Manila Prince Hotel v.

GSIS (1997)
G.R. No. 122156 | 1997-02-03

Facts

The controversy arose when Government Service Insurance System (GSIS), pursuant to the
privatization program of the Philippine Government under Proclamation No. 50, decided to sell
through public bidding 30% to 51% of the issued and outstanding shares of Manila Hotel
Corporation (MHC). In a close bidding, only two bidders participated: Manila Prince Hotel
Corporation, a Filipino corporation, which offered to buy 51% of the MHC at P41.58 per share,
and Renong Berhad, a Malaysian firm, with ITT-Sheraton as its hotel operator, which bid for the
same number of shares at P44.00 per share, or P2.42 more than the bid of petitioner.

Pending the declaration of Renong Berhad as the winning bidder, Manila Prince matched the
bid price of P44.00 per share tendered by Renong Berhad.

Perhaps apprehensive that the sale will consummated with Renong Berhad, Manila Prince
came to this Court on prohibition and mandamus.

Manila Prince invokes Sec. 10, second paragraph, Art. XII, of the 1987 Constitution and submits
that the Manila Hotel has been identified with the Filipino nation and has practically become a
historical monument of Philippine heritage and culture. it has become a part of the national
patrimony. Petitioner also argues that since 51% of the shares of the MHC carries with it the
ownership of the business of the hotel which is owned by GSIS, a government-owned and
controlled corporation, the hotel business of GSIS being a part of the tourism industry is
unquestionably a part of the national economy.

Held:

Constitutional Supremacy

1. A constitution is a system of fundamental laws for the governance and administration of a

nation. It is supreme, imperious, absolute and unalterable except by the authority from which it
emanates.
2. Under the doctrine of constitutional supremacy, if a law or contract violates any norm of the
constitution that law or contract whether promulgated by the legislative or by the executive
branch or entered into by private persons for private purposes is null and void and without any
force and effect.

3. Since the Constitution is the fundamental, paramount and supreme law of the nation, it
is deemed written in every statute and contract.

Self-executory provisions

4. A constitutional provision is self-executing if the nature and extent of the right conferred and
the liability imposed are fixed by the constitution itself, so that they can be determined by an
examination and construction of its terms, and there is no language indicating that the subject is
referred to the legislature for action.

5. A provision which lays down a general principle, such as those found in Art. II of the 1987
Constitution is usually not self-executing. But a provision which is complete in itself and
becomes operative without the aid of supplementary or enabling legislation, or that which
supplies sufficient rule by means of which the right it grants may be enjoyed or protected, is self-
executing.

6. Unless it is expressly provided that a legislative act is necessary to enforce a constitutional

mandate, the presumption now is that all provisions of the constitution are self- executing.

7. The omission from a constitution of any express provision for a remedy for enforcing a right or
liability is not necessarily an indication that it was not intended to be self-executing.

8. The rule is that a self-executing provision of the constitution does not necessarily exhaust
legislative power on the subject, but any legislation must be in harmony with the constitution,
further the exercise of constitutional right and make it more available.

9. A constitutional provision may be self-executing in one part and non-self-executing in

another.
National patrimony

10. In its plain and ordinary meaning, the term patrimony pertains to heritage. When the
Constitution speaks of “national patrimony,” it refers not only to the natural resources of the
Philippines but also to the cultural heritage of the Filipinos.

11. Nationalism is inherent in the very concept of the Philippines being a democratic and
republican state, with sovereignty residing in the Filipino people and from whom all government
authority emanates. Any interpretation of any constitutional provision must adhere to such basic
concept. Protection of foreign investments, while laudible, is merely a policy. It cannot override
the demands of nationalism.

12. Manila Hotel has become a landmark—a living testimonial of Philippine heritage. It has
become part of our national economy and patrimony. While it was restrictively an American
hotel when it first opened in 1912, it immediately evolved to be truly Filipino. Formerly a
concourse for the elite, it has since then become the venue of various significant events which
have shaped Philippine history.

Filipino First policy is Self-Executory

13. Sec. 10, second par., Art. XII of the 1987 Constitution is a mandatory, positive command
which is complete in itself and which needs no further guidelines or implementing laws or rules
for its enforcement.

14. When the Constitution mandates that in the grant of rights, privileges, and concessions
covering national economy and patrimony, the State shall give preference to qualified Filipinos,
it means just that—qualified Filipinos shall be preferred.

Filipino First Policy

15. The Filipino First Policy is a product of Philippine nationalism, embodied in the 1987
Constitution not merely to be used as a guideline for future legislation but primarily to be
enforced—so must it be enforced.
16. The term “qualified Filipinos” as used in the Constitution also includes corporations at least
60% of which is owned by Filipinos. This is very clear from the proceedings of the 1986
Constitutional Commission.

17. Since the Filipino First Policy provision of the Constitution bestows preference on qualified
Filipinos, the mere tending of the highest bid is not an assurance that the highest bidder will be
declared the winning bidder

18. Where a foreign firm submits the highest bid in a public bidding concerning the grant of
rights, privileges and concessions covering the national economy and patrimony, thereby
exceeding the bid of a Filipino, there is no question that the Filipino will have to be allowed to
match the bid of the foreign entity.

19. Any person desiring to do business in the Philippines or with any of its agencies or
instrumentalities is presumed to know his rights and obligations under the Constitution and the
laws of the forum.

State action

20. In constitutional jurisprudence, the acts of a person distinct from the government are
considered “state action” covered by the Constitution:

(1) when the activity it engages in is a “public function”;

(2) when the government is so significantly involved with the private actor as to make the
government responsible for his action; and,

(3) when the government has approved or authorized the action.

21. When the Constitution addresses the State it refers not only to the people but also to the
government as elements of the State.
22. Government is composed of three (3) divisions of power—legislative, executive and judicial.
Accordingly, a constitutional mandate directed to the State is correspondingly directed to the
three (3) branches of government.
Tanada vs. Angara (1997)
G.R. No. 118295 | 1997-05-02

Subject:

Justiciable Controversy, Special Civil Actions, Constitutional Principles and State Policies,
“Filipino First” Policy, Sovereignty, Doctrine of Incorporation, Treaties, TRIPS Agreement,
Separation of Powers, Ratification by the Senate

Facts:

Secretary Navarro of the Department of Trade and Industry, representing the Philippines,
signed the Final Act Embodying the Results of the Uruguay Round of Multilateral Negotiations.
As a result, the Philippines agreed to submit the World Trade organization (WTO) Agreement
for approval with the authorities of the country and adoption of the same. The President of the
Philippines certified the necessity of the immediate adoption a resolution for the ratification of
the WTO.

On December 14, 1994, the Philippine Senate adopted Resolution No. 97, thereby concurring in
the ratification by the President of the WTO Agreement.

Petitioners filed this petition, questioning the constitutionality of the ratification by the Senate.
Petitioners allege that the WTO Agreement contravenes the mandate of the 1987 Constitution,
specifically Art, 11 Sec 19, and Art 12, sec 10. They contended that the agreement places
nationals and products of member countries on the same footing as Filipinos and local products
in contravention of the “Filipino First” Policy.

Held:

Justiciable Controversy

1. In seeking to nullify an act of the Philippine Senate on the ground that it contravenes the
Constitution, the petition no doubt raises a justiciable controversy.

2. Where an action of the legislative branch is seriously alleged to have infringed the
Constitution, it becomes not only the right but in fact the duty of the judiciary to settle the
dispute. The question thus posed is judicial rather than political.

3. Once a controversy as to the application or interpretation of a constitutional provision is

raised before this Court, it becomes a legal issue which the Court is bound by constitutional
mandate to decide.

Special Civil Actions

4. Certiorari, prohibition and mandamus are appropriate remedies to raise constitutional issues
and to review and/or prohibit/nullify, when proper, acts of legislative and executive officials

5. In deciding to take jurisdiction over this petition, the Supreme Court only exercises its
constitutional duty “to determine whether or not there had been a grave abuse of discretion
amounting to lack or excess of jurisdiction” on the part of the Senate in ratifying the WTO
Agreement and its three annexes.

Constitutional Principles and State Policies

6. The principles and state policies enumerated in Article II and some sections of Article XII
are not self-executing provisions, the disregard of which can give rise to a cause of action in the
courts.

7. These are used by the judiciary as aids or as guides in the exercise of its power of judicial
review, and by the legislature in its enactment of laws.

“Filipino First” Policy

8. While the Constitution indeed mandates a bias in favor of Filipino goods, services, labor and
enterprises, at the same time, it recognizes the need for business exchange with the rest of the
world on the bases of equality and reciprocity and limits protection of Filipino enterprises only
against foreign competition and trade practices that are unfair—the Constitution did not intend to
pursue an isolationist policy.

9. There is hardly any basis for the statement that under the WTO, local industries and
enterprises will all be wiped out and that Filipinos will be deprived of control of the economy, for,
quite to the contrary, the weaker situations of developing nations like the Philippines have been
taken into account.

10. The WTO reliance on “most favored nation,” “national treatment,” and “trade without
discrimination” cannot be struck down as unconstitutional as in fact they are rules of equality
and reciprocity that apply to all WTO members. The fundamental law encourages industries that
are “competitive in both domestic and foreign markets,” thereby demonstrating a clear policy
against a sheltered domestic trade environment, but one in favor of the gradual development of
robust industries that can compete with the best in the foreign markets.

11. The responses to questions on whether WTO/GATT will favor the general welfare of the
public at large involve “judgment calls” by our policy makers, for which they are answerable to
our people during appropriate electoral exercises—such questions and the answers thereto are
not subject to judicial pronouncements based on grave abuse of discretion.

Sovereignty
12. While sovereignty has traditionally been deemed absolute and all—encompassing on
the domestic level, it is subject to restrictions and limitations voluntarily agreed to by the
Philippines, expressly or impliedly, as a member of the family of nations.

Doctrine of Incorporation

13. The Constitution “adopts the generally accepted principles of international law as part of the
law of the land, and adheres to the policy of peace, equality, justice, freedom, cooperation and
amity, with all nations.” (Article II, Section 2)

14. By the doctrine of incorporation, the country is bound by generally accepted principles of
international law, which are considered to be automatically part of our own laws.

Treaties

15. Pacta sunt servanda is one of the most fundamental rules of international law which
provides that international agreements must be performed in good faith. “A treaty engagement
is not a mere moral obligation but creates a legally binding obligation on the parties x x x. A
state which has contracted valid international obligations is bound to make in its legislations
such modifications as may be necessary to ensure the fulfillment of the obligations undertaken.”
16. By their voluntary act, nations may surrender some aspects of their state power in exchange
for greater benefits granted by or derived from a convention or pact.

TRIPS Agreement

17. Article 34 of the General Provisions and Basic Principles of the Agreement on Trade-
Related Aspects of Intellectual Property Rights (TRIPS) does not contain an unreasonable
burden, consistent as it is with due process and the concept of adversarial dispute settlement
inherent in Philippine judicial system.

18. Since the Philippines is a signatory to most international conventions on patents, trademarks
and copyrights, the adjustment in legislation and rules of procedure will not be substantial.

19. A WTO Member is required to provide a rule of disputable (note the words “in the absence
of proof to the contrary”) presumption that a product shown to be identical to one produced with
the use of a patented process shall be deemed to have been obtained by the (illegal) use of the
said patented process, (1) where such product obtained by the patented product is new, or (2)
where there is “substantial likelihood” that the identical product was made with the use of the
said patented process but the owner of the patent could not determine the exact process used
in obtaining such identical product.

20. The “burden of proof” contemplated by Article 34 should be understood as the duty of the
alleged patent infringer to overthrow such presumption. It refers to the “burden of evidence”
(burden of going forward) placed on the producer of the identical (or fake) product to show that
his product was produced without the use of the patented process.

21. The patent owner still has the “burden of proof” since, regardless of the presumption
provided under paragraph 1 of Article 34, such owner still has to introduce evidence of the
existence of the alleged identical product, the fact that it is “identical” to the genuine one
produced by the patented process and the fact of “newness ” of the genuine product or the fact
of “substantial likelihood” that the identical product was made by the patented process.

Separation of Powers

22. The Supreme Court never forgets that the Senate, whose act is under review, is one of two
sovereign houses of Congress and is thus entitled to great respect in its actions. It is itself a
constitutional body independent and coordinate, and thus its actions are presumed regular and
done in good faith.

23. Unless convincing proof and persuasive arguments are presented to overthrow such
presumptions, the Court will resolve every doubt in its favor.

Ratification by the Senate

24. It is a legitimate exercise of the sovereign duty and power of the Senate that, after
deliberation and voting, it voluntarily and overwhelmingly gave its consent to the WTO
Agreement thereby making it “a part of the law of the land” is a legitimate exercise of its
sovereign duty and power.

25. What the Senate did was a valid exercise of its authority. As to whether such exercise was
wise, beneficial or viable is outside the realm of judicial inquiry and review. That is a matter
between the elected policy makers and the people. As to whether the nation should join the
worldwide march toward trade liberalization and economic globalization is a matter that our
people should determine in electing their policy makers.
Domino vs. COMELEC G.R. No. 134015, July 19, 1999
Sunday, January 25, 2009 Posted by Coffeeholic Writes
Labels: Case Digests, Political Law

Facts: Petitioner Domino filed his certificate of candidacy for the position of
Representative of the lone legislative district of the Province of Sarangani
indicating that he has resided in the constituency where he seeks to
be elected for 1 year and 2 months. Private respondents filed a petition seeking
to cancel the certificate of candidacy of Domino, alleging that Domino, contrary
to his declaration in the certificate of candidacy, is not a resident, much less a
registered voter, of the province of Sarangani where he seeks election.
Thereafter, the COMELEC promulgated a resolution
declaring Domino disqualified as candidate for the position of representative of
the lone district of Sarangani in the May 11, 1998 polls for lack of the one-year
residency requirement and likewise ordered the cancellation of his certificate of
candidacy based on his own Voter’s Registration Record and his address indicated
as 24 Bonifacio St., Ayala Hts., Old Balara, Quezon City.

Issue: Whether or not petitioner has resided in Sarangani Province for at

least 1 year immediately preceding the May 11, 1998 elections

Held: The term “residence,” as used in the law prescribing the qualifications
for suffrage and for elective office, means the same thing as “domicile,” which
imports not only an intention to reside in a fixed place but also personal presence
in that place, coupled with conduct indicative of such intention. “Domicile”
denotes a fixed permanent residence to which, whenever absent for business,
pleasure, or some other reasons, one intends to return.

Records show that petitioner’s domicile of origin was Candon, Ilocos Sur and that
sometime in 1991, he acquired a new domicile of choice in Quezon City, as shown
by his certificate of candidacy for the position of representative of the Third
District of Quezon City in the May 1995 election. Petitioner is now claiming that
he had effectively abandoned his residence in Quezon City and has established a
new domicile of choice in the Province of Sarangani.

A person’s domicile, once established, is considered to continue and will not be

deemed lost until a new one is established. To successfully effect a change of
domicile, one must demonstrate an actual removal or an actual change of
domicile; a bona fide intention of abandoning the former place of residence and
establishing a new one and definite acts which correspond with the purpose.

The contract of lease of a house and lot entered into sometime in January 1997
does not adequately support a change of domicile. The lease contract may be
indicative of Domino’s intention to reside in Sarangani, but it does not engender
the kind of permanency required to prove abandonment of one’s original domicile.
The mere absence of individual from his permanent residence, no matter how
long, without the intention to abandon it does not result in loss or change of
domicile. Thus, the date of the contract of lease of a house and lot in Sarangani
cannot be used, in the absence of other circumstances, as the reckoning period
of the one-year residence requirement. Further, Domino’s lack of intention to
abandon his residence in Quezon City is strengthened by his act of registering as
voter in Quezon City. While voting is not conclusive of residence, it does give rise
to a strong presumption of residence especially in this case where Domino
registered in his former barangay.
Pamatong vs Comelec (2004)
G.R. No. 161872 | 2004-04-13

Subject: There is no constitutional right to run for or hold public office; Policy provisions
under the Constitution are generally not self-executing and not give rise to judicially
enforceable rights; "Equal access" provision requires implementing legislation to make it
operative; “Nuisance candidate” prohibition is a valid limitation on the privilege to seek
elective office; Prohibition against nuisance candidates; Question of whether a candidate
is a nuisance candidate or not is both legal and factual; Validity of the form for the
certificate of candidacy

Facts:

Rev. Elly Velez Pamatong (petitioner) filed his Certificate of Candidacy for President for
the 2004 elections. The Commission on Elections (COMELEC) refused to give due course
to petitioner's Certificate of Candidacy in its Resolution No. 6558 . The decision, however,
was not unanimous since Commissioners Tancangco and Sadain voted to include
petitioner as they believed he had parties or movements to back up his candidacy.

The COMELEC denied petitioner's Motion for Reconsideration. The COMELEC declared
petitioner and thirty-five (35) others nuisance candidates who could not wage a
nationwide campaign and/or are not nominated by a political party or are not supported
by a registered political party with a national constituency.

Petitioner filed the present Petition For Writ of Certiorari. Petitioner alleged that COMELEC
resolutions were rendered in violation of his right to "equal access to opportunities for
public service" under Section 26, Article II of the 1987 Constitution by limiting the number
of qualified candidates only to those who can afford to wage a nationwide campaign
and/or are nominated by political parties.

Petitioner likewise attacks the validity of the form for the Certificate of Candidacy
prepared by the COMELEC. Petitioner claims that the form does not provide clear and
reasonable guidelines for determining the qualifications of candidates since it does not
ask for the candidate's bio-data and his program of government.

Held:

There is no constitutional right to run for or hold public office

1. Implicit in the petitioner's invocation of the constitutional provision ensuring "equal

access to opportunities for public office" is the claim that there is a constitutional right to
run for or hold public office and, particularly in his case, to seek the presidency. There is
none. What is recognized is merely a privilege subject to limitations imposed by law.
Section 26, Article II of the Constitution neither bestows such a right nor elevates the
privilege to the level of an enforceable right. There is nothing in the plain language of the
provision which suggests such a thrust or justifies an interpretation of the sort.
Policy provisions under the Constitution are generally not self-executing and
not give rise to judicially enforceable rights

2. The "equal access" provision is a subsumed part of Article II of the Constitution,

entitled "Declaration of Principles and State Policies." The provisions under the Article are
generally considered not self-executing,and there is no plausible reason for according a
different treatment to the "equal access" provision. Like the rest of the policies
enumerated in Article II, the provision does not contain any judicially enforceable
constitutional right but merely specifies a guideline for legislative or executive action.
The disregard of the provision does not give rise to any cause of action before the courts.

3. The original wording of the present Section 26, Article II had read, "The State shall
broaden opportunities to public office and prohibit public dynasties." Commissioner (now
Chief Justice) Hilario Davide, Jr. successfully brought forth an amendment that changed
the word "broaden" to the phrase "ensure equal access," and the substitution of the word
"office" to "service." The provision is not intended to compel the State to enact positive
measures that would accommodate as many people as possible into public office. The
approval of the "Davide amendment" indicates the design of the framers to cast the
provision as simply enunciatory of a desired policy objective and not reflective of the
imposition of a clear State burden.

"Equal access" provision requires implementing legislation to make it operative

4. It is difficult to interpret the clause as operative in the absence of legislation since its
effective means and reach are not properly defined. Broadly written, the myriad of claims
that can be subsumed under this rubric appear to be entirely open-ended. Words and
phrases such as "equal access," "opportunities," and "public service" are susceptible to
countless interpretations owing to their inherent impreciseness. Certainly, it was not the
intention of the framers to inflict on the people an operative but amorphous foundation
from which innately unenforceable rights may be sourced.

“Nuisance candidate” prohibition is a valid limitation on the privilege to seek

elective office

5. The privilege of equal access to opportunities to public office may be subjected to

limitations. Some valid limitations specifically on the privilege to seek elective office are
found in the provisions of the Omnibus Election Code on "Nuisance Candidates" and
COMELEC Resolution No. 6452 dated December 10, 2002 outlining the instances wherein
the COMELEC may motu proprio refuse to give due course to or cancel a Certificate of
Candidacy.

6. As long as the limitations apply to everybody equally without discrimination, however,

the equal access clause is not violated. Equality is not sacrificed as long as the burdens
engendered by the limitations are meant to be borne by any one who is minded to file a
certificate of candidacy. In the case at bar, there is no showing that any person is exempt
from the limitations or the burdens which they create.

7. Petitioner does not challenge the constitutionality or validity of Section 69 of the

Omnibus Election Code and COMELEC Resolution No. 6452 . Thus, their presumed validity
stands and has to be accorded due weight.

Prohibition against nuisance candidates

8. The rationale behind the prohibition against nuisance candidates and the
disqualification of candidates who have not evinced a bona fide intention to run for office
is easy to divine. The State has a compelling interest to ensure that its electoral exercises
are rational, objective, and orderly. Towards this end, the State takes into account the
practical considerations in conducting elections. Inevitably, the greater the number of
candidates, the greater the opportunities for logistical confusion, not to mention the
increased allocation of time and resources in preparation for the election.

9. The preparation of ballots is but one aspect that would be affected by allowance of
"nuisance candidates" to run in the elections. Our election laws provide various
entitlements for candidates for public office, such as watchers in every polling place,
watchers in the board of canvassers, or even the receipt of electoral contributions.
Moreover, there are election rules and regulations the formulations of which are
dependent on the number of candidates in a given election.

10. Owing to the superior interest in ensuring a credible and orderly election, the State
could exclude nuisance candidates and need not indulge in, as the song goes, "their trips
to the moon on gossamer wings."

11. The COMELEC is mandated by the Constitution with the administration of elections
and endowed with considerable latitude in adopting means and methods that will ensure
the promotion of free, orderly and honest elections. Moreover, the Constitution
guarantees that only bona fide candidates for public office shall be free from any form of
harassment and discrimination. The determination of bona fide candidates is governed
by the statutes and the concept is satisfactorily defined in the Omnibus Election Code.

Question of whether a candidate is a nuisance candidate or not is both legal and

factual

12. The assailed resolutions of the COMELEC do not direct the Court to the evidence
which it considered in determining that petitioner was a nuisance candidate. This
precludes the Court from reviewing at this instance whether the COMELEC committed
grave abuse of discretion in disqualifying petitioner.

13. Petitioner has submitted to the Court mere photocopies of various documents
purportedly evincing his credentials as an eligible candidate for the presidency. Yet the
Supreme Court, not being a trier of facts, can not properly pass upon the reproductions
as evidence at this level.

14. The question of whether a candidate is a nuisance candidate or not is both legal and
factual. The basis of the factual determination is not before this Court. Thus, the remand
of this case for the reception of further evidence is in order.

Validity of the form for the certificate of candidacy

15. As to petitioner's attacks on the validity of the form for the certificate of candidacy,
suffice it to say that the form strictly complies with Section 74 of the Omnibus Election
Code. This provision specifically enumerates what a certificate of candidacy should
contain, with the required information tending to show that the candidate possesses the
minimum qualifications for the position aspired for as established by the Constitution and
other election laws.
Yrasuegui v. PAL, 569 SCRA 467 (2008)
Post under case digests, Political Law at Wednesday, February 08, 2012 Postedby
Schizophrenic Mind
Facts:
Petitioner was a former international flight steward of PAL, herein respondent.Petitioner was
dismissed because of his failure to adhere to the weight standards
ofthe airline company. Petitioner claims that he was illegally dismissed.
Issue:
Whether or not petitioner was discriminated against when he was dismissed.
Held:
Petition denied. To make his claim more believable, petitioner invokes the
equalprotection clause guaranty of the Constitution. However, in the absence ofgovernmental in
terference, the liberties guaranteed by the Constitution cannot beinvoked. Put differently, the Bill
of Rights is not meant to be invoked against acts ofprivate individuals. Indeed, the US Supreme
Court, in interpreting the 14th Amendment,which is the source of our equal
protection guarantee, is consistent in saying thatthe equal protection erects no shield against
private conduct, however discriminatory orwrongful. Private actions, no
matter how egregious, cannot violate the equalprotection guarantee.
Datu Michael Abas Kida vs. Senate of the Philippines (2012)
G.R. No. 196271/196305/197221/197280/197282/197392/197454 | 2012-02-28

Subject: Synchronization mandate for national and local elections includes ARMM
elections; Autonomous regions like the ARMM are classified as local governments;
Elections held in autonomous regions are considered as local elections; R.A. No. 10153
does not amend R.A. No. 9054; Supermajority vote requirement makes RA No. 9054 an
irrepealable law which is constitutionally prohibited; Not every amendment to the ARMM
Organic Act requires ratification by means of a plebiscite (The plebiscite requirement in
RA No. 9054 is overly broad and therefore unconstitutional); Congress has no authority
to extend the three-year term limit by inserting a holdover provision in RA No. 9054;
COMELEC has no authority to hold special elections; President’s power to appoint OICs
under RA 10153 covers both appointive and elective positions in the ARMM; Power to
appoint OICs is not incompatible with the President’s power of supervision over local
governments and autonomous regions; RA No. 10153 is an interim measure; Executive
is not bound by the principle of judicial courtesy

Facts:

On October 18, 2011, the Supreme Court issued a Decision where it upheld the
constitutionality of Republic Act No. 10153.

Pursuant to the constitutional mandate of synchronization, RA 10153 postponed the

regional elections in the Autonomous Region in Muslim Mindanao (ARMM) (which were
scheduled to be held on the second Monday of August 2011) to the second Monday of
May 2013 and recognized the President’s power to appoint officers-in-charge (OICs) to
temporarily assume these positions upon the expiration of the terms of the elected
officials.

Hence, the present motions for reconsideration filed by petitioners. The motions raise the
following questions:

(a) Does the Constitution mandate the synchronization of ARMM regional elections with
national and local elections?

(b) Does RA No. 10153 amend RA No. 9054? If so, does RA No. 10153 have to comply
with the supermajority vote and plebiscite requirements?

(c) Is the holdover provision in RA No. 9054 constitutional?

(d) Does the COMELEC have the power to call for special elections in ARMM?

(e) Does granting the President the power to appoint OICs violate the elective and
representative nature of ARMM regional legislative and executive offices?

(f) Does the appointment power granted to the President exceed the President’s
supervisory powers over autonomous

Held:

Synchronization mandate for national and local elections includes ARMM

elections

1. While the Constitution does not expressly instruct Congress to synchronize the
national and local elections, the intention can be inferred from the provisions of the
Transitory Provisions (Article XVIII) of the Constitution, particularly Sec 1, 2 and 5. The
court came to the same conclusion in Osmeña v. Commission on Elections, where the
court unequivocally stated that “the Constitution has mandated synchronized national
and local elections.

2. That the ARMM elections were not expressly mentioned in the Transitory Provisions
of the Constitution on synchronization cannot be interpreted to mean that the ARMM
elections are not covered by the constitutional mandate of synchronization. We have to
consider that the ARMM, as we now know it, had not yet been officially organized at the
time the Constitution was enacted and ratified by the people. Keeping in mind that a
constitution is not intended to provide merely for the exigencies of a few years but is to
endure through generations for as long as it remains unaltered by the people as ultimate
sovereign, a constitution should be construed in the light of what actually is a continuing
instrument to govern not only the present but also the unfolding events of the indefinite
future. Although the principles embodied in a constitution remain fixed and unchanged
from the time of its adoption, a constitution must be construed as a dynamic process
intended to stand for a great length of time, to be progressive and not static.

Autonomous regions like the ARMM are classified as local governments

3. Article X of the Constitution, entitled “Local Government,” clearly shows the intention
of the Constitution to classify autonomous regions, such as the ARMM, as local
governments. Section 1 of Article X provides:

Section 1. The territorial and political subdivisions of the Republic of the Philippines are
the provinces, cities, municipalities, and barangays. There shall be autonomous regions
in Muslim Mindanao and the Cordilleras as hereinafter provided.

4. The inclusion of autonomous regions in the enumeration of political subdivisions of

the State under the heading “Local Government” indicates quite clearly the constitutional
intent to consider autonomous regions as one of the forms of local governments.

5. That the Constitution mentions only the “national government” and the “local
governments,” and does not make a distinction between the “local government” and the
“regional government,” is particularly revealing, betraying as it does the intention of the
framers of the Constitution to consider the autonomous regions not as separate forms of
government, but as political units which, while having more powers and attributes than
other local government units, still remain under the category of local governments.
Elections held in autonomous regions are considered as local elections

6. The petitioners argue that the ARMM elections are not covered by the synchronization
mandate since they are regional elections and not local elections.

7. Since autonomous regions are classified as local governments, it follows that elections
held in autonomous regions are also considered as local elections.

8. In construing provisions of the Constitution, the first rule is verba legis, “that is,
wherever possible, the words used in the Constitution must be given their ordinary
meaning except where technical terms are employed.” Applying this principle to
determine the scope of “local elections,” we refer to the meaning of the word “local,” as
understood in its ordinary sense. As defined in Webster’s Third New International
Dictionary Unabridged, “local” refers to something “that primarily serves the needs of a
particular limited district, often a community or minor political subdivision.” Obviously,
the ARMM elections, which are held within the confines of the autonomous region of
Muslim Mindanao, fall within this definition.

9. To be sure, the fact that the ARMM possesses more powers than other provinces,
cities, or municipalities is not enough reason to treat the ARMM regional elections
differently from the other local elections. Ubi lex non distinguit nec nos distinguire
debemus. When the law does not distinguish, we must not distinguish.

R.A. No. 10153 does not amend R.A. No. 9054

10. Petitioners insist that the provisions of RA No. 10153, in postponing the ARMM
elections, amend RA No. 9054.

11. A thorough reading of RA No. 9054 reveals that it fixes the schedule for only the first
ARMM elections; it does not provide the date for the succeeding regular ARMM elections.
In fixing the date of the ARMM elections subsequent to the first election, RA No. 9333
and RA No. 10153 merely filled the gap left in RA No. 9054, and do not change or revise
any provision in RA No. 9054.

12. The clear intention of Congress is to treat the laws which fix the date of the
subsequent ARMM elections as separate and distinct from the Organic Acts. Congress
only acted consistently with this intent when it passed RA No. 10153 without requiring
compliance with the amendment prerequisites embodied in Section 1 and Section 3,
Article XVII of RA No. 9054.

Supermajority vote requirement makes RA No. 9054 an irrepealable law which

is constitutionally prohibited

13. Since RA No. 10153 does not amend, but merely fills in the gap in RA No. 9054,
there is no need for RA No. 10153 to comply with the amendment requirements set forth
in Article XVII of RA No. 9054.

14. Even so, the supermajority vote requirement set forth in Section 1, Article XVII of
RA No. 9054 ( i.e., 2/3 vote from the House of Representatives and the Senate, voting
separately) is unconstitutional for violating the principle that Congress cannot pass
irrepealable laws.

15. The power of the legislature to make laws includes the power to amend and repeal
these laws. Where the legislature, by its own act, attempts to limit its power to amend
or repeal laws, the Court has the duty to strike down such act for interfering with the
plenary powers of Congress.

16. Every legislative body may modify or abolish the acts passed by itself or its
predecessors. This power of repeal may be exercised at the same session at which the
original act was passed; and even while a bill is in its progress and before it becomes a
law. This legislature cannot bind a future legislature to a particular mode of repeal. It
cannot declare in advance the intent of subsequent legislatures or the effect of
subsequent legislation upon existing statutes. (see Duarte v. Dade)

17. Under our Constitution, each House of Congress has the power to approve bills by
a mere majority vote, provided there is quorum. In requiring all laws which amend RA
No. 9054 to comply with a higher voting requirement (2/3 vote) than what the
Constitution provides, Congress, which enacted RA No. 9054, clearly violated the very
principle established in Duarte. To reiterate, the act of one legislature is not binding upon,
and cannot tie the hands of, future legislatures. .

18. One Congress cannot limit or reduce the plenary legislative power of succeeding
Congresses by requiring a higher vote threshold than what the Constitution requires to
enact, amend or repeal laws. No law can be passed fixing such a higher vote threshold
because Congress has no power, by ordinary legislation, to amend the Constitution.

Not every amendment to the ARMM Organic Act requires ratification by means
of a plebiscite (The plebiscite requirement in RA No. 9054 is overly broad and
therefore unconstitutional)

19. Petitioners' contention that the plebiscite requirement applies to all amendments of
RA No. 9054 is also struck down for being an unreasonable enlargement of the plebiscite
requirement set forth in the Constitution.

20. Section 18, Article X of the Constitution provides that “the creation of the
autonomous region shall be effective when approved by majority of the votes cast by the
constituent units in a plebiscite called for the purpose.”

21. We interpreted this to mean that only amendments to, or revisions of, the Organic
Act constitutionally-essential to the creation of autonomous regions – i.e., those aspects
specifically mentioned in the Constitution which Congress must provide for in the Organic
Act – require ratification through a plebiscite. We stand by this interpretation.

22. For if we were to go by the petitioners’ interpretation of Section 18, Article X of the
Constitution that all amendments to the Organic Act have to undergo the plebiscite
requirement before becoming effective, this would lead to impractical and illogical results
– hampering the ARMM’s progress by impeding Congress from enacting laws that timely
address problems as they arise in the region, as well as weighing down the ARMM
government with the costs that unavoidably follow the holding of a plebiscite.
23. It is posited that that Sec 3 of RA No. 10153, in giving the President the power to
appoint OICs to take the place of the elective officials of the ARMM, creates a fundamental
change in the basic structure of the government, and thus requires compliance with the
plebiscite requirement embodied in RA No. 9054. The court disagrees. The said provision
clearly preserves the basic structure of the ARMM regional government when it recognizes
the offices of the ARMM regional government and directs the OICs who shall temporarily
assume these offices to “perform the functions pertaining to the said offices.”

Congress has no authority to extend the three-year term limit by inserting a

holdover provision in RA No. 9054

24. Petitioners are one in defending the constitutionality of Section 7(1), Article VII of
RA No. 9054, which allows the regional officials to remain in their positions in a holdover
capacity. The petitioners essentially argue that the ARMM regional officials should be
allowed to remain in their respective positions until the May 2013 elections since there is
no specific provision in the Constitution which prohibits regional elective officials from
performing their duties in a holdover capacity.

25. Section 8, Article X of the Constitution provides:

Section 8. The term of office of elective local officials, except barangay officials, which
shall be determined by law, shall be three years and no such official shall serve for more
than three consecutive terms.

26. The clear wording of Section 8, Article X of the Constitution expresses the intent of
the framers of the Constitution to categorically set a limitation on the period within which
all elective local officials can occupy their offices.

27. Elective ARMM officials are also local officials,thus, they are bound by the three-year
term limit prescribed by the Constitution.

28. It is irrelevant that the Constitution does not expressly prohibit elective officials from
acting in a holdover capacity. Short of amending the Constitution,Congress has no
authority to extend the three-year term limit by inserting a holdover provision in RA No.
9054. Thus, the term of three years for local officials should stay at three (3) years, as
fixed by the Constitution, and cannot be extended by holdover by Congress.

29. In the past, the court has recognized the validity of holdover provisions in various
laws. One significant difference is that while these past cases all refer to
elective barangay or sangguniang kabataan officials whose terms of office are not
explicitly provided for in the Constitution, the present case refers to local elective officials
- the ARMM Governor, the ARMM Vice Governor, and the members of the Regional
Legislative Assembly - whose terms fall within the three-year term limit set by Section 8,
Article X of the Constitution.

30. Even assuming that a holdover is constitutionally permissible, and there had been
statutory basis for it, the rule of holdover can only apply as an available option where no
express or implied legislative intent to the contrary exists; it cannot apply where such
contrary intent is evident.

31. Congress, in passing RA No. 10153 in the exercise of its plenary legislative powers,
has clearly acted within its discretion when it deleted the holdover option under RA 9054.

COMELEC has no authority to hold special elections

32. The Constitution has merely empowered the COMELEC to enforce and administer all
laws and regulations relative to the conduct of an election. Although the legislature, under
the Omnibus Election Code (Batas Pambansa Bilang (BP) 881), has granted the COMELEC
the power to postpone elections to another date, this power is confined to the specific
terms and circumstances provided for in the law. Specifically, both Section 5 and Section
6 of BP 881 address instances where elections have already been scheduled to take place
but do not occur or had to be suspended because of unexpected and
unforeseen circumstances, such as violence, fraud, terrorism, and other analogous
circumstances.

33. In contrast, the ARMM elections were postponed by law, in furtherance of the
constitutional mandate of synchronization of national and local elections. Obviously, this
does not fall under any of the circumstances contemplated by Section 5 or Section 6 of
BP 881.

34. More importantly, RA No. 10153 has already fixed the date for the next ARMM
elections and the COMELEC has no authority to set a different election date.

35. Even assuming that the COMELEC has the authority to hold special elections, and
this Court can compel the COMELEC to do so, there is still the problem of having to
shorten the terms of the newly elected officials in order to synchronize the ARMM elections
with the May 2013 national and local elections. Obviously, neither the Court nor the
COMELEC has the authority to do this, amounting as it does to an amendment of Section
8, Article X of the Constitution, which limits the term of local officials to three years.

President’s power to appoint OICs under RA 10153 covers both appointive and
elective positions in the ARMM

36. It is argued that the President’s power to appoint pertains only to appointive positions
and cannot extend to positions held by elective officials.

37. The power to appoint has traditionally been recognized as executive in nature.
Section 16, Article VII of the Constitution describes in broad strokes the extent of this
power, thus:

Section 16. The President shall nominate and, with the consent of the Commission on
Appointments, appoint the heads of the executive departments, ambassadors, other
public ministers and consuls, or officers of the armed forces from the rank of colonel or
naval captain, and other officers whose appointments are vested in him in this
Constitution. He shall also appoint all other officers of the Government whose
appointments are not otherwise provided for by law, and those whom he may be
authorized by law to appoint. The Congress may, by law, vest the appointment of other
officers lower in rank in the President alone, in the courts, or in the heads of departments,
agencies, commissions, or boards.

38. While in the 1935 Constitution, the various appointments the President can make
are enumerated in a single sentence, the 1987 Constitution enumerates the various
appointments the President is empowered to make and divides the enumeration
in two sentences. The change in style is significant; in providing for this change, the
framers of the 1987 Constitution clearly sought to make a distinction between the first
group of presidential appointments and the second group of presidential appointments.

39. The first group of presidential appointments: the heads of the executive departments,
ambassadors, other public ministers and consuls, or officers of the Armed Forces, and
other officers whose appointments are vested in the President by the Constitution,
pertains to the appointive officials who have to be confirmed by the Commission on
Appointments.

40. The second group of officials the President can appoint are “all other officers of the
Government whose appointments are not otherwise provided for by law, and those whom
he may be authorized by law to appoint.” The second sentence acts as the “catch-all
provision” for the President’s appointment power, in recognition of the fact that the power
to appoint is essentially executive in nature. In other words, where there are offices which
have to be filled, but the law does not provide the process for filling them, the Constitution
recognizes the power of the President to fill the office by appointment.

41. Any limitation on or qualification to the exercise of the President’s appointment

power should be strictly construed and must be clearly stated in order to be recognized.
Given that the President derives his power to appoint OICs in the ARMM regional
government from law, it falls under the classification of presidentialappointments covered
by the second sentence of Section 16, Article VII of the Constitution. The President’s
appointment power thus rests on clear constitutional basis.

Power to appoint OICs is not incompatible with the President’s power of

supervision over local governments and autonomous regions

42. There is no incompatibility between the President’s power of supervision over local
governments and autonomous regions, and the power granted to the President to appoint
OICs.

43. The power of supervision is defined as “the power of a superior officer to see to it
that lower officers perform their functions in accordance with law.” This is distinguished
from the power of control or “the power of an officer to alter or modify or set aside what
a subordinate officer had done in the performance of his duties and to substitute the
judgment of the former for the latter.

44. The petitioners’ apprehension regarding the President’s alleged power of control over
the OICs is rooted in their belief that the President’s appointment power includes the
power to remove these officials at will. However, Section 3 of RA No. 10153 clearly
provides that once the President has appointed the OICs for the offices of the Governor,
Vice Governor and members of the Regional Legislative Assembly, these same officials
will remain in office until they are replaced by the duly elected officials in the May 2013
elections. Nothing in this provision even hints that the President has the power to recall
the appointments he already made.

RA No. 10153 is an interim measure

45. Congress enacted RA No. 10153 primarily to heed the constitutional mandate to
synchronize the ARMM regional elections with the national and local elections. To do this,
Congress had to postpone the scheduled ARMM elections for another date, leaving it with
the problem of how to provide the ARMM with governance in the intervening
period, between the expiration of the term of those elected in August 2008 and the
assumption to office – 21 months away – of those who will win in the synchronized
elections on May 13, 2013.

46. In this way, RA No. 10153 is in reality an interim measure, enacted to respond to
the adjustment that synchronization requires. Given the context, we have tojudge RA No.
10153 by the standard of reasonableness in responding to the challenges brought about
by synchronizing the ARMM elections with the national and local elections. In other words,
“given the plain unconstitutionality of providing for a holdover and the unavailability of
constitutional possibilities for lengthening or shortening the term of the elected ARMM
officials, is the choice of the President’s power to appoint – for a fixed and specific period
as an interim measure, and as allowed under Section 16, Article VII of the Constitution –
an unconstitutional or unreasonable choice for Congress to make?

47. The grant to the President of the power to appoint OICs in place of the elective
members of the Regional Legislative Assembly is neither novel nor innovative. The power
granted to the President, via RA No. 10153, to appoint members of the Regional
Legislative Assembly is comparable to the power granted by BP 881 (the Omnibus
Election Code) to the President to fill any vacancy for any cause in the Regional
Legislative Assembly (then called the Sangguniang Pampook)

48. While synchronization will temporarily disrupt the election process in a local
community, however, the adoption of this measure is a matter of necessity in order to
comply with a mandate that the Constitution itself has set out.

Executive is not bound by the principle of judicial courtesy

49. Several petitioners question the propriety of the appointment by the President of
Mujiv Hataman as acting Governor and Bainon Karon as acting Vice Governor of the
ARMM. They argue that since our previous decision was based on a close vote of 8-7, and
given the numerous motions for reconsideration filed by the parties, the President, in
recognition of the principle of judicial courtesy, should have refrained from implementing
our decision until we have ruled with finality on this case.

50. Firstly, the principle of judicial courtesy is based on the hierarchy of courts and
applies only to lower courts in instances where, even if there is no writ of preliminary
injunction or TRO issued by a higher court, it would be proper for a lower court to suspend
its proceedings for practical and ethical considerations. In other words, the principle of
“judicial courtesy” applies where there is a strong probability that the issues before the
higher court would be rendered moot and moribund as a result of the continuation of the
proceedings in the lower court or court of origin. Consequently, this principle cannot be
applied to the President, who represents a co-equal branch of government. To suggest
otherwise would be to disregard the principle of separation of powers, on which our whole
system of government is founded upon.

51. Secondly, the fact that our previous decision was based on a slim vote of 8-7 does
not, and cannot, have the effect of making our ruling any less effective or binding.
Regardless of how close the voting is, so long as there is concurrence of the majority of
the members of the en banc who actually took part in the deliberations of the case, a
decision garnering only 8 votes out of 15 members is still a decision of the Supreme
Court en banc and must be respected as such. The petitioners are, therefore, not in any
position to speculate that, based on the voting, “the probability exists that their motion
for reconsideration may be granted.”

52. We agree with the petitioner that the lifting of a TRO can be included as a subject of
a motion for reconsideration filed to assail our decision. It does not follow, however, that
the TRO remains effective until after we have issued a final and executory decision. Unlike
in Tolentino v. Secretary of Finance cited by petitioners, in the present case, we expressly
lifted the TRO issued on September 13, 2011. There is, therefore, no legal impediment
to prevent the President from exercising his authority to appoint an acting ARMM
Governor and Vice Governor as specifically provided for in RA No. 10153.
Chavez vs. Judicial and Bar Council
Facts:

In 1994, instead of having only 7 members, an eighth member was added to the JBC as
two representatives from Congress began sitting in the JBC – one from the House of
Representatives and one from the Senate, with each having one-half (1/2) of a vote. Then,
the JBC En Banc, in separate meetings held in 2000 and 2001, decided to allow the
representatives from the Senate and the House of Representatives one full vote each.
Senator Francis Joseph G. Escudero and Congressman Niel C. Tupas, Jr. (respondents)
simultaneously sit in the JBC as representatives of the legislature. It is this practice that
petitioner has questioned in this petition. Respondents argued that the crux of the
controversy is the phrase “a representative of Congress.” It is their theory that the two
houses, the Senate and the House of Representatives, are permanent and mandatory
components of “Congress,” such that the absence of either divests the term of its
substantive meaning as expressed under the Constitution. Bicameralism, as the system
of choice by the Framers, requires that both houses exercise their respective powers in
the performance of its mandated duty which is to legislate. Thus, when Section 8(1),
Article VIII of the Constitution speaks of “a representative from Congress,” it should mean
one representative each from both Houses which comprise the entire Congress.

Issue:

1. Are the conditions sine qua non for the exercise of the power of judicial review have
been met in this case?

2. Is the JBC’s practice of having members from the Senate and the House of
Representatives making 8 instead of 7 sitting members unconstitutional?

3. What is the effect of the Court's finding that the current composition of the JBC is
unconstitutional?

Held:

1. Yes. The Courts’ power of judicial review is subject to several limitations, namely: (a)
there must be an actual case or controversy calling for the exercise of judicial power; (b)
the person challenging the act must have “standing” to challenge; he must have a
personal and substantial interest in the case, such that he has sustained or will sustain,
direct injury as a result of its enforcement; (c) the question of constitutionality must be
raised at the earliest possible opportunity; and (d) the issue of constitutionality must be
the very lis mota of the case. Generally, a party will be allowed to litigate only when these
conditions sine qua non are present, especially when the constitutionality of an act by a
co-equal branch of government is put in issue.

The Court disagrees with the respondents’ contention that petitioner lost his standing to
sue because he is not an official nominee for the post of Chief Justice. While it is true that
a “personal stake” on the case is imperative to have locus standi, this is not to say that
only official nominees for the post of Chief Justice can come to the Court and question
the JBC composition for being unconstitutional. The JBC likewise screens and nominates
other members of the Judiciary. Albeit heavily publicized in this regard, the JBC’s duty is
not at all limited to the nominations for the highest magistrate in the land. A vast number
of aspirants to judicial posts all over the country may be affected by the Court’s ruling.
More importantly, the legality of the very process of nominations to the positions in the
Judiciary is the nucleus of the controversy. The claim that the composition of the JBC is
illegal and unconstitutional is an object of concern, not just for a nominee to a judicial
post, but for all citizens who have the right to seek judicial intervention for rectification of
legal blunders.

2. Section 8, Article VIII of the 1987 Constitution provides:

Section 8. (1) A Judicial and Bar Council is hereby created under the supervision of the
Supreme Court composed of the Chief Justice as ex officio Chairman, the Secretary of
Justice, and a representative of the Congress as ex officio Members, a representative of
the Integrated Bar, a professor of law, a retired Member of the Supreme Court, and a
representative of the private sector.
From a simple reading of the above-quoted provision, it can readily be discerned that the
provision is clear and unambiguous. The first paragraph calls for the creation of a JBC
and places the same under the supervision of the Court. Then it goes to its composition
where the regular members are enumerated: a representative of the Integrated Bar, a
professor of law, a retired member of the Court and a representative from the private
sector. On the second part lies the crux of the present controversy. It enumerates the ex
officio or special members of the JBC composed of the Chief Justice, who shall be its
Chairman, the Secretary of Justice and “a representative of Congress.”

The use of the singular letter “a” preceding “representative of Congress” is unequivocal
and leaves no room for any other construction. It is indicative of what the members of the
Constitutional Commission had in mind, that is, Congress may designate only one (1)
representative to the JBC. Had it been the intention that more than one (1) representative
from the legislature would sit in the JBC, the Framers could have, in no uncertain terms,
so provided.

One of the primary and basic rules in statutory construction is that where the words of a
statute are clear, plain, and free from ambiguity, it must be given its literal meaning and
applied without attempted interpretation. It is a well-settled principle of constitutional
construction that the language employed in the Constitution must be given their ordinary
meaning except where technical terms are employed. As much as possible, the words of
the Constitution should be understood in the sense they have in common use. What it
says according to the text of the provision to be construed compels acceptance and
negates the power of the courts to alter it, based on the postulate that the framers and
the people mean what they say. Verba legis non est recedendum – from the words of a
statute there should be no departure.

Applying the foregoing principle to this case, it becomes apparent that the word
“Congress” used in Article VIII, Section 8(1) of the Constitution is used in its generic
sense. No particular allusion whatsoever is made on whether the Senate or the House of
Representatives is being referred to, but that, in either case, only a singular representative
may be allowed to sit in the JBC.

It is worthy to note that the seven-member composition of the JBC serves a practical
purpose, that is, to provide a solution should there be a stalemate in voting. This
underlying reason leads the Court to conclude that a single vote may not be divided into
half (1/2), between two representatives of Congress, or among any of the sitting members
of the JBC for that matter. This unsanctioned practice can possibly cause disorder and
eventually muddle the JBC’s voting process, especially in the event a tie is reached. The
aforesaid purpose would then be rendered illusory, defeating the precise mechanism
which the Constitution itself createdWhile it would be unreasonable to expect that the
Framers provide for every possible scenario, it is sensible to presume that they knew that
an odd composition is the best means to break a voting deadlock.

The respondents insist that owing to the bicameral nature of Congress, the word
“Congress” in Section 8(1), Article VIII of the Constitution should be read as including
both the Senate and the House of Representatives. They theorize that it was so worded
because at the time the said provision was being drafted, the Framers initially intended a
unicameral form of Congress. Then, when the Constitutional Commission eventually
adopted a bicameral form of Congress, the Framers, through oversight, failed to amend
Article VIII, Section 8 of the Constitution.

It is evident that the definition of “Congress” as a bicameral body refers to its primary
function in government – to legislate. In the passage of laws, the Constitution is explicit
in the distinction of the role of each house in the process. The same holds true in
Congress’ non-legislative powers. An inter-play between the two houses is necessary in
the realization of these powers causing a vivid dichotomy that the Court cannot simply
discount. This, however, cannot be said in the case of JBC representation because no
liaison between the two houses exists in the workings of the JBC. Hence, the term
“Congress” must be taken to mean the entire legislative department.

3. As a general rule, an unconstitutional act is not a law; it confers no rights; it imposes

no duties; it affords no protection; it creates no office; it is inoperative as if it has not been
passed at all. This rule, however, is not absolute. Under the doctrine of operative facts,
actions previous to the declaration of unconstitutionality are legally recognized. They are
not nullified. This is essential in the interest of fair play.

The doctrine of operative fact, as an exception to the general rule, only applies as a matter
of equity and fair play. It nullifies the effects of an unconstitutional law by recognizing that
the existence of a statute prior to a determination of unconstitutionality is an operative
fact and may have consequences which cannot always be ignored. The past cannot
always be erased by a new judicial declaration. The doctrine is applicable when a
declaration of unconstitutionality will impose an undue burden on those who have relied
on the invalid law. Thus, it was applied to a criminal case when a declaration of
unconstitutionality would put the accused in double jeopardy or would put in limbo the
acts done by a municipality in reliance upon a law creating it.3

Under the circumstances, the Court finds the exception applicable in this case and holds
that notwithstanding its finding of unconstitutionality in the current composition of the JBC,
all its prior official actions are nonetheless valid. (Chavez vs. Judicial and Bar Council,
G.R. No. 202242, July 17, 2012)
G.R. No. 202242 April 16, 2013 FRANCISCO I. CHAVEZ vs.
JUDICIAL AND BAR COUNCIL,
G.R. No. 202242 April 16, 2013

FRANCISCO I. CHAVEZ, Petitioner,

vs.
JUDICIALAND BAR COUNCIL, SEN. FRANCIS JOSEPH G. ESCUDERO and REP. NIEL C.
TUPAS, JR.,Respondents.
MENDOZA, J.:

NATURE:
The case is a motion for reconsideration filed by the JBC in a prior decision rendered July 17, 2012 that
JBC’s action of allowing more than one member of the congress to represent the JBC to be
unconstitutional

FACTS:

In 1994, instead of having only seven members, an eighth member was added to the JBC as two
representatives from Congress began sitting in the JBC – one from the House of Representatives and
one from the Senate, with each having one-half (1/2) of a vote. Then, the JBC En Banc, in separate
meetings held in 2000 and 2001, decided to allow the representatives from the Senate and the House of
Representatives one full vote each. Senator Francis Joseph G. Escudero and Congressman Niel C.
Tupas, Jr. (respondents) simultaneously sit in the JBC as representatives of the legislature. It is this
practice that petitioner has questioned in this petition. it should mean one representative each from both
Houses which comprise the entire Congress. Respondent contends that the phrase “ a representative of
congress” refers that both houses of congress should have one representative each, and that these two
houses are permanent and mandatory components of “congress” as part of the bicameral system of
legislature. Both houses have their respective powers in performance of their duties. Art VIII Sec 8 of the
constitution provides for the component of the JBC to be 7 members only with only one representative
from congress.

ISSUE:

Whether the JBC’s practice of having members from the Senate and the House of Representatives
making 8 instead of 7 sitting members to be unconstitutional as provided in Art VIII Sec 8 of the
constitution.

HELD: Yes. The practice is unconstitutional; the court held that the phrase “a representative of congress”
should be construed as to having only one representative that would come from either house, not both.
That the framers of the constitution only intended for one seat of the JBC to be allotted for the legislative.

It is evident that the definition of “Congress” as a bicameral body refers to its primary function in
government – to legislate. In the passage of laws, the Constitution is explicit in the distinction of the role
of each house in the process. The same holds true in Congress’ non-legislative powers. An inter-play
between the two houses is necessary in the realization of these powers causing a vivid dichotomy that
the Court cannot simply discount. This, however, cannot be said in the case of JBC representation
because no liaison between the two houses exists in the workings of the JBC. Hence, the term
“Congress” must be taken to mean the entire legislative department. The Constitution mandates that the
JBC be composed of seven (7) members only.

FALLO: The motion was denied.

Knights of Rizal vs. DMCI Homes, Inc. (2017)
G.R. No. 213948 | 2017-04-25

Subject: There is no law prohibiting the construction of the Torre de Manila; Mandamus
does not lie against the City of Manila; Certiorari does not lie; Pro hac vice decision not
allowed; Ratification of zoning permit is within the discretion of the City of Manila; The
KOR is estopped from questioning the Torre de Manila Construction; Torre de Manila is
not a nuisance per se; TRO must be lifted

Facts:

DMCI Project Developers, Inc. (DMCI-PDI) acquired a lot in the City of Manila, located
near Taft Avenue, Ermita, beside the former Manila Jai-Alai Building and Adamson
University. The lot was earmarked for the construction of DMCI-PDI’s Torre de Manila
condominium project. The Building Official issued to DMCI-PDI a Building Permit, allowing
it to build a “49-Storey w/Basement & 2 penthouse Level Residential Condominium” on
the property

However, the City Council of Manila later issued Resolution No. 121 enjoining the Office
of the Building Official to temporarily suspend the Building Permit of DMCI-PDI, citing
that “the Torre de Manila Condominium, based on their development plans, upon
completion, will rise up high above the back of the national monument, to clearly dwarf
the statue of our hero, and with such towering heights, would certainly ruin the line of
sight of the Rizal Shrine from the frontal Roxas Boulevard vantage point.”

When consulted by the Building Official, the City of Manila’s City Legal Officer stated that
there is “no legal justification for the temporary suspension of the Building Permit issued
in favor of DMCI-PDI since the construction lies outside the Luneta Park and is simply too
far to be a repulsive distraction or have an objectionable effect on the artistic and
historical significance of the Rizal Monument.” He also pointed out that there is no
showing that the area of subject property has been officially declared as an
anthropological or archeological area. Neither has it been categorically designated by the
National Historical Institute as a heritage zone, a cultural property, a historical landmark
or even a national treasure.

The Manila Zoning Board of Adjustments and Appeals (MZBAA) issued Zoning Board
Resolution No. 06, Series of 2013,1recommending the approval of DMCI-PDI’s application
for variance.

The City Council of Manila issued Resolution No. 5, Series of 2014, where it essentially
ratifiies and confirms all previously issued permits, licenses and approvals issued by the
City Council of Manila for Torre de Manila.

The Knights of Rizal (KOR) a “civic, patriotic, cultural, non- partisan, non-sectarian and
non-profit organization” created under Republic Act No. 646 filed a Petition for Injunction
seeking a permanent injunction against the construction of DMCI- PDI’s Torre de Manila
condominium project. The KOR contends that the project is a nuisance per se because
the despoliation of the sight view of the Rizal Monument is a situation that ‘annoys or
offends the senses’ of every Filipino who honors the memory of the National Hero Jose
Rizal. The KOR also claims that the Torre de Manila project violates the NHCP’s Guidelines
on Monuments Honoring National Heroes, Illustrious Filipinos and Other Personages,
which state that historic monuments should assert a visual “dominance” over its
surroundings, as well as the country’s commitment under the International Charter for
the Conservation and Restoration of Monuments and Sites (Venice Charter).

Issue:

Can the Court issue a writ of mandamus against the officials of the City of Manila to stop
the construction of DMCI-PDI’s Torre de Manila project?

Held:

Petition for mandamus lacks merit and must be dismissed.

There is no law prohibiting the construction of the Torre de Manila

1. The Court has held that “what is not expressly or impliedly prohibited by law may be
done, except when the act is contrary to morals, customs and public order.” In essence,
this principle, which is the foundation of a civilized society under the rule of law,
prescribes that the freedom to act can be curtailed only through law. However, it is the
law itself- Articles 1306 and 1409(1) of the Civil Code- which prescribes that acts not
contrary to morals, good customs, public order, or public policy are allowed if also not
contrary to law. In this case, there is no law prohibiting the construction of the Torre de
Manila due to its effect on the background “view, vista, sightline, or setting” of the Rizal
Monument.

(a) City of Manila's zoning ordinance does not apply

2. Zoning, as well as land use, in the City of Manila is governed by Ordinance No. 8119.
Section 47 of Ordinance No. 8119 specifically regulates the “development of historic sites
and facilities.” Section 48 regulates “large commercial signage and/or pylon.” There is
nothing in Sections 47 and 48 of Ordinance No. 8119 that disallows the construction of
a building outside the boundaries of a historic site or facility, where such building may
affect the background of a historic site. In this case, the Torre de Manila stands 870
meters outside and to the rear of the Rizal Monument and “cannot possibly obstruct the
front view of the Rizal Monument. Likewise, the Torre de Manila is not in an area that has
been declared as an “anthropological or archeological area” or in an area designated as
a heritage zone, cultural property, historical landmark, or a national treasure by the
NHCP.

3. Further, it is clear that the standards laid down in Section 47 of Ordinance No. 8119
only serve as guides, as it expressly states that “the following shall guide the
development of historic sites and facilities.” A guide simply sets a direction or gives an
instruction to be followed by property owners and developers in order to conserve and
enhance a property’s heritage values.

(b) The National Cultural Heritage Act does not apply

4. Section 15, Article XIV of the Constitution, which deals with the subject of arts and
culture, provides that “the State shall conserve, promote and popularize the nation’s
historical and cultural heritage and resources x x x.” Since this provision is not self-
executory, Congress passed laws dealing with the preservation and conservation of our
cultural heritage.

5. One such law is Republic Act No. 10066, or the National Cultural Heritage Act of 2009,
which empowers the National Commission for Culture and the Arts and other cultural
agencies to issue a cease and desist order “when the physical integrity of the national
cultural treasures or important cultural properties is found to be in danger of destruction
or significant alteration from its original state.” This law declares that the State should
protect the “physical integrity” of the heritage property or building if there is “danger of
destruction or significant alteration from its original state.” Physical integrity refers to the
structure itself- how strong and sound the structure is. The same law does not mention
that another project, building, or property, not itself a heritage property or building, may
be the subject of a cease and desist order when it adversely affects the background view,
vista, or sightline of a heritage property or building. Thus, Republic Act No. 10066 cannot
apply to the Torre de Manila condominium project.

(c) Venice Charter does not create a legal obligation

6. The Venice Charter does not constitute clear legal bases for the issuance of a writ of
mandamus. The Venice Charter is merely a codification of guiding principles for the
preservation and restoration of ancient monuments, sites, and buildings. It brings
together principles in the field of historical conservation and restoration that have been
developed, agreed upon, and and laid down by experts over the years. Each country,
however, remains “responsible for applying the plan within the framework of its own
culture and traditions.

7. The Venice Charter is not a treaty and therefore does not become enforceable as law.
The Philippines is not legally bound to follow its directive, as in fact, these are not
directives but mere guidelines- a set of the best practices and techniques that have been
proven over the years to be the most effective in preserving and restoring historical
monuments, sites and buildings.

Mandamus does not lie against the City of Manila

8. The Constitution states that “no person shall be deprived of life, liberty or property
without due process of law x x x.” The dispossession of property, or in this case the
stoppage of the construction of a building in one’s own property, would violate
substantive due process.

9. The Rules on Civil Procedure are clear that mandamus only issues when there is a
clear legal duty imposed upon the office or the officer sought to be compelled to perform
an act, and when the party seeking mandamus has a clear legal right to the performance
of such act.

10. In the present case, nowhere is it found in Ordinance No. 8119 or in any law,
ordinance, or rule for that matter, that the construction of a building outside the Rizal
Park is prohibited if the building is within the background sightline or view of the Rizal
Monument. Thus, there is no legal duty on the part of the City of Manila “to consider,”
in the words of the Dissenting Opinion, “the standards set under Ordinance No. 8119” in
relation to the applications of DMCI-PDI for the Torre de Manila since under the
ordinance these standards can never be applied outside the boundaries of Rizal Park. The
area where Torre de Manila is being built is a privately-owned property that is “not part
of the Rizal Park that has been declared as a National Heritage Site in 1995.”

11. Mandamus will lie only if the officials of the City of Manila have a ministerial duty to
consider these standards to buildings outside of the Rizal Park. There can be no such
ministerial duty because these standards are not applicable to buildings outside of the
Rizal Park.

12. There is no standard in Ordinance No. 8119 for defining or determining the
background sightline that is supposed to be protected or that is part of the “physical
integrity” of the Rizal Monument. How far should a building like the Torre de Manila be
from the Rizal Monument- one, two, three, four, or five kilometers? Even the Solicitor
General, during the Oral Arguments, conceded that the ordinance does not prescribe how
sightline is determined, neither is there any way to measure by metes and bounds
whether a construction that is not part of the historic monument itself or is outside the
protected area can be said to violate the Rizal Monument’s physical integrity, except only
to say “when you stand in front of the Rizal Monument, there can be no doubt that your
view is marred and impaired.” This kind of a standard has no parameters and can include
a sightline or a construction as far as the human eyes can see when standing in front of
the Rizal Monument. Obviously, this Court cannot apply such a subjective and non-
uniform standard that adversely affects property rights several kilometers away from a
historical sight or facility.

Certiorari does not lie

13. The KOR also invokes this Court’s exercise of its extraordinary certiorari power of
review under Section 1, Article VIII of the Constitution. However, this Court can only
exercise its extraordinary certiorari power if the City of Manila, in issuing the required
permits and licenses, gravely abused its discretion amounting to lack or excess of
jurisdiction.

14. The exercise of this Court’s extraordinary certiorari power is limited to actual cases
and controversies that necessarily involve a violation of the Constitution or the
determination of the constitutionality or validity of a governmental act or issuance.
Specific violation of a statute that does not raise the issue of constitutionality or validity
of the statute cannot, as a rule, be the subject of the Court’s direct exercise of its
expanded certiorari power. Thus, the KOR’s recourse lies with other judicial remedies or
proceedings allowed under the Rules of Court.

15. It is the policy of the courts not to interfere with the discretionary executive acts of
the executive branch unless there is a clear showing of grave abuse of discretion
amounting to lack or excess of jurisdiction. And subject to well-settled exceptions,
mandamus does not lie against the legislative and executive branches or their members
acting in the exercise of their official ministerial functions. This emanates from the respect
accorded by the judiciary to said branches as co-equal entities under the principle of
separation of powers.

16. As a rule, as required by the hierarchy of courts principle, these cases are filed with
the lowest court with jurisdiction over the subject matter. In the present case, the KOR
elevated this case immediately to this Court in an original petition for injunction which
we later on treated as one for mandamus under Rule 65. There is, however, no clear
legal duty on the City of Manila to consider the provisions of Ordinance No. 8119 for
applications for permits to build outside the protected areas of the Rizal Park. Even if
there were such legal duty, the determination of whether the City of Manila failed to abide
by this legal duty would involve factual matters which have not been admitted or
established in this case. Establishing factual matters is not within the realm of this Court.
Findings of fact are the province of the trial courts.

Pro hac vice decision not allowed

17. Pro hac vice means a specific decision does not constitute a precedent because the
decision is for the specific case only, not to be followed in other cases. Apro hac
vice decision violates statutory law- Article 8 of the Civil Code- which states that “judicial
decisions applying or interpreting the laws or the Constitution shall form part of the legal
system of the Philippines.” The decision of the Court in this case cannot be pro hac
vice because by mandate of the law every decisionof the Court forms part of the legal
system of the Philippines. If another case comes up with the same facts as the present
case, that case must be decided in the same way as this case to comply with the
constitutional mandate of equal protection of the law. Thus, a pro hac vice decision also
violates the equal protection clause of the Constitution.

Ratification of zoning permit is within the discretion of the City of Manila

18. The City of Manila concedes that DMCI-PDI’s Zoning Permit was granted without
going through the process under Ordinance No. 8119. However, the same was properly
rectified when, faced with mounting opposition, DMCI-PDI itself sought clarification from
the City of Manila and immediately began complying with the procedure for applying for
a variance. The MZBAA did subsequently recommend the approval of the variance and
the City Council of Manila approved the same, ratifying the licenses and permits already
given to DMCI-PDI. Such ratification was well within the right of the City Council of Manila.
The City Council of Manila could have denied the application had it seen any reason to do
so. Again, the ratification is a function of the City Council of Manila, an exercise of its
discretion and well within the authority granted it by law and the City’s own Ordinance
No. 8119.

19. The main purpose of zoning is the protection of public safety, health, convenience,
and welfare. There is no indication that the Torre de Manila project brings any harm,
danger, or hazard to the people in the surrounding areas except that the building
allegedly poses an unsightly view on the taking of photos or the visual appreciation of
the Rizal Monument by locals and tourists. In fact, the Court must take the approval of
the MZBAA, and its subsequent ratification by the City Council of Manila, as the duly
authorized exercise of discretion by the city officials. Great care must be taken that the
Court does not unduly tread upon the local government’s performance of its duties. It is
not for this Court to dictate upon the other branches of the government how their
discretion must be exercised so long as these branches do not commit grave abuse of
discretion amounting to lack or excess of jurisdiction

20. It was likewise established that the granting of a variance is neither uncommon nor
irregular. On the contrary, current practice has made granting of a variance the rule
rather than the exception. Thus, the MZBAA’s grant of the variance cannot be used as a
basis to grant the mandamus petition absent any clear finding that said act amounted to
“grave abuse of discretion, manifest injustice, or palpable excess of authority.

21. Likewise, any violation of Ordinance No. 8119 must be determined in the proper case
and before the proper forum. In the first place, this Court has no jurisdiction to make
findings of fact in an original action like this before this Court. Moreover, the City of Manila
could not legally apply standards to sites outside the area covered by the ordinance that
prescribed the standards.

The KOR is estopped from questioning the Torre de Manila Construction

22. The KOR is now estopped from questioning the construction of the Torre de Manila
project. In the mid-1950s, the Jose Rizal National Centennial Commission (JRNCC)
formulated a plan to build an Educational Center within the Rizal Park. In July 1955,
the KOR proposed the inclusion of a national theater on the site of the Educational Center.
However, several sectors voiced their objections to the construction for various reasons.
Among them was the fact that the proposed 29.25 meter high national theater proposed
by the KOR would dwarf the 12.7 meter high Rizal Monument. The JRNCC revised the
plan and only the National Library- which still stands today- was built/.

23. In contrast, the Torre de Manila is located well outside the Rizal Park, and to the rear
of the Rizal Monument- approximately 870 meters from the Rizal Monument and 30
meters from the edge of Rizal Park. It is a basic principle that “one who seeks equity and
justice must come to court with clean hands. This “signifies that a litigant may be denied
relief by a court of equity on the ground that his conduct has been inequitable, unfair and
dishonest, or fraudulent, or deceitful as to the controversy in issue.”8Thus, the KOR,
having earlier proposed a national theater a mere 286 meters in distance from the back
of the Rizal Monument that would dwarf the Rizal Monument, comes to this Court with
unclean hands. It is now precluded from “seeking any equitable refuge” from the Court.
The KOR’s petition should be dismissed on this ground alone.

Torre de Manila is not a nuisance per se

24. The Court recognizes two kinds of nuisances. The first, nuisance per se, is one
“recognized as a nuisance under any and all circumstances, because it constitutes a direct
menace to public health or safety, and, for that reason, may be abated summarily under
the undefined law of necessity.” The second, nuisanceper accidens, is that which
“depends upon certain conditions and circumstances, and its existence being a question
of fact, it cannot be abated without due hearing thereon in a tribunal authorized to decide
whether such a thing in law constitutes a nuisance.”

25. The Torre de Manila is not a nuisance per se. The Torre de Manila project cannot be
considered as a “direct menace to public health or safety.” Not only is a condominium
project commonplace in the City of Manila, DMCI-PDI has, according to the proper
government agencies, complied with health and safety standards set by law.
26. A nuisance per accidens is determined based on its surrounding conditions and
circumstances. These conditions and circumstances must be well established, not merely
alleged. The KOR itself concedes that the question of whether the Torre de Manila is a
nuisance per accidens is a question of fact. This Court is not a trier of facts. The task to
receive and evaluate evidence is lodged with the trial courts. The question, then, of
whether the Torre de Manila project is a nuisance per accidens must be settled after due
proceedings brought before the proper Regional Trial Court. The KOR cannot circumvent
the process in the guise of protecting national culture and heritage.

TRO must be lifted

27. Injunctive reliefs are meant to preserve substantive rights and prevent further injury
until final adjudication on the merits of the case. In the present case, since the legal
rights of the KOR are not well-defined, clear, and certain, the petition for mandamus
must be dismissed and the TRO lifted.

28. The general rule is that courts will not disturb the findings of administrative agencies
when they are supported by substantial evidence. In this case, DMCI-PDI already
acquired vested rights in the various permits, licenses, or even variances it had applied
for in order to build a 49-storey building which is, and had been, allowed by the City of
Manila’s zoning ordinance.
OCAMPO V. ABANDO - CASE DIGEST - CONSTITUTIONAL
LAW
OCAMPO V. ABANDO G.R. No. 176830 February 11, 2014

FACTS:

A mass graveyard was found at Sitio Sapang Daco, Barangay Kaulisihan, Inopacan, Leyte by the43rd Infantry Brigade
containing 67 skeletal remains of those believed to be victims of “Operation Venereal Disease (VD)” by the
Communist Party of the Philippines/ New People’s Army/National Democratic Front (CPP/NPA/NPDF) of the
Philippines. This was done to purge their ranks of suspected military informers.

Members of the Scene of the Crime Operation team conducted forensic crime analysis to identify the bodies by way
of DNA sample. The initial report of the PNP Crime Laboratory on their identities remained inconclusive, but, in a
Special Report, the Case Secretariat of the Regional and National Inter-Agency Legal Action Group came up with ten
names of possible victims after comparing the testimonies of relatives and witnesses.

Police Chief Inspector George L. Almaden and Staff Judge Advocate Captain Allan Tiu sent undated letters to Pros.
Vivero, requesting for legal action on the twelve attached complaint affidavits. These were from relatives of the
alleged victims of Operation VD who all swore that their relatives had been abducted or last seen with members of
the CPP/NPA/NDFP.

Charging them with murder, the affidavits were directed to 71 named members of the group, including the
petitioners. Namely, the petitioners were Ocampo, Echanis, Baylosis and Ladlad who were all pointed out to be
members of the Central Committee that ordered the campaign to be carried out in 1985.

On this basis, Pros. Vivero issued a subpoena requiring them to submit their counter-affidavits and Ocampo
complied. However, Echanis and Baylosis did not do so because allegedly they were not served the copy of a
subpoena. As for Ladlad, though his counsel made formal appearance during the preliminary investigation, he also
did not submit for the same reason as the two.

Pros. Vivero, in a resolution, directed the filing of information for 15 counts of multiple murder against the 54 named
members, including the petitioners. He also caused some respondents to be used as state witnesses for their
testimony is vital to the prosecution. Said information was filed before RTC Hilongos, Leyte branch 18 presided by
Judge Abando.

Prior to receiving the resolution, Ocampo filed an Ex Parte Motion to Set Case for Clarificatory Hearing. Judge Obando
found probable cause and ordered the issuance of warrants of arrest against them with no recommended bail.
Ocampo went to the Supreme Court by way of special civil action for certiorari and prohibition under Rule 65 and
asked for the abovementioned order and the prosecutor’s resolution to be annulled. He said that a case for rebellion
against him and 44 others was then already pending before RTC Makati and so, the crime of murder was absorbed
by the rebellion in line with the political offense doctrine.

The Court ordered the Solicitor General to comment on the issue and also ordered the parties to submit their
memoranda. From the oral arguments, the Court found that the single Information charging them all of 15 counts
of murder was defective. The prosecution moved to admit amended and new information, but Judge Abando
suspended the proceedings during the pendency of the case before the Court.

Meanwhile, Echanis was arrested and he, along with Baylosis, filed a Motion for Judicial Reinvestigation/
Determination of Probable Cause with Prayer to Dismiss the Case Outright and Alternative Prayer to Recall/ Suspend
Service of Warrant, but it was dismissed by Judge Abando. Around this time, Ladlad filed a Motion to Quash/Dismiss
with the RTC Manila.

Echanis and Baylosis moved to reconsider but it was not acted because, as per request of the DOJ Secretary to change
the venue of the trial, the records were transmitted to RTC Manila. Echanis and Baylosis continued to seek relief
from the Supreme Court in response to Judge Abando’s orders. Echanis also prayed for his release.

Both Ocampo and Echanis were granted provisional release by the Supreme Court under cash bonds.

As to Ladlad’s Motion to Quash, it was denied by respondent judge and the same happened to his Motion for
Reconsideration. Ladlad sought to annul the latter’s orders by way of special civil action for certiorari under Rule 65.

As to their bail, Ladlad filed an Urgent Motion to Fix Bail whereas Baylosis filed a Motion to Allow Petitioner to Post
Bail which were granted, with no opposition from the OSG (bec. they’re consultants of the NDFP negotiating team,
then having talks with the GRP peace panel).

ISSUE:

Whether or not the petitioners’ right to due process was violated.

HELD:

NO. Petitioners were accorded due process during preliminary investigation and in the issuance of the warrants of
arrest.
A preliminary investigation is "not a casual affair." It is conducted to protect the innocent from the embarrassment,
expense and anxiety of a public trial. While the right to have a preliminary investigation before trial is statutory
rather than constitutional, it is a substantive right and a component of due process in the administration of criminal
justice.

In the context of a preliminary investigation, the right to due process of law entails the opportunity to be heard. It
serves to accord an opportunity for the presentation of the respondent’s side with regard to the accusation.
Afterwards, the investigating officer shall decide whether the allegations and defenses lead to a reasonable belief
that a crime has been committed, and that it was the respondent who committed it. Otherwise, the investigating
officer is bound to dismiss the complaint.

"The essence of due process is reasonable opportunity to be heard and submit evidence in support of one's defense."
What is proscribed is lack of opportunity to be heard. Thus, one who has been afforded a chance to present one’s
own side of the story cannot claim denial of due process.

As to the claim of petitioners Echanis and Baylosis that they were denied due process, we quote the pertinent portion
of Prosecutor Vivero’s Resolution, which states:

In connection with the foregoing and pursuant to the Revised Rules of Criminal Procedure[,] the respondents were
issued and served with Subpoena at their last known address for them to submit their counter-affidavits and that of
their witnesses.

Majority of the respondents did not submit their counter-affidavits because they could no longer be found in their
last known address, per return of the subpoenas. On the other hand, Saturnino Ocampo Satur, Fides Lim, Maureen
Palejaro and Ruben Manatad submitted their Counter-Affidavits. However, Vicente Ladlad and Jasmin Jerusalem
failed to submit the required Counter Affidavits in spite entry of appearance by their respective counsels.

Section 3(d), Rule 112 of the Rules of Court, allows Prosecutor Vivero to resolve the complaint based on the evidence
before him if a respondent could not be subpoenaed. As long as efforts to reach a respondent were made, and he
was given an opportunity to present countervailing evidence, the preliminary investigation remains valid. The rule
was put in place in order to foil underhanded attempts of a respondent to delay the prosecution of offenses.In this
case, the Resolution stated that efforts were undertaken to serve subpoenas on the named respondents at their last
known addresses. This is sufficient for due process. It was only because a majority of them could no longer be found
at their last known addresses that they were not served copies of the complaint and the attached documents or
evidence.

Moreover, Petitioner Ladlad, through his counsel, had every opportunity to secure copies of the complaint after his
counsel’s formal entry of appearance and, thereafter, to participate fully in the preliminary investigation. Instead,
he refused to participate.
We have previously cautioned that "litigants represented by counsel should not expect that all they need to do is sit
back, relax and await the outcome of their case."106 Having opted to remain passive during the preliminary
investigation, petitioner Ladlad and his counsel cannot now claim a denial of due process, since their failure to file a
counter-affidavit was of their own doing.

As to Ocampo’s claim that he was denied the right to file a motion for reconsideration or to appeal the Resolution
of Prosecutor Vivero due to the 19-day delay in the service of the Resolution, it must be pointed out that the period
for filing a motion for reconsideration or an appeal to the Secretary of Justice is reckoned from the date of receipt
of the resolution of the prosecutor, not from the date of the resolution. This is clear from Section 3 of the 2000
National Prosecution Service Rule on Appeal:

Sec. 3. Period to appeal. – The appeal shall be taken within fifteen (15) days from receipt of the resolution, or of the
denial of the motion for reconsideration/ reinvestigation if one has been filed within fifteen (15) days from receipt of
the assailed resolution. Only one motion for reconsideration shall be allowed. (Emphasis supplied)

Thus, when petitioner Ocampo received the Resolution of Prosecutor Vivero on 12 March 2007,108 the former had
until 27 March 2007 within which to file either a motion for reconsideration before the latter or an appeal before
the Secretary of Justice. Instead, petitioner Ocampo chose to file the instant petition for certiorari directly before
this Court on 16 March 2007.
G.R. No. 200628. January 13, 2015.*

MARIA THERESA G. GUTIERREZ, petitioner, vs. COMMISSION ON AUDIT and AUDITOR

NARCISA DJ JOAQUIN, respondents.

Constitutional Law; Right to Counsel; The right to counsel under Section 12(1) of Article III of
the Constitution applies in criminal proceedings, but not in administrative proceedings.—The
right to counsel under Section 12(1) of Article III of the Constitution applies in criminal
proceedings, but not in administrative proceedings. It is a right given to persons accused of an
offense during criminal investigation. Any proceeding conducted by an administrative body is
not part of the criminal investigation or prosecution.

Criminal Procedure; Administrative Proceedings; “Criminal Proceedings” and “Administrative

Proceedings,” Distinguished.—While the purpose of criminal proceedings is to determine if a
person suspected of committing an offense has indeed committed an offense, the purpose of an
administrative proceeding is to determine if a person in public office has violated the trust
reposed in him or her by the public. In a criminal proceeding, if a person is found guilty of an
offense, corresponding punishment is imposed primarily to protect the public being exposed to
and correct his or her deviant behavior. In an administrative proceeding, if a person is found
administratively liable, the corresponding penalty is imposed primarily to preserve public trust
and protect the integrity of public service.

Constitutional Law; Due Process; Requisites of Administrative Due Process.—This court in Ang
Tibay v. Court of Industrial Relations, 69 Phil. 635 (1940), ruled that administrative due process
requires only the following: (a) The party should be allowed to present his or her own case and
submit supporting evidence; (b) The deciding tribunal must consider the party’s evidence; (c)
There is evidence to support the tribunal’s decision; (d) The evidence supporting the tribunal’s
decision must be substantial or such “relevant evidence as a reasonable mind might accept as
adequate to support a conclusion”; (e) The tribunal’s decision was based on the evidence
presented or the records of the case disclosed to the parties; (f) The tribunal’s decision must be
based on the judges’ independent consideration of the facts and law governing the case; and
(g) The tribunal’s decision must be rendered such that the issues of the case and the reasons
for the decisions are known to the parties.

Same; Same; Administrative Proceedings; Due process in administrative proceedings does not
necessarily require a trial type of hearing.—In sum, due process in administrative proceedings
does not necessarily require a trial type of hearing. Neither does it require an exchange of
pleadings between or among the parties. Due process is satisfied if the party who is properly
notified of allegations against him or her is given an opportunity to defend himself or herself
against those allegations, and such defense was considered by the tribunal in arriving at its own
independent conclusions.

Administrative Law; Accountable Officers; Cashiers; As a cashier for the National Food
Authority (NFA), petitioner qualified as an accountable officer under Presidential Decree (PD)
No. 1445; PD No. 1445 makes cashiers liable for the value of the money or property in their
custody in case they were lost because of negligence or unlawful deposit, use, or application.—
As a cashier for the National Food Authority, petitioner qualified as an accountable officer under
Presidential Decree No. 1445. Accountable officers are government officers whose duties
require them to possess or be in custody of government funds or properties. They are in charge
of the safekeeping of the funds or properties under their custody. Presidential Decree No. 1445
makes cashiers liable for the value of the money or property in their custody in case they were
lost because of negligence or unlawful deposit, use, or application.

Commissioner on Audit; Jurisdiction; The Commission on Audit (COA) has the power to
withhold payment of money due to persons indebted to the government.—Imposing liability on
cashiers for lost money or property in their custody means that the value of the money or
property becomes their debt. The Commission on Audit has the power to withhold payment of
money due to persons indebted to the government. Section 37 of Presidential Decree No. 1445
provides: Section 37. Retention of money for satisfaction of indebtedness to government.—
When any person is indebted to any government agency, the Commission may direct the proper
officer to withhold the payment of any money due such person or his estate to be applied in
satisfaction of the indebtedness.

Administrative Law; Negligence; Keeping National Food Authority (NFA) collections outside the
vault constituted negligence on the part of petitioner.—Keeping National Food Authority
collections outside the vault constituted negligence on the part of petitioner. The test of
negligence is stated in Picart v. Smith, Jr., 37 Phil. 809 (1918): The test by which to determine
the existence of negligence in a particular case may be stated as follows: Did the defendant in
doing the alleged negligent act use that reasonable care and caution which an ordinarily prudent
person would have used in the same situation? If not, then he is guilty of negligence. “The
existence of negligence in a given case is not determined by reference to the personal judgment
of the actor in the situation before him. The Law considers what would be reckless,
blameworthy, or negligent in the man of ordinary intelligence and prudence and determines
liability by that.” Petitioner is negligent because she failed to use “that reasonable care and
caution which an ordinarily prudent person would have used in the same situation.” A cashier in
her position would have used the vault to keep her collections. Petitioner failed to do this. Her
negligence is made more pronounced by the fact that the collections kept in the vault were not
taken by the robbers.
MARIA THERESA G. GUTIERREZ, PETITIONER, VS. COMMISSION ON
AUDIT AND AUDITOR NARCISA DJ JOAQUIN, RESPONDENTS.
G.R. No. 200628 | 2015-01-13

EN BANC

DECISION

LEONEN, J.:

A cashier who is found to have been negligent in keeping the funds in his or her custody
cannot be relieved from his or her accountability for amounts lost through robbery.

This is a Petition for Certiorari under Rule 65 of the Rules of Court assailing the June 5,
2008 withholding order and the Commission on Audit's January 31, 2012 decision holding
Maria Theresa G. Gutierrez (Gutierrez) liable for the P10,105,687.25 that was lost
through robbery.

Gutierrez is a Cash Collecting Officer, with the designation of Cashier III at National Food
Authority-National Capital Region, National District Office (NFA-NCR, NDO).[1] On May 30,
2008, she had collections amounting to F9,390,834.00, covered by Official Receipt Nos.
0420975 to 0421246.[2] On that day, she placed the collections in a wooden cabinet.[3]

The next day,. Gutierrez’s collections amounted to P1,505,625.00.[4] Of that amount,

P714,852.75 and an undeposited amount of P0.50 from March 2008 were placed in a
wooden cabinet.[5] The rest was placed in the safety vault.[6]

The total undeposited collection as of March 31, 2008 was P10,896,459.50. Of that
amount, P10,105,687.25 was placed in the "pearless" boxes[7] in a wooden cabinet and
P790,772.25 was placed in the safety vault.[8]

On June 1, 2008, at about 1:35 a.m., armed men in military uniforms with Philippine
National Police-Security Agencies and Guards Supervision Division (PNP-SAGSD)
identifications entered the NFA-NCR, NDO.[9] The armed men disarmed NFA-NCR, NDO's
security guards and took Gutierrez's undeposited collections.[10] Lockheed Detective and
Watchman Agency, Inc. was NFA-NCR, NDO's contracted security agency.[11]

The security guards on duty executed their respective affidavits. Based on their affidavits,
armed men entered the NFA-NCR, NDO compound after they had been disarmed,
threatened, and tied up.[12] The security guards immediately reported the incident to the
Valenzuela Police Station,[13] where an investigation report[14]was issued consistent with
the security guards' narrations in their affidavits.[15]

On June 3, 2008, the Commission on Audit, National Food Authority-NCR, North District
Office, Malanday, Valenzuela City, through State Auditor Narcisa DJ Joaquin (State
Auditor Joaquin), issued a demand letter to Gutierrez.[16] Gutierrez was informed that she
must immediately produce the missing funds amounting to P10,105,686.75. [17] She was
also ordered to submit within 72 hours a written explanation why such shortage
occurred.[18]
On June 5, 2008, the Commission on Audit, through State Auditor Joaquin, issued a
withholding order, addressed to Roberto S. Musngi (Musngi), Manager of National Food
Authority, North District Office.[19] Musngi was informed that upon examination of
Gutierrez's account on June 1, 2008, it was established that there was a P10,105,686.75
shortage in Gutierrez's accountabilities.[20] Pursuant to Section 37 of Presidential Decree
No. 1445, Musngi was directed to withhold Gutierrez's salaries and other emoluments so
these could be applied to the satisfaction of the shortage.[21]

In response to the June 3, 2008 demand letter of the Commission on Audit, Gutierrez
executed an affidavit dated June 6, 2008 wherein she narrated that she had been serving
as National Food Authority's Cash Collecting Officer since 1985.[22] Her office was located
at the far end of the National Food Authority building.[23]That was where the "pearless"
boxes and the cabinet where she kept her collections could be found.[24] Quoted below is
her explanation for using "pearless" boxes to keep her collections:

6. That because of the volume of money I accept every day, which averages from 4 to 6
million pesos every day depending on the seasons, most of my time inside the office is
spent to counting, bundling by different denominations the money. To emphasize the
point, the money that I am accepting from remittances and payments are of different
denominations, from twenty five centavo (Php0.25) coins to one thousand peso
(Php1,000.00) bills. The coins alone would amount in the average of Twelve thousand
pesos (Php12,000.00). I could literally say that from the time I timed in the office at
about 6:30 a.m. up to the time I timed out at about 6:30 p.m., my only rest from my
work is to [be] going to the ladies room and the break during lunch time.

....

8. That when the rice crises came up on April 2008, volume of work including the amount
of money that comes into my office almost doubled. That because of the heavy operations
in our office I had an average collection starting April 2008 of 6 to 9 Million Pesos every
day of every denomination, with coins averaging from 12 to 16 thousand pesos that
needs to be counted, receipted, bundled, balanced, reported and kept.

9. That it is almost automatic that when I enter my office what comes to my mind is to
count the money and bundle them by the hundreds and prepare receipts for the payments
and remittances until the time to leave at about 6:30 p.m. I would also cause the deposit
of the money collected the day before to Land Bank. But there were even times that
because of the volume of the money, bank representatives could not sort out all the
smaller bills (P20s and P50s) being picked up from our office as the Armor van should be
in the bank at 3:00 p.m. Thus, there would be arrangements in the bank that the counting
would continue inside their office, which oftentimes lasts until late night.

10. That since April 2008 or the start of the heavy operations, I have been putting some
of the money in the "pearless" box, because of the volume, which I have to carry and
keep safe at the cabinet inside. I have six (6) pearless boxes in the office.

....

13. That since May 30, 2008 is a Friday, banks are closed the following day and the
money collected on said date would have remained in my office until the next banking
day.
....

18. It was very unfortunate that the money accepted on May 30, 2008 and the collection
in the night before the robbery were left in the pearless box inside the cabinet and not
inside the vault. But with the volume of money, the vault has not enough space to
accommodate all of it.

19. And with the amount of work that I am doing every day from 6:30 in the morning up
to 6:30 p.m., more or less, where my only rest is literally going to the ladies room, and
with the safe location of my office, it did not come to my mind that this incident would
come.

20. That I have nothing to do with what happened in the incident of June 1, 2008 at 1:30
in the morning and I am not in control now to produce those missing funds taken by the
robbers.[25]

On June 10, 2008, Gutierrez requested relief from money accountability for the loss of
the collections.[26] The letter was addressed to State Auditor Joaquin.

In the letter dated June 26, 2008 addressed to State Auditor Joaquin, Gutierrez appealed
the withholding order issued on June 5, 2008.[27] She prayed that her salaries and
emoluments be given to her while the robbery incident was still under investigation.[28] She
was a widow who had three (3) dependents and an 85-year-old mother residing with her
in need of medical attention.[29] She had no other source of income to support herself, her
dependents, and her mother.[30]

On June 26, 2008, State Auditor Joaquin denied Gutierrez's appeal of the withholding
order.[31] State Auditor Joaquin informed Gutierrez that there was already a prima facie
case for malversation against her under Article 217 of the Revised Penal Code.[32]

On July 11, 2008, Gutierrez filed a notice of appeal of State Auditor Joaquin's withholding
order dated June 5, 2008.[33]

On July 21, 2008, Atty. Saturnino R. Rola, Jr., Director of the National Food Authority,
Enforcement, Investigation and Prosecution Department, submitted a memorandum
addressed to the Administrator, Jessup P. Navarro.[34] He found that the security agency
was solidarity liable with security guard Romeo Casta for the amount lost.[35] He also found
that Gutierrez, by keeping her collections in unsecured "pearless" boxes and not in a
vault, was grossly negligent in safekeeping her collections.[36] He recommended that
Gutierrez be administratively charged with dishonesty, gross neglect of duty, conduct
prejudicial to the best interest of the service, and violation of reasonable office rules and
regulations without prejudice to the filing of appropriate criminal charges. [37] He also
recommended the restitution of the amount lost from Lockheed Detective and Watchman
Agency, Inc. Further, he recommended the ban of security guard Romeo Casta from
deployment in any National Food Authority installations.[38]

Similar incidents of robbery at different National Food Authority offices involving

Lockheed Detective and Watchman Agency, Inc. were reported between 2006 and
2008.[39]
On September 11, 2008, Commission on Audit Director IV Tito S. Nabua (Director Nabua)
issued a decision denying Gutierrez's appeal[40] and expressing his agreement with the
issuance of the withholding order.[41] The robbery incident was acknowledged in the
decision.[42] However, Gutierrez's alleged act of negligence in the performance of her
duties could not be set aside.[43] Her failure to follow safekeeping procedures showed lack
of due care on her part.[44] Aside from Article 217 of the Revised Penal Code, the liabilities
of an accountable officer are found in Section 105 of Presidential Decree No. 1445.[45]

Gutierrez filed a motion for reconsideration of the September 11, 2008 decision of
Director Nabua on the ground that he did not give her a chance to file a memorandum of
appeal before submission of the case for resolution.[46] According to Gutierrez, this was a
violation of the rules and of her right to due process. [47]She also cited reversible error in
upholding State Auditor Joaquin's order despite lack of factual and legal bases as ground
for her motion.[48]

On January 31, 2012, the Commission on Audit denied her request for relief from money
accountability.[49] Its ruling is reproduced as follows:

WHEREFORE, premises considered, this Commission DENIES the herein request for relief
from money accountability, there being positive showing of fault or negligence on the
part of Ms. Maria Theresa G. Gutierrez in the safekeeping and custody of subject
government funds.

Accordingly, Ms. Gutierrez shall be liable to pay to1 the NFA the missing amount of
P10,105,687.25. This is without prejudice to the right of the NFA-NCR, NDO to proceed
against Lockheed Detective and Watchman Agency, Inc. for the indemnification of the
loss as security services provider to the NFA-NCR, NDO, Valenzuela City.[50]

The Commission on Audit found that Gutierrez was negligent in safekeeping her
collections.[51] Placement of collections in a "pearless" box instead of in the safety vault,
especially given the volume of collections, constituted gross negligence on her part.[52] Her
20-year service aggravated her negligence.[53] It should have made her more "security-
conscious."[54]

The Commission on Audit also found that the security guards' failure to secure National
Food Authority's premises was a violation of the contract between National Food Authority
and Lockheed Detective and Watchman Agency, Inc.[55]

We decide whether Gutierrez's due process rights were violated when the Commission on
Audit decided her appeal without requiring her to file an appeal memorandum. We also
decide whether Gutierrez is liable for the amounts lost through a robbery.

Petitioner emphasizes that she was first assisted by counsel only when she filed a notice
of appeal. Respondent auditor had already issued the withholding order dated June 5,
2008 and .letter dated June 26, 2008 before petitioner was assisted by counsel.

Petitioner argues that her right to due process was violated when a decision was rendered
against her without giving her a chance to file an appeal memorandum in accordance
with Section 5 of Rule V of the Revised Rules of Procedure of the Commission on Audit.
The appeal memorandum was her chance to raise issues against respondent auditor's
orders to prove her case and to submit evidence to support her defense.[56]
Petitioner's right to due process was further violated when her motion for reconsideration
was resolved by the Commission on Audit instead of by Director Nabua. This prevented
her from filing a petition for review of Director Nabua's decision before the Commission
on Audit.[57]

Petitioner cites Article IX(A), Section 7 of the Constitution to support her argument that
she has a right to present her side in a memorandum.[58] It provides:

Section 7. Each Commission shall decide by a majority vote of all its Members, any case
or matter brought before it within sixty days from the date of its submission for decision
or resolution. A case or matter is deemed submitted for decision or resolution
upon the filing of the last pleading, brief, or memorandum required by the rules
of the Commission or by the Commission itself. Unless otherwise provided by this
Constitution or by law, any decision, order, or ruling of each Commission may be brought
to the Supreme Court on certiorari by the aggrieved party within thirty days from receipt
of a copy thereof. (Emphasis supplied)

Petitioner argues that aside from the right to be heard, administrative due process also
requires the right to present evidence and for such evidence to be considered by the
deciding tribunal.[59]

Lastly, petitioner points out that the cause of the shortage was the robbery incident,
which was a result of the negligence of the security guards and not her negligence.[60] The
vault that was assigned to her did not have enough space to accommodate her
collections.[61]

On the other hand, respondents argue that petitioner was not deprived of due process
when she was not given the opportunity to file an appeal memorandum. Her affidavit was
a sufficient platform to raise her defenses.[62] Moreover, the presence of a counsel is not
required in administrative proceedings.[63]

Respondents also argue that petitioner cannot ask the Director or the Auditor to allow
her to file an appeal memorandum since it is the Commission on Audit that has the
exclusive jurisdiction over requests for relief from accountability in excess of
P500,000.00.[64] This, according to respondent, is based on Commission on Audit
Resolution No. 93-605 dated August 3, 1993.[65]

Finally, respondents argue that the circumstances show that petitioner fell short of the
demands of her position as cashier.[66] What she could have done was to request additional
vaults if the vaults in her possession were not enough to accommodate all her
collections.[67]

We rule for respondents.

Petitioner's due process rights were not violated

Petitioner argues that she was assisted by counsel only after a withholding order had
already been issued. She also argued that the Commission on Audit Director's issuance
of a decision on her appeal without requiring her to file an appeal memorandum was a
violation of her due process rights.

Petitioner's arguments are not tenable.

The right to counsel under Section 12(1) of Article III of the Constitution applies in
criminal proceedings, but not in administrative proceedings. It is a right given to persons
accused of an offense during criminal investigation.[68] Any proceeding conducted by an
administrative body is not part of the criminal investigation or prosecution.[69]

Thus, this court said in Remolona v. Civil Service Commission:[70]

While investigations conducted by an administrative body may at times be akin to a

criminal proceeding, the fact remains that under existing laws, a party in an
administrative inquiry may or may not be assisted by counsel, irrespective of the nature
of the charges and of the respondent's capacity to represent himself, and no duty rests
on such body to furnish the person being investigated with counsel. In an administrative
proceeding, a respondent has the option of engaging the services of counsel or not. This
is clear from the provisions of Section 32, Article VII of Republic Act No. 2260 (otherwise
known as the Civil Service Act) and Section 39, paragraph 2, Rule XIV (on discipline) of
the Omnibus Rules Implementing Book V of Executive Order No. 292 (otherwise known
as the Administrative Code of 1987). Thus, the right to counsel is not always imperative
in administrative investigations because such inquiries are conducted merely to
determine whether there are facts that merit disciplinary measure against erring public
officers and employees, with the purpose of maintaining the dignity of government
service. As such, the hearing conducted by the investigating authority is not part of a
criminal prosecution.[71]

While the purpose of criminal proceedings is to determine if a person suspected of

committing an offense has indeed committed an offense, the purpose of an administrative
proceeding is to determine if a person in public office has violated the trust reposed in
him or her by the public. In a criminal proceeding, if a person is found guilty of an offense,
the corresponding punishment is imposed primarily to protect the public from being
exposed to and correct his or her deviant behavior. In an administrative proceeding, if a
person is found administratively liable, the corresponding penalty is imposed primarily to
preserve public trust and protect the integrity of public service.[72]

Petitioner is not being accused of or investigated for a crime. The Commission on Audit's
withholding order and its denial of petitioner's request for relief from shortage were issued
after it had made a finding that the money entrusted to petitioner was lost. A finding of
criminal liability was not the reason for the Commission on Audit's issuances. The
Commission on Audit has no jurisdiction to investigate a crime or to make a finding of
criminal liability. Any proceeding conducted prior to these issuances was for the purpose
of determining if petitioner's salaries should be withheld or if petitioner should be relieved
from her liability as a cashier.

Petitioner argues that Rule V, Section 5 of the Revised Rules of Procedure of the
Commission on Audit[73] requires that she be given an opportunity to file an appeal
memorandum before the case is submitted for decision. Section 5 is cited as follows:

Section 5. APPEAL MEMORANDUM AND REPLY - Upon receipt of the records of the case,
the Director shall issue an Order requiring the appellant to file an appeal memorandum
within twenty (20) days from receipt of the order. The appellant shall serve a copy of his
appeal memorandum to the Auditor or appellee who may reply thereto within the same
period of time. With the filing of the appeal memorandum and reply or lapse of the period
within which to file them, the appeal shall be deemed submitted for decision.

Petitioner also argues that her due process rights were violated when the Commission on
Audit decided her motion for reconsideration of the Commission on Audit Director's
decision dated September 11, 2008, and denied her request for relief from accountability
without her filing a memorandum or a petition for review. She cites Article IX(A), Section
7 of the Constitution:

Section 7. Each Commission shall decide by a majority vote of all its Members, any case
or matter brought before it within sixty days from the date of its submission for decision
or resolution. A case or matter is deemed submitted for decision or resolution upon the
filing of the last pleading, brief, or memorandum required by the rules of the Commission
or by the Commission itself. Unless otherwise provided by this Constitution or by law,
any decision, order, or ruling of each Commission may be brought to the Supreme Court
on certiorari by the aggrieved party within thirty days from receipt of a copy thereof.
(Emphasis supplied)

Petitioner's due process rights were not violated when the Commission on Audit Director
had failed to require her to submit an appeal memorandum before he decided her appeal
of the State Auditor's issuance of a withholding order. There was also no violation of due
process rights when the Commission on Audit issued its January 31, 2012 decision
denying her request for relief from accountability, without a petition for review of the
Commission on Audit Director's decision. The right to appeal is not part of due
process.[74] Neither is it a natural right.[75]

Total Amount of Money or Cost of

Approving COA Official
Property Involved

Corporate and National Unit Auditor Provincial

not exceeding P5 0,000
and City Auditor

Director/Officer-in-Charge of Central and

in excess of P50,000 up to P100,000
Regional Offices

Assistant Commissioner in excess of P100,000 up to P200,000

COA Chairman in excess of P200,000 up to P500,000

 Commission Proper above P500,000

Moreover, petitioner's relief from accountability may be decided by the Commission on

Audit at the first instance. Based on Commission on Audit Resolution No. 93-605,[76] only
the Commission on Audit may approve requests for relief from accountabilities amounting
to more than P500,000.00. Thus:

Now, therefore, pursuant to Article IX-D, Section 2(2) of the Constitution, Section 73 of
PD 1445 and in conformity with Section 378 of the Local Government Code, the
Commission Proper hereby resolves, as it does hereby resolve, to authorize the following
COA Officials to act on requests for relief from property and/or money accountability in
the amounts indicated hereunder, except in cases of questions of law, without prejudice
to the usual appeal that may be taken therefrom to the Commission Proper, pursuant to
Section 48 of PD 1445.

In any case, we determine if petitioner's due process rights were violated in the course
of the proceedings before the Commission on Audit.

This court in Ang Tibay v. Court of Industrial Relations[77] ruled that administrative due
process requires only the following:

(a) The party should be allowed to present his or her own case and submit supporting
evidence;

(b) The deciding tribunal must consider the party's evidence;

(c) There is evidence to support the tribunal's decision;

(d) The evidence supporting the tribunal's decision must be substantial or such "relevant
evidence as a reasonable mind might accept as adequate to support a conclusion";[78]

(e) The tribunal's decision was based on the evidence presented or the records of the
case disclosed to the parties;

(f) The tribunal's decision must be based on the judges' independent consideration of the
facts and law governing the case; and

(g) The tribunal's decision must be rendered such that the issues of the case and the
reasons for the decisions are known to the parties.[79]

In sum, due process in administrative proceedings does not necessarily require a trial
type of hearing. Neither does it require an exchange of pleadings between or among the
parties. Due process is satisfied if the party who is properly notified of allegations against
him or her is given an opportunity to defend himself or herself against those allegations,
and such defense was considered by the tribunal in arriving at its own independent
conclusions. This court explained in Ledesma v. Court of Appeals:[80]

Due process is satisfied when a person is notified of the charge against him and given an
opportunity to explain or defend himself. In administrative proceedings, the filing of
charges and giving reasonable opportunity for the person so charged to answer the
accusations against him constitute the minimum requirements of due process. The
essence of due process is simply to be heard, or as applied to administrative proceedings,
an opportunity to explain one's side, or an opportunity to seek a reconsideration of the
action or ruling complained of.

....

Administrative due process cannot be fully equated with due process in its strict judicial
sense for it is enough that the party is given the chance to be heard before the case
against him is decided.[81]

Petitioner's arguments and the issues she raised are sufficiently expressed in her affidavit
submitted to the Commission on Audit, her motion for reconsideration of the Commission
on Audit Director's decision, and her petition and memorandum submitted to this court.
Even though petitioner was not able to file an appeal memorandum, she was able to state
her substantive defenses in the pleadings she filed before the Commission on Audit and
this court. According to petitioner, the money that was lost through robbery was not a
result of her negligence. She kept the money in "pearless" boxes for practical and not for
malicious reasons.

The decisions of the State Auditor, the Commission on Audit Director, and the
Commission on Audit had considered these facts and defenses before they made
conclusions' against petitioner. Therefore, petitioner cannot say that her due process
rights were violated for the lack of order to file an appeal memorandum.

II
Relief from cashier's liability cannot be granted if the cashier was negligent in
keeping funds under his or her custody

As a cashier for the National Food Authority, petitioner qualified as an accountable officer
under Presidential Decree No. 1445. Accountable officers are government officers whose
duties require them to possess or be in custody of government funds or
properties.[82] They are in charge of the safekeeping of the funds or properties under their
custody.[83]

Presidential Decree No. 1445 makes cashiers liable for the value of the money or property
in their custody in case they were lost because of negligence or unlawful deposit, use, or
application. Thus:

Section 105. Measure of liability of accountable officers.

(1) Every officer accountable for government property shall be liable for its money value
in case of improper or unauthorized use or misapplication thereof, by himself or any
person for whose acts he may be responsible. We shall likewise be liable for all losses,
damages, or deterioration occasioned by negligence in the keeping or use of the property,
whether or not it be at the time in his actual custody.

(2) Every officer accountable for government funds shall be liable for all losses resulting
from the unlawful deposit, use, or application thereof and for all losses attributable to
negligence in the keeping of the funds.
Imposing liability on cashiers for lost money or property in their custody means that the
value of the money or property becomes their debt.

The Commission on Audit has the power to withhold payment of money due to persons
indebted to the government. Section 37 of Presidential Decree No. 1445 provides:

Section 37. Retention of money for satisfaction of indebtedness to government. When

any person is indebted to any government agency, the Commission may direct the proper
officer to withhold the payment of any money due such person or his estate to be applied
in satisfaction of the indebtedness.

Petitioner does not deny that the money for which she was accountable as a cashier was
lost through robbery. She also did not deny that she kept the greater portion of the
amount lost, not in the vault, but in boxes, for practical reasons. She was not motivated
by malice when she kept the money that was in her possession in the boxes.

Without going to the issue of the existence of negligence, the Commission on Audit may
already issue a withholding order for petitioner's salaries and emoluments because of
this. Petitioner's act of keeping the money in boxes instead of in the vault can be
subsumed under "unlawful deposit" that may cause a cashier to incur liability in case the
unlawfully deposited money was lost.

A similar case, Leano v. Domingo,[84] showed that the safety of money cannot be ensured
when it is deposited in enclosures other than the safety vault. Leano also involves a
government cashier whose money accountability was lost through robbery. As in this
case, the cashier did not keep her money accountabilities in the vault. Requesting this
court to review the Commission on Audit's denial of her request for accountability, Leano
argued that she had no other choice but to use a steel cabinet to keep her money
accountabilities because the former cashier did not entrust to her the safety vault's
combination. This court upheld the Commission on Audit's decision to deny Leano's
request for relief from accountabilities and found her to be negligent in handling her
money accountabilities:

[I]t is evident that petitioner fell short of the demands inherent in her position. As aptly
argued by the Solicitor General, an exercise of proper diligence expected of her position
would have compelled petitioner to request an immediate change of the combination of
the safe. However, the record is bare of any showing that petitioner had, at least, exerted
any effort to have the combination changed, content with the fact that, according to her,
the former cashier also used the steel cabinet as depository of the funds.

In addition, it was found that the use of the steel cabinet was not a wise and prudent
decision. The steel cabinet, even when locked, at times could be pulled open, thus it can
be surmised that even without the use of a key, the robbery could be committed once
the culprits succeed in entering the room (Progress Report of the Police dated February
28, 1985). Moreover, the original key of the steel cabinet was left inside a small wooden
box placed near the steel cabinet; it is therefore highly possible that the said steel cabinet
was opened with the use of its original key (Police Alarm Report).[85]

Hence, keeping National Food Authority collections outside the vault constituted
negligence on the part of petitioner.
The test of negligence is stated in Picart v. Smith, Jr.:[86]

The test by which to determine the existence of negligence in a particular case may be
stated as follows: Did the defendant in doing the alleged negligent act use that reasonable
care and caution which an ordinarily prudent person would have used in the same
situation? If not, then he is guilty of negligence.[87]

"The existence of negligence in a given case is not determined by reference to the

personal judgment of the actor in the situation before him. The Law considers what would
be reckless, blameworthy, or negligent in the man of ordinary intelligence and prudence
and determines liability by that."[88]

Petitioner is negligent because she failed to use "that reasonable care and caution which
an ordinarily prudent person would have used in the same situation."[89] A cashier in her
position would have used the vault to keep her collections. Petitioner failed to do this.
Her negligence is made more pronounced by the fact that the collections kept in the vault
were not taken by the robbers.

Petitioner insists that the space in the vault was not enough to accommodate all her
collections. However, she admitted that she had been receiving relatively large collections
in the past three (3) months prior to the robbery. She should have requested an
additional vault wherein she could safely keep her collections. She could also have set
aside time to deposit her collections for the day considering the. amount of cash she had
been collecting, in order to prevent its accumulation. This could have ensured that the
vault's space would be sufficient to keep any remaining collection after the deposit. This
could also have prevented her collections from accumulating to an amount that rendered
any loss through untoward incidents such as robbery significant. Petitioner failed to even
allege that she exerted effort to obtain additional vaults or to set aside time to deposit
her collections to the bank.

For these reasons, petitioner cannot be relieved from liability. A person who is negligent
in keeping the funds cannot be relieved from liability.[90]

WHEREFORE, the petition is DENIED.

SO ORDERED.
G.R. No. 181381. July 20, 2015.*

SECURITIES and EXCHANGE COMMISSION, petitioner, vs. UNIVERSAL RIGHTFIELD

PROPERTY HOLDINGS, INC., respondent.

Mercantile Law; Securities Regulation Code; There is no dispute that violation of the reportorial
requirements under Section 17.1 of the Amended Implementing Rules and Regulation (IRR) of
the Securities Regulation Code (SRC) is a ground for suspension or revocation of registration of
securities pursuant to Sections 13.1 and 54.1 of the SRC.—There is no dispute that violation of
the reportorial requirements under Section 17.1 of the Amended Implementing Rules and
Regulation of the SRC is a ground for suspension or revocation of registration of securities
pursuant to Sections 13.1 and 54.1 of the SRC. However, contrary to the CA ruling that
separate notices and hearings for suspension and revocation of registration of securities and
permit to sell them to the public are required, Sections 13.1 and 54.1 of the SRC expressly
provide that the SEC may suspend or revoke such registration only after due notice and
hearing.

Due Process; The Supreme Court (SC) has consistently held that the essence of due process is
simply an opportunity to be heard, or as applied to administrative proceedings, an opportunity to
explain one’s side or an opportunity to seek a reconsideration of the action or ruling complained
of.—The Court has consistently held that the essence of due process is simply an opportunity to
be heard, or as applied to administrative proceedings, an opportunity to explain one’s side or an
opportunity to seek a reconsideration of the action or ruling complained of. Any seeming defect
in its observance is cured by the filing of a motion for reconsideration, and denial of due process
cannot be successfully invoked by a party who has had the opportunity to be heard on such
motion. What the law prohibits is not the absence of previous notice, but the absolute absence
thereof and the lack of opportunity to be heard.

Same; Due Notice; Words and Phrases; “Due notice” simply means the information that must be
given or made to a particular person or to the public within a legally mandated period of time so
that its recipient will have the opportunity to respond to a situation or to allegations that affect
the individual’s or public’s legal rights or duties.—Contrary to the view that a separate notice of
hearing to revoke is necessary to initiate the revocation proceeding, the Court holds that such
notice would be a superfluity since the Order dated July 27, 2004 already states that such
proceeding shall ensue if URPHI would still fail to submit the reportorial requirements after the
lapse of the 60-day suspension period. After all, “due notice” simply means the information that
must be given or made to a particular person or to the public within a legally mandated period of
time so that its recipient will have the opportunity to respond to a situation or to allegations that
affect the individual’s or public’s legal rights or duties.
Mercantile Law; Securities and Exchange Commission; Regulatory Power; The revocation of
registration of securities and permit to sell them to the public is not an exercise of the Securities
and Exchange Commission’s (SEC’s) quasi-judicial power, but of its regulatory power.—The
revocation of registration of securities and permit to sell them to the public is not an exercise of
the SEC’s quasi-judicial power, but of its regulatory power. A “quasi-judicial function” is a term
which applies to the action, discretion, etc., of public administrative officers or bodies, who are
required to investigate facts, or ascertain the existence of facts, hold hearings, and draw
conclusions from them, as a basis for their official action and to exercise discretion of a judicial
nature. Although Section 13.1 of the SRC requires due notice and hearing before issuing an
order of revocation, the SEC does not perform such quasi-judicial functions and exercise
discretion of a judicial nature in the exercise of such regulatory power. It neither settles actual
controversies involving rights which are legally demandable and enforceable, nor adjudicates
private rights and obligations in cases of adversarial nature. Rather, when the SEC exercises its
incidental power to conduct administrative hearings and make decisions, it does so in the
course of the performance of its regulatory and law enforcement function. Securities and
Exchange Commission vs. Universal Rightfield Property Holdings, Inc., 763 SCRA 197, G.R.
No. 181381 July 20, 2015

G.R. No. 181381 July 20, 2015

SECURITIES and EXCHANGE COMMISSION, Petitioner,

vs.
UNIVERSAL RIGHTFIELD PROPERTY HOLDINGS, INC., Respondent.

DECISION

PERALTA, J.:

Before the Court is a petition for review under Rule 45 of the Rules of Court, which seeks to reverse
and set aside the Decision1 dated January 21, 2008 of the Court of Appeals (CA) in CA-G.R. SP No.
93337, the dispositive portion of which reads:

WHEREFORE, in view of the foregoing, the petition is GRANTED. The assailed Resolution, dated
December 15, 2005, of the Securities and Exchange Commission, as well as its Order of Revocation
dated December 8, 2004, are hereby SET ASIDE.

SO ORDERED.2

The facts are as follows:

Respondent Universal Rightfield Property Holdings, Inc. (URPHI) is a corporation duly registered
and existing under the Philippine Laws, and is engaged in the business of providing residential and
leisure-related needs and wants of the middle and upper middle-income market.

On May 29, 2003, petitioner Securities and Exchange Commission (SEC), through its Corporate
Finance Department, issued an Order revoking URPHI's Registration of Securities and Permit to Sell
Securities to the Public for its failure to timely file its Year 2001 Annual Report and Year 2002 1st,
2nd and 3rd Quarterly Reports pursuant to Section 173 of the Securities Regulation Code (SRC),
Republic Act No. 8799.

On October 16, 2003, URPHI filed with the SEC a Manifestation/Urgent Motion to Set Aside
Revocation Order and Reinstate Registration after complying with its reportorial requirements.

On October 24, 2003, the SEC granted URPHI's motion to lift the revocation order, considering the
current economic situation, URPHI's belated filing of the required annual and quarterly reports, and
its payment of the reduced fine of ₱82,000.00.

Thereafter, URPHI failed again to comply with the same reportorial requirements.

In a Notice of Hearing dated June 25, 2004, the SEC directed URPHI to show cause why its
Registration of Securities and Certificate of Permit to Sell Securities to the Public should not be
suspended for failure to submit the said requirements. Pertinent portion of the notice reads: Records
show that the corporation has failed to submit the following reports in violation of SRC Rule 17.1:

(1) 2003 Annual Report (SEC Form 17-A); and

(2) 2004 1st Quarter Report (SEC Form 17-Q)

The company has been allowed a non-extendible period until May 31, 2004 within which to file its
2003 Annual Report but to date the said report has not been submitted.

In view of the foregoing and considering the inadequate information available to the public, the
corporation is hereby directed to show cause why the Registration of its Securities and Certificate of
Permit to Sell Securities should not be suspended, in a hearing scheduled before Atty. Francia A.
Tiuseco-Manlapaz on July 6, 2004, at the Securities Registration Division, Corporation Finance
Department of the Commission, 6th Floor, SEC Building, EDA, Greenhills, Mandaluyong, Metro
Manila at 10:00 o'clock in the morning. Failure of the company to appear, through its representative,
at the said hearing shall be deemed a waiver on its part to be heard with regard to the suspension of
its Certificate of Permit to Sell Securities to the Public.

SO ORDERED.4

During the scheduled hearing on July 6, 2004, URPHI, through its Chief Accountant, Rhodora
Lahaylahay, informed the SEC why it failed to submit the reportorial requirements, viz.: (1) it was
constrained to reduce its accounting staff due to cost-cutting measures; thus, some of the audit
requirements were not completed within the original timetable; and (2) its audited financial
statements for the period ending December 31, 2003 could not be finalized by reason of the delay in
the completion of some of its audit requirements.

In an Order dated July 27, 2004, the SEC suspended URPHI's Registration of Securities and Permit
to Sell Securities to the Public for failure to submit its reportorial requirements despite the lapse of
the extension period, and due to lack of sufficient justification for its inability to comply with the said
requirements.

On August 23, 2004, the SEC, through its Corporation Finance Department, informed URPHI that it
failed to submit its 2004 2nd Quarter Report (SEC Form 17-Q) in violation of the Amended
Implementing Rules and Regulations of the SRC Rule 17 .1(1)(A)(ii).5 It also directed URPHI to file
the said report, and to show cause why it should not be held liable for violation of the said rule.
In a letter dated September 28, 2004, URPHI requested for a final extension, or until November 15,
2004, within which to submit its reportorial requirements. Pertinent portions of the letter read:

We refer to your Order dated 27 July 2004, wherein the Commission resolved to SUSPEND the
Corporation's Registration of Securities and Permit to Sell Securities to the Public due to non-filing of
the Corporation's reportorial requirements under SRC Rule 17 effective for sixty (60) days or until the
reporting requirements are complied [with]; otherwise, the Commission shall proceed with the
revocation of the Corporation's registration [of] securities. To date, the Corporation has not filed with
the Commission its 2003 Annual Report in SEC Form 17-A and 2004 1st and 2°d Quarterly reports
in SEC Form 17-Q. The non-submission of these reportorial requirements, as we have already
disclosed to you per our letter dated 13 September 2004, was due to the non-finalization of the
Corporation's audited financial statement for the fiscal year ended December 31, 2003.

During our meeting with our external auditor, SGV & Co. last 8 September 2004, SGV agreed to
facilitate the finalization of our financial statements within two (2) weeks. Notwithstanding the same,
the Corporation foresees the impossibility of complying with its submission until the end of the
month, as the partners of SGV are still reviewing the final draft of the financial statements. The
Corporation intends to comply with its reportorial requirements. However, due to the foregoing
circumstances, the finalization of our financial statement has again been delayed. In this regard, may
we request for the last time until November 15, 2004 within which to submit said reportorial
requirements.6

On December 1, 2004, URPHI filed with the SEC its 2003 Annual Report.

In an Order of Revocation7 dated December 8, 2004, the SEC revoked URPHI's Registration of
Securities and Permit to Sell Securities to the Public for its failure to submit its reportorial
requirements within the final extension period.

On December 9, 10, and 14, 2004, URPHI finally submitted to the SEC its 1st Quarterly Report for
2004, 2nd Quarterly Report for 2004, and 3rd Quarterly Report for 2004, respectively. Meantime,
URPHI appealed the SEC Order of Revocation dated December 8, 2004 by filing a Notice of Appeal
and a Memorandum both dated January 3, 2005.

In a Resolution dated December 15, 2005, the SEC denied URPHI's appeal, thus: WHEREFORE,
premises considered, the Memorandum dated 03 January 2005 of Universal Rightfield Property
Holdings, Inc. praying for the reversal of the Order of Revocation dated 08 December 2004 is
DENIED for lack of merit.

SO ORDERED.8

Aggrieved, URPHI filed a petition for review with the CA.

In a Decision dated January 21, 2008, the CA granted the petition and set aside the SEC Order of
Revocation after finding that URPHI was not afforded due process because no due notice was given
and no hearing was conducted before its registration of securities and permit to sell them to the
public was revoked. The CA noted that the hearing conducted on July 6, 2004 was only for the
purpose of determining whether URPHI's registration and permit to sell should be suspended and
not whether said registration should be revoked.

The CA ruled that based on how Sections 5.1 (m)9 and 13.110 of the SRC are worded, suspension
and revocation of URPHI's registration of securities each requires separate notices and hearings. It
also held that the Ruling11 in Globe Telecom, Inc. v. The National Telecommunications
Commission12 (Globe Telecom, Inc.) applies squarely to this case since the Section 13.1 of the SRC
itself provides that due notice and hearing are required before revocation may be ordered by the
SEC. In view of such specific mandate of the SRC in cases of revocation, the CA rejected the SEC's
argument that the hearing conducted for the suspension of URPHI's registration can already be
considered as the hearing for revocation.

The CA also held that the SEC cannot brush aside the specific mandate of Section 13 .1 of the SRC
by merely invoking the doctrine that administrative due process is satisfied when the party is given
the opportunity to explain one's side or the opportunity to seek a reconsideration of the action or
ruling taken. Citing Globe Telecom, Inc.13 the CA explained that while such doctrine remains valid
and has been applied in numerous instances, it must give way in instances when the statute itself,
such as Section 13 .1, demands prior notice and hearing. It added that the imperativeness for a
hearing in cases of revocation of registration of securities assumes greater significance, considering
that revocation is a measure punitive in character undertaken by an administrative agency in the
exercise of its quasi-judicial functions. Dissatisfied with the CA Decision, the SEC filed the instant
petition for review on certiorari, raising the sole issue that:

THE COURT OF APPEALS DECIDED A QUESTION OF SUBSTANCE WHICH IS NOT IN

ACCORD WITH THE LAW AND PREVAILING JURISPRUDENCE.14

On the one hand, the SEC contends that URPHI was accorded all the opportunity to be heard and
comply with all the reportorial requirements before the Order of Revocation was issued. Specifically,
in the Order dated July 27, 2004 suspending URPHI's registration of securities for 60 days, the SEC
expressly warned that such registration would be revoked should it persistently fail to comply with
the said requirements. Still, URPHI continuously failed to submit the required reports. On August 23,
2004, the SEC directed again URPHI to submit the required report and to show cause why it should
not be held liable for violation of the law. Instead of submitting the required reports, URPHI
requested for a final extension, or until November 15, 2004, within which to comply with its
reportorial requirements. For URPHI's failure to submit the said reports, the SEC issued the Order of
Revocation dated December 8, 2004. URPHI immediately filed a motion for reconsideration thereof
through a Notice of Appeal and a Memorandum both dated January 3, 2005, which the SEC later
denied in the Resolution dated December 15, 2005. Hence, URPHI was amply accorded its
guaranteed right to due process.

The SEC also submits that the factual milieu of Globe Telecom, Inc.15 cited by the CA in its Decision
is starkly different from this case. Unlike in the former case where the Court ruled that the fine
imposed by the National Telecommunications Commission without notice and hearing, was null and
void due to the denial of petitioner's right to due process, the SEC points out that URPHI was duly
notified of its violations and the corresponding penalty that may be imposed should it fail to submit
the required reports, and was given more than enough time to comply before the Order of
Revocation was issued. The SEC adds that a hearing was conducted on July 6, 2004 as to URPHI's
repeated failure to submit the reportorial requirements as mandated by the SRC and its
implementing rules and regulations, which was the basis in issuing the said Order.

On the other hand, URPHI insists that the CA was correct in ruling that the SRC requires separate
notices and hearings for revocation and suspension of registration of securities and permit to sell
them to the public. It then asserts that the warning contained in the SEC's suspension Order dated
July 27, 2004 does not meet the requirement of notice under the SRC. It stresses that while the SEC
issued a separate notice of hearing for such suspension, no similar notice was issued as regards
such revocation. It also notes that the July 6, 2004 hearing was with regard to the suspension of its
registration of securities, and that no hearing was ever conducted for purposes of revocation of such
registration.
On the SEC's claim that URPHI was afforded due process because it was already given the
opportunity to seek a reconsideration of the Order of Revocation by filing its Notice of Appeal and
Memorandum, URPHI argues that the filing of such appeal did not cure the violation of its right to
due process. In support of its argument, URPHI cites the Globe Telecom, Inc.16 ruling that notice and
hearing are indispensable when an administrative agency exercises quasi-judicial functions and that
such requirements become even more imperative if the statute itself demands it.

URPHI further cites the ruling17 in BLTB, Co. v. Cadiao, et al.,18 to support its view that a motion for
reconsideration is curative of a defect in procedural due process only if a party is given sufficient
opportunity to explain his side of the controversy. It claims that the controversy referred to is the
underlying substantive controversy of which the procedural due process controversy is but an
offshoot. Noting that the only issue raised in its appeal was procedural, i.e., whether it was denied
prior notice and hearing under the SRC, URPHI contends that it cannot be said that by appealing to
the SEC, it had the opportunity to explain its side on substantive controversy which pertains to its
alleged violation of the SRC and failure to comply with the reportorial requirements that prompted
the SEC to issue the Order of Revocation. Hence, such appeal cannot be considered curative of the
defect in procedural due process which attended the issuance of the said Order.

URPHI further submits that the prior revocation of its registration on May 29, 2003 did not cure the
lack of due process which attended the revocation of its registration on December 8, 2004. Since the
SEC deemed it proper to lift the prior revocation, such can no longer be used to sustain another
revocation order, much less one issued without prior notice and hearing. Granted that it was
accorded due process, URPHI asserts that the revocation of its registration of securities and permit
to sell them to the public is inequitable under the circumstances. It calls attention to the severe and
certain consequences of such revocation, i.e., termination of the public offering of its securities,
return of payments received from purchasers thereof, and its delisting from the PSE, which will
cause financial ruin and jeopardize its efforts to recover from its current financial distress. Claiming
that it exerted best effort and exercised good faith in complying with the reportorial requirements,
URPHI avers that the interest of the investing public will be better served if, instead of revoking its
registration of securities, the SEC will merely impose penalties and allow it to continue as a going
concern in the hope that it may later return to profitability.

The petition is meritorious.

There is no dispute that violation of the reportorial requirements under Section 17.119 of the Amended
Implementing Rules and Regulation20 of the SRC is a ground for suspension or revocation of
registration of securities pursuant to Sections 13.1 and 54.1 of the SRC. However, contrary to the
CA ruling that separate notices and hearings for suspension and revocation of registration of
securities and permit to sell them to the public are required, Sections 13 .1 and 54.1 of the SRC
expressly provide that the SEC may suspend or revoke such registration only after due notice and
hearing, to wit:

13.1. The Commission may reject a registration statement and refuse registration of the security
thereunder, or revoke the effectivity of a registration statement and the registration of the security
thereunder after due notice and hearing by issuing an order to such effect, setting forth its findings in
respect thereto, if it finds that:

a) The issuer:

xxxx
(ii) Has violated any of the provisions of this Code, the rules promulgated pursuant thereto, or any
order of the Commission of which the issuer has notice in connection with the offering for which a
registration statement has been filed;21

xxxx

54.1. If, after due notice and hearing, the Commission finds that: (a) There is a violation of this Code,
its rules, or its orders; (b) Any registered broker or dealer, associated person thereof has failed
reasonably to supervise, with a view to preventing violations, another person subject to supervision
who commits any such violation; ( c) Any registrant or other person has, in a registration statement
or in other reports, applications, accounts, records or documents required by law or rules to be filed
with the Commission, made any untrue statement of a material fact, or omitted to state any material
fact required to be stated therein or necessary to make the statements therein not misleading; or, in
the case of an underwriter, has failed to conduct an inquiry with reasonable diligence to insure that a
registration statement is accurate and complete in all material respects; or ( d) Any person has
refused to permit any lawful examinations into its affairs, it shall, in its discretion, and subject only to
the limitations hereinafter prescribed, impose any or all of the following sanctions as may be
appropriate in light of the facts and circumstances:

(i) Suspension, or revocation of any registration for the offering of securities;22

The Court has consistently held that the essence of due process is simply an opportunity to be
heard, or as applied to administrative proceedings, an opportunity to explain one's side or an
opportunity to seek a reconsideration of the action or ruling complained of.23 Any seeming defect in
its observance is cured by the filing of a motion for reconsideration, and denial of due process
cannot be successfully invoked by a party who has had the opportunity to be heard on such
motion.24 What the law prohibits is not the absence of previous notice, but the absolute absence
thereof and the lack of opportunity to be heard.25

In the present case, due notice of revocation was given to URPHI through the SEC Order dated July
27, 2004 which reads:

Considering that the company is under rehabilitation, the request was granted and it was given a
non-extendible period until May 31, 2004 within which to comply.

Despite the extension[,] however, it failed to submit said reports. Hence, a hearing was held on July
6, 2004 wherein the company's representative, its Chief Accountant and a Researcher appeared. No
sufficient reason or justification for the company's inability to comply with its reporting obligation was
presented.

In view thereof, the Commission[,] in its meeting held on July 22, 2004, resolved to SUSPEND the
Registration of Securities and Permit to Sell Securities to the Public issued to UNIVERSAL
RIGHTFIELD PROPERTY HOLDINGS, INC., in accordance with Section 54 of the Securities
Regulation Code.

This said Suspension shall be effective for sixty (60) days or until the reporting requirements are
complied [with,] otherwise the Commission shall proceed with the revocation of the company's
registration of securities.

Let this Order be published in a newspaper of general circulation in the Philippines or on the
Commission's web page.
SO ORDERED.26

Contrary to the view that a separate notice of hearing to revoke is necessary to initiate the
revocation proceeding, the Court holds that such notice would be a superfluity since the Order dated
July 27, 2004 already states that such proceeding shall ensue if URPHI would still fail to submit the
reportorial requirements after the lapse of the 60-day suspension period. After all, "due notice"
simply means the information that must be given or made to a particular person or to the public
within a legally mandated period of time so that its recipient will have the opportunity to respond to a
situation or to allegations that affect the individual's or public's legal rights or duties.27

Granted that no formal hearing was held before the issuance of the Order of Revocation, the Court
finds that there was substantial compliance with the requirements of due process when URPHI was
given opportunity to be heard. Upon receipt of the SEC Order dated July 27, 2004, URPHI filed the
letters dated September 13 and 28, 2004, seeking a final extension to submit the reportorial
requirements, and admitting that its failure to submit its 2nd Quarterly Report for 2004 was due to
the same reasons that it was unable to submit its 2003 Annual Report and 1st Quarterly Report for
2004. Notably, in its Order of Revocation, the SEC considered URPHI's letters and stated that it still
failed to submit the required reports, despite the lapse of the final extension requested.

In A.Z. Arnaiz, Realty, Inc. v. Office of the President,28 the Court held that due process, as a
constitutional precept, does not always, and in all situations, require a trial-type proceeding. Litigants
may be heard through pleadings, written explanations, position papers, memoranda or oral
arguments. The standard of due process that must be met in administrative tribunals allows a certain
degree of latitude as long as fairness is not ignored. It is, therefore, not legally objectionable for
being violative of due process for an administrative agency to resolve a case based solely on
position papers, affidavits or documentary evidence submitted by the parties. Guided by the
foregoing principle, the Court rules that URPHI was afforded opportunity to be heard when the SEC
took into account in its Order of Revocation URPHI's September 13 and 28, 2004 letters, explaining
its failure to submit the reportorial requirements, as well as its request for final extension within which
to comply. Pertinent portions of the said Order read:

The Commission in its meeting held on July 22, 2004 resolved to suspend its Registration of
Securities and Permit to Sell Securities to the Public. The Order of Suspension stated that it was to
be effective for sixty (60) days or until the reporting requirements were complied with by the
company; otherwise, the Commission shall proceed with the revocation of the company's registration
of securities.

The sixty (60)-day period had elapsed on September 25, 2004 but the Commission received a letter
on September 29, 2004 from the President of the company, Mr. Jose L. Merin. In the said letter, it
was admitted that the corporation had failed to submit its 2003 Annual Report (SEC Form 17-A) and
its 2004 1st and 2nd Quarterly Reports (SEC Form 17-Q) but explained that the reason for its
inability to submit said reports was due to the non-finalization of the company's audited financial
statements for the fiscal year ended December 31, 2003. It further stated that during its meeting with
its external auditor, SGV & Co., last September 8, 2004, SGV agreed to facilitate the finalization of
its financial statements within two (2) weeks. The corporation foresaw the impossibility of complying
with its submission until the end of the month as the partners of SGV were still reviewing the final
draft of the financial statements, thus, the request for extension FOR THE LAST TIME until
November 15, 2004 within which to comply.

SEC Form 17-A (for 2003) was finally submitted on December 1, 2004.
IN VIEW THEREOF, the Commission, in its meeting held on December 2, 2004, resolved to
REVOKE the Registration of Securities and Permit to Sell Securities to the Public issued to
UNIVERSAL RIGHTFIELD PROPERTY HOLDINGS, INC.29

Aside from having been given the opportunity to be heard before the SEC issued the Order of
Revocation, URPHI was likewise able to seek reconsideration of such action complained of. After
the issuance of the said Order, URPHI filed a Notice of Appeal and a Memorandum, asserting that it
was issued without due notice and hearing, and that the revocation is inequitable under the
circumstances. In the Resolution dated December 15, 2004, the SEC denied URPHI's appeal in this
wise:

In the instant case, URPHI was accorded due process when its Chief Financial Officer gave its side
on the imputed violation and informed the Commission that it will not be able to submit its Annual
Report (SEC Form 17-A) for the fiscal year ending on 31 December 2003 and requested for
additional time to comply with the said requirements. The Commission granted URPHI a non-
extendible period of forty-seven (47) calendar days or until 15 November 2004 within which to
comply.

In spite of the extension of time given, URPHI still failed to submit the said reports. During the 06
July 2004 hearing where the Chief Accountant and researcher of URPHI were present, both failed to
present sufficient justifications for URPHI's inability to comply with its reporting obligations.

It is also noteworthy to mention that URPHI's Registration of Securities and Permit to Sell Securities
to the Public had been revoked on several occasions on account of the same deficiency. URPHI is
aware of the SRC Rules and must suffer the consequences of its reported violations.30

Verily, URPHI was given the opportunity to be heard before the Order of Revocation was issued, as
well as the opportunity to seek the reconsideration of such order.

Meanwhile, the Court disagrees with URPHI's claim that the Globe Telecom, Inc.31 ruling - that notice
and hearing are indispensable when an administrative agency exercises quasi-judicial functions and
that such requirements become even more imperative if the statute itself demands it -is applicable to
the present case.

In Gamboa v. Finance Secretary,32 the Court has held that the SEC has both regulatory and
adjudicative functions, thus:

Under its regulatory responsibilities, the SEC may pass upon applications for, or may suspend or
revoke (after due notice and hearing), certificates of registration of corporations, partnerships and
associations (excluding cooperatives, homeowners associations, and labor unions); compel legal
and regulatory compliances; conduct inspections; and impose fines or other penalties for violations
of the Revised Securities Act, as well as implementing rules and directives of the SEC, such as may
be warranted.

Relative to its adjudicative authority, the SEC has original and exclusive jurisdiction to hear and
decide controversies and cases involving

a. Intra-corporate and partnership relations between or among the corporation, officers and
stockholders and partners, including their elections or appointments;
 b. State and corporate affairs in relation to the legal existence of corporations, partnerships
and associations or to their franchises; and

c. Investors and corporate affairs particularly in respect of devices and schemes, such as
fraudulent practices, employed by directors, officers, business associates, and/or other
stockholders, partners, or members of registered firms; x x x

As can be gleaned from the aforequoted ruling, the revocation of registration of securities and permit
to sell them to the public is not an exercise of the SEC's quasi-judicial power, but of its regulatory
power. A "quasi-judicial function" is a term which applies to the action, discretion, etc., of public
administrative officers or bodies, who are required to investigate facts, or ascertain the existence of
facts, hold hearings, and draw conclusions from them, as a basis for their official action and to
exercise discretion of a judicial nature.33 Although Section 13.1 of the SRC requires due notice and
hearing before issuing an order of revocation, the SEC does not perform such quasi-judicial
functions and exercise discretion of a judicial nature in the exercise of such regulatory power. It
neither settles actual controversies involving rights which are legally demandable and enforceable,
nor adjudicates private rights and obligations in cases of adversarial nature. Rather, when the SEC
exercises its incidental power to conduct administrative hearings and make decisions, it does so in
the course of the performance of its regulatory and law enforcement function.

Significantly, unlike in Globe Telecom, Inc.34 where the Court ruled that the fine imposed by the NTC
without notice and hearing, was null and void due to the denial of petitioner's right to due process,
the revocation of URPHI's registration of securities and permit to sell them to the public cannot be
considered a penalty but a withdrawal of a privilege, which regulatory power the SEC validly
exercised after giving it due notice and opportunity to be heard.

While URPHI correctly relied in BLTB Co., Inc. v. Cadiao35 to support its view that a motion for
reconsideration is curative of a defect in procedural due process only if a party is given sufficient
opportunity to explain his side of the controversy, the Court rejects URPHI's claim that it did not have
the opportunity to explain the substantive controversy of its violation of the SRC reportorial
requirements.36 Contrary to the claim that only the issue of procedural due process was raised in its
appeal with the SEC, URPHI also raised in its Memorandum dated January 3, 2005 the reasons why
it failed to comply with the said requirements, and why revocation is inequitable under the
circumstances.37

For the late filing of annual report and quarterly report, SEC Memorandum Circular No. 6, Series of
2005, the Consolidated Scale of Fines in effect at the time the offenses were committed, provides for
the following administrative penalties:

SRC/IRR Description First Offense Second Offense Third Offense

Provisions
Section Late Filing of Reprimand/Warning ₱50,000.00 plus ₱60,000.00 plus
17.1; Quarterly Report ₱300.00 per day of ₱600.00 per day of
SRC Rule (SEC Form 17-Q) delay delay
17.1
Late Filing of Annual Reprimand/Warning ₱100,000.00 plus ₱200,000.00 plus
Report (SEC Form ₱500.00 per day of ₱1000.00 per day of
17-A) delay delay

It bears emphasis that URPHI had committed several 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 Permit to Sell
Securities to the Public for its failure to timely file its Year 2001 Annual Report and Year 2002 1st,
2nd and 3rd Quarterly Reports. Then, on October 24, 2003, the SEC granted URPHI's petition to lift
the revocation, considering the current economic situation, its belated filing of the required annual
and quarterly reports, and its payment of the reduced fine of ₱82,000.00. Despite the foregoing,
URPHI failed again to submit its 2003 Annual Report, and Year 2004 1st, 2nd and 3rd Quarterly
Reports within the requested extension periods.

Therefore, notwithstanding the belated filing of the said reports, as well as the claim that public
interest would be better served if the SEC will merely impose penalties and allow it to continue in
order to become profitable again, the SEC cannot be faulted for revoking once again URPHI's
registration of securities and permit to sell them to the public due to its repeated failure to timely
submit such reports. Needless to state, such continuing reportorial requirements are pursuant to the
state policies declared in Section 238 of the SRC of protecting investors and ensuring full and fair
disclosure of information about securities and their issuer.

All told, the CA erred in ruling that the SEC revoked URPHI's registration of securities and permit to
sell them to the public without due process of law. Quite the contrary, the requirements of due
1âwphi 1

notice and hearing under Sections 13 .1 and 54.1 of the SRC were substantially complied with. Due
notice was made through the Order dated July 27, 2004 stating that revocation proceeding shall
ensue if URPHI would still fail to submit the reportorial requirements after the lapse of the 60-day
suspension period. Though no formal hearing was held, URPHI was still given an opportunity to be
heard through the letters dated September 13 and 18, 2004 before the Order of Revocation was
issued, as well as through its Notice of Appeal and Memorandum when it moved to reconsider the
said order.

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

SO ORDERED.
G.R. No. 169343. August 5, 2015.*

SAN MIGUEL PROPERTIES, INC., petitioner, vs. BF HOMES, INC., respondent.

Housing; Housing and Land Use Regulatory Board; Presidential Decree (PD) No. 957 dated
July 12, 1976 conferred exclusive jurisdiction to regulate the real estate trade and business
upon the National Housing Authority (NHA); Per Executive Order (EO) No. 648 dated February
7, 1981, the powers of the NHA were transferred to the Human Settlements Regulatory
Commission (HSRC), which, pursuant to EO No. 90 dated December 17, 1986, was
subsequently renamed as Housing and Land Use Regulatory Board (HLURB).—Presidential
Decree No. 957 dated July 12, 1976 conferred exclusive jurisdiction to regulate the real estate
trade and business upon the National Housing Authority (NHA). Presidential Decree No. 1344
dated April 2, 1978 expanded the quasi-judicial powers of NHA by providing as follows: Section
1. In the exercise of its functions to regulate the real estate trade and business and in addition to
its powers provided for in Presidential Decree No. 957, the National Housing Authority shall
have exclusive jurisdiction to hear and decide cases of the following nature: A. Unsound real
estate business practices; B. Claims involving refund and any other claims filed by subdivision
lot or condominium unit buyer against the project owner, developer, dealer, broker or salesman;
and C. Cases involving specific performance of contractual and statutory obligations filed by
buyers of subdivision lot or condominium unit against the owner, developer, dealer, broker or
salesman. (Emphases ours) Per Executive Order No. 648 dated February 7, 1981, the powers
of the NHA were transferred to the Human Settlements Regulatory Commission, which,
pursuant to Executive Order No. 90 dated December 17, 1986, was subsequently renamed as
HLURB. In Siasoco v. Narvaja, 315 SCRA 144 (1999), the Court highlighted the exclusive
jurisdiction of the HLURB over complaints for specific performance in certain real estate
transactions: Under the Executive Order creating it, the HLURB has exclusive jurisdiction to
“hear and decide cases of unsound real estate business practices; claims involving refund filed
against project owners, developers, dealers, brokers, or salesmen; and cases of specific
performance.” Accordingly, in United Housing Corporation v. Dayrit, we ruled that it is the
HLURB, not the trial court, which has jurisdiction over complaints for specific performance filed
against subdivision developers to compel the latter to execute deeds of absolute sale and to
deliver the certificates of title to buyers. (Emphases supplied) The Court reiterated in Bank of
the Philippines Islands v. ALS Management and Development Corporation, 427 SCRA 564
(2004), that: [T]he jurisdiction of the HLURB over cases enumerated in Section 1 of PD No.
1344 is exclusive. Thus, we have ruled that the board has sole jurisdiction in a complaint of
specific performance for the delivery of a certificate of title to a buyer of a subdivision lot; for
claims of refund regardless of whether the sale is perfected or not; and for determining whether
there is a perfected contract of sale. (Emphases supplied) It is clear from the plain language of
Section 1 of Presidential Decree No. 1344 and aforecited jurisprudence that the HLURB had
exclusive jurisdiction over the complaint for specific performance filed by SMPI against BF
Homes for the delivery of the remaining 20 TCTs.
Remedial Law; Civil Procedure; Jurisdiction; Doctrine of Primary Jurisdiction; Pursuant to the
doctrine of primary jurisdiction, “the courts cannot or will not determine a controversy involving a
question which is within the jurisdiction of an administrative tribunal, where the question
demands the exercise of sound administrative discretion requiring the special knowledge,
experience, and services of the administrative tribunal to determine technical and intricate
matters of fact, and a uniformity of ruling is essential to comply with the purposes of the
regulatory statute administered.”—Pursuant to the doctrine of primary jurisdiction, “the courts
cannot or will not determine a controversy involving a question which is within the jurisdiction of
an administrative tribunal, where the question demands the exercise of sound administrative
discretion requiring the special knowledge, experience, and services of the administrative
tribunal to determine technical and intricate matters of fact, and a uniformity of ruling is essential
to comply with the purposes of the regulatory statute administered.” However, said doctrine is
not an absolute or inflexible rule. The Court recognized several exceptions in Republic v. Lacap,
517 SCRA 255 (2007), viz.: [T]he doctrine of exhaustion of administrative remedies and the
corollary doctrine of primary jurisdiction, which are based on sound public policy and practical
considerations, are not inflexible rules. There are many accepted exceptions, such as: (a) where
there is estoppel on the part of the party invoking the doctrine; (b) where the challenged
administrative act is patently illegal, amounting to lack of jurisdiction; (c) where there is
unreasonable delay or official inaction that will irretrievably prejudice the complainant; (d) where
the amount involved is relatively small so as to make the rule impractical and oppressive; (e)
where the question involved is purely legal and will ultimately have to be decided by the courts
of justice; (f) where judicial intervention is urgent; (g) when its application may cause great and
irreparable damage; (h) where the controverted acts violate due process; (i) when the issue of
non-exhaustion of administrative remedies has been rendered moot; (j) when there is no other
plain, speedy and adequate remedy; (k) when strong public interest is involved; and (l) in quo
warranto proceedings.

Due Process; Administrative Due Process; Administrative due process cannot be fully equated
with due process in its strict judicial sense, for in the former a formal or trial-type hearing is not
always necessary, and technical rules of procedure are not strictly applied.—“The essence of
due process is to be heard, and, as applied to administrative proceedings, this means a fair and
reasonable opportunity to explain one’s side, or an opportunity to seek a reconsideration of the
action or ruling complained of. Administrative due process cannot be fully equated with due
process in its strict judicial sense, for in the former a formal or trial-type hearing is not always
necessary, and technical rules of procedure are not strictly applied.” In the instant case, SMPI
and BF Homes were afforded the opportunity to present and address each other’s arguments
through an exchange of pleadings, as well as to submit their respective evidence before Arbiter
Balasolla. To recall, the case was already submitted for decision before Arbiter Balasolla,
meaning, there is nothing more left for the parties to submit or do. To remand the case and
repeat the entire process once again before the HLURB Arbiter will not only be impractical, but
also unreasonable and oppressive for SMPI.
Condominiums; Subdivisions; Section 25 of Presidential Decree (PD) No. 957 explicitly
mandates that “[t]he owner or developer shall deliver the title of the [subdivision] lot or
[condominium] unit to the buyer upon full payment of the lot or unit.”—Section 25 of Presidential
Decree No. 957 explicitly mandates that “[t]he owner or developer shall deliver the title of the
[subdivision] lot or [condominium] unit to the buyer upon full payment of the lot or unit.”

Civil Law; Property; Immovable Properties; Public Documents; Article 1358(1) of the Civil Code
requires that “[a]cts and contracts which have for their object the creation, transmission,
modification or extinguishment of real rights over immovable property” must appear in a public
document; and sales of real property or of an interest therein shall be governed by Articles
1403(2) and 1405 of the same Code.—Article 1358(1) of the Civil Code requires that “[a]cts and
contracts which have for their object the creation, transmission, modification or extinguishment
of real rights over immovable property” must appear in a public document; and sales of real
property or of an interest therein shall be governed by Articles 1403(2) and 1405 of the same
Code.

Securities and Exchange Commission Reorganization Act; Receivership; Under Section 6(d) of
Presidential Decree (PD) No. 902-A, otherwise known as the Securities and Exchange
Commission (SEC) Reorganization Act, the management committee or rehabilitation receiver is
empowered to take custody and control of all existing assets and properties of such
corporations under management; to evaluate the existing assets and liabilities, earnings and
operations of such corporations; to determine the best way to salvage and protect the interest of
investors and creditors; to study, review and evaluate the feasibility of continuing operations,
and restructure and rehabilitate such entities if determined to be feasible by the SEC.—Under
Section 6(d) of Presidential Decree No. 902-A, otherwise known as the SEC Reorganization
Act, the management committee or rehabilitation receiver is empowered to take custody and
control of all existing assets and properties of such corporations under management; to
evaluate the existing assets and liabilities, earnings and operations of such corporations; to
determine the best way to salvage and protect the interest of investors and creditors; to study,
review and evaluate the feasibility of continuing operations, and restructure and rehabilitate
such entities if determined to be feasible by the SEC. The acts of the receiver, being an
appointed officer of the SEC, enjoy the presumption of regularity. Attorney’s Fees; Article 2208
of the Civil Code allows the recovery of attorney’s fees and expenses of litigation, other than
judicial costs, even in the absence of stipulation, “[w]here the defendant acted in gross and
evident bad faith in refusing to satisfy the plaintiff’s plainly valid, just and demandable claim.”—
As to the award of attorney’s fees, Article 2208 of the Civil Code allows the recovery of
attorney’s fees and expenses of litigation, other than judicial costs, even in the absence of
stipulation, “[w]here the defendant acted in gross and evident bad faith in refusing to satisfy the
plaintiff’s plainly valid, just and demandable claim.” SMPI obviously had a valid and demandable
claim against BF Homes, which unjustifiably and inexcusably refused to comply with the
mandate in Presidential Decree No. 957 and undertaking in the Deeds of Absolute Sale to
deliver the titles to the subdivision lots upon complete payment for said properties. The sudden
refusal of BF Homes to deliver the last 20 TCTs, after having previously delivered the other 110
TCTs, constitutes bad faith and justifies the award of attorney’s fees in favor of SMPI, which
was forced to litigate to enforce its rights. The amount of P100,000.00 awarded by the OP as
attorney’s fees is just and reasonable under the circumstances.

LEONARDO-DE CASTRO, J.:

Assailed in this Petition for Review on Certiorari under Rule 45 of the
Revised Rules of Court filed by San Miguel Properties, Inc. (SMPI) are: 1)
the Decision[1] dated January 31, 2005 of the Court of Appeals in CA-G.R.
SP No. 83631, which affirmed with modification the Decision dated
January 27, 2004 of the Office of the President (OP), in O.P. Case No. 03-E-
203, and remanded the case to the Housing and Land Use Regulatory
Board (HLURB) for further proceedings; and 2) the Resolution[2] dated
August 9, 2005 of the appellate court in the same case, which denied the
Motion for Reconsideration of SMPI.

The antecedents of the case are as follows:

BF Homes, Inc. (BF Homes) is the owner of several parcels of land located
in the northern portion of BF Homes Parañaque Subdivision, particularly
identified as Italia II lots.

BF Homes, represented by Florencio B. Orendain (Orendain), as

rehabilitation receiver appointed by the Securities and Exchange
Commission (SEC); and SMPI, represented by Federico C. Gonzales,
President, entered into three successive Deeds of Absolute Sale whereby the
former sold to the latter a total of 130 Italia II lots with a combined area of
44,345 square meters for the aggregate consideration of P106,247,701.00,
broken down as follows:

Total Area
Deed of Date of No. of
(square Consideration
Absolute Sale Execution Lots
meters)
First Deed[3] In 1992 76 22,816 P52,134,560.00
Second Deed[4] In 1993 13 5,964 P14,990,514.00
Third Deed[5] 41
April 1993 15,565 P39,122,627.00
(Third Sale)
Total 130 44,345 P106,247,701.00
SMPI completed the payments for the 130 Italia II lots in December
1995.[6] In compliance with Section 3[7] of all the three Deeds of Absolute
Sale, BF Homes delivered the Transfer Certificates of Title (TCTs) to SMPI
but only for 110 of the 130 Italia II lots purchased by SMPI.

SMPI, thru counsel, sent BF Homes a letter on May 20, 1996 demanding
the delivery of the remaining 20 TCTs, specifically:

TCT No. Area

1. (S-41285) 123526-A 538 sq. m.
2. (S-41261) 123522-A 329 sq. m.
3. (S-41279) 123520-A 384 sq. m.
4. (S-41277) 123518-A 380 sq. m.
5. (S-41275) 123516-A 364 sq. m.
6. (S-41271) 123512-A 364 sq. m.
7. (S-41273) 123514-A 364 sq. m.
8. (S-41269) 123510-A 364 sq. m.
9. (S-41267)123508-A 364 sq. m.
10. (S-41265) 123506-A 429 sq. m.
11. (S-41263) 123505-A 329 sq. m.
12. (S-41261) 19477-A 329 sq. m.
13.(S-41258)19476-A 280 sq. m.
14. (S-41257) 23504-A 308 sq. m.
15.(S-41256)23503-A 280 sq. m.
16. (S-41255) 23502-A 308 sq. m.
17. (S-41254)23501-A 280 sq. m.
8. (S-41253) 123500-A 308 sq. m.
19. (S-41557)28372-A 502 sq. m.
20. (S-41279) 123520-A 665 sq. m.

Despite receipt of the afore-mentioned letter, BF Homes failed or refused to

heed the demand of SMPI. Consequently, SMPI filed a Complaint[8] for
specific performance with damages before the HLURB on August 24, 2000
to compel BF Homes to deliver the remaining 20 TCTs to SMPI. The case
was docketed as HLURB Case No. REM-082400-11183.

In its Answer (With Counterclaim),[9] BF Homes alleged that the Deeds of

Absolute Sale executed in 1992 to 1993 were entered into by Orendain in
his personal capacity and without authority, as his appointment as
rehabilitation receiver was revoked by the SEC in an Order dated May 17,
1989. In support of its counterclaims, BF Homes averred that the
consideration paid by SMPI for the 130 Italia II lots was grossly inadequate
and disadvantageous to BF Homes; and that the Deeds of Absolute Sale
were undated and not notarized. Hence, BF Homes prayed that the HLURB
render judgment: 1) dismissing the complaint of SMPI; 2) declaring the sale
of the 130 Italia II lots null and void; 3) ordering SMPI to reconvey to BF
Homes the titles for the [110] Italia II lots; and 4) ordering SMPI to pay BF
Homes exemplary damages, attorney's fees, and cost of suit.

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

2000),[10] countered that the validity of the three Deeds of Absolute Sale
was already upheld by the SEC in its Omnibus Order dated November 7,
1994, and the motion for reconsideration of BF Homes of said Omnibus
Order was denied by the SEC in its subsequent Order dated August 22,
1995. Both Orders were deemed final, executory, and unappealable by the
SEC in another Omnibus Order dated July 31, 1996. As a result, the Deeds
of Absolute Sale were binding on BF Homes. SMPI further maintained that
Orendain was authorized to sign the Deeds of Absolute Sale for and in
behalf of FBO Networks Management, Inc. - the receiver which the SEC
appointed to replace Orendain, upon the latter's motion to convert his
involvement in the receivership from an individual to a corporate capacity.
SMPI additionally asserted that absent substantiation, the allegation of BF
Homes of inadequate consideration for the sale of the Italia II lots was self-
serving; and that despite being undated and not notarized, the Deeds of
Absolute Sale were valid since they contained the essential elements of a
contract. And even assuming that the Deeds of Absolute Sale may be
rescinded, SMPI argued that BF Homes did not offer and was not prepared
to return the consideration paid by SMPI, plus interest.

BF Homes filed a Rejoinder (To Complainant's Reply)[11] contending that

the SEC Omnibus Order dated July 31, 1996 has not yet become final as BF
Homes assailed the said Order in a Petition for Certiorari before the SEC.
In its Decision dated May 8, 1997, the SEC neither confirmed the authority
of Orendain nor cleared Orendain/FBO Networks Management, Inc. from
any liability for his/its unauthorized acts, but clarified that the final report
of the rehabilitation receiver was not yet approved and was merely
admitted as part of the records. BF Homes also stated that although the
SEC Order dated September 12, 2000 already terminated the rehabilitation
proceedings because of the improvement in the solvency status of BF
Homes, BF Homes filed a Motion for Clarification and/or Partial
Reconsideration of said SEC Order and sought a resolution of the issues
relating to the receiver's irregular acts, including the sale of the Italia II lots
to SMPI. BiF Homes insisted that the transactions entered into by
Orendain were anomalous as the latter sold the 130 Italia II lots to SMPI at
a price that was inadequate and disadvantageous to BF Homes.

Housing and Land Use Arbiter Rowena C. Balasolla (Arbiter Balasolla)

issued an Order dated January 22, 2001[12] directing the parties to submit
their respective position papers and supporting evidence, as well as their
draft decisions. Thereafter, the case was deemed submitted for resolution.

In her Decision[13] dated January 25, 2002, Arbiter Balasolla suspended the
proceedings in HLURB Case No. REM-082400-11183 for the following
reasons:

What clearly is the issue to be resolved is whether or not [BF Homes] is

obligated to deliver the title of the remaining twenty (20) lots to [SMPI]
notwithstanding that the latter had fully paid the same.

Were this is a simple case of non-delivery of title of the lot or unit to the
buyer upon full payment, sans the attendant problems, the answer would
readily be in the affirmative. But this is not so in the instant case. This is a
case of non-delivery of titles of a sale of 20 lots between two developers,
and the lots sold are from an existing subdivision, which was under
rehabilitation and made by a receiver which authority had been
continuously questioned by the controlling stockholders of a corporation
under rehabilitation.

In the light thereof, it becomes imperative to discuss the antecedent facts

that would help in arriving at a judicious resolution of the instant
complaint.

Sometime in September 1984, respondent [BF Homes] filed with the SEC a
petition for rehabilitation and for declaration of suspension of payments. In
February 1988, the SEC appointed Florencio Orendain as [BF Homes']
rehabilitation receiver. In May 1989, the SEC revoked the appointment of
Mr. Orendain and appointed FBO Networks Management, Inc. (FBO) as
receiver of the [BF Homes].

It was during the time 1992-1993 that [SMPI] bought from [BF Homes] the
130 parcels of land located in the northern portion of BF Homes,
Paranaque City.

In June 1994, Mr. Orendain, on behalf of FBO, submitted to the SEC the
Closing Report on [BF Homes] I of the receivership program covering the
period from March 1988 to January 1994. [BF Homes] protested and
questioned the said report by filing the corresponding pleadings with the
SEC praying that the receivership of FBO represented by Mr. Orendain be
suspended due to violations of trust and breach of fiduciary obligation and
sought the nullification of the transaction entered into by Mr. Orendain. In
November 1994, FBO was relieved of its duties and responsibilities as
rehabilitation receiver and a Committee of Receivers was appointed in lieu
thereof, to undertake and continue the rehabilitation program of [BF
Homes].

In July 1996, the SEC issued an Omnibus Order in regard to rehabilitation

case. Subsequently, however, [BF Homes] filed a petition for review for
which the SEC rendered a decision in May 1997. In the said decision, the
SEC held that the admission of the Receiver's Closing Report is merely for
the purpose of receiving and noting them for inclusion in the records of the
case and not an admittance (sic) and acceptance of the merits and veracity
of the contents thereof.

In September 2000, the SEC issued another Order terminating the

rehabilitation proceedings without, however, deciding on the merits and
veracity of the contents of the Receiver's Closing Report. Hence, [BF
Homes] filed in October 2000 a Motion for Clarification and/or Partial
Reconsideration of the said Order which remains pending with the SEC
until the present.

Apparently, it is in the context of the foregoing issues that [BF Homes]

refused to deliver the remaining twenty (20) titles of the lots sold to [SMPI]
as the former claimed, among others, that Mr. Orendain did not have the
authority to sell the 130 parcels of land in the first place.

As the peculiar background of this case would tell, it is inevitable that the
resolution of the issues raised in the instant complaint would be largely
influenced by the outcome of the cases pending in other tribunals which are
directly and ineluctably related to the issues brought before this Board.

This Board is cognizant of the fact that respondent had questioned the
action of its rehabilitation receiver before the SEC, raising several issues
against him, including but not limited, to his authority to sell the subject
lots to the complainant the resolution of which is still pending the said
body.

Thus, while this Board may have jurisdiction over the instant complaint,
the issue on whether or not Mr. Orendain has overstepped his authority
which is pending resolution by the SEC, is to our mind a condition sine qua
non, the final resolution of which by said body is a logical antecedent to the
issue involved in the instant complaint and which only the SEC has
exclusive jurisdiction to decide.

Under the circumstances, we are inclined to suspend the proceedings

before the Board until the SEC shall have resolved with finality on the issue
of the authority of Mr. Orendain/FBO Networks Management to enter into
such transactions on behalf of [BF Homes].

WHEREFORE, PREMISES CONSIDERED, this Office hereby suspends the

proceedings of the instant complaint until the final resolution of the
pending incidents before the Securities and Exchange Commission.[14]

SMPI filed a Petition for Review (Re: Decision dated January 25,
2002)[15] with the HLURB Board of Commissioners, asseverating that: 1)
the SEC, in its Orders dated November 7, 1994 and August 22, 1995, had
upheld the validity of the Deeds of Absolute Sale and confirmed the
authority of the receiver to sell the 130 Italia II lots to SMPI, and said
Orders already became final after BF Homes failed to appeal the same
before the Court of Appeals, as provided for in Section 3,[16] Republic Act
No. 5434, the law in force at that time; 2) Orendain and/or FBO Networks
Management, Inc. were immune from suit pursuant to Section 9, Rule
9[17] of the Interim Rules of Procedure Governing Intra-corporate
Controversies and Section 17, Rule 4[18] of the Interim Rules of Procedure
on Corporate Rehabilitation; 3) BF Homes was estopped from refusing to
deliver the remaining 20 titles since it had already received the
consideration and benefits from the sale of the Italia II lots to SMPI and
delivered 110 out of 130 TCTs to SMPI; 4) the principle of suspending a
case due to a prejudicial question only applies to criminal cases; 5) BF
Homes was mandated, under pain of criminal sanction under Section
25,[19]in relation to Section 39[20] of Presidential Decree No. 957,[21] also
known as "The Subdivision and Condominium Buyer's Protection Decree,"
to deliver the TCTs of the remaining 20 Italia II lots, which had already
been fully paid for by SMPI; 6) assuming that Orendain exceeded his
authority as receiver of BF Homes in selling the 130 Italia II lots to SMPI,
then Orendain could be held liable for damages but the titles to said lots
acquired by SMPI by reason of the sale would be unaffected, absent any
action for reconveyance instituted by BF Homes; and 7) the issue regarding
Orendain's authority to undertake the sale of the Italia II lots to SMPI was
rendered moot and academic by the issuance of SEC Order dated
September 12, 2000, terminating the receivership of BF Homes.

After a further exchange of pleadings by the parties, the HLURB Board of

Commissioners[22] rendered its Decision[23] dated March 28, 2003, ruling
thus:

We find no evidence to support the argument that the SEC had upheld with
finality on the sales transaction entered into by Orendain with [SMPI]. On
the contrary the order of the SEC stated that the closing report of the
receiver is being accepted for inclusion of the records and not an
admittance (sic) or acceptance of the merits and veracity of the contents
thereof. The issue of whether Orendain had authority to sell the lots is still
unresolved.

While this board may have the competence to rule on the validity of the
sales transaction entered into by Orendain ostensibly in behalf of BF
Homes, we decline to rule on the said issue in deference to the SEC or its
successor-in-interest, which has first taken cognizance of the issue,
applying the doctrine of primary jurisdiction. Thus, in Vidad vs. RTC of
Negros Oriental, it was held:

While no prejudicial question strictly arises where one is a civil case and the
other is an administrative proceeding, in the interest of good order, it
behooves the court to suspend its action on the cases before it pending the
final outcome of the administrative proceedings. The doctrine of primary
jurisdiction does not warrant a court to arrogate unto itself the authority to
resolve a controversy the jurisdiction over which is initially lodged with an
administrative body [of special competence].

Wherefore, the petition for review is denied and the decision of the office
below is affirmed.[24]

SMPI appealed the foregoing Decision of the HLURB Board of

Commissioners before the OP. The appeal was docketed as O.P. Case No.
03-E-203. The OP, in its Decision[25] dated January 27, 2004, adjudged that
the HLURB should have resolved HLURB Case No. REM-082400-11183:

The basic complaint in this case is one for specific performance under
Section 25 of Presidential Decree (PD) 957 - "The Subdivision and
Condominium Buyers' Protective", infra.

As early as August 1987, the Supreme Court already recognized the

authority of the HLURB, as successor agency of the National Housing
Authority (NHA), to regulate, pursuant to PD 957 in relation to PD 1344,
the real estate trade, with exclusive jurisdiction to hear and decide cases
"involving specific performance of contractual and statutory obligations
filed by buyers of subdivision lots . . . against the owner, developer, dealer,
broker or salesman" (Antipolo Realty Corp. vs. National Housing
Authority (153 SCRA). Then came the reiterative rulings in Solid Homes vs.
Pavawal (177 SCRA 72 [1989]), United Housing Corp. vs. Dayrit (181 SCRA
295 [1990]), and Realty Exchange Venture Corp. vs. Sendino, 233 SCRA
665 [1994]. And as stressed in Realty Exchange, citing C.T. Torres
Enterprises, Inc. vs. Hibionada (191 SCRA 268 [1990], the HLURB, in the
exercise of its adjudicatory powers and functions, "must interpret and
apply contracts, determine the rights of the parties under these contracts
and award damages whenever appropriate."

Given its clear statutory mandate, the HLURB's decision to await for some
other forum to decide - if ever one is forthcoming - the issue on the
authority of Orendain to dispose of subject lots before it peremptorily
resolves the basic complaint is unwarranted, the issues thereon having been
joined and the respective position papers and the evidence of the parties
having been submitted. To us, it behooved the HLURB to adjudicate, with
usual dispatch, the right and obligations of the parties in line with its
appreciation of the obtaining facts and applicable law. To borrow
from Mabuhay Textile Mills Corp. vs. Ongpin (141 SCRA 437), it does not
have to rely on the findings of others to discharge this adjudicatory
functions.[26]

The OP then proceeded to resolve the question of whether or not SMPI was
entitled to the delivery of the 20 TCTs:

There can be no quibbling about the following postulates: 1) The existence

of a perfected deed of absolute sale covering the said lots; 2) SMPI appears
to be an innocent purchaser for value; 3) Full payment and receipt by [BF
Homes] of the stipulated purchase price; 4) Admission by the SEC of FBO's
audited Closing Report; 5). Termination of the rehabilitation proceedings,
and 6) The obligation of the owner or developer under Sec. 25 of PD 957
to "deliver the title of the lot or units to the buyer upon [full] payment of
the lot or unit."

Given the foregoing perspective, the question thus formulated should be

answered in the affirmative. [BF Homes'] challenge against the validity of
the conveying deed on the ground of inadequacy of the purchase price
cannot be given cogency. As a matter of law, lesion or inadequacy of cause
shall not invalidate a contract, save in cases specified by law or unless there
has been fraud, mistake or undue influence (Art. 1355, Civil Code). Thus,
[BF Homes'] allegation about the inadequacy of price for the twenty (20)
lots, even if true, cannot invalidate the sale in question, absent a showing
that such sale is a case exempted by law from the operation of said article or
that fraud, mistake or undue influence attended the sale (Auyong Hian vs.
CTA, 59 SCRA 110).

[BF Homes'] posture regarding the invalidity of the same sales transaction
owing to Orendain's alleged lack of authority to execute the corresponding
deed may be accorded serious consideration were it not for its acceptance
and retention of the purchase price for the covered lots. As aptly argued in
this appeal, citing jurisprudence, estoppel attached to [BF Homes] when it
accepted the benefits arising from the performance of SMPI of its
undertaking under the contract of sale. By the doctrine of estoppel, a party
is barred from repudiating or canceling an otherwise defective or rescissible
contract by his receipt of payments due thereunder (Republic v. Acoje
Mining Co., Inc., 7 SCRA 361; Angeles v. Calasanz, 135 SCRA 332); the bar
of estoppel also precludes one who, by his conduct, had induced another to
act in a particular manner, from adopting an inconsistent position that
thereby causes prejudice to another (Cruz vs. CA, 293 SCRA 239).

Significantly, Orendain signed the three deeds of sale adverted to covering

130 lots in 1992 and 1993, or during FBO's watch as receiver. Yet, [BF
Homes] opted to fully implement the transactions covered by two of these
deeds and partially implement the third by delivering the titles to 110 lots.
In net effect, [BF Homes] did recognize the authority of Orendain to
execute those contracts. But if Orendain was indeed bereft of authority
during the time material, as [BF Homes] would have this Office believe,
how explain (sic) its inaction to recover damages against one it veritably
depicts as an impostor?

xxxx

Much has been made about the sale of the 130 lots not having been
approved by the SEC. It bears to stress in this regard that the Closing
Report which, doubtless includes the said sale, had been confirmed and
admitted by the SEC Hearing Panel. It may be that the Commission en
banc did not specifically confirm and approve the sale. But neither did it
interpose objection thereto, let alone disapprove the same. Be that as it
may, the presumptive validity and enforceability of such sale must be
posited.[27]

The OP denied the claims for damages of both parties for insufficiency of
evidence but awarded attorney's fees in the amount of PI00,000.00 to
SMPI, which was compelled to litigate. In the end, the OP decreed:

IN VIEW OF ALL THE FOREGOING, judgment is hereby entered ordering

BF Homes, Inc., to deliver to San Miguel Properties, Inc., the
corresponding titles to the lots subject of the instant case, free from all liens
aind encumbrances, except to the subdivision restrictions referred to in the
conveying deed of sale, and to pay the latter the sum of P100,000.00 as
and. by way of attorneys' fees. All other claims and counterclaims are
hereby DISMISSED. The decision of the HLURB dated 28 March 2003 is
accordingly REVERSED and SET ASIDE.[28]

BF Homes filed a Motion for Reconsideration but it was denied by the OP

in a Resolution[29] dated March 26, 2004.
Aggrieved, BF Homes sought recourse from the Court of Appeals by way of
a Petition for Review[30] under Rule 43 of the Revised Rules of Court, which
was docketed as CA-G.R. SP No. 83631. In its Decision[31] dated January 31,
2005, the Court of Appeals agreed with the OP that the HLURB had the
primary and exclusive jurisdiction to resolve the complaint for specific
performance and damages of SMPI and should not have suspended the
proceedings until the SEC had ruled with finality on the issue of Orendain's
authority to sell the 130 Italia II lots to SMPI:

Presidential Decree No. 957 was issued on 12 July 1976. It was promulgated
to cover questions that relate to subdivisions and condominiums. Its object
is to provide for an appropriate government agency, the HLURB, to which
all parties aggrieved in the enforcement of contractual rights with respect to
said category of real estate may take course.

In the case of JESUS LIM ARRANZA vs. B.F. HOMES, INC., the
Supreme Court said:

Section 3 ofP.D. No. 957 empowered the National Housing

Authority (NHA) with the "exclusive jurisdiction to regulate the
real estate trade and business." On 2 April

1978, P.D. No. 1344 was issued to expand the jurisdiction of the NHA to
include the following:

SECTION 1. In the exercise of its functions to regulate the real

estate trade and business and in addition to its powers provided
for in Presidential Decree No. 957, the National Housing
Authority shall have exclusive jurisdiction to hear and decide
cases of the following nature:

A. Unsound real estate business practices;

B. Claims involving refund and any other claims filed by

subdivision lot or condominium unit buyer against the project
owner, developer, dealer, broker or salesman; and
C. Cases involving specific performance of contractual and
statutory obligations filed by buyers of subdivision lot or
condominium unit asainst the owner, developer, dealer, broker
or salesman. (Emphasis supplied.)

Thereafter, the regulatory and quasi-judicial functions of

the NHA were transferred to the Human Settlements
Regulatory Commission (HSRC) by virtue of Executive Order
No. 648 dated 7 February 1981. Section 8 thereof specifies the
functions of the NHA that were transferred to the HSRC
including the authority to hear and decide "cases on unsound
real estate business practices; claims involving refund filed
against project owners, developers, dealers, brokers or
salesmen and cases of specific performance." Executive Order
No. 90 dated 17 December 1986 renamed the HSRC as the
Housing and Land Use Resulatory
Board (HLURB). (Underscoring supplied.)
Certainly, in the instant case, [SMPI] is a buyer within the contemplation of
P.D. 957. Clearly, the acquisition of the one hundred thirty (130) lots was
for a valuable consideration.

The jurisdiction of the SEC, on the other hand, is defined by P.D. No.
902-A, as amended, as follows:

Sec. 5. In addition to the regulatory and adjudicative functions

of the Securities and Exchange Commission over corporations,
partnerships and other forms of associations registered with it
as expressly granted under existing laws and decrees, it shall
have original and exclusive jurisdiction to hear and decide
cases involving.

(a) Devices or schemes employed by or any acts, of the board of

directors, business associates, its officers or partnership,
amounting to fraud and misrepresentation which may be
detrimental to the interest of the public and/or of the
stockholder, partners, members of associations or
organizations registered with the Commission;

(b) Controversies arising out of intra-corporate or partnership

relations, between and among stockholders, members, or
associates; between any or all of them and the corporation,
partnership or association of which they are stockholders,
members or associates, respectively; and between such
corporation, partnership or association and the state insofar as
it concerns their individual franchise or right to exist as such
entity; and

(c) Controversies in the election or appointments of directors,

trustees, officers or managers of such corporations,
partnerships or associations.
In the ARRANZA case, the Supreme Court said that:

For the SEC to acquire jurisdiction over any controversy under

these provisions, two elements must be considered: (1) the
status or relationship of the parties; and (2) the nature of the
Question that is the subject of their controversy.

The first element requires that the controversy must arise "out
of intra-corporate or partnership relations between and among
stockholders, members or associates; between any or all of
them and the corporation, partnership or association of which
they are stockholders, members or associates, respectively; and
between such corporation, partnership or association and the
State in so far as it concerns their individual franchises.
In the instant case, [SMPI] is not a stockholder, member or associate of [BF
Homes]. It is a lot buyer in the subdivision developed by [BF Homes.]

The second element requires that the dispute among the parties
be intrinsically connected with the regulation or the internal affairs of the
corporation, partnership or association.

In the case at hand, [SMPI's] complaint before the HLURB is for specific
performance to enforce its rights as purchaser of subdivision lots as regards
the delivery of twenty (20) TCTs. Certainly, the issue in this case is not
related to the "regulation" of [BF Homes] or to [BF Homes'] "internal
affairs."

As a matter of fact, Section 25 of PD 957 provides:

Section 25. Issuance of Title. The owner or developer shall
deliver the title of the lot or unit to the buyer upon full payment
of the lot or unit. No fee, except those required for the
registration of the deed of sale in the Registry of Deeds, shall be
collected for the issuance of such title. In the event a mortgage
over the lot or unit is outstanding at the time of the issuance of
the title to the buyer, the owner or developer shall redeem the
mortgage or the corresponding portion thereof within six
months from such issuance in order that the title over any fully
paid lot or unit may be secured and delivered to the buyer in
accordance herewith, (underscoring supplied.)
In the above-mentioned case of Arranza, the Supreme Court also said:

P.D. No. 902-A, as amended, defines the jurisdiction of the SEC; while P.D.
No. 957, as amended, delineates that of the HLURB. These two quasi-
judicial agencies exercise functions that are distinct from each other. The
SEC has authority over the operation of all kinds of corporations,
partnerships or associations with the end in view of protecting the
interests of the investing public and creditors. On the other hand, the
HLURB has jurisdiction over matters relating to observance of laws
governing corporations engaged in the specific business of development of
subdivisions and condominiums. The HLURB and the SEC being bestowed
with distinct powers and functions, the exercise of those functions by one
shall not abate the performance by the other of its own functions. As
respondent puts it, "there is no contradiction between P.D. No. 902-A and
P.D. No. 957."
Hence, the powers of the HLURB can not be in derogation of the SEC's
authority. P.D. Nos. 902-A and 957 are laws in pari materia. This is because
P.D. No. 902-A relates to all corporations, while P.D. No. 957 pertains to
corporations engaged in the particular business of developing subdivisions
and condominiums.

Next, this brings us to the collateral issue of whether or not HLURB

properly suspended the proceeding until SEC shall have resolved with
finality the issue of authority of Mr. Orendain.

Given the foregoing perspective, the collateral issue thus formulated should
be answered in the negative. Furthermore, in several cases decided by the
Supreme Court, the High Court has consistently ruled that the NHA or the
HLURB has jurisdiction over complaints arising from contracts between
the subdivision developer and the lot buyer or those aimed at compelling
the subdivision developer to comply with its contractual and statutory
obligations.

Hence, the HLURB should take jurisdiction over respondent's complaint

because it pertains to matters within the HLURB's competence and
expertise. The proceedings before the HLURB should not be suspended.[32]

The Court of Appeals, however, differed from the OP Decision by ordering

the; remand of the case to the HLURB in recognition of the doctrine of
primary jurisdiction. The dispositive portion of the Decision of the
appellate court reads:

WHEREFORE, the questioned Decision of the Office of the President [is]

AFFIRMED with modification. The case is REMANDED to the Housing
and Land Use Regulatory Board for continuation of proceedings with
dispatch.[33]
SMPI filed a Motion for Partial Reconsideration (Re: Decision dated
January 31, 2005)[34] insofar as the Court of Appeals remanded the case to
the HLURB for further proceedings. The appellate court denied said
Motion in a Resolution[35] dated August 9, 2005.

SMPI now comes before this Court,. through the instant Petition, assailing
the aforementioned Decision and Resolution of the Court of Appeals based
on the following assignment of errors:

I.

THE COURT OF APPEALS' DECISION DATED 31 JANUARY 2005

REMANDING THE CASE TO THE HLURB IS CONSTITUTIONALLY
FLAWED AND A PATENT NULLITY CONSIDERING THAT:

1. IT MISERABLY FAILED TO DISCUSS CLEARLY AND DISTINCTLY

THE LEGAL BASIS AND/OR JUSTIFICATION FOR REMANDING
 THE CASE TO THE HLURB AS MANDATED BY SECTION 14,
ARTICLE VIII, 1987 CONSTITUTION.

2. WORSE, THE COURT OF APPEALS FAILED TO IDENTIFY THE

FACTUAL MATTERS THAT IT CLAIMS NEED STILL BE TRIED OR
DETERMINED BY THE HLURB THAT WOULD HAVE JUSTIFIED
THE REMAND OF THE CASE.

3. IN ANY EVENT, [BF HOMES] AND THE COURT OF APPEALS'

CLAIMED DOCTRINE OF PRIMARY JURISDICTION IS FOREVER
BARRED AS IT COULD NOT BE INVOKED FOR THE FIRST TIME
ON APPEAL.

4. EVEN ASSUMING ARGUENDO THAT THE DOCTRINE OF

PRIMARY JURISDICTION IS STILL INVOCABLE, IT IS
NONETHELESS INAPPLICABLE SINCE THE PARTIES HAD DULY
AMPLIFIED THEIR RESPECTIVE CAUSES OF ACTION AND
DEFENSES VIA THEIR SUBMISSION OF PLEADINGS AND
POSITION PAPERS BEFORE THE HLURB, AND UPON WHICH
THE OFFICE OF THE PRESIDENT DECIDED ON THE MERITS.

II.

EVEN THEN, THE COURT OF APPEALS COMMITTED GRAVE, SERIOUS

AND REVERSIBLE ERROR WHEN IT REMANDED THE CASE TO THE
HLURB FOR FURTHER "PRESENTATION OF EVIDENCE" DESPITE
THE DECISION ON THE MERITS OF THE OFFICE OF THE PRESIDENT
IN THAT:

1. THE ISSUE HERE BEING A SIMPLE QUESTION OF LAW ON

WHETHER OR NOT SMPI WAS ENTITLED TO THE DELIVERY OF
THE BALANCE OF 130 FULLY PAID LOTS/TITLES OR
EQUIVALENT TO TWENTY (20) TITLES, THE COURT OF
APPEALS SHOULD HAVE AFFIRMED THE DECISION ON THE
MERITS OF THE OFFICE OF THE PRESIDENT.
 2. IN FACT, THE RELEVANT FACTS OF THE CASE, E.G. FULL
PAYMENT OF THE PURCHASE PRICE OF THE SUBJECT LOTS IN
FAVOR OF [BF HOMES] AND NON-DELIVERY TO SMPI OF THE
TITLES OVER THE SUBJECT LOTS BY [BF HOMES], WERE
UNDISPUTED AND MORE SO ADMITTED BY THE PARTIES IN
THEIR RESPECTIVE HLURB POSITION PAPERS AND OTHER
PLEADINGS FOR WHICH NO TRIABLE EVIDENTIARY MATTER
IS LEFT TO BE RESOLVED BY THE HLURB.

3. INDEED, THE OFFICE OF THE PRESIDENT, PER ITS DECISION

DATED 27 JANUARY 2004, CORRECTLY RESOLVED THIS
SIMPLE ISSUE, AND FORTUNATELY IN FAVOR OF SMPI, BASED
ON THE PLEADINGS AND POSITION PAPERS FILED BY THE
PARTIES IN ACCORDANCE WITH SECTION 5, RULE VI, HLURB
RULES. THE COURT OF APPEALS OUGHT TO HAVE SIMILARLY
ENFORCED THIS HLURB RULE.

4. FURTHER PROCEEDINGS BEFORE THE HLURB IS DILATORY,

UNNECESSARY, SUPERFLUOUS AND CIRCUITOUS.
HIERARCHICALLY (sic), THE HLURB IS PRECLUDED AND
BARRED FROM REOPENING, MUCH LESS REVERSING THE
DECISION OF THE OFFICE OF THE PRESIDENT.

5. THE COURT OF APPEALS' STANCE IS TANTAMOUNT TO A RE-

OPENING OF THE OFFICE OF THE PRESIDENT'S DECISION,
HENCE WOULD WREAK HAVOC TO THE DOCTRINE OF
SUBSTANTIAL RES JUDICATA.

6. IF AT ALL, THE HLURB NEED ONLY BE DIRECTED TO RESOLVE

SMPI'S PENDING MOTION FOR EXECUTION, AND NOT
CONDUCT FURTHER PROCEEDINGS FOR RECEPTION OF THE
PARTIES' EVIDENCE THAT ARE UNSPECIFIED.

III.

THE COURT OF APPEALS COMMITTED GRAVE, SERIOUS AND

REVERSIBLE ERROR WHEN IT FAILED AND/OR REFUSED TO
AFFIRM THE OFFICE OF THE PRESIDENT'S DECISION DATED 27
JANUARY 2004 IN THAT:

1. THE SUBJECT SALE TRANSACTIONS, DULY APPROVED AND

CONFIRMED BY THE SEC PER ITS ORDERS DATED 07
NOVEMBER 1994 AND 31 JULY-1996, ARE PRESUMED VALID
AND REGULAR SINCE THESE WERE OFFICIAL ACTS OF SEC-
APPOINTED RECEIVER MR. FLORENCIO B. ORENDAIN.

2. IN FACT, SEC RECEIVER ORENDAIN'S ACTS CANNOT BE

IMPUGNED BY [BF HOMES] SINCE UNDER SECTION 9, RULE 9,
INTERIM RULES OF PROCEDURE GOVERNING INTRA-
CORPORATE CONTROVERSIES AND SECTION 17, RULE 4,
INTERIM RULES OF PROCEDURE ON CORPORATE
REHABILITATION, WHICH OPERATES RETROACTIVELY BEING
A PROCEDURAL RULE, RECEIVERS ENJOY IMMUNITY FROM
SUITS ARISING FROM THE EXERCISE OF THEIR FUNCTIONS
AND DUTIES.

3. NONETHELESS, [BF HOMES] IS ESTOPPED FROM REFUSING TO

DELIVER THE REMAINING 20 TCTs SINCE IT HAD PREVIOUSLY
DELIVERED TO SMPI 110 TCTs OUT OF 130 TCTs FOR WHICH [BF
HOMES] HAD DULY .RECEIVED FULL PAYMENT THEREFOR IN
THE TOTAL AMOUNT PHP104,600,402.47.[36] CONSEQUENTLY,
[BF HOMES] IS OBLIGED TO DELIVER THE TITLES TO SMPI
PURSUANT TO SECTION 25, P.D. 957.

4. THE MATTER OF THE PURCHASE PRICE IS IRRELEVANT

CONSIDERING THE BIG VOLUME INVOLVED. IN FACT, THE
AVERAGE PURCHASE PRICE OF THE LOTS IN THE AMOUNT OF
PHP2,500.00 PER SQ. M. IS VALID AND REASONABLE SINCE
THE SALE INVOLVED A TOTAL OF 130 LOTS AMOUNTING TO
PHP 104,600,402.47.

5. EVEN ASSUMING ARGUENDO THAT THERE MAY BE

SUBSTANTIAL DISPARITY BETWEEN THE AVERAGE PURCHASE
PRICE OF PHP2.500/SQ.M. AND THE MARKET VALUE AT
PHP3,500/SQ.M. AS [BF HOMES] CLAIMS, MERE INADEQUACY
OF THE PURCHASE PRICE, STANDING ALONE AND WITHOUT
 PROOF OF ACTUAL FRAUD, CANNOT INVALIDATE THE
PARTIES' SALES CONTRACT PER ARTICLE 1355, NEW CIVIL
CODE.

6. IF AT ALL, [BF HOMES'] REMEDY IS TO FILE THE APPROPRIATE

ACTION FOR RECONVEYANCE WITH THE REGULAR COURT,
ABSENT WHICH, IT IS LEGALLY BOUND TO DELIVER TO SMPI
THE SUBJECT TITLES.

7. ACCORDINGLY, SINCE SMPI WAS CONSTRAINED TO LITIGATE

DUE TO [BF HOMES'] UNJUSTIFIED REFUSAL TO DELIVER THE
SUBJECT TITLES, SMPI IS ENTITLED TO THE PAYMENT OF
ATTORNEY'S FEES.[37]

The Petition is meritorious.

Presidential Decree No. 957[38] dated July 12, 1976 conferred exclusive
jurisdiction to regulate the real estate trade and business upon the National
Housing Authority (NHA).[39] Presidential Decree No. 1344[40] dated April
2, 1978 expanded the quasi-judicial powers of NHA by providing as follows:

Section 1. In the exercise of its functions to regulate the real estate trade
and business and in addition to its powers provided for in Presidential
Decree No. 957, the National Housing Authority shall have exclusive
jurisdiction to hear and decide cases of the following nature:

A. Unsound real estate business practices;

B. Claims involving refund and any other claims filed by subdivision lot
or condominium unit buyer against the project owner, developer,
dealer, broker or salesman; and

C. Cases involving specific performance of contractual and

statutory obligations filed by buyers of subdivision lot or
condominium unit against the owner, developer, dealer,
broker or salesman." (Emphases ours.)
Per Executive Order No. 648[41] dated February 7, 1981, the powers of the
NHA were transferred to the Human Settlements Regulatory Commission,
which, pursuant to Executive Order No. 90 dated December 17, 1986, was
subsequently renamed as HLURB.[42] In Siasoco v. Narvaja,[43] the Court
highlighted the exclusive jurisdiction of the HLURB over complaints for
specific performance in certain real estate transactions:

Under the Executive Order creating it, the HLURB has exclusive
jurisdiction to "hear and decide cases of unsound real estate business
practices; claims involving refund filed against project owners, developers,
dealers, brokers, or salesmen; and cases of specific performance."
Accordingly, in United Housing Corporation v. Dayrit, we ruled that it is
the HLURB, not the trial court, which has jurisdiction over complaints
for specific performance filed against subdivision developers to
compel the latter to execute deeds of absolute sale and to deliver
the certificates of title to buyers. (Emphases supplied.)

The Court reiterated in Bank of the Philippines Islands v. ALS

Management and Development Corporation[44] that:

[T]he jurisdiction of the HLURB over cases enumerated in Section 1 of PD

No. 1344 is exclusive. Thus, we have ruled that the board has sole
jurisdiction in a complaint of specific performance for the
delivery of a certificate of title to a buyer of a subdivision lot; for
claims of refund regardless of whether the sale is perfected or not; and for
determining whether there is a perfected contract of sale. (Emphases
supplied.)

It is clear from the plain language of Section 1 of Presidential Decree No.

1344 and aforecited jurisprudence that the HLURB had exclusive
jurisdiction over the complaint for specific performance filed by SMPI
against BF Homes for the delivery of the remaining 20 TCTs.

In fact, in the instant case, the HLURB did exercise jurisdiction over and
did take cognizance of the complaint of SMPI. Arbiter Balasolla received
pleadings and evidences from the parties, and after the period for filing
position papers and draft decisions by the parties had lapsed, deemed the
case submitted for decision. However, at this stage, Arbiter Balasolla
demurred, and instead of deciding the case, suspended the proceedings
until the SEC ruled on the issue of whether or not Orendain, the receiver of
BF Homes, had authority to execute the Deeds of Absolute Sale over the 130
Italia II lots in favor of SMPI. On appeal, the HLURB Board of
Commissioners affirmed the suspension of proceedings.

When the case was appealed to the OP by SMPI, and then to the Court of
Appeals by BF Homes, both the OP and the Court of Appeals sustained the
jurisdiction of HLURB over the complaint for specific performance filed by
SMPI, the only difference being that the OP proceeded to resolve the case
on the merits based on the evidence on record while the appellate court
remanded the case to the HLURB for further proceedings.

The OP and the Court of Appeals are correct that the HLURB, in the
exercise of its exclusive jurisdiction, did not have to suspend the
proceedings and should have went ahead to resolve the complaint for
specific performance filed by SMPI given its statutory mandate under
Section 1 of Presidential Decree No. 1344 and its technical competence and
expertise over the subject matter. The HLURB was called upon to
determine the contractual obligations of BF Homes and SMPI, as seller and
buyer of subdivision lots, respectively, under the terms and conditions of
the Deeds of Absolute Sale in relation to the provisions of Presidential
Decree No. 957. In contrast, the proceedings before the SEC involved the
receivership of BF Homes, an intra-corporate matter, as pointed out by the
Court of Appeals. While the HLURB and SEC proceedings may be related
(i.e., Orendain executed the Deeds of Absolute Sale of the 130 Italia II lots
as receiver of BF Homes), the two cases could proceed independently of one
another. A ruling by the SEC that Orendain did not have or had exceeded
his authority as receiver in executing the Deeds of Absolute Sale is not
absolutely determinative of the fate of the complaint for specific
performance of SMPI before the HLURB. It would not automatically result
in the nullification or rescission of the said Deeds or justify the refusal of BF
Homes to deliver the 20 TCTs to SMPI as there would be other issues which
need to be considered, such as the good faith or bad faith of SMPI as buyer,
ratification by BF Homes of the Deeds, etc., and the HLURB is not obliged
to suspend its proceedings until all of these issues are resolved or decided
by other courts/tribunals. HLURB could already make a preliminary
finding on the validity of the Deeds of Absolute Sale executed by Orendain
for the purpose of ascertaining the right of SMPI to the delivery of the 20
TCTs. The HLURB is behooved to settle the controversy brought before it
with dispatch if only to achieve the purpose of Presidential Decree No. 957,
to wit:

The provisions of P.D No. 957 were intended to encompass all questions
regarding subdivisions and condominiums. The intention was to provide
for an appropriate government agency, the HLURB, to which all parties -
buyers and sellers of subdivision and condominium units - may seek
remedial recourse. The law recognized, too, that subdivision and
condominium development involves public interest and welfare and should
be brought to a body, like the HLURB, that has technical expertise. In the
exercise of its powers, the HLURB, on the other hand, is empowered to
interpret and apply contracts, and determine the rights of private parties
under these contracts. This ancillary power, generally judicial, is now no
longer with the regular courts to the extent that the pertinent HLURB laws
provide.[45]

Nonetheless, the Court disagrees with the Court of Appeals and finds no
more need to remand the case to the HLURB.

To recall, the parties were able to file pleadings and submit evidence before
Arbiter Balasolla. The case was already deemed submitted for resolution
with Arbiter Balasolla stopping short only of actually rendering a decision.
Taking into account that the necessary pleadings and evidence of the
parties are already on record, returning the instant case to the HLURB for
further proceedings will simply be circuitous and inconsistent with the
summary nature of HLURB proceedings.[46] The Court keeps in mind the
shared objective of Rule 1, Section 2 of the 1996 Rules of Procedure of the
HLURB, as amended, and Rule 1, Section 6 of the Revised Rules of Court to
promote a just, speedy, and inexpensive disposition/determination of every
action.[47]

Pursuant to the doctrine of primary jurisdiction, "the courts cannot or will

not determine a controversy involving a question which is within the
jurisdiction of an administrative tribunal, where the question demands the
exercise of sound administrative discretion requiring the special
knowledge, experience, and services of the administrative tribunal to
determine technical and intricate matters of fact, and a uniformity of ruling
is essential to comply with the purposes of the regulatory statute
administered."[48] However, said doctrine is not an absolute or inflexible
rule. The Court recognized several exceptions in Republic v. Lacap,[49] viz.:

[T]he doctrine of exhaustion of administrative remedies and the corollary

doctrine of primary jurisdiction, which are based on sound public policy
and practical considerations, are not inflexible rules. There are many
accepted exceptions, such as: (a) where there is estoppel on the part of the
party invoking the doctrine; (b) where the challenged administrative act is
patently illegal, amounting to lack of jurisdiction; (c) where there is
unreasonable delay or official inaction that will irretrievably prejudice the
complainant; (d) where the amount involved is relatively small so as to
make the rule impractical and oppressive; (e) where the question involved
is purely legal and will ultimately have to be decided by the courts of
justice; (f) where judicial intervention is urgent; (g) when its
application may cause great and irreparable damage; (h) where the
controverted acts violate due process; (i) when the issue of non-exhaustion
of administrative remedies has been rendered moot; (j) when there is no
other plain, speedy and adequate remedy; (k) when strong public
interest is involved; and, (1) in quo warranto proceedings, x x x.
(Emphases supplied.)

The contractual relationship between BF Homes as owner and SMPI as

buyer of subdivision lots is governed by Presidential Decree No. 957 and is
undeniably imbued with public interest. Hence, it is crucial that the dispute
between them be resolved as swiftly as possible. InSpouses Chua v.
Ang,[50] the Court declared that "public interest and welfare are involved in
subdivision and condominium development, as the terms of Presidential
Decree Nos. 957 and 1344 expressly reflect, x x x Shelter is a basic human
need whose fulfillment cannot afford any kind of delay."

Even if the case is no longer remanded, BF Homes cannot claim denial of

due process. "The essence of due process is to be heard, and, as applied to
administrative proceedings, this means a fair and reasonable opportunity to
explain one's side, or an opportunity to seek a reconsideration of the action
or ruling complained of. Administrative due process cannot be fully
equated with due process in its strict judicial sense, for in the former a
formal or trial-type hearing is not always necessary, and technical rules of
procedure are not strictly applied."51 In the instant case, SMPI and BF
Homes were afforded the opportunity to present and address each other's
arguments through an exchange of pleadings, as well as to submit their
respective evidence before Arbiter Balasolla. To recall, the case was already
submitted for decision before Arbiter Balasolla, meaning, there is nothing
more left for the parties to submit or do. To remand the case and repeat the
entire process once again before the HLURB Arbiter will not only be
impractical, but also unreasonable and oppressive for SMPI.

Relevant herein are the following pronouncements of the Court in Ching v.

Court of Appeals[52]:

[T]he Supreme Court may, on certain exceptional instances, resolve the

merit:? of a case on the basis of the records and other evidence before it,
most especially when the resolution of these issues would best serve the
ends of justice and promote the speedy disposition of cases.

Thus, considering the peculiar circumstances attendant in the instant case,

this Court sees the cogency to exercise its plenary power:

"It is a rule of procedure for the Supreme Court to strive to settle the entire
controversy in a single proceeding leaving no root or branch to bear the
seeds of future litigation. No useful purpose will be served if a case or the
determination of an issue in a case is remanded to the trial court only to
have its decision raised again to the Court of Appeals and from there to the
Supreme Court (citing Board of Commissioners vs. Judge Joselito de la
Rosa and Judge Capulong, G.R. Nos. 95122-23).

"We have laid down the rule that the remand of the case or of an issue to
the lower court for further reception of evidence is not necessary where the
Court is in position to resolve the dispute based on the records before it and
particularly where the ends of justice would not be subserved by the
remand thereof (Escudem vs. Dulay, 158 SCRA 69). Moreover, the
Supreme Court is clothed with ample authority to review matters, even
those not raised on appeal if it finds that their consideration is necessary in
arriving at a just disposition of the case."
On many occasions, the Court, in the public interest and for the expeditious
administration of justice, has resolved actions on the merits instead of
remanding them to the trial court for further proceedings, such as where
the ends of justice would not be subserved by the remand of the case.
Consequently, the Court proceeds to resolve the primary issue in this case:
Whether or not SMPI is entitled to the delivery of the remaining 20 TCTs
for the lots it purchased from BF Homes.

The Court answers affirmatively.

Section 25 of Presidential Decree No. 957 explicitly mandates that "[t]he

owner or developer shall deliver the title of the [subdivision] lot or
[condominium] unit to the buyer upon full payment of the lot or unit."

Section 3 of all the three Deeds of Absolute Sale also reads:

3. [BF Homes] likewise covenants to deliver to [SMPI] the properties free

and clear of tenants, if any, and shall submit any and all titles, documents
and/or papers which may be required to effect the transfer of the properties
to [SMPI][.][53]

In the case at bench, SMPI submitted adequate proof showing full payment
to and receipt by BF Homes of the purchase price for the 130 Italia II lots as
fixed in the Deeds of Absolute Sale.[54] BF Homes expressly admitted
receipt of some payments, while it remained silent as to the others without
presenting controverting evidence.

Upon full payment by SMPI of the purchase price for the 130 Italia II lots to
BF Homes, it became mandatory upon BF Homes to deliver the TCTs for
said lots to SMPI. As the Court held in G.O.A.L., Inc. v. Court of Appeals[55]:

Upon full payment of the agreed price, petitioner is mandated by

law to deliver the title of the lot or unit to the buyer. Both the
"Contract to Sell" of petitioner and private respondents, and Sec. 25 of P.D.
957 state -

Sec. III (Contract to Sell). - Title and Ownership of Unit. Upon full payment
by the vendees of the full amount of the purchase price stipulated under
Sec. Ill hereof, the assessments and expenses under Sec. IV and otherwise
upon compliance by the VENDEES of all obligations therein, the VENDOR
will convey to the VENDEE all rights and interests of the former and to the
Unit, subject hereof together with the interest in the common area and in
the Condominium Corporation appurtenant to such unit x x x."

Sec. 25, P.D. 957 - Issuance of Title. - The owner or developer shall
deliver the title of the lot or unit to the buyer upon full payment
of the lot or unit x x x. In the event a mortgage over the lot or unit is
outstanding at the time of the issuance of the title to the buyer, the owner
or developer shall redeem the mortgage or the corresponding portion
thereof within six months from such issuance in order that the title over
any paid lot or unit may be secured and delivered to the buyer in
accordance herewith."
Petitioner also attempts to justify its failure to deliver the certificate of title
of private respondent Teng by claiming that it used the title as part
collateral for the additional loan NHA had extended for the construction of
the fifth floor.

The Court observes the frequent allusion of petitioner to its predicament

brought about by the abandonment of the project by the first
contractor. But such is irrelevant in light of Sec. 25 of P.D. 957 as
well as of the Contract to Sell of the parties. While we empathize
with petitioner in its financial dilemma we cannot make
innocent parties suffer the consequences of the former's lack of
business acumen. Upon full payment of a unit, petitioner loses
all its rights and interests to the unit in favor of the buyer, x x x.
(Emphases supplied.)

To justify its refusal to deliver the remaining 20 TCTs to SMPI, BF Homes

asserts that 1) the Deeds of Absolute Sale were undated and not notarized;
2) Orendain did not have or exceeded his authority as receiver in entering
into the contracts of sale of the Italia II lots with SMPI; and 3) the
consideration for the said Italia II lots were grossly inadequate and
disadvantageous for BF Homes.

The Court is not persuaded.

Article 1358(1) of the Civil Code requires that "[a]cts and contracts which
have for their object the creation, transmission, modification or
extinguishment of real rights over immovable property" must appear in a
public document; and sales of real property or of an interest therein shall be
governed by Article 1403(2) and 1405 of the same Code. Pertinent portions
of Articles 1403(2) and 1405 of the Civil Code are reproduced below:

Art. 1403. The following contracts are unenforceable, unless they are
ratified:

xxxx

(2) Those that do not comply with the Statute of Frauds as set forth in this
number. In the following cases an agreement hereafter made shall be
unenforceable by action, unless the same, or some note or memorandum,
thereof, be in writing, and subscribed by the party charged, or by his agent;
evidence, therefore, of the agreement cannot be received without the
writing, or a secondary evidence of its contents:

xxxx

(e) An agreement of the leasing for a longer period than one year, or for the
sale of real property or of an interest therein;

xxxx
Art. 1405. Contracts infringing the Statute of Frauds, referred to in No. 2 of
Article 1403, are ratified by the failure to object to the presentation of oral
evidence to prove the same, or by the acceptance of benefit under them.

The contracts of sale of the 130 Italia II lots between BF Homes and SMPI
were actually reduced into writing into the three Deeds of Absolute Sale
which were signed by the representatives of the two corporations. The only
defect was that the Deeds were not notarized and, therefore, were not
public documents as required by Article 1358(1) of the Civil Code. Cenido v.
Spouses Apacionado[56] involved a closely similar situation and the Court
adjudged therein that:

The sale of real property should be in writing and subscribed by the party
charged for it to be enforceable. The "Pagpapatunay" is in writing
and subscribed by Bonifacio Aparato, the vendor; hence, it is
enforceable under the Statute of Frauds. Not having been subscribed
and sworn to before a notary public, however, the "Pagpapatunay" is not a
public document, and therefore does not comply with Article 1358,
Paragraph 1 of the Civil Code.

The requirement of a public document in Article 1358 is not for

the validity of the instrument but for its efficacy. Although a
conveyance of land is not made in a public document, it does not
affect the validity of such conveyance. Article 1358 does not require
the accomplishment of the acts or contracts in a public instrument in order
to validate the act or contract but only to insure its efficacy, so that after the
existence of said contract has been admitted, the party bound may be
compelled to execute the proper document, x x x.

xxxx

The private conveyance of the house and lot is therefore valid between
Bonifacio Aparato and respondent spouses, x x x For greater efficacy of the
contract, convenience of the parties and to bind third persons, respondent
spouses have the right to compel the vendor or his heirs; to execute the
necessary document to properly convey the property.

Also instructive is the following discussion of the Court in Swedish Match

v. Court of Appeals,[57] on the Statute of Frauds:

The Statute of Frauds embodied in Article 1403, paragraph (2), of the Civil
Code requires certain contracts enumerated therein to be evidenced by
some note or memorandum in order to be enforceable. The term "Statute of
Frauds" is descriptive of statutes which require certain classes of contracts
to be in writing. The Statute does not deprive the parties of the
right to contract with respect to the matters therein involved, but
merely regulates the formalities of the contract necessary to
render it enforceable. Evidence of the agreement cannot be
received without the writing or a secondary evidence of its
contents.

The Statute, however, simply provides the method by which the

contracts enumerated therein may be proved but does not
declare them invalid because they are not reduced to writing. By
law, contracts are obligatory in whatever form they may have been entered
into, provided all the essential requisites for their validity are present.
However, when the law requires that a contract be in some form
in order that it may be valid or enforceable, or that a contract be
proved in a certain way, that requirement is absolute and
indispensable. Consequently, the effect of non-compliance with
the requirement of the Statute is simply that no action can be
enforced unless the requirement is complied with.Clearly, the form
required is for evidentiary purposes only. Hence, if the parties permit a
contract to be proved, without any objection, it is then just as binding as if
the Statute has been complied with.

The purpose of the Statute is to prevent fraud and perjury in the

enforcement of obligations depending for their evidence on the unassisted
memory of witnesses, by requiring certain enumerated contracts and
transactions to be evidenced by a writing signed by the party to be charged.

However, for a note or memorandum to satisfy the Statute, it must be

complete in itself and cannot rest partly in writing and partly in parol. The
note or memorandum must contain the names of the parties, the terms and
conditions of the contract, and a description of the property sufficient to
render it capable of identification. Such note or memorandum must contain
the essential elements of the contract expressed with certainty that may be
ascertained from the note or memorandum itself, or some other writing to
which it refers or within which it is connected, without resorting to parol
evidence.

xxxx

The Statute of Frauds is applicable only to contracts which are

executory and not to those which have been consummated either
totally or partially. If a contract has been totally or partially
performed, the exclusion of parol evidence would promote fraud
or bad faith, for it would enable the defendant to keep the
benefits already derived by him from the transaction in
litigation, and at the same time, evade the obligations,
responsibilities or liabilities assumed or contracted by him
thereby. This rule, however, is predicated on the fact of
ratification of the contract within the meaning of Article 1405 of
the Civil Code either (1) by failure to object to the presentation of
oral evidence to prove the same, or (2) by the acceptance of
benefits under them. x x x. (Emphases supplied.)

Based on the afore-quoted jurisprudence, the Deeds of Absolute Sale are

enforceable. First, the Deeds are already in writing and signed by the
parties, and only lack notarization, a formality which SMPI could compel
BF Homes to comply with. As private documents, the Deeds are still
binding between the parties and the conveyance of the 130 Italia II lots by
BF Homes to SMPI by virtue of said Deeds is valid. And second, the Deeds
were already ratified as BF Homes had accepted the benefits from said
contracts when it received full payment from SMPI of the purchase price
for the 130 Italia II lots. The Deeds were also substantially performed
considering that BF Homes had previously delivered to SMPI the TCTs for
110 out of the 130 lots, only refusing to deliver the TCTs for the remaining
20 lots.

BF Homes cannot insist on the lack of authority of Orendain as receiver to

sign the Deeds of Absolute Sale for the 130 Italia II lots. While it is true the
SEC revoked the appointment of Orendain as rehabilitation receiver of BF
Homes in 1989, the SEC thereafter immediately appointed FBO Networks
Management, Inc., in replacement as receiver. Orendain was the Chairman
of FBO Networks Management, Inc. Hence, when Orendain signed the
Deeds of Absolute Sale for the 130 Italia II lots, he did so as Chairman of
FBO Networks Management, Inc., the appointed receiver of BF Homes.

Under Section 6(d) of Presidential Decree No. 902-A, otherwise known as

the SEC Reorganization Act, the management committee or rehabilitation
receiver is empowered to take custody and control of all existing assets and
properties of such corporations under management; to evaluate the existing
assets and liabilities, earnings and operations of such corporations; to
determine the best way to salvage and protect the interest of investors and
creditors; to study, review and evaluate the feasibility of continuing
operations, and restructure and rehabilitate such entities if determined to
be feasible by the SEC.[58] The acts of the receiver, being an appointed
officer of the SEC,[59] enjoy the presumption of regularity.[60]

In the instant case, the acts of FBO Networks Management, Inc., as receiver
of BF Homes, undertaken through Orendain, including the sale of the 130
Italia II lots to SMPI in 1992 and 1993, are so far presumed to have been
regularly performed absent evidence to the contrary. While BF Homes
questioned the acts of Orendain/FBO Networks Management, Inc. as
receiver before the SEC, the SEC terminated the rehabilitation proceedings
without definitively ruling on the same and recognized the transfer of
jurisdiction over such subject matter to the Regional Trial Courts (RTC)
with the passage of Republic Act No. 8799, otherwise known as the
Securities Regulation Code. There is no showing herein whether BF Homes
pursued before the RTC any case to nullify or invalidate the alleged
unauthorized or irregular acts of Orendain/FBO Networks Management,
Inc. as receiver.

Moreover, even assuming for the sake of argument that Orendain/FBO

Networks Management, Inc. did act without or beyond his/its authority as
receiver in entering into the contracts of sale of the 130 Italia II lots with
SMPI, then the said contracts were merely unenforceable and could be
ratified, Article 1403(1) of the Civil Code provides:

ARTICLE 1403. The following contracts are unenforceable, unless they are
ratified:

(1) Those entered into in the name of another person by one who has been
given no authority or legal representation, or who has acted beyond his
powers[.]

As the OP observed, BF Homes ratified the Deeds of Absolute Sale with

SMPI by accepting full payment from SMPI of the purchase price for the
130 Italia II lots, and fully implementing the transaction covered by the
first two Deeds and partially implementing the third by delivering the TCTs
for 110 of the 130 lots.

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

Furthermore, it is clear that BISTRANCO received material benefits from

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

xxxx

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

BISTRANCO from repudiating an obligation voluntarily assumed by it,
after having accepted benefits therefrom.' To countenance such repudiation
would be contrary to equity and would put a premium on fraud or
misrepresentation, which this Court will not sanction.

Furthermore, the averment of BF Homes of inadequacy of the purchase

price for the 130 Italia II lots deserves scant consideration. Section 3(p),
Rule 131 of the Revised Rules of Court presumes that private transactions
have been fair and regular. The only evidence submitted by BF Homes in
support of its claim is the appraisal report which valued the lots at
P3,500.00 and P3,000.00 per square meter. The appraisal report, however,
does not necessarily prove that the purchase price for the lots agreed upon
in the Deeds of Absolute Sale, averaged at P2,500.00 per square meter, is
grossly inadequate and disadvantageous to BF Homes. There are
considerations for which sellers may agree to sell their property for less
than the market value, such as the urgent financial need of the seller, cash
or immediate payment, and/or the high number of properties purchased at
the same time. In this case, SMPI explained that it was granted a lower
purchase price because it bought the Italia II lots in volume, and BF Homes
was unable to repudiate said explanation.

Finally, as to the award of attorney's fees, Article 2208 of the Civil Code
allows the recovery of attorney's fees and expenses of litigation, other than
judicial costs, even in the absence of stipulation, "[w]here the defendant
acted in gross and evident bad faith in refusing to satisfy the plaintiffs
plainly valid, just and demandable claim." SMPI obviously had a valid and
demandable claim against BF Homes, which unjustifiably and inexcusably
refused to comply with the mandate in Presidential Decree No. 957 and
undertaking in the Deeds of Absolute Sale to deliver the titles to the
subdivision lots upon complete payment for said properties. The sudden
refusal of BF Homes to deliver the last 20 TCTs, after having previously
delivered the other 110 TCTs, constitutes bad faith and justifies the award
of attorney's fees in favor of SMPI, which was forced to litigate to enforce its
rights. The amount of P100,000.00 awarded by the OP as attorney's fees is
just and reasonable under the circumstances.

WHEREFORE, premises considered, the Petition for Review on Certiorari

of San Miguel Properties, Inc. is GRANTED. The Decision dated January
31, 2005 and Resolution dated August 9, 2005 of the Court of Appeals in
CA-G.R. SP No. 83631 ordering the remand of the case to the Housing and
Land Use Regulatory Board is REVERSED and SET ASIDE; and the
Decision dated January 27, 2004 of the Office of the President in O.P. Case
No. 03-E-203 is REINSTATED.

SO ORDERED.
Cawad vs. Abad (2015)
G.R. No. 207145 | 2015-07-28

Subject: Rule 65 petition for certiorari and prohibition not the proper remedy to question
acts in the exercise of legislative or quasi-legislative functions; DBM-DOH Joint Circular
was a valid exercise of quasi-legislative power; Publication requirement for administrative
issuances does not apply to interpretative regulations; DBM-CSC Joint Circular, which
imposed new conditions not present in the law, is unenforceable for the failure to file the
same with the UP Law Center – ONAR; DBM-DOH Joint Circular invalid insofar as it lowers
the hazard pay rate below that provided under the law

Facts:

Republic Act No. 7305 (The Magna Carta of Public Health Workers) was signed into law
in order to promote the social and economic well-being of health workers. Accordingly,
public health workers (PHWs) were granted the following allowances and benefits: hazard
allowance, subsistence allowance, longevity pay, laundry allowance and remote
assignment allowance.

In July 1992, the Secretary of Health promulgated its Implementing Rules and
Regulations (IRR). Thereafter, in November 1999, the DOH promulgated a Revised IRR
consolidating all additional and clarificatory rules issued by the former Secretaries of
Health dating back from the effectivity of the Magna Carta.

In 2012, DBM-CSC Joint Circular No. 1, Series of 2012 was issued to prescribe the
rules on the grant of Step Increments due to meritorious performance and Step
Increment due to length of service. Specifically, it provided that “an official or employee
authorized to be granted Longevity Pay under an existing law is not eligible for the grant
of Step Increment due to length of service.

Likewise, DBM-DOH Joint Circular No. 1, Series of 2012 provided that: “Hazard Pay
may be granted to PHWs only if the nature of the duties and responsibilities of their
positions, their actual services, and location of work expose them to great danger,
occupational risks, perils of life, and physical hardships; and only during periods of actual
exposure to hazards and hardships.”

In a letter addressed to respondents Secretary of Budget and Management and Secretary

of Health, the officers and members of the Philippine Public Health Association, Inc.
(PPHAI) (herein petitioners) expressed their opposition to the Joint Circulars on the
ground that the same diminishes the benefits granted by the Magna Carta to PHWs, as
the Joint Circulars prescribe certain requirements on the grant of benefits that are not
otherwise required by RA No. 7305

Unsatisfied, petitioners filed the instant Petition for certiorari and prohibition under Rule
65 of the Rules of Court.

Held:
 I. Procedural Issue

Rule 65 petition for certiorari and prohibition not the proper remedy to question
acts in the exercise of legislative or quasi-legislative functions

1. The petition for certiorari and prohibition filed by petitioners is not the appropriate
remedy to assail the validity of respondents’ circulars.

2. Certiorari as a special civil action is available only if:

(i) it is directed against a tribunal, board, or officer exercising judicial or quasi-judicial

functions;
(ii) the tribunal, board, or officer acted without or in excess of jurisdiction or with grave
abuse of discretion amounting to lack or excess of jurisdiction; and
(iii) there is no appeal nor any plain, speedy, and adequate remedy in the ordinary course
of law.

3. Prohibition as a special civil action is available only if:

(i) it is directed against a tribunal, corporation, board, officer, or person exercising

functions, judicial, quasi-judicial, or ministerial;
(ii) the tribunal, corporation, board or person acted without or in excess of its jurisdiction,
or with grave abuse of discretion amounting to lack or excess of jurisdiction; and
(iii) there is no appeal or any other plain, speedy, and adequate remedy in the ordinary
course of law.

4. Petitions for certiorari and prohibition may be invoked only against tribunals,
corporations, boards, officers, or persons exercising judicial, quasi-judicial or ministerial
functions, and not against their exercise of legislative or quasi-legislative
functions

5. Judicial functions involve the power to determine what the law is and what the legal
rights of the parties are, and then undertaking to determine these questions and
adjudicate upon the rights of the parties. Quasi-judicial functions apply to the actions
and discretion of public administrative officers or bodies required to investigate facts,
hold hearings, and draw conclusions from them as a basis for their official action, in their
exercise of discretion of a judicial nature.Ministerial functions are those which an
officer or tribunal performs in the context of a given set of facts, in a prescribed manner
and without regard to the exercise of his own judgment upon the propriety or impropriety
of the act done.

6. Before a tribunal, board, or officer may exercise judicial or quasi-judicial acts, it is

necessary that there be a law that gives rise to some specific rights under which adverse
claims are made, and the controversy ensuing therefrom is brought before a tribunal,
board, or officer clothed with authority to determine the law and adjudicate the respective
rights of the contending parties.

7. In this case, respondents did not act in any judicial, quasi-judicial, or ministerial
capacity in their issuance of the assailed joint circulars. In issuing and implementing the
subject circulars, respondents were not called upon to adjudicate the rights of contending
parties to exercise, in any manner, discretion of a judicial nature. The issuance and
enforcement by the Secretaries of the DBM, CSC and DOH of the questioned joint circulars
were done in the exercise of their quasi-legislative and administrative functions. It was
in the nature of subordinate legislation, promulgated by them in their exercise of
delegated power. Quasi-legislative power is exercised by administrative agencies through
the promulgation of rules and regulations within the confines of the granting statute and
the doctrine of non-delegation of powers from the separation of the branches of the
government

8. It is beyond the province of certiorari to declare the aforesaid administrative issuances

illegal because petitions for certiorari seek solely to correct defects in jurisdiction, and
not to correct just any error committed by a court, board, or officer exercising judicial or
quasi-judicial functions unless such court, board, or officer thereby acts without or in
excess of jurisdiction or with such grave abuse of discretion amounting to lack of
jurisdiction

9. It is likewise beyond the territory of a writ of prohibition since generally, the purpose
of the same is to keep a lower court within the limits of its jurisdiction in order to maintain
the administration of justice in orderly channels. It affords relief against usurpation of
jurisdiction by an inferior court, or when, in the exercise of jurisdiction, the inferior court
transgresses the bounds prescribed by the law, or where there is no adequate remedy
available in the ordinary course of law.

II. Substantive Issue

DBM-DOH Joint Circular was a valid exercise of quasi-legislative power

10. The DBM-DOH Joint Circular cannot be said to have been issued with grave abuse of
discretion for not only are they reasonable, they were likewise issued well within the
scope of authority granted to the respondents. In fact, as may be gathered from prior
issuances on the matter, the circular did not make any substantial deviation therefrom,
but actually remained consistent with, and germane to, the purposes of the law.

11. First, the qualification imposed by the DBM-DOH Joint Circular granting the payment
of Hazard Pay only if the nature of PHWs’ duties expose them to danger and depending
on whether the risk involved is high or low was merely derived from Section 7.1.1 of the
Revised IRR of RA No. 7305.

12. Second, fixing the Subsistence Allowance at P50 for each day of full-time service and
P25 for part-time service was also merely a reiteration of the limits prescribed by the
Revised IRR, validly issued by the Secretary of Health pursuant to Section 35 of RA No.
7305.

13. Third, the condition imposed in granting longevity pay only to those PHWs holding
regular plantilla positions merely implements the qualification imposed by the Revised
IRR. Not only are they based on the same premise, but the intent of longevity pay, which
is paid to workers for every five (5) years of continuous, efficient and meritorious
services, necessarily coincides with that of regularization.

Publication requirement for administrative issuances does not apply to

interpretative regulations

14. Petitioners contend that the DBM-DOH Joint Circular is null and void for its failure to
comply with Section 35 of RA No. 7305 providing that its implementing rules shall take
effect thirty (30) days after publication in a newspaper of general circulation, as well as
its failure to file a copy of the same with the University of the Philippines Law Center-
Office of the National Administrative Register (UP Law Center-ONAR),

15. Publication, as a basic postulate of procedural due process, is required by law in

order for administrative rules and regulations to be effective. There are, however, several
exceptions, one of which are interpretative regulations which “need nothing further than
their bare issuance for they give no real consequence more than what the law itself has
already prescribed.” These regulations need not be published for they add nothing to the
law and do not affect substantial rights of any person.

16. The DBM-DOH Joint Circular in question gives no real consequence more than what
the law itself had already prescribed. There is really no new obligation or duty imposed
by the subject circular for it merely reiterated those embodied in RA No. 7305 and its
Revised IRR. The Joint Circular did not modify, amend nor supplant the Revised IRR, the
validity of which is undisputed. Interpretative regulations, such as the DBM-DOH circular
, need not be published nor filed with the UP Law Center – ONAR in order to be effective.
Neither is prior hearing or consultation mandatory.

17. Nonetheless, its basic objective in informing the public of the contents of the law
was sufficiently accomplished when the DBM-DOH Joint Circular was published in the
Philippine Star, a newspaper of general circulation, on December 29, 2012.

18. It must be recalled that administrative regulations, such as the DBM-DOH Joint
Circular herein, enacted by administrative agencies to implement and interpret the law
they are entrusted to enforce are entitled to great respect. They partake of the nature of
a statute and are just as binding as if they have been written in the statute itself. As
such, administrative regulations have the force and effect of law and enjoy the
presumption of legality. Unless and until they are overcome by sufficient evidence
showing that they exceeded the bounds of the law, their validity and legality must be
upheld.

DBM-CSC Joint Circular, which imposed new conditions not present in the law,
is unenforceable for the failure to file the same with the UP Law Center – ONAR

19. With respect to the DBM-CSC Joint Circular, the contested provision states: “6.5 An
official or employee authorized to be granted Longevity Pay under an existing law is not
eligible for the grant of Step Increment Due to Length of Service.”

20. A review of RA No. 7305 and its Revised IRR reveals that the law does not similarly
impose such condition on the grant of longevity pay to PHWs in the government service.
As such, the DBM-CSC Joint Circular effectively created a new imposition which was not
otherwise stipulated in the law it sought to interpret.Consequently, the same exception
granted to the DBM-DOH Joint Circular cannot be applied to the DBM-CSC Joint Circular
insofar as the requirements on publication and submission with the UP Law Center –
ONAR are concerned. Thus, while it was well within the authority of the respondents to
issue rules regulating the grant of step increments as provided by RA No. 6758
(Compensation and Position Classification Act of 1989), and while it was duly published
in the Philippine Star, a newspaper of general circulation, the DBM-CSC Joint Circular
remains unenforceable for the failure of respondents to file the same with the UP Law
Center – ONAR. Moreover, insofar as the DBM-DOH Joint Circular similarly withholds the
Step Increment due to length of service from those who are already being granted
Longevity Pay, the same must likewise be declared unenforceable.

DBM-DOH Joint Circular invalid insofar as it lowers the hazard pay rate below
that provided under the law

21. The DBM-DOH Joint Circular must further be invalidated insofar as it lowers the
hazard pay at rates below the minimum prescribed by Section 21 of RA No. 7305 and
Section 7.1.5 (a) of its Revised IRR. 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.Thus, the
rates embodied in Section 7.2 of DBM-DOH Joint Circular must be struck down as invalid
for being contrary to the mandate of RA No. 7305 and its Revised IRR.

G.R. No. 189081. August 10, 2016.*

GLORIA S. DY, petitioner, vs. PEOPLE OF THE PHILIPPINES, MANDY COMMODITIES CO.,
INC., represented by its President, WILLIAM MANDY, respondents.

Criminal Liability; Criminal Liability involves a penalty affecting a person’s liberty.—A crime is a
liability against the state. It is prosecuted by and for the state. Acts considered criminal are
penalized by law as a means to protect the society from dangerous transgressions. As criminal
liability involves a penalty affecting a person’s liberty, acts are only treated criminal when the
law clearly says so.

Civil Liability; Civil liabilities do not carry with them the imposition of imprisonment as a
penalty.—Civil liabilities take a less public and more private nature. Civil liabilities are claimed
through civil actions as a means to enforce or protect a right or prevent or redress a wrong.
They do not carry with them the imposition of imprisonment as a penalty. Instead, civil liabilities
are compensated in the form of damages.
Same; Criminal Liability; While an act considered criminal is a breach of law against the State,
our legal system allows the recovery of civil damages where there is a private person injured by
a criminal act.—Our jurisdiction recognizes that a crime has a private civil component. Thus,
while an act considered criminal is a breach of law against the State, our legal system allows for
the recovery of civil damages where there is a private person injured by a criminal act. It is in
recognition of this dual nature of a criminal act that our Revised Penal Code provides that every
person criminally liable is also civilly liable. This is the concept of civil liability ex delicto.

Same; Same; Standards of Proof in civil and criminal proceedings.—There is an important

difference between civil and criminal proceedings that require a fine distinction as to how these
twin actions shall proceed. These two proceedings involve two different standards of proof. A
criminal action requires proof of guilt beyond reasonable doubt while a civil action requires a
lesser quantum of proof, that of preponderance of evidence.

Criminal Procedure; Acquittals; In judgments of acquittal, the court must state whether the
evidence of the prosecution failed to prove the guilt of the accused or merely failed to prove his
guilt beyond reasonable doubt.—Consistent with this, the Rules of Court requires that in
judgments of acquittal the court must state whether “the evidence of the prosecution absolutely
failed to prove the guilt of the accused or merely failed to prove his guilt beyond reasonable
doubt. In either case, the judgment shall determine if the act or omission from which the civil
liability might arise did not exist.”

Same; Same; Civil Liability; A civil action filed for the purpose of enforcing civil liability ex
delicto, even if mandatorily instituted with the corresponding criminal action, survives an
acquittal when it is based on the presence of reasonable doubt.—A civil action filed for the
purpose of enforcing civil liability ex delicto, even if mandatorily instituted with the corresponding
criminal action, survives an acquittal when it is based on the presence of reasonable doubt. In
these instances, while the evidence presented does not establish the fact of the crime with
moral certainty, the civil action still prevails for as long as the greater weight of evidence tilts in
favor of a finding of liability.

Same; Same; Same; Estafa; When the court finds that the source of obligation is a contract, it
takes a position completely inconsistent with the presence of estafa.—When the court finds that
the source of obligation is in fact, a contract, as in a contract of loan, it takes a position
completely inconsistent with the presence of estafa. In estafa, a person parts with his money
because of abuse of confidence or deceit. In a contract, a person willingly binds himself or
herself to give something or to render some service. In estafa, the accused’s failure to account
for the property received amounts to criminal fraud. In a contract, a party’s failure to comply with
his obligation is only a contractual breach.
Same; Civil Liability; Estafa; Actions focused on proving estafa is not the proper vehicle to
thresh out civil liability arising from a contract.—Actions focused on proving estafa is not the
proper vehicle to thresh out civil liability arising from a contract. The Due Process Clause of the
Constitution dictates that a civil liability arising from a contract must be litigated in a separate
civil action.

Constitutional Law; Due Process; The right to be heard under the Due Process Clause requires
not just any kind of an opportunity to be heard.—The right to be heard under the Due Process
Clause requires not just any kind of an opportunity to be heard. It mandates that a party to a
case must have the chance to be heard in a real and meaningful sense. It does not require a
perfunctory hearing, but a court proceeding where the party may adequately avail of the
procedural remedies granted to him or her. A court decision resulting from this falls short of the
mandate of the Due Process Clause.

Same; Same; Any court ruling directing an accused in a fused action to pay civil liability arising
from a contract is one that completely disregards the Due Process Clause.—A court ordering an
accused in a fused action to pay his or her contractual liability deprives him or her of his or her
property without the right to notice and hearing as expressed in the procedures and remedies
under the Rules of Court. Thus, any court ruling directing an accused in a fused action to pay
civil liability arising from a contract is one that completely disregards the Due Process Clause.

Criminal Procedure; Acquittals; Prescription; When a litigant erroneously pursues an estafa

case and the accused is acquitted because the obligation arose out of a contract, the
prescriptive period will still be counted from the time the cause of action arose.—Whenever a
litigant erroneously pursues an estafa case, and the accused is subsequently acquitted because
the obligation arose out of a contract, the prescriptive period will still be counted from the time
the cause of action arose. In this eventuality, it is probable that the action has already
prescribed by the time the criminal case shall have been completed. This possibility demands
that prospective litigants do not haphazardly pursue the filing of an estafa case in order to force
an obligor to pay his or her obligation with the threat of criminal conviction. Dy vs. People, 800
SCRA 39, G.R. No. 189081 August 10, 2016

JARDELEZA, J.:
Our law states that every person criminally liable for a felony is also civilly
liable. This civil liability ex delicto may be recovered through a civil action
which, under our Rules of Court, is deemed instituted with the criminal
action. While they are actions mandatorily fused,[1]they are, in truth,
separate actions whose existences are not dependent on each other. Thus,
civil liability ex delicto survives an acquittal in a criminal case for failure to
prove guilt beyond reasonable doubt. However, the Rules of Court limits
this mandatory fusion to a civil action for the recovery of civil liability ex
delicto. It, by no means, includes a civil liability arising from a different
source of obligation, as in the case of a contract. Where the civil liability
is ex contractu, the court hearing the criminal case has no authority to
award damages.

The Case

This is a Petition for Review on Certiorari under Rule 45 of the Rules of

Court. Petitioner Gloria S. Dy (petitioner) seeks the reversal of the decision
of the Court of Appeals (CA) dated February 25, 2009 (Assailed
Decision)[2] ordering her to pay Mandy Commodities Company, Inc.
(MCCI) in the amount of P21,706,281.00.[3]

The Facts

Petitioner was the former General Manager of MCCL. In the course of her
employment, petitioner assisted MCCI in its business involving several
properties. One such business pertained to the construction of warehouses
over a property (Numancia Property) that MCCI leased from the Philippine
National Bank (PNB). Sometime in May 1996, in pursuit of MCCI's
business, petitioner proposed to William Mandy (Mandy), President of
MCCI, the purchase of a property owned by Pantranco. As the transaction
involved a large amount of money, Mandy agreed to obtain a loan from the
International China Bank of Commerce (ICBC). Petitioner represented that
she could facilitate the approval of the loan. True enough, ICBC granted a
loan to MCCI in the amount of P20,000,000.00, evidenced by a promissory
note. As security, MCCI also executed a chattel mortgage over the
warehouses in the Numancia Property. Mandy entrusted petitioner with the
obligation to manage the payment of the loan.[4]

In February 1999, MCCI received a notice of foreclosure over the

mortgaged property due to its default in paying the loan obligation.[5] In
order to prevent the foreclosure, Mandy instructed petitioner to facilitate
the payment of the loan. MCCI, through Mandy, issued 13 Allied Bank
checks and 12 Asia Trust Bank checks in varying amounts and in different
dates covering the period from May 18, 1999 to April 4, 2000.[6] The total
amount of the checks, which were all payable to cash, was P21,706,281.00.
Mandy delivered the checks to petitioner. Mandy claims that he delivered
the checks with the instruction that petitioner use the checks to pay the
loan.[7] Petitioner, on the other hand, testified that she encashed the checks
and returned the money to Mandy.[8] ICBC eventually foreclosed the
mortgaged property as MCCI continued to default in its obligation to pay.
Mandy claims that it was only at this point in time that he discovered that
not a check was paid to ICBC.[9]

Thus, on October 7, 2002, MCCI, represented by Mandy, filed a Compiamt-

Affidavit for Estafa[10] before the Office of the City Prosecutor of Manila. On
March 3, 2004, an Information[11] was filed against petitioner before the
Regional Trial Court (RTC) Manila.

After a full-blown trial, the RTC Manila rendered a decision[12] dated

November 11, 2005 (RTC Decision) acquitting petitioner. The RTC Manila
found that while petitioner admitted that she received the checks, the
prosecution failed to establish that she was under any obligation to deliver
them to ICBC in payment of MCCFs loan. The trial court made this finding
on the strength of Mandy's admission that he gave the checks to petitioner
with the agreement that she would encash them. Petitioner would then pay
ICBC using her own checks. The trial court further made a finding that
Mandy and petitioner entered into a contract of loan.[13] Thus, it held that
the prosecution failed to establish an important element of the crime
of estafa—misappropriation or conversion. However, while the RTC Manila
acquitted petitioner, it ordered her to pay the amount of the checks. The
dispositive portion of the RTC Decision states —

WHEREFORE, the prosecution having failed to establish the guilt of the

accused beyond reasonable doubt, judgment is hereby rendered
ACQUITTING the accused of the offense charged. With costs de officio.

The accused is however civilly liable to the complainant for the amount of
P21,706,281.00.

SO ORDERED.[14]
Petitioner filed an appeal[15] of the civil aspect of the RTC Decision with the
CA. In the Assailed Decision,[16] the CA found the appeal without merit. It
held that the acquittal of petitioner does not necessarily absolve her of civil
liability. The CA said that it is settled that when an accused is acquitted on
the basis of reasonable doubt, courts may still find him or her civilly liable if
the evidence so warrant. The CA explained that the evidence on record
adequately prove that petitioner received the checks as a loan from MCCI.
Thus, preventing the latter from recovering the amount of the checks would
constitute unjust enrichment. Hence, the Assailed Decision ruled

WHEREFORE, in view of the foregoing, the appeal is DENIED. The

Decision dated November 11, 2005 of the Regional Trial Court, Manila,
Branch 33 in Criminal Case No. 04-224294 which found Gloria Dy civilly
liable to William Mandy is AFFIRMED.

SO ORDERED.[17]
The CA also denied petitioner's motion for reconsideration in a
resolution[18] dated August 3, 2009.

Hence, this Petition for Review on Certiorari (Petition). Petitioner argues

that since she was acquitted for failure of the prosecution to prove all the
elements of the crime charged, there was therefore no crime
committed.[19] As there was no crime, any civil liability ex delicto cannot be
awarded.

The Issues

The central issue is the propriety of making a finding of civil liability in a

criminal case for estafa when the accused is acquitted for failure of the
prosecution to prove all the elements of the crime charged.

The Ruling of the Court

We grant the petition.

Civil Liability Arising From Crime

Our laws recognize a bright line distinction between criminal and civil
liabilities. A crime is a liability against the state. It is prosecuted by and for
the state. Acts considered criminal are penalized by law as a means to
protect the society from dangerous transgressions. As criminal liability
involves a penalty affecting a person's liberty, acts are only treated criminal
when the law clearly says so. On the other hand, civil liabilities take a less
public and more private nature. Civil liabilities are claimed through civil
actions as a means to enforce or protect a right or prevent or redress a
wrong.[20] They do not carry with them the imposition of imprisonment as a
penalty. Instead, civil liabilities are compensated in the form of damages.

Nevertheless, our jurisdiction recognizes that a crime has a private civil

component. Thus, while an act considered criminal is a breach of law
against the State, our legal system allows for the recovery of civil damages
where there is a private person injured by a criminal act. It is in recognition
of this dual nature of a criminal act that our Revised Penal Code provides
that every person criminally liable is also civilly liable.[21] This is the concept
of civil liability ex delicto.

This is echoed by the New Civil Code when it recognizes acts or omissions
punished by law as a separate source of obligation.[22] This is reinforced by
Article 30 of the same code which refers to the filing of a separate civil
action to demand civil liability arising from a criminal offense.[23]

The Revised Penal Code fleshes out this civil liability in Article 104[24] which
states that it includes restitution, reparation of damage caused and
indemnification for consequential damages.

Rules of procedure for criminal and civil actions involving the same act or
omission

The law and the rules of procedure provide for a precise mechanism in
instituting a civil action pertaining to an act or omission which is also
subject of a criminal case. Our Rules of Court prescribes a kind of fusion
such that, subject to certain defined qualifications, when a criminal action
is instituted, the civil action for the recovery of the civil liability arising
from the offense is deemed instituted as well.[25]

However, there is an important difference between civil and criminal

proceedings that require a fine distinction as to how these twin actions shall
proceed. These two proceedings involve two different standards of proof. A
criminal action requires proof of guilt beyond reasonable doubt while a civil
action requires a lesser quantum of proof, that of preponderance of
evidence. This distinction also agrees with the essential principle in our
legal system that while a criminal liability carries with it a corresponding
civil liability, they are nevertheless separate and distinct. In other words,
these two liabilities may co-exist but their existence is not dependent on
each other.[26]
The Civil Code states that when an accused in a criminal prosecution is
acquitted on the ground that his guilt has not been proven beyond
reasonable doubt, a civil action for damages for the same act or omission
may be filed. In the latter case, only preponderance of evidence is
required.[27] This is supported by the Rules of Court which provides that the
extinction of the criminal action does not result in the extinction of the
corresponding civil action.[28] The latter may only be extinguished when
there is a "finding in a final judgment in the criminal action that the act or
omission from which the civil liability may arise did not
exist."[29] Consistent with this, the Rules of Court requires that in judgments
of acquittal the court must state whether "the evidence of the prosecution
absolutely failed to prove the guilt of the accused or merely failed to prove
his guilt beyond reasonable doubt. In either case, the judgment shall
determine if the act or omission from which the civil liability might arise
did not exist."[30]

Thus, whether an exoneration from the criminal action should affect the
corresponding civil action depends on the varying kinds of acquittal.
In Manantan v. Court of Appeals,[31] we explained —

Our law recognizes two kinds of acquittal, with different effects on the civil
liability of the accused. First is an acquittal on the ground that the accused
is not the author of the act or omission complained of. This instance closes
the door to civil liability, for a person who has been found to be not the
perpetrator of any act or omission cannot and can never be held liable for
such act or omission. There being no delict civil liability ex delicto is out of
the question, and the civil action, if any, which may be instituted must be
based on grounds other than the delict complained of. This is the situation
contemplated in Rule 111 of the Rules of Court. The second instance is an
acquittal based on reasonable doubt on the guilt of the accused. In this case,
even if the guilt of the accused has not been satisfactorily established, he is
not exempt from civil liability which may be proved by preponderance of
evidence only. This is the situation contemplated in Article 29 of the Civil
Code, where the civil action for damages is "for the same act or omission."
Although the two actions have different purposes, the matters discussed in
the civil case are similar to those discussed in the criminal case. However,
the judgment In the criminal proceeding cannot be read in evidence In the
civil action to establish any fact there determined, even though both actions
involve the same act or omission. The reason for this rule is that the parties
are not the same and secondarily, different rules of evidence are applicable.
Hence, notwithstanding herein petitioner's acquittal, the Court of Appeals
in determining whether Article 29 applied, was not precluded from looking
into the question of petitioner's negligence or reckless imprudence.[32]
In Dayap v. Sendiong,[33] we further said —

The acquittal of the accused does not automatically preclude a judgment

against him on the civil aspect of the case. The extinction of the penal
action does not carry with it the extinction of the civil liability where: (a)
the acquittal is based on reasonable doubt as only preponderance of
evidence is required; (b) the court declares that the liability of the accused
is only civil; and (c) the civil liability of the accused does not arise from or is
not based upon the crime of which the accused is acquitted. However, the
civil action based on delict may be deemed extinguished if mere is a finding
on the final judgment in the criminal action that the act or omission from
which the civil liability may arise did not exist or where the accused did not
commit the acts or omission imputed to him.[34]
Hence, a civil action filed for the purpose of enforcing civil liability ex
delicto, even if mandatorily instituted with the corresponding criminal
action, survives an acquittal when it is based on the presence of reasonable
doubt. In these instances, while the evidence presented does not establish
the fact of the crime with moral certainty, the civil action still prevails for as
long as the greater weight of evidence tilts in favor of a finding of liability.
This means that while the mind of the court cannot rest easy in penalizing
the accused for the commission of a crime, it nevertheless finds that he or
she committed or omitted to perform acts which serve as a separate source
of obligation. There is no sufficient proof that the act or omission is
criminal beyond reasonable doubt, but there is a preponderance of evidence
to show that the act or omission caused injury which demands
compensation.

Civil Liability Ex Delicto in Estafa Cases

Our laws penalize criminal fraud which causes damage capable of

pecuniary estimation through estafa under Article 315 of the Revised Penal
Code. In general, the elements of estafa are:

That the accused defrauded another (a) by abuse of confidence, or (b)

(1)
by means of deceit; and
 That damage or prejudice capable of pecuniary estimation is caused to
(2)
the offended party or third person.
The essence of the crime is the unlawful abuse of confidence or deceit in
order to cause damage. As this Court previously held, "the element of fraud
or bad faith is indispensable."[35] Our law abhors the act of defrauding
another person by abusing his trust or deceiving him, such that, it
criminalizes this kind of fraud.

Article 315 of the Revised Penal Code identifies the circumstances which
constitute estafa. Article 315, paragraph 1 (b) states that estafa is
committed by abuse of confidence —

Art. 315. Swindling (estafa) - x x x (b) By misappropriating or converting, to

the prejudice of another, money, goods, or any other personal property
received by the offender in trust or on commission, or for administration,
or under any other obligation involving the duty to make delivery of or to
return the same, even though such obligation be totally or partially
guaranteed by a bond; or by denying having received such money, goods, or
other property.
In this kind of estafa, the fraud which the law considers as criminal is the
act of misappropriation or conversion. When the element of
misappropriation or conversion is missing, there can be no estafa. In such
case, applying the foregoing discussions on civil liability ex delicto, there
can be no civil liability as there is no act or omission from which any civil
liability may be sourced. However, when an accused is acquitted because a
reasonable doubt exists as to the existence of misappropriation or
conversion, then civil liability may still be awarded. This means that, while
there is evidence to prove fraud, such evidence does not suffice to convince
the court to the point of moral certainty that the act of fraud amounts
to estafa. As the act was nevertheless proven, albeit without sufficient proof
justifying the imposition of any criminal penalty, civil liability exists.

In this case, the RTC Manila acquitted petitioner because the prosecution
failed to establish by sufficient evidence the element of misappropriation or
conversion. There was no adequate evidence to prove that Mandy gave the
checks to petitioner with the instruction that she will use them to pay the
ICBC loan. Citing Mandy's own testimony in open court, the RTC Manila
held that when Mandy delivered the checks to petitioner, their agreement
was that it was a "sort of loan."[36] In the dispositive portion of the RTC
Decision, the RTC Manila ruled that the prosecution "failed to establish the
guilt of the accused beyond reasonable doubt."[37] It then proceeded to
order petitioner to pay the amount of the loan.

The ruling of the RTC Manila was affirmed by the CA. It said that "[t]he
acquittal of Gloria Dy is anchored on the ground that her guilt was not
proved beyond reasonable doubt - not because she is not the author of the
act or omission complained of. x x x The trial court found no trickery nor
deceit in obtaining money from the private complainant; instead, it
concluded that the money obtained was undoubtedly a loan."[38]

Our jurisprudence on this matter diverges.

Earlier cases ordered the dismissal of the civil action for recovery of civil
liability ex delicto whenever there is a finding that there was no estafa but
rather an obligation to pay under a contract. In People v. Pantig,[39] this
Court affirmed the ruling of the lower court acquitting Pantig, but revoked
the portion sentencing him to pay the offended party the amount of money
alleged to have been obtained through false and fraudulent representations,
thus —

The trial court found as a fact that the sum of P1,200, ordered to be paid in
the judgment of acquittal, was received by the defendant-appellant as loan.
This finding is inconsistent with the existence of the criminal act charged in
the information. The liability of the defendant for the return of the
amount so received arises from a civil contract, not from a
criminal act, and may not be enforced in the criminal case.

The portion of the judgment appealed from, which orders the defendant-
appellant to pay the sum of Pi ,200 to the offended party, is hereby revoked,
without prejudice to the filing of a civil action for the recovery of the said
amount.[40]
This was also the import of the ruling in People v. Singson.[41] In that case,
this Court found that "the evidence [was] not sufficient to establish the
existence of fraud or deceit on the part of the accused. x x x And when there
is no proven deceit or fraud, there is no crime of estafa."[42] While we also
said that the established facts may prove Singson's civil liability (obligation
to pay under a contract of sale), we nevertheless made no finding of civil
liability because "our mind cannot rest easy on the certainty of
guilt"[43] considering the above finding. The dispositive portion stated that
Singson is acquitted "without prejudice to any civil liability which may be
established in a civil case against her."[44]

However, our jurisprudence on the matter appears to have changed in later

years.

In Eusebio-Calderon v. People,[45] this Court affirmed the finding of the CA

that Calderon "did not employ trickery or deceit in obtaining money from
the private complainants, instead, it concluded that the money obtained
was undoubtedly loans for which [Calderon] paid interest."[46] Thus, this
Court upheld Calderon's acquittal of estafa, but found her civilly liable for
the principal amount borrowed from the private complainants.[47]

The ruling was similar in People v. Cuyugan.[48] In that case, we acquitted

Cuyugan of estafa for failure of the prosecution to prove fraud. We held that
the transaction between Cuyugan and private complainants was a loan to
be used by Cuyugan in her business. Thus, this Court ruled that Cuyugan
has the obligation, which is civil in character, to pay the amount
borrowed.[49]

We hold that the better rule in ascertaining civil liability in estafa cases is
that pronounced in Pantig and Singson. The rulings in these cases are more
in accord with the relevant provisions of the Civil Code, and the Rules of
Court. They are also logically consistent with this Court's pronouncement
in Manantan.

Under Pantig and Singson, whenever the elements of estafa are not
established, and that the delivery of any personal property was made
pursuant to a contract, any civil liability arising from the estafa cannot be
awarded in the criminal case. This is because the civil liability arising from
the contract is not civil liability ex delicto, which arises from the same act or
omission constituting the crime. Civil liability ex delicto is the liability
sought to be recovered in a civil action deemed instituted with the criminal
case.

The situation envisioned in the foregoing cases, as in this case, is civil

liability ex contractu where the civil liability arises from an entirely
different source of obligation. Therefore, it is not the type of civil action
deemed instituted in the criminal case, and consequently must be filed
separately. This is necessarily so because whenever the court makes a
finding that the elements of estafa do not exist, it effectively says that there
is no crime. There is no act or omission that constitutes criminal fraud.
Civil liability ex delicto cannot be awarded as it cannot be sourced from
something that does not exist.

When the court finds that the source of obligation is in fact, a contract, as in
a contract of loan, it takes a position completely inconsistent with the
presence of estafa. In estafa, a person parts with his money because of
abuse of confidence or deceit. In a contract, a person willingly binds himself
or herself to give something or to render some service.[50] In estafa, the
accused's failure to account for the property received amounts to criminal
fraud. In a contract, a party's failure to comply with his obligation is only a
contractual breach. Thus, any finding that the source of obligation is a
contract negates estafa. The finding, in turn, means that there is no civil
liability ex delicto. Thus, the rulings in the foregoing cases are consistent
with the concept of fused civil and criminal actions, and the different
sources of obligations under our laws.

We apply this doctrine to the facts of this case. Petitioner was acquitted by
the RTC Manila because of the absence of the element of misappropriation
or conversion. The RTC Manila, as affirmed by the CA, found that Mandy
delivered the checks to petitioner pursuant to a loan agreement. Clearly,
there is no crime of estafa. There is no proof of the presence of any act or
omission constituting criminal fraud. Thus, civil liability ex delicto cannot
be awarded because there is no act or omission punished by law which can
serve as the source of obligation. Any civil liability arising from the loan
takes the nature of a civil liability ex contractu. It does not pertain to the
civil action deemed instituted with the criminal case.

In Manantan, this Court explained the effects of this result on the civil
liability deemed instituted with the criminal case. At the risk of
repetition, Manantan held that when there is no delict, "civil liability ex
delicto is out of the question, and the civil action, if any, which may be
instituted must be based on grounds other than the delict complained
of."[51] In Dy's case, the civil liability arises out of contract—a different
source of obligation apart from an act or omission punished by law—and
must be claimed in a separate civil action.

Violation of Due Process

We further note that the evidence on record never fully established the
terms of this loan contract. As the trial before the RTC Manila was focused
on proving estafa, the loan contract was, as a consequence, only
tangentially considered. This provides another compelling reason why the
civil liability arising from the loan should be instituted in a separate civil
case. A civil action for collection of sum of money filed before the proper
court will provide for a better venue where the terms of the loan and other
relevant details may be received. While this may postpone a warranted
recovery of the civil liability, this Court deems it more important to uphold
the principles underlying the inherent differences in the various sources of
obligations under our law, and the rule that fused actions only refer to
criminal and civil actions involving the same act or omission. These legal
tenets play a central role in this legal system. A confusion of these
principles will ultimately jeopardize the interests of the parties involved.
Actions focused on proving estafa is not the proper vehicle to thresh out
civil liability arising from a contract.[52] The Due Process Clause of the
Constitution dictates that a civil liability arising from a contract must be
litigated in a separate civil action.

Section 1 of the Bill of Rights states that no person shall be deprived of

property without due process of law. This provision protects a person's
right to both substantive and procedural due process. Substantive due
process looks into the validity of a law and protects against
arbitrariness.[53] Procedural due process, on the other hand, guarantees
procedural fairness.[54] It requires an ascertainment of "what process is due,
when it is due, and the degree of what is due."[55] This aspect of due process
is at the heart of this case.

In general terms, procedural due process means the right to notice and
hearing.[56] More specifically, our Rules of Court provides for a set of
procedures through which a person may be notified of the claims against
him or her as well as methods through which he or she may be given the
adequate opportunity to be heard.

The Rules of Court requires that any person invoking the power of the
judiciary to protect or enforce a right or prevent or redress a wrong[57] must
file an initiatory pleading which embodies a cause of action,[58] which is
defined as the act or omission by which a party violates a right of
another.[59] The contents of an initiatory pleading alleging a cause of action
will vary depending on the source of the obligation involved. In the case of
an obligation arising from a contract, as in this case, the cause of action in
an initiatory pleading will involve the duties of the parties to the contract,
and what particular obligation was breached. On the other hand, when the
obligation arises from an act or omission constituting a crime, the cause of
action must necessarily be different. In such a case, the initiatory pleading
will assert as a cause of action the act or omission of respondent, and the
specific criminal statute he or she violated. Where the initiatory pleading
fails to state a cause of action, the respondent may file a motion to dismiss
even before trial.[60] These rules embody the fundamental right to notice
under the Due Process Clause of the Constitution.

In a situation where a court (in a fused action for the enforcement of

criminal and civil liability) may validly order an accused-respondent to pay
an obligation arising from a contract, a person's right to be notified of the
complaint, and the right to have the complaint dismissed if there is no
cause of action, are completely defeated. In this event, the accused-
respondent is completely unaware of the nature of the liability claimed
against him or her at the onset of the case. The accused-respondent will not
have read any complaint stating the cause of action of an obligation arising
from a contract. All throughout the trial, the accused-respondent is made to
believe that should there be any civil liability awarded against him or her,
this liability is rooted from the act or omission constituting the crime. The
accused-respondent is also deprived of the remedy of having the complaint
dismissed through a motion to dismiss before trial. In a fused action, the
accused-respondent could not have availed of this remedy because he or
she was not even given an opportunity to ascertain what cause of action to
look for in the initiatory pleading. In such a case, the accused-respondent is
blindsided. He or she could not even have prepared the appropriate
defenses and evidence to protect his or her interest. This is not the concept
of fair play embodied in the Due Process Clause. It is a clear violation of a
person's right to due process.

The Rules of Court also allows a party to a civil action certain remedies that
enable him or her to effectively present his or her case. A party may file a
cross-claim, a counterclaim or a third-party complaint.[61] The Rules of
Court prohibits these remedies in a fused civil and criminal case.[62] The
Rules of Court requires that any cross-claim, counterclaim or third-party
complaint must be instituted in a separate civil action.[63] In a legal regime
where a court may order an accused in a fused action to pay civil liability
arising from a contract, the accused-respondent is completely deprived of
the remedy to file a cross-claim, a counterclaim or a third-party complaint.
This—coupled with an accused-respondent's inability to adequately prepare
his or her defense because of lack of adequate notice of the claims against
him or her—prevents the accused-respondent from having any right to a
meaningful hearing. The right to be heard under the Due Process Clause
requires not just any kind of an opportunity to be heard. It mandates that a
party to a case must have the chance to be heard in a real and meaningful
sense. It does not require a perfunctory hearing, but a court proceeding
where the party may adequately avail of the procedural remedies granted to
him or her. A court decision resulting from this falls short of the mandate of
the Due Process Clause.

Indeed, the language of the Constitution is clear. No person shall be

deprived of property without due process of law. Due Process, in its
procedural sense, requires, in essence, the right to notice and hearing.
These rights are further fleshed out in the Rules of Court. The Rules of
Court enforces procedural due process because, to repeat the words of this
Court in Secretary of Justice v. Lantion, it provides for "what process is due,
when it is due, and the degree of what is due."[64] A court ordering an
accused in a fused action to pay his or her contractual liability deprives him
or her of his or her property without the right to notice and hearing as
expressed in the procedures and remedies under the Rules of Court. Thus,
any court ruling directing an accused in a fused action to pay civil liability
arising from a contract is one that completely disregards the Due Process
Clause. This ruling must be reversed and the Constitution upheld.

Conclusion

The lower courts erred when they ordered petitioner to pay her civil
obligation arising from a contract of loan in the same criminal case where
she was acquitted on the ground that there was no crime. Any contractual
obligation she may have must be litigated in a separate civil action
involving the contract of loan. We clarify that in cases where the accused is
acquitted on the ground that there is no crime, the civil action deemed
instituted with the criminal case cannot prosper precisely because there is
no delict from which any civil obligation may be sourced. The peculiarity of
this case is the finding that petitioner, in fact, has an obligation arising from
a contract. This civil action arising from the contract is not necessarily
extinguished. It can be instituted in the proper court through the proper
civil action.
We note that while there is no written contract of loan in this case, there is
an oral contract of loan which must be brought within six years.[65] Under
the facts of the case, it appears that any breach in the obligation to pay the
loan may have happened between 1996 and 1999, or more than six years
since this case has been instituted. This notwithstanding, we find that the
civil action arising from the contract of loan has not yet prescribed. Article
1150 of the Civil Code states —

Art. 1150. The time for prescription for all kinds of actions, when there is no
special provision which ordains otherwise, shall be counted from the day
they may be brought.
We held in numerous cases that it is the legal possibility of bringing the
action that determines the starting point for the computation of the period
of prescription.[67] We highlight the unique circumstances surrounding this
case. As discussed in this decision, there has been diverse jurisprudence as
to the propriety of ordering an accused to pay an obligation arising from a
contract in the criminal case where the accused was acquitted on the
ground that there is no crime. Litigants, such as MCCI, cannot be blamed
for relying on prior rulings where the recovery on a contract of loan in a
criminal case for estafa was allowed. We have found the opportunity to
clarify this matter through this decision. As it is only now that we delineate
the rules governing the fusion of criminal and civil actions pertaining
to estafa, it is only upon the promulgation of this judgment that litigants
have a clear understanding of the proper recourse in similar cases. We
therefore rule that insofar as MCCI is concerned, the filing of an action, if
any (that may be sourced from the contract of loan), becomes a legal
possibility only upon the finality of this decision which definitively ruled
upon the principles on fused actions.

We add, however, that upon finality of this decision, prospective litigants

should become more circumspect in ascertaining their course of action in
similar cases. Whenever a litigant erroneously pursues an estafa case, and
the accused is subsequently acquitted because the obligation arose out of a
contract, the prescriptive period will still be counted from the time the
cause of action arose. In this eventuality, it is probable that the action has
already prescribed by the time the criminal case shall have been completed.
This possibility demands that prospective litigants do not haphazardly
pursue the filing of an estafa case in order to force an obligor to pay his or
her obligation with the threat of criminal conviction. It compels litigants to
be honest and fair in their judgment as to the proper action to be filed. This
ruling should deter litigants from turning to criminal courts as their
collection agents, and should provide a disincentive to the practice of filing
of criminal cases based on unfounded grounds in order to provide a litigant
a bargaining chip in enforcing contracts.

WHEREFORE, in view of the foregoing, the Petition is GRANTED. The

Decision of the CA dated February 25, 2009 is REVERSED. This is
however, without prejudice to any civil action which may be filed to claim
civil liability arising from the contract.

SO ORDERED.
Alliance for the Family Foundation,
Philippines, Inc. (ALFI) et.al. vs. Hon. Garin
(G.R. Nos. 217872 and 221866, 26
April 2017)
Leave a reply

I will summarize the facts as follows:

Petitioners opposed the unilateral act of the Food and Drugs Administration (FDA) on
re-certifying the contraceptive drugs named Implanon and Implanon NXT; the basis of
their opposition hinges on the fact that these drugs are abortifacients. Thus, according
to them, they should have been given notice of the certification proceedings, and a
chance to present evidence that indeed such drugs are abortifacients.

Respondents, on the other hand, alleged that petitioners are not entitled to notice and
hearing because the said proceedings are done in the exercise of its regulatory power,
not quasi-judicial power; also, they alleged that the Honorable Supreme Court is
incompetent to rule on the instant controversy due to the same reason.

Issues:

(a) Whether or not said controversy is outside the scope of Judicial Review;

(b) Whether or not petitioners were deprived of substantial and procedural due process
of law;

Held/Doctrines:

It is quite fascinating that the Supreme Court again reminded us the two fundamental
powers of an administrative body, in the words of the Honorable Court:

“The powers of an administrative body are classified into two fundamental

powers: quasi-legislative and quasi-judicial. Quasi-legislative power, otherwise
known as the power of subordinate legislation, has been defined as the authority
delegated by the lawmaking body to the administrative body to adopt rules and
regulations intended to carry out the provisions of law and implement legislative policy.
A legislative rule is in the nature of subordinate legislation designed to implement a
primary legislation by providing the details thereof. The exercise by the administrative
body of its quasi-legislative power through the promulgation of regulations of general
application does not, as a rule, require notice and hearing. The only exception being
where the Legislature itself requires it and mandates that the regulation shall be based
on certain facts as determined at an appropriate investigation.

Quasi-judicial power, on the other hand, is known as the power of the administrative
agency to determine questions of fact to which the legislative policy is to apply, in
accordance with the standards laid down by the law itself. As it involves the exercise
of discretion in determining the rights and liabilities of the parties, the proper exercise
of quasi-judicial power requires the concurrence of two elements: one, jurisdiction
which must be acquired by the administrative body and two, the observance of the
requirements of due process, that is, the right to notice and hearing.”

To answer (a) above, the Supreme Court has this to say, viz:

“On the argument that the certification proceedings were conducted by the FDA in the
exercise of its “regulatory powers” and, therefore, beyond judicial review, the Court
holds that it has the power to review all acts and decisions where there is a commission
of grave abuse of discretion. No less than the Constitution decrees that the Court must
exercise its duty to ensure that no grave abuse of discretion amounting to lack or excess
of jurisdiction is committed by any branch or instrumentality of the Government. Such
is committed when there is a violation of the constitutional mandate that “no person is
deprived of life, liberty, and property without due process of law.” The Court’s power
cannot be curtailed by the FDA’s invocation of its regulatory power.”

With regard to (b), the Supreme Court ruled that petitioners were deprived of their Right
to Due Process. Perusal of the law and rules of procedure of the instant agency reveals
the need of an issuance of notice to all concerned MAHs and a posting of the
contraceptive products for public comments.These, respondents failed to do.

This was thoroughly explained by the Court, to wit:

“Due process of law has two aspects: substantive and procedural. In order that a
particular act may not be impugned as violative of the due process clause, there must
be compliance with both the substantive and procedural requirements thereof.
Substantive due process refers to the intrinsic validity of a law that interferes with the
rights of a person to his property. Procedural due process, on the other hand, means
compliance with the procedures or steps, even periods, prescribed by the statute, in
conformity with the standard of fair play and without arbitrariness on the part of those
who are called upon to administer it. xxx

xxx To conclude that product registration, recertification, procurement, and distribution

of the questioned contraceptive drugs and devices by the FDA in the exercise of its
regulatory power need not comply with the requirements of due process would render
the issuance of notices to concerned MAHs and the posting of a list of contraceptives
for public comment a meaningless exercise. Concerned MAHs and the public in general
will be deprived of any significant participation if what they will submit will not be
considered.

Section 7.04, Rule 7 of the IRR of the RH Law (RH-IRR), relied upon by the
respondents in support of their claims, expressly allows the consideration of
conflicting evidence, such as that supplied by the petitioners in support of their
opposition to the approval of certain contraceptive drugs and devices. In fact, the said
provision mandated that the FDA utilize the “best evidence available” to ensure that no
abortifacient is approved as family planning drug or device. It bears mentioning that the
same provision even allows an independent evidence review group (ERG) to ensure
that evidence for or against the certification of a contraceptive drug or device is duly
considered.”

A.M. No. P-13-3137. August 23, 2016.*

OFFICE OF THE COURT ADMINISTRATOR, complainant, vs. UMAIMA L. SILONGAN, ABIE

M. AMILIL, and SALICK U. PANDA, JR., respondents.

Administrative Investigations; Civil Service Commission; Administrative investigations shall be

conducted without strict recourse to technical rules of procedure and evidence applicable to
judicial proceedings.—The Revised Rules on Administrative Cases in the Civil Service, which
govern the conduct of disciplinary and non-disciplinary proceedings in administrative cases,
clearly provide that “[administrative investigations shall be conducted without strict recourse to
the technical rules of procedure and evidence applicable to judicial proceedings.” Thus,
administrative due process cannot be fully equated with due process in its strict judicial sense.
Same; Administrative Proceedings; Due Process; In administrative proceedings, the essence of
due process is simply an opportunity to explain one’s side or an opportunity to seek a
reconsideration of the action or ruling complained of.—In administrative proceedings, the
essence of due process is simply an opportunity to explain one’s side or an opportunity to seek
a reconsideration of the action or ruling complained of. It is enough that the party is given the
chance to be heard before the case is decided.
Same; Same; Same; Due process is not violated when a person is not heard because he or she
has chosen, for whatever reason, not to be heard.—Due process is not violated when a person
is not heard because he or she has chosen, for whatever reason, not to be heard. If one opts to
be silent when one has a right to speak, one cannot later be heard to complain that he or she
was unduly silenced.

Administrative Law; Misconduct; Words and Phrases; Misconduct is defined as a transgression

of some established and definite rule of action, more particularly, unlawful behavior or gross
negligence by a public officer.—The Court defines misconduct as a transgression of some
established and definite rule of action, more particularly, unlawful behavior or gross negligence
by a public officer. As distinguished from simple misconduct, the element of corruption, clear
intent to violate the law, or flagrant disregard of established rule, must be manifest in a charge
of grave misconduct.

Same; Grave Misconduct; Acts of authenticating and certifying as true and correct spurious
decisions constitute grave misconduct.—Silongan and Amilil should not have attested to the
truthfulness of the decisions issued by Judge Indar knowing that there were no records to verify
its truthfulness, as the decisions were not even in the court dockets. Their acts of authenticating
and certifying as true and correct spurious decisions issued by Judge Indar undoubtedly
constitute grave misconduct as those acts manifest clear intention to violate the law or to
flagrantly disregard established rule.

Same; Dishonesty; Words and Phrases; Dishonesty is defined as disposition to lie, cheat,
deceive, or defraud; unworthiness; lack of integrity; lack of honesty, probity or integrity in
principle; lack of fairness and straightforwardness; disposition to defraud, deceive or betray.—
Their acts also amount to dishonesty, which is defined as “disposition to lie, cheat, deceive, or
defraud; untrustworthiness; lack of integrity; lack of honesty, probity or integrity in principle; lack
of fairness and straightforwardness; disposition to defraud, deceive or betray.”

Same; Courts; Court Personnel; The conduct of court personnel, from the presiding judge to the
lowliest clerk, must always be beyond reproach and must be circumscribed with the heavy
burden of responsibility as to let them be free from any suspicion that may taint the Judiciary.—
No other office in the government service exacts a greater demand for moral righteousness and
uprightness from an employee than the Judiciary. Thus, this Court has often stated that the
conduct of court personnel, from the presiding judge to the lowliest clerk, must always be
beyond reproach and must be circumscribed with the heavy burden of responsibility as to let
them be free from any suspicion that may taint the Judiciary.

Same; Grave Misconduct; Dishonesty; Gross misconduct and dishonesty are grave offenses
punishable by dismissal even for the first offense.—The Revised Rules on Administrative Cases
in the Civil Service provide that gross misconduct and dishonesty are grave offenses punishable
by dismissal even for the first offense.

Same; Administrative Proceedings; In order for the Court to acquire jurisdiction over an
administrative case, the complaint must be filed during the incumbency of the respondent public
official or employee.—It is well-settled that in order for the Court to acquire jurisdiction over an
administrative case, the complaint must be filed during the incumbency of the respondent public
official or employee.

CARPIO, J.:
The Case

This administrative case originated from the Decision of the Supreme Court
in Office of the Court Administrator, Complainant, v. Judge Cader P.
Indar, Presiding Judge and Acting Presiding Judge of the Regional Trial
Court, Branch 14, Cotabato City and Branch 15, Shariff Aguak,
Maguindanao, respectively, Respondent[1] docketed as A.M. No. RTJ-10-
2232, ordering the Office of the Court Administrator (OCA) to investigate
Atty. Umaima L. Silongan (Silongan) on her alleged authentication of
decisions issued by Judge Cader P. Indar (Judge Indar).

The Facts

The facts, as culled from the records, are as follows:

In Office of the Court Administrator, Complainant, v. Judge Cader P.

Indar, Presiding Judge and Acting Presiding Judge of the Regional Trial
Court, Branch 14, Cotabato City and Branch 15, Shariff Aguak,
Maguindanao, respectively, Respondent,[2] this Court issued a Resolution
dated 28 September 2010 directing Justice Angelita A. Gacutan (Justice
Gacutan) to conduct a fact-finding investigation to determine the
authenticity of decisions on numerous annulment of marriage cases
rendered by Judge Indar and to ascertain who are the parties responsible
for the issuance of the questioned decisions.

The fact-finding investigation revealed that the questioned decisions do not

exist in the records of the Office of the Clerk of Court of the Regional Trial
Court, Branch 14 in Cotabato City (RTC Branch 14) or the Regional Trial
Court, Branch 15 in Shariff Aguak, Maguindanao (RTC Branch 15). These
decisions were also accompanied by Certificates of Finality issued by
Silongan and in one case, by Abie M. Amilil (Amilil), Officer-in-Charge
(OIC) Branch Clerk of Court. At the time Justice Gacutan conducted the
fact-finding investigation, Silongan and Amilil were employees of the
Judiciary.

In a Decision dated 10 April 2012, this Court dismissed Judge Indar from
the service for gross misconduct and dishonesty in issuing the spurious
decisions on numerous annulment of marriage cases. The Court likewise
directed the OCA to investigate Silongan, Acting Clerk of Court of RTC
Branch 14, on her alleged participation in the authentication of the said
decisions.

Upon investigation, the OCA found that:

(1) Silongan certified as true copy 27 decisions[3] issued by Judge Indar in

RTC Branch 14. These cases cannot be found in the docket books. Neither
have these cases been filed before RTC Branch 14, per Certification[4] issued
by Clerk of Court Atty. Janis Rohaniah G. Dumama-Kadatuan (Atty.
Kadatuan).

Silongan also certified as true copy an Order in Special Proceeding Case No.
08-1163, entitled Carmelita Balagtas v. The Local Civil Registrar of the
City of Manila, which is also non-existent in the dockets of RTC Branch 15.

On 3 January 2011, the Employees Welfare Benefit Division of the Office of

Administrative Services (OAS) received from Silongan an Application for
Separation Benefit[5] effective 31 December 2010.

(2) On 24 January 2008, Amilil issued a Certificate of Finality[6] and

certified as true copy Judge Indar's decision in Special Civil Case No. 508,
entitled Caroline Flor Buenafe v. Roberto R. Buenafe, Jr., which case does
not appear in the court docket per letter of the current OIC Clerk of Court
Atty. Dennis U. Relayson (Atty. Relayson).

Amilil also certified as true copy an Order issued by Judge Indar in Special
Civil Case No. 1049, involving a petition for cancellation of certificates of
live birth of two children, which case is not docketed in the trial court.

(3) On 15 April 2005, then RTC Branch 15 Clerk of Court Salick U. Panda,
Jr. (Panda) issued a Certificate of Finality[7] for Civil Case No. 517, a case
supposedly involving declaration of nullity of marriage. The docket of RTC
Branch 15, however, reveals that Civil Case No. 517 is actually a case for
foreclosure of mortgage.

Based on OAS's records, Panda was temporarily appointed as Clerk of

Court VI on 11 April 2005 and his appointment expired on 5 April 2006.

Thus, in its Memorandum dated 29 October 2012 addressed to the Office of

the Chief Justice,[8] the OCA recommended that Silongan, Amilil, and
Panda be investigated.

In a Resolution dated 15 January 2013,[9] the Court En Banc, upon

recommendation of the OCA, resolved to: (a) docket separately the matter
involving Silongan, Amilil, and Panda as OCA IPI No. 13-4035-P; (b) refer
the remaining matter to the Executive Justice of the Court of Appeals (CA),
stationed in Cagayan de Oro City, for raffle among the members of the said
court; and (c) direct the CA Justice to whom this case will be assigned to
investigate and submit his/her report and recommendation within 60 days
from notice.

The case was raffled to Justice Henri Jean-Paul B. Inting (Investigating

Justice) of the CA Cagayan de Oro City.

In an Order dated 22 March 2013,[10] the Investigating Justice set the

hearing on 23, 24, and 25 April 2013, and required Silongan, Amilil, and
Panda to appear and submit their counter-affidavit/s and affidavit/s of
their witnesses, if any.

In a Return of Service dated 27 March 2013,[11] Atty. Kadatuan stated that

Amilil and Panda received the notice of hearing as evidenced by their
signatures in the Order, while Silongan's copy of the notice was forwarded
to her brother, who refused to acknowledge its receipt.
Thereafter, Panda requested for a copy of the formal charge against him to
enable him to prepare his counter-affidavit.

On 23 April 2013, Silongan and Amilil failed to appear before the

Investigating Justice. Only Panda appeared during the hearing. Panda
informed the Investigating Justice that he is no longer a Clerk of Court, but
an administrative officer in the Provincial Prosecution Office of
Maguindanao. He was then informed of the nature of the investigation
against him, furnished a copy of the certificate of finality he issued, and
given ten days to file his responsive pleading. The Investigating Justice then
directed the Clerks of Court of RTC Branches 14 and 15 to submit the
employment status of Silongan and Amilil.

In an Order dated 25 April 2013,[12] the Investigating Justice set the

continuation of the hearing on 21 May 2013, considering that Silongan and
Amilil failed to appear on the 24 and 25 April 2013 hearings.

In his Affidavit dated 2 May 2013,[13] Panda alleged that the copy of the
certificate of finality he signed was one of the voluminous documents
presented to him during the period of transition; he was barely a week in
office when he signed the document. He alleged that he unceremoniously
affixed his signature upon Silongan's assurance and based on the judgment
attached. He further contended that he only performed his duties as Acting
Clerk of Court and he did not act with malice when he signed the document.

In a Return of Service dated 17 May 2013,[14] Atty. Kadatuan stated that: (1)
Panda affixed his signature on the Order dated 25 April 2013; (2) Amilil
acknowledged the receipt of the Order and subpoena but refused to sign;
and (3) Silongan's copy was again forwarded to her brother, who refused to
sign in the subpoena. On 21 May 2013, Panda, Amilil, and Silongan failed to
appear in the hearing.

In an Order dated 30 May 2013,[15] the Investigating Justice directed

Silongan and Amilil to show cause why they should not be cited in
contempt of court for their failure to attend the hearings. The Investigating
Justice likewise directed the Clerks of Court of RTC Branches 14 and 15 to
issue a certification regarding the employment status of Silongan and
Amilil. Further hearings were set on 25 and 26 June 2013.

On 10 June 2013, the OIC Designate Sheriff of RTC Branch 14 filed a

Return of Service[16] stating that the Order dated 30 May 2013 and
subpoenas were duly served to: (1) Panda; (2) Atty. Lalaine T. Mastura
(Atty. Mastura), Clerk of Court of RTC Branch 15; (3) Atty. Relayson, OIC
Clerk of Court of RTC Branch 14; (4) Aileen M. Burahan of RTC Branch 14,
who received AmiliPs subpoena; and (5) the brother of Silongan, who again
refused to sign in the subpoena.

In the meantime, Atty. Relayson filed a Certification stating that Amilil

resigned as Sheriff IV effective 17 September 2012.[17] Atty. Mastura also
filed a Certification stating that Silongan applied for early retirement,
which is still pending due to the present administrative case.[18]

In an Order dated 11 July 2013,[19] the Investigating Justice stated that since
they failed to appear during the 25 and 26 June 2013 hearings, Silongan's
and Amilil's rights to be heard and defend themselves are deemed waived.

In his Report dated 19 August 2013,[20] the Investigating Justice found that
Silongan and Amilil were given due process, since they were aware of the
administrative matter against them and they chose not to attend the
hearings and be heard.

The Investigating Justice held Silongan and Amilil liable for grave
misconduct and dishonesty for certifying as true and correct bogus
decisions in their capacity as court personnel. According to the
Investigating Justice, their acts of certifying several bogus decisions
indicate a pattern of willful intention to violate and disregard established
rules. On the other hand, since Panda certified one decision only and acted
without malice, the Investigating Justice held him liable for simple neglect
of duty.

The Investigating Justice then recommended the imposition of fines,

instead of dismissal and suspension from office, after finding that Silongan,
Amilil, and Panda are no longer connected with the Judiciary, to wit:

WHEREFORE, the undersigned investigating justice respectfully

recommends to the Honorable Supreme Court the following:

1. The case be Re-docketed as a regular administrative matter;

2. Atty. Silongan and Mr. Amilil be held liable for Grave Misconduct and
Dishonesty;

3. Mr. Panda be held liable for Simple [Neglect of Duty];

4. Considering that Atty. Silongan had already retired and Mr. Amilil
resigned from Office, they be Fined in the amount of P40,000 with
forfeiture of retirement benefits and perpetual disqualification [from]
 re-employment in any government service;

5. Considering that this is Mr. Panda's first administrative complaint

and absent any showing that he acted with malice, he be Fined the
amount of P5,000.

Respectfully submitted, August 19, 2013, Cagayan de Oro City.[21]

In a Resolution dated 19 November 2013,[22] the Court directed the
Presiding Judge of RTC Branch 14 to furnish the Court with the present and
correct address of Silongan, considering that a resolution addressed to
Silongan was returned unserved with notation on the letter-envelope:
"RTS-No Longer Connected." Both the Executive Judge of RTC Branch 13
and Acting Presiding Judge of RTC Branch 15 sent letters to the Court
informing it of the present address of Silongan.[23] Thereafter, all court
processes were delivered to Silongan's present address.

The Ruling of the Court

We adopt the recommendations of the Investigating Justice for Silongan

and Amilil, but modify it for Panda.

The Revised Rules on Administrative Cases in the Civil Service, which

govern the conduct of disciplinary and non-disciplinary proceedings in
administrative cases, clearly provide that "[administrative investigations
shall be conducted without strict recourse to the technical rules of
procedure and evidence applicable to judicial proceedings."[24] Thus,
administrative due process cannot be fully equated with due process in its
strict judicial sense.[25]

In administrative proceedings, the essence of due process is simply an

opportunity to explain one's side or an opportunity to seek a
reconsideration of the action or ruling complained of.[26] It is enough that
the party is given the chance to be heard before the case is decided.[27] Due
process is not violated when a person is not heard because he or she has
chosen, for whatever reason, not to be heard.[28] If one opts to be silent
when one has a right to speak, one cannot later be heard to complain that
he or she was unduly silenced.[29]

In the present case, the Investigating Justice set six hearings, and both
Silongan and Amilil were duly notified of the hearings and the
administrative case against them. As aptly found by the Investigating
Justice:

Silongan was furnished a copy of the Decision of the Supreme Court

ordering the OCA to investigate her alleged participation in the
authentication of questioned Decisions by the Judge Indar. Moreover, the
benefits due her from her early retirement were put on hold because of the
pending investigation. These notices in addition to the Subpoenas issued to
her and received by her brother clearly show that she is aware of the
pending investigation. Thus, there can be no doubt that Silongan is aware
of the administrative matter against her. Yet she chose not to attend the
hearings and to be heard.

Amilil on the other hand resigned from office. Despite Subpoenas received
by him, he did not attend the hearings and did not submit his counter-
affidavit.[30]
Thus, Silongan and Amilil cannot feign ignorance of the administrative
investigation against them. They were given ample opportunity to
controvert the charges against them; yet, they chose not to appear in any of
the hearings or file any explanation. Unlike Panda, both Silongan and
Amilil chose not to be heard despite the opportunity given to them.

Having found that Silongan and Amilil were accorded due process, we
resolve the issue of whether Silongan, Amilil, and Panda are
administratively liable in this case.

The Court defines misconduct as a transgression of some established and

definite rule of action, more particularly, unlawful behavior or gross
negligence by a public officer.[31] As distinguished from simple misconduct,
the element of corruption, clear intent to violate the law, or flagrant
disregard of established rule, must be manifest in a charge of grave
misconduct.[32]

In the present case, both the OCA and the Investigating Justice found that
Silongan and Amilil certified as true copies spurious annulment decisions
issued by Judge Indar. There is no question as to their guilt as the records
speak for itself. The records clearly show that the 27 cases, which were
certified as true copies by Silongan, were not in the court dockets nor have
they been filed before the trial court. Amilil also certified as true copies two
decisions, which did not appear in the court dockets. As custodians of court
records in RTC Branches 14 and 15, Silongan and Amilil should have known
that there were no existing records that could have served as basis for the
issuance of the certificates.

A certificate is a written assurance, or official representation, that some act

has or has not been done, or some event occurred, or some legal formality
has been complied with.[33] To certify is to attest to the truthfulness of the
document.[34] Without the records to verify the truthfulness and
authenticity of a document, no certification should be issued.[35]

Thus, Silongan and Amilil. should not have attested to the truthfulness of
the decisions issued by Judge Indar knowing that there were no records to
verify its truthfulness, as the decisions were not even in the court dockets.
Their acts of authenticating and certifying as true and correct spurious
decisions issued by Judge Indar undoubtedly constitute grave misconduct
as those acts manifest clear intention to violate the law or to flagrantly
disregard established rule.

Their acts also amount to dishonesty, which is defined as "disposition to lie,

cheat, deceive, or defraud; untrustworthiness; lack of integrity; lack of
honesty, probity or integrity in principle; lack of fairness and
straightforwardness; disposition to defraud, deceive or betray."[36] Their
acts further amount to a breach of Canon IV of the Code of Conduct for
Court Personnel which states that: "Court personnel shall at all times
perform official duties properly and with diligence. They shall commit
themselves exclusively to the business and responsibilities of their office
during working hours."

In Atty. Alcantara-Aquino v. Dela Cruz,[37] we held respondent therein

liable for gross misconduct and dishonesty for authenticating documents
despite lack of authority to do so and lack of records that could have served
as basis for issuance of the certificate. In Balanza v. Criste,[38] we found
respondent guilty of serious dishonesty for certifying a spurious decision
and certificate of finality without authority.
No less than the Constitution mandates that all public officers and
employees should serve with responsibility, integrity and efficiency, for
public office is a public trust.[39] No other office in the government service
exacts a greater demand for moral righteousness and uprightness from an
employee than the Judiciary.[40] Thus, this Court has often stated that the
conduct of court personnel, from the presiding judge to the lowliest clerk,
must always be beyond reproach and must be circumscribed with the heavy
burden of responsibility as to let them be free from any suspicion that may
taint the Judiciary.[41] The Court condemns any conduct, act, or omission on
the part of all those involved in the administration of justice which would
violate the norm of public accountability and diminish the faith of the
people in the Judiciary.[42]

Silongan and Amilil should have known that when they certified the
questioned decisions, they did so under the seal of the court. Thus, by their
actions, they undoubtedly jeopardized the integrity of the court. Their acts
betray their complicity, if not participation, in acts that were irregular and
violative of ethics and procedure, causing damage not only to the
complainant but also to the public.[43]

The Revised Rules on Administrative Cases in the Civil Service provide that
gross misconduct and dishonesty are grave offenses punishable by
dismissal even for the first offense.[44] The Court notes that this is not
Silongan's and Amilil's first offense. In A.M. No. P-06-2267,[45] the Court
fined Silongan with PI,000 for neglect of duty because she failed to produce
303 cases for examination by the audit team, make a report on the actual
status of these 303 cases, and take action on 22 civil cases. On the other
hand, in A.M. No. RTJ-07-2069,[46] Amilil was found guilty of neglect of
duty and was suspended for two months without pay because he: (1) failed
to inform Judge Indar of the existence of Court decisions which nullified
and set aside Judge Indar's Order; (2) failed to inform and send the parties
notices and court orders; and (3) issued a Certificate of Finality without
verifying if indeed a motion for reconsideration was filed in connection with
the case.

Considering that the penalty of dismissal can no longer be imposed due to

Silongan's retirement and Amilil's resignation, we find the
recommendation of the Investigating Justice to be appropriate under the
circumstances and impose on both Silongan and Amilil the penalty of fine
in the amount of P40,000 each with forfeiture of all benefits, except
accrued leave credits, if any. They are further declared disqualified from
any future government employment.

As for Panda, we dismiss the administrative case against him.

It is well-settled that in order for the Court to acquire jurisdiction over an

administrative case, the complaint must be filed during the incumbency of
the respondent public official or employee.[47] In Re: Missing Exhibits and
Court Properties in Regional Trial Court, Branch 4, Panabo City, Davao
del Norte,[48] we dismissed the complaint against a respondent judge since
the Memorandum recommending the filing of an administrative case
against the judge was submitted by the OCA to the Court on 10 July 2012,
or more than two years after the judge retired. In the similar case of Office
of the Court Administrator v. Grageda,[49] the Court held that the
respondent judge's retirement effectively barred the Court from pursuing
the administrative proceeding that was instituted after his tenure in office,
and divested the Court of any jurisdiction to still subject him to
administrative investigation and to penalize him administratively for the
infractions committed while he was still in the service. In Office of
the Court Administrator v. Judge Andaya,[50]we likewise dismissed the
administrative case against the respondent judge upon finding that the
administrative complaint was docketed only on 29 April 2009, or after his
compulsory retirement on 27 March 2009. The Court also dismissed an
administrative case filed against a retired court stenographer for having
been initiated over a month after her retirement from the service.[51]

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

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

WHEREFORE, we find respondent Umaima L.

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

We likewise find respondent Abie M. Amilil GUILTY of GRAVE

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

We DISMISS the administrative case against respondent Salick U. Panda,

Jr. for lack of jurisdiction.

Let a copy of this Decision be furnished the Office of the Ombudsman for
whatever appropriate action the Ombudsman may wish to take with respect
to the possible criminal liability of respondents Umaima L. Silongan and
Abie M. Amilil.

SO ORDERED.
Rama, et al. vs. Moises, et al. Case Digest
Hon. Michael L. Rama, et al. vs. Hon. Gilbert P. Moises, et al.

G.R. No. 197146. December 6, 2016

Synopsis

A law enacted prior to the 1987 Constitution, like a presidential decree, is presumed to be valid and
constitutional on the theory that it was carefully studied by the Legislative and Executive Departments
prior to its enactment, and determined to be in accord with the Fundamental Law. However, the
presumption of validity and constitutionality is overturned and the law should be struck down once it
becomes inconsistent with the present Constitution and the later laws.

Facts

On May 25, 1973, President Ferdinand E. Marcos issued Presidential Decree No. 198 (Provincial Water
Utilities Act of 1973). By virtue of P. D. No. 198, Cebu City formed the Metro Cebu Water District (MCWD)
in 1974. Thereafter, the Cities of Mandaue, Lapu-Lapu and Talisay, and the Municipalities of Liloan,
Compostela, Consolacion, and Cordova turned over their waterworks systems and services to the
MCWD. From 1974 to 2002, the Cebu City Mayor appointed all the members of the MCWD Board of
Directors in accordance with Section 3 (b) of P. D. No. 198, to wit:

(b) Appointing authority. The person empowered to appoint the members of the board of Directors of a
local water district, depending upon the geographic coverage and population make-up of the particular
district. In the event that more than seventy-five percent of the total active water service
connections of a local water district are within the boundary of any city or municipality, the
appointing authority shall be the mayor of that city or municipality, as the case may be; otherwise,
the appointing authority shall be the governor of the province within which the district is
located. If portions of more than one province are included within the boundary of the district, and the
appointing authority is to be the governors then the power to appoint shall rotate between the governors
involved with the initial appointments made by the governor in whose province the greatest number of
service connections exists. (emphasis supplied)

In July 2002, Cebu Provincial Governor Pablo L. Garcia wrote to the MCWD to assert his authority and
intention to appoint the members of the MCWD Board of Directors.' He stated in his letter that since 1996,
the active water service connections in Cebu City had been below 75% of the total active water service
connection of the MCWD; that no other city or municipality under the MCWD had reached the required
percentage of 75%; and that, accordingly, he, as the Provincial Governor of Cebu, was the appointing
authority for the members of the MCWD Board of Directors pursuant to Section 3 (b) of P. D. No. 198.

Later on, the MCWD commenced in the Regional Trial Court in Cebu City (RTC) its action for declaratory
relief seeking to declare Section 3(b) of P.D. No. 198 unconstitutional; or, should the provision be
declared valid, it should be interpreted to mean that the authority to appoint the members of the MCWD
Board of Directors belonged solely to the Cebu City Mayor. The RTC (Branch 7) dismissed the action for
declaratory relief.
To avoid a vacuum and in the exigency of the service, Provincial Governor Gwendolyn F. Garcia and
Cebu City Mayor Tomas R. Osmeña jointly appointed Atty. Adelino Sitoy and Leo Pacana to fill the
vacancies. However, the position of Atty. Sitoy was deemed vacated upon his election as the Municipal
Mayor of Cordova, Cebu in the 2007 elections.

Governor Garcia commenced an action for declaratory relief to seek the interpretation of Section 3 (b) of
P.D. No. 198 on the proper appointing authority for the members of the MCWD Board of Directors.

On February 22, 2008, however, Mayor Osmeña appointed Yu as a member of the MCWD Board of
Directors.7 Accordingly, on May 20, 2008, the RTC dismissed the action for declaratory relief on the
ground that declaratory relief became improper once there was a breach or violation of the provision.

On June 13, 2008, Governor Garcia filed a complaint to declare the nullity of the appointment of Yu as a
member of the MCWD Board of Directors (docketed as Civil Case No. CEB-34459), alleging that the
appointment by Mayor Osmefia was illegal; that under Section 3(b) of P.D. No. 198, it was she as the
Provincial Governor of Cebu who was vested with the authority to appoint members of the MCWD Board
of Directors because the total active water service connections of Cebu City and of the other cities and
municipalities were below 75% of the total water service connections in the area of the MCWD.

On November 16, 2010, the RTC rendered the assailed judgment declaring the appointment of Yu as
illegal and void and ruled that the court has not been able to find any constitutional infirmity in the
questioned provision (Sec. 3) of Presidential Decree No. 198. The fundamental criterion is that all
reasonable doubts should be resolved in favor of the constitutionality of a statute. Every law has in its
favor the presumption of constitutionality. For a law to be nullified, there must be shown that there is a
clear and unequivocal breach of the Constitution. The ground for nullity must be clear and beyond
reasonable doubt.

Mayor Osmeña and Yu jointly moved for reconsideration, but the RTC denied their motion. Hence, the
petitioners have instituted this special civil action for certiorari.

Issues

1. Whether Yu's expiration of term renders case moot and academic.

2. Whether Section 3(b) of P.D. No. 198 was void on its face for violating the constitutional
provision on local autonomy and independence of HUCs under Article X of the 1987 Constitution.
3. Whether Section 3(b) of P.D. 198 is unconstitutional for violating the Due Process Clause
and the Equal Protection Clause.

Rulings
Yu's expiration of term did not

render case moot and academic

We note that respondent Yu's term as a member of the MCWD Board of Directors expired on December
31, 2012. However, this fact does not justify the dismissal of the petition on the ground of its being
rendered moot and academic. The case should still be decided, despite the intervening developments
that could have rendered the case moot and academic, because public interest is involved, and because
the issue is capable of repetition yet evading review.

For sure, the appointment by the proper official of the individuals to manage the system of water
distribution and service for the consumers residing in the concerned cities and municipalities involves the
interest of their populations and the general public affected by the services of the MCWD as a public
utility. Moreover, the question on the proper appointing authority for the members of the MCWD Board of
Directors should none of the cities and municipalities have at least 75% of the water consumers will not
be definitively resolved with finality if we dismiss the petition on the ground of mootness.

Section 3(b) of P.D. 198 is already superseded

The Court opines that Section 3(b) of P.D. No. 198 should be partially struck down for being repugnant to
the local autonomy granted by the 1987 Constitution to LGUs, and for being inconsistent with R.A. No.
7160 (1991 Local Government Code) and related laws on local governments.

The enactment of P.D. No. 198 on May 25, 1973 was prior to the enactment on December 22, 1979 of
Batas Pambansa Blg. 51 (An Act Providing for the Elective or Appointive Positions in Various Local
Governments and for Other Purposes) and antedated as well the effectivity of the 1991 Local
Government Code on January 1, 1992. At the time of the enactment of P.D. No. 198, Cebu City was still a
component city of Cebu Province. Section 328 of B.P. Blg. 51 reclassified the cities of the Philippines
based on well-defined criteria. Cebu City thus became an HUC, which immediately meant that its
inhabitants were ineligible to vote for the officials of Cebu Province. In accordance with Section 12 of
Article X of the 1987 Constitution, cities that are highly urbanized, as determined by law, and component
cities whose charters prohibit their voters from voting for provincial elective officials, shall be independent
of the province, but the voters of component cities within a province, whose charters contain no such
prohibition, shall not be deprived of their right to vote for elective provincial officials. Later on, Cebu City,
already an HUC, was further effectively rendered independent from Cebu Province pursuant to Section
29 of the 1991 Local Government Code.

Hence, all matters relating to its administration, powers and functions were exercised through its local
executives led by the City Mayor, subject to the President's retained power of general supervision over
provinces, HUCs, and independent component cities pursuant to and in accordance with Section 252 of
the 1991 Local Government Code, a law enacted for the purpose of strengthening the autonomy of the
LGUs in accordance with the 1987 Constitution.
Article X of the 1987 Constitution guarantees and promotes the administrative and fiscal autonomy of the
LGUs. The foregoing statutory enactments enunciate and implement the local autonomy provisions
explicitly recognized under the 1987 Constitution. To conform with the guarantees of the Constitution in
favor of the autonomy of the LGUs, therefore, it becomes the duty of the Court to declare and pronounce
Section 3(b) of P.D. No. 198 as already partially unconstitutional.

Section 3(b) of P.D. 198 is unconstitutional for

violating the Due Process Clause and

the Equal Protection Clause

We opine that although Section 3(b) of P.D. No. 198 provided for substantial distinction and was germane
to the purpose of P.D. No. 198 when it was enacted in 1973, the intervening reclassification of the City of
Cebu into an HUC and the subsequent enactment of the 1991 Local Government Code rendered the
continued application of Section 3(b) in disregard of the reclassification unreasonable and unfair. Clearly,
the assailed provision no longer provided for substantial distinction because, firstly, it ignored that the
MCWD was built without the participation of the provincial government; secondly, it failed to consider that
the MCWD existed to serve the community that represents the needs of the majority of the active water
service connections; and, thirdly, the main objective of the decree was to improve the water service while
keeping up with the needs of the growing population.

Hence, we deem it to be inconsistent with the true. objectives of the decree to still leave to the provincial
governor the appointing authority if the provincial governor had administrative supervision only over
municipalities and component cities accounting for 16.92% of the active water service connection in the
MCWD. In comparison, the City of Cebu had 61.28% of the active service water connections; Mandaue,
another HUC, 16%; and Lapu Lapu City, another HUC, 6.8%. There is no denying that the MCWD has
been primarily serving the needs of Cebu City. Although it is impermissible to inquire into why the decree
set 75% as the marker for determining the proper appointing authority, the provision has meanwhile
become unfair for ignoring the needs and circumstances of Cebu City as the LGU accounting for the
majority of 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. Indeed, the classification has truly ceased to be
germane or related to the main objective for the enactment of P.D. No. 198 in 1973.

Under the foregoing circumstances, therefore, the RTC gravely abused its discretion in upholding Section
3(b) of P.D. No. 198. It thereby utterly disregarded the clear policies favoring local autonomy enshrined in
the 1987 Constitution and effected by the 1991 Local Government Code and related subsequent statutory
enactments, and for being violative of the Due Process Clause and the Equal Protection Clause of the
1987 Constitution.
WHEREFORE, we GRANT the petition for certiorari; ANNUL and SET ASIDE the decision rendered in
Civil Case No. CEB-34459 on November 16, 2010 by the Regional Trial Court, Branch 18, in Cebu City;
and DECLARE as UNCONSTITUTIONAL Section 3(b) of Presidential Decree No. 198 to the extent that it
applies to highly urbanized cities like the City of Cebu and to component cities with charters expressly
providing for their voters not to be eligible to vote for the officials of the provinces to which they belong for
being in violation of the express policy of the 1987 Constitution on local autonomy, the 1991 Local
Government Code and subsequent statutory enactments, and for being also in violation of the Due
Process Clause and the Equal Protection Clause.
Subido Pagente Certeza Mendoza and Binay Law Offices vs.
Court of Appeals, et al. Case Digest
Subido Pagente Certeza Mendoza and Binay Law Offices vs. The Court of Appeals, et al.

G.R. No. 216914. December 6, 2016

Facts

Challenged in this petition for certiorari and prohibition under Rule 65 of the Rules of Court is the
constitutionality of Section 11 of R.A No. 9160, the Anti-Money Laundering Act, as amended, specifically
the Anti-Money Laundering Council's authority to file with the Court of Appeals (CA) in this case, an ex-
parte application for inquiry into certain bank deposits and investments, including related accounts based
on probable cause.

In 2015, a year before the 2016 presidential elections, reports abounded on the supposed
disproportionate wealth of then Vice President Jejomar Binay and the rest of his family, some of whom
were likewise elected public officers. The Office of the Ombudsman and the Senate conducted
investigations and inquiries thereon.

From various news reports announcing the inquiry into then Vice President Binay's bank accounts,
including accounts of members of his family, petitioner Subido Pagente Certeza Mendoza & Binay Law
Firm (SPCMB) was most concerned with the article published in the Manila Times on 25 February 2015
entitled "Inspect Binay Bank Accounts" which read, in pertinent part:

xxx The Anti-Money Laundering Council (AMLC) asked the Court of Appeals (CA) to allow the [C]ouncil to
peek into the bank accounts of the Binays, their corporations, and a law office where a family member
was once a partner.

xx xx

Also the bank accounts of the law office linked to the family, the Subido Pagente Certeza Mendoza &
Binay Law Firm, where the Vice President's daughter Abigail was a former partner.

By 8 March 2015, the Manila Times published another article entitled, "CA orders probe of Binay 's
assets" reporting that the appellate court had issued a Resolution granting the ex-parte application of the
AMLC to examine the bank accounts of SPCMB. Forestalled in the CA thus alleging that it had no
ordinary, plain, speedy, and adequate remedy to protect its rights and interests in the purported ongoing
unconstitutional examination of its bank accounts by public respondent Anti-Money Laundering Council
(AMLC), SPCMB undertook direct resort to this Court via this petition for certiorari and prohibition on the
following grounds that the he Anti-Money Laundering Act is unconstitutional insofar as it allows the
examination of a bank account without any notice to the affected party: (1) It violates the person's right to
due process; and (2) It violates the person's right to privacy.

Issues:

1. Whether Section 11 of R.A No. 9160 violates substantial due process.

2. Whether Section 11 of R.A No. 9160 violates procedural due process.
3. Whether Section 11 of R.A No. 9160 is violative of the constitutional right to privacy
enshrined in Section 2, Article III of the Constitution.

Rulings

1. No. We do not subscribe to SPCMB' s position. Succinctly, Section 11 of the AMLA providing for ex-
parte application and inquiry by the AMLC into certain bank deposits and investments does not violate
substantive due process, there being no physical seizure of property involved at that stage.

In fact, .Eugenio delineates a bank inquiry order under Section 11 from a freeze order under Section 10
on both remedies' effect on the direct objects, i.e. the bank deposits and investments:

On the other hand, a bank inquiry order under Section 11 does not necessitate any form of physical
seizure of property of the account holder. What the bank inquiry order authorizes is the examination of the
particular deposits or investments in banking institutions or non-bank financial institutions. The monetary
instruments or property deposited with such banks or financial institutions are not seized in a physical
sense, but are examined on particular details such as the account holder's record of deposits and
transactions. Unlike the assets subject of the freeze order, the records to be inspected under a bank
inquiry order cannot be physically seized or hidden by the account holder. Said records are in the
possession of the bank and therefore cannot be destroyed at the instance of the account holder alone as
that would require the extraordinary cooperation and devotion of the bank.

At the stage in which the petition was filed before us, the inquiry into certain bank deposits and
investments by the AMLC still does not contemplate any form of physical seizure of the targeted
corporeal property.

2. No. The AMLC functions solely as an investigative body in the instances mentioned in Rule 5.b.26
Thereafter, the next step is for the AMLC to file a Complaint with either the DOJ or the Ombudsman
pursuant to Rule 6b. Even in the case of Estrada v. Office of the Ombudsman, where the conflict arose at
the preliminary investigation stage by the Ombudsman, we ruled that the Ombudsman's denial of Senator
Estrada's Request to be furnished copies of the counter-affidavits of his co-respondents did not violate
Estrada's constitutional right to due process where the sole issue is the existence of probable cause for
the purpose of determining whether an information should be filed and does not prevent Estrada from
requesting a copy of the counter-affidavits of his co-respondents during the pre-trial or even during trial.
Plainly, the AMLC's investigation of money laundering offenses and its determination of possible money
laundering offenses, specifically its inquiry into certain bank accounts allowed by court order, does not
transform it into an investigative body exercising quasi-judicial powers. Hence, Section 11 of the AMLA,
authorizing a bank inquiry court order, cannot be said to violate SPCMB's constitutional right to due
process.

3. No. We now come to a determination of whether Section 11 is violative of the constitutional right to
privacy enshrined in Section 2, Article III of the Constitution. SPCMB is adamant that the CA's denial of its
request to be furnished copies of AMLC's ex-parte application for a bank inquiry order and all subsequent
pleadings, documents and orders filed and issued in relation thereto, constitutes grave abuse of
discretion where the purported blanket authority under Section 11: ( 1) partakes of a general warrant
intended to aid a mere fishing expedition; (2) violates the attorney-client privilege; (3) is not preceded by
predicate crime charging SPCMB of a money laundering offense; and ( 4) is a form of political
harassment [of SPCMB' s] clientele.

We thus subjected Section 11 of the AMLA to heightened scrutiny and found nothing arbitrary in the
allowance and authorization to AMLC to undertake an inquiry into certain bank accounts or deposits.
Instead, we found that it provides safeguards before a bank inquiry order is issued, ensuring adherence
to the general state policy of preserving the absolutely confidential nature of Philippine bank accounts:

1. The AMLC is required to establish probable cause as basis for its ex-parte application for
bank inquiry order;
2. The CA, independent of the AMLC's demonstration of probable cause, itself makes a
finding of probable cause that the deposits or investments are related to an unlawful activity
under Section 3(i) or a money laundering offense under Section 4 of the AMLA;
3. A bank inquiry court order ex-parte for related accounts is preceded by a bank inquiry
court order ex-parte for the principal account which court order ex-parte for related accounts is
separately based on probable cause that such related account is materially linked to the principal
account inquired into; and
4. The authority to inquire into or examine the main or principal account and the related
accounts shall comply with the requirements of Article III, Sections 2 and 3 of the Constitution.
The foregoing demonstrates that the inquiry and examination into the bank account are not
undertaken whimsically and solely based on the investigative discretion of the AMLC. In
particular, the requirement of demonstration by the AMLC, and determination by the CA, of
probable cause emphasizes the limits of such governmental action. We will revert to these
safeguards under Section 11 as we specifically discuss the CA' s denial of SPCMB' s letter
request for information concerning the purported issuance of a bank inquiry order involving its
accounts.

All told, we affirm the constitutionality of Section 11 of the AMLA allowing the ex-parte application by the
AMLC for authority to inquire into, and examine, certain bank deposits and investments.

WHEREFORE, the petition is DENIED. Section 11 of Republic Act No. 9160, as amended, is
declared VALID and CONSTITUTIONAL.