basis for issuance of the certificate. In Balanza
element of corruption, clear intent to violate the law, or v. Criste,[38] we found respondent guilty of serious
flagrant disregard of established rule, must be manifest in dishonesty for certifying a spurious decision and
a charge of grave misconduct.[32] certificate of finality without authority.
No less than the Constitution mandates that all public
In the present case, both the OCA and the Investigating officers and employees should serve with responsibility,
Justice found that Silongan and Amilil certified as true integrity and efficiency, for public office is a public trust.
copies spurious annulment decisions issued by Judge [39]No other office in the government service exacts a
Indar. There is no question as to their guilt as the records greater demand for moral righteousness and uprightness
speak for itself. The records clearly show that the 27 from an employee than the Judiciary.[40] Thus, this
cases, which were certified as true copies by Silongan, Court has often stated that the conduct of court
were not in the court dockets nor have they been filed personnel, from the presiding judge to the lowliest clerk,
before the trial court. Amilil also certified as true copies must always be beyond reproach and must be
two decisions, which did not appear in the court dockets. circumscribed with the heavy burden of responsibility as
As custodians of court records in RTC Branches 14 and to let them be free from any suspicion that may taint the
15, Silongan and Amilil should have known that there Judiciary.[41] The Court condemns any conduct, act, or
were no existing records that could have served as basis omission on the part of all those involved in the
for the issuance of the certificates. administration of justice which would violate the norm of
public accountability and diminish the faith of the people
A certificate is a written assurance, or official in the Judiciary.[42]
representation, that some act has or has not been done, or
some event occurred, or some legal formality has been Silongan and Amilil should have known that when they
complied with.[33] To certify is to attest to the certified the questioned decisions, they did so under the
truthfulness of the document.[34] Without the records to seal of the court. Thus, by their actions, they undoubtedly
verify the truthfulness and authenticity of a document, no jeopardized the integrity of the court. Their acts betray
certification should be issued.[35] their complicity, if not participation, in acts that were
irregular and violative of ethics and procedure, causing
Thus, Silongan and Amilil. should not have attested to damage not only to the complainant but also to the
the truthfulness of the decisions issued by Judge Indar public.[43]
knowing that there were no records to verify its
truthfulness, as the decisions were not even in the court The Revised Rules on Administrative Cases in the Civil
dockets. Their acts of authenticating and certifying as Service provide that gross misconduct and dishonesty are
true and correct spurious decisions issued by Judge Indar grave offenses punishable by dismissal even for the first
undoubtedly constitute grave misconduct as those acts offense.[44] The Court notes that this is not Silongan's
manifest clear intention to violate the law or to flagrantly and Amilil's first offense. In A.M. No. P-06-2267,
disregard established rule. [45] the Court fined Silongan with PI,000 for neglect of
duty because she failed to produce 303 cases for
Their acts also amount to dishonesty, which is defined as examination by the audit team, make a report on the
"disposition to lie, cheat, deceive, or defraud; actual status of these 303 cases, and take action on 22
untrustworthiness; lack of integrity; lack of honesty, civil cases. On the other hand, in A.M. No. RTJ-07-2069,
probity or integrity in principle; lack of fairness and [46] Amilil was found guilty of neglect of duty and was
straightforwardness; disposition to defraud, deceive or suspended for two months without pay because he: (1)
betray."[36] Their acts further amount to a breach of failed to inform Judge Indar of the existence of Court
Canon IV of the Code of Conduct for Court Personnel decisions which nullified and set aside Judge Indar's
which states that: "Court personnel shall at all times Order; (2) failed to inform and send the parties notices
perform official duties properly and with diligence. They and court orders; and (3) issued a Certificate of Finality
shall commit themselves exclusively to the business and without verifying if indeed a motion for reconsideration
responsibilities of their office during working hours." was filed in connection with the case.

In Atty. Alcantara-Aquino v. Dela Cruz,[37] we held Considering that the penalty of dismissal can no longer
respondent therein liable for gross misconduct and be imposed due to Silongan's retirement and Amilil's
resignation, we find the recommendation of the benefits and privileges, except accrued leave credits, if
Investigating Justice to be appropriate under the any, and with prejudice to re-employment in any branch
circumstances and impose on both Silongan and Amilil or instrumentality of the government, including
the penalty of fine in the amount of P40,000 each with government-owned or controlled corporations.
forfeiture of all benefits, except accrued leave credits, if
any. They are further declared disqualified from any We likewise find respondent Abie M.
future government employment. Amilil GUILTY of GRAVE
MISCONDUCT and DISHONESTY. Since he had
As for Panda, we dismiss the administrative case against resigned from the service, he is, instead of being
him. dismissed from the service, ordered to pay a FINE in the
amount of P40,000 with forfeiture of all retirement
It is well-settled that in order for the Court to acquire benefits and privileges, except accrued leave credits, if
jurisdiction over an administrative case, the complaint any, and with prejudice to re-employment in any branch
must be filed during the incumbency of the respondent or instrumentality of the government, including
public official or employee.[47] In Re: Missing Exhibits government-owned or controlled corporations.
and Court Properties in Regional Trial Court, Branch 4,
Panabo City, Davao del Norte,[48] we dismissed the We DISMISS the administrative case against respondent
complaint against a respondent judge since the Salick U. Panda, Jr. for lack of jurisdiction.
Memorandum recommending the filing of an
administrative case against the judge was submitted by Let a copy of this Decision be furnished the Office of the
the OCA to the Court on 10 July 2012, or more than two Ombudsman for whatever appropriate action the
years after the judge retired. In the similar case of Office Ombudsman may wish to take with respect to the
of the Court Administrator v. Grageda,[49] the Court possible criminal liability of respondents Umaima L.
held that the respondent judge's retirement effectively Silongan and Abie M. Amilil.
barred the Court from pursuing the administrative
proceeding that was instituted after his tenure in office,
and divested the Court of any jurisdiction to still subject SO ORDERED.
him to administrative investigation and to penalize him
administratively for the infractions committed while he
was still in the service. In Office of the Court G.R. No. 197146, December 06, 2016
Administrator v. Judge Andaya,[50] we likewise
dismissed the administrative case against the respondent HON. MICHAEL L. RAMA, IN HIS CAPACITY AS
judge upon finding that the administrative complaint was MAYOR OF CEBU CITY, METROPOLITAN CEBU
docketed only on 29 April 2009, or after his compulsory WATER DISTRICT (MCWD), REPRESENTED BY
retirement on 27 March 2009. The Court also dismissed ITS GENERAL MANAGER, ARMANDO
an administrative case filed against a retired court PAREDES; THE BOARD OF DIRECTORS OF
stenographer for having been initiated over a month after MCWD, REPRESENTED BY ITS CHAIR, ELIGIO
her retirement from the service.[51] A. PACANA; JOEL MARI S. YU, IN HIS
CAPACITY AS MEMBER OF THE MCWD
In the present case, Panda's temporary appointment in the BOARD; AND THE HONORABLE TOMAS R.
Judiciary expired on 5 April 2006, while the OCA OSMEÑA, IN HIS CAPACITY AS
submitted its Memorandum dated 29 October 2012 to the CONGRESSIONAL REPRESENTATIVE OF THE
Court recommending his investigation on 7 January 2013 SOUTH DISTRICT, CEBU
or more than six years after he left the Judiciary. CITY, Petitioners, v. HON. GILBERT P. MOISES, IN
Accordingly, we no longer have jurisdiction to impose an HIS CAPACITY AS PRESIDING JUDGE OF
administrative penalty on him. REGIONAL TRIAL COURT, BRANCH 18, CEBU
CITY; AND HON. GWENDOLYN F. GARCIA, IN
WHEREFORE, we find respondent Umaima L. HER CAPACITY AS GOVERNOR OF THE
Silongan GUILTY of GRAVE PROVINCE OF CEBU, Respondents.
MISCONDUCT and DISHONESTY. Since she had
retired from the service, she is, instead of being DECISION
dismissed from the service, ordered to pay a FINE in the
amount of P40,000 with forfeiture of all retirement BERSAMIN, J.:
A law enacted prior to the 1987 Constitution, like a to appoint the members of the MCWD Board of
presidential decree, is presumed to be valid and Directors.1 He stated in his letter that since 1996, the
constitutional on the theory that it was carefully studied active water service connections in Cebu City had been
by the Legislative and Executive Departments prior to its below 75% of the total active water service connection of
enactment, and determined to be in accord with the the MCWD; that no other city or municipality under the
Fundamental Law. However, the presumption of validity MCWD had reached the required percentage of 75%; and
and constitutionality is overturned and the law should be that, accordingly, he, as the Provincial Governor of Cebu,
struck down once it becomes inconsistent with the was the appointing authority for the members of the
present Constitution and the later laws. MCWD Board of Directors pursuant to Section 3 (b) of
P. D. No. 198.
Antecedents
Later on, the MCWD commenced in the Regional Trial
On May 25, 1973, President Ferdinand E. Marcos issued Court in Cebu City (RTC) its action for declaratory relief
Presidential Decree No. 198 (Provincial Water Utilities seeking to declare Section 3(b) of P.D. No. 198
Act of 1973). By virtue of P. D. No. 198, Cebu City unconstitutional; or, should the provision be declared
formed the Metro Cebu Water District (MCWD) in 1974. valid, it should be interpreted to mean that the authority
Thereafter, the Cities of Mandaue, Lapu-Lapu and to appoint the members of the MCWD Board of
Talisay, and the Municipalities of Liloan, Compostela, Directors belonged solely to the Cebu City Mayor.2
Consolacion, and Cordova turned over their waterworks
systems and services to the MCWD. Since then, the The RTC (Branch 7) dismissed the action for declaratory
MCWD has distributed water and sold water services to relief without any finding and declaration as to the
said cities and municipalities. From 1974 to 2002, the proper appointing authority for the members of the
Cebu City Mayor appointed all the members of the MCWD Board of Directors should none of the cities and
MCWD Board of Directors in accordance with Section 3 municipalities reach 75% of the total water service
(b) of P. D. No. 198, to wit: connections in the areas under the MCWD.3
Section 3. Definitions. - As used in this Decree, the
following words and terms shall have the meanings In the meanwhile, the terms of two members of the
herein set forth, unless a different meaning clearly MCWD Board of Directors ended, resulting in two
appears from the context. The definition of a word or vacancies. To avoid a vacuum and in the exigency of the
term applies to any of its variants. service, Provincial Governor Gwendolyn F. Garcia and
Cebu City Mayor Tomas R. Osmeña jointly appointed
(a) Act. This is the Provincial Water Utilities Act of 1973. Atty. Adelino Sitoy and Leo Pacaña to fill the
vacancies.4However, the position of Atty. Sitoy was
(b) Appointing authority. The person empowered to deemed vacated upon his election as the Municipal
appoint the members of the board of Directors of a local Mayor of Cordova, Cebu in the 2007 elections.
water district, depending upon the geographic coverage
and population make-up of the particular district. In the Consequently, Governor Garcia commenced an action
event that more than seventy-five percent of the total for declaratory relief to seek the interpretation of Section
active water service connections of a local water 3 (b) of P.D. No. 198 on the proper appointing authority
district are within the boundary of any city or for the members of the MCWD Board of Directors.5
municipality, the appointing authority shall be the
mayor of that city or municipality, as the case may be; It appears that on February 7, 2008, the Cebu Provincial
otherwise, the appointing authority shall be the Legal Office, upon being informed that Mayor Osmeña
governor of the province within which the district is would be appointing Joel Mari S. Yu to replace Atty.
located. If portions of more than one province are Sitoy as a member of the MCWD Board of Directors,
included within the boundary of the district, and the formally advised in writing Cynthia A. Barrit, the
appointing authority is to be the governors then the MCWD Board Secretary, to defer the submission of the
power to appoint shall rotate between the governors list of nominees to any appointing authority until the
involved with the initial appointments made by the RTC rendered its final ruling on the issue of the proper
governor in whose province the greatest number of appointing authority.6 On February 22, 2008, however,
service connections exists. (bold underscoring supplied Mayor Osmeña appointed Yu as a member of the MCWD
for emphasis) Board of Directors.7 Accordingly, on May 20, 2008, the
In July 2002, Cebu Provincial Governor Pablo L. Garcia RTC dismissed the action for declaratory relief on the
wrote to the MCWD to assert his authority and intention
ground that declaratory relief became improper once service connections of a local water district are within
there was a breach or violation of the provision.8 the boundary of any city or municipality, the appointing
authority shall be the mayor of the city or municipality,
On June 13, 2008, Governor Garcia filed a complaint to as the case may be; otherwise, the appointing authority
declare the nullity of the appointment of Yu as a member shall be the governor of the province within which the
of the MCWD Board of Directors (docketed as Civil district is located.
Case No. CEB-34459), alleging that the appointment by
Mayor Osmeña was illegal; that under Section 3(b) of It has not been belied by defendants that the active water
P.D. No. 198, it was she as the Provincial Governor of service connections of Cebu City in the Metropolitan
Cebu who was vested with the authority to appoint Cebu Water District (MCWD), at 61.28%, have gone
members of the MCWD Board of Directors because the below the required 75% required by law for the city
total active water service connections of Cebu City and mayor to have the authority to appoint members of the
of the other cities and municipalities were below 75% of board of directors of the water district. Lacking such
the total water service connections in the area of the percentage requisite, the appointing power is now vested
MCWD.9 She impleaded Mayor Osmeña, the MCWD, with the governor of the Province of Cebu. While it may
and Yu as defendants. be true that the governor had not participated in
organizing MCWD and neither did the Province of Cebu
In his answer, Mayor Osmeña contended that the invest in establishing waterworks in the component local
authority to appoint the members of the MCWD Board of governments, the law, however, does not impose any
Directors solely belonged to him; that since the creation condition or restriction in transferring the power to the
of the MCWD in 1974, it was the Cebu City Mayor who governor to appoint members of the board of directors
had been appointing the members of the MCWD Board when the percentage falls below 75%. Thus, there is no
of Directors; that the Province of Cebu had not invested doubt that when any of the water district's participating
or participated in the creation of the MCWD; and that city or municipality could not obtain 75% of the active
Cebu City, being a highly urbanized city (HUC), was water service connections, the governor shall appoint the
independent from the Province of Cebu under the members of the board of directors of the water district,
provisions on local autonomy of the 1987 Constitution.10 whether it is a participant or not, in its organization.

The RTC (Branch 18), to which the case was raffled, As to the constitutionality of the questioned provision,
required the parties to submit their memorandum. the Court finds that Sec. 3 of P.O. 198 does not violate
the Constitution or the Local Government Code. Vesting
In their joint memorandum, Osmeña and Yu posited that the authority in the governor to appoint a member of the
the Province of Cebu did not participate in the board of directors of a water district is not intruding into
organization of the MCWD; that the words and sentences the affairs of the highly urbanized cities and component
of Section 3(b) of P.D. No. 198 should not be read and cities which comprise the district, and neither is it a
understood or interpreted literally; and that the case threat to their autonomy. It does not interfere with their
should be dismissed because: (1) Section 3(b) of P.D. No. powers and functions and neither can it be considered an
198 was unconstitutional for being arbitrary and exercise of the provincial government's supervisory
unreasonable; (2) Governor Garcia had no authority to powers. At most, it is simply giving the authority to
appoint any members of the MCWD Board of Directors; appoint the head of the government unit (the governor)
and (3) that the Mayor of the city or municipality having where all the members of the water district are
the majority of water connections within the area under geographically located, and only when none of these
the MCWD had the power to appoint the members of the cities and municipalities has the required 75% of the
MCWD Board of Directors.11 active water service connections. Nevertheless, the issue
is not whether the governor took any part in organizing
On November 16, 2010, the RTC rendered the assailed the water district or has contributed to its formation, but
judgment declaring the appointment of Yu as illegal and that by law, she has been made the appointing authority
void,12 holding as follows: even if she has no participation or involvement in the
The questioned provision, paragraph (b) of Section 3 of cooperative effort of the members of the water district.
P.O. 198 is clear enough that it needs no interpretation. It This may not be the most expedient and appropriate
expressly states in unequivocal terms the appointing solution, but still, it is not illegal. As to why this is so is a
authority in the water district's board of directors --- if question only our lawmakers could answer.
more than seventy-five percent of the total active water
All presumptions are indulged in favor of Issues
constitutionality, one who attacks a statute, alleging
constitutionality must prove its invalidity beyond a Hence, the petitioners have instituted this special civil
reasonable doubt; that a law may work hardship does not action for certiorari,16 contending that:
render it unconstitutional, that if any reasonable basis I.
may be conceived which supports the statute, it will be
upheld and the challenger must negate all possible bases; THE RESPONDENT COURT ABDICATED ITS
that the courts are not concerned with the wisdom, CONSTITUTIONAL DUTY IN REFUSING TO
justice, policy or expediency of a statute, and that a DELVE ON THE ISSUE OF
liberal interpretation of the constitution in favour of the CONSTITUTIONALITY.
constitutionality of legislation should be adopted.
II.
Notably, among the admissions found in the Answer for
defendants Yu and MCWD states: "x x x with respect to THE JUDGMENT IS VOID ON ITS FACE
the two (2) vacancies in the Board of MCWD and that BECAUSE OF CLEAR CONSTITUTIONAL
joint appointment was made by the plaintiff and VIOLATIONS APPARENT BY A MERE READING
defendant Mayor Osmeña to Atty. Adelino Sitoy and Mr. OF THE DECREE.
Eligio Pacana." The Court surmises from this statement
that as early as the previous appointments (of Mr. Pacana III.
and Atty. Sitoy) defendants have already recognized the
appointing authority of the governor for members of the THE JUDGMENT VIOLATES DUE PROCESS AND
MCWD board of directors, considering Cebu City's THE EQUAL PROTECTION CLAUSE OF THE
failure to reach the 75% benchmark on active water CONSTITUTION.17
service connections. Ruling of the Court
In sum, the Court has not been able to find any The petition for certiorari is granted.
constitutional infirmity in the questioned provision (Sec.
3) of Presidential Decree No. 198. The fundamental 1.
criterion is that all reasonable doubts should be resolved Preliminary Matter:
in favor of the constitutionality of a statute. Every law Yu's expiration of term did not render case moot and
has in its favor the presumption of constitutionality. For a academic
law to be nullified, there must be shown that there is a
clear and unequivocal breach of the Constitution. The We note that respondent Yu's term as a member of the
ground for nullity must be clear and beyond reasonable MCWD Board of Directors expired on December 31,
doubt. Those who seek to declare the law, or parts thereof 2012.18 However, this fact does not justify the dismissal
unconstitutional, must clearly establish the basis of the petition on the ground of its being rendered moot
therefore. Otherwise, the arguments fall short. and academic. The case should still be decided, despite
the intervening developments that could have rendered
Based on the grounds raised by defendants to challenge the case moot and academic, because public interest is
the constitutionality of Section 3 of P.D. 198, the Court involved, and because the issue is capable of repetition
finds that defendants have failed to overcome the yet evading review.19
presumption of constitutionality of the law. As to whether
the questioned section constitutes a wise legislation, For sure, the appointment by the proper official of the
considering the issues being raised by petitioners, is for individuals to manage the system of water distribution
Congress to determine. and service for the consumers residing in the concerned
cities and municipalities involves the interest of their
WHEREFORE, Judgment is hereby rendered in favour of populations and the general public affected by the
plaintiff and against defendants, finding the appointment services of the MCWD as a public utility. Moreover, the
of defendant Joel Mari S. Yu as member of the question on the proper appointing authority for the
Metropolitan Cebu Water District (MCWD) as illegal, members of the MCWD Board of Directors should none
null and void.13 of the cities and municipalities have at least 75% of the
Mayor Osmeña and Yu jointly moved for water consumers will not be definitively resolved with
reconsideration,14 but the RTC denied their motion.15 finality if we dismiss the petition on the ground of
mootness. It is notable that the two cases for declaratory the members of the water district. This may not be the
relief filed for the purpose of determining the proper most expedient and appropriate solution, but still, it is
appointing authority were dismissed without any not illegal. As to why this is so is a question only our
definitive declaration or ultimate determination of the lawmakers could answer.
merits of the issue. The issue festers. Hence, the Court
needs to decide it now, not later. All presumptions are indulged in favor of
constitutionality; one who attacks a statute, alleging
2. constitutionality must prove its invalidity beyond a
First Issue: reasonable doubt; that a law may work hardship does not
RTC explained its holding of the assailed provision as render it unconstitutional; that if any reasonable basis
valid and constitutional but it thereby erred may be conceived which supports the statute, it will be
nonetheless upheld and the challenger must negate all possible bases,
that the courts are not concerned with the wisdom,
The petitioners take the RTC to task for not explaining justice, policy or expediency of a statute; and that a
why it held Section 3(b) of P.D. No. 198 to be not liberal interpretation of the constitution in favor of the
violative of the constitutional provision on local constitutionality of legislation should be adopted.
autonomy and HUCs, and why it only opined that the
question of constitutionality of the provision should be x x x x
left to Congress; that it did not determine whether the
requisites for raising the constitutional issue had been In sum, the Court has not been able to find any
met; that it did not discuss the reasons for holding that constitutional infirmity in the questioned provision (Sec.
the issue about Section 3(b) of P.D. No. 198 was a 3) of Presidential Decree No. 198. The fundamental
political question; that no political question was involved criterion is that all reasonable doubts should be resolved
because what was being inquired into was not the in favor of the constitutionality of a statute. Every law
wisdom of the provision but its validity; and that because has in its favor the presumption of constitutionality. For a
it did not perform its constitutional duty of reviewing the law to be nullified, there must be shown that there is a
provision, its judgment was void.20 clear and unequivocal breach of the Constitution. The
ground for nullity must be clear and beyond reasonable
The petitioners are mistaken on the first issue. The doubt. Those who seek to declare the law, or parts
records show that the RTC, which indisputably had the thereof, unconstitutional, must clearly establish the basis
power and the duty to determine and decide the issue of therefore. Otherwise, the arguments fall short.22
the constitutionality of Section 3(b) of P.D. No. Nonetheless, the petitioners rightly contend that the RTC
198,21 fully discharged its duty. In its assailed decision of improperly regarded the matter about Section 3(b) of
November 16, 2010, the RTC ruled as follows: P.D. No. 198 as a political question; hence, not
As to the constitutionality of the questioned provision, justiciable. It was not.
the Court finds that Sec. 3 of P.D. 198 does not violate
the Constitution or the Local Government Code. Vesting Political questions refer to "those questions which, under
the authority in the governor to appoint a member of the the Constitution, are to be decided by the people in their
board of directors of a water district is not intruding into sovereign capacity; or in regard to which full
the affairs of the highly urbanized cities and component discretionary authority has been delegated to the
cities which comprise the district, and neither is it a threat legislature or executive branch of the
to their autonomy. It does not interfere with their powers government."23 They are "neatly associated with the
and functions and neither can it be considered an exercise wisdom" of a particular act.24
of the provincial government's supervisory powers. At
most, it is simply giving the authority to appoint the head The difference between the political and the justiciable
oftbe government unit (the governor) where all the questions has been noted in Sanidad v. Commission on
members of the water district are geographically located, Elections,25cralawred as follows:
and only when none of these cities and municipalities has x x x The implementing Presidential Decree Nos. 991,
the required 75% of the active water service 1031, and 1033, which commonly purport to have the
connections. Nevertheless, the issue is not whether the force and effect of legislation are assailed as
governor took any part in organizing the water district or invalid, thus the issue of the validity of said Decrees is
has contributed to its formation, but that by law, she has plainly a justiciable one, within the competence of this
been made the appointing authority even if she has no Court to pass upon. Section 2 (2), Article X of the new
participation or involvement in the cooperative effort of
Constitution provides: "All cases involving the arbitrary because the determination of who would
constitutionality of a treaty, executive agreement, or law exercise the power to appoint the members of the
may shall be heard and decided by the Supreme Court en MCWD Board of Directors was thereby made to depend
bane and no treaty, executive agreement, or law may be on the shifting number of water users in the water
declared unconstitutional without the concurrence of at district's component LGUs; that the provision on the
least ten Members...." The Supreme Court has the last authority of the Provincial Governor to appoint in cases
word in the construction not only of treaties and statutes, where the water connections of any of the water district's
but also of the Constitution itself. The amending, like all cities or municipalities were below 75% was arbitrary for
other powers organized in the Constitution, is in form a not distinguishing whether or not the province had
delegated and hence a limited power, so that the Supreme contributed any waterworks to the water district; that the
Court is vested with that authority to determine whether provision did not consider whether a city or municipality
that power has been discharged within its limits. comprised the majority or more of the water consumers;
(Emphasis supplied) that the provision was irrational as it gave the Provincial
The petitioners have averred the unconstitutionality or Governor the power to appoint regardless of whether the
invalidity of Section3 (b) of P.D. No 198 based on the province had participated in the organization of the water
provision's arbitrariness in denying substantive due district or not; that in a democracy, the principle that if
process and equal protection to the affected local power or authority was conferred through determination
government units (LGUs). Such issue, being justiciable, of numerical figures then the numerical superiority or the
comes within the power of judicial review. As such, the rule of the majority should apply; that the rule of the
RTC skirted its duty of judicial review by improperly majority was being applied in electing government
relying on the political question doctrine. It should have leaders as well as in choosing the leaders in the private
instead adhered to the pronouncement in Estrada v. sector; that the provision violated the rule of the
Desierto,26 to wit: majority; that at the time of the filing of this case, the
To a great degree, the 1987 Constitution has narrowed majority of MCWD water service connections were in
the reach of the political question doctrine when it Cebu City (61.28%); and that the appointing power
expanded the power of judicial review of this court not should necessarily remain in the City Mayor of Cebu
only to settle actual controversies involving rights which City because the appointing power was based on the
are legally demandable and enforceable but also to number of water service connections.
determine whether or not there has been a grave abuse of
discretion amounting to lack or excess of jurisdiction on The petitioners asseverate that the provision or any part
the part of any branch or instrumentality of government. of P.D. No. 198 did not state any reason for departing
Heretofore, the judiciary has focused on the "thou shalt from the rule of the majority; that the provision failed
not's" of the Constitution directed against the exercise of reasonableness as a standard of substantive due process;
its jurisdiction. With the new provision, however, courts that the appointing authority should be the mayor of the
are given a greater prerogative to determine what it can city or municipality having the majority of the water
do to prevent grave abuse of discretion amounting to lack connections; that if such majority could not be attained,
or excess of jurisdiction on the part of any branch or there must be a power sharing scheme among those
instrumentality of government. Clearly, the new having the largest number of water connections
provision did not just grant the Court power of doing conformably with the rule of the majority; that the
nothing. x x x (Italics omitted) temporary alternative was the Board of Directors
3. themselves, who, under Section 10 of P.D. No. 198,
Second Issue: could appoint upon failure of the appointing authority to
Section 3(b) of P.D. 198 is already superseded do so; that the assailed provision was void on its face for
violating the constitutional provision on local autonomy
The petitioners argue that the MCWD became a water and independence of HUCs under Article X of the 1987
district by the pooling of the water utilities belonging to Constitution; that the provision unduly interfered with
several HUCs and municipalities; that the active water the internal affairs of Cebu City, and diminished the
connections in the MCWD have been distributed as autonomy of the LGUs; that the provision undermined
follows: Cebu City: 61.28%; Mandaue City: 16%; the independence of HUCs; that both the Office of the
Lapulapu City: 6.8%; Talisay City and the Municipalities Government Corporate Counsel and the Office of the
of Liloan, Consolacion, Compostela, and Cordova: Solicitor General have opined that because Cebu City
16.92%; that Section 3 (b) of P.D. No. 198 was was an HUC, the City Mayor of Cebu City should retain
unconstitutional on its face for being unreasonable and the right to appoint the members of the MCWD Board of
Directors; that the chief executive of the LGU having the
majority of water consumers was in the best position to WHEREAS, domestic water systems and sanitary sewers
exercise the discretion of choosing the most competent are two of the most basic and essential elements of local
persons who could best serve the constituents; that utility system, which, with a few exceptions, do not exist
because the largest number of water consumers were in in provincial areas in the Philippines;
Cebu City, any intrusion on the City Mayor's power to
appoint would violate its independence and autonomy; WHEREAS, existing domestic water utilities are not
that the Province of Cebu could not exercise powers that meeting the needs of the communities they serve; water
affected the constituents of HUCs; that providing water quality is unsatisfactory; pressure is inadequate; and
to constituents was the sole responsibility of the reliability of service is poor; in fact, many persons
concerned LGU; that the water utility of the LGU was a receive no piped water service whatsoever;
patrimonial property that was not for public use; that as
such, the operation, ownership and management of the WHEREAS, conditions of service continue to worsen for
public utility should belong to the LGU; and that the two apparent reasons, namely: (1) that key element of
operation of the water utilities involved the private rights existing systems are deteriorating faster than they are
of the LGUs that could not be amended or altered by a being maintained or replaced, and (2) that they are not
statute.27 being expanded at a rate sufficient to match population
growth; and
The Court opines that Section 3(b) of P.D. No. 198
should be partially struck down for being repugnant to WHEREAS, local water utilities should be locally-
the local autonomy granted by the 1987 Constitution to controlled and managed, as well as have support on the
LGUs, and for being inconsistent with R.A. No. 7160 national level in the area of technical advisory services
(1991 Local Government Code) and related laws on local and financing;
governments.
NOW, THEREFORE, I, FERDINAND E. MARCOS,
P.D. No. 198 - issued by President Marcos in the exercise President of the Philippines, by virtue of the powers
of his legislative power during the period of Martial Law vested in my by the Constitution, as Commander-in-
proclaimed under the 1973 Constitution - relevantly Chief of all the Armed Forces of the Philippines, and
provided: pursuant to Proclamation No. 1081 dated September 21,
MALACAÑANG 1972 and General Order No. 1 dated September 22,
Manila 1972, as amended, do hereby decree, order and make as
part of the law of the land the following measure:
PRESIDENTIAL DECREE No. 198 May 25, 1973
TITLE I
DECLARING A NATIONAL POLICY FAVORING
LOCAL OPERATION AND CONTROL OF WATER PRELIMINARY PROVISIONS
SYSTEMS; AUTHORIZING THE FORMATION OF
LOCAL WATER DISTRICTS AND PROVIDING FOR Section 1. Title. - This Decree shall be known and
THE GOVERNMENT AND ADMINISTRATION OF referred to as the "Provincial Water Utilities Act of
SUCH DISTRICTS; CHARTERING A NATIONAL 1973."
ADMINISTRATION TO FACILITATE
IMPROVEMENT OF LOCAL WATER UTILITIES; Section 2. Declaration of Policy. - The creation,
GRANTING SAID ADMINISTRATION SUCH operation, maintenance and expansion of reliable and
POWERS AS ARE NECESSARY TO OPTIMIZE economically viable and sound water supply and
PUBLIC SERVICE FROM WATER UTILITY wastewater disposal system for population centers of the
OPERATIONS, AND FOR OTHER PURPOSES Philippines is hereby declared to be an objective of
national policy of high priority. For purpose of achieving
WHEREAS, one of the pre-requisites to the orderly and said objective, the formulation and operation of
well balanced growth of urban areas is an effective independent, locally controlled public water districts is
system of local utilities, the absence of which is found and declared to be the most feasible and favored
recognized as a deterrent to economic growth, a hazard to institutional structure. To this end, it is hereby declared to
public health and an irritant to the spirit and well-being be in the national interest that said districts be formed
of the citizenry; and that local water supply and wastewater disposal
systems be operated by and through such districts to the
greatest extent practicable. To encourage the formulation At the time of the enactment of P.D. No. 198, Cebu City
of such local water districts and the transfer thereto to was still a component city of Cebu Province. Section
existing water supply and wastewater disposal facilities, 328 of B.P. Blg. 51 reclassified the cities of the
this Decree provides the general act the authority for the Philippines based on well-defined criteria. Cebu City
formation thereof, on a local option basis. It is likewise thus became an HUC, which immediately meant that its
declared appropriate, necessary and advisable that all inhabitants were ineligible to vote for the officials of
funding requirements for such local water systems, other Cebu Province. In accordance with Section 12 of Article
than those provided by local revenues, should be X of the 1987 Constitution, cities that are highly
channeled through and administered by an institution on urbanized, as determined by law, and component cities
the national level, which institution shall be responsible whose charters prohibit their voters from voting for
for and have authority to promulgate and enforce certain provincial elective officials, shall be independent of the
rules and regulations to achieve national goals and the province, but the voters of component cities within a
objective of providing public waterworks services to the province, whose charters contain no such prohibition,
greatest number at least cost, to effect system integration shall not be deprived of their right to vote for elective
or joint investments and operations whenever provincial officials. Later on, Cebu City, already an
economically warranted and to assure the maintenance of HUC, was further effectively rendered independent
uniform standards, training of personnel and the adoption fromCebu Province pursuant to Section 29 of the 1991
of sound operating and accounting procedures. Local Government Code, viz.:
Section 29. Provincial Relations with Component Cities
Section 3. Definitions. - As used in this Decree, the and Municipalities. - The province, through the governor,
following words and terms shall have the meanings shall ensure that every component city and municipality
herein set forth, unless a different meaning clearly within its territorial jurisdiction acts within the scope of
appears from the context. The definition of a word or its prescribed powers and functions. Highly urbanized
term applies to any of its variants. cities and independent component cities shall be
independent of the province. (Emphasis supplied)
(a) Act. This Provincial Water Utilities Act of 1973. Hence, all matters relating to its administration, powers
and functions were exercised through its local executives
(b) Appointing authority. The person empowered to led by the City Mayor, subject to the President's retained
appoint the members of the Board of Directors of a local power of general supervision over provinces, HUCs, and
water district, depending upon the geographic coverage independent component cities pursuant to and in
and population make-up of the particular district. In the accordance with Section 2529 of the 1991 Local
event that more than seventy-five percent of the total Government Code, a law enacted for the purpose of
active water service connections of a local water strengthening the autonomy of the LGUs in accordance
district are within the boundary of any city or with the 1987 Constitution.
municipality, the appointing authority shall be the
mayor of that city or municipality, as the case may Article X of the 1987 Constitution guarantees and
be; otherwise, the appointing authority shall be the promotes the administrative and fiscal autonomy of the
governor of the province within which the district is LGUs.30 The foregoing statutory enactments enunciate
located. If portions of more than one province are and implement the local autonomy provisions explicitly
included within the boundary of the district, and the recognized under the 1987 Constitution. To conform with
appointing authority is to be the governors then the the guarantees of the Constitution in favor of the
power to appoint shall rotate between the governors autonomy of the LGUs, therefore, it becomes the duty of
involved with the initial appointments made by the the Court to declare and pronounce Section 3(b) of P.D.
governor in whose province the greatest number of No. 198 as already partially unconstitutional. We note
service connections exists. (Emphasis supplied) that this pronouncement is also advocated by the
National Government, as shown in the comment of the
xxxx Solicitor General.31
The enactment of P.D. No. 198 on May 25, 1973 was
prior to the enactment on December 22, 1979 of Batas In Navarro v. Ermita,32 the Court has pointed out that the
Pambansa Blg. 51 (An Act Providing for the Elective or central policy considerations in the creation of local
Appointive Positions in Various Local Governments and government units are economic viability, efficient
for Other Purposes) and antedated as well the effectivity administration, and capability to deliver basic services to
of the 1991 Local Government Code on January 1, 1992. their constituents. These considerations must be given
importance as they ensure the success of local autonomy. privileged class (the provinces) without any justification
It is accepted that the LGUs, more than the National in reason; and that "the classification is not germane to
Government itself, know the needs of their constituents, the purpose of the law and is not based on substantial
and cater to such needs based on the particular distinctions that make real differences."34
circumstances of their localities. Where a particular law
or statute affecting the LGUs infringes on their Substantive due process "requires that the law itself, not
autonomy, and on their rights and powers to efficiently merely the procedures by which the law would be
and effectively address the needs of their constituents, we enforced, is fair, reasonable, and just."35 It demands the
should lean in favor of their autonomy, their rights and intrinsic validity of the law in interfering with the rights
their powers. of the person to life, liberty or property. In short, to be
determined is whether the law has a valid governmental
Water and its efficient supply are among the primary objective, like the interest of the public as against that of
concerns of every LGU. Issues that tend to reduce or a particular class.36
diminish the authority of the boards of directors to
manage the water districts are imbued with public On the other hand, the principle of equal protection
interest. Bearing this in mind, and recalling that the enshrined in the Constitution does not require the
MCWD had been established from the erstwhile Osmeña territorial uniformity of laws. According to Tiu v. Court
Waterworks Systems (OWS) without any investment or of Appeals,37 the fundamental right of equal protection of
contribution of funds and material from the Province of the law is not absolute, but subject to reasonable
Cebu towards the creation and maintenance of OWS and classification. Classification, to be valid, must: (1) rest
the MCWD,33 and considering that it had always been the on substantial distinctions; (2) be germane to the purpose
City Mayor of the City of Cebu who appointed the of the law; (3) not be limited to existing conditions only;
members of the MCWD Board of Directors regardless of and (4) apply equally to all members of the same class.
the percentage of the water subscribers, our
pronouncement herein rests on firm ground. We opine that although Section 3(b) of P.D. No. 198
provided for substantial distinction and was germane to
4. the purpose of P.D. No. 198 when it was enacted in 1973,
Third Issue: the intervening reclassification of the City of Cebu into
Section 3(b) of P.D. 198 is unconstitutional for an HUC and the subsequent enactment of the 1991 Local
violating the Due Process Clause and the Equal Government Code rendered the continued application of
Protection Clause Section 3(b) in disregard of the reclassification
unreasonable and unfair. Clearly, the assailed provision
The petitioners assert that Section 3(b) of P.D. No. 198, no longer provided for substantial distinction because,
being unfair, violated substantive due process; that firstly, it ignored that the MCWD was built without the
Governor Garcia could not determine the water needs of participation of the provincial government; secondly, it
each of the LGUs within the MCWD; that the provision failed to consider that the MCWD existed to serve the
allowed inequality of treatment of the cities and community that represents the needs of the majority of
municipalities in relation to the province, and thus the active water service connections; and, thirdly, the
violated the Equal Protection Clause of the Constitution; main objective of the decree was to improve the water
that the provision unduly deprived Cebu City of the service while keeping up with the needs of the growing
power to determine the membership in the MCWD Board population.
of Directors despite Cebu City having the majority of the
water service connections; that the Province of Cebu was The Whereas Clauses of P.D. No. 198 essentially state
given unreasonable and unwarranted benefit despite the raison d'etre of its enactment, to wit:
Cebu City being independent from the Province of Cebu; WHEREAS, existing domestic water utilities are not
that Section 3(b) of P.D. No. 198 did not distinguish meeting the needs of the communities they serve;
whether the province contributed any resource to the water quality is unsatisfactory; pressure is inadequate;
water district or not; that under the provision, if two or and reliability of service is poor; in fact, many persons
more provinces contributed to the water district, they receive no piped water service whatsoever;
were not subject to the 75% requirement to avail of the
power of appointment, indicating that the power to WHEREAS, conditions of service continue to worsen for
appoint devolved only in the provinces; that this violated two apparent reasons, namely: (1) that key element of
the guarantee of equality of treatment in favor of the existing systems are deteriorating faster than they are
participating LGUs; that the provision created a
being maintained or replaced, and (2) that they are not for being violative of the Due Process Clause and the
being expanded at a rate sufficient to match Equal Protection Clause of the 1987 Constitution.
population growth; and
WHEREFORE, we GRANT the petition
WHEREAS, local water utilities should be locally- for certiorari; ANNUL and SET ASIDE the decision
controlled and managed, as well as have support on the rendered in Civil Case No. CEB-34459 on November 16,
national level in the area of technical advisory services 2010 by the Regional Trial Court, Branch 18, in Cebu
and financing; (bold emphasis supplied) City;
Verily, the decree was enacted to provide adequate, and DECLARE as UNCONSTITUTIONAL Section
quality and reliable water and waste-water services to 3(b) of Presidential Decree No. 198 to the extent that it
meet the needs of the local communities and their applies to highly urbanized cities like the City of Cebu
growing populations. The needs of the communities and to component cities with charters expressly
served were paramount. Hence, we deem it to be providing for their voters not to be eligible to vote for the
inconsistent with the true objectives of the decree to still officials of the provinces to which they belong for being
leave to the provincial governor the appointing authority in violation of the express policy of the 1987
if the provincial governor had administrative supervision Constitution on local autonomy, the 1991 Local
only over municipalities and component cities accounting Government Codeand subsequent statutory enactments,
for 16.92% of the active water service connection in the and for being also in violation of the Due Process Clause
MCWD. In comparison, the City of Cebu had and the Equal Protection Clause.
61.28%38 of the active service water connections;
Mandaue, another HUC, 16%; and Lapu Lapu City, ACCORDINGLY, the Mayor of the the City of Cebu is
another HUC, 6.8%. There is no denying that the MCWD declared to be the appointing authority of the Members
has been primarily serving the needs of Cebu City. of the Board of Directors of the Metro Cebu Water
Although it is impermissible to inquire into why the District.
decree set 75% as the marker for determining the proper
appointing authority, the provision has meanwhile No pronouncement on costs of suit.
become unfair for ignoring the needs and circumstances
of Cebu City as the LGU accounting for the majority of SO ORDERED. Cralawlawlibrary
the active water service connections, and whose
constituency stood to be the most affected by the
decisions made by the MCWD's Board of Directors. G.R. No. 216914, December 06, 2016
Indeed, the classification has truly ceased to be germane
or related to the main objective for the enactment of P.D. SUBIDO PAGENTE CERTEZA MENDOZA AND
No. 198 in 1973. BINAY LAW OFFICES, Petitioner, v. THE COURT
OF APPEALS, HON. ANDRES B. REYES, JR., IN
Grave abuse of discretion means either that the judicial or HIS CAPACITY AS PRESIDING JUSTICE OF THE
quasi judicial power was exercised in an arbitrary or COURT OF APPEALS, AND THE ANTI-MONEY
despotic manner by reason of passion or personal LAUNDERING COUNCIL, REPRESENTED BY
hostility, or that the respondent judge, tribunal or board ITS MEMBERS, HON. AMANDO M. TETANGCO,
evaded a positive duty, or virtually refused to perform the JR., GOVERNOR OF THE BANGKO SENTRAL
duty enjoined or to act in contemplation of law, such as NG PILIPINAS, HON. TERESITA J. HERBOSA,
when such judge, tribunal or board exercising judicial or CHAIRPERSON OF THE SECURITIES AND
quasi-judicial powers acted in a capricious or whimsical EXCHANGE COMMISSION, AND HON.
manner as to be equivalent to lack of jurisdiction. Mere EMMANUEL F. DOOC, INSURANCE
abuse of discretion is not enough to warrant the issuance COMMISSIONER OF THE INSURANCE
of the writ. The abuse of discretion must be grave.39 COMMISSION, Respondents.

Under the foregoing circumstances, therefore, the RTC DECISION


gravely abused its discretion in upholding Section 3(b) of
P.D. No. 198. It thereby utterly disregarded the clear PEREZ, J.:
policies favoring local autonomy enshrined in the 1987
Constitution and effected by the 1991 Local Government Challenged in this petition for certiorari1 and prohibition
Code and related subsequent statutory enactments, and under Rule 65 of the Rules of Court is the
constitutionality of Section 11 of Republic Act (R.A.) likewise authorized to secure copies of the relevant
No. 9160, the Anti-Money Laundering Act, as amended, documents of the case, such as the petition and orders
specifically the Anti-Money Laundering Council's issued, if such a case exists.
authority to file with the Court of Appeals (CA) in this
case, an ex-parte application for inquiry into certain bank As this is a matter demanding serious and immediate
deposits and investments, including related accounts attention, the Firm respectfully manifests that if no
based on probable cause. written response is received within 24-hours from receipt
of this letter, we shall be at liberty to assume that such a
In 2015, a year before the 2016 presidential elections, case exists and we shall act accordingly.
reports abounded on the supposed disproportionate
wealth of then Vice President Jejomar Binay and the rest Hoping for your immediate action.

of his family, some of whom were likewise elected public


officers. The Office of the Ombudsman and the Senate Respectfully
conducted investigations2 and inquiries3 thereon yours,
ostensibly based on their respective powers delineated in For the Firm
the Constitution.
CLARO F.
From various news reports announcing the inquiry into CERTEZA5
then Vice President Binay's bank accounts, including
accounts of members of his family, petitioner Subido Within twenty four (24) hours, Presiding Justice Reyes
Pagente Certeza Mendoza & Binay Law Firm (SPCMB) wrote SPCMB denying its request, thus:
was most concerned with the article published in the
Manila Times on 25 February 2015 entitled "Inspect Anent your request for a comment on a supposed petition
Binay Bank Accounts" which read, in pertinent part: to inquire into your law office's bank accounts, please be
informed that a petition of this nature is strictly
xxx The Anti-Money Laundering Council (AMLC) asked confidential in that when processing the same, not even
the Court of Appeals (CA) to allow the [C]ouncil to peek the handling staff members of the Office of the Presiding
into the bank accounts of the Binays, their corporations, Justice know or have any knowledge who the subject
and a law office where a family member was once a bank account holders are, as well as the bank accounts
partner. involved.
xxxx Please be informed further that clearly under the rules,
the Office of the Presiding Justice is strictly mandated
Also the bank accounts of the law office linked to the not to disclose, divulge, or communicate to anyone
family, the Subido Pagente Certeza Mendoza & Binay directly or indirectly, in any manner or by any means, the
Law Firm, where the Vice President's daughter Abigail fact of the filing of any petition brought before this Court
was a former partner.4 by the Anti-Money Laundering Council, its contents and
even its entry in the logbook.
The following day, 26 February 2015, SPCMB wrote
public respondent, Presiding Justice of the CA, Andres B. Trusting that you find satisfactory the foregoing
Reyes, Jr.: explanation.6
The law firm of Subido Pagente Certeza Mendoza and By 8 March 2015, the Manila Times published another
Binay was surprised to receive a call from Manila Times article entitled, "CA orders probe of Binay's assets"
requesting for a comment regarding a [supposed petition] reporting that the appellate court had issued a Resolution
filed by the Republic of the Philippines represented by granting the ex-parte application of the AMLC to
the Anti-Money Laundering Council before the Court of examine the bank accounts of SPCMB:
Appeals seeking to examine the law office's bank
accounts. The Court of Appeals (CA) has officially issued an order
for examination of Vice President Jejomar Binay's bank
To verify the said matter, the law office is authorizing its accounts.
associate Atty. Jose Julius R. Castro to inquire on the
veracity of said report with the Court of Appeals. He is
In granting the petition of the Anti-Money Laundering TO PETITIONER'S BANK ACCOUNTS VIOLATES
Council (AMLC), the CA also ordered the inspection of THE ATTORNEY-CLIENT PRIVILEGE WHICH IS
the bank deposits of Binay's wife, children, and a law SACROSANCT IN THE LEGAL PROFESSION;
office connected to him.

xxx xxx xxx A BLANKET AUTHORITY TO EXAMINE


PETITIONER'S BANK ACCOUNTS, INCLUDING
The bank accounts of the law office linked to Binay - the ANY AND ALL TRANSACTIONS THEREIN
Subido Pagente Certeza Mendoza & Binay where 3. FROM ITS OPENING UP TO THE PRESENT,
Binay's daughter, Makati City (Metro Manila) Rep. Mar- PARTAKES THE NATURE OF A GENERAL
len Abigail Binay was a partner, are also included in the WARRANT THAT IS CLEARLY INTENDED TO
probe, the sources said.7 AID A MERE FISHING EXPEDITION;
Forestalled in the CA thus alleging that it had no
ordinary, plain, speedy, and adequate remedy to protect THERE IS NOTHING IN THE ANTI-MONEY
its rights and interests in the purported ongoing LAUNDERING ACT THAT ALLOWS OR
unconstitutional examination of its bank accounts by JUSTIFIES THE WITHHOLDING OF
public respondent Anti-Money Laundering Council INFORMATION AND/OR ANY COURT RECORDS
(AMLC), SPCMB undertook direct resort to this 4. OR PROCEEDINGS PERTAINING TO AN
Court via this petition for certiorari and prohibition on EXAMINATION OF A BANK ACCOUNT,
the following grounds: ESPECIALLY IF THE COURT HAS ALREADY
GRANTED THE AUTHORITY TO CONDUCT THE
1. THE ANTI-MONEY LAUNDERING ACT IS
EXAMINATION;
UNCONSTITUTIONAL INSOFAR AS IT ALLOWS THE
EXAMINATION OF A BANK ACCOUNT WITHOUT ANY
NOTICE TO THE AFFECTED PARTY:cralawlawlibrary

THE PETITIONER DID NOT COMMIT, NOR HAS


IT VIOLATES THE PERSON'S RIGHT TO DUE THE PETITIONER BEEN IMPLEADED IN ANY
1.
PROCESS; AND 5. COMPLAINT INVOLVING ANY PREDICATE
CRIME THAT WOULD JUSTIFY AN INQUIRY
INTO ITS BANK ACCOUNTS; AND
IT VIOLATES THE PERSON'S RIGHT TO
2. PRIVACY.
THE EXAMINATION OF THE PETITIONER'S
2. 7. BANK ACCOUNTS IS A FORM OF POLITICAL
3. EVEN ASSUMING ARGUENDO THAT THE ANTI-MONEY PERSECUTION OR HARASSMENT.8
LAUNDERING ACT IS CONSTITUTIONAL, THE
RESPONDENTS COMMITTED GRAVE ABUSE OF 4.
DISCRETION AMOUNTING TO LACK OR EXCESS OF
JURISDICTION CONSIDERING THAT:cralawlawlibrary
In their Comment, the AMLC, through the Office of the
THE REFUSAL OF RESPONDENT PRESIDING Solicitor General (OSG), points out a supposed
JUSTICE TO PROVIDE PETITIONER WITH A jurisdictional defect of the instant petition, i.e., SPCMB
COPY OF THE EX-PARTE APPLICATION FOR failed to implead the House of Representatives which
BANK EXAMINATION FILED BY RESPONDENT enacted the AMLA and its amendments. In all, the OSG
AMLC AND ALL OTHER PLEADINGS, argues for the dismissal of the present petition,
1.
MOTIONS, ORDERS, RESOLUTIONS, AND highlighting that the AMLC's inquiry into bank deposits
PROCESSES ISSUED BY THE RESPONDENT does not violate due process nor the right to privacy:
COURT OF APPEALS IN RELATION THERETO
VIOLATES PETITIONER'S RIGHT TO DUE 1. Section 11's allowance for AMLC's ex-
PROCESS; parte application for an inquiry into particular bank
deposits and investments is investigative, not
adjudicatory;
2. A CARTE BLANCHE AUTHORITY TO EXAMINE
ANY AND ALL TRANSACTIONS PERTAINING
2. The text of Section 11 itself provides safeguards and The foregoing shall be addressed specifically and bears
limitations on the allowance to the AMLC to inquire into directly on the disposition of the decision herein.
bank deposits: (a) issued by the CA based on probable
cause; and (b) specific compliance to the requirements of Additionally, we note that the OSG did not question how
Sections 2 and 3, Article III of the Constitution; this petition reaches us from a letter of the appellate
court's Presiding Justice, only that, procedurally, SPCMB
3. The ex-parte procedure for investigating bank accounts should have impleaded Congress.
is necessary to achieve a legitimate state objective;
On the sole procedural issue of whether SPCMB ought to
4. There is no legitimate expectation of privacy as to the have impleaded Congress, the contention of the OSG
bank records of a depositor; though novel is untenable. All cases questioning the
constitutionality of a law does not require that Congress
5. The examination of, and inquiry, into SPCMB's bank be impleaded for their resolution. The requisites of a
accounts does not violate Attorney-Client Privilege; and judicial inquiry are elementary:

6. A criminal complaint is not a pre-requisite to a bank 1. There must be an actual case or controversy; party;
inquiry order.
2. The question of constitutionality must be raised by the
In their Reply, SPCMB maintains that the ex- proper party;
parte proceedings authorizing inquiry of the AMLC into
certain bank deposits and investments is unconstitutional, 3. The constitutional question must be raised at the
violating its rights to due process and privacy. earliest possible opportunity; and

Before anything else, we here have an original action 4. The decision of the constitutional question must be
turning on three crucial matters: (1) the petition reaches necessary to the determination of the case itself.9
us from a letter of the Presiding Justice of the CA in
response to a letter written by SPCMB; (2) SPCMB's The complexity of the issues involved herein require us
bank account has been reported to be a related account to to examine the assailed provision vis-a-vis the
Vice President Binay's investigated by the AMLC for constitutional proscription against violation of due
anti-money laundering activities; and (3) the process. The statute reads:
constitutionality of Section 11 of the AMLA at its recent
amendment has not been squarely raised and addressed. SEC. 11. Authority to Inquire into Bank Deposits. -
Notwithstanding the provisions of Republic Act No.
To obviate confusion, we act on this petition given that 1405, as amended; Republic Act No. 6426, as amended;
SPCMB directly assails the constitutionality of Section Republic Act No. 8791; and other laws, the AMLC may
11 of the AMLA where it has been widely reported that inquire into or examine any particular deposit or
Vice President Binay's bank accounts and all related investment, including related accounts, with any banking
accounts therewith are subject of an investigation by the institution or non-bank financial institution upon order of
AMLC. In fact, subsequent events from the filing of this any competent court based on an ex parte application in
petition have shown that these same bank accounts cases of violations of this Act, when it has been
(including related accounts) were investigated by the established that there is probable cause that the deposits
Ombudsman and both Houses of the Legislature. or investments, including related accounts involved, are
However, at the time of the filing of this petition, related to an unlawful activity as defined in Section 3(i)
SPCMB alleged that its accounts have been inquired into hereof or a money laundering offense under Section 4
but not subjected to a freeze order under Section 10 of hereof; except that no court order shall be required in
the AMLA. Thus, as previously noted, with its preclusion cases involving activities defined in Section 3(i)(1), (2),
of legal remedies before the CA which under the AMLA and (12) hereof, and felonies or offenses of a nature
issues the ex-parte bank inquiry and freeze orders, similar to those mentioned in Section 3(i)(1), (2), and
Sections 10 and 11, respectively, SPCMB establishes that (12), which are punishable under the penal laws of other
it has no plain, speedy and adequate remedy in the countries, and terrorism and conspiracy to commit
ordinary course of law to protect its rights and interests terrorism as defined and penalized under Republic Act
from the purported unconstitutional intrusion by the No. 9372.
AMLC into its bank accounts.
The Court of Appeals shall act on the application to of Rep. of the Phils. v. Hon. Judge Eugenio, Jr., et al.
inquire into or examine any deposit or investment with (Eugenio)13 where the petitioner therein, Republic of the
any banking institution or non-bank financial institution Philippines, asseverated that the application for that kind
within twenty-four (24) hours from filing of the of order under the questioned section of the AMLA did
application. not require notice and hearing. Eugenio schooled us on
the AMLA, specifically on the provisional remedies
To ensure compliance with this Act, the Bangko Sentral provided therein to aid the AMLC in enforcing the law:
ng Pilipinas may, in the course of a periodic or special
examination, check the compliance of a covered It is evident that Section 11 does not specifically
institution with the requirements of the AMLA and its authorize, as a general rule, the issuanceex-parte of the
implementing rules and regulations. bank inquiry order. We quote the provision in full:

For purposes of this section, 'related accounts' shall refer SEC. 11. Authority to Inquire into Bank Deposits. —
to accounts, the funds and sources of which originated Notwithstanding the provisions of Republic Act No.
from and/or are materially linked to the monetary 1405, as amended, Republic Act No. 6426, as amended,
instrument(s) or property(ies) subject of the freeze Republic Act No. 8791, and other laws, the AMLC may
order(s). inquire into or examine any particular deposit or
investment with any banking institution or non bank
A court order ex parte must first be obtained before the financial institution upon order of any competent court in
AMLC can inquire into these related Accounts: Provided, cases of violation of this Act, when it has been
That the procedure for the ex parte application of the ex established that there is probable cause that the
partecourt order for the principal account shall be the deposits or investments are related to an unlawful
same with that of the related accounts. activity as defined in Section 3(i) hereof or a money
laundering offense under Section 4 hereof, except that
The authority to inquire into or examine the main account no court order shall be required in cases involving
and the related accounts shall comply with the unlawful activities defined in Sections 3(i)1, (2) and
requirements of Article III, Sections 2 and 3 of the 1987 (12).
Constitution, which are hereby incorporated by
reference.10 To ensure compliance with this Act, the Bangko Sentral
ng Pilipinas (BSP) may inquire into or examine any
The due process clause of the Constitution reads: deposit of investment with any banking institution or non
bank financial institution when the examination is made
SECTION 1. No person shall be deprived of life, liberty in the course of a periodic or special examination, in
or property without due process of law, nor shall any accordance with the rules of examination of the BSP.
person be denied the equal protection of the laws. 11 (Emphasis supplied)

The right to due process has two aspects: (1) substantive Of course, Section 11 also allows the AMLC to inquire
which deals with the extrinsic and intrinsic validity of the into bank accounts without having to obtain a judicial
law; and (2) procedural which delves into the rules order in cases where there is probable cause that the
government must follow before it deprives a person of its deposits or investments are related to kidnapping for
life, liberty or property.12 ransom, certain violations of the Comprehensive
Dangerous Drugs Act of 2002, hijacking and other
As presently worded, Section 11 of the AMLA has three violations under R.A. No. 6235, destructive arson and
elements: (1) ex-parte application by the AMLC; (2) murder. Since such special circumstances do not apply in
determination of probable cause by the CA; and (3) this case, there is no need for us to pass comment on this
exception of court order in cases involving unlawful proviso. Suffice it to say, the proviso contemplates a
activities defined in Sections 3(i)(1), (2), and (12). situation distinct from that which presently confronts us,
and for purposes of the succeeding discussion, our
As a brief backgrounder to the amendment to Section 11 reference to Section 11 of the AMLA excludes said
of the AMLA, the text originally did not specify for proviso.
an ex-parte application by the AMLC for authority to
inquire into or examine certain bank accounts or In the instances where a court order is required for the
investments. The extent of this authority was the topic issuance of the bank inquiry order, nothing in Section 11
specifically authorizes that such court order may be Section 10, the implementing rules do expressly provide
issued ex parte. It might be argued that this silence does that the applications for freeze orders be filed ex parte,
not preclude the ex parte issuance of the bank inquiry but no similar clearance is granted in the case of inquiry
order since the same is not prohibited under Section 11. orders under Section 11. These implementing rules were
Yet this argument falls when the immediately preceding promulgated by the Bangko Sentral ng Pilipinas, the
provision, Section 10, is examined. Insurance Commission and the Securities and Exchange
Commission, and if it was the true belief of these
SEC 10. Freezing of Monetary Instrument or institutions that inquiry orders could be issued ex
Property. — The Court of Appeals, upon application ex parte similar to freeze orders, language to that effect
parte by the AMLC and after determination that probable would have been incorporated in the said Rules. This is
cause exists that any monetary instrument or property is stressed not because the implementing rules could
in any way related to an unlawful activity as defined in authorize ex parte applications for inquiry orders despite
Section 3(i) hereof, may issue a freeze order which shall the absence of statutory basis, but rather because the
be effective immediately. The freeze order shall be for a framers of the law had no intention to allow such ex
period of twenty (20) days unless extended by the court. parte applications.

Although oriented towards different purposes, the freeze Even the Rules of Procedure adopted by this Court in
order under Section 10 and the bank inquiry order under A.M. No. 05-11-04-SC to enforce the provisions of the
Section 11 are similar in that they are extraordinary AMLA specifically authorize ex parte applications with
provisional reliefs which the AMLC may avail of to respect to freeze orders under Section 10 but make no
effectively combat and prosecute money laundering similar authorization with respect to bank inquiry orders
offenses. Crucially, Section 10 uses specific language to under Section 11.
authorize an ex parte application for the provisional relief
therein, a circumstance absent in Section 11. If indeed the The Court could divine the sense in allowing ex
legislature had intended to authorize ex parte proceedings parte proceedings under Section 10 and in proscribing
for the issuance of the bank inquiry order, then it could the same under Section 11. A freeze order under Section
have easily expressed such intent in the law, as it did with 10 on the one hand is aimed at preserving monetary
the freeze order under Section 10. instruments or property in any way deemed related to
unlawful activities as defined in Section 3(i) of the
Even more tellingly, the current language of Sections 10 AMLA. The owner of such monetary instruments or
and 11 of the AMLA was crafted at the same time, property would thus be inhibited from utilizing the same
through the passage of R.A. No. 9194. Prior to the for the duration of the freeze order. To make such freeze
amendatory law, it was the AMLC, not the Court of order anteceded by a judicial proceeding with notice to
Appeals, which had authority to issue a freeze order, the account holder would allow for or lead to the
whereas a bank inquiry order always then required, dissipation of such funds even before the order could be
without exception, an order from a competent court. It issued. (Citations omitted.)
was through the same enactment that ex
parte proceedings were introduced for the first time into Quite apparent from the foregoing is that absent a
the AMLA, in the case of the freeze order which now can specific wording in the AMLA allowing for ex-
only be issued by the Court of Appeals. It certainly would parteproceedings in orders authorizing inquiry and
have been convenient, through the same amendatory law, examination by the AMLC into certain bank deposits or
to allow a similar ex parte procedure in the case of a bank investments, notice to the affected party is required.
inquiry order had Congress been so minded. Yet nothing
in the provision itself, or even the available legislative Heeding the Court's observance in Eugenio that the
record, explicitly points to an ex parte judicial procedure remedy of the Republic then lay with the legislative,
in the application for a bank inquiry order, unlike in the Congress enacted Republic Act No. 10167 amending
case of the freeze order. Section 11 of the AMLA and specifically inserted the
word ex-parte appositive of the nature of this provisional
That the AMLA does not contemplate ex remedy available to the AMLC thereunder.
parte proceedings in applications for bank inquiry orders
is confirmed by the present implementing rules and It is this current wording of Section 11 which SPCMB
regulations of the AMLA, promulgated upon the passage posits as unconstitutional and purportedly actually
of R.A. No. 9194. With respect to freeze orders under proscribed in Eugenio.
We do not subscribe to SPCMB's position. We are not unaware of the obiter in Eugenio17 and cited
by SPCMB, voicing misgivings on an interpretation of
Succinctly, Section 11 of the AMLA providing for ex- the former Section 11 of the AMLA allowing for ex-
parte application and inquiry by the AMLC into certain parte proceedings in bank inquiry orders, to wit:
bank deposits and investments does not violate
substantive due process, there being no physical seizure There certainly is fertile ground to contest the issuance of
of property involved at that stage. It is the preliminary an ex-parte order. Section 11 itself requires that it be
and actual seizure of the bank deposits or investments in established that "there is probable cause that the deposits
question which brings these within reach of the judicial or investments are related to unlawful activities," and it
process, specifically a determination that the seizure obviously is the court which stands as arbiter whether
violated due process.14 In fact, Eugenio delineates a bank there is indeed such probable cause. The process of
inquiry order under Section 11 from a freeze order under inquiring into the existence of probable cause would
Section 10 on both remedies' effect on the direct involve the function of determination reposed on the trial
objects, i.e. the bank deposits and investments: court. Determination clearly implies a function of
adjudication on the part of the trial court, and not a
On the other hand, a bank inquiry order under Section 11 mechanical application of a standard pre-determination
does not necessitate any form of physical seizure of by some other body. The word "determination" implies
property of the account holder. What the bank inquiry deliberation and is, in normal legal contemplation,
order authorizes is the examination of the particular equivalent to "the decision of a court of justice."
deposits or investments in banking institutions or non-
bank financial institutions. The monetary instruments or The court receiving the application for inquiry order
property deposited with such banks or financial cannot simply take the AMLC's word that probable cause
institutions are not seized in a physical sense, but are exists that the deposits or investments are related to an
examined on particular details such as the account unlawful activity. It will have to exercise its own
holder's record of deposits and transactions. Unlike the determinative function in order to be convinced of such
assets subject of the freeze order, the records to be fact. The account holder would be certainly capable of
inspected under a bank inquiry order cannot be contesting such probable cause if given the
physically seized or hidden by the account holder. Said opportunity to be apprised of the pending application
records are in the possession of the bank and therefore to inquire into his account; hence a notice
cannot be destroyed at the instance of the account holder requirement would not be an empty spectacle. It may
alone as that would require the extraordinary cooperation be so that the process of obtaining the inquiry order may
and devotion of the bank.15 become more cumbersome or prolonged because of the
notice requirement, yet we fail to see any unreasonable
At the stage in which the petition was filed before us, the burden cast by such circumstance. After all, as earlier
inquiry into certain bank deposits and investments by the stated, requiring notice to the account holder should not,
AMLC still does not contemplate any form of physical in any way, compromise the integrity of the bank records
seizure of the targeted corporeal property. From this cite, subject of the inquiry which remain in the possession and
we proceed to examine whether Section 11 of the law control of the bank. (Emphasis supplied)
violates procedural due process.
On that score, the SPCMB points out that the AMLC 's
As previously stated, the AMLA now specifically bank inquiry is preliminary to the seizure and deprivation
provides for an ex-parte application for an order of its property as in a freeze order under Section 10 of
authorizing inquiry or examination into bank deposits or the AMLA which peculiarity lends itself to a sui generis
investments which continues to pass constitutional proceeding akin to the evaluation process in extradition
muster. proceedings pronounced in Secretary of Justice v. Hon.
Lantion.18 Under the extradition law, the Secretary of
Procedural due process is essentially the opportunity to Foreign Affairs is bound to make a finding that the
be heard.16 In this case, at the investigation stage by the extradition request and its supporting documents are
AMLC into possible money laundering offenses, SPCMB sufficient and complete in form and substance before
demands that it have notice and hearing of AMLC's delivering the same to the Secretary of Justice. We ruled:
investigation into its bank accounts.
[L]ooking at the factual milieu of the case before us, it
would appear that there was failure to abide by the
provisions of Presidential Decree No. 1069. For while it or tool in an administrative agency's performance of its
is true that the extradition request was delivered to the rule-making or quasi-judicial functions. Notably,
Department of Foreign Affairs on June 17, 1999, the investigation is indispensable to prosecution.19 (Emphasis
following day or less than 24 hours later, the Department supplied, citations omitted)
of Justice received the request, apparently without the
Department of Foreign affairs discharging its duty The submission of AMLC requires a determination
thoroughly evaluating the same and its accompanying whether the AMLC is an administrative body with quasi-
documents. xxx. judicial powers; corollary thereto, a determination of the
jurisdiction of the AMLC.
xxxx
Lim v. Gamosa20 is enlightening on jurisdiction and the
[T]he record cannot support the presumption of regularity requirement of a specific grant thereof in the enabling
that the Department of Foreign Affairs thoroughly law. We declared that the creation of the National
reviewed the extradition request and supporting Commission on Indigenous Peoples (NCIP) by the
documents and that it arrived at a well-founded judgment Indigenous Peoples Rights Act (IPRA) did not confer it
that the request and its annexed documents satisfy the exclusive and original, nor primary jurisdiction, in all
requirements of law. XXX. claims and disputes involving rights of IPs and ICCs
where no such specific grant is bestowed.
The evaluation process, just like the extradition
proceedings, proper belongs to a class by itself. It In this instance, the grant of jurisdiction over cases
is sui generis. It is not a criminal investigation, but it is involving money laundering offences is bestowed on the
also erroneous to say that it is purely an exercise of Regional Trial Courts and the Sandiganbayan as the case
ministerial functions. At such stage, the executive may be. In fact, Rule 5 of the IRR is
authority has the power: (a) to make a technical entitled Jurisdiction of Money Laundering Cases and
assessment of the completeness and sufficiency of the Money Laundering Investigation Procedures:
extradition papers; (b) to outrightly deny the request if on
its face and on the face of the supporting documents the Rule 5.a. Jurisdiction of Money Laundering
crimes indicated are not extraditable; and (c) to make a Cases. The Regional Trial Courts shall have the
determination whether or not the request is politically jurisdiction to try all cases on money laundering. Those
motivated, or that the offense is a military one which is committed by public officers and private persons who are
not punishable under non-military penal legislation. in conspiracy with such public officers shall be under the
Hence, said process may be characterized as an jurisdiction of the Sandiganbayan.
investigative or inquisitorial process in contrast to a
proceeding conducted in the exercise of an administrative Rule 5.b. Investigation of Money Laundering
body's quasi-judicial power. Offenses. - The AMLC shall investigate:

In administrative law, a quasi-judicial proceeding (1) suspicious transactions;


involves: (a) taking and evaluation of evidence; (b) (2) covered transactions deemed suspicious after an
determining facts based upon the evidence presented; and investigation conducted by the AMLC;
(c) rendering an order or decision supported by the facts (3) money laundering activities; and
proved. Inquisitorial power, which is also known as (4) other violations of the AMLA, as amended.
examining or investigatory power, is one of the
determinative powers of an administrative body which The confusion on the scope and parameters of the
better enables it to exercise its quasi-judicial authority. AMLC's investigatory powers and whether such seeps
This power allows the administrative body to inspect the into and approximates a quasi-judicial agency's
records and premises, and investigate the activities, of inquisitorial powers lies in the AMLC's investigation and
persons or entities coming under its jurisdiction, or to consequent initial determination of whether certain
require disclosure of information by means of accounts, activities are constitutive of anti-money laundering
records, reports, testimony of witnesses, production of offenses.
documents, or otherwise.
The enabling law itself, the AMLA, specifies the
The power of investigation consists in gathering, jurisdiction of the trial courts, RTC and Sandiganbayan,
organizing, and analyzing evidence, which is a useful aid
over money laundering cases, and delineates the only power is to determine whether the papers comply
investigative powers of the AMLC. with the requirements of the law and the treaty and,
therefore, sufficient to be the basis of an extradition
Textually, the AMLA is the first line of defense against petition. Such finding is thus merely initial and not final.
money laundering in compliance with our international The body has no power to determine whether or not the
obligation. There are three (3) stages of determination, extradition should be effected. That is the role of the
two (2) levels of investigation, falling under three (3) court. The body's power is limited to an initial finding of
jurisdictions: whether or not the extradition petition can be filed in
court.
1. The AMLC investigates possible money laundering
offences and initially determines whether there is It is to be noted, however, that in contrast to ordinary
probable cause to charge any person with a money investigations, the evaluation procedure is characterized
laundering offence under Section 4 of the AMLA, by certain peculiarities. Primarily, it sets into motion the
resulting in the filing of a complaint with the Department wheels of the extradition process. Ultimately, it may
of Justice or the Office of the Ombudsman;21 result in the deprivation of liberty of the prospective
extraditee. This deprivation can be effected at two
2. The DOJ or the Ombudsman conducts the preliminary stages: First, the provisional arrest of the prospective
investigation proceeding and if after due notice and extraditee pending the submission of the request. This is
hearing finds probable cause for money laundering so because the Treaty provides that in case of urgency, a
offences, shall file the necessary information before the contracting party may request the provisional arrest of
Regional Trial Courts or the Sandiganbayan;22 the person sought pending presentation of the request
(Paragraph [1], Article 9, RP-US Extradition Treaty), but
3. The RTCs or the Sandiganbayan shall try all cases on he shall be automatically discharged after 60 days if no
money laundering, as may be applicable.23 request is submitted (Paragraph 4). Presidential Decree
No. 1069 provides for a shorter period of 20 days after
Nowhere from the text of the law nor its Implementing which the arrested person could be discharged (Section
Rules and Regulations can we glean that the AMLC 20[d]). Logically, although the Extradition Law is silent
exercises quasi-judicial functions whether the actual on this respect, the provisions only mean that once a
preliminary investigation is done simply at its behest or request is forwarded to the Requested State, the
conducted by the Department of Justice and the prospective extraditee may be continuously detained, or
Ombudsman. if not, subsequently rearrested (Paragraph [5], Article 9,
RP-US Extradition Treaty), for he will only be
Again, we hark back to Lantion citing Ruperto v. discharged if no request is submitted. Practically, the
Torres,23-a where the Court had occasion to rule on the purpose of this detention is to prevent his possible flight
functions of an investigatory body with the sole power of from the Requested State. Second, the temporary arrest
investigation: of the prospective extraditee during the pendency of the
extradition petition in court (Section 6, Presidential
[Such a body] does not exercise judicial functions and its Decree No. 1069).
power is limited to investigating facts and making
findings in respect thereto. The Court laid down the test Clearly, there is an impending threat to a prospective
of determining whether an administrative body is extraditee's liberty as early as during the evaluation
exercising judicial functions or merely investigatory stage. It is not only an imagined threat to his liberty, but a
functions: Adjudication signifies the exercise of power very imminent one.
and authority to adjudicate upon the rights and
obligations of the parties before it. Hence, if the only Because of these possible consequences, we conclude
purpose for investigation is to evaluate evidence that the evaluation process is akin to an administrative
submitted before it based on the facts and Circumstances agency conducting an investigative proceeding, the
presented to it, and if the agency is not authorized to consequences of which are essentially criminal since
make a final pronouncement affecting the parties, then such technical assessment sets off or commences the
there is an absence of judicial discretion and judgment. procedure for, and ultimately, the deprivation of liberty
of a prospective extraditee, As described by petitioner
adjudicate in regard to the rights and obligations of both himself, this is a "tool" for criminal law enforcement. In
the Requesting State and the prospective extraditee. Its essence, therefore, the evaluation process partakes of the
nature of a criminal investigation. In a number of cases, cause. We find it significant that the specimen signatures
we had occasion to make available to a respondent in an in the possession of Metrobank were submitted by the
administrative case or investigation certain constitutional respondents for the consideration of the city prosecutor
rights that are ordinarily available only in criminal and eventually of the Secretary of Justice during the
prosecutions. Further, as pointed out by Mr. Justice preliminary investigation proceedings. Thus, these
Mendoza during the oral arguments, there are rights officers had the opportunity to examine these signatures.
formerly available only at the trial stage that had been
advanced to an earlier stage in the proceedings, such as The respondents were not likewise denied their right to
the right to counsel and the right against self- due process when the NBI issued the questioned
incrimination.24 (Citations omitted) documents report. We note that this report merely stated
that the signatures appearing on the two deeds and in the
In contrast to the disposition in Lantion that the petitioner's submitted sample signatures were not written
evaluation process before the Department of Foreign by one and the same person. Notably, there was no
Affairs is akin to an administrative agency conducting categorical finding in the questioned documents report
investigative proceedings with implications on the that the respondents falsified the documents. This report,
consequences of criminal liability, i.e., deprivation of too, was procured during the conduct of the NBI's
liberty of a prospective extraditee, the sole investigative investigation at the petitioner's request for assistance in
functions of the AMLC finds more resonance with the the investigation of the alleged crime of falsification. The
investigative functions of the National Bureau of report is inconclusive and does not prevent the
Investigation (NBI). respondents from securing a separate documents
examination by handwriting experts based on their own
That the AMLC does not exercise quasi-judicial powers evidence. On its own, the NBI's questioned documents
and is simply an investigatory body finds support in our report does not directly point to the respondents'
ruling in Shu v. Dee.25 In that case, petitioner Shu had involvement in the crime charged. Its significance is that,
filed a complaint before the NBI charging respondents taken together with the other pieces of evidence
therein with falsification of two (2) deeds of real estate submitted by the parties during the preliminary
mortgage submitted to the Metropolitan Bank and Trust investigation, these evidence could be sufficient for
Company (Metrobank). After its investigation, the NBI purposes of finding probable cause — the action that the
came up with a Questioned Documents Report No. 746- Secretary of Justice undertook in the present case.
1098 finding that the signatures of petitioner therein
which appear on the questioned deeds are not the same as As carved out in Shu, the AMLC functions solely as an
the standard sample signatures he submitted to the NBI. investigative body in the instances mentioned in Rule
Ruling on the specific issue raised by respondent therein 5.b.26 Thereafter, the next step is for the AMLC to file a
that they had been denied due process during the NBI Complaint with either the DOJ or the Ombudsman
investigation, we stressed that the functions of this pursuant to Rule 6.b.
agency are merely investigatory and informational in
nature: Even in the case of Estrada v. Office of the
Ombudsman,27 where the conflict arose at the
[The NBI] has no judicial or quasi-judicial powers and is preliminary investigation stage by the Ombudsman, we
incapable of granting any relief to any party. It cannot ruled that the Ombudsman's denial of Senator Estrada's
even determine probable cause. The NBI is an Request to be furnished copies of the counter-affidavits
investigative agency whose findings are merely of his co-respondents did not violate Estrada's
recommendatory. It undertakes investigation of crimes constitutional right to due process where the sole issue is
upon its own initiative or as public welfare may require the existence of probable cause for the purpose of
in accordance with its mandate. It also renders assistance determining whether an information should be filed and
when requested in the investigation or detection of does not prevent Estrada from requesting a copy of the
crimes in order to prosecute the persons responsible. counter-affidavits of his co-respondents during the pre-
trial or even during trial. We expounded on the nature of
Since the NBI's findings were merely recommendatory, preliminary investigation proceedings, thus:
we find that no denial of the respondent's due process
right could have taken place; the NBI's findings were still It should be underscored that the conduct of a
subject to the prosecutor's and the Secretary of Justice's preliminary investigation is only for the determination of
actions for purposes of finding the existence of probable probable cause, and "probable cause merely implies
probability of guilt and should be determined in a before the trial court during the trial proper and not in the
summary manner. A preliminary investigation is not a preliminary investigation.
part of the trial and it is only in a trial where an accused
can demand the full exercise of his rights, such as the Furthermore, the technical rules on evidence are not
right to confront and cross-examine his accusers to binding on the fiscal who has jurisdiction and control
establish his innocence." Thus, the rights of a respondent over the conduct of a preliminary investigation. If by its
in a preliminary investigation are limited to those granted very nature a preliminary investigation could be waived
by procedural law. by the accused, we find no compelling justification for a
strict application of the evidentiary rules. In addition,
A preliminary investigation is defined as an inquiry or considering that under Section 8, Rule 112 of the Rules
proceeding for the purpose of determining whether there of Court, the record of the preliminary investigation does
is sufficient ground to engender a well founded belief not form part of the record of the case in the Regional
that a crime cognizable by the Regional Trial Court has Trial Court, then the testimonies of Galarion and
been committed and that the respondent is probably Hanopol may not be admitted by the trial court if not
guilty thereof, and should be held for trial. The quantum presented in evidence by the prosecuting fiscal. And,
of evidence now required in preliminary investigation is even if the prosecution does present such testimonies,
such evidence sufficient to "engender a well founded petitioner can always object thereto and the trial court
belief' as to the fact of the commission of a crime and the can rule on the admissibility thereof; or the petitioner
respondent's probable guilt thereof A preliminary can, during the trial, petition said court to compel the
investigation is not the occasion for the full and presentation of Galarion and Hanopol for purposes of
exhaustive display of the parties' evidence; it is for the cross-examination. (Citations and emphasis omitted)
presentation of such evidence only as may engender a
well-grounded belief that an offense has been committed Plainly, the AMLC's investigation of money laundering
and that the accused is probably guilty thereof. We are in offenses and its determination of possible money
accord with the state prosecutor's findings in the case at laundering offenses, specifically its inquiry into certain
bar that there exists prima facie evidence of petitioner's bank accounts allowed by court order, does not transform
involvement in the commission of the crime, it being it into an investigative body exercising quasi-judicial
sufficiently supported by the evidence presented and the powers. Hence, Section 11 of the AMLA, authorizing a
facts obtaining therein. bank inquiry court order, cannot be said to violate
SPCMB's constitutional right to procedural due process.
Likewise devoid of cogency is petitioner's argument that
the testimonies of Galarion and Hanopol are inadmissible We now come to a determination of whether Section 11
as to him since he was not granted the opportunity of is violative of the constitutional right to privacy
cross-examination. enshrined in Section 2, Article III of the Constitution.
SPCMB is adamant that the CA's denial of its request to
It is a fundamental principle that the accused in a be furnished copies of AMLC's ex-parte application for a
preliminary investigation has no right to cross-examine bank inquiry order and all subsequent pleadings,
the witnesses which the complainant may present. documents and orders filed and issued in relation thereto,
Section 3, Rule 112 of the Rules of Court expressly constitutes grave abuse of discretion where the purported
provides that the respondent shall only have the right to blanket authority under Section 11: (1) partakes of a
submit a counter-affidavit, to examine all other evidence general warrant intended to aid a mere fishing
submitted by the complainant and, where the fiscal sets a expedition; (2) violates the attorney-client privilege; (3)
hearing to propound clarificatory questions to the parties is not preceded by predicate crime charging SPCMB of a
or their witnesses, to be afforded an opportunity to be money laundering offense; and (4) is a form of political
present but without the right to examine or cross- harassment [of SPCMB's] clientele.
examine. Thus, even if petitioner was not given the
opportunity to cross-examine Galarion and Hanopol at We shall discuss these issues jointly since the assailed
the time they were presented to testify during the separate Section 11 incorporates by reference that "[t]he authority
trial of the case against Galarion and Roxas, he cannot to inquire into or examine the main and the related
assert any legal right to cross-examine them at the accounts shall comply with the requirements of Article
preliminary investigation precisely because such right III, Sections 2 and 3 of the 1987 Constitution." On this
was never available to him. The admissibility or point, SPCMB asseverates that "there is nothing in the
inadmissibility of said testimonies should be ventilated AMLA that allows or justifies the withholding of
information and/or any court records or proceedings expectation of privacy as to the bank records of a
pertaining to an examination of a bank account, depositor. Moreover, the text of our Constitution has not
especially if the court has already granted the authority to bothered with the triviality of allocating specific rights
conduct the examination." peculiar to bank deposits.

The theme of playing off privacy rights and interest However, sufficient for our purposes, we can assert there
against that of the state's interest in curbing money is a right to privacy governing bank accounts in the
laundering offenses is recurring.28 Philippines, and that such right finds application to the
case at bar. The source of such right is statutory,
The invoked constitutional provisions read: expressed as it is in R.A. No. 1405 otherwise known as
the Bank Secrecy Act of 1955. The right to privacy is
SEC. 2. The right of the people to be secure in their enshrined in Section 2 of that law, to wit:
persons, houses, papers, and effects against unreasonable
searches and seizures of whatever nature and for any SECTION 2. All deposits of whatever nature with
purpose shall be inviolable, and no search warrant or banks or banking institutions in the Philippines
warrant of arrest shall issue except upon probable cause including investments in bonds issued by the
to be determined personally by the judge after Government of the Philippines, its political
examination under oath or affirmation of the complainant subdivisions and its instrumentalities, are hereby
and the witnesses he may produce, and particularly considered as of an absolutely confidential nature and
describing the place to be searched and the person or may not be examined, inquired or looked into by any
things to be seized. person, government official, bureau or office, except
upon written permission of the depositor, or in cases of
SEC. 3. (1) The privacy of communication and impeachment, or upon order of a competent court in
correspondence shall be inviolable except upon lawful cases of bribery or dereliction of duty of public officials,
order of the court, or when public policy or order requires or in cases where the money deposited or invested is the
otherwise as prescribed by law. subject matter of the litigation.

(2) Any evidence obtained in violation of this or the Because of the Bank Secrecy Act, the confidentiality of
preceding section shall be inadmissible for any purpose bank deposits remains a basic state policy in the
in any proceeding. Philippines. Subsequent laws, including the AMLA, may
have added exceptions to the Bank Secrecy Act, yet the
Once again, Eugenio29 offers guidance: secrecy of bank deposits still lies as the general rule. It
falls within the zones of privacy recognized by our laws.
The Court's construction of Section 11 of the AMLA is The framers of the 1987 Constitution likewise
undoubtedly influenced by right to privacy recognized that bank accounts are not covered by either
considerations. If sustained, petitioner's argument that a the right to information under Section 7, Article III or
bank account may be inspected by the government under the requirement of full public disclosure under
following an ex parte proceeding about which the Section 28, Article II. Unless the Bank Secrecy Act is
depositor would know nothing would have significant repealed or amended, the legal order is obliged to
implications on the right to privacy, a right innately conserve the absolutely confidential nature of Philippine
cherished by all notwithstanding the legally recognized bank deposits.
exceptions thereto. The notion that the government could
be so empowered is cause for concern of any individual Any exception to the rule of absolute confidentiality
who values the right to privacy which, after all, embodies must be specifically legislated. Section 2 of the Bank
even the right to be "let alone," the most comprehensive Secrecy Act itself prescribes exceptions whereby these
of rights and the right most valued by civilized people. bank accounts may be examined by "any person,
government official, bureau or office"; namely when: (1)
One might assume that the constitutional dimension of upon written permission of the depositor; (2) in cases of
the right to privacy, as applied to bank deposits, warrants impeachment; (3) the examination of bank accounts is
our present inquiry. We decline to do so. Admittedly, that upon order of a competent court in cases of bribery or
question has proved controversial in American dereliction of duty of public officials; and (4) the money
jurisprudence. Notably, the United States Supreme deposited or invested is the subject matter of the
Court in U.S. v. Miller held that there was no legitimate litigation. Section 8 of R.A. Act No. 3019, the Anti-Graft
and Corrupt Practices Act, has been recognized by this From the foregoing disquisition, we extract the following
Court as constituting an additional exception to the rule principles:
of absolute confidentiality, and there have been other
similar recognitions as well. 1. The Constitution did not allocate specific rights
peculiar to bank deposits;
The AMLA also provides exceptions to the Bank Secrecy
Act. Under Section 11, the AMLC may inquire into a 2. The general rule of absolute confidentiality is simply
bank account upon order of any competent court in cases statutory,30i.e. not specified in the Constitution, which
of violation of the AMLA, it having been established that has been affirmed in jurisprudence;31
there is probable cause that the deposits or investments
are related to unlawful activities as defined in Section 3. Exceptions to the general rule of absolute
3(i) of the law, or a money laundering offense under confidentiality have been carved out by the Legislature
Section 4 thereof. Further, in instances where there is which legislation have been sustained, albeit subjected to
probable cause that the deposits or investments are heightened scrutiny by the courts;32 and
related to kidnapping for ransom, certain violations of the
Comprehensive Dangerous Drugs Act of 2002, hijacking 4. One such legislated exception is Section 11 of the
and other violations under R.A. No. 6235, destructive AMLA.
arson and murder, then there is no need for the AMLC to
obtain a court order before it could inquire into such The warning in Eugenio that an ex-parte proceeding
accounts. authorizing the government to inspect certain bank
accounts or investments without notice to the depositor
It cannot be successfully argued the proceedings relating would have significant implications on the right to
to the bank inquiry order under Section 11 of the AMLA privacy still does not preclude such a bank inquiry order
is a "litigation" encompassed in one of the exceptions to to be allowed by specific legislation as an exception to
the Bank Secrecy Act which is when "the money the general rule of absolute confidentiality of bank
deposited or invested is the subject matter of the deposits.
litigation." The orientation of the bank inquiry order is
simply to serve as a provisional relief or remedy. As We thus subjected Section 11 of the AMLA to heightened
earlier stated, the application for such does not entail a scrutiny and found nothing arbitrary in the allowance and
full-blown trial. authorization to AMLC to undertake an inquiry into
certain bank accounts or deposits. Instead, we found that
Nevertheless, just because the AMLA establishes it provides safeguards before a bank inquiry order is
additional exceptions to the Bank Secrecy Act it does not issued, ensuring adherence to the general state policy of
mean that the later law has dispensed with the general preserving the absolutely confidential nature of
principle established in the older law that "[a]ll deposits Philippine bank accounts:
of whatever nature with banks or banking institutions in
the Philippines x x x are hereby considered as of an (1) The AMLC is required to establish probable cause as
absolutely confidential nature." Indeed, by force of basis for its ex-parte application for bank inquiry order;
statute, all bank deposits are absolutely confidential, and
that nature is unaltered even by the legislated exceptions (2) The CA, independent of the AMLC's demonstration
referred to above. There is disfavor towards construing of probable cause, itself makes a finding of probable
these exceptions in such a manner that would authorize cause that the deposits or investments are related to an
unlimited discretion on the part of the government or of unlawful activity under Section 3(i) or a money
any party seeking to enforce those exceptions and inquire laundering offense under Section 4 of the AMLA;
into bank deposits. If there are doubts in upholding the
absolutely confidential nature of bank deposits against (3) A bank inquiry court order ex-parte for related
affirming the authority to inquire into such accounts, then accounts is preceded by a bank inquiry court order ex-
such doubts must be resolved in favor of the former. Such parte for the principal account which court order ex-
a stance would persist unless Congress passes a law parte for related accounts is separately based on probable
reversing the general state policy of preserving the cause that such related account is materially linked to the
absolutely confidential nature of Philippine bank principal account inquired into; and
accounts. (Citations omitted, emphasis supplied)
(4) The authority to inquire into or examine the main or Second. As regards SPCMB's contention that the bank
principal account and the related accounts shall comply inquiry order is in the nature of a general
with the requirements of Article III, Sections 2 and 3 of warrant, Eugenio already declared that Section 11, even
the Constitution. with the allowance of an ex parte application therefor, "is
not a search warrant or warrant of arrest as it
The foregoing demonstrates that the inquiry and contemplates a direct object but not the seizure of
examination into the bank account are not undertaken persons or property."34 It bears repeating that the ''bank
whimsically and solely based on the investigative inquiry order" under Section 11 is a provisional remedy
discretion of the AMLC. In particular, the requirement of to aid the AMLC in the enforcement of the AMLA.
demonstration by the AMLC, and determination by the
CA, of probable cause emphasizes the limits of such Third. Contrary to the stance of SPCMB, the bank
governmental action. We will revert to these safeguards inquiry order does not contemplate that SPCMB be first
under Section 11 as we specifically discuss the CA's impleaded in a money laundering case already filed
denial of SPCMB's letter request for information before the courts:
concerning the purported issuance of a bank inquiry
order involving its accounts. We are unconvinced by this proposition, and agree
instead with the then Solicitor General who conceded
First. The AMLC and the appellate court are respectively that the use of the phrase "in cases of' was unfortunate,
required to demonstrate and ascertain probable yet submitted that it should be interpreted to mean "in the
cause. Ret. Lt. Gen. Ligot, et al. v. Republic of the event there are violations" of the AMLA, and not that
Philippines,33 which dealt with the adjunct provisional there are already cases pending in court concerning such
remedy of freeze order under Section 10 of the AMLA, violations. If the contrary position is adopted, then the
defined probable cause, thus: bank inquiry order would be limited in purpose as a tool
in aid of litigation of live cases, and wholly inutile as a
The probable cause required for the issuance of a freeze means for the government to ascertain whether there is
order differs from the probable cause required for the sufficient evidence to sustain an intended prosecution of
institution of a criminal action, xxx. the account holder for violation of the AMLA. Should
that be the situation, in all likelihood the AMLC would
As defined in the law, the probable cause required for the be virtually deprived of its character as a discovery tool,
issuance of a freeze order refers to "such facts and and thus would become less circumspect in filing
circumstances which would lead a reasonably discreet, complaints against suspect account holders. After all,
prudent or cautious man to believe that an unlawful under such set-up the preferred strategy would be to
activity and/or money laundering offence is about to be, allow or even encourage the indiscriminate filing of
is being or has been committed and that the account or complaints under the AMLA with the hope or
any monetary instrument or property subject thereof expectation that the evidence of money laundering would
sought to be frozen is in any way related to said unlawful somehow .surface during the trial. Since the AMLC
activity and/or money laundering offense." could not make use of the bank inquiry order to
determine whether there is evidentiary basis to prosecute
In other words, in resolving the issue of whether probable the suspected malefactors, not filing any case at all
cause exits, the CA's statutorily-guided determination's would not be an alternative. Such unwholesome set-up
focus is not on the probable commissions of an unlawful should not come to pass. Thus Section 11 cannot be
activity (or money laundering) that the office of the interpreted in a way that would emasculate the remedy it
Ombudsman has already determined to exist, but on has established and encourage the unfounded initiation of
whether the bank accounts, assets, or other monetary complaints for money laundering.35 (Citation omitted)
instruments sought to be frozen are in any way related to
any of the illegal activities enumerated under R.A. 9160, Guided as we are by prior holdings, and bound as we are
as amended. Otherwise stated, probable cause refers to by the requirements for issuance of a bank inquiry order
the sufficiency of the relation between an unlawful under Section 11 of the AMLA, we are hard pressed to
activity and the property or monetary instrument which is declare that it violates SPCMB's right to privacy.
the focal point of Section 10 of RA No. 9160, as
amended. xxx. (Emphasis supplied) Nonetheless, although the bank inquiry order ex-
parte passes constitutional muster, there is nothing in
Section 11 nor the implementing rules and regulations of
the AMLA which prohibits the owner of the bank (a) the account numbers;
account, as in his instance SPCMB, to ascertain from the (b) the names of the account owners or holders;
CA, post issuance of the bank inquiry order ex-parte, if (c) the amount of the monetary instrument, property or
his account is indeed the subject of an examination. related accounts as of the time they were frozen;
Emphasized by our discussion of the safeguards under (d) all relevant information as to the nature of the
Section 11 preceding the issuance of such an order, we monetary instrument or property;
find that there is nothing therein which precludes the (e) any information on the related accounts pertaining to
owner of the account from challenging the basis for the the monetary instrument or property subject of the freeze
issuance thereof. order; and
(f) the time when the freeze thereon took effect.
The present controversy revolves around the issue of
whether or not the appellate court, through the Presiding Rule 10.d. Upon receipt of the freeze order issued by the
Justice, gravely abused its discretion when it effectively Court of Appeals and upon verification by the covered
denied SPCMB's letter-request for confirmation that the institution that the related accounts originated from
AMLC had applied (ex-parte) for, and was granted, a and/or are materially linked to the monetary instrument
bank inquiry order to examine SPCMB's bank accounts or property subject of the freeze order, the covered
relative to the investigation conducted on Vice-President institution shall freeze these related accounts wherever
Binay's accounts. these may be found.

We recall the Presiding Justice's letter to SPCMB The return of the covered institution as required under
categorically stating that "under the rules, the Office of Rule 10.c.3 shall include the fact of such freezing and an
the Presiding Justice is strictly mandated not to disclose, explanation as to the grounds for the identification of the
divulge, or communicate to anyone directly or indirectly, related accounts.
in any manner or by any means, the fact of the filing of
the petition brought before [the Court of Appeals] by the If the related accounts cannot be determined within
[AMLC], its contents and even its entry in the logbook." twenty-four (24) hours from receipt of the freeze order
Note that the letter did not cite the aforementioned rules due to the volume and/or complexity of the transactions
that were supposedly crystal clear to foreclose ambiguity. or any other justifiable factor(s), the covered institution
Note further that Rules 10.c.3 and 10.d of the IRR on shall effect the freezing of the related accounts, monetary
Authority to File Petitions for Freeze Order provides that: instruments and properties as soon as practicable and
shall submit a supplemental return thereof to the Court of
Rule 10.c. Duty of Covered Institutions upon receipt Appeals and the AMLC within twenty-four (24) hours
thereof. — from the freezing of said related accounts, monetary
instruments and properties.
Rule 10.c.1. Upon receipt of the notice of the freeze
order, the covered institution concerned shall The foregoing rule, in relation to what Section 11 already
immediately freeze the monetary instrument or property provides, signifies that ex-parte bank inquiry orders on
and related accounts subject thereof. related accounts may be questioned alongside, albeit
subsequent to, the issuance of the initial freeze order of
Rule 10.c.2. The covered institution shall likewise the subject bank accounts. The requirements and
immediately furnish a copy of the notice of the freeze procedure for the issuance of the order, including the
order upon the owner or holder of the monetary return to be made thereon lay the grounds for judicial
instrument or property or related accounts subject review thereof. We expound.
thereof.
An act of a court or tribunal can only be considered
Rule 10.c.3. Within twenty-four (24) hours from receipt tainted with grave abuse of discretion when such act is
of the freeze order, the covered institution concerned done in a capricious or whimsical exercise of judgment
shall submit to the Court of Appeals and the AMLC, by as is equivalent to lack of jurisdiction. It is well-settled
personal delivery, a detailed written return on the freeze that the abuse of discretion to be qualified as "grave"
order, specifying all the pertinent and relevant must be so patent or gross as to constitute an evasion of a
information which shall include the following: positive duty or a virtual refusal to perform the duty or to
act at all in contemplation of law.36 In this relation, case
law states that not every error in the proceedings, or
every erroneous conclusion of law or fact, constitutes requirements as basis for a valid exception to the general
grave abuse of discretion.37 The degree of gravity, as rule on absolute confidentiality of bank accounts.
above-described, must be met. However, these very safe guards allow SPCMB, post
issuance of the ex-parte bank inquiry order, legal bases to
That the propriety of the issuance of the bank inquiry question the propriety of such issued order, if any. To
order is a justiciable issue brooks no argument. A emphasize, this allowance to the owner of the bank
justiciable controversy refers to an existing case or account to question the bank inquiry order is granted
controversy that is appropriate or ripe for judicial only after issuance of the freeze order physically seizing
determination, not one that is conjectural or merely the subject bank account. It cannot be undertaken prior to
anticipatory.38 the issuance of the freeze order.

As previously adverted to in our discussion on the right While no grave abuse of discretion could be ascribed on
to privacy, the clash of privacy rights and interest against the part of the appellate court when it explained in its
that of the government's is readily apparent. However, the letter that petitions of such nature "is strictly confidential
statutorily enshrined general rule on absolute in that when processing the same, not even the handling
confidentiality of bank accounts remains. Thus, the staff members of the Office of the Presiding Justice know
safeguards instituted in Section II of the AMLA and or have any knowledge who the subject bank account
heretofore discussed provide for certain well defined holders are, as well as the bank accounts involved," it
limits, as in the language of Baker v. Carr, "judicially was incorrect when it declared that "under the rules, the
discoverable standards" for determining the validity of Office of the Presiding Justice is strictly mandated not to
the exercise of such discretion by the appellate court in disclose, divulge, or communicate to anyone directly or
denying the letter-request of SPCMB.39 In short, Section indirectly, in any manner or by any means, the fact of the
II itself provides the basis for the judicial inquiry and filing of any petition brought before [the Court of
which the owner of the bank accounts subject of the Appeals] by the Anti-Money Laundering Council, its
AMLC inquiry may invoke. contents and even its entry in the logbook." As a result,
the appellate court effectively precluded and prevented
Undeniably, there is probable and preliminary SPCMB of any recourse, amounting to a denial of
governmental action against SPCMB geared towards SPCMB's letter request.
implementation of the AMLA directed at SPCMB's
property, although there is none, as yet, physical seizure We cannot overemphasize that SPCMB, as the owner of
thereof, as in freezing of bank accounts under Section 10 the bank account which may be the subject of inquiry of
of the AMLA.40 Note, however, that the allowance to the AMLC, ought to have a legal remedy to question the
question the bank inquiry order we carve herein is tied to validity and propriety of such an order by the appellate
the appellate court's issuance of a freeze order on the court under Section 11 of the AMLA even if subsequent
principal accounts. Even in Eugenio, while declaring that to the issuance of a freeze order. Moreover, given the
the bank inquiry order under Section II then required scope of inquiry of the AMLC, reaching and including
prior notice of such to the account owner, we recognized even related accounts, which inquiry into specifies a
that the determination of probable cause by the appellate proviso that: "[t]hat the procedure for the ex-
court to issue the bank inquiry order can be contested. As parte application of the ex-partecourt order for the
presently worded and how AMLC functions are designed principal account shall be the same with that of the
under the AMLA, the occasion for the issuance of the related accounts," SPCMB should be allowed to question
freeze order upon the actual physical seizure of the the government intrusion. Plainly, by implication,
investigated and inquired into bank account, calls into SPCMB can demonstrate the absence of probable
motions the opportunity for the bank account owner to cause, i.e. that it is not a related account nor are its
then question, not just probable cause for the issuance of accounts materially linked to the principal account being
the freeze order under Section I 0, but, to begin with, the investigated.41
determination of probable cause for an ex-parte bank
inquiry order into a purported related account under In BSB Group, Inc. v. Go,42 we recounted the objective
Section II. of the absolute confidentiality rule which is protection
from unwarranted inquiry or investigation if the purpose
In enacting the amendment to Section II of the AMLC, of such inquiry or investigation is merely to determine
the legislature saw it fit to place requirements before a the existence and nature, as well as the amount of the
bank inquiry order may be issued. We discussed these deposit in any given bank account:
xxx. There is, in fact, much disfavor to construing these Mr. Marcos: But under our rules of procedure and under
primary and supplemental exceptions in a manner that the Civil Code, the attachment or garnishment of money
would authorize unbridled discretion, whether deposited is allowed. Let us assume for instance that
governmental or otherwise, in utilizing these exceptions there is a preliminary attachment which is for
as authority for unwarranted inquiry into bank accounts. garnishment or for holding liable all moneys deposited
It is then perceivable that the present legal order is belonging to a certain individual, but such attachment or
obliged to conserve the absolutely confidential nature of garnishment will bring out into the open the value of
bank deposits. such deposit. Is that prohibited by... the law?

The measure of protection afforded by the law has been Mr. Ramos: It is only prohibited to the extent that the
explained in China Banking Corporation v. Ortega. That inquiry... is made only for the purpose of satisfying a tax
case principally addressed the issue of whether the liability already declared for the protection of the right in
prohibition against an examination of bank deposits favor of the government; but when the object is merely to
precludes garnishment in satisfaction of a judgment. inquire whether he has a deposit or not for purposes of
Ruling on that issue in the negative, the Court found taxation, then this is fully covered by the law. x x x
guidance in the relevant portions of the legislative
deliberations on Senate Bill No. 351 and House Bill No. Mr. Marcos: The law prohibits a mere investigation into
3977, which later became the Bank Secrecy Act, and it the existence and the amount of the deposit.
held that the absolute confidentiality rule in R.A. No.
1405 actually aims at protection from unwarranted Mr. Ramos: Into the very nature of such deposit. x x x
inquiry or investigation if the purpose of such inquiry or (Citations omitted)
investigation is merely to determine the existence and
nature, as well as the amount of the deposit in any given What is reflected by the foregoing disquisition is that the
bank account. Thus, law plainly prohibits a mere investigation into the
existence and the amount of the deposit. We relate the
x x x The lower court did not order an examination of or principle to SPCMB's relationship to the reported
inquiry into the deposit of B&B Forest Development principal account under investigation, one of its clients,
Corporation, as contemplated in the law. It merely former Vice President Binay. SPCMB as the owner of
required Tan Kim Liong to inform the court whether or one of the bank accounts reported to be investigated by
not the defendant B&B Forest Development Corporation the AMLC for probable money laundering offenses
had a deposit in the China Banking Corporation only for should be allowed to pursue remedies therefrom where
purposes of the garnishment issued by it, so that the bank there are legal implications on the inquiry into its
would hold the same intact and not allow any withdrawal accounts as a law firm. While we do not lapse into
until further order. It will be noted from the discussion of conjecture and cannot take up the lance for SPCMB on
the conference committee report on Senate Bill No. 351 probable violation of the attorney-client privilege based
and House Bill No. 3977 which later became Republic on pure speculation, the extent of information obtained
Act No. 1405, that it was not the intention of the by the AMLC concerning the clients of SPCMB has not
lawmakers to place banks deposits beyond the reach of been fully drawn and sufficiently demonstrated. At the
execution to satisfy a final judgment Thus: same time, the owner of bank accounts that could be
x x x Mr. Marcos: Now, for purposes of the record, I potentially affected has the right to challenge whether the
should like the Chairman of the Committee on Ways and requirements for issuance of the bank inquiry order were
Means to clarify this further. Suppose an individual has a indeed complied with given that such has implications on
tax case. He is being held liable by the Bureau of Internal its property rights. In this regard, SPCMB's obeisance to
Revenue [(BIR)] or, say, P1,000.00 worth of tax liability, promulgated rules on the matter could have afforded it a
and because of this the deposit of this individual [has remedy, even post issuance of the bank inquiry order.
been] attached by the [BIR].
Rule 10.b. of the IRR defines probable cause as "such
Mr. Ramos: The attachment will only apply after the facts and circumstances which would lead a reasonably
court has pronounced sentence declaring the liability of discreet, prudent or cautious man to believe that an
such person. But where the primary aim is to determine unlawful activity and/or a money laundering offense is
whether he has a bank deposit in order to bring about a about to be, is being or has been committed and that the
proper assessment by the [BIR], such inquiry is not account or any monetary instrument or property sought
allowed by this proposed law. to be frozen is in any way related to said unlawful
activity and/or money laundering offense." Evidently, the perceived to be violation of its rights as owner of the
provision only refers to probable cause for freeze orders bank account examined. The reply of the Presiding
under Section 10 of the AMLA. From this we note that Justice failed to take into consideration Section 54 of
there is a glaring lacunae in our procedural rules A.M. No. 05-11-04-SC on Notice of Freeze Order which
concerning the bank inquiry order under Section 11. reads:
Despite the advent of RA No. 10167, amending Section
11 of the AMLA, we have yet to draft additional rules SEC. 54. Notice of freeze order.- The Court shall order
corresponding to the ex-parte bank inquiry order under that notice of the freeze order be served personally, in the
Section 11. A.M. No. 05-11-04-SC entitled "Rule of same manner provided for the service of the asset
Procedure in Cases of Civil Forfeiture, Asset preservation order in Section 14 of this Rule, upon the
Preservation, and Freezing of Monetary Instrument, respondent or any person acting in his behalf and such
Property, or Proceeds Representing, Involving, or covered institution or government agency. The court
Relating to an Unlawful Activity or Money Laundering shall notify also such party in interest as may have
Offense Under Republic Act No. 9160, as Amended," appeared before the court. (Emphasis supplied)
only covers what is already provided in the title. As we
have already noted, the bank inquiry order must likewise We relate this Section 54 to the already cited Rule 10.d
be governed by rules specific to its issuance where the of the IRR
AMLC regularly invokes this provision and which,
expectedly clashes with the rights of bank account Rule 10.d. Upon receipt of the freeze order issued by the
holders. Court of Appeals and upon verification by the covered
institution that the related accounts originated from
Apart from Section 2, Rule IV of the 2009 Internal Rules and/or are materially linked to the monetary instrument
of the CA (IRCA) reads: or property subject of the freeze order, the covered
institution shall freeze these related accounts wherever
SEC. 2. Action by the Presiding Justice or Executive these may be found.
Justice. — When a petition involves an urgent matter,
such as an application for writ of habeas corpus, amparo The return of the covered institution as required
or habeas data or for temporary restraining order, and under Rule 10.c.3 shall include the fact of such
there is no way of convening the Raffle Committee or freezing and an explanation as to the grounds for the
calling any of its members, the Presiding Justice or the identification of the related accounts.
Executive Justice, as the case may be, or in his/her
absence, the most senior Justice present, may conduct the If the related accounts cannot be determined within
raffle or act on the petition, subject to raffle in the latter twenty-four (24) hours from receipt of the freeze
case on the next working day in accordance with Rule III order due to the volume and/or complexity of the
hereof. transactions or any other justifiable factor(s), the
covered institution shall effect the freezing of the
(AMLA cases are limited to the first three most senior related accounts, monetary instruments and
Justices as stated in the law and are raffled by the properties as soon as practicable and shall submit a
Chairmen of the First, Second and Third Divisions to supplemental return thereof to the Court of Appeals
the members of their Divisions only.) and the AMLC within twenty-four (24) hours from
the freezing of said related accounts, monetary
Nothing in the IRCA justifies the disallowance to instruments and properties. (Emphasis supplied)
SPCMB of information and/or court records or
proceedings pertaining to the possible bank inquiry order demonstrating that the return of the Freeze Order must
covering its bank deposits or investment. provide an explanation as to the grounds for the
identification of the related accounts, or the requirement
We note that the Presiding Justice's reply to the request of notice to a party in interest affected thereby whose
for comment of SPCMB on the existence of a petition for bank accounts were examined. This necessarily
bank inquiry order by the AMLC covering the latter's contemplates the procedure for a prior bank inquiry order
account only contemplates the provisions of Section 10 which we ought to provide for.
of the AMLA, its IRR and the promulgated rules thereon.
Such immediate and definitive foreclosure left SPCMB For exact reference, we cite A.M. No. 05-11-04-SC, Title
with no recourse on how to proceed from what it VIII on Petitions for Freeze Order in the CA which
certain pertinent provisions we adopt and apply belongs shall act on the petition within twenty-four hours
suppletorily as a separate Title on Petitions for Bank after its filing. However, if one member of the Division
Inquiry Order: is not available, the assigned justice and the other justice
present shall act on the petition. If only the assigned
TITLE VIII justice is present, he shall act alone. The action of the
PETITIONS FOR FREEZE ORDER IN THE COURT two justices or of the assigned justice alone, as the case
OF APPEALS may be, shall be forthwith promulgated and thereafter
submitted on the next working day to the absent member
SEC. 43. Applicability. - This Rule shall apply to or members of the Division for ratification, modification
petitions for freeze order in the Court of Appeals. The or recall.
2002 Internal Rules of the Court of Appeals, as amended,
shall apply suppletorily in all other aspects. If the Court is satisfied from the verified allegations of
the petition that there exists probable cause that the
xxxx monetary instrument, property, or proceeds are in any
way related to or involved in any unlawful activity as
SEC. 46. Contents of the petition. - The petition shall contain the defined in Section 3(i) of Republic Act No. 9160, as
following allegations:
amended by Republic Act No. 9194, it shall issue ex
parte a freeze order as hereinafter provided.
(a) The name and address of the respondent;
A specific description with particularity of the If the Court finds no substantial merit in the petition, it
monetary instrument, property or proceeds, their shall dismiss the petition outright, stating the specific
(b) reasons for such dismissal.
location, the name of the owner, holder, lienholder or
possessor, if known;
When the unanimous vote of the three justices of the
The grounds relied upon for the issuance of a freeze Division cannot be obtained, the Presiding Justice or the
(c)
order; and Executive Justice shall designate two justices by raffle
The supporting evidence showing that the subject from among the other justices of the first three divisions
monetary instrument, property, or proceeds are in any to sit temporarily with them forming a special division of
way related to or involved in an unlawful activity as five justices. The concurrence of a majority of such
defined under Section 3(i) of Republic Act No. 9160, special division shall be required for the pronouncement
(d) as amended by Republic Act No. 9194. of a judgment or resolution.
The petition shall be filed in seven clearly legible
SEC. 52. Issuance, form and contents of the freeze order - The
copies and shall be accompanied by clearly legible freeze order shall:
copies of supporting documents duly subscribed
under oath. issue in the name of the Republic of the Philippines
(a)
represented by the Anti-Money Laundering Council;
xxxx
describe with particularity the monetary instrument,
SEC. 49. Confidentiality; prohibited disclosure. - The (b) property or proceeds frozen, as well as the names of
logbook and the entries therein shall be kept strictly their owner or owners; and
confidential and maintained under the responsibility of direct the person or covered institution to
the Presiding Justice or the Executive Justices, as the (c) immediately freeze the subject monetary instrument,
case may be. No person, including Court personnel, shall property or proceeds or its related web of accounts.
disclose, divulge or communicate to anyone directly or
indirectly, in any manner or by any means, the fact of the SEC. 53. Freeze order.
filing of the petition for freeze order, its contents and its
entry in the logbook except to those authorized by the (a) Effectivity; post issuance hearing. - The freeze order
Court. Violation shall constitute contempt of court. shall be effective immediately for a period of twenty
days. Within the twenty-day period, the court shall
xxxx conduct a summary hearing, with notice to the
parties, to determine whether or not to modify or lift
SEC. 51. Action by the Court of Appeals.- All members the freeze order, or extend its effectivity as
of the Division of the Court to which the assigned justice
hereinafter provided. these factual and legal issues ought to be reviewable,
albeit post issuance of the Freeze Order, akin to the
Extension. - On motion of the petitioner filed before provision of an Appeal to the Supreme Court under
the expiration of twenty days from issuance of a Section 57 of A.M. No. 05-11-04-SC.
(b)
freeze order, the court may for good cause extend its
effectivity for a period not exceeding six months. Palpably, the requirement to establish probable cause is
not a useless supposition. To establish and demonstrate
SEC. 54. Notice of freeze order.- The Court shall order the required probable cause before issuance of the bank
that notice of the freeze order be served personally, in the inquiry and the freeze orders is a screw on which the
same manner provided for the service of the asset AMLC's intrusive functions turns. We are hard pressed to
preservation order in Section 14 of this Rule, upon the justify a disallowance to an aggrieved owner of a bank
respondent or any person acting in his behalf and such account to avail of remedies.
covered institution or government agency. The court shall
notify also such party in interest as may have appeared That there are no specific rules governing the bank
before the court. inquiry order does not signify that the CA cannot confirm
to the actual owner of the bank account reportedly being
SEC. 55. Duty of respondent, covered institution or investigated whether it had in fact issued a bank inquiry
government agency upon receipt of freeze order. - Upon order for covering its accounts, of course after the
receipt of a copy of the freeze order, the respondent, issuance of the Freeze Order. Even in Ligot,43 we held
covered institution or government agency shall that by implication, where the law did not specify, the
immediately desist from and not allow any transaction, owner of the "frozen" property may move to lift the
withdrawal, deposit, transfer, removal, conversion, other freeze order issued under Section 10 of the AMLA if he
movement or concealment the account representing, can show that no probable cause exists or the 20-day
involving or relating to the subject monetary instrument, period of the freeze order has already lapsed without any
property, proceeds or its related web of accounts. extension being requested from and granted by the CA.
Drawing a parallel, such a showing of the absence of
SEC. 56. Consolidation with the pending civil forfeiture probable cause ought to be afforded SPCMB.
proceedings - After the post-issuance hearing required in
Section 53, the Court shall forthwith remand the case and Ligot clarifies that "probable cause refers to the
transmit the records to the regional trial court for sufficiency of the relation between an unlawful activity
consolidation with the pending civil forfeiture and the property or monetary instrument which is the
proceeding. focal point of Section 10 of the AMLA, as amended."
This same probable cause is likewise the focal point in a
SEC. 57. Appeal.- Any party aggrieved by the decision or bank inquiry order to further determine whether the
ruling of the court may appeal to the Supreme Court by account under investigation is linked to unlawful
petition for review on certiorari under Rule 45 of the activities and/or money laundering offense. Thus, the
Rules of Court. The appeal shall not stay the enforcement specific applicability of Sections 52, 53, 54 and 57 Title
of the subject decision or final order unless the Supreme VIII of A.M. No. 05-11-04-SC covering the following:
Court directs otherwise. (1) Issuance, Form and Content of the Freeze Order; (2)
Effectivity of the Freeze Order and Post Issuance
A reverse situation affords us a clearer picture of the Hearing thereon; (3) Notice of the Freeze Order; and (4)
arbitrary and total preclusion of SPCMB to question the Appeal from the Freeze Order as separate Rules for
bank inquiry order of the appellate court. In particular, in Petitions to Question the Bank Inquiry Order. And as
an occasion where the appellate court denies the held in Eugenio which now applies to the present Section
AMLC's ex-parte application for a bank inquiry order 11 of the AMLA:
under Section 11, the AMLC can question this denial and
assail such an order by the appellate court before us on Although oriented towards different purposes, the freeze
grave abuse of discretion. Among others, the AMLC can order under Section 10 and the bank inquiry order under
demonstrate that it has established probable cause for its Section 11 are similar in that they are extraordinary
issuance, or if the situation contemplates a denial of an provisional reliefs which the AMLC may avail of to
application for a bank inquiry order into a related effectively combat and prosecute money laundering
account, the AMLC can establish that the account offenses. Crucially, Section 10 uses specific language to
targeted is indeed a related account. The resolution on
authorize an ex parte application for the provisional relief inquiry order is a separate from the freeze order does not
therein, a circumstance absent in Section 11. xxx.44 denote that it cannot be questioned. The opportunity is
still rife for the owner of a bank account to question the
The cited rules cover and approximate the distinction basis for its very inclusion into the investigation and the
made by Eugenio in declaring that the bank inquiry order corresponding freezing of its account in the process.
is not a search warrant, and yet there are instituted
requirements for the issuance of these orders given that As noted in Eugenio, such an allowance accorded the
such is now allowed ex-parte: account holder who wants to contest the issuance of the
order and the actual investigation by the AMLC, does not
The Constitution and the Rules of Court prescribe cast an unreasonable burden since the bank inquiry order
particular requirements attaching to search warrants that has already been issued. Further, allowing for notice to
are not imposed by the AMLA with respect to bank the account holder should not, in any way, compromise
inquiry orders. A constitutional warrant requires that the the integrity of the bank records subject of the inquiry
judge personally examine under oath or affirmation the which remain in the possession and control of the bank.
complainant and the witnesses he may produce, such The account holder so notified remains unable to do
examination being in the form of searching questions and anything to conceal or cleanse his bank account records
answers. Those are impositions which the legislative did of suspicious or anomalous transactions, at least not
not specifically prescribe as to the bank inquiry order without the whole hearted cooperation of the bank,
under the AMLA and we cannot find sufficient legal which inherently has no vested interest to aid the account
basis to apply them to Section 11 of the AMLA. Simply holder in such manner. Rule 10.c.46 of the IRR provides
put, a bank inquiry order is not a search warrant or for Duty of the Covered Institution receiving the Freeze
warrant of arrest as it contemplates a direct object but not Order. Such can likewise be made applicable to covered
the seizure of persons or property. institutions notified of a bank inquiry order.

Even as the Constitution and the Rules of Court impose a On the other hand, a scenario where SPCMB or any
high procedural standard for the determination of account holder under examination later shows that the
probable cause for the issuance of search warrants which bank inquiry order was without the required probable
Congress chose not to prescribe for the bank inquiry cause, the information obtained through the account
order under the AMLA, Congress nonetheless reverts to, and maintains, its confidentiality. In short, any
disallowed ex parte applications for the inquiry order. We and all information obtained therein by the AMLC
can discern that in exchange for these procedural remains confidential, as if no examination or inquiry on
standards normally applied to search warrants, Congress the bank account or investments was undertaken. The
chose instead to legislate a right to notice and a right to foregoing consequence can be added as a Section in the
be heard — characteristics of judicial proceedings which Rules entitled "Effect of absence of probable cause."
are not ex parte. Absent any demonstrable constitutional
infirmity, there is no reason for us to dispute such All told, we affirm the constitutionality of Section 11 of
legislative policy choices.45 the AMLA allowing the ex-parte application by the
AMLC for authority to inquire into, and examine, certain
Thus, as an ex-parte bank inquiry order which Congress bank deposits and investments.
has now specifically allowed, the owner of a bank
account post issuance of the freeze order has an Section 11 of the AMLA providing for the ex-parte bank
opportunity under the Rules to contest the establishment deposit inquiry is constitutionally firm for the reasons
of probable cause. already discussed. The ex-parte inquiry shall be upon
probable cause that the deposits or investments are
Again, we cannot avoid the requirement-limitation nexus related to an unlawful activity as defined in Section 3(i)
in Section 11. As it affords the government authority to of the law or a money laundering offense under Section 4
pursue a legitimate state interest to investigate money of the same law. To effect the limit on the ex-
laundering offenses, such likewise provides the limits for parte inquiry, the petition under oath for authority to
the authority given. Moreover, allowance to the owner of inquire, must, akin to the requirement of a petition for
the bank account, post issuance of the bank inquiry order freeze order enumerated in Title VIII of A.M. No. 05-11-
and the corresponding freeze order, of remedies to 04-SC, contain the name and address of the respondent;
question the order, will not forestall and waylay the the grounds relied upon for the issuance of the order of
government's pursuit of money launderers. That the bank inquiry; and the supporting evidence that the subject
bank deposit are in any way related to or involved in an In City of Manila v. Laguio, Jr.,1 the Court affirmed the
unlawful activity. nullification of a city ordinance barring the operation of
motels and inns, among other establishments, within the
If the CA finds no substantial merit in the petition, it shall Ermita-Malate area. The petition at bar assails a
dismiss the petition outright stating the specific reasons similarly-motivated city ordinance that prohibits those
for such denial. If found meritorious and there is a same establishments from offering short-time admission,
subsequent petition for freeze order, the proceedings shall as well as pro-rated or "wash up" rates for such
be governed by the existing Rules on Petitions for Freeze abbreviated stays. Our earlier decision tested the city
Order in the CA. From the issuance of a freeze order, the ordinance against our sacred constitutional rights to
party aggrieved by the ruling of the court may appeal to liberty, due process and equal protection of law. The
the Supreme Court by petition for review same parameters apply to the present petition.
on certiorari under Rule 45 of the Rules of Court raising
all pertinent questions of law and issues, including the This Petition2 under Rule 45 of the Revised Rules on
propriety of the issuance of a bank inquiry order. The Civil Procedure, which seeks the reversal of the
appeal shall not stay the enforcement of the subject Decision3 in C.A.-G.R. S.P. No. 33316 of the Court of
decision or final order unless the Supreme Court directs Appeals, challenges the validity of Manila City
otherwise. The CA is directed to draft rules based on the Ordinance No. 7774 entitled, "An Ordinance Prohibiting
foregoing discussions to complement the existing A.M. Short-Time Admission, Short-Time Admission Rates,
No. 05-11-04-SC Rule of Procedure in Cases of Civil and Wash-Up Rate Schemes in Hotels, Motels, Inns,
Forfeiture, Asset Preservation, and Freezing of Monetary Lodging Houses, Pension Houses, and Similar
Instrument, Property, or Proceeds Representing, Establishments in the City of Manila" (the Ordinance).
Involving, or Relating to an Unlawful Activity or Money
Laundering Offense under Republic Act No. 9160, as I.
Amended for submission to the Committee on the
Revision of the Rules of Court and eventual approval and The facts are as follows:
promulgation of the Court en banc.
On December 3, 1992, City Mayor Alfredo S. Lim
WHEREFORE, the petition is DENIED. Section 11 of (Mayor Lim) signed into law the Ordinance.4 The
Republic Act No. 9160, as amended, is Ordinance is reproduced in full, hereunder:
declared VALID and CONSTITUTIONAL.
SECTION 1. Declaration of Policy. It is hereby the
SO ORDERED. declared policy of the City Government to protect the
best interest, health and welfare, and the morality of its
G.R. No. 122846 January 20, 2009 constituents in general and the youth in particular.

WHITE LIGHT CORPORATION, TITANIUM SEC. 2. Title. This ordinance shall be known as "An
CORPORATION and STA. MESA TOURIST & Ordinance" prohibiting short time admission in hotels,
DEVELOPMENT CORPORATION, Petitioners, motels, lodging houses, pension houses and similar
vs. establishments in the City of Manila.
CITY OF MANILA, represented by DE CASTRO,
MAYOR ALFREDO S. LIM, Respondent. SEC. 3. Pursuant to the above policy, short-time
admission and rate [sic], wash-up rate or other similarly
DECISION concocted terms, are hereby prohibited in hotels, motels,
inns, lodging houses, pension houses and similar
Tinga, J.: establishments in the City of Manila.

With another city ordinance of Manila also principally SEC. 4. Definition of Term[s]. Short-time admission
involving the tourist district as subject, the Court is shall mean admittance and charging of room rate for less
confronted anew with the incessant clash between than twelve (12) hours at any given time or the renting
government power and individual liberty in tandem with out of rooms more than twice a day or any other term
the archetypal tension between law and morality. that may be concocted by owners or managers of said
establishments but would mean the same or would bear
the same meaning.
SEC. 5. Penalty Clause. Any person or corporation who On December 23, 1992, the RTC granted the motion to
shall violate any provision of this ordinance shall upon intervene.10 The RTC also notified the Solicitor General
conviction thereof be punished by a fine of Five of the proceedings pursuant to then Rule 64, Section 4 of
Thousand (₱5,000.00) Pesos or imprisonment for a the Rules of Court. On the same date, MTDC moved to
period of not exceeding one (1) year or both such fine withdraw as plaintiff.11
and imprisonment at the discretion of the court; Provided,
That in case of [a] juridical person, the president, the On December 28, 1992, the RTC granted MTDC's
manager, or the persons in charge of the operation thereof motion to withdraw.12 The RTC issued a TRO on January
shall be liable: Provided, further, That in case of 14, 1993, directing the City to cease and desist from
subsequent conviction for the same offense, the business enforcing the Ordinance.13 The City filed an Answer
license of the guilty party shall automatically be dated January 22, 1993 alleging that the Ordinance is a
cancelled. legitimate exercise of police power.14

SEC. 6. Repealing Clause. Any or all provisions of City On February 8, 1993, the RTC issued a writ of
ordinances not consistent with or contrary to this measure preliminary injunction ordering the city to desist from the
or any portion hereof are hereby deemed repealed. enforcement of the Ordinance.15 A month later, on March
8, 1993, the Solicitor General filed his Comment arguing
SEC. 7. Effectivity. This ordinance shall take effect that the Ordinance is constitutional.
immediately upon approval.
During the pre-trial conference, the WLC, TC and STDC
Enacted by the city Council of Manila at its regular agreed to submit the case for decision without trial as the
session today, November 10, 1992. case involved a purely legal question.16 On October 20,
1993, the RTC rendered a decision declaring the
Approved by His Honor, the Mayor on December 3, Ordinance null and void. The dispositive portion of the
1992. decision reads:

On December 15, 1992, the Malate Tourist and WHEREFORE, in view of all the foregoing, [O]rdinance
Development Corporation (MTDC) filed a complaint for No. 7774 of the City of Manila is hereby declared null
declaratory relief with prayer for a writ of preliminary and void.
injunction and/or temporary restraining order
( TRO)5 with the Regional Trial Court (RTC) of Manila, Accordingly, the preliminary injunction heretofor issued
Branch 9 impleading as defendant, herein respondent is hereby made permanent.
City of Manila (the City) represented by Mayor
Lim.6 MTDC prayed that the Ordinance, insofar as it SO ORDERED.17
includes motels and inns as among its prohibited
establishments, be declared invalid and unconstitutional. The RTC noted that the ordinance "strikes at the personal
MTDC claimed that as owner and operator of the liberty of the individual guaranteed and jealously
Victoria Court in Malate, Manila it was authorized by guarded by the Constitution."18 Reference was made to
Presidential Decree (P.D.) No. 259 to admit customers on the provisions of the Constitution encouraging private
a short time basis as well as to charge customers wash up enterprises and the incentive to needed investment, as
rates for stays of only three hours. well as the right to operate economic enterprises. Finally,
from the observation that the illicit relationships the
On December 21, 1992, petitioners White Light Ordinance sought to dissuade could nonetheless be
Corporation (WLC), Titanium Corporation (TC) and Sta. consummated by simply paying for a 12-hour stay, the
Mesa Tourist and Development Corporation (STDC) RTC likened the law to the ordinance annulled in Ynot v.
filed a motion to intervene and to admit attached Intermediate Appellate Court,19 where the legitimate
complaint-in-intervention7 on the ground that the purpose of preventing indiscriminate slaughter of
Ordinance directly affects their business interests as carabaos was sought to be effected through an inter-
operators of drive-in-hotels and motels in Manila. 8 The province ban on the transport of carabaos and carabeef.
three companies are components of the Anito Group of
Companies which owns and operates several hotels and The City later filed a petition for review
motels in Metro Manila.9 on certiorari with the Supreme Court.20 The petition was
docketed as G.R. No. 112471. However in a resolution
dated January 26, 1994, the Court treated the petition as a TC, WLC and STDC come to this Court via petition for
petition for certiorari and referred the petition to the review on certiorari.25 In their petition and Memorandum,
Court of Appeals.21 petitioners in essence repeat the assertions they made
before the Court of Appeals. They contend that the
Before the Court of Appeals, the City asserted that the assailed Ordinance is an invalid exercise of police power.
Ordinance is a valid exercise of police power pursuant to
Section 458 (4)(iv) of the Local Government Code which II.
confers on cities, among other local government units,
the power: We must address the threshold issue of petitioners’
standing. Petitioners allege that as owners of
[To] regulate the establishment, operation and establishments offering "wash-up" rates, their business is
maintenance of cafes, restaurants, beerhouses, hotels, being unlawfully interfered with by the Ordinance.
motels, inns, pension houses, lodging houses and other However, petitioners also allege that the equal protection
similar establishments, including tourist guides and rights of their clients are also being interfered with. Thus,
transports.22 the crux of the matter is whether or not these
establishments have the requisite standing to plead for
The Ordinance, it is argued, is also a valid exercise of the protection of their patrons' equal protection rights.
power of the City under Article III, Section 18(kk) of the
Revised Manila Charter, thus: Standing or locus standi is the ability of a party to
demonstrate to the court sufficient connection to and
"to enact all ordinances it may deem necessary and harm from the law or action challenged to support that
proper for the sanitation and safety, the furtherance of the party's participation in the case. More importantly, the
prosperity and the promotion of the morality, peace, good doctrine of standing is built on the principle of separation
order, comfort, convenience and general welfare of the of powers,26 sparing as it does unnecessary interference
city and its inhabitants, and such others as be necessary or invalidation by the judicial branch of the actions
to carry into effect and discharge the powers and duties rendered by its co-equal branches of government.
conferred by this Chapter; and to fix penalties for the
violation of ordinances which shall not exceed two The requirement of standing is a core component of the
hundred pesos fine or six months imprisonment, or both judicial system derived directly from the
such fine and imprisonment for a single offense.23 27
Constitution. The constitutional component of standing
doctrine incorporates concepts which concededly are not
Petitioners argued that the Ordinance is unconstitutional susceptible of precise definition.28 In this jurisdiction, the
and void since it violates the right to privacy and the extancy of "a direct and personal interest" presents the
freedom of movement; it is an invalid exercise of police most obvious cause, as well as the standard test for a
power; and it is an unreasonable and oppressive petitioner's standing.29 In a similar vein, the United States
interference in their business. Supreme Court reviewed and elaborated on the meaning
of the three constitutional standing requirements of
The Court of Appeals reversed the decision of the RTC injury, causation, and redressability in Allen v. Wright.30
and affirmed the constitutionality of the
Ordinance.24 First, it held that the Ordinance did not Nonetheless, the general rules on standing admit of
violate the right to privacy or the freedom of movement, several exceptions such as the overbreadth doctrine,
as it only penalizes the owners or operators of taxpayer suits, third party standing and, especially in the
establishments that admit individuals for short time stays. Philippines, the doctrine of transcendental importance.31
Second, the virtually limitless reach of police power is
only constrained by having a lawful object obtained For this particular set of facts, the concept of third party
through a lawful method. The lawful objective of the standing as an exception and the overbreadth doctrine are
Ordinance is satisfied since it aims to curb immoral appropriate. In Powers v. Ohio,32 the United States
activities. There is a lawful method since the Supreme Court wrote that: "We have recognized the right
establishments are still allowed to operate. Third, the of litigants to bring actions on behalf of third parties,
adverse effect on the establishments is justified by the provided three important criteria are satisfied: the litigant
well-being of its constituents in general. Finally, as held must have suffered an ‘injury-in-fact,’ thus giving him or
in Ermita-Malate Motel Operators Association v. City her a "sufficiently concrete interest" in the outcome of
Mayor of Manila, liberty is regulated by law. the issue in dispute; the litigant must have a close
relation to the third party; and there must exist some Assuming arguendo that petitioners do not have a
hindrance to the third party's ability to protect his or her relationship with their patrons for the former to assert the
own interests."33 Herein, it is clear that the business rights of the latter, the overbreadth doctrine comes into
interests of the petitioners are likewise injured by the play. In overbreadth analysis, challengers to government
Ordinance. They rely on the patronage of their customers action are in effect permitted to raise the rights of third
for their continued viability which appears to be parties. Generally applied to statutes infringing on the
threatened by the enforcement of the Ordinance. The freedom of speech, the overbreadth doctrine applies
relative silence in constitutional litigation of such special when a statute needlessly restrains even constitutionally
interest groups in our nation such as the American Civil guaranteed rights.39 In this case, the petitioners claim that
Liberties Union in the United States may also be the Ordinance makes a sweeping intrusion into the right
construed as a hindrance for customers to bring suit.34 to liberty of their clients. We can see that based on the
allegations in the petition, the Ordinance suffers from
American jurisprudence is replete with examples where overbreadth.
parties-in-interest were allowed standing to advocate or
invoke the fundamental due process or equal protection We thus recognize that the petitioners have a right to
claims of other persons or classes of persons injured by assert the constitutional rights of their clients to patronize
state action. In Griswold v. Connecticut,35 the United their establishments for a "wash-rate" time frame.
States Supreme Court held that physicians had standing
to challenge a reproductive health statute that would III.
penalize them as accessories as well as to plead the
constitutional protections available to their patients. The To students of jurisprudence, the facts of this case will
Court held that: recall to mind not only the recent City of Manila ruling,
but our 1967 decision in Ermita-Malate Hotel and Motel
"The rights of husband and wife, pressed here, are likely Operations Association, Inc., v. Hon. City Mayor of
to be diluted or adversely affected unless those rights are Manila.40Ermita-Malate concerned the City ordinance
considered in a suit involving those who have this kind of requiring patrons to fill up a prescribed form stating
confidential relation to them."36 personal information such as name, gender, nationality,
age, address and occupation before they could be
An even more analogous example may be found in Craig admitted to a motel, hotel or lodging house. This earlier
v. Boren,37 wherein the United States Supreme Court held ordinance was precisely enacted to minimize certain
that a licensed beverage vendor has standing to raise the practices deemed harmful to public morals. A purpose
equal protection claim of a male customer challenging a similar to the annulled ordinance in City of Manila which
statutory scheme prohibiting the sale of beer to males sought a blanket ban on motels, inns and similar
under the age of 21 and to females under the age of 18. establishments in the Ermita-Malate area.
The United States High Court explained that the vendors
had standing "by acting as advocates of the rights of third
parties who seek access to their market or function."38
However, the constitutionality of the
ordinance in Ermita-Malate was sustained
by the Court.
justification for numerous equal protection questions,
The common thread that statute; (2) must not be and varied actions by the the courts are naturally
runs through those unfair or oppressive; (3) State. These range from inhibited by a due
decisions and the case at must not be partial or the regulation of dance deference to the co-equal
bar goes beyond the discriminatory; (4) must halls,44 movie branches of government as
singularity of the not prohibit but may theaters,45 gas they exercise their political
localities covered under regulate trade; (5) must stations46 and functions. But when we
the respective be general and consistent cockpits.47 The awesome are compelled to nullify
ordinances. All three with public policy; and scope of police power is executive or legislative
ordinances were enacted (6) must not be best demonstrated by the actions, yet another form
41
with a view of unreasonable. fact that in its hundred or of caution emerges. If the
regulating public morals so years of presence in Court were animated by
including particular The Ordinance prohibits our nation’s legal system, the same passing fancies
illicit activity in two specific and distinct its use has rarely been or turbulent emotions that
transient lodging business practices, denied. motivate many political
establishments. This namely wash rate decisions, judicial integrity
could be described as admissions and renting The apparent goal of the is compromised by any
the middle case, wherein out a room more than Ordinance is to minimize perception that the
there is no wholesale twice a day. The ban is if not eliminate the use of judiciary is merely the
ban on motels and hotels evidently sought to be the covered third political branch of
but the services offered rooted in the police establishments for illicit government. We derive
by these establishments power as conferred on sex, prostitution, drug use our respect and good
have been severely local government units and alike. These goals, by standing in the annals of
restricted. At its core, by the Local Government themselves, are history by acting as
this is another case Code through such unimpeachable and judicious and neutral
about the extent to implements as the certainly fall within the arbiters of the rule of law,
which the State can general welfare clause. ambit of the police power and there is no surer way
intrude into and regulate of the State. Yet the to that end than through
the lives of its citizens. A. desirability of these ends the development of
do not sanctify any and rigorous and sophisticated
The test of a valid Police power, while all means for their legal standards through
ordinance is well incapable of an exact achievement. Those which the courts analyze
established. A long line definition, has been means must align with the most fundamental and
of decisions purposely veiled in the Constitution, and our far-reaching constitutional
including City of general terms to emerging sophisticated questions of the day.
Manila has held that for underscore its analysis of its guarantees
an ordinance to be valid, comprehensiveness to to the people. The Bill of B.
it must not only be meet all exigencies and Rights stands as a rebuke
within the corporate provide enough room for to the seductive theory of The primary constitutional
powers of the local an efficient and flexible Macchiavelli, and, question that confronts us
government unit to response as the sometimes even, the is one of due process, as
enact and pass according conditions political majorities guaranteed under Section
to the procedure warrant.42 Police power is animated by his 1, Article III of the
prescribed by law, it based upon the concept cynicism. Constitution. Due process
must also conform to the of necessity of the State evades a precise
48
following substantive and its corresponding Even as we design the definition. The purpose
requirements: (1) must right to protect itself and precedents that establish of the guaranty is to
not contravene the its people.43 Police power the framework for prevent arbitrary
Constitution or any has been used as analysis of due process or governmental
encroachment against Substantive due process tested when assessed with We ourselves have often
the life, liberty and completes the protection the evolved footnote 4 applied the rational basis
property of individuals. envisioned by the due test laid down by the U.S. test mainly in analysis of
The due process process clause. It inquires Supreme Court in U.S. v. equal protection
guaranty serves as a whether the government Carolene challenges.57 Using the
protection against has sufficient justification Products.51 Footnote 4 of rational basis examination,
arbitrary regulation or for depriving a person of the Carolene Products laws or ordinances are
seizure. Even life, liberty, or property.50 case acknowledged that upheld if they rationally
corporations and the judiciary would defer further a legitimate
partnerships are The question of to the legislature unless governmental
protected by the substantive due process, there is a discrimination interest.58 Under
guaranty insofar as their moreso than most other against a "discrete and intermediate review,
property is concerned. fields of law, has insular" minority or governmental interest is
reflected dynamism in infringement of a extensively examined and
The due process progressive legal thought "fundamental the availability of less
guaranty has tied with the expanded right."52 Consequently, restrictive measures is
traditionally been acceptance of two standards of judicial considered.59 Applying
interpreted as imposing fundamental freedoms. review were established: strict scrutiny, the focus is
two related but distinct Police power, strict scrutiny for laws on the presence of
restrictions on traditionally awesome as dealing with freedom of compelling, rather than
government, "procedural it may be, is now the mind or restricting the substantial, governmental
due process" and confronted with a more political process, and the interest and on the absence
"substantive due rigorous level of analysis rational basis standard of of less restrictive means
process." Procedural due before it can be upheld. review for economic for achieving that interest.
process refers to the The vitality though of legislation.
procedures that the constitutional due process In terms of judicial review
government must follow has not been predicated A third standard, of statutes or ordinances,
before it deprives a on the frequency with denominated as strict scrutiny refers to the
person of life, liberty, or which it has been utilized heightened or immediate standard for determining
property.49 Procedural to achieve a liberal result scrutiny, was later the quality and the amount
due process concerns for, after all, the adopted by the U.S. of governmental interest
itself with government libertarian ends should Supreme Court for brought to justify the
action adhering to the sometimes yield to the evaluating classifications regulation of fundamental
established process prerogatives of the State. based on gender53 and freedoms.60 Strict scrutiny
when it makes an Instead, the due process legitimacy.54 Immediate is used today to test the
intrusion into the private clause has acquired scrutiny was adopted by validity of laws dealing
sphere. Examples range potency because of the the U.S. Supreme Court with the regulation of
from the form of notice sophisticated in Craig,55 after the Court speech, gender, or race as
given to the level of methodology that has declined to do so in Reed well as other fundamental
formality of a hearing. emerged to determine the v. Reed.56 While the test rights as expansion from
proper metes and bounds may have first been its earlier applications to
If due process were for its application. articulated in equal equal protection.61 The
confined solely to its protection analysis, it has United States Supreme
procedural aspects, there C. in the United States since Court has expanded the
would arise absurd been applied in all scope of strict scrutiny to
situation of arbitrary The general test of the substantive due process protect fundamental rights
government action, validity of an ordinance cases as well. such as suffrage,62 judicial
provided the proper on substantive due access63and interstate
formalities are followed. process grounds is best travel.64
If we were to take the exercise any day without facilities with which he Constitution for a free
myopic view that an the impairing awareness has been endowed by his people, there can be no
Ordinance should be of their constitutional Creator, subject only to doubt that the meaning of
analyzed strictly as to its consequence – that such restraint as are "liberty" must be broad
effect only on the accurately reflect the necessary for the indeed.67 [Citations
65
petitioners at bar, then it degree of liberty enjoyed common welfare."[ ] In omitted]
would seem that the by the people. Liberty, as accordance with this
only restraint imposed integrally incorporated as case, the rights of the It cannot be denied that the
by the law which we are a fundamental right in the citizen to be free to use primary animus behind the
capacitated to act upon Constitution, is not a Ten his faculties in all lawful ordinance is the
is the injury to property Commandments-style ways; to live and work curtailment of sexual
sustained by the enumeration of what may where he will; to earn his behavior. The City asserts
petitioners, an injury or what may not be done; livelihood by any lawful before this Court that the
that would warrant the but rather an atmosphere calling; and to pursue any subject establishments
application of the most of freedom where the avocation are all deemed "have gained notoriety as
deferential standard – people do not feel embraced in the concept venue of ‘prostitution,
the rational basis test. labored under a Big of liberty.[66] adultery and fornications’
Yet as earlier stated, we Brother presence as they in Manila since they
recognize the capacity interact with each other, The U.S. Supreme Court ‘provide the necessary
of the petitioners to their society and nature, in the case of Roth v. atmosphere for clandestine
invoke as well the in a manner innately Board of Regents, sought entry, presence and exit
constitutional rights of understood by them as to clarify the meaning of and thus became the ‘ideal
their patrons – those inherent, without doing "liberty." It said: haven for prostitutes and
persons who would be harm or injury to others. thrill-seekers.’"68 Whether
deprived of availing While the Court has not or not this depiction of a
short time access or D. attempted to define with mise-en-scene of vice is
wash-up rates to the exactness the liberty . . . accurate, it cannot be
lodging establishments The rights at stake herein guaranteed [by the Fifth denied that legitimate
in question. fall within the same and Fourteenth sexual behavior among
fundamental rights to Amendments], the term willing married or
Viewed cynically, one liberty which we upheld denotes not merely consenting single adults
might say that the in City of Manila v. Hon. freedom from bodily which is constitutionally
infringed rights of these Laguio, Jr. We restraint but also the right protected69 will be
customers were are expounded on that most of the individual to curtailed as well, as it was
trivial since they seem primordial of rights, thus: contract, to engage in any in the City of Manila case.
shorn of political of the common Our holding therein retains
consequence. Liberty as guaranteed by occupations of life, to significance for our
Concededly, these are the Constitution was acquire useful purposes:
not the sort of cherished defined by Justice knowledge, to marry,
rights that, when Malcolm to include "the establish a home and The concept of liberty
proscribed, would impel right to exist and the right bring up children, to compels respect for the
the people to tear up to be free from arbitrary worship God according to individual whose claim to
their cedulas. Still, the restraint or servitude. The the dictates of his own privacy and interference
Bill of Rights does not term cannot be dwarfed conscience, and generally demands respect. As the
shelter gravitas alone. into mere freedom from to enjoy those privileges case of Morfe v. Mutuc,
Indeed, it is those physical restraint of the long recognized . . . as borrowing the words of
"trivial" yet fundamental person of the citizen, but essential to the orderly Laski, so very aptly stated:
freedoms – which the is deemed to embrace the pursuit of happiness by
people reflexively right of man to enjoy the free men. In a
Man is one among We cannot discount other with private rights and candidates, this Ordinance
many, obstinately legitimate activities the means must be is a blunt and heavy
refusing reduction to which the Ordinance reasonably necessary for instrument.75 The
unity. His separateness, would proscribe or the accomplishment of Ordinance makes no
his isolation, are impair. There are very the purpose and not distinction between places
indefeasible; indeed, legitimate uses for a wash unduly oppressive of frequented by patrons
they are so fundamental rate or renting the room private rights.71 It must engaged in illicit activities
that they are the basis on out for more than twice a also be evident that no and patrons engaged in
which his civic day. Entire families are other alternative for the legitimate actions. Thus it
obligations are built. He known to choose pass the accomplishment of the prevents legitimate use of
cannot abandon the time in a motel or hotel purpose less intrusive of places where illicit
consequences of his whilst the power is private rights can work. activities are rare or even
isolation, which are, momentarily out in their More importantly, a unheard of. A plain
broadly speaking, that homes. In transit reasonable relation must reading of section 3 of the
his experience is private, passengers who wish to exist between the Ordinance shows it makes
and the will built out of wash up and rest between purposes of the measure no classification of places
that experience personal trips have a legitimate and the means employed of lodging, thus deems
to himself. If he purpose for abbreviated for its accomplishment, them all susceptible to
surrenders his will to stays in motels or hotels. for even under the guise illicit patronage and
others, he surrenders Indeed any person or of protecting the public subject them without
himself. If his will is set groups of persons in need interest, personal rights exception to the
by the will of others, he of comfortable private and those pertaining to unjustified prohibition.
ceases to be a master of spaces for a span of a few private property will not
himself. I cannot believe hours with purposes other be permitted to be The Court has professed
that a man no longer a than having sex or using arbitrarily invaded.72 its deep sentiment and
master of himself is in illegal drugs can tenderness of the Ermita-
any real sense free. legitimately look to Lacking a concurrence of Malate area, its longtime
staying in a motel or these requisites, the home,76 and it is skeptical
Indeed, the right to hotel as a convenient police measure shall be of those who wish to
privacy as a alternative. struck down as an depict our capital city –
constitutional right was arbitrary intrusion into the Pearl of the Orient – as
recognized in Morfe, the E. private rights. As held in a modern-day Sodom or
invasion of which Morfe v. Mutuc, the Gomorrah for the Third
should be justified by a That the Ordinance exercise of police power World set. Those still
compelling state prevents the lawful uses is subject to judicial steeped in Nick Joaquin-
interest. Morfe accorded of a wash rate depriving review when life, liberty dreams of the grandeur of
recognition to the right patrons of a product and or property is Old Manila will have to
to privacy independently the petitioners of affected.73 However, this accept that Manila like all
of its identification with lucrative business ties in is not in any way meant evolving big cities, will
liberty; in itself it is with another to take it away from the have its problems. Urban
fully deserving of constitutional requisite vastness of State police decay is a fact of mega
constitutional for the legitimacy of the power whose exercise cities such as Manila, and
protection. Ordinance as a police enjoys the presumption of vice is a common problem
Governmental powers power measure. It must validity.74 confronted by the modern
should stop short of appear that the interests metropolis wherever in the
certain intrusions into of the public generally, as Similar to the Comelec world. The solution to
the personal life of the distinguished from those resolution requiring such perceived decay is
citizen.70 of a particular class, newspapers to donate not to prevent legitimate
require an interference advertising space to businesses from offering a
legitimate product. motel rooms and even of public morality is a right-wrong distinction,
Rather, cities revive apartments. function of the State is as but also the advent of
themselves by offering old as Aristotle.78 The fundamental liberties as
incentives for new IV. advancement of moral the key to the enjoyment
businesses to sprout up relativism as a school of of life to the fullest. Our
thus attracting the We reiterate that philosophy does not de- democracy is
dynamism of individuals individual rights may be legitimize the role of distinguished from non-
that would bring a new adversely affected only to morality in law, even if it free societies not with any
grandeur to Manila. the extent that may fairly may foster wider debate more extensive elaboration
be required by the on which particular on our part of what is
The behavior which the legitimate demands of behavior to penalize. It is moral and immoral, but
Ordinance seeks to public interest or public conceivable that a society from our recognition that
curtail is in fact already welfare. The State is a with relatively little the individual liberty to
prohibited and could in leviathan that must be shared morality among its make the choices in our
fact be diminished restrained from citizens could be lives is innate, and
simply by applying needlessly intruding into functional so long as the protected by the State.
existing laws. Less the lives of its citizens. pursuit of sharply variant Independent and fair-
intrusive measures such However well- moral perspectives yields minded judges themselves
as curbing the intentioned the Ordinance an adequate are under a moral duty to
proliferation of may be, it is in effect an accommodation of uphold the Constitution as
prostitutes and drug arbitrary and whimsical different interests.79 the embodiment of the rule
dealers through active intrusion into the rights of law, by reason of their
police work would be of the establishments as To be candid about it, the expression of consent to
more effective in easing well as their patrons. The oft-quoted American do so when they take the
the situation. So would Ordinance needlessly maxim that "you cannot oath of office, and because
the strict enforcement of restrains the operation of legislate morality" is they are entrusted by the
existing laws and the businesses of the ultimately illegitimate as people to uphold the law.81
regulations penalizing petitioners as well as a matter of law, since as
prostitution and drug restricting the rights of explained by Calabresi, Even as the
use. These measures their patrons without that phrase is more implementation of moral
would have minimal sufficient justification. accurately interpreted as norms remains an
intrusion on the The Ordinance rashly meaning that efforts to indispensable complement
businesses of the equates wash rates and legislate morality will fail to governance, that
petitioners and other renting out a room more if they are widely at prerogative is hardly
legitimate merchants. than twice a day with variance with public absolute, especially in the
Further, it is apparent immorality without attitudes about right and face of the norms of due
that the Ordinance can accommodating wrong.80 Our penal laws, process of liberty. And
easily be circumvented innocuous intentions. for one, are founded on while the tension may
by merely paying the age-old moral traditions, often be left to the courts
whole day rate without The promotion of public and as long as there are to relieve, it is possible for
any hindrance to those welfare and a sense of widely accepted the government to avoid
engaged in illicit morality among citizens distinctions between right the constitutional conflict
activities. Moreover, deserves the full and wrong, they will by employing more
drug dealers and endorsement of the remain so oriented. judicious, less drastic
prostitutes can in fact judiciary provided that means to promote
collect "wash rates" such measures do not Yet the continuing morality.
from their clientele by trample rights this Court progression of the human
charging their customers is sworn to protect.77 The story has seen not only WHEREFORE, the
a portion of the rent for notion that the promotion the acceptance of the Petition is GRANTED.
The Decision of the
Court of Appeals
is REVERSED, and the
Decision of the
Regional Trial Court of
Manila, Branch 9,
is REINSTATED.
Ordinance No. 7774 is
hereby declared
UNCONSTITUTIONA
L. No pronouncement as
to costs.

SO ORDERED.