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Manila G.R. No.

80887 September 30, 1994

FIRST DIVISION

BLISS DEVELOPMENT CORPORATION EMPLOYEES UNION (BDCEU)-SENTRO NG DEMOKRATIKONG MANGGAGAWA (SDM), petitioner, vs. HON. PURA FERRER CALLEJA and BLISS DEVELOPMENT CORPORATION, respondents. Capulong, Magpantay, Ladrido, Canilao and Malabanan for private respondent. KAPUNAN, J.: The focal issue in the case at bench is whether or not Bliss Development Corporation (BDC) is a government-owned controlled corporation subject to Civil Service Laws, rules and regulations. Corollary to this issue is the question of whether or not petitioner is covered by Executive Order No. 180 and must register under Section 7 thereof as a precondition for filing a petition for certification election. The antecedents of the case are: On October 10, 1986, petitioner, a duly registered labor union, filed with the Department of Labor, National Capital Region, a petition for certification election of private respondent Bliss Development Corporation (BDC). Based on the position papers submitted by the parties, Med-Arbiter Napoleon V. Fernando, in an order dated January 26, 1987, dismissed the petition for lack of jurisdiction stating that the majority of BDC's stocks is owned by the Human Settlement Development Corporation (HSDC), a wholly-owned government corporation. Therefore, BDC is subject to Civil Service law, rules and regulations. The pertinent portion of said Order reads: It may not be amised (sic) to further state that the Supreme Court in its Decision in the case of National Housing Corporation versus Benjamin Juco and the National Labor Relations Commission G-R 63313 promulgated on January 17, 1985 has pronounced that: There should no longer be any question at this time that employees of government owned or controlled corporations are governed by the Civil Service Rules and Regulations. Corollary to the issue of whether or not employees of BDC may form or join labor organizations therefore is the issue of whether or not BDC is a government owned corporation. The pertinent law on the matter is P.D. No. 2029 which provides that: Section 2 Definition A government-owned or controlled corporation is a stock or non-stock corporation whether performing government or proprietary functions, which is directly chartered by special law or if organized under the general corporation law is owned or controlled by the government or subsidiary corporation, to the extent of at least a majority of its outstanding capital stock or of its outstanding voting stock. In the case at bar, it is not disputed that majority of the stocks of BDC are owned by Human Settlement Development Corporation, a wholly government owned corporation, hence, this Office cannot, but otherwise conclude that Bliss Development Corporation is a government owned corporation whose employees are governed not by the Labor Code but by the Civil Service law, rules, and regulations. Its employees therefore, are prohibited to join or form labor organization. Further, this Office is without authority to entertain the present petition for obvious lack of jurisdiction. Indeed, Opinion No. 94, series of 1985, the Minister of Justice has declared: In determining whether a corporation created under the Corporation Code is government owned or controlled or not, this ministry has consistently applied the ownership testwhereby a corporation will be deemed owned by the government if the majority of its voting stocks are owned by the government. It appearing that Human Settlement Development Corporation (HSDC), which is a wholly-owned government corporation, owns a majority of the stocks of Bliss Development Corporation (BDC), our conclusion is that BDC is a government-owned corporation subject to the coverage of the Civil Service law, rules and regulations as pronounced by the Supreme Court in the case of NHA versus Juco. 1

Petitioner then filed an appeal with the Bureau of Labor Relations. In the meantime, or on June 1, 1987 Executive Order No. 180 was issued the then President Corazon C. Aquino extending to government employees the right to organize and bargain collectively. Sections 1 and 7 of said Order provide: Sec. 1. This Executive Order applies to all employees of all branches, subdivisions, instrumentalities, and agencies of the government, including government-owned or controlled corporations with original charters. . . . (Emphasis supplied) Sec. 7. Government employees' organizations shall register with the Civil Service Commission and the Department of Labor and Employment. The application shall be filed with the Bureau of Labor Relations of the Department which shall process the same in accordance with the provisions of the Labor Code of the Philippines, as amended. Applications may also be filed with the Regional Offices of the Department of Labor and Employment which shall immediately transmit the said applications to the Bureau of Labor Relations within three (3) days from receipt hereof. On August 7, 1987, Director Pura Ferrer-Calleja of the Bureau of Labor Relations issued an Order dismissing the appeal. Said Order is reproduced hereunder: For disposition is an appeal of the Bliss Development Corporation Employees Union Sentro ng Demokratikong Manggagawa (BDCEU-SDM) from the Order of the Med-Arbiter dismissing its petition for direct certification/certification election dated January 26, 1987. On January 26, 1987, the Med-Arbiter issued an Order dismissing the petition filed by BDCEU-SDM. He ruled that the Bliss Development Corporation which is under the then Ministry of Human Settlement, is a government Corporation where the workers are prohibited from organizing and joining labor unions. The Med-Arbiter cited Opinion No. 94 series of 1985, of the Minister of Justice which is hereunder quoted as follows: In determining whether a corporation created under the Corporation Code is government-owned or a controlled or not, this Ministry has consistently applied the ownership test whereby a corporation will be deemed owned by the government if all or a majority of its stocks are owned by the government, and it will be deemed controlled by the government, if the majority of its voting stocks are owned by the government. It appearing that HSDC, which is a wholly-owned government corporation, owns a majority of the stocks of BDC, our conclusion is that BDC is a government-owned corporation subject to the coverage of the Civil Service Law and rules as pronounced by the Supreme Court in the case of NHA vs. Juco. But circumstances have changed. With the issuance of Executive Order No. 180 dated June 1, 1987, government employees are now given the right to organize and bargain collectively. This, therefore, renders academic the order subject of the appeal. xxx xxx xxx Consequently, this Bureau hereby enjoins the Petitioner to register in accordance with the aforecited provision. Meantime, the petition is dismissed without prejudice to its refiling after petitioner is granted registration to avoid legal complications. WHEREFORE, in view of the foregoing, the case is hereby dismissed without prejudice. SO ORDERED.
2

Taking exception to the Director's Order, petitioner brought the instant petition to annul the same on the following grounds: I THE DIRECTOR GRAVELY ABUSED HER DISCRETION AMOUNTING TO LACK OF JURISDICTION WHEN SHE ORDERED PETITIONER TO REGISTER UNDER SECTION 7 OF EXECUTIVE ORDER NO. 180 WHICH DOES NOT COVER PETITIONER; II

THE DIRECTOR GRAVELY ABUSED HER DISCRETION WHEN SHE INSISTED ON ENFORCING AN OPINION OF THE MINISTER OF JUSTICE WHICH RESPONDENT BDC ITSELF HAS CONSISTENTLY IGNORED AND CONTINUES TO IGNORE AND WHICH THE ENTIRE GOVERNMENT DOES NOT CARE TO ENFORCE. 3 In a resolution dated May 29, 1989 the Court gave due course to the petition and required the parties to file their respective memoranda which was complied with. The Solicitor General begged leave to be relieved from filing a comment on the petition and a memorandum, averring that he could not sustain the position of respondent Director. The petition is impressed with merit. Section 1 of Executive Order No. 180 expressly limits its application to only government-owned or controlled corporations with original charters. Hence, public respondent's order dated August 7, 1987 requiring petitioner to register in accordance with Section 7 of executive Order No. 180 is without legal basis. Without categorically saying so, public respondent sustained the Med-Arbiter's invocation of the case of National Housing Corporation v. Juco, 4 which rules that the inclusion of "government-owned or controlled corporations" within the embrace of the civil service shows a deliberate effort of the framers of the 1973 Constitution to plug an earlier loophole which allowed government-owned or controlled corporations to avoid the full consequences of the all encompassing coverage of the civil service system. In said case, we stressed that: Section 1 of Article XII-B, Constitution uses the word "every" to modify the phrase "government-owned or controlled corporation." Every means each one of a group, without exception. It means all possible and all, taken one by one. Of course, our decision in this case refers to a corporation created as a government-owned or controlled entity. . . . . 5 However, our ruling in NHC v. Juco 6 case, which was decided under the 1973 Constitution, lost its applicability with the advent of the 1987 Constitution. Thus, in National Service Corporation v. NLRC, 7 we held that: . . . (I)n the matter of coverage by the civil service of government-owned or controlled corporations, the 1987 Constitution starkly varies from the 1973 Constitution, upon which National Housing Corporation vs. Juco is based. Under the 1973 Constitution, it was provided that: The civil service embraces every branch, agency, subdivision, and instrumentality of the Government, including every government-owned or controlled corporation. . . . [Constitution, 1973, Art. II-B, Sec. I(1)] On the other hand, the 1987 Constitution provides that: The civil service embraces all branches, subdivisions, instrumentalities, and agencies of the Government, including government-owned or controlled corporations with original charter. (Emphasis supplied) [Constitution (1987), Art. IXB, Sec. 2(1). Thus the situations sought to be avoided by the 1973 Constitution and expressed by the Court in theNational Housing Corporation case in the following manner The infirmity of the respondents' position lies in its permitting a circumvention or emasculation of Section 1, Article XII-B of the Constitution. It would be possible for a regulate ministry of government to create a host of subsidiary corporations under the Corporation Code funded by a willing legislature. A government-owned corporation could create several subsidiary corporations. These subsidiary corporations would enjoy the best of two worlds. Their officials and employees would be privileged individuals, free from the strict accountability required by the Civil Service Decree and the regulations of the Commission on Audit. Their incomes would not be subject to the competitive restrains of the open market nor to the terms and conditions of civil service employment. Conceivably, all government-owned or controlled corporations could be created, no longer by special charters, but through incorporations under the general law. The Constitutional amendment including such corporations in the embrace of the civil service would cease to have application. Certainly, such a situation cannot be allowed to exist. [134 SCRA 182-183] appear relegated to relative insignificance by the 1987 Constitutional provision that the Civil Service embraces government-owned or controlled corporations with original charter; and, therefore, by clear implication, the Civil Service does not include government-owned or controlled corporations which are organized as subsidiaries of government-owned or controlled corporations under the general corporation law. 8

A corporation is created by operation of law. It acquires a judicial personality either by special law or a general law. The general law under which a private corporation may be formed or organized is the Corporation Code, the requirements of which must be complied with by those wishing to incorporate. Only upon such compliance will the corporation come into being and acquire a juridical personality, thus giving rise to is right to exist and act as a legal entity. On the other hand, a government corporation is normally created by special law, referred to often as a charter. 9 BDC is a government-owned corporation created under the Corporation Law. It is without a charter, governed by the Labor Code and not by the Civil Service Law hence, Executive Order No. 180 does not apply to it. Consequently, public respondent committed grave abuse of discretion in ordering petition to register under Section 7, of Executive Order No. 180 as a precondition for filing a petition for certification election. WHEREFORE, the instant petition is hereby GRANTED. The order of public respondent dated August 7, 1987 is SET ASIDE and the Director of Labor Relations is hereby directed to give due course of petitioner's application for certification election. SO ORDERED.

Manila G.R. No. 165641 August 25, 2010

THIRD DIVISION

ENGR. RANULFO C. FELICIANO, in his capacity as General Manager of the Leyte Metropolitan Water District (LMWD), Tacloban City, Petitioner, NAPOLEON G. ARANEZ, in his capacity as President and Chairman of "No Tax, No Impairment of Contracts Coalition, Inc.," Petitioner-in-intervention, vs. HON. CORNELIO C. GISON, Undersecretary, Department of Finance, Respondent. DECISION BRION, J.: Before this Court is the Petition for Review on Certiorari1 under Rule 45 of the Rules of Court filed by Leyte Metropolitan Water District (LMWD) through its General Manager, Engr. Ranulfo C. Feliciano, which seeks to set aside the July 14, 2004 decision of the Court of Appeals (CA)2 that in turn affirmed the ruling of the Court of Tax Appeals (CTA) in CTA Case No. 6165.3 The CTA dismissed LMWDs petition for lack of jurisdiction to try the case. Joining the petitioner is the "No Tax, No Impairment of Contracts Coalition, Inc." (Coalition), a corporation represented by its President and Chairman, Napoleon G. Aranez, which filed a motion for leave to admit complaintpetition in intervention on February 17, 2005. 4 The Court granted said motion and required the Coalition, together with LMWD, to submit their respective memoranda in a resolution dated July 5, 2006. 5 BACKGROUND FACTS The present petition arose from the tax case initiated by LMWD after it filed with the Department of Finance (DOF) a petition requesting that certain water supply equipment and a motor vehicle, particularly a Toyota Hi-Lux pick-up truck, be exempted from tax. These properties were given to LMWD through a grant by the Japanese Government for the rehabilitation of its typhoon-damaged water supply system. In an indorsement dated July 5, 1995, the DOF granted the tax exemption on the water supply equipment but assessed the corresponding tax and duty on the Toyota Hi-Lux pick-up truck.6 On June 9, 2000, LMWD moved to reconsider the disallowance of the tax exemption on the subject vehicle. The DOF, through then Undersecretary Cornelio C. Gison, denied LMWDs request for reconsideration because the tax exemption privileges of government agencies and government owned and controlled corporations (GOCCs) had already been withdrawn by Executive Order No. 93.7 This prompted LMWD, through its General Manager Engr. Ranulfo C. Feliciano, to appeal to the CTA.

After considering the evidence presented at the hearing, the CTA found LMWD to be a GOCC with an original charter. For this reason, the CTA resolved to dismiss LMWDs appeal for lack of jurisdiction to take cognizance of the case.8 The CTAs resolution was without prejudice to the right of LMWD to refile the case, if it so desires, in the appropriate forum. Likewise, the CTA denied LMWDs motion to reconsider the dismissal of its appeal.9 LMWD filed a petition for review10 with the CA raising the issues of whether the CTA decided the case in accord with the evidence presented and the applicable law, and whether the LMWD is a GOCC with original charter. The CA found the petition to be unmeritorious and affirmed the CTAs ruling that the LMWD is a GOCC with original charter, and not a private corporation or entity as LMWD argued. Hence, the present petition for review oncertiorari filed by LMWD with this Court. THE PETITION LMWD appeals to us primarily to determine whether water districts are, by law, GOCCs with original charter. Citing the Constitution and Presidential Decree (P.D.) No. 198,11 LMWD claims that water districts are private corporations and as such are entitled to certain tax exemptions under the law. LMWD argues that P.D. No. 198 is a general law, similar to the Corporation Code and other general laws, and is not a special law. Because it is a general law, water districts constituted under its terms are private corporations, not a government-owned or controlled corporation (GOCC) with original charter. In support of its position, LMWD points out provisions in P.D. No. 198 that it claims implements the general policy of the decree as enunciated in its Section 2, specifically, Section 5 12 (pertaining to the purpose of water districts), Section 6 (formation of a water district), as amended by P.D. No. 1479,13 and Section 7 (filing of resolution forming a water district), as amended by P.D. No. 768,14 of Chapter II. LMWD concludes from this examination that P.D. No. 198 is not an original charter but a general act authorizing the formation of water districts on a local option basis, similar to the Corporation Code (Batas Pambansa Blg. 68). In drawing parallelism with the Corporation Code, LMWD cites (1) the Resolution of Formation passed by thesanggunian under PD 198 for the creation of a water district as an equivalent to the Articles of Incorporation and By-laws under the Corporation Code, and (2) the filing of the Resolution of Formation of the water district with the LWUA as the counterpart of the issuance of the Certificate of Filing of the Articles of Incorporation and By-laws to the private corporation by the Securities and Exchange Commission (SEC). The juridical personality of a water district is acquired on the date of filing of the resolution in the same way that the juridical personality of a private corporation is acquired on the date of issuance of the certificate of filing with the SEC. LMWD further claims that the Constitution does not limit the meaning of the term "general law" to the Corporation Code, as there are other general laws such as Republic Act (R.A.) No. 693815 (including R.A. No. 6939 -- An Act Creating the Cooperative Development Authority), and R.A. No. 6810. 16 Under R.A. No. 6938 and R.A. No. 6810, any group of individuals can form a cooperative and a Countryside and Barangay Business Enterprise (CBBE), respectively, and acquire a juridical personality separate and distinct from their creators, members or officers provided that they comply with all the requirements under said laws. In the same manner, any group of individuals in a given local government unit can form and organize themselves into a water district provided that they comply with the requirements under P.D. No. 198. Part of LMWDs theory is that P.D. No. 198 is not the operative act that created the local water districts; they are created through compliance with the nine separate and distinct operative acts found in the Procedural Formation of a Water District prescribed under Section 6 of P.D. No. 198 and its Implementing Rules and Regulations. The last step of these operative acts is the filing of the Resolution of Formation of the sanggunian concerned with the LWUA after the latter has determined that such resolution has conformed to the requirements of Section 6 and the policy objectives in Section 2 of P.D. No. 198, as amended. 17 According to LMWD, no water district is formed by the enactment of P.D. No. 198. The decree merely authorized the formation of water districts by the sanggunian, in the same manner that the Corporation Code authorizes the formation of private corporations. LMWD theorizes that what is actually chartered, formed and created under P.D. No. 198 is the Local Water Utilities Administration (LWUA), as provided in Section 49 of the decree. This provision establishing LWUAs charter and the policy statement in Section 2 of P.D. No. 198, are in stark contrast to the decrees failure to provide an express provision on what constitutes the water districts charter, leading to the inference that the decree is not the charter of the water districts but merely authorizes their formation, on a local option basis. THE PETITION-IN-INTERVENTION On February 17, 2005, Napoleon G. Aranez (Aranez), acting in behalf of the "No Tax, No Impairment of Contracts Coalition, Inc." (Coalition) filed a motion for leave to admit complaint-petition in intervention in connection with the petition for review on certiorari filed by LMWD with this Court. Aranez is the Coalitions president and chairman. The

Coalition claims to indirectly represent all the water district concessionaires of the entire country figuring to more or less four hundred million, aside from the 26,000 concessionaires situated in the city of Tacloban and the municipalities of Dagami, Palo, Pastrana, Sta. Fe, Tabon-Tabon, Tanauan, Tolosa -- all within the province of Leyte. The petition in intervention raises three main arguments: (1) that the water districts are not GOCCs as they are quasipublic corporations or private corporations exercising public functions, (2) that classifying the water districts as GOCCs will result in an unjust disregard of the "non-impairment of contracts" clause in the Constitution, and (3) that the appealed CA decision, if not corrected or reversed, would result in a nationwide crisis and would create social unrest. Interestingly, the Coalition sets forth the premise that P.D. No. 198 is not entirely a special law or a general law, but a composite law made up of both laws: Title II Local Water District Law being the general law, and Title III Local Water Utilities Law being the special law or charter. For the rest of the petition in intervention, the Coalition adopts supporting arguments similar, if not exactly the same, as those of LMWDs. THE COURTS RULING We find no merit in the petition and the petition in intervention, particularly in their core position that water districts are private corporations, not GOCCs. The question is a long-settled matter that LMWD and the Coalition seek to revive and to re-litigate in their respective petitions. The present petition is not the first instance that the petitioner LMWD, through Engr. Ranulfo C. Feliciano, has raised for determination by this Court the corporate classification of local water districts. 18 LMWD posed this exact same question in Feliciano v. Commission on Audit (COA).19 In ruling that local water districts, such as the LMWD, are GOCCs with special charter, the Court even pointed to settled jurisprudence 20 culminating in Davao City Water District v. Civil Service Commission21 and recently reiterated in De Jesus v. COA. 22 In Feliciano, LMWD likewise claimed that it is a private corporation and therefore, should not be subject to the audit jurisdiction of the COA. LMWD then argued that P.D. No. 198 is not an "original charter" that would place the water districts within the audit jurisdiction of the COA as defined in Section 2 (1), Article IX-D of the 1987 Constitution.23 Neither did P.D. No. 198 expressly direct the creation of the water districts. LMWD posited that the decree merely provided for their formation on an optional or voluntary basis and what actually created the water districts is the approval of the Sanggunian Resolution.24 Significantly, these are the very same positions that the LMWD and the Coalition (as petitioner-intervenor) submit in the present petition. Our ruling in Feliciano squarely addressed the difference between a private corporation created under general law and a GOCC created by a special charter, and we need only to quote what Feliciano said: We begin by explaining the general framework under the fundamental law. The Constitution recognizes two classes of corporations. The first refers to private corporations created under a general law. The second refers to governmentowned or controlled corporations created by special charters. Section 16, Article XII of the Constitution provides: Sec. 16. The Congress shall not, except by general law, provide for the formation, organization, or regulation of private corporations. Government-owned or controlled corporations may be created or established by special charters in the interest of the common good and subject to the test of economic viability. The Constitution emphatically prohibits the creation of private corporations except by a general law applicable to all citizens. The purpose of this constitutional provision is to ban private corporations created by special charters, which historically gave certain individuals, families or groups special privileges denied to other citizens. In short, Congress cannot enact a law creating a private corporation with a special charter. Such legislation would be unconstitutional. Private corporations may exist only under a general law. If the corporation is private, it must necessarily exist under a general law. Stated differently, only corporations created under a general law can qualify as private corporations. Under existing laws, that general law is the Corporation Code, except that the Cooperative Code governs the incorporation of cooperatives. The Constitution authorizes Congress to create government-owned or controlled corporations through special charters. Since private corporations cannot have special charters, it follows that Congress can create corporations with special charters only if such corporations are government-owned or controlled. Obviously, LWDs [referring to local water districts] are not private corporations because they are not created under the Corporation Code. LWDs are not registered with the Securities and Exchange Commission. Section 14 of the Corporation Code states that "[A]ll corporations organized under this code shall file with the Securities and Exchange Commission articles of incorporation x x x." LWDs have no articles of incorporation, no incorporators and no

stockholders or members. There are no stockholders or members to elect the board directors of LWDs as in the case of all corporations registered with the Securities and Exchange Commission. The local mayor or the provincial governor appoints the directors of LWDs for a fixed term of office. This Court has ruled that LWDs are not created under the Corporation Code, thus: From the foregoing pronouncement, it is clear that what has been excluded from the coverage of the CSC are those corporations created pursuant to the Corporation Code. Significantly, petitioners are not created under the said code, but on the contrary, they were created pursuant to a special law and are governed primarily by its provision. (Emphasis supplied)" (Citations Omitted)25 Feliciano further categorically held that P.D. No. 198 constitutes the special charter by virtue of which local water districts exist. Unlike private corporations that derive their legal existence and power from the Corporation Code, water districts derive their legal existence and power from P.D. No. 198. Section 6 of the decree in fact provides that water districts "shall exercise the powers, rights and privileges given to private corporations under existing laws, in addition to the powers granted in, and subject to such restrictions imposed under this Act." Therefore, water districts would not have corporate powers without P.D. No. 198. As already mentioned above, the Court reiterated this ruling i.e. that a water district is a government-owned and controlled corporation with a special charter since it is created pursuant to a special law, PD 198 albeit with respect to the authority of the COA to audit water districts, in De Jesus v. COA.26 In light of these settled rulings, specifically rendered conclusive on LMWD by Feliciano v. COA and the application of the principle of "conclusiveness of judgment," we cannot but deny the present petition and petition in intervention. The principle of doctrine of "conclusiveness of judgment" a branch of the rule on res judicata27 provides that issues actually and directly resolved in a former suit cannot again be raised in any future case between the same parties involving a different cause of action. Where there has been a previous final judgment on the merits between the same parties or substantially the same parties, rendered by a court of competent jurisdiction over the matter and the parties, the matters or issues raised and adjudged in the previous final judgment shall be conclusive on the parties although they are now litigating a different cause of action 28 and shall continue to be binding between the same parties for as long as the facts on which that judgment was predicated continue to be the facts of the case or incident before the court.29 No doubt exists that the judgment in Feliciano v. COA was a final judgment rendered by a court with competent jurisdiction over the subject matter and the parties. The decision was in fact a ruling of this Court on the same issue posed in the present case. The ruling was also on the merits as it squarely responded to the issues the parties raised on the basis of their submitted arguments. There was, likewise, between Feliciano v. COA and the present case a substantial identity of parties and issue presented. In both cases, the main petitioner has been LMWD, represented by its General Manager Engr. Ranulfo C. Feliciano. While the respondents in these cases were different government offices the Commission on Audit and the Department of Finance they nevertheless represented and spoke for the same government; thus, a substantial identity of respondents obtained in resolving the same contentious issue of whether local water districts should be treated as private corporations and not as GOCCs with special charter. IN VIEW OF THE FOREGOING, we hereby DENY the petition and the petition for intervention for lack of merit and accordingly AFFIRM the decision of the Court of Appeals dated July 14, 2004 affirming the ruling of the Court of Tax Appeals in CTA Case No. 6165. Costs against the petitioners. SO ORDERED.

G.R. No. 190259

EN BANC

DATU ZALDY UY AMPATUAN, ANSARUDDIN ADIONG, REGIE SAHALI-GENERALE Petitioners, - versus PERALTA, BERSAMIN, DEL CASTILLO, ABAD, VILLARAMA, JR., PEREZ, MENDOZA, and SERENO, JJ. Respondents.

HON. RONALDO PUNO, in his capacity as Secretary of the Department of Interior and Local Government and alter-ego of President Gloria Macapagal-Arroyo, and anyone acting in his stead and on behalf of the President of the Philippines, ARMED FORCES OF THE PHILIPPINES (AFP), or any of their units operating in the Autonomous Region in Muslim Mindanao (ARMM), and PHILIPPINE NATIONAL POLICE, or any of their units operating in ARMM, Promulgated: June , 2011 x ---------------------------------------------------------------------------------------- x DECISION ABAD, J.:

On November 24, 2009, the day after the gruesome massacre of 57 men and women, including some news reporters, then President Gloria Macapagal-Arroyo issued Proclamation 1946,[1] placing the Provinces of Maguindanao and Sultan Kudarat and the City of Cotabato under a state of emergency. She directed the Armed Forces of the Philippines (AFP) and the Philippine National Police (PNP) to undertake such measures as may be allowed by the Constitution and by law to prevent and suppress all incidents of lawless violence in the named places. Three days later or on November 27, President Arroyo also issued Administrative Order 273 (AO 273)[2] transferring supervision of the Autonomous Region of Muslim Mindanao (ARMM) from the Office of the President to the Department of Interior and Local Government (DILG). But, due to issues raised over the terminology used in AO 273, the President issued Administrative Order 273-A (AO 273-A) amending the former, by delegating instead of transferring supervision of the ARMM to the DILG.[3] Claiming that the Presidents issuances encroached on the ARMMs autonomy, petitioners Datu Zaldy Uy Ampatuan, Ansaruddin Adiong, and Regie Sahali-Generale, all ARMM officials,[4] filed this petition for prohibition under Rule 65. They alleged that the proclamation and the orders empowered the DILG Secretary to take over ARMMs operations and seize the regional governments powers, in violation of the principle of local autonomy under Republic Act 9054 (also known as the Expanded ARMM Act) and the Constitution. The President gave the DILG Secretary the power to exercise, not merely administrative supervision, but control over the ARMM since the latter could suspend ARMM officials and replace them.[5] Petitioner ARMM officials claimed that the President had no factual basis for declaring a state of emergency, especially in the Province of Sultan Kudarat and the City of Cotabato, where no critical violent incidents occurred. The deployment of troops and the taking over of the ARMM constitutes an invalid exercise of the Presidents emergency powers.[6] Petitioners asked that Proclamation 1946 as well as AOs 273 and 273-A be declared unconstitutional and that respondents DILG Secretary, the AFP, and the PNP be enjoined from implementing them. In its comment for the respondents,[7] the Office of the Solicitor General (OSG) insisted that the President issued Proclamation 1946, not to deprive the ARMM of its autonomy, but to restore peace and order in subject places.[8] She issued the proclamation pursuant to her calling out power[9] as Commander-in-Chief under the first sentence of Section 18, Article VII of the Constitution. The determination of the need to exercise this power rests solely on her wisdom.[10] She must use her judgment based on intelligence reports and such best information as are available to her to call out the armed forces to suppress and prevent lawless violence wherever and whenever these reared their ugly heads. On the other hand, the President merely delegated through AOs 273 and 273-A her supervisory powers over the ARMM to the DILG Secretary who was her alter ego any way. These orders did not authorize a take over of the ARMM. They did not give him blanket authority to suspend or replace ARMM officials.[11] The delegation was necessary to facilitate the investigation of the mass killings.[12] Further, the assailed proclamation and administrative orders did not provide for the exercise of emergency powers.[13] Although normalcy has in the meantime returned to the places subject of this petition, it might be relevant to rule on the issues raised in this petition since some acts done pursuant to Proclamation 1946 and AOs 273 and 273-A could impact on the administrative and criminal cases that the government subsequently filed against those believed affected by such proclamation and orders. The Issues Presented The issues presented in this case are: 1. Whether or not Proclamation 1946 and AOs 273 and 273-A violate the principle of local autonomy under Section 16, Article X of the Constitution, and Section 1, Article V of the Expanded ARMM Organic Act;

2. Whether or not President Arroyo invalidly exercised emergency powers when she called out the AFP and the PNP to prevent and suppress all incidents of lawless violence in Maguindanao, Sultan Kudarat, and Cotabato City; and 3. Whether or not the President had factual bases for her actions. The Rulings of the Court We dismiss the petition. One. The claim of petitioners that the subject proclamation and administrative orders violate the principle of local autonomy is anchored on the allegation that, through them, the President authorized the DILG Secretary to take over the operations of the ARMM and assume direct governmental powers over the region. But, in the first place, the DILG Secretary did not take over control of the powers of the ARMM. After law enforcement agents took respondent Governor of ARMM into custody for alleged complicity in the Maguindanao massacre, the ARMM Vice-Governor, petitioner Ansaruddin Adiong, assumed the vacated post on December 10, 2009 pursuant to the rule on succession found in Article VII, Section 12,[14]of RA 9054. In turn, Acting Governor Adiong named the then Speaker of the ARMM Regional Assembly, petitioner Sahali-Generale, Acting ARMM Vice-Governor.[15] In short, the DILG Secretary did not take over the administration or operations of the ARMM. Two. Petitioners contend that the President unlawfully exercised emergency powers when she ordered the deployment of AFP and PNP personnel in the places mentioned in the proclamation.[16] But such deployment is not by itself an exercise of emergency powers as understood under Section 23 (2), Article VI of the Constitution, which provides: SECTION 23. x x x (2) In times of war or other national emergency, the Congress may, by law, authorize the President, for a limited period and subject to such restrictions as it may prescribe, to exercise powers necessary and proper to carry out a declared national policy. Unless sooner withdrawn by resolution of the Congress, such powers shall cease upon the next adjournment thereof. The President did not proclaim a national emergency, only a state of emergency in the three places mentioned. And she did not act pursuant to any law enacted by Congress that authorized her to exercise extraordinary powers. The calling out of the armed forces to prevent or suppress lawless violence in such places is a power that the Constitution directly vests in the President. She did not need a congressional authority to exercise the same. Three. The Presidents call on the armed forces to prevent or suppress lawless violence springs from the power vested in her under Section 18, Article VII of the Constitution, which provides.[17] SECTION 18. The President shall be the Commander-in-Chief of all armed forces of the Philippines and whenever it becomes necessary, he may call out such armed forces to prevent or suppress lawless violence, invasion or rebellion. x x x While it is true that the Court may inquire into the factual bases for the Presidents exercise of the above power,[18] it would generally defer to her judgment on the matter. As the Court acknowledged inIntegrated Bar of the Philippines v. Hon. Zamora,[19] it is clearly to the President that the Constitution entrusts the determination of the need for calling out the armed forces to prevent and suppress lawless violence. Unless it is shown that such determination was attended by grave abuse of discretion, the Court will accord respect to the Presidents judgment. Thus, the Court said: If the petitioner fails, by way of proof, to support the assertion that the President acted without factual basis, then this Court cannot undertake an independent investigation beyond the pleadings. The factual necessity of calling out the armed forces is not easily quantifiable and cannot be objectively established since matters considered for satisfying the same is a combination of several factors which are not always accessible to the courts. Besides the absence of textual standards that the court may use to judge necessity, information necessary to arrive at such judgment might also prove unmanageable for the courts. Certain pertinent information might be difficult to verify, or wholly unavailable to the courts. In many instances, the evidence upon which the President might decide that there is a need to call out the armed forces may be of a nature not constituting technical proof. On the other hand, the President, as Commander-in-Chief has a vast intelligence network to gather information, some of which may be classified as highly confidential or affecting the security of the state. In the exercise of the power to call, on-the-spot decisions may be imperatively necessary in emergency situations to avert great loss of human lives and mass destruction of property. Indeed, the decision to call out the military to prevent or suppress lawless violence must be done swiftly and decisively if it were to have any effect at all. x x x.[20]

Here, petitioners failed to show that the declaration of a state of emergency in the Provinces of Maguindanao, Sultan Kudarat and Cotabato City, as well as the Presidents exercise of the calling out power had no factual basis. They simply alleged that, since not all areas under the ARMM were placed under a state of emergency, it follows that the take over of the entire ARMM by the DILG Secretary had no basis too.[21] But, apart from the fact that there was no such take over to begin with, the OSG also clearly explained the factual bases for the Presidents decision to call out the armed forces, as follows: The Ampatuan and Mangudadatu clans are prominent families engaged in the political control of Maguindanao. It is also a known fact that both families have an arsenal of armed followers who hold elective positions in various parts of the ARMM and the rest of Mindanao. Considering the fact that the principal victims of the brutal bloodshed are members of the Mangudadatu family and the main perpetrators of the brutal killings are members and followers of the Ampatuan family, both the military and police had to prepare for and prevent reported retaliatory actions from the Mangudadatu clan and additional offensive measures from the Ampatuan clan. xxxx The Ampatuan forces are estimated to be approximately two thousand four hundred (2,400) persons, equipped with about two thousand (2,000) firearms, about four hundred (400) of which have been accounted for. x x x As for the Mangudadatus, they have an estimated one thousand eight hundred (1,800) personnel, with about two hundred (200) firearms. x x x Apart from their own personal forces, both clans have Special Civilian Auxiliary Army (SCAA) personnel who support them: about five hundred (500) for the Ampatuans and three hundred (300) for the Mangudadatus. What could be worse than the armed clash of two warring clans and their armed supporters, especially in light of intelligence reports on the potential involvement of rebel armed groups (RAGs). One RAG was reported to have planned an attack on the forces of Datu Andal Ampatuan, Sr. to show support and sympathy for the victims. The said attack shall worsen the age-old territorial dispute between the said RAG and the Ampatuan family. xxxx On the other hand, RAG faction which is based in Sultan Kudarat was reported to have received three million pesos (P3,000,000.00) from Datu Andal Ampatuan, Sr. for the procurement of ammunition. The said faction is a force to reckon with because the group is well capable of launching a series of violent activities to divert the attention of the people and the authorities away from the multiple murder case. x x x In addition, two other factions of a RAG are likely to support the Mangudadatu family. The Cotabato-based faction has the strength of about five hundred (500) persons and three hundred seventy-two (372) firearms while the Sultan Kudarat-based faction has the strength of about four hundred (400) persons and three hundred (300) firearms and was reported to be moving towards Maguindanao to support the Mangudadatu clan in its armed fight against the Ampatuans.[22] In other words, the imminence of violence and anarchy at the time the President issued Proclamation 1946 was too grave to ignore and she had to act to prevent further bloodshed and hostilities in the places mentioned. Progress reports also indicated that there was movement in these places of both high-powered firearms and armed men sympathetic to the two clans.[23] Thus, to pacify the peoples fears and stabilize the situation, the President had to take preventive action. She called out the armed forces to control the proliferation of loose firearms and dismantle the armed groups that continuously threatened the peace and security in the affected places. Notably, the present administration of President Benigno Aquino III has not withdrawn the declaration of a state of emergency under Proclamation 1946. It has been reported[24] that the declaration would not be lifted soon because there is still a need to disband private armies and confiscate loose firearms. Apparently, the presence of troops in those places is still necessary to ease fear and tension among the citizenry and prevent and suppress any violence that may still erupt, despite the passage of more than a year from the time of the Maguindanao massacre. Since petitioners are not able to demonstrate that the proclamation of state of emergency in the subject places and the calling out of the armed forces to prevent or suppress lawless violence there have clearly no factual bases, the Court must respect the Presidents actions. WHEREFORE, the petition is DISMISSED for lack of merit. SO ORDERED.

FIRST DIVISION G.R. No. 169913 June 8, 2011

HEIRS OF DR. JOSE DELESTE, namely: JOSEFA DELESTE, JOSE RAY DELESTE, RAUL HECTOR DELESTE, and RUBEN ALEX DELESTE, Petitioners, vs. LAND BANK OF THE PHILIPPINES (LBP), as represented by its Manager, LAND VALUATION OFFICE OF LBP COTABATO CITY; THE REGIONAL DIRECTOR - REGION 12 OF COTABATO CITY, THE SECRETARY OF THE DEPARTMENT OF AGRARIAN REFORM; THE REGIONAL DIRECTOR OF REGION X - CAGAYAN DE ORO CITY, represented by MCMILLAN LUCMAN, in his capacity as Provincial Agrarian Reform Officer (PARO) of DAR Lanao del Norte; LIZA BALBERONA, in her capacity as DAR Municipal Agrarian Reform Officer (MARO); REYNALDO BAGUIO, in his capacity as the Register of Deeds of Iligan City as nominal party; the emancipation patent holders: FELIPE D. MANREAL, CUSTUDIO M. RICO, HEIRS OF DOMINGO V. RICO, HEIRS OF ABDON T. MANREAL, MACARIO M. VELORIA, ALICIA B. MANREAL, PABLO RICO, SALVACION MANREAL, HEIRS OF TRANQUILIANA MANREAL, HEIRS OF ANGELA VELORIA, HEIRS OF NECIFURO CABALUNA, HEIRS OF CLEMENTE RICO, HEIRS OF MANTILLANO OBISO, HEIRS OF HERCULANO BALORIO, and TITO BALER, Respondents.

DECISION VELASCO, JR., J.: The Case Before Us is a Petition for Review on Certiorari under Rule 45 seeking to reverse and set aside the October 28, 2004 Resolution1 of the Court of Appeals (CA) and its September 13, 2005 Resolution2 denying petitioners motion for reconsideration. The Facts The spouses Gregorio Nanaman (Gregorio) and Hilaria Tabuclin (Hilaria) were the owners of a parcel of agricultural land located in Tambo, Iligan City, consisting of 34.7 hectares (subject property). Said spouses were childless, but Gregorio had a son named Virgilio Nanaman (Virgilio) by another woman. Virgilio had been raised by the couple since he was two years old. Gregorio also had two daughters, Esperanza and Caridad, by still another woman.3 When Gregorio died in 1945, Hilaria and Virgilio administered the subject property.4 On February 16, 1954, Hilaria and Virgilio sold the subject property to Dr. Jose Deleste (Deleste) for PhP 16,000.5 The deed of sale was notarized on February 17, 1954 and registered on March 2, 1954. Also, the tax declaration in the name of Virgilio was canceled and a new tax declaration was issued in the name of Deleste. The arrears in the payment of taxes from 1952 had been updated by Deleste and from then on, he paid the taxes on the property.6 On May 15, 1954, Hilaria died.7 Gregorios brother, Juan Nanaman, was appointed as special administrator of the estate of the deceased spouses. Subsequently, Edilberto Noel (Noel) was appointed as the regular administrator of the joint estate.8 On April 30, 1963, Noel, as the administrator of the intestate estate of the deceased spouses, filed before the Court of First Instance, Branch II, Lanao del Norte an action against Deleste for the reversion of title over the subject property, docketed as Civil Case No. 698.9 Said case went up to this Court in Noel v. CA, where We rendered a Decision10 on January 11, 1995, affirming the ruling of the CA that the subject property was the conjugal property of the late spouses Gregorio and Hilaria and that the latter could only sell her one-half (1/2) share of the subject property to Deleste. As a result, Deleste, who died in 1992, and the intestate estate of Gregorio were held to be the co-owners of the subject property, each with a one-half (1/2) interest in it.11 Notably, while Civil Case No. 698 was still pending before the CFI, particularly on October 21, 1972, Presidential Decree No. (PD) 27 was issued. This law mandates that tenanted rice and corn lands be brought under the Operation Land Transfer (OLT) Program and awarded to farmer-beneficiaries. Thus, the subject property was placed under the said program.12 However, only the heirs of Gregorio were identified by the Department of Agrarian Reform (DAR) as the landowners. Concomitantly, the notices and processes relative to the coverage were sent to these heirs.13 In 1975, the City of Iligan passed City Ordinance No. 1313, known as the "Zoning Regulation of Iligan City," reclassifying the subject property as commercial/residential.14

Eventually, on February 12, 1984, DAR issued Certificates of Land Transfer (CLTs) in favor of private respondents who were tenants and actual cultivators of the subject property.15 The CLTs were registered on July 15, 1986.16 In 1991, the subject property was surveyed.17 The survey of a portion of the land consisting of 20.2611 hectares, designated as Lot No. 1407, was approved on January 8, 1999.18 The claim folder for Lot No. 1407 was submitted to the LBP which issued a Memorandum of Valuation and a Certificate of Cash Deposit on May 21, 2001 and September 12, 2001, respectively. Thereafter, Emancipation Patents (EPs) and Original Certificates of Title (OCTs) were issued on August 1, 2001 and October 1, 2001, respectively, in favor of private respondents over their respective portions of Lot No. 1407.19 Meanwhile, on November 22, 1999, the City of Iligan filed a complaint with the Regional Trial Court (RTC), Branch 4 in Iligan City for the expropriation of a 5.4686-hectare portion of Lot No. 1407, docketed as Special Civil Action No. 4979. On December 11, 2000, the RTC issued a Decision granting the expropriation. Considering that the real owner of the expropriated portion could not be determined, as the subject property had not yet been partitioned and distributed to any of the heirs of Gregorio and Deleste, the just compensation for the expropriated portion of the subject property in the amount of PhP 27,343,000 was deposited with the Development Bank of the Philippines in Iligan City, in trust for the RTC in Iligan City.20 On February 28, 2002, the heirs of Deleste, petitioners herein, filed with the Department of Agrarian Reform Adjudication Board (DARAB) a petition seeking to nullify private respondents EPs.21 This was docketed as Reg. Case No. X-471-LN-2002. On July 21, 2003, the Provincial Agrarian Reform Adjudicator (PARAD) rendered a Decision22 declaring that the EPs were null and void in view of the pending issues of ownership, the subsequent reclassification of the subject property into a residential/commercial land, and the violation of petitioners constitutional right to due process of law. Dissatisfied, private respondents immediately filed their Notice of Appeal on July 22, 2003. Notwithstanding it, on July 24, 2003, petitioners filed a Motion for a Writ of Execution pursuant to Section 2, Rule XII of the Revised Rules of Procedure, which was granted in an Order dated August 4, 2003 despite strong opposition from private respondents.23 On January 28, 2004, the DARAB nullified the Order dated August 4, 2003 granting the writ of execution.24 Subsequently, the DARAB, in DARAB Case No. 12486, reversed the ruling of the PARAD in its Decision25 dated March 15, 2004. It held, among others, that the EPs were valid as it was the heirs of Deleste who should have informed the DAR of the pendency of Civil Case No. 698 at the time the subject property was placed under the coverage of the OLT Program considering that DAR was not a party to the said case. Further, it stated that the record is bereft of any evidence that the city ordinance has been approved by the Housing and Land Use Regulatory Board (HLURB), as mandated by DAR Administrative Order No. 01, Series of 1990, and held that whether the subject property is indeed exempt from the OLT Program is an administrative determination, the jurisdiction of which lies exclusively with the DAR Secretary or the latters authorized representative. Petitioners motion for reconsideration was likewise denied by the DARAB in its Resolution26 dated July 8, 2004. Undaunted, petitioners filed a petition for review with the CA, docketed as CA-G.R. SP No. 85471, challenging the Decision and Resolution in DARAB Case No. 12486. This was denied by the CA in a Resolution dated October 28, 2004 for petitioners failure to attach the writ of execution, the order nullifying the writ of execution, and such material portions of the record referred to in the petition and other supporting papers, as required under Sec. 6 of Rule 43 of the Rules of Court. Petitioners motion for reconsideration was also denied by the appellate court in a Resolution dated September 13, 2005 for being pro forma. On November 18, 2005, petitioners filed a petition for review with this Court. In Our Resolution27 dated February 4, 2008, We resolved to deny the said petition for failure to show sufficiently any reversible error in the assailed judgment to warrant the exercise by the Court of its discretionary appellate jurisdiction in this case. On March 19, 2008, petitioners filed a Motion for Reconsideration.28 On April 11, 2008, they also filed a Supplement to the Motion for Reconsideration.29 In Our Resolution30 dated August 20, 2008, this Court resolved to grant petitioners motion for reconsideration and give due course to the petition, requiring the parties to submit their respective memoranda. The Issues I. [WHETHER THE CA WAS CORRECT IN DISMISSING] OUTRIGHT THE PETITION FOR REVIEW OF PETITIONERS X X X. II. [WHETHER] THE OUTRIGHT DENIAL OF PETITIONERS MOTION FOR RECONSIDERATION BASED ON A MISAPPRECIATION OF FACTS IS JUSTIFIED; AND [WHETHER THE] OUTRIGHT DISMISSAL OF THE PETITION IS JUST CONSIDERING THE IMPORTANCE OF THE ISSUES RAISED THEREIN.

XXXX III. [WHETHER PETITIONERS LAND IS] COVERED BY AGRARIAN REFORM GIVEN THAT THE CITY OF ILIGAN PASSED [CITY] ORDINANCE NO. 1313 RECLASSIFYING THE AREA INTO A STRICTLY RESIDENTIAL AREA IN 1975. IV. [WHETHER THE LAND] THAT HAS BEEN PREVIOUSLY AND PARTIALLY EXPROPRIATED BY A CITY GOVERNMENT [MAY] STILL BE SUBJECT[ED] TO AGRARIAN REFORM. V. [WHETHER DAR VIOLATED] THE RIGHTS OF PETITIONERS TO PROCEDURAL DUE PROCESS. VI. [WHETHER] THE COMPENSATION DETERMINED BY DAR AND LBP IS CORRECT GIVEN THAT THE FORMULA USED HAD BEEN REPEALED. VII. [WHETHER] THE ISSUANCE OF EMANCIPATION PATENTS [IS] LEGAL GIVEN THAT THEY WERE FRUITS OF AN ILLEGAL PROCEEDING. VIII. [WHETHER] THE CERTIFICATES OF TITLE [ARE] VALID GIVEN THAT THEY WERE DIRECTLY ISSUED TO THE FARMER-BENEFICIARIES IN GROSS VIOLATION OF SECTION 16(E) OF R.A. 6657 X X X.31 Our Ruling The petition is meritorious. Effect of non-compliance with the requirements under Sec. 6, Rule 43 of the Rules of Court In filing a petition for review as an appeal from awards, judgments, final orders, or resolutions of any quasi-judicial agency in the exercise of its quasi-judicial functions, it is required under Sec. 6(c), Rule 43 of the Rules of Court that it be accompanied by a clearly legible duplicate original or a certified true copy of the award, judgment, final order, or resolution appealed from, with certified true copies of such material portions of the record referred to in the petition and other supporting papers. As stated: Sec. 6. Contents of the petition. The petition for review shall (a) state the full names of the parties to the case, without impleading the court or agencies either as petitioners or respondents; (b) contain a concise statement of the facts and issues involved and the grounds relied upon for the review; (c) be accompanied by a clearly legible duplicate original or a certified true copy of the award, judgment, final order or resolution appealed from, together with certified true copies of such material portions of the record referred to therein and other supporting papers; and (d) contain a sworn certification against forum shopping as provided in the last paragraph of section 2, Rule 42. The petition shall state the specific material dates showing that it was filed within the period fixed herein. (Emphasis supplied.) Non-compliance with any of the above-mentioned requirements concerning the contents of the petition, as well as the documents that should accompany the petition, shall be sufficient ground for its dismissal as stated in Sec. 7, Rule 43 of the Rules: Sec. 7. Effect of failure to comply with requirements. The failure of the petitioner to comply with any of the foregoing requirements regarding the payment of the docket and other lawful fees, the deposit for costs, proof of service of the petition, and the contents of and the documents which should accompany the petition shall be sufficient ground for the dismissal thereof. (Emphasis supplied.) In the instant case, the CA dismissed the petition in CA-G.R. SP No. 85471 for petitioners failure to attach the writ of execution, the order nullifying the writ of execution, and such material portions of the record referred to in the petition and other supporting papers.32 A perusal of the issues raised before the CA would, however, show that the foregoing documents required by the appellate court are not necessary for the proper disposition of the case. Specifically: Is [Lot No. 1407] within the ambit of the [Comprehensive Agrarian Reform Program]? Can the OLT by DAR over the subject land validly proceed without notice to the landowner? Can the OLT be validly completed without a certification of deposit by Land Bank? [I]s the landowner barred from exercising his right of retention x x x [considering that EPs were already issued on the basis of CLTs]?

Are the EPs over the subject land x x x valid x x x?33 Petitioners complied with the requirement under Sec. 6(c), Rule 43 of the Rules of Court when they appended to the petition filed before the CA certified true copies of the following documents: (1) the challenged resolution dated July 8, 2004 issued by the DARAB denying petitioners motion for reconsideration; (2) the duplicate original copy of petitioners Motion for Reconsideration dated April 6, 2005; (3) the assailed decision dated March 15, 2004 issued by the DARAB reversing on appeal the decision of the PARAD and nullifying with finality the order of execution pending appeal; (4) the Order dated December 8, 2003 issued by the PARAD reinstating the writ of execution earlier issued; and (5) the Decision dated July 21, 2003 issued by the PARAD in the original proceedings for the cancellation of the EPs.34 The CA, therefore, erred when it dismissed the petition based on such technical ground. Even assuming that the omitted documents were material to the appeal, the appellate court, instead of dismissing outright the petition, could have just required petitioners to submit the necessary documents. In Spouses Espejo v. Ito,35 the Court held that "under Section 3 (d), Rule 3 of the Revised Internal Rules of the Court of Appeals,36 the Court of Appeals is with authority to require the parties to submit additional documents as may be necessary to promote the interests of substantial justice." Moreover, petitioners subsequent submission of the documents required by the CA with the motion for reconsideration constitutes substantial compliance with Section 6(c), Rule 43 of the Rules of Court.37 In Jaro v. CA, this Court held that subsequent and substantial compliance may call for the relaxation of the rules of procedure. Particularly: The amended petition no longer contained the fatal defects that the original petition had but the Court of Appeals still saw it fit to dismiss the amended petition. The Court of Appeals reasoned that "non-compliance in the original petition is admittedly attributable to the petitioner and that no highly justifiable and compelling reason has been advanced" to the court for it to depart from the mandatory requirements of Administrative Circular No. 3-96. The hard stance taken by the Court of Appeals in this case is unjustified under the circumstances. There is ample jurisprudence holding that the subsequent and substantial compliance of an appellant may call for the relaxation of the rules of procedure. In Cusi-Hernandez vs. Diaz and Piglas-Kamao vs. National Labor Relations Commission, we ruled that the subsequent submission of the missing documents with the motion for reconsideration amounts to substantial compliance. The reasons behind the failure of the petitioners in these two cases to comply with the required attachments were no longer scrutinized. What we found noteworthy in each case was the fact that the petitioners therein substantially complied with the formal requirements. We ordered the remand of the petitions in these cases to the Court of Appeals, stressing the ruling that by precipitately dismissing the petitions "the appellate court clearly put a premium on technicalities at the expense of a just resolution of the case."38 (Citations omitted; emphasis supplied.)1avvphi1 Time and again, this Court has held that a strict and rigid application of technicalities must be avoided if it tends to frustrate rather than promote substantial justice.39 As held in Sta. Ana v. Spouses Carpo:40 Rules of procedure are merely tools designed to facilitate the attainment of justice. If the application of the Rules would tend to frustrate rather than to promote justice, it is always within our power to suspend the rules or except a particular case from their operation. Law and jurisprudence grant to courts the prerogative to relax compliance with the procedural rules, even the most mandatory in character, mindful of the duty to reconcile the need to put an end to litigation speedily and the parties right to an opportunity to be heard. Our recent ruling in Tanenglian v. Lorenzo is instructive: We have not been oblivious to or unmindful of the extraordinary situations that merit liberal application of the Rules, allowing us, depending on the circumstances, to set aside technical infirmities and give due course to the appeal. In cases where we dispense with the technicalities, we do not mean to undermine the force and effectivity of the periods set by law. In those rare cases where we did not stringently apply the procedural rules, there always existed a clear need to prevent the commission of a grave injustice. Our judicial system and the courts have always tried to maintain a healthy balance between the strict enforcement of procedural laws and the guarantee that every litigant be given the full opportunity for the just and proper disposition of his cause. (Citations omitted; emphasis supplied.) Clearly, the dismissal of the petition by the CA on mere technicality is unwarranted in the instant case. On the coverage of the subject property by the agrarian reform program Petitioners contend that the subject property, particularly Lot No. 1407, is outside the coverage of the agrarian reform program in view of the enactment of City Ordinance No. 1313 by the City of Iligan reclassifying the area into a residential/commercial land.41

Unconvinced, the DARAB, in its Decision, noted that the record is bereft of any evidence that the city ordinance has been approved by the HLURB, thereby allegedly casting doubt on the validity of the reclassification over the subject property.42 It further noted that whether the subject property is exempt from the OLT Program is an administrative determination, the jurisdiction of which lies exclusively with the DAR Secretary, not with the DARAB. Indeed, it is the Office of the DAR Secretary which is vested with the primary and exclusive jurisdiction over all matters involving the implementation of the agrarian reform program.43 However, this will not prevent the Court from assuming jurisdiction over the petition considering that the issues raised in it may already be resolved on the basis of the records before Us. Besides, to allow the matter to remain with the Office of the DAR Secretary would only cause unnecessary delay and undue hardship on the parties. Applicable, by analogy, is Our ruling in the recent Bagong Pagkakaisa ng Manggagawa ng Triumph International v. Department of Labor and Employment Secretary,44 where We held: But as the CA did, we similarly recognize that undue hardship, to the point of injustice, would result if a remand would be ordered under a situation where we are in the position to resolve the case based on the records before us. As we said in Roman Catholic Archbishop of Manila v. Court of Appeals: [w]e have laid down the rule that the remand of the case to the lower court for further reception of evidence is not necessary where the Court is in a position to resolve the dispute based on the records before it. 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. Thus, we shall directly rule on the dismissal issue. And while we rule that the CA could not validly rule on the merits of this issue, we shall not hesitate to refer back to its dismissal ruling, where appropriate. (Citations omitted; emphasis supplied.) Pertinently, after an assiduous study of the records of the case, We agree with petitioners that the subject property, particularly Lot No. 1407, is outside the coverage of the agrarian reform program in view of the enactment by the City of Iligan of its local zoning ordinance, City Ordinance No. 1313. It is undeniable that the local government has the power to reclassify agricultural into non-agricultural lands. In Pasong Bayabas Farmers Association, Inc. v. CA,45 this Court held that pursuant to Sec. 3 of Republic Act No. (RA) 2264, amending the Local Government Code, municipal and/or city councils are empowered to "adopt zoning and subdivision ordinances or regulations in consultation with the National Planning Commission." It was also emphasized therein that "[t]he power of the local government to convert or reclassify lands [from agricultural to non-agricultural lands prior to the passage of RA 6657] is not subject to the approval of the [DAR]."46 Likewise, it is not controverted that City Ordinance No. 1313, which was enacted by the City of Iligan in 1975, reclassified the subject property into a commercial/residential area. DARAB, however, believes that the approval of HLURB is necessary in order for the reclassification to be valid. We differ. As previously mentioned, City Ordinance No. 1313 was enacted by the City of Iligan in 1975. Significantly, there was still no HLURB to speak of during that time. It was the Task Force on Human Settlements, the earliest predecessor of HLURB, which was already in existence at that time, having been created on September 19, 1973 pursuant to Executive Order No. 419. It should be noted, however, that the Task Force was not empowered to review and approve zoning ordinances and regulations. As a matter of fact, it was only on August 9, 1978, with the issuance of Letter of Instructions No. 729, that local governments were required to submit their existing land use plans, zoning ordinances, enforcement systems and procedures to the Ministry of Human Settlements for review and ratification. The Human Settlements Regulatory Commission (HSRC) was the regulatory arm of the Ministry of Human Settlements.47 Significantly, accompanying the Certification48 dated October 8, 1999 issued by Gil R. Balondo, Deputy Zoning Administrator of the City Planning and Development Office, Iligan City, and the letter49 dated October 8, 1999 issued by Ayunan B. Rajah, Regional Officer of the HLURB, is the Certificate of Approval issued by Imelda Romualdez Marcos, then Minister of Human Settlements and Chairperson of the HSRC, showing that the local zoning ordinance was, indeed, approved on September 21, 1978. This leads to no other conclusion than that City Ordinance No. 1313 enacted by the City of Iligan was approved by the HSRC, the predecessor of HLURB. The validity of said local zoning ordinance is, therefore, beyond question. Since the subject property had been reclassified as residential/commercial land with the enactment of City Ordinance No. 1313 in 1975, it can no longer be considered as an "agricultural land" within the ambit of RA 6657. As this Court held in Buklod nang Magbubukid sa Lupaing Ramos, Inc. v. E.M. Ramos and Sons, Inc.,50 "To be exempt from CARP, all that is needed is one valid reclassification of the land from agricultural to non-agricultural by a duly authorized government agency before June 15, 1988, when the CARL took effect."

Despite the foregoing ruling, respondents allege that the subsequent reclassification by the local zoning ordinance cannot free the land from the legal effects of PD 27 which deems the land to be already taken as of October 21, 1972, when said law took effect. Concomitantly, they assert that the rights which accrued from said date must be respected. They also maintain that the reclassification of the subject property did not alter its agricultural nature, much less its actual use.51 Verily, vested rights which have already accrued cannot just be taken away by the expedience of issuing a local zoning ordinance reclassifying an agricultural land into a residential/commercial area. As this Court extensively discussed in Remman Enterprises, Inc. v. CA:52 In the main, REMMAN hinges its application for exemption on the ground that the subject lands had ceased to be agricultural lands by virtue of the zoning classification by the Sangguniang Bayan of Dasmarias, Cavite, and approved by the HSRC, specifying them as residential. In Natalia Realty, Inc. v. Department of Agriculture, this Court resolved the issue of whether lands already classified for residential, commercial or industrial use, as approved by the Housing and Land Use Regulatory Board (HLURB) and its precursor agencies, i.e., National Housing Authority and Human Settlements Regulatory Commission, prior to 15 June 1988, are covered by Republic Act No. 6657, otherwise known as the Comprehensive Agrarian Reform Law of 1988. We answered in the negative, thus: We now determine whether such lands are covered by the CARL. Section 4 of R.A. 6657 provides that the CARL shall "cover, regardless of tenurial arrangement and commodity produced, all public and private agricultural lands." As to what constitutes "agricultural land," it is referred to as "land devoted to agricultural activity as defined in this Act and not classified as mineral, forest, residential, commercial or industrial land." The deliberations of the Constitutional Commission confirm this limitation. "Agricultural lands" are only those lands which are "arable and suitable agricultural lands" and "do not include commercial, industrial and residential land." xxx xxx xxx

Indeed, lands not devoted to agricultural activity are outside the coverage of CARL. These include lands previously converted to non-agricultural uses prior to the effectivity of CARL by government agencies other than respondent DAR. In its Revised Rules and Regulations Governing Conversion of Private Agricultural Lands to Non-Agricultural Uses, DAR itself defined "agricultural land" thus . . . Agricultural lands refers to those devoted to agricultural activity as defined in R.A. 6657 and not classified as mineral or forest by the Department of Environment and Natural Resources (DENR) and its predecessor agencies, and not classified in town plans and zoning ordinances as approved by the Housing and Land Use Regulatory Board (HLURB) and its preceding competent authorities prior to 15 June 1988 for residential, commercial or industrial use. Since the NATALIA lands were converted prior to 15 June 1988, respondent DAR is bound by such conversion. . . . . However, Natalia should be cautiously applied in light of Administrative Order 04, Series of 2003, which outlines the rules on the Exemption on Lands from CARP Coverage under Section (3) of Republic Act No. 6657, and Department of Justice (DOJ) Opinion No. 44, Series of 1990. It reads: I. Prefatory Statement Republic Act (RA) 6657 or the Comprehensive Agrarian Reform Law (CARL), Section 3, Paragraph (c) defines "agricultural land" as referring to "land devoted to agricultural activity as defined in this Act and not classified as mineral, forest, residential, commercial or industrial land." Department of Justice Opinion No. 44, Series of 1990, (or "DOJ Opinion 44-1990" for brevity) and the case of Natalia Realty versus Department of Agrarian Reform (12 August 2993, 225 SCRA 278) opines that with respect to the conversion of agricultural land covered by RA 6657 to non-agricultural uses, the authority of the Department of Agrarian Reform (DAR) to approve such conversion may be exercised from the date of its effectivity, on 15 June 1988. Thus, all lands that are already classified as commercial, industrial or residential before 15 June 1988 no longer need any conversion clearance. However, the reclassification of lands to non-agricultural uses shall not operate to divest tenant[-]farmers of their rights over lands covered by Presidential Decree (PD) No. 27, which have been vested prior to 15 June 1988. As emphasized, the reclassification of lands to non-agricultural cannot be applied to defeat vested rights of tenantfarmers under Presidential Decree No. 27. Indeed, in the recent case of Sta. Rosa Realty Development Corporation v. Amante, where the Court was confronted with the issue of whether the contentious property therein is agricultural in nature on the ground that the same had

been classified as "park" since 1979 under the Zoning Ordinance of Cabuyao, as approved by the HLURB, the Court said: The Court recognizes the power of a local government to reclassify and convert lands through local ordinance, especially if said ordinance is approved by the HLURB. Municipal Ordinance No. 110-54 dated November 3, 1979, enacted by the Municipality of Cabuyao, divided the municipality into residential, commercial, industrial, agricultural and institutional districts, and districts and parks for open spaces. It did not convert, however, existing agricultural lands into residential, commercial, industrial, or institutional. While it classified Barangay Casile into a municipal park, as shown in its permitted uses of land map, the ordinance did not provide for the retroactivity of its classification. In Co vs. Intermediate Appellate Court, it was held that an ordinance converting agricultural lands into residential or light industrial should be given prospective application only, and should not change the nature of existing agricultural lands in the area or the legal relationships existing over such land. . . . . A reading of Metro Manila Zoning Ordinance No. 81-01, series of 1981, does not disclose any provision converting existing agricultural lands in the covered area into residential or light industrial. While it declared that after the passage of the measure, the subject area shall be used only for residential or light industrial purposes, it is not provided therein that it shall have retroactive effect so as to discontinue all rights previously acquired over lands located within the zone which are neither residential nor light industrial in nature. This simply means that, if we apply the general rule, as we must, the ordinance should be given prospective operation only. The further implication is that it should not change the nature of existing agricultural lands in the area or the legal relationships existing over such lands. (Citations omitted; emphasis supplied.) This, however, raises the issue of whether vested rights have actually accrued in the instant case. In this respect, We reckon that under PD 27, tenant-farmers of rice and corn lands were "deemed owners" of the land they till as of October 21, 1972. This policy, intended to emancipate the tenant-farmers from the bondage of the soil, is given effect by the following provision of the law: The tenant farmer, whether in land classified as landed estate or not, shall be deemed owner of a portion constituting a family size farm of five (5) hectares if not irrigated and three (3) hectares if irrigated. (Emphasis supplied.) It should be clarified that even if under PD 27, tenant-farmers are "deemed owners" as of October 21, 1972, this is not to be construed as automatically vesting upon these tenant-farmers absolute ownership over the land they were tilling. Certain requirements must also be complied with, such as payment of just compensation, before full ownership is vested upon the tenant-farmers. This was elucidated by the Court in Association of Small Landowners in the Philippines, Inc. v. Sec. of Agrarian Reform:53 It is true that P.D. No. 27 expressly ordered the emancipation of tenant-farmer as October 21, 1972 and declared that he shall "be deemed the owner" of a portion of land consisting of a family-sized farm except that "no title to the land owned by him was to be actually issued to him unless and until he had become a full-fledged member of a duly recognized farmers cooperative." It was understood, however, that full payment of the just compensation also had to be made first, conformably to the constitutional requirement. When E.O. No. 228, categorically stated in its Section 1 that: All qualified farmer-beneficiaries are now deemed full owners as of October 21, 1972 of the land they acquired by virtue of Presidential Decree No. 27. it was obviously referring to lands already validly acquired under the said decree, after proof of full-fledged membership in the farmers cooperatives and full payment of just compensation. Hence, it was also perfectly proper for the Order to also provide in its Section 2 that the "lease rentals paid to the landowner by the farmer-beneficiary after October 21, 1972 (pending transfer of ownership after full payment of just compensation), shall be considered as advance payment for the land." The CARP Law, for its part, conditions the transfer of possession and ownership of the land to the government on receipt by the landowner of the corresponding payment or the deposit by the DAR of the compensation in cash or LBP bonds with an accessible bank. Until then, title also remains with the landowner. No outright change of ownership is contemplated either. (Citations omitted; emphasis supplied.) Prior to compliance with the prescribed requirements, tenant-farmers have, at most, an inchoate right over the land they were tilling. In recognition of this, a CLT is issued to a tenant-farmer to serve as a "provisional title of ownership over the landholding while the lot owner is awaiting full payment of [just compensation] or for as long as the [tenantfarmer] is an amortizing owner."54 This certificate "proves inchoate ownership of an agricultural land primarily devoted to rice and corn production. It is issued in order for the tenant-farmer to acquire the land"55 he was tilling.

Concomitantly, with respect to the LBP and the government, tenant-farmers cannot be considered as full owners of the land they are tilling unless they have fully paid the amortizations due them. This is because it is only upon such full payment of the amortizations that EPs may be issued in their favor. In Del Castillo v. Orciga, We explained that land transfer under PD 27 is effected in two (2) stages. The first stage is the issuance of a CLT to a farmer-beneficiary as soon as the DAR transfers the landholding to the farmer-beneficiary in recognition that said person is its "deemed owner." And the second stage is the issuance of an EP as proof of full ownership of the landholding upon full payment of the annual amortizations or lease rentals by the farmerbeneficiary.56 In the case at bar, the CLTs were issued in 1984. Therefore, for all intents and purposes, it was only in 1984 that private respondents, as farmer-beneficiaries, were recognized to have an inchoate right over the subject property prior to compliance with the prescribed requirements. Considering that the local zoning ordinance was enacted in 1975, and subsequently approved by the HSRC in 1978, private respondents still had no vested rights to speak of during this period, as it was only in 1984 that private respondents were issued the CLTs and were "deemed owners." The same holds true even if EPs and OCTs were issued in 2001, since reclassification had taken place twenty-six (26) years prior to their issuance. Undeniably, no vested rights accrued prior to reclassification and its approval. Consequently, the subject property, particularly Lot No. 1407, is outside the coverage of the agrarian reform program. On the violation of petitioners right to due process of law Petitioners contend that DAR failed to notify them that it is subjecting the subject property under the coverage of the agrarian reform program; hence, their right to due process of law was violated.57 Citing De Chavez v. Zobel,58 both the DAR and the private respondents claim that the enactment of PD 27 is a statutory notice to all owners of agricultural lands devoted to rice and/or corn production,59 implying that there was no need for an actual notice. We agree with petitioners. The importance of an actual notice in subjecting a property under the agrarian reform program cannot be underrated, as non-compliance with it trods roughshod with the essential requirements of administrative due process of law.60 Our ruling in Heirs of Jugalbot v. CA61 is particularly instructive: Firstly, the taking of subject property was done in violation of constitutional due process. The Court of Appeals was correct in pointing out that Virginia A. Roa was denied due process because the DAR failed to send notice of the impending land reform coverage to the proper party. The records show that notices were erroneously addressed and sent in the name of Pedro N. Roa who was not the owner, hence, not the proper party in the instant case. The ownership of the property, as can be gleaned from the records, pertains to Virginia A. Roa. Notice should have been therefore served on her, and not Pedro N. Roa. xxxx In addition, the defective notice sent to Pedro N. Roa was followed by a DAR certification signed by team leader Eduardo Maandig on January 8, 1988 stating that the subject property was tenanted as of October 21, 1972 and primarily devoted to rice and corn despite the fact that there was no ocular inspection or any on-site fact-finding investigation and report to verify the truth of the allegations of Nicolas Jugalbot that he was a tenant of the property. The absence of such ocular inspection or on-site fact-finding investigation and report likewise deprives Virginia A. Roa of her right to property through the denial of due process. By analogy, Roxas & Co., Inc. v. Court of Appeals applies to the case at bar since there was likewise a violation of due process in the implementation of the Comprehensive Agrarian Reform Law when the petitioner was not notified of any ocular inspection and investigation to be conducted by the DAR before acquisition of the property was to be undertaken. Neither was there proof that petitioner was given the opportunity to at least choose and identify its retention area in those portions to be acquired. Both in the Comprehensive Agrarian Reform Law and Presidential Decree No. 27, the right of retention and how this right is exercised, is guaranteed by law. Since land acquisition under either Presidential Decree No. 27 and the Comprehensive Agrarian Reform Law govern the extraordinary method of expropriating private property, the law must be strictly construed. Faithful compliance with legal provisions, especially those which relate to the procedure for acquisition of expropriated lands should therefore be observed. In the instant case, no proper notice was given to Virginia A. Roa by the DAR. Neither did the DAR conduct an ocular inspection and investigation. Hence, any act committed by the DAR or any of its agencies that results from its failure to comply with the proper procedure for expropriation of land is a violation of constitutional due process and should be deemed arbitrary, capricious, whimsical and tainted with grave abuse of discretion. (Citations omitted; emphasis supplied.) Markedly, a reading of De Chavez invoked by both the DAR and private respondents does not show that this Court ever made mention that actual notice may be dispensed with under PD 27, its enactment being a purported "statutory

notice" to all owners of agricultural lands devoted to rice and/or corn production that their lands are subjected to the OLT program. Quite contrarily, in Sta. Monica Industrial & Devt. Corp. v. DAR,62 this Court underscored the significance of notice in implementing the agrarian reform program when it stated that "notice is part of the constitutional right to due process of law. It informs the landowner of the States intention to acquire a private land upon payment of just compensation and gives him the opportunity to present evidence that his landholding is not covered or is otherwise excused from the agrarian law." The Court, therefore, finds interest in the holding of the DARAB that petitioners were not denied the right to due process despite the fact that only the Nanamans were identified as the owners. Particularly: Fourthly, the PARAD also ruled that the petitioners were denied the right to be given the notice since only the Nanamans were identified as the owners. The fault lies with petitioners who did not present the tax declaration in the name of Dr. Deleste as of October 21, 1972. It was only in 1995 that Civil Case No. 698 was finally decided by the Supreme Court dividing the 34.7 hectares between the Delestes and the Nanamans. Note that Dr. Deleste died in 1992 after PD 27 was promulgated, hence, the subject land or his share was considered in his name only (see Art. 777, New Civil Code). Even then, it must be borne in mind that on September 26, 1972, PD No. 2 was issued by President Marcos proclaiming the whole country as a land reform area, this was followed by PD 27. This should have alarmed them more so when private respondents are in actual possession and cultivation of the subject property. But it was incumbent upon the DAR to notify Deleste, being the landowner of the subject property. It should be noted that the deed of sale executed by Hilaria in favor of Deleste was registered on March 2, 1954, and such registration serves as a constructive notice to the whole world that the subject property was already owned by Deleste by virtue of the said deed of sale. In Naval v. CA, this Court held: Applying the law, we held in Bautista v. Fule that the registration of an instrument involving unregistered land in the Registry of Deeds creates constructive notice and binds third person who may subsequently deal with the same property.63 x x x (Emphasis supplied.) It bears stressing that the principal purpose of registration is "to notify other persons not parties to a contract that a transaction involving the property has been entered into."64 There was, therefore, no reason for DAR to feign ignorance of the transfer of ownership over the subject property. Moreover, that DAR should have sent the notice to Deleste, and not to the Nanamans, is bolstered by the fact that the tax declaration in the name of Virgilio was already canceled and a new one issued in the name of Deleste.65 Although tax declarations or realty tax payments of property are not conclusive evidence of ownership, they are nonetheless "good indicia of possession in the concept of an owner, for no one in his right mind would be paying taxes for a property that is not in his actual or, at least, constructive possession."66 Petitioners right to due process of law was, indeed, violated when the DAR failed to notify them that it is subjecting the subject property under the coverage of the agrarian reform program. On this note, We take exception to our ruling in Roxas & Co., Inc. v. CA,67 where, despite a finding that there was a violation of due process in the implementation of the comprehensive agrarian reform program when the petitioner was not notified of any ocular inspection and investigation to be conducted by the DAR before acquiring the property, thereby effectively depriving petitioner the opportunity to at least choose and identify its retention area in those portions to be acquired,68 this Court nonetheless ruled that such violation does not give the Court the power to nullify the certificates of land ownership award (CLOAs) already issued to the farmer-beneficiaries, since the DAR must be given the chance to correct its procedural lapses in the acquisition proceedings. Manifesting her disagreement that this Court cannot nullify illegally issued CLOAs and should first ask the DAR to reverse and correct itself, Justice Ynares-Santiago, in her Concurring and Dissenting Opinion,69 stated that "[i]f the acts of DAR are patently illegal and the rights of Roxas & Co. violated, the wrong decisions of DAR should be reversed and set aside. It follows that the fruits of the wrongful acts, in this case the illegally issued CLOAs, must be declared null and void." She also noted that "[i]f CLOAs can under the DARs own order be cancelled administratively, with more reason can the courts, especially the Supreme Court, do so when the matter is clearly in issue." In the same vein, if the illegality in the issuance of the CLTs is patent, the Court must immediately take action and declare the issuance as null and void. There being no question that the CLTs in the instant case were "improperly issued, for which reason, their cancellation is warranted."70 The same holds true with respect to the EPs and certificates of title issued by virtue of the void CLTs, as there can be no valid transfer of title should the CLTs on which they were grounded are void.71 Cancellation of the EPs and OCTs are clearly warranted in the instant case since, aside from the violation of petitioners right to due process of law, the subject property is outside the coverage of the agrarian reform program.

Issue of Validity of EPs Not Barred by Res Judicata The LBP maintains that the issue of the EPs validity has already been settled by this Court in Heirs of Sofia Nanaman Lonoy v. Secretary of Agrarian Reform,72 where We held that the EPs and OCTs issued in 2001 had already become indefeasible and incontrovertible by the time the petitioners therein instituted the case in 2005; hence, their issuance may no longer be reviewed.73 In effect, the LBP raises the defense of res judicata in order to preclude a "relitigation" of the issue concerning the validity of the EPs issued to private respondents. Notably, the doctrine of res judicata has two aspects, namely: (1) "bar by prior judgment,"74 wherein the judgment in a prior case bars the prosecution of a second action upon the same claim, demand, or cause of action;75 and (2) "conclusiveness of judgment,"76 which precludes relitigation of a particular fact or issue in another action between the same parties on a different claim or cause of action.77 Citing Agustin v. Delos Santos,78 this Court, in Spouses Antonio v. Sayman,79 expounded on the difference between the two aspects of res judicata: The principle of res judicata is applicable by way of (1) "bar by prior judgment" and (2) "conclusiveness of judgment." This Court had occasion to explain the difference between these two aspects of res judicata as follows: There is "bar by prior judgment" when, as between the first case where the judgment was rendered and the second case that is sought to be barred, there is identity of parties, subject matter, and causes of action. In this instance, the judgment in the first case constitutes an absolute bar to the second action. Otherwise put, the judgment or decree of the court of competent jurisdiction on the merits concludes the litigation between the parties, as well as their privies, and constitutes a bar to a new action or suit involving the same cause of action before the same or other tribunal. But where there is identity of parties in the first and second cases, but no identity of causes of action, the first judgment is conclusive only as to those matters actually and directly controverted and determined and not as to matters merely involved therein. This is the concept of res judicata known as "conclusiveness of judgment." Stated differently, any right, fact or matter in issue directly adjudicated or necessarily involved in the determination of an action before a competent court in which judgment is rendered on the merits is conclusively settled by the judgment therein and cannot again be litigated between the parties and their privies whether or not the claim, demand, purpose, or subject matter of the two actions is the same. (Citations omitted; emphasis supplied.) To be sure, conclusiveness of judgment merits application "when a fact or question has been squarely put in issue, judicially passed upon, and adjudged in a former suit by a court of competent jurisdiction."80 Elucidating further on this second aspect of res judicata, the Court, in Spouses Antonio, stated: x x x The fact or question settled by final judgment or order binds the parties to that action (and persons in privity with them or their successors-in-interest), and continues to bind them while the judgment or order remains standing and unreversed by proper authority on a timely motion or petition; the conclusively-settled fact or question cannot again be litigated in any future or other action between the same parties or their privies and successors-in-interest, in the same or in any other court of concurrent jurisdiction, either for the same or for a different cause of action. Thus, only the identities of parties and issues are required for the operation of the principle of conclusiveness of judgment.81 (Citations omitted; emphasis supplied.) Applying the above statement of the Court to the case at bar, We find that LBPs contention that this Courts ruling in Heirs of Sofia Nanaman Lonoy that the EPs and OCTs issued in 2001 had already become indefeasible and incontrovertible precludes a "relitigation" of the issue concerning the validity of the EPs issued to private respondents does not hold water. In the first place, there is no identity of parties in Heirs of Sofia Nanaman Lonoy and the instant case. Arguably, the respondents in these two cases are similar. However, the petitioners are totally different. In Heirs of Sofia Nanaman Lonoy, the petitioners are the more than 120 individuals who claim to be descendants of Fulgencio Nanaman, Gregorios brother, and who collectively assert their right to a share in Gregorios estate, arguing that they were deprived of their inheritance by virtue of the improper issuance of the EPs to private respondents without notice to them. On the other hand, in the instant case, petitioners are the heirs of Deleste who seek nullification of the EPs issued to private respondents on grounds of violation of due process of law, disregard of landowners right of retention, improvident issuance of EPs and OCTs, and non-coverage of the agrarian reform program, among others. Evidently, there is even no privity among the petitioners in these two cases. And in the second place, the issues are also dissimilar. In Heirs of Sofia Nanaman Lonoy, the issue was whether the filing of a petition for prohibition was the proper remedy for the petitioners therein, considering that the EPs and OCTs had already been issued in 2001, four (4) years prior to the filing of said petition in 2005. In the instant case,

however, the issue is whether the EPs and OCTs issued in favor of private respondents are void, thus warranting their cancellation. In addition, the factual circumstances in these two cases are different such that the necessity of applying the rule on indefeasibility of title in one is wanting in the other. In Heirs of Sofia Nanaman Lonoy, the petition for prohibition was filed by the petitioners therein in 2005, notwithstanding the fact that the EPs and OCTs had already been issued in 2001. For that reason, apart from making a ruling that "[p]rohibition, as a rule, does not lie to restrain an act that is already a fait accompli," it becomes incumbent upon this Court to hold that: x x x Considering that such EPs and OCTs were issued in 2001, they had become indefeasible and incontrovertible by the time petitioners instituted CA-G.R. SP No. 00365 in 2005, and may no longer be judicially reviewed.82 (Emphasis supplied.) On the contrary, in the instant case, the petition for nullification of private respondents EPs and OCTs was filed on February 28, 2002. Taking into account that the EPs and OCTs were issued on August 1, 2001 and October 1, 2001, respectively, the filing of the petition was well within the prescribed one year period, thus, barring the defense of indefeasibility and incontrovertibility. Even if the petition was filed before the DARAB, and not the Regional Trial Court as mandated by Sec. 32 of the Property Registration Decree,83 this should necessarily have the same effect, considering that DARABs jurisdiction extends to cases involving the cancellation of CLOAs, EPs, and even of certificates of title issued by virtue of a void EP. As this Court held in Gabriel v. Jamias:84 It is well-settled that the DAR, through its adjudication arm, i.e., the DARAB and its regional and provincial adjudication boards, exercises quasi-judicial functions and jurisdiction on all matters pertaining to an agrarian dispute or controversy and the implementation of agrarian reform laws. Pertinently, it is provided in the DARAB Revised Rules of Procedure that the DARAB has primary and exclusive jurisdiction, both original and appellate, to determine and adjudicate all agrarian disputes involving the implementation of the Comprehensive Agrarian Reform Program (CARP) and related agrarian reform laws. Such jurisdiction shall extend to cases involving the issuance, correction and cancellation of Certificates of Land Ownership Award (CLOAs) and Emancipation Patents which are registered with the Land Registration Authority. This Court has had the occasion to rule that the mere issuance of an emancipation patent does not put the ownership of the agrarian reform beneficiary beyond attack and scrutiny. Emancipation patents may be cancelled for violations of agrarian laws, rules and regulations. Section 12 (g) of P.D. No. 946 (issued on June 17, 1976) vested the then Court of Agrarian Relations with jurisdiction over cases involving the cancellation of emancipation patents issued under P.D. No. 266. Exclusive jurisdiction over such cases was later lodged with the DARAB under Section 1 of Rule II of the DARAB Rules of Procedure. For sure, the jurisdiction of the DARAB cannot be deemed to disappear the moment a certificate of title is issued, for, such certificates are not modes of transfer of property but merely evidence of such transfer, and there can be no valid transfer of title should the CLOA, on which it was grounded, be void. The same holds true in the case of a certificate of title issued by virtue of a void emancipation patent. From the foregoing, it is therefore undeniable that it is the DARAB and not the regular courts which has jurisdiction herein, this notwithstanding the issuance of Torrens titles in the names of the petitioners. For, it is a fact that the petitioners Torrens titles emanated from the emancipation patents previously issued to them by virtue of being the farmer-beneficiaries identified by the DAR under the OLT of the government. The DAR ruling that the said emancipation patents were erroneously issued for failing to consider the valid retention rights of respondents had already attained finality. Considering that the action filed by respondents with the DARAB was precisely to annul the emancipation patents issued to the petitioners, the case squarely, therefore, falls within the jurisdiction of the DARAB. x x x (Citations omitted; emphasis supplied.) Inevitably, this leads to no other conclusion than that Our ruling in Heirs of Sofia Nanaman Lonoy concerning the indefeasibility and incontrovertibility of the EPs and OCTs issued in 2001 does not bar Us from making a finding in the instant case that the EPs and OCTs issued to private respondents are, indeed, void. With the foregoing disquisition, it becomes unnecessary to dwell on the other issues raised by the parties. WHEREFORE, the Court GRANTS the petition and REVERSES and SETS ASIDE the CAs October 28, 2004 and September 13, 2005 Resolutions in CA-G.R. SP No. 85471. The Emancipation Patents and Original Certificates of Title covering the subject property, particularly Lot No. 1407, issued in favor of private respondents are hereby declared NULL and VOID. The DAR is ordered to CANCEL the aforementioned Emancipation Patents and Original Certificates of Title erroneously issued in favor of private respondents. No pronouncement as to costs. SO ORDERED.

PRESBITERO J. VELASCO, JR. Associate Justice WE CONCUR: RENATO C. CORONA Chief Justice Chairperson TERESITA J. LEONARDO-DE CASTRO Associate Justice MARIANO C. DEL CASTILLO Associate Justice JOSE PORTUGAL PEREZ Associate Justice CERTIFICATION Pursuant to Section 13, Article VIII of the Constitution, I certify that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Courts Division. RENATO C. CORONA Chief Justice

SUPREME COURT G.R. No. 176951

Baguio City April 12, 2011

EN BANC

LEAGUE OF CITIES OF THE PHILIPPINES (LCP), represented by LCP National President Jerry P. Treas; City of Calbayog, represented by Mayor Mel Senen S. Sarmiento; and Jerry P. Treas, in his personal capacity as Taxpayer, Petitioners, vs. COMMISSION ON ELECTIONS; Municipality of Baybay, Province of Leyte; Municipality of Bogo, Province of Cebu; Municipality of Catbalogan, Province of Western Samar; Municipality of Tandag, Province of Surigao del Sur; Municipality of Borongan, Province of Eastern Samar; and Municipality of Tayabas, Province of Quezon, Respondents. x - - - - - - - - - - - - - - - - - - - - - - -x G.R. No. 177499 LEAGUE OF CITIES OF THE PHILIPPINES (LCP), represented by LCP National President Jerry P. Treas; City of Calbayog, represented by Mayor Mel Senen S. Sarmiento; and Jerry P. Treas, in his personal capacity as Taxpayer, Petitioners, vs. COMMISSION ON ELECTIONS; Municipality of Lamitan, Province of Basilan; Municipality of Tabuk, Province of Kalinga; Municipality of Bayugan, Province of Agusan del Sur; Municipality of Batac, Province of Ilocos Norte; Municipality of Mati, Province of Davao Oriental; and Municipality of Guihulngan, Province of Negros Oriental, Respondents. x - - - - - - - - - - - - - - - - - - - - - - -x G.R. No. 178056 LEAGUE OF CITIES OF THE PHILIPPINES (LCP), represented by LCP National President Jerry P. Treas; City of Calbayog, represented by Mayor Mel Senen S. Sarmiento; and Jerry P. Treas, in his personal capacity as Taxpayer, Petitioners, vs. COMMISSION ON ELECTIONS; Municipality of Cabadbaran, Province of Agusan del Norte; Municipality of Carcar, Province of Cebu; Municipality of El Salvador, Province of Misamis Oriental; Municipality of Naga, Cebu; and Department of Budget and Management, Respondents. RESOLUTION

BERSAMIN, J.: We consider and resolve the Ad Cautelam Motion for Reconsideration filed by the petitioners vis--vis the Resolution promulgated on February 15, 2011. To recall, the Resolution promulgated on February 15, 2011 granted the Motion for Reconsideration of the respondents presented against the Resolution dated August 24, 2010, reversed the Resolution dated August 24, 2010, and declared the 16 Cityhood Laws Republic Acts Nos. 9389, 9390, 9391, 9392, 9393, 9394, 9398, 9404, 9405, 9407, 9408, 9409, 9434, 9435, 9436, and 9491 constitutional. Now, the petitioners anchor their Ad Cautelam Motion for Reconsideration upon the primordial ground that the Court could no longer modify, alter, or amend its judgment declaring the Cityhood Laws unconstitutional due to such judgment having long become final and executory. They submit that the Cityhood Laws violated Section 6 and Section 10 of Article X of the Constitution, as well as the Equal Protection Clause. The petitioners specifically ascribe to the Court the following errors in its promulgation of the assailed February 15, 2011 Resolution, to wit: I. THE HONORABLE COURT HAS NO JURISDICTION TO PROMULGATE THE RESOLUTION OF 15 FEBRUARY 2011 BECAUSE THERE IS NO LONGER ANY ACTUAL CASE OR CONTROVERSY TO SETTLE. II. THE RESOLUTION CONTRAVENES THE 1997 RULES OF CIVIL PROCEDURE AND RELEVANT SUPREME COURT ISSUANCES. III. THE RESOLUTION UNDERMINES THE JUDICIAL SYSTEM IN ITS DISREGARD OF THE PRINCIPLES OF RES JUDICATA AND THE DOCTRINE OF IMMUTABILITY OF FINAL JUDGMENTS. IV. THE RESOLUTION ERRONEOUSLY RULED THAT THE SIXTEEN (16) CITYHOOD BILLS DO NOT VIOLATE ARTICLE X, SECTIONS 6 AND 10 OF THE 1987 CONSTITUTION. V. THE SIXTEEN (16) CITYHOOD LAWS VIOLATE THE EQUAL PROTECTION CLAUSE OF THE CONSTITUTION AND THE RIGHT OF LOCAL GOVERNMENTS TO A JUST SHARE IN THE NATIONAL TAXES. Ruling Upon thorough consideration, we deny the Ad Cautelam Motion for Reconsideration for its lack of merit. I. Procedural Issues With respect to the first, second, and third assignments of errors, supra, it appears that the petitioners assail the jurisdiction of the Court in promulgating the February 15, 2011 Resolution, claiming that the decision herein had long become final and executory. They state that the Court thereby violated rules of procedure, and the principles of res judicata and immutability of final judgments. The petitioners posit that the controversy on the Cityhood Laws ended with the April 28, 2009 Resolution denying the respondents second motion for reconsideration vis--vis the November 18, 2008 Decision for being a prohibited pleading, and in view of the issuance of the entry of judgment on May 21, 2009. The Court disagrees with the petitioners. In the April 28, 2009 Resolution, the Court ruled: By a vote of 6-6, the Motion for Reconsideration of the Resolution of 31 March 2009 is DENIED for lack of merit. The motion is denied since there is no majority that voted to overturn the Resolution of 31 March 2009. The Second Motion for Reconsideration of the Decision of 18 November 2008 is DENIED for being a prohibited pleading, and the Motion for Leave to Admit Attached Petition in Intervention dated 20 April 2009 and the Petition in Intervention dated 20 April 2009 filed by counsel for Ludivina T. Mas, et al. are also DENIED in view of the denial of the second motion for reconsideration. No further pleadings shall be entertained. Let entry of judgment be made in due course. Justice Presbitero J. Velasco, Jr. wrote a Dissenting Opinion, joined by Justices Consuelo Ynares-Santiago, Renato C. Corona, Minita Chico-Nazario, Teresita Leonardo-De Castro, and Lucas P. Bersamin. Chief Justice Reynato S. Puno and Justice Antonio Eduardo B. Nachura took no part. Justice Leonardo A. Quisumbing is on leave.1

Within 15 days from receipt of the April 28, 2009 Resolution, the respondents filed a Motion To Amend Resolution Of April 28, 2009 By Declaring Instead That Respondents "Motion for Reconsideration Of the Resolution Of March 31, 2009" And "Motion For Leave To File, And To Admit Attached Second Motion For Reconsideration Of The Decision Dated November 18, 2008 Remain Unresolved And To Conduct Further Proceedings Thereon, arguing therein that a determination of the issue of constitutionality of the 16 Cityhood Laws upon a motion for reconsideration by an equally divided vote was not binding on the Court as a valid precedent, citing the separate opinion of then Chief Justice Reynato S. Puno in Lambino v. Commission on Elections.2 Thus, in its June 2, 2009 Resolution, the Court issued the following clarification of the April 28, 2009 Resolution, viz: As a rule, a second motion for reconsideration is a prohibited pleading pursuant to Section 2, Rule 52 of the Rules of Civil Procedure which provides that: "No second motion for reconsideration of a judgment or final resolution by the same party shall be entertained." Thus, a decision becomes final and executory after 15 days from receipt of the denial of the first motion for reconsideration. However, when a motion for leave to file and admit a second motion for reconsideration is granted by the Court, the Court therefore allows the filing of the second motion for reconsideration. In such a case, the second motion for reconsideration is no longer a prohibited pleading. In the present case, the Court voted on the second motion for reconsideration filed by respondent cities. In effect, the Court allowed the filing of the second motion for reconsideration. Thus, the second motion for reconsideration was no longer a prohibited pleading. However, for lack of the required number of votes to overturn the 18 November 2008 Decision and 31 March 2009 Resolution, the Court denied the second motion for reconsideration in its 28 April 2009 Resolution.3 As the result of the aforecited clarification, the Court resolved to expunge from the records several pleadings and documents, including respondents Motion To Amend Resolution Of April 28, 2009 etc. The respondents thus filed their Motion for Reconsideration of the Resolution of June 2, 2009, asseverating that their Motion To Amend Resolution Of April 28, 2009 etc. was not another motion for reconsideration of the November 18, 2008 Decision, because it assailed the April 28, 2009 Resolution with respect to the tie-vote on the respondents Second Motion For Reconsideration. They pointed out that the Motion To Amend Resolution Of April 28, 2009 etc. was filed on May 14, 2009, which was within the 15-day period from their receipt of the April 28, 2009 Resolution; thus, the entry of judgment had been prematurely made. They reiterated their arguments with respect to a tie-vote upon an issue of constitutionality. In the September 29, 2009 Resolution,4 the Court required the petitioners to comment on the Motion for Reconsideration of the Resolution of June 2, 2009 within 10 days from receipt. As directed, the petitioners filed their Comment Ad Cautelam With Motion to Expunge. The respondents filed their Motion for Leave to File and to Admit Attached "Reply to Petitioners Comment Ad Cautelam With Motion to Expunge", together with the Reply. On November 17, 2009, the Court resolved to note the petitioners Comment Ad Cautelam With Motion to Expunge, to grant the respondents Motion for Leave to File and Admit Reply to Petitioners Comment Ad Cautelam with Motion to Expunge, and to note the respondents Reply to Petitioners Comment Ad Cautelam with Motion to Expunge. On December 21, 2009, the Court, resolving the Motion To Amend Resolution Of April 28, 2009 etc. and voting anew on the Second Motion For Reconsideration in order to reach a concurrence of a majority, promulgated its Decision granting the motion and declaring the Cityhood Laws as constitutional,5 disposing thus: WHEREFORE, respondent LGUs Motion for Reconsideration dated June 2, 2009, their "Motion to Amend the Resolution of April 28, 2009 by Declaring Instead that Respondents Motion for Reconsideration of the Resolution of March 31, 2009 and Motion for Leave to File and to Admit Attached Second Motion for Reconsideration of the Decision Dated November 18, 2008 Remain Unresolved and to Conduct Further Proceedings," dated May 14, 2009, and their second Motion for Reconsideration of the Decision dated November 18, 2008 are GRANTED. The June 2, 2009, the March 31, 2009, and April 31, 2009 Resolutions are REVERSED and SET ASIDE. The entry of judgment made on May 21, 2009 must accordingly be RECALLED. The instant consolidated petitions and petitions-in-intervention are DISMISSED. The cityhood laws, namely Republic Act Nos. 9389, 9390, 9391, 9392, 9393, 9394, 9398, 9404, 9405, 9407, 9408, 9409, 9434, 9435, 9436, and 9491 are declared VALID and CONSTITUTIONAL. SO ORDERED.

On January 5, 2010, the petitioners filed an Ad Cautelam Motion for Reconsideration against the December 21, 2009 Decision.6 On the same date, the petitioners also filed a Motion to Annul Decision of 21 December 2009.7 On January 12, 2010, the Court directed the respondents to comment on the motions of the petitioners.8 On February 4, 2010, petitioner-intervenors City of Santiago, City of Legazpi, and City of Iriga filed their separate Manifestations with Supplemental Ad Cautelam Motions for Reconsideration.9 Similar manifestations with supplemental motions for reconsideration were filed by other petitioner-intervenors, specifically: City of Cadiz on February 15, 2010;10 City of Batangas on February 17, 2010;11 and City of Oroquieta on February 24, 2010.12 The Court required the adverse parties to comment on the motions.13 As directed, the respondents complied. On August 24, 2010, the Court issued its Resolution reinstating the November 18, 2008 Decision.14 On September 14, 2010, the respondents timely filed a Motion for Reconsideration of the "Resolution" Dated August 24, 2010.15 They followed this by filing on September 20, 2010 a Motion to Set "Motion for Reconsideration of the Resolution dated August 24, 2010" for Hearing.16 On November 19, 2010, the petitioners sent in their Opposition [To the "Motion for Reconsideration of Resolution dated August 24, 2010"].17 On November 30, 2010,18 the Court noted, among others, the petitioners Opposition. On January 18, 2011,19 the Court denied the respondents Motion to Set "Motion for Reconsideration of the Resolution dated August 24, 2010" for Hearing. Thereafter, on February 15, 2011, the Court issued the Resolution being now challenged. It can be gleaned from the foregoing that, as the June 2, 2009 Resolution clarified, the respondents Second Motion For Reconsideration was not a prohibited pleading in view of the Courts voting and acting on it having the effect of allowing the Second Motion For Reconsideration; and that when the respondents filed their Motion for Reconsideration of the Resolution of June 2, 2009 questioning the expunging of their Motion To Amend Resolution Of April 28, 2009 etc. (which had been filed within the 15-day period from receipt of the April 28, 2009 Resolution), the Court opted to act on the Motion for Reconsideration of the Resolution of June 2, 2009 by directing the adverse parties through its September 29, 2009 Resolution to comment. The same permitting effect occurred when the Court, by its November 17, 2009 Resolution, granted the respondents Motion for Leave to File and Admit Reply to Petitioners Comment Ad Cautelam with Motion to Expunge, and noted the attached Reply. Moreover, by issuing the Resolutions dated September 29, 2009 and November 17, 2009, the Court: (a) rendered ineffective the tie-vote under the Resolution of April 28, 2009 and the ensuing denial of the Motion for Reconsideration of the Resolution of March 31, 2009 for lack of a majority to overturn; (b), re-opened the Decision of November 18, 2008 for a second look under reconsideration; and (c) lifted the directive that no further pleadings would be entertained. The Court in fact entertained and acted on the respondents Motion for Reconsideration of the Resolution of June 2, 2009. Thereafter, the Court proceeded to deliberate anew on the respondents Second Motion for Reconsideration and ended up with the promulgation of the December 21, 2009 Decision (declaring the Cityhood Laws valid and constitutional). It is also inaccurate for the petitioners to insist that the December 21, 2009 Decision overturned the November 18, 2008 Decision on the basis of the mere Reflections of the Members of the Court. To be sure, the Reflections were the legal opinions of the Members and formed part of the deliberations of the Court. The reference in the December 21, 2009 Decision to the Reflections pointed out that there was still a pending incident after the April 28, 2009 Resolution that had been timely filed within 15 days from its receipt,20 pursuant to Section 10, Rule 51,21 in relation to Section 1, Rule 52,22 of the Rules of Court. Again, the Court did act and deliberate upon this pending incident, leading to the issuance of the December 21, 2009 Decision (declaring the Cityhood Laws free from constitutional infirmity). It was thereafter that the Court rendered its August 24, 2010 Resolution (reinstating the November 18, 2008 Decision), to correct which the respondents Motion for Reconsideration of the "Resolution" Dated August 24, 2010 was filed. And, finally, the Court issued its February 15, 2011 Resolution, reversing and setting aside the August 24, 2010 Resolution. It is worth repeating that the actions taken herein were made by the Court en banc strictly in accordance with the Rules of Court and its internal procedures. There has been no irregularity attending or tainting the proceedings. It also relevant to state that the Court has frequently disencumbered itself under extraordinary circumstances from the shackles of technicality in order to render just and equitable relief.23 On whether the principle of immutability of judgments and bar by res judicata apply herein, suffice it to state that the succession of the events recounted herein indicates that the controversy about the 16 Cityhood Laws has not yet been resolved with finality. As such, the operation of the principle of immutability of judgments did not yet come into play. For the same reason is an adherence to the doctrine of res judicata not yet warranted, especially considering that the precedential ruling for this case needed to be revisited and set with certainty and finality.

II. Substantive Issues The petitioners reiterate their position that the Cityhood Laws violate Section 6 and Section 10 of Article X of the Constitution, the Equal Protection Clause, and the right of local governments to a just share in the national taxes. The Court differs. Congress clearly intended that the local government units covered by the Cityhood Laws be exempted from the coverage of R.A. No. 9009. The apprehensions of the then Senate President with respect to the considerable disparity between the income requirement of P20 million under the Local Government Code (LGC) prior to its amendment, and the P100 million under the amendment introduced by R.A. No. 9009 were definitively articulated in his interpellation of Senator Pimentel during the deliberations on Senate Bill No. 2157. The then Senate President was cognizant of the fact that there were municipalities that then had pending conversion bills during the 11th Congress prior to the adoption of Senate Bill No. 2157 as R.A. No. 9009,24 including the municipalities covered by the Cityhood Laws. It is worthy of mention that the pertinent deliberations on Senate Bill No. 2157 occurred on October 5, 2000 while the 11th Congress was in session, and the conversion bills were then pending in the Senate. Thus, the responses of Senator Pimentel made it obvious that R.A. No. 9009 would not apply to the conversion bills then pending deliberation in the Senate during the 11th Congress. R.A. No. 9009 took effect on June 30, 2001, when the 12th Congress was incipient. By reason of the clear legislative intent to exempt the municipalities covered by the conversion bills pending during the 11th Congress, the House of Representatives adopted Joint Resolution No. 29, entitled Joint Resolution to Exempt Certain Municipalities Embodied in Bills Filed in Congress before June 30, 2001 from the coverage of Republic Act No. 9009. However, the Senate failed to act on Joint Resolution No. 29. Even so, the House of Representatives readopted Joint Resolution No. 29 as Joint Resolution No. 1 during the 12th Congress,25 and forwarded Joint Resolution No. 1 to the Senate for approval. Again, the Senate failed to approve Joint Resolution No. 1. At this juncture, it is worthwhile to consider the manifestation of Senator Pimentel with respect to Joint Resolution No. 1, to wit: MANIFESTATION OF SENATOR PIMENTEL House Joint Resolution No. 1 seeks to exempt certain municipalities seeking conversion into cities from the requirement that they must have at least P100 million in income of locally generated revenue, exclusive of the internal revenue share that they received from the central government as required under Republic Act No. 9009. The procedure followed by the House is questionable, to say the least. The House wants the Senate to do away with the income requirement of P100 million so that, en masse, the municipalities they want exempted could now file bills specifically converting them into cities. The reason they want the Senate to do it first is that Cong. Dodo Macias, chair of the House Committee on Local Governments, I am told, will not entertain any bill for the conversion of municipalities into cities unless the issue of income requirement is first hurdled. The House leadership therefore wants to shift the burden of exempting certain municipalities from the income requirement to the Senate rather than do it itself. That is most unusual because, in effect, the House wants the Senate to pass a blanket resolution that would qualify the municipalities concerned for conversion into cities on the matter of income alone. Then, at a later date, the House would pass specific bills converting the municipalities into cities. However, income is not only the requirement for municipalities to become cities. There are also the requirements on population and land area. In effect, the House wants the Senate to tackle the qualification of the municipalities they want converted into cities piecemeal and separately, first is the income under the joint resolution, then the other requirements when the bills are file to convert specific municipalities into cities. To repeat, this is a most unusual manner of creating cities. My respectful suggestion is for the Senate to request the House to do what they want to do regarding the applications of certain municipalities to become cities pursuant to the requirements of the Local Government Code. If the House wants to exempt certain municipalities from the requirements of the Local Government Code to become cities, by all means, let them do their thing. Specifically, they should act on specific bills to create cities and cite the reasons why the municipalities concerned are qualified to become cities. Only after the House shall have completed what they are expected to do under the law would it be proper for the Senate to act on specific bills creating cities.

In other words, the House should be requested to finish everything that needs to be done in the matter of converting municipalities into cities and not do it piecemeal as they are now trying to do under the joint resolution. In my long years in the Senate, this is the first time that a resort to this subterfuge is being undertaken to favor the creation of certain cities. I am not saying that they are not qualified. All I am saying is, if the House wants to pass and create cities out of certain municipalities, by all means let them do that. But they should do it following the requirements of the Local Government Code and, if they want to make certain exceptions, they can also do that too. But they should not use the Senate as a ploy to get things done which they themselves should do. Incidentally, I have recommended this mode of action verbally to some leaders of the House. Had they followed the recommendation, for all I know, the municipalities they had envisioned to be covered by House Joint Resolution No. 1 would, by now if not all, at least some have been converted into cities. House Joint Resolution No. 1, the House, in effect, caused the delay in the approval in the applications for cityhood of the municipalities concerned. Lastly, I do not have an amendment to House Joint Resolution No. 1. What I am suggesting is for the Senate to request the House to follow the procedure outlined in the Local Government Code which has been respected all through the years. By doing so, we uphold the rule of law and minimize the possibilities of power play in the approval of bills converting municipalities into cities.26 Thereafter, the conversion bills of the respondents were individually filed in the House of Representatives, and were all unanimously and favorably voted upon by the Members of the House of Representatives.27 The bills, when forwarded to the Senate, were likewise unanimously approved by the Senate.28 The acts of both Chambers of Congress show that the exemption clauses ultimately incorporated in the Cityhood Laws are but the express articulations of the clear legislative intent to exempt the respondents, without exception, from the coverage of R.A. No. 9009. Thereby, R.A. No. 9009, and, by necessity, the LGC, were amended, not by repeal but by way of the express exemptions being embodied in the exemption clauses. The petitioners further contend that the new income requirement of P100 million from locally generated sources is not arbitrary because it is not difficult to comply with; that there are several municipalities that have already complied with the requirement and have, in fact, been converted into cities, such as Sta. Rosa in Laguna (R.A. No 9264), Navotas (R.A. No. 9387) and San Juan (R.A. No. 9388) in Metro Manila, Dasmarias in Cavite (R.A. No. 9723), and Bian in Laguna (R.A. No. 9740); and that several other municipalities have supposedly reached the income of P100 million from locally generated sources, such as Bauan in Batangas, Mabalacat in Pampanga, and Bacoor in Cavite. The contention of the petitioners does not persuade. As indicated in the Resolution of February 15, 2011, fifty-nine (59) existing cities had failed as of 2006 to post an average annual income of P100 million based on the figures contained in the certification dated December 5, 2008 by the Bureau of Local Government. The large number of existing cities, virtually 50% of them, still unable to comply with the P100 million threshold income five years after R.A. No. 9009 took effect renders it fallacious and probably unwarranted for the petitioners to claim that the P100 million income requirement is not difficult to comply with. In this regard, the deliberations on Senate Bill No. 2157 may prove enlightening, thus: Senator Osmea III. And could the gentleman help clarify why a municipality would want to be converted into a city? Senator Pimentel. There is only one reason, Mr. President, and it is not hidden. It is the fact that once converted into a city, the municipality will have roughly more than three times the share that it would be receiving over the internal revenue allotment than it would have if it were to remain a municipality. So more or less three times or more. Senator Osmea III. Is it the additional funding that they will be able to enjoy from a larger share from the internal revenue allocations? Senator Pimentel. Yes, Mr. President. Senator Osmea III. Now, could the gentleman clarify, Mr. President, why in the original Republic Act No. 7160, known as the Local Government Code of 1991, such a wide gap was made between a municipalitywhat a municipality would earnand a city? Because essentially, to a persons mind, even with this new requirement, if approved by Congress, if a municipality is earning P100 million and has a population of more than 150,000 inhabitants but has less than 100 square kilometers, it would not qualify as a city. Senator Pimentel. Yes.

Senator Osmea III. Now would that not be quite arbitrary on the part of the municipality? Senator Pimentel. In fact, Mr. President, the House version restores the "or". So, this is a matter that we can very well take up as a policy issue. The chair of the committee does not say that we should, as we know, not listen to arguments for the restoration of the word "or" in the population or territorial requirement. Senator Osmea III. Mr. President, my point is that, I agree with the gentlemans "and", but perhaps we should bring down the area. There are certainly very crowded places in this country that are less than 10,000 hectares100 square kilometers is 10,000 hectares. There might only be 9,000 hectares or 8,000 hectares. And it would be unfair if these municipalities already earning P100,000,000 in locally generated funds and have a population of over 150,000 would not be qualified because of the simple fact that the physical area does not cover 10,000 hectares. Senator Pimentel. Mr. President, in fact, in Metro Manila there are any number of municipalities. San Juan is a specific example which, if we apply the present requirements, would not qualify: 100 square kilometers and a population of not less than 150,000. But my reply to that, Mr. President, is that they do not have to become a city? Senator Osmea III. Because of the income. Senator Pimentel. But they are already earning a lot, as the gentleman said. Otherwise, the danger here, if we become lax in the requirements, is the metropolis-located local governments would have more priority in terms of funding because they would have more qualifications to become a city compared to far-flung areas in Mindanao or in the Cordilleras, or whatever. Therefore, I think we should not probably ease up on the requirements. Maybe we can restore the word "or" so that if they do not have the 100 square kilometers of territory, then if they qualify in terms of population and income, that would be all right, Mr. President. Senator Osmea III. Mr. President, I will not belabor the point at this time. I know that the distinguished gentleman is considering several amendments to the Local Government Code. Perhaps this is something that could be further refined at a later time, with his permission. So I would like to thank the gentleman for his graciousness in answering our questions. Senator Pimentel. I also thank the gentleman, Mr. President.29 The Court takes note of the fact that the municipalities cited by the petitioners as having generated the threshold income of P100 million from local sources, including those already converted into cities, are either in Metro Manila or in provinces close to Metro Manila. In comparison, the municipalities covered by the Cityhood Laws are spread out in the different provinces of the Philippines, including the Cordillera and Mindanao regions, and are considerably very distant from Metro Manila. This reality underscores the danger the enactment of R.A. No. 9009 sought to prevent, i.e., that "the metropolis-located local governments would have more priority in terms of funding because they would have more qualifications to become a city compared to the far-flung areas in Mindanao or in the Cordilleras, or whatever," actually resulting from the abrupt increase in the income requirement. Verily, this result is antithetical to what the Constitution and LGC have nobly envisioned in favor of countryside development and national growth. Besides, this result should be arrested early, to avoid the unwanted divisive effect on the entire country due to the local government units closer to the National Capital Region being afforded easier access to the bigger share in the national coffers than other local government units. There should also be no question that the local government units covered by the Cityhood Laws belong to a class of their own. They have proven themselves viable and capable to become component cities of their respective provinces. They are and have been centers of trade and commerce, points of convergence of transportation, rich havens of agricultural, mineral, and other natural resources, and flourishing tourism spots. In his speech delivered on the floor of the Senate to sponsor House Joint Resolution No. 1, Senator Lim recognized such unique traits,30 viz: It must be noted that except for Tandag and Lamitan, which are both second-class municipalities in terms of income, all the rest are categorized by the Department of Finance as first-class municipalities with gross income of at least P70 million as per Commission of Audit Report for 2005. Moreover, Tandag and Lamitan, together with Borongan, Catbalogan, and Tabuk, are all provincial capitals. The more recent income figures of the 12 municipalities, which would have increased further by this time, indicate their readiness to take on the responsibilities of cityhood. Moreover, the municipalities under consideration are leading localities in their respective provinces. Borongan, Catbalogan, Tandag, Batac and Tabuk are ranked number one in terms of income among all the municipalities in their

respective provinces; Baybay and Bayugan are number two; Bogo and Lamitan are number three; Carcar, number four; and Tayabas, number seven. Not only are they pacesetters in their respective provinces, they are also among the frontrunners in their regions Baybay, Bayugan and Tabuk are number two income-earners in Regions VIII, XIII, and CAR, respectively; Catbalogan and Batac are number three in Regions VIII and I, respectively; Bogo, number five in Region VII; Borongan and Carcar are both number six in Regions VIII and VII, respectively. This simply shows that these municipalities are viable. Petitioner League of Cities argues that there exists no issue with respect to the cityhood of its member cities, considering that they became cities in full compliance with the criteria for conversion at the time of their creation. The Court considers the argument too sweeping. What we pointed out was that the previous income requirement of P20 million was definitely not insufficient to provide the essential government facilities, services, and special functions vis--vis the population of a component city. We also stressed that the increased income requirement of P100 million was not the only conclusive indicator for any municipality to survive and remain viable as a component city. These observations were unerringly reflected in the respective incomes of the fifty-nine (59) members of the League of Cities that have still failed, remarkably enough, to be compliant with the new requirement of the P100 million threshold income five years after R.A. No. 9009 became law. Undoubtedly, the imposition of the income requirement of P100 million from local sources under R.A. No. 9009 was arbitrary. When the sponsor of the law chose the specific figure of P100 million, no research or empirical data buttressed the figure. Nor was there proof that the proposal took into account the after-effects that were likely to arise. As already mentioned, even the danger the passage of R.A. No. 9009 sought to prevent might soon become a reality. While the Constitution mandates that the creation of local government units must comply with the criteria laid down in the LGC, it cannot be justified to insist that the Constitution must have to yield to every amendment to the LGC despite such amendment imminently producing effects contrary to the original thrusts of the LGC to promote autonomy, decentralization, countryside development, and the concomitant national growth. Moreover, if we were now to adopt the stringent interpretation of the Constitution the petitioners are espousing, we may have to apply the same restrictive yardstick against the recently converted cities cited by the petitioners, and find two of them whose conversion laws have also to be struck down for being unconstitutional. The two laws are R.A. No. 938731 and R.A. No. 9388,32 respectively converting the municipalities of San Juan and Navotas into highly urbanized cities. A cursory reading of the laws indicates that there is no indication of compliance with the requirements imposed by the LGC, for, although the two local government units concerned presumably complied with the income requirement of P50 million under Section 452 of the LGC and the income requirement of P100 million under the amended Section 450 of the LGC, they obviously did not meet the requirements set forth under Section 453 of the LGC, to wit: Section 453. Duty to Declare Highly Urbanized Status.It shall be the duty of the President to declare a city as highly urbanized within thirty (30) days after it shall have met the minimum requirements prescribed in the immediately preceding Section, upon proper application therefor and ratification in a plebiscite by the qualified voters therein. Indeed, R.A. No. 9387 and R.A. No. 9388 evidently show that the President had not classified San Juan and Navotas as highly urbanized cities upon proper application and ratification in a plebiscite by the qualified voters therein. A further perusal of R.A. No. 9387 reveals that San Juan did not qualify as a highly urbanized city because it had a population of only 125,558, contravening the required minimum population of 200,000 under Section 452 of the LGC. Such non-qualification as a component city was conceded even by Senator Pimentel during the deliberations on Senate Bill No. 2157. The petitioners contention that the Cityhood Laws violated their right to a just share in the national taxes is not acceptable. In this regard, it suffices to state that the share of local government units is a matter of percentage under Section 285 of the LGC, not a specific amount. Specifically, the share of the cities is 23%, determined on the basis of population (50%), land area (25%), and equal sharing (25%). This share is also dependent on the number of existing cities, such that when the number of cities increases, then more will divide and share the allocation for cities. However, we have to note that the allocation by the National Government is not a constant, and can either increase or decrease. With every newly converted city becoming entitled to share the allocation for cities, the percentage of internal revenue allotment (IRA) entitlement of each city will decrease, although the actual amount received may be more than that received in the preceding year. That is a necessary consequence of Section 285 and Section 286 of the LGC. As elaborated here and in the assailed February 15, 2011 Resolution, the Cityhood Laws were not violative of the Constitution and the LGC. The respondents are thus also entitled to their just share in the IRA allocation for cities. They have demonstrated their viability as component cities of their respective provinces and are developing continuously, albeit slowly, because they had previously to share the IRA with about 1,500 municipalities. With their conversion into component cities, they will have to share with only around 120 cities.

Local government units do not subsist only on locally generated income, but also depend on the IRA to support their development. They can spur their own developments and thereby realize their great potential of encouraging trade and commerce in the far-flung regions of the country. Yet their potential will effectively be stunted if those already earning more will still receive a bigger share from the national coffers, and if commercial activity will be more or less concentrated only in and near Metro Manila. III. Conclusion We should not ever lose sight of the fact that the 16 cities covered by the Cityhood Laws not only had conversion bills pending during the 11th Congress, but have also complied with the requirements of the LGC prescribed prior to its amendment by R.A. No. 9009. Congress undeniably gave these cities all the considerations that justice and fair play demanded. Hence, this Court should do no less by stamping its imprimatur to the clear and unmistakable legislative intent and by duly recognizing the certain collective wisdom of Congress. WHEREFORE, the Ad Cautelam Motion for Reconsideration (of the Decision dated 15 February 2011) is denied with finality. SO ORDERED. LUCAS P. BERSAMIN Associate Justice WE CONCUR: RENATO C. CORONA Chief Justice ANTONIO T. CARPIO Associate Justice CONCHITA CARPIO MORALES Associate Justice PRESBITERO J. VELASCO, JR. Associate Justice ANTONIO EDUARDO B. NACHURA Associate Justice TERESITA J. LEONARDO-DE CASTRO Associate Justice ARTURO D. BRION Associate Justice DIOSDADO M. PERALTA Associate Justice MARIANO C. DEL CASTILLO Associate Justice ROBERTO A. ABAD Associate Justice MARTIN S. VILLARAMA, JR. Associate Justice JOSE PORTUGAL PEREZ Associate Justice JOSE CATRAL MENDOZA Associate Justice MARIA LOURDES P. A. SERENO Associate Justice CERTIFICATION Pursuant to Section 13, Article VIII of the Constitution, I certify that the conclusions in the above decision had been reached in consultation before the case was assigned to the writer of the opinion of the Court. RENATO C. CORONA Chief Justice

SECOND DIVISION G.R. No. 182967 April 6, 2011

PHILIPPINE NATIONAL RAILWAYS, Petitioner, vs. KANLAON CONSTRUCTION ENTERPRISES CO., INC. Respondent. DECISION CARPIO, J.: The Case This is a petition for review1 of the 26 February 2008 Decision2 and 26 May 2008 Resolution3 of the Court of Appeals in CA-G.R. CV No. 70205. In its 26 February 2008 Decision, the Court of Appeals affirmed the 12 December 2000 Decision,4 as amended by the 22 February 2001 Order,5 of the Regional Trial Court of Quezon City, Branch 221 (trial court), directing petitioner Philippine National Railways (PNR) to pay respondent Kanlaon Construction Enterprises Co., Inc. (Kanlaon) the remaining balance of the contracts and to release the retention money. In its 26 May 2008 Resolution, the Court of Appeals denied PNRs motion for reconsideration. The Facts In July 1990, PNR and Kanlaon entered into contracts for the repair of three PNR station buildings and passenger shelters, namely: 1) College Station for P2,316,568.41;6 2) Bian Station for P2,547,978.63;7 and 3) Buendia Station for P1,820,534.40.8 The total cost of the three projects was P6,685,081.44. By November 1990, Kanlaon alleged that it had already completed the three projects.9 On 30 June 1994, Kanlaon sent a demand letter to PNR requesting for the release of the retention money in the amount of P333,894.07.10 In a letter dated 12 July 1994,11 PNR denied Kanlaons demand because of the 24 January 1994 Notices of Suspension12 issued by the Commission on Audit (COA). On 8 November 1994, Kanlaon filed a complaint for collection of sum of money plus damages against PNR.13Kanlaon sought to recover from PNR a total of P865,906.79 consisting of the remaining balance of the three projects in the amount of P531,652.7214 and the retention money in the amount of P334,254.07. In its amended complaint dated 17 August 1995, Kanlaon impleaded the COA.15 In its answer, PNR admitted the existence of the three contracts but alleged that Kanlaon did not comply with the conditions of the contract. PNR also alleged that Kanlaon did not complete the projects and that PNR did not have any unpaid balance. PNR added that it had a valid ground to refuse the release of the retention money because of the COA orders suspending the release of payment to Kanlaon. In its 12 December 2000 Decision, the trial court ruled in favor of Kanlaon. The dispositive portion of the 12 December 2000 Decision reads: WHEREFORE, premises considered, judgment is hereby rendered in favor of the plaintiff [Kanlaon] and against the herein defendants [PNR and COA]. Accordingly, defendant PNR is ordered to pay the plaintiff the following amount[s]: 1. P333,894.07 representing the unreleased retention money plus legal interest at 12% per annum computed from the date of the first written demand; [and] 2. P531,652.72 representing the unpaid contract price for the completed projects plus legal interest of 12% per annum computed from the date of the first written demand. Defendant COA is absolved of any liability for actual damages or moral damages. However, both defendant PNR and defendant COA are solidarily liable for reasonable attorneys fees in the amount of P50,000.00 and cost of suit. SO ORDERED.16

On 28 December 2000, COA appealed. On 9 January 2001, PNR filed a motion for reconsideration. In its 22 February 2001 Order, the trial court modified its 12 December 2000 Decision and fixed the interest rate from twelve percent to six percent per annum from the date of the first written demand. PNR and COA appealed to the Court of Appeals. In its 26 February 2008 Decision, the Court of Appeals affirmed the trial courts 12 December 2000 Decision, as amended by its 22 February 2001 Order. PNR filed a motion for reconsideration. In its 26 May 2008 Resolution, the Court of Appeals denied PNRs motion. The Ruling of the Trial Court The trial court found that Kanlaon completed the projects and that it was entitled to payment in full of the contract price, as well as the release of the retention money. The trial court declared the PNR ledger, which was the only documentary evidence presented by PNR to show that the projects were not completed, to be self-serving and unverified. The trial court declared that PNR failed to present any credible and substantial evidence that Kanlaon failed to complete the projects. Moreover, the trial court stated that COA suspended payment because PNR failed to comply with certain conditions and not because Kanlaon did not complete the projects. The trial court also took judicial notice of the fact that the PNR stations at College, Bian and Buendia are fully operational and have been continuously used by PNR and the riding public. The trial court absolved COA from actual and moral damages because there was no contractual relations between COA and Kanlaon and it was not shown that COA acted in bad faith or with malice or gross negligence when it issued the Notices of Suspension. The Ruling of the Court of Appeals The Court of Appeals sustained the trial courts ruling that PNR was liable for the remaining balance of the contract price and the retention money. The Court of Appeals agreed with the trial court that the preponderance of evidence leaned in favor of Kanlaons claim against PNR and that there was nothing on record which supports PNRs allegation that Kanlaon failed to complete the project. The Court of Appeals said the only reason PNR refused to pay Kanlaon was because of COAs Notices of Suspension and not Kanlaons non-completion of the projects. However, the Court of Appeals held that COA is not liable for attorneys fees and costs of the suit for lack of factual and legal bases. The Issues PNR raises the following issues: I. The Court of Appeals erred in finding that the projects were completed. II. The Court of Appeals erred in affirming the 12 December 2000 Decision of the trial court, as modified by the Order dated February 22, 2001. III. The Court of Appeals erred in ruling that interest should be reckoned from the date of respondents first written demand.17 The Ruling of the Court The petition is meritorious. The Court notes that one of the reasons the COA issued the Notices of Suspension was because the contracts did not contain a Certificate of Availability of Funds as required under Sections 85 and 86 of Presidential Decree No. 1445.18 Kanlaon does not dispute the absence of a Certificate of Availability of Funds. The Administrative Code of 1987, a more recent law, also contains the same provisions. Sections 46, 47, and 48, Chapter 8, Subtitle B, Title I, Book V of the Administrative Code of 1987 provide: SECTION 46. Appropriation Before Entering into Contract.

1. No contract involving the expenditure of public funds shall be entered into unless there is an appropriation therefor, the unexpended balance of which, free of other obligations, is sufficient to cover the proposed expenditure; and 2. Notwithstanding this provision, contracts for the procurement of supplies and materials to be carried in stock may be entered into under regulations of the Commission provided that when issued, the supplies and materials shall be charged to the proper appropriations account. SECTION 47. Certificate Showing Appropriation to Meet Contract. Except in the case of a contract for personal service, for supplies for current consumption or to be carried in stock not exceeding the estimated consumption for three (3) months, or banking transactions of government-owned or controlled banks, no contract involving the expenditure of public funds by any government agency shall be entered into or authorized unless the proper accounting official of the agency concerned shall have certified to the officer entering into the obligation that funds have been duly appropriated for the purpose and that the amount necessary to cover the proposed contract for the current calendar year is available for expenditure on account thereof, subject to verification by the auditor concerned. The certificate signed by the proper accounting official and the auditor who verified it, shall be attached to and become an integral part of the proposed contract, and the sum so certified shall not thereafter be available for expenditure for any other purpose until the obligation of the government agency concerned under the contract is fully extinguished. SECTION 48. Void Contract and Liability of Officer. Any contract entered into contrary to the requirements of the two (2) immediately preceding sections shall be void, and the officer or officers entering into the contract shall be liable to the Government or other contracting party for any consequent damage to the same extent as if the transaction had been wholly between private parties. (Emphasis supplied) Thus, the Administrative Code of 1987 expressly prohibits the entering into contracts involving the expenditure of public funds unless two prior requirements are satisfied. First, there must be an appropriation law authorizing the expenditure required in the contract. Second, there must be attached to the contract a certification by the proper accounting official and auditor that funds have been appropriated by law and such funds are available. Failure to comply with any of these two requirements renders the contract void. In several cases,19 the Court had the occasion to apply these provisions of the Administrative Code of 1987 and the Government Auditing Code of the Philippines. In these cases, the Court clearly ruled that the two requirements the existence of appropriation and the attachment of the certification are "conditions sine qua non for the execution of government contracts." In COMELEC v. Quijano-Padilla,20 we stated: It is quite evident from the tenor of the language of the law that the existence of appropriations and the availability of funds are indispensable pre-requisites to or conditions sine qua non for the execution of government contracts. The obvious intent is to impose such conditions as a priori requisites to the validity of the proposed contract.21 The law expressly declares void a contract that fails to comply with the two requirements, namely, an appropriation law funding the contract and a certification of appropriation and fund availability. 22 The clear purpose of these requirements is to insure that government contracts are never signed unless supported by the corresponding appropriation law and fund availability.23 The three contracts between PNR and Kanlaon do not comply with the requirement of a certification of appropriation and fund availability. Even if a certification of appropriation is not applicable to PNR if the funds used are internally generated, still a certificate of fund availability is required. Thus, the three contracts between PNR and Kanlaon are void for violation of Sections 46, 47, and 48, Chapter 8, Subtitle B, Title I, Book V of the Administrative Code of 1987, as well as Sections 85, 86, and 87 of the Government Auditing Code of the Philippines.1avvphi1 However, Kanlaon is not left without recourse. The law itself affords it the remedy. Section 48 of the Administrative Code of 1987 provides that "the officer or officers entering into the contract shall be liable to the Government or other contracting party for any consequent damage to the same extent as if the transaction had been wholly between private parties."24 Kanlaon could go after the officers who signed the contract and hold them personally liable. WHEREFORE, we GRANT the petition. We REVERSE and SET ASIDE the 26 February 2008 Decision and 26 May 2008 Resolution of the Court of Appeals in CA-G.R. CV No. 70205. SO ORDERED.

Baguio City G.R. No. 180050

EN BANC April 12, 2011

RODOLFO G. NAVARRO, VICTOR F. BERNAL, and RENE O. MEDINA, Petitioners, vs. EXECUTIVE SECRETARY EDUARDO ERMITA, representing the President of the Philippines; Senate of the Philippines, represented by the SENATE PRESIDENT; House of Representatives, represented by the HOUSE SPEAKER; GOVERNOR ROBERT ACE S. BARBERS, representing the mother province of Surigao del Norte; GOVERNOR GERALDINE ECLEO VILLAROMAN, representing the new Province of Dinagat Islands, Respondents, CONGRESSMAN FRANCISCO T. MATUGAS, HON. SOL T. MATUGAS, HON. ARTURO CARLOS A. EGAY, JR., HON. SIMEON VICENTE G. CASTRENCE, HON. MAMERTO D. GALANIDA, HON. MARGARITO M. LONGOS, and HON. CESAR M. BAGUNDOL, Intervenors. RESOLUTION NACHURA, J.: For consideration of the Court is the Urgent Motion to Recall Entry of Judgment dated October 20, 2010 filed by Movant-Intervenors1 dated and filed on October 29, 2010, praying that the Court (a) recall the entry of judgment, and (b) resolve their motion for reconsideration of the July 20, 2010 Resolution. To provide a clear perspective of the instant motion, we present hereunder a brief background of the relevant antecedents On October 2, 2006, the President of the Republic approved into law Republic Act (R.A.) No. 9355 (An Act Creating the Province of Dinagat Islands).2 On December 3, 2006, the Commission on Elections (COMELEC) conducted the mandatory plebiscite for the ratification of the creation of the province under the Local Government Code (LGC). 3 The plebiscite yielded 69,943 affirmative votes and 63,502 negative votes. 4 With the approval of the people from both the mother province of Surigao del Norte and the Province of Dinagat Islands (Dinagat), the President appointed the interim set of provincial officials who took their oath of office on January 26, 2007. Later, during the May 14, 2007 synchronized elections, the Dinagatnons elected their new set of provincial officials who assumed office on July 1, 2007. 5 On November 10, 2006, petitioners Rodolfo G. Navarro, Victor F. Bernal and Rene O. Medina, former political leaders of Surigao del Norte, filed before this Court a petition for certiorari and prohibition (G.R. No. 175158) challenging the constitutionality of R.A. No. 9355.6 The Court dismissed the petition on technical grounds. Their motion for reconsideration was also denied.7 Undaunted, petitioners, as taxpayers and residents of the Province of Surigao del Norte, filed another petition for certiorari8 seeking to nullify R.A. No. 9355 for being unconstitutional. They alleged that the creation of Dinagat as a new province, if uncorrected, would perpetuate an illegal act of Congress, and would unjustly deprive the people of Surigao del Norte of a large chunk of the provincial territory, Internal Revenue Allocation (IRA), and rich resources from the area. They pointed out that when the law was passed, Dinagat had a land area of 802.12 square kilometers only and a population of only 106,951, failing to comply with Section 10, Article X of the Constitution and of Section 461 of the LGC, on both counts, viz. Constitution, Article X Local Government Section 10. No province, city, municipality, or barangay may be created, divided, merged, abolished, or its boundary substantially altered, except in accordance with the criteria established in the local government code and subject to the approval by a majority of the votes cast in a plebiscite in the political units directly affected. LGC, Title IV, Chapter I Section 461. Requisites for Creation. (a) A province may be created if it has an average annual income, as certified by the Department of Finance, of not less than Twenty million pesos (P20,000,000.00) based on 1991 constant prices and either of the following requisites: (i) a continuous territory of at least two thousand (2,000) square kilometers, as certified by the Lands Management Bureau; or

(ii) a population of not less than two hundred fifty thousand (250,000) inhabitants as certified by the National Statistics Office: Provided, That, the creation thereof shall not reduce the land area, population, and income of the original unit or units at the time of said creation to less than the minimum requirements prescribed herein. (b) The territory need not be contiguous if it comprises two (2) or more islands or is separated by a chartered city or cities which do not contribute to the income of the province. (c) The average annual income shall include the income accruing to the general fund, exclusive of special funds, trust funds, transfers, and non-recurring income. (Emphasis supplied.) On February 10, 2010, the Court rendered its Decision9 granting the petition.10 The Decision declared R.A. No. 9355 unconstitutional for failure to comply with the requirements on population and land area in the creation of a province under the LGC. Consequently, it declared the proclamation of Dinagat and the election of its officials as null and void. The Decision likewise declared as null and void the provision on Article 9(2) of the Rules and Regulations Implementing the LGC (LGC-IRR), stating that, "[t]he land area requirement shall not apply where the proposed province is composed of one (1) or more islands" for being beyond the ambit of Article 461 of the LGC, inasmuch as such exemption is not expressly provided in the law.11 The Republic, represented by the Office of the Solicitor General, and Dinagat filed their respective motions for reconsideration of the Decision. In its Resolution12 dated May 12, 2010,13 the Court denied the said motions.14 Unperturbed, the Republic and Dinagat both filed their respective motions for leave of court to admit their second motions for reconsideration, accompanied by their second motions for reconsideration. These motions were eventually "noted without action" by this Court in its June 29, 2010 Resolution.15 Meanwhile, the movants-intervenors filed on June 18, 2010 a Motion for Leave to Intervene and to File and to Admit Intervenors Motion for Reconsideration of the Resolution dated May 12, 2010. They alleged that the COMELEC issued Resolution No. 8790, relevant to this case, which provides RESOLUTION NO. 8790 WHEREAS, Dinagat Islands, consisting of seven (7) municipalities, were previously components of the First Legislative District of the Province of Surigao del Norte. In December 2006 pursuant to Republic Act No. 9355, the Province of Dinagat Island[s] was created and its creation was ratified on 02 December 2006 in the Plebiscite for this purpose; WHEREAS, as a province, Dinagat Islands was, for purposes of the May 10, 2010 National and Local Elections, allocated one (1) seat for Governor, one (1) seat for Vice Governor, one (1) for congressional seat, and ten (10) Sangguniang Panlalawigan seats pursuant to Resolution No. 8670 dated 16 September 2009; WHEREAS, the Supreme Court in G.R. No. 180050 entitled "Rodolfo Navarro, et al., vs. Executive Secretary Eduardo Ermita, as representative of the President of the Philippines, et al." rendered a Decision, dated 10 February 2010, declaring Republic Act No. 9355 unconstitutional for failure to comply with the criteria for the creation of a province prescribed in Sec. 461 of the Local Government Code in relation to Sec. 10, Art. X, of the 1987 Constitution; WHEREAS, respondents intend to file Motion[s] for Reconsideration on the above decision of the Supreme Court; WHEREAS, the electoral data relative to the: (1) position for Member, House of Representatives representing the lone congressional district of Dinagat Islands, (2) names of the candidates for the aforementioned position, (3) position for Governor, Dinagat Islands, (4) names of the candidates for the said position, (5) position of the Vice Governor, (6) the names of the candidates for the said position, (7) positions for the ten (10) Sangguniang Panlalawigan Members and, [8] all the names of the candidates for Sangguniang Panlalawigan Members, have already been configured into the system and can no longer be revised within the remaining period before the elections on May 10, 2010. NOW, THEREFORE, with the current system configuration, and depending on whether the Decision of the Supreme Court in Navarro vs. Ermita is reconsidered or not, the Commission RESOLVED, as it hereby RESOLVES, to declare that: a. If the Decision is reversed, there will be no problem since the current system configuration is in line with the reconsidered Decision, meaning that the Province of Dinagat Islands and the Province of Surigao del Norte remain as two (2) separate provinces;

b. If the Decision becomes final and executory before the election, the Province of Dinagat Islands will revert to its previous status as part of the First Legislative District, Surigao del Norte. But because of the current system configuration, the ballots for the Province of Dinagat Islands will, for the positions of Member, House of Representatives, Governor, Vice Governor and Members, Sangguniang Panlalawigan, bear only the names of the candidates for the said positions. Conversely, the ballots for the First Legislative District of Surigao del Norte, will, for the position of Governor, Vice Governor, Member, House of Representatives, First District of Surigao del Norte and Members, Sangguniang Panlalawigan, show only candidates for the said position. Likewise, the whole Province of Surigao del Norte, will, for the position of Governor and Vice Governor, bear only the names of the candidates for the said position[s]. Consequently, the voters of the Province of Dinagat Islands will not be able to vote for the candidates of Members, Sangguniang Panlalawigan, and Member, House [of] Representatives, First Legislative District, Surigao del Norte, and candidates for Governor and Vice Governor for Surigao del Norte. Meanwhile, voters of the First Legislative District of Surigao del Norte, will not be able to vote for Members, Sangguniang Panlalawigan and Member, House of Representatives, Dinagat Islands. Also, the voters of the whole Province of Surigao del Norte, will not be able to vote for the Governor and Vice Governor, Dinagat Islands. Given this situation, the Commission will postpone the elections for Governor, Vice Governor, Member, House of Representatives, First Legislative District, Surigao del Norte, and Members, Sangguniang Panlalawigan, First Legislative District, Surigao del Norte, because the election will result in [a] failure to elect, since, in actuality, there are no candidates for Governor, Vice Governor, Members, Sangguniang Panlalawigan, First Legislative District, and Member, House of Representatives, First Legislative District (with Dinagat Islands) of Surigao del Norte. c. If the Decision becomes final and executory after the election, the Province of Dinagat Islands will revert to its previous status as part of the First Legislative District of Surigao del Norte. The result of the election will have to be nullified for the same reasons given in Item "b" above. A special election for Governor, Vice Governor, Member, House of Representatives, First Legislative District of Surigao del Norte, and Members, Sangguniang Panlalawigan, First District, Surigao del Norte (with Dinagat Islands) will have to be conducted. xxxx SO ORDERED. They further alleged that, because they are the duly elected officials of Surigao del Norte whose positions will be affected by the nullification of the election results in the event that the May 12, 2010 Resolution is not reversed, they have a legal interest in the instant case and would be directly affected by the declaration of nullity of R.A. No. 9355. Simply put, movants-intervenors election to their respective offices would necessarily be annulled since Dinagat Islands will revert to its previous status as part of the First Legislative District of Surigao del Norte and a special election will have to be conducted for governor, vice governor, and House of Representatives member and Sangguniang Panlalawigan member for the First Legislative District of Surigao del Norte. Moreover, as residents of Surigao del Norte and as public servants representing the interests of their constituents, they have a clear and strong interest in the outcome of this case inasmuch as the reversion of Dinagat as part of the First Legislative District of Surigao del Norte will affect the latter province such that: (1) the whole administrative set-up of the province will have to be restructured; (2) the services of many employees will have to be terminated; (3) contracts will have to be invalidated; and (4) projects and other developments will have to be discontinued. In addition, they claim that their rights cannot be adequately pursued and protected in any other proceeding since their rights would be foreclosed if the May 12, 2010 Resolution would attain finality. In their motion for reconsideration of the May 12, 2010 Resolution, movants-intervenors raised three (3) main arguments to challenge the above Resolution, namely: (1) that the passage of R.A. No. 9355 operates as an act of Congress amending Section 461 of the LGC; (2) that the exemption from territorial contiguity, when the intended province consists of two or more islands, includes the exemption from the application of the minimum land area requirement; and (3) that the Operative Fact Doctrine is applicable in the instant case. In the Resolution dated July 20, 2010,16 the Court denied the Motion for Leave to Intervene and to File and to Admit Intervenors Motion for Reconsideration of the Resolution dated May 12, 2010 on the ground that the allowance or disallowance of a motion to intervene is addressed to the sound discretion of the Court, and that the appropriate time to file the said motion was before and not after the resolution of this case. On September 7, 2010, movants-intervenors filed a Motion for Reconsideration of the July 20, 2010 Resolution, citing several rulings17 of the Court, allowing intervention as an exception to Section 2, Rule 19 of the Rules of Court that it

should be filed at any time before the rendition of judgment. They alleged that, prior to the May 10, 2010 elections, their legal interest in this case was not yet existent. They averred that prior to the May 10, 2010 elections, they were unaware of the proceedings in this case. Even for the sake of argument that they had notice of the pendency of the case, they pointed out that prior to the said elections, Sol T. Matugas was a simple resident of Surigao del Norte, Arturo Carlos A. Egay, Jr. was a member of the Sangguniang Panlalawigan of the Second District of Surigao del Norte, and Mamerto D. Galanida was the Municipal Mayor of Socorro, Surigao del Norte, and that, pursuant to COMELEC Resolution No. 8790, it was only after they were elected as Governor of Surigao del Norte, Vice Governor of Surigao del Norte and Sangguniang Panlalawigan Member of the First District of Surigao del Norte, respectively, that they became possessed with legal interest in this controversy. On October 5, 2010, the Court issued an order for Entry of Judgment, stating that the decision in this case had become final and executory on May 18, 2010. Hence, the above motion. At the outset, it must be clarified that this Resolution delves solely on the instant Urgent Motion to Recall Entry of Judgment of movants-intervenors, not on the second motions for reconsideration of the original parties, and neither on Dinagats Urgent Omnibus Motion, which our esteemed colleague, Mr. Justice Arturo D. Brion considers as Dinagats third motion for reconsideration. Inasmuch as the motions for leave to admit their respective motions for reconsideration of the May 12, 2010 Resolution and the aforesaid motions for reconsideration were already noted without action by the Court, there is no reason to treat Dinagats Urgent Omnibus Motion differently. In relation to this, the Urgent Motion to Recall Entry of Judgment of movants-intervenors could not be considered as a second motion for reconsideration to warrant the application of Section 3, Rule 15 of the Internal Rules of the Supreme Court. 18 It should be noted that this motion prays for the recall of the entry of judgment and for the resolution of their motion for reconsideration of the July 20, 2010 Resolution which remained unresolved. The denial of their motion for leave to intervene and to admit motion for reconsideration of the May 12, 2010 Resolution did not rule on the merits of the motion for reconsideration of the May 12, 2010 Resolution, but only on the timeliness of the intended intervention. Their motion for reconsideration of this denial elaborated on movants-intervenors interest in this case which existed only after judgment had been rendered. As such, their motion for intervention and their motion for reconsideration of the May 12, 2010 Resolution merely stand as an initial reconsideration of the said resolution. With due deference to Mr. Justice Brion, there appears nothing in the records to support the claim that this was a ploy of respondents legal tactician to reopen the case despite an entry of judgment. To be sure, it is actually COMELEC Resolution No. 8790 that set this controversy into motion anew. To reiterate, the pertinent portion of the Resolution reads: c. If the Decision becomes final and executory after the election, the Province of Dinagat Islands will revert to its previous status as part of the First Legislative District of Surigao del Norte. The result of the election will have to be nullified for the same reasons given in Item "b" above. A special election for Governor, Vice Governor, Member, House of Representatives, First Legislative District of Surigao del Norte, and Members, Sangguniang Panlalawigan, First District, Surigao del Norte (with Dinagat Islands) will have to be conducted. (Emphasis supplied.) Indeed, COMELEC Resolution No. 8790 spawned the peculiar circumstance of proper party interest for movantsintervenors only with the specter of the decision in the main case becoming final and executory. More importantly, if the intervention be not entertained, the movants-intervenors would be left with no other remedy as regards to the impending nullification of their election to their respective positions. Thus, to the Courts mind, there is an imperative to grant the Urgent Motion to Recall Entry of Judgment by movants-intervenors. It should be remembered that this case was initiated upon the filing of the petition for certiorari way back on October 30, 2007. At that time, movants-intervenors had nothing at stake in the outcome of this case. While it may be argued that their interest in this case should have commenced upon the issuance of COMELEC Resolution No. 8790, it is obvious that their interest in this case then was more imaginary than real. This is because COMELEC Resolution No. 8790 provides that should the decision in this case attain finality prior to the May 10, 2010 elections, the election of the local government officials stated therein would only have to be postponed. Given such a scenario, movantsintervenors would not have suffered any injury or adverse effect with respect to the reversion of Dinagat as part of Surigao del Norte since they would simply have remained candidates for the respective positions they have vied for and to which they have been elected. For a party to have locus standi, one must allege "such a personal stake in the outcome of the controversy as to assure that concrete adverseness which sharpens the presentation of issues upon which the court so largely depends for illumination of difficult constitutional questions." Because constitutional cases are often public actions in which the relief sought is likely to affect other persons, a preliminary question frequently arises as to this interest in the constitutional question raised.19

It cannot be denied that movants-intervenors will suffer direct injury in the event their Urgent Motion to Recall Entry of Judgment dated October 29, 2010 is denied and their Motion for Leave to Intervene and to File and to Admit Intervenors Motion for Reconsideration of the Resolution dated May 12, 2010 is denied with finality. Indeed, they have sufficiently shown that they have a personal and substantial interest in the case, such that if the May 12, 2010 Resolution be not reconsidered, their election to their respective positions during the May 10, 2010 polls and its concomitant effects would all be nullified and be put to naught. Given their unique circumstances, movantsintervenors should not be left without any remedy before this Court simply because their interest in this case became manifest only after the case had already been decided. The consequences of such a decision would definitely work to their disadvantage, nay, to their utmost prejudice, without even them being parties to the dispute. Such decision would also violate their right to due process, a right that cries out for protection. Thus, it is imperative that the movants-intervenors be heard on the merits of their cause. We are not only a court of law, but also of justice and equity, such that our position and the dire repercussions of this controversy should be weighed on the scales of justice, rather than dismissed on account of mootness. The "moot and academic" principle is not a magical formula that can automatically dissuade the courts from resolving a case. Courts will decide cases, otherwise moot and academic, if: (1) there is a grave violation of the Constitution; (2) there is an exceptional character of the situation and the paramount public interest is involved; (3) the constitutional issue raised requires formation of controlling principles to guide the bench, the bar, and the public; and (4) the case is capable of repetition yet evading review.20 The second exception attends this case. This Court had taken a liberal attitude in the case of David v. Macapagal-Arroyo,21 where technicalities of procedure on locus standi were brushed aside, because the constitutional issues raised were of paramount public interest or of transcendental importance deserving the attention of the Court. Along parallel lines, the motion for intervention should be given due course since movants-intervenors have shown their substantial legal interest in the outcome of this case, even much more than petitioners themselves, and because of the novelty, gravity, and weight of the issues involved. Undeniably, the motion for intervention and the motion for reconsideration of the May 12, 2010 Resolution of movants-intervenors is akin to the right to appeal the judgment of a case, which, though merely a statutory right that must comply with the requirements of the rules, is an essential part of our judicial system, such that courts should proceed with caution not to deprive a party of the right to question the judgment and its effects, and ensure that every party-litigant, including those who would be directly affected, would have the amplest opportunity for the proper and just disposition of their cause, freed from the constraints of technicalities.22 Verily, the Court had, on several occasions, sanctioned the recall entries of judgment in light of attendant extraordinary circumstances.23 The power to suspend or even disregard rules of procedure can be so pervasive and compelling as to alter even that which this Court itself had already declared final.24 In this case, the compelling concern is not only to afford the movants-intervenors the right to be heard since they would be adversely affected by the judgment in this case despite not being original parties thereto, but also to arrive at the correct interpretation of the provisions of the LGC with respect to the creation of local government units. In this manner, the thrust of the Constitution with respect to local autonomy and of the LGC with respect to decentralization and the attainment of national goals, as hereafter elucidated, will effectively be realized. On the merits of the motion for intervention, after taking a long and intent look, the Court finds that the first and second arguments raised by movants-intervenors deserve affirmative consideration. It must be borne in mind that the central policy considerations in the creation of local government units are economic viability, efficient administration, and capability to deliver basic services to their constituents. The criteria prescribed by the LGC, i.e., income, population and land area, are all designed to accomplish these results. In this light, Congress, in its collective wisdom, has debated on the relative weight of each of these three criteria, placing emphasis on which of them should enjoy preferential consideration. Without doubt, the primordial criterion in the creation of local government units, particularly of a province, is economic viability. This is the clear intent of the framers of the LGC. In this connection, the following excerpts from congressional debates are quoted hereunder HON. ALFELOR. Income is mandatory. We can even have this doubled because we thought CHAIRMAN CUENCO. In other words, the primordial consideration here is the economic viability of the new local government unit, the new province? xxxx

HON. LAGUDA. The reason why we are willing to increase the income, double than the House version, because we also believe that economic viability is really a minimum. Land area and population are functions really of the viability of the area, because you have an income level which would be the trigger point for economic development, population will naturally increase because there will be an immigration. However, if you disallow the particular area from being converted into a province because of the population problems in the beginning, it will never be able to reach the point where it could become a province simply because it will never have the economic take off for it to trigger off that economic development. Now, were saying that maybe Fourteen Million Pesos is a floor area where it could pay for overhead and provide a minimum of basic services to the population. Over and above that, the provincial officials should be able to trigger off economic development which will attract immigration, which will attract new investments from the private sector. This is now the concern of the local officials. But if we are going to tie the hands of the proponents, simply by telling them, "Sorry, you are now at 150 thousand or 200 thousand," you will never be able to become a province because nobody wants to go to your place. Why? Because you never have any reason for economic viability. xxxx CHAIRMAN PIMENTEL. Okay, what about land area? HON. LUMAUIG. 1,500 square kilometers HON. ANGARA. Walang problema yon, in fact thats not very critical, yong land area because CHAIRMAN PIMENTEL. Okay, ya, our, the Senate version is 3.5, 3,500 square meters, ah, square kilometers. HON. LAGUDA. Ne, Ne. A province is constituted for the purpose of administrative efficiency and delivery of basic services. CHAIRMAN PIMENTEL. Right. HON. LAGUDA. Actually, when you come down to it, when government was instituted, there is only one central government and then everybody falls under that. But it was later on subdivided into provinces for purposes of administrative efficiency. CHAIRMAN PIMENTEL. Okay. HON. LAGUDA. Now, what were seeing now is that the administrative efficiency is no longer there precisely because the land areas that we are giving to our governors is so wide that no one man can possibly administer all of the complex machineries that are needed. Secondly, when you say "delivery of basic services," as pointed out by Cong. Alfelor, there are sections of the province which have never been visited by public officials, precisely because they dont have the time nor the energy anymore to do that because its so wide. Now, by compressing the land area and by reducing the population requirement, we are, in effect, trying to follow the basic policy of why we are creating provinces, which is to deliver basic services and to make it more efficient in administration. CHAIRMAN PIMENTEL. Yeah, thats correct, but on the assumption that the province is able to do it without being a burden to the national government. Thats the assumption. HON. LAGUDA. Thats why were going into the minimum income level. As we said, if we go on a minimum income level, then we say, "this is the trigger point at which this administration can take place."25 Also worthy of note are the requisites in the creation of a barangay, a municipality, a city, and a province as provided both in the LGC and the LGC-IRR, viz. For a Barangay: LGC: SEC. 386. Requisites for Creation. (a) A barangay may be created out of a contiguous territory which has a population of at least two thousand (2,000) inhabitants as certified by the National Statistics Office except in cities and municipalities within Metro Manila and other metropolitan political subdivisions or in highly urbanized cities where such territory shall have a certified population of at least five thousand (5,000) inhabitants: Provided, That the

creation thereof shall not reduce the population of the original barangay or barangays to less than the minimum requirement prescribed herein. To enhance the delivery of basic services in the indigenous cultural communities, barangays may be created in such communities by an Act of Congress, notwithstanding the above requirement. (b) The territorial jurisdiction of the new barangay shall be properly identified by metes and bounds or by more or less permanent natural boundaries. The territory need not be contiguous if it comprises two (2) or more islands. (c) The governor or city mayor may prepare a consolidation plan for barangays, based on the criteria prescribed in this Section, within his territorial jurisdiction. The plan shall be submitted to the sangguniang panlalawigan or sangguniang panlungsod concerned for appropriate action. In the case of municipalities within the Metropolitan Manila area and other metropolitan political subdivisions, the barangay consolidation plan can be prepared and approved by the sangguniang bayan concerned. LGC-IRR: ARTICLE 14. Barangays. (a) Creation of barangays by the sangguniang panlalawigan shall require prior recommendation of the sangguniang bayan. (b) New barangays in the municipalities within MMA shall be created only by Act of Congress, subject to the limitations and requirements prescribed in this Article. (c) Notwithstanding the population requirement, a barangay may be created in the indigenous cultural communities by Act of Congress upon recommendation of the LGU or LGUs where the cultural community is located. (d) A barangay shall not be created unless the following requisites are present: (1) Population which shall not be less than two thousand (2,000) inhabitants, except in municipalities and cities within MMA and other metropolitan political subdivisions as may be created by law, or in highly-urbanized cities where such territory shall have a population of at least five thousand (5,000) inhabitants, as certified by the NSO. The creation of a barangay shall not reduce the population of the original barangay or barangays to less than the prescribed minimum/ (2) Land Area which must be contiguous, unless comprised by two (2) or more islands. The territorial jurisdiction of a barangay sought to be created shall be properly identified by metes and bounds or by more or less permanent natural boundaries. Municipality: LGC: SEC. 442. Requisites for Creation. (a) A municipality may be created if it has an average annual income, as certified by the provincial treasurer, or at least Two million five hundred thousand pesos (P2,500,000.00) for the last two (2) consecutive years based on the 1991 constant prices; a population of at least twenty-five thousand (25,000) inhabitants as certified by the National Statistics Office; and a contiguous territory of at least fifty (50) square kilometers as certified by the Lands Management Bureau: Provided, That the creation thereof shall not reduce the land area, population or income of the original municipality or municipalities at the time of said creation to less than the minimum requirements prescribed herein. (b) The territorial jurisdiction of a newly-created municipality shall be properly identified by metes and bounds. The requirement on land area shall not apply where the municipality proposed to be created is composed of one (1) or more islands. The territory need not be contiguous if it comprises two (2) or more islands. (c) The average annual income shall include the income accruing to the general fund of the municipality concerned, exclusive of special funds, transfers and non-recurring income. (d) Municipalities existing as of the date of effectivity of this Code shall continue to exist and operate as such. Existing municipal districts organized pursuant to presidential issuances or executive orders and which have their respective set of elective municipal officials holding office at the time of the effectivity of this Code shall henceforth be considered regular municipalities.

LGC-IRR: ARTICLE 13. Municipalities. (a) Requisites for Creation A municipality shall not be created unless the following requisites are present: (i) Income An average annual income of not less than Two Million Five Hundred Thousand Pesos (P2,500,000.00), for the immediately preceding two (2) consecutive years based on 1991 constant prices, as certified by the provincial treasurer. The average annual income shall include the income accruing to the general fund, exclusive of special funds, special accounts, transfers, and nonrecurring income; (ii) Population which shall not be less than twenty five thousand (25,000) inhabitants, as certified by NSO; and (iii) Land area which must be contiguous with an area of at least fifty (50) square kilometers, as certified by LMB. The territory need not be contiguous if it comprises two (2) or more islands. The requirement on land area shall not apply where the proposed municipality is composed of one (1) or more islands. The territorial jurisdiction of a municipality sought to be created shall be properly identified by metes and bounds. The creation of a new municipality shall not reduce the land area, population, and income of the original LGU or LGUs at the time of said creation to less than the prescribed minimum requirements. All expenses incidental to the creation shall be borne by the petitioners. City: LGC: SEC. 450. Requisites for Creation. (a) A municipality or a cluster of barangays may be converted into a component city if it has an average annual income, as certified by the Department of Finance, of at least Twenty million pesos (P20,000,000.00) for the last two (2) consecutive years based on 1991 constant prices, and if it has either of the following requisities: (i) a contiguous territory of at least one hundred (100) square kilometers, as certified by the Lands Management Bureau; or, (ii) a population of not less than one hundred fifty thousand (150,000) inhabitants, as certified by the National Statistics Office: Provided, That, the creation thereof shall not reduce the land area, population, and income of the original unit or units at the time of said creation to less than the minimum requirements prescribed herein. (b) The territorial jurisdiction of a newly-created city shall be properly identified by metes and bounds. The requirement on land area shall not apply where the city proposed to be created is composed of one (1) or more islands. The territory need not be contiguous if it comprises two (2) or more islands. (c) The average annual income shall include the income accruing to the general fund, exclusive of special funds, transfers, and non-recurring income. LGC-IRR: ARTICLE 11. Cities. (a) Requisites for creation A city shall not be created unless the following requisites on income and either population or land area are present: (1) Income An average annual income of not less than Twenty Million Pesos (P20,000,000.00), for the immediately preceding two (2) consecutive years based on 1991 constant prices, as certified by DOF. The average annual income shall include the income accruing to the general fund, exclusive of special funds, special accounts, transfers, and nonrecurring income; and (2) Population or land area Population which shall not be less than one hundred fifty thousand (150,000) inhabitants, as certified by the NSO; or land area which must be contiguous with an area of at least one hundred (100) square kilometers, as certified by LMB. The territory need not be contiguous if it comprises two (2) or more islands or is separated by a chartered city or cities which do not contribute to the income of the province. The land area requirement shall not apply where the proposed city is composed of one (1) or more islands. The territorial jurisdiction of a city sought to be created shall be properly identified by metes and bounds. The creation of a new city shall not reduce the land area, population, and income of the original LGU or LGUs at the time of said creation to less than the prescribed minimum requirements. All expenses incidental to the creation shall be borne by the petitioners.

Provinces: LGC: SEC. 461. Requisites for Creation. (a) A province may be created if it has an average annual income, as certified by the Department of Finance, of not less than Twenty million pesos (P20,000,000.00) based on 1991 prices and either of the following requisites: (i) a contiguous territory of at least two thousand (2,000) square kilometers, as certified by the Lands Management Bureau; or, (ii) a population of not less than two hundred fifty thousand (250,000) inhabitants as certified by the National Statistics Office: Provided, That the creation thereof shall not reduce the land area, population, and income of the original unit or units at the time of said creation to less than the minimum requirements prescribed herein. (b) The territory need not be contiguous if it comprises two (2) or more islands or is separated by a chartered city or cities which do not contribute to the income of the province. (c) The average annual income shall include the income accruing to the general fund, exclusive of special funds, trust funds, transfers, and non-recurring income. LGC-IRR: ARTICLE 9. Provinces. (a) Requisites for creation A province shall not be created unless the following requisites on income and either population or land area are present: (1) Income An average annual income of not less than Twenty Million pesos (P20,000,000.00) for the immediately preceding two (2) consecutive years based on 1991 constant prices, as certified by DOF. The average annual income shall include the income accruing to the general fund, exclusive of special funds, special accounts, transfers, and non-recurring income; and (2) Population or land area Population which shall not be less than two hundred fifty thousand (250,000) inhabitants, as certified by NSO; or land area which must be contiguous with an area of at least two thousand (2,000) square kilometers, as certified by LMB. The territory need not be contiguous if it comprises two (2) or more islands or is separated by a chartered city or cities which do not contribute to the income of the province. The land area requirement shall not apply where the proposed province is composed of one (1) or more islands. The territorial jurisdiction of a province sought to be created shall be properly identified by metes and bounds. The creation of a new province shall not reduce the land area, population, and income of the original LGU or LGUs at the time of said creation to less than the prescribed minimum requirements. All expenses incidental to the creation shall be borne by the petitioners. (Emphasis supplied.) It bears scrupulous notice that from the above cited provisions, with respect to the creation of barangays, land area is not a requisite indicator of viability. However, with respect to the creation of municipalities, component cities, and provinces, the three (3) indicators of viability and projected capacity to provide services, i.e., income, population, and land area, are provided for. But it must be pointed out that when the local government unit to be created consists of one (1) or more islands, it is exempt from the land area requirement as expressly provided in Section 442 and Section 450 of the LGC if the local government unit to be created is a municipality or a component city, respectively. This exemption is absent in the enumeration of the requisites for the creation of a province under Section 461 of the LGC, although it is expressly stated under Article 9(2) of the LGC-IRR. There appears neither rhyme nor reason why this exemption should apply to cities and municipalities, but not to provinces. In fact, considering the physical configuration of the Philippine archipelago, there is a greater likelihood that islands or group of islands would form part of the land area of a newly-created province than in most cities or municipalities. It is, therefore, logical to infer that the genuine legislative policy decision was expressed in Section 442 (for municipalities) and Section 450 (for component cities) of the LGC, but was inadvertently omitted in Section 461 (for provinces). Thus, when the exemption was expressly provided in Article 9(2) of the LGC-IRR, the inclusion was intended to correct the congressional oversight in Section 461 of the LGC and to reflect the true legislative intent. It would, then, be in order for the Court to uphold the validity of Article 9(2) of the LGC-IRR.

This interpretation finds merit when we consider the basic policy considerations underpinning the principle of local autonomy. Section 2 of the LGC, of which paragraph (a) is pertinent to this case, provides Sec. 2. Declaration of Policy. (a) It is hereby declared the policy of the State that the territorial and political subdivisions of the State shall enjoy genuine and meaningful local autonomy to enable them to attain their fullest development as self-reliant communities and make them more effective partners in the attainment of national goals. Toward this end, the State shall provide for a more responsive and accountable local government structure instituted through a system of decentralization whereby local government units shall be given more powers, authority, responsibilities, and resources. The process of decentralization shall proceed from the national government to the local government units. This declaration of policy is echoed in Article 3(a) of the LGC-IRR26 and in the Whereas clauses of Administrative Order No. 270,27 which read WHEREAS, Section 25, Article II of the Constitution mandates that the State shall ensure the autonomy of local governments; WHEREAS, pursuant to this declared policy, Republic Act No. 7160, otherwise known as the Local Government Code of 1991, affirms, among others, that the territorial and political subdivisions of the State shall enjoy genuine and meaningful local autonomy to enable them to attain their fullest development as self-reliant communities and make them more effective partners in the attainment of national goals; WHEREAS, Section 533 of the Local Government Code of 1991 requires the President to convene an Oversight Committee for the purpose of formulating and issuing the appropriate rules and regulations necessary for the efficient and effective implementation of all the provisions of the said Code; and WHEREAS, the Oversight Committee, after due deliberations and consultations with all the concerned sectors of society and consideration of the operative principles of local autonomy as provided in the Local Government Code of 1991, has completed the formulation of the implementing rules and regulations; x x x Consistent with the declared policy to provide local government units genuine and meaningful local autonomy, contiguity and minimum land area requirements for prospective local government units should be liberally construed in order to achieve the desired results. The strict interpretation adopted by the February 10, 2010 Decision could prove to be counter-productive, if not outright absurd, awkward, and impractical. Picture an intended province that consists of several municipalities and component cities which, in themselves, also consist of islands. The component cities and municipalities which consist of islands are exempt from the minimum land area requirement, pursuant to Sections 450 and 442, respectively, of the LGC. Yet, the province would be made to comply with the minimum land area criterion of 2,000 square kilometers, even if it consists of several islands. This would mean that Congress has opted to assign a distinctive preference to create a province with contiguous land area over one composed of islands and negate the greater imperative of development of self-reliant communities, rural progress, and the delivery of basic services to the constituency. This preferential option would prove more difficult and burdensome if the 2,000square-kilometer territory of a province is scattered because the islands are separated by bodies of water, as compared to one with a contiguous land mass. Moreover, such a very restrictive construction could trench on the equal protection clause, as it actually defeats the purpose of local autonomy and decentralization as enshrined in the Constitution. Hence, the land area requirement should be read together with territorial contiguity. Another look at the transcript of the deliberations of Congress should prove enlightening: CHAIRMAN ALFELOR. Can we give time to Congressman Chiongbian,28 with respect to his CHAIRMAN LINA. Okay. HON. CHIONGBIAN. At the outset, Chairman Lina, we would like to apprise the distinguished Senator about the action taken by the House, on House Bill No. 7166. This was passed about two years ago and has been pending in the Senate for consideration. This is a bill that I am not the only one involved, including our distinguished Chairman here. But then we did want to sponsor the bill, being the Chairman then of the Local Government.

So, I took the cudgels for the rest of the Congressmen, who were more or less interested in the creation of the new provinces, because of the vastness of the areas that were involved. At any rate, this bill was passed by the House unanimously without any objection. And as I have said a while ago, that this has been pending in the Senate for the last two years. And Sen. Pimentel himself was just in South Cotabato and he delivered a speech that he will support this bill, and he says, that he will incorporate this in the Local Government Code, which I have in writing from him. I showed you the letter that he wrote, and naturally, we in the House got hold of the Senate version. It becomes an impossibility for the whole Philippines to create a new province, and that is quite the concern of the respective Congressmen. Now, insofar as the constitutional provision is concerned, there is nothing to stop the mother province from voting against the bill, if a province is going to be created. So, we are talking about devolution of powers here. Why is the province not willing to create another province, when it can be justified. Even Speaker Mitra says, what will happen to Palawan? We wont have one million people there, and if you look at Palawan, there will be about three or four provinces that will comprise that island. So, the development will be hampered. Now, I would like to read into the record the letter of Sen. Pimentel, dated November 2, 1989. This was practically about a year after 7166 was approved by the House, House Bill 7166. On November 2, 1989, the Senator wrote me: "Dear Congressman Chiongbian: We are in receipt of your letter of 17 October. Please be informed that your House No. 7166 was incorporated in the proposed Local Government Code, Senate Bill No. 155, which is pending for second reading. Thank you and warm regards. Very truly yours," That is the very context of the letter of the Senator, and we are quite surprised that the Senate has adopted another position. So, we would like because this is a unanimously approved bill in the House, thats the only bill that is involving the present Local Government Code that we are practically considering; and this will be a slap on the House, if we do not approve it, as approved by the lower House. This can be [an] irritant in the approval of the Conference Committee Report. And I just want to manifest that insofar as the creation of the province, not only in my province, but the other provinces. That the mother province will participate in the plebiscite, they can defeat the province, lets say, on the basis of the result, the province cannot be created if they lose in the plebiscite, and I dont see why, we should put this stringent conditions to the private people of the devolution that they are seeking. So, Mr. Senator, I think we should consider the situation seriously, because, this is an approved version of the House, and I will not be the one to raise up and question the Conference Committee Report, but the rest of the House that are interested in this bill. And they have been approaching the Speaker about this. So, the Speaker reminded me to make sure that it takes the cudgel of the House approved version. So, thats all what I can say, Mr. Senator, and I dont believe that it is not, because its the wish of the House, but because the mother province will participate anyhow, you vote them down; and that is provided for in the Constitution. As a matter of fact, I have seen the amendment with regards to the creation of the city to be urbanized, subject to the plebiscite. And why should we not allow that to happen in the provinces! In other words, we dont want the people who wants to create a new province, as if they are left in the devolution of powers, when they feel that they are far away from civilization. Now, I am not talking about other provinces, because I am unaware, not aware of their situation. But the province of South Cotabato has a very unique geographical territorial conglomerations. One side is in the other side of the Bay, of Sarangani Bay. The capital town is in the North; while these other municipalities are in the East and in the West. And if they have to travel from the last town in the eastern part of the province, it is about one hundred forty kilometers to the capital town. And from the West side, it is the same distance. And from the North side, it is about one hundred kilometers. So that is the problem there. And besides, they have enough resources and I feel that, not because I am

interested in the province, I am after their welfare in the future. Who am I to dictate on those people? I have no interest but then I am looking at the future development of these areas. As a matter of fact, if I am in politics, its incidental; I do not need to be there, but I can foresee what the creation of a new province will bring to these people. It will bring them prosperity; it will bring them more income, and it will encourage even foreign investors. Like the PAP now, they are concentrating in South Cotabato, especially in the City of General Santos and the neighboring municipalities, and they are quite interested and even the AID people are asking me, "What is holding the creation of a new province when practically you need it?" Its not 20 or 30 kilometers from the capital town; its about 140 kilometers. And imagine those people have to travel that far and our road is not like Metropolitan Manila. That is as far as from here to Tarlac. And there are municipalities there that are just one municipality is bigger than the province of La Union. They have the income. Of course, they dont have the population because thats a part of the land of promise and people from Luzon are migrating everyday because they feel that there are more opportunities here. So, by creating the new provinces, not only in my case, in the other cases, it will enhance the development of the Philippines, not because I am interested in my province. Well, as far as I am concerned, you know, I am in the twilight years of my life to serve and I would like to serve my people well. No personal or political interest here. I hope the distinguished Chairman of the Committee will appreciate the House Bill 7166, which the House has already approved because we dont want them to throw the Conference Committee Report after we have worked that the house Bill has been, you know, drawn over board and not even considered by the Senate. And on top of that, we are considering a bill that has not yet been passed. So I hope the Senator will take that into account. Thank you for giving me this time to explain. CHAIRMAN LINA. Thank you very much, Congressman James. We will look into the legislative history of the Senate version on this matter of creation of provinces. I am sure there was an amendment. As I said, Ill look into it. Maybe the House version was incorporated in toto, but maybe during the discussion, their amendments were introduced and, therefore, Senator Pimentel could not hold on to the original version and as a result new criteria were introduced. But because of the manifestation that you just made, we will definitely, when we reach a book, Title IV, on the matter of provinces, we will look at it sympathetically from your end so that the objective that you want [to] achieve can be realized. So we will look at it with sympathy. We will review our position on the matter, how we arrived at the Senate version and we will adopt an open mind definitely when we come into it. CHAIRMAN ALFELOR. Kanino yan? CHAIRMAN LINA. Book III. CHAIRMAN ALFELOR. Title? CHAIRMAN LINA. Title IV. CHAIRMAN ALFELOR. I have been pondering on the case of James, especially on economic stimulation of a certain area. Like our case, because I put myself on our province, our province is quite very big. Its composed of four (4) congressional districts and I feel it should be five now. But during the Batasan time, four of us talked and conversed proposing to divide the province into two. There are areas then, when since time immemorial, very few governors ever tread on those areas. That is, maybe youre acquainted with the Bondoc Peninsula of Quezon, fronting that is Ragay Gulf. From Ragay there is a long stretch of coastal area. From Albay going to Ragay, very few governors ever tread [there] before, even today. That area now is infested with NPA. That is the area of Congressman Andaya. Now, we thought that in order to stimulate growth, maybe provincial aid can be extended to these areas. With a big or a large area of a province, a certain administrator or provincial governor definitely will have no sufficient time. For me, if we really would like to stimulate growth, I believe that an area where there is physical or geographical impossibilities, where administrators can penetrate, I think we have to create certain provisions in the law where maybe we can treat it with special considerations.

Now, we went over the graduate scale of the Philipppine Local Government Data as far as provinces are concerned. It is very surprising that there are provinces here which only composed of six municipalities, eight municipalities, seven municipalities. Like in Cagayan, Tuguegarao, there are six municipalities. Ah, excuse me, Batanes. CHAIRMAN LINA. Will you look at the case of --- how many municipalities are there in Batanes province? CHAIRMAN ALFELOR. Batanes is only six. CHAIRMAN LINA. Six town. Siquijor? CHAIRMAN ALFELOR. Siquijor. It is region? CHAIRMAN LINA. Seven. CHAIRMAN ALFELOR.L Seven. Anim. CHAIRMAN LINA. Six also. CHAIRMAN ALFELOR. Six also. CHAIRMAN LINA. It seems with a minimum number of towns? CHAIRMAN ALFELOR. The population of Siquijor is only 70 thousand, not even one congressional district. But tumaas in 1982. Camiguin, that is Region 9. Wala dito. Nagtataka nga ako ngayon. CHAIRMAN LINA. Camiguin, Camiguin. CHAIRMAN ALFELOR. That is region? Camiguin has five municipalities, with a population of 63 thousand. But we do not hold it against the province because maybe thats one stimulant where growth can grow, can start. The land area for Camiguin is only 229 square kilometers. So if we hard fast on requirements of, we set a minimum for every province, palagay ko we just leave it to legislation, eh. Anyway, the Constitution is very clear that in case we would like to divide, we submit it to a plebiscite. Pabayaan natin ang tao. Kung maglalagay tayo ng set ng minimum, tila yata mahihirapan tayo, eh. Because what is really the thrust of the Local Government Code? Growth. To devolve powers in order for the community to have its own idea how they will stimulate growth in their respective areas. So, in every geographical condition, mayroon sariling id[i]osyncracies eh, we cannot make a generalization. CHAIRMAN LINA. Will the creation of a province, carved out of the existing province because of some geographical id[i]osyncracies, as you called it, stimulate the economic growth in the area or will substantial aid coming from the national government to a particular area, say, to a municipality, achieve the same purpose? CHAIRMAN ALFELOR. Ano tayo dito sa budget. All right, here is a province. Usually, tinitingnan lang yun, provision eh, hindi na yung composition eh. You are entitled to, say, 20% of the area. Theres a province of Camarines Sur which have the same share with that of Camiguin and Siquijor, but Camiguin is composed only of five municipalities; in Siquijor, its composed of six, but the share of Siquijor is the same share with that of the province of Camarines Sur, having a bigger area, very much bigger. That is the budget in process. CHAIRMAN LINA. Well, as I said, we are going to consider this very seriously and even with sympathy because of the explanation given and we will study this very carefully.29 The matters raised during the said Bicameral Conference Committee meeting clearly show the manifest intention of Congress to promote development in the previously underdeveloped and uninhabited land areas by allowing them to directly share in the allocation of funds under the national budget. It should be remembered that, under Sections 284 and 285 of the LGC, the IRA is given back to local governments, and the sharing is based on land area, population, and local revenue.30

Elementary is the principle that, if the literal application of the law results in absurdity, impossibility, or injustice, then courts may resort to extrinsic aids of statutory construction, such as the legislative history of the law, 31 or may consider the implementing rules and regulations and pertinent executive issuances in the nature of executive and/or legislative construction. Pursuant to this principle, Article 9(2) of the LGC-IRR should be deemed incorporated in the basic law, the LGC. It is well to remember that the LGC-IRR was formulated by the Oversight Committee consisting of members of both the Executive and Legislative departments, pursuant to Section 533 32 of the LGC. As Section 533 provides, the Oversight Committee shall formulate and issue the appropriate rules and regulations necessary for the efficient and effective implementation of any and all provisions of this Code, thereby ensuring compliance with the principles of local autonomy as defined under the Constitution. It was also mandated by the Constitution that a local government code shall be enacted by Congress, to wit Section 3. The Congress shall enact a local government code which shall provide for a more responsive and accountable local government structure instituted through a system of decentralization with effective mechanisms of recall, initiative, and referendum, allocate among the different local government units their powers, responsibilities, and resources, and provide for the qualifications, election, appointment and removal, term, salaries, powers and functions and duties of local officials, and all other matters relating to the organization and operation of the local units. (Emphasis supplied.) These State policies are the very reason for the enactment of the LGC, with the view to attain decentralization and countryside development. Congress saw that the old LGC, Batas Pambansa Bilang 337, had to be replaced with a new law, now the LGC of 1991, which is more dynamic and cognizant of the needs of the Philippines as an archipelagic country. This accounts for the exemption from the land area requirement of local government units composed of one or more islands, as expressly stated under Sections 442 and 450 of the LGC, with respect to the creation of municipalities and cities, but inadvertently omitted from Section 461 with respect to the creation of provinces. Hence, the void or missing detail was filled in by the Oversight Committee in the LGC-IRR. With three (3) members each from both the Senate and the House of Representatives, particularly the chairpersons of their respective Committees on Local Government, it cannot be gainsaid that the inclusion by the Oversight Committee of the exemption from the land area requirement with respect to the creation of provinces consisting of one (1) or more islands was intended by Congress, but unfortunately not expressly stated in Section 461 of the LGC, and this intent was echoed through an express provision in the LGC-IRR. To be sure, the Oversight Committee did not just arbitrarily and whimsically insert such an exemption in Article 9(2) of the LGC-IRR. The Oversight Committee evidently conducted due deliberation and consultations with all the concerned sectors of society and considered the operative principles of local autonomy as provided in the LGC when the IRR was formulated. 33 Undoubtedly, this amounts not only to an executive construction, entitled to great weight and respect from this Court,34 but to legislative construction as well, especially with the inclusion of representatives from the four leagues of local government units as members of the Oversight Committee. With the formulation of the LGC-IRR, which amounted to both executive and legislative construction of the LGC, the many details to implement the LGC had already been put in place, which Congress understood to be impractical and not too urgent to immediately translate into direct amendments to the LGC. But Congress, recognizing the capacity and viability of Dinagat to become a full-fledged province, enacted R.A. No. 9355, following the exemption from the land area requirement, which, with respect to the creation of provinces, can only be found as an express provision in the LGC-IRR. In effect, pursuant to its plenary legislative powers, Congress breathed flesh and blood into that exemption in Article 9(2) of the LGC-IRR and transformed it into law when it enacted R.A. No. 9355 creating the Island Province of Dinagat. Further, the bill that eventually became R.A. No. 9355 was filed and favorably voted upon in both Chambers of Congress. Such acts of both Chambers of Congress definitively show the clear legislative intent to incorporate into the LGC that exemption from the land area requirement, with respect to the creation of a province when it consists of one or more islands, as expressly provided only in the LGC-IRR. Thereby, and by necessity, the LGC was amended by way of the enactment of R.A. No. 9355. What is more, the land area, while considered as an indicator of viability of a local government unit, is not conclusive in showing that Dinagat cannot become a province, taking into account its average annual income ofP82,696,433.23 at the time of its creation, as certified by the Bureau of Local Government Finance, which is four times more than the minimum requirement of P20,000,000.00 for the creation of a province. The delivery of basic services to its constituents has been proven possible and sustainable. Rather than looking at the results of the plebiscite and the May 10, 2010 elections as mere fait accompli circumstances which cannot operate in favor of Dinagats existence as a province, they must be seen from the perspective that Dinagat is ready and capable of becoming a province. This Court should not be instrumental in stunting such capacity. As we have held in League of Cities of the Philippines v. Commission on Elections35

Ratio legis est anima. The spirit rather than the letter of the law. A statute must be read according to its spirit or intent, for what is within the spirit is within the statute although it is not within its letter, and that which is within the letter but not within the spirit is not within the statute. Put a bit differently, that which is within the intent of the lawmaker is as much within the statute as if within the letter, and that which is within the letter of the statute is not within the statute unless within the intent of the lawmakers. Withal, courts ought not to interpret and should not accept an interpretation that would defeat the intent of the law and its legislators. So as it is exhorted to pass on a challenge against the validity of an act of Congress, a co-equal branch of government, it behooves the Court to have at once one principle in mind: the presumption of constitutionality of statutes. This presumption finds its roots in the tri-partite system of government and the corollary separation of powers, which enjoins the three great departments of the government to accord a becoming courtesy for each others acts, and not to interfere inordinately with the exercise by one of its official functions. Towards this end, courts ought to reject assaults against the validity of statutes, barring of course their clear unconstitutionality. To doubt is to sustain, the theory in context being that the law is the product of earnest studies by Congress to ensure that no constitutional prescription or concept is infringed. Consequently, before a law duly challenged is nullified, an unequivocal breach of, or a clear conflict with, the Constitution, not merely a doubtful or argumentative one, must be demonstrated in such a manner as to leave no doubt in the mind of the Court. WHEREFORE, the Court resolved to: 1. GRANT the Urgent Motion to Recall Entry of Judgment by movants-intervenors, dated and filed on October 29, 2010; 2. RECONSIDER and SET ASIDE the July 20, 2010 Resolution, and GRANT the Motion for Leave to Intervene and to File and to Admit Intervenors Motion for Reconsideration of the Resolution dated July 20, 2010; 3. GRANT the Intervenors Motion for Reconsideration of the Resolution dated May 12, 2010. The May 12, 2010 Resolution is RECONSIDERED and SET ASIDE. The provision in Article 9(2) of the Rules and Regulations Implementing the Local Government Code of 1991 stating, "The land area requirement shall not apply where the proposed province is composed of one (1) or more islands," is declared VALID. Accordingly, Republic Act No. 9355 (An Act Creating the Province of Dinagat Islands) is declared as VALID and CONSTITUTIONAL, and the proclamation of the Province of Dinagat Islands and the election of the officials thereof are declared VALID; and 4. The petition is DISMISSED. No pronouncement as to costs. ANTONIO EDUARDO B. NACHURA Associate Justice SO ORDERED.

[G.R. No. 160923, January 24, 2011]

SECOND DIVISION

MOISES TINIO, JR. AND FRANCIS TINIO, petitioners, VS. NATIONAL POWER CORPORATION, respondent. [G.R. NO. 161093] NATIONAL POWER CORPORATION, petitioner, VS. MOISES TINIO, JR. AND FRANCIS TINIO, respondent. DECISION
PERALTA, J.:

Before the Court are two consolidated petitions for review on certiorari under Rule 45 of the Rules of Court both seeking the reversal and setting aside of the Decision[1] of the Court of Appeals (CA) in CA-G.R. CV No. 70252, dated November 19, 2003. The assailed CA Decision modified the Resolution[2] dated January 22, 2001, of the Regional Trial Court (RTC) of Urdaneta, Pangasinan, Branch 48 in Civil Case No. U-6938. The pertinent factual and procedural antecedents of the case are as follows: The National Power Corporation (NPC) is a government-owned and controlled corporation created and existing by virtue of Republic Act No. 6395,[3] as amended by Presidential Decree No. 938. The main purpose of the NPC, as stated in its charter, is to undertake the development of hydroelectric generation of power and the production of electricity from nuclear, geothermal and other sources, as well as the transmission of electric power on a nationwide basis. In order to accomplish its objectives, the NPC is granted the power, among others, to exercise the right of eminent domain. For purposes of constructing and maintaining its San Roque Multi-Purpose Project, which is one of the major undertakings of the government for North Luzon, the NPC filed on October 13, 1999 a complaint for eminent domain with the RTC of Urdaneta, Pangasinan against Moises Tinio, Jr. and Francis Tinio (hereafter collectively referred to as the Tinios) for the purpose of expropriating a parcel of land owned by the Tinios. The subject property, consisting of 52,710 square meters, denominated as Lot 14556-A and covered by Transfer Certificate of Title (TCT) No. T-5775, is located atBarangay San Roque, San Manuel, Pangasinan. Prior to filing its complaint, the NPC took possession of the subject land on February 9, 1998 by virtue of a Permit to Enter signed by Moises. During the pre-trial conference, one of the stipulations proposed by the NPC and admitted by the Tinios is the authority of the NPC to expropriate the subject lot. Thus, the parties agreed that the only issue left for determination by the trial court is the just compensation to be paid to the Tinios. Commissioners were then appointed to appraise the value of the subject property and, thereafter, to make a recommendation to the RTC. Subsequently, the commissioners made separate reports and recommendations. On January 22, 2001, the trial court issued a Resolution disposing of the case as follows: WHEREFORE, PREMISES CONSIDERED, the Court hereby orders the National Power Corporation to pay defendants Moises Tinio, Jr. and Francis Tinio the amount of P12,850,400.00, plus legal interest until fully paid as just compensation for Lot No. 14556 under TCT No. T-5775 with a total area of 52,710 sq.m. Costs against the plaintiff. SO ORDERED.[4] NPC filed a Motion for Reconsideration,[5] but the same was denied by the RTC in an Order[6] dated February 20, 2001. Thereafter, the NPC appealed the January 22, 2001 Resolution and February 20, 2001 Order of the RTC with the CA. On November 19, 2003, the CA rendered its presently assailed Decision, with the following dispositive portion:

In view of the Foregoing, the resolution appealed from is MODIFIED, in that the NPC is ordered to pay the defendants as just compensation for the land taken from them, the amount of P2,343,900 with legal interest of 6 percent [per] annum from February 9, 1998 until paid. SO ORDERED.[7] Feeling aggrieved, both the NPC and the Tinios are now before this Court arguing that the CA committed error in its judgment. Praying that the judgment of the RTC be reinstated, the Tinios contend that the CA erred in affirming the findings of the RTC that the NPC took possession of, or entered upon, the subject property on February 9, 1998. They also argue that the CA erred in arriving at a lower amount of just compensation than that arrived at by the RTC on the ground that before the NPC made improvements on the subject property, the same was already classified as industrial or commercial land. The Tinios claim that in 1997, the NPC declared its properties inBarangay San Roque, San Manuel, Pangasinan, as commercial lands with a value of P250.00 per square meter. They aver that the subject lot is within the vicinity of the NPC properties. As such, any increase in the value of the NPC properties should also redound to the benefit of the lands which are located within the same locality. On its part, the NPC's main asseveration is that the CA erred in relying on the present state and character of the subject land as commercial in determining just compensation. It prayed for the reduction of the just compensation awarded by the CA. The issues raised by the parties boil down to the question of whether the CA was correct in its determination of just compensation as based on its findings on the time of taking of the subject property and the nature and character of the subject property at the time of such taking. The Court finds no error in the assailed Decision of the CA. With respect to the time of the taking of the subject property, the findings of fact of the CA and the RTC with respect to this issue shall no longer be disturbed. It is axiomatic that this Court will not review, much less reverse, the factual findings of the CA, especially where, as in this case, such findings coincide with those of the trial court and that these findings are supported by sufficient evidence. Both the RTC and the CA are one in finding that the NPC took possession of the subject lot on February 9, 1998 as evidenced by a Permit to Enter Land/Property[8] signed by Moises on even date. While the Tinios aver that Moises was deceived into signing the said permit, no evidence was presented to prove this allegation. As to the nature and character of the subject lot at the time of its taking, the Court takes exception to the contention of the NPC that the CA determined the value of just compensation on the basis of the subject lot's classification as industrial. A perusal of the disputed decision of the CA would clearly show that the appellate court's determination of just compensation is based on its finding that 12,710 square meters of the subject property was considered residential and that the remaining 40,000 square meter portion thereof was classified as agricultural land at the time of taking of the said lot. This finding is based on a certification dated March 10, 1998 issued by the Municipal Assessor of San Manuel, Pangasinan, attesting to the fact that the disputed property was indeed partly residential and largely agricultural prior to its possession by the NPC. In this respect, the Court agrees with the following findings of the CA: x x x The four government offices which gave their contemporaneous findings at the time were one in saying that of the total area of 5.2 hectares, 4 were for agricultural use. About 1.2 hectares had been traversed by the hydro highway, and an area of this size was specifically determined by the municipal assessor to be residential in character. x x x[9] In fact, an examination of the evidence on record, to wit: a subsequent certification issued by the Municipal Assessor, dated August 11, 1998, and the Tinios' Tax Declaration for 1999, would show that the subject lot was classified as industrial only after six months upon the NPC's entry into and development of the said land. It is settled that the nature and character of the land at the time of its taking is the principal criterion for determining how much just compensation should be given to the landowner.[10]

Hence, the argument of the Tinios that the subject property should benefit from the subsequent classification of its adjoining properties as industrial lands is, likewise, untenable. The Court, in a number of cases, [11] has enunciated the principle that it would be injustice on the part of the expropriator where the owner would be given undue incremental advantages arising from the use to which the government devotes the property expropriated. In the instant case, it cannot be denied that prior to the NPC's introduction of improvements in the area where the subject parcel of land is located, the properties therein, including the disputed lot, remained agricultural and residential. It was only upon entry of the NPC in Barangay San Roque, and after constructing buildings and other facilities and bringing in various equipment for its multi-purpose project, that the lands in the said locality were later classified as commercial or industrial. Stated differently, to allow the Tinios to ask compensation on the basis of the subsequent classification of the contested lot as industrial would be to allow them to recover more than the value of the land at the time when it was taken, which is the true measure of the damages or just compensation. WHEREFORE, the petitions are DENIED. The Decision of the Court of Appeals, dated November 19, 2003, in CA-G.R. CV No. 70252, is AFFIRMED. SO ORDERED. Carpio, (Chairperson), Nachura, Abad, and Mendoza, JJ., concur.

Manila G.R. No. 172224 January 26, 2011

SECOND DIVISION

OFFICE OF THE OMBUDSMAN, Petitioner, vs. COURT OF APPEALS and DINAH C. BARRIGA, Respondents. DECISION CARPIO, J.: The Case Before the Court is a petition for certiorari1 assailing the Resolutions dated 20 February 20062 and 16 June 20053of the Court of Appeals (CA) in CA-G.R. SP No. 00079. The Facts Sometime in 2000, Sonia Q. Pua (Pua), a Municipal Councilor of Carmen, Cebu, filed a complaint 4 with the Office of the Deputy Ombudsman for Visayas. Pua alleged that Virgilio E. Villamor (Villamor), Municipal Mayor; Bebelia C. Bontia (Bontia), Municipal Treasurer; and respondent Dinah C. Barriga (Barriga), Municipal Accountant, all public officials of Carmen, Cebu, entered into several irregular and anomalous transactions in their official capacity. These transactions pertained to the handling of the trust fund of the Municipality of Carmen, Cebu in the Central Visayas Water and Sanitation Project. On 7 March 2001, the Office of the Deputy Ombudsman for Visayas directed the parties to submit their counteraffidavits. In their Joint Counter-Affidavit dated 9 May 2001, Villamor and Barriga denied Puas allegations. In a Decision dated 28 August 2002,5 the Office of the Deputy Ombudsman for Visayas found Barriga guilty of misconduct and imposed on her the penalty of six months suspension from the service. In the same decision, the case against Villamor and Bontia were dismissed for being moot and academic. At the time, Villamor was no longer the incumbent mayor of Carmen, Cebu but the municipalitys elected vice-mayor and Bontia had already been dismissed from government service pursuant to a final decision of the Office of the Ombudsman dated 19 August 1998. 6

Upon review, petitioner Office of the Ombudsman modified the decision and found Barriga guilty of conduct prejudicial to the best interest of the service and imposed on her the penalty of suspension for one year. 7 Barriga filed a motion for reconsideration which petitioner denied in an Order dated 2 April 2003. 8 Later, in an Order dated 13 November 2002,9 petitioner directed the municipal mayor of Carmen, Cebu to implement the decision dated 28 August 2002. Barriga filed a petition for review with the CA, docketed as CA G.R. SP No. 76958. On 7 July 2003, the petition was denied for lack of merit.10 Barriga then elevated the case to the Supreme Court, docketed as G.R. No. 160402. In a Resolution dated 14 January 2004, this Court denied the petition. Barriga filed a motion for reconsideration which this Court denied in a Resolution dated 17 March 2004. Barriga filed a second motion for reconsideration which this Court again denied in a Resolution dated 7 July 2004. After a month, in a letter dated 10 August 2004, petitioner, through the Office of the Deputy Ombudsman for Visayas, again directed the municipal mayor of Carmen, Cebu to implement the Order dated 13 November 2002. In a letter11 dated 16 August 2004 addressed to petitioner, Barriga made a request that the implementation of the penalty of one-year suspension be held in abeyance pending the issuance of the entry of judgment by this Court in G.R. No. 160402. The request was denied by petitioner in a letter dated 3 September 2004. 12 Barriga then challenged the said letters of petitioner with the CA through a petition for review. 13 Meanwhile, the Supreme Court issued the entry of judgment in G.R. No. 160402 on 28 October 2004. In addition, the municipal mayor of Carmen, Cebu implemented Barrigas suspension from service through an Order dated 2 November 2004.14 Thereafter, in a Decision dated 18 March 2005, the CA denied Barrigas appeal. Barriga filed a motion for reconsideration. In a Resolution dated 16 June 2005, the CA modified its earlier decision and declared as null and void the orders of petitioner in the letters dated 10 August 2004 and 3 September 2004. The CA explained that the acts of petitioner went beyond mere recommendation but rather imposed upon the mayor to implement the order of suspension which run counter to its authority. The appellate court said that the immediate implementation of petitioners Order dated 13 November 2002 was premature pending resolution of the appeal. Since Republic Act No. 6770 or the Ombudsman Act of 1989 gives parties the right to appeal then such right also generally carries with it the right to stay these decisions pending appeal. Thus, the CA concluded that the acts of petitioner cannot be permitted nor tolerated. The dispositive portion of the resolution states: WHEREFORE, the decision in the instant case is MODIFIED in that the Orders of the Office of the Ombudsmandated August 10, 2004 and September 3, 2004 in so far as it directed the implementation of the suspension of petitioner is declared null and void having been made beyond its authority and prematurely. Consequently, the letter of the municipal mayor of Carmen, Cebu dated November 2, 2004 implementing said order is also nullified. Petitioners immediate reinstatement is in order.1avvphi1 No pronouncement as to costs. SO ORDERED.15 Pursuant to the CAs Resolution dated 16 June 2005, the municipal mayor of Carmen, Cebu reinstated Barriga as municipal accountant in Memorandum No. 2005-99 dated 21 June 2005.16 Petitioner filed a Motion for Reconsideration and raised the issue of finality of the Ombudsmans Decision dated 28 August 2002. The motion was denied by the CA in a Resolution dated 20 February 2006. Hence, this petition. The Issue The main issue is whether the Court of Appeals gravely abused its discretion in nullifying the orders of the Office of the Ombudsman to the municipal mayor of Carmen, Cebu for the immediate implementation of the penalty of suspension from service of respondent Barriga even though the case was pending on appeal. The Courts Ruling

The petition is meritorious. Petitioner submits that the Office of the Ombudsman is possessed with jurisdiction to entertain an administrative complaint against a public official and if found guilty, has the authority to impose a penalty and implement the decision. Petitioner explains that the implementation of administrative sanctions over erring public officials is not merely advisory in nature but is actually mandatory within the bounds of law. It is absurd for the Ombudsman to only recommend a penalty to a head of office, in this case, a municipal mayor, since political independence is the element that provides integrity to its quasi-judicial findings. Petitioner adds that a municipal mayor has no authority to adopt or reject petitioners decision, as if in review, where no such recourse is provided by law. Also, petitioner insists that the Ombudsmans Decision dated 28 August 2002 already reached finality after this Court in G.R. No. 160402 denied Barrigas second motion for reconsideration in a Resolution dated 7 July 2004. Thus, the implementation of the decision finding Barrigas administrative liability and the imposition of the corresponding disciplinary penalty should follow as a matter of course. Section 7, Rule III of Administrative Order No. 7,17 as amended by Administrative Order No. 17,18 states: Section 7. Finality and execution of decision.- Where the respondent is absolved of the charge, and in case of conviction where the penalty imposed is public censure or reprimand, suspension of not more than one month, or a fine equivalent to one month salary, the decision shall be final, executory and unappealable. In all other cases, the decision may be appealed to the Court of Appeals on a verified petition for review under the requirements and conditions set forth in Rule 43 of the Rules of Court, within fifteen (15) days from receipt of the written Notice of the Decision or Order denying the Motion for Reconsideration. An appeal shall not stop the decision from being executory. In case the penalty is suspension or removal and the respondent wins such appeal, he shall be considered as having been under preventive suspension and shall be paid the salary and such other emoluments that he did not receive by reason of the suspension or removal. A decision of the Office of the Ombudsman in administrative cases shall be executed as a matter of course. The Office of the Ombudsman shall ensure that the decision shall be strictly enforced and properly implemented. The refusal or failure by any officer without just cause to comply with an order of the Office of the Ombudsman to remove, suspend, demote, fine, or censure shall be a ground for disciplinary action against said officer. (Emphasis supplied) It is clear from the provision that when a public official has been found guilty of an administrative charge by the Office of the Ombudsman and the penalty imposed is suspension for more than a month, just like in the present case, an appeal may be made to the CA. However, such appeal shall not stop the decision from being executory and the implementation of the decision follows as a matter of course. Here, petitioners modified Decision dated 28 August 2002 was not only appealed by Barriga to the CA but also reached the Supreme Court. The appeal to the CA was denied in a decision dated 7 July 2003. In this Court, the appeal was denied in a Resolution dated 14 January 2004. The motions for reconsideration were likewise denied in the Resolutions dated 17 March 2004 and 7 July 2004. The decision became final on 28 October 2004. Petitioner ordered the municipal mayor of Carmen, Cebu to implement the decision suspending Barriga from government service two times, one through a letter dated 10 August 2004 and the other in a letter dated 3 September 2004 denying Barrigas request for the suspension of the penalty until the date of finality of the case. However, Barriga, in order to delay the implementation of her suspension from service elevated the case once again to the CA. The CA in rendering a favorable decision in favor of Barriga nullified the Ombudsmans orders from implementing its decision. The CA is incorrect. The provision in the Rules of Procedure of the Office of the Ombudsman is clear that an appeal by a public official from a decision meted out by the Ombudsman shall not stop the decision from being executory. In Office of the Ombudsman v. Court of Appeals and Macabulos,19 we held that decisions of the Ombudsman are immediately executory even pending appeal in the CA. As explained by this Court in the case ofIn the Matter to Declare in Contempt of Court Hon. Simeon A. Datumanong, Secretary of DPWH,20 this provision in the rules of the Ombudsman is similar to that provided under Section 47 of the Uniform Rules on Administrative Cases in the Civil Service.21 Thus, the Ombudsmans order imposing on Barriga the penalty of suspension from office for one year without pay is immediately executory even pending appeal in the Court of Appeals.

WHEREFORE, we GRANT the petition. We SET ASIDE the Resolutions dated 20 February 2006 and 16 June 2005 of the Court of Appeals in CA-G.R. SP No. 00079. We REINSTATE the modified Order dated 28 August 2002 of the Office of the Ombudsman suspending Dinah C. Barriga from government service for one year without pay. Since Dinah C. Barriga already partially served her suspension from government service, the Municipal Mayor of Carmen, Cebu is DIRECTED to implement with dispatch the remaining balance of number of days of suspension from office not yet served by Dinah C. Barriga pursuant to Orders dated 10 August 2004 and 3 September 2004 of the Office of the Ombudsman in OMB-VIS-ADM-2000-0968. SO ORDERED. ANTONIO T. CARPIO Associate Justice

Manila EN BANC G.R. No. 182574 September 28, 2010

THE PROVINCE OF NEGROS OCCIDENTAL, represented by its Governor ISIDRO P. ZAYCO, Petitioner, vs. THE COMMISSIONERS, COMMISSION ON AUDIT; THE DIRECTOR, CLUSTER IV-VISAYAS; THE REGIONAL CLUSTER DIRECTORS; and THE PROVINCIAL AUDITOR, NEGROS OCCIDENTAL, Respondents. DECISION CARPIO, J.: The Case Before the Court is a petition for certiorari1 assailing Decision No. 2006-0442 dated 14 July 2006 and Decision No. 2008-0103 dated 30 January 2008 of the Commission on Audit (COA) disallowing premium payment for the hospitalization and health care insurance benefits of 1,949 officials and employees of the Province of Negros Occidental. The Facts On 21 December 1994, the Sangguniang Panlalawigan of Negros Occidental passed Resolution No. 720A4allocating P4,000,000 of its retained earnings for the hospitalization and health care insurance benefits of 1,949 officials and employees of the province. After a public bidding, the Committee on Awards granted the insurance coverage to Philam Care Health System Incorporated (Philam Care). Petitioner Province of Negros Occidental, represented by its then Governor Rafael L. Coscolluela, and Philam Care entered into a Group Health Care Agreement involving a total payment of P3,760,000 representing the insurance premiums of its officials and employees. The total premium amount was paid on 25 January 1996. On 23 January 1997, after a post-audit investigation, the Provincial Auditor issued Notice of Suspension No. 97-0011015 suspending the premium payment because of lack of approval from the Office of the President (OP) as provided under Administrative Order No. 1036 (AO 103) dated 14 January 1994. The Provincial Auditor explained that the premium payment for health care benefits violated Republic Act No. 6758 (RA 6758), 7 otherwise known as the Salary Standardization Law. Petitioner complied with the directive post-facto and sent a letter-request dated 12 January 1999 to the OP. In a Memorandum dated 26 January 1999,8 then President Joseph E. Estrada directed the COA to lift the suspension but only in the amount of P100,000. The Provincial Auditor ignored the directive of the President and instead issued Notice of Disallowance No. 99-005-101(96)9 dated 10 September 1999 stating similar grounds as mentioned in Notice of Suspension No. 97-001-101. Petitioner appealed the disallowance to the COA. In a Decision dated 14 July 2006, the COA affirmed the Provincial Auditors Notice of Disallowance dated 10 September 1999. 10 The COA ruled that under AO 103, no government entity, including a local government unit, is exempt from securing prior approval from the President granting additional benefits to its personnel. This is in conformity with the policy of standardization of compensation laid down

in RA 6758. The COA added that Section 468(a)(1)(viii) 11 of Republic Act No. 7160 (RA 7160) or the Local Government Code of 1991 relied upon by petitioner does not stand on its own but has to be harmonized with Section 1212 of RA 6758. Further, the COA stated that the insurance benefits from Philam Care, a private insurance company, was a duplication of the benefits provided to employees under the Medicare program which is mandated by law. Being merely a creation of a local legislative body, the provincial health care program should not contravene but instead be consistent with national laws enacted by Congress from where local legislative bodies draw their authority. The COA held the following persons liable: (1) all the 1,949 officials and employees of the province who benefited from the hospitalization and health care insurance benefits with regard to their proportionate shares; (2) former Governor Rafael L. Coscolluela, being the person who signed the contract on behalf of petitioner as well as the person who approved the disbursement voucher; and (3) the Sangguniang Panlalawigan members who passed Resolution No. 720-A. The COA did not hold Philam Care and Provincial Accountant Merly P. Fortu liable for the disallowed disbursement. The COA explained that it was unjust to require Philam Care to refund the amount received for services it had duly rendered since insurance law prohibits the refund of premiums after risks had already attached to the policy contract. As for the Provincial Accountant, the COA declared that the Sangguniang Panlalawigan resolution was sufficient basis for the accountant to sign the disbursement voucher since there were adequate funds available for the purpose. However, being one of the officials who benefited from the subject disallowance, the inclusion of the accountants name in the persons liable was proper with regard to her proportionate share of the premium. The dispositive portion of the COAs 14 July 2006 decision states: WHEREFORE, premises considered, and finding no substantial ground or cogent reason to disturb the subject disallowance, the instant appeal is hereby denied for lack of merit. Accordingly, Notice of Disallowance No. 99-005101(96) dated 10 September 1999 in the total amount of P3,760,000.00 representing the hospitalization and insurance benefits of the officials and employees of the Province of Negros Occidental is hereby AFFIRMED and the refund thereof is hereby ordered. The Cluster Director, Cluster IV-Visayas, COA Regional Office No. VII, Cebu City shall ensure the proper implementation of this decision.13 Petitioner filed a Motion for Reconsideration dated 23 October 2006 which the COA denied in a Resolution dated 30 January 2008. Hence, the instant petition. The Issue The main issue is whether COA committed grave abuse of discretion in affirming the disallowance of P3,760,000 for premium paid for the hospitalization and health care insurance benefits granted by the Province of Negros Occidental to its 1,949 officials and employees. The Courts Ruling Petitioner insists that the payment of the insurance premium for the health benefits of its officers and employees was not unlawful and improper since it was paid from an allocation of its retained earnings pursuant to a valid appropriation ordinance. Petitioner states that such enactment was a clear exercise of its express powers under the principle of local fiscal autonomy which includes the power of Local Government Units (LGUs) to allocate their resources in accordance with their own priorities. Petitioner adds that while it is true that LGUs are only agents of the national government and local autonomy simply means decentralization, it is equally true that an LGU has fiscal control over its own revenues derived solely from its own tax base. Respondents, on the other hand, maintain that although LGUs are afforded local fiscal autonomy, LGUs are still bound by RA 6758 and their actions are subject to the scrutiny of the Department of Budget and Management (DBM) and applicable auditing rules and regulations enforced by the COA. Respondents add that the grant of additional compensation, like the hospitalization and health care insurance benefits in the present case, must have prior Presidential approval to conform with the state policy on salary standardization for government workers. AO 103 took effect on 14 January 1994 or eleven months before the Sangguniang Panlalawigan of the Province of Negros Occidental passed Resolution No. 720-A. The main purpose of AO 103 is to prevent discontentment, dissatisfaction and demoralization among government personnel, national or local, who do not receive, or who receive

less, productivity incentive benefits or other forms of allowances or benefits. This is clear in the Whereas Clauses of AO 103 which state: WHEREAS, the faithful implementation of statutes, including the Administrative Code of 1987 and all laws governing all forms of additional compensation and personnel benefits is a Constitutional prerogative vested in the President of the Philippines under Section 17, Article VII of the 1987 Constitution; WHEREAS, the Constitutional prerogative includes the determination of the rates, the timing and schedule of payment, and final authority to commit limited resources of government for the payment of personal incentives, cash awards, productivity bonus, and other forms of additional compensation and fringe benefits; WHEREAS, the unilateral and uncoordinated grant of productivity incentive benefits in the past gave rise to discontentment, dissatisfaction and demoralization among government personnel who have received less or have not received at all such benefits; NOW, THEREFORE, I, FIDEL V. RAMOS, President of the Republic of the Philippines, by virtue of the powers vested in me by law and in order to forestall further demoralization of government personnel do hereby direct: x x x (Emphasis supplied) Sections 1 and 2 of AO 103 state: SECTION 1. All agencies of the National Government including government-owned and/or -controlled corporations and government financial institutions, and local government units, are hereby authorized to grant productivity incentive benefit in the maximum amount of TWO THOUSAND PESOS (P2,000.00) each to their permanent and full-time temporary and casual employees, including contractual personnel with employment in the nature of a regular employee, who have rendered at least one (1) year of service in the Government as of December 31, 1993. SECTION 2. All heads of government offices/agencies, including government owned and/or controlled corporations, as well as their respective governing boards are hereby enjoined and prohibited from authorizing/granting Productivity Incentive Benefits or any and all forms of allowances/benefits without prior approval and authorization via Administrative Order by the Office of the President. Henceforth, anyone found violating any of the mandates in this Order, including all officials/agency found to have taken part thereof, shall be accordingly and severely dealt with in accordance with the applicable provisions of existing administrative and penal laws. Consequently, all administrative authorizations to grant any form of allowances/benefits and all forms of additional compensation usually paid outside of the prescribed basic salary under R.A. 6758, the Salary Standardization Law, that are inconsistent with the legislated policy on the matter or are not covered by any legislative action are hereby revoked. (Emphasis supplied) It is clear from Section 1 of AO 103 that the President authorized all agencies of the national government as well as LGUs to grant the maximum amount of P2,000 productivity incentive benefit to each employee who has rendered at least one year of service as of 31 December 1993. In Section 2, the President enjoined all heads of government offices and agencies from granting productivity incentive benefits or any and all similar forms of allowances and benefits without the Presidents prior approval. In the present case, petitioner, through an approved Sangguniang Panlalawigan resolution, granted and released the disbursement for the hospitalization and health care insurance benefits of the provinces officials and employees without any prior approval from the President. The COA disallowed the premium payment for such benefits since petitioner disregarded AO 103 and RA 6758. We disagree with the COA. From a close reading of the provisions of AO 103, petitioner did not violate the rule of prior approval from the President since Section 2 states that the prohibition applies only to "government offices/agencies, including government-owned and/or controlled corporations, as well as their respective governing boards." Nowhere is it indicated in Section 2 that the prohibition also applies to LGUs. The requirement then of prior approval from the President under AO 103 is applicable only to departments, bureaus, offices and government-owned and controlled corporations under the Executive branch. In other words, AO 103 must be observed by government offices under the Presidents control as mandated by Section 17, Article VII of the Constitution which states: Section 17. The President shall have control of all executive departments, bureaus and offices. He shall ensure that the laws be faithfully executed. (Emphasis supplied)1awphi1

Being an LGU, petitioner is merely under the Presidents general supervision pursuant to Section 4, Article X of the Constitution: Sec. 4. The President of the Philippines shall exercise general supervision over local governments.Provinces with respect to component cities and municipalities, and cities and municipalities with respect to component barangays shall ensure that the acts of their component units are within the scope of their prescribed powers and functions. (Emphasis supplied) The Presidents power of general supervision means the power of a superior officer to see to it that subordinates perform their functions according to law.14 This is distinguished from the Presidents power of control which is the power 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 President over that of the subordinate officer.15 The power of control gives the President the power to revise or reverse the acts or decisions of a subordinate officer involving the exercise of discretion.16 Since LGUs are subject only to the power of general supervision of the President, the Presidents authority is limited to seeing to it that rules are followed and laws are faithfully executed. The President may only point out that rules have not been followed but the President cannot lay down the rules, neither does he have the discretion to modify or replace the rules. Thus, the grant of additional compensation like hospitalization and health care insurance benefits in the present case does not need the approval of the President to be valid. Also, while it is true that LGUs are still bound by RA 6758, the COA did not clearly establish that the medical care benefits given by the government at the time under Presidential Decree No. 1519 17 were sufficient to cover the needs of government employees especially those employed by LGUs. Petitioner correctly relied on the Civil Service Commissions (CSC) Memorandum Circular No. 33 (CSC MC No. 33), series of 1997, issued on 22 December 1997 which provided the policy framework for working conditions at the workplace. In this circular, the CSC pursuant to CSC Resolution No. 97-4684 dated 18 December 1997 took note of the inadequate policy on basic health and safety conditions of work experienced by government personnel. Thus, under CSC MC No. 33, all government offices including LGUs were directed to provide a health program for government employees which included hospitalization services and annual mental, medical-physical examinations. Later, CSC MC No. 33 was further reiterated in Administrative Order No. 40218 (AO 402) which took effect on 2 June 1998. Sections 1, 2, and 4 of AO 402 state: Section 1. Establishment of the Annual Medical Check-up Program. An annual medical check-up for government of officials and employees is hereby authorized to be established starting this year, in the meantime that this benefit is not yet integrated under the National Health Insurance Program being administered by the Philippine Health Insurance Corporation (PHIC). Section 2. Coverage. x x x Local Government Units are also encouraged to establish a similar program for their personnel. Section 4. Funding. x x x Local Government Units, which may establish a similar medical program for their personnel, shall utilize local funds for the purpose. (Emphasis supplied) The CSC, through CSC MC No. 33, as well as the President, through AO 402, recognized the deficiency of the state of health care and medical services implemented at the time. Republic Act No. 7875 19 or the National Health Insurance Act of 1995 instituting a National Health Insurance Program (NHIP) for all Filipinos was only approved on 14 February 1995 or about two months after petitioners Sangguniang Panlalawigan passed Resolution No. 720-A. Even with the establishment of the NHIP, AO 402 was still issued three years later addressing a primary concern that basic health services under the NHIP either are still inadequate or have not reached geographic areas like that of petitioner. Thus, consistent with the state policy of local autonomy as guaranteed by the 1987 Constitution, under Section 25, Article II20 and Section 2, Article X,21 and the Local Government Code of 1991,22 we declare that the grant and release of the hospitalization and health care insurance benefits given to petitioners officials and employees were validly enacted through an ordinance passed by petitioners Sangguniang Panlalawigan. In sum, since petitioners grant and release of the questioned disbursement without the Presidents approval did not violate the Presidents directive in AO 103, the COA then gravely abused its discretion in applying AO 103 to disallow the premium payment for the hospitalization and health care insurance benefits of petitioners officials and employees.

WHEREFORE, we GRANT the petition. We REVERSE AND SET ASIDE Decision No. 2006-044 dated 14 July 2006 and Decision No. 2008-010 dated 30 January 2008 of the Commission on Audit. SO ORDERED.

Manila THIRD DIVISION G.R. No. 146622 April 24, 2009

LEONORA P. CALANZA, EVA M. AMOREN, GENE P. ROO, SANNY C. CALANZA, GREGORIO C. YNCIERTO IIand ANGEL M. PUYO, Petitioners, vs. PAPER INDUSTRIES CORPORATION OF THE PHILIPPINES (picop), GOOD EARTH MINERAL CORP. (GEMCOR), EVARISTO NARVAEZ, JR., RICARDO G. SANTIAGO, ROBERTO A. DORMENDO and REYDANDE D. AZUCENA, Respondents. DECISION CHICO-NAZARIO, J.: This Petition for Review under Rule 45 of the Rules of Court seeks to reverse and set aside the 19 June 2000 Decision1 of the Court of Appeals in CA-G.R. CV No. 45234 which annulled the Decision of the Regional Trial Court (RTC) of Banganga, Davao Oriental, Branch 7, granting the Complaint for Injunction filed by petitioners. On 23 August 1991, petitioners Leonora P. Calanza, Eva M. Amoren, Gene P. Roo, Sanny C. Calanza, Gregorio C. Yncierto II, and Angel M. Puyo filed with the Mines and Geo-Sciences Development Service, Department of Environment and Natural Resources (DENR), Region XI, of Davao City, applications for small-scale mining permits for the purpose of extracting gold. In their applications, petitioners stated that the area where they will conduct mining operations was in the Municipality of Boston, Davao Oriental.2 On 22 December 1992, the governor of Davao Oriental, Rosalind Y. Lopez, approved the applications and issued six small-scale mining permits in favor of the petitioners.3 Since the mining areas applied for by petitioners were within the respondent Paper Industries Corporation of the Philippines (PICOP) logging concession area under Timber License Agreements (TLAs) that covered large tracts of forest lands of the Provinces of Surigao del Sur, Agusan del Sur, Davao Oriental and Davao del Norte, petitioners negotiated with PICOP for their entry into the mining site at Barangay Catihan, Municipality of Boston, Davao Oriental. PICOP, through its officer Roberto A. Dormendo, refused petitioners entry into the mining area on the grounds that it has the exclusive right of occupation, possession and control over the area being a logging concessionaire thereof; that petitioners mining permits are defective since they were issued by the governor of Davao Oriental when in fact the mining area is situated in Barangay Pagtilaan, Municipality of Lingig, Surigao del Sur; and that mining permits cannot be issued over areas covered by forest rights such as TLAs or forest reservations unless their status as such is withdrawn by competent authority. On 7 May 1993, petitioners filed a Complaint for Injunction with Prayer for the Issuance of a Restraining Order, Damages and Attorneys Fees against PICOP and its officers before the RTC of Banganga, Davao Oriental, praying that PICOP or its agent be enjoined from preventing and prohibiting them from entering into the mining site. PICOP countered that the RTC of Davao Oriental has no jurisdiction over the complaint of petitioners since the disputed area is situated in the Province of Surigao del Sur. PICOP also claimed that the issuance of petitioners permits were void ab initio since the same violated Section 5 of Republic Act No. 7076, otherwise known as the Peoples Small-Scale Mining Act of 1991, which allegedly prohibits the issuance of mining permits over areas covered by forest rights such as TLAs or forest reservations unless their status as such is withdrawn by the competent authority. In the Pre-Trial Order dated 4 October 1993, the following are identified as the issues: 1. Whether the mining areas claimed by petitioners are found within the territories of Davao Oriental or Surigao del Sur. 2. Whether the small-scale mining permits of petitioners are valid.

3. Whether PICOP has the right and authority to deny petitioners access to, possession of and the authority to conduct mining activities within the disputed areas.4 In a decision dated 26 November 1993, the RTC ruled in favor of the petitioners. The RTC opined that Barangay Pagtilaan (as claimed by PICOP) or Catihan (as claimed by petitioners) is within the territory of the Province of Davao Oriental. Citing Section 465, paragraph (b), Sub-paragraph (3)iv of Republic Act No. 7160 or the Local Government Code of 1991 which states to the effect that the governor has the power to issue licenses and permits, the RTC ruled that the governor is vested with the power to issue the small-scale mining permits to the petitioners. The decretal portion of the RTC decision provides: IN VIEW OF ALL THE FOREGOING, judgment is hereby rendered: 1. Declaring that all the [petitioners] have the rights under the laws to extract and remove gold ore from their permit area as particularly described by its technical descriptions found in their respective permits subject to the terms and conditions stipulated therein; 2. Finding that [respondents] have no rights to deny [petitioners] entry into the mining permit areas and hereby enjoining [respondents], their agents, representatives, their attorneys, the SCAA or any persons acting in their behalf to allow petitioners/permittees, their agents, representatives and vehicles to enter, travel into the mining site areas of plaintiffs without any restrictions, preventions and/or harassment of the purpose of conducting mining activities thereat; 3. Further restraining and enjoining the respondents, their attorneys, agents and/or representatives, the SCAA or its officers and such other persons acting for and in their behalf from preventing, prohibiting or harassing the [petitioners], their agents or authorized representatives, their vehicles, tools and other mining paraphernalias from entering, traveling into the mining site using and passing through the most accessible concession roads of [respondents], such as but not limited to Road 5M and spurs within PICOPs TLA 43 areas. There being no evidentiary proof of actual and compensatory damages, and in the absence of fraud or evident bad faith on the part of defendants, especially PICOP, which apparently is exercising its right to litigate, this Court makes no finding as to actual, compensatory and moral damages nor attorneys fees.5 Respondent PICOP appealed the RTC decision. In a Decision dated 19 June 2000, the Court of Appeals reversed the RTC Decision and dismissed the complaint of respondents. In setting aside the RTC Decision, the Court of Appeals stated that the RTC erred in passing upon the issue of the boundary dispute between the provinces of Davao Oriental and Surigao del Sur since the resolution of the boundary dispute primarily resides with the sangguniang panlalawigans of the two provinces and the RTC has only appellate jurisdiction over the case, pursuant to the Local Government Code of 1991. The Court of Appeals also said that the governor has no power to issue small-scale mining permits since such authority under Section 9 of Republic Act No. 7076 is vested with the Provincial Mining Regulatory Board. The disposition of the Court of Appeals reads: WHEREFORE, premises considered, the appealed decision in Civil Case No. 489 is hereby REVERSED and SET ASIDE and a new one is hereby rendered dismissing the complaint filed by [petitioners].6 Petitioners filed a motion for reconsideration, which was denied by the Court of Appeals in its Order dated 10 November 2000. Hence, the instant petition. The petition is not meritorious. There is boundary dispute when a portion or the whole of the territorial area of a Local Government Unit (LGU) is claimed by two or more LGUs.7 In settling boundary disputes, Section 118 of the 1991 Local Government Code provides: Sec. 118. Jurisdictional Responsibility for Settlement of Boundary Dispute. Boundary disputes between and among local government units shall, as much as possible, be settled amicably. To this end:

(a) Boundary disputes involving two (2) or more barangays in the same city or municipality shall be referred for settlement to the sangguniang panlungsod or sangguniang bayan concerned. (b) Boundary disputes involving two (2) or more municipalities within the same province shall be referred for settlement to the sangguniang panlalawigan concerned. (c) Boundary disputes involving municipalities or component cities of different provinces shall be jointly referred for settlement to the sanggunians of the provinces concerned. (d) Boundary disputes involving a component city or municipality on the one hand and a highly urbanized city on the other, or two (2) or more highly urbanized cities, shall be jointly referred for settlement to the respective sanggunians of the parties. (e) In the event the sanggunian fails to effect an amicable settlement within sixty (60) days from the date the dispute was referred thereto, it shall issue a certification to that effect. Thereafter, the dispute shall be formally tried by the sanggunian concerned which shall decide the issue within sixty (60) days from the date of the certification referred to above.1avvphi1 Under paragraph (c) of Section 118, the settlement of a boundary dispute involving municipalities or component cities of different provinces shall be jointly referred for settlement to the respective sanggunians or the provincial boards of the different provinces involved. Section 119 of the Local Government Code gives a dissatisfied party an avenue to question the decision of the sanggunian to the RTC having jurisdiction over the area, viz: Section 119. Appeal. - Within the time and manner prescribed by the Rules of Court, any party may elevate the decision of the sanggunian concerned to the proper Regional Trial Court having jurisdiction over the area in dispute x x x. Article 17, Rule III of the Rules and Regulations Implementing The Local Government Code of 1991 outlines the procedures governing boundary disputes, which succinctly includes the filing of the proper petition, and in case of failure to amicably settle, a formal trial will be conducted and a decision will be rendered thereafter. An aggrieved party can appeal the decision of the sanggunian to the appropriate RTC. Said rules and regulations state: Article 17. Procedures for Settling Boundary Disputes. The following procedures shall govern the settlement of boundary disputes: (a) Filing of petition - The sanggunian concerned may initiate action by filing a petition, in the form of a resolution, with the sanggunian having jurisdiction over the dispute. (b) Contents of petition - The petition shall state the grounds, reasons or justifications therefore. (c) Documents attached to petition - The petition shall be accompanied by: 1. Duly authenticated copy of the law or statute creating the LGU or any other document showing proof of creation of the LGU; 2. Provincial, city, municipal, or barangay map, as the case may be, duly certified by the LMB. 3. Technical description of the boundaries of the LGUs concerned; 4. Written certification of the provincial, city, or municipal assessor, as the case may be, as to territorial jurisdiction over the disputed area according to records in custody; 5. Written declarations or sworn statements of the people residing in the disputed area; and 6. Such other documents or information as may be required by the sanggunian hearing the dispute. (d) Answer of adverse party - Upon receipt by the sanggunian concerned of the petition together with the required documents, the LGU or LGUs complained against shall be furnished copies thereof and shall be given fifteen (15) working days within which to file their answers.

(e) Hearing - Within five (5) working days after receipt of the answer of the adverse party, the sanggunianshall hear the case and allow the parties concerned to present their respective evidences. (f) Joint hearing - When two or more sanggunians jointly hear a case, they may sit en banc or designate their respective representatives. Where representatives are designated, there shall be an equal number of representatives from each sanggunian. They shall elect from among themselves a presiding officer and a secretary. In case of disagreement, selection shall be by drawing lot. (g) Failure to settle - In the event the sanggunian fails to amicably settle the dispute within sixty (60) days from the date such dispute was referred thereto, it shall issue a certification to the effect and copies thereof shall be furnished the parties concerned. (h) Decision - Within sixty (60) days from the date the certification was issued, the dispute shall be formally tried and decided by the sanggunian concerned. Copies of the decision shall, within fifteen (15) days from the promulgation thereof, be furnished the parties concerned, DILG, local assessor, COMELEC, NSO, and other NGAs concerned. (i) Appeal - Within the time and manner prescribed by the Rules of Court, any party may elevate the decision of the sanggunian concerned to the proper Regional Trial Court having jurisdiction over the dispute by filing therewith the appropriate pleading, stating among others, the nature of the dispute, the decision of the sanggunian concerned and the reasons for appealing therefrom. The Regional Trial Court shall decide the case within one (1) year from the filing thereof. Decisions on boundary disputes promulgated jointly by two (2) or more sangguniang panlalawigans shall be heard by the Regional Trial Court of the province which first took cognizance of the dispute. The records of the case reveal that the instant case was initiated by petitioners against respondents predicated on the latters refusal to allow the former entry into the disputed mining areas. This is not a case where the sangguniang panlalawigans of Davao Oriental and Surigao del Sur jointly rendered a decision resolving the boundary dispute of the two provinces and the same decision was elevated to the RTC. Clearly, the RTC cannot exercise appellate jurisdiction over the case since there was no petition that was filed and decided by the sangguniang panlalawigans of Davao Oriental and Surigao del Sur. Neither can the RTC assume original jurisdiction over the boundary dispute since the Local Government Code allocates such power to the sangguniang panlalawigans of Davao Oriental and Surigao del Sur. Since the RTC has no original jurisdiction on the boundary dispute between Davao Oriental and Surigao del Sur, its decision is a total nullity. We have repeatedly ruled that a judgment rendered by a court without jurisdiction is null and void and may be attacked anytime.8 It creates no rights and produces no effect. In fact it remains a basic fact in law that the choice of the proper forum is crucial as the decision of a court or tribunal without jurisdiction is a total nullity. A void judgment for want of jurisdiction is no judgment at all. It cannot be the source of any right nor the creator of any obligation. All acts performed pursuant to it and all claims emanating from it have no legal effect. 9 Moreover, petitioners small-scale mining permits are legally questionable. Under Presidential Decree No. 1899, applications of small-scale miners are processed with the Director of the Mines and Geo-Sciences Bureau. Pursuant to Republic Act No. 7076, which took effect10 on 18 July 1991, approval of the applications for mining permits and for mining contracts are vested in the Provincial/City Mining Regulatory Board. Composed of the DENR representative, a representative from the small-scale mining sector, a representative from the big-scale mining industry and a representative from an environmental group, this body is tasked to approve small-scale mining permits and contracts. In the case under consideration, petitioners filed their small-scale mining permits on 23 August 1991, making them bound by the procedures provided for under the applicable and prevailing statute, Republic Act No. 7076. Instead of processing and obtaining their permits from the Provincial Mining Regulatory Board, petitioners were able to get the same from the governor of Davao del Norte. Considering that the governor is without legal authority to issue said mining permits, the same permits are null and void. Based on the discussions above, the Court of Appeals is correct in finding that petitioners have no right to enter into and to conduct mining operations within the disputed lands under the infirmed small-scale mining permits. In fine, this Court defers to the findings of the Court of Appeals, there being no cogent reason to veer away from such findings. WHEREFORE, the petition is DENIED. The Decision of the Court of Appeals dated 19 June 2000 and its Resolution dated 10 November 2000 reversing the 26 November 1993 Decision of the Regional Trial Court of Banganga, Davao Oriental, Branch 7, are hereby AFFIRMED. No costs. SO ORDERED.

Manila SECOND DIVISION G.R. No. 169726 March 18, 2010 represented by Sec. EMILIA T. BONCODIN, Petitioner,

DEPARTMENT OF BUDGET AND MANAGEMENT, vs. OLIVIA D. LEONES, Respondent. DECISION CARPIO, J.: The Case

This resolves the petition for review1 of the Decision2 of the Court of Appeals finding respondent Olivia D. Leones entitled to representation and transportation allowance. The Facts Before 1996, respondent Olivia D. Leones (respondent) was the Municipal Treasurer of Bacnotan, La Union. In December 1996, respondent was reassigned to the Office of the Provincial Treasurer, La Union, pending resolution of administrative cases filed against her.3 As Municipal Treasurer, respondent received, on top of her salary, representation and transportation allowance (RATA). The Municipality of Bacnotan stopped paying RATA to respondent upon her reassignment to the Provincial Government. After unsuccessfully obtaining administrative relief,4 respondent filed a mandamus suit with the Regional Trial Court of San Fernando City, La Union (trial court) against petitioner Department of Budget and Management (DBM) and then mayor of Bacnotan, Ma. Minda Fontanilla (Fontanilla), to compel payment of RATA. The trial court dismissed the petition for non-exhaustion of administrative remedies. On appeal by respondent,5 the Court of Appeals affirmed the dismissal. As respondent no longer pursued the case, the trial courts ruling became final on 30 June 2003. However, respondent again sought an opinion, this time from the DBM Secretary, on her entitlement to RATA. In its reply dated 3 September 2003 (Opinion), the DBM found respondent entitled to RATA only for 1999 under the General Appropriation Act (GAA) for that year which, unlike previous and succeeding years, did not require "actual performance of x x x functions" as condition for receipt of RATA. Assailing the Opinion, respondent filed a petition for certiorari with the Court of Appeals. Respondent contended that her non-receipt of RATA violates the rule on non-dimunition of salary in reassignments. The Ruling of the Court of Appeals In its Decision dated 24 May 2005, the Court of Appeals granted respondents petition and ordered the DBM and Fontanilla to pay respondent RATA for the duration of her reassignment. Sustaining respondents theory, the Court of Appeals characterized RATA as part of salary, thus subject to the rule on non-dimunition of salary in reassignments.6 The Court of Appeals found erroneous the DBMs reliance on the GAAs requiring actual performance of functions as precondition for payment of RATA because respondents salary was charged against the local budget of Bacnotan and not against the national budget.7 The DBMs motion for reconsideration equally proved unsuccessful.8 Hence, this petition. The DBM argues that RATA is not part of salary and does not attach to the position but is paid based on the actual performance of functions. Hence, respondent, not having been in the actual performance of her functions as treasurer of Bacnotan during her reassignment to the La Union treasurers office, is not entitled to receive RATA except for 1999 because the GAA for that year did not require actual performance of functions as condition for payment of RATA. The Issue The question is whether, after her reassignment to the La Union treasurers office, respondent, the treasurer of Bacnotan, was entitled to receive RATA.

The Ruling of the Court We hold that respondent was entitled to receive RATA after her reassignment, not because the allowance forms part of her salary, but because the discontinuance of payment lacks legal basis. RATA Distinct from Salary The DBM correctly characterizes RATA as allowance distinct from salary. Statutory law, 9 as implemented by administrative issuances10 and interpreted in decisions,11 has consistently treated RATA as distinct from salary. Unlike salary which is paid for services rendered, RATA belongs to a basket of allowances 12 to defray expenses deemed unavoidable in the discharge of office.13 Hence, RATA is paid only to certain officials who, by the nature of their offices, incur representation and transportation expenses. However, the foregoing does not inexorably lead to the conclusion that under all circumstances and despite lack of legal basis, RATA is paid only if the RATA-entitled officer actually discharges his office. First, it became necessary to distinguish allowances (such as RATA) from salary mainly because under Section 12 of the Compensation and Position Classification Act of 1989 (RA 6758)14 (applicable to all public sector employees), all forms of "financial assistance" and "allowances"15 were integrated to the standardized salaries except for certain allowances specified by RA 6758 (such as RATA) and as determined by regulation.16 Second, non-performance of duties may result from compliance with orders devoid of the employees volition such as suspension, termination resulting in reinstatement, or, as here, reassignment. At any rate, the denial of RATA must be grounded on relevant and specific provision of law. No Law Justifies Denial of RATA for Reassigned Local Government Officials The DBM concedes that as Municipal Treasurer, respondent was entitled to receive (and did receive) RATA because such position is equivalent to a head of a municipal government department. 17 However, the DBM contends that respondents reassignment to La Union treasurers office cut off this entitlement. As bases for this claim, the DBM invokes the GAAs from 1996 to 2005 (except in 199918) uniformly providing (in different sections19) thus: [T]he following officials and those of equivalent rank as may be determined by the Department of Budget and Management while in the actual performance of their respective functions are hereby granted monthly commutable representation and transportation allowances payable from the programmed appropriations provided for their respective offices not exceeding the rates indicated below x x x. (Emphasis supplied) As secondary basis, the DBM calls the Courts attention to Section 3.3.1 of the National Compensation Circular No. 67 (Section 3.3.1), dated 1 January 1992, which provides: 3.3. The officials and employees referred to in Sections 2.1, 2.2 and 2.3 hereof shall no longer be authorized to continue to collect RATA in the following instances: 3.3.1 When on full-time detail with another organizational unit of the same agency, another agency, or special project for one (1) full calendar month or more, except when the duties and responsibilities they perform are comparable with those of their regular positions, in which case, they may be authorized to continue to collect RATA on a reimbursable basis, subject to the availability of funds[.] (Emphasis supplied) and contends that respondent falls under the general rule thus justifying the cessation of her RATA payment. None of these rules supports the DBMs case. On the relevance of the GAAs, the Court of Appeals correctly pointed out that they find no application to a local government official like respondent whose compensation and allowances are funded by local appropriation laws passed by the Sangguniang Bayan of Bacnotan. It is the municipal ordinances of Bacnotan, providing for the annual budget for its operation, which govern respondents receipt of RATA. Although the records do not contain copies of the relevant Bacnotan budget ordinances, we find significant Fontanillas referral to the DBM of respondents April 2002 letter requesting RATA payment.20 Evidently, Bacnotans annual budgetary appropriations for 1996 to 2005 contained no provision similar to the provisions in the GAAs the DBM now cites; otherwise, Fontanilla would have readily invoked them to deny respondents request. The DBM tries to go around this insuperable obstacle by distinguishing payment from the conditions for the payment and theorizes that although respondents salary and allowances were charged against Bacnotans annual budget, they

were subject to the condition contained in the GAAs for 1996-2005 linking the payment of RATA to the actual performance of duties.21 The Court cannot subscribe to this theory without ignoring the wall dividing the vertical structure of government in this country and a foundational doctrine animating local governance. Although the Philippines is a unitary State, the present Constitution (as in the past) accommodates within the system the operation of local government units with enhanced administrative autonomy and autonomous regions with limited political autonomy.22 Subject to the Presidents power of general supervision23 and exercising delegated powers, these units and regions operate much like the national government, with their own executive and legislative branches, financed by locally generated and nationally allocated funds disbursed through budgetary ordinances passed by their local legislative councils. The DBMs submission tinkers with this design by making provisions in national budgetary laws automatically incorporated in local budgetary ordinances, thus reducing local legislative councils from the provinces down to the barangays and the legislative assembly of the Autonomous Region in Muslim Mindanao, to mere extensions of Congress. Although novel, the theory is anathema to the present vertical structure of Philippine government and to any notion of local autonomy which the Constitution mandates. Nor can the DBM anchor its case on Section 3.3.1. The National Compensation Circular No. 67, which the DBM issued, is entitled "Representation and Transportation Allowances of National Government Officials and Employees," thus excluding local government officials like respondent from its ambit. At any rate, respondent falls under the exception clause in Section 3.3.1, having been reassigned to another unit of the same agency with duties and responsibilities "comparable" to her previous position. Respondent was reassigned to La Union treasurers office within the same "agency," 24 namely, the Department of Finance, because local treasuries remain under the control of the Secretary of Finance 25 (unlike some offices which were devolved to the local governments26). Paragraphs (d) and (e) of Section 470 of Republic Act No. 7160 (RA 7160), the Local Government Code of 1991, provide the functions of "The treasurer": (d) The treasurer shall take charge of the treasury office, perform the duties provided for under Book II of this Code, and shall: (1) Advise the governor or mayor, as the case may be, the sanggunian, and other local government and national officials concerned regarding disposition of local government funds, and on such other matters relative to public finance; (2) Take custody of and exercise proper management of the funds of the local government unit concerned; (3) Take charge of the disbursement of all local government funds and such other funds the custody of which may be entrusted to him by law or other competent authority; (4) Inspect private commercial and industrial establishments within the jurisdiction of the local government unit concerned in relation to the implementation of tax ordinances, pursuant to the provisions under Book II of this Code; (5) Maintain and update the tax information system of the local government unit; (6) In the case of the provincial treasurer, exercise technical supervision over all treasury offices of component cities and municipalities; and (e) Exercise such other powers and perform such other duties and functions as may be prescribed by law or ordinance. (Emphasis supplied) Thus, irrespective of the level of the local government unit involved, no distinction exists in the functions of local treasurers except in the technical supervision by the provincial treasurer over subordinate treasury offices. Logically, the employees in all local treasuries perform comparable functions within the framework of Section 70 (d) and (e). Hence, the DBMs casual claim that "the facts at hand do not reflect that the functions performed by respondent during the period of her reassignment were comparable to those she performed prior to her reassignment" 27 finds no basis in fact or in law. In terms of performing comparative functions, the reassignment here is no different from that of a RATA-entitled officer of the Department of Science and Technology who, as Chief of the Finance and Management Division, was reassigned to the Directors Office, Finance and Management Service Office. We considered the officer entitled to RATA despite the reassignment for lack of basis for the non-payment.28 Indeed, for an employee not to fall under the exception in Section 3.3.1, the functions attached to the new office must be so alien to the functions pertaining to the former office as to make the two absolutely unrelated or non-comparable.1avvphi1 Before disposing of this matter, we highlight the element of inequity undergirding the DBMs case. By insisting that, as requisite for her receipt of RATA, respondent must discharge her office as Bacnotans treasurer while on reassignment

at the La Union treasurers office, the DBM effectively punishes respondent for acceding to her reassignment. Surely, the law could not have intended to place local government officials like respondent in the difficult position of having to choose between disobeying a reassignment order or keeping an allowance. As we observed in a parallel case: [O]n petitioners contention that RATA should be allowed only if private respondent is performing the duties of her former office, the CSC correctly explained that private respondent was reassigned to another office and thus her inability to perform the functions of her position as Division Chief is beyond her control and not of her own volition.[] x x x29 The DBM itself acknowledged the harshness of its position by carving in Section 3.3.1 an exception for national government officials performing comparable duties while on reassignment, cushioning the deleterious financial effects reassignments bring to the employee with due regard to the state of the governments coffers. WHEREFORE, we DENY the petition. We AFFIRM the Decision dated 24 May 2005 and the Resolution dated 15 September 2005 of the Court of Appeals. SO ORDERED.

Manila

EN BANC January 30, 2009

G.R. No. 182088

ROBERTO L. DIZON, Petitioner, vs COMMISSION ON ELECTIONS and MARINO P. MORALES, Respondents.


DECISION CARPIO, J.: The Case This is a petition for certiorari and prohibition, with prayer for the issuance of a temporary restraining order and writ of preliminary injunction under Rule 65 of the 1997 Rules of Civil Procedure. The present petition seeks the reversal of the Resolution dated 27 July 2007 of the Commission on Elections (COMELEC) Second Division which dismissed the petition to disqualify and/or to cancel Marino P. Morales (Morales) certificate of candidacy, as well as the Resolution dated 14 February 2008 of the COMELEC En Banc which denied Roberto L. Dizons (Dizon) motion for reconsideration. The Facts The COMELEC Second Division stated the facts as follows: Roberto L. Dizon, hereinafter referred to as petitioner, is a resident and taxpayer of the Municipality of Mabalacat, Pampanga. Marino P. Morales, hereinafter referred to as respondent, is the incumbent Mayor of the Municipality of Mabalacat, Pampanga. Petitioner alleges respondent was proclaimed as the municipal mayor of Mabalacat, Pampanga during the 1995, 1998, 2001 and 2004 elections and has fully served the same. Respondent filed his Certificate of Candidacy on March 28, 2007 again for the same position and same municipality. Petitioner argues that respondent is no longer eligible and qualified to run for the same position for the May 14, 2007 elections under Section 43 of the Local Government Code of 1991. Under the said provision, no local elective official is allowed to serve for more than three (3) consecutive terms for the same position. Respondent, on the other hand, asserts that he is still eligible and qualified to run as Mayor of the Municipality of Mabalacat, Pampanga because he was not elected for the said position in the 1998 elections. He avers that the Commission en banc in SPA Case No. A-04-058, entitled Atty. Venancio Q. Rivera III and Normandick P. De Guzman vs. Mayor Marino P. Morales, affirmed the decision of the Regional Trial Court of Angeles City declaring Anthony D. Dee as the duly elected Mayor of Mabalacat, Pampanga in the 1998 elections.

Respondent alleges that his term should be reckoned from 2001 or when he was proclaimed as Mayor of Mabalacat, Pampanga. Respondent further asserts that his election in 2004 is only for his second term. Hence, the three term rule provided under the Local Government Code is not applicable to him. Respondent further argues that the grounds stated in the instant petition are not covered under Section 78 of the Omnibus Election Code. Respondent further contend [sic] that even if it is covered under the aforementioned provision, the instant petition failed to allege any material misrepresentation in the respondents Certificate of Candidacy.1 The Ruling of the COMELEC Second Division In its Resolution dated 27 July 2007, the COMELEC Second Division took judicial notice of this Courts ruling in the consolidated cases of Atty. Venancio Q. Rivera III v. COMELEC and Marino "Boking" Morales in G.R. No. 167591 and Anthony Dee v. COMELEC and Marino "Boking" Morales in G.R. No. 170577 (Rivera case) promulgated on 9 May 2007. The pertinent portions of the COMELEC Second Divisions ruling read as follows: Respondent was elected as mayor of Mabalacat from July 1, 1995 to June 30, 1998. There was no interruption of his second term from 1998 to 2001. He was able to exercise the powers and enjoy the position of a mayor as "caretaker of the office" or a "de facto officer" until June 30, 2001 notwithstanding the Decision of the RTC in an electoral protest case. He was again elected as mayor from July 1, 2001 to June 30, 2003 [sic]. It is worthy to emphasize that the Supreme Court ruled that respondent has violated the three-term limit under Section 43 of the Local Government Code. Respondent was considered not a candidate in the 2004 Synchronized National and Local Elections. Hence, his failure to qualify for the 2004 elections is a gap and allows him to run again for the same position in the May 14, 2007 National and Local Elections. WHEREFORE, premises considered, the Commission RESOLVED, as it hereby RESOLVES to DENY the instant Petition to Cancel the Certificate of Candidacy and/or Petition for the Disqualification of Marino P. Morales for lack of merit. 2 Dizon filed a motion for reconsideration before the COMELEC En Banc. The Ruling of the COMELEC En Banc The COMELEC En Banc affirmed the resolution of the COMELEC Second Division. The pertinent portions of the COMELEC En Bancs Resolution read as follows: Respondents certificate of candidacy for the May 2004 Synchronized National and Local Elections was cancelled pursuant to the above-mentioned Supreme Court decision which was promulgated on May 9, 2007. As a result, respondent was not only disqualified but was also not considered a candidate in the May 2004 elections. Another factor which is worth mentioning is the fact that respondent has relinquished the disputed position on May 16, 2007. The vice-mayor elect then took his oath and has assumed office as mayor of Mabalacat on May 17, 2007 until the term ended on June 30, 2007. For failure to serve for the full term, such involuntary interruption in his term of office should be considered a gap which renders the three-term limit inapplicable. The three-term limit does not apply whenever there is an involuntary break. The Constitution does not require that the interruption or hiatus to be a full term of three years. What the law requires is for an interruption, break or a rest period from a candidates term of office "for any length of time." The Supreme Court in the case of Latasa v. Comelec ruled: Indeed, the law contemplates a rest period during which the local elective official steps down from office and ceases to exercise power or authority over the inhabitants of the territorial jurisdiction of a particular local government unit. In sum, the three-term limit is not applicable in the instant case for lack of the two conditions: 1) respondent was not the duly-elected mayor of Mabalacat for the July 1, 2004 to June 30, 2007 term primordially because he was not even considered a candidate thereat; and 2) respondent has failed to serve the entire duration of the term of office because he has already relinquished the disputed office on May 16, 2007 which is more than a month prior to the end of his supposed term. xxx

WHEREFORE, premises considered, the Commission RESOLVED, as it hereby RESOLVES, to DENY the instant Motion for Reconsideration for LACK OF MERIT. The Resolution of the Commission Second Division is hereby AFFIRMED. SO ORDERED.3 The Issues Dizon submits that the factual findings made in the Rivera case should still be applied in the present case because Morales had, except for one month and 14 days, served the full term of 2004-2007. Morales assumption of the mayoralty position on 1 July 2007 makes the 2007-2010 term Morales fifth term in office. Dizon raises the following grounds before this Court: 1. THE COMELEC GRAVELY ABUSED ITS DISCRETION AMOUNTING TO LACK OR EXCESS OF ITS JURISDICTION WHEN IT RULED THAT RESPONDENT MORALES DID NOT VIOLATE THE THREE-YEAR TERM LIMIT WHEN HE RAN AND WON AS MAYOR OF MABALACAT, PAMPANGA DURING THE MAY 14, 2007 ELECTION. 2. THE COMELEC GRAVELY ABUSED ITS DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION WHEN IT RULED THAT DUE TO THIS HONORABLE COURTS RULING IN THE AFORESAID CONSOLIDATED CASES, RESPONDENT MORALES FOURTH TERM IS CONSIDERED A GAP IN THE LATTERS SERVICE WHEN HE FILED HIS CERTIFICATE OF CANDIDACY FOR THE 2007 ELECTIONS. 3. THE COMELEC GRAVELY ABUSED ITS DISCRETION WHEN IT RULED THAT THE FOURTH TERM OF MORALES WAS INTERRUPTED WHEN HE "RELINQUISHED" HIS POSITION FOR ONE MONTH AND 14 DAYS PRIOR TO THE MAY 14, 2007 ELECTION.4 The Ruling of the Court The petition has no merit. The present case covers a situation wherein we have previously ruled that Morales had been elected to the same office and had served three consecutive terms, and wherein we disqualified and removed Morales during his fourth term. Dizon claims that Morales is currently serving his fifth term as mayor. Is the 2007-2010 term really Morales fifth term? The Effect of our Ruling in the Rivera Case In our decision promulgated on 9 May 2007, this Court unseated Morales during his fourth term. We cancelled his Certificate of Candidacy dated 30 December 2003. This cancellation disqualified Morales from being a candidate in the May 2004 elections. The votes cast for Morales were considered stray votes. The dispositive portion in theRivera case reads: WHEREFORE, the petition in G.R. No. 167591 is GRANTED. Respondent Morales Certificate of Candidacy dated December 30, 2003 is cancelled. In view of the vacancy in the Office of the Mayor of Mabalacat, Pampanga, the vicemayor elect of the said municipality in the May 10, 2004 Synchronized National and Local Elections is hereby declared mayor and shall serve as such for the remaining duration of the term July 1, 2004 to June 30, 2007. The petition in G.R. No. 170577 is DISMISSED for being moot. This Decision is immediately executory. SO ORDERED.5 Article X, Section 8 of the 1987 Constitution reads: 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. Voluntary renunciation of the office for any length of time shall not be considered as an interruption in the continuity of his service for the full term for which he was elected. Section 43(b) of the Local Government Code restated Article X, Section 8 of the 1987 Constitution as follows:

No local elective official shall serve for more than three (3) consecutive terms in the same position. Voluntary renunciation of the office for any length of time shall not be considered as an interruption in the continuity of service for the full term for which the elective official concerned was elected. For purposes of determining the resulting disqualification brought about by the three-term limit, it is not enough that an individual has served three consecutive terms in an elective local office, he must also have been elected to the same position for the same number of times.6 There should be a concurrence of two conditions for the application of the disqualification: (1) that the official concerned has been elected for three consecutive terms in the same local government post and (2) that he has fully served three consecutive terms.7lavvphil.net In the Rivera case, we found that Morales was elected as mayor of Mabalacat for four consecutive terms: 1 July 1995 to 30 June 1998, 1 July 1998 to 30 June 2001, 1 July 2001 to 30 June 2004, and 1 July 2004 to 30 June 2007. We disqualified Morales from his candidacy in the May 2004 elections because of the three-term limit. Although the trial court previously ruled that Morales proclamation for the 1998-2001 term was void, there was no interruption of the continuity of Morales service with respect to the 1998-2001 term because the trial courts ruling was promulgated only on 4 July 2001, or after the expiry of the 1998-2001 term. Our ruling in the Rivera case served as Morales involuntary severance from office with respect to the 2004-2007 term. Involuntary severance from office for any length of time short of the full term provided by law amounts to an interruption of continuity of service.8 Our decision in the Rivera case was promulgated on 9 May 2007 and was effective immediately. The next day, Morales notified the vice mayors office of our decision. The vice mayor assumed the office of the mayor from 17 May 2007 up to 30 June 2007. The assumption by the vice mayor of the office of the mayor, no matter how short it may seem to Dizon, interrupted Morales continuity of service. Thus, Morales did not hold office for the full term of 1 July 2004 to 30 June 2007. 2007-2010: Morales Fifth Term? Dizon claims that the 2007-2010 term is Morales fifth term in office. Dizon asserts that even after receipt of our decision on 10 May 2007, Morales "waited for the election to be held on 14 May 2007 to ensure his victory for a fifth term."9 We concede that Morales occupied the position of mayor of Mabalacat for the following periods: 1 July 1995 to 30 June 1998, 1 July 1998 to 30 June 2001, 1 July 2001 to 30 June 2004, and 1 July 2004 to 16 May 2007. However, because of his disqualification, Morales was not the duly elected mayor for the 2004-2007 term. Neither did Morales hold the position of mayor of Mabalacat for the full term. Morales cannot be deemed to have served the full term of 2004-2007 because he was ordered to vacate his post before the expiration of the term. Morales occupancy of the position of mayor of Mabalacat from 1 July 2004 to 16 May 2007 cannot be counted as a term for purposes of computing the three-term limit. Indeed, the period from 17 May 2007 to 30 June 2007 served as a gap for purposes of the three-term limit rule. Thus, the present 1 July 2007 to 30 June 2010 term is effectively Morales first term for purposes of the three-term limit rule. Dizon alleges that Morales "was able to serve his fourth term as mayor through lengthy litigations. x x x In other words, he was violating the rule on three-term limit with impunity by the sheer length of litigation and profit from it even more by raising the technicalities arising therefrom."10 To this, we quote our ruling in Lonzanida v. COMELEC: The respondents harp on the delay in resolving the election protest between petitioner and his then opponent Alvez which took roughly about three years and resultantly extended the petitioners incumbency in an office to which he was not lawfully elected. We note that such delay cannot be imputed to the petitioner. There is no specific allegation nor proof that the delay was due to any political maneuvering on his part to prolong his stay in office. Moreover, protestant Alvez, was not without legal recourse to move for the early resolution of the election protest while it was pending before the regional trial court or to file a motion for the execution of the regional trial courts decision declaring the position of mayor vacant and ordering the vice-mayor to assume office while the appeal was pending with the COMELEC. Such delay which is not here shown to have been intentionally sought by the petitioner to prolong his stay in office cannot serve as basis to bar his right to be elected and to serve his chosen local government post in the succeeding mayoral election.11 WHEREFORE, we DISMISS the petition. We AFFIRM the Resolution of the Commission on Elections En Bancdated 14 February 2008 as well as the Resolution of the Commission on Elections Second Division dated 27 July 2007. SO ORDERED.

Manila G.R. No. 182065

THIRD DIVISION October 27, 2009

EVELYN ONGSUCO and ANTONIA SALAYA, Petitioners, vs. HON. MARIANO M. MALONES, both in his private and official capacity as Mayor of the Municipality of Maasin, Iloilo, Respondent.
DECISION CHICO-NAZARIO, J.: This is a Petition for Review on Certiorari under Rule 45 of the Rules of Court, assailing the Decision 1 dated 28 November 2006, rendered by the Court of Appeals in CA-G.R. SP No. 86182, which affirmed the Decision2 dated 15 July 2003, of the Regional Trial Court (RTC), Branch 39, of Iloilo City, in Civil Case No. 25843, dismissing the special civil action for Mandamus/Prohibition with Prayer for Issuance of a Temporary Restraining Order and/or Writ of Preliminary Injunction, filed by petitioners Evelyn Ongsuco and Antonia Salaya against respondent Mayor Mariano Malones of the Municipality of Maasin, Iloilo. Petitioners are stall holders at the Maasin Public Market, which had just been newly renovated. In a letter3 dated 6 August 1998, the Office of the Municipal Mayor informed petitioners of a meeting scheduled on 11 August 1998 concerning the municipal public market. Revenue measures were discussed during the said meeting, including the increase in the rentals for the market stalls and the imposition of "goodwill fees" in the amount of P20,000.00,4payable every month. On 17 August 1998, the Sangguniang Bayan of Maasin approved Municipal Ordinance No. 98-01, entitled "The Municipal Revised Revenue Code." The Code contained a provision for increased rentals for the stalls and the imposition of goodwill fees in the amount of P20,000.00 and P15,000.00 for stalls located on the first and second floors of the municipal public market, respectively. The same Code authorized respondent to enter into lease contracts over the said market stalls,5 and incorporated a standard contract of lease for the stall holders at the municipal public market. Only a month later, on 18 September 1998, the Sangguniang Bayan of Maasin approved Resolution No. 68, series of 1998,6 moving to have the meeting dated 11 August 1998 declared inoperative as a public hearing, because majority of the persons affected by the imposition of the goodwill fee failed to agree to the said measure. However, Resolution No. 68, series of 1998, of the Sangguniang Bayan of Maasin was vetoed by respondent on 30 September 1998.7 After Municipal Ordinance No. 98-01 was approved on 17 August 1998, another purported public hearing was held on 22 January 1999.8 On 9 June 1999, respondent wrote a letter to petitioners informing them that they were occupying stalls in the newly renovated municipal public market without any lease contract, as a consequence of which, the stalls were considered vacant and open for qualified and interested applicants.9 This prompted petitioners, together with other similarly situated stall holders at the municipal public market, 10 to file before the RTC on 25 June 1999 a Petition for Prohibition/Mandamus, with Prayer for Issuance of Temporary Restraining Order and/or Writ of Preliminary Injunction,11 against respondent. The Petition was docketed as Civil Case No. 25843. Petitioners alleged that they were bona fide occupants of the stalls at the municipal public market, who had been religiously paying the monthly rentals for the stalls they occupied. Petitioners argued that public hearing was mandatory in the imposition of goodwill fees. Section 186 of the Local Government Code of 1991 provides that an ordinance levying taxes, fees, or charges shall not be enacted without any prior hearing conducted for the purpose. Municipal Ordinance No. 98-01, imposing goodwill fees, is invalid on the ground that the conferences held on 11 August 1998 and 22 January 1999 could not be considered public hearings. According to Article 277(b)(3) of the Implementing Rules and Regulations of the Local Government Code:

(3) The notice or notices shall specify the date or dates and venue of the public hearing or hearings. The initial public hearing shall be held not earlier than ten (10) days from the sending out of the notice or notices, or the last day of publication, or date of posting thereof, whichever is later. (Emphasis ours.) The letter from the Office of the Municipal Mayor was sent to stall holders on 6 August 1998, informing the latter of the meeting to be held, as was in fact held, on 11 August 1998, only five days after notice. 12 Hence, petitioners prayed that respondent be enjoined from imposing the goodwill fees pending the determination of the reasonableness thereof, and from barring petitioners from occupying the stalls at the municipal public market and continuing with the operation of their businesses. Respondent, in answer, maintained that Municipal Ordinance No. 98-01 is valid. He reasoned that Municipal Ordinance No. 98-01 imposed goodwill fees to raise income to pay for the loan obtained by the Municipality of Maasin for the renovation of its public market. Said ordinance is not per se a tax or revenue measure, but involves the operation and management of an economic enterprise of the Municipality of Maasin as a local government unit; thus, there was no mandatory requirement to hold a public hearing for the enactment thereof. And, even granting that a public hearing was required, respondent insisted that public hearings take place on 11 August 1998 and 22 January 1999. Respondent further averred that petitioners were illegally occupying the market stalls, and the only way petitioners could legitimize their occupancy of said market stalls would be to execute lease contracts with the Municipality of Maasin. While respondent admitted that petitioners had been paying rentals for their market stalls in the amount ofP45.00 per month prior to the renovation of the municipal public market, respondent asserted that no rentals were paid or collected from petitioners ever since the renovation began. Respondent sought from the RTC an award for moral damages in the amount of not less than P500,000.00, for the social humiliation and hurt feelings he suffered by reason of the unjustified filing by petitioners of Civil Case No. 25843; and an order for petitioners to vacate the renovated market stalls and pay reasonable rentals from the date they began to occupy said stalls until they vacate the same. 13 The RTC subsequently rendered a Decision14 on 15 July 2003 dismissing the Petition in Civil Case No. 25843. The RTC found that petitioners could not avail themselves of the remedy of mandamus or prohibition. It reasoned that mandamus would not lie in this case where petitioners failed to show a clear legal right to the use of the market stalls without paying the goodwill fees imposed by the municipal government. Prohibition likewise would not apply to the present case where respondents acts, sought to be enjoined, did not involve the exercise of judicial or quasi-judicial functions. The RTC also dismissed the Petition in Civil Case No. 25843 on the ground of non-exhaustion of administrative remedies. Petitioners failure to question the legality of Municipal Ordinance No. 98-01 before the Secretary of Justice, as provided under Section 187 of the Local Government Code,15 rendered the Petition raising the very same issue before the RTC premature. The dispositive part of the RTC Decision dated 15 July 2003 reads: WHEREFORE, in view of all the foregoing, and finding the petition without merit, the same is, as it is hereby ordered, dismissed. 16 On 12 August 2003, petitioners and their co-plaintiffs filed a Motion for Reconsideration.17 The RTC denied petitioners Motion for Reconsideration in a Resolution dated 18 June 2004.18 While Civil Case No. 25843 was pending, respondent filed before the 12th Municipal Circuit Trial Court (MCTC) of Cabatuan-Maasin, Iloilo City a case in behalf of the Municipality of Maasin against petitioner Evelyn Ongsuco, entitled Municipality of Maasin v. Ongsuco, a Complaint for Unlawful Detainer with Damages, docketed as MCTC Civil Case No. 257. On 18 June 2002, the MCTC decided in favor of the Municipality of Maasin and ordered petitioner Ongsuco to vacate the market stalls she occupied, Stall No. 1-03 and Stall No. 1-04, and to pay monthly rentals in the amount of P350.00 for each stall from October 2001 until she vacates the said market stalls. 19 On appeal, Branch 36 of the RTC of Maasin, Iloilo City, promulgated a Decision, dated 29 April 2003, in a case docketed as Civil Case No. 0227229 affirming the decision of the MCTC. A Writ of Execution was issued by the MCTC on 8 December 2003.20 Petitioners, in their appeal before the Court of Appeals, docketed as CA-G.R. SP No. 86182, challenged the dismissal of their Petition for Prohibition/Mandamus docketed as Civil Case No. 25843 by the RTC. Petitioners explained that they did appeal the enactment of Municipal Ordinance No. 98-01 before the Department of Justice, but their appeal was not acted upon because of their failure to attach a copy of said municipal ordinance. Petitioners claimed that one

of their fellow stall holders, Ritchelle Mondejar, wrote a letter to the Officer-in-Charge (OIC), Municipal Treasurer of Maasin, requesting a copy of Municipal Ordinance No. 98-01, but received no reply.21 In its Decision dated 28 November 2006 in CA-G.R. SP No. 86182, the Court of Appeals again ruled in respondents favor. The Court of Appeals declared that the "goodwill fee" was a form of revenue measure, which the Municipality of Maasin was empowered to impose under Section 186 of the Local Government Code. Petitioners failed to establish any grave abuse of discretion committed by respondent in enforcing goodwill fees. The Court of Appeals additionally held that even if respondent acted in grave abuse of discretion, petitioners resort to a petition for prohibition was improper, since respondents acts in question herein did not involve the exercise of judicial, quasi-judicial, or ministerial functions, as required under Section 2, Rule 65 of the Rules of Court. Also, the filing by petitioners of the Petition for Prohibition/Mandamus before the RTC was premature, as they failed to exhaust administrative remedies prior thereto. The appellate court did not give any weight to petitioners assertion that they filed an appeal challenging the legality of Municipal Ordinance No. 98-01 before the Secretary of Justice, as no proof was presented to support the same. In the end, the Court of Appeals decreed: WHEREFORE, in view of the foregoing, this Court finds the instant appeal bereft of merit. The assailed decision dated July 15, 2003 as well as the subsequent resolution dated 18 June 2004 are hereby AFFIRMED and the instant appeal is hereby DISMISSED. 22 Petitioners filed a Motion for Reconsideration23 of the foregoing Decision, but it was denied by the Court of Appeals in a Resolution24 dated 8 February 2008. Hence, the present Petition, where petitioners raise the following issues: I WHETHER OR NOT THE PETITIONERS HAVE EXHAUSTED ADMINISTRATIVE REMEDIES BEFORE FILING THE INSTANT CASE IN COURT; II WHETHER OR NOT EXHAUSTION OF ADMINISTRATIVE REMEDIES IS APPLICABLE IN THIS CASE; AND III WHETHER OR NOT THE APPELLEE MARIANO MALONES WHO WAS THEN THE MUNICIPAL MAYOR OF MAASIN, ILOILO HAS COMMITTED GRAVE ABUSE OF DISCRETION.25 After a close scrutiny of the circumstances that gave rise to this case, the Court determines that there is no need for petitioners to exhaust administrative remedies before resorting to the courts. The findings of both the RTC and the Court of Appeals that petitioners Petition for Prohibition/Mandamus in Civil Case No. 25843 was premature is anchored on Section 187 of the Local Government Code, which reads: Section 187. Procedure for Approval and Effectivity of Tax Ordinances and Revenue Measures; Mandatory Public Hearings.The procedure for approval of local tax ordinances and revenue measures shall be in accordance with the provisions of this Code: Provided, That public hearings shall be conducted for the purpose prior to the enactment thereof: Provided, further, That any question on the constitutionality or legality of tax ordinances or revenue measures may be raised on appeal within thirty (30) days from the effectivity thereof to the Secretary of Justice who shall render a decision within sixty (60) days from the date of receipt of the appeal: Provided, however, That such appeal shall not have the effect of suspending the effectivity of the ordinance and the accrual and payment of the tax, fee, or charge levied therein: Provided, finally, That within thirty (30) days after receipt of the decision or the lapse of the sixty-day period without the Secretary of Justice acting upon the appeal, the aggrieved party may file appropriate proceedings with a court of competent jurisdiction. (Emphasis ours.) It is true that the general rule is that before a party is allowed to seek the intervention of the court, he or she should have availed himself or herself of all the means of administrative processes afforded him or her. Hence, if resort to a

remedy within the administrative machinery can still be made by giving the administrative officer concerned every opportunity to decide on a matter that comes within his or her jurisdiction, then such remedy should be exhausted first before the courts judicial power can be sought. The premature invocation of the intervention of the court is fatal to ones cause of action. The doctrine of exhaustion of administrative remedies is based on practical and legal reasons. The availment of administrative remedy entails lesser expenses and provides for a speedier disposition of controversies. Furthermore, the courts of justice, for reasons of comity and convenience, will shy away from a dispute until the system of administrative redress has been completed and complied with, so as to give the administrative agency concerned every opportunity to correct its error and dispose of the case. However, there are several exceptions to this rule. 26 The rule on the exhaustion of administrative remedies is intended to preclude a court from arrogating unto itself the authority to resolve a controversy, the jurisdiction over which is initially lodged with an administrative body of special competence. Thus, a case where the issue raised is a purely legal question, well within the competence; and the jurisdiction of the court and not the administrative agency, would clearly constitute an exception. 27Resolving questions of law, which involve the interpretation and application of laws, constitutes essentially an exercise of judicial power that is exclusively allocated to the Supreme Court and such lower courts the Legislature may establish. 28 In this case, the parties are not disputing any factual matter on which they still need to present evidence. The sole issue petitioners raised before the RTC in Civil Case No. 25843 was whether Municipal Ordinance No. 98-01 was valid and enforceable despite the absence, prior to its enactment, of a public hearing held in accordance with Article 276 of the Implementing Rules and Regulations of the Local Government Code. This is undoubtedly a pure question of law, within the competence and jurisdiction of the RTC to resolve. Paragraph 2(a) of Section 5, Article VIII of the Constitution, expressly establishes the appellate jurisdiction of this Court, and impliedly recognizes the original jurisdiction of lower courts over cases involving the constitutionality or validity of an ordinance: Section 5. The Supreme Court shall have the following powers: xxxx (2) Review, revise, reverse, modify or affirm on appeal or certiorari, as the law or the Rules of Court may provide, final judgments and orders of lower courts in: (a) All cases in which the constitutionality or validity of any treaty, international or executive agreement, law, presidential decree, proclamation, order, instruction, ordinance, or regulation is in question. (Emphases ours.) In J.M. Tuason and Co., Inc. v. Court of Appeals,29 Ynot v. Intermediate Appellate Court,30 and Commissioner of Internal Revenue v. Santos,31 the Court has affirmed the jurisdiction of the RTC to resolve questions of constitutionality and validity of laws (deemed to include local ordinances) in the first instance, without deciding questions which pertain to legislative policy. Although not raised in the Petition at bar, the Court is compelled to discuss another procedural issue, specifically, the declaration by the RTC, and affirmed by the Court of Appeals, that petitioners availed themselves of the wrong remedy in filing a Petition for Prohibition/Mandamus before the RTC. Sections 2 and 3, Rule 65 of the Rules of the Rules of Court lay down under what circumstances petitions for prohibition and mandamus may be filed, to wit: SEC. 2. Petition for prohibition. When the proceedings of any tribunal, corporation, board, officer or person, whether exercising judicial, quasi-judicial or ministerial functions, are without or in excess of its or his jurisdiction, or with grave abuse of discretion amounting to lack or excess of jurisdiction, and there is no appeal or any other plain, speedy, and adequate remedy in the ordinary course of law, a person aggrieved thereby may file a verified petition in the proper court, alleging the facts with certainty and praying that judgment be rendered commanding the respondent to desist from further proceedings in the action or matter specified therein, or otherwise granting such incidental reliefs as law and justice may require. SEC. 3. Petition for mandamus. When any tribunal, corporation, board, officer or person unlawfully neglects the performance of an act which the law specifically enjoins as a duty resulting from an office, trust, or station, or unlawfully excludes another from the use and enjoyment of a right or office to which such other is entitled, and there is no other plain, speedy and adequate remedy in the ordinary course of law, the person aggrieved thereby may file a verified petition in the proper court, alleging the facts with certainty and praying that judgment be rendered commanding the respondent, immediately or at some other time to be specified by the court, to do the act required to

be done to protect the rights of the petitioner, and to pay the damages sustained by the petitioner by reason of the wrongful acts of the respondent. (Emphases ours.) In a petition for prohibition against any tribunal, corporation, board, or person -- whether exercising judicial, quasijudicial, or ministerial functions -- who has acted without or in excess of jurisdiction or with grave abuse of discretion, the petitioner prays that judgment be rendered, commanding the respondent to desist from further proceeding in the action or matter specified in the petition.32 On the other hand, the remedy of mandamus lies to compel performance of a ministerial duty.33 The petitioner for such a writ should have a well-defined, clear and certain legal right to the performance of the act, and it must be the clear and imperative duty of respondent to do the act required to be done.34 In this case, petitioners primary intention is to prevent respondent from implementing Municipal Ordinance No. 9801, i.e., by collecting the goodwill fees from petitioners and barring them from occupying the stalls at the municipal public market. Obviously, the writ petitioners seek is more in the nature of prohibition (commanding desistance), rather than mandamus (compelling performance). For a writ of prohibition, the requisites are: (1) the impugned act must be that of a "tribunal, corporation, board, officer, or person, whether exercising judicial, quasi-judicial or ministerial functions"; and (2) there is no plain, speedy, and adequate remedy in the ordinary course of law."35 The exercise of judicial function consists of the power to determine what the law is and what the legal rights of the parties are, and then to adjudicate upon the rights of the parties. The term quasi-judicial function applies to the action and discretion of public administrative officers or bodies that 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. In implementing Municipal Ordinance No. 98-01, respondent is not called upon to adjudicate the rights of contending parties or to exercise, in any manner, discretion of a judicial nature. A ministerial function is one that an officer or tribunal performs in the context of a given set of facts, in a prescribed manner and without regard for the exercise of his or its own judgment, upon the propriety or impropriety of the act done.36 The Court holds that respondent herein is performing a ministerial function. It bears to emphasize that Municipal Ordinance No. 98-01 enjoys the presumption of validity, unless declared otherwise. Respondent has the duty to carry out the provisions of the ordinance under Section 444 of the Local Government Code: Section 444. The Chief Executive: Powers, Duties, Functions and Compensation. (a) The Municipal mayor, as the chief executive of the municipal government, shall exercise such powers and perform such duties and functions as provided by this Code and other laws. (b) For efficient, effective and economical governance the purpose of which is the general welfare of the municipality and its inhabitants pursuant to Section 16 of this Code, the Municipal mayor shall: xxxx (2) Enforce all laws and ordinances relative to the governance of the municipality and the exercise of its corporate powers provided for under Section 22 of this Code, implement all approved policies, programs, projects, services and activities of the municipality x x x. xxxx (3) Initiate and maximize the generation of resources and revenues, and apply the same to the implementation of development plans, program objectives sand priorities as provided for under Section 18 of this Code, particularly those resources and revenues programmed for agro-industrial development and country-wide growth and progress, and relative thereto, shall: xxxx (iii) Ensure that all taxes and other revenues of the municipality are collected, and that municipal funds are applied in accordance with law or ordinance to the payment of expenses and settlement of obligations of the municipality; x x x. (Emphasis ours.)

Municipal Ordinance No. 98-01 imposes increased rentals and goodwill fees on stall holders at the renovated municipal public market, leaving respondent, or the municipal treasurer acting as his alter ego, no discretion on whether or not to collect the said rentals and fees from the stall holders, or whether or to collect the same in the amounts fixed by the ordinance. The Court further notes that respondent already deemed petitioners stalls at the municipal public market vacated. Without such stalls, petitioners would be unable to conduct their businesses, thus, depriving them of their means of livelihood. It is imperative on petitioners part to have the implementation of Municipal Ordinance No. 98-01 by respondent stopped the soonest. As this Court has established in its previous discussion, there is no more need for petitioners to exhaust administrative remedies, considering that the fundamental issue between them and respondent is one of law, over which the courts have competence and jurisdiction. There is no other plain, speedy, and adequate remedy for petitioners in the ordinary course of law, except to seek from the courts the issuance of a writ of prohibition commanding respondent to desist from continuing to implement what is allegedly an invalid ordinance.1 a vv p h i 1 This brings the Court to the substantive issue in this Petition on the validity of Municipal Ordinance N. 98-01. Respondent maintains that the imposition of goodwill fees upon stall holders at the municipal public market is not a revenue measure that requires a prior public hearing. Rentals and other consideration for occupancy of the stalls at the municipal public market are not matters of taxation. Respondents argument is specious. Article 219 of the Local Government Code provides that a local government unit exercising its power to impose taxes, fees and charges should comply with the requirements set in Rule XXX, entitled "Local Government Taxation": Article 219. Power to Create Sources of Revenue.Consistent with the basic policy of local autonomy, each LGU shall exercise its power to create its own sources of revenue and to levy taxes, fees, or charges, subject to the provisions of this Rule. Such taxes, fees, or charges shall accrue exclusively to the LGU. (Emphasis ours.) Article 221(g) of the Local Government Code of 1991 defines "charges" as: Article 221. Definition of Terms. xxxx (g) Charges refer to pecuniary liability, as rents or fees against persons or property. (Emphasis ours.) Evidently, the revenues of a local government unit do not consist of taxes alone, but also other fees and charges. And rentals and goodwill fees, imposed by Municipal Ordinance No. 98-01 for the occupancy of the stalls at the municipal public market, fall under the definition of charges. For the valid enactment of ordinances imposing charges, certain legal requisites must be met. Section 186 of the Local Government Code identifies such requisites as follows: Section 186. Power to Levy Other Taxes, Fees or Charges.Local government units may exercise the power to levy taxes, fees or charges on any base or subject not otherwise specifically enumerated herein or taxed under the provisions of the National Internal Revenue Code, as amended, or other applicable laws: Provided, That the taxes, fees or charges shall not be unjust, excessive, oppressive, confiscatory or contrary to declared national policy: Provided, further, That the ordinance levying such taxes, fees or charges shall not be enacted without any prior public hearing conducted for the purpose. (Emphasis ours.) Section 277 of the Implementing Rules and Regulations of the Local Government Code establishes in detail the procedure for the enactment of such an ordinance, relevant provisions of which are reproduced below: Section 277. Publication of Tax Ordinance and Revenue Measures.x x x. xxxx (b) The conduct of public hearings shall be governed by the following procedure:

xxxx (2) In addition to the requirement for publication or posting, the sanggunian concerned shall cause the sending of written notices of the proposed ordinance, enclosing a copy thereof, to the interested or affected parties operating or doing business within the territorial jurisdiction of the LGU concerned. (3) The notice or notices shall specify the date or dates and venue of the public hearing or hearings. The initial public hearing shall be held not earlier than ten (10) days from the sending out of the notice or notices, or the last day of publication, or date of posting thereof, whichever is later; xxxx (c) No tax ordinance or revenue measure shall be enacted or approved in the absence of a public hearing duly conducted in the manner provided under this Article. (Emphases ours.) It is categorical, therefore, that a public hearing be held prior to the enactment of an ordinance levying taxes, fees, or charges; and that such public hearing be conducted as provided under Section 277 of the Implementing Rules and Regulations of the Local Government Code. There is no dispute herein that the notices sent to petitioners and other stall holders at the municipal public market were sent out on 6 August 1998, informing them of the supposed "public hearing" to be held on 11 August 1998. Even assuming that petitioners received their notice also on 6 August 1998, the "public hearing" was already scheduled, and actually conducted, only five days later, on 11 August 1998. This contravenes Article 277(b)(3) of the Implementing Rules and Regulations of the Local Government Code which requires that the public hearing be held no less than ten days from the time the notices were sent out, posted, or published. When the Sangguniang Bayan of Maasin sought to correct this procedural defect through Resolution No. 68, series of 1998, dated 18 September 1998, respondent vetoed the said resolution. Although the Sangguniang Bayan may have had the power to override respondents veto,37 it no longer did so. The defect in the enactment of Municipal Ordinance No. 98 was not cured when another public hearing was held on 22 January 1999, after the questioned ordinance was passed by the Sangguniang Bayan and approved by respondent on 17 August 1998. Section 186 of the Local Government Code prescribes that the public hearing be held prior to the enactment by a local government unit of an ordinance levying taxes, fees, and charges. Since no public hearing had been duly conducted prior to the enactment of Municipal Ordinance No. 98-01, said ordinance is void and cannot be given any effect. Consequently, a void and ineffective ordinance could not have conferred upon respondent the jurisdiction to order petitioners stalls at the municipal public market vacant. IN VIEW OF THE FOREGOING, the instant Petition is GRANTED. The assailed Decision dated 28 November 2006 of the Court of Appeals in CA-G.R. SP No. 86182 is REVERSED and SET ASIDE. Municipal Ordinance No. 98-01 is DECLARED void and ineffective, and a writ of prohibition is ISSUED commanding the Mayor of the Municipality of Maasin, Iloilo, to permanently desist from enforcing the said ordinance. Petitioners are also DECLARED as lawful occupants of the market stalls they occupied at the time they filed the Petition for Mandamus/Prohibition docketed as Civil Case No. 25843. In the event that they were deprived of possession of the said market stalls, petitioners are entitled to recover possession of these stalls. SO ORDERED.

Manila

EN BANC March 17, 2009

G.R. No. 184082

NICASIO BOLOS, JR., Petitioner, vs. THE COMMISSION ON ELECTIONS and REY ANGELES CINCONIEGUE, Respondents.
DECISION

PERALTA, J.: This is a petition for certiorari, under Rule 65 of the Rules of Court, alleging that the Commission on Elections (COMELEC) committed grave abuse of discretion amounting to lack or excess of jurisdiction in issuing the Resolutions promulgated on March 4, 2008 and August 7, 2008 holding that petitioner Nicasio Bolos, Jr. is disqualified as a candidate for the position of Punong Barangay of Barangay Biking, Dauis, Bohol in the October 29, 2007 Barangay and Sangguniang Kabataan Elections on the ground that he has served the three-term limit provided in the Constitution and Republic Act (R.A.) No. 7160, otherwise known as the Local Government Code of 1991. The facts are as follows: For three consecutive terms, petitioner was elected to the position of Punong Barangay of Barangay Biking, Dauis, Bohol in the Barangay Elections held in 1994, 1997 and 2002. In May 2004, while sitting as the incumbent Punong Barangay of Barangay Biking, petitioner ran for Municipal Councilor of Dauis, Bohol and won. He assumed office as Municipal Councilor on July 1, 2004, leaving his post asPunong Barangay. He served the full term of the Sangguniang Bayan position, which was until June 30, 2007. Thereafter, petitioner filed his Certificate of Candidacy for Punong Barangay of Barangay Biking, Dauis, Bohol in the October 29, 2007 Barangay and Sangguniang Kabataan Elections. Respondent Rey Angeles Cinconiegue, the incumbent Punong Barangay and candidate for the same office, filed before the COMELEC a petition for the disqualification of petitioner as candidate on the ground that he had already served the three-term limit. Hence, petitioner is no longer allowed to run for the same position in accordance with Section 8, Article X of the Constitution and Section 43 (b) of R.A. No. 7160. Cinconiegue contended that petitioners relinquishment of the position of Punong Barangay in July 2004 was voluntary on his part, as it could be presumed that it was his personal decision to run as municipal councilor in the May 14, 2004 National and Local Elections. He added that petitioner knew that if he won and assumed the position, there would be a voluntary renunciation of his post as Punong Barangay. In his Answer, petitioner admitted that he was elected as Punong Barangay of Barangay Biking, Dauis, Bohol in the last three consecutive elections of 1994, 1997 and 2002. However, he countered that in the May 14, 2004 National and Local Elections, he ran and won as Municipal Councilor of Dauis, Bohol. By reason of his assumption of office as Sangguniang Bayan member, his remaining term of office as Punong Barangay, which would have ended in 2007, was left unserved. He argued that his election and assumption of office as Sangguniang Bayanmember was by operation of law; hence, it must be considered as an involuntary interruption in the continuity of his last term of service. Pursuant to Section 10 of COMELEC Resolution No. 8297 dated September 6, 2007, the petition was heard by the Provincial Election Supervisor of Bohol. Upon completion of the proceedings, the evidence, records of the case, and the Hearing Officers action on the matter were endorsed to and received by the Commission on November 21, 2007. The issue before the COMELEC was whether or not petitioners election, assumption and discharge of the functions of the Office of Sangguniang Bayan member can be considered as voluntary renunciation of his office asPunong Barangay of Barangay Biking, Dauis, Bohol which will render unbroken the continuity of his service asPunong Barangay for the full term of office, that is, from 2004 to 2007. If it is considered a voluntary renunciation, petitioner will be deemed to have served three consecutive terms and shall be disqualified to run for the same position in the October 29, 2007 elections. But if it is considered as an involuntary renunciation, petitioners service is deemed to have been interrupted; hence, he is not barred from running for another term. In a Resolution1 dated March 4, 2008, the First Division of the COMELEC ruled that petitioners relinquishment of the office of Punong Barangay of Biking, Dauis, Bohol, as a consequence of his assumption of office asSangguniang Bayan member of Dauis, Bohol, on July 1, 2004, was a voluntary renunciation of the Office ofPunong Barangay. The dispositive portion of the Resolution reads: WHEREFORE, in view of the foregoing, the Commission (First Division) GRANTS the petition. Respondent NICASIO BOLOS, JR., having already served as Punong Barangay of Barangay Biking, Dauis, Bohol for three consecutive terms is hereby DISQUALIFIED from being a candidate for the same office in the October 29, 2007 Barangay and SK

Elections. Considering that respondent had already been proclaimed, said proclamation is hereby ANNULLED. Succession to said office shall be governed by the provisions of Section 44 of the Local Government Code.2 Petitioners motion for reconsideration was denied by the COMELEC en banc in a Resolution 3 dated August 7, 2008. Hence, this petition for certiorari raising this lone issue: WHETHER OR NOT THE HONORABLE COMMISSION ON ELECTIONS ACTED WITHOUT OR IN EXCESS OF ITS JURISDICTION AMOUNTING TO LACK OF JURISDICTION OR WITH GRAVE ABUSE OF DISCRETION IN DISQUALIFYING [PETITIONER] AS A CANDIDATE FOR PUNONG BARANGAY IN THE OCTOBER 29, 2007 BARANGAY AND SANGGUNIANG KABATAAN ELECTIONS AND, SUBSEQUENTLY, ANNULLING HIS PROCLAMATION.4 The main issue is whether or not there was voluntary renunciation of the Office of Punong Barangay by petitioner when he assumed office as Municipal Councilor so that he is deemed to have fully served his third term as Punong Barangay, warranting his disqualification from running for the same position in the October 29, 2007 Barangayand Sangguniang Kabataan Elections. Petitioner contends that he is qualified to run for the position of Punong Barangay in the October 29, 2007Barangay and Sangguniang Kabataan Elections since he did not serve continuously three consecutive terms. He admits that in the 1994, 1997 and 2002 Barangay elections, he was elected as Punong Barangay for three consecutive terms. Nonetheless, while serving his third term as Punong Barangay, he ran as Municipal Councilor of Dauis, Bohol, and won. On July 1, 2004, he assumed office and, consequently, left his post as Punong Barangay by operation of law. He averred that he served the full term as member of the Sangguniang Bayan until June 30, 2007. On October 29, 2007, he filed his Certificate of Candidacy for Punong Barangay and won. Hence, the COMELEC gravely abused its discretion in disqualifying him as a candidate for Punong Barangay since he did not complete his third term by operation of law. The argument does not persuade. The three-term limit for elective local officials is contained in Section 8, Article X of the Constitution, which provides: Sec. 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. Voluntary renunciation of the office for any length of time shall not be considered as an interruption in the continuity of his service for the full term for which he was elected. David v. Commission on Elections5 elucidates that the Constitution did not expressly prohibit Congress from fixing any term of office for barangay officials, thereby leaving to the lawmakers full discretion to fix such term in accordance with the exigencies of public service. The discussions in the Constitutional Commission showed that the term of office of barangay officials would be "[a]s may be determined by law," and more precisely, "[a]s provided for in the Local Government Code."6 Section 43(b) of the Local Government Code provides thatbarangay officials are covered by the three-term limit, while Section 43(c)7 thereof states that the term of office ofbarangay officials shall be five (5) years. The cited provisions read, thus: Sec. 43. Term of Office. x x x (b) No local elective official shall serve for more than three (3) consecutive terms in the same position. Voluntary renunciation of the office for any length of time shall not be considered as an interruption in the continuity of service for the full term for which the elective official concerned was elected. (c) The term of barangay officials and members of the sangguniang kabataan shall be for five (5) years, which shall begin after the regular election of barangay officials on the second Monday of May 1997:Provided, That the sangguniang kabataan members who were elected in the May 1996 elections shall serve until the next regular election of barangay officials. Socrates v. Commission on Elections8 held that the rule on the three-term limit, embodied in the Constitution and the Local Government Code, has two parts: x x x The first part provides that an elective local official cannot serve for more than three consecutive terms. The clear intent is that only consecutive terms count in determining the three-term limit rule. The second part states that voluntary renunciation of office for any length of time does not interrupt the continuity of service. The clear intent is

that involuntary severance from office for any length of time interrupts continuity of service and prevents the service before and after the interruption from being joined together to form a continuous service or consecutive terms. After three consecutive terms, an elective local official cannot seek immediate reelection for a fourth term. The prohibited election refers to the next regular election for the same office following the end of the third consecutive term. 9 In Lonzanida v. Commission on Elections,10 the Court stated that the second part of the rule on the three-term limit shows the clear intent of the framers of the Constitution to bar any attempt to circumvent the three-term limit by a voluntary renunciation of office and at the same time respect the peoples choice and grant their elected official full service of a term. The Court held that two conditions for the application of the disqualification must concur: (1) that the official concerned has been elected for three consecutive terms in the same government post; and (2) that he has fully served three consecutive terms.11 In this case, it is undisputed that petitioner was elected as Punong Barangay for three consecutive terms, satisfying the first condition for disqualification. What is to be determined is whether petitioner is deemed to have voluntarily renounced his position as Punong Barangay during his third term when he ran for and won as Sangguniang Bayan member and assumed said office. The Court agrees with the COMELEC that there was voluntary renunciation by petitioner of his position as Punong Barangay. The COMELEC correctly held: It is our finding that Nicasio Bolos, Jr.s relinquishment of the office of Punong Barangay of Biking, Dauis, Bohol, as a consequence of his assumption to office as Sangguniang Bayan member of Dauis, Bohol, on July 1, 2004, is a voluntary renunciation. As conceded even by him, respondent (petitioner herein) had already completed two consecutive terms of office when he ran for a third term in the Barangay Elections of 2002. When he filed his certificate of candidacy for the Office of Sangguniang Bayan of Dauis, Bohol, in the May 10, 2004 [elections], he was not deemed resigned. Nonetheless, all the acts attending his pursuit of his election as municipal councilor point out to an intent and readiness to give up his post as Punong Barangay once elected to the higher elective office, for it was very unlikely that respondent had filed his Certificate of Candidacy for the Sangguniang Bayan post, campaigned and exhorted the municipal electorate to vote for him as such and then after being elected and proclaimed, return to his former position. He knew that his election as municipal councilor would entail abandonment of the position he held, and he intended to forego of it. Abandonment, like resignation, is voluntary.12 Indeed, petitioner was serving his third term as Punong Barangay when he ran for Sangguniang Bayan member and, upon winning, assumed the position of Sangguniang Bayan member, thus, voluntarily relinquishing his office as Punong Barangay which the Court deems as a voluntary renunciation of said office. Petitioner erroneously argues that when he assumed the position of Sangguniang Bayan member, he left his post as Punong Barangay by operation of law; hence, he did not fully serve his third term as Punong Barangay. The term "operation of law" is defined by the Philippine Legal Encyclopedia 13 as "a term describing the fact that rights may be acquired or lost by the effect of a legal rule without any act of the person affected." Black's Law Dictionary also defines it as a term that "expresses the manner in which rights, and sometimes liabilities, devolve upon a person by the mere application to the particular transaction of the established rules of law, without the act or cooperation of the party himself."14 An interruption in the service of a term of office, by operation of law, is exemplified in Montebon v. Commission on Elections.15 The respondent therein, Sesinando F. Potencioso, Jr., was elected and served three consecutive terms as Municipal Councilor of Tuburan, Cebu in 1998-2001, 2001-2004, and 2004-2007. However, during his second term, he succeeded as Vice-Mayor of Tuburan due to the retirement of the Vice-Mayor pursuant to Section 44 of R.A. No. 7160.16 Potenciosos assumption of office as Vice-Mayor was considered an involuntary severance from his office as Municipal Councilor, resulting in an interruption in his second term of service.17 The Court held that it could not be deemed to have been by reason of voluntary renunciation because it was by operation of law.18 Hence, Potencioso was qualified to run as candidate for municipal councilor of the Municipality of Tuburan, Cebu in the May 14, 2007 Synchronized National and Local Elections.

Further, in Borja, Jr. v. Commission on Elections,19 respondent therein, Jose T. Capco, Jr., was elected as Vice-Mayor of Pateros on January 18, 1988 for a term ending on June 30, 1992. On September 2, 1989, Capco became Mayor, by operation of law, upon the death of the incumbent, Cesar Borja. Thereafter, Capco was elected and served as Mayor for two more terms, from 1992 to 1998. On March 27, 1998, Capco filed a Certificate of Candidacy for Mayor of Pateros in the May 11, 1998 election. Capcos disqualification was sought on the ground that he would have already served as Mayor for three consecutive terms by June 30, 1998; hence, he would be ineligible to serve for another term. The Court declared that the term limit for elective local officials must be taken to refer to the right to be elected as well as the right to serve the same elective position. 20 The Court held that Capco was qualified to run again as mayor in the next election because he was not elected to the office of mayor in the first term but simply found himself thrust into it by operation of law.21 Neither had he served the full term because he only continued the service, interrupted by the death, of the deceased mayor.22 The vice-mayors assumption of the mayorship in the event of the vacancy is more a matter of chance than of design.23 Hence, his service in that office should not be counted in the application of any term limit.24 In this case, petitioner did not fill in or succeed to a vacancy by operation of law. He instead relinquished his office as Punong Barangay during his third term when he won and assumed office as Sangguniang Bayan member of Dauis, Bohol, which is deemed a voluntary renunciation of the Office of Punong Barangay. In fine, the COMELEC did not commit grave abuse of discretion amounting to lack or excess of jurisdiction in issuing the Resolutions dated March 4, 2008 and August 7, 2008, disqualifying petitioner from being a candidate for Punong Barangay in the October 29, 2007 Barangay and Sangguniang Kabataan Elections. WHEREFORE, the petition is DISMISSED. The COMELEC Resolutions dated March 4, 2008 and August 7, 2008 are hereby AFFIRMED. No pronouncement as to costs. SO ORDERED.

Manila

THIRD DIVISION June 16, 2009

G.R. No. 157714

MUNICIPALITY OF PATEROS, Petitioner, vs. THE HONORABLE COURT OF APPEALS, THE MUNICIPALITY OF MAKATI, THE DIRECTOR OF LANDS, and THE DEPARTMENT OF ENVIRONMENT AND NATURAL RESOURCES, Respondents.
DECISION NACHURA, J.: Before this Court is a Petition1 for Review on Certiorari under Rule 45 of the Rules of Civil Procedure, seeking the reversal of the Court of Appeals (CA) Decision2 dated January 22, 2003, which denied the appeal of petitioner Municipality of Pateros (Pateros) for undertaking a wrong mode of appeal. Subject of the appeal was the Order 3 of the Regional Trial Court (RTC) of Makati City, Branch 139, dated June 14, 1996, which dismissed petitioners complaint for lack of jurisdiction. The Facts The property subject of this case consists of portions of then Fort William McKinley, now known as Fort Bonifacio (subject property), currently comprising Barangays Cembo, South Cembo, West Rembo, East Rembo, Comembo, Pembo, and Pitogo (entire property). The subject property is allegedly situated within the territorial jurisdiction of respondent Municipality (now City) of Makati (Makati) per Proclamation No. 2475 4 issued on January 7, 1986 (Proclamation No. 2475) by former President Ferdinand E. Marcos (President Marcos). Subsequently, on January 31, 1990, former President Corazon C. Aquino (President Aquino) issued Proclamation No. 518,5 amending Proclamation No. 2475. Parenthetically, it may be noted that a similar boundary dispute over the entire property exists between the Municipality (now City) of Taguig and Makati, docketed as Civil Case No. 63896 and pending before the RTC of Pasig City, Branch 153. As Proclamation Nos. 2475 and 518 respectively stated that the entire property is situated in Makati, Pateros, on January 18, 1991, filed an action6 for Judicial Declaration of the Territorial Boundaries of Pateros against Makati before the RTC of Pasig City, Branch 154 (Pasig RTC). The case was, however, dismissed for lack of jurisdiction inasmuch as the subject property is located in Makati and it should have been filed before the Makati RTC. 7Heeding the directive of

the Pasig RTC, Pateros, on December 8, 1993, filed with the RTC of Makati a Complaint 8against Makati and corespondents, Director of Lands and the Department of Environment and Natural Resources (DENR), for the Judicial Declaration of the Territorial Boundaries of Pateros with a prayer for the issuance of a writ of Preliminary Injunction and Temporary Restraining Order (TRO). Pateros claimed that, based on historical and official records, it had an original area of one thousand thirty-eight (1,038) hectares, more or less. However, when a cadastral mapping was conducted by the Bureau of Lands in 1978, Pateros was appalled to learn that its territorial boundaries had been substantially reduced to merely one hundred sixty-six (166) hectares. Pateros opined that this disparity was brought about by the issuance of Proclamation Nos. 2475 and 518. Thus, Pateros prayed that the RTC judicially declare the territorial boundaries of Pateros based on supporting pieces of evidence, and that it nullify Proclamation No. 2475. Makati filed a Motion to Dismiss,9 contending that the issue was not the nullification of Proclamation No. 2475; that the RTC had no jurisdiction over the subject matter of the action because original jurisdiction to resolve boundary disputes among municipalities situated in Metro Manila is vested in the Metropolitan Manila Authority (MMA); that the RTC's jurisdiction is merely appellate; that the complaint failed to state a cause of action as Pateros failed to exhaust administrative remedies by failing to settle the dispute amicably; and that Pateros' claims had already been barred by laches because Makati, throughout the years, had already developed the subject property and had spent millions on such development. Makati also filed a Motion to Suspend Proceedings,10 arguing that the bill converting Makati into a city was pending approval before the Senate and portions of the subject property are included in the proposed charter. Makati, thus, opined that the continuation of the RTC proceedings would create a conflict between the judicial and the legislative branches. In its Order11 dated October 21, 1994, the RTC granted Makatis Motion. On July 19, 1994, Republic Act No. 7854 12 was enacted into law, converting Makati into a highly urbanized city. Pateros then moved for the revival of the proceedings before the RTC, 13 which it granted in its Order14 dated March 17, 1995. However, due to the pending Motion to Dismiss earlier filed by Makati, the RTC required the parties to submit their respective Memoranda. The RTC's Ruling On June 14, 1996, the RTC issued an Order, dismissing the case on the ground of lack of jurisdiction. The RTC held that Proclamation No. 2475 specifically declared that the subject property is within the territorial jurisdiction of Makati and, inasmuch as the Proclamation was not declared unconstitutional, the same is a valid and subsisting law. In the main, citing Sections 1015 and 11,16 Article X of the 1987 Constitution, and pursuant to this Court's ruling in Municipality of Sogod v. Rosal,17 the RTC held that the modification or substantial alteration of boundaries of municipalities can be done only through a law enacted by Congress which shall be subject to approval by a majority of the votes cast in a plebiscite in the political units directly affected. Hence, the RTC opined that it is without jurisdiction to fix the territorial boundaries of the parties. Pateros filed a Motion for Reconsideration18 which was, however, denied by the RTC in its Order19 dated August 30, 1996. Aggrieved, Pateros appealed to the CA.20 The CA's Ruling On January 22, 2003, the CA denied Pateros' appeal. The CA held that the RTC did not make any findings of fact but merely applied various provisions of law and jurisprudence. Thus, the case presented a pure question of law, which Pateros should have brought directly to the Supreme Court, pursuant to Section 5(2), 21 Article VIII of the 1987 Constitution and Section 2,22 Rule 41 of the Revised Rules of Civil Procedure. The CA also held that it would amount to grave abuse of discretion amounting to lack of jurisdiction if the CA insisted on resolving the issues raised therein. Thus, by undertaking a wrong mode of appeal and citing Section 2, 23 Rule 50 of the Revised Rules of Civil Procedure, the CA denied Pateros' appeal. Pateros filed a Motion for Reconsideration, 24 which the CA denied in its Resolution25 dated March 27, 2003. The Issue Hence, this Petition based on the sole ground that the CA committed grave abuse of discretion in dismissing the appeal for lack of jurisdiction.26 Pateros asseverates that the issues raised before the CA involved mixed questions of fact and law, because Pateros sought the determination of its territorial boundaries and the nullification of Proclamation No. 2475; that Pateros does not seek the alteration, modification, or creation of another or a new local government unit (LGU), but is concerned only with its territorial boundaries which, according to existing records, consisted of 1,038 hectares; that nonpresentation of evidence before the RTC does not make the appeal purely a question of law, because the parties were

prevented from presenting any evidence due to the RTC's erroneous dismissal of the case based on lack of jurisdiction; that Proclamation Nos. 2475 and 518 suffer from Constitutional infirmity; that the alteration or modification of the boundaries of municipalities or cities can only be made by a law enacted by Congress and approved by the majority of the votes cast in a plebiscite in the political units directly affected; that Proclamation No. 2475, although issued by then President Marcos during the Marcos era, was not a legislative enactment, pursuant to Section 6 of the 1976 Amendment to the Constitution; and granting, without admitting, that Proclamation No. 2475 is a law, it should be subject to approval by the majority of the votes cast in a plebiscite in the political units directly affected. Thus, Pateros prays that the assailed CA Decision be reversed and set aside, and that the RTC be directed to proceed with the trial of the instant case.27 On the other hand, Makati claims that the sole issue in Pateros' appeal before the CA is jurisdiction and as the question of jurisdiction is a question of law and as the CA lacks jurisdiction over pure questions of law, therefore, Pateros resorted to a wrong mode of appeal. The issues raised by Pateros do not consist of questions of fact as the RTC rendered the assailed Order based on Makati's Motion to Dismiss and no trial on the merits was ever conducted. Makati points out that the CA quoted the decision of the RTC's discourse in order to show that only a question of law was involved in Pateros' appeal. Thus, Makati posits that Pateros defies the rules on trial, evidence, and jurisdiction in a desperate bid to extricate itself from its mistake in taking a wrong mode of appeal,i.e., by notice of appeal to the CA rather than a petition for review on certiorari under Rule 45 of the Revised Rules of Civil Procedure filed before this Court. Makati submits that the dismissal of Pateros' appeal was proper, as mandated by Section 2, Rule 50 of the said Rules. Due to the availment of the wrong mode of appeal, the RTC's Order dismissing the case already attained finality.28 The Director of Lands and the DENR, through the Office of the Solicitor General (OSG), share the stand and arguments of Makati. The OSG stresses that the parties never presented any evidence before the RTC which resolved the case based on the parties' undisputed factual submissions and the application thereto of the pertinent laws, Rules of Civil Procedure, and jurisprudence. Hence, the OSG concludes that the appeal before the CA involved a pure question of law.29 Our Ruling We agree that Pateros indeed committed a procedural infraction. It is clear that the issue raised by Pateros to the CA involves the jurisdiction of the RTC over the subject matter of the case. The jurisdiction of a court over the subject matter of the action is a matter of law; it is conferred by the Constitution or by law. Consequently, issues which deal with the jurisdiction of a court over the subject matter of a case are pure questions of law. As Pateros' appeal solely involves a question of law, it should have directly taken its appeal to this Court by filing a petition for review on certiorari under Rule 45, not an ordinary appeal with the CA under Rule 41. The CA did not err in holding that Pateros pursued the wrong mode of appeal.30 However, in the interest of justice and in order to write finis to this controversy, we opt to relax the rules. Our ruling in Atty. Ernesto A. Tabujara III and Christine S. Dayrit v. People of the Philippines and Daisy Afable 31 provides us with ample justification, viz.: While it is true that rules of procedure are intended to promote rather than frustrate the ends of justice, and while the swift unclogging of the dockets of the courts is a laudable objective, it nevertheless must not be met at the expense of substantial justice. The Court has allowed some meritorious cases to proceed despite inherent procedural defects and lapses. This is in keeping with the principle that rules of procedure are mere tools designed to facilitate the attainment of justice, and that strict and rigid application of rules which would result in technicalities that tend to frustrate rather than promote substantial justice must always be avoided. It is a far better and more prudent cause of action for the court to excuse a technical lapse and afford the parties a review of the case to attain the ends of justice, rather than dispose of the case on technicality and cause grave injustice to the parties, giving a false impression of speedy disposal of cases while actually resulting in more delay, if not a miscarriage of justice.1avvphi1 In those rare cases to which we did not stringently apply the procedural rules, there always existed a clear need to prevent the commission of a grave injustice. Our judicial system and the courts have always tried to maintain a healthy balance between the strict enforcement of procedural laws and the guarantee that every litigant is given the full opportunity for a just and proper disposition of his cause. The emerging trend in the rulings of this Court is to afford every party litigant the amplest opportunity for the proper and just determination of his cause, free from the constraints of technicalities. Time and again, we have consistently held that rules must not be applied so rigidly as to override substantial justice.

Given the circumstances surrounding the instant case, we find sufficient reason to relax the rules. Thus, we now resolve the sole issue of whether the RTC has jurisdiction to entertain the boundary dispute between Pateros and Makati. Apart from the doctrine that the jurisdiction of a tribunal over the subject matter of an action is conferred by law, it is also the rule that the courts exercise of jurisdiction is determined by the material allegations of the complaint or information and the law applicable at the time the action was commenced. Lack of jurisdiction of the court over an action or the subject matter of an action cannot be cured by the silence, by acquiescence, or even by express consent of the parties. Thus, the jurisdiction of a court over the nature of the action and the subject matter thereof cannot be made to depend upon the defenses set up in court or upon a motion to dismiss for, otherwise, the question of jurisdiction would depend almost entirely on the defendant. Once jurisdiction is vested, the same is retained up to the end of the litigation.32 It is worth stressing that, at the time the instant case was filed, the 1987 Constitution and the Local Government Code (LGC) of 1991 were already in effect. Thus, the law in point is Section 118 of the LGC, which provides: Section. 118. Jurisdictional Responsibility for Settlement of Boundary Disputes. Boundary disputes between and among local government units shall, as much as possible, be settled amicably. To this end: (a) Boundary disputes involving two (2) or more barangays in the same city or municipality shall be referred for settlement to the sangguniang panlungsod or sangguniang bayan concerned. (b) Boundary disputes involving two (2) or more municipalities within the same province shall be referred for settlement to the sangguniang panlalawigan concerned. (c) Boundary disputes involving municipalities or component cities of different provinces shall be jointly referred for settlement to the sanggunians of the province concerned. (d) Boundary disputes involving a component city or municipality on the one hand and a highly urbanized city on the other, or two (2) or more highly urbanized cities, shall be jointly referred for settlement to the respective sanggunians of the parties. (e) In the event the sanggunian fails to effect an amicable settlement within sixty (60) days from the date the dispute was referred thereto, it shall issue a certification to that effect. Thereafter, the dispute shall be formally tried by the sanggunian concerned which shall decide the issue within sixty (60) days from the date of the certification referred to above.33 Notably, when Pateros filed its complaint with the RTC of Makati, Makati was still a municipality. We take judicial notice of the fact that there was no Sangguniang Panlalawigan that could take cognizance of the boundary dispute, as provided in Section 118(b) of the LGC. Neither was it feasible to apply Section 118(c) or Section 118(d), because these two provisions clearly refer to situations different from that obtaining in this case. Also, contrary to Makati's postulation, the former MMA did not also have the authority to take the place of the Sangguniang Panlalawigan because the MMA's power was limited to the delivery of basic urban services requiring coordination in Metropolitan Manila. The MMA's governing body, the Metropolitan Manila Council, although composed of the mayors of the component cities and municipalities, was merely given the power of: (1) formulation of policies on the delivery of basic services requiring coordination and consolidation; and (2) promulgation of resolutions and other issuances, approval of a code of basic services, and exercise of its rule-making power.34Thus, there is no merit in Makatis argument that Pateros failed to exhaust administrative remedies inasmuch as the LGC is silent as to the governing body in charge of boundary disputes involving municipalities located in the Metropolitan Manila area. However, now that Makati is already a highly urbanized city, the parties should follow Section 118(d) of the LGC and should opt to amicably settle this dispute by joint referral to the respective sanggunians of the parties. This has become imperative because, after all, no attempt had been made earlier to settle the dispute amicably under the aegis of the LGC. The specific provision of the LGC, now made applicable because of the altered status of Makati, must be complied with. In the event that no amicable settlement is reached, as envisioned under Section 118(e) of the LGC, a certification shall be issued to that effect, and the dispute shall be formally tried by the Sanggunian concerned within sixty (60) days from the date of the aforementioned certification. In this regard, Rule III of the Rules and Regulations Implementing the LGC shall govern.35 Only upon failure of these intermediary steps will resort to the RTC follow, as specifically provided in Section 119 of the LGC:

Section 119. Appeal. Within the time and manner prescribed by the Rules of Court, any party may elevate the decision of the sanggunian concerned to the proper Regional Trial Court having jurisdiction over the area in dispute. The Regional Trial Court shall decide the appeal within one (1) year from the filing thereof. Pending final resolution of the disputed area prior to the dispute shall be maintained and continued for all legal purposes. On this score, the jurisdiction of the RTC over boundary disputes among LGUs was settled in National Housing Authority v. Commission on the Settlement of Land Problems, 36 where this Court recognized the appellate jurisdiction of the proper RTC. The jurisdiction of the RTC was clarified in Municipality of Kananga v. Judge Madrona,37 where this Court held that, even in the absence of any specific provision of law, "RTCs have general jurisdiction to adjudicate all controversies except those expressly withheld from their plenary powers. They have the power not only to take judicial cognizance of a case instituted for judicial action for the first time, but also to do so to the exclusion of all other courts at that stage. Indeed, the power is not only original, but also exclusive." Corollarily, we feel obliged to inform Congress of the need to pass a law specifically delineating the metes and bounds of the disputing LGUs. In Mariano, Jr. v. COMELEC,38 we held that the existence of a boundary dispute does not per se present an unsurmountable difficulty which will prevent Congress from defining with reasonable certitude the territorial jurisdiction of an LGU. Congress, by virtue of the powers vested in it by the Constitution, could very well put an end to this dispute. We reiterate what we already said about the importance and sanctity of the territorial jurisdiction of an LGU: The importance of drawing with precise strokes the territorial boundaries of a local unit of government cannot be overemphasized. The boundaries must be clear for they define the limits of the territorial jurisdiction of a local government unit. It can legitimately exercise powers of government only within the limits of its territorial jurisdiction. Beyond these limits, its acts are ultra vires. Needless to state, any uncertainty in the boundaries of local government units will sow costly conflicts in the exercise of governmental powers which ultimately will prejudice the people's welfare. This is the evil sought to be avoided by the Local Government Unit in requiring that the land area of a local government unit must be spelled out in metes and bounds, with technical descriptions. 39 WHEREFORE, the instant Petition is DENIED, having been mooted by the conversion of respondent Municipality of Makati into a highly urbanized city. The parties are hereby DIRECTED to comply with Section 118(d) and (e) of the Local Government Code, and Rule III of the Rules and Regulations Implementing the Local Government Code of 1991 without prejudice to judicial recourse, as provided in the Local Government Code. No costs. SO ORDERED. ootnotes
1

Dated May 7, 2003; rollo, pp. 7-29.

Particularly docketed as CA-G.R. CV No. 55886, penned by Associate Justice Perlita J. Tria Tirona, with Associate Justices Roberto A. Barrios and Edgardo F. Sundiam (both deceased), concurring; rollo, pp. 200-208.
3

Particularly docketed as Civil Case No. 93-4529, penned by then Judge Florentino A. Tuason, Jr. (now a Commissioner of the Commission on Elections); rollo, pp. 119-123.
4

Entitled: EXCLUDING FROM THE OPERATION OF PROCLAMATION NO. 423, SERIES OF 1957 WHICH ESTABLISHED THE FORT WILLIAM MCKINLEY (NOW FORT BONIFACIO) MILITARY RESERVATION SITUATED IN THE MUNICIPALITIES OF PASIG, TAGUIG, PARAAQUE, MAKATI AND PASAY CITY, METRO MANILA, A CERTAIN PORTION OF THE LAND EMBRACED THEREIN SITUATED IN THE MUNICIPALITY OF MAKATI AND DECLARING THE SAME OPEN TO DISPOSITION UNDER THE PROVISIONS OF ACT NO. 3038 AND REPUBLIC ACT NO. 274 IN RELATION [TO] THE PROVISIONS OF THE PUBLIC LAND ACT, AS AMENDED.
5

Entitled: EXCLUDING FROM THE OPERATION OF PROCLAMATION NO. 423 DATED JULY 12, 1957 WHICH ESTABLISHED THE MILITARY RESERVATION KNOWN AS "FORT WILLIAM MCKINLEY" (NOW FORT ANDRES BONIFACIO) SITUATED IN THE MUNICIPALITIES OF PASIG, TAGUIG, PATEROS AND PARAAQUE, PROVINCE OF RIZAL AND PASAY CITY (NOW METROPOLITAN MANILA) AS AMENDED BY PROCLAMATION NO. 2475 DATED JANUARY 7, 1986, CERTAIN PORTIONS OF LAND EMBRACED THEREIN KNOWN AS BARANGAYS CEMBO, SOUTH CEMBO, WEST REMBO, EAST REMBO, COMEMBO, PEMBO AND PITOGO, SITUATED IN THE MUNICIPALITY OF MAKATI, METROPOLITAN MANILA AND DECLARING THE SAME OPEN FOR DISPOSITION UNDER THE PROVISIONS OF REPUBLIC ACT NO. 274, AND REPUBLIC ACT NO. 730 IN RELATION TO THE PROVISIONS OF THE PUBLIC LAND ACT, AS AMENDED.
6

Records, pp. 281-287. Id. at 288-291.

Id. at 1-10. Id. at 32-40. Id. at 87-88. Id. at 104. An Act Converting the Municipality of Makati into a Highly Urbanized City to be known as the City of Makati. Records, pp. 201-203. Id. at 209.

10

11

12

13

14

15

SECTION 10. No province, city, municipality, or barangay may be created, divided, merged, abolished, or its boundary substantially altered, except in accordance with the criteria established in the local government code and subject to approval by a majority of the votes cast in a plebiscite in the political units directly affected.
16

SECTION 11. The Congress may, by law, create special metropolitan political subdivisions, subject to a plebiscite as set forth in Section 10 hereof. The component cities and municipalities shall retain their basic autonomy and shall be entitled to their own local executives and legislative assemblies. The jurisdiction of the metropolitan authority that will thereby be created shall be limited to basic services requiring coordination.
17

G.R. Nos. 38204 and 38205, September 24, 1991, 201 SCRA 632, 640. Rollo, pp. 124-132. Id. at 150-157. Id. at 158-159. SECTION 5. The Supreme Court shall have the following powers:

18

19

20

21

xxxx (2) Review, revise, reverse, modify, or affirm on appeal or certiorari, as the law or the Rules of Court may provide, final judgments and orders of lower courts in: (a) All cases in which the constitutionality or validity of any treaty, international or executive agreement, law, presidential decree, proclamation, order, instruction, ordinance, or regulation is in question. (b) All cases involving the legality of any tax, impost, assessment, or toll, or any penalty imposed in relation thereto. (c) All cases in which the jurisdiction of any lower court is in issue. (d) All criminal cases in which the penalty imposed is reclusion perpetua or higher. (e) All cases in which only an error or question of law is involved.
22

SEC. 2. Modes of appeal.

(a) Ordinary appeal. The appeal to the Court of Appeals in cases decided by the Regional Trial Court in the exercise of its original jurisdiction shall be taken by filing a notice of appeal with the court which rendered the judgment or final order appealed from and serving a copy thereof upon the adverse party. No record on appeal shall be required except in special proceedings and other cases of multiple or separate appeals where the law or these Rules so require. In such cases, the record on appeal shall be filed and served in like manner. (b) Petition for review. The appeal to the Court of Appeals in cases decided by the Regional Trial Court in the exercise of its appellate jurisdiction shall be by petition for review in accordance with Rule 42.

(c) Appeal by certiorari. In all cases where only questions of law are raised or involved, the appeal shall be to the Supreme Court by petition for review on certiorari in accordance with Rule 45.
23

SEC. 2. Dismissal of improper appeal to the Court of Appeals. An appeal under Rule 41 taken from the Regional Trial Court to the Court of Appeals raising only questions of law shall be dismissed, issues purely of law not being reviewable by said court. Similarly, an appeal by notice of appeal instead of by petition for review from the appellate judgment of a Regional Trial Court shall be dismissed. An appeal erroneously taken to the Court of Appeals shall not be transferred to the appropriate court but shall be dismissed outright.
24 25

Rollo, pp. 209-217. Id. at 222. 26 Supra note 1, at 18. 27 Pateros' Memorandum dated August 9, 2004; rollo, pp. 314-333. 28 Makati's Memorandum dated August 23, 2004; rollo, pp. 336-351. 29 OSG's Comment dated April 16, 2004; rollo, pp. 279-289. 30 Quezon City and the City Treasurer of Quezon City v. ABS-CBN Broadcasting Corporation, G.R. No. 166408, October 6, 2008. 31 G.R. No. 175162, October 29, 2008. (Citations omitted.) 32 People v. Vanzuela, G.R. No. 178266, July 21, 2008, 559 SCRA 234, 242-243, citing Laresma v. Abellana, 442 SCRA 156, 168 (2004). 33 Emphasis supplied.
34

Metropolitan Manila Devt. Authority v. Bel-Air Village Asso., 385 Phil. 586, 616 (2000).

35

Rule III of Administrative Order No. 270 dated February 21, 1992, entitled "Prescribing the Implementing Rules and Regulations of the Local Government Code of 1991" provides: RULE III Settlement of Boundary Disputes ARTICLE 15. Definition and Policy. There is a boundary dispute when a portion or the whole of the territorial area of an LGU is claimed by two or more LGUs. Boundary disputes between or among LGUs shall, as much as possible, be settled amicably. ARTICLE 16. Jurisdictional Responsibility. Boundary disputes shall be referred for settlement to the following: (a) Sangguniang panlungsod or sangguniang bayan for disputes involving two (2) or more barangays in the same city or municipality, as the case may be; (b) Sangguniang panlalawigan, for those involving two (2) or more municipalities within the same province; (c) Jointly, to the sanggunians of provinces concerned, for those involving component cities or municipalities of different provinces; or (d) Jointly, to the respective sanggunians, for those involving a component city or municipality and a highly-urbanized city; or two (2) or more highly-urbanized cities. ARTICLE 17. Procedures for Settling Boundary Disputes. The following procedures shall govern the settlement of boundary disputes: (a) Filing of petition The sanggunian concerned may initiate action by filing a petition, in the form of a resolution, with the sanggunian having jurisdiction over the dispute. (b) Contents of petition The petition shall state the grounds, reasons or justifications therefor. (c) Documents attached to petition The petition shall be accompanied by:

(1) Duly authenticated copy of the law or statute creating the LGU or any other document showing proof of creation of the LGU; (2) Provincial, city, municipal, or barangay map, as the case may be, duly certified by the LMB; (3) Technical description of the boundaries of the LGUs concerned; (4) Written certification of the provincial, city, or municipal assessor, as the case may be, as to territorial jurisdiction over the disputed area according to records in custody; (5) Written declarations or sworn statements of the people residing in the disputed area; and (6) Such other documents or information as may be required by the sanggunian hearing the dispute. (d) Answer of adverse party Upon receipt by the sanggunian concerned of the petition together with the required documents, the LGU or LGUs complained against shall be furnished copies thereof and shall be given fifteen (15) working days within which to file their answers. (e) Hearing Within five (5) working days after receipt of the answer of the adverse party, the sanggunian shall hear the case and allow the parties concerned to present their respective evidences. (f) Joint hearing When two or more sanggunians jointly hear a case, they may sit en banc or designate their respective representatives. Where representatives are designated, there shall be an equal number of representatives from each sanggunian. They shall elect from among themselves a presiding officer and a secretary. In case of disagreement, selection shall be by drawing lot. (g) Failure to settle In the event the sanggunian fails to amicably settle the dispute within sixty (60) days from the date such dispute was referred thereto, it shall issue a certification to that effect and copies thereof shall be furnished the parties concerned. (h) Decision Within sixty (60) days from the date the certification was issued, the dispute shall be formally tried and decided by the sanggunian concerned. Copies of the decision shall, within fifteen (15) days from the promulgation thereof, be furnished the parties concerned, DILG, local assessor, COMELEC, NSO, and other NGAs concerned. (i) Appeal Within the time and manner prescribed by the Rules of Court, any party may elevate the decision of the sanggunian concerned to the proper Regional Trial Court having jurisdiction over the dispute by filing therewith the appropriate pleading, stating among others, the nature of the dispute, the decision of the sanggunian concerned and the reasons for appealing therefrom. The Regional Trial Court shall decide the case within one (1) year from the filing thereof. Decisions on boundary disputes promulgated jointly by two (2) or more sangguniang panlalawigans shall be heard by the Regional Trial Court of the province which first took cognizance of the dispute. ARTICLE 18. Maintenance of Status Quo. Pending final resolution of the dispute, the status of the affected area prior to the dispute shall be maintained and continued for all purposes. ARTICLE 19. Official Custodian. The DILG shall be the official custodian of copies of all documents on boundary disputes of LGUs. (Emphasis supplied)

Manila

EN BANC April 28, 2009

G.R. No. 180363

EDGAR Y. TEVES, Petitioner, vs. THE COMMISSION ON ELECTIONS and HERMINIO G. TEVES, Respondents.
DECISION

YNARES-SANTIAGO, J.: The issue for resolution is whether the crime of which petitioner Edgar Y. Teves was convicted in Teves v. Sandiganbayan1 involved moral turpitude. The facts of the case are undisputed. Petitioner was a candidate for the position of Representative of the 3rd legislative district of Negros Oriental during the May 14, 2007 elections. On March 30, 2007, respondent Herminio G. Teves filed a petition to disqualify 2petitioner on the ground that in Teves v. Sandiganbayan,3 he was convicted of violating Section 3(h), Republic Act (R.A.) No. 3019, or the Anti-Graft and Corrupt Practices Act, for possessing pecuniary or financial interest in a cockpit, which is prohibited under Section 89(2) of the Local Government Code (LGC) of 1991, and was sentenced to pay a fine of P10,000.00. Respondent alleged that petitioner is disqualified from running for public office because he was convicted of a crime involving moral turpitude which carries the accessory penalty of perpetual disqualification from public office.4 The case was docketed as SPA No. 07-242 and assigned to the COMELECs First Division. On May 11, 2007, the COMELEC First Division disqualified petitioner from running for the position of member of House of Representatives and ordered the cancellation of his Certificate of Candidacy.5 Petitioner filed a motion for reconsideration before the COMELEC en banc which was denied in its assailed October 9, 2007 Resolution for being moot, thus: It appears, however, that [petitioner] lost in the last 14 May 2007 congressional elections for the position of member of the House of Representatives of the Third district of Negros Oriental thereby rendering the instant Motion for Reconsideration moot and academic. WHEREFORE, in view of the foregoing, the Motion for Reconsideration dated 28 May 2007 filed by respondent Edgar Y. Teves challenging the Resolution of this Commission (First Division) promulgated on 11 May 2007 is hereby DENIED for having been rendered moot and academic. SO ORDERED.6 Hence, the instant petition based on the following grounds: I. THERE WAS ABUSE OF DISCRETION, AMOUNTING TO LACK OR EXCESS OF JURISDICTION, WHEN THE COMELEC EN BANC DEMURRED IN RESOLVING THE MAIN ISSUE RAISED IN PETITIONERS MOTION FOR RECONSIDERATION, WHETHER PETITIONER IS DISQUALIFIED TO RUN FOR PUBLIC OFFICE TAKING INTO CONSIDERATION THE DECISION OF THE SUPREME COURT IN G.R. NO. 154182. II. THE MAIN ISSUE IS NOT RENDERED MOOT AND ACADEMIC AS THE RESOLUTION THEREOF WILL DETERMINE PETITIONERS QUALIFICATION TO RUN FOR OTHER PUBLIC POSITIONS IN FUTURE ELECTIONS. III. THERE WAS ABUSE OF DISCRETION, AMOUNTING TO LACK OR EXCESS OF JURISDICTION, WHEN THE COMELEC EN BANC IN EFFECT AFFIRMED THE FINDINGS OF THE FIRST DIVISION WHICH RULED THAT PETITIONERS CONVICTION FOR VIOLATION OF SECTION 3(H) OF R.A. 3019 AND THE IMPOSITION OF FINE IS A CONVICTION FOR A CRIME INVOLVING MORAL TURPITUDE. A. THE ISSUE OF WHETHER PETITIONER WAS CONVICTED OF A CRIME INVOLVING MORAL TURPITUDE SHOULD BE RESOLVED TAKING INTO CONSIDERATION THE FINDINGS OF THE SUPREME COURT IN G.R. NO. 154182. B.

THERE IS NOTHING IN THE DECISION OF THE SUPREME COURT THAT SUPPORTS THE FINDINGS OF THE FIRST DIVISION OF THE COMELEC, THAT BASED ON THE "TOTALITY OF FACTS" DOCTRINE, PETITIONER WAS CONVICTED OF A CRIME INVOLVING MORAL TURPITUDE.7 The petition is impressed with merit. The fact that petitioner lost in the congressional race in the May 14, 2007 elections did not effectively moot the issue of whether he was disqualified from running for public office on the ground that the crime he was convicted of involved moral turpitude. It is still a justiciable issue which the COMELEC should have resolved instead of merely declaring that the disqualification case has become moot in view of petitioners defeat. Further, there is no basis in the COMELECs findings that petitioner is eligible to run again in the 2010 elections because his disqualification shall be deemed removed after the expiration of a period of five years from service of the sentence. Assuming that the elections would be held on May 14, 2010, the records show that it was only on May 24, 2005 when petitioner paid the fine of P10,000.00 he was sentenced to pay in Teves v. Sandignbayan. 8Such being the reckoning point, thus, the five-year disqualification period will end only on May 25, 2010. Therefore he would still be ineligible to run for public office during the May 14, 2010 elections. Hence, it behooves the Court to resolve the issue of whether or not petitioners violation of Section 3(h), R.A. No. 3019 involves moral turpitude.1avvphi1 Section 12 of the Omnibus Election Code reads: Sec. 12. Disqualifications. - Any person who has been declared by competent authority insane or incompetent, or has been sentenced by final judgment for subversion, insurrection, rebellion, or for any offense for which he has been sentenced to a penalty of more than eighteen months, or for a crime involving moral turpitude, shall be disqualified to be a candidate and to hold any office, unless he has been given plenary pardon or granted amnesty.lawphil.net The disqualifications to be a candidate herein provided shall be deemed removed upon the declaration by competent authority that said insanity or incompetence had been removed or after the expiration of a period of five years from his service of sentence, unless within the same period he again becomes disqualified. (Emphasis supplied) Moral turpitude has been defined as everything which is done contrary to justice, modesty, or good morals; an act of baseness, vileness or depravity in the private and social duties which a man owes his fellowmen, or to society in general.9 Section 3(h) of R.A. 3019 of which petitioner was convicted, reads: Sec. 3. Corrupt practices of public officers. In addition to acts or omissions of public officers already penalized by existing law, the following shall constitute corrupt practices of any public officer and are hereby declared to be unlawful: xxxx (h) Directly or indirectly having financial or pecuniary interest in any business, contract or transaction in connection with which he intervenes or takes part in his official capacity, or in which he is prohibited by the Constitution or by any law from having any interest. The essential elements of the violation of said provision are as follows: 1) The accused is a public officer; 2) he has a direct or indirect financial or pecuniary interest in any business, contract or transaction; 3) he either: a) intervenes or takes part in his official capacity in connection with such interest, or b) is prohibited from having such interest by the Constitution or by law.10 Thus, there are two modes by which a public officer who has a direct or indirect financial or pecuniary interest in any business, contract, or transaction may violate Section 3(h) of R.A. 3019. The first mode is when the public officer intervenes or takes part in his official capacity in connection with his financial or pecuniary interest in any business, contract, or transaction. The second mode is when he is prohibited from having such an interest by the Constitution or by law.11 In Teves v. Sandiganbayan,12 petitioner was convicted under the second mode for having pecuniary or financial interest in a cockpit which is prohibited under Sec. 89(2) of the Local Government Code of 1991. The Court held therein:

However, the evidence for the prosecution has established that petitioner Edgar Teves, then mayor of Valencia, Negros Oriental, owned the cockpit in question. In his sworn application for registration of cockpit filed on 26 September 1983 with the Philippine Gamefowl Commission, Cubao, Quezon City, as well as in his renewal application dated 6 January 1989 he stated that he is the owner and manager of the said cockpit. Absent any evidence that he divested himself of his ownership over the cockpit, his ownership thereof is rightly to be presumed because a thing once proved to exist continues as long as is usual with things of that nature. His affidavit dated 27 September 1990 declaring that effective January 1990 he "turned over the management of the cockpit to Mrs. Teresita Z. Teves for the reason that [he] could no longer devote a full time as manager of the said entity due to other work pressure" is not sufficient proof that he divested himself of his ownership over the cockpit. Only the management of the cockpit was transferred to Teresita Teves effective January 1990. Being the owner of the cockpit, his interest over it was direct. Even if the ownership of petitioner Edgar Teves over the cockpit were transferred to his wife, still he would have a direct interest thereon because, as correctly held by respondent Sandiganbayan, they remained married to each other from 1983 up to 1992, and as such their property relation can be presumed to be that of conjugal partnership of gains in the absence of evidence to the contrary. Article 160 of the Civil Code provides that all property of the marriage is presumed to belong to the conjugal partnership unless it be proved that it pertains exclusively to the husband or to the wife. And Section 143 of the Civil Code declares all the property of the conjugal partnership of gains to be owned in common by the husband and wife. Hence, his interest in the Valencia Cockpit is direct and is, therefore, prohibited under Section 89(2) of the LGC of 1991, which reads: Section 89. Prohibited Business and Pecuniary Interest. (a) It shall be unlawful for any local government official or employee, directly or indirectly, to: xxxx (2) Hold such interests in any cockpit or other games licensed by a local government unit. [Emphasis supplied]. The offense proved, therefore, is the second mode of violation of Section 3(h) of the Anti-Graft Law, which is possession of a prohibited interest.13 However, conviction under the second mode does not automatically mean that the same involved moral turpitude. A determination of all surrounding circumstances of the violation of the statute must be considered. Besides, moral turpitude does not include such acts as are not of themselves immoral but whose illegality lies in their being positively prohibited, as in the instant case. Thus, in Dela Torre v. Commission on Elections,14 the Court clarified that: Not every criminal act, however, involves moral turpitude. It is for this reason that "as to what crime involves moral turpitude, is for the Supreme Court to determine." In resolving the foregoing question, the Court is guided by one of the general rules that crimes mala in se involve moral turpitude, while crimes mala prohibita do not, the rationale of which was set forth in "Zari v. Flores," to wit: "It (moral turpitude) implies something immoral in itself, regardless of the fact that it is punishable by law or not. It must not be merely mala prohibita, but the act itself must be inherently immoral. The doing of the act itself, and not its prohibition by statute fixes the moral turpitude. Moral turpitude does not, however, include such acts as are not of themselves immoral but whose illegality lies in their being positively prohibited." This guideline nonetheless proved short of providing a clear-cut solution, for in "International Rice Research Institute v. NLRC, the Court admitted that it cannot always be ascertained whether moral turpitude does or does not exist by merely classifying a crime as malum in se or as malum prohibitum. There are crimes which are mala in se and yet but rarely involve moral turpitude and there are crimes which involve moral turpitude and are mala prohibita only. In the final analysis, whether or not a crime involves moral turpitude is ultimately a question of fact and frequently depends on all the circumstances surrounding the violation of the statute. (Emphasis supplied)1awphi1 Applying the foregoing guidelines, we examined all the circumstances surrounding petitioners conviction and found that the same does not involve moral turpitude. First, there is neither merit nor factual basis in COMELECs finding that petitioner used his official capacity in connection with his interest in the cockpit and that he hid the same by transferring the management to his wife, in violation of the trust reposed on him by the people. The COMELEC, in justifying its conclusion that petitioners conviction involved moral turpitude, misunderstood or misapplied our ruling in Teves v. Sandiganbayan. According to the COMELEC:

In the present case, while the crime for which [petitioner] was convicted may per se not involve moral turpitude, still the totality of facts evinces [his] moral turpitude. The prohibition was intended to avoid any conflict of interest or any instance wherein the public official would favor his own interest at the expense of the public interest. The [petitioner] knew of the prohibition but he attempted to circumvent the same by holding out that the Valencia Cockpit and Recreation Center is to be owned by a certain Daniel Teves. Later on, he would aver that he already divested himself of any interest of the cockpit in favor of his wife. But the Supreme Court saw through the ruse and declared that what he divested was only the management of the cockpit but not the ownership. And even if the ownership is transferred to his wife, the respondent would nevertheless have an interest thereon because it would still belong to the conjugal partnership of gains, of which the [petitioner] is the other half. [Petitioner] therefore maintained ownership of the cockpit by deceit. He has the duty to divest himself but he did not and instead employed means to hide his interests. He knew that it was prohibited he nevertheless concealed his interest thereon. The facts that he hid his interest denotes his malicious intent to favor self-interest at the expense of the public. Only a man with a malevolent, decadent, corrupt and selfish motive would cling on and conceal his interest, the acquisition of which is prohibited. This plainly shows his moral depravity and proclivity to put primacy on his self interest over that of his fellowmen. Being a public official, his act is also a betrayal of the trust reposed on him by the people. Clearly, the totality of his acts is contrary to the accepted rules of right and duty, honesty and good morals. The crime, as committed by the [petitioner], plainly involves moral turpitude.15 On the contrary, the Courts ruling states: The Sandiganbayan found that the charge against Mayor Teves for causing the issuance of the business permit or license to operate the Valencia Cockpit and Recreation Center is "not well-founded." This it based, and rightly so, on the additional finding that only the Sangguniang Bayan could have issued a permit to operate the Valencia Cockpit in the year 1992. Indeed, under Section 447(3) of the LGC of 1991, which took effect on 1 January 1992, it is the Sangguniang Bayan that has the authority to issue a license for the establishment, operation, and maintenance of cockpits. Unlike in the old LGC, Batas Pambansa Blg. 337, wherein the municipal mayor was the presiding officer of the Sangguniang Bayan, under the LGC of 1991, the mayor is not so anymore and is not even a member of the Sangguniang Bayan. Hence, Mayor Teves could not have intervened or taken part in his official capacity in the issuance of a cockpit license during the material time, as alleged in the information, because he was not a member of the Sangguniang Bayan.16 Thus, petitioner, as then Mayor of Valencia, did not use his influence, authority or power to gain such pecuniary or financial interest in the cockpit. Neither did he intentionally hide his interest in the subject cockpit by transferring the management thereof to his wife considering that the said transfer occurred before the effectivity of the present LGC prohibiting possession of such interest. As aptly observed in Teves v. Sandiganbayan: As early as 1983, Edgar Teves was already the owner of the Valencia Cockpit. Since then until 31 December 1991, possession by a local official of pecuniary interest in a cockpit was not yet prohibited. It was before the effectivity of the LGC of 1991, or on January 1990, that he transferred the management of the cockpit to his wife Teresita. In accordance therewith it was Teresita who thereafter applied for the renewal of the cockpit registration. Thus, in her sworn applications for renewal of the registration of the cockpit in question dated 28 January 1990 and 18 February 1991, she stated that she is the Owner/Licensee and Operator/Manager of the said cockpit. In her renewal application dated 6 January 1992, she referred to herself as the Owner/Licensee of the cockpit. Likewise in the separate Lists of Duly Licensed Personnel for Calendar Years 1991 and 1992, which she submitted on 22 February 1991 and 17 February 1992, respectively, in compliance with the requirement of the Philippine Gamefowl Commission for the renewal of the cockpit registration, she signed her name as Operator/Licensee.17 (Emphasis supplied) Second, while possession of business and pecuniary interest in a cockpit licensed by the local government unit is expressly prohibited by the present LGC, however, its illegality does not mean that violation thereof necessarily involves moral turpitude or makes such possession of interest inherently immoral. Under the old LGC, mere possession by a public officer of pecuniary interest in a cockpit was not among the prohibitions. Thus, in Teves v. Sandiganbayan, the Court took judicial notice of the fact that: x x x under the old LGC, mere possession of pecuniary interest in a cockpit was not among the prohibitions enumerated in Section 41 thereof. Such possession became unlawful or prohibited only upon the advent of the LGC of 1991, which took effect on 1 January 1992. Petitioner Edgar Teves stands charged with an offense in connection with his prohibited interest committed on or about 4 February 1992, shortly after the maiden appearance of the prohibition. Presumably, he was not yet very much aware of the prohibition. Although ignorance thereof would not excuse him from criminal liability, such would justify the imposition of the lighter penalty of a fine of P10,000 under Section 514 of the LGC of 1991.18 (Italics supplied)

The downgrading of the indeterminate penalty of imprisonment of nine years and twenty-one days as minimum to twelve years as maximum to a lighter penalty of a fine of P10,000.00 is a recognition that petitioners violation was not intentionally done contrary to justice, modesty, or good morals but due to his lack of awareness or ignorance of the prohibition. Lastly, it may be argued that having an interest in a cockpit is detrimental to public morality as it tends to bring forth idlers and gamblers, hence, violation of Section 89(2) of the LGC involves moral turpitude. Suffice it to state that cockfighting, or sabong in the local parlance, has a long and storied tradition in our culture and was prevalent even during the Spanish occupation.19 While it is a form of gambling, the morality thereof or the wisdom in legalizing it is not a justiciable issue. In Magtajas v. Pryce Properties Corporation, Inc., it was held that: The morality of gambling is not a justiciable issue. Gambling is not illegal per se. While it is generally considered inimical to the interests of the people, there is nothing in the Constitution categorically proscribing or penalizing gambling or, for that matter, even mentioning it at all. It is left to Congress to deal with the activity as it sees fit. In the exercise of its own discretion, the legislature may prohibit gambling altogether or allow it without limitation or it may prohibit some forms of gambling and allow others for whatever reasons it may consider sufficient. Thus, it has prohibited jueteng and monte but permits lotteries, cockfighting and horse-racing. In making such choices, Congress has consulted its own wisdom, which this Court has no authority to review, much less reverse. Well has it been said that courts do no sit to resolve the merits of conflicting theories. That is the prerogative of the political departments. It is settled that questions regarding the wisdom, morality, or practicability of statutes are not addressed to the judiciary but may be resolved only by the legislative and executive departments, to which the function belongs in our scheme of government. That function is exclusive. Whichever way these branches decide, they are answerable only to their own conscience and the constituents who will ultimately judge their acts, and not to the courts of justice. WHEREFORE, the petition is GRANTED. The assailed Resolutions of the Commission on Elections dated May 11, 2007 and October 9, 2007 disqualifying petitioner Edgar Y. Teves from running for the position of Representative of the 3rd District of Negros Oriental, are REVERSED and SET ASIDE and a new one is entered declaring that the crime committed by petitioner (violation of Section 3(h) of R.A. 3019) did not involve moral turpitude. SO ORDERED. CONCURRING OPINION BRION, J.: I fully concur with the ponencia of my esteemed colleague, Justice Consuelo Ynares-Santiago. I add these views to further explore the term "moral turpitude" a term that, while carrying far-reaching effects, embodies a concept that to date has not been given much jurisprudential focus. I. Historical Roots The term "moral turpitude" first took root under the United States (U.S.) immigration laws.1 Its history can be traced back as far as the 17th century when the States of Virginia and Pennsylvania enacted the earliest immigration resolutions excluding criminals from America, in response to the British governments policy of sending convicts to the colonies. State legislators at that time strongly suspected that Europe was deliberately exporting its human liabilities.2 In the U.S., the term "moral turpitude" first appeared in the Immigration Act of March 3, 1891, which directed the exclusion of persons who have been convicted of a felony or other infamous crime or misdemeanor involving moral turpitude; this marked the first time the U.S. Congress used the term "moral turpitude" in immigration laws.3 Since then, the presence of moral turpitude has been used as a test in a variety of situations, including legislation governing the disbarment of attorneys and the revocation of medical licenses. Moral turpitude also has been judicially used as a criterion in disqualifying and impeaching witnesses, in determining the measure of contribution between joint tortfeasors, and in deciding whether a certain language is slanderous.4 In 1951, the U.S. Supreme Court ruled on the constitutionality of the term "moral turpitude" in Jordan v. De George.5 The case presented only one question: whether conspiracy to defraud the U.S. of taxes on distilled spirits is a crime involving moral turpitude within the meaning of Section 19 (a) of the Immigration Act of 1919 (Immigration Act). Sam De George, an Italian immigrant was convicted twice of conspiracy to defraud the U.S. government of taxes on distilled spirits. Subsequently, the Board of Immigration Appeals ordered De Georges deportation on the basis of the Immigration Act provision that allows the deportation of aliens who commit multiple crimes involving moral turpitude. De George argued that he should not be deported because his tax evasion crimes did not involve moral turpitude. The U.S. Supreme Court, through Chief Justice Vinzon, disagreed, finding that "under an unbroken course of judicial decisions, the crime of conspiring to defraud the U.S. is a crime involving moral turpitude."6 Notably, the Court determined that fraudulent conduct involved moral turpitude without exception:

Whatever the phrase "involving moral turpitude" may mean in peripheral cases, the decided cases make it plain that crimes in which fraud was an ingredient have always been regarded as involving moral turpitude.xxx Fraud is the touchstone by which this case should be judged.xxx We therefore decide that Congress sufficiently forewarned respondent that the statutory consequence of twice conspiring to defraud the United States is deportation. 7 Significantly, the U.S. Congress has never exactly defined what amounts to a "crime involving moral turpitude." The legislative history of statutes containing the moral turpitude standard indicates that Congress left the interpretation of the term to U.S. courts and administrative agencies.8 In the absence of legislative history as interpretative aid, American courts have resorted to the dictionary definition "the last resort of the baffled judge."9 The most common definition of moral turpitude is similar to one found in the early editions of Blacks Law Dictionary: [An] act of baseness, vileness, or the depravity in private and social duties which man owes to his fellow man, or to society in general, contrary to the accepted and customary rule of right and duty between man and man. xxx Act or behavior that gravely violates moral sentiment or accepted moral standards of community and is a morally culpable quality held to be present in some criminal offenses as distinguished from others. xxx The quality of a crime involving grave infringement of the moral sentiment of the community as distinguished from statutory mala prohibita.10 In the Philippines, the term moral turpitude was first introduced in 1901 in Act No. 190, otherwise known as the Code of Civil Actions and Special Proceedings.11 The Act provided that a member of the bar may be removed or suspended from his office as lawyer by the Supreme Court upon conviction of a crime involving moral turpitude. 12Subsequently, the term "moral turpitude" has been employed in statutes governing disqualifications of notaries public,13 priests and ministers in solemnizing marriages,14 registration to military service,15 exclusion16 and naturalization of aliens,17 discharge of the accused to be a state witness,18 admission to the bar,19 suspension and removal of elective local officials,20 and disqualification of persons from running for any elective local position.21 In Re Basa,22 a 1920 case, provided the first instance for the Court to define the term moral turpitude in the context of Section 21 of the Code of Civil Procedure on the disbarment of a lawyer for conviction of a crime involving moral turpitude. Carlos S. Basa, a lawyer, was convicted of the crime of abduction with consent. The sole question presented was whether the crime of abduction with consent, as punished by Article 446 of the Penal Code of 1887, involved moral turpitude. The Court, finding no exact definition in the statutes, turned to Bouviers Law Dictionary for guidance and held: "Moral turpitude," it has been said, "includes everything which is done contrary to justice, honesty, modesty, or good morals." (Bouvier's Law Dictionary, cited by numerous courts.) Although no decision can be found which has decided the exact question, it cannot admit of doubt that crimes of this character involve moral turpitude. The inherent nature of the act is such that it is against good morals and the accepted rule of right conduct. Thus, early on, the Philippines followed the American lead and adopted a general dictionary definition, opening the way for a case-to-case approach in determining whether a crime involves moral turpitude. II. Problems with the Definition of Moral Turpitude Through the years, the Court has never significantly deviated from the Blacks Law Dictionary definition of moral turpitude as "an act of baseness, vileness, or depravity in the private duties which a man owes his fellow men, or to society in general, contrary to the accepted and customary rule of right and duty between man and woman, or conduct contrary to justice, honesty, modesty, or good morals." 23 This definition is more specific than that used in In re Vinzon24 where the term moral turpitude was considered as encompassing "everything which is done contrary to justice, honesty, or good morals."25 In the U.S., these same definitions have been highly criticized for their vagueness and ambiguity.26 In Jordan, Justice Jackson noted that "except for the Courts [majority opinion], there appears to be a universal recognition that we have here an undefined and undefinable standard."27 Thus, the phrase "crimes involving moral turpitude" has been described as "vague," "nebulous," "most unfortunate," and even "bewildering." 28 Criticisms of moral turpitude as an inexactly defined concept are not unwarranted. First, the current definition of the term is broad. It can be stretched to include most kinds of wrongs in society -- a result that the Legislature could not have intended. This Court itself concluded in IRRI v. NLRC29 that moral turpitude "is somewhat a vague and indefinite term, the meaning of which must be left to the process of judicial inclusion or exclusion as the cases are reached" once again confirming, as late as 1993 in IRRI, our case-by-case approach in determining the crimes involving moral turpitude. Second, the definition also assumes the existence of a universally recognized code for socially acceptable behavior -the "private and social duties which man owes to his fellow man, or to society in general"; moral turpitude is an act

violating these duties. The problem is that the definition does not state what these duties are, or provide examples of acts which violate them. Instead, it provides terms such as "baseness," "vileness," and "depravity," which better describe moral reactions to an act than the act itself. In essence, they are "conclusory but non-descriptive."30 To be sure, the use of morality as a norm cannot be avoided, as the term "moral turpitude" contains the word "moral" and its direct connotation of right and wrong. "Turpitude," on the other hand, directly means "depravity" which cannot be appreciated without considering an acts degree of being right or wrong. Thus, the law, in adopting the term "moral turpitude," necessarily adopted a concept involving notions of morality standards that involve a good measure of subjective consideration and, in terms of certainty and fixity, are far from the usual measures used in law.31 Third, as a legal standard, moral turpitude fails to inform anyone of what it requires. 32 It has been said that the loose terminology of moral turpitude hampers uniformity since [i]t is hardly to be expected that a word which baffle judges will be more easily interpreted by laymen.33 This led Justice Jackson to conclude in Jordan that "moral turpitude offered judges no clearer guideline than their own consciences, inviting them to condemn all that we personally disapprove and for no better reason than that we disapprove it." 34 This trait, however, cannot be taken lightly, given that the consequences of committing a crime involving moral turpitude can be severe. Crimes Categorized as Crimes Involving Moral Turpitude35 Since the early 1920 case of In re Basa,36 the Court has maintained its case-by-case categorization of crimes on the basis of moral turpitude and has labeled specific crimes as necessarily involving moral turpitude. The following is a list, not necessarily complete, of the crimes adjudged to involve moral turpitude: 1. Abduction with consent37 2. Bigamy38 3. Concubinage39 4. Smuggling40 5. Rape41 6. Estafa through falsification of a document42 7. Attempted Bribery43 8. Profiteering44 9. Robbery45 10. Murder, whether consummated or attempted46 11. Estafa47 12. Theft48 13. Illicit Sexual Relations with a Fellow Worker49 14. Violation of BP Bldg. 2250 15. Falsification of Document51 16. Intriguing against Honor52 17. Violation of the Anti-Fencing Law53 18. Violation of Dangerous Drugs Act of 1972 (Drug-pushing)54 19. Perjury55 20. Forgery56 21. Direct Bribery57 22. Frustrated Homicide58 Zari v. Flores59 is one case that has provided jurisprudence its own list of crimes involving moral turpitude, namely: adultery, concubinage, rape, arson, evasion of income tax, barratry, bigamy, blackmail, bribery, criminal conspiracy to smuggle opium, dueling, embezzlement, extortion, forgery, libel, making fraudulent proof of loss on insurance contract, murder, mutilation of public records, fabrication of evidence, offenses against pension laws, perjury, seduction under the promise of marriage, estafa, falsification of public document, and estafa thru falsification of public document.60 Crimes Categorized as Crimes Not Involving Moral Turpitude61 The Court, on the other hand, has also had the occasion to categorically rule that certain crimes do not involve moral turpitude, namely: 1. 2. 3. 4. Minor transgressions of the law (i.e., conviction for speeding) 62 Illegal recruitment63 Slight physical injuries and carrying of deadly weapon (Illegal possession of firearms)64 Indirect Contempt65

III. Approaches and Standards.

Even a cursory examination of the above lists readily reveals that while the concept of "moral turpitude" does not have one specific definition that lends itself to easy and ready application, the Court has been fairly consistent in its understanding and application of the term and has not significantly deviated from what it laid down in In re Basa. The key element, directly derived from the word "turpitude," is the standard of depravity viewed from a scale of right and wrong. The application of this depravity standard can be made from at least three perspectives or approaches, namely: from the objective perspective of the act itself, irrespective of whether or not the act is a crime; from the perspective of the crime itself, as defined through its elements; and from the subjective perspective that takes into account the perpetrators level of depravity when he committed the crime. The Court best expressed the first approach in Zari v. Flores66 where the Court saw the involvement of moral turpitude where an act is intrinsically immoral, regardless of whether it is punishable by law or not. The Court emphasized that moral turpitude goes beyond being merely mala prohibita; the act itself must be inherently immoral. Thus, this approach requires that the committed act itself be examined, divorced from its characterization as a crime. A ruling that exemplifies this approach is that made in the U.S. case In The Matter of G---67 where, in considering gambling, it was held that: Gambling has been in existence since time immemorial. Card playing for small stakes is a common accompaniment of social life; small bets on horse racing and the "policy or numbers games" are diversions of the masses. That such enterprises exist surreptitiously is a matter of common knowledge. Many countries permit it under a license system. In ancient times laws were enacted to discourage people from gambling on the theory that the State had first claim upon their time and energy, and at later dates antigambling laws were aimed especially at the activity as practiced by the working classes. Present-day movements to suppress gambling are also tinged with other considerations. In urban communities in the past few decades the purely religious opposition to gambling has tended to become less violent because certain activities, highly reputable according to prevailing social standards, have come more and more to resemble it. Prohibition against gambling has had something of a police rather than a truly penal character. At all times an important fact in arousing antagonism in gambling has been the association, almost inevitable, with sharp practice. In established societies more or less serious attempts are everywhere made, however, to prohibit or to regulate gambling in its more notorious forms. It would appear that statutes permitting gambling, such as those under discussion, rest primarily on the theory that they are in the interest of public policy: that is to regulate and restrict any possible abuse, to obviate cheating and other corrupt practices that may result if uncontrolled. From this discussion, the Court went on to conclude that gambling is a malum prohibitum that is not intrinsically evil and, thus, is not a crime involving moral turpitude. With the same approach, but with a different result, is Office of the Court Administrator v. Librado, 68 a case involving drug possession. Librado, a Deputy Sheriff in MTCC Iligan City was convicted of possession of "shabu," a prohibited drug. The Office of the Court Administrator commenced an administrative case against him and he was subsequently suspended from office. In his subsequent plea for reinstatement, the Court strongly denounced drug possession as an "especially vicious crime, one of the most pernicious evils that has ever crept into our society For those who become addicted to it not only slide into the ranks of the living dead, what is worse, they become a grave menace to the safety of law abiding members of society." The Court, apparently drawing on what society deems important, held that the use of drugs amounted to an act so inherently evil that no law was needed to deem it as such; it is an evil without need for a law to call it evil69 - "an immoral act in itself regardless of whether it is punishable or not."70 In People v. Yambot,71 the Court categorically ruled that the possession of a deadly weapon does not involve moral turpitude since the act of carrying a weapon by itself is not inherently wrong in the absence of a law punishing it. Likewise, the Court acknowledged in Court Administrator v. San Andres 72 that illegal recruitment does not involve moral turpitude since it is not in itself an evil act being ordinarily an act in the ordinary course of business in the absence of the a law prohibiting it. The second approach is to look at the act committed through its elements as a crime. In Paras v. Vailoces, 73 the Court recognized that as a "general rule, all crimes of which fraud is an element are looked on as involving moral turpitude." This is the same conclusion that the U.S. Supreme Court made in Jordan, i.e., that crimes requiring fraud or intent to defraud always involve moral turpitude.74 Dela Torre v. Commission on Elections75 is a case in point that uses the second approach and is one case where the Court even dispensed with the review of facts and circumstances surrounding the commission of the crime since Dela Torre did not assail his conviction. Dela Torre was disqualified by the Comelec from running as Mayor of Cavinti, Laguna on the basis of his conviction for violation of Presidential Decree No. 1612, otherwise known as the Anti-

Fencing Law. Dela Torre appealed to this Court to overturn his disqualification on the ground that the crime of fencing is not a crime involving moral turpitude. The Court ruled that moral turpitude is deducible from the third element. Actual knowledge by the fence of the fact that property received is stolen displays the same degree of malicious deprivation of ones rightful property as that which animated the robbery or theft which, by their very nature, are crimes of moral turpitude. To be sure, the elements of the crime can be a critical factor in determining moral turpitude if the second approach is used in the crimes listed above as involving moral turpitude. In Villaber v. Commission on Elections, 76 the Court, by analyzing the elements alone of the offense under Batas Pambansa Blg. 22, held that the "presence of the second element manifest moral turpitude" in that "a drawer who issues an unfunded check deliberately reneges on his private duties he owes his fellow men or society in a manner contrary to accepted and customary rule of right and duty, justice, honesty or good morals." The same conclusion was reached by the Court in Magno v. Commission on Elections,77 when it ruled that direct bribery involves moral turpitude, thus: Moral turpitude can be inferred from the third element. The fact that the offender agrees to accept a promise or gift and deliberately commits an unjust act or refrains from performing an official duty in exchange for some favors, denotes a malicious intent on the part of the offender to renege on the duties which he owes his fellowmen and society in general. Also, the fact that the offender takes advantage of his office and position is a betrayal of the trust reposed on him by the public. It is a conduct clearly contrary to the accepted rules of right and duty, justice, honesty and good morals. In all respects, direct bribery is a crime involving moral turpitude. [Emphasis supplied] The third approach, the subjective approach, essentially takes the offender and his acts into account in light of the attendant circumstances of the crime: was he motivated by ill will indicating depravity? The Court apparently used this approach in Ao Lin v. Republic,78 a 1964 case, when it held "that the use of a meter stick without the corresponding seal of the Internal Revenue Office by one who has been engaged in business for a long time, involves moral turpitude because it involves a fraudulent use of a meter stick, not necessarily because the Government is cheated of the revenue involved in the sealing of the meter stick, but because it manifests an evil intent on the part of the petitioner to defraud customers purchasing from him in respect to the measurement of the goods purchased." In IRRI v. NLRC,79 the International Rice Research Institute terminated the employment contract of Nestor Micosa on the ground that he has been convicted of the crime of homicide a a crime involving moral turpitude. The Court refused to characterize the crime of homicide as one of moral turpitude in light of the circumstances of its commission. The Court ruled: These facts show that Micosas intention was not to slay the victim but only to defend his person. The appreciation in his favor of the mitigating circumstances of self-defense and voluntary surrender, plus the total absence of any aggravating circumstances demonstrate that Micosas character and intentions were not inherently vile, immoral or unjust. [italics supllied]. The Court stressed, too, not only the subjective element, but the need for the appreciation of facts in considering whether moral turpitude exists an unavoidable step under the third approach. Thus, the Court explained: This is not to say that all convictions of the crime of homicide do not involve moral turpitude. Homicide may or may not involve moral turpitude depending on the degree of the crime. Moral turpitude is not involved in every criminal act and is not shown by every known and intentional violation of statute, but whether any particular conviction involves moral turpitude may be a question of fact and frequently depends on all the surrounding circumstances. [Emphasis supplied] In contrast, while IRRI refused to characterize the crime of homicide as one of moral turpitude, the recent case of Soriano v. Dizon80 held that based on the circumstances, the crime of frustrated homicide committed by the respondent involved moral turpitude. In Soriano, complainant Soriano filed a disbarment case against respondent Atty. Manuel Dizon alleging that the crime of frustrated homicide involves moral turpitude under the circumstances surrounding its commission, and was a sufficient ground for his disbarment under Section 27 of Rule 138 of the Rules of Court. The Court after noting the factual antecedents of IRRI held that The present case is totally different. As the IBP correctly found, the circumstances clearly evince the moral turpitude of respondent and his unworthiness to practice law. Atty. Dizon was definitely the aggressor, as he pursued and shot complainant when the latter least expected it. The act of aggression shown by respondent will not be mitigated by the fact that he was hit once and his arm twisted by complainant. Under the circumstances, those were reasonable actions clearly intended to fend off the lawyers assault. We also consider the trial courts finding of treachery as a further indication of the skewed morals of respondent. He shot the victim when the latter was not in a position to defend himself. In fact, under the impression that the assault was already over, the unarmed complainant was merely returning the eyeglasses of Atty. Dizon when the latter

unexpectedly shot him. To make matters worse, respondent wrapped the handle of his gun with a handkerchief so as not to leave fingerprints. In so doing, he betrayed his sly intention to escape punishment for his crime. The totality of the facts unmistakably bears the earmarks of moral turpitude. By his conduct, respondent revealed his extreme arrogance and feeling of self-importance. As it were, he acted like a god on the road, who deserved to be venerated and never to be slighted. Clearly, his inordinate reaction to a simple traffic incident reflected poorly on his fitness to be a member of the legal profession. His overreaction also evinced vindictiveness, which was definitely an undesirable trait in any individual, more so in a lawyer. In the tenacity with which he pursued complainant, we see not the persistence of a person who has been grievously wronged, but the obstinacy of one trying to assert a false sense of superiority and to exact revenge. 81 [Emphasis supplied] Laguitan v. Tinio,82 expressed in terms of the protection of the sanctity of marriage,83 also necessarily looked at the subjective element because the offenders concubinage involved an assault on the basic social institution of marriage. Another subjective element case, in terms of looking at the damage wrought by the offenders act, is People v. Jamero84 where the Court disregarded the appellants argument that the trial court erred in ordering the discharge of Inocencio Retirado from the Information in order to make him a state witness, since he has been previously convicted of the crime of malicious mischief a crime involving moral turpitude. The Court said: In the absence of any evidence to show the gravity and the nature of the malicious mischief committed, We are not in a position to say whether or not the previous conviction of malicious mischief proves that accused had displayed the baseness, the vileness and the depravity which constitute moral turpitude. And considering that under paragraph 3 of Article 329 of the Revised Penal Code, any deliberate act (not constituting arson or other crimes involving destruction) causing damage in the property of another, may constitute the crime of malicious mischief, We should not make haste in declaring that such crime involves moral turpitude without determining, at least, the value of the property destroyed and/or the circumstances under which the act of destroying was committed.85[Emphasis supplied] Thus, again, the need for a factual determination was considered necessary. In sum, a survey of jurisprudence from the earliest case of In Re Basa 86 to the recent case of Soriano v. Dizon 87shows that the Court has used varying approaches, but used the same standard or measure the degree of attendant depravity. The safest approach to avoid being misled in ones conclusion is to apply all three approaches, if possible, and to evaluate the results from each of the approaches. A useful caveat in the evaluation is to resolve any doubt in favor of the perpetrator, as a conclusion of moral turpitude invariably signifies a worse consequence for him or her. IV. The Approaches Applied to TEVES The Objective Approach The crime for which petitioner Teves was convicted (possession of pecuniary or financial interest in a cockpit) is, at its core, related to gambling an act that by contemporary community standards is not per se immoral. Other than the ruling heretofore cited on this point,88 judicial notice can be taken of state-sponsored gambling activities in the country that, although not without controversy, is generally regarded to be within acceptable moral limits. The ponencia correctly noted that prior to the enactment of the Local Government Code of 1991, mere possession by a public officer of pecuniary interest in a cockpit was not expressly prohibited. This bit of history alone is an indicator that, objectively, no essential depravity is involved even from the standards of a holder of a public office. This reasoning led the ponencia to conclude that "its illegality does not mean that violation thereof . . . makes such possession of interest inherently immoral."89 From the Perspective of the Elements of the Crime Under this approach, we determine whether a crime involves moral turpitude based solely on our analysis of the elements of the crime alone. The essential elements of the offense of possession of prohibited interest (Section 3(h) of the Anti-Graft Law) for which the petitioner was convicted are: 1. The accused is a public officer; 2. He has a direct or indirect financial or pecuniary interest in any business, contract or transaction; and 3. He is prohibited from having such interest by the Constitution or any law.

From the perspective of moral turpitude, the third element is the critical element. This element shows that the holding of interest that the law covers is not a conduct clearly contrary to the accepted rules of right and duty, justice, honesty and good morals; it is illegal solely because of the prohibition that exists in law or in the Constitution. Thus, no depravity immediately leaps up or suggests itself based on the elements of the crime committed. The Subjective Approach This approach is largely the ponencias approach, as it expressly stated that "a determination of all surrounding circumstances of the violation of the statute must be considered." 90 In doing this, the ponencia firstly considered that the petitioner did not use his official capacity in connection with the interest in the cockpit, not that he hid this interest by transferring it to his wife, as the transfer took effect before the effectivity of the law prohibiting the possession of interest. The ponencia significantly noted, too, that the violation was not intentionally committed in a manner contrary to justice, modesty, or good morals, but due simply to Teves lack of awareness or ignorance of the prohibition. This, in my view, is the clinching argument that no moral turpitude can be involved as no depravity can be gleaned where intent is clearly absent.

Conclusiono recapitulate, all three approaches point to the conclusion that no moral turpitude was involved in the crime Teves committed, with the predominant reasons being the first (or objective) and the third (or subjective) approaches. Analysis in this manner, with one approach reinforcing another, results in clear and easily appreciated conclusions. ARTURO D. BRION Associate Justice