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Hacienda Luisita Inc. (HLI) v. Presidential Agrarian Reform Council (PARC), et al., G.R. No. 171101, July 5, 2011 DECISION VELASCO, JR., J.: I. THE FACTS In 1958, the Spanish owners of Compaia General de Tabacos de Filipinas (Tabacalera) sold Hacienda Luisita and the Central Azucarera de Tarlac, the sugar mill of the hacienda, to the Tarlac Development Corporation (Tadeco), then owned and controlled by the Jose Cojuangco Sr. Group. The Central Bank of the Philippines assisted Tadeco in obtaining a dollar loan from a US bank. Also, the GSIS extended a PhP5.911 million loan in favor of Tadeco to pay the peso price component of the sale, with the condition that the lots comprising the Hacienda Luisita be subdivided by the applicant -corporation and sold at cost to the tenants, should there be any, and whenever conditions should exist warranting such action under the provisions of the Land Tenure Act. Tadeco however did not comply with this condition. On May 7, 1980, the martial law administration filed a suit before the Manila RTC against Tadeco, et al., for them to surrender Hacienda Luisita to the then Ministry of Agrarian Reform (MAR) so that the land can be distributed to farmers at cost. Responding, Tadeco alleged that Hacienda Luisita does not have tenants, besides which sugar lands of which the hacienda consisted are not covered by existing agrarian reform legislations. The Manila RTC rendered judgment ordering Tadeco to surrender Hacienda Luisita to the MAR. Therefrom, Tadeco appealed to the CA. On March 17, 1988, during the administration of President Corazon Cojuangco Aquino, the Office of the Solicitor General moved to withdraw the governments case against Tadeco, et al. The CA dismissed the case, subject to the PARCs approval of Tadecos proposed stock distribution plan (SDP) in favor of its farmworkers. [Under EO 229 and later RA 6657, Tadeco had the option of availing stock distribution as an alternative modality to actual land transfer to the farmworkers.] On August 23, 1988, Tadeco organized a spin-off corporation, herein petitioner HLI, as vehicle to facilitate stock acquisition by the farmworkers. For this purpose, Tadeco conveyed to HLI the agricultural land portion (4,915.75 hectares) and other farm-related properties of Hacienda Luisita in exchange for HLI shares of stock. On May 9, 1989, some 93% of the then farmworker-beneficiaries (FWBs) complement of Hacienda Luisita signified in a referendum their acceptance of the proposed HLIs Stock Distribution Option Plan (SOD P). On May 11, 1989, the SDOA was formally entered into by Tadeco, HLI, and the 5,848 qualified FWBs. This attested to by then DAR Secretary Philip Juico. The SDOA embodied the basis and mechanics of HLIs SDP, which was eventually approved by the PARC af ter a follow-up referendum conducted by the DAR on October 14, 1989, in which 5,117 FWBs, out of 5,315 who participated, opted to receive shares in HLI. On August 15, 1995, HLI applied for the conversion of 500 hectares of land of the hacienda from agricultural to industrial use, pursuant to Sec. 65 of RA 6657. The DAR approved the application on August 14, 1996, subject to payment of three percent (3%) of the gross selling price to the FWBs and to HLIs continued compliance with its undertakings under the SDP, among other conditions. On December 13, 1996, HLI, in exchange for subscription of 12,000,000 shares of stocks of Centennary Holdings, Inc. (Centennary), ceded 300 hectares of the converted area to the latter. Subsequently, Centennary sold the entire 300 hectares for PhP750 million to Luisita Industrial Park Corporation (LIPCO), which used it in developing an industrial complex. From this area was carved out 2 parcels, for which 2 separate titles were issued in the name of LIPCO. Later, LIPCO transferred these 2 parcels to the Rizal Commercial Banking Corporation (RCBC) in payment of LIPCOs PhP431,695,732.10 loan obligations to RCBC. LIPCOs titles were cancelled and new ones were issued to RCBC. Apart from the 500 hectares, another 80.51 hectares were later detached from Hacienda Luisita and acquired by the government as part of the Subic-Clark-Tarlac Expressway (SCTEX) complex. Thus, 4,335.75 hectares remained of the original 4,915 hectares Tadeco ceded to HLI. Such, was the state of things when two separate petitions reached the DAR in the latter part of 2003. The first was filed by the Supervisory Group of HLI (Supervisory Group), praying for a renegotiation of the SDOA, or, in the alternative, its revocation. The second petition, praying for the revocation and nullification of the SDOA and the distribution of the lands in the hacienda, was filed by Alyansa ng mga Manggagawang Bukid ng Hacienda Luisita (AMBALA). The DAR then constituted a Special Task Force (STF) to attend to issues relating to the SDP of HLI. After investigation and evaluation, the STF found that HLI has not complied with its obligations under RA 6657 despite the implementation of the SDP. On December 22, 2005, the PARC issued the assailed Resolution No. 2005-32-01, recalling/revoking the SDO plan of Tadeco/HLI. It further resolved that the subject lands be forthwith placed under the compulsory coverage or mandated land acquisition scheme of the CARP. From the foregoing resolution, HLI sought reconsideration. Its motion notwithstanding, HLI also filed a petition before the Supreme Court in light of what it considers as the DARs hasty placing of Hacienda Luisita under CARP even before PARC could rule or even read the motion for reconsideration. PARC would eventually deny HLIs motion for reconsideration via Resolution No. 2006-3401 dated May 3, 2006. II. THE ISSUES

(1) Does the PARC possess jurisdiction to recall or revoke HLIs SDP?

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(2) [Issue raised by intervenor FARM (group of farmworkers)] Is Sec. 31 of RA 6657, which allows stock transfer in lieu of outright land transfer, unconstitutional? (3) Is the revocation of the HLIs SDP valid? [Did PARC gravely abuse its discretion in revoking the subject SDP and placing the hacienda under CARPs compulsory acquisition and distribution scheme?] (4) Should those portions of the converted land within Hacienda Luisita that RCBC and LIPCO acquired by purchase be excluded from the coverage of the assailed PARC resolution? [Did the PARC gravely abuse its discretion when it included LIPCOs and RCBCs respective properties that once formed part of Hacienda Luisita under the CARP compulsory acquisition scheme via the assailed Notice of Coverage?]

III. THE RULING [The Court DENIED the petition of HLI and AFFIRMED the PARC resolution placing the lands subject of HLIs SDP under compulsory coverage on mandated land acquisition scheme of the CARP, with the MODIFICATION that the original 6,296 qualified FWBs were given the option to remain as stockholders of HLI. It also excluded from the mandatory CARP coverage that part of Hacienda Luisita that had been acquired by RCBC and LIPCO.] (1) YES, the PARC has jurisdiction to revoke HLIs SDP under the doctrine of necessary implication. Under Sec. 31 of RA 6657, as implemented by DAO 10, the authority to approve the plan for stock distribution of the corporate landowner belongs to PARC. Contrary to petitioner HLIs posture, PARC also has the power to revoke the SDP which it previously approved. It may be, as urged, that RA 6657 or other executive issuances on agrarian reform do not explicitly vest the PARC with the power to revoke/recall an approved SDP. Such power or authority, however, is deemed possessed by PARC under the principle of necessary implication, a basic postulate that what is implied in a statute is as much a part of it as that which is expressed. Following the doctrine of necessary implication, it may be stated that the conferment of express power to approve a plan for stock distribution of the agricultural land of corporate owners necessarily includes the power to revoke or recall the approval of the plan. To deny PARC such revocatory power would reduce it into a toothless agency of CARP, because the very same agency tasked to ensure compliance by the corporate landowner with the approved SDP would be without authority to impose sanctions for noncompliance with it.

(2) NO, Sec. 31 of RA 6657 is not unconstitutional. [The Court actually refused to pass upon the constitutional question because it was not raised at the earliest opportunity and because the resolution thereof is not the lis mota of the case. Moreover, the issue has been rendered moot and academic since SDO is no longer one of the modes of acquisition under RA 9700.] When the Court is called upon to exercise its power of judicial review over, and pass upon the constitutionality of, acts of the executive or legislative departments, it does so only when the following essential requirements are first met, to wit: (1) there is an actual case or controversy; (2) that the constitutional question is raised at the earliest possible opportunity by a proper party or one with locus standi; and (3) the issue of constitutionality must be the very lis mota of the case. Not all the foregoing requirements are satisfied in the case at bar. While there is indeed an actual case or controversy, intervenor FARM, composed of a small minority of 27 farmers, has yet to explain its failure to challenge the constitutionality of Sec. 31 of RA 6657 as early as November 21, 1989 when PARC approved the SDP of Hacienda Luisita or at least within a reasonable time thereafter, and why its members received benefits from the SDP without so much of a protest. It was only on December 4, 2003 or 14 years after approval of the SDP that said plan and approving resolution were sought to be revoked, but not, to stress, by FARM or any of its members, but by petitioner AMBALA. Furthermore, the AMBALA petition did NOT question the constitutionality of Sec. 31 of RA 6657, but concentrated on the purported flaws and gaps in the subsequent implementation of the SDP. Even the public respondents, as represented by the Solicitor General, did not question the constitutionality of the provision. On the other hand, FARM, whose 27 members formerly belonged to AMBALA, raised the constitutionality of Sec. 31 only on May 3, 2007 when it filed its Supplemental Comment with the Court. Thus, it took FARM some eighteen (18) years from November 21, 1989 before it challenged the constitutionality of Sec. 31 of RA 6657 which is quite too late in the day. The FARM members slept on their rights and even accepted benefits from the SDP with nary a complaint on the alleged unconstitutionality of Sec. 31 upon which the benefits were derived. The Court cannot now be goaded into resolving a constitutional issue that FARM failed to assail after the lapse of a long period of time and the occurrence of numerous events and activities which resulted from the application of an alleged unconstitutional legal provision. The last but the most important requisite that the constitutional issue must be the very lis mota of the case does not likewise obtain. The lis mota aspect is not present, the constitutional issue tendered not being critical to the resolution of the case. The unyielding rule has been to avoid, whenever plausible, an issue assailing the constitutionality of a statute or governmental act. If some other grounds exist by which judgment can be made without touching the constitutionality of a law, such recourse is favored.

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The lis mota in this case, proceeding from the basic positions originally taken by AMBALA (to which the FARM members previously belonged) and the Supervisory Group, is the alleged non-compliance by HLI with the conditions of the SDP to support a plea for its revocation. And before the Court, the lis mota is whether or not PARC acted in grave abuse of discretion when it ordered the recall of the SDP for such non-compliance and the fact that the SDP, as couched and implemented, offends certain constitutional and statutory provisions. To be sure, any of these key issues may be resolved without plunging into the constitutionality of Sec. 31 of RA 6657. Moreover, looking deeply into the underlying petitions of AMBALA, et al., it is not the said section per se that is invalid, but rather it is the alleged application of the said provision in the SDP that is flawed. It may be well to note at this juncture that Sec. 5 of RA 9700, amending Sec. 7 of RA 6657, has all but superseded Sec. 31 of RA 6657 vis--vis the stock distribution component of said Sec. 31. In its pertinent part, Sec. 5 of RA 9700 provides: [T]hat after June 30, 2009, the modes of acquisition shall be limited to voluntary offer to sell and compulsory acquisition . Thus, for all intents and purposes, the stock distribution scheme under Sec. 31 of RA 6657 is no longer an available option under existing law. The question of whether or not it is unconstitutional should be a moot issue. (3) YES, the revocation of the HLIs SDP valid. [NO, the PARC did NOT gravely abuse its discretion in revoking the subject SDP and placing the hacienda under CARPs compulsory acquisition and distribution scheme.] The revocation of the approval of the SDP is valid: (1) the mechan ics and timelines of HLIs stock distribution violate DAO 10 because the minimum individual allocation of each original FWB of 18,804.32 shares was diluted as a result of the use of man days and the hiring of additional farmworkers; (2) the 30-year timeframe for HLI-to-FWBs stock transfer is contrary to what Sec. 11 of DAO 10 prescribes. In our review and analysis of par. 3 of the SDOA on the mechanics and timelines of stock distribution, We find that it violates two (2) provisions of DAO 10. Par. 3 of the SDOA states: 3. At the end of each fiscal year, for a period of 30 years, the SECOND PARTY [HLI] shall arrange with the FIRST PARTY [TDC] the acquisition and distribution to the THIRD PARTY [FWBs] on the basis of number of days worked and at no cost to them of one-thirtieth (1/30) of 118,391,976.85 shares of the capital stock of the SECOND PARTY that are presently owned and held by the FIRST PARTY, until such time as the entire block of 118,391,976.85 shares shall have been completely acquired and distributed to the THIRD PARTY. [I]t is clear as day that the original 6,296 FWBs, who were qualified beneficiaries at the time of the approval of the SDP, suffered from watering down of shares. As determined earlier, each original FWB is entitled to 18,804.32 HLI shares. The original FWBs got less than the guaranteed 18,804.32 HLI shares per beneficiary, because the acquisition and distribution of the HLI shares were based on man days or number of days worked by the FWB in a years time. As explained by HLI, a beneficiary needs to work for at least 37 days in a fiscal year before he or she becomes entitled to HLI shares. If it falls below 37 days, the FWB, unfortunately, does not get any share at year end. The number of HLI shares distributed varies depending on the number of days the FWBs were allowed to work in one year. Worse, HLI hired farmworkers in addition to the original 6,296 FWBs, such that, as indicated in the Compliance dated August 2, 2010 submitted by HLI to the Court, the total number of farmworkers of HLI as of said date stood at 10,502. All these farmworkers, which include the original 6,296 FWBs, were given shares out of the 118,931,976.85 HLI shares representing the 33.296% of the total outstanding capital stock of HLI. Clearly, the minimum individual allocation of each original FWB of 18,804.32 shares was diluted as a result of the use of man days and the hiring of additional farmworkers. Going into another but related matter, par. 3 of the SDOA expressly providing for a 30-year timeframe for HLI-to-FWBs stock transfer is an arrangement contrary to what Sec. 11 of DAO 10 prescribes. Said Sec. 11 provides for the implementation of the approved stock distribution plan within three (3) months from receipt by the corporate landowner of the approval of the plan by PARC. In fact, based on the said provision, the transfer of the shares of stock in the names of the qualified FWBs should be recorded in the stock and transfer books and must be submitted to the SEC within sixty (60) days from implementation. To the Court, there is a purpose, which is at once discernible as it is practical, for the three-month threshold. Remove this timeline and the corporate landowner can veritably evade compliance with agrarian reform by simply deferring to absurd limits the implementation of the stock distribution scheme. Evidently, the land transfer beneficiaries are given thirty (30) years within which to pay the cost of the land thus awarded them to make it less cumbersome for them to pay the government. To be sure, the reason underpinning the 30-year accommodation does not apply to corporate landowners in distributing shares of stock to the qualified beneficiaries, as the shares may be issued in a much shorter period of time. Taking into account the above discussion, the revocation of the SDP by PARC should be upheld [because of violations of] DAO 10. It bears stressing that under Sec. 49 of RA 6657, the PARC and the DAR have the power to issue rules and regulations, substantive or procedural. Being a product of such rule-making power, DAO 10 has the force and effect of law and must be duly complied with. The PARC is, therefore, correct in revoking the SDP. Consequently, the PARC Resolution No. 89-12-2 dated November 21, l989 approving the HLIs SDP is nullified and voided.

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(4) YES, those portions of the converted land within Hacienda Luisita that RCBC and LIPCO acquired by purchase should be excluded from the coverage of the assailed PARC resolution. [T]here are two (2) requirements before one may be considered a purchaser in good faith, namely: (1) that the purchaser buys the property of another without notice that some other person has a right to or interest in such property; and (2) that the purchaser pays a full and fair price for the property at the time of such purchase or before he or she has notice of the claim of another. It can rightfully be said that both LIPCO and RCBC arebased on the above requirements and with respect to the adverted transactions of the converted land in questionpurchasers in good faith for value entitled to the benefits arising from such status. First, at the time LIPCO purchased the entire three hundred (300) hectares of industrial land, there was no notice of any supposed defect in the title of its transferor, Centennary, or that any other person has a right to or interest in such property. In fact, at the time LIPCO acquired said parcels of land, only the following annotations appeared on the TCT in the name of Centennary: the Secretarys Certificate in favor o f Teresita Lopa, the Secretarys Certificate in favor of Shintaro Murai, and the conversion of the property from agricultural to industrial and residential use. The same is true with respect to RCBC. At the time it acquired portions of Hacienda Luisita, only the following general annotations appeared on the TCTs of LIPCO: the Deed of Restrictions, limiting its use solely as an industrial estate; the Secretarys Certificate in favor of Koji Komai and Kyosuke Hori; and the Real Estate Mortgage in favor of RCBC to guarantee the payment of PhP 300 million. To be sure, intervenor RCBC and LIPCO knew that the lots they bought were subjected to CARP coverage by means of a stock distribution plan, as the DAR conversion order was annotated at the back of the titles of the lots they acquired. However, they are of the honest belief that the subject lots were validly converted to commercial or industrial purposes and for which said lots were taken out of the CARP coverage subject of PARC Resolution No. 89-12-2 and, hence, can be legally and validly acquired by them. After all, Sec. 65 of RA 6657 explicitly allows conversion and disposition of agricultural lands previously covered by CARP land acquisition after the lapse of five (5) years from its awa rd when the land ceases to be economically feasible and sound for agricultural purposes or the locality has become urbanized and the land will have a greater economic value for residential, commercial or industrial purposes. Moreover, DAR notified all the affected parties, more particularly the FWBs, and gave them the opportunity to comment or oppose the proposed conversion. DAR, after going through the necessary processes, granted the conversion of 500 hectares of Hacienda Luisita pursuant to its primary jurisdiction under Sec. 50 of RA 6657 to determine and adjudicate agrarian reform matters and its original exclusive jurisdiction over all matters involving the implementation of agrarian reform. The DAR conversion order became final and executory after none of the FWBs interposed an appeal to the CA. In this factual setting, RCBC and LIPCO purchased the lots in question on their honest and well-founded belief that the previous registered owners could legally sell and convey the lots though these were previously subject of CARP coverage. Ergo, RCBC and LIPCO acted in good faith in acquiring the subject lots. And second, both LIPCO and RCBC purchased portions of Hacienda Luisita for value. Undeniably, LIPCO acquired 300 hectares of land from Centennary for the amount of PhP750 million pursuant to a Deed of Sale dated July 30, 1998. On the other hand, in a Deed of Absolute Assignment dated November 25, 2004, LIPCO conveyed portions of Hacienda Luisita in favor of RCBC by way of dacion en pago to pay for a loan of PhP431,695,732.10. In relying upon the above-mentioned approvals, proclamation and conversion order, both RCBC and LIPCO cannot be considered at fault for believing that certain portions of Hacienda Luisita are industrial/commercial lands and are, thus, outside the ambit of CARP. The PARC, and consequently DAR, gravely abused its discretion when it placed LIPCOs and RCBCs property which once formed part of Hacienda Luisita under the CARP compulsory acquisition scheme via the assailed Notice of Coverage. [The Court went on to apply the operative fact doctrine to determine what should be done in the aftermath of its disposition of the aboveenumerated issues: While We affirm the revocation of the SDP on Hacienda Luisita subject of PARC Resolution Nos. 2005-32-01 and 2006-34-01, the Court cannot close its eyes to certain operative facts that had occurred in the interim. Pertinently, the operative fact doctrine realizes that, in declaring a law or executive action null and void, or, by extension, no longer without force and effect, undue harshness and resulting unfairness must be avoided. This is as it should realistically be, since rights might have accrued in favor of natural or juridical persons and obligations justly incurred in the meantime. The actual existence of a statute or executive act is, prior to such a determination, an operative fact and may have consequences which cannot justly be ignored; the past cannot always be erased by a new judicial declaration. While the assailed PARC resolutions effectively nullifying the Hacienda Luisita SDP are upheld, the revocation must, by application of the operative fact principle, give way to the right of the original 6,296 qualified FWBs to choose whether they want to remain as HLI stockholders or not. The Court cannot turn a blind eye to the fact that in 1989, 93% of the FWBs agreed to the SDOA (or the MOA), which became the basis of the SDP approved by PARC per its Resolution No. 89-12-2 dated November 21, 1989. From 1989 to 2005, the FWBs were said to have received from HLI salaries and cash benefits, hospital and medical benefits, 240-square meter homelots, 3% of the gross produce from agricultural lands, and 3% of the proceeds of the sale of the 500-hectare converted land and the 80.51-hectare lot sold to SCTEX. HLI shares totaling 118,391,976.85 were distributed as of April 22, 2005. On August 6, 20l0, HLI and private respondents submitted a Compromise Agreement, in which HLI gave the FWBs the option of acquiring a piece of agricultural land or remain as HLI stockholders, and as a matter of fact, most FWBs indicated their choice of remaining as stockholders. These facts and circumstances tend to indicate that some, if not all, of the FWBs may actually desire to continue as HLI shareholders. A matter best left to their own discretion.] [WHEREFORE, the instant petition is DENIED. PARC Resolution No. 2005-32-01 dated December 22, 2005 and Resolution No. 2006-34-01 dated May 3, 2006, placing the lands subject of HLIs SDP under compulsory coverage on mandated lan d acquisition scheme of the CARP, are hereby AFFIRMED with the MODIFICATION that the original 6,296 qualified FWBs shall have the option to remain as stockholders of HLI. DAR shall immediately schedule meetings with the said 6,296 FWBs and explain to them the effects, consequences and legal or practical implications of their choice, after which the FWBs will be asked to manifest, in secret voting, their choices in the ballot, signing their signatures or placing their thumbmarks, as the case may be, over their printed names.]

5 Flores vs. Pacasio, AM No. P-06-2130, Jun 13, 2011

RESOLUTION BRION, J.:

This is an administrative complaint filed by Susana E. Flores (complainant) against Ariel R. Pascasio (respondent), Sheriff III in the Municipal Trial Court in Cities (MTCC), Branch 5, Olongapo City, for Grave Misconduct and Grave Abuse of Authority. In her complaint-affidavit dated June 2, 2004, the complainant narrated that on March 5, 2004, an auction sale of a JVC DVD player and a Sony TV set was conducted by the respondent at the Office of the Clerk of Court, Olongapo City. She submitted a bid of Ten Thousand Two Hundred Pesos (P10,200.00) for the two (2) items. During the public auction, the two items were sold separately, the JVC DVD player for P2,520.00 and the Sony TV set for P2,500.00. The complainant claimed that the respondent manipulated the bidding process to make it appear that she submitted a bid of only One Thousand Two Hundred Pesos (P1,200.00) instead of her bid of Ten Thousand Two Hundred Pesos (P10,200.00). She further alleged that the respondent even scolded her for questioning the conduct of the auction sale. According to her, when she asked the respondent why she lost the bidding, he replied, Wala kang magagawa dahil ako ang masusunod dito. Ako ang sheriff dito, kung kanino ko [1] gustong mapunta and items, yun ang masusunod . In his comment dated August 24, 2004, the respondent denied having discriminated against the complainant. He admitted having received the complainants bid, but because it was not itemized, he disregarded it on ground of technicality. While he listed the complainants name in the minutes of the auction sale, no amount was placed opposite her name because her bid was invalid. He explained to the complainant that only itemized bids were considered and that she should have submitted separate bids and not just one bid for the two (2) items. In an Evaluation Report dated November 30, 2005, the Office of the Court Administrator (OCA) submitted its findings: The respondent stated in his Minutes of the Auction Sale that the complainant submitted a bid only for the DVD in the amount of P1,200.00. But based on the certified photocopies of the bids of all those who participated in the auction sale, complainants bid of P10,200.00 for the two items was the highest. It must be remembered that this Court has countless times reiterated that the conduct and behavior of everyone connected with an office charged with the dispensation of justice must not only be characterized by propriety and decorum but above else (sic) must be above suspicion. The conduct of the respondent in disregarding the highest bid of the complainant and his making a false entry in the [4] minutes of the auction sale is clearly an act of dishonesty which erodes the faith and confidence of our people in the judiciary. The OCA recommended: 1. That the instant administrative complaint be REDOCKETED as a result administrative matter; 2. 3. That Sheriff Ariel R. Pascasio be found GUILTY of Dishonesty in the performance of his official duties; and That Sheriff Pascasio be SUSPENDED for a period of two (2) months and STERNLY WARNED that a [5] repetition of the same or a similar act in the future shall be dealt with more severely.
[3] [2]

Pursuant to the OCAs recommendation, the Court, in a Resolution dated February 15, 2006, directed that the complaint be re-docketed as a regular administrative matter and required the parties to manifest whether they were willing to submit the matter for resolution on the basis [6] of the pleadings filed. On March 21, 2006, the complainant, through her counsel Atty. Randy B. Escolango, filed a Manifestation with Motion manifesting that she would file a Reply to controvert the respondents allegations in his comment, at the same time asking for an extension of fifteen (15) days for the filing of her reply. Despite several extensions granted, Atty. Escolango failed to file the complainants reply. He was required to show cause why [8] he should not be disciplinary dealt with or held in contempt for his failure, and was later imposed a fine of P2,000.00. Finally, on August 22, 2008, Atty. Escolango complied, claiming that he could no longer locate and contact the complainant. He presumed that the complainant was no longer [9] interested in pursuing the case as the respondent had already been dismissed from the service; thus, it was no longer necessary to file a reply. In a Resolution dated December 3, 2008, the Court *deemed+ as waived the filing of complainants xxx reply. The case was referred to the Executive Judge of the Regional Trial Court (RTC) of Olongapo City for investigation, report and recommendation in a resolution dated March [11] 4, 2009. In a memorandum dated September 24, 2009, the OCA reported that the respondent had already been ordered dismissed from the service in the Decision of May 7, 2008 in A.M. No. P-08-2454 entitled Virgilio A. Musngi v. Ariel R. Pascasio, etc. At the time the present
[12] [10] [7]

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administrative case was referred to the Executive Judge of the RTC of Olongapo City, however, the respondents motion for rec onsideration of his dismissal was still pending. It was eventually denied in a resolution dated April 28, 2009. In view thereof, the OCA recommended that the Resolution of March 4, 2009 referring the complaint to the Executive Judge of the RTC of Olongapo City, be set aside for being moot and academic, respondent Pascasio having been already dismissed from the service and complainant Flores having shown no interest at all to pursue the case. However, the OCA submits that proceedings against respondent may continue without violating his right to due proce ss. He was required to comment on the complaint and he presented evidence to controvert the charges against him. The Court agrees with the OCA that the respondent has been accorded due process when he was required to comment on the complaint during the preliminary investigation of the charges against him. While it is true that continued investigation is no longer feasible, the pleadings submitted by both parties are uncontroverted and their submitted evidence are sufficient to determine the respondents culpab ility. The respondent filed his comment on the complaint against him. Clearly, he was afforded an opportunity to be heard through his pleadings; hence, his right to due process was not impaired. The OCA found the respondent guilty of dishonesty in the performance of official duty instead of grave misconduct and grave abuse of authority as charged. As the penalty of suspension is no longer feasible in view of the respondents dismissal from the servi ce, the OCA recommended that its original recommendation of a two-month suspension be converted into a payment of a two-month salary. In support of its finding that the respondent is guilty of dishonesty, the OCA, in its Evaluation Report of November 30, 2005, reported that the respondent stated in *the+ Minutes of the Auction Sale that the complainant submitted a bid only for the DVD in the amount of P1,200.00. On the other hand, the respondent, in his Comment, claimed that he included the complainants name in the minutes of the auction sale, but he did not place the amount of her bid as the bid was not itemized. A perusal of the minutes of the auction sale, attached to the records of the case, shows that, indeed, the complainants name was included but no amount of bid was indicated opposite her name. The bid ofP1,200.00 for the DVD corresponds to the person listed as no. 13 among those who submitted bids. The complainants name was listed as no. 14, the last name o n the list. [13] No amount was indicated opposite her name. While the complainant may have failed to itemize her bid and to indicate how much she was willing to pay for each item, it is clear from her bid nevertheless that she was bidding for the two items at the combined price of P10,200.00 when she listed therein, Item(s): 1. Sony TV -21 [14] inches [and] 2. DVD-JVC. In disregarding the bid of the complainant, which was the highest submitted bid, the respondent violated Section 19, Rule 39 of the Rules of Civil Procedure which directs that sale of personal property should be made in such parcels as likely to bring the highest price. The public auction was conducted by the respondent to sell the levied personal properties in order to enforce the judgment against the defendants in Civil Case No. 16-03 of the MTCC of Olongapo City, Branch 4, to satisfy their indebtedness to the plaintiffs in the amount ofP30,000.00. The respondent sold the personal properties for a total of P5,200.00 only, compared to the complainants bid of P10,200.00. Respondents failure to consider the complainants bid prejudiced the plaintiffs right to recover a bigger amount of the defendants indebtedness. Sheriffs play an important role in the administration of justice and high standards are expected of them. Their conduct, at all times, must [15] not only be characterized by propriety and decorum but must, at all times, be above suspicion. Part of this stringent requirement is that agents of the law should refrain from the use of abusive, offensive, scandalous, menacing or otherwise improper language. Judicial employees are expected to accord due respect, not only to their superiors, but also to others and their rights at all times. Their every act and word should be [16] characterized by prudence, restraint, courtesy and dignity. The respondents arrogant behavior, telling complainant, Wala kang magagawa dahil ako ang masusunod. Ako ang sheriff dito, kung kanino ko gustong mapunta ang items, yun ang masusunod, was an evident violation of these rules of conduct for judicial employees. The Court defines misconduct as any unlawful conduct, on the part of a person concerned in the administration of justice, prejudicial to the rights of the parties or to the right determination of the cause. It generally means wrongful, improper and unlawful conduct motivated by a [17] premeditated, obstinate or intentional purpose. It means intentional wrongdoing or deliberate violations of a rule of law or standard or behavior, especially by a government official. Dishonesty means a disposition to lie, cheat, deceive or defraud; untrustworthiness; lack of integrity, lack of honesty, probity or integrity [18] in principle; lack of fairness and straightforwardness; and disposition to defraud, deceive or betray.

Given the above parameters, the Court finds the respondent guilty of dishonesty as recommended by OCA. Under Section 52, B(2), Rule IV of the Revised Uniform Rules on Administrative Cases in the Civil Service, dishonesty is punishable by dismissal from the service. Since the respondent had previously been ordered dismissed from the service, suspension is no longer possible. Thus, instead of suspension, the respondent, shall be imposed a fine as alternative penalty. We deem the fine equivalent to three- month salary to be appropriate in light of the penalty of dismissal that it replaces and the potential damage that his dishonesty caused. WHEREFORE, the Court finds the respondent Ariel R. Pascacio, Sheriff III, Municipal Trial Court in Cities, Branch 5, Olongapo City, GUILTY of Dishonesty and he is hereby imposed a FINE in the amount equivalent to his three-month salary, deductible from the money value of his accrued leave credits, if he has any. SO ORDERED.

7 Atienza, Jr., et. al. vs. COMELEC, et. al., GR No. 188920, Feb. 16, 2010

This petition is an offshoot of two earlier cases already resolved by the Court involving a leadership dispute within a political party. In this case, the petitioners question their expulsion from that party and assail the validity of the election of new party leaders conducted by the respondents. Statement of the Facts and the Case For a better understanding of the controversy, a brief recall of the preceding events is in order. On July 5, 2005 respondent Franklin M. Drilon (Drilon), as erstwhile president of the Liberal Party (LP), announced his partys withdrawal of support for the administration of President Gloria Macapagal -Arroyo. But petitioner Jose L. Atienza, Jr. (Atienza), LP Chairman, and a number of party members denounced Drilons move, claiming that he made the announcement without consulting his party. On March 2, 2006 petitioner Atienza hosted a party conference to supposedly discuss local autonomy and party matters but, when convened, the assembly proceeded to declare all positions in the LPs ruling body vacant and elected new officers, with Atienza as LP president. Respondent Drilon immediately filed a petition[1] with the Commission on Elections (COMELEC) to nullify the elections. He claimed that it was illegal considering that the partys electing bodies, the National Executive Council (NECO) and the National Political Council (NAPOLCO), were not properly convened. Drilon also claimed that under the amended LP Constitution,[2] party officers were elected to a fixed three-year term that was yet to end on November 30, 2007. On the other hand, petitioner Atienza claimed that the majority of the LPs NECO and NAPOLCO attended the March 2, 2006 assembly. The election of new officers on that occasion could be likened to people power, wherein the LP majority removed respondent Drilon as president by direct action. Atienza also said that the amendments[3] to the original LP Constitution, or the Salonga Constitution, giving LP officers a fixed three-year term, had not been properly ratified. Consequently, the term of Drilon and the other officers already ended on July 24, 2006. On October 13, 2006, the COMELEC issued a resolution,[4] partially granting respondent Drilons petition. It annulled the March 2, 2006 elections and ordered the holding of a new election under COMELEC supervision. It held that the election of petitioner Atienza and the others with him was invalid since the electing assembly did not convene in accordance with the Salonga Constitution. But, since the amendments to the Salonga Constitution had not been properly ratified, Drilons term may be deemed to have ended. Thus, he held the position of LP president in a holdover capacity until new officers were elected. Both sides of the dispute came to this Court to challenge the COMELEC rulings. On April 17, 2007 a divided Court issued a resolution,[5] granting respondent Drilons petition and denying that of petitioner At ienza. The Court held, through the majority, that the COMELEC had jurisdiction over the intra-party leadership dispute; that the Salonga Constitution had been validly amended; and that, as a consequence, respondent Drilons term as LP president was to end only on November 30, 2007. Subsequently, the LP held a NECO meeting to elect new party leaders before respondent Drilons term expired. Fifty-nine NECO members out of the 87 who were supposedly qualified to vote attended. Before the election, however, several persons associated with petitioner Atienza sought to clarify their membership status and raised issues regarding the composition of the NECO. Eventually, that meeting installed respondent Manuel A. Roxas II (Roxas) as the new LP president. On January 11, 2008 petitioners Atienza, Matias V. Defensor, Jr., Rodolfo G. Valencia, Danilo E. Suarez, Solomon R. Chungalao, Salvacion Zaldivar-Perez, Harlin Cast-Abayon, Melvin G. Macusi, and Eleazar P. Quinto, filed a petition for mandatory and prohibitory injunction[6] before the COMELEC against respondents Roxas, Drilon and J.R. Nereus O. Acosta, the party secretary general. Atienza, et al. sought to enjoin Roxas from assuming the presidency of the LP, claiming that the NECO assembly which elected him was invalidly convened. They questioned the existence of a quorum and claimed that the NECO composition ought to have been based on a list appearing in the partys 60th Anniversary Souvenir Program. Both Atienza and Drilon adopted that list as common exhibit in the earlier cases and it showed that the NECO had 103 members. Petitioners Atienza, et al. also complained that Atienza, the incumbent party chairman, was not invited to the NECO meeting and that some members, like petitioner Defensor, were given the status of guests during the meeting. Atienzas allies allegedly raised these issues but respondent Drilon arbitrarily thumb ed them down and railroaded the proceedings. He suspended the meeting and moved it to another room, where Roxas was elected without notice to Atienzas allies.

8
On the other hand, respondents Roxas, et al. claimed that Roxas election as LP president faithfully complied with the provisions of the amended LP Constitution. The partys 60th Anniversary Souvenir Program could not be used for determining the NECO members because supervening events changed the bodys number and composition. Some NECO members had died, voluntarily resigned, or had gone on leave after accepting positions in the government. Others had lost their re-election bid or did not run in the May 2007 elections, making them ineligible to serve as NECO members. LP members who got elected to public office also became part of the NECO. Certain persons of national stature also became NECO members upon respondent Drilons nomination, a privilege granted the LP president under the amended LP Constitution. In other words, the NECO membership was not fixed or static; it changed due to supervening circumstances. Respondents Roxas, et al. also claimed that the party deemed petitioners Atienza, Zaldivar-Perez, and Cast-Abayon resigned for holding the illegal election of LP officers on March 2, 2006. This was pursuant to a March 14, 2006 NAPOLCO resolution that NECO subsequently ratified. Meanwhile, certain NECO members, like petitioners Defensor,Valencia, and Suarez, forfeited their party membership when they ran under other political parties during the May 2007 elections. They were dropped from the roster of LP members. On June 18, 2009 the COMELEC issued the assailed resolution denying petitioners Atienza, et al.s petition. It noted that the May 2007 elections necessarily changed the composition of the NECO since the amended LP Constitution explicitly made incumbent senators, members of the House of Representatives, governors and mayors members of that body. That some lost or won these positions in the May 2007 elections affected the NECO membership. Petitioners failed to prove that the NECO which elected Roxas as LP president was not properly convened. As for the validity of petitioners Atienza, et al.s expulsion as LP members, the COMELEC obser ved that this was a membership issue that related to disciplinary action within the political party. The COMELEC treated it as an internal party matter that was beyond its jurisdiction to resolve. Without filing a motion for reconsideration of the COMELEC resolution, petitioners Atienza, et al. filed this petition for certiorari under Rule 65. The Issues Presented Respondents Roxas, et al. raise the following threshold issues: 1. 2. election. Petitioners Atienza, et al., on the other hand, raise the following issues: 3. Whether or not the COMELEC gravely abused its discretion when it upheld the NECO membership that elected respondent Roxas as LP president; 4. Whether or not the COMELEC gravely abused its discretion when it resolved the issue concerning the validity of the NECO meeting without first resolving the issue concerning the expulsion of Atienza, et al. from the party; and 5. Whether or not respondents Roxas, et al. violated petitioners Atienza, et al.s constitutional right to due process by the latters expulsion from the party. The Courts Ruling One. Respondents Roxas, et al. assert that the Court should dismiss the petition for failure of petitioners Atienza, et al. to implead the LP as an indispensable party. Roxas, et al. point out that, since the petition seeks the issuance of a writ of mandatory injunction against the NECO, the controversy could not be adjudicated with finality without making the LP a party to the case.[7] But petitioners Atienza, et al.s causes of action in this case consist in respondents Roxas, et al.s disenfranchisement of Atienza, et al. from the election of party leaders and in the illegal election of Roxas as party president. Atienza, et al. were supposedly excluded from the elections by a series of despotic acts of Roxas, et al., who controlled the proceedings. Among these acts are Atienza, et al.s expulsion from the party, their exclusion from the NECO, and respondent Drilons railroading of election proceedings. Atienza, et al. attributed all these illegal and prejudicial acts to Roxas, et al. Whether or not the LP, which was not impleaded in the case, is an indispensable party; and Whether or not petitioners Atienza, et al., as ousted LP members, have the requisite legal standing to question Roxas

9
Since no wrong had been imputed to the LP nor had some affirmative relief been sought from it, the LP is not an indispensable party. Petitioners Atienza, et al.s prayer for the undoing of respondents Roxas, et al.s acts and the reconvening of the NECO are directed against Roxas, et al. Two. Respondents Roxas, et al. also claim that petitioners Atienza, et al. have no legal standing to question the election of Roxas as LP president because they are no longer LP members, having been validly expelled from the party or having joined other political parties.[8] As non-members, they have no stake in the outcome of the action. But, as the Court held in David v. Macapagal-Arroyo,[9] legal standing in suits is governed by the real parties-in-interest rule under Section 2, Rule 3 of the Rules of Court. This states that every action must be prosecuted or defended in the name of the real party-in-interest. And real party-in-interest is one who stands to be benefited or injured by the judgment in the suit or the party entitled to the avails of the suit. In other words, the plaintiffs standing is based on his own right to the reli ef sought. In raising petitioners Atienza, et al.s lack of standing as a threshold issue, respondents Roxas, et al. would have the Court hypothetically assume the truth of the allegations in the petition. Here, it is precisely petitioners Atienza, et al.s allegations that respondents Roxas, et al. deprived them of their rights as LP members by summarily excluding them from the LP roster and not allowing them to take part in the election of its officers and that not all who sat in the NECO were in the correct list of NECO members. If Atienza, et al.s allegations were correct, they would have been irregularly expelled from the party and the election of officers, void. Further, they would be entitled to recognition as members of good standing and to the holding of a new election of officers using the correct list of NECO members. To this extent, therefore, Atienza, et al. who want to take part in another election would stand to be benefited or prejudiced by the Courts decision in this case. Consequently, they have legal standing to pursue this petition. Three. In assailing respondent Roxas election as LP president, petitioners Atienza, et al. claim that the NECO members allowed to take part in that election should have been limited to those in the list of NECO members appearing in the partys 60th Anniversary Souvenir Program. Atienza, et al. allege that respondent Drilon, as holdover LP president, adopted that list in the earlier cases before the COMELEC and it should thus bind respondents Roxas, et al. The Courts decision in the earlier cases, said Atienza, et al., anointed that list for the next party election. Thus, Roxas, et al. in effect defied the Courts ruling when they removed Atienza as party chairman and changed the NECOs comp osition.[10] But the list of NECO members appearing in the partys 60 th Anniversary Souvenir Program was drawn before the May 2007 elections. After the 2007 elections, changes in the NECO membership had to be redrawn to comply with what the amended LP Constitution required. Respondent Drilon adopted the souvenir program as common exhibit in the earlier cases only to prove that the NECO, which supposedly elected Atienza as new LP president on March 2, 2006, had been improperly convened. It cannot be regarded as an immutable list, given the nature and character of the NECO membership. Nothing in the Courts resolution in the earlier cases implies that the NECO membership should be pegged to the partys 60th Anniversary Souvenir Program. There would have been no basis for such a position. The amended LP Constitution did not intend the NECO membership to be permanent. Its Section 27[11] provides that the NECO shall include all incumbent senators, members of the House of Representatives, governors, and mayors who were LP members in good standing for at least six months. It follows from this that with the national and local elections taking place in May 2007, the number and composition of the NECO would have to yield to changes brought about by the elections. Former NECO members who lost the offices that entitled them to membership had to be dropped. Newly elected ones who gained the privilege because of their offices had to come in. Furthermore, former NECO members who passed away, resigned from the party, or went on leave could not be expected to remain part of the NECO that convened and held elections on November 26, 2007. In addition, Section 27 of the amended LP Constitution expressly authorized the party president to nominate persons of national stature to the NECO. Thus, petitioners Atienza, et al. cannot validly object to the admission of 12 NECO members nominated by respondent Drilon when he was LP president. Even if this move could be regarded as respondents Roxas, et al.s way of ensuring their election as party officers, there was certainly nothing irregular about the act under the amended LP Constitution. The NECO was validly convened in accordance with the amended LP Constitution. Respondents Roxas, et al. explained in details how they arrived at the NECO composition for the purpose of electing the party leaders.[12] The explanation is logical and consistent with party rules. Consequently, the COMELEC did not gravely abuse its discretion when it upheld the composition of the NECO that elected Roxas as LP president. Petitioner Atienza claims that the Courts resolution in the earlier cases recognized his right as party chairman with a term , like respondent Drilon, that would last up to November 30, 2007 and that, therefore, his ouster from that position violated the Courts

10
resolution. But the Courts resolution in the earlier cases did not preclude the party from disciplining Atienza under Sections 29[13] and 46[14] of the amended LP Constitution. The party could very well remove him or any officer for cause as it saw fit. Four. Petitioners Atienza, et al. lament that the COMELEC selectively exercised its jurisdiction when it ruled on the composition of the NECO but refused to delve into the legality of their expulsion from the party. The two issues, they said, weigh heavily on the leadership controversy involved in the case. The previous rulings of the Court, they claim, categorically upheld the jurisdiction of the COMELEC over intra-party leadership disputes.[15] But, as respondents Roxas, et al. point out, the key issue in this case is not the validity of the expulsion of petitioners Atienza, et al. from the party, but the legitimacy of the NECO assembly that elected respondent Roxas as LP president. Given the COMELECs finding as upheld by this Court that the membership of the NECO in question complied with the LP Constitution, the resolution of the issue of whether or not the party validly expelled petitioners cannot affect the election of officers that the NECO held. While petitioners Atienza, et al. claim that the majority of LP members belong to their faction, they did not specify who these members were and how their numbers could possibly affect the composition of the NECO and the outcome of its election of party leaders. Atienza, et al. has not bothered to assail the individual qualifications of the NECO members who voted for Roxas. Nor did Atienza, et al. present proof that the NECO had no quorum when it then assembled. In other words, the claims of Atienza, et al. were totally unsupported by evidence. Consequently, petitioners Atienza, et al. cannot claim that their expulsion from the party impacts on the party leadership issue or on the election of respondent Roxas as president so that it was indispensable for the COMELEC to adjudicate such claim. Under the circumstances, the validity or invalidity of Atienza, et al.s expulsion was purely a membership issue that had to be settled within the party. It is an internal party matter over which the COMELEC has no jurisdiction. What is more, some of petitioner Atienzas allies raised objections before the NECO assembly regarding the status of members from their faction. Still, the NECO proceeded with the election, implying that its membership, whose composition has been upheld, voted out those objections. The COMELECs jurisdiction over intra-party disputes is limited. It does not have blanket authority to resolve any and all controversies involving political parties. Political parties are generally free to conduct their activities without interference from the state. The COMELEC may intervene in disputes internal to a party only when necessary to the discharge of its constitutional functions. The COMELECs jurisdiction over intra-party leadership disputes has already been settled by the Court. The Court ruled in Kalaw v. Commission on Elections[16] that the COMELECs powers and functions under Section 2, Article IX -C of the Constitution, include the ascertainment of the identity of the political party and its legitimate officers responsible for its acts. The Court also declared in another case[17] that the COMELECs power to register political parties necessarily involved the determination of the persons who must act on its behalf. Thus, the COMELEC may resolve an intra-party leadership dispute, in a proper case brought before it, as an incident of its power to register political parties. The validity of respondent Roxas election as LP president is a leadership issue that the COMELEC had to settle. Under the amended LP Constitution, the LP president is the issuing authority for certificates of nomination of party candidates for all national elective positions. It is also the LP president who can authorize other LP officers to issue certificates of nomination for candidates to local elective posts.[18] In simple terms, it is the LP president who certifies the official standard bearer of the party. The law also grants a registered political party certain rights and privileges that will redound to the benefit of its official candidates. It imposes, too, legal obligations upon registered political parties that have to be carried out through their leaders. The resolution of the leadership issue is thus particularly significant in ensuring the peaceful and orderly conduct of the elections.[19] Five. Petitioners Atienza, et al. argue that their expulsion from the party is not a simple issue of party membership or discipline; it involves a violation of their constitutionally-protected right to due process of law. They claim that the NAPOLCO and the NECO should have first summoned them to a hearing before summarily expelling them from the party. According to Atienza, et al., proceedings on party discipline are the equivalent of administrative proceedings [20] and are, therefore, covered by the due process requirements laid down in Ang Tibay v. Court of Industrial Relations.[21] But the requirements of administrative due process do not apply to the internal affairs of political parties. The due process standards set in Ang Tibay cover only administrative bodies created by the state and through which certain governmental acts or functions are performed. An administrative agency or instrumentality contemplates an authority to which the state delegates governmental power for the performance of a state function. [22] The constitutional limitations that generally apply to the exercise of the states powers thus, apply too, to administrative

11
bodies.

The constitutional limitations on the exercise of the states powers are found in Article III of the Constitution or the Bill of Rights. The Bill of Rights, which guarantees against the taking of life, property, or liberty without due process under Section 1 is generally a limitation on the states powers in relation to the rights of its citizens. The right to due process is meant to protect ordinary citizens against arbitrary government action, but not from acts committed by private individuals or entities. In the latter case, the specific statutes that provide reliefs from such private acts apply. The right to due process guards against unwarranted encroachment by the state into the fundamental rights of its citizens and cannot be invoked in private controversies involving private parties. [23] Although political parties play an important role in our democratic set-up as an intermediary between the state and its citizens, it is still a private organization, not a state instrument. The discipline of members by a political party does not involve the right to life, liberty or property within the meaning of the due process clause. An individual has no vested right, as against the state, to be accepted or to prevent his removal by a political party. The only rights, if any, that party members may have, in relation to other party members, correspond to those that may have been freely agreed upon among themselves through their charter, which is a contract among the party members. Members whose rights under their charter may have been violated have recourse to courts of law for the enforcement of those rights, but not as a due process issue against the government or any of its agencies. But even when recourse to courts of law may be made, courts will ordinarily not interfere in membership and disciplinary matters within a political party. A political party is free to conduct its internal affairs, pursuant to its constitutionally-protected right to free association. In Sinaca v. Mula,[24] the Court said that judicial restraint in internal party matters serves the public interest by allowing the political processes to operate without undue interference. It is also consistent with the state policy of allowing a free and open party system to evolve, according to the free choice of the people. [25] To conclude, the COMELEC did not gravely abuse its discretion when it upheld Roxas election as LP president but refused to rule on the validity of Atienza, et al.s expulsion from the party. While the question of party leadership has implications on the COMELECs performance of its functions under Section 2, Article IX -C of the Constitution, the same cannot be said of the issue pertaining to Atienza, et al.s expulsion from the LP. Such expulsion is for the moment an issue of party membership and discipline, in which the COMELEC cannot intervene, given the limited scope of its power over political parties. WHEREFORE, the Court DISMISSES the petition and UPHOLDS the Resolution of the Commission on Elections dated June 18, 2009 in COMELEC Case SPP 08-001.