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G.R. No.

191178 March 13, 2013 1) The amount of Eight Million Six Hundred Ninety Five Thousand
Two Hundred Two pesos and Fifty Nine centavos
ANCHOR SAVINGS BANK (FORMERLY ANCHOR FINANCE AND (Php8,695,202.59) as PRINCIPAL OBLIGATION as of 12 April
INVESTMENT CORPORATION), Petitioner, 1999;
vs.
HENRY H. FURIGAY, GELINDA C. FURIGAY, HERRIETTE C. FURIGAY 2) An INTEREST of Twelve per cent (12%) per annum until fully
and HEGEM C. FURIGAY, Respondents. paid;

DECISION 3) PENALTY CHARGE of Twelve per cent (12%) per annum until
fully paid;
MENDOZA, J.:
4) LIQUIDATED DAMAGES of Ten (10%) per cent of the total
This concerns a petition for review_ on certiorari filed by petitioner Anchor amount due;
Savings Bank (ASB) under Rule 45 of the 1997 Rules of Civil Procedure,
assailing the May 28, 2009 Decision1 and the January 22, 2010 5) One Hundred Thousand pesos as reasonable ATTORNEYS
Resolution2 of the Court of Appeals (CA), in CA-G.R. CV No. 90123, FEES;
dismissing the appeal.3
6) Costs of suit.
The assailed resolution denied the separate motions for reconsideration
of both parties. SO ORDERED.6

The Facts While Civil Case No. 99-865 was pending, respondent spouses donated
their registered properties in Alaminos, Pangasinan, to their minor
On April 21, 1999, ASB filed a verified complaint for sum of money and children, respondents Hegem G. Furigay and Herriette C. Furigay. As a
damages with application for replevin against Ciudad Transport Services, result, Transfer Certificate of Title (TCT) Nos.
Inc. (CTS), its president, respondent Henry H. Furigay; his wife, 21743,7 21742,8 21741,9 and 2174010 were issued in the names of Hegem
respondent Gelinda C. Furigay; and a "John Doe." The case was and Herriette Furigay.
docketed as Civil Case No. 99-865 and raffled to Branch 143 of the
Regional Trial Court of Makati City (RTC).4 Claiming that the donation of these properties was made in fraud of
creditors, ASB filed a Complaint for Rescission of Deed of Donation, Title
On November 7, 2003, the RTC rendered its Decision5 in favor of ASB, and Damages11 against the respondent spouses and their children. The
the dispositive portion of which reads: case was docketed as Civil Case No. A-3040 and raffled to Branch 55 of
the RTC of Alaminos, Pangasinan. In its Complaint, ASB made the
WHEREFORE, judgment is hereby rendered in favor of plaintiff Anchor following allegations:
Savings Bank ordering defendants Ciudad Transport Services, Inc., Henry
H. Furigay and Genilda C. Furigay to pay the following: xxxx
4. That Ciudad Transport Services, Inc., Henry H. Furigay and Gelinda C. 9. Clearly, the Donation made by defendants Sps. Furigay was intended
Furigay obtained a loan from Anchor Savings Bank and subsequently the to deprive plaintiff Anchor Savings Bank from going after the subject
former defaulted from their loan obligation which prompted Anchor properties to answer for their due and demandable obligation with the
Savings Bank to file the case entitled "Anchor Savings Bank vs. Ciudad Bank. The donation being undertaken in fraud of creditors then the same
Transport Services, Inc., Henry H. Furigay and Gelinda C. Furigay" may be rescinded pursuant to Article 1381 of the New Civil Code. The
lodged before Makati City Regional Trial Court Branch 143 and docketed said provision provides that: x x x x
as Civil Case No. 99-865. On 7 November 2003 the Honorable Court in
the aforesaid case issued a Decision the dispositive portion of which Consequently, Transfer Certificate of Title Nos. 21743, 21742, 21741, and
reads as follows: 21740 issued under the names of defendants Herriette C. Furigay and
Hegem C. Furigay should likewise be cancelled and reverted to the
xxxx names of co-defendants Henry and Gelinda Furigay.

5. That defendants Sps. Henry H. Furigay and Gelinda C. Furigay are the 10. That because of the fraud perpetrated by defendants, plaintiff suffered
registered owners of various real properties located at the Province of the following damages.
Pangasinan covered by Transfer Certificate of Title Nos. 19721, 21678,
21679, and 21682. x x x 11. Plaintiff suffered actual and compensatory damages as a result of the
filing of the case the bank has spent a lot of man-hours of its employees
6. That on 8 March 2001 defendants Sps. Henry H. Furigay and Gelinda and officers re-evaluating the account of defendant Sps. Furigay. Such
C. Furigay executed a Deed of Donation in favor of their children herein man-hour when converted into monetary consideration represents the
defendants Hegem C. Furigay and Herriette C. Furigay donating to them salaries and per diems of its employees particularly the CI/Appraiser,
all of the above-mentioned properties. Hence, the following titles were Head Office Lawyer and Bank Auditor;
issued under their names to wit: Transfer Certificate of Title Nos. 21743,
21742, 21741, and 21740. x x x 12. Said claim likewise represents administrative expenses such as
transportation expenses, reproduction of documents, and courier
7. That the donation made by defendants Sps. Henry H. Furigay and expenses among others;
Gelinda C. Furigay were done with the intention to defraud its creditors
particularly Anchor Savings Bank. Said transfer or conveyance is the one 13. Defendants should be made to pay plaintiff Anchor Savings Bank the
contemplated by Article 1387 of the New Civil Code, which reads: amount of PESOS: ONE MILLION (P1,000,000.00) as moral damages for
the damage it caused to the latters business goodwill and reputation;
xxxx
14. By way of example for the public and to deter others from the
8. x x x In the instant case, Sps. Furigay donated the properties at the malicious filing of baseless (sic) suit, defendants should be ordered to pay
time there was a pending case against them. x x x. In the instant case, [plaintiff] the amount of PESOS: TWO HUNDRED THOUSAND
the Sps. Furigay donated the properties to their son and daughter. (P200,000.00) as exemplary damages.
Moreover, the transfer or donation was executed in 2001 when both
donees Hegem C. Furigay and Herriette C. Furigay are minors. 15. Attorneys fees equivalent to twenty-five percent (25%) of the total
amount that can be collected from defendant;
16. Defendants should also be held liable to pay for the cost of suit. 12 filed the action for rescission only on October 14, 2005 or after four (4)
years from the time the Deed of Donation was registered in the Register
Instead of filing an answer, respondents sought the dismissal of the of Deeds of Alaminos, Pangasinan, on April 4, 2001. The four-year
complaint, principally arguing that the RTC failed to acquire jurisdiction prescriptive period should be reckoned from the date of registration of the
over their persons as well as over the subject matter in view of the failure deed of donation and not from the date of the actual discovery of the
of the ASB to serve the summons properly and to pay the necessary legal registration of the deeds of donation because registration is considered
fees. notice to the whole world. Thus, the RTC disposed:

RTC Resolutions WHEREFORE, premises considered, the Order dated September 29,
2006 is hereby reconsidered and set aside, in lieu thereof, the instant
On September 29, 2006, the RTC issued an Order13 denying the motion complaint is hereby ordered dismissed on the account of lack of
to dismiss. Respondents sought reconsideration of the Order adding that jurisdiction over the subject matter of the case for failure of the plaintiff to
the ASBs action for rescission had already prescribed. pay the correct docket fees upon its institution attended by bad faith and
on the ground of prescription.
Upon filing of ASBs opposition to the motion for reconsideration, on
February 27, 2007, the RTC reconsidered its earlier pronouncement and SO ORDERED.15
dismissed the complaint for failure of ASB to pay the correct docket fees
and for prescription.14 ASB sought reconsideration, but to no avail.16

RTC explained that the service of summons by publication made by ASB Ruling of the CA
was valid because respondents whereabouts could not have been
ascertained with exactitude and because Section 14, Rule 14 of the Rules On appeal, the CA agreed with ASB that its complaint should not have
of Court did not distinguish what kind of action it would apply. been dismissed on the ground that it failed to pay the correct docket fees.
It stated that the lack of specific amount of actual damages and attorneys
On the issue of lack of jurisdiction over the subject matter of the case, the fees in ASBs complaint did not, by itself, amount to evident bad faith. The
RTC ruled that the complaint was actually a real action as it affected title CA noted that ASB had previously manifested before the trial court that it
to or possession of real property. Accordingly, the basis for determining was willing to pay additional docket fees should the same be found
the correct docket fees was the fair market value of the real property insufficient.
under litigation as stated in its current tax declaration or its current zonal
valuation, whichever was higher. Considering that ASB did not state the On the issue of prescription, however, the CA saw things differently.
current tax declaration or current zonal valuation of the real properties Considering the subsidiary nature of an action for rescission, the CA
involved, as well as the amount of actual damages and attorneys fees it found that the action of ASB had not yet prescribed, but was premature.
prayed for, the trial court was of the view that ASB purposely evaded the The CA noted that ASB failed to allege in its complaint that it had resorted
payment of the correct filing fees. to all legal remedies to obtain satisfaction of its claim. The CA wrote:

On the issue of prescription, the RTC ruled that the action for rescission After a thorough examination of the foregoing precepts and the facts
had already prescribed. It stated that an action for rescission grounded on engirding this case, this court opines that plaintiff-appellants action for
fraud should be filed within four (4) years from the discovery of fraud. ASB rescission has not yet prescribed for it must be emphasized that it has not
even accrued in the first place. To stress, an action for rescission or Hence, this recourse of ASB to the Court, presenting the lone issue of:
accion pauliana accrues only if all five requisites are present, to wit:
WHETHER OR NOT THE COURT OF APPEALS, IN CA G.R. CV NO
1) That the plaintiff asking for rescission, has a credit prior to the 90123, HAS DECIDED A QUESTION OF SUBSTANCE, NOT
alienation, although demandable later; HERETOFORE DETERMINED BY THE SUPREME COURT, OR HAS
DECIDED IT IN A WAY PROBABLY NOT IN ACCORDANCE WITH LAW
2) That the debtor has made a subsequent contract conveying a OR THE APPLICABLE DECISIONS OF THE SUPREME COURT, WHEN
patrimonial benefit to a third person; IT RENDERED THE DECISION DATED 28 MAY 2009, AND
RESOLUTION DATED 22 JANUARY 2010, IN FINDING THAT
3) That the creditor has no other legal remedy to satisfy his claim, PETITIONER FAILED TO PROVE THAT IT HAS RESORTED TO ALL
but would benefit by rescission of the conveyance to the third LEGAL REMEDIES TO OBTAIN SATISFACTION OF ITS CLAIM,
person; WITHOUT GIVING PETITIONER THE OPPORTUNITY TO BE HEARD
OR THE CHANCE TO PRESENT EVIDENCE TO SUPPORT ITS
4) That the act being impugned is fraudulent; and ACTION, THEREBY DEPRIVING THE LATTER OF THE RIGHT TO DUE
PROCESS.18
5) That the third person who received the property conveyed, if by
onerous title, has been an accomplice in the fraud. ASB argues that, considering that its action was still in its preliminary
stages, the CA erred in dismissing its action on the ground that it failed to
In the instant case, the plaintiff-appellant failed to satisfy the third allege in its complaint the fact that it had resorted to all other legal
requirement considering that it did not allege in its complaint that it has remedies to satisfy its claim, because it is a matter that need not be
resorted to all legal remedies to obtain satisfaction of his claim. It did not alleged in its complaint, but, rather, to be proved during trial. It asserts
even point out in its complaint if the decision in Civil Case No. 99-865 has that its action is not yet barred by prescription, insisting that the reckoning
already become final and executory and whether the execution thereof point of the four
yielded negative result in satisfying its claims. Even the skip tracing
allegedly done by the plaintiff-appellant to locate the properties of the (4)-year prescriptive period should be counted from September 2005,
defendant-appellees was not mentioned. And although the skip tracing when it discovered the fraudulent donation made by respondent spouses.
reports were subsequently presented by the plaintiff-appellant, such
reports are not sufficient to satisfy the third requirement. First, they are The basic issue in this case is whether the CA was correct in dismissing
not prepared and executed by the sheriff, and second, they do not ASBs complaint on the ground that the action against respondents was
demonstrate that the sheriff failed to enforce and satisfy the judgment of premature.
the court and that the plaintiff-appellant has exhausted the property of the
defendant-appellees. Perforce, the action for rescission filed by the Ruling of the Court
plaintiff-appellant is dismissible.17
The Court finds the petition bereft of merit.
As stated at the outset, both parties sought reconsideration but were
rebuffed. Section 1 of Rule 2 of the Revised Rules of Court requires that every
ordinary civil action must be based on a cause of action. Section 2 of the
Issue same rule defines a cause of action as an act or omission by which a
party violates the right of another. In order that one may claim to have a The creditors, after having pursued the property in possession of the
cause of action, the following elements must concur: (1) a right in favor of debtor to satisfy their claims, may exercise all the rights and bring all the
the plaintiff by whatever means and under whatever law it arises or is actions of the latter for the same purpose, save those which are inherent
created; (2) an obligation on the part of the named defendant to respect in his person; they may also impugn the actions which the debtor may
or not to violate such right; and (3) an act or omission on the part of such have done to defraud them. (Emphasis added)
defendant in violation of the right of the plaintiff or constituting a breach of
the obligation of the defendant to the plaintiff for which the latter may Consequently, following the subsidiary nature of the remedy of rescission,
maintain an action for recovery of damages or other appropriate relief. 19 In a creditor would have a cause of action to bring an action for rescission, if
other words, "a cause of action arises when that should have been done it is alleged that the following successive measures have already been
is not done, or that which should not have been done is done." 20 taken: (1) exhaust the properties of the debtor through levying by
attachment and execution upon all the property of the debtor, except such
In Philippine American General Insurance Co., Inc. v. Sweet Lines, as are exempt by law from execution; (2) exercise all the rights and
Inc.,21 it was held that "before an action can properly be commenced, all actions of the debtor, save those personal to him (accion subrogatoria);
the essential elements of the cause of action must be in existence, that is, and (3) seek rescission of the contracts executed by the debtor in fraud of
the cause of action must be complete. All valid conditions precedent to their rights (accion pauliana).25
the institution of the particular action, whether prescribed by statute, fixed
by agreement of the parties or implied by law must be performed or With respect to an accion pauliana, it is required that the ultimate facts
complied with before commencing the action, unless the conduct of the constituting the following requisites must all be alleged in the complaint,
adverse party has been such as to prevent or waive performance or viz.:
excuse non-performance of the condition."
1) That the plaintiff asking for rescission, has credit prior to the
Moreover, it is not enough that a party has, in effect, a cause of action. alienation, although demandable later;

The rules of procedure require that the complaint must contain a concise 2) That the debtor has made a subsequent contract conveying a
statement of the ultimate or essential facts constituting the plaintiff's patrimonial benefit to a third person;
cause of action. "The test of the sufficiency of the facts alleged in the
complaint is whether or not, admitting the facts alleged, the court can 3) That the creditor has no other legal remedy to satisfy his claim,
render a valid judgment upon the same in accordance with the prayer of but would benefit by rescission of the conveyance to the third
plaintiff."22 The focus is on the sufficiency, not the veracity, of the material person;
allegations. Failure to make a sufficient allegation of a cause of action in
the complaint warrants its dismissal.23 4) That act being impugned is fraudulent; and

In relation to an action for rescission, it should be noted that the remedy 5) That the third person who received the property conveyed, if by
of rescission is subsidiary in nature; it cannot be instituted except when onerous title, has been an accomplice in the fraud.26
the party suffering damage has no other legal means to obtain reparation
for the same.24 Article 1177 of the New Civil Code provides: A cursory reading of the allegations of ASBs complaint would show that it
failed to allege the ultimate facts constituting its cause of action and the
prerequisites that must be complied before the same may be instituted.
ASB, without availing of the first and second remedies, that is, exhausting Civil Code for respondent Philam to file its action for rescission of the
the properties of CTS, Henry H. Furigay and Genilda C. Furigay or their subject deeds of donation commence to run?
transmissible rights and actions, simply undertook the third measure and
filed an action for annulment of the donation. This cannot be done. The The petition is without merit.
Court hereby quotes with approval the thorough discourse of the CA on
this score:27 Article 1389 of the Civil Code simply provides that, The action to claim
rescission must be commenced within four years. Since this provision of
To answer the issue of prescription, the case of Khe Hong Cheng vs. law is silent as to when the prescriptive period would commence, the
Court of Appeals (G.R. No. 144169, March 28, 2001) is pertinent. In said general rule, i.e, from the moment the cause of action accrues, therefore,
case, Philam filed an action for collection against Khe Hong Cheng. While applies. Article 1150 of the Civil Code is particularly instructive:
the case was still pending, or on December 20, 1989, Khe Hong Cheng,
executed deeds of donations over parcels of land in favor of his children, ARTICLE 1150. The time for prescription for all kinds of actions, when
and on December 27, 1989, said deeds were registered. Thereafter, new there is no special provision which ordains otherwise, shall be counted
titles were issued in the names of Khe Hong Chengs children. Then, the from the day they may be brought.
decision became final and executory. But upon enforcement of writ of
execution, Philam found out that Khe Hong Cheng no longer had any Indeed, this Court enunciated the principle that it is the legal possibility of
property in his name. Thus, on February 25, 1997, Philam filed an action bringing the action which determines the starting point for the computation
for rescission of the deeds of donation against Khe Hong Cheng alleging of the prescriptive period for the action. Article 1383 of the Civil Code
that such was made in fraud of creditors. However, Khe Hong Cheng provides as follows:
moved for the dismissal of the action averring that it has already
prescribed since the four-year prescriptive period for filing an action for ARTICLE 1383. An action for rescission is subsidiary; it cannot be
rescission pursuant to Article 1389 of the Civil Code commenced to run instituted except when the party suffering damage has no other legal
from the time the deeds of donation were registered on December 27, means to obtain reparation for the same.
1989. Khe Hong Cheng averred that registration amounts to constructive
notice and since the complaint was filed only on February 25, 1997, or It is thus apparent that an action to rescind or an accion pauliana must be
more than four (4) years after said registration, the action was already of last resort, availed of only after all other legal remedies have been
barred by prescription. The trial court ruled that the complaint had not yet exhausted and have been proven futile.1wphi1 For an accion pauliana to
prescribed since the prescriptive period began to run only from December accrue, the following requisites must concur:
29, 1993, the date of the decision of the trial court. Such decision was
affirmed by this court but reckoned the accrual of Philam's cause of action 1) That the plaintiff asking for rescission, has a credit prior to the
in January 1997, the time when it first learned that the judgment award alienation, although demandable later; 2) That the debtor has made a
could not be satisfied because the judgment creditor, Khe Hong Cheng, subsequent contract conveying a patrimonial benefit to a third person; 3)
had no more properties in his name. Hence, the case reached the That the creditor has no other legal remedy to satisfy his claim, but would
Supreme Court which ruled that the action for rescission has not yet benefit by rescission of the conveyance to the third person; 4) That the
prescribed, ratiocinating as follows: act being impugned is fraudulent; 5) That the third person who received
the property conveyed, if by onerous title, has been an accomplice in the
"Essentially, the issue for resolution posed by petitioners is this: When did fraud.
the four (4) year prescriptive period as provided for in Article 1389 of the
We quote with approval the following disquisition of the CA on the matter: from the date of registration of the conveyance with the Register of
Deeds, as alleged by the petitioners, would run counter to Article 1383 of
An accion pauliana accrues only when the creditor discovers that he has the Civil Code as well as settled jurisprudence. It would likewise violate
no other legal remedy for the satisfaction of his claim against the debtor the third requisite to file an action for rescission of an allegedly fraudulent
other than an accion pauliana. The accion pauliana is an action of a last conveyance of property, i.e., the creditor has no other legal remedy to
resort. For as long as the creditor still has a remedy at law for the satisfy his claim.
enforcement of his claim against the debtor, the creditor will not have any
cause of action against the creditor for rescission of the contracts entered An accion pauliana thus presupposes the following: 1) A judgment; 2) the
into by and between the debtor and another person or persons. Indeed, issuance by the trial court of a writ of execution for the satisfaction of the
an accion pauliana presupposes a judgment and the issuance by the trial judgment, and 3) the failure of the sheriff to enforce and satisfy the
court of a writ of execution for the satisfaction of the judgment and the judgment of the court. It requires that the creditor has exhausted the
failure of the Sheriff to enforce and satisfy the judgment of the court. It property of the debtor. The date of the decision of the trial court is
presupposes that the creditor has exhausted the property of the debtor. immaterial. What is important is that the credit of the plaintiff antedates
The date of the decision of the trial court against the debtor is immaterial. that of the fraudulent alienation by the debtor of his property. After all, the
What is important is that the credit of the plaintiff antedates that of the decision of the trial court against the debtor will retroact to the time when
fraudulent alienation by the debtor of his property. After all, the decision of the debtor became indebted to the creditor.
the trial court against the debtor will retroact to the time when the debtor
became indebted to the creditor. xxxx

Petitioners, however, maintain that the cause of action of respondent Even if respondent Philam was aware, as of December 27, 1989, that
Philam against them for the rescission of the deeds of donation accrued petitioner Khe Hong Cheng had executed the deeds of donation in favor
as early as December 27, 1989, when petitioner Khe Hong Cheng of his children, the complaint against Butuan Shipping Lines and/or
registered the subject conveyances with the Register of Deeds. petitioner Khe Hong Cheng was still pending before the trial court.
Respondent Philam allegedly had constructive knowledge of the Respondent Philam had no inkling, at the time, that the trial court's
execution of said deeds under Section 52 of Presidential Decree No. judgment would be in its favor and further, that such judgment would not
1529, quoted infra, as follows: be satisfied due to the deeds of donation executed by petitioner Khe
Hong Cheng during the pendency of the case. Had respondent Philam
SECTION 52. Constructive knowledge upon registration. Every filed his complaint on December 27, 1989, such complaint would have
conveyance, mortgage, lease, lien, attachment, order, judgment, been dismissed for being premature. Not only were all other legal
instrument or entry affecting registered land shall, if registered, filed or remedies for the enforcement of respondent Philam's claims not yet
entered in the Office of the Register of Deeds for the province or city exhausted at the time the deeds of donation were executed and
where the land to which it relates lies, be constructive notice to all registered. Respondent Philam would also not have been able to prove
persons from the time of such registering, filing, or entering. then that petitioner Khe Hong Cheng had no more property other than
those covered by the subject deeds to satisfy a favorable judgment by the
Petitioners argument that the Civil Code must yield to the Mortgage and trial court.
Registration Laws is misplaced, for in no way does this imply that the
specific provisions of the former may be all together ignored. To count the xxxx
four year prescriptive period to rescind an allegedly fraudulent contract
As mentioned earlier, respondent Philam only learned about the unlawful WHEREFORE, the petition is DENIED.
conveyances made by petitioner Khe Hong Cheng in January 1997 when
its counsel accompanied the sheriff to Butuan City to attach the properties SO ORDERED.
of petitioner Khe Hong Cheng. There they found that he no longer had
any properties in his name. It was only then that respondent

Philam's action for rescission of the deeds of donation accrued because


then it could be said that respondent Philam had exhausted all legal
means to satisfy the trial court's judgment in its favor. Since respondent
Philam filed its complaint for accion pauliana against petitioners on
February 25, 1997, barely a month from its discovery that petitioner Khe
Hong Cheng had no other property to satisfy the judgment award against
him, its action for rescission of the subject deeds clearly had not yet
prescribed."

From the foregoing, it is clear that the four-year prescriptive period


commences to run neither from the date of the registration of the deed
sought to be rescinded nor from the date the trial court rendered its
decision but from the day it has become clear that there are no other legal
remedies by which the creditor can satisfy his claims. [Emphases in the
original]

In all, it is incorrect for ASB to argue that a complaint need not allege all
PHILIPPINE DAILY INQUIRER, ISAGANI
the elements constituting its cause of action since it would simply adduce YAMBOT, LETTY JIMENEZ-MAGSANOC, G.R. No. 160604
proof of the same during trial. "Nothing is more settled than the rule that in PERGENITO B. BANDAYREL, JR.,
a motion to dismiss for failure to state a cause of action, the inquiry is GOBLETH C. MOULIC, ESTANISLAO
"into the sufficiency, not the veracity, of the material allegations." 28 The CALDEZ, and ZENAIDA CALDEZ,
inquiry is confined to the four comers of the complaint, and no Petitioners,
other.29 Unfortunately for ASB, the Court finds the allegations of its Present:
complaint insufficient in establishing its cause of action and in apprising PUNO, C.J., Chairperson,
HON. ELMO M. ALAMEDA, in his capacity CARPIO,
the respondents of the same so that they could defend themselves as the Presiding Judge of the REGIONAL CORONA,
intelligently and effectively pursuant to their right to due process. It is a TRIAL COURT OF TUGUEGARAO CITY, AZCUNA, and
rule of universal application that courts of justice are constituted to CAGAYAN, BRANCH 5, and LUZ CORTEZ LEONARDO-DE CASTRO, JJ.
adjudicate substantive rights. While courts should consider public policy BABARAN,
and necessity in putting an end to litigations speedily they must Respondents. Promulgated:
nevertheless harmonize such necessity with the fundamental right of
litigants to due process.
March 28, 2008
On September 13, 2001, petitioners filed their Answer [7] with
counterclaims. In said answer, petitioners raised, among others, the
following defenses: that the complaint states no cause of action against
them; that the complaint fails and omits to state the factual premises to
x-----------------------------------------------------------------------------------------x
support a conclusion that there was malice on the part of the PDI in
publishing the questioned news report; that private respondent failed to
DECISION allege actual malice on the part of the petitioners; that a case for
AZCUNA, J.: actionable libel with claims for damages has not been adequately stated
in the complaint; and, that the complaint fails to establish the basis of
Before us is a petition for review on certiorari seeking the review, petitioners liability.[8]
setting aside, and annulment of the Resolution [1] of the Court of Appeals
(CA) in CA-G.R. SP No. 79702 dated October 22, 2003 dismissing the Pre-trial was held and terminated, and petitioners thereafter filed
petition for certiorari and prohibition filed by petitioners. a Motion for a Preliminary Hearing on Affirmative Defense Raised in the
Answer (which is also a ground for a motion to dismiss). [9] In said motion,
The antecedents are as follows: it was alleged that at the pre-trial on February 19, 2003, the court noted
that one of the defenses raised by petitioners was that private respondent
The Philippine Daily Inquirer (PDI), in its August 1, 2000 issue, has not delineated the participation of each of petitioners in the
published an article with the heading After Bong, whos next? [2] The article publication of the alleged libelous articles.[10] Thereupon, private
narrates the death of Expedito Bong Caldez, a photo correspondent of the respondents counsel asked for a few days to determine whether the
PDI in Cagayan. In said article, the family of the deceased correspondent complaint should be amended to cure its defects. However, private
laments the death of their loved one due to the alleged erroneous respondent had not moved to amend the complaint, hence, petitioners
diagnosis of Dr. Luz Babaran.[3] filed the motion.[11]

Later, in its September 29, 2000 issue, the PDI published another In support thereof, petitioners contend that: in libel charges, the
article with the heading DOH orders probe of fotogs death. [4] In said participation of each defendant must be specifically alleged in the
article, it was reported that the regional Department of Health (DOH) complaint, which private respondent failed to do; and the allegations of
in Tuguegarao City has started investigating the death of Expedito Caldez the complaint are mere conclusions of law and opinions of the private
following an order from the DOHs Bureau of Licensing and Regulation. respondent.[12] Petitioners ultimately prayed that a preliminary hearing be
conducted on their affirmative defense that the complaint failed to state a
On July 25, 2001, based on the two PDI column articles, Dr. cause of action; and that, thereafter, the complaint be dismissed. [13]
Babaran filed a complaint for Damages,[5] Civil Case No. 5850, against
herein petitioners. In said complaint Dr. Babaran alleged, among other Subsequently, private respondent filed a Comment/Opposition to
things, that: after learning about the article published in the August 1, the Motion to Dismiss Based on Affirmative Defense. [14] In said
2000 issue of the PDI, she wrote a letter to the editor of the PDI but she comment/opposition, private respondent averred that at the February 19,
never received any response from the latter; to aggravate the matter, 2003 pre-trial, the issue of whether or not the complaint states a cause of
another article appeared in the September 29, 2000 issue of the PDI and action was not raised. As such, it is no longer an issue to be litigated in
she was again singled out as having erroneously diagnosed the illness of the case. Private respondent prayed that the court deny petitioners
Expedito Caldez; the Report[6] of the DOH Fact-Finding Committee motion to dismiss.
concluding that her diagnosis cannot be considered erroneous, was
suppressed and was never published by the PDI; the articles portrayed On May 30, 2003, the Regional Trial Court (RTC) issued an
her as incompetent and one whose alleged erroneous diagnosis caused Order[15] denying petitioners motion in this wise:
the death of Expedito Caldez; and, in causing the articles to be published,
petitioners acted in bad faith.
With this finding and conclusion, the Court finds RESPONDENT, AND NOT STATEMENTS OF
no further necessity in dwelling at length on the other ULTIMATE FACTS.[21]
issues raised by the defendants. Consequently, the
motion for a Preliminary Hearing on Affirmative Defense Petitioners prayed among others: that the Orders of the RTC
Raised in the Answer (which is also a ground for a motion dated May 30, 2003 and July 29, 2003 be annulled and set aside for
to dismiss) is hereby DENIED. The initial presentation of having been rendered with grave abuse of discretion and/or excess of
plaintiffs evidence is set on July 3, 2003, at 8:30 oclock in jurisdiction; and that Civil Case No. 5850 be dismissed for failure to state
the morning. a cause of action.[22]

SO ORDERED.[16] On October 22, 2003, the CA issued a Resolution [23] dismissing the
petition for being insufficient in form and substance and for presenting no
justiciable issue needing serious consideration by the court. Also, the CA
The RTC opined that private respondents allegations in her complaint, as noted that the Order dated May 30, 2003 shows that the RTC had already
well as her documentary evidence, show that there is sufficient cause of ruled against petitioners affirmative defense that the complaint states no
action. It added that the documentary evidence discloses facts which are cause of action.
sufficient to enable the court to go beyond the disclosures in the
complaint. Considering that the facts alleged in the complaint which make Hence, this petition, raising the following issues:
out the principal cause of action and relief are sufficient, the case should
not be dismissed.[17] WHETHER OR NOT A COMPLAINT WHICH
FAILS TO VALIDLY AND SUFFICIENTLY STATE A
Petitioners filed a Motion for Reconsideration [18] but it was denied in the CAUSE OF ACTION FOR LIBEL BECAUSE:
Order[19] dated July 29, 2003.
A) THE PARTICIPATION OF EACH
Aggrieved, petitioners filed a Petition for Certiorari and Prohibition (with DEFENDANT (PETITIONER) IN THE WRITING,
Prayer for the Issuance of Temporary Restraining Order and/or EDITING, PRINTING, AND PUBLICATION OF
Preliminary Injunction)[20] with the CA, relying on the ground that: THE NEWS ARTICLES IN QUESTION IS NOT
SPECIFICALLY SET OUT IN THE COMPLAINT;
THE RESPONDENT TRIAL JUDGE GRAVELY ABUSED
HIS DISCRETION AND EXCEEDED HIS JURISDICTION B) THE MATERIAL ALLEGATIONS OF THE
IN NOT DISMISSING THE COMPLAINT DESPITE ITS COMPLAINT ARE PURELY LEGAL
FAILURE TO VALIDLY AND SUFFICIENTLY STATE A CONCLUSIONS AND OPINIONS OF PRIVATE
CAUSE OF ACTION FOR LIBEL AGAINST THE RESPONDENT, AND NOT STATEMENTS OF
PETITIONERS BECAUSE: ULTIMATE FACTS; AND

A) THE PARTICIPATION OF EACH C) THE COMPLAINT IS VIOLATIVE OF


DEFENDANT (PETITIONER) IN THE WRITING, PETITIONERS CONSTITUTIONAL RIGHTS TO
EDITING, PRINTING, AND PUBLICATION OF FREE PRESS AND TO FREE SPEECH.
THE NEWS ARTICLES IN QUESTION IS NOT
SPECIFICALLY SET OUT IN THE COMPLAINT; SHOULD BE DISMISSED UPON MOTION BY
THE DEFENDANTS (PETITIONERS HEREIN). [24]
B) THE MATERIAL ALLEGATIONS OF THE
COMPLAINT ARE PURELY LEGAL
CONCLUSIONS AND OPINIONS OF PRIVATE Petitioners argue that private respondents complaint failed to
comply with the requirement in libel cases that the participation of each
defendant must be specifically alleged in the complaint.Petitioners pleading states a cause of action, the test is as follows: admitting the truth
maintain that their divergent personal circumstances and different legal of the facts alleged, can the court render a valid judgment in accordance
existence, not to mention the absence of any professional relationship of with the prayer? To be taken into account are only the material allegations
two of petitioners with the rest of them, should have prompted private in the complaint; extraneous facts and circumstances or other
respondent to specify the participation of each petitioner in the news matters aliunde are not considered. The court may however consider, in
gathering, reporting, editing, publication, and circulation of the subject addition to the complaint, the appended annexes or documents, other
articles. As such it cannot be determined with certainty from the pleadings of the plaintiff, or admissions in the records. [30]
allegations in the complaint whose acts and omissions are actually
complained of.[25] When a defendant seeks the dismissal of the complaint through a
motion to dismiss, the sufficiency of the motion should be tested on the
Also, petitioners added that the material allegations of the strength of the allegations of facts contained in the complaint and on no
complaint are not statements of ultimate facts but were mere conclusions other basis.[31] The issue of whether or not the complaint failed to state a
of law and were merely private respondents opinions. [26] cause of action, warranting its dismissal, must be passed upon on the
basis of the allegations stated therein assuming them to be true and the
Finally, petitioners contend that the complaint violates their court cannot inquire into the truth of the allegations and declare them to
constitutionally protected freedom of speech and of the press. [27] be false; otherwise, it would be a procedural error and a denial of due
process to the plaintiff.[32]
As defined in Section 2, Rule 2 of the Rules of Court, a cause of
action is the act or omission by which a party violates the right of This Court finds that petitioners raised the threshold question of
another. In relation to a complaint, it is a formal statement of the operative whether the complaint sufficiently alleges a cause of action.
facts that give rise to a remedial right. The question of whether the
complaint states a cause of action is determined by its averments
regarding the acts committed by the defendant.Thus, it must contain a Hence, the trial court should have granted petitioners motion for a
concise statement of the ultimate or essential facts constituting the preliminary hearing on the affirmative defenses raised in the answer
plaintiff's cause of action. As such, the failure to make a sufficient based on failure to state a cause of action. This procedure is designed to
allegation of a cause of action in the complaint warrants its dismissal. prevent a tedious, if not traumatic, trial in case the complaint falls short of
[28]
Its essential elements are as follows: sufficiently alleging a cause of action

1. A right in favor of the plaintiff by whatever means and under G.R. No. 172175 October 9, 2006
whatever law it arises or is created;
SPS. EXPEDITO ZEPEDA AND ALICE D. ZEPEDA, petitioners, vs.
2. An obligation on the part of the named defendant to respect or CHINA BANKING CORPORATION, respondent.
not to violate such right; and
DECISION
3. Act or omission on the part of such defendant in violation of the
right of the plaintiff or constituting a breach of the
obligation of the defendant to the plaintiff for which the YNARES-SANTIAGO, J.:
latter may maintain an action for recovery of damages or
other appropriate relief. This petition for review under Rule 45 of the Rules of Court assails the
January 24, 2006 Decision1 of the Court of Appeals in CA-G.R. SP No.
Of the three, the most important is the last element since it is only 89148 granting respondent China Banking Corporations (Chinabank)
upon the occurrence of the last element that a cause of action arises, petition to annul the Orders dated April 1, 20042 and October 22, 20043 of
giving the plaintiff the right to maintain an action in court for recovery of the Regional Trial Court of San Jose, Camarines Sur, Branch 30, 4 in Civil
damages or other appropriate relief. [29] In determining whether an initiatory
Case No. T-947. Also assailed is the March 31, 2006 Resolution 5 denying that compelling reasons warrant the dismissal of petitioners complaint
petitioners motion for reconsideration. because they acted in bad faith when they ignored the hearings set by the
trial court to determine the veracity of Chinabanks affirmative defenses;
The facts are as follows. they failed to answer Chinabanks written interrogatories; and the
complaint states no cause of action.
On February 18, 2003, spouses Expedito and Alice Zepeda filed a
complaint for nullification of foreclosure proceedings and loan documents On March 31, 2006, petitioners motion for reconsideration was denied
with damages6 against respondent Chinabank before the Regional Trial hence, the instant petition raising the following issues:
Court of San Jose, Camarines Sur, which was docketed as Civil Case No.
T-947 and raffled to Branch 30. They alleged that on June 28, 1995, they I. THE HONORABLE COURT OF APPEALS COMMITTED
obtained a loan in the amount of P5,800,000.00 from respondent secured REVERSIBLE ERROR WHEN IT ISSUED THE ASSAILED
by a Real Estate Mortgage over a parcel of land covered by Transfer DECISION DECLARING THAT THE PETITIONER[S]
Certificate of Title (TCT) No. T-23136. COMPLAINT DATED 12 FEBRUARY 2003 HAS NO CAUSE OF
ACTION.
Petitioners subsequently encountered difficulties in paying their loan
obligations hence they requested for restructuring which was allegedly II. CAUSE OF ACTION HAS BEEN SUFFICIENTLY
granted by Chinabank. Hence, they were surprised when respondent ESTABLISHED IN THE COMPLAINT AND THE GROUND
bank extrajudicially foreclosed the subject property on October 9, 2001 RELIED UPON BY THE PRIVATE RESPONDENT BANK ARE
where it emerged as the highest bidder. Respondent bank was issued a MERE EVIDENTIARY MATTERS.7
Provisional Certificate of Sale and upon petitioners failure to redeem the
property, ownership was consolidated in its favor. The issues for resolution are: a) whether the complaint states a cause of
action and b) whether the complaint should be dismissed for failure of
According to petitioners, the foreclosure proceedings should be annulled petitioners to answer respondents written interrogatories as provided for
for failure to comply with the posting and publication requirements. They in Section 3(c), Rule 29 of the Rules of Court.
also claimed that they signed the Real Estate Mortgage and Promissory
Note in blank and were not given a copy and the interest rates thereon The petition is meritorious.
were unilaterally fixed by the respondent.
Anent the first issue, the Court of Appeals ruled that the complaint failed
Respondent banks motion to dismiss was denied, hence it filed an to state a cause of action because petitioners admitted that they failed to
answer with special affirmative defenses and counterclaim. It also filed a redeem the property and that ownership of the same was consolidated in
set of written interrogatories with 20 questions. the name of Chinabank.

In an Order dated April 1, 2004, the trial court denied Chinabanks A cause of action is a formal statement of the operative facts that give rise
affirmative defenses for lack of merit as well as its motion to expunge the to a remedial right. The question of whether the complaint states a cause
complaint for being premature. The trial court reiterated its denial of of action is determined by its averments regarding the acts committed by
Chinabanks affirmative defenses in its Order dated October 22, 2004 and the defendant. Thus it "must contain a concise statement of the ultimate
directed the Clerk of Court to set the pre-trial conference for the marking or essential facts constituting the plaintiffs cause of action." Failure to
of the parties documentary evidence. make a sufficient allegation of a cause of action in the complaint "warrants
its dismissal."8
Aggrieved, respondent bank filed a petition for certiorari under Rule 65
which was granted by the Court of Appeals. It held that the trial court
gravely abused its discretion in issuing the two assailed Orders. It ruled
As defined in Section 2, Rule 2 of the Rules of Court, a cause of action is We find the allegations in the complaint sufficient to establish a cause of
the act or omission by which a party violates the right of another. Its action for nullifying the foreclosure of the mortgaged property. The fact
essential elements are as follows: that petitioners admitted that they failed to redeem the property and that
the title was consolidated in respondent banks name did not preclude
1. A right in favor of the plaintiff by whatever means and under them from seeking to nullify the extrajudicial foreclosure. Precisely,
whatever law it arises or is created; petitioners seek to nullify the proceedings based on circumstances
obtaining prior to and during the foreclosure which render it void.
2. An obligation on the part of the named defendant to respect or
not to violate such right; and Anent the second issue, we do not agree with the Court of Appeals ruling
that the complaint should be dismissed for failure of petitioners to answer
respondent banks written interrogatories.
3. Act or omission on the part of such defendant in violation of the
right of the plaintiff or constituting a breach of the obligation of the
defendant to the plaintiff for which the latter may maintain an It should be noted that respondent bank filed a motion to expunge the
action for recovery of damages or other appropriate relief. complaint based on Section 3(c) of Rule 29 which states:

It is, thus, only upon the occurrence of the last element that a cause of SEC. 3. Other consequences. If any party or an officer or
action arises, giving the plaintiff the right to maintain an action in court for managing agent of a party refuses to obey an order made under
recovery of damages or other appropriate relief.9 In determining whether section 112 of this Rule requiring him to answer designated
an initiatory pleading states a cause of action, "the test is as follows: questions, or an order under Rule 27 to produce any document or
admitting the truth of the facts alleged, can the court render a valid other thing for inspection, copying, or photographing or to permit
judgment in accordance with the prayer?" To be taken into account are it to be done, or to permit entry upon land or other property, or an
only the material allegations in the complaint; extraneous facts and order made under Rule 28 requiring him to submit to a physical or
circumstances or other matters aliunde are not considered. The court may mental examination, the court may make such orders in regard to
consider in addition to the complaint the appended annexes or the refusal as are just, and among others the following:
documents, other pleadings of the plaintiff, or admissions in the records. 10
xxxx
In the instant case, petitioners specifically alleged that respondent bank
acted in bad faith when it extrajudicially foreclosed the mortgaged (c) An order striking out pleadings or parts thereof, or staying
property notwithstanding the approval of the restructuring of their loan further proceedings until the order is obeyed, or dismissing the
obligation. They claimed that with such approval, respondent bank made action or proceeding or any part thereof, or rendering a judgment
them believe that foreclosure would be held in abeyance. They also by default against the disobedient party; and
alleged that the proceeding was conducted without complying with the
posting and publication requirements. x x x x.13

Assuming these allegations to be true, petitioners can validly seek the As we have explained in Arellano v. Court of First Instance of
nullification of the foreclosure since the alleged restructuring of their debt Sorsogon,14 the consequences enumerated in Section 3(c) of Rule 29
would effectively modify the terms of the original loan obligations and would only apply where the party upon whom the written interrogatories is
accordingly supersede the original mortgage thus making the subsequent served, refuses to answer a particular question in the set of written
foreclosure void. Similarly, the allegation of lack of notice if subsequently interrogatories and despite an order compelling him to answer the
proven renders the foreclosure a nullity in line with prevailing particular question, still refuses to obey the order.
jurisprudence.11
In the instant case, petitioners refused to answer the whole set of written The imposition of sanctions under Section 5 is within the sound discretion
interrogatories, not just a particular question. Clearly then, respondent of the trial court. Thus, in Insular Life Assurance Co., Ltd. v. Court of
bank should have filed a motion based on Section 5 and not Section 3(c) Appeals,17 we held:
of Rule 29. Section 5 of Rule 29 reads:
The matter of how, and when, the above sanctions should be
SEC. 5. Failure of party to attend or serve answers. If a party or applied is one that primarily rests on the sound discretion of the
an officer or managing agent of a party willfully fails to appear court where the case pends, having always in mind the
before the officer who is to take his deposition, after being served paramount and overriding interest of justice. For while the modes
with a proper notice, or fails to serve answers to interrogatories of discovery are intended to attain the resolution of litigations with
submitted under Rule 25 after proper service of such great expediency, they are not contemplated, however, to be
interrogatories, the court on motion and notice, may strike out all ultimate causes of injustice. It behooves trial courts to examine
or any part of any pleading of that party, or dismiss the action or well the circumstances of each case and to make their
proceeding or any part thereof, or enter a judgment by default considered determination thereafter. x x x
against that party, and in its discretion, order him to pay
reasonable expenses incurred by the other, including attorneys WHEREFORE, the petition is GRANTED. The January 24, 2006 Decision
fees. and the March 31, 2006 Resolution of the Court of Appeals in CA-G.R. SP
No. 89148, which granted respondent China Banking Corporations
Due to respondent banks filing of an erroneous motion, the trial court petition to annul the April 1, 2004 and October 22, 2004 Orders of the
cannot be faulted for ruling that the motion to expunge was premature for Regional Trial Court of San Jose, Camarines Sur, Branch 30 denying
lack of a prior application to compel compliance based on Section 3. respondent banks affirmative defenses without a hearing as well as its
motion to expunge the complaint because of petitioners failure to answer
This Court has long encouraged the availment of the various modes or the written interrogatories are REVERSED and SET ASIDE. The instant
instruments of discovery as embodied in Rules 24 to 29 of the Rules of case is REMANDED to the Regional Trial Court of San Jose, Camarines
Court.15 In the case of Hyatt Industrial Manufacturing Corporation v. Ley Sur, Branch 30, for further proceedings.
Construction and Development Corporation,16 we declared:
SO ORDERED.
Indeed, the importance of discovery procedures is well
recognized by the Court. It approved A.M. No. 03-1-09-SC on
July 13, 2004 which provided for the guidelines to be observed by
trial court judges and clerks of court in the conduct of pre-trial and
use of deposition-discovery measures. Under A.M. No. 03-1-09-
SC, trial courts are directed to issue orders requiring parties to G.R. No. 147593 July 31, 2006
avail of interrogatories to parties under Rule 45 and request for
admission of adverse party under Rule 26 or at their discretion GERONIMO Q. QUADRA, petitioner, vs.
make use of depositions under Rule 23 or other measures under
THE COURT OF APPEALS and the PHILIPPINE CHARITY
Rule 27 and 28 within 5 days from the filing of the answer. The
parties are likewise required to submit, at least 3 days before the SWEEPSTAKES OFFICE, respondents.
pre-trial, pre-trial briefs, containing among others a manifestation
of the parties of their having availed or their intention to avail DECISION
themselves of discovery procedures or referral to commissioners.
PUNO, J.:
This is a petition for review of the decision of the Court of Appeals in CA- filed with the Supreme Court a petition for review on certiorari entitled
G.R. SP No. 55634 dated December 29, 2000 and its resolution dated "Philippine Charity Sweepstakes Office, et al. v. The Association of
March 26, 2001. The Court of Appeals reversed and set aside the Sweepstakes Staff Personnel, et al." assailing the decision of the CIR in
decision of the National Labor Relations Commission (NLRC) in NLRC Case No. 4312-ULP. The petition was docketed as G.R. No. L-27546. 2
NCR Case No. 4312-ULP which affirmed the decision of the Labor Arbiter
granting moral and exemplary damages to petitioner Geronimo Q. Quadra On March 16, 1967, during the pendency of the case in the Supreme
in connection with his dismissal from the service. Court, petitioner filed with the CIR a "Petition for Damages." He prayed for
moral and exemplary damages in connection with Case No. 4312-ULP.
Petitioner Geronimo Q. Quadra was the Chief Legal Officer of respondent He cited the decision of the Supreme Court in Rheem of the Philippines,
Philippine Charity Sweepstakes Office (PCSO) when he organized and Inc., et al. v. Ferrer, et al.3 where it upheld the jurisdiction of the CIR over
actively participated in the activities of Philippine Charity Sweepstakes claims for damages incidental to an employee's dismissal.
Employees Association (CUGCO), an organization composed of the rank
and file employees of PCSO, and then later, the Association of Respondent PCSO moved to dismiss the petition for damages on the
Sweepstakes Staff Personnel and Supervisors (CUGCO) (ASSPS following grounds: (1) the CIR has no jurisdiction to award moral and
[CUGCO]). In April 1964, he was administratively charged before the Civil exemplary damages; (2) the cause of action is barred by prior judgment, it
Service Commission with violation of Civil Service Law and Rules for appearing that two complaints are brought for different parts of a single
neglect of duty and misconduct and/or conduct prejudicial to the interest cause of action; and (3) the petition states no valid cause of action.
of the service. On July 14, 1965, the Civil Service Commission rendered a
decision finding petitioner guilty of the charges and recommending the Petitioner resigned from PCSO on August 18, 1967.
penalty of dismissal. The following day, on July 15, 1965, the General
Manager of PCSO, Ignacio Santos Diaz, sent petitioner a letter of The petition for damages and the motion to dismiss, however, remained
dismissal, in accordance with the decision of the Civil Service pending with the CIR until it was abolished and the NLRC was created.
Commission. Petitioner filed a motion for reconsideration of the decision On April 25, 1980, the Labor Arbiter rendered a decision awarding moral
of the Civil Service Commission on August 10, 1965. At the same time, and exemplary damages to petitioner in the amount of P1.6 million. The
petitioner, together with ASSPS (CUGCO), filed with the Court of dispositive portion of the decision stated:
Industrial Relations (CIR) a complaint for unfair labor practice against
respondent PCSO and its officers. The case was docketed as Case No. WHEREFORE, in view of all the foregoing considerations,
4312-ULP. judgment is hereby rendered awarding to complainant Geronimo
Q. Quadra moral damages consisting of the following sum: Three
On November 19, 1966, the CIR issued its decision finding respondent Hundred Fifty Thousand Pesos (P350,000.00) for besmirched
PCSO guilty of unfair labor practice for having committed discrimination reputation; Three Hundred Fifty Thousand Pesos (P350,000.00)
against the union and for having dismissed petitioner due to his union for social humiliation; One Hundred Thousand Pesos
activities. It ordered the reinstatement of petitioner to his former position (P100,000.00) for mental anguish; One Hundred Thousand Pesos
with full backwages and with all the rights and privileges pertaining to said (P100,000.00) for serious anxiety; One Hundred Thousand Pesos
position.1 (P100,000.00) for wounded feelings; One Hundred Thousand
Pesos (P100,000.00) for moral shock; and the further sum
Respondent PCSO complied with the decision of the CIR. But while it of P500,000.00 as exemplary damages, on account of the
reinstated petitioner to his former position and paid his backwages, it also arbitrary and unlawful dismissal effected by respondents.
Consequently, respondents are therefore ordered to pay Second: The ruling of the Court of Appeals that the claims for
complainant Quadra the total sum of One Million Six Hundred moral and exemplary damages of the petitioner is allegedly
Thousand Pesos (P1,600,000.00) within ten (10) days after this "tantamount to splitting of cause of action under Sec. 4, Rule 2 of
Decision becomes final. the 1997 Rules of Civil Procedure" is contrary to law. When
petitioner filed with the CIR his complaint for illegal dismissal and
SO ORDERED.4 unfair labor practice, the prevailing law and jurisprudence was
that the CIR did not have jurisdiction to grant moral and
The NLRC affirmed the decision of the Labor Arbiter,5 prompting exemplary damages. Petitioner's claim for moral damages was
respondent PCSO to file a petition for certiorari with the Court of Appeals. filed with the CIR in the same case by virtue of the ruling of the
High Court in Rheem v. Ferrer, 19 SCRA 130 holding that the CIR
The Court of Appeals reversed the decision of the NLRC. It held that there has jurisdiction to award moral and exemplary damages arising
was no basis for the grant of moral and exemplary damages to petitioner out of illegal dismissal and unfair labor practice.8
as his dismissal was not tainted with bad faith. It was the Civil Service
Commission that recommended petitioner's dismissal after conducting an The petition is impressed with merit.
investigation. It also held that the petition claiming moral and exemplary
damages filed by petitioner after respondent PCSO had complied with the A dismissed employee is entitled to moral damages when the dismissal is
CIR decision of reinstatement and backwages amounted to splitting of attended by bad faith or fraud or constitutes an act oppressive to labor, or
cause of action.6 is done in a manner contrary to good morals, good customs or public
policy. Exemplary damages may be awarded if the dismissal is effected in
Petitioner filed a motion for reconsideration of the decision of the Court of a wanton, oppressive or malevolent manner.9 It appears from the facts
Appeals, but the same was denied for lack for merit. 7 that petitioner was deliberately dismissed from the service by reason of
his active involvement in the activities of the union groups of both the rank
Petitioner now seeks the Court to review the ruling of the Court of and file and the supervisory employees of PCSO, which unions he himself
Appeals. He basically argues: organized and headed. Respondent PCSO first charged petitioner before
the Civil Service Commission for alleged neglect of duty and conduct
First: The ruling of the Court of Appeals that the PCSO did not act prejudicial to the service because of his union activities. The Civil Service
in bad faith when it dismissed the petitioner is contrary to the Commission recommended the dismissal of petitioner. Respondent PCSO
already final and executory decision of the CIR dated November immediately served on petitioner a letter of dismissal even before the
1[9], 1966 finding the PCSO guilty of bad faith and unfair labor latter could move for a reconsideration of the decision of the Civil Service
practice in dismissing the petitioner. The decision of the CIR was Commission. Respondent PCSO may not impute to the Civil Service
affirmed by the High Court in the case of PCSO, et al. v. Commission the responsibility for petitioner's illegal dismissal as it was
Geronimo Q. Quadra, et al., 115 SCRA 34. The Court of Appeals respondent PCSO that first filed the administrative charge against him. As
has no jurisdiction to amend the final and executory decision of found by the CIR, petitioner's dismissal constituted unfair labor practice. It
November 1[9], 1966 of the CIR which was affirmed by the High was done to interfere with, restrain or coerce employees in the exercise of
Court. Once a decision has become final [and] executory, it could their right to self-organization. It stated:
no longer be amended or altered.
Upon the entire evidence as a whole (sic), the [c]ourt feels and
believes that complainant Quadra was discriminatorily dismissed
by reason of his militant union activities, not only as President of Court and before the ruling on their case became final. Such filing could
PCSEA, but also as President of the ASSPS.10 not be considered as splitting of cause of action.

In Nueva Ecija I Electric Cooperative, Inc. (NEECO I) Employees IN VIEW WHEREOF, the assailed decision and resolution of the Court of
Association, et al. v. NLRC, et al.,11 we found it proper to award moral Appeals are REVERSED and SET ASIDE. The decision of the NLRC in
and exemplary damages to illegally dismissed employees as their NLRC NCR Case No. 4312-ULP is REINSTATED.
dismissal was tainted with unfair labor practice. The Court said:
SO ORDERED.
Unfair labor practices violate the constitutional rights of workers
and employees to self-organization, are inimical to the legitimate
interests of both labor and management, including their right to
bargain collectively and otherwise deal with each other in an
atmosphere of freedom and mutual respect; and disrupt industrial
peace and hinder the promotion of healthy and stable labor-
management relations. As the conscience of the government, it is
the Court's sworn duty to ensure that none trifles with labor rights.

For this reason, we find it proper in this case to impose moral and
exemplary damages on private respondent. x x x

On the second issue, we agree with petitioner that the filing of a petition
for damages before the CIR did not constitute splitting of cause of action
under the Revised Rules of Court. The Revised Rules of Court prohibits
parties from instituting more than one suit for a single cause of action.
Splitting a cause of action is the act of dividing a single cause of action,
claim or demand into two or more parts, and bringing suit for one of such
parts only, intending to reserve the rest for another separate action. The
purpose of the rule is to avoid harassment and vexation to the defendant
and avoid multiplicity of suits.12

The prevailing rule at the time that the action for unfair labor practice and
illegal dismissal was filed and tried before the CIR was that said court had
no jurisdiction over claims for damages. Hence, petitioner, at that time,
could not raise the issue of damages in the proceedings. However, on
January 27, 1967, the Supreme Court rendered its ruling in Rheem of the
Philippines, Inc., et al. v. Ferrer, et al.13 upholding the jurisdiction of the
CIR over claims for damages incidental to an employee's illegal dismissal.
Petitioner properly filed his claim for damages after the declaration by the
2006,1 whereby the Court of Appeals (CA) in CA-G.R. CV No. 79145
affirmed the judgment rendered on April 28, 2003 by the Regional Trial
Court in Parafiaque City (RTC) holding Stronghold Insurance and
respondent Manuel D. Marafion, Jr. jointly and solidarily liable for
damages to respondents Tomas Cuenca, Marcelina Cuenca, Milagros
Cuenca (collectively referred to as Cuencas), and Bramie Tayactac, upon
the latters claims against the surety bond issued by Stronghold Insurance
for the benefit of Maraon.2

Antecedents

On January 19, 1998, Maraon filed a complaint in the RTC against the
Cuencas for the collection of a sum of money and damages. His
complaint, docketed as Civil Case No. 98-023, included an application for
the issuance of a writ of preliminary attachment.3 On January 26, 1998,
the RTC granted the application for the issuance of the writ of preliminary
G.R. No. 173297 March 6, 2013 attachment conditioned upon the posting of a bond of P1,000,000.00
executed in favor of the Cuencas. Less than a month later, Maraon
amended the complaint to implead Tayactac as a defendant. 4
STRONGHOLD INSURANCE COMPANY, INC., Petitioner,
vs.
TOMAS CUENCA, MARCELINA CUENCA, MILAGROS CUENCA, On February 11, 1998, Maraon posted SICI Bond No. 68427 JCL (4) No.
BRAMIE T. TAYACTAC, and MANUEL D. MARANON, 02370 in the amount of P1,000,000.00 issued by Stronghold Insurance.
JR., Respondents. Two days later, the RTC issued the writ of preliminary attachment. 5 The
sheriff served the writ, the summons and a copy of the complaint on the
Cuencas on the same day. The service of the writ, summons and copy of
DECISION
the complaint were made on Tayactac on February 16, 1998. 6
BERSAMIN, J.:
Enforcing the writ of preliminary attachment on February 16 and February
17, 1998, the sheriff levied upon the equipment, supplies, materials and
The personality of a corporation is distinct and separate from the
various other personal property belonging to Arc Cuisine, Inc. that were
personalities of its stockholders. Hence, its stockholders are not
found in the leased corporate office-cum-commissary or kitchen of the
themselves the real parties in interest to claim and recover compensation
corporation.7 On February 19, 1998, the sheriff submitted a report on his
for the damages arising from the wrongful attachment of its assets. Only
proceedings,8 and filed an ex parte motion seeking the transfer of the
the corporation is the real party in interest for that purpose.
levied properties to a safe place. The RTC granted the ex parte motion on
February 23, 1998.9
The Case

On February 25, 1998, the Cuencas and Tayactac presented in the RTC a
Stronghold Insurance Company, Inc. (Stronghold Insurance), a domestic
Motion to Dismiss and to Quash Writ of Preliminary Attachment on the
insurance company, assails the decision promulgated on January 31,
grounds that: (1) the action involved intra-corporate matters that were On February 17, 2000,16 the sheriff reported to the RTC, as follows:
within the original and exclusive jurisdiction of the Securities and
Exchange Commission (SEC); and (2) there was another action pending On the scheduled inventory of the properties (February 17, 2000) and to
in the SEC as well as a criminal complaint in the Office of the City comply with the Resolution of the Court of Appeals dated December 24,
Prosecutor of Paraaque City.10 1999 ordering the delivery of the attached properties to the defendants,
the proceedings thereon being:
On March 5, 1998, Maraon opposed the motion.11
1. With the assistance for (sic) the counsel of Cuencas, Atty.
On August 10, 1998, the RTC denied the Motion to Dismiss and to Quash Pulumbarit, Atty. Ayo, defendant Marcelina Cuenca, and two
Writ of Preliminary Attachment, stating that the action, being one for the Court Personnel, Robertson Catorce and Danilo Abanto, went to
recovery of a sum of money and damages, was within its jurisdiction. 12 the warehouse where Mr. Maraon recommended for
safekeeping the properties in which he personally assured its
Under date of September 3, 1998, the Cuencas and Tayactac moved for safety, at No. 14, Marian II Street, East Service Road, Paraaque
the reconsideration of the denial of their Motion to Dismiss and to Quash Metro Manila.
Writ of Preliminary Attachment, but the RTC denied their motion for
reconsideration on September 16, 1998. 2. That to our surprise, said warehouse is now tenanted by a new
lessee and the properties were all gone and missing.
Thus, on October 14, 1998, the Cuencas and Tayactac went to the CA on
certiorari and prohibition to challenge the August 10, 1998 and September 3. That there are informations (sic) that the properties are seen at
16, 1998 orders of the RTC on the basis of being issued with grave abuse Contis Pastry & Bake Shop owned by Mr. Maraon, located at BF
of discretion amounting to lack or excess of jurisdiction (C.A.-G.R. SP No. Homes in Paraaque City.
49288).13
On April 6, 2000, the Cuencas and Tayactac filed a Motion to Require
On June 16, 1999, the CA promulgated its assailed decision in C.A.-G.R. Sheriff to Deliver Attached Properties and to Set Case for
SP No. 49288,14 granting the petition. It annulled and set aside the Hearing,17 praying that: (1) the Branch Sheriff be ordered to immediately
challenged orders, and dismissed the amended complaint in Civil Case deliver the attached properties to them; (2) Stronghold Insurance be
No. 98-023 for lack of jurisdiction, to wit: directed to pay them the damages being sought in accordance with its
undertaking under the surety bond for P1,000,0000.00; (3) Maraon be
WHEREFORE, the Orders herein assailed are hereby ANNULLED AND held personally liable to them considering the insufficiency of the amount
SET ASIDE, and the judgment is hereby rendered DISMISSING the of the surety bond; (4) they be paid the total of P1,721,557.20 as actual
Amended Complaint in Civil Case No. 98-023 of the respondent court, for damages representing the value of the lost attached properties because
lack of jurisdiction. they, being accountable for the properties, would be turning that amount
over to Arc Cuisine, Inc.; and (5) Maraon be made to pay P200,000.00
SO ORDERED. as moral damages, P100,000.00 as exemplary damages,
and P100,000.00 as attorneys fees.
On December 27, 1999, the CA remanded to the RTC for hearing and
resolution of the Cuencas and Tayactacs claim for the damages Stronghold Insurance filed its answer and opposition on April 13, 2000. In
sustained from the enforcement of the writ of preliminary attachment. 15 turn, the Cuencas and Tayactac filed their reply on May 5, 2000.
On May 25, 2000, Maraon filed his own comment/opposition to the (5) To pay the cost of suit.
Motion to Require Sheriff to Deliver Attached Properties and to Set Case
for Hearing of the Cuencas and Tayactac, arguing that because the SO ORDERED.
attached properties belonged to Arc Cuisine, Inc. 50% of the stockholding
of which he and his relatives owned, it should follow that 50% of the value Ruling of the CA
of the missing attached properties constituted liquidating dividends that
should remain with and belong to him. Accordingly, he prayed that he Only Stronghold Insurance appealed to the CA (C.A.-G.R. CV No. 79145),
should be required to return only P100,000.00 to the Cuencas and assigning the following errors to the RTC, to wit:
Tayactac.18
I.
On June 5, 2000, the RTC commanded Maraon to surrender all the
attached properties to the RTC through the sheriff within 10 days from THE LOWER COURT ERRED IN ORDERING SURETY-APPELLANT TO
notice; and directed the Cuencas and Tayactac to submit the affidavits of PAY THE AMOUNT OF P1,000,000.00 REPRESENTING THE AMOUNT
their witnesses in support of their claim for damages. 19 OF THE BOND AND OTHER DAMAGES TO THE DEFENDANTS.

On June 6, 2000, the Cuencas and Tayactac submitted their II.


Manifestation and Compliance.20
THE LOWER COURT ERRED IN NOT TAKING INTO ACCOUNT THE
Ruling of the RTC INDEMNITY AGREEMENT (EXH. "2-SURETY") EXECUTED BY
MANUEL D. MARAON, JR. IN FAVOR OF STRONGHOLD WHEREIN
After trial, the RTC rendered its judgment on April 28, 2003, holding HE BOUND HIMSELF TO INDEMNIFY STRONGHOLD OF WHATEVER
Maraon and Stronghold Insurance jointly and solidarily liable for AMOUNT IT MAY BE HELD LIABLE ON ACCOUNT OF THE ISSUANCE
damages to the Cuencas and Tayactac,21 viz: OF THE ATTACHMENT BOND.22

WHEREFORE, premises considered, as the defendants were able to On January 31, 2006, the CA, finding no reversible error, promulgated its
preponderantly prove their entitlement for damages by reason of the decision affirming the judgment of the RTC.23
unlawful and wrongful issuance of the writ of attachment, MANUEL D.
MARAON, JR., plaintiff and defendant, Stronghold Insurance Company Stronghold Insurance moved for reconsideration, but the CA denied its
Inc., are found to be jointly and solidarily liable to pay the defendants the motion for reconsideration on June 22, 2006.
following amount to wit:
Issues
(1) PhP1,000,000.00 representing the amount of the bond;
Hence, this appeal by petition for review on certiorari by Stronghold
(2) PhP 100,000.00 as moral damages; Insurance, which submits that:

(3) PhP 50,000.00 as exemplary damages; I.

(4) Php 100,000.00 as attorneys fees; and


THE COURT OF APPEALS COMMITTED GRAVE REVERSIBLE ERROR DAMAGES, COSTS, LOSSES, PENALTIES, CHARGES AND
AND DECIDED QUESTIONS OF SUBSTANCE IN A WAY NOT IN EXPENSES IT SUSTAINED IN CONNECTION WITH THE INSTANT
ACCORDANCE WITH LAW AND APPLICABLE DECISIONS OF THE CASE, PURSUANT TO THE INDEMNITY AGREEMENT ENTERED INTO
HONORABLE COURT CONSIDERING THAT THE COURT OF APPEALS BY PETITIONER STRONGHOLD AND RESPONDENT MARA[]ON.24
AFFIRMED THE ERRONEOUS DECISION OF THE TRIAL COURT
HOLDING RESPONDENT MARA[]ON AND PETITIONER On their part, the Cuencas and Tayactac counter:
STRONGHOLD JOINTLY AND SOLIDARILY LIABLE TO PAY THE
RESPONDENTS CUENCA, et al., FOR PURPORTED DAMAGES BY A. Having actively participated in the trial and appellate
REASON OF THE ALLEGED UNLAWFUL AND WRONGFUL ISSUANCE proceedings of this case before the Regional Trial Court and the
OF THE WRIT OF ATTACHMENT, DESPITE THE FACT THAT: Court of Appeals, respectively, petitioner Stronghold is legally and
effectively BARRED by ESTOPPEL from raising for the first time
A) RESPONDENT CUENCA et al., ARE NOT THE OWNERS OF on appeal before this Honorable Court a defense and/or issue not
THE PROPERTIES ATTACHED AND THUS, ARE NOT THE raised below.25
PROPER PARTIES TO CLAIM ANY PURPORTED DAMAGES
ARISING THEREFROM. B. Even assuming arguendo without admitting that the principle of
estoppel is not applicable in this instant case, the assailed
B) THE PURPORTED DAMAGES BY REASON OF THE Decision and Resolution find firm basis in law considering that the
ALLEGED UNLAWFUL AND WRONGFUL ISSUANCE OF THE writ of attachment issued and enforced against herein
WRIT OF ATTACHMENT WERE CAUSED BY THE respondents has been declared ILLEGAL, NULL AND VOID for
NEGLIGENCE OF THE BRANCH SHERIFF OF THE TRIAL having been issued beyond the jurisdiction of the trial court.
COURT AND HIS FAILURE TO COMPLY WITH THE
PROVISIONS OF THE RULES OF COURT PERTAINING TO C. There having been a factual and legal finding of the illegality of
THE ATTACHMENT OF PROPERTIES. the issuance and consequently, the enforcement of the writ of
attachment, Maranon and his surety Stronghold, consistent with
C) THE TRIAL COURT GRAVELY ERRED WHEN IT HELD the facts and the law, including the contract of suretyship they
PETITIONER STRONGHOLD TO BE SOLIDARILY LIABLE WITH entered into, are JOINTLY AND SEVERALLY liable for the
RESPONDENT MARA[]ON TO RESPONDENTS CUENCA et damages sustained by herein respondents by reason thereof.
al., FOR MORAL DAMAGES, EXEMPLARY DAMAGES,
ATTORNEYS FEES AND COST OF SUIT DESPITE THE FACT D. Contrary to the allegations of Stronghold, its liability as surety
THAT THE GUARANTY OF PETITIONER STRONGHOLD under the attachment bond without which the writ of attachment
PURSUANT TO ITS SURETY BOND IS LIMITED ONLY TO THE shall not issue and be enforced against herein respondent if
AMOUNT OF P1,000,000.00. prescribed by law. In like manner, the obligations and liability on
the attachment bond are also prescribed by law and not left to the
II discretion or will of the contracting parties to the prejudice of the
persons against whom the writ was issued.
IN ANY EVENT, THE DECISION OF THE COURT APPEALS SHOULD
HAVE HELD RESPONDENT MARA[]ON TO BE LIABLE TO E. Contrary to the allegations of Stronghold, its liability for the
INDEMNIFY PETITIONER STRONGHOLD FOR ALL PAYMENTS, damages sustained by herein respondents is both a statutory and
contractual obligation and for which, it cannot escape opinions. They only resolve actual controversies, for that is what they are
accountability and liability in favor of the person against whom the authorized to do by the Fundamental Law itself, which forthrightly ordains
illegal writ of attachment was issued and enforced. To allow that the judicial power is wielded only to settle actual controversies
Stronghold to delay, excuse or exempt itself from liability is involving rights that are legally demandable and enforceable. 28
unconstitutional, unlawful, and contrary to the basic tenets of
equity and fair play. To ensure the observance of the mandate of the Constitution, Section 2,
Rule 3 of the Rules of Court requires that unless otherwise authorized by
F. While the liability of Stronghold as surety indeed covers the law or the Rules of Court every action must be prosecuted or defended in
principal amount of P1,000,000.00, nothing in the law and the the name of the real party in interest.29 Under the same rule, a real party
contract between the parties limit or exempt Stronghold from in interest is one who stands to be benefited or injured by the judgment in
liability for other damages. Including costs of suit and interest.26 the suit, or one who is entitled to the avails of the suit. Accordingly, a
person , to be a real party in interest in whose name an action must be
In his own comment,27 prosecuted, should appear to be the present real owner of the right
sought to be enforced, that is, his interest must be a present substantial
Maraon insisted that he could not be personally held liable under the interest, not a mere expectancy, or a future, contingent, subordinate, or
attachment bond because the judgment of the RTC was rendered without consequential interest.30
jurisdiction over the subject matter of the action that involved an intra-
corporate controversy among the stockholders of Arc Cuisine, Inc.; and Where the plaintiff is not the real party in interest, the ground for the
that the jurisdiction properly pertained to the SEC, where another action motion to dismiss is lack of cause of action.31The reason for this is that the
was already pending between the parties. courts ought not to pass upon questions not derived from any actual
controversy. Truly, a person having no material interest to protect cannot
Ruling invoke the jurisdiction of the court as the plaintiff in an action. 32 Nor does a
court acquire jurisdiction over a case where the real party in interest is not
Although the question of whether the Cuencas and Tayactac could present or impleaded.
themselves recover damages arising from the wrongful attachment of the
assets of Arc Cuisine, Inc. by claiming against the bond issued by The purposes of the requirement for the real party in interest prosecuting
Stronghold Insurance was not raised in the CA, we do not brush it aside or defending an action at law are: (a) to prevent the prosecution of actions
because the actual legal interest of the parties in the subject of the by persons without any right, title or interest in the case; (b) to require that
litigation is a matter of substance that has jurisdictional impact, even on the actual party entitled to legal relief be the one to prosecute the action;
appeal before this Court. (c) to avoid a multiplicity of suits; and (d) to discourage litigation and keep
it within certain bounds, pursuant to sound public policy.33 Indeed,
The petition for review is meritorious. considering that all civil actions must be based on a cause of
action,34 defined as the act or omission by which a party violates the right
There is no question that a litigation should be disallowed immediately if it of another,35 the former as the defendant must be allowed to insist upon
involves a person without any interest at stake, for it would be futile and being opposed by the real party in interest so that he is protected from
meaningless to still proceed and render a judgment where there is no further suits regarding the same claim.36 Under this rationale, the
actual controversy to be thereby determined. Courts of law in our judicial requirement benefits the defendant because "the defendant can insist
system are not allowed to delve on academic issues or to render advisory
upon a plaintiff who will afford him a setup providing good res judicata are no adversary parties before it, the court would be without jurisdiction
protection if the struggle is carried through on the merits to the end." 37 to render a judgment.41

The rule on real party in interest ensures, therefore, that the party with the There is no dispute that the properties subject to the levy on attachment
legal right to sue brings the action, and this interest ends when a belonged to Arc Cuisine, Inc. alone, not to the Cuencas and Tayactac in
judgment involving the nominal plaintiff will protect the defendant from a their own right. They were only stockholders of Arc Cuisine, Inc., which
subsequent identical action. Such a rule is intended to bring before the had a personality distinct and separate from that of any or all of
court the party rightfully interested in the litigation so that only real them.42 The damages occasioned to the properties by the levy on
controversies will be presented and the judgment, when entered, will be attachment, wrongful or not, prejudiced Arc Cuisine, Inc., not them. As
binding and conclusive and the defendant will be saved from further such, only Arc Cuisine, Inc. had the right under the substantive law to
harassment and vexation at the hands of other claimants to the same claim and recover such damages. This right could not also be asserted by
demand.38 the Cuencas and Tayactac unless they did so in the name of the
corporation itself. But that did not happen herein, because Arc Cuisine,
But the real party in interest need not be the person who ultimately will Inc. was not even joined in the action either as an original party or as an
benefit from the successful prosecution of the action. Hence, to aid itself intervenor.
in the proper identification of the real party in interest, the court should
first ascertain the nature of the substantive right being asserted, and then The Cuencas and Tayactac were clearly not vested with any direct
must determine whether the party asserting that right is recognized as the interest in the personal properties coming under the levy on attachment
real party in interest under the rules of procedure. Truly, that a party by virtue alone of their being stockholders in Arc Cuisine, Inc. Their
stands to gain from the litigation is not necessarily controlling. 39 stockholdings represented only their proportionate or aliquot interest in
the properties of the corporation, but did not vest in them any legal right or
It is fundamental that the courts are established in order to afford reliefs to title to any specific properties of the corporation. Without doubt, Arc
persons whose rights or property interests have been invaded or violated, Cuisine, Inc. remained the owner as a distinct legal person. 43
or are threatened with invasion by others conduct or acts, and to give
relief only at the instance of such persons. The jurisdiction of a court of Given the separate and distinct legal personality of Arc Cuisine, Inc., the
law or equity may not be invoked by or for an individual whose rights have Cuencas and Tayactac lacked the legal personality to claim the damages
not been breached.40 sustained from the levy of the formers properties. According to Asset
Privatization Trust v. Court of Appeals,44 even when the foreclosure on the
The remedial right or the remedial obligation is the persons interest in the assets of the corporation was wrongful and done in bad faith the
controversy. The right of the plaintiff or other claimant is alleged to be stockholders had no standing to recover for themselves moral damages;
violated by the defendant, who has the correlative obligation to respect otherwise, they would be appropriating and distributing part of the
the right of the former. Otherwise put, without the right, a person may not corporations assets prior to the dissolution of the corporation and the
become a party plaintiff; without the obligation, a person may not be sued liquidation of its debts and liabilities. Moreover, in Evangelista v.
as a party defendant; without the violation, there may not be a suit. In Santos,45 the Court, resolving whether or not the minority stockholders
such a situation, it is legally impossible for any person or entity to be both had the right to bring an action for damages against the principal officers
plaintiff and defendant in the same action, thereby ensuring that the of the corporation for their own benefit, said:
controversy is actual and exists between adversary parties. Where there
As to the second question, the complaint shows that the action is for While plaintiffs ask for remedy to which they are not entitled unless the
damages resulting from mismanagement of the affairs and assets of the requirement of section 16 of the Corporation Law be first complied with,
corporation by its principal officer, it being alleged that defendants we note that the action stated in their complaint is susceptible of being
maladministration has brought about the ruin of the corporation and the converted into a derivative suit for the benefit of the corporation by a mere
consequent loss of value of its stocks. The injury complained of is thus change in the prayer. Such amendment, however, is not possible now,
primarily to the corporation, so that the suit for the damages claimed since the complaint has been filed in the wrong court, so that the same
should be by the corporation rather than by the stockholders (3 Fletcher, has to be dismissed.46
Cyclopedia of Corporation pp. 977-980). The stockholders may not
directly claim those damages for themselves for that would result in the That Maraon knew that Arc Cuisine, Inc. owned the properties levied on
appropriation by, and the distribution among them of part of the corporate attachment but he still excluded Arc Cuisine, Inc. from his complaint was
assets before the dissolution of the corporation and the liquidation of its of no consequence now. The Cuencas and Tayactac still had no right of
debts and liabilities, something which cannot be legally done in view of action even if the affected properties were then under their custody at the
section 16 of the Corporation Law, which provides: time of the attachment, considering that their custody was only incidental
to the operation of the corporation.
No shall corporation shall make or declare any stock or bond dividend or
any dividend whatsoever except from the surplus profits arising from its It is true, too, that the Cuencas and Tayactac could bring in behalf of Arc
business, or divide or distribute its capital stock or property other than Cuisine, Inc. a proper action to recover damages resulting from the
actual profits among its members or stockholders until after the payment attachment. Such action would be one directly brought in the name of the
of its debts and the termination of its existence by limitation or lawful corporation. Yet, that was not true here, for, instead, the Cuencas and
dissolution. Tayactac presented the claim in their own names.

xxxx In view of the outcome just reached, the Court deems it unnecessary to
give any extensive consideration to the remaining issues.
In the present case, the plaintiff stockholders have brought the action not
for the benefit of the corporation but for their own benefit, since they ask WHEREFORE, the Court GRANTS the petition for review; and
that the defendant make good the losses occasioned by his REVERSES and SETS ASIDE the decision of the Court of Appeals in CA-
mismanagement and pay to them the value of their respective G.R. CV No. 79145 promulgated on January 31, 2006.
participation in the corporate assets on the basis of their respective
holdings. Clearly, this cannot be done until all corporate debts, if there be G.R. No. 179736 June 26, 2013
any, are paid and the existence of the corporation terminated by the
limitation of its charter or by lawful dissolution in view of the provisions of SPOUSES BILL AND VICTORIA HING, Petitioners,
section 16 of the Corporation Law. (Emphasis ours) vs.
ALEXANDER CHOACHUY, SR. and ALLAN CHOACHUY, Respondents.
It results that plaintiffs complaint shows no cause of action in their favor
so that the lower court did not err in dismissing the complaint on that DECISION
ground.
DEL CASTILLO, J.:
"The concept of liberty would be emasculated if it does not likewise ordered to remove the video surveillance cameras and enjoined from
compel respect for one's personality as a unique individual whose claim to conducting illegal surveillance.14
privacy and non-interference demands respect."1
In their Answer with Counterclaim,15 respondents claimed that they did not
2
This Petition for Review on Certiorari under Rule 45 of the Rules of Court install the video surveillance cameras,16 nor did they order their
assails the July 10, 2007 Decision3and the September 11, 2007 employees to take pictures of petitioners construction. 17 They also
Resolution4 of the Court of Appeals (CA) in CA-G.R. CEB-SP No. 01473. clarified that they are not the owners of Aldo but are mere stockholders. 18

Factual Antecedents Ruling of the Regional Trial Court

On August 23, 2005, petitioner-spouses Bill and Victoria Hing filed with On October 18, 2005, the RTC issued an Order 19 granting the application
the Regional Trial Court (RTC) of Mandaue City a Complaint5 for for a TRO. The dispositive portion of the said Order reads:
Injunction and Damages with prayer for issuance of a Writ of Preliminary
Mandatory Injunction/Temporary Restraining Order (TRO), docketed as WHEREFORE, the application for a Temporary Restraining Order or a
Civil Case MAN-5223 and raffled to Branch 28, against respondents Writ of Preliminary Injunction is granted. Upon the filing and approval of a
Alexander Choachuy, Sr. and Allan Choachuy. bond by petitioners, which the Court sets at P50,000.00, let a Writ of
Preliminary Injunction issue against the respondents Alexander
Petitioners alleged that they are the registered owners of a parcel of land Choachuy, Sr. and Allan Choachuy. They are hereby directed to
(Lot 1900-B) covered by Transfer Certificate of Title (TCT) No. 42817 immediately remove the revolving camera that they installed at the left
situated in Barangay Basak, City of Mandaue, Cebu;6 that respondents side of their building overlooking the side of petitioners lot and to transfer
are the owners of Aldo Development & Resources, Inc. (Aldo) located at and operate it elsewhere at the back where petitioners property can no
Lots 1901 and 1900-C, adjacent to the property of petitioners; 7 that longer be viewed within a distance of about 2-3 meters from the left
respondents constructed an auto-repair shop building (Aldo Goodyear corner of Aldo Servitec, facing the road.
Servitec) on Lot 1900-C; that in April 2005, Aldo filed a case against
petitioners for Injunction and Damages with Writ of Preliminary IT IS SO ORDERED.20
Injunction/TRO, docketed as Civil Case No. MAN-5125; 8 that in that case,
Aldo claimed that petitioners were constructing a fence without a valid Respondents moved for reconsideration21 but the RTC denied the same in
permit and that the said construction would destroy the wall of its building, its Order22 dated February 6, 2006.23 Thus:
which is adjacent to petitioners property;9 that the court, in that case,
denied Aldos application for preliminary injunction for failure to WHEREFORE, the Motion for Reconsideration is hereby DENIED for lack
substantiate its allegations;10 that, in order to get evidence to support the of merit. Issue a Writ of Preliminary Injunction in consonance with the
said case, respondents on June 13, 2005 illegally set-up and installed on Order dated 18 October 2005.
the building of Aldo Goodyear Servitec two video surveillance cameras
facing petitioners property;11 that respondents, through their employees IT IS SO ORDERED.24
and without the consent of petitioners, also took pictures of petitioners
on-going construction;12 and that the acts of respondents violate Aggrieved, respondents filed with the CA a Petition for Certiorari 25 under
petitioners right to privacy.13 Thus, petitioners prayed that respondents be Rule 65 of the Rules of Court with application for a TRO and/or Writ of
Preliminary Injunction.
Ruling of the Court of Appeals PRIVACY DESPITE THE FACTUAL FINDINGS OF THE RTC, WHICH
RESPONDENTS CHOACHUY FAILED TO REFUTE, THAT THE
On July 10, 2007, the CA issued its Decision26 granting the Petition for ILLEGALLY INSTALLED SURVEILLANCE CAMERAS OF
Certiorari. The CA ruled that the Writ of Preliminary Injunction was issued RESPONDENTS CHOACH[U]Y WOULD CAPTURE THE PRIVATE
with grave abuse of discretion because petitioners failed to show a clear ACTIVITIES OF PETITIONER SPOUSES HING, THEIR CHILDREN AND
and unmistakable right to an injunctive writ. 27 The CA explained that the EMPLOYEES.
right to privacy of residence under Article 26(1) of the Civil Code was not
violated since the property subject of the controversy is not used as a III.
residence.28 The CA alsosaid that since respondents are not the owners
of the building, they could not have installed video surveillance THE X X X CA COMMITTED A REVERSIBLE ERROR WHEN IT RULED
cameras.29 They are mere stockholders of Aldo, which has a separate THAT SINCE THE OWNER OF THE BUILDING IS ALDO
juridical personality.30 Thus, they are not the proper parties.31 The fallo DEVELOPMENT AND RESOURCES, INC. THEN TO SUE
reads: RESPONDENTS CHOACHUY CONSTITUTES A PURPORTEDLY
UNWARRANTED PIERCING OF THE CORPORATE VEIL.
WHEREFORE, in view of the foregoing premises, judgment is hereby
rendered by us GRANTING the petition filed in this case. The assailed IV.
orders dated October 18, 2005 and February 6, 2006 issued by the
respondent judge are hereby ANNULLED and SET ASIDE. THE X X X CA COMMITTED A REVERSIBLE ERROR WHEN IT
IGNORED THE SERIOUS FORMAL DEFICIENCIES OF BOTH THE
SO ORDERED.32 PETITION AND THE MOTION FOR RECONSIDERATION DATED 15
MARCH 2006 OF RESPONDENTS CHOACHUY AND GAVE X X X
Issues THEM DUE COURSE AND CONSIDERATION.33

Hence, this recourse by petitioners arguing that: Essentially, the issues boil down to (1) whether there is a violation of
petitioners right to privacy, and (2) whether respondents are the proper
I. parties to this suit.

THE X X X CA COMMITTED A REVERSIBLE ERROR WHEN IT Petitioners Arguments


ANNULLED AND SET ASIDE THE ORDERS OF THE RTC DATED 18
OCTOBER 2005 AND 6 FEBRUARY 2006 HOLDING THAT THEY WERE Petitioners insist that they are entitled to the issuance of a Writ of
ISSUED WITH GRAVE ABUSE OF DISCRETION. Preliminary Injunction because respondents installation of a stationary
camera directly facing petitioners property and a revolving camera
II. covering a significant portion of the same property constitutes a violation
of petitioners right to privacy.34 Petitioners cite Article 26(1) of the Civil
THE X X X CA COMMITTED A REVERSIBLE ERROR WHEN IT RULED Code, which enjoins persons from prying into the private lives of
THAT PETITIONER SPOUSES HING ARE NOT ENTITLED TO THE others.35 Although the said provision pertains to the privacy of anothers
WRIT OF PRELIMINARY INJUNCTION ON THE GROUND THAT THERE residence, petitioners opine that it includes business offices, citing
IS NO VIOLATION OF THEIR CONSTITUTIONAL AND CIVIL RIGHT TO Professor Arturo M. Tolentino.36 Thus, even assuming arguendo that
petitioners property is used for business, it is still covered by the said only under the stringent procedural safeguards," can disturb them in the
provision.37 privacy of their homes.48

As to whether respondents are the proper parties to implead in this case, The right to privacy under Article 26(1)
petitioners claim that respondents and Aldo are one and the same, and
that respondents only want to hide behind Aldos corporate fiction. 38 They of the Civil Code covers business offices
point out that if respondents are not the real owners of the building, where
the video surveillance cameras were installed, then they had no business where the public are excluded
consenting to the ocular inspection conducted by the court. 39
therefrom and only certain individuals
Respondents Arguments
are allowed to enter.
Respondents, on the other hand, echo the ruling of the CA that petitioners
cannot invoke their right to privacy since the property involved is not used Article 26(1) of the Civil Code, on the other hand, protects an individuals
as a residence.40 Respondents maintain that they had nothing to do with right to privacy and provides a legal remedy against abuses that may be
the installation of the video surveillance cameras as these were installed committed against him by other individuals. It states:
by Aldo, the registered owner of the building,41 as additional security for its
building.42 Hence, they were wrongfully impleaded in this case. 43 Art. 26. Every person shall respect the dignity, personality, privacy and
peace of mind of his neighbors and other persons. The following and
Our Ruling similar acts, though they may not constitute a criminal offense, shall
produce a cause of action for damages, prevention and other relief:
The Petition is meritorious.
(1) Prying into the privacy of anothers residence;
The right to privacy is the right to be let alone.
xxxx
The right to privacy is enshrined in our Constitution 44 and in our laws. It is
defined as "the right to be free from unwarranted exploitation of ones This provision recognizes that a mans house is his castle, where his right
person or from intrusion into ones private activities in such a way as to to privacy cannot be denied or even restricted by others. It includes "any
cause humiliation to a persons ordinary sensibilities." 45 It is the right of an act of intrusion into, peeping or peering inquisitively into the residence of
individual "to be free from unwarranted publicity, or to live without another without the consent of the latter." 49 The phrase "prying into the
unwarranted interference by the public in matters in which the public is privacy of anothers residence," however, does not mean that only the
not necessarily concerned."46 Simply put, the right to privacy is "the right residence is entitled to privacy. As elucidated by Civil law expert Arturo M.
to be let alone."47 Tolentino:

The Bill of Rights guarantees the peoples right to privacy and protects Our Code specifically mentions "prying into the privacy of anothers
them against the States abuse of power. In this regard, the State residence." This does not mean, however, that only the residence is
recognizes the right of the people to be secure in their houses. No one, entitled to privacy, because the law covers also "similar acts." A business
not even the State, except "in case of overriding social need and then office is entitled to the same privacy when the public is excluded
therefrom and only such individuals as are allowed to enter may come in. business office as it would be no different from eavesdropping, which is a
x x x50 (Emphasis supplied) crime under Republic Act No. 4200 or the Anti-Wiretapping Law.

Thus, an individuals right to privacy under Article 26(1) of the Civil Code In this case, the RTC, in granting the application for Preliminary
should not be confined to his house or residence as it may extend to Injunction, ruled that:
places where he has the right to exclude the public or deny them access.
The phrase "prying into the privacy of anothers residence," therefore, After careful consideration, there is basis to grant the application for a
covers places, locations, or even situations which an individual considers temporary restraining order. The operation by respondents of a revolving
as private. And as long as his right is recognized by society, other camera, even if it were mounted on their building, violated the right of
individuals may not infringe on his right to privacy. The CA, therefore, privacy of petitioners, who are the owners of the adjacent lot. The camera
erred in limiting the application of Article 26(1) of the Civil Code only to does not only focus on respondents property or the roof of the factory at
residences. the back (Aldo Development and Resources, Inc.) but it actually spans
through a good portion of the land of petitioners.
The "reasonable expectation of
privacy" test is used to determine Based on the ocular inspection, the Court understands why petitioner
whether there is a violation of the right Hing was so unyielding in asserting that the revolving camera was set up
to privacy. deliberately to monitor the on[-]going construction in his property. The
monitor showed only a portion of the roof of the factory of Aldo. If the
In ascertaining whether there is a violation of the right to privacy, courts purpose of respondents in setting up a camera at the back is to secure
use the "reasonable expectation of privacy" test. This test determines the building and factory premises, then the camera should revolve only
whether a person has a reasonable expectation of privacy and whether towards their properties at the back. Respondents camera cannot be
the expectation has been violated.51 In Ople v. Torres,52 we enunciated made to extend the view to petitioners lot. To allow the respondents to do
that "the reasonableness of a persons expectation of privacy depends on that over the objection of the petitioners would violate the right of
a two-part test: (1) whether, by his conduct, the individual has exhibited petitioners as property owners. "The owner of a thing cannot make use
an expectation of privacy; and (2) this expectation is one that society thereof in such a manner as to injure the rights of a third person." 55
recognizes as reasonable." Customs, community norms, and practices
may, therefore, limit or extend an individuals "reasonable expectation of The RTC, thus, considered that petitioners have a "reasonable
privacy."53 Hence, the reasonableness of a persons expectation of privacy expectation of privacy" in their property, whether they use it as a business
must be determined on a case-to-case basis since it depends on the office or as a residence and that the installation of video surveillance
factual circumstances surrounding the case.54 cameras directly facing petitioners property or covering a significant
portion thereof, without their consent, is a clear violation of their right to
In this day and age, video surveillance cameras are installed practically privacy. As we see then, the issuance of a preliminary injunction was
everywhere for the protection and safety of everyone. The installation of justified. We need not belabor that the issuance of a preliminary injunction
these cameras, however, should not cover places where there is is discretionary on the part of the court taking cognizance of the case and
reasonable expectation of privacy, unless the consent of the individual, should not be interfered with, unless there is grave abuse of discretion
whose right to privacy would be affected, was obtained. Nor should these committed by the court.56 Here, there is no indication of any grave abuse
cameras be used to pry into the privacy of anothers residence or of discretion. Hence, the CA erred in finding that petitioners are not
entitled to an injunctive writ.
This brings us to the next question: whether respondents are the proper family concerning the boundaries of their respective properties. 62 With
parties to this suit. these factual circumstances in mind, we believe that respondents are the
proper parties to be impleaded.
A real party defendant is one who has a
correlative legal obligation to redress a Moreover, although Aldo has a juridical personality separate and distinct
wrong done to the plaintiff by reason of from its stockholders, records show that it is a family-owned corporation
the defendant's act or omission which managed by the Choachuy family.63
had violated the legal right of the
former. Also quite telling is the fact that respondents, notwithstanding their claim
that they are not owners of the building, allowed the court to enter the
Section 2, Rule 3 of the Rules of Court provides: compound of Aldo and conduct an ocular inspection. The counsel for
respondents even toured Judge Marilyn Lagura-Yap inside the building
SEC. 2. Parties-in-interest. A real party-in-interest is the party who and answered all her questions regarding the set-up and installation of
stands to be benefited or injured by the judgment in the suit, or the party the video surveillance cameras.64 And when respondents moved for
entitled to the avails of the suit. Unless otherwise authorized by law or reconsideration of the Order dated October 18, 2005 of the RTC, one of
these Rules, every action must be prosecuted or defended in the name of the arguments they raised is that Aldo would suffer damages if the video
the real party-in-interest. surveillance cameras are removed and transferred.65 Noticeably, in these
instances, the personalities of respondents and Aldo seem to merge.
A real party defendant is "one who has a correlative legal obligation to
redress a wrong done to the plaintiff by reason of the defendants act or All these taken together lead us to the inevitable conclusion that
omission which had violated the legal right of the former." 57 respondents are merely using the corporate fiction of Aldo as a shield to
protect themselves from this suit. In view of the foregoing, we find that
In ruling that respondents are not the proper parties, the CA reasoned that respondents are the proper parties to this suit.
since they do not own the building, they could not have installed the video
surveillance cameras.58 Such reasoning, however, is erroneous. The fact WHEREFORE, the Petition is hereby GRANTED. The Decision dated
that respondents are not the registered owners of the building does not July 10, 2007 and the Resolution dated September 11, 2007 of the Court
automatically mean that they did not cause the installation of the video of Appeals in CA-G.R. CEB-SP No. 01473 are hereby REVERSED and
surveillance cameras. SET ASIDE. The Orders dated October 18,2005 and February 6, 200[6] of
Branch 28 of the Regional Trial Court of Mandaue City in Civil Case No.
In their Complaint, petitioners claimed that respondents installed the video MAN-5223 are hereby REINSTATED and AFFIRMED.
surveillance cameras in order to fish for evidence, which could be used
against petitioners in another case.59 During the hearing of the application SO ORDERED.
for Preliminary Injunction, petitioner Bill testified that when respondents
installed the video surveillance cameras, he immediately broached his
concerns but they did not seem to care,60 and thus, he reported the matter
to the barangay for mediation, and eventually, filed a Complaint against
respondents before the RTC.61 He also admitted that as early as 1998
there has already been a dispute between his family and the Choachuy
Solicitor General Arturo A. Alafriz, Assistant Solicitor General Pacifico P.
de Castro and Solicitor Augusto M. Amores for respondent.

MUOZ PALMA, J.:

The lone point of controversy 1 in this seventeen-year old Quo Warrant to


suit which commenced on March 16, 1960 before the Court of First
Instance of Davao centers on the interpretation and application of See. 1,
R.A. 1551 which provides:

Section 1. Hereafter, all employees whose salaries are


paid out of the general funds of the municipality shall,
subject to the civil service law, be appointed by the
Municipal Mayor upon the recommendation of the
corresponding chief of office; Provided, that in case of
disagreement between the chief of office concerned and
the municipal mayor, the matter shall be submitted for
action to the proper provincial department head, whose
decision shall be final: Provided, further, That the chief of
police and members of the police force of the municipality
shall be appointed by the mayor with the consent of the
municipal council.

In his complaint, petitioner herein, Matias S. Carillo, sought his


reinstatement as chief of police of the municipality of Matanao, province
of Davao, claiming that he was validly appointed to said position but was
subsequently replaced by the respondent Municipal Mayor Cesar U. de la
G.R. No. L-24554 May 31, 1967
Victoria with the appointment of the other respondent Cornolio de la Rey
as chief of police.
MATIAS S. CARILLO, petitioner,
vs.
The Court of First Instance on motion of respondent-public officials
THE COURT OF APPEALS and CESAR U. DE LA VICTORIA,
dismissed Carillo's complaint holding that the evidence of Carillo does not
CORNELIO DE LA REY, and MUNICIPALITY OF MATANAO,
establish an essential element for the validity of his appointment which is
DAVAO, respondents.
the approval or consent of the municipal council. Carillo appealed to the
Court of Appeals but the latter court affirmed the trial court's order of
Artemio Al. Loyola & Emmanuel D. Galicia for petitioner.
dismissal. 2 Hence, this Petition for Review on Certiorari.
The uncontroverted facts as summarized in the brief filed by the Solicitor On May 16, 1960, appellant could not discharge his
General for the respondents-appellees, follow: duties as Chief of Police because appellee de la Ray had
already assumed office (Exh. D). (pp. 192, appellee's
Petitioner-appellant was appointed Chief of Police of brief)
Lower Matanao effective July 8,1957; (Exh. E).
It is claimed by petitioner that the requirement of the law that an
He was again appointed to that position effective July 8, appointment of a chief of police be made with the consent of the
1958, but his appointment was "subject to the provision of municipal council was complied with in his case when the municipal
Section 1 of Republic Act No. 1551." (Exh. F). council of Matanao in a specail session held on July 11, 1957, approved
the plantilla of personnel with his name appearing as incumbent in the
Petitioner-appellant had previously qualified in the position of chief of police for the fiscal year ending June 30, 1958. Such
examinations for Chief of Police conducted on January approval of all intents and purposes constituted consent by the municipal
11, 1963 (Exh. G) and for patrolman taken on August 21, council to his appointment, petitioner asserts.
1937 (Exh. H).
Petititioner's submittal is without legal basis.
Pursuant to Memorandum No. 1 a. 1960, issued by the
newly elected Mayor Cesar U. de la Victoria, petitioner- We hold that under the law the approval by the municipal council of an
appellant was called to the Mayor's Office and asked to appointment of a chief of police must be express and should appear on
resign (Exhs. J, J-1 and J-2). the appointment itself; the consent is not to be presumed or implied. It is
the approval of the municipal council which gives validity to the
On January 11, 1960, petitioner-appellant applied for and appointment extended by the municipal mayor. The raison d'etre of the
was granted leave of absence for sixty days (Exhs. B and requirement is to be force. The maintenance of peace and order is of vital
B -1). concern to the community and more than any where else appointments to
the police force are to be based on integrity, honesty, and competence of
On March 13, 1960, the petitioner-appellant notified the the appointees to be adjudged not only by the mayor who may be guided
appellee Mayor that he was not willing to serve as solely by political considerations and personal loyalties but also by
detached service but that he will serve only as Chief of members of the municipal council which after all is the legisltive governing
Police (Exh. A or 1). body of the municipality. the approval of the Commissioner of Civil
Service attests solely to the appointee's civil service eligibilitym, the
On May 15, 1960, appellee de la Rey was appointed attestation being "merely a check to assure compliance with the civil
Acting Chief of Police of Matanao, Davao, vice 'Matias S. service law." 3
Carillo (Lesser Civil Service Eligibility),' effective May 16,
1960, and was attested by the Provincial Treasurer under In Torres vs. The Municipal Council of Malalag, Davao, et al., 1959, which
Section 20, Republic Act No. 2260. This appellee was the court a quo correctly applied in deciding this case, the arguments to
then a regular junior teacher and regular senior teacher the contrary of petitioner Carillo notwhithstanding, this Court held inter
civil service eligible. alia that inasmuch as Torres' appointment as patrolman showed neither
approval of the municipal council not that of the Commissioner of Civil
Service and the right to the office cannot be based on a mere
presumption, there was no valid appointment extended to him and his embodied in Section 32 of the Civil Service Act of 1959
petition for reinstatement necessarily must fail. 4 which provides: "No officer or employee in the civil
service shall be removed or suspended except for cause
Moreover, petitioner Carillo's assertion of a substantial compliance with as provided by law and after due process." (Edgardo R.
the law loses its validity in the face of the uncontrovertible - that the Hojilla vs. Hon. Salvador L. Marino, et al., L-20574, Feb.
approved plantilla carrying his name as chief of police was only for the 26, 1965, 13 SCRA 293, 206. See also Tolentino vs. De
fiscal year 1957-58, after which he accepted a new appointment effective Jesus, supra).
July 8, 1958 which was "subject to the provisions of Section 1 of Republic
Act No. 1551" (Exh. F, per appellee's brief). Inasmuch as the new Petitioner Carillo argues further that his appointment (Exh. F) was duly
appointment of Carillo states expressly that it is subject to the consent attested to and approved by the Civil Service Commissioner and it was
and approval of the municipal council (Sec. 1, R.A. 1551), and the record such approval which gave validity to his appointment. 8 This alleged
of the case is ominously silent on the existence of such a consent, approval is not admitted however in appellee's brief. At any rate, We
express or implied, there is no complete appointment to speak of. repeat that Carillo's appointment, Exhibit F, was by its very terms subject
to Section 1, Republic Act 1551, and that the appointment was not
At the most, pending compliance with the condition, all that petitioner completed since the condition imposed by the foregoing provision of law
Carillo was holding was a temporary appointment as chief of police, had not been fulfilled. An appointment becomes complete upon the
which could be terminated at any time with or without cause. 5 performance of the last act required by law of the appointing power. 9 The
last act is the approval of the municipal council. It is preposterous to state
In Taboada vs. Municipality of Badian, May 31, 1961, L-14604, this Court that the consent or approval of the municipal council provided for in the
stated that one who holds a temporary appointment has no fixed tenure of law can be substituted by the approval of the appointment by the Civil
office; his employment can be terminated at the pleasure of the Service Commissioner. The purpose of one is distinct from the purpose of
appointing power,, there being no need to show that the termination is for the other as We have indicated earlier.
cause. 6
The approval by both the President and the Director of
It is argued that Carillo was the only one qualified to the position of chief the Civil Service of "acting" appointments does not make
of police as there was nobody in the ranks of the police force of Matanao the appointments permanent. For the President or the
with higher civil service eligibility than them. 7 That fact, however, even if Director of the Civil Service to convert an "acting"
true is inconsequential, for his civil service eligibility affords him no appointment into a permanent one would infringe the
protection or guarantee of security of tenure of office after he had constitutional provision (Article VII, section 10 (1) limiting
accepted a conditional appointment which was temporary in nature while the power of the Chief Executive over local governments
the condition was not fulfilled. to "general supervision as may be provided by law." To
change the character of a municipal appointment beyond
Petitioner's appointment being temporary, it can be doubt transcends General supervision. (Juan B. Mendez
terminated at pleasure even if he is a civil service eligible. vs. Rodolfo Ganzon, et al., L- 10483, 1957, 101 Phil.
And this holds true notwithstanding his badge of eligibility 48,49)
for, having accepted a temporary appointment, he cannot
invoke the security of tenure guaranteed by our
Constitution. In fine, to him cannot apply the safeguard
It now follows that inasmuch as petitioner Carillo holds no valid right or
title to the position of chief of police, the dismissal of his quo warranto suit
is in order.

Long standing jurisprudence upholds the rule that in a quo


warranto proceeding the person suing must show that he has a clear right
to the office allegedly held unlawfully by another. Absent that right, the
lack of qualification or eligibility of the supposed usurper is immaterial. 10

We agree with respondent appellate court that "one who cannot show that
he is entitled to occupy a public office, lacks the legal personality to
institute quo warranto proceedings; in which case, it is not necessary to
inquire into the right of the respondent to occupy said office (Guekeko vs.
Santos, 76 Phil. 237; Topacio Nueno vs. Angeles, 76 Phil. 12)." 11 It is
axiomatic that where there is a right, there is a remedy. In the instant case
petitioner has not established any right to the office he claims, hence, no
remedy or relief of reinstatement may be accorded him.

PREMISES CONSIDERED, We affirm the dismissal of petitioner's


G.R. No. 208566 November 19, 2013
complaint without pronouncement as to costs.
GRECO ANTONIOUS BEDA B. BELGICA JOSE M. VILLEGAS JR.
So ordered. JOSE L. GONZALEZ REUBEN M. ABANTE and QUINTIN PAREDES
SAN DIEGO, Petitioners,
vs.
HONORABLE EXECUTIVE SECRETARY PAQUITO N. OCHOA JR.
SECRETARY OF BUDGET AND MANAGEMENT FLORENCIO B.
ABAD, NATIONAL TREASURER ROSALIA V. DE LEON SENATE OF
THE PHILIPPINES represented by FRANKLIN M. DRILON m his
capacity as SENATE PRESIDENT and HOUSE OF
REPRESENTATIVES represented by FELICIANO S. BELMONTE, JR.
in his capacity as SPEAKER OF THE HOUSE, Respondents.

x-----------------------x

G.R. No. 208493

SOCIAL JUSTICE SOCIETY (SJS) PRESIDENT SAMSON S.


ALCANTARA, Petitioner,
vs.
HONORABLE FRANKLIN M. DRILON in his capacity as SENATE
PRESIDENT and HONORABLE FELICIANO S. BELMONTE, JR., in his refrigeration has made the actual pork barrel obsolete, it persists
capacity as SPEAKER OF THE HOUSE OF in reference to political bills that "bring home the bacon" to a
REPRESENTATIVES, Respondents. legislators district and constituents.6 In a more technical sense,
"Pork Barrel" refers to an appropriation of government spending
x-----------------------x meant for localized projects and secured solely or primarily to
bring money to a representative's district.7 Some scholars on the
subject further use it to refer to legislative control of local
G.R. No. 209251
appropriations.8
PEDRITO M. NEPOMUCENO, Former Mayor-Boac, Marinduque
In the Philippines, "Pork Barrel" has been commonly referred to
Former Provincial Board Member -Province of
as lump-sum, discretionary funds of Members of the
Marinduque, Petitioner,
Legislature,9 although, as will be later discussed, its usage would
vs.
evolve in reference to certain funds of the Executive.
PRESIDENT BENIGNO SIMEON C. AQUINO III* and SECRETARY
FLORENCIO BUTCH ABAD, DEPARTMENT OF BUDGET AND
MANAGEMENT, Respondents. II. History of Congressional Pork Barrel in the Philippines.

DECISION A. Pre-Martial Law Era (1922-1972).

PERLAS-BERNABE, J.: Act 3044,10 or the Public Works Act of 1922, is


considered11 as the earliest form of "Congressional Pork
Barrel" in the Philippines since the utilization of the funds
"Experience is the oracle of truth."1
appropriated therein were subjected to post-enactment
legislator approval. Particularly, in the area of fund
-James Madison release, Section 312 provides that the sums appropriated
for certain public works projects13"shall be distributed x x
Before the Court are consolidated petitions2 taken under Rule 65 of the x subject to the approval of a joint committee elected by
Rules of Court, all of which assail the constitutionality of the Pork Barrel the Senate and the House of Representatives. "The
System. Due to the complexity of the subject matter, the Court shall committee from each House may also authorize one of its
heretofore discuss the systems conceptual underpinnings before members to approve the distribution made by the
detailing the particulars of the constitutional challenge. Secretary of Commerce and Communications."14 Also, in
the area of fund realignment, the same section provides
The Facts that the said secretary, "with the approval of said joint
committee, or of the authorized members thereof, may,
I. Pork Barrel: General Concept. for the purposes of said distribution, transfer unexpended
portions of any item of appropriation under this Act to any
other item hereunder."
"Pork Barrel" is political parlance of American -English
origin.3 Historically, its usage may be traced to the degrading
ritual of rolling out a barrel stuffed with pork to a multitude of black In 1950, it has been documented15 that post-enactment
slaves who would cast their famished bodies into the porcine legislator participation broadened from the areas of fund
feast to assuage their hunger with morsels coming from the release and realignment to the area of project
generosity of their well-fed master.4 This practice was later identification. During that year, the mechanics of the
compared to the actions of American legislators in trying to direct public works act was modified to the extent that the
federal budgets in favor of their districts.5 While the advent of discretion of choosing projects was transferred from the
Secretary of Commerce and Communications to public works projects such as those which would fall
legislators. "For the first time, the law carried a list of under the categories of, among others, education, health
projects selected by Members of Congress, they being and livelihood.22
the representatives of the people, either on their own
account or by consultation with local officials or civil C. Post-Martial Law Era:
leaders."16 During this period, the pork barrel process
commenced with local government councils, civil groups, Corazon Cojuangco Aquino Administration (1986-1992).
and individuals appealing to Congressmen or Senators
for projects. Petitions that were accommodated formed
part of a legislators allocation, and the amount each After the EDSA People Power Revolution in 1986 and the
legislator would eventually get is determined in a caucus restoration of Philippine democracy, "Congressional Pork
convened by the majority. The amount was then Barrel" was revived in the form of the "Mindanao
integrated into the administration bill prepared by the Development Fund" and the "Visayas Development
Department of Public Works and Communications. Fund" which were created with lump-sum appropriations
Thereafter, the Senate and the House of Representatives of P480 Million and P240 Million, respectively, for the
added their own provisions to the bill until it was signed funding of development projects in the Mindanao and
into law by the President the Public Works Act.17 In the Visayas areas in 1989. It has been documented23 that the
1960s, however, pork barrel legislation reportedly ceased clamor raised by the Senators and the Luzon legislators
in view of the stalemate between the House of for a similar funding, prompted the creation of the
Representatives and the Senate.18 "Countrywide Development Fund" (CDF) which was
integrated into the 1990 GAA24 with an initial funding
of P2.3 Billion to cover "small local infrastructure and
B. Martial Law Era (1972-1986). other priority community projects."

While the previous" Congressional Pork Barrel" was Under the GAAs for the years 1991 and 1992,25 CDF
apparently discontinued in 1972 after Martial Law was funds were, with the approval of the President, to be
declared, an era when "one man controlled the released directly to the implementing agencies but
legislature,"19 the reprieve was only temporary. By 1982, "subject to the submission of the required list of projects
the Batasang Pambansa had already introduced a new and activities."Although the GAAs from 1990 to 1992
item in the General Appropriations Act (GAA) called the" were silent as to the amounts of allocations of the
Support for Local Development Projects" (SLDP) under individual legislators, as well as their participation in the
the article on "National Aid to Local Government Units". identification of projects, it has been reported 26 that by
Based on reports,20 it was under the SLDP that the 1992, Representatives were receiving P12.5 Million each
practice of giving lump-sum allocations to individual in CDF funds, while Senators were receiving P18 Million
legislators began, with each assemblyman each, without any limitation or qualification, and that they
receiving P500,000.00. Thereafter, assemblymen would could identify any kind of project, from hard or
communicate their project preferences to the Ministry of infrastructure projects such as roads, bridges, and
Budget and Management for approval. Then, the said buildings to "soft projects" such as textbooks, medicines,
ministry would release the allocation papers to the and scholarships.27
Ministry of Local Governments, which would, in turn,
issue the checks to the city or municipal treasurers in the
assemblymans locality. It has been further reported that D. Fidel Valdez Ramos (Ramos) Administration (1992-1998).
"Congressional Pork Barrel" projects under the SLDP
also began to cover not only public works projects, or so- The following year, or in 1993,28 the GAA explicitly stated
called "hard projects", but also "soft projects", 21 or non- that the release of CDF funds was to be made upon the
submission of the list of projects and activities identified ministrations political agenda.37 It has been articulated
by, among others, individual legislators. For the first time, that since CIs "formed part and parcel of the budgets of
the 1993 CDF Article included an allocation for the Vice- executive departments, they were not easily identifiable
President.29 As such, Representatives were and were thus harder to monitor." Nonetheless, the
allocated P12.5 Million each in CDF funds, Senators, P18 lawmakers themselves as well as the finance and budget
Million each, and the Vice-President, P20 Million. officials of the implementing agencies, as well as the
DBM, purportedly knew about the insertions.38Examples
In 1994,30 1995,31 and 1996,32 the GAAs contained the of these CIs are the Department of Education (DepEd)
same provisions on project identification and fund release School Building Fund, the Congressional Initiative
as found in the 1993 CDF Article. In addition, however, Allocations, the Public Works Fund, the El Nio Fund,
the Department of Budget and Management (DBM) was and the Poverty Alleviation Fund.39 The allocations for the
directed to submit reports to the Senate Committee on School Building Fund, particularly, shall be made upon
Finance and the House Committee on Appropriations on prior consultation with the representative of the legislative
the releases made from the funds.33 district concerned.40 Similarly, the legislators had the
power to direct how, where and when these
appropriations were to be spent.41
Under the 199734 CDF Article, Members of Congress and
the Vice-President, in consultation with the implementing
agency concerned, were directed to submit to the DBM E. Joseph Ejercito Estrada (Estrada) Administration (1998-2001).
the list of 50% of projects to be funded from their
respective CDF allocations which shall be duly endorsed In 1999,42 the CDF was removed in the GAA and
by (a) the Senate President and the Chairman of the replaced by three (3) separate forms of CIs, namely, the
Committee on Finance, in the case of the Senate, and (b) "Food Security Program Fund,"43 the "Lingap Para Sa
the Speaker of the House of Representatives and the Mahihirap Program Fund,"44and the "Rural/Urban
Chairman of the Committee on Appropriations, in the Development Infrastructure Program Fund,"45 all of which
case of the House of Representatives; while the list for contained a special provision requiring "prior
the remaining 50% was to be submitted within six (6) consultation" with the Member s of Congress for the
months thereafter. The same article also stated that the release of the funds.
project list, which would be published by the
DBM,35 "shall be the basis for the release of funds" and It was in the year 200046 that the "Priority Development
that "no funds appropriated herein shall be disbursed for Assistance Fund" (PDAF) appeared in the GAA. The
projects not included in the list herein required." requirement of "prior consultation with the respective
Representative of the District" before PDAF funds were
The following year, or in 1998,36 the foregoing provisions directly released to the implementing agency concerned
regarding the required lists and endorsements were was explicitly stated in the 2000 PDAF Article. Moreover,
reproduced, except that the publication of the project list realignment of funds to any expense category was
was no longer required as the list itself sufficed for the expressly allowed, with the sole condition that no amount
release of CDF Funds. shall be used to fund personal services and other
personnel benefits.47 The succeeding PDAF provisions
The CDF was not, however, the lone form of remained the same in view of the re-enactment48 of the
"Congressional Pork Barrel" at that time. Other forms of 2000 GAA for the year 2001.
"Congressional Pork Barrel" were reportedly fashioned
and inserted into the GAA (called "Congressional F. Gloria Macapagal-Arroyo (Arroyo) Administration (2001-2010).
Insertions" or "CIs") in order to perpetuate the ad
The 200249 PDAF Article was brief and straightforward as appropriation for school buildings, NGOs were, by law,
it merely contained a single special provision ordering the encouraged to participate. For such purpose, the law
release of the funds directly to the implementing agency stated that "the amount of at least P250 Million of
or local government unit concerned, without further the P500 Million allotted for the construction and
qualifications. The following year, 2003,50 the same single completion of school buildings shall be made available to
provision was present, with simply an expansion of NGOs including the Federation of Filipino-Chinese
purpose and express authority to realign. Nevertheless, Chambers of Commerce and Industry, Inc. for its
the provisions in the 2003 budgets of the Department of "Operation Barrio School" program, with capability and
Public Works and Highways51 (DPWH) and the proven track records in the construction of public school
DepEd52 required prior consultation with Members of buildings x x x."62 The same allocation was made
Congress on the aspects of implementation delegation available to NGOs in the 2007 and 2009 GAAs under the
and project list submission, respectively. In 2004, the DepEd Budget.63 Also, it was in 2007 that the
2003 GAA was re-enacted.53 Government Procurement Policy Board64(GPPB) issued
Resolution No. 12-2007 dated June 29, 2007 (GPPB
In 2005,54 the PDAF Article provided that the PDAF shall Resolution 12-2007), amending the implementing rules
be used "to fund priority programs and projects under the and regulations65 of RA 9184,66 the Government
ten point agenda of the national government and shall be Procurement Reform Act, to include, as a form of
released directly to the implementing agencies." It also negotiated procurement,67 the procedure whereby the
introduced the program menu concept,55 which is Procuring Entity68 (the implementing agency) may enter
essentially a list of general programs and implementing into a memorandum of agreement with an NGO, provided
agencies from which a particular PDAF project may be that "an appropriation law or ordinance earmarks an
subsequently chosen by the identifying authority. The amount to be specifically contracted out to NGOs." 69
2005 GAA was re-enacted56 in 2006 and hence, operated
on the same bases. In similar regard, the program menu G. Present Administration (2010-Present).
concept was consistently integrated into the
2007,57 2008,58 2009,59 and 201060 GAAs. Differing from previous PDAF Articles but similar to the
CDF Articles, the 201170 PDAF Article included an
Textually, the PDAF Articles from 2002 to 2010 were express statement on lump-sum amounts allocated for
silent with respect to the specific amounts allocated for individual legislators and the Vice-President:
the individual legislators, as well as their participation in Representatives were given P70 Million each, broken
the proposal and identification of PDAF projects to be down into P40 Million for "hard projects" and P30 Million
funded. In contrast to the PDAF Articles, however, the for "soft projects"; while P200 Million was given to each
provisions under the DepEd School Building Program Senator as well as the Vice-President, with a P100 Million
and the DPWH budget, similar to its predecessors, allocation each for "hard" and "soft projects." Likewise, a
explicitly required prior consultation with the concerned provision on realignment of funds was included, but with
Member of Congress61anent certain aspects of project the qualification that it may be allowed only once. The
implementation. same provision also allowed the Secretaries of
Education, Health, Social Welfare and Development,
Significantly, it was during this era that provisions which Interior and Local Government, Environment and Natural
allowed formal participation of non-governmental Resources, Energy, and Public Works and Highways to
organizations (NGO) in the implementation of realign PDAF Funds, with the further conditions that: (a)
government projects were introduced. In the realignment is within the same implementing unit and
Supplemental Budget for 2006, with respect to the same project category as the original project, for
infrastructure projects; (b) allotment released has not yet
been obligated for the original scope of work, and (c) the March 22, 1976. In enacting the said law, Marcos recognized the
request for realignment is with the concurrence of the need to set up a special fund to help intensify, strengthen, and
legislator concerned.71 consolidate government efforts relating to the exploration,
exploitation, and development of indigenous energy resources
In the 201272 and 201373 PDAF Articles, it is stated that vital to economic growth.82 Due to the energy-related activities of
the "identification of projects and/or designation of the government in the Malampaya natural gas field in Palawan, or
beneficiaries shall conform to the priority list, standard or the "Malampaya Deep Water Gas-to-Power Project",83 the special
design prepared by each implementing agency (priority fund created under PD 910 has been currently labeled as
list requirement) x x x." However, as practiced, it would Malampaya Funds.
still be the individual legislator who would choose and
identify the project from the said priority list.74 On the other hand the Presidential Social Fund was created
under Section 12, Title IV84 of PD 1869,85 or the Charter of the
Provisions on legislator allocations75 as well as fund Philippine Amusement and Gaming Corporation (PAGCOR). PD
realignment76 were included in the 2012 and 2013 PDAF 1869 was similarly issued by Marcos on July 11, 1983. More than
Articles; but the allocation for the Vice-President, which two (2) years after, he amended PD 1869 and accordingly issued
was pegged at P200 Million in the 2011 GAA, had been PD 1993 on October 31, 1985,86 amending Section 1287 of the
deleted. In addition, the 2013 PDAF Article now allowed former law. As it stands, the Presidential Social Fund has been
LGUs to be identified as implementing agencies if they described as a special funding facility managed and administered
have the technical capability to implement the by the Presidential Management Staff through which the
projects.77 Legislators were also allowed to identify President provides direct assistance to priority programs and
programs/projects, except for assistance to indigent projects not funded under the regular budget. It is sourced from
patients and scholarships, outside of his legislative district the share of the government in the aggregate gross earnings of
provided that he secures the written concurrence of the PAGCOR.88
legislator of the intended outside-district, endorsed by the
Speaker of the House.78 Finally, any realignment of PDAF IV. Controversies in the Philippines.
funds, modification and revision of project identification,
as well as requests for release of funds, were all required Over the decades, "pork" funds in the Philippines have increased
to be favorably endorsed by the House Committee on tremendously,89 owing in no small part to previous Presidents who
Appropriations and the Senate Committee on Finance, as reportedly used the "Pork Barrel" in order to gain congressional
the case may be.79 support.90 It was in 1996 when the first controversy surrounding
the "Pork Barrel" erupted. Former Marikina City Representative
III. History of Presidential Pork Barrel in the Philippines. Romeo Candazo (Candazo), then an anonymous source, "blew
the lid on the huge sums of government money that regularly
While the term "Pork Barrel" has been typically associated with went into the pockets of legislators in the form of kickbacks." 91 He
lump-sum, discretionary funds of Members of Congress, the said that "the kickbacks were SOP (standard operating
present cases and the recent controversies on the matter have, procedure) among legislators and ranged from a low 19 percent
however, shown that the terms usage has expanded to include to a high 52 percent of the cost of each project, which could be
certain funds of the President such as the Malampaya Funds and anything from dredging, rip rapping, sphalting, concreting, and
the Presidential Social Fund. construction of school buildings."92 "Other sources of kickbacks
that Candazo identified were public funds intended for medicines
and textbooks. A few days later, the tale of the money trail
On the one hand, the Malampaya Funds was created as a special
became the banner story of the Philippine Daily Inquirer issue of
fund under Section 880 of Presidential Decree No. (PD)
August 13, 1996, accompanied by an illustration of a roasted
910,81 issued by then President Ferdinand E. Marcos (Marcos) on
pig."93 "The publication of the stories, including those about total releases covered by the audit amounted to P8.374 Billion in
congressional initiative allocations of certain lawmakers, PDAF and P32.664 Billion in VILP, representing 58% and 32%,
including P3.6 Billion for a Congressman, sparked public respectively, of the total PDAF and VILP releases that were found
outrage."94 to have been made nationwide during the audit
period.102 Accordingly, the Co As findings contained in its Report
Thereafter, or in 2004, several concerned citizens sought the No. 2012-03 (CoA Report), entitled "Priority Development
nullification of the PDAF as enacted in the 2004 GAA for being Assistance Fund (PDAF) and Various Infrastructures including
unconstitutional. Unfortunately, for lack of "any pertinent Local Projects (VILP)," were made public, the highlights of which
evidentiary support that illegal misuse of PDAF in the form of are as follows:103
kickbacks has become a common exercise of unscrupulous
Members of Congress," the petition was dismissed.95 Amounts released for projects identified by a
considerable number of legislators significantly exceeded
Recently, or in July of the present year, the National Bureau of their respective allocations.
Investigation (NBI) began its probe into allegations that "the
government has been defrauded of some P10 Billion over the Amounts were released for projects outside of
past 10 years by a syndicate using funds from the pork barrel of legislative districts of sponsoring members of the Lower
lawmakers and various government agencies for scores of ghost House.
projects."96 The investigation was spawned by sworn affidavits of
six (6) whistle-blowers who declared that JLN Corporation "JLN" Total VILP releases for the period exceeded the total
standing for Janet Lim Napoles (Napoles) had swindled billions amount appropriated under the 2007 to 2009 GAAs.
of pesos from the public coffers for "ghost projects" using no
fewer than 20 dummy NGOs for an entire decade. While the Infrastructure projects were constructed on private lots
NGOs were supposedly the ultimate recipients of PDAF funds, without these having been turned over to the government.
the whistle-blowers declared that the money was diverted into
Napoles private accounts.97 Thus, after its investigation on the
Napoles controversy, criminal complaints were filed before the Significant amounts were released to implementing
Office of the Ombudsman, charging five (5) lawmakers for agencies without the latters endorsement and without
Plunder, and three (3) other lawmakers for Malversation, Direct considering their mandated functions, administrative and
Bribery, and Violation of the Anti-Graft and Corrupt Practices Act. technical capabilities to implement projects.
Also recommended to be charged in the complaints are some of
the lawmakers chiefs -of-staff or representatives, the heads and Implementation of most livelihood projects was not
other officials of three (3) implementing agencies, and the several undertaken by the implementing agencies themselves but
presidents of the NGOs set up by Napoles.98 by NGOs endorsed by the proponent legislators to which
the Funds were transferred.
On August 16, 2013, the Commission on Audit (CoA) released the
results of a three-year audit investigation99 covering the use of The funds were transferred to the NGOs in spite of the
legislators' PDAF from 2007 to 2009, or during the last three (3) absence of any appropriation law or ordinance.
years of the Arroyo administration. The purpose of the audit was
to determine the propriety of releases of funds under PDAF and Selection of the NGOs were not compliant with law and
the Various Infrastructures including Local Projects (VILP)100 by regulations.
the DBM, the application of these funds and the implementation
of projects by the appropriate implementing agencies and several Eighty-Two (82) NGOs entrusted with implementation
government-owned-and-controlled corporations (GOCCs).101 The of seven hundred seventy two (772) projects amount
to P6.156 Billion were either found questionable, or Preliminary Injunction dated August 27, 2013 under Rule 65 of the Rules
submitted questionable/spurious documents, or failed to of Court (Belgica Petition), seeking that the annual "Pork Barrel System,"
liquidate in whole or in part their utilization of the Funds. presently embodied in the provisions of the GAA of 2013 which provided
for the 2013 PDAF, and the Executives lump-sum, discretionary funds,
Procurement by the NGOs, as well as some such as the Malampaya Funds and the Presidential Social Fund, 107 be
implementing agencies, of goods and services reportedly declared unconstitutional and null and void for being acts constituting
used in the projects were not compliant with law. grave abuse of discretion. Also, they pray that the Court issue a TRO
against respondents Paquito N. Ochoa, Jr., Florencio B. Abad (Secretary
Abad) and Rosalia V. De Leon, in their respective capacities as the
As for the "Presidential Pork Barrel", whistle-blowers alleged that"
incumbent Executive Secretary, Secretary of the Department of Budget
at least P900 Million from royalties in the operation of the
and Management (DBM), and National Treasurer, or their agents, for
Malampaya gas project off Palawan province intended for
them to immediately cease any expenditure under the aforesaid funds.
agrarian reform beneficiaries has gone into a dummy
Further, they pray that the Court order the foregoing respondents to
NGO."104 According to incumbent CoA Chairperson Maria Gracia
release to the CoA and to the public: (a) "the complete schedule/list of
Pulido Tan (CoA Chairperson), the CoA is, as of this writing, in the
legislators who have availed of their PDAF and VILP from the years 2003
process of preparing "one consolidated report" on the Malampaya
to 2013, specifying the use of the funds, the project or activity and the
Funds.105
recipient entities or individuals, and all pertinent data thereto"; and (b) "the
use of the Executives lump-sum, discretionary funds, including the
V. The Procedural Antecedents. proceeds from the x x x Malampaya Funds and remittances from the
PAGCOR x x x from 2003 to 2013, specifying the x x x project or activity
Spurred in large part by the findings contained in the CoA Report and the recipient entities or individuals, and all pertinent data
and the Napoles controversy, several petitions were lodged thereto."108 Also, they pray for the "inclusion in budgetary deliberations
before the Court similarly seeking that the "Pork Barrel System" with the Congress of all presently off-budget, lump-sum, discretionary
be declared unconstitutional. To recount, the relevant procedural funds including, but not limited to, proceeds from the Malampaya Funds
antecedents in these cases are as follows: and remittances from the PAGCOR."109 The Belgica Petition was docketed
as G.R. No. 208566.110
On August 28, 2013, petitioner Samson S. Alcantara (Alcantara),
President of the Social Justice Society, filed a Petition for Prohibition of Lastly, on September 5, 2013, petitioner Pedrito M. Nepomuceno
even date under Rule 65 of the Rules of Court (Alcantara Petition), (Nepomuceno), filed a Petition dated August 23, 2012 (Nepomuceno
seeking that the "Pork Barrel System" be declared unconstitutional, and a Petition), seeking that the PDAF be declared unconstitutional, and a
writ of prohibition be issued permanently restraining respondents Franklin cease and desist order be issued restraining President Benigno Simeon
M. Drilon and Feliciano S. Belmonte, Jr., in their respective capacities as S. Aquino III (President Aquino) and Secretary Abad from releasing such
the incumbent Senate President and Speaker of the House of funds to Members of Congress and, instead, allow their release to fund
Representatives, from further taking any steps to enact legislation priority projects identified and approved by the Local Development
appropriating funds for the "Pork Barrel System," in whatever form and by Councils in consultation with the executive departments, such as the
whatever name it may be called, and from approving further releases DPWH, the Department of Tourism, the Department of Health, the
pursuant thereto.106 The Alcantara Petition was docketed as G.R. No. Department of Transportation, and Communication and the National
208493. Economic Development Authority.111 The Nepomuceno Petition was
docketed as UDK-14951.112
On September 3, 2013, petitioners Greco Antonious Beda B. Belgica,
Jose L. Gonzalez, Reuben M. Abante, Quintin Paredes San Diego On September 10, 2013, the Court issued a Resolution of even date (a)
(Belgica, et al.), and Jose M. Villegas, Jr. (Villegas) filed an Urgent consolidating all cases; (b) requiring public respondents to comment on
Petition For Certiorari and Prohibition With Prayer For The Immediate the consolidated petitions; (c) issuing a TRO (September 10, 2013 TRO)
Issuance of Temporary Restraining Order (TRO) and/or Writ of enjoining the DBM, National Treasurer, the Executive Secretary, or any of
the persons acting under their authority from releasing (1) the remaining Based on the pleadings, and as refined during the Oral Arguments, the
PDAF allocated to Members of Congress under the GAA of 2013, and (2) following are the main issues for the Courts resolution:
Malampaya Funds under the phrase "for such other purposes as may be
hereafter directed by the President" pursuant to Section 8 of PD 910 but I. Procedural Issues.
not for the purpose of "financing energy resource development and
exploitation programs and projects of the government under the same Whether or not (a) the issues raised in the consolidated petitions involve
provision; and (d) setting the consolidated cases for Oral Arguments on an actual and justiciable controversy; (b) the issues raised in the
October 8, 2013. consolidated petitions are matters of policy not subject to judicial review;
(c) petitioners have legal standing to sue; and (d) the Courts Decision
On September 23, 2013, the Office of the Solicitor General (OSG) filed a dated August 19, 1994 in G.R. Nos. 113105, 113174, 113766, and
Consolidated Comment (Comment) of even date before the Court, 113888, entitled "Philippine Constitution Association v.
seeking the lifting, or in the alternative, the partial lifting with respect to Enriquez"114 (Philconsa) and Decision dated April 24, 2012 in G.R. No.
educational and medical assistance purposes, of the Courts September 164987, entitled "Lawyers Against Monopoly and Poverty v. Secretary of
10, 2013 TRO, and that the consolidated petitions be dismissed for lack of Budget and Management"115 (LAMP) bar the re-litigatio n of the issue of
merit.113 constitutionality of the "Pork Barrel System" under the principles of res
judicata and stare decisis.
On September 24, 2013, the Court issued a Resolution of even date
directing petitioners to reply to the Comment. II. Substantive Issues on the "Congressional Pork Barrel."

Petitioners, with the exception of Nepomuceno, filed their respective Whether or not the 2013 PDAF Article and all other Congressional Pork
replies to the Comment: (a) on September 30, 2013, Villegas filed a Barrel Laws similar thereto are unconstitutional considering that they
separate Reply dated September 27, 2013 (Villegas Reply); (b) on violate the principles of/constitutional provisions on (a) separation of
October 1, 2013, Belgica, et al. filed a Reply dated September 30, 2013 powers; (b) non-delegability of legislative power; (c) checks and balances;
(Belgica Reply); and (c) on October 2, 2013, Alcantara filed a Reply dated (d) accountability; (e) political dynasties; and (f) local autonomy.
October 1, 2013.
III. Substantive Issues on the "Presidential Pork Barrel."
On October 1, 2013, the Court issued an Advisory providing for the
guidelines to be observed by the parties for the Oral Arguments Whether or not the phrases (a) "and for such other purposes as may be
scheduled on October 8, 2013. In view of the technicality of the issues hereafter directed by the President" under Section 8 of PD 910, 116 relating
material to the present cases, incumbent Solicitor General Francis H. to the Malampaya Funds, and (b) "to finance the priority infrastructure
Jardeleza (Solicitor General) was directed to bring with him during the development projects and to finance the restoration of damaged or
Oral Arguments representative/s from the DBM and Congress who would destroyed facilities due to calamities, as may be directed and authorized
be able to competently and completely answer questions related to, by the Office of the President of the Philippines" under Section 12 of PD
among others, the budgeting process and its implementation. Further, the 1869, as amended by PD 1993, relating to the Presidential Social Fund,
CoA Chairperson was appointed as amicus curiae and thereby requested are unconstitutional insofar as they constitute undue delegations of
to appear before the Court during the Oral Arguments. legislative power.

On October 8 and 10, 2013, the Oral Arguments were conducted. These main issues shall be resolved in the order that they have been
Thereafter, the Court directed the parties to submit their respective stated. In addition, the Court shall also tackle certain ancillary issues as
memoranda within a period of seven (7) days, or until October 17, 2013, prompted by the present cases.
which the parties subsequently did.
The Courts Ruling
The Issues Before the Court
The petitions are partly granted. The requirement of contrariety of legal rights is clearly satisfied by the
antagonistic positions of the parties on the constitutionality of the "Pork
I. Procedural Issues. Barrel System." Also, the questions in these consolidated cases are ripe
for adjudication since the challenged funds and the provisions allowing for
their utilization such as the 2013 GAA for the PDAF, PD 910 for the
The prevailing rule in constitutional litigation is that no question involving
Malampaya Funds and PD 1869, as amended by PD 1993, for the
the constitutionality or validity of a law or governmental act may be heard
Presidential Social Fund are currently existing and operational; hence,
and decided by the Court unless there is compliance with the legal
there exists an immediate or threatened injury to petitioners as a result of
requisites for judicial inquiry,117 namely: (a) there must be an actual case
the unconstitutional use of these public funds.
or controversy calling for the exercise of judicial power; (b) the person
challenging the act must have the standing to question the validity of the
subject act or issuance; (c) the question of constitutionality must be raised As for the PDAF, the Court must dispel the notion that the issues related
at the earliest opportunity ; and (d) the issue of constitutionality must be thereto had been rendered moot and academic by the reforms
the very lis mota of the case.118 Of these requisites, case law states that undertaken by respondents. A case becomes moot when there is no more
the first two are the most important119 and, therefore, shall be discussed actual controversy between the parties or no useful purpose can be
forthwith. served in passing upon the merits.125 Differing from this description, the
Court observes that respondents proposed line-item budgeting scheme
would not terminate the controversy nor diminish the useful purpose for its
A. Existence of an Actual Case or Controversy.
resolution since said reform is geared towards the 2014 budget, and not
the 2013 PDAF Article which, being a distinct subject matter, remains
By constitutional fiat, judicial power operates only when there is an actual legally effective and existing. Neither will the Presidents declaration that
case or controversy.120 This is embodied in Section 1, Article VIII of the he had already "abolished the PDAF" render the issues on PDAF moot
1987 Constitution which pertinently states that "judicial power includes the precisely because the Executive branch of government has no
duty of the courts of justice to settle actual controversies involving rights constitutional authority to nullify or annul its legal existence. By
which are legally demandable and enforceable x x x." Jurisprudence constitutional design, the annulment or nullification of a law may be done
provides that an actual case or controversy is one which "involves a either by Congress, through the passage of a repealing law, or by the
conflict of legal rights, an assertion of opposite legal claims, susceptible of Court, through a declaration of unconstitutionality. Instructive on this point
judicial resolution as distinguished from a hypothetical or abstract is the following exchange between Associate Justice Antonio T. Carpio
difference or dispute.121 In other words, "there must be a contrariety of (Justice Carpio) and the Solicitor General during the Oral Arguments: 126
legal rights that can be interpreted and enforced on the basis of existing
law and jurisprudence."122 Related to the requirement of an actual case or
Justice Carpio: The President has taken an oath to faithfully execute the
controversy is the requirement of "ripeness," meaning that the questions
law,127 correct? Solicitor General Jardeleza: Yes, Your Honor.
raised for constitutional scrutiny are already ripe for adjudication. "A
question is ripe for adjudication when the act being challenged has had a
direct adverse effect on the individual challenging it. It is a prerequisite Justice Carpio: And so the President cannot refuse to implement the
that something had then been accomplished or performed by either General Appropriations Act, correct?
branch before a court may come into the picture, and the petitioner must
allege the existence of an immediate or threatened injury to itself as a Solicitor General Jardeleza: Well, that is our answer, Your Honor. In the
result of the challenged action."123 "Withal, courts will decline to pass upon case, for example of the PDAF, the President has a duty to execute the
constitutional issues through advisory opinions, bereft as they are of laws but in the face of the outrage over PDAF, the President was saying,
authority to resolve hypothetical or moot questions." 124 "I am not sure that I will continue the release of the soft projects," and that
started, Your Honor. Now, whether or not that (interrupted)
Based on these principles, the Court finds that there exists an actual and
justiciable controversy in these cases. Justice Carpio: Yeah. I will grant the President if there are anomalies in
the project, he has the power to stop the releases in the meantime, to
investigate, and that is Section 38 of Chapter 5 of Book 6 of the Revised Constitution with respect to, inter alia, the principles of separation of
Administrative Code128 x x x. So at most the President can suspend, now powers, non-delegability of legislative power, checks and balances,
if the President believes that the PDAF is unconstitutional, can he just accountability and local autonomy.
refuse to implement it?
The applicability of the second exception is also apparent from the nature
Solicitor General Jardeleza: No, Your Honor, as we were trying to say in of the interests involved
the specific case of the PDAF because of the CoA Report, because of the
reported irregularities and this Court can take judicial notice, even the constitutionality of the very system within which significant amounts
outside, outside of the COA Report, you have the report of the whistle- of public funds have been and continue to be utilized and expended
blowers, the President was just exercising precisely the duty . undoubtedly presents a situation of exceptional character as well as a
matter of paramount public interest. The present petitions, in fact, have
xxxx been lodged at a time when the systems flaws have never before been
magnified. To the Courts mind, the coalescence of the CoA Report, the
Justice Carpio: Yes, and that is correct. Youve seen the CoA Report, accounts of numerous whistle-blowers, and the governments own
there are anomalies, you stop and investigate, and prosecute, he has recognition that reforms are needed "to address the reported abuses of
done that. But, does that mean that PDAF has been repealed? the PDAF"130 demonstrates a prima facie pattern of abuse which only
underscores the importance of the matter. It is also by this finding that the
Court finds petitioners claims as not merely theorized, speculative or
Solicitor General Jardeleza: No, Your Honor x x x.
hypothetical. Of note is the weight accorded by the Court to the findings
made by the CoA which is the constitutionally-mandated audit arm of the
xxxx government. In Delos Santos v. CoA,131 a recent case wherein the Court
upheld the CoAs disallowance of irregularly disbursed PDAF funds, it
Justice Carpio: So that PDAF can be legally abolished only in two (2) was emphasized that:
cases. Congress passes a law to repeal it, or this Court declares it
unconstitutional, correct? The COA is endowed with enough latitude to determine, prevent, and
disallow irregular, unnecessary, excessive, extravagant or unconscionable
Solictor General Jardeleza: Yes, Your Honor. expenditures of government funds. It is tasked to be vigilant and
conscientious in safeguarding the proper use of the government's, and
Justice Carpio: The President has no power to legally abolish PDAF. ultimately the people's, property. The exercise of its general audit power is
(Emphases supplied) among the constitutional mechanisms that gives life to the check and
balance system inherent in our form of government.
Even on the assumption of mootness, jurisprudence, nevertheless,
dictates that "the moot and academic principle is not a magical formula It is the general policy of the Court to sustain the decisions of
that can automatically dissuade the Court in resolving a case." The Court administrative authorities, especially one which is constitutionally-created,
will decide cases, otherwise moot, if: first, there is a grave violation of the such as the CoA, not only on the basis of the doctrine of separation of
Constitution; second, the exceptional character of the situation and the powers but also for their presumed expertise in the laws they are
paramount public interest is involved; third, when the constitutional issue entrusted to enforce. Findings of administrative agencies are accorded
raised requires formulation of controlling principles to guide the bench, the not only respect but also finality when the decision and order are not
bar, and the public; and fourth, the case is capable of repetition yet tainted with unfairness or arbitrariness that would amount to grave abuse
evading review.129 of discretion. It is only when the CoA has acted without or in excess of
jurisdiction, or with grave abuse of discretion amounting to lack or excess
The applicability of the first exception is clear from the fundamental of jurisdiction, that this Court entertains a petition questioning its rulings. x
posture of petitioners they essentially allege grave violations of the x x. (Emphases supplied)
Thus, if only for the purpose of validating the existence of an actual and judicially discoverable and manageable standards for resolving it" or "the
justiciable controversy in these cases, the Court deems the findings under impossibility of deciding without an initial policy determination of a kind
the CoA Report to be sufficient. clearly for non- judicial discretion." Cast against this light, respondents
submit that the "the political branches are in the best position not only to
The Court also finds the third exception to be applicable largely due to the perform budget-related reforms but also to do them in response to the
practical need for a definitive ruling on the systems constitutionality. As specific demands of their constituents" and, as such, "urge the Court not
disclosed during the Oral Arguments, the CoA Chairperson estimates that to impose a solution at this stage."140
thousands of notices of disallowances will be issued by her office in
connection with the findings made in the CoA Report. In this relation, The Court must deny respondents submission.
Associate Justice Marvic Mario Victor F. Leonen (Justice Leonen) pointed
out that all of these would eventually find their way to the Suffice it to state that the issues raised before the Court do not present
courts.132 Accordingly, there is a compelling need to formulate controlling political but legal questions which are within its province to resolve. A
principles relative to the issues raised herein in order to guide the bench, political question refers to "those questions which, under the Constitution,
the bar, and the public, not just for the expeditious resolution of the are to be decided by the people in their sovereign capacity, or in regard to
anticipated disallowance cases, but more importantly, so that the which full discretionary authority has been delegated to the Legislature or
government may be guided on how public funds should be utilized in executive branch of the Government. It is concerned with issues
accordance with constitutional principles. dependent upon the wisdom, not legality, of a particular measure." 141 The
intrinsic constitutionality of the "Pork Barrel System" is not an issue
Finally, the application of the fourth exception is called for by the dependent upon the wisdom of the political branches of government but
recognition that the preparation and passage of the national budget is, by rather a legal one which the Constitution itself has commanded the Court
constitutional imprimatur, an affair of annual occurrence. 133 The relevance to act upon. Scrutinizing the contours of the system along constitutional
of the issues before the Court does not cease with the passage of a lines is a task that the political branches of government are incapable of
"PDAF -free budget for 2014."134 The evolution of the "Pork Barrel rendering precisely because it is an exercise of judicial power. More
System," by its multifarious iterations throughout the course of history, importantly, the present Constitution has not only vested the Judiciary the
lends a semblance of truth to petitioners claim that "the same dog will just right to exercise judicial power but essentially makes it a duty to proceed
resurface wearing a different collar."135 In Sanlakas v. Executive therewith. Section 1, Article VIII of the 1987 Constitution cannot be any
Secretary,136 the government had already backtracked on a previous clearer: "The judicial power shall be vested in one Supreme Court and in
course of action yet the Court used the "capable of repetition but evading such lower courts as may be established by law. It includes the duty of the
review" exception in order "to prevent similar questions from re- courts of justice to settle actual controversies involving rights which are
emerging."137The situation similarly holds true to these cases. Indeed, the legally demandable and enforceable, and to determine whether or not
myriad of issues underlying the manner in which certain public funds are there has been a grave abuse of discretion amounting to lack or excess of
spent, if not resolved at this most opportune time, are capable of jurisdiction on the part of any branch or instrumentality of the
repetition and hence, must not evade judicial review. Government." In Estrada v. Desierto,142 the expanded concept of judicial
power under the 1987 Constitution and its effect on the political question
B. Matters of Policy: the Political Question Doctrine. doctrine was explained as follows:143

The "limitation on the power of judicial review to actual cases and To a great degree, the 1987 Constitution has narrowed the reach of the
controversies carries the assurance that "the courts will not intrude into political question doctrine when it expanded the power of judicial review of
areas committed to the other branches of government." 138 Essentially, the this court not only to settle actual controversies involving rights which are
foregoing limitation is a restatement of the political question doctrine legally demandable and enforceable but also to determine whether or not
which, under the classic formulation of Baker v. Carr,139applies when there there has been a grave abuse of discretion amounting to lack or excess of
is found, among others, "a textually demonstrable constitutional jurisdiction on the part of any branch or instrumentality of government.
commitment of the issue to a coordinate political department," "a lack of Heretofore, the judiciary has focused on the "thou shalt not's" of the
Constitution directed against the exercise of its jurisdiction. With the new being deflected to any improper purpose, or that public funds are wasted
provision, however, courts are given a greater prerogative to determine through the enforcement of an invalid or unconstitutional law,147 as in
what it can do to prevent grave abuse of discretion amounting to lack or these cases.
excess of jurisdiction on the part of any branch or instrumentality of
government. Clearly, the new provision did not just grant the Court power Moreover, as citizens, petitioners have equally fulfilled the standing
of doing nothing. x x x (Emphases supplied) requirement given that the issues they have raised may be classified as
matters "of transcendental importance, of overreaching significance to
It must also be borne in mind that when the judiciary mediates to society, or of paramount public interest."148 The CoA Chairpersons
allocate constitutional boundaries, it does not assert any superiority over statement during the Oral Arguments that the present controversy
the other departments; does not in reality nullify or invalidate an act of the involves "not merely a systems failure" but a "complete breakdown of
legislature or the executive, but only asserts the solemn and sacred controls"149 amplifies, in addition to the matters above-discussed, the
obligation assigned to it by the Constitution." 144 To a great extent, the seriousness of the issues involved herein. Indeed, of greater import than
Court is laudably cognizant of the reforms undertaken by its co-equal the damage caused by the illegal expenditure of public funds is the mortal
branches of government. But it is by constitutional force that the Court wound inflicted upon the fundamental law by the enforcement of an
must faithfully perform its duty. Ultimately, it is the Courts avowed invalid statute.150 All told, petitioners have sufficient locus standi to file the
intention that a resolution of these cases would not arrest or in any instant cases.
manner impede the endeavors of the two other branches but, in fact, help
ensure that the pillars of change are erected on firm constitutional D. Res Judicata and Stare Decisis.
grounds. After all, it is in the best interest of the people that each great
branch of government, within its own sphere, contributes its share Res judicata (which means a "matter adjudged") and stare decisis non
towards achieving a holistic and genuine solution to the problems of quieta et movere (or simply, stare decisis which means "follow past
society. For all these reasons, the Court cannot heed respondents plea precedents and do not disturb what has been settled") are general
for judicial restraint. procedural law principles which both deal with the effects of previous but
factually similar dispositions to subsequent cases. For the cases at bar,
C. Locus Standi. the Court examines the applicability of these principles in relation to its
prior rulings in Philconsa and LAMP.
"The gist of the question of standing is whether a party alleges such
personal stake in the outcome of the controversy as to assure that The focal point of res judicata is the judgment. The principle states that a
concrete adverseness which sharpens the presentation of issues upon judgment on the merits in a previous case rendered by a court of
which the court depends for illumination of difficult constitutional competent jurisdiction would bind a subsequent case if, between the first
questions. Unless a person is injuriously affected in any of his and second actions, there exists an identity of parties, of subject matter,
constitutional rights by the operation of statute or ordinance, he has no and of causes of action.151 This required identity is not, however, attendant
standing."145 hereto since Philconsa and LAMP, respectively involved constitutional
challenges against the 1994 CDF Article and 2004 PDAF Article, whereas
Petitioners have come before the Court in their respective capacities as the cases at bar call for a broader constitutional scrutiny of the entire
citizen-taxpayers and accordingly, assert that they "dutifully contribute to "Pork Barrel System." Also, the ruling in LAMP is essentially a dismissal
the coffers of the National Treasury."146 Clearly, as taxpayers, they based on a procedural technicality and, thus, hardly a judgment on the
possess the requisite standing to question the validity of the existing "Pork merits in that petitioners therein failed to present any "convincing proof x
Barrel System" under which the taxes they pay have been and continue to x x showing that, indeed, there were direct releases of funds to the
be utilized. It is undeniable that petitioners, as taxpayers, are bound to Members of Congress, who actually spend them according to their sole
suffer from the unconstitutional usage of public funds, if the Court so discretion" or "pertinent evidentiary support to demonstrate the illegal
rules. Invariably, taxpayers have been allowed to sue where there is a misuse of PDAF in the form of kickbacks and has become a common
claim that public funds are illegally disbursed or that public money is exercise of unscrupulous Members of Congress." As such, the Court up
held, in view of the presumption of constitutionality accorded to every law, herein warranted may be, therefore, considered as a powerful
the 2004 PDAF Article, and saw "no need to review or reverse the countervailing reason against a wholesale application of the stare decisis
standing pronouncements in the said case." Hence, for the foregoing principle.
reasons, the res judicata principle, insofar as the Philconsa and LAMP
cases are concerned, cannot apply. In addition, the Court observes that the Philconsa ruling was actually
riddled with inherent constitutional inconsistencies which similarly
On the other hand, the focal point of stare decisis is the doctrine created. countervail against a full resort to stare decisis. As may be deduced from
The principle, entrenched under Article 8152 of the Civil Code, evokes the the main conclusions of the case, Philconsas fundamental premise in
general rule that, for the sake of certainty, a conclusion reached in one allowing Members of Congress to propose and identify of projects would
case should be doctrinally applied to those that follow if the facts are be that the said identification authority is but an aspect of the power of
substantially the same, even though the parties may be different. It appropriation which has been constitutionally lodged in Congress. From
proceeds from the first principle of justice that, absent any powerful this premise, the contradictions may be easily seen. If the authority to
countervailing considerations, like cases ought to be decided alike. Thus, identify projects is an aspect of appropriation and the power of
where the same questions relating to the same event have been put appropriation is a form of legislative power thereby lodged in Congress,
forward by the parties similarly situated as in a previous case litigated and then it follows that: (a) it is Congress which should exercise such
decided by a competent court, the rule of stare decisis is a bar to any authority, and not its individual Members; (b) such authority must be
attempt to re-litigate the same issue.153 exercised within the prescribed procedure of law passage and, hence,
should not be exercised after the GAA has already been passed; and (c)
Philconsa was the first case where a constitutional challenge against a such authority, as embodied in the GAA, has the force of law and, hence,
Pork Barrel provision, i.e., the 1994 CDF Article, was resolved by the cannot be merely recommendatory. Justice Vitugs Concurring Opinion in
Court. To properly understand its context, petitioners posturing was that the same case sums up the Philconsa quandary in this wise: "Neither
"the power given to the Members of Congress to propose and identify would it be objectionable for Congress, by law, to appropriate funds for
projects and activities to be funded by the CDF is an encroachment by the such specific projects as it may be minded; to give that authority,
legislature on executive power, since said power in an appropriation act is however, to the individual members of Congress in whatever guise, I am
in implementation of the law" and that "the proposal and identification of afraid, would be constitutionally impermissible." As the Court now largely
the projects do not involve the making of laws or the repeal and benefits from hindsight and current findings on the matter, among others,
amendment thereof, the only function given to the Congress by the the CoA Report, the Court must partially abandon its previous ruling in
Constitution."154 In deference to the foregoing submissions, the Court Philconsa insofar as it validated the post-enactment identification
reached the following main conclusions: one, under the Constitution, the authority of Members of Congress on the guise that the same was merely
power of appropriation, or the "power of the purse," belongs to Congress; recommendatory. This postulate raises serious constitutional
two, the power of appropriation carries with it the power to specify the inconsistencies which cannot be simply excused on the ground that such
project or activity to be funded under the appropriation law and it can be mechanism is "imaginative as it is innovative." Moreover, it must be
detailed and as broad as Congress wants it to be; and, three, the pointed out that the recent case of Abakada Guro Party List v.
proposals and identifications made by Members of Congress are merely Purisima155 (Abakada) has effectively overturned Philconsas allowance of
recommendatory. At once, it is apparent that the Philconsa resolution was post-enactment legislator participation in view of the separation of powers
a limited response to a separation of powers problem, specifically on the principle. These constitutional inconsistencies and the Abakada rule will
propriety of conferring post-enactment identification authority to Members be discussed in greater detail in the ensuing section of this Decision.
of Congress. On the contrary, the present cases call for a more holistic
examination of (a) the inter-relation between the CDF and PDAF Articles As for LAMP, suffice it to restate that the said case was dismissed on a
with each other, formative as they are of the entire "Pork Barrel System" procedural technicality and, hence, has not set any controlling doctrine
as well as (b) the intra-relation of post-enactment measures contained susceptible of current application to the substantive issues in these cases.
within a particular CDF or PDAF Article, including not only those related to In fine, stare decisis would not apply.
the area of project identification but also to the areas of fund release and
realignment. The complexity of the issues and the broader legal analyses
II. Substantive Issues. First, there is the Congressional Pork Barrel which is herein defined as a
kind of lump-sum, discretionary fund wherein legislators, either
A. Definition of Terms. individually or collectively organized into committees, are able to
effectively control certain aspects of the funds utilization through various
post-enactment measures and/or practices. In particular, petitioners
Before the Court proceeds to resolve the substantive issues of these
consider the PDAF, as it appears under the 2013 GAA, as Congressional
cases, it must first define the terms "Pork Barrel System," "Congressional
Pork Barrel since it is, inter alia, a post-enactment measure that allows
Pork Barrel," and "Presidential Pork Barrel" as they are essential to the
individual legislators to wield a collective power; 160 and
ensuing discourse.

Second, there is the Presidential Pork Barrel which is herein defined as a


Petitioners define the term "Pork Barrel System" as the "collusion
kind of lump-sum, discretionary fund which allows the President to
between the Legislative and Executive branches of government to
determine the manner of its utilization. For reasons earlier stated, 161 the
accumulate lump-sum public funds in their offices with unchecked
Court shall delimit the use of such term to refer only to the Malampaya
discretionary powers to determine its distribution as political
Funds and the Presidential Social Fund.
largesse."156 They assert that the following elements make up the Pork
Barrel System: (a) lump-sum funds are allocated through the
appropriations process to an individual officer; (b) the officer is given sole With these definitions in mind, the Court shall now proceed to discuss the
and broad discretion in determining how the funds will be used or substantive issues of these cases.
expended; (c) the guidelines on how to spend or use the funds in the
appropriation are either vague, overbroad or inexistent; and (d) projects B. Substantive Issues on the Congressional Pork Barrel.
funded are intended to benefit a definite constituency in a particular part
of the country and to help the political careers of the disbursing official by 1. Separation of Powers.
yielding rich patronage benefits.157 They further state that the Pork Barrel
System is comprised of two (2) kinds of discretionary public funds: first, a. Statement of Principle.
the Congressional (or Legislative) Pork Barrel, currently known as the
PDAF;158 and, second, the Presidential (or Executive) Pork Barrel,
specifically, the Malampaya Funds under PD 910 and the Presidential The principle of separation of powers refers to the constitutional
Social Fund under PD 1869, as amended by PD 1993. 159 demarcation of the three fundamental powers of government. In the
celebrated words of Justice Laurel in Angara v. Electoral Commission, 162 it
means that the "Constitution has blocked out with deft strokes and in bold
Considering petitioners submission and in reference to its local concept lines, allotment of power to the executive, the legislative and the judicial
and legal history, the Court defines the Pork Barrel System as the departments of the government."163 To the legislative branch of
collective body of rules and practices that govern the manner by which government, through Congress,164 belongs the power to make laws; to the
lump-sum, discretionary funds, primarily intended for local projects, are executive branch of government, through the President, 165belongs the
utilized through the respective participations of the Legislative and power to enforce laws; and to the judicial branch of government, through
Executive branches of government, including its members. The Pork the Court,166 belongs the power to interpret laws. Because the three great
Barrel System involves two (2) kinds of lump-sum discretionary funds: powers have been, by constitutional design, ordained in this respect,
"each department of the government has exclusive cognizance of matters
within its jurisdiction, and is supreme within its own sphere." 167 Thus, "the
legislature has no authority to execute or construe the law, the executive
has no authority to make or construe the law, and the judiciary has no
power to make or execute the law."168 The principle of separation of
powers and its concepts of autonomy and independence stem from the
notion that the powers of government must be divided to avoid
concentration of these powers in any one branch; the division, it is hoped,
would avoid any single branch from lording its power over the other appropriation made by law." Upon approval and passage of the GAA,
branches or the citizenry.169 To achieve this purpose, the divided power Congress law -making role necessarily comes to an end and from there
must be wielded by co-equal branches of government that are equally the Executives role of implementing the national budget begins. So as
capable of independent action in exercising their respective mandates. not to blur the constitutional boundaries between them, Congress must
Lack of independence would result in the inability of one branch of "not concern it self with details for implementation by the Executive." 176
government to check the arbitrary or self-interest assertions of another or
others.170 The foregoing cardinal postulates were definitively enunciated in Abakada
where the Court held that "from the moment the law becomes effective,
Broadly speaking, there is a violation of the separation of powers principle any provision of law that empowers Congress or any of its members to
when one branch of government unduly encroaches on the domain of play any role in the implementation or enforcement of the law violates the
another. US Supreme Court decisions instruct that the principle of principle of separation of powers and is thus unconstitutional." 177 It must
separation of powers may be violated in two (2) ways: firstly, "one branch be clarified, however, that since the restriction only pertains to "any role in
may interfere impermissibly with the others performance of its the implementation or enforcement of the law," Congress may still
constitutionally assigned function";171 and "alternatively, the doctrine may exercise its oversight function which is a mechanism of checks and
be violated when one branch assumes a function that more properly is balances that the Constitution itself allows. But it must be made clear that
entrusted to another."172 In other words, there is a violation of the principle Congress role must be confined to mere oversight. Any post-enactment-
when there is impermissible (a) interference with and/or (b) assumption of measure allowing legislator participation beyond oversight is bereft of any
another departments functions. constitutional basis and hence, tantamount to impermissible interference
and/or assumption of executive functions. As the Court ruled in
The enforcement of the national budget, as primarily contained in the Abakada:178
GAA, is indisputably a function both constitutionally assigned and properly
entrusted to the Executive branch of government. In Guingona, Jr. v. Hon. Any post-enactment congressional measure x x x should be limited to
Carague173 (Guingona, Jr.), the Court explained that the phase of budget scrutiny and investigation.1wphi1 In particular, congressional oversight
execution "covers the various operational aspects of budgeting" and must be confined to the following:
accordingly includes "the evaluation of work and financial plans for
individual activities," the "regulation and release of funds" as well as all (1) scrutiny based primarily on Congress power of appropriation
"other related activities" that comprise the budget execution cycle. 174 This and the budget hearings conducted in connection with it, its
is rooted in the principle that the allocation of power in the three principal power to ask heads of departments to appear before and be
branches of government is a grant of all powers inherent in them. 175 Thus, heard by either of its Houses on any matter pertaining to their
unless the Constitution provides otherwise, the Executive department departments and its power of confirmation; and
should exclusively exercise all roles and prerogatives which go into the
implementation of the national budget as provided under the GAA as well (2) investigation and monitoring of the implementation of laws
as any other appropriation law. pursuant to the power of Congress to conduct inquiries in aid of
legislation.
In view of the foregoing, the Legislative branch of government, much
more any of its members, should not cross over the field of implementing Any action or step beyond that will undermine the separation of powers
the national budget since, as earlier stated, the same is properly the guaranteed by the Constitution. (Emphases supplied)
domain of the Executive. Again, in Guingona, Jr., the Court stated that
"Congress enters the picture when it deliberates or acts on the budget
proposals of the President. Thereafter, Congress, "in the exercise of its b. Application.
own judgment and wisdom, formulates an appropriation act precisely
following the process established by the Constitution, which specifies that In these cases, petitioners submit that the Congressional Pork Barrel
no money may be paid from the Treasury except in accordance with an among others, the 2013 PDAF Article "wrecks the assignment of
responsibilities between the political branches" as it is designed to allow representative of the district concerned concurs in writing. Meanwhile,
individual legislators to interfere "way past the time it should have ceased" Special Provision 3 clarifies that PDAF projects refer to "projects to be
or, particularly, "after the GAA is passed."179 They state that the findings identified by legislators"188 and thereunder provides the allocation limit for
and recommendations in the CoA Report provide "an illustration of how the total amount of projects identified by each legislator. Finally,
absolute and definitive the power of legislators wield over project paragraph 2 of Special Provision 4 requires that any modification and
implementation in complete violation of the constitutional principle of revision of the project identification "shall be submitted to the House
separation of powers."180 Further, they point out that the Court in the Committee on Appropriations and the Senate Committee on Finance for
Philconsa case only allowed the CDF to exist on the condition that favorable endorsement to the DBM or the implementing agency, as the
individual legislators limited their role to recommending projects and not if case may be." From the foregoing special provisions, it cannot be
they actually dictate their implementation.181 seriously doubted that legislators have been accorded post-enactment
authority to identify PDAF projects.
For their part, respondents counter that the separations of powers
principle has not been violated since the President maintains "ultimate Aside from the area of project identification, legislators have also been
authority to control the execution of the GAA and that he "retains the accorded post-enactment authority in the areas of fund release and
final discretion to reject" the legislators proposals.182 They maintain that realignment. Under the 2013 PDAF Article, the statutory authority of
the Court, in Philconsa, "upheld the constitutionality of the power of legislators to participate in the area of fund release through congressional
members of Congress to propose and identify projects so long as such committees is contained in Special Provision 5 which explicitly states that
proposal and identification are recommendatory."183 As such, they claim "all request for release of funds shall be supported by the documents
that "everything in the Special Provisions [of the 2013 PDAF Article prescribed under Special Provision No. 1 and favorably endorsed by
follows the Philconsa framework, and hence, remains constitutional." 184 House Committee on Appropriations and the Senate Committee on
Finance, as the case may be"; while their statutory authority to participate
The Court rules in favor of petitioners. in the area of fund realignment is contained in: first , paragraph 2, Special
Provision 4189 which explicitly state s, among others, that "any realignment
of funds shall be submitted to the House Committee on Appropriations
As may be observed from its legal history, the defining feature of all forms
and the Senate Committee on Finance for favorable endorsement to the
of Congressional Pork Barrel would be the authority of legislators to
DBM or the implementing agency, as the case may be ; and, second ,
participate in the post-enactment phases of project implementation.
paragraph 1, also of Special Provision 4 which authorizes the "Secretaries
of Agriculture, Education, Energy, Interior and Local Government, Labor
At its core, legislators may it be through project lists, 185 prior and Employment, Public Works and Highways, Social Welfare and
consultations186 or program menus187 have been consistently accorded Development and Trade and Industry190 x x x to approve realignment from
post-enactment authority to identify the projects they desire to be funded one project/scope to another within the allotment received from this Fund,
through various Congressional Pork Barrel allocations. Under the 2013 subject to among others (iii) the request is with the concurrence of the
PDAF Article, the statutory authority of legislators to identify projects post- legislator concerned."
GAA may be construed from the import of Special Provisions 1 to 3 as
well as the second paragraph of Special Provision 4. To elucidate, Special
Clearly, these post-enactment measures which govern the areas of
Provision 1 embodies the program menu feature which, as evinced from
project identification, fund release and fund realignment are not related to
past PDAF Articles, allows individual legislators to identify PDAF projects
functions of congressional oversight and, hence, allow legislators to
for as long as the identified project falls under a general program listed in
intervene and/or assume duties that properly belong to the sphere of
the said menu. Relatedly, Special Provision 2 provides that the
budget execution. Indeed, by virtue of the foregoing, legislators have
implementing agencies shall, within 90 days from the GAA is passed,
been, in one form or another, authorized to participate in as Guingona,
submit to Congress a more detailed priority list, standard or design
Jr. puts it "the various operational aspects of budgeting," including "the
prepared and submitted by implementing agencies from which the
evaluation of work and financial plans for individual activities" and the
legislator may make his choice. The same provision further authorizes
"regulation and release of funds" in violation of the separation of powers
legislators to identify PDAF projects outside his district for as long as the
principle. The fundamental rule, as categorically articulated in Abakada,
cannot be overstated from the moment the law becomes effective, any xxxx
provision of law that empowers Congress or any of its members to play
any role in the implementation or enforcement of the law violates the Justice Bernabe: Now, would you know of specific instances when a
principle of separation of powers and is thus unconstitutional. 191 That the project was implemented without the identification by the individual
said authority is treated as merely recommendatory in nature does not legislator?
alter its unconstitutional tenor since the prohibition, to repeat, covers any
role in the implementation or enforcement of the law. Towards this end, Solicitor General Jardeleza: I do not know, Your Honor; I do not think so
the Court must therefore abandon its ruling in Philconsa which sanctioned but I have no specific examples. I would doubt very much, Your Honor,
the conduct of legislator identification on the guise that the same is merely because to implement, there is a need for a SARO and the NCA. And the
recommendatory and, as such, respondents reliance on the same falters SARO and the NCA are triggered by an identification from the legislator.
altogether.
xxxx
Besides, it must be pointed out that respondents have nonetheless failed
to substantiate their position that the identification authority of legislators
is only of recommendatory import. Quite the contrary, respondents Solictor General Jardeleza: What we mean by mandatory, Your Honor, is
through the statements of the Solicitor General during the Oral Arguments we were replying to a question, "How can a legislator make sure that he is
have admitted that the identification of the legislator constitutes a able to get PDAF Funds?" It is mandatory in the sense that he must
mandatory requirement before his PDAF can be tapped as a funding identify, in that sense, Your Honor. Otherwise, if he does not identify, he
source, thereby highlighting the indispensability of the said act to the cannot avail of the PDAF Funds and his district would not be able to have
entire budget execution process:192 PDAF Funds, only in that sense, Your Honor. (Emphases supplied)

Justice Bernabe: Now, without the individual legislators identification of Thus, for all the foregoing reasons, the Court hereby declares the 2013
the project, can the PDAF of the legislator be utilized? PDAF Article as well as all other provisions of law which similarly allow
legislators to wield any form of post-enactment authority in the
implementation or enforcement of the budget, unrelated to congressional
Solicitor General Jardeleza: No, Your Honor. oversight, as violative of the separation of powers principle and thus
unconstitutional. Corollary thereto, informal practices, through which
Justice Bernabe: It cannot? legislators have effectively intruded into the proper phases of budget
execution, must be deemed as acts of grave abuse of discretion
Solicitor General Jardeleza: It cannot (interrupted) amounting to lack or excess of jurisdiction and, hence, accorded the
same unconstitutional treatment. That such informal practices do exist
Justice Bernabe: So meaning you should have the identification of the and have, in fact, been constantly observed throughout the years has not
project by the individual legislator? been substantially disputed here. As pointed out by Chief Justice Maria
Lourdes P.A. Sereno (Chief Justice Sereno) during the Oral Arguments of
these cases:193
Solicitor General Jardeleza: Yes, Your Honor.
Chief Justice Sereno:
xxxx
Now, from the responses of the representative of both, the DBM and two
(2) Houses of Congress, if we enforces the initial thought that I have, after
Justice Bernabe: In short, the act of identification is mandatory? I had seen the extent of this research made by my staff, that neither the
Executive nor Congress frontally faced the question of constitutional
Solictor General Jardeleza: Yes, Your Honor. In the sense that if it is not compatibility of how they were engineering the budget process. In fact,
done and then there is no identification. the words you have been using, as the three lawyers of the DBM, and
both Houses of Congress has also been using is surprise; surprised that
all of these things are now surfacing. In fact, I thought that what the 2013 Notably, the principle of non-delegability should not be confused as a
PDAF provisions did was to codify in one section all the past practice that restriction to delegate rule-making authority to implementing agencies for
had been done since 1991. In a certain sense, we should be thankful that the limited purpose of either filling up the details of the law for its
they are all now in the PDAF Special Provisions. x x x (Emphasis and enforcement (supplementary rule-making) or ascertaining facts to bring
underscoring supplied) the law into actual operation (contingent rule-making). 199 The conceptual
treatment and limitations of delegated rule-making were explained in the
Ultimately, legislators cannot exercise powers which they do not have, case of People v. Maceren200 as follows:
whether through formal measures written into the law or informal
practices institutionalized in government agencies, else the Executive The grant of the rule-making power to administrative agencies is a
department be deprived of what the Constitution has vested as its own. relaxation of the principle of separation of powers and is an exception to
the nondelegation of legislative powers. Administrative regulations or
2. Non-delegability of Legislative Power. "subordinate legislation" calculated to promote the public interest are
necessary because of "the growing complexity of modern life, the
multiplication of the subjects of governmental regulations, and the
a. Statement of Principle.
increased difficulty of administering the law."
As an adjunct to the separation of powers principle, 194 legislative power
xxxx
shall be exclusively exercised by the body to which the Constitution has
conferred the same. In particular, Section 1, Article VI of the 1987
Constitution states that such power shall be vested in the Congress of the Nevertheless, it must be emphasized that the rule-making power must be
Philippines which shall consist of a Senate and a House of confined to details for regulating the mode or proceeding to carry into
Representatives, except to the extent reserved to the people by the effect the law as it has been enacted. The power cannot be extended to
provision on initiative and referendum.195 Based on this provision, it is amending or expanding the statutory requirements or to embrace matters
clear that only Congress, acting as a bicameral body, and the people, not covered by the statute. Rules that subvert the statute cannot be
through the process of initiative and referendum, may constitutionally sanctioned. (Emphases supplied)
wield legislative power and no other. This premise embodies the principle
of non-delegability of legislative power, and the only recognized b. Application.
exceptions thereto would be: (a) delegated legislative power to local
governments which, by immemorial practice, are allowed to legislate on In the cases at bar, the Court observes that the 2013 PDAF Article,
purely local matters;196 and (b) constitutionally-grafted exceptions such as insofar as it confers post-enactment identification authority to individual
the authority of the President to, by law, exercise powers necessary and legislators, violates the principle of non-delegability since said legislators
proper to carry out a declared national policy in times of war or other are effectively allowed to individually exercise the power of appropriation,
national emergency,197 or fix within specified limits, and subject to such which as settled in Philconsa is lodged in Congress. 201 That the power
limitations and restrictions as Congress may impose, tariff rates, import to appropriate must be exercised only through legislation is clear from
and export quotas, tonnage and wharfage dues, and other duties or Section 29(1), Article VI of the 1987 Constitution which states that: "No
imposts within the framework of the national development program of the money shall be paid out of the Treasury except in pursuance of an
Government.198 appropriation made by law." To understand what constitutes an act of
appropriation, the Court, in Bengzon v. Secretary of Justice and Insular
Auditor202 (Bengzon), held that the power of appropriation involves (a) the
setting apart by law of a certain sum from the public revenue for (b) a
specified purpose. Essentially, under the 2013 PDAF Article, individual
legislators are given a personal lump-sum fund from which they are able
to dictate (a) how much from such fund would go to (b) a specific project
or beneficiary that they themselves also determine. As these two (2) acts
comprise the exercise of the power of appropriation as described in Elaborating on the Presidents item-veto power and its relevance as a
Bengzon, and given that the 2013 PDAF Article authorizes individual check on the legislature, the Court, in Bengzon, explained that: 206
legislators to perform the same, undoubtedly, said legislators have been
conferred the power to legislate which the Constitution does not, however, The former Organic Act and the present Constitution of the Philippines
allow. Thus, keeping with the principle of non-delegability of legislative make the Chief Executive an integral part of the law-making power. His
power, the Court hereby declares the 2013 PDAF Article, as well as all disapproval of a bill, commonly known as a veto, is essentially a
other forms of Congressional Pork Barrel which contain the similar legislative act. The questions presented to the mind of the Chief
legislative identification feature as herein discussed, as unconstitutional. Executive are precisely the same as those the legislature must determine
in passing a bill, except that his will be a broader point of view.
3. Checks and Balances.
The Constitution is a limitation upon the power of the legislative
a. Statement of Principle; Item-Veto Power. department of the government, but in this respect it is a grant of power to
the executive department. The Legislature has the affirmative power to
The fact that the three great powers of government are intended to be enact laws; the Chief Executive has the negative power by the
kept separate and distinct does not mean that they are absolutely constitutional exercise of which he may defeat the will of the Legislature.
unrestrained and independent of each other. The Constitution has also It follows that the Chief Executive must find his authority in the
provided for an elaborate system of checks and balances to secure Constitution. But in exercising that authority he may not be confined to
coordination in the workings of the various departments of the rules of strict construction or hampered by the unwise interference of the
government.203 judiciary. The courts will indulge every intendment in favor of the
constitutionality of a veto in the same manner as they will presume the
constitutionality of an act as originally passed by the Legislature.
A prime example of a constitutional check and balance would be the
(Emphases supplied)
Presidents power to veto an item written into an appropriation, revenue or
tariff bill submitted to him by Congress for approval through a process
known as "bill presentment." The Presidents item-veto power is found in The justification for the Presidents item-veto power rests on a variety of
Section 27(2), Article VI of the 1987 Constitution which reads as follows: policy goals such as to prevent log-rolling legislation,207 impose fiscal
restrictions on the legislature, as well as to fortify the executive branchs
role in the budgetary process.208 In Immigration and Naturalization Service
Sec. 27. x x x.
v. Chadha, the US Supreme Court characterized the Presidents item-
power as "a salutary check upon the legislative body, calculated to guard
xxxx the community against the effects of factions, precipitancy, or of any
impulse unfriendly to the public good, which may happen to influence a
(2) The President shall have the power to veto any particular item or items majority of that body"; phrased differently, it is meant to "increase the
in an appropriation, revenue, or tariff bill, but the veto shall not affect the chances in favor of the community against the passing of bad laws,
item or items to which he does not object. through haste, inadvertence, or design."209

The presentment of appropriation, revenue or tariff bills to the President, For the President to exercise his item-veto power, it necessarily follows
wherein he may exercise his power of item-veto, forms part of the "single, that there exists a proper "item" which may be the object of the veto. An
finely wrought and exhaustively considered, procedures" for law-passage item, as defined in the field of appropriations, pertains to "the particulars,
as specified under the Constitution.204 As stated in Abakada, the final step the details, the distinct and severable parts of the appropriation or of the
in the law-making process is the "submission of the bill to the President bill." In the case of Bengzon v. Secretary of Justice of the Philippine
for approval. Once approved, it takes effect as law after the required Islands,210 the US Supreme Court characterized an item of appropriation
publication."205 as follows:
An item of an appropriation bill obviously means an item which, in itself, is In contrast, what beckons constitutional infirmity are appropriations which
a specific appropriation of money, not some general provision of law merely provide for a singular lump-sum amount to be tapped as a source
which happens to be put into an appropriation bill. (Emphases supplied) of funding for multiple purposes. Since such appropriation type
necessitates the further determination of both the actual amount to be
On this premise, it may be concluded that an appropriation bill, to ensure expended and the actual purpose of the appropriation which must still be
that the President may be able to exercise his power of item veto, must chosen from the multiple purposes stated in the law, it cannot be said that
contain "specific appropriations of money" and not only "general the appropriation law already indicates a "specific appropriation of
provisions" which provide for parameters of appropriation. money and hence, without a proper line-item which the President may
veto. As a practical result, the President would then be faced with the
predicament of either vetoing the entire appropriation if he finds some of
Further, it is significant to point out that an item of appropriation must be
its purposes wasteful or undesirable, or approving the entire appropriation
an item characterized by singular correspondence meaning an
so as not to hinder some of its legitimate purposes. Finally, it may not be
allocation of a specified singular amount for a specified singular purpose,
amiss to state that such arrangement also raises non-delegability issues
otherwise known as a "line-item."211 This treatment not only allows the
considering that the implementing authority would still have to determine,
item to be consistent with its definition as a "specific appropriation of
again, both the actual amount to be expended and the actual purpose of
money" but also ensures that the President may discernibly veto the
the appropriation. Since the foregoing determinations constitute the
same. Based on the foregoing formulation, the existing Calamity Fund,
integral aspects of the power to appropriate, the implementing authority
Contingent Fund and the Intelligence Fund, being appropriations which
would, in effect, be exercising legislative prerogatives in violation of the
state a specified amount for a specific purpose, would then be considered
principle of non-delegability.
as "line- item" appropriations which are rightfully subject to item veto.
Likewise, it must be observed that an appropriation may be validly
apportioned into component percentages or values; however, it is crucial b. Application.
that each percentage or value must be allocated for its own
corresponding purpose for such component to be considered as a proper In these cases, petitioners claim that "in the current x x x system where
line-item. Moreover, as Justice Carpio correctly pointed out, a valid the PDAF is a lump-sum appropriation, the legislators identification of the
appropriation may even have several related purposes that are by projects after the passage of the GAA denies the President the chance to
accounting and budgeting practice considered as one purpose, e.g., veto that item later on."212 Accordingly, they submit that the "item veto
MOOE (maintenance and other operating expenses), in which case the power of the President mandates that appropriations bills adopt line-item
related purposes shall be deemed sufficiently specific for the exercise of budgeting" and that "Congress cannot choose a mode of budgeting which
the Presidents item veto power. Finally, special purpose funds and effectively renders the constitutionally-given power of the President
discretionary funds would equally square with the constitutional useless."213
mechanism of item-veto for as long as they follow the rule on singular
correspondence as herein discussed. Anent special purpose funds, it On the other hand, respondents maintain that the text of the Constitution
must be added that Section 25(4), Article VI of the 1987 Constitution envisions a process which is intended to meet the demands of a
requires that the "special appropriations bill shall specify the purpose for modernizing economy and, as such, lump-sum appropriations are
which it is intended, and shall be supported by funds actually available as essential to financially address situations which are barely foreseen when
certified by the National Treasurer, or t o be raised by a corresponding a GAA is enacted. They argue that the decision of the Congress to create
revenue proposal therein." Meanwhile, with respect to discretionary funds, some lump-sum appropriations is constitutionally allowed and textually-
Section 2 5(6), Article VI of the 1987 Constitution requires that said funds grounded.214
"shall be disbursed only for public purposes to be supported by
appropriate vouchers and subject to such guidelines as may be The Court agrees with petitioners.
prescribed by law."
Under the 2013 PDAF Article, the amount of P24.79 Billion only appears
as a collective allocation limit since the said amount would be further
divided among individual legislators who would then receive personal c. Accountability.
lump-sum allocations and could, after the GAA is passed, effectively
appropriate PDAF funds based on their own discretion. As these Petitioners further relate that the system under which various forms of
intermediate appropriations are made by legislators only after the GAA is Congressional Pork Barrel operate defies public accountability as it
passed and hence, outside of the law, it necessarily means that the actual renders Congress incapable of checking itself or its Members. In
items of PDAF appropriation would not have been written into the General particular, they point out that the Congressional Pork Barrel "gives each
Appropriations Bill and thus effectuated without veto consideration. This legislator a direct, financial interest in the smooth, speedy passing of the
kind of lump-sum/post-enactment legislative identification budgeting yearly budget" which turns them "from fiscalizers" into "financially-
system fosters the creation of a budget within a budget" which subverts interested partners."219 They also claim that the system has an effect on
the prescribed procedure of presentment and consequently impairs the re- election as "the PDAF excels in self-perpetuation of elective officials."
Presidents power of item veto. As petitioners aptly point out, the above- Finally, they add that the "PDAF impairs the power of impeachment" as
described system forces the President to decide between (a) accepting such "funds are indeed quite useful, to well, accelerate the decisions of
the entire P24.79 Billion PDAF allocation without knowing the specific senators."220
projects of the legislators, which may or may not be consistent with his
national agenda and (b) rejecting the whole PDAF to the detriment of all The Court agrees in part.
other legislators with legitimate projects.215
The aphorism forged under Section 1, Article XI of the 1987 Constitution,
Moreover, even without its post-enactment legislative identification which states that "public office is a public trust," is an overarching
feature, the 2013 PDAF Article would remain constitutionally flawed since reminder that every instrumentality of government should exercise their
it would then operate as a prohibited form of lump-sum appropriation official functions only in accordance with the principles of the Constitution
above-characterized. In particular, the lump-sum amount of P24.79 Billion which embodies the parameters of the peoples trust. The notion of a
would be treated as a mere funding source allotted for multiple purposes public trust connotes accountability,221 hence, the various mechanisms in
of spending, i.e., scholarships, medical missions, assistance to indigents, the Constitution which are designed to exact accountability from public
preservation of historical materials, construction of roads, flood control, officers.
etc. This setup connotes that the appropriation law leaves the actual
amounts and purposes of the appropriation for further determination and,
therefore, does not readily indicate a discernible item which may be Among others, an accountability mechanism with which the proper
subject to the Presidents power of item veto. expenditure of public funds may be checked is the power of congressional
oversight. As mentioned in Abakada,222 congressional oversight may be
performed either through: (a) scrutiny based primarily on Congress power
In fact, on the accountability side, the same lump-sum budgeting scheme of appropriation and the budget hearings conducted in connection with it,
has, as the CoA Chairperson relays, "limited state auditors from obtaining its power to ask heads of departments to appear before and be heard by
relevant data and information that would aid in more stringently auditing either of its Houses on any matter pertaining to their departments and its
the utilization of said Funds."216 Accordingly, she recommends the power of confirmation;223 or (b) investigation and monitoring of the
adoption of a "line by line budget or amount per proposed program, implementation of laws pursuant to the power of Congress to conduct
activity or project, and per implementing agency." 217 inquiries in aid of legislation.224

Hence, in view of the reasons above-stated, the Court finds the 2013 The Court agrees with petitioners that certain features embedded in some
PDAF Article, as well as all Congressional Pork Barrel Laws of similar forms of Congressional Pork Barrel, among others the 2013 PDAF Article,
operation, to be unconstitutional. That such budgeting system provides for has an effect on congressional oversight. The fact that individual
a greater degree of flexibility to account for future contingencies cannot legislators are given post-enactment roles in the implementation of the
be an excuse to defeat what the Constitution requires. Clearly, the first budget makes it difficult for them to become disinterested "observers"
and essential truth of the matter is that unconstitutional means do not when scrutinizing, investigating or monitoring the implementation of the
justify even commendable ends.218 appropriation law. To a certain extent, the conduct of oversight would be
tainted as said legislators, who are vested with post-enactment authority, One of the petitioners submits that the Pork Barrel System enables
would, in effect, be checking on activities in which they themselves politicians who are members of political dynasties to accumulate funds to
participate. Also, it must be pointed out that this very same concept of perpetuate themselves in power, in contravention of Section 26, Article II
post-enactment authorization runs afoul of Section 14, Article VI of the of the 1987 Constitution225 which states that:
1987 Constitution which provides that:
Sec. 26. The State shall guarantee equal access to opportunities for
Sec. 14. No Senator or Member of the House of Representatives may public service, and prohibit political dynasties as may be defined by law.
personally appear as counsel before any court of justice or before the (Emphasis and underscoring supplied)
Electoral Tribunals, or quasi-judicial and other administrative bodies.
Neither shall he, directly or indirectly, be interested financially in any At the outset, suffice it to state that the foregoing provision is considered
contract with, or in any franchise or special privilege granted by the as not self-executing due to the qualifying phrase "as may be defined by
Government, or any subdivision, agency, or instrumentality thereof, law." In this respect, said provision does not, by and of itself, provide a
including any government-owned or controlled corporation, or its judicially enforceable constitutional right but merely specifies guideline for
subsidiary, during his term of office. He shall not intervene in any matter legislative or executive action.226Therefore, since there appears to be no
before any office of the Government for his pecuniary benefit or where he standing law which crystallizes the policy on political dynasties for
may be called upon to act on account of his office. (Emphasis supplied) enforcement, the Court must defer from ruling on this issue.

Clearly, allowing legislators to intervene in the various phases of project In any event, the Court finds the above-stated argument on this score to
implementation a matter before another office of government renders be largely speculative since it has not been properly demonstrated how
them susceptible to taking undue advantage of their own office. the Pork Barrel System would be able to propagate political dynasties.

The Court, however, cannot completely agree that the same post- 5. Local Autonomy.
enactment authority and/or the individual legislators control of his PDAF
per se would allow him to perpetuate himself in office. Indeed, while the The States policy on local autonomy is principally stated in Section 25,
Congressional Pork Barrel and a legislators use thereof may be linked to Article II and Sections 2 and 3, Article X of the 1987 Constitution which
this area of interest, the use of his PDAF for re-election purposes is a read as follows:
matter which must be analyzed based on particular facts and on a case-
to-case basis.
ARTICLE II
Finally, while the Court accounts for the possibility that the close
operational proximity between legislators and the Executive department, Sec. 25. The State shall ensure the autonomy of local governments.
through the formers post-enactment participation, may affect the process
of impeachment, this matter largely borders on the domain of politics and ARTICLE X
does not strictly concern the Pork Barrel Systems intrinsic
constitutionality. As such, it is an improper subject of judicial assessment. Sec. 2. The territorial and political subdivisions shall enjoy local autonomy.

In sum, insofar as its post-enactment features dilute congressional Sec. 3. The Congress shall enact a local government code which shall
oversight and violate Section 14, Article VI of the 1987 Constitution, thus provide for a more responsive and accountable local government
impairing public accountability, the 2013 PDAF Article and other forms of structure instituted through a system of decentralization with effective
Congressional Pork Barrel of similar nature are deemed as mechanisms of recall, initiative, and referendum, allocate among the
unconstitutional. different local government units their powers, responsibilities, and
resources, and provide for the qualifications, election, appointment and
4. Political Dynasties. removal, term, salaries, powers and functions and duties of local officials,
and all other matters relating to the organization and operation of the local which are best resolved by the officials and inhabitants of such political
units. units. The decision we reach today conforms not only to the letter of the
pertinent laws but also to the spirit of the Constitution. 229 (Emphases and
Pursuant thereto, Congress enacted RA 7160,227 otherwise known as the underscoring supplied)
"Local Government Code of 1991" (LGC), wherein the policy on local
autonomy had been more specifically explicated as follows: In the cases at bar, petitioners contend that the Congressional Pork Barrel
goes against the constitutional principles on local autonomy since it
Sec. 2. Declaration of Policy. (a) It is hereby declared the policy of the allows district representatives, who are national officers, to substitute their
State that the territorial and political subdivisions of the State shall enjoy judgments in utilizing public funds for local development. 230 The Court
genuine and meaningful local autonomy to enable them to attain their agrees with petitioners.
fullest development as self-reliant communities and make them more
effective partners in the attainment of national goals. Toward this end, the Philconsa described the 1994 CDF as an attempt "to make equal the
State shall provide for a more responsive and accountable local unequal" and that "it is also a recognition that individual members of
government structure instituted through a system of decentralization Congress, far more than the President and their congressional
whereby local government units shall be given more powers, authority, colleagues, are likely to be knowledgeable about the needs of their
responsibilities, and resources. The process of decentralization shall respective constituents and the priority to be given each
proceed from the National Government to the local government units. project."231Drawing strength from this pronouncement, previous legislators
justified its existence by stating that "the relatively small projects
xxxx implemented under the Congressional Pork Barrel complement and link
the national development goals to the countryside and grassroots as well
as to depressed areas which are overlooked by central agencies which
(c) It is likewise the policy of the State to require all national agencies and
are preoccupied with mega-projects.232 Similarly, in his August 23, 2013
offices to conduct periodic consultations with appropriate local
speech on the "abolition" of PDAF and budgetary reforms, President
government units, nongovernmental and peoples organizations, and
Aquino mentioned that the Congressional Pork Barrel was originally
other concerned sectors of the community before any project or program
established for a worthy goal, which is to enable the representatives to
is implemented in their respective jurisdictions. (Emphases and
identify projects for communities that the LGU concerned cannot afford. 233
underscoring supplied)

Notwithstanding these declarations, the Court, however, finds an inherent


The above-quoted provisions of the Constitution and the LGC reveal the
defect in the system which actually belies the avowed intention of "making
policy of the State to empower local government units (LGUs) to develop
equal the unequal." In particular, the Court observes that the gauge of
and ultimately, become self-sustaining and effective contributors to the
PDAF and CDF allocation/division is based solely on the fact of office,
national economy. As explained by the Court in Philippine Gamefowl
without taking into account the specific interests and peculiarities of the
Commission v. Intermediate Appellate Court:228
district the legislator represents. In this regard, the allocation/division
limits are clearly not based on genuine parameters of equality, wherein
This is as good an occasion as any to stress the commitment of the economic or geographic indicators have been taken into consideration. As
Constitution to the policy of local autonomy which is intended to provide a result, a district representative of a highly-urbanized metropolis gets the
the needed impetus and encouragement to the development of our local same amount of funding as a district representative of a far-flung rural
political subdivisions as "self - reliant communities." In the words of province which would be relatively "underdeveloped" compared to the
Jefferson, "Municipal corporations are the small republics from which the former. To add, what rouses graver scrutiny is that even Senators and
great one derives its strength." The vitalization of local governments will Party-List Representatives and in some years, even the Vice-President
enable their inhabitants to fully exploit their resources and more who do not represent any locality, receive funding from the
important, imbue them with a deepened sense of involvement in public Congressional Pork Barrel as well. These certainly are anathema to the
affairs as members of the body politic. This objective could be blunted by Congressional Pork Barrels original intent which is "to make equal the
undue interference by the national government in purely local affairs
unequal." Ultimately, the PDAF and CDF had become personal funds Treasury. Petitioners submit that Section 8 of PD 910 is not an
under the effective control of each legislator and given unto them on the appropriation law since the "primary and specific purpose of PD 910 is
sole account of their office. the creation of an Energy Development Board and Section 8 thereof only
created a Special Fund incidental thereto.237 In similar regard, petitioners
The Court also observes that this concept of legislator control underlying argue that Section 12 of PD 1869 is neither a valid appropriations law
the CDF and PDAF conflicts with the functions of the various Local since the allocation of the Presidential Social Fund is merely incidental to
Development Councils (LDCs) which are already legally mandated to the "primary and specific" purpose of PD 1869 which is the amendment of
"assist the corresponding sanggunian in setting the direction of economic the Franchise and Powers of PAGCOR.238 In view of the foregoing,
and social development, and coordinating development efforts within its petitioners suppose that such funds are being used without any valid law
territorial jurisdiction."234 Considering that LDCs are instrumentalities allowing for their proper appropriation in violation of Section 29(1), Article
whose functions are essentially geared towards managing local VI of the 1987 Constitution which states that: "No money shall be paid out
affairs,235 their programs, policies and resolutions should not be of the Treasury except in pursuance of an appropriation made by law." 239
overridden nor duplicated by individual legislators, who are national
officers that have no law-making authority except only when acting as a The Court disagrees.
body. The undermining effect on local autonomy caused by the post-
enactment authority conferred to the latter was succinctly put by "An appropriation made by law under the contemplation of Section
petitioners in the following wise:236 29(1), Article VI of the 1987 Constitution exists when a provision of law (a)
sets apart a determinate or determinable240 amount of money and (b)
With PDAF, a Congressman can simply bypass the local development allocates the same for a particular public purpose. These two minimum
council and initiate projects on his own, and even take sole credit for its designations of amount and purpose stem from the very definition of the
execution. Indeed, this type of personality-driven project identification has word "appropriation," which means "to allot, assign, set apart or apply to a
not only contributed little to the overall development of the district, but has particular use or purpose," and hence, if written into the law, demonstrate
even contributed to "further weakening infrastructure planning and that the legislative intent to appropriate exists. As the Constitution "does
coordination efforts of the government." not provide or prescribe any particular form of words or religious recitals
in which an authorization or appropriation by Congress shall be made,
Thus, insofar as individual legislators are authorized to intervene in purely except that it be made by law," an appropriation law may according to
local matters and thereby subvert genuine local autonomy, the 2013 Philconsa be "detailed and as broad as Congress wants it to be" for as
PDAF Article as well as all other similar forms of Congressional Pork long as the intent to appropriate may be gleaned from the same. As held
Barrel is deemed unconstitutional. in the case of Guingona, Jr.:241

With this final issue on the Congressional Pork Barrel resolved, the Court There is no provision in our Constitution that provides or prescribes any
now turns to the substantive issues involving the Presidential Pork Barrel. particular form of words or religious recitals in which an authorization or
appropriation by Congress shall be made, except that it be "made by law,"
such as precisely the authorization or appropriation under the questioned
C. Substantive Issues on the Presidential Pork Barrel.
presidential decrees. In other words, in terms of time horizons, an
appropriation may be made impliedly (as by past but subsisting
1. Validity of Appropriation. legislations) as well as expressly for the current fiscal year (as by
enactment of laws by the present Congress), just as said appropriation
Petitioners preliminarily assail Section 8 of PD 910 and Section 12 of may be made in general as well as in specific terms. The Congressional
PD1869 (now, amended by PD 1993), which respectively provide for the authorization may be embodied in annual laws, such as a general
Malampaya Funds and the Presidential Social Fund, as invalid appropriations act or in special provisions of laws of general or special
appropriations laws since they do not have the "primary and specific" application which appropriate public funds for specific public purposes,
purpose of authorizing the release of public funds from the National such as the questioned decrees. An appropriation measure is sufficient if
the legislative intention clearly and certainly appears from the language Sec. 12. Special Condition of Franchise. After deducting five (5%)
employed (In re Continuing Appropriations, 32 P. 272), whether in the past percent as Franchise Tax, the Fifty (50%) percent share of the
or in the present. (Emphases and underscoring supplied) Government in the aggregate gross earnings of the Corporation from this
Franchise, or 60% if the aggregate gross earnings be less
Likewise, as ruled by the US Supreme Court in State of Nevada v. La than P150,000,000.00 shall be set aside and shall accrue to the General
Grave:242 Fund to finance the priority infrastructure development projects and to
finance the restoration of damaged or destroyed facilities due to
calamities, as may be directed and authorized by the Office of the
To constitute an appropriation there must be money placed in a fund
President of the Philippines. (Emphases supplied)
applicable to the designated purpose. The word appropriate means to
allot, assign, set apart or apply to a particular use or purpose. An
appropriation in the sense of the constitution means the setting apart a Analyzing the legal text vis--vis the above-mentioned principles, it may
portion of the public funds for a public purpose. No particular form of then be concluded that (a) Section 8 of PD 910, which creates a Special
words is necessary for the purpose, if the intention to appropriate is Fund comprised of "all fees, revenues, and receipts of the Energy
plainly manifested. (Emphases supplied) Development Board from any and all sources" (a determinable amount)
"to be used to finance energy resource development and exploitation
programs and projects of the government and for such other purposes as
Thus, based on the foregoing, the Court cannot sustain the argument that
may be hereafter directed by the President" (a specified public purpose),
the appropriation must be the "primary and specific" purpose of the law in
and (b) Section 12 of PD 1869, as amended by PD 1993, which similarly
order for a valid appropriation law to exist. To reiterate, if a legal provision
sets aside, "after deducting five (5%) percent as Franchise Tax, the Fifty
designates a determinate or determinable amount of money and allocates
(50%) percent share of the Government in the aggregate gross earnings
the same for a particular public purpose, then the legislative intent to
of PAGCOR, or 60%, if the aggregate gross earnings be less
appropriate becomes apparent and, hence, already sufficient to satisfy
than P150,000,000.00" (also a determinable amount) "to finance the
the requirement of an "appropriation made by law" under contemplation of
priority infrastructure development projects and x x x the restoration of
the Constitution.
damaged or destroyed facilities due to calamities, as may be directed and
authorized by the Office of the President of the Philippines" (also a
Section 8 of PD 910 pertinently provides: specified public purpose), are legal appropriations under Section 29(1),
Article VI of the 1987 Constitution.
Section 8. Appropriations. x x x
In this relation, it is apropos to note that the 2013 PDAF Article cannot be
All fees, revenues and receipts of the Board from any and all sources properly deemed as a legal appropriation under the said constitutional
including receipts from service contracts and agreements such as provision precisely because, as earlier stated, it contains post-enactment
application and processing fees, signature bonus, discovery bonus, measures which effectively create a system of intermediate
production bonus; all money collected from concessionaires, representing appropriations. These intermediate appropriations are the actual
unspent work obligations, fines and penalties under the Petroleum Act of appropriations meant for enforcement and since they are made by
1949; as well as the government share representing royalties, rentals, individual legislators after the GAA is passed, they occur outside the law.
production share on service contracts and similar payments on the As such, the Court observes that the real appropriation made under the
exploration, development and exploitation of energy resources, shall form 2013 PDAF Article is not the P24.79 Billion allocated for the entire PDAF,
part of a Special Fund to be used to finance energy resource but rather the post-enactment determinations made by the individual
development and exploitation programs and projects of the government legislators which are, to repeat, occurrences outside of the law.
and for such other purposes as may be hereafter directed by the Irrefragably, the 2013 PDAF Article does not constitute an "appropriation
President. (Emphases supplied) made by law" since it, in its truest sense, only authorizes individual
legislators to appropriate in violation of the non-delegability principle as
Whereas Section 12 of PD 1869, as amended by PD 1993, reads: afore-discussed.
2. Undue Delegation. the subject phrase may be confined only to "energy resource
development and exploitation programs and projects of the government"
On a related matter, petitioners contend that Section 8 of PD 910 under the principle of ejusdem generis, meaning that the general word or
constitutes an undue delegation of legislative power since the phrase phrase is to be construed to include or be restricted to things akin to,
"and for such other purposes as may be hereafter directed by the resembling, or of the same kind or class as those specifically
President" gives the President "unbridled discretion to determine for what mentioned,249 is belied by three (3) reasons: first, the phrase "energy
purpose the funds will be used."243 Respondents, on the other hand, resource development and exploitation programs and projects of the
urged the Court to apply the principle of ejusdem generis to the same government" states a singular and general class and hence, cannot be
section and thus, construe the phrase "and for such other purposes as treated as a statutory reference of specific things from which the general
may be hereafter directed by the President" to refer only to other phrase "for such other purposes" may be limited; second, the said phrase
purposes related "to energy resource development and exploitation also exhausts the class it represents, namely energy development
programs and projects of the government."244 programs of the government;250 and, third, the Executive department has,
in fact, used the Malampaya Funds for non-energy related purposes
under the subject phrase, thereby contradicting respondents own position
The Court agrees with petitioners submissions.
that it is limited only to "energy resource development and exploitation
programs and projects of the government."251 Thus, while Section 8 of PD
While the designation of a determinate or determinable amount for a 910 may have passed the completeness test since the policy of energy
particular public purpose is sufficient for a legal appropriation to exist, the development is clearly deducible from its text, the phrase "and for such
appropriation law must contain adequate legislative guidelines if the same other purposes as may be hereafter directed by the President" under the
law delegates rule-making authority to the Executive 245 either for the same provision of law should nonetheless be stricken down as
purpose of (a) filling up the details of the law for its enforcement, known unconstitutional as it lies independently unfettered by any sufficient
as supplementary rule-making, or (b) ascertaining facts to bring the law standard of the delegating law. This notwithstanding, it must be
into actual operation, referred to as contingent rule-making. 246 There are underscored that the rest of Section 8, insofar as it allows for the use of
two (2) fundamental tests to ensure that the legislative guidelines for the Malampaya Funds "to finance energy resource development and
delegated rule-making are indeed adequate. The first test is called the exploitation programs and projects of the government," remains legally
"completeness test." Case law states that a law is complete when it sets effective and subsisting. Truth be told, the declared unconstitutionality of
forth therein the policy to be executed, carried out, or implemented by the the aforementioned phrase is but an assurance that the Malampaya
delegate. On the other hand, the second test is called the "sufficient Funds would be used as it should be used only in accordance with the
standard test." Jurisprudence holds that a law lays down a sufficient avowed purpose and intention of PD 910.
standard when it provides adequate guidelines or limitations in the law to
map out the boundaries of the delegates authority and prevent the
As for the Presidential Social Fund, the Court takes judicial notice of the
delegation from running riot.247To be sufficient, the standard must specify
fact that Section 12 of PD 1869 has already been amended by PD 1993
the limits of the delegates authority, announce the legislative policy, and
which thus moots the parties submissions on the same.252 Nevertheless,
identify the conditions under which it is to be implemented. 248
since the amendatory provision may be readily examined under the
current parameters of discussion, the Court proceeds to resolve its
In view of the foregoing, the Court agrees with petitioners that the phrase constitutionality.
"and for such other purposes as may be hereafter directed by the
President" under Section 8 of PD 910 constitutes an undue delegation of
Primarily, Section 12 of PD 1869, as amended by PD 1993, indicates that
legislative power insofar as it does not lay down a sufficient standard to
the Presidential Social Fund may be used "to first, finance the priority
adequately determine the limits of the Presidents authority with respect to
infrastructure development projects and second, to finance the restoration
the purpose for which the Malampaya Funds may be used. As it reads,
of damaged or destroyed facilities due to calamities, as may be directed
the said phrase gives the President wide latitude to use the Malampaya
and authorized by the Office of the President of the Philippines." The
Funds for any other purpose he may direct and, in effect, allows him to
Court finds that while the second indicated purpose adequately curtails
unilaterally appropriate public funds beyond the purview of the law. That
the authority of the President to spend the Presidential Social Fund only
for restoration purposes which arise from calamities, the first indicated Sec. 28. Subject to reasonable conditions prescribed by law, the State
purpose, however, gives him carte blanche authority to use the same fund adopts and implements a policy of full public disclosure of all its
for any infrastructure project he may so determine as a "priority". Verily, transactions involving public interest.
the law does not supply a definition of "priority in frastructure development
projects" and hence, leaves the President without any guideline to ARTICLE III Sec. 7.
construe the same. To note, the delimitation of a project as one of
"infrastructure" is too broad of a classification since the said term could The right of the people to information on matters of public concern shall
pertain to any kind of facility. This may be deduced from its lexicographic be recognized. Access to official records, and to documents and papers
definition as follows: "the underlying framework of a system, especially pertaining to official acts, transactions, or decisions, as well as to
public services and facilities (such as highways, schools, bridges, sewers, government research data used as basis for policy development, shall be
and water-systems) needed to support commerce as well as economic afforded the citizen, subject to such limitations as may be provided by law.
and residential development."253In fine, the phrase "to finance the priority
infrastructure development projects" must be stricken down as
unconstitutional since similar to the above-assailed provision under The Court denies petitioners submission.
Section 8 of PD 910 it lies independently unfettered by any sufficient
standard of the delegating law. As they are severable, all other provisions Case law instructs that the proper remedy to invoke the right to
of Section 12 of PD 1869, as amended by PD 1993, remains legally information is to file a petition for mandamus. As explained in the case of
effective and subsisting. Legaspi v. Civil Service Commission:256

D. Ancillary Prayers. 1. While the manner of examining public records may be subject to
reasonable regulation by the government agency in custody thereof, the
Petitioners Prayer to be Furnished Lists and Detailed Reports. duty to disclose the information of public concern, and to afford access to
public records cannot be discretionary on the part of said agencies.
Certainly, its performance cannot be made contingent upon the discretion
Aside from seeking the Court to declare the Pork Barrel System of such agencies. Otherwise, the enjoyment of the constitutional right may
unconstitutional as the Court did so in the context of its be rendered nugatory by any whimsical exercise of agency discretion.
pronouncements made in this Decision petitioners equally pray that the The constitutional duty, not being discretionary, its performance may be
Executive Secretary and/or the DBM be ordered to release to the CoA compelled by a writ of mandamus in a proper case.
and to the public: (a) "the complete schedule/list of legislators who have
availed of their PDAF and VILP from the years 2003 to 2013, specifying
the use of the funds, the project or activity and the recipient entities or But what is a proper case for Mandamus to issue? In the case before Us,
individuals, and all pertinent data thereto" (PDAF Use the public right to be enforced and the concomitant duty of the State are
Schedule/List);254 and (b) "the use of the Executives lump-sum, unequivocably set forth in the Constitution.
discretionary funds, including the proceeds from the x x x Malampaya
Funds and remittances from the PAGCOR x x x from 2003 to 2013, The decisive question on the propriety of the issuance of the writ of
specifying the x x x project or activity and the recipient entities or mandamus in this case is, whether the information sought by the
individuals, and all pertinent data thereto"255 (Presidential Pork Use petitioner is within the ambit of the constitutional guarantee. (Emphases
Report). Petitioners prayer is grounded on Section 28, Article II and supplied)
Section 7, Article III of the 1987 Constitution which read as follows:
Corollarily, in the case of Valmonte v. Belmonte Jr.257 (Valmonte), it has
ARTICLE II been clarified that the right to information does not include the right to
compel the preparation of "lists, abstracts, summaries and the like." In the
same case, it was stressed that it is essential that the "applicant has a
well -defined, clear and certain legal right to the thing demanded and that
it is the imperative duty of defendant to perform the act required." Hence, It bears clarification that the Courts denial herein should only cover
without the foregoing substantiations, the Court cannot grant a particular petitioners plea to be furnished with such schedule/list and report and not
request for information. The pertinent portions of Valmonte are hereunder in any way deny them, or the general public, access to official documents
quoted:258 which are already existing and of public record. Subject to reasonable
regulation and absent any valid statutory prohibition, access to these
Although citizens are afforded the right to information and, pursuant documents should not be proscribed. Thus, in Valmonte, while the Court
thereto, are entitled to "access to official records," the Constitution does denied the application for mandamus towards the preparation of the list
not accord them a right to compel custodians of official records to prepare requested by petitioners therein, it nonetheless allowed access to the
lists, abstracts, summaries and the like in their desire to acquire documents sought for by the latter, subject, however, to the custodians
information on matters of public concern. reasonable regulations,viz.:259

It must be stressed that it is essential for a writ of mandamus to issue that In fine, petitioners are entitled to access to the documents evidencing
the applicant has a well-defined, clear and certain legal right to the thing loans granted by the GSIS, subject to reasonable regulations that the
demanded and that it is the imperative duty of defendant to perform the latter may promulgate relating to the manner and hours of examination, to
act required. The corresponding duty of the respondent to perform the the end that damage to or loss of the records may be avoided, that undue
required act must be clear and specific Lemi v. Valencia, G.R. No. L- interference with the duties of the custodian of the records may be
20768, November 29,1968,126 SCRA 203; Ocampo v. Subido, G.R. No. prevented and that the right of other persons entitled to inspect the
L-28344, August 27, 1976, 72 SCRA 443. records may be insured Legaspi v. Civil Service Commission, supra at p.
538, quoting Subido v. Ozaeta, 80 Phil. 383, 387. The petition, as to the
second and third alternative acts sought to be done by petitioners, is
The request of the petitioners fails to meet this standard, there being no
meritorious.
duty on the part of respondent to prepare the list requested. (Emphases
supplied)
However, the same cannot be said with regard to the first act sought by
petitioners, i.e.,
In these cases, aside from the fact that none of the petitions are in the
nature of mandamus actions, the Court finds that petitioners have failed to
establish a "a well-defined, clear and certain legal right" to be furnished by "to furnish petitioners the list of the names of the Batasang Pambansa
the Executive Secretary and/or the DBM of their requested PDAF Use members belonging to the UNIDO and PDP-Laban who were able to
Schedule/List and Presidential Pork Use Report. Neither did petitioners secure clean loans immediately before the February 7 election thru the
assert any law or administrative issuance which would form the bases of intercession/marginal note of the then First Lady Imelda Marcos."
the latters duty to furnish them with the documents requested. While
petitioners pray that said information be equally released to the CoA, it The Court, therefore, applies the same treatment here.
must be pointed out that the CoA has not been impleaded as a party to
these cases nor has it filed any petition before the Court to be allowed 2. Petitioners Prayer to Include Matters in Congressional Deliberations.
access to or to compel the release of any official document relevant to the
conduct of its audit investigations. While the Court recognizes that the Petitioners further seek that the Court "order the inclusion in budgetary
information requested is a matter of significant public concern, however, if deliberations with the Congress of all presently, off-budget, lump sum,
only to ensure that the parameters of disclosure are properly foisted and discretionary funds including but not limited to, proceeds from the x x x
so as not to unduly hamper the equally important interests of the Malampaya Fund, remittances from the PAGCOR and the PCSO or the
government, it is constrained to deny petitioners prayer on this score, Executives Social Funds."260
without prejudice to a proper mandamus case which they, or even the
CoA, may choose to pursue through a separate petition.
Suffice it to state that the above-stated relief sought by petitioners covers
a matter which is generally left to the prerogative of the political branches
of government. Hence, lest the Court itself overreach, it must equally moot by the present Decision. The unconstitutionality of the 2013 PDAF
deny their prayer on this score. Article as declared herein has the consequential effect of converting the
temporary injunction into a permanent one. Hence, from the promulgation
3. Respondents Prayer to Lift TRO; Consequential Effects of Decision. of this Decision, the release of the remaining PDAF funds for 2013,
among others, is now permanently enjoined.
The final issue to be resolved stems from the interpretation accorded by
the DBM to the concept of released funds. In response to the Courts The propriety of the DBMs interpretation of the concept of "release" must,
September 10, 2013 TRO that enjoined the release of the remaining nevertheless, be resolved as it has a practical impact on the execution of
PDAF allocated for the year 2013, the DBM issued Circular Letter No. the current Decision. In particular, the Court must resolve the issue of
2013-8 dated September 27, 2013 (DBM Circular 2013-8) which whether or not PDAF funds covered by obligated SAROs, at the time this
pertinently reads as follows: Decision is promulgated, may still be disbursed following the DBMs
interpretation in DBM Circular 2013-8.
3.0 Nonetheless, PDAF projects funded under the FY 2013 GAA, where a
Special Allotment Release Order (SARO) has been issued by the DBM On this score, the Court agrees with petitioners posturing for the
and such SARO has been obligated by the implementing agencies prior fundamental reason that funds covered by an obligated SARO are yet to
to the issuance of the TRO, may continually be implemented and be "released" under legal contemplation. A SARO, as defined by the DBM
disbursements thereto effected by the agencies concerned. itself in its website, is "aspecific authority issued to identified agencies to
incur obligations not exceeding a given amount during a specified period
for the purpose indicated. It shall cover expenditures the release of which
Based on the text of the foregoing, the DBM authorized the continued
is subject to compliance with specific laws or regulations, or is subject to
implementation and disbursement of PDAF funds as long as they are:
separate approval or clearance by competent authority." 263
first, covered by a SARO; and, second, that said SARO had been
obligated by the implementing agency concerned prior to the issuance of
the Courts September 10, 2013 TRO. Based on this definition, it may be gleaned that a SARO only evinces the
existence of an obligation and not the directive to pay. Practically
speaking, the SARO does not have the direct and immediate effect of
Petitioners take issue with the foregoing circular, arguing that "the
placing public funds beyond the control of the disbursing authority. In fact,
issuance of the SARO does not yet involve the release of funds under the
a SARO may even be withdrawn under certain circumstances which will
PDAF, as release is only triggered by the issuance of a Notice of Cash
prevent the actual release of funds. On the other hand, the actual release
Allocation [(NCA)]."261 As such, PDAF disbursements, even if covered by
of funds is brought about by the issuance of the NCA, 264 which is
an obligated SARO, should remain enjoined.
subsequent to the issuance of a SARO. As may be determined from the
statements of the DBM representative during the Oral Arguments: 265
For their part, respondents espouse that the subject TRO only covers
"unreleased and unobligated allotments." They explain that once a SARO
Justice Bernabe: Is the notice of allocation issued simultaneously with the
has been issued and obligated by the implementing agency concerned,
SARO?
the PDAF funds covered by the same are already "beyond the reach of
the TRO because they cannot be considered as remaining PDAF." They
conclude that this is a reasonable interpretation of the TRO by the xxxx
DBM.262
Atty. Ruiz: It comes after. The SARO, Your Honor, is only the go signal for
The Court agrees with petitioners in part. the agencies to obligate or to enter into commitments. The NCA, Your
Honor, is already the go signal to the treasury for us to be able to pay or
to liquidate the amounts obligated in the SARO; so it comes after. x x x
At the outset, it must be observed that the issue of whether or not the
The NCA, Your Honor, is the go signal for the MDS for the authorized
Courts September 10, 2013 TRO should be lifted is a matter rendered
government-disbursing banks to, therefore, pay the payees depending on thereto, and (c) the phrases (1) "and for such other purposes as may be
the projects or projects covered by the SARO and the NCA. hereafter directed by the President" under Section 8 of PD 910, and (2)
"to finance the priority infrastructure development projects" under Section
Justice Bernabe: Are there instances that SAROs are cancelled or 12 of PD 1869, as amended by PD 1993, must only be treated as
revoked? prospective in effect in view of the operative fact doctrine.

Atty. Ruiz: Your Honor, I would like to instead submit that there are To explain, the operative fact doctrine exhorts the recognition that until the
instances that the SAROs issued are withdrawn by the DBM. judiciary, in an appropriate case, declares the invalidity of a certain
legislative or executive act, such act is presumed constitutional and thus,
entitled to obedience and respect and should be properly enforced and
Justice Bernabe: They are withdrawn?
complied with. As explained in the recent case of Commissioner of
Internal Revenue v. San Roque Power Corporation,266 the doctrine merely
Atty. Ruiz: Yes, Your Honor x x x. (Emphases and underscoring supplied) "reflects awareness that precisely because the judiciary is the
governmental organ which has the final say on whether or not a
Thus, unless an NCA has been issued, public funds should not be treated legislative or executive measure is valid, a period of time may have
as funds which have been "released." In this respect, therefore, the elapsed before it can exercise the power of judicial review that may lead
disbursement of 2013 PDAF funds which are only covered by obligated to a declaration of nullity. It would be to deprive the law of its quality of
SAROs, and without any corresponding NCAs issued, must, at the time of fairness and justice then, if there be no recognition of what had transpired
this Decisions promulgation, be enjoined and consequently reverted to prior to such adjudication."267 "In the language of an American Supreme
the unappropriated surplus of the general fund. Verily, in view of the Court decision: The actual existence of a statute, prior to such a
declared unconstitutionality of the 2013 PDAF Article, the funds determination of unconstitutionality, is an operative fact and may have
appropriated pursuant thereto cannot be disbursed even though already consequences which cannot justly be ignored."268
obligated, else the Court sanctions the dealing of funds coming from an
unconstitutional source. For these reasons, this Decision should be heretofore applied
prospectively.
This same pronouncement must be equally applied to (a) the Malampaya
Funds which have been obligated but not released meaning, those Conclusion
merely covered by a SARO under the phrase "and for such other
purposes as may be hereafter directed by the President" pursuant to
The Court renders this Decision to rectify an error which has persisted in
Section 8 of PD 910; and (b) funds sourced from the Presidential Social
the chronicles of our history. In the final analysis, the Court must strike
Fund under the phrase "to finance the priority infrastructure development
down the Pork Barrel System as unconstitutional in view of the inherent
projects" pursuant to Section 12 of PD 1869, as amended by PD 1993,
defects in the rules within which it operates. To recount, insofar as it has
which were altogether declared by the Court as unconstitutional.
allowed legislators to wield, in varying gradations, non-oversight, post-
However, these funds should not be reverted to the general fund as afore-
enactment authority in vital areas of budget execution, the system has
stated but instead, respectively remain under the Malampaya Funds and
violated the principle of separation of powers; insofar as it has conferred
the Presidential Social Fund to be utilized for their corresponding special
unto legislators the power of appropriation by giving them personal,
purposes not otherwise declared as unconstitutional.
discretionary funds from which they are able to fund specific projects
which they themselves determine, it has similarly violated the principle of
E. Consequential Effects of Decision. non-delegability of legislative power ; insofar as it has created a system of
budgeting wherein items are not textualized into the appropriations bill, it
As a final point, it must be stressed that the Courts pronouncement anent has flouted the prescribed procedure of presentment and, in the process,
the unconstitutionality of (a) the 2013 PDAF Article and its Special denied the President the power to veto items ; insofar as it has diluted the
Provisions, (b) all other Congressional Pork Barrel provisions similar effectiveness of congressional oversight by giving legislators a stake in
the affairs of budget execution, an aspect of governance which they may phrases (1) "and for such other purposes as may be hereafter directed by
be called to monitor and scrutinize, the system has equally impaired the President" under Section 8 of Presidential Decree No. 910 and (2) "to
public accountability ; insofar as it has authorized legislators, who are finance the priority infrastructure development projects" under Section 12
national officers, to intervene in affairs of purely local nature, despite the of Presidential Decree No. 1869, as amended by Presidential Decree No.
existence of capable local institutions, it has likewise subverted genuine 1993, for both failing the sufficient standard test in violation of the
local autonomy ; and again, insofar as it has conferred to the President principle of non-delegability of legislative power.
the power to appropriate funds intended by law for energy-related
purposes only to other purposes he may deem fit as well as other public Accordingly, the Courts temporary injunction dated September 10, 2013
funds under the broad classification of "priority infrastructure development is hereby declared to be PERMANENT. Thus, the disbursement/release
projects," it has once more transgressed the principle of non-delegability. of the remaining PDAF funds allocated for the year 2013, as well as for all
previous years, and the funds sourced from (1) the Malampaya Funds
For as long as this nation adheres to the rule of law, any of the under the phrase "and for such other purposes as may be hereafter
multifarious unconstitutional methods and mechanisms the Court has directed by the President" pursuant to Section 8 of Presidential Decree
herein pointed out should never again be adopted in any system of No. 910, and (2) the Presidential Social Fund under the phrase "to finance
governance, by any name or form, by any semblance or similarity, by any the priority infrastructure development projects" pursuant to Section 12 of
influence or effect. Disconcerting as it is to think that a system so Presidential Decree No. 1869, as amended by Presidential Decree No.
constitutionally unsound has monumentally endured, the Court urges the 1993, which are, at the time this Decision is promulgated, not covered by
people and its co-stewards in government to look forward with the Notice of Cash Allocations (NCAs) but only by Special Allotment Release
optimism of change and the awareness of the past. At a time of great civic Orders (SAROs), whether obligated or not, are hereby ENJOINED. The
unrest and vociferous public debate, the Court fervently hopes that its remaining PDAF funds covered by this permanent injunction shall not be
Decision today, while it may not purge all the wrongs of society nor bring disbursed/released but instead reverted to the unappropriated surplus of
back what has been lost, guides this nation to the path forged by the the general fund, while the funds under the Malampaya Funds and the
Constitution so that no one may heretofore detract from its cause nor Presidential Social Fund shall remain therein to be utilized for their
stray from its course. After all, this is the Courts bounden duty and no respective special purposes not otherwise declared as unconstitutional.
others.
On the other hand, due to improper recourse and lack of proper
WHEREFORE, the petitions are PARTLY GRANTED. In view of the substantiation, the Court hereby DENIES petitioners prayer seeking that
constitutional violations discussed in this Decision, the Court hereby the Executive Secretary and/or the Department of Budget and
declares as UNCONSTITUTIONAL: (a) the entire 2013 PDAF Article; (b) Management be ordered to provide the public and the Commission on
all legal provisions of past and present Congressional Pork Barrel Laws, Audit complete lists/schedules or detailed reports related to the
such as the previous PDAF and CDF Articles and the various availments and utilization of the funds subject of these cases. Petitioners
Congressional Insertions, which authorize/d legislators whether access to official documents already available and of public record which
individually or collectively organized into committees to intervene, are related to these funds must, however, not be prohibited but merely
assume or participate in any of the various post-enactment stages of the subjected to the custodians reasonable regulations or any valid statutory
budget execution, such as but not limited to the areas of project prohibition on the same. This denial is without prejudice to a proper
identification, modification and revision of project identification, fund mandamus case which they or the Commission on Audit may choose to
release and/or fund realignment, unrelated to the power of congressional pursue through a separate petition.
oversight; (c) all legal provisions of past and present Congressional Pork
Barrel Laws, such as the previous PDAF and CDF Articles and the The Court also DENIES petitioners prayer to order the inclusion of the
various Congressional Insertions, which confer/red personal, lump-sum funds subject of these cases in the budgetary deliberations of Congress
allocations to legislators from which they are able to fund specific projects as the same is a matter left to the prerogative of the political branches of
which they themselves determine; (d) all informal practices of similar government.
import and effect, which the Court similarly deems to be acts of grave
abuse of discretion amounting to lack or excess of jurisdiction; and (e) the
Finally, the Court hereby DIRECTS all prosecutorial organs of the This Decision is immediately executory but prospective in effect.
government to, within the bounds of reasonable dispatch, investigate and
accordingly prosecute all government officials and/or private individuals SO ORDERED.
for possible criminal offenses related to the irregular, improper and/or
unlawful disbursement/utilization of all funds under the Pork Barrel
System.