EVELYN S. CABUNGCAL v. SONIA R. LORENZO, GR No.

160367, 2009-12-18
Facts:
Assailed in this Petition for Review on Certiorari[1] under Rule 45 of the Rules of Court are
the March 20, 2003 Decision[2] of the Court of Appeals (CA) dismissing petitioners' petition
for lack of merit and its October 6, 2003
Resolution[3] denying the motion for reconsideration
On July 9, 2001, the Sangguniang Bayan of San Isidro, Nueva Ecija, issued Resolution No.
27 s. 2001[4] declaring the reorganization of all offices of the municipal government. On
July 23, 2001, the Resolution was approved by the Sangguniang
Panlalawigan via Resolution No. 154 s. 2001.[5]
Thereafter, on November 12, 2001, the Sangguniang Bayan passed Resolution No. 80 s.
2001,[6] approving and adopting the proposed new staffing pattern of the municipal
government. On November 26, 2001, the Sangguniang Panlalawigan... approved the same
through Resolution No. 299 s. 2001.[7]
On December 21, 2001, the Municipal Mayor of San Isidro, Nueva Ecija, herein respondent
Sonia R. Lorenzo, issued a memorandum[8] informing all employees of the municipal
government that, pursuant to the reorganization, all positions were deemed vacant and...
that all employees must file their respective applications for the newly created positions
listed in the approved staffing pattern on or before January 10, 2002. Otherwise, they would
not be considered for any of the newly created positions.
Instead of submitting their respective applications, petitioners, on January 17, 2002, filed
with the CA a Petition for Prohibition and Mandamus with application for issuance of Writ of
Preliminary Injunction and Restraining Order.[9] They alleged that they... were permanent
employees of the Rural Health Unit of the Municipality of San Isidro, Nueva Ecija,... were
sued in their capacity as Mayor, as Vice Mayor, and as members of the
Sangguniang Bayan respectively, of San Isidro, Nueva Ecija.
were sued in their capacity as Vice Governor and as members of the Sangguniang
Panlalawigan, respectively.
Petitioners sought to prohibit respondents from implementing the reorganization of the
municipal government of San Isidro, Nueva Ecija, under Resolution Nos. 27 and 80 s. 2001
of the Sangguniang Bayan. They likewise prayed for the nullification of said
Resolutions.
While the case was pending, respondent Mayor Sonia R. Lorenzo issued a letter
terminating the services of those who did not re-apply as well as those who were not
selected for the new positions effective April 21, 2002.[11]
On March 20, 2003, the CA rendered a Decision dismissing the petition for lack of merit.
petitioners' allegation of... grave abuse of discretion on the part of public respondents
particularly Mayor Lorenzo, can hardly be justified.
were not issued by respondents with grave abuse of discretion amounting to lack or excess
of jurisdiction,... Petitioners moved for a reconsideration[13] which was denied by the C
Petitioners contend that the March 20, 2003 Decision and October 6, 2003 Resolution of the
CA were not in accordance with Republic Act (RA) No. 6656, otherwise known as "An Act to
Protect the Security of Tenure of Civil Service Officers and Employees in the
Implementation of
Government Reorganization", specifically Section 2[14] thereof and RA 7305, otherwise
known as the "Magna Carta of Health Workers".
Respondents, for their part, argue that petitioners' separation from service was a result of a
valid reorganization done in accordance with law and in good faith.
Issues:
1. Whether petitioners' automatic resort to the Court of Appeals is proper.
2. Whether the case falls under the exceptions to the rule on exhaustion of
administrative remedies.
Ruling:
Petitioners' recourse should... have been with the Civil Service
Commission and not with the
Court of Appeals
Section 2 (1) and Section 3, Article IX-B of the Constitution provide that:
Section 2. (1) The civil service embraces all branches, subdivisions, instrumentalities and
agencies of the Government, including government-owned or controlled corporations with
original charters.
Section 3. The Civil Service Commission, as the central personnel agency of the
Government, shall establish a career service and adopt measures to promote morale,
efficiency, integrity, responsiveness, progressiveness, and courtesy in the civil service. It
shall strengthen the... merit and rewards system, integrate all human resources
development programs for all levels and ranks, and institutionalize a management climate
conducive to public accountability. It shall submit to the President and the Congress an
annual report on its personnel... programs.
Section 4 of CSC Memorandum Circular No. 19-99, states that:
Section 4. Jurisdiction of the Civil Service Commission. -- The Civil Service Commission
shall hear and decide administrative cases instituted by, or brought before it, directly or on
appeal, including contested appointments, and shall review decisions and... actions of its
offices and of the agencies attached to it.
Except as otherwise provided by the Constitution or by law, the Civil Service Commission
shall have the final authority to pass upon the removal, separation and suspension of all
officers and employees in the civil service and upon all matters relating to... the conduct,
discipline and efficiency of such officers and employees.
Pursuant to the foregoing provisions, the CSC, as the central personnel agency of the
Government, has jurisdiction over disputes involving the removal and separation of all
employees of government branches, subdivisions, instrumentalities and agencies, including
government-owned... or controlled corporations with original charters. Simply put, it is the
sole arbiter of controversies relating to the civil service.
Considering that they belong to the... civil service, the CSC has jurisdiction over their
separation from office.
Under RA 6656 and RA 7305, which were cited by the petitioners in their petition, it is the
CSC which determines whether an employee's dismissal or separation from office was
carried out in... violation of the law or without due process. Accordingly, it is also the CSC
which has the power to reinstate or reappoint an unlawfully dismissed or terminated
employee. Quoted hereunder are Section 9 of RA 6656 and Section 8 of RA 7305
All told, we hold that it is the CSC which has jurisdiction over appeals from personnel
actions taken by respondents against petitioners as a result of reorganization.
Consequently, petitioners' resort to the CA was premature. The jurisdiction lies with the
CSC and not with the... appellate court.
The case does not fall under any... of the exceptions to the rule on... exhaustion of
administrative... remedies
The rule on exhaustion of administrative remedies provides that a party must exhaust all
administrative remedies to give the administrative agency an opportunity to decide the
matter and to prevent unnecessary and premature resort to the courts.
exceptions,[19] viz:
1. when there is a violation of due process;
2. when the issue involved is purely a legal question;
3. when the administrative action is patently illegal amounting to lack or excess of
jurisdiction;
4. when there is estoppel on the part of the administrative agency concerned;
5. when there is irreparable injury;
6. when the respondent is a department secretary whose acts as an alter ego of the
President bears the implied and assumed approval of the latter;
7. when to require exhaustion of administrative remedies would be unreasonable;
8. when it would amount to a nullification of a claim;
9. when the subject matter is a private land in land case proceedings;
10. when the rule does not provide a plain, speedy and adequate remedy; and
11. when there are circumstances indicating the urgency of judicial intervention.
The instant case does not fall under any of the exceptions. Petitioners' filing of a petition for
mandamus and prohibition with the CA was premature. It bears stressing that the remedies
of mandamus and prohibition may be availed of only when there is no appeal or any other...
plain, speedy and adequate remedy in the ordinary course of law.[20] Moreover, being
extraordinary remedies, resort may be had only in cases of extreme necessity where the
ordinary forms of procedure are powerless to afford relief.
Thus, instead of immediately filing a petition with the CA, petitioners should have first
brought the matter to the CSC which has primary jurisdiction over the case.[22] Thus, we
find that the CA correctly dismissed the petition but not the grounds cited in... support
thereof. The CA should have dismissed the petition for non-exhaustion of administrative
remedies.[

PROSPERO A. PICHAY v. OFFICE OF DEPUTY EXECUTIVE SECRETARY FOR LEGAL

AFFAIRS INVESTIGATIVE, GR No. 196425, 2012-07-24
Facts:
On April 16, 2001, then President Gloria Macapagal-Arroyo issued Executive Order No. 12
(E.O. 12) creating the Presidential Anti-Graft Commission (PAGC) and vesting it with the
power to investigate or hear administrative cases or complaints for possible graft and
corruption,... among others, against presidential appointees and to submit its report and
recommendations to the President.
On November 15, 2010, President Benigno Simeon Aquino III issued Executive Order No.
13 (E.O. 13), abolishing the PAGC and transferring its functions to the Office of the Deputy
Executive Secretary for Legal Affairs (ODESLA), more particularly to its newly-established
Investigative and Adjudicatory Division (IAD).
On April 6, 2011, respondent Finance Secretary Cesar V. Purisima filed before the IAD-
ODESLA a complaint affidavit[2] for grave misconduct against petitioner Prospero A.
Pichay, Jr., Chairman of the Board of Trustees of the Local Water Utilities
Administration (LWUA), as well as the incumbent members of the LWUA Board of Trustees,
namely, Renato Velasco, Susana Dumlao Vargas, Bonifacio Mario M. Pena, Sr. and Daniel
Landingin, which arose from the purchase by the LWUA of Four Hundred Forty-Five
Thousand Three Hundred
Seventy Seven (445,377) shares of stock of Express Savings Bank, Inc.
On April 14, 2011, petitioner received an Order[3] signed by Executive Secretary Paquito N.
Ochoa, Jr. requiring him and his co-respondents to submit their respective written
explanations under oath. In compliance therewith, petitioner filed a Motion to
Dismiss Ex Abundante Ad Cautelam manifesting that a case involving the same transaction
and charge of grave misconduct entitled, "Rustico B. Tutol, et al. v. Prospero Pichay, et al.",
and docketed as OMB-C-A-10-0426-I, is already pending before the Office of the
Ombudsman.
Now alleging that no other plain, speedy and adequate remedy is available to him in the
ordinary course of law, petitioner has resorted to the instant petition for certiorari and
prohibition
Issues:
I. E.O. 13 IS UNCONSTITUTIONAL FOR USURPING THE POWER OF THE
LEGISLATURE TO CREATE A PUBLIC OFFICE.
II. E.O. 13 IS UNCONSTITUTIONAL FOR USURPING THE POWER OF THE
LEGISLATURE TO APPROPRIATE FUNDS.
III. E.O. 13 IS UNCONSTITUTIONAL FOR USURPING THE POWER OF CONGRESS TO
DELEGATE QUASI-JUDICIAL POWERS TO ADMINISTRATIVE AGENCIES.
IV. E.O. 13 IS UNCONSTITUTIONAL FOR ENCROACHING UPON THE POWERS OF
THE OMBUDSMAN.
V. E.O. 13 IS UNCONSTITUTIONAL FOR VIOLATING THE GUARANTEE OF DUE
PROCESS.
VI. E.O. 13 IS UNCONSTITUTIONAL FOR VIOLATING THE EQUAL PROTECTION
CLAUSE.
In assailing the constitutionality of E.O. 13, petitioner asseverates that the President is not
authorized under any existing law to create the Investigative and Adjudicatory Division,
Office of the Deputy Executive Secretary for Legal Affairs (IAD-ODESLA) and that by
creating a... new, additional and distinct office tasked with quasi-judicial functions, the
President has not only usurped the powers of congress to create a public office, appropriate
funds and delegate quasi-judicial functions to administrative agencies but has also
encroached upon the... powers of the Ombudsman.
Petitioner, however, goes on to assert that the President went beyond the authority granted
by E.O. 292 for him to reorganize the executive department since his issuance of E.O. 13
did not merely involve the abolition of an office but the creation of one as well.
Petitioner next avers that the IAD-ODESLA was illegally vested with judicial power which is
reserved to the Judicial Department and, by way of exception through an express grant by
the legislature, to administrative agencies. He points out that the name Investigative and
Adjudicatory Division is proof itself that the IAD-ODESLA wields quasi-judicial power.
Ruling:
The President has Continuing Authority... to Reorganize the Executive Department... under
E.O. 292.
Section 31 of Executive Order No. 292 (E.O. 292), otherwise known as the Administrative
Code of 1987, vests in the President the continuing authority to reorganize the offices under
him in order to achieve simplicity, economy and efficiency. E.O. 292 sanctions the
following... actions undertaken for such purpose:
(1) Restructure the internal organization of the Office of the President Proper, including the
immediate Offices, the Presidential Special Assistants/Advisers System and the Common
Staff Support System, by abolishing, consolidating, or merging units thereof or... transferring
functions from one unit to another;
(2) Transfer any function under the Office of the President to any other Department or
Agency as well as transfer functions to the Office of the President from other Departments
and Agencies; and
(3) Transfer any agency under the Office of the President to any other Department or
Agency as well as transfer agencies to the Office of the President from other departments
or agencies.[4]
Clearly, the abolition of the PAGC and the transfer of its functions to a division specially
created within the ODESLA is properly within the prerogative of the President under his
continuing "delegated legislative authority to reorganize" his own office pursuant to E.O.

292.

Generally, this authority to implement organizational changes is limited to transferring either

an office or a function from the Office of the President to another Department or Agency,
and the other way around.[7] Only Section 31(1) gives the President a... virtual freehand in
dealing with the internal structure of the Office of the President Proper by allowing him to
take actions as extreme as abolition, consolidation or merger of units, apart from the less
drastic move of transferring functions and offices from one unit to... another.
The Reorganization Did not Entail... the Creation of a New, Separate and
Distinct Office.
The abolition of the PAGC did not require the creation of a new, additional and distinct office
as the duties and functions that pertained to the defunct anti-graft body were simply
transferred to the ODESLA, which is an existing office within the Office of the President
Proper. The reorganization required no more than a mere alteration of the administrative
structure of the ODESLA through the establishment of a third division the Investigative and
Adjudicatory Division through which ODESLA could take on the additional functions it has...
been tasked to discharge under E.O. 13.
The Reorganization was
Pursued in Good Faith. 
A valid reorganization must not only be exercised through legitimate authority but must also
be pursued in good faith. A reorganization is said to be carried out in good faith if it is done
for purposes of economy and efficiency.[13] It appears in this case... that the streamlining of
functions within the Office of the President Proper was pursued with such purposes in
mind.  In its Whereas clauses, E.O. 13 cites as bases for the reorganization the policy
dictates of eradicating corruption in the government and... promoting economy and
efficiency in the bureaucracy. Indeed, the economical effects of the reorganization is shown
by the fact that while Congress had initially appropriated P22 Million for the PAGC's
operation in the 2010 annual budget,[14] no separate... or added funding of such a
considerable amount was ever required after the transfer of the PAGC functions to the IAD-
ODESLA.
Apparently, the budgetary requirements that the IAD-ODESLA needed to discharge its
functions and maintain its personnel would be sourced from the following year's
appropriation for the President's Offices under the General Appropriations Act of 2011.[15]
Petitioner asseverates, however, that since Congress did not indicate the manner by which
the appropriation for the Office of the President was to be distributed, taking therefrom the
operational funds of the IAD-ODESLA would amount to an illegal appropriation by the
President.
The contention is without legal basis.
There is no usurpation of the legislative... power to appropriate public funds.
In the chief executive dwell the powers to run government. Placed upon him is the power to
recommend the budget necessary for the operation of the Government,[16] which implies
that he has the necessary authority to evaluate and determine the structure that... each
government agency in the executive department would need to operate in the most
economical and efficient manner.[17] Hence, the express recognition under Section 78 of
R.A. 9970 or the General Appropriations Act of 2010 of the President's authority to
"direct changes in the organizational units or key positions in any department or agency."
The aforecited provision, often and consistently included in the general appropriations laws,
recognizes the extent of the President's power to reorganize the executive offices and...
agencies under him, which is, "even to the extent of modifying and realigning appropriations
for that purpose."[18]
And to further enable the President to run the affairs of the executive department, he is
likewise given constitutional authority to augment any item in the General Appropriations
Law using the savings in other items of the appropriation for his office.[19]
In fact, he is explicitly allowed by law to transfer any fund appropriated for the different
departments, bureaus, offices and agencies of the Executive Department which is included
in the General Appropriations Act, to any program, project or activity of any department,
bureau... or office included in the General Appropriations Act or approved  after its
enactment.[20]
Thus, while there may be no specific amount earmarked for the IADODESLA from the total
amount appropriated by Congress in the annual budget for the Office of the President, the
necessary funds for the IADODESLA may be properly sourced from the President's own
office budget... without committing any illegal appropriation.  After all, there is no usurpation
of the legislature's power to appropriate funds when the President simply allocates the
existing funds previously appropriated by Congress for his office.
The IAD-ODESLA is a fact- finding... and recommendatory body not vested... with quasi-
judicial powers.
while the term "adjudicatory" appears part of its appellation, the IAD-ODESLA cannot try
and resolve cases, its authority being limited to the conduct of investigations, preparation
of... reports and submission of recommendations. E.O. 13 explicitly states that the IAD-
ODESLA shall "perform powers, functions and duties xxx, of PAGC."[22]
Under E.O. 12, the PAGC was given the authority to "investigate or hear administrative
cases or complaints against all presidential appointees in the government"[23] and to
"submit its report and recommendations to the President."[24]  The IAD-ODESLA is a fact-
finding and recommendatory body to the President, not having the power to settle
controversies and adjudicate cases.
The President's authority to issue E.O. 13 and constitute the IAD ODESLA as his fact-
finding investigator cannot be doubted. After all, as Chief Executive, he is granted full
control over the Executive Department to ensure the enforcement of the laws. Section 17,
Article VII of... the Constitution provides:
Section 17. The President shall have control of all the executive departments, bureaus and
offices. He shall ensure that the laws be faithfully executed.
The obligation to see to it that laws are faithfully executed necessitates the corresponding
power in the President to conduct investigations into the conduct of officials and employees
in the executive department.[27]
The IAD-ODESLA does not encroach... upon the powers and duties of the
Ombudsman.
The primary jurisdiction of the Ombudsman to investigate and prosecute cases refers to
criminal cases cognizable by the Sandiganbayan and not to administrative cases. It is only
in the exercise of its primary jurisdiction that... the Ombudsman may, at any time, take over
the investigation being conducted by another investigatory agency. Section 15 (1) of R.A.
No. 6770 or the Ombudsman Act of 1989, empowers the Ombudsman to
(1) Investigate and prosecute on its own or on complaint by any person, any act or omission
of any public officer or employee, office or agency, when such act or omission appears to
be illegal, unjust, improper or inefficient. It has primary jurisdiction over... cases cognizable
by the Sandiganbayan and, in the exercise of its primary jurisdiction, it may take over, at
any stage, from any investigatory agency of government, the investigation of such cases.
(Emphasis supplied)
Since the case filed before the IAD-ODESLA is an administrative disciplinary case for grave
misconduct, petitioner may not invoke the primary jurisdiction of the Ombudsman to prevent
the IAD-ODESLA from proceeding with its investigation. In any event, the Ombudsman's
authority... to investigate both elective and appointive officials in the government, extensive
as it may be, is by no means exclusive. It is shared with other similarly authorized
government agencies.[28]
While the Ombudsman's function goes into the determination of the existence of probable
cause and the adjudication of the merits of a criminal accusation, the investigative authority
of the IAD-ODESLA is limited to that of a fact-finding investigator whose determinations
and... recommendations remain so until acted upon by the President. As such, it commits
no usurpation of the Ombudsman's constitutional duties.
Executive Order No. 13 Does Not
Violate Petitioner's Right to Due
Process and the Equal Protection... of the Laws.
Presidential appointees come under the direct disciplining authority of the President. This
proceeds from the well settled principle that, in the absence of a contrary law, the power to
remove or to discipline is lodged in the same authority on which the power to appoint is...
vested.[32] Having the power to remove and/or discipline presidential appointees, the
President has the corollary authority to investigate such public officials and look into their
conduct in office.[33] Petitioner is a presidential... appointee occupying the high-level
position of Chairman of the LWUA. Necessarily, he comes under the disciplinary jurisdiction
of the President, who is well within his right to order an investigation into matters that
require his informed decision.
Also, contrary to petitioner's assertions, his right to due process was not violated when the
IAD-ODESLA took cognizance of the administrative complaint against him since he was
given sufficient opportunity to oppose the formal complaint filed by Secretary Purisima. In...
administrative proceedings, the filing of charges and giving reasonable opportunity for the
person so charged to answer the accusations against him constitute the minimum
requirements of due process,[35] which simply means having the opportunity to explain...
one's side.[36] Hence, as long as petitioner was given the opportunity to explain his side
and present evidence, the requirements of due process are satisfactorily complied with
because what the law abhors is  an absolute lack of opportunity to be... heard.[37] The
records show that petitioner was issued an Order requiring him to submit his written
explanation under oath with respect to the charge of grave misconduct filed against him. His
own failure to submit his explanation despite notice defeats his... subsequent claim of denial
of due process.
Finally, petitioner doubts that the IAD-ODESLA can lawfully perform its duties as an
impartial tribunal, contending that both the IAD-ODESLA and respondent Secretary
Purisima are connected to the President. The mere suspicion of partiality will not suffice to
invalidate the... actions of the IADODESLA. Mere allegation is not equivalent to proof. Bias
and partiality cannot be presumed.[38] Petitioner must present substantial proof to show
that the lAD-ODES LA had unjustifiably sided against him in the conduct of the
investigation.
No such evidence has been presented as to defeat the presumption of regularity m the
perfonnance of the fact-finding investigator's duties. The assertion, therefore, deserves
scant consideration.
Every law has in its favor the presumption of constitutionality, and to justify its nullification,
there must be a clear and unequivocal breach of the Constitution, not a doubtful and
argumentative one.[39] Petitioner has failed to discharge the burden of... proving the
illegality of E.O. 13, which IS indubitably a valid exercise of the President's continuing
authority to reorganize the Office of the President.
WHEREFORE, premises considered, the petition is hereby DISMISSED.
Principles:
The equal protection of the laws is a... guaranty against any form of undue favoritism or
hostility from the government.[29] It is embraced under the due process concept and simply
requires that, in the application of the law, "all persons or things similarly situated should be
treated alike, both... as to rights conferred and responsibilities imposed."[30] The equal
protection clause, however, is not absolute but subject to reasonable classification so that
aggrupations bearing substantial distinctions may be treated differently from each other.
The equal protection of the law clause is against undue favor and individual or class
privilege, as well as hostile discrimination or the oppression of inequality. It is not intended
to prohibit legislation which is limited either in the object to which it is... directed or by
territory within which it is to operate. It does not demand absolute equality among residents;
it merely requires that all persons shall be treated alike, under like circumstances and
conditions both as to privileges conferred and liabilities enforced. The... equal protection
clause is not infringed by legislation which applies only to those persons falling within a
specified class, if it applies alike to all persons within such class, and reasonable grounds
exist for making a distinction between those who fall within such class and... those who do
not. (Emphasis supplied)
Substantial distinctions clearly exist between elective officials and appointive officials. The
former occupy their office by virtue of the mandate of the electorate. They are elected to an
office for a definite term and may be removed therefrom only upon... stringent conditions.
On the other hand, appointive officials hold their office by virtue of their designation thereto
by an appointing authority. Some appointive officials hold their office in a permanent
capacity and are entitled to security of tenure while others serve... at the pleasure of the
appointing authority.
x       x      x      x
An election is the embodiment of the popular will, perhaps the purest expression of the
sovereign power of the people. It involves the choice or selection of candidates to public
office by popular vote. Considering that elected officials are put in office by their
constituents... for a definite term, x x x complete deference is accorded to the will of the
electorate that they be served by such officials until the end of the term for which they were
elected. In contrast, there is no such expectation insofar as appointed officials are
concerned.
(Emphasis supplied)

Republic of the Philippines

SUPREME COURT
Manila

FIRST DIVISION

G.R. No. 160093             July 31, 2007

MALARIA EMPLOYEES AND WORKERS ASSOCIATION OF THE PHILIPPINES, INC. (MEWAP),

represented by its National President, DR. RAMON A. SULLA, and MEWAP DOH Central
Office Chapter President, DR. GRACELA FIDELA MINA-RAMOS, and PRISCILLA CARILLO,
and HERMINIO JAVIER, petitioners,
vs.
THE HONORABLE EXECUTIVE SECRETARY ALBERTO ROMULO, (substituting the former
Executive Secretary Renato de Villa), THE HONORABLE SECRETARY OF HEALTH MANUEL
DAYRIT and THE HONORABLE SECRETARY OF BUDGET AND MANAGEMENT EMILIA T.
BONCODIN, respondents.

DECISION

PUNO, CJ.:
At bar is a Petition for Review on Certiorari of the Decision of the Court of Appeals in CA-G.R. SP
No. 65475 dated September 12, 2003 which upheld the validity of Executive Order (E.O.) No.
102,1 the law Redirecting the Functions and Operations of the Department of Health. Then President
Joseph E. Estrada issued E.O. No. 102 on May 24, 1999 pursuant to Section 20, Chapter 7, Title I,
Book III of E.O. No. 292, otherwise known as the Administrative Code of 1987, and Sections 78 and
80 of Republic Act (R.A.) No. 8522, also known as the General Appropriations Act (GAA) of 1998.
E.O. No. 102 provided for structural changes and redirected the functions and operations of the
Department of Health.

On October 19, 1999, the President issued E.O. No. 165 "Directing the Formulation of an
Institutional Strengthening and Streamlining Program for the Executive Branch" which created the
Presidential Committee on Executive Governance (PCEG) composed of the Executive Secretary as
chair and the Secretary of the Department of Budget and Management (DBM) as co-chair.

The DBM, on July 8, 2000, issued the Notice of Organization, Staffing and Compensation Action
(NOSCA). On July 17, 2000, the PCEG likewise issued Memorandum Circular (M.C.) No. 62,
entitled "Implementing Executive Order No. 102, Series of 1999 Redirecting the Functions and
Operations of the Department of Health." 2 M.C. No. 62 directed the rationalization and streamlining
of the said Department.

On July 24, 2000, the Secretary of Health issued Department Memorandum No. 136, Series of 2000,
ordering the Undersecretary, Assistant Secretaries, Bureau or Service Directors and Program
Managers of the Department of Health to direct all employees under their respective offices to
accomplish and submit the Personal Information Sheet due to the approval of the Department of
Health – Rationalization and Streamlining Plan.

On July 28, 2000, the Secretary of Health again issued Department Circular No. 221, Series of 2000,
stating that the Department will start implementing the Rationalization and Streamlining Plan by a
process of selection, placement or matching of personnel to the approved organizational chart and
the list of the approved plantilla items.3 The Secretary also issued Administrative Order (A.O.) No.
94, Series of 2000, which set the implementing guidelines for the restructuring process on personnel
selection and placement, retirement and/or voluntary resignation. A.O. No. 94 outlined the general
guidelines for the selection and placement of employees adopting the procedures and standards set
forth in R.A. No. 66564 or the "Rules on Governmental Reorganization," Civil Service Rules and
Regulations, Sections 76 to 78 of the GAA for the Year 2000, and Section 42 of E.O. No. 292.

On August 29, 2000, the Secretary of Health issued Department Memorandum No. 157, Series of
2000, viz.:

Pursuant to the Notice of Organization, Staffing and Compensation Action (NOSCA)

approved by the DBM on 8 July 2000 and Memorandum Circular No. 62 issued by the
Presidential Committee on Effective Governance (PCEG) on 17 July 2000, Implementing
E.O. 102 dated 24 May 1999, the following approved Placement List of DOH Personnel is
hereby disseminated for your information and guidance.

All personnel are hereby directed to report to their new assignments on or before 2 October
2000 pending processing of new appointments, required clearances and other pertinent
documents.

All Heads of Office/Unit in the Department of Health are hereby directed to facilitate the
implementation of E.O. 102, to include[,] among others, the transfer or movement of
 personnel, properties, records and documents to appropriate office/unit and device other
necessary means to minimize disruption of office functions and delivery of health services.

Appeals, oversights, issues and concerns of personnel related to this Placement List shall be
made in writing using the Appeals Form (available at the Administrative Service) addressed
to the Appeals Committee chaired by Dr. Gerardo Bayugo. All Appeals Forms shall be
submitted to the Re-Engineering Secretariat xxx not later than 18 September 2000. 5

Petitioner Malaria Employees and Workers Association of the Philippines, Inc. (MEWAP) is a union
of affected employees in the Malaria Control Service of the Department of Health. MEWAP filed a
complaint, docketed as Civil Case No. 00-98793, with the Regional Trial Court of Manila seeking to
nullify Department Memorandum No. 157, the NOSCA and the Placement List of Department of
Health Personnel and other issuances implementing E.O. No. 102.

On May 2, 2001, while the civil case was pending at the Regional Trial Court of Manila, Branch 22,
petitioners filed with this Court a petition for certiorari under Rule 65 of the Rules of Court.
Petitioners sought to nullify E.O. No. 102 for being issued with grave abuse of discretion amounting
to lack or excess of jurisdiction as it allegedly violates certain provisions of E.O. No. 292 and R.A.
No. 8522. The petition was referred to the Court of Appeals which dismissed the same in its assailed
Decision. Hence, this appeal where petitioners ask for a re-examination of the pertinent
pronouncements of this Court that uphold the authority of the President to reorganize a department,
bureau or office in the executive department. Petitioners raise the following issues, viz.:

1. Whether Sections 78 and 80 of the General Provision of Republic Act No. 8522, otherwise
known as the General Appropriation[s] Act of 1998[,] empower former President Joseph E.
Estrada to reorganize structurally and functionally the Department of Health.

2. Whether Section 20, Chapter I, title i, Book III of the Administrative Code of 1987 provides
legal basis in reorganizing the Department of Health.

(A) Whether Presidential Decree No. 1416, as amended by Presidential Decree No. 1772,
has been repealed.

3. Whether the President has authority under Section 17, Article VIII of the Constitution to
effect a reorganization of a department under the executive branch.

4. Whether there has been abuse of discretion amounting to lack or excess of jurisdiction on
the part of former President Joseph E. Estrada in issuing Executive Order No. 102,
Redirecting the functions and operations of the Department of Health.

5. Whether Executive Order No. 102 is null and void. 6

We deny the petition.

The President has the authority to carry out a reorganization of the Department of Health under the
Constitution and statutory laws. This authority is an adjunct of his power of control under Article VII,
Sections 1 and 17 of the 1987 Constitution, viz.:

Section 1. The executive power shall be vested in the President of the Philippines.
 Section 17. The President shall have control of all the executive departments, bureaus and
offices. He shall ensure that the laws be faithfully executed.

In Canonizado v. Aguirre,7 we held that reorganization "involves the reduction of

personnel, consolidation of offices, or abolition thereof by reason of economy or redundancy of
functions." It alters the existing structure of government offices or units therein, including the lines of
control, authority and responsibility between them. 8 While the power to abolish an office is generally
lodged with the legislature, the authority of the President to reorganize the executive branch, which
may include such abolition, is permissible under our present laws, viz.:

The general rule has always been that the power to abolish a public office is lodged with the
legislature. This proceeds from the legal precept that the power to create includes the power
to destroy. A public office is either created by the Constitution, by statute, or by authority of
law. Thus, except where the office was created by the Constitution itself, it may be abolished
by the same legislature that brought it into existence.

The exception, however, is that as far as bureaus, agencies or offices in the executive
department are concerned, the President’s power of control may justify him to inactivate the
functions of a particular office, or certain laws may grant him the broad authority to carry out
reorganization measures.9

The President’s power to reorganize the executive branch is also an exercise of his residual powers
under Section 20, Title I, Book III of E.O. No. 292 which grants the President broad organization
powers to implement reorganization measures, viz.:

SEC. 20. Residual Powers. – Unless Congress provides otherwise, the President shall
exercise such other powers and functions vested in the President which are provided
for under the laws and which are not specifically enumerated above, or which are not
delegated by the President in accordance with law. 10

We explained the nature of the President’s residual powers under this section in the case of Larin v.
Executive Secretary, 11 viz.:

This provision speaks of such other powers vested in the President under the law. What
law then gives him the power to reorganize? It is Presidential Decree No. 1772 which
amended Presidential Decree No. 1416. These decrees expressly grant the President
of the Philippines the continuing authority to reorganize the national government,
which includes the power to group, consolidate bureaus and agencies, to abolish
offices, to transfer functions, to create and classify functions, services and activities
and to standardize salaries and materials. The validity of these two decrees [is]
unquestionable. The 1987 Constitution clearly provides that "all laws, decrees, executive
orders, proclamations, letters of instructions and other executive issuances not inconsistent
with this Constitution shall remain operative until amended, repealed or revoked." So far,
there is yet no law amending or repealing said decrees. 12

The pertinent provisions of Presidential Decree No. 1416, as amended by Presidential Decree No.
1772, clearly support the President’s continuing power to reorganize the executive branch, viz.:

1. The President of the Philippines shall have continuing authority to reorganize the National
Government. In exercising this authority, the President shall be guided by generally
acceptable principles of good government and responsive national development, including
 but not limited to the following guidelines for a more efficient, effective, economical and
development-oriented governmental framework:

xxx

b) Abolish departments, offices, agencies or functions which may not be necessary, or create
those which are necessary, for the efficient conduct of government functions, services and
activities;

c) Transfer functions, appropriations, equipment, properties, records and personnel from one
department, bureau, office, agency or instrumentality to another;

d) Create, classify, combine, split, and abolish positions;

e) Standardize salaries, materials, and equipment;

f) Create, abolish, group, consolidate, merge, or integrate entities, agencies,

instrumentalities, and units of the National Government, as well as expand, amend, change,
or otherwise modify their powers, functions, and authorities, including, with respect to
government-owned or controlled corporations, their corporate life, capitalization, and other
relevant aspects of their charters;

g) Take such other related actions as may be necessary to carry out the purposes and
objectives of this Decree.

Petitioners argue that the residual powers of the President under Section 20, Title I, Book III of E.O.
No. 292 refer only to the Office of the President and not to the departments, bureaus or offices within
the executive branch. They invoke Section 31, Chapter 10, Title III, Book III of the same law, viz.:

Section 31. Continuing Authority of the President to Reorganize his Office. – The President,
subject to the policy in the Executive Office and in order to achieve simplicity, economy and
efficiency, shall have continuing authority to reorganize the administrative structure of the
Office of the President. x x x

The interpretation of petitioners is illogically restrictive and lacks legal basis. The residual powers
granted to the President under Section 20, Title I, Book III are too broad to be construed as having
a sole application to the Office of the President. As correctly stated by respondents, there is nothing
in E.O. No. 292 which provides that the continuing authority should apply only to the Office of the
President.13 If such was the intent of the law, the same should have been expressly stated. To adopt
the argument of petitioners would result to two conflicting provisions in one statute. It is a basic
canon of statutory construction that in interpreting a statute, care should be taken that every part
thereof be given effect, on the theory that it was enacted as an integrated measure and not as a
hodge-podge of conflicting provisions. The rule is that a construction that would render a provision
inoperative should be avoided; instead, apparently inconsistent provisions should be reconciled
whenever possible as parts of a coordinated and harmonious whole. 14

In fact, as pointed out by respondents, the President’s power to reorganize the executive department
even finds further basis under Sections 78 and 80 of R.A. No. 8522, viz.:15

Section 78. Organizational Changes – Unless otherwise provided by law or directed by the
President of the Philippines, no organizational unit or changes in key positions in any
 department or agency shall be authorized in their respective organizational structure and
funded from appropriations provided by this Act.

Section 80. Scaling Down and Phase-out of Activities of Agencies within the Executive
Branch – The heads of departments, bureaus, offices and agencies are hereby directed to
identify their respective activities which are no longer essential in the delivery of public
services and which may be scaled down, phased-out or abolished subject to Civil Service
rules and regulations. Said activities shall be reported to the Office of the President through
the Department of Budget and Management and to the Chairman, Committee on
Appropriations of the House of Representatives and the Chairman, Committee on Finance of
the Senate. Actual scaling down, phase-out or abolition of the activities shall be effected
pursuant to Circulars or Orders issued for the purpose by the Office of the President.

Petitioners contend that Section 78 refers only to changes in "organizational units" or "key positions"
in any department or agency, while Section 80 refers merely to scaling down and phasing out of
"activities" within the executive department. They argue that neither section authorizes
reorganization. Thus, the realignment of the appropriations to implement the reorganization of the
Department of Health under E.O. No. 102 is illegal.

Again, petitioners’ construction of the law is unduly restrictive. This Court has consistently held
in Larin16 and Buklod ng Kawanihang EIIB v. Zamora17 that the corresponding pertinent provisions
in the GAA in these subject cases authorize the President to effect organizational changes in the
department or agency concerned.

Be that as it may, the President must exercise good faith in carrying out the reorganization of any
branch or agency of the executive department. Reorganization is effected in good faith if it is for the
purpose of economy or to make bureaucracy more efficient. 18 R.A. No. 665619 provides for the
circumstances which may be considered as evidence of bad faith in the removal of civil service
employees made as a result of reorganization, to wit: (a) where there is a significant increase in the
number of positions in the new staffing pattern of the department or agency concerned; (b) where an
office is abolished and another performing substantially the same functions is created; (c) where
incumbents are replaced by those less qualified in terms of status of appointment, performance and
merit; (d) where there is a classification of offices in the department or agency concerned and the
reclassified offices perform substantially the same functions as the original offices; and (e) where the
removal violates the order of separation.

We agree with the ruling of the Court of Appeals that the President did not commit bad faith in the
questioned reorganization, viz.:

In this particular case, there is no showing that the reorganization undertaking in the
[Department of Health] had violated this requirement, nor [are] there adequate allegations to
that effect. It is only alleged that the petitioners were directly affected by the reorganization
ordered under E.O. [No.] 102. Absent is any showing that bad faith attended the actual
implementation of the said presidential issuance.

IN VIEW WHEREOF, the petition is DENIED. The assailed Decision of the Court of Appeals in CA-
G.R. SP No. 65475 dated September 12, 2003 is AFFIRMED.

Costs against petitioners.

SO ORDERED.
 Republic of the Philippines
SUPREME COURT
Manila

EN BANC

G.R. Nos. 177857-58               September 4, 2012

PHILIPPINE COCONUT PRODUCERS FEDERATION, INC. (COCOFED), MANUEL V. DEL

ROSARIO, DOMINGO P. ESPINA, SALVADOR P. BALLARES, JOSELITO A. MORALEDA, PAZ
M. YASON, VICENTE A. CADIZ, CESARIA DE LUNA TITULAR, and RAYMUNDO C. DE
VILLA, Petitioners,
vs.
REPUBLIC OF THE PHILIPPINES, Respondent.

WIGBERTO E. TAÑADA, OSCAR F. SANTOS, SURIGAO DEL SUR FEDERATION OF

AGRICULTURAL COOPERATIVES (SUFAC) and MORO FARMERS ASSOCIATION OF
ZAMBOANGA DEL SUR (MOFAZS), represented by ROMEO C. ROYANDOYAN, Intervenors.

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

G.R. No. 178193

DANILO B. URSUA, Petitioner,
vs.
REPUBLIC OF THE PHILIPPINES, Respondent.

RESOLUTION

VELASCO, JR., J.:

For consideration is a Motion for Reconsideration of the Decision of the Court dated January 24,
2012 interposed by petitioners in G.R. Nos. 177857-58, namely: Philippine Coconut Producers
Federation, Inc. (COCOFED), Manuel V. del Rosario, Domingo P. Espina, Salvador P. Ballares,
Joselito A. Moraleda, Paz M. Yason, Vicente A. Cadiz, Cesaria De Luna Titular, and Raymundo C.
De Villa.

On March 14, 2012, petitioner-movants filed a Manifestation and Motion stating that they failed to
include the Office of the Solicitor General (OSG) in the list of persons to be furnished with a copy of
the Motion for Reconsideration. They accordingly moved that their belated service of a copy of the
Motion for Reconsideration on the OSG be considered compliance with the rules on service of
motions for reconsideration. This Court noted and accepted the Manifestation and Motion. On March
15, 2012, petitioner-movants filed a Memorandum in support of the instant motion for
reconsideration.

To the said motion, intervenors Wigberto E. Tañada, et al. filed on June 10, 2012 their Comment and
Opposition. The OSG, on the other hand, after filing two motions for extension on May 22, 2012 and
June 21, 2012, respectively, filed its Motion to Admit Comment, with Comment attached, on July 13,
2012. This Court noted and admitted the Comment.
As will be recalled, the Court, in its January 24, 2012 Decision, affirmed, with modification, the
Partial Summary Judgments (PSJs) rendered by the Sandiganbayan (1) on July 11, 2003 in Civil
Case No. 0033-A (PSJ-A), as amended by a Resolution issued on June 5, 2007; and (2) on

May 7, 2004 in Civil Case No. 0033-F (PSJ-F), as amended by a Resolution issued on May 11,
2007.

In this recourse, petitioner-movants urge the Court to reconsider its Decision of January 24, 2012 on
the ground that it:

1. Made erroneous findings of fact;

2. Erred in affirming the Sandiganbayan’s jurisdiction of the subject matter of the subdivided
amended complaints;

3. Erred in ruling that due process was not violated;

4. Erred in ruling on the constitutionality of the coconut levy laws;

5. Erred in ruling that the Operative Fact Doctrine does not apply; and

6. Erred in ruling that the right to speedy disposition of cases was not violated.

The instant motion is but a mere reiteration or rehash of the arguments that have already been
previously pleaded, discussed and resolved by this Court in its January 24, 2012 Decision. And
considering that the motion’s arguments are unsubstantial to warrant a reconsideration or at least a
modification, this Court finds no reason to modify or let alone reverse the challenged Decision.

As of 1983, the Class A and B San Miguel Corporation (SMC) common shares in the names of the
1 

14 CIIF Holding Companies are 33,133,266 shares. From 1983 to November 19, 2009 when the
Republic of the Philippines representing the Presidential Commission on Good Government (PCGG)
filed the "Motion To Approve Sale of CIIF SMC Series I Preferred Shares," the common shares of
the CIIF Holding companies increased to 753,848,312 Class A and B SMC common shares. 2

Owing, however, to a certain development that altered the factual situation then obtaining in G.R.
Nos. 177857-58, there is, therefore, a compelling need to clarify the fallo of the January 24, 2012
Decision to reconcile it, vis-a-vis the shares of stocks in SMC which were declared owned by the
Government, with this development. We refer to the Resolution issued by the Court on September
3 

17, 2009 in the then consolidated cases docketed as G.R. Nos. 177857-58, G.R. No. 178193 and
G.R. No. 180705. In that Resolution which has long become final and executory, the Court, upon
motion of COCOFED and with the approval of the Presidential Commission on Good Government,
granted the conversion of 753,848,312 Class "A" and Class "B" SMC common shares registered in
the name of the CIIF companies to SMC Series 1 Preferred Shares of 753,848,312, subject to
certain terms and conditions. The dispositive portion of the aforementioned Resolution states:

WHEREFORE, the Court APPROVES the conversion of the 753,848,312 SMC Common Shares
registered in the name of CIIF companies to SMC SERIES 1 PREFERRED SHARES of
753,848,312, the converted shares to be registered in the names of CIIF companies in accordance
with the terms and conditions specified in the conversion offer set forth in SMC’s Information
Statement and appended as Annex "A" of COCOFED’s Urgent Motion to Approve the Conversion of
the CIIF SMC Common Shares into SMC Series 1 Preferred Shares. The preferred shares shall
remain in custodia legis and their ownership shall be subject to the final ownership determination of
the Court. Until the ownership issue has been resolved, the preferred shares in the name of the CIIF
companies shall be placed under sequestration and PCGG management. (Emphasis added.)

The net dividend earnings and/or redemption proceeds from the Series 1 Preferred Shares shall be
deposited in an escrow account with the Land Bank of the Philippines or the Development Bank of
the Philippines.

Respondent Republic, thru the PCGG, is hereby directed to cause the CIIF companies, including
their respective directors, officers, employees, agents, and all other persons acting in their behalf, to
perform such acts and execute such documents as required to effectuate the conversion of the
common shares into SMC Series 1 Preferred Shares, within ten (10) days from receipt of this
Resolution.

Once the conversion is accomplished, the SMC Common Shares previously registered in the names
of the CIIF companies shall be released from sequestration.

SO ORDERED. 4

The CIIF block of SMC shares, as converted, is the same shares of stocks that are subject matter of,
and declared as owned by the Government in, the January 24, 2012 Decision. Hence, the need to
clarify.

WHEREFORE, the Court resolves to DENY with FINALITY the instant Motion for Reconsideration
dated February 14, 2012 for lack of merit.

The Court further resolves to CLARIFY that the 753,848,312 SMC Series 1 preferred shares of the
CIIF companies converted from the CIIF block of SMC shares, with all the dividend earnings as well
as all increments arising from, but not limited to, the exercise of preemptive rights subject of the
September 17, 2009 Resolution, shall now be the subject matter of the January 24, 2012 Decision
and shall be declared owned by the Government and be used only for the benefit of all coconut
farmers and for the development of the coconut industry.

As modified, the fallo of the January 24, 2012 Decision shall read, as follows:

WHEREFORE, the petitions in G.R. Nos. 177857-58 and 178793 are hereby DENIED. The Partial
Summary Judgment dated July 11, 2003 in Civil Case No. 0033-A as reiterated with modification in
Resolution dated June 5, 2007, as well as the Partial Summary Judgment dated May 7, 2004 in Civil
Case No. 0033-F, which was effectively amended in Resolution dated May 11, 2007, are AFFIRMED
with MODIFICATION, only with respect to those issues subject of the petitions in G.R. Nos. 177857-
58 and 178193. However, the issues raised in G.R. No. 180705 in relation to Partial Summary
Judgment dated July 11, 2003 and Resolution dated June 5, 2007 in Civil Case No. 0033-A, shall be
decided by this Court in a separate decision.

The Partial Summary Judgment in Civil Case No. 0033-A dated July 11, 2003, is hereby MODIFIED,
and shall read as follows:

WHEREFORE, in view of the foregoing, We rule as follows:

SUMMARY OF THE COURT’S RULING.

A. Re: CLASS ACTION MOTION FOR A SEPARATE SUMMARY JUDGMENT dated April 11, 2001
filed by Defendant Maria Clara L. Lobregat, COCOFED, et al., and Ballares, et al.

The Class Action Motion for Separate Summary Judgment dated April 11, 2001 filed by defendant
Maria Clara L. Lobregat, COCOFED, et al. and Ballares, et al., is hereby DENIED for lack of merit.

B. Re: MOTION FOR PARTIAL SUMMARY JUDGMENT (RE: COCOFED, ET AL. AND BALLARES,
ET AL.) dated April 22, 2002 filed by Plaintiff.

1. a. The portion of Section 1 of P.D. No. 755, which reads:

…and that the Philippine Coconut Authority is hereby authorized to distribute, for free, the
shares of stock of the bank it acquired to the coconut farmers under such rules and
regulations it may promulgate.

taken in relation to Section 2 of the same P.D., is unconstitutional: (i) for having allowed the
use of the CCSF to benefit directly private interest by the outright and unconditional grant of
absolute ownership of the FUB/UCPB shares paid for by PCA entirely with the CCSF to the
undefined "coconut farmers", which negated or circumvented the national policy or public
purpose declared by P.D. No. 755 to accelerate the growth and development of the coconut
industry and achieve its vertical integration; and (ii) for having unduly delegated legislative
power to the PCA.

b. The implementing regulations issued by PCA, namely, Administrative Order No. 1, Series
of 1975 and Resolution No. 074-78 are likewise invalid for their failure to see to it that the
distribution of shares serve exclusively or at least primarily or directly the aforementioned
public purpose or national policy declared by P.D. No. 755.

2. Section 2 of P.D. No. 755 which mandated that the coconut levy funds shall not be
considered special and/or fiduciary funds nor part of the general funds of the national
government and similar provisions of Sec. 5, Art. III, P.D. No. 961 and Sec. 5, Art. III, P.D.
No. 1468 contravene the provisions of the Constitution, particularly, Art. IX (D), Sec. 2; and
Article VI, Sec. 29 (3).

3. Lobregat, COCOFED, et al. and Ballares, et al. have not legally and validly obtained title
of ownership over the subject UCPB shares by virtue of P.D. No. 755, the Agreement dated
May 25, 1975 between the PCA and defendant Cojuangco, and PCA implementing rules,
namely, Adm. Order No. 1, s. 1975 and Resolution No. 074-78.

4. The so-called "Farmers’ UCPB shares" covered by 64.98% of the UCPB shares of stock,
which formed part of the 72.2% of the shares of stock of the former FUB and now of the
UCPB, the entire consideration of which was charged by PCA to the CCSF, are hereby
declared conclusively owned by, the Plaintiff Republic of the Philippines.

x x x           x x x          x x x

SO ORDERED.

The Partial Summary Judgment in Civil Case No. 0033-F dated May 7, 2004, is hereby MODIFIED,
and shall read as follows:
WHEREFORE, the MOTION FOR EXECUTION OF PARTIAL SUMMARY JUDGMENT (RE: CIIF
BLOCK OF SMC SHARES OF STOCK) dated August 8, 2005 of the plaintiff is hereby denied for
lack of merit. However, this Court orders the severance of this particular claim of Plaintiff. The Partial
Summary Judgment dated May 7, 2004 is now considered a separate final and appealable judgment
with respect to the said CIIF Block of SMC shares of stock. 1âwphi1

The Partial Summary Judgment rendered on May 7, 2004 is modified by deleting the last paragraph
of the dispositive portion, which will now read, as follows:

WHEREFORE, in view of the foregoing, we hold that:

The Motion for Partial Summary Judgment (Re: Defendants CIIF Companies, 14 Holding Companies
and Cocofed, et al) filed by Plaintiff is hereby GRANTED. ACCORDINGLY, THE CIIF COMPANIES,
NAMELY:

1. Southern Luzon Coconut Oil Mills (SOLCOM);

2. Cagayan de Oro Oil Co., Inc. (CAGOIL);

3. Iligan Coconut Industries, Inc. (ILICOCO);

4. San Pablo Manufacturing Corp. (SPMC);

5. Granexport Manufacturing Corp. (GRANEX); and

6. Legaspi Oil Co., Inc. (LEGOIL),

AS WELL AS THE 14 HOLDING COMPANIES, NAMELY:

1. Soriano Shares, Inc.;

2. ACS Investors, Inc.;

3. Roxas Shares, Inc.;

4. Arc Investors; Inc.;

5. Toda Holdings, Inc.;

6. AP Holdings, Inc.;

7. Fernandez Holdings, Inc.;

8. SMC Officers Corps, Inc.;

9. Te Deum Resources, Inc.;

10. Anglo Ventures, Inc.;

11. Randy Allied Ventures, Inc.;

 12. Rock Steel Resources, Inc.;

13. Valhalla Properties Ltd., Inc.; and

14. First Meridian Development, Inc.

AND THE CONVERTED SMC SERIES 1 PREFERRED SHARES TOTALING 753,848,312 SHARES
SUBJECT OF THE RESOLUTION OF THE COURT DATED SEPTEMBER 17, 2009 TOGETHER
"WITH ALL DIVIDENDS DECLARED, PAID OR ISSUEDTHEREON AFTER THAT DATE, AS WELL
AS ANY INCREMENTS THERETO ARISING FROM, BUT NOT LIMITED TO, EXERCISE OF PRE-
EMPTIVE RIGHTS ARE DECLARED OWNED BY THE GOVERNMENT TO RE USED ONLY FOH
THE BENEFIT OF ALL COCONUT FARMERS AND FOR THE DEVELOPMENT OF THE
COCONUT INDUSTRY. AND ORDERED HECONVEYED TO THE GOVERNMENT.

THE COURT AFFIRMIS THE RESOLUTIONS ISSUED BY THE SANDIGANBAYAN ON JUNE 5,

2007 IN CIVIL CASE NO. 0033-A AND ON MAY 11, 2007 IN CIVIL CASE NO. 0033-F, THAT
THERE IS NO MORE NECESSITY OF FURTHER TRIAL WITH RESPECT TO THE ISSUE OF
OWNERSHIP OF (1) THE SEQUESTERED UCPB SHARES, (2) THE CHF BLOCK OF SMC
SHARES AND (3) THE CIIF COMPANIES, AS THEY HAVE FINALLY BEEN ADJUDICATED IN
THE AFOREMIENTIONED PARTIAL SUMMARY JUDGMENTS DATED JULY 11, 2003 AND MAY
7, 2004.

SO ORDERED.

Costs against petitioners COCOFED, et al., in G.R. Nos. 177857-58 and Danilo S. Ursua in G.R. No.
178193.

No further pleadings shall be entertained. Let Entry of Judgment be made in due course.

SO ORDERED.

Cariño v. CHR, 204 SCRA 483 (1991)

FACTS:  On September 17, 1990, a Monday and a class day, some 800 public school teacher,
among them the 8 herein private respondents who were members of the Manila Public School
Teachers Association (MPSTA) and Alliance of Concerned Teachers (ACT) undertook “mass
concerted actions” to “dramatize and highlight” their plight resulting from the alleged failure of
the public authorities to act upon grievances that had time and again been brought to the latter’s
attention.

The respondents were preventively suspended by the Secretary of Education. They complained
to CHR.

ISSUE: WON CHR has the power to adjudicate alleged human rights violations
RULING: No.

The Commission evidently intends to itself adjudicate, that is to say, determine with the
character of finality and definiteness, the same issues which have been passed upon and
decided by the Secretary of Education and subject to appeal to CSC, this Court having in fact,
as aforementioned, declared that the teachers affected may take appeals to the CSC on said
matter, if still timely.

The threshold question is whether or not the CHR has the power under the constitution to do so;
whether or not, like a court of justice or even a quasi-judicial agency, it has jurisdiction or
adjudicatory powers over, or the power to try and decide, or dear and determine, certain specific
type of cases, like alleged human rights violations involving civil or political rights.

The Court declares that the CHR to have no such power, and it was not meant by the
fundamental law to be another court or quasi-judicial agency in this country, or duplicate much
less take over the functions of the latter.

The most that may be conceded to the Commission in the way of adjudicative power is that it
may investigate, i.e. receive evidence and make findings of fact as regards claimed human
rights violations involving civil and political rights. But fact-finding is not adjudication, and cannot
be likened to judicial function of a court of justice, or even a quasi judicial agency or official.  The
function of receiving evidence and ascertaining therefrom the facts of a controversy is not a
judicial function, properly speaking. To be considered such, the faculty of receiving evidence
and making factual conclusions in a controversy must be accompanied by the authority
of applying the law to those factual conclusions to the end that the controversy be decided or
determined authoritatively, finally and definitely, subject to such appeals or modes of review as
may be provided by law. This function, to repeat, the Commission does not have.

Hence it is that the CHR having merely the power to “investigate,” cannot and not “try and
resolve on the merits” (adjudicate) the matters involved in Striking Teachers HRC Case No. 90-
775, as it has announced it means to do; and cannot do so even if there be a claim that in the
administrative disciplinary proceedings against the teachers in question, initiated and conducted
by the DECS, their human rights, or civil or political rights had been transgressed. 

Republic of the Philippines

SUPREME COURT
Manila
 SECOND DIVISION

G.R. No. 207791               July 15, 2015

THE CITY OF DAVAO, REPRESENTED BY THE CITY TREASURER OF DAVAO CITY, Petitioner,

vs.
THE INTESTATE ESTATE OF AMADO S. DALISAY, REPRESENTED BY SPECIAL
ADMINISTRATOR ATTY. NICASIO B. PADERNA, Respondent.

DECISION

MENDOZA, J.:

This is a petition for review on certiorari under Rule 45 of the Rules of Court assailing the January
24, 2013 Decision  and the May 15, 2013 Resolution  of the Court of Appeals (CA), in CA-G.R. CV
1 2

No. 01903-MIN, which affirmed the June 6, 2008 Decision of the Regional Trial Court, Branch 17,
Davao City (RTC), ordering the City of Davao to, among others, receive the amount of
₱5,000,000.00 as full payment of the redemption price of the forfeited properties of the Intestate
Estate of Amado S. Dalisay.

The Facts

The Estate of Amado S. Dalisay (the Estate)owned the following properties, all situated in Davao
City:

1. Lot 1, Pcs-11-001298, covered by Transfer Certificate of Title (TCT) No. T-202211 with
Tax Declaration No. E-1-34-10484;

2. Lot 6, Pcs-11-001298, covered by TCT No. T-202215 with Tax Declaration No. E-1-34-
10488;

3. Lot 7, Pcs-11-001298, covered by TCT No. T-202216 with Tax Declaration No. E-1-34-
10489;

4. Lot 2, Pcs-11-001298, covered by TCT No. T-202212 with Tax Declaration No. E-1-34-
10492; and

5. Building erected in Lot No. 26-B and covered by Tax Declaration No. E-1-34-10480.

These properties were advertised for sale at a public auction for nonpayment of real estate taxes.
The public auction was scheduled on July 19, 2004. No bidders appeared on the date of the public
auction, thus, the aforesaid properties were acquired by the City Government of Davao (the
City)pursuant to Section 263 of Republic Act (R.A.) No. 7160 of the Local Government Code of 1991
(LGC) which provides:

Section 263. Purchase of Property By the Local Government Units for Want of Bidder.- In case there
is no bidder for the real property advertised for sale as provided herein, the real property tax and the
related interest and costs of sale, the local treasurer conducting the sale shall purchase the property
in behalf of the local government unit concerned to satisfy the claim and within two (2) days
thereafter shall make a report of his proceedings which shall be reflected upon the records of his
office. It shall be the duty of the Registrar of Deeds concerned upon registration with his office of any
such declaration of forfeiture to transfer the title of the forfeited property to the local government unit
concerned without the necessity of an order from a competent court.

Within one (1) year from the date of such forfeiture, the taxpayer or any of his representative, may
redeem the property by paying to the local treasurer the full amount of the real property tax and the
related interest and the costs of sale. If the property is not redeemed as provided herein, the
ownership thereof shall be vested on the local government unit concerned.

On September 13, 2005, or more than a year after the public auction, the Declarations of Forfeiture
for the five (5) properties were separately issued by the City Treasurer. The common provisions of
the declarations read:

WHEREAS, the delinquent taxpayer or his authorized representative, has within a period of one (1)
year from said date of Declaration of Forfeiture as herein specified, to redeem the property sold by
paying to the City Treasurer the full amount of the real property tax and related interest and cost of
sale as authorized under R.A. 7160. If the property is not redeemed as herein provided, the
ownership of the above described property shall be fully vested to the City Government of Davao in
accordance with Section 263 of R.A. 7160.

NOW, THEREFORE, for and in accordance of the foregoing, I RODRIGO S. RIOLA, in my capacity
as the Acting City Treasurer of Davao City, and pursuant to the provision of Section 262 of Republic
Act 7160 otherwise known as the Local Government Code of 1991 hereby DECLARE AS IT
HEREBY DECLARED the above described property FORFEITED in favor of the City Government of
Davao.

EXECUTED in Davao City, Philippines this 13th day of September 2005.

[Emphases Supplied]

On October 3, 2005, the City caused the annotation of the five (5) Declarations of Forfeiture on the
corresponding TCTs of the properties.

Subsequently, the Estate inquired from the City Treasurer’s Office regarding the amount of the
redemption price of the properties. On September 11, 2006, the Real Property Tax Division of the
City furnished the Estate copies of the billing statements containing a handwritten summary of the
amount showing the aggregate total of ₱4,996,534.67.

Thus, on September 13, 2006, the Estate delivered a written tender of payment to the City Treasurer
and, at the same time, tendered the amount of ₱5,000,000.00. The City, however, refused to accept
the same. This constrained the Estate to file the Notice to Deposit the ₱5,000,000.00 with the Office
of the Clerk of Court, RTC, at the disposal of the City Treasurer. In doing so, the Estate was made to
pay legal fees amounting to ₱75,200.00. An action for redemption, consignation and damages
against the City was consequently filed by the Estate with the RTC.

For its part, the City admitted the existence of the billing statements, but it posited that their issuance
was not an admission that the Estate still had the right to redeem the properties. The period of
redemption had long expired on July 19, 2005, a year after the subject properties were acquired by
the City during the public auction for want of a bidder. Hence, its refusal to accept the tendered
amount was valid and for a lawful cause.
On June 6, 2008, the RTC ruled in favor of the Estate, finding the latter’s evidence as
preponderantly acceptable in establishing its right of redemption. The City was ordered to: 1) receive
the ₱5,000,000.00 deposited with the Clerk of Court, as full payment of the redemption price of the
forfeited properties; and 2) issue a certificate of redemption in favor of the Estate. Further, actual
damages and attorneys fees in the amount of ₱75,200.00 and ₱50,000.00,respectively, were
awarded in favor of the Estate. 3

Aggrieved, the City appealed the RTC decision to the CA, arguing that the one (1) year period
should be reckoned from the date of forfeiture, that is, when the properties of the Estate were
purchased by the City for want of a bidder during the public auction on July 19, 2004. In the same
vein, the RTC erred in holding that the City was estopped from disclaiming and denying the
erroneous statement made by the City Treasurer when the Estate was inadvertently informed that
the one year redemption period started from the date of the issued Declaration of Forfeiture. To this,
the Estate countered that the reckoning date should be the one stated in the Declarations of
Forfeiture which corresponded to their date of issuance, to wit, on September 13, 2005.

In the assailed decision, the CA affirmed the ruling of the RTC. It observed that the City had been
remiss in its duty to immediately issue the Declaration of Forfeiture within two (2) days from
purchase of the property as required under Section 263 of the LGC. The CA then explained that
"redemption should be looked upon with favor, and where no injury would follow, a liberal
construction will be given to redemption laws, specifically on the exercise of the right to redeem." In
the words of the CA:

In the case at bench, We have come to the conclusion upon inquiry into the equities of this case to
liberally apply the redemption provision of the law in favor of the Estate of Amado Dalisay and give
them another opportunity to recover the properties.

It must be stressed that the delinquent taxpayer may within one (1) year from the date of such
forfeiture, redeem the property by paying to the local treasurer the full amount of the real property
tax and the related interest and the costs of sale. The City, by its own inefficiency, belatedly issued
the DECLARATIONS OF FORFEITURE on September 13, 2005. Such is no fault of the plaintiff-
appellee.4

[Emphasis and Underscoring in the Original]

As regards the issue on damages, the CA found the award of attorney’s fees proper, in accordance
with Article 2208 of the Civil Code which allowed an award of the said fees and expenses of
litigation, other than judicial costs, when by the act or omission of one party, compelled the other to
litigate and incur expenses of litigation to protect his interest.  In this case, the City’s refusal to
5

accept the Estate’s tendered payment for the redemption of the lots had effectively constrained it to
file suit. Lastly, the actual damages in the amount of ₱75,200.00 as consignation fees had been
proven with the corresponding receipt.

Hence, this petition.

ASSIGNMENT OF ERRORS:

1. THAT THE HONORABLE COURT ERRED IN HOLDING THAT THE ONE YEAR
REDEMPTION PERIOD BEGINS FROM THE DATE OF DECLARATION OF FORFEITURE
ISSUED BY THE CITY TREASURER ON SEPTEMBER 13, 2006, INSTEAD OF JULY 19,
2004, WHEN THE SUBJECT DELINQUENT PROPERTIES WERE FORFEITED BY THE
CITY GOVERNMENT FOR WANT OF BIDDER DURING THE PUBLIC AUCTION SALE;
 2. THAT THE HONORABLE COURT ERRED IN HOLDING THAT THE CITY
GOVERNMENT IS ESTOPPED FROM DISCLAIMING AND DENYING THE ERRONEOUS
STATEMENT MADE BY THE CITY TREASURER IN HIS DECLARATION OF
FORFEITURES DATED SEPTEMBER 13, 2006, WHICH INADVERTINTLY (SIC)
INFORMED THE PLAINTIFF THAT THE ONE YEAR REDEMPTION PERIOD STARTS
FROM THE DATE OF DECLARATION;

3. THAT THE HONORABLE COURT ERRED IN HOLDING THAT THE PROVISION OF

SECTION 263 OF R.A. 7160, OTHERWISE KNOWN AS THE "LOCAL GOVERNMENT
CODE OF 1991" DID NOT EXPRESSLY REPEAL THE PERTINENT PROVISION OF
REDEMPTION UNDER P.D. 464, THE LAW GOVERNING REAL PROPERTY TAXATION
THEN, AND ACT 496, SECTIONS 50 AND 377 GRANTING THE RIGHT OF REDEMPTION
TO BE EXERCISED WITHIN ONE YEAR FROM THE REGISTRATION OF SAID
FORFEITED PROPERTIES IN THE REGISTER OF DEEDS;

4. THAT THE HONORABLE COURT ERRED IN HOLDING PUBLIC DEFENDANT-

APPELLANT LIABLE TO PAY PLAINTIFF FOR ACTUAL DAMAGES IN THE AMOUNT OF
₱75,200.00 AS CONSIGNATION FEES AND ATTORNEY’S FEES AMOUNTING TO
₱50,000.00. 6

The City argues that no law provides that the one (1) year redemption period should be counted
from the date of the Declaration of Forfeiture. What the LGC simply provides is that the period of
redemption is "within one (1) year from the date of such forfeiture. "For the City, this phrase means
that the effective date of the forfeiture was July 19, 2004, when the tax delinquent properties were
sold at a public auction and, thus, forfeited in its favor for want of a bidder, rather than September
13, 2005 or the date of the issued Declarations of Forfeiture.

Further, and contrary to the observation of the CA, Section 263 of the LGC does not order the City
Treasurer to issue a declaration of forfeiture within two (2) days from the date when tax delinquent
real properties, sold at auction sale, are purchased by the local government in the absence of a
bidder. It merely directs the local treasurer to make a report of his proceedings which shall be
reflected in the records of his office. In fine, it is the position of the City that the issuance of the said
declarations of forfeiture had no bearing in the determination of the period of redemption, inasmuch
as the same were only issued for registration purposes with the Register of Deeds.  Here, the date of
7

issuance of the five (5) declarations of forfeiture on September 13, 2005 was immaterial as the same
was merely intended to facilitate the transfers of title to the forfeited properties in favor of the City
after the lapse of the redemption period reckoned from the auction sale held on July 19, 2004.

Assuming arguendo that the City Treasurer is mandated by law to issue a declaration of forfeiture
within two (2) days from the purchase of the properties, the City avers that it should not be bound by
the consequences of the malfeasance of its public officers. In other words, the City invokes the
doctrine that the principle of estoppel does not operate against the government for the act of its
agents, and that it is never estopped by any mistake or error on their part.  Position of the Estate
8

For its part, the Estate argues that the City erred when it interpreted the subject provision and
concluded that "[t]he law does not say that the one (1) year period of redemption is counted from the
date of ‘declaration of forfeiture.’"  It explained that the provision merely states that the redemption
9

period is counted from "the date of such forfeiture," and the word "such" before the word "forfeiture"
was resorted to in order to avoid the repetition of the words "declaration of" before the word
"forfeiture."  This interpretation is supported by the second paragraph of the same provision which
10

mentions the phrase, "any such declaration of forfeiture" in connection with the duty of the Register
of Deeds to transfer the title of the forfeited property to the local government unit sans a court order.
The Estate submits that the subject provision should be read as follows:

Within one (1) year from the date of declaration of forfeiture the taxpayer or any of its representative,
may redeem the property by paying to the local treasurer the full amount of the real property tax and
the related interest and costs of sale. If the property is not redeemed as provided herein, the
ownership thereof shall be fully vested in the local government unit concerned. 11

[Emphasis Supplied]

The Estate likewise opposes the City’s theory that declarations of forfeiture have no bearing in the
determination of the period of redemption because the same were only issued by the treasurer for
registration purposes with the Register of Deeds. For the Estate, there is a difference between
redemption of property sold at a public auction and redemption of property purchased by the local
government unit for want of bidder. The former is governed by Section 261 of the LGC, while the
latter is covered by Section 263 (2) of the same law.

Reply of the City

The City replies that the term "such" as found in the phrase, "date of such forfeiture," should be
construed as referring to the entire legal process of forfeiture as prescribed in the first paragraph of
Section 263 and not to the singular word, "declaration," as found in the second sentence of the said
paragraph. More importantly, the operative act of forfeiture is the act of the City Treasurer, in behalf
of the city, in purchasing the property for lack of a bidder, and not the registration of any declaration
of forfeiture because the said document only facilitates the transfer of ownership of the property. The
City also makes reference to Section 261 of the LGC, involving the redemption of tax delinquent
properties purchased by the public, which provides that the redemption of the property is to be
reckoned from the date of the sale. For the City, this rule is equally applicable in resolving the
present case involving Section 263 of the LGC because the distinctions between the said provisions
are too insignificant, for the Court to rule otherwise. Regardless of whether the property put up for
auction was purchased by the public or by the local government for want of a bidder, the
commencement of the period for redemption must begin on the date of the sale, for the sake of
uniformity in the rules.
12

The Issues

After a perusal of the arguments presented by the parties, the Court culled the main issue into this
significant question of law:

Whether the one (1) year redemption period of forfeited tax delinquent properties purchased by the
local government for want of a bidder is reckoned from the date of the auction or sale or from the
date of the issuance of the declaration of forfeiture.

The Court's Ruling

In its decision, the CA obviously resorted to an interpretation based solely on the basic rules in
interpretation: the liberal application of redemption laws. It inquired into the "equities of this case"
and preferred to uphold the protection afforded to the original owner of the property as it is "the
policy of the law to aid rather than defeat the owner’s right."13
The Court need not belabor the existence of this rule in jurisprudence. In a long line of cases, the
Court has indeed been copious in its stance to allow the redemption of property where in doing so,
the ends of justice are better realized. Doronila v. Vasquez  allowed redemption in certain cases
14

even after the lapse of the one-year period in order to promote justice and avoid injustice. In
Tolentino v. Court of Appeals,  the policy of the law to aid rather than defeat the right of redemption
15

was expressed, stressing that where no injury would ensue, liberal construction of redemption laws
was to be pursued and the exercise of the right to redemption to be permitted to better serve the
ends of justice. In De los Reyes v. Intermediate Appellate Court,  the rule was liberally interpreted in
16

favor of the original owner of the property to give him another opportunity, should his fortunes
improve, to recover his property.

Nonetheless, the Court’s agreement with the CA decision ends here. The above rulings now beget a
more important question for the resolution of this case: Does a simplistic application of the liberal
construction of redemption laws provide a just resolution of this case? The Court answers this
question in the negative.

While it is a given that redemption by property owners is looked upon with favor, it is equally true that
the right to redeem properties remains to be a statutory privilege.  Redemption is by force of law,
17

and the purchaser at public auction is bound to accept it.  Further, the right to redeem property sold
18

as security for the satisfaction of an unpaid obligation does not exist preternaturally. Neither is it
predicated on proprietary right, which, after the sale of the property on execution, leaves the
judgment debtor and vests in the purchaser. Instead, it is a bare statutory privilege to be exercised
only by the persons named in the statute. 19

In other words, a valid redemption of property must appropriately be based on the law which is the
very source of this substantive right. It is, therefore, necessary that compliance with the rules set
forth by law and jurisprudence should be shown in order to render validity to the exercise of this
right. Hence, when the Court is beckoned to rule on this validity, a hasty resort to elementary rules
on construction proves inadequate. Especially so, when there are deeper underpinnings involved,
not only as to the right of the owner to take back his property, but equally important, as to the right of
the purchaser to acquire the property after deficient compliance with statutory requirements,
including the exercise of the right within the period prescribed by law.

The Court cannot close its eyes and automatically rule in favor of the redemptioner at all times. The
right acquired by the purchaser at an execution sale is inchoate and does not become absolute until
after the expiration of the redemption period without the right of redemption having been exercised.
"But inchoate though it be, it is, like any other right, entitled to protection and must be respected until
extinguished by redemption."  Suffice it to say, the liberal application of redemption laws in favor of
20

the property owner is not an austere solution to a controversy, where there are remarkable factors
that lead to a more sound and reasonable interpretation of the law. Here, the proper focus of the CA
should have been the just and fair interpretation of the law, instead of an automatic and constricted
view on its liberal application.

It is without question that Section 263 of the LGC lacks definiteness as to the reckoning point for the
redemption of tax delinquent properties. It merely employs the phrase, "within one (1) year from the
date of such forfeiture." On one hand, the City avers that the period commences from the date of the
forfeiture, that is, the date of the auction. On the other hand, the Estate insists that the redemption
period begins from the date when the declarations of forfeiture were issued. For the Court, the
arguments of the City point toward a more just and fair resolution of the perceived vagueness in the
law.
First. The City’s theory that the term "forfeiture," contemplated in the subject phrase, refers to the
date when the tax delinquent properties were sold at a public auction, holds more logic than the
conjecture of the Estate on the usage of the word "such."

Indeed, Section 263 of the LGC takes into effect because of one vital factor: the absence of a bidder
in a public auction for tax delinquent properties. Were it not for this fact, this provision would not
come into operation or, at the least, find relevance. Sections 260 and 261 would have come into play
in cases where a purchaser, other than the local government unit, places a bid on the property. This
is undeniably a distinct feature of Section 263 that cannot be ignored. The absence of the public
impels the City Treasurer to purchase the property in behalf of the city. Reason would, therefore,
dictate that this purchase by the City is the very forfeiture mandated by the law. The contemplated
"forfeiture" in the provision points to the situation where the local government ipso facto "forfeits" the
property for want of a bidder.

This analysis is ridden with substance that surpasses the hypothesis of the Estate. The Estate purely
speculates that the term "such" in the phrase "the date of such forfeiture," was only resorted to in
order to avoid the repetition of the words in the text of the law. It attempts to convince the Court that
the second paragraph of the same provision which mentions the phrase, "any such declaration of
forfeiture," in connection with the duty of the Register of Deeds to transfer the title of the forfeited
property, shows that the "forfeiture" contemplated by the law is that of the issuance of the
Declaration of Forfeiture. While the Estate has a point in saying that the City may not speciously
insist that the law does not say that the one (1) year period of redemption is counted from the date of
"declaration of forfeiture," this proffered explanation is far more hallow and unfounded.

As explained above, the better theory that is consistent with the subject matter of the provision is
that forfeiture of tax delinquent properties transpires no later than the purchase made by the city due
to lack of a bidder from the public. This happens on the date of the sale, and not upon the issuance
of the declaration of forfeiture.

To rule otherwise would be similar to saying that prior to the accrual of the local government’s right
as a purchaser, an additional requirement of issuing a declaration of forfeiture is necessary. Not only
is this duty unfounded, but it also places the local government in a vacuum from the time of the
auction up to the time it issues the document. It causes the absurd situation, where the local
government’s forfeiture of the property for want of a bidder becomes an empty and meaningless
exercise merely because the issuance of the declaration of forfeiture came at a much subsequent
time. The precarious effect of this view strips off the local government of the protection given by law
to a purchaser during and after a public auction. This goes against the safeguards to which a
purchaser is entitled until a valid redemption of the property ensues because then, it is burdened
with yet another positive act of issuing a document in order to gain rights. Surely, this is not the
intention of Section 263. The local government’s power to acquire tax delinquent properties cannot
be overemphasized at this point.

Second. The CA seemed to have completely disregarded the ruling in City Mayor v. RCBC (City
Mayor)  in its quick application of the liberal rules of statutory construction. True, City Mayor involved
21

Section 261 of the LGC, instead of Section 263, because it involved a private individual who was
adjudged as the highest bidder during the public auction. Nevertheless, the said case passed upon
the very issue at bench: the reckoning period of the redemption period for auctioned tax delinquent
properties.

In City Mayor, the property owner and respondent bank filed a petition for the acceptance of its
tender of payment and for the subsequent issuance of the certificate of redemption, after the highest
bidder during the auction had effected payment of the tax delinquencies and the issuance and
registration of the corresponding Certificate of Sale of Delinquent Property. The lower court ruled in
favor of the respondent bank on the ground that "the counting of the one (1) year redemption period
of tax delinquent properties sold at public auction should start from the date of registration of the
certificate of sale or the final deed of sale in favor of the purchaser" based on Section 78 of
Presidential Decree (P.D.) No. 464. 22

The Court, however, disagreed with the lower court’s position, viz:

However, since the passing of R.A. No. 7160, such is no longer controlling. The issue of whether or
not R.A No. 7160 or the Local Government Code, repealed P.D. No. 464 or the Real Property Tax
Code has long been laid to rest by this Court. Jurisdiction thrives to the effect that R.A. No. 7160
repealed P.D. No. 464. From January 1, 1992 onwards, the proper basis for the computation of the
real property tax payable, including penalties or interests, if applicable, must be R. A. No. 7160. Its
repealing clause, Section 534, reads:

SECTION 534. Repealing Clause. –

xxxx

(c) The provisions of Sections 2, 3, and 4 of Republic Act No. 1939 regarding hospital fund; Section
3, a (3) and b (2) of Republic Act No. 5447 regarding the Special Education Fund; Presidential
Decree No. 144 as amended by Presidential Decree Nos. 559 and 1741; Presidential Decree No.
231 as amended; Presidential Decree No. 436 as amended by Presidential Decree No. 558; and
Presidential Decrees Nos. 381, 436, 464, 477, 526, 632, 752, and 1136 are hereby repealed and
rendered of no force and effect.

Inasmuch as the crafter of the Local Government Code clearly worded the above-cited Section to
repeal P.D. No. 464, it is a clear showing of their legislative intent that R.A. No. 7160 was to
supersede P.D. No. 464. As such, it is apparent that in case of sale of tax delinquent properties, R.A.
No. 7160 is the general law applicable.

xxx

From the foregoing, the owner of the delinquent real property or person having legal interest therein,
or his representative, has the right to redeem the property within one (1) year from the date of sale
upon payment of the delinquent tax and other fees. Verily, the period of redemption of tax delinquent
properties should be counted not from the date of registration of the certificate of sale, as previously
provided by Section 78 of P.D. No. 464, but rather on the date of sale of the tax delinquent property,
as explicitly provided by Section 261 of R.A. No. 7160.

[Emphases and Underscoring Supplied]

It is worthy to note, however, that City Mayor was ultimately resolved in favor of respondent bank
because it turned out that petitioner city government enacted an ordinance, which provided for the
procedure in the collection of delinquent taxes on real properties within its territorial jurisdiction.
Section 14 (a) Paragraph 7 of the said ordinance expressly set the redemption period within one (1)
year from the date of the annotation of the sale of the property at the proper registry. Being a special
law with limited territorial application, the city ordinance prevailed over that of the LGC which was,
and still is, the general law on the matter. Consequently, the respondent bank had until February 10,
2005 to redeem the subject properties counted from the date of registration of the Certificate of Sale
of Delinquent Property on February 10, 2004. Its tender of payment of the subject properties’ tax
delinquencies and other fees on June 10, 2004, was then well within the redemption period.

It is now apparent that the previous rule enunciating the reckoning period of redemption for tax
delinquent properties from the date of the registration of sale of the property is no longer controlling.
Section 261 now mandates that the owner of the delinquent real property or person having legal
interest therein, or his representative, has the right to redeem the property within one (1) year from
the date of sale upon payment of the delinquent tax and other fees.

In the case at bench, considering the fact that neither of the parties has invoked the existence of an
ordinance of similar import, the general law on the matter finds bearing. In applying the
pronouncements in City Mayor to this case, the Court finds no harm in considering the interpretation
of Section 261 which is emphatic in saying that the redemption period is set "within one (1) year from
the date of sale," as applicable to Section 263. The usage of the terms "sale" and "forfeiture" in
Sections 261 and 263, respectively, only highlights a distinction in the situations covered and
produces no significant variance. The former refers to the voluntary purchase made by a bidder in
public auction while the latter points to the divesting of the ownership of a particular property on
account of the breach of a legal duty, without compensation,  for example, the non-payment of tax.
23

Therefore, in cases covered by these pertinent provisions in the LGC, the date of the "sale" or
"forfeiture" is rightfully the point in time when the owner is divested of certain attributes of ownership
over the property albeit only until the redemption of the property. This translates to no other event
but to the date of the public auction. More than the purpose of uniformity and harmony among
provisions of law, the Court finds this conclusion as consistent with the intention of the law.

Third. At this juncture, the Court considers the peculiar fact involved in this case: the City Treasurer’s
belated issuance of the disputed Declarations of Forfeiture.  Clearly, this irregularity had eventually
1âwphi1

shaped and brought forth the subject controversy. Had it not been for the severe delay in the
issuance, there would have been no dispute and the reckoning period of the redemption period
would have been a toss between closer dates, rather than those claimed, which are years apart, to
wit: July 19, 2004 and September 13, 2005.

The general rule is that the State cannot be put in estoppel by the mistakes or errors of its officials or
agents.  Indeed, like all general rules, this is also subject to exceptions. Estoppel should not be
24

invoked except in a rare and unusual circumstance. It may not be invoked where they would operate
to defeat the effective operation of a policy adopted to protect the public. They must be applied with
circumspection and should be applied only in those special cases where the interests of justice
clearly require it.
25

The Court, however, can only commiserate with the situation of the state and its lost chance of
recovering its property, as it still sees no reason to depart from the general rule. The following
circumstances became the object of the Court’s perplexity:

1. The Estate does not dispute the validity of the notices with respect to the public auction.
This brings the Court to the safe assumption that there was valid constructive notice as to
possible danger of forfeiture of the properties prior to the auction. The Estate, with its
administrator in the person of Nicasio B. Paderna, is undoubtedly bound by this. Corollary
thereto, the delinquent status of the properties may not be said to have been surprising news
to the Estate.

2. Just the same, it took the Estate more than one (1) year from the date of the auction of
which it was properly notified, to inquire from the City Treasurer’s Office regarding the
amount of the redemption price due. On the same date of inquiry or on September 11, 2006,
 the Estate was furnished a handwritten summary of the amount due for redemption. It is fair
to suppose that at this point, the Estate became aware that no declaration of forfeiture had
yet been issued by the City Treasurer.

3. Two (2) days after this inquiry, and as if a reaction thereto, the City Treasurer issued the
subject five (5) Declarations of Forfeiture on September 13, 2006. Now with full confidence
on the said document and its expressed statement that the property owner had one year
from the date of its issuance, within which to redeem the properties, the Estate lost no time in
tendering its payment for the redemption of the properties.

The delay on the part of the Estate to at least inquire into the outcome of the auction and its
misplaced reliance on a curious document heightens the belief of the Court that the City may not be
deprived of a right that has long been vested in its favor. The odd timing in the issuance of the
Declarations of Forfeiture and its very contents which observably benefit the Estate to the core form
a nagging doubt that may not be easily shrugged off. This hinders the Court from applying the
exceptions to the rule on estoppel, when doing this would result in more impropriety.

It is the City that would suffer an injustice if it were to be bound by its officer’s suspect actions. The
policy of enabling local governments to fully utilize the income potentialities of the real property tax
would be put at a losing end if tax delinquent properties could be recovered by the sheer expediency
of a document erroneously or, perhaps fraudulently, issued by its officers. This would place at
naught, the essence of redemption as a statutory privilege; for then, the statutory period for its
exercise may be extended by the indiscretion of scrupulous officers. In other words, the period would
become flexible because extensions of the period would depend, not just on the sound discretion of
the City Treasurer but on his attitude, work ethics and worse, temperament.

The Court cannot allow this situation to prevail.

In this case, the period to redeem the subject properties of this case had long expired on July 19,
2005, and since then, the forfeiture of the properties had become absolute. The failure of the Estate
to validly exercise its right of redemption within the statutory period had already resulted in the
consolidation of ownership over the properties by the City.

One final word. The resolution of this case does not, in any way, cloud the glaring misfeasance in
office committed by the City Treasurer. As discussed, this legal battle could not have developed
were it not for the lull of more than a year between the subject auction and the issuance of the
declarations of forfeiture. More often than not, inordinate delay in the issuance of documents,
whether out of a ministerial or directory function, creates an injurious effect to the parties concerned.
This inefficiency in the bureaucracy must be thwarted lest the quality of public service in local
governments deteriorate and personal rights suffer. No less than the Constitution sanctifies the
principle that a public office is a public trust, and enjoins all public officers and employees to serve
with the highest degree of responsibility, integrity, loyalty, and efficiency.  These attributes, by all
26

means, are expected of a City Treasurer. WHEREFORE, the assailed January 24, 2013 Decision of
the Court of Appeals and its May 15, 2013 Resolution in C.A.-G.R. CV No. 01903-MIN are
REVERSED and SET ASIDE. No costs. The action for redemption, consignation and damages filed
by respondent Estate is ordered DISMISSED.

SO ORDERED.
 Republic of the Philippines
SUPREME COURT
Manila

FIRST DIVISION

G.R. No. 72969-70 December 17, 1986

PHILIPPINE GAMEFOWL COMMISSION AND HEE ACUSAR, petitioners,

vs.
HON. INTERMEDIATE APPELLATE COURT, MAYOR CELESTINO E. MARTINEZ, JR., THE
SANGGUNIANG BAYAN OF BOGO (CEBU), and SANTIAGO SEVILLA, respondents.

Ramon M. Durano & Associates for petitioner Hee Acusar.

Clavel Asas-Martinez for respondents.

CRUZ, J.:

This case involves a conflict of jurisdiction between the Philippine Gamefowl Commission and the
municipal government of Bogo, Cebu, both of which claim the power to issue licenses for the
operation of cockpits in the said town.

The issue arose when Hee Acusar, who was operating the lone cockpit in Bogo, was ordered to
relocate the same pursuant to P.D. No. 449, the Cockfighting Law of 1974, on the ground that it was
situated in a tertiary commercial zone, a prohibited area.   Although the period of grace for such
1

relocation was extended to June 11, 1980 by P.D. 1535, Acusar failed to comply with the
requirement, as a result of which the Philippine Constabulary considered the cockpit phased
out.   To add to his troubles, the Court of First Instance of Cebu, in a petition to compel the municipal
2

mayor to issue Acusar a permit to operate a cockpit, declared that he had waived his right to a
renewal thereof because of his failure to relocate.  3

On July 24, 1980, Santiago Sevilla, private respondent herein, was granted a license to operate a
cockpit by Mayor Celestino E. Martinez by authority of the Sangguniang Bayan of Bogo and with
subsequent approval of the PC Regional Command 7 as required by law.   As only one cockpit is
4

allowed by law in cities or municipalities with a population of not more than one hundred
thousand,   Acusar sued to revoke this license. He failed, however, first before the PC Recom 7   and
5 6

later before the Court of First Instance of Cebu.   His petition for certiorari challenging the decision of
7

the lower court was dismissed by this Court.  8

Nothing daunted, Acusar went to the Philippine Gamefowl Commission seeking a renewal of his
cockpit license and the cancellation of Sevilla's in what was docketed as PGC Case No. 10. He
succeeded initially with the issuance by the PGC on August 16, 1984, of an interlocutory order
allowing him to temporarily operate his cockpit.   This was challenged in two separate actions   filed
9 10

by Sevilla and the municipal government of Bogo in the Court of First Instance of Cebu which, on
petition of Acusar, were temporarily restrained by the Intermediate Appellate Court.   This same
11

court also temporarily restrained the enforcement of the PGC order of August 16, 1984 pending
consideration of the petition to nullify it filed by Sevilla and the Bogo municipal officials. 
12
On December 6, 1984, the Philippine Gamefowl Commission issued its resolution on the merits of
Acusar's petition and ordered Mayor Martinez and the Sangguniang Bayan "to issue the necessary
mayor's permit in favor of Hee Acusar" and "to cancel and/or revoke the mayor's permit in favor of
Engr. Santiago A. Sevilla." The Commission also "RESOLVED to issue the Registration Certificate of
Hee Acusar for the current year 1984 and revoke the Registration Certificate of E ngr. Santiago A.
Sevilla." 
13

The above-stated resolution was on appeal declared null and void by the Intermediate Court of
Appeals,   and its decision is now before us in a petition for review on certiorari.
14

We shall first compare the powers vested respectively in the Philippine Gamefowl Commission and
the city and municipal officials under the applicable laws, to wit, P.D. 1802, P.D. 1802-A and the
Local Government Code.

The pertinent powers of the Philippine Gamefowl Commission under Section 2 of P.D. 1802, which
became effective on January 16, 1981, are the following.

a) Promulgate and enforce rules and regulations relative to the holding of cockfight derbies
and cockfights in the Philippines including the frequency sites, conduct and operation of such
derbies and cockfights;

b) Issue licenses for the holding of international derbies;

xxx xxx xxx

d) Fix and periodically revise whenever necessary, subject to the approval of the Ministry of
Finance, the rates of license fees and other levies that may be imposed on local derbies and
cockfights and international cockfight derbies, cockpit personnel and employees;

e) To promulgate rules and regulations relative to the holding, methods, procedures,

operations and conduct of cockfighting in general as well as accreditation of cockpit
personnel and association of cockpit owners, operators and lessees, to elevate the standard
of cockfighting;

xxx xxx xxx

By contrast, P.D. 1802, as amended by P.D. 1802-A, provides as follows:

SECTION 1. Section 4 of Presidential Decree No. 1802 is hereby amended to read as

follows:

Sec. 4. City and Municipal Mayors with the concurrence of their respective "Sanggunians"
shall have the authority to license and regulate regular cockfighting pursuant to the rules and
regulations promulgated by the Commission and subject to its review and supervision.

According to the Local Government Code, the municipal mayor has the power to "grant licenses and
permits in accordance with existing laws and municipal ordinances and revoke them for violation of
the conditions upon which they have been granted,"   and the Sangguniang Bayan is authorized to
15

"regulate cockpits, cockfighting and the keeping or training of gamecocks, subject to existing
guidelines promulgated by the Philippine Gamefowl Commission."  16
A study of the above-cited powers shows that it is the municipal mayor with the authorization of the
Sangguniang Bayan that has the primary power to issue licenses for the operation of ordinary
cockpits. Even the regulation of cockpits is vested in the municipal officials, subject only to the
guidelines laid down by the Philippine Gamefowl Commission. Its power to license is limited only
to international derbies and does not extend to ordinary cockpits. Over the latter kind of cockpits, it
has the power not of control but only of review and supervision.

We have consistently held that supervision means "overseeing or the power or authority of an officer
to see that their subordinate officers perform their duties. If the latter fail or neglect to fulfill them, the
former may take such action or steps as prescribed by law to make them perform their
duties."   Supervision is a lesser power than control, which connotes "the power of the officer to alter
17

or modify or set aside what a subordinate had done in the performance of his duties and to
substitute the judgment of the former for that of the latter. "   Review, on the other hand, is a
18

reconsideration or reexamination for purposes of correction.  19

As thus defined, the power of supervision does not snow the supervisor to annul the acts of the
subordinate, for that comes under the power of control. What it can do only is to see to it that the
subordinate performs his duties in accordance with law. The power of review is exercised to
determine whether it is necessary to correct the acts of the subordinate. If such correction is
necessary, it must be done by the authority exercising control over the subordinate or through the
instrumentality of the courts of justice, unless the subordinate motu proprio corrects himself after his
error is called to his attention by the official exercising the power of supervision and review over him.

At that, even the power of review vested in the Philippine Gamefowl Commission by P.D. 1802-A
may have been modified by the Local Government Code, which became effective on February 14,
1983. Under the Code, the Sangguniang Panlalawigan is supposed to examine the ordinances,
resolutions and executive orders issued by the municipal government and to annul the same, but
only on one ground, to wit, that it is beyond the powers of the municipality or ultra
vires.   Significantly, no similar authority is conferred in such categorical terms on the Philippine
20

Gamefowl Commission regarding the licensing and regulation of cockpits by the municipal
government.

The conferment of the power to license and regulate municipal cockpits in the municipal authorities
is in line with the policy of local autonomy embodied in Article II, Section 10, and Article XI of the
1973 Constitution. It is also a recognition, as the Court of Appeals correctly points out, of the
superior competence of the municipal officials in dealing with this local matter with which they can be
expected to be more knowledgeable than the national officials. Surely, the Philippine Gamefowl
Commission cannot claim to know more than the municipal mayor and the Sangguniang Bayan of
Bogo, Cebu, about the issues being disputed by the applicants to the cockpit license.

At any rate, assuming that the resolution of the Sangguniang Bayan authorizing the issuance of a
cockpit license to Sevilla was subject to reversal by the PGC, such action could be justified only if
based upon a proven violation of law by the municipal officials. It may not be made only for the
purpose of substituting its own discretion for the discretion exercised by the municipal authorities in
determining the applicant to which the lone cockpit license should be issued.

In the absence of a clear showing of a grave abuse of discretion, the choice of the municipal
authorities should be respected by the PGC and in any event cannot be replaced by it simply
because it believes another person should have been selected. Stated otherwise, the PGC cannot
directly exercise the power to license cockpits and in effect usurp the authority directly conferred by
law on the municipal authorities.
If at all, the power to review includes the power to disapprove; but it does not carry the authority to
substitute one's own preferences for that chosen by the subordinate in the exercise of its sound
discretion. In the instant case, the PGC did not limit itself to vetoing the choice of Sevilla, assuming
he was disqualified, but directly exercised the authority of replacing him with its own choice.
Assuming Sevilla was really disqualified, the choice of his replacement still remained with the
municipal authorities, subject only to the review of the PGC.

In ordering the respondent municipal officials to cancel the mayor's permit in favor of Santiago A.
Sevilla and to issue another one in favor of Acusar, the PGC was exercising not the powers of mere
supervision and review but the power of control, which had not been conferred upon it.

The other issue raised by the petitioner is easily resolved. It appearing that they are supported by
substantial evidence, we accept the factual findings of the respondent court that Acusar's cockpit
was within the prohibited area and was therefore correctly considered phased out when its operator
failed to relocate it as required by law. According to the Court of Appeals, "it is not controverted that
Acusar's cockpit is near a Roman Catholic church near the Cebu Roosevelt Memorial College, near
residential dwellings and near a public market." These circumstances should be more than enough
to disqualify Acusar even under the prior-operator rule he invokes, assuming that rule was
applicable.

Under that rule, preference is given to the actual holder of the permit, but in the instant case Acusar
could not be said to be actually holding the permit at the time it was given to Sevilla. Acusar had
then already forfeited his right to renew it by reason of his non-compliance with the requirement to
relocate.

This is as good an occasion as any to stress the commitment of the Constitution to the policy of local
autonomy which is intended to provide the needed impetus and encouragement to the development
of our local political subdivisions as "self-reliant communities." In the words of Jefferson, "Municipal
corporations are the small republics from which the great one derives its strength." The vitalization of
local governments will enable their inhabitants to fully exploit their resources and, more important,
imbue them with a deepened sense of involvement in public affairs as members of the body politic.
This objective could be blunted by undue interference by the national government in purely local
affairs which are best resolved by the officials and inhabitants of such political units. The decision we
reach today conforms not only to the letter of the pertinent laws but also to the spirit of the
Constitution.

WHEREFORE, the petition is dismissed. The decision of the respondent court of Appeals dated May
29, 1985, is hereby affirmed in toto, with costs against petitioner Hee Acusar.

SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila

THIRD DIVISION

G.R. No. 167982             August 13, 2008

OFFICE OF THE OMBUDSMAN, petitioner,

vs.
MERCEDITAS DE SAHAGUN, MANUELA T. WAQUIZ and RAIDIS J. BASSIG, respondent.*
 DECISION

AUSTRIA-MARTINEZ, J.:

Before the Court is a Petition for Review on Certiorari under Rule 45 of the Rules of Court assailing the
Decision1 dated April 28, 2005 of the Court of Appeals (CA) in CA-G.R. SP No. 78008 which set aside the
Orders dated March 10, 2003 and June 24, 2003 of the petitioner Office of the Ombudsman in OMB-
ADM-0-00-0721.

The material antecedents are as follows:

On November 13, 1992, respondent Raidis J. Bassig, Chief of the Research and Publications Division of
the Intramuros Administration, submitted a Memorandum to then Intramuros Administrator Edda V.
Henson (Henson) recommending that Brand Asia, Ltd. be commissioned to produce a video documentary
for a television program, as well implement a media plan and marketing support services for Intramuros.

On November 17, 1992, the Bids and Awards Committee (BAC) of the Intramuros Administration,
composed of respondent Merceditas de Sahagun, as Chairman, with respondent Manuela T. Waquiz and
Dominador C. Ferrer, Jr. (Ferrer), as members, submitted a recommendation to Henson for the approval
of the award of said contract to Brand Asia, Ltd. On the same day, Henson approved the recommendation
and issued a Notice of Award to Brand Asia, Ltd.

On November 23, 1992, a contract of service to produce a video documentary on Intramuros for TV
program airing was executed between Henson and Brand Asia, Ltd. On December 1, 1992, a Notice to
Proceed was issued to Brand Asia, Ltd.

On June 2, 1993, the BAC, with Augusto P. Rustia (Rustia) as additional member, recommended to
Henson the approval of the award of contract for print collaterals to Brand Asia, Ltd. On the same day,
Henson approved the recommendation and issued a Notice of Award/Notice to Proceed to Brand Asia,
Ltd.

On June 22, 1993, a contract of services to produce print collaterals was entered between Henson and
Brand Asia, Ltd.

On March 7, 1995, an anonymous complaint was filed with the Presidential Commission Against Graft
and Corruption (PGAC) against Henson in relation to the contracts entered into with Brand Asia, Ltd.

On November 30, 1995, Henson was dismissed from the service by the Office of the President upon
recommendation of the PGAC which found that the contracts were entered into without the required
public bidding and in violation of Section 3 (a) and (e) of Republic Act (R.A.) No. 3019, or the Anti-Graft
and Corrupt Practices Act.

On August 8, 1996, an anonymous complaint was filed with the Ombudsman against the BAC in relation
to the latter’s participation in the contracts with Brand Asia, Ltd. for which Henson was dismissed from
service.

On September 5, 2000, Fact-Finding Intelligence Bureau (FFIB) filed criminal and administrative charges
against respondents, along with Ferrer and Rustia, for violation of Section 3 (a) and (c) of R.A. No. 3019
in relation to Section 1 of Executive Order No. 302 and grave misconduct, conduct grossly prejudicial to
the best interest of the service and gross violation of Rules and Regulations pursuant to the
Administrative Code of 1987, docketed as OMB-0-00-1411 and OMB-ADM-0-00-0721,
respectively.2 OMB-0-00-1411 was dismissed on February 27, 2002 for lack of probable cause. 3
In his proposed Decision4 dated June 19, 2002, Graft Investigation Officer II Joselito P. Fangon
recommended the dismissal of OMB-ADM-0-00-0721.

However, then Ombudsman Simeon V. Marcelo disapproved the recommendation. In an Order 5 dated

March 10, 2003, he held that there was substantial evidence to hold respondents administratively liable
since the contracts awarded to Brand Asia, Ltd. failed to go through the required procedure for public
bidding under Executive Order No. 301 dated July 26, 1987. Respondents and Ferrer were found guilty of
grave misconduct and dismissed from service. Rustia was found guilty of simple misconduct and
suspended for six months without pay.

On March 17, 2003, respondents, along with Rustia, filed a Motion for Reconsideration. 6

On June 24, 2003, Ombudsman Marcelo issued an Order7 partially granting the motion for

reconsideration. Respondents and Ferrer were found guilty of the lesser offense of simple misconduct
and suspended for six months without pay. Rustia's suspension was reduced to three months.

Dissatisfied, respondents filed a Petition for Review8 with the CA assailing the Orders dated March 10,
2003 and June 24, 2003 of the Ombudsman.

On April 28, 2005, the CA rendered a Decision9 setting aside the Orders dated March 10, 2003 and June
24, 2003 of the Ombudsman. The CA held that respondents may no longer be prosecuted since the
complaint was filed more than seven years after the imputed acts were committed which was beyond the
one year period provided for by Section 20 (5) of Republic Act (R.A.) No. 6770, otherwise known as "The
Ombudsman Act of 1989"; and that the nature of the function of the Ombudsman was purely
recommendatory and it did not have the power to penalize erring government officials and employees.
The CA relied on the following statement made by the Court in Tapiador v. Office of the Ombudsman,10 to
wit:

x x x Besides, assuming arguendo, that petitioner [Tapiador] was administratively liable, the

Ombudsman has no authority to directly dismiss the petitioner from the government
service, more particularly from his position in the BID. Under Section 13, subparagraph 3, of
Article XI of the 1987 Constitution, the Ombudsman can only "recommend" the removal of
the public official or employee found to be at fault, to the public official
concerned.11 (Emphasis supplied)

Hence, the present petition raising the following issues (1) whether Section 20 (5) of R.A. No. 6770
prohibits administrative investigations in cases filed more than one year after commission, and (2)
whether the Ombudsman only has recommendatory, not punitive, powers against erring government
officials and employees.

The Court rules in favor of the petitioner.

The issues in the present case are settled by precedents.

On the first issue, well-entrenched is the rule that administrative offenses do not
prescribe.12 Administrative offenses by their very nature pertain to the character of public officers and
employees. In disciplining public officers and employees, the object sought is not the punishment of the
officer or employee but the improvement of the public service and the preservation of the public’s faith
and confidence in our government.13

Respondents insist that Section 20 (5) of R.A. No. 6770, to wit:

 SEC. 20. Exceptions. – The Office of the Ombudsman may not conduct the necessary
investigation of any administrative act or omission complained of if it believes that:

xxx

(5) The complaint was filed after one year from the occurrence of the act or omission complained
of. (Emphasis supplied)

proscribes the investigation of any administrative act or omission if the complaint was filed after one year
from the occurrence of the complained act or omission.

In Melchor v. Gironella,14  the Court held that the period stated in Section 20(5) of R.A. No. 6770 does not
refer to the prescription of the offense but to the discretion given to the  Ombudsman on whether it would
investigate a particular administrative offense. The use of the word "may" in the provision is construed as
permissive and operating to confer discretion.15 Where the words of a statute are clear, plain and free
from ambiguity, they must be given their literal meaning and applied without attempted interpretation. 16

In Filipino v. Macabuhay,17 the Court interpreted Section 20 (5) of R.A. No. 6770 in this manner:

Petitioner argues that based on the abovementioned provision [Section 20(5) of RA 6770)],
respondent's complaint is barred by prescription considering that it was filed more than one year
after the alleged commission of the acts complained of.

Petitioner's argument is without merit.

The use of the word "may" clearly shows that it is directory in nature and not mandatory as
petitioner contends. When used in a statute, it is permissive only and operates to confer
discretion; while the word "shall" is imperative, operating to impose a duty which may be
enforced. Applying Section 20(5), therefore, it is discretionary upon the Ombudsman whether
or not to conduct an investigation on a complaint even if it was filed after one year from
the occurrence of the act or omission complained of. In fine, the complaint is not barred
by prescription.18 (Emphasis supplied)

The declaration of the CA in its assailed decision that while as a general rule the word "may" is directory,
the negative phrase "may not" is mandatory in tenor; that a directory word, when qualified by the word
"not," becomes prohibitory and therefore becomes mandatory in character, is not plausible. It is not
supported by jurisprudence on statutory construction.

As the Court recently held in Office of the Ombudsman v. Court of Appeals,19 Section 20 of R.A. No. 6770
has been clarified by Administrative Order No. 17,20 which amended Administrative Order No. 07,
otherwise known as the Rules of Procedure of the Office of the Ombudsman. Section 4, Rule III21 of the
amended Rules of Procedure of the Office of the Ombudsman reads:

Section 4. Evaluation. - Upon receipt of the complaint, the same shall be evaluated to determine
whether the same may be:

a) dismissed outright for any grounds stated under Section 20 of Republic Act No. 6770,
provided, however, that the dismissal thereof is not mandatory and shall be discretionary
on the part of the Ombudsman or the Deputy Ombudsman concerned;

b) treated as a grievance/request for assistance which may be referred to the Public Assistance
Bureau, this Office, for appropriate action under Section 2, Rule IV of this Rules;
 c) referred to other disciplinary authorities under paragraph 2, Section 23, R.A. 6770 for the
taking of appropriate administrative proceedings;

d) referred to the appropriate office/agency or official for the conduct of further fact-finding
investigation; or

e) docketed as an administrative case for the purpose of administrative adjudication by the Office
of the Ombudsman. (Emphasis supplied)

It is, therefore, discretionary upon the Ombudsman whether or not to conduct an investigation of a

complaint even if it was filed after one year from the occurrence of the act or omission complained of.

Thus, while the complaint herein was filed only on September 5, 2000, or more than seven years after the
commission of the acts imputed against respondents in November 1992 and June 1993, it was within the
authority of the Ombudsman to conduct the investigation of the subject complaint.

On the second issue, the authority of the Ombudsman to determine the administrative liability of a public
official or employee, and to direct and compel the head of the office or agency concerned to implement
the penalty imposed is likewise settled.

In Ledesma v. Court of Appeals,22 the Court has ruled that the statement in Tapiador that made reference
to the power of the Ombudsman to impose an administrative penalty was merely an obiter dictum and
could not be cited as a doctrinal declaration of this Court, thus:

x x x [A] cursory reading of Tapiador reveals that the main point of the case was the failure of the
complainant therein to present substantial evidence to prove the charges of the administrative
case. The statement that made reference to the power of the Ombudsman is, at best,
merely an obiter dictum and, as it is unsupported by sufficient explanation, is susceptible to
varying interpretations, as what precisely is before us in this case. Hence, it cannot be cited as
a doctrinal declaration of this Court nor is it safe from judicial examination.23 (Emphasis
supplied)

In Estarija v. Ranada,24 the Court reiterated its pronouncements in Ledesma and categorically stated:

x x x [T]he Constitution does not restrict the powers of the Ombudsman in Section 13, Article XI
of the 1987 Constitution, but allows the Legislature to enact a law that would spell out the powers
of the Ombudsman. Through the enactment of Rep. Act No. 6770, specifically Section 15, par. 3,
the lawmakers gave the Ombudsman such powers to sanction erring officials and employees,
except members of Congress, and the Judiciary. To conclude, we hold that Sections 15, 21, 22
and 25 of Republic Act No. 6770 are constitutionally sound. The powers of the Ombudsman
are not merely recommendatory. His office was given teeth to render this constitutional body
not merely functional but also effective. Thus, we hold that under Republic Act No. 6770 and
the 1987 Constitution, the Ombudsman has the constitutional power to directly remove
from government service an erring public official other than a member of Congress and the
Judiciary.25 (Emphasis supplied)

The power of the Ombudsman to directly impose administrative sanctions has been repeatedly reiterated
in the subsequent cases of Barillo v. Gervasio,26  Office of the Ombudsman v. Madriaga,27  Office of the
Ombudsman v. Court of Appeals,28  Balbastro v. Junio,29 Commission on Audit, Regional Office No. 13,
Butuan City v. Hinampas,30 Office of the Ombudsman v. Santiago,31 Office of the Ombudsman v.
Lisondra,32 and most recently in Deputy Ombudsman for the Visayas v. Abugan33 and continues to be the
controlling doctrine.
In fine, it is already well-settled that the Ombudsman's power as regards the administrative penalty to be
imposed on an erring public officer or employee is not merely recommendatory. The Ombudsman has the
power to directly impose the penalty of removal, suspension, demotion, fine, censure, or prosecution of a
public officer or employee, other than a member of Congress and the Judiciary, found to be at fault, within
the exercise of its administrative disciplinary authority as provided in the Constitution, R.A. No. 6770, as
well as jurisprudence. This power gives the said constitutional office teeth to render it not merely
functional, but also effective.34

Thus, the CA committed a reversible error in holding that the case had already prescribed and that
the Ombudsman does not have the power to penalize erring government officials and employees.

WHEREFORE, the petition is GRANTED. The Decision dated April 28, 2005 of the Court of Appeals in
CA-G.R. SP No. 78008 is REVERSED and SET ASIDE. The Order dated June 24, 2003 of the Office of
the Ombudsman is REINSTATED.

SO ORDERED.