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Republic of the Philippines

SUPREME COURT
Manila

HON. RAUL D. BACALTOS, HON.


CARMIANO A. KINTANAR, HON.
JOSE MA. C. GASTARDO, HON.
AGNES A. MAGPALE, HON.
VICTORIA G. COROMINAS,
HON. ESTRELLA P. YAPHA, and
HON. GABRIEL LUIS R.
QUISUMBING, Members of the
Sangguniang Panlalawigan of Cebu,
Petitioners,
G.R. No.
- versus - (RTC Civil Case No. CEB -
31568)
GWENDOLYN F. GARCIA, in her
capacity as Governor of the Province
of Cebu, DELFIN P. AGUILAR, in
his capacity as Director IV (Cluster
Director) of the Commission on Audit
(COA) Cluster IV - Visayas Local
Government Sector, HELEN S.
HILAYO, in her capacity as Regional
Cluster Director of COA, ROY I.
URSAL, in his capacity as Regional
Legal and Adjudication Director of
COA,
Respondents.
x---------------------------------------------/

PETITION FOR REVIEW


ON CERTIORARI

Petitioners, through counsels, unto this Honorable Court, respectfully


state that:

PREFATORY STATEMENT

This is an appeal under Rule 45 of the Rules of Court from the Decision1
of the Regional Trial Court (RTC) of Cebu City, Branch 9, dated July 11,

1
A certified true copy of which is hereto attached as Annex “A”.
1
2006, in Civil Case No. CEB-31568 entitled “Gwendolyn F. Garcia vs.
Delfin P. Aguilar, et. al.” as well as from the Order2 from the RTC of Cebu
City, Branch 9, dated October 25, 2006 denying the Motion for
Reconsideration filed by herein Petitioners.

PARTIES

Petitioners HON. RAUL D. BACALTOS, HON. CARMIANO A.


KINTANAR, HON. JOSE MA. C. GASTARDO, HON. AGNES A.
MAGPALE, HON. VICTORIA G. COROMINAS, HON. ESTRELLA P.
YAPHA, and HON. GABRIEL LUIS R. QUISUMBING are the Members
of the Sangguniang Panlalawigan of the Province of Cebu. They may be
served summons and processes by this Honorable Court at their official
address at the Legislative Building, Provincial Capitol Compound, Cebu
City.

Respondent GWENDOLYN F. GARCIA is the Governor of the


Province of Cebu. She is holding office at the Office of the Governor,
Province of Cebu, Provincial Capitol Building, Cebu City, where she may
be served with notices and orders by this Honorable Court.

On the other hand, respondents DELFIN P. AGUILAR, HELEN S.


HILAYO and ROY I. URSAL are filing this instant Petition in their official
capacities as the Cluster Director of the Commission on Audit (COA)
Cluster IV - Visayas Local Government Sector, Regional Cluster Director
of COA, and Regional Legal and Adjudication Director of COA,
respectively. They have an office address at COA Compound, Corner V.
Sotto and M.J. Cuenco Streets, Cebu City, where they may be served
processes by this Honorable Court.

NATURE OF THE PETITION

This Petition is an Appeal by Certiorari before the Supreme Court under


Rule 45 of the Revised Rules of Court, questioning the Regional Trial
Court’s Decision dated July 11, 2006 and Order in Civil Case No. CEB-
31568 entitled “Gwendolyn F. Garcia vs. Delfin P. Aguilar, et. al.”

In its Decision, the Regional Trial Court rendered judgment in favor of


herein Respondent and declared that pursuant to Section 22 (c), in relation
to Sections 306 and 346, of the Local Government Code and Section 37 of
the Government Procurement Reform Act, herein Respondent need not
secure prior authorization by way of a resolution from the Sangguniang
Panlalawigan of the Province of Cebu before she enters into a contract
2
A certified true copy of which is hereto attached as Annex “B”.
2
involving monetary obligations on the part of the Province of Cebu when
there is a prior authorization ordinance enacted.

In its Order, the Regional Trial Court denied herein Petitioners’ Motion
for Reconsideration of the aforementioned RTC Decision.

Petitioners respectfully submit that the Regional Trial Court’s Decision


and Order were rendered in a way not in accord with law and with the
applicable decisions of this Honorable Court. Hence, this petition.

STATEMENT OF MATERIAL DATES

Under Rule 45 of the Revised Rules of Court, and pursuant to the ruling
in Neypes vs. Court of Appeals3, herein Petitioners have 15 days from the
notice of the judgment or final order or resolution appealed from, or of the
denial of the petitioner's motion for new trial or reconsideration filed in due
time after notice of the judgment.

Notice of the RTC Order denying the Motion for Reconsideration filed
by herein Petitioners was received by Petitioners, through their counsels, on
August 8, 2016; thus, Petitioners had until August 23, 2016 within which to
file the Petition.

Petitioners, therefore, are filing the instant Petition within the 15-day
reglementary period provided for under the Rules of Court.

STATEMENT OF MATERIAL FACTS

On August 3, 2005, herein Respondent GWENDOLYN F. GARCIA


received an Audit Report dated June 30, 2005, from herein Respondents
DELFIN P. AGUILAR and HELEN S. HILAYO, both of the Commission
on Audit, on the accounts and operations of the Provincial Government of
Cebu for the year ended December 31, 2004. In said Audit Report, herein
Respondent Garcia was found to have violated Section 22(c) of the Local
Government Code when she entered into several infrastructure contracts
without authorization from the Sangguniang Panlalawigan.

On August 18, 2005, herein Respondent Garcia, in her capacity as


Governor of the Province of Cebu, filed a Petition for Declaratory Relief
under Rule 63 of the Rules of Court to determine a question of construction,
particularly of Section 22 of R.A. No. 7160, otherwise known as the Local
Government Code of 1991, in relation to Sections 306 and 346 of the same
3
Neypes, et. al. vs. Court of Appeals, et. al., G.R. No. 141524, September 14, 2005.
3
Code and Section 37 of R.A. No. 9184, otherwise known as the Government
Procurement Act.

In said Petition, Respondent Garcia contended that under Section 22(c),


in relation to Section 306 and 346, of the Local Government Code and
Section 37 of the Government Procurement Act, she need not secure prior
authorization from the Sangguniang Panlalawigan in order to enter into a
contract to implement items in the regular or supplemental appropriation
ordinances passed by the sanggunian.

In an Answer dated September 28, 2005 and in a Memorandum dated


May 10, 2006, herein Petitioners, Members of the Sangguniang
Panlalawigan of the Province of Cebu, stated that the action for declaratory
relief was inappropriate as there was already a breach or violation of a
statute, particularly Section 22(c) of the Local Government Code.

In a Memorandum dated May 8, 2006, the officers of the Commission


on Audit, herein Respondents, stated that Section 306 of the Local
Government Code should not be mistaken with the specific authorization by
the Sangguniang Panlalawigan as such provision refers to the authorization
for the effectivity of the budget. Furthermore, it submitted that Section 346
does not serve as an exception to the requirement under Section 22(c) of the
Local Government Code.

In a Decision4 dated July 11, 2006, the Regional Trial Court rendered a
decision in favor of Respondent Garcia, the dispositive portion of which
reads:

“WHEREFORE, premises considered, this court hereby


renders judgment in favor of Petitioner and against the
Respondent COA officials and declares that pursuant to
Section 22 paragraph c in relation to Section 306 and 346 of
the Local Government Code and Section 37 of the
Government Procurement Reform Act, the Petitioner
Governor of Cebu need not secure prior authorization by way
of a resolution from the Sangguniang Panlalawigan of the
Province of Cebu before she enters into a contract involving
monetary obligations on the part of the Province of Cebu
when there is a prior appropriation ordinance enacted.”

Thereafter, herein Petitioners and Members of the Sangguniang


Panlalawigan of the Province of Cebu filed a Motion for Reconsideration
dated August 1, 2006.

4
Supra, Note 1.
4
An Opposition to the Motion for Reconsideration was then filed by
Respondent Garcia on August 10, 2006.

In an Order5 dated October 25, 2006, the Regional Trial Court


dismissed the Motion for Reconsideration filed by herein Petitioners; hence,
this Petition for Review on Certiorari before this Honorable Court.

STATEMENT OF ISSUES

I. WHETHER OR NOT THE HONORABLE COURT A QUO


GRAVELY ERRED IN GIVING DUE COURSE TO THE ACTION
FOR DECLARATORY RELIEF.

II. WHETHER OR NOT THE HONORABLE COURT A QUO


GRAVELY ERRED IN DECLARING THAT A PRIOR
AUTHORIZATION FROM THE SANGGUNIANG
PANLALAWIGAN OF THE PROVINCE OF CEBU IS NOT
REQUIRED FOR CONTRACTS INVOLVING MONETARY
OBLIGATIONS ON THE PART OF THE PROVINCE WHEN THERE
IS A PRIOR APPROPRIATION ORDINANCE ENACTED.

SUBMISSIONS

I. THE HONORABLE COURT A QUO GRAVELY ERRED, UNDER


THE LAW, WHEN IT GAVE DUE COURSE TO THE ACTION FOR
DECLARATORY RELIEF CONSIDERING THAT A BREACH HAS
ALREADY BEEN COMMITTED.

II. THE HONORABLE COURT A QUO GRAVELY ERRED, UNDER


THE LAW, WHEN IT DECLARED THAT THAT A PRIOR
AUTHORIZATION, BY WAY OF RESOLUTION, FROM THE
SANGGUNIANG PANLALAWIGAN OF THE PROVINCE OF
CEBU IS NOT REQUIRED FOR CONTRACTS INVOLVING
MONETARY OBLIGATIONS ON THE PART OF THE PROVINCE
WHEN THERE IS A PRIOR APPROPRIATION ORDINANCE
ENACTED.

5
Supra, Note 2.
5
ARGUMENTS AND DISCUSSION

I. THE HONORABLE COURT


A QUO GRAVELY ERRED IN
TAKING COGNIZANCE TO
THE ACTION FOR
DECLARATORY RELIEF
AGAINST THE OFFICIALS
OF COA AND THE
SANGGUNIAN
PANLALAWIGAN OF CEBU
WHEN IT HELD THAT
BREACH BY RESPONDENT
GOVERNOR GARCIA OF
CEBU OF THE LAW IS OF
NO MOMENT AND IN THE
EVENT THAT THERE IS A
DETERMINATION BY THE
COURT A QUO THAT
RESPONDENT HAS
ALREADY BREACHED THE
DEED, DOCUMENT, LAW
OR ORDINANCE, THEN THE
CASE WILL RIPEN INTO AN
ORDINARY CIVIL ACTION
FOR BREACH AND DOES
NOT MEAN THAT THE
CASE WOULD BE
DISMISSED.

Paragraph 1, Section 1 of Rule 63 of the 1997 Rules of Civil Procedure


provides for who and where to file a petition for declaratory relief, to wit:

SECTION 1. Who may file petition. - Any person interested


under a deed, will, contract or other written instrument, or
whose rights are affected by a statute, executive order or
regulation, ordinance, or any other governmental
regulation may, before breach or violation thereof, bring
an action in the appropriate Regional Trial Court to
determine any question of construction or validity arising,
and for a declaration of his rights or duties, thereunder
(Emphasis and underscoring supplied).

6
The Supreme court in the case of City of Lapu-Lapu vs. PEZA,6
elucidated that a special civil action for declaratory relief is filed for a
judicial determination of any question of construction or validity arising
from, and for a declaration of rights and duties, under any of the following
subject matters: a deed, will, contract or other written instrument, statute,
executive order or regulation, ordinance, or any other governmental
regulation.

However, a declaratory judgment may issue only if there has been "no
breach of the documents in question" (Emphasis ours).7 If the contract or
statute subject matter of the action has already been breached, the
appropriate ordinary civil action must be filed. 8

In the recent case of Aquino vs. Municipality of Malay, Aklan, the court
had the opportunity to explain that since the purpose of an action for
declaratory relief is to secure an authoritative statement of the rights and
obligations of the parties under a statute, deed, or contract for their guidance
in the enforcement thereof, or compliance therewith, and not to settle issues
arising from an alleged breach thereof, it may be entertained before the
breach or violation of the statute, deed or contract to which it refers.9

It is crystal clear in the instant case that respondent Governor Garcia


already entered into contracts without the requisite approval of the
Sanggunian. Contracts amounting to more than One Hundred Million Pesos
of people’s funds have already been signed, without the authorization of the
Sanggunian concerned. The respondent has already acted and all that she is
asking now to do is for the Honorable Court to declare that her actions were
not in violation of the law. This cannot be permitted.

In addition, an action for Declaratory Relief may be entertained only


before the breach or violation of the statute, deed, contract, etc. to which it
refers. Where the law or contract has already been contravened prior to the
filing of an action for declaratory relief, the court can no longer assume
jurisdiction over the action.10

In other words, a court has no more jurisdiction over an action for


declaratory relief if its subject, i.e., the statute, deed, contract, etc., has
already been infringed or transgressed before the institution of the action.
Under such circumstances, inasmuch as a cause of action has already
accrued in favor of one or the other party, there is nothing more for the court
to explain or clarify short of a judgment or final order.

6
City of Lapu-Lapu vs. PEZA, G.R. No. 184203, November 26, 2014.
7
Republic vs. Roque, G.R. No. 204603, September 24, 2013.
8
Ollada vs. Central Bank of the Philippines, G.R. No. L-11357, May 31, 1962.
9
Aquino vs. Municipality of Malay, Aklan, G.R. No. 211356, September 29, 2014.
10
Tambunting vs. Sps. Sumabat, G.R. No. 144101 September 16, 2005.
7
Furthermore, in the case of Republic vs. CA11, the Supreme Court said
that a party cannot act, then ask the courts to declare that its action was not a
violation of its agreement with another person and, at the same time, seek to
enjoin the other party from revoking or cancelling their agreement.

In the more recent case of The Honorable Monetary Board vs.


Philippine Veterans Bank12, it held that in declaratory relief, the only issue
that may be raised in such a petition is the question of construction or
validity of provisions in an instrument or statute. Moreover, the judgment of
the court concerned cannot extend beyond a declaration of the rights and
duties of the parties to the action or provide for corrective relief.13 Likewise,
It is worthy to recall that courts should refuse to exercise its prerogative to
declare rights and to construe instruments where it would not terminate the
uncertainty or controversy which gave rise to the action or where it is not
necessary and proper at the time under all circumstances.14

Applying the above-mentioned rule, the Honorable court should refuse


to exercise its prerogative. In the instant case, the issues brought before the
Honorable Court have been lodged first by Petitioners before the Office of
the Ombudsman for the Visayas. Since there is another prior action now
pending consideration by another forum, the action for declaratory relief
filed by respondent will not put an end to the controversy. Thus it is of
equal importance to take note of the rule that an action for Declaratory
Relief is proper only if adequate relief is not available through the means of
other existing forms of action or proceeding.15

II. THE HONORABLE COURT


A QUO GRAVELY ERRED,
UNDER THE LAW, WHEN
IT DECLARED THAT THAT
A PRIOR AUTHORIZATION,
BY WAY OF RESOLUTION,
FROM THE SANGGUNIANG
PANLALAWIGAN OF THE
PROVINCE OF CEBU IS
NOT REQUIRED FOR
CONTRACTS INVOLVING
MONETARY OBLIGATIONS
ON THE PART OF THE
PROVINCE WHEN THERE
IS A PRIOR
11
Republic vs. CA, G.R. No. 128010, February 28, 2000.
12
Honorable Monetary Board vs. Philippine Veterans Bank, (G.R. No. 18957, January 21, 2015.
13
Atlas Consolidated Mining vs. CA, G.R. No. L-54305, February 14, 1990.
14
Ibid.
15
Supra, Note 1.
8
APPROPRIATION
ORDINANCE ENACTED.

A. Sections 306 and 346 of the Local Government Code are not
exceptions to Section 22, paragraph C.

Section 22 (c) of the Local Government Code provides that “Unless


otherwise provided in this code, no contract may be entered into by the
local chief executive in behalf of the local government unit without prior
authorization by the sanggunian concerned.”

This provision of law is clear and leaves no room for doubt, hence
there is no room for interpretation. It mandates that the local chief
executive cannot enter into contracts in behalf of the local government
without a corresponding authorization from the sanggunian concerned,
subject only to the instances where the Code provides otherwise.

The Civil Code defines contract as a meeting of the minds between


two persons whereby one binds himself with respect to the other, give
something or render some service.

As can be gleaned from a cursory reading of the provision it pertains


to entering into contracts which creates an obligation on the part of the
local government, either to give something or to render some service.

On the other hand, Section 306 of the Local Government Code states
that:

SECTION 306. Definitions. - When used in this Title, the


term -

xxx xxx xxx

(b) "Appropriation" refers to an authorization made by


ordinance, directing the payment of goods and services
from local government funds under specified conditions or
for specific purposes;

xxx xxx xxx

9
Section 346 of the same statute further provides that:

SECTION 346. Disbursements of Local Funds and


Statement of Accounts. - disbursements shall be made in
accordance with the ordinance authorizing the annual or
supplemental appropriations without the prior approval of
the sanggunian concerned. Within thirty (30) days after the
close of each month, the local accountant shall furnish the
sanggunian with such financial statements as may be
prescribed by the Commission on Audit. In the case of year-
end statement of accounts, the period shall be sixty (60) days
after the thirty-first (31st) of December.

Section 306 read in conjunction with Section 346 points to a


conclusion that once a local government unit passes an appropriation
ordinance, disbursements shall be made in accordance with it.
Corollarily, there is no more need for an authorization from the
sanggunian. This however should not be taken to mean that Sections 306
and 346 are exceptions to Section 22, paragraph C.

Section 306 contemplates authorization for the effectivity of the


budget of the local government concerned; while, Section 346 tackles
disbursements of funds in general in accordance with the budget in
relation to the prior appropriation ordinance duly passed by the local
sanggunian concerned.

These provisions therefore belong to a different sphere than that


contemplated under Section 22, paragraph C, which pertains to
authorization for liability-creating contracts to be entered into by the
local chief executive. Whereas the aforementioned sections refer to
disbursements already specified or indicated in the appropriation
ordinance.

Release of funds in relation to Sections 306 and 346 contemplates


previous obligations of the local government concerned, payment of
which from the public funds is being authorized by the appropriation
ordinance duly passed by the sanggunian concerned.

The premise of Section 22 is the act of entering into a contact by the


local chief executive which creates a liability for the local government
not heretofore contemplated by a previously passed appropriation
ordinance. Hence the need for prior authorization from the sanggunian.

10
It is therefore apparent and without question that Section 306 and
346 and Section 22 (c) diverge in application.

B. The Province of Cebu was acting under a re-enacted


appropriation ordinance.

The Province of Cebu was operating under a re-enacted appropriation


ordinance because no appropriation ordinance was passed in 2004. Hence,
Section 323 of the Local Government Code applies. The provision reads:

SECTION 323. Failure to enact the annual appropriation. -


In case the sanggunian concerned fails to pass the
ordinance authorizing the annual appropriations at the
beginning of the ensuing fiscal year, it shall continue to
hold sessions, without additional remuneration for its
members, until such ordinance is approved, and no other
business may be taken up during such sessions. If the
sanggunian still fails to enact such ordinance after ninety
(90) days from the beginning of the fiscal year, the
ordinance authorizing the appropriations of the preceding
year shall be deemed reenacted and shall remain in force
and effect until the ordinance authorizing the proposed
appropriations is passed by the sanggunian concerned.
However, only the annual appropriations for salaries and
wages of existing positions, statutory and contractual
obligations, and essential operating expenses authorized in
the annual and supplemental budgets for the preceding
year shall be deemed reenacted and disbursement of funds
shall be in accordance therewith. (Emphasis and
underscoring supplied)

xxx xxx xxx

In her petition, petitioner admitted that the contracts entered into were
infrastructure contracts. As such, under the abovementioned provision, she
could not validly enter into such contracts without prior authorization
because the province was operating under a reenacted budget. Only the
annual appropriations for salaries and wages of existing positions, statutory
and contractual obligations, and essential operating expenses are
authorized to be disbursed. Infrastructure contracts not being one of those
authorized under the reenacted appropriation. Clearly then, petitioner has
violated the Local Government Code.

11
C. The invocation of lack of authorization requirement under R.A. No.
9184 by the RTC is improper.

The absence of a prior authorization requirement in Section 37 of R.A.


No. 9184 or the Government Procurement Reform Act, as quoted by the
RTC, has no bearing on the need for prior authorization by the local chief
executive before he/she enters into a contract. Said law deals with the
bidding process which is characteristic of contracts entered into by the
government. It does not deal with the procedure anterior to the act of
entering into contracts by the local chief executive.

R.A. No. 9184 comes into operation only when the local chief
executive already has the requisite authority to enter into a contract. It is
concerned with the procedure on whom the local chief executive will enter
into a contract with. Said law does not dwell on the authorization
requirement needed by the local chief executive precisely because it not
covered in said legislation. The invocation therefore of this law with
respect to the need for prior authorization from the sanggunian is off
tangent.

PRAYER FOR RELIEF

WHEREFORE, premises considered, it is respectfully prayed of this


Honorable Court that it REVERSE AND SET ASIDE the Decision of the
Regional Trial Court of Cebu City, Branch 9, dated July 11, 2006, in Civil
Case No. CEB-31568 and consequently declare that a prior authorization, in
the form of a resolution, from the Sangguniang Panlalawigan of the
Province of Cebu is required before herein Respondent can enter into a
contract involving monetary obligations on the part of the Province.

Other relief, just and equitable, are also prayed for.

Cebu City, August 17, 2016.

By the Counsel for the Petitioners

CABRADILLA, DUCE AND PABUAYA LAW OFFICE


Room 204, CRM Building,
Corner Escario and Molave Streets, Lahug,
Cebu City 6000
Telephone Number: (032) 253-1890 to 92
Fax Number: (032) 253-1893
E-mail Address: inquiry@cdplawoffice.com

12
ARFEL JANE C. CABRADILLA
Roll No. 44403
IBP No. 9849 (Lifetime) Cebu City
MCLE Compliance No. III-0008600
PTR No. 1161031-5-8-2016-Cebu City
Telephone No. (032) 253-1890 local 101
E-mail Address: ajccabradilla@cdplawoffice.com

JESAT CATHY J. DUCE


Roll No. 44413
IBP No. 9859 (Lifetime) Cebu City
MCLE Compliance No. III-0008700
PTR No. 1161031-6-9-2016-Cebu City
Telephone No. (032) 253-1890 local 102
E-mail Address: jcjduce@cdplawoffice.com

CRISTIE PEARL O. PABUAYA


Roll No. 44433
IBP No. 9846 (Lifetime) Cebu City
MCLE Compliance No. III-0008800
PTR No. 1161032-8-9-2016-Cebu City
Telephone No. (032) 253-1890 local 103
E-mail Address: cpopabuaya@cdplawoffice.com

Copy furnished, in accordance with


Section 11, Rule 13 of the Revised
Rules of Court, by registered mail, in
view of far distance making personal
service not practicable, to:

ATTY. JOHN EMMANUEL F. MADAMBA


Assistant Solicitor General
134 Amorsolo Street,
Legaspi Village,
Makati City

13
and by personal service, to:

ATTY. MARINO E. MARTINQUILLA


Cebu Provincial Legal Officer
3rd Floor, Capitol Building,
Cebu City

ATTY. CHEVIN Q. VASQUEZ


OIC, Clerk of Court V
Regional Trial Court of Cebu City, Branch 9,
3/F Qimonda IT Center,
Sergio Osmeña Boulevard,
Cebu City

14