G.R. No.

193089 July 9, 2012

ROSENA FONTELAR OGAWA, Petitioner,

vs.
ELIZABETH GACHE MENIGISHI, Respondent.

DECISION

PERLAS-BERNABE, J.:

This is a Petition for Review on Certiorari under Rule 45 of the Rules of Court assailing the
March 8, 2010 Decision1and June 21, 2010 Resolution2 of the Court of Appeals (CA) in CA-
G.R. CV No. 86362 which affirmed with modification the September 1, 2005 Decision 3 of the
Regional Trial Court (RTC) of Sorsogon City, Branch 52, granting respondent’s
counterclaim in the amount of 1,000,000.00 Yen and deleting the award of damages as well
as attorney’s fees in favor of the petitioner.

The Facts

Petitioner Roseña Fontelar Ogawa and respondent Elizabeth Gache Menigishi were
childhood friends and former residents of Sorsogon City. Respondent married a Japanese
national, Tomohito Menigishi (Tomohito), and lived in Japan. Sometime in June 1992, the
Menigishis visited the Philippines and introduced Yashoyuki Ogawa (Yashoyuki),
Tomohito’s friend, to petitioner. Yashoyuki and petitioner eventually got married in the
Philippines and thereafter, also lived in Japan.

On January 26, 2004, petitioner filed a complaint4 for sum of money, damages, breach of
good human relation and unjust enrichment before the RTC against respondent, docketed
as Civil Case No. 2004-7299, alleging that the latter borrowed from her the amounts of
P15,000.00, P100,000.00 and P8,000.00, in September 2000, August 2001, and March
2003, respectively. Unable to pay, respondent offered to sell her building and its
improvements in Sorsogon City to petitioner for a consideration of P1,500,000.00 with the
agreement that her outstanding loans with petitioner be deducted from the purchase price
and the balance payable in installments.

As partial payment for the properties, petitioner remitted the following amounts to
respondent: (a) P150,000.00 through the account of her friend Emma Fulleros on October
23, 2003; and (b) P250,772.90 by way of bank remittance to respondent's Equitable-PCI
Bank Account on December 8, 2003. Having paid huge amounts and in order to protect her
proprietary rights, petitioner then demanded for the execution of the corresponding deed of
sale, but respondent backed out from the deal and reneged on her obligations.

In her Answer with Counterclaim,5 respondent specifically denied her indebtedness to

petitioner and claimed that it was the latter who owed her 1,000,000.00 Yen, equivalent to
about P500,000.00, as evidenced by a receipt. In partial payment of her indebtedness,
petitioner, thus, remitted the amounts of P150,000.00 and P250,000.00 to respondent,
leaving a balance of P100,000.00. Respondent also sought reimbursement of the advances
she allegedly made for the wedding expenses of petitioner and Yashoyuki in the amount of
4,000,000.00 Yen. While she admitted offering her property for sale to petitioner,
respondent explained that the sale did not materialize as petitioner failed to produce the
stipulated downpayment. By way of counterclaim, respondent prayed for the award of
4,000,000.00 Yen, the balance of petitioner's purported loan in the amount of P100,000.00;
moral and exemplary damages; and attorney’s fees.

The RTC Ruling

Finding that respondent was indeed indebted to petitioner in the amounts of P150,000.00
and P250,772.90 or the total amount of P400,772.90, the RTC rendered a Decision6 dated
September 1, 2005, thus:
 1. Ordering the defendant to pay the plaintiff the amount of P400,772.90 plus interest
of 12% from the date of filing of this case until the same shall have been paid in full.

2. Ordering the defendant to reimburse the plaintiff for the actual expenses she
incurred in filing the instant case, to wit:

a. P54,000.00 for her fare of plane tickets

b. P7,355.00 for docket fees

3. Ordering the defendant to pay the plaintiff the following amounts:

a. P25,000.00 – moral damages

b. P25,000.00 – exemplary damages

c. P50,000.00 – attorney’s fees

d. P1,000.00 – per appearance of her lawyer

SO ORDERED.

The RTC refused to give credence to respondent's testimony on her counterclaims for being
incredible, inconsistent, and contrary to human experience. It likewise disregarded the
receipt presented by respondent as proof of petitioner's purported indebtedness of
1,000,000.00 Yen.

The CA Ruling

On appeal, the CA affirmed the RTC’s awards of the sums of P150,000.00 and
P250,772.90 in favor of petitioner and sustained the denial of respondent's counterclaim of
4,000,000.00 Yen for lack of evidence. However, it gave probative value to the receipt for
1,000,000.00 Yen and held it sufficient to establish petitioner's indebtedness to respondent,
considering the purported admission of the former's counsel as well as petitioner's own
failure to specifically deny the same under oath as provided for under Section 8, Rule 8 of
the Rules of Court. Consequently, it granted respondent's counterclaim of 1,000,000.00
Yen. Finally, having found both parties at fault, the CA deleted the awards of damages and
attorney’s fees.

Issue Before The Court

In this petition, petitioner advances the question of whether the disputed receipt sufficiently
established respondent's counterclaim that petitioner owed her 1,000,000.00 Yen.

Petitioner’s Arguments

Petitioner argues that the receipt for 1,000,000 Yen is not a promissory note and as such,
its due execution and genuineness need not be denied under oath. Moreover, she denied
any admission of liability that can be deduced from her counsel’s manifestation during the
trial that "the one who usually prepares the receipt is the obligor or the creditor."

Respondent’s Arguments

Respondent, in her Comment, prays for the dismissal of the petition insisting that the CA did
not err in sustaining the obligation of petitioner in her favor on the basis of the disputed
receipt which the latter never denied and her counsel even admitted.

The Court’s Ruling

The Court finds merit in the petition.

At the outset, it should be emphasized that the factual findings of the trial court, when
adopted and confirmed by the CA, are binding and conclusive upon the Court and may not
be reviewed on appeal. However, when the RTC and the CA differ in their findings of fact
and conclusions, as in this case, it becomes imperative to digress from this general rule and
revisit the factual circumstances surrounding the controversy.7

In this case, the RTC and the CA gave different interpretations on the context of the receipt
(Exhibit 1) executed by the parties and arrived at incongruent findings. On one hand, the
RTC considered it as having failed to establish any right on the part of respondent to collect
from petitioner the purported indebtedness of 1,000,000.00 Yen, while on the other, the CA
found it sufficient to confer liability.

A receipt is defined as a written and signed acknowledgment that money or good was
delivered or received.8 Exhibit 1, upon which respondent relies to support her counterclaim,
sufficiently satisfies this definition. It reads in full:

June 13, 2003

I receive the total amount of 1,000,000 Yen (x x x)

Signed

Elizabeth Menigishi Roseña Ogawa

However, while indubitably containing the signatures of both parties, a plain reading of the
contents of Exhibit 1 negates any inference as to the nature of the transaction for which the
1,000,000 Yen was received and who between the parties is the obligor and the obligee.
What is apparent is a mere written and signed acknowledgment that money was received.
There are no terms and conditions found therein from which a right or obligation may be
established. Hence, it cannot be considered an actionable document 9 upon which an action
or defense may be founded.

Consequently, there was no need to deny its genuineness and due execution under oath in
accordance with Section 8, Rule 8 of the Rules of Civil Procedure which provides:

Section 8. How to contest such documents. – When an action or defense is founded upon a
written instrument, copied in, or attached to the corresponding pleading as provided in the
preceding Section, the genuineness and due execution of the instrument shall be deemed
admitted unless the adverse party, under oath, specifically denies them, and sets forth what
he claims to be the facts; but the requirement of an oath does not apply when the adverse
party does not appear to be party to the instrument or when compliance with an order for an
inspection of the original is refused.

Corollary thereto, the manifestation made in open court by Atty. Gerona, petitioner's
counsel, cannot be construed as an admission of her liability. The pertinent testimony of
respondent and the manifestation of Atty. Gerona on May 18, 2005 read:

Q: Ms. Witness, on the cross-examination, the counsel asked you how come that the
signature of Rosena which was marked as EXHIBIT "1-a" and your signature marked as
EXHIBIT "1-b" are parallel to each other?

A: Because it was Rosena who made this. I was just made to confirm that she borrowed
money from me.
Q: Whose handwriting are these, the wording I received One Million Yen… (interrupted)

ATTY. GERONA: (TO THE COURT)

That is admitted, Your Honor, because the one who usually prepares the receipt is the
obligor or the creditor.10

From the foregoing exchange, it cannot be clearly ascertained who between the two
signatories is the obligor and obligee. Atty. Gerona's statement that the one who usually
prepares the receipt is the obligor or the creditor did not conclusively imply that petitioner
owed respondent 1,000,000.00 Yen, or vice versa. Hence, absent any other evidence to
prove the transaction for which the receipt was issued, the Court cannot consider Exhibit 1
as evidence of a purported loan between petitioner and respondent which the former
categorically denied. It is settled that the burden of proof lies with the party who asserts
his/her right. In a counterclaim, the burden of proving the existence of the claim lies with the
defendant, by the quantum of evidence required by law, which in this case is
preponderance of evidence. On this score, Section 1, Rule 133 of the Revised Rules on
Evidence provides:

Section 1. Preponderance of evidence, how determined. – In civil cases, the party having
the burden of proof must establish his case by a preponderance of evidence. In determining
where the preponderance of evidence or superior weight of evidence on the issues involved
lies, the court may consider all the facts and circumstance of the case, the witness’ manner
of testifying, their intelligence, their means and opportunity of knowing the facts to which
they are testifying, the nature of the facts to which they testify, the probability of their
testimony, their interest or want of interest, and also their personal credibility so far as the
same may legitimately appear upon the trial. The court may also consider the number of
witnesses, though the preponderance is not necessarily with the greater number.

"Preponderance of evidence" is the weight, credit, and value of the aggregate evidence on
either side and is usually considered to be synonymous with the term "greater weight of
evidence" or "greater weight of credible evidence."11

From the evidence on record, it is clear that respondent failed to prove her counterclaim by
preponderance of evidence. 1âw phi1

In view of the foregoing, the Court cannot sustain the findings of the CA that both parties
are at fault.12 Accordingly, the award of damages granted by the RTC in favor of petitioner
must be reinstated with the modification that the award of actual damages in the amount of

P400,772.00,13 in the nature of a loan or forbearance of money, shall earn 12% interest per
annum reckoned from the date of filing of the instant complaint until the finality of this
Decision. Thereafter, the judgment award inclusive of interest shall bear 12% annual
interest until fully paid. 14

WHEREFORE, the instant petition is GRANTED. The March 8, 201 0 Decision and June
21, 2010 Resolution of the Court of Appeals are REVERSED and SET ASIDE and the
September 1, 2005 Decision of the Regional Trial Court of Sorsogon City, Branch 52 is
REINSTATED with MODIFICATION ordering respondent Elizabeth Gache Menigishi to pay

petitioner Rosefia Fontelar Ogawa the amount of P400,772.00 plus 12% interest per annum
reckoned from the date of filing of the instant complaint until the finality of this Decision.
Thereafter, the judgment award inclusive of interest shall bear 12% annual interest until fully
paid.
 [G.R. NO. 195770 - July 17, 2012]

AQUILINO Q. PIMENTEL, JR., SERGIO TADEO and NELSON

ALCANTARA, Petitioners, v.EXECUTIVE SECRETARY PAQUITO N. OCHOA and SECRETARY
CORAZON JULIANO-SOLIMAN OF THE DEPARTMENT OF SOCIAL WELFARE and
DEVELOPMENT (DSWD), Respondents.

DECISION

PERLAS-BERNABE, J.:

The Case

For the Court s consideration in this Petition for Certiorari and Prohibition is the constitutionality of
certain provisions of Republic Act No. 10147 or the General Appropriations Act (GAA) of 20111 which
provides a P21 Billion budget allocation for the Conditional Cash Transfer Program (CCTP) headed by
the Department of Social Welfare & Development (DSWD). Petitioners seek to enjoin respondents
Executive Secretary Paquito N. Ochoa and DSWD Secretary Corazon Juliano-Soliman from
implementing the said program on the ground that it amounts to a "recentralization" of government
functions that have already been devolved from the national government to the local government
units.

The Facts

In 2007, the DSWD embarked on a poverty reduction strategy with the poorest of the poor as target
beneficiaries.2 Dubbed "Ahon Pamilyang Pilipino," it was pre-pilot tested in the municipalities of
Sibagat and Esperanza in Agusan del Sur; the municipalities of Lopez Jaena and Bonifacio in Misamis
Occidental, the Caraga Region; and the cities of Pasay and Caloocan3 upon the release of the amount
of P50 Million Pesos under a Special Allotment Release Order (SARO) issued by the Department of
Budget and Management.4 ς rνll

On July 16, 2008, the DSWD issued Administrative Order No. 16, series of 2008 (A.O. No. 16, s.
2008),5setting the implementing guidelines for the project renamed "Pantawid Pamilyang Pilipino
Program" (4Ps), upon the following stated objectives, to wit: ςηα ñrοb lε š ν ιr†υ αl l αω lιbrαrÿ

1. To improve preventive health care of pregnant women and young children

2. To increase enrollment/attendance of children at elementary level

3. To reduce incidence of child labor

4. To raise consumption of poor households on nutrient dense foods

5. To encourage parents to invest in their children's (and their own) future

6. To encourage parent's participation in the growth and development of young children, as well as
involvement in the community.6 ςrνl l

chanrobles vi rt ual law li bra ry

This government intervention scheme, also conveniently referred to as CCTP, "provides cash grant to
extreme poor households to allow the members of the families to meet certain human development
goals."7 ςrνll

Eligible households that are selected from priority target areas consisting of the poorest provinces
classified by the National Statistical Coordination Board (NCSB)8 are granted a health assistance of
P500.00/month, or P6,000.00/year, and an educational assistance of P300.00/month for 10 months,
or a total of P3,000.00/year, for each child but up to a maximum of three children per family. 9 Thus,
after an assessment on the appropriate assistance package, a household beneficiary could receive
from the government an annual subsidy for its basic needs up to an amount of P15,000.00, under the
following conditionalities: ςηαñrοbl ε š νιr⠀ υαl lαω l ιb rαrÿ

a) Pregnant women must get pre natal care starting from the 1st trimester, child birth is attended by
skilled/trained professional, get post natal care thereafter

b) Parents/guardians must attend family planning sessions/mother's class, Parent Effectiveness

Service and others
c) Children 0-5 years of age get regular preventive health check-ups and vaccines

d) Children 3-5 years old must attend day care program/pre-school

e) Children 6-14 years of age are enrolled in schools and attend at least 85% of the time 10 ςrνl l

chanrobles vi rt ual law li bra ry

Under A.O. No. 16, s. 2008, the DSWD also institutionalized a coordinated inter-agency network
among the Department of Education (DepEd), Department of Health (DOH), Department of Interior
and Local Government (DILG), the National Anti-Poverty Commission (NAPC) and the local
government units (LGUs), identifying specific roles and functions in order to ensure effective and
efficient implementation of the CCTP. As the DSWD takes on the role of lead implementing agency
that must "oversee and coordinate the implementation, monitoring and evaluation of the program,"
the concerned LGU as partner agency is particularly tasked to ςη αñrοblε š ν ιr†υαl l αω l ιb rα rÿ

A. Ensure availability of the supply side on health and education in the target areas.

b. Provide necessary technical assistance for Program implementation

c. Coordinate the implementation/operationalization of sectoral activities at the City/Municipal level to

better execute Program objectives and functions

d. Coordinate with various concerned government agencies at the local level, sectoral representatives
and NGO to ensure effective Program implementation

e. Prepare reports on issues and concerns regarding Program implementation and submit to the
Regional Advisory Committee, and

f. Hold monthly committee meetings11 ςrνll

chanrobles vi rt ual law li bra ry

A Memorandum of Agreement (MOA)12 executed by the DSWD with each participating LGU outlines in
detail the obligation of both parties during the intended five-year implementation of the CCTP.

Congress, for its part, sought to ensure the success of the CCTP by providing it with funding under the
GAA of 2008 in the amount of Two Hundred Ninety-Eight Million Five Hundred Fifty Thousand Pesos
(P298,550,000.00). This budget allocation increased tremendously to P5 Billion Pesos in 2009, with
the amount doubling to P10 Billion Pesos in 2010. But the biggest allotment given to the CCTP was in
the GAA of 2011 at Twenty One Billion One Hundred Ninety-Four Million One Hundred Seventeen
Thousand Pesos (P21,194,117,000.00).13 ςrνl l

Petitioner Aquilino Pimentel, Jr., a former Senator, joined by Sergio Tadeo, incumbent President of the
Association of Barangay Captains of Cabanatuan City, Nueva Ecija, and Nelson Alcantara, incumbent
Barangay Captain of Barangay Sta. Monica, Quezon City, challenges before the Court the
disbursement of public funds and the implementation of the CCTP which are alleged to have
encroached into the local autonomy of the LGUs.

The Issue

THE P21 BILLION CCTP BUDGET ALLOCATION UNDER THE DSWD IN THE GAA FY 2011 VIOLATES ART.
II, SEC. 25 & ART. X, SEC. 3 OF THE 1987 CONSTITUTION IN RELATION TO SEC. 17 OF THE LOCAL
GOVERNMENT CODE OF 1991 BY PROVIDING FOR THE RECENTRALIZATION OF THE NATIONAL
GOVERNMENT IN THE DELIVERY OF BASIC SERVICES ALREADY DEVOLVED TO THE LGUS.

Petitioners admit that the wisdom of adopting the CCTP as a poverty reduction strategy for the
Philippines is with the legislature. They take exception, however, to the manner by which it is being
implemented, that is, primarily through a national agency like DSWD instead of the LGUs to which the
responsibility and functions of delivering social welfare, agriculture and health care services have been
devolved pursuant to Section 17 of Republic Act No. 7160, also known as the Local Government Code
of 1991, in relation to Section 25, Article II & Section 3, Article X of the 1987 Constitution.

Petitioners assert that giving the DSWD full control over the identification of beneficiaries and the
manner by which services are to be delivered or conditionalities are to be complied with, instead of
allocating the P21 Billion CCTP Budget directly to the LGUs that would have enhanced its delivery of
basic services, results in the "recentralization" of basic government functions, which is contrary to the
precepts of local autonomy and the avowed policy of decentralization.
Our Ruling

The Constitution declares it a policy of the State to ensure the autonomy of local governments14 and
even devotes a full article on the subject of local governance15 which includes the following pertinent
provisions: ςrαlα ω

Section 3. The Congress shall enact a local government code which shall provide for a more
responsive and accountable local government structure instituted through a system of
decentralization with effective mechanisms of recall, initiative, and referendum, allocate among the
different local government units their powers, responsibilities, and resources, and provide for the
qualifications, election, appointment and removal, term, salaries, powers and functions and duties of
local officials, and all other matters relating to the organization and operation of the local units.

xxx

Section 14. The President shall provide for regional development councils or other similar bodies
composed of local government officials, regional heads of departments and other government offices,
and representatives from non-governmental organizations within the regions for purposes of
administrative decentralization to strengthen the autonomy of the units therein and to accelerate the
economic and social growth and development of the units in the region. (Underscoring supplied) cralawlib rary

In order to fully secure to the LGUs the genuine and meaningful autonomy that would develop them
into self-reliant communities and effective partners in the attainment of national goals,16 Section 17 of
the Local Government Code vested upon the LGUs the duties and functions pertaining to the delivery
of basic services and facilities, as follows: ςrα lαω

SECTION 17. Basic Services and Facilities. ςηα ñrοbl ε š νιr†υ αl lα ω lιbrαrÿ

(a) Local government units shall endeavor to be self-reliant and shall continue exercising the powers
and discharging the duties and functions currently vested upon them. They shall also discharge the
functions and responsibilities of national agencies and offices devolved to them pursuant to this Code.
Local government units shall likewise exercise such other powers and discharge such other functions
and responsibilities as are necessary, appropriate, or incidental to efficient and effective provision of
the basic services and facilities enumerated herein.

(b) Such basic services and facilities include, but are not limited to, x x x.

While the aforementioned provision charges the LGUs to take on the functions and responsibilities that
have already been devolved upon them from the national agencies on the aspect of providing for basic
services and facilities in their respective jurisdictions, paragraph (c) of the same provision provides a
categorical exception of cases involving nationally-funded projects, facilities, programs and services,
thus: ς rα lαω

(c) Notwithstanding the provisions of subsection (b) hereof, public works and infrastructure projects
and other facilities, programs and services funded by the National Government under the annual
General Appropriations Act, other special laws, pertinent executive orders, and those wholly or
partially funded from foreign sources, are not covered under this Section, except in those cases where
the local government unit concerned is duly designated as the implementing agency for such projects,
facilities, programs and services. (Underscoring supplied) cralawlibra ry

chanrobles vi rt ual law li bra ry

The essence of this express reservation of power by the national government is that, unless an LGU is
particularly designated as the implementing agency, it has no power over a program for which funding
has been provided by the national government under the annual general appropriations act, even if
the program involves the delivery of basic services within the jurisdiction of the LGU.

The Court held in Ganzon v. Court of Appeals17 that while it is through a system of decentralization
that the State shall promote a more responsive and accountable local government structure, the
concept of local autonomy does not imply the conversion of local government units into "mini-
states."18 We explained that, with local autonomy, the Constitution did nothing more than "to break up
the monopoly of the national government over the affairs of the local government" and, thus, did not
intend to sever "the relation of partnership and interdependence between the central administration
and local government units."19 In Pimentel v. Aguirre,20 the Court defined the extent of the local
government's autonomy in terms of its partnership with the national government in the pursuit of
common national goals, referring to such key concepts as integration and coordination. Thus: ςrαl αω

Under the Philippine concept of local autonomy, the national government has not completely
relinquished all its powers over local governments, including autonomous regions. Only administrative
powers over local affairs are delegated to political subdivisions. The purpose of the delegation is to
make governance more directly responsive and effective at the local levels. In turn, economic, political
and social development at the smaller political units are expected to propel social and economic
growth and development. But to enable the country to develop as a whole, the programs and policies
effected locally must be integrated and coordinated towards a common national goal. Thus, policy-
setting for the entire country still lies in the President and Congress.

Certainly, to yield unreserved power of governance to the local government unit as to preclude any
and all involvement by the national government in programs implemented in the local level would be
to shift the tide of monopolistic power to the other extreme, which would amount to a decentralization
of power explicated in Limbona v. Mangelin21 as beyond our constitutional concept of autonomy,
thus:ς rα lαω

Now, autonomy is either decentralization of administration or decentralization of power. There is

decentralization of administration when the central government delegates administrative powers to
political subdivisions in order to broaden the base of government power and in the process to make
local governments more responsive and accountable and ensure their fullest development as self-
reliant communities and make them more effective partners in the pursuit of national development
and social progress. At the same time, it relieves the central government of the burden of managing
local affairs and enables it to concentrate on national concerns. The President exercises general
supervision over them, but only to ensure that local affairs are administered according to law. He has
no control over their acts in the sense that he can substitute their judgments with his own.

Decentralization of power, on the other hand, involves an abdication of political power in the [sic]
favor of local governments [sic] units declared to be autonomous. In that case, the autonomous
government is free to chart its own destiny and shape its future with minimum intervention from
central authorities. According to a constitutional author, decentralization of power amounts to self-
immolation, since in that event, the autonomous government becomes accountable not to the central
authorities but to its constituency.22
ς rνll

Indeed, a complete relinquishment of central government powers on the matter of providing basic
facilities and services cannot be implied as the Local Government Code itself weighs against it. The
national government is, thus, not precluded from taking a direct hand in the formulation and
implementation of national development programs especially where it is implemented locally in
coordination with the LGUs concerned.

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.23Petitioners have failed to discharge the burden of proving the invalidity of the provisions under
the GAA of 2011. The allocation of a P21 billion budget for an intervention program formulated by the
national government itself but implemented in partnership with the local government units to achieve
the common national goal development and social progress can by no means be an encroachment
upon the autonomy of local governments.

WHEREFORE, premises considered, the petition is hereby DISMISSED.

G.R. No. 185527 July 18, 2012

HARRY L. GO, TONNY NGO, JERRY NGO AND JANE GO, Petitioners,
vs.
THE PEOPLE OF THE PHILIPPINES and HIGHDONE COMPANY, LTD., ET
AL., Respondents.

DECISION

PERLAS-BERNABE, J.:

The procedure for taking depositions in criminal cases recognizes the prosecution's right to
preserve testimonial evidence and prove its case despite the unavailability of its witness. It
cannot, however, give license to prosecutorial indifference or unseemly involvement in a
prosecution witness' absence from trial. To rule otherwise would effectively deprive the
accused of his fundamental right to be confronted with the witnesses against him.

In this Petition for Review on Certiorari under Rule 45 of the Revised Rules of Court,
petitioners seek to nullify and set aside the February 19, 2008 Decision 1 and November 28,
2008 Resolution2 of the Court of Appeals (CA) in CA-G.R. SP No. 99383, which reversed
the September 12, 2006 Order3 issued by the Regional Trial Court (RTC) of Manila, Branch
27 in Civil Case No. 06-114844 and upheld the grant of the prosecution’s motion to take the
testimony of a witness by oral depositions in Laos, Cambodia.

Petitioners Harry Go, Tonny Ngo, Jerry Ngo and Jane Go were charged before the
Metropolitan Trial Court (MeTC) of Manila for Other Deceits under Article 318 of the
Revised Penal Code (RPC) docketed as Criminal Case No. 396447. The Information4 dated
September 24, 2003, later amended5 on September 14, 2004, reads:

"That sometime in August 1996, in the City of Manila, Philippines, the said accused,
conspiring, confederating together and helping one another, did then and there willfully,
unlawfully and feloniously defraud Highdone Company Ltd. Represented by Li Luen Ping, in
the following manner, to wit: all said accused, by means of false manifestations and
fraudulent representations which they made to said Li Luen Ping to the effect that they have
chattels such as machinery, spare parts, equipment and raw materials installed and fixed in
the premises of BGB Industrial Textile Mills Factory located in the Bataan Export
Processing Zone (BEPZ) in Mariveles, Bataan, executed a Deed of Mortgage for a
consideration of the amount of $464,266.90 or its peso equivalent at P20,892,010.50 more
or less in favor of ML Resources and Highdone Company Ltd. Representing that the said
deed is a FIRST MORTGAGE when in truth and in fact the accused well knew that the
same had been previously encumbered, mortgaged and foreclosed by CHINA BANK
CORPORATION as early as September 1994 thereby causing damage and prejudice to
said HIGHDONE COMPANY LTD., in the said amount of $464,266.90 or its peso equivalent
at P20,892,010.50 more or less."

Upon arraignment, petitioners pleaded not guilty to the charge.

The prosecution's complaining witness, Li Luen Ping, a frail old businessman from Laos,
Cambodia, traveled from his home country back to the Philippines in order to attend the
hearing held on September 9, 2004. However, trial dates were subsequently postponed due
to his unavailability.

On October 13, 2005, the private prosecutor filed with the MeTC a Motion to Take Oral
Deposition6 of Li Luen Ping, alleging that he was being treated for lung infection at the
Cambodia Charity Hospital in Laos, Cambodia and that, upon doctor's advice, he could not
make the long travel to the Philippines by reason of ill health.

Notwithstanding petitioners' Opposition,7 the MeTC granted8 the motion after the prosecution
complied with the directive to submit a Medical Certificate of Li Luen Ping. Petitioners
sought its reconsideration which the MeTC denied,9 prompting petitioners to file a Petition
for Certiorari10 before the RTC.

On September 12, 2006, the RTC granted the petition and declared the MeTC Orders null
and void.11 The RTC held that Section 17, Rule 23 on the taking of depositions of witnesses
in civil cases cannot apply suppletorily to the case since there is a specific provision in the
Rules of Court with respect to the taking of depositions of prosecution witnesses in criminal
cases, which is primarily intended to safeguard the constitutional rights of the accused to
meet the witness against him face to face.

Upon denial by the RTC of their motion for reconsideration through an Order dated March 5,
2006,12 the prosecution elevated the case to the CA.

On February 19, 2008, the CA promulgated the assailed Decision which held that no grave
abuse of discretion can be imputed upon the MeTC for allowing the deposition-taking of the
complaining witness Li Luen Ping because no rule of procedure expressly disallows the
taking of depositions in criminal cases and that, in any case, petitioners would still have
every opportunity to cross-examine the complaining witness and make timely objections
during the taking of the oral deposition either through counsel or through the consular officer
who would be taking the deposition of the witness.

On November 28, 2008, the CA denied petitioners' motion for reconsideration. Hence, this
petition alleging that –

I.THE COURT OF APPEALS ERRED IN NOT FINDING THAT THE

METROPOLITAN TRIAL COURT INFRINGED THE CONSTITUTIONAL RIGHT OF
THE PETITIONERS TO A PUBLIC TRIAL IN ALLOWING THE TAKING OF THE
DEPOSITION OF THE COMPLAINING WITNESS IN LAOS, CAMBODIA.

II.THE COURT OF APPEALS ERRED IN NOT FINDING THAT THE DEPOSITION

TAKING OF THE COMPLAINING WITNESS IN LAOS, CAMBODIA IS AN
INFRINGEMENT OF THE CONSTITUTIONAL RIGHT OF THE PETITIONERS TO
CONFRONT THE SAID WITNESS FACE TO FACE.

III.THE COURT OF APPEALS ERRED IN SUSTAINING THE JUDICIAL

LEGISLATION COMMITTED BY THE METROPOLITAN TRIAL COURT IN
APPLYING THE RULES ON DEPOSITION-TAKING IN CIVIL CASES TO
CRIMINAL CASES.

IV.THE COURT OF APPEALS ERRED IN LIMITING THE TRADITIONAL

DEFINITION OF GRAVE ABUSE OF DISCRETION, OVERLOOKING THE
ESTABLISHED RULE THAT VIOLATION OF THE CONSTITUTION, THE LAW OR
JURISPRUDENCE SIMILARLY COMES WITHIN THE PURVIEW OF GRAVE
ABUSE OF DISCRETION.

We rule in favor of petitioners.

The Procedure for Testimonial Examination of an Unavailable Prosecution Witness is

Covered Under Section 15, Rule 119.

The examination of witnesses must be done orally before a judge in open court.13 This is true
especially in criminal cases where the Constitution secures to the accused his right to a
public trial and to meet the witnessess against him face to face. The requirement is the
"safest and most satisfactory method of investigating facts" as it enables the judge to test
the witness' credibility through his manner and deportment while testifying. 14 It is not without
exceptions, however, as the Rules of Court recognizes the conditional examination of
witnesses and the use of their depositions as testimonial evidence in lieu of direct court
testimony.
Even in criminal proceedings, there is no doubt as to the availability of conditional
examination of witnesses – both for the benefit of the defense, as well as the prosecution.
The Court's ruling in the case of Vda. de Manguerra v. Risos15 explicitly states that –

"x x x As exceptions, Rule 23 to 28 of the Rules of Court provide for the different modes of
discovery that may be resorted to by a party to an action. These rules are adopted either to
perpetuate the testimonies of witnesses or as modes of discovery. In criminal proceedings,
Sections 12, 13 and 15, Rule 119 of the Revised Rules of Criminal Procedure, which took
effect on December 1, 2000, allow the conditional examination of both the defense and
prosecution witnesses." (Underscoring supplied)16

The procedure under Rule 23 to 28 of the Rules of Court allows the taking of depositions in
civil cases, either upon oral examination or written interrogatories, before any judge, notary
public or person authorized to administer oaths at any time or place within the Philippines;
or before any

Philippine consular official, commissioned officer or person authorized to administer oaths in

a foreign state or country, with no additional requirement except reasonable notice in writing
to the other party.17

But for purposes of taking the deposition in criminal cases, more particularly of a
prosecution witness who would forseeably be unavailable for trial, the testimonial
examination should be made before the court, or at least before the judge, where the case
is pending as required by the clear mandate of Section 15, Rule 119 of the Revised Rules
of Criminal Procedure. The pertinent provision reads thus:

SEC. 15. Examination of witness for the prosecution. – When it satisfactorily appears that a
witness for the prosecution is too sick or infirm to appear at the trial as directed by the court,
or has to leave the Philippines with no definite date of returning, he may forthwith be
conditionally examined before the court where the case is pending. Such examination, in
the presence of the accused, or in his absence after reasonable notice to attend the
examination has been served on him shall be conducted in the same manner as an
examination at the trial. Failure or refusal of the accused to attend the examination after
notice shall be considered a waiver. The statement taken may be admitted in behalf of or
against the accused.

Since the conditional examination of a prosecution witness must take place at no other
place than the court where the case is pending, the RTC properly nullified the MeTC's
orders granting the motion to take the deposition of Li Luen Ping before the Philippine
consular official in Laos, Cambodia. We quote with approval the RTC's ratiocination in this
wise:

The condition of the private complainant being sick and of advanced age falls within the
provision of Section 15 Rule 119 of the Rules of Court. However, said rule substantially
provides that he should be conditionally examined before the court where the case is
pending. Thus, this Court concludes that the language of Section 15 Rule 119 must be
interpreted to require the parties to present testimony at the hearing through live witnesses,
whose demeanor and credibility can be evaluated by the judge presiding at the hearing,
rather than by means of deposition. No where in the said rule permits the taking of
deposition outside the Philippines whether the deponent is sick or not. 18(Underscoring
supplied)

Certainly, to take the deposition of the prosecution witness elsewhere and not before the
very same court where the case is pending would not only deprive a detained accused of
his right to attend the proceedings but also deprive the trial judge of the opportunity to
observe the prosecution witness' deportment and properly assess his credibility, which is
especially intolerable when the witness' testimony is crucial to the prosecution's case
against the accused. This is the import of the Court's ruling in Vda. de Manguerra 19 where
we further declared that –
While we recognize the prosecution's right to preserve the testimony of its witness in order
to prove its case, we cannot disregard the rules which are designed mainly for the
protection of the accused's constitutional rights. The giving of testimony during trial is the
general rule. The conditional examination of a witness outside of the trial is only an
exception, and as such, calls for a strict construction of the rules. 20 (Underscoring supplied)

It is argued that since the Rules of Civil Procedure is made explicitly applicable in all cases,
both civil and criminal as well as special proceedings, the deposition-taking before a
Philippine consular official under Rule 23 should be deemed allowable also under the
circumstances.

However, the suggested suppletory application of Rule 23 in the testimonial examination of

an unavailable prosecution witness has been categorically ruled out by the Court in the
same case of Vda. de Manguerra, as follows:

It is true that Section 3, Rule 1 of the Rules of Court provides that the rules of civil
procedure apply to all actions, civil or criminal, and special proceedings. In effect, it says
that the rules of civil procedure have suppletory application to criminal cases. However, it is
likewise true that criminal proceedings are primarily governed by the Revised Rules of
Criminal Procedure.

Considering that Rule 119 adequately and squarely covers the situation in the instant case,
we find no cogent reason to apply Rule 23 suppletorily or otherwise." (Underscoring
supplied)

The Conditional Examination of a Prosecution Witness Cannot Defeat the Rights of the
Accused to Public Trial and Confrontation of Witnesses

The CA took a simplistic view on the use of depositions in criminal cases and overlooked
fundamental considerations no less than the Constitution secures to the accused, i.e., the
right to a public trial and the right to confrontation of witnesses. Section 14(2), Article III of
the

Constitution provides as follows:

Section 14. (1) x x x

(2) In all criminal prosecutions, the accused shall be presumed innocent until the contrary is
proved, and shall enjoy the right to be heard by himself and counsel, to be informed of the
nature and cause of the accusation against him, to have a speedy, impartial and public trial,
to meet the witnesses face to face, and to have compulsory process to secure the
attendance of witnesses and the production of evidence in his behalf. However, after
arraignment, trial may proceed notwithstanding the absence of the accused provided that
he has been duly notified and his failure to appear is unjustifiable. (Underscoring supplied)

In dismissing petitioners' apprehensions concerning the deprivation of their constitutional

rights to a public trial and confrontation, the CA opined that petitioners would still be
accorded the right to cross-examine the deponent witness and raise their objections during
the deposition-taking in the same manner as in a regular court trial.

We disagree. There is a great deal of difference between the face-to- face confrontation in a
public criminal trial in the presence of the presiding judge and the cross-examination of a
witness in a foreign place outside the courtroom in the absence of a trial judge. In the aptly
cited case of People v. Estenzo,21 the Court noted the uniqueness and significance of a
witness testifying in open court, thus:

"The main and essential purpose of requiring a witness to appear and testify orally at a trial
is to secure for the adverse party the opportunity of cross-examination. "The opponent",
according to an eminent authority, "demands confrontation, not for the idle purpose of
gazing upon the witness, or of being gazed upon by him, but for the purpose of cross
examination which cannot be had except by the direct and personal putting of questions
and obtaining immediate answers." There is also the advantage of the witness before the
judge, and it is this – it enables the judge as trier of facts "to obtain the elusive and
incommunicable evidence of a witness' deportment while testifying, and a certain subjective
moral effect is produced upon the witness. It is only when the witness testifies orally that the
judge may have a true idea of his countenance, manner and expression, which may confirm
or detract from the weight of his testimony. Certainly, the physical condition of the witness
will reveal his capacity for accurate observation and memory, and his deportment and
physiognomy will reveal clues to his character. These can only be observed by the judge if
the witness testifies orally in court. x x x"22 (Underscoring supplied)
1âwphi1

The right of confrontation, on the other hand, is held to apply specifically to criminal
proceedings and to have a twofold purpose: (1) to afford the accused an opportunity to test
the testimony of witnesses by cross-examination, and (2) to allow the judge to observe the
deportment of witnesses.23 The Court explained in People v. Seneris24 that the constitutional
requirement "insures that the witness will give his testimony under oath, thus deterring lying
by the threat of perjury charge; it forces the witness to submit to cross-examination, a
valuable instrument in exposing falsehood and bringing out the truth; and it enables the
court to observe the demeanor of the witness and assess his credibility."25

As the right of confrontation is intended "to secure the accused in the right to be tried as far
as facts provable by witnesses as meet him face to face at the trial who give their testimony
in his presence, and give to the accused an opportunity of cross-examination,"26 it is properly
viewed as a guarantee against the use of unreliable testimony in criminal trials. In the
American case of Crawford v. Washington,27 the US Supreme Court had expounded on the
procedural intent of the confrontation requirement, thus:

Where testimonial statements are involved, we do not think the Framers meant to leave the
Sixth Amendment's right to confront witness face to face protection to the vagaries of the
rules of evidence, much less to amorphous notions of "reliability". Certainly, none of the
authorities discussed above acknowledges any general reliability exception to the common-
law rule.

Admitting statements deemed reliable by a judge is fundamentally at odds with the right of
confrontation. To be sure, the Clause's ultimate goal is to ensure reliability of evidence, but
it is a procedural rather than a substantive guarantee. It commands, not that evidence be
reliable, but that reliability be assessed in a particular manner: by testing in the crucible of
cross-examination. The Clause thus reflects a judgment, not only about the desirability of
reliable evidence (a point on which there could be little dissent), but about how reliability can
best be determined." (Underscoring supplied)

The Webb Ruling is Not on All Fours with the Instant Case

The CA found the frail and infirm condition of the prosecution witness as sufficient and
compelling reason to uphold the MeTC Orders granting the deposition-taking, following the
ruling in the case of People v. Webb28 that the taking of an unavailable witness' deposition is
in the nature of a discovery procedure the use of which is within the trial court's sound
discretion which needs only to be exercised in a reasonable manner and in consonance
with the spirit of the law.29

But the ruling in the cited case is not instantly applicable herein as the factual settings are
not similar. The accused in the Webb case had sought to take the oral deposition of five
1âwphi1

defense witnesses before a Philippine consular agent in lieu of presenting them as live
witnesses, alleging that they were all residents of the United States who could not be
compelled by subpoena to testify in court. The trial court denied the motion of the accused
but the CA differed and ordered the deposition taken. When the matter was raised before
this Court, we sustained the trial court's disallowance of the deposition-taking on the limited
ground that there was no necessity for the procedure as the matter sought to be proved by
way of deposition was considered merely corroborative of the evidence for the defense. 30

In this case, where it is the prosecution that seeks to depose the complaining witness
against the accused, the stringent procedure under Section 15, Rule 119 cannot be ignored
without violating the constitutional rights of the accused to due process.

Finally, the Court takes note that prosecution witness Li Luen Ping had managed to attend
the initial trial proceedings before the MeTC of Manila on September 9, 2004. At that time,
Li Luen Ping's old age and fragile constitution should have been unmistakably apparent and
yet the prosecution failed to act with zeal and foresight in having his deposition or testimony
taken before the MeTC pursuant to Section 15, Rule 119 of the Revised Rules of Court. In
fact, it should have been imperative for the prosecution to have moved for the preservation
of Li Luen Ping's testimony at that first instance given the fact that the witness is a non-
resident alien who can leave the Philippines anytime without any definite date of return.
Obviously, the prosecution allowed its main witness to leave the court's jurisdiction without
availing of the court procedure intended to preserve the testimony of such witness. The loss
of its cause is attributable to no other party.

Still, even after failing to secure Li Luen Ping's conditional examination before the MeTC
prior to said witness' becoming sick and unavailable, the prosecution would capitalize upon
its own failure by pleading for a liberal application of the rules on depositions. It must be
emphasized that while the prosecution must provide the accused every opportunity to take
the deposition of witnesses that are material to his defense in order to avoid charges of
violating the right of the accused to compulsory process, the State itself must resort to
deposition-taking sparingly if it is to guard against accusations of violating the right of the
accused to meet the witnesses against him face to face. Great care must be observed in
the taking and use of depositions of prosecution witnesses to the end that no conviction of
an accused will rely on ex parte affidavits and deposition.31

Thus, the CA ignored the procedure under the Revised Rules of Criminal Procedure for
taking the deposition of an unavailable prosecution witness when it upheld the trial court's
order allowing the deposition of prosecution witness Li Luen Ping to take place in a venue
other than the court where the case is pending. This was certainly grave abuse of
discretion.

WHEREFORE, the petition is hereby GRANTED. The assailed Decision dated February 19,
2008 and the Resolution dated November 28, 2008 of the Court of Appeals are REVERSED
and SET ASIDE. Accordingly, the Decision of the Regional Trial Court which disallowed the
deposition-taking in Laos, Cambodia is REINSTATED.

SO ORDERED.
G.R. No. 175552
SPOUSES ROLANDO D. SOLLER AND NENITA T. SOLLER, PETITIONERS, VS. HEIRS OF JEREMIAS ULAYAO, NAMELY,
NELSON ULAYAO, FERELYN ULAYAO-DEL MUNDO, EDJUNNE ULAYAO, WILMA ULAYAO, LAILA ULAYAO, ANALYN ULAYAO,
AND LILIBETH ULAYAO RESPONDENTS.
July 18, 2012

SPOUSES ROLANDO D. SOLLER AND NENITA T. SOLLER, PETITIONERS,

VS. HEIRS OF JEREMIAS ULAYAO, NAMELY, NELSON ULAYAO,
FERELYN ULAYAO-DEL MUNDO, EDJUNNE ULAYAO, WILMA ULAYAO,
LAILA ULAYAO, ANALYN ULAYAO, AND LILIBETH ULAYAO
RESPONDENTS.

RESOLUTION
PERLAS-BERNABE, J.:
This Petition for Review on Certiorari assails the August 18, 2006 Decision[1] and November 21, 2006
Resolution[2]of the Court of Appeals ( CA) in CA-G.R. SP No. 92478 which vacated and set aside the
November 9, 2005 Decision[3] of the Regional Trial Court (RTC) of Pinamalayan, Oriental Mindoro,
Branch XLII, which, in turn, affirmed with modification the July 1, 2005 Summary Judgment [4] rendered by
the Municipal Circuit Trial Court (MCTC) of Bansud-Gloria, Oriental Mindoro.

The Factual Antecedents

Petitioners-spouses Rolando and Nenita Soller are allegedly the registered owners of a parcel of land
situated in Poblacion, Bansud, Oriental Mindoro with an area of 564 square meters, more or less, covered
by Transfer Certificate of Title (TCT) No. 72780 of the Register of Deeds of Oriental Mindoro. Petitioners
and their predecessors-in-interest were purportedly in open, peaceful, and continuous possession of the
property in the concept of owner since time immemorial.

However, in February 1996, the original defendant, now-deceased Jeremias Ulayao (Jeremias), and all
persons claiming rights under him, allegedly by means of force, violence, stealth and intimidation, entered
into the possession of the land and, despite repeated demands to desist, constructed a house on the
property. This prompted petitioners to bring the matter before the barangay, but conciliation failed. Thus,
petitioners instituted a complaint[5] for recovery of possession with damages before the MCTC of Bansud,
Oriental Mindoro.

In Jeremias' Answer,[6] he denied petitioners' allegations and raised the special and affirmative defense of
acquisitive prescription, as he had purportedly been in long, continuous and adverse possession of the
property for more than thirty (30) years. Jeremias also claimed that when Paulina Lusterio (Paulina),
petitioners' predecessor-in-interest, surreptitiously had the property registered in her name under a free
patent, the Community Environment and Natural Resources Office (CENRO) conducted an investigation,
upon Jeremias' protest, and found that it was the latter who was in actual occupation and possession of
the property. The CENRO thus recommended that the title issued in Paulina's name be revoked in order
for the property to be reverted back to the state. To further support his defense of acquisitive prescription,
Jeremias claimed that his house and other permanent improvements are still existing on the property.

The MCTC Ruling

Upon motion of petitioners, the MCTC rendered a Summary Judgment upon a finding that no genuine
issue of fact had been tendered by the answer. Holding that petitioners' claim to the disputed property
was founded on TCT No. 72780 issued in their names, which is indefeasible and cannot be attacked
collaterally, the MCTC directed Jeremias and all persons claiming rights under him (1) to surrender the
possession of the property to petitioners and (2) to pay actual damages in the amount of P3,000.00 per
month from February 1996 until actual turnover of the possession of the property, as well as moral
damages and attorney's fees, each in the amount of P10,000.00.

The RTC Ruling

During the pendency of the case[7] before the MCTC, Jeremias died and was consequently substituted by
his heirs, herein respondents, who appealed the Summary Judgment before the RTC.

While the RTC affirmed the findings of the MCTC, it however deleted the award of damages, ruling that
the “environmental milieu does not justify such recovery x xx” [8] and that there was no showing of gross
and evident bad faith on the part of respondents.

The CA Ruling

On appeal before it, the CA found merit in respondents' petition and vacated the summary judgments
rendered by the RTC and MCTC on the ground that the defenses raised by respondents' predecessor-in-
interest, Jeremias, are substantially factual as to necessitate a full-blown trial on the merits. The CA held
that, having raised the defense of acquisitive prescription in Jeremias' answer, he ought to have been
duly heard on such defense in the course of a trial. Consequently, the rendition of a summary judgment in
this case was improper. The CA, thus, ordered the remand of the case to the MCTC of Bansud-Gloria for
the conduct of a full-blown trial.

Issue Before The Court

The basic issue advanced for resolution in this case is the propriety of rendering a summary judgment.

The Court's Ruling

Summary judgments are proper when, upon motion of the plaintiff or the defendant, the court finds that
the answer filed by the defendant does not tender a genuine issue as to any material fact and that one
party is entitled to a judgment as a matter of law.[9] In Viajar v. Estenzo,[10] the Court explained:

Relief by summary judgment is intended to expedite or promptly dispose of cases where the facts appear
undisputed and certain from the pleadings, depositions, admissions and affidavits. But if there be a doubt
as to such facts and there be an issue or issues of fact joined by the parties, neither one of them can pray
for a summary judgment. Where the facts pleaded by the parties are disputed or contested, proceedings
for a summary judgment cannot take the place of a trial.

x x x [R]elief by summary judgment can only be allowed after compliance with the minimum requirement
of vigilance by the court in a summary hearing considering that this remedy is in derogation of a party's
right to a plenary trial of his case. At any rate, a party who moves for summary judgment has the burden
of demonstrating clearly the absence of any genuine issue of fact, or that the issue posed in the complaint
is so patently unsubstantial as not to constitute a genuine issue for trial, and any doubt as to the
existence of such an issue is resolved against the movant.

In this case, records show that the original defendant, Jeremias, raised the special and affirmative
defense of acquisitive prescription in his answer, claiming that he was in open, continuous and notorious
possession or the disputed property as, in fact, his house and other permanent improvements are still
existing thereon. As succinctly explained by the CA in its assailed Decision, the defense of acquisitive
prescription inevitably involves the issue of actual, physical and material possession, which is always a
question of fact.[11] The existence of this issue therefore necessitates, for its proper resolution, the
presentation of competent and relevant evidence, which can only be done in the course of a full-blown
trial.

As aptly observed in the case of Calubaquib, et al. v. Republic,[12] where the disputed property was
actually covered by an original certificate of title (OCT) in the name of the respondent:

More importantly. by proceeding to rule against petitioners without any trial, the trial and appellate courts
made a conclusion which was based merely on an assumption that petitioners' defense of acquisitive
prescription was a sham, and that the ultimate facts pleaded in their Answer (e.g., open and continuous
possession of the property since the early 1900s) cannot be proven at all. This assumption is baseless as
it is premature and unfair.x x x

WHEREFORE, the assailed Decision and Resolution of the Court of Appeals are hereby AFFIRMED.

SO ORDERED.
G.R. No. 196425
PROSPERO A. PICHAY, JR., PETITIONER, VS. OFFICE OF THE DEPUTY EXECUTIVE SECRETARY FOR LEGAL AFFAIRS
INVESTIGATIVE AND ADJUDICATORY DIVISION, HON. PAQUITO N. OCHOA, JR., IN HIS CAPACITY AS EXECUTIVE
SECRETARY, AND HON. CESAR V. PURISIMA, IN HIS CAPACITY AS SECRETARY OF FINANCE, AND AS AN EX
OFFICIO MEMBER OF THE MONETARY BOARD, RESPONDENTS.
July 24, 2012

DECISION
PERLAS-BERNABE, J.:
The Case

This is a Petition for Certiorari and Prohibition with a prayer for the issuance of a temporary restraining
order, seeking to declare as unconstitutional Executive Order No. 13, entitled, “Abolishing the Presidential
Anti-Graft Commission and Transferring Its Investigative, Adjudicatory and Recommendatory Functions to
the Office Of The Deputy Executive Secretary For Legal Affairs, Office of the President”,[1] and to
permanently prohibit respondents from administratively proceeding against petitioner on the strength of
the assailed executive order.

The 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. Pertinent portions
of E.O. 12 provide:

Section 4. Jurisdiction, Powers and Functions. –

(a) xxx xxx xxx

(b) The Commission, acting as a collegial body, shall have the authority to investigate or hear
administrative cases or complaints against all presidential appointees in the government and any of its
agencies or instrumentalities xxx

xxx xxx xxx

xxx xxx xxx

Section 8. Submission of Report and Recommendations. – After completing its investigation or hearing,
the Commission en banc shall submit its report and recommendations to the President. The report and
recommendations shall state, among others, the factual findings and legal conclusions, as well as the
penalty recommend (sic) to be imposed or such other action that may be taken.”

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). The full text of the assailed executive order reads:

EXECUTIVE ORDER NO. 13

ABOLISHING THE PRESIDENTIAL ANTI-GRAFT COMMISSION AND TRANSFERRING ITS

INVESTIGATIVE, ADJUDICATORY AND RECOMMENDATORY FUNCTIONS TO THE OFFICE OF THE
DEPUTY EXECUTIVE SECRETARY FOR LEGAL AFFAIRS, OFFICE OF THE PRESIDENT

WHEREAS, this administration has a continuing mandate and advocacy to fight and eradicate corruption
in the different departments, bureaus, offices and other government agencies and instrumentalities;

WHEREAS, the government adopted a policy of streamlining the government bureaucracy to promote
economy and efficiency in government;

WHEREAS, Section VII of the 1987 Philippine Constitution provides that the President shall have control
of all the executive departments, bureaus and offices;

WHEREAS, Section 31 Chapter 10, Title III, Book III of Executive Order 292 (Administrative Code of
1987) provides for the continuing authority of the President to reorganize the administrative structure of
the Office of the President;

WHEREAS, Presidential Decree (PD) No. 1416 (Granting Continuing Authority to the President of the
Philippines to Reorganize the National Government), as amended by PD 1722, provides that the
President of the Philippines shall have continuing authority to reorganize the administrative structure of
the National Government and may, at his discretion, 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;

WHEREAS, Section 78 of the General Provisions of Republic Act No. 9970 (General Appropriations Act
of 2010) authorizes the President of the Philippines to direct changes in the organizational units or key
positions in any department or agency;

NOW, THEREFORE, I, BENIGNO S. AQUINO III, President of the Philippines, by virtue of the powers
vested in me by law, do hereby order the following:

SECTION 1. Declaration of Policy. It is the policy of the government to fight and eradicate graft and
corruption in the different departments, bureaus, offices and other government agencies and
instrumentalities.

The government adopted a policy of streamlining the government bureaucracy to promote economy and
efficiency in the government.

SECTION 2. Abolition of Presidential Anti-Graft Commission (PAGC). To enable the Office of the
President (OP) to directly investigate graft and corrupt cases of Presidential appointees in the Executive
Department including heads of government-owned and controlled corporations, the Presidential Anti-Graft
Commission (PAGC) is hereby abolished and their vital functions and other powers and functions
inherent or incidental thereto, transferred to the Office of the Deputy Executive Secretary for Legal Affairs
(ODESLA), OP in accordance with the provisions of this Executive Order.

SECTION 3. Restructuring of the Office of the Deputy Executive Secretary for Legal Affairs, OP. In
addition to the Legal and Legislative Divisions of the ODESLA, the Investigative and Adjudicatory Division
shall be created.

The newly created Investigative and Adjudicatory Division shall perform powers, functions and duties
mentioned in Section 2 hereof, of PAGC.

The Deputy Executive Secretary for Legal Affairs (DESLA) will be the recommending authority to the
President, thru the Executive Secretary, for approval, adoption or modification of the report and
recommendations of the Investigative and Adjudicatory Division of ODESLA.

SECTION 4. Personnel Who May Be Affected By the Abolition of PAGC. The personnel who may be
affected by the abolition of the PAGC shall be allowed to avail of the benefits provided under existing laws
if applicable. The Department of Budget and Management (DBM) is hereby ordered to release the
necessary funds for the benefits of the employees.

SECTION 5. Winding Up of the Operation and Disposition of the Functions, Positions, Personnel, Assets
and Liabilities of PAGC. The winding up of the operations of PAGC including the final disposition or
transfer of their functions, positions, personnel, assets and liabilities as may be necessary, shall be in
accordance with the applicable provision(s) of the Rules and Regulations Implementing EO 72
(Rationalizing the Agencies Under or Attached to the Office of the President) dated March 15, 2002. The
winding up shall be implemented not later than 31 December 2010.

The Office of the Executive Secretary, with the assistance of the Department of Budget and Management,
shall ensure the smooth and efficient implementation of the dispositive actions and winding-up of the
activities of PAGC.

SECTION 6. Repealing Clause. All executive orders, rules, regulations and other issuances or parts
thereof, which are inconsistent with the provisions of this Executive Order, are hereby revoked or
modified accordingly.

SECTION 7. Effectivity. This Executive Order shall take effect immediately after its publication in a
newspaper of general circulation.

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 upon the following
grounds:

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.

Our Ruling

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 avers that the unconstitutionality of E.O. 13 is also evident when weighed against the due
process requirement and equal protection clause under the 1987 Constitution.

The contentions are unavailing.

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]

In the case of Buklod ng Kawaning EIIB v. Zamora the Court[5] affirmed that the President's authority to
carry out a reorganization in any branch or agency of the executive department is an express grant by the
legislature by virtue of E.O. 292, thus:

But of course, the list of legal basis authorizing the President to reorganize any department or agency in
the executive branch does not have to end here. We must not lose sight of the very source of the power –
that which constitutes an express grant of power. Under Section 31, Book III of Executive Order No.
292 (otherwise known as the Administrative Code of 1987), “the President, subject to the policy of the
Executive Office and in order to achieve simplicity, economy and efficiency, shall have the continuing
authority to reorganize the administrative structure of the Office of the President.” For this purpose,
he may transfer the functions of other Departments or Agencies to the Office of the President. (Emphasis
supplied)

And in Domingo v. Zamora,[6] the Court gave the rationale behind the President's continuing authority in
this wise:

The law grants the President this power in recognition of the recurring need of every President to
reorganize his office “to achieve simplicity, economy and efficiency.” The Office of the President is the
nerve center of the Executive Branch. To remain effective and efficient, the Office of the President
must be capable of being shaped and reshaped by the President in the manner he deems fit to
carry out his directives and policies. After all, the Office of the President is the command post of the
President. (Emphasis supplied)

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. Again, in Domingo v. Zamora[8] the Court noted:

However, the President's power to reorganize the Office of the President under Section 31 (2) and (3) of
EO 292 should be distinguished from his power to reorganize the Office of the President Proper. Under
Section 31 (1) of EO 292, the President can reorganize the Office of the President Proper by abolishing,
consolidating or merging units, or by transferring functions from one unit to another. In contrast, under
Section 31 (2) and (3) of EO 292, the President's power to reorganize offices outside the Office of the
President Proper but still within the Office of the President is limited to merely transferring functions or
agencies from the Office of the President to Departments or Agencies, and vice versa.

The distinction between the allowable organizational actions under Section 31(1) on the one hand and
Section 31 (2) and (3) on the other is crucial not only as it affects employees' tenurial security but also
insofar as it touches upon the validity of the reorganization, that is, whether the executive actions
undertaken fall within the limitations prescribed under E.O. 292. When the PAGC was created under E.O.
12, it was composed of a Chairman and two (2) Commissioners who held the ranks of Presidential
Assistant II and I, respectively[9], and was placed directly “under the Office of the President.” [10] On the
other hand, the ODESLA, to which the functions of the PAGC have now been transferred, is an office
within the Office of the President Proper.[11] Since both of these offices belong to the Office of the
President Proper, the reorganization by way of abolishing the PAGC and transferring its functions to the
ODESLA is allowable under Section 31 (1) of E.O. 292.

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. He argues that nowhere in the legal definition laid
down by the Court in several cases does a reorganization include the act of creating an office.

The contention is misplaced.

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 existingoffice 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. In Canonizado v. Aguirre,[12] We ruled that –
Reorganization takes place when there is an alteration of the existing structure of government offices or
units therein, including the lines of control, authority and responsibility between them. It involves a
reduction of personnel, consolidation of offices, or abolition thereof by reason of economy or redundancy
of functions.

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.

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.

The argument is tenuous. As the OSG aptly explained in its Comment,[21] 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. As the Court ruled
in Cariño v. Commission on Human Rights,[25] and later reiterated in Biraogo v. The Philippine Truth
Commission:[26]

Fact-finding is not adjudication and it cannot be likened to the judicial function of a court of justice, or
even a quasi-judicial agency or office. The function of receiving evidence and ascertaining therefrom the
facts of a controversy is not a judicial function. To be considered as such, the act of receiving evidence
and arriving at factual conclusions in a controversy must be accompanied by the authority of applying the
law to the factual conclusions to the end that the controversy may be decided or determined
authoritatively, finally and definitively, subject to such appeals or modes of review as may be provided by
law.

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.

Contrary to petitioner's contention, the IAD-ODESLA did not encroach upon the Ombudsman's primary
jurisdiction when it took cognizance of the complaint affidavit filed against him notwithstanding the earlier
filing of criminal and administrative cases involving the same charges and allegations before the Office 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.

Petitioner goes on to assail E.O. 13 as violative of the equal protection clause pointing to the arbitrariness
of limiting the IAD-ODESLA's investigation only to presidential appointees occupying upper-level positions
in the government. 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. This we ruled in Farinas v. Executive Secretary,[31] wherein we further
stated that –

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)

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.

There are substantial distinctions that set apart presidential appointees occupying upper-level positions in
government from non-presidential appointees and those that occupy the lower positions in government.
In Salumbides v. Office of the Ombudsman,[34] we had ruled extensively on the substantial distinctions
that exist between elective and appointive public officials, thus:

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)

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.

SO ORDERED.
G.R. No. 196990
ARTURO DELA CRUZ, SR., PETITIONER, VS. MARTIN AND FLORA FANKHAUSER, RESPONDENTS.
July 30, 2012

ARTURO DELA CRUZ, SR., PETITIONER, VS. MARTIN AND FLORA

FANKHAUSER, RESPONDENTS.

RESOLUTION
PERLAS-BERNABE, J.:
This Petition for Review on Certiorari assails the March 10, 2011[1] and May 16, 2011[2] Resolutions of the
Court of Appeals (CA) which dismissed petitioner's appeal on the ground that it was the wrong remedy.

The Factual Antecedents

On March 17, 1988, petitioner Arturo dela Cruz, Sr. and his wife, while then still living, entered into a
contract of lease with option to buy with respondents Martin and Flora Fankhauser, over a parcel of
residential land in Puerto Princesa City, covered by Transfer Certificate of Title (TCT) No. 5620. The
contract stated that the lessee will occupy the leased premises beginning April 1, 1988; that in
consideration of the lessee's option to buy, the lessee will advance P162,000.00; that from April 1988 to
December 1988 rental on the leased premises is considered fully paid, applying therefor the interest of
the advanced amount of P162,000.00; that in consideration further of the lessee's option to buy, the
lessee will advance to the lessor commencing from January 1989 up to April 1990 a monthly amount of
P18,000.00 and during this period the rentals shall be considered paid by applying therefor the interests
on the above-mentioned advances; that after the lessee shall have completely paid all the advances
mentioned, a contract of sale over the leased house and lot shall be deemed to have been perfected and
consummated and the lessor binds himself to execute in favor of the lessee a deed of absolute sale.

The respondents did not advance the monthly amount of P18,000.00. Hence, petitioner sought the
rescission of the contract, which was granted by the Regional Trial Court of Palawan, Branch 49 (RTC).
On appeal, the CA in CA-G.R. CV No. 80372 found that petitioner's claim for rescission was premature. It
ruled that the RTC should have fixed a grace period of 60 days to comply with the notice required in
Republic Act (RA) No. 6552. The CA set aside the decision of the RTC and disposed as follows:

WHEREFORE, the foregoing premises considered, the appealed Decision dated May 27, 2003 of Branch
49 of the Regional Trial Court of Palawan and Puerto Princesa City in Civil Case No. 2143 is hereby SET
ASIDE. A new one is ENTERED as follows:

The plaintiff-appellants are ORDERED to pay (1) the balance of the purchase price amounting to
P288,000.00 within 60 days from the finality of this Decision; and (2) rentals in arrears of P1,080.00 a
month from January 1989 until full payment of balance of purchase price. On the other hand, the
defendants-appellees are ORDERED to execute a deed of absolute sale in favor of the plaintiffs-
appellants upon full payment of purchase price of the subject property and rentals in arrears.

In case of failure to pay the balance of the purchase price with[in] 60 days from finality of this Decision,
the plaintiffs-appellants are ordered (1) to vacate the subject property without need of further demand;
and (2) to pay after deducting the downpayment of PI 62,000.00, rentals in arrears of PI,080.00 a month
from January 1989 until possession is surrendered to the defendants-appellees.

SO ORDERED.[3]

The CA Decision became final and executory on December 21, 2007.[4] On January 18, 2008,
respondents communicated to petitioner that two (2) checks covering the balance of the price and the
rental arrears were already ready for petitioner to claim. A manifestation to this effect was also received
by the RTC on February 19, 2008.[5]Petitioner did not claim the checks[6] but instead moved, on March 12,
2008, for the execution of the CA Decision, particularly the second part of the dispositive portion ordering
the respondents to vacate the subject property and to pay rental arrears.

The RTC Ruling

The RTC, in its October 29, 2008 Order,[7] granted the motion for execution and disposed as follows:

WHEREFORE, premises considered, the motion for execution filed by defendants-appellees is hereby
granted. Accordingly, let a writ issue for the execution of the decision of the Court of Appeals in this case,
which the Deputy Sheriff of this Court-Branch is hereby directed to enforce strictly in accordance with the
whole dispositive portion of the said decision, with the 60-day period to be counted from herein parties'
notice of this order.
 xxx xxx xxx

SO ORDERED.

Petitioner elevated the RTC Order of execution to the CA by notice of appeal. [8] He claimed that the order
of execution issued by the RTC varied the judgment of the CA.

The CA Ruling

In its assailed Resolution,[9] the CA dismissed the appeal for being the wrong remedy. It quoted Rule 41
of the Rules of Court which states that "[n]o appeal may be taken from xxx (e) An order of execution[.]" It
also denied the motion for reconsideration filed by petitioner.

Issues Before The Court

Hence, the instant petition anchored on the following errors: 1) The CA erred in dismissing the appeal on
a procedural technicality and not on the merits; and 2) The CA erred in not declaring that the RTC
committed an error and varied the terms of the dispositive portion of the CA Decision dated November 29,
2007.

The Court's Ruling

Rule 41 of the Revised Rules of Court indeed states that no appeal may be taken from an order of
execution. However, in De Guzman v. Court of Appeals,[10] the Court stated that there are certain
instances when an appeal from an order of execution should be allowed, to wit:

It is also a settled rule that an order of execution of judgment is not appealable. However, where such
order of execution in the opinion of the defeated party varies the terms of the judgment and does not
conform to the essence thereof, or when the terms of the judgment are not clear and there is room for
interpretation and the interpretation given by the trial court as contained in its order of execution is wrong
in the opinion of the defeated party, the latter should be allowed to appeal from said order so that the
Appellate Tribunal may pass upon the legality and correctness of the said order. (Underscoring supplied)

Recently, the Court En Banc, in Philippine Amusement and Gaming Corporation v. Aumentado,
Jr.,[11] reiterated that there are exceptions to the general rule that an order of execution is not appealable,
one of which is when the writ of execution varies the judgment.

In view of the foregoing, it is clear that the appeal made by petitioner from the RTC order of execution, on
the ground that it varied the judgment, is permissible and the CA should not have perfunctorily dismissed
it.

The second issue raised by petitioner regarding the order of execution issued by the RTC, as well as the
matters raised in respondents' manifestation dated March 19, 2012, which must also be properly
addressed, involves questions of facts that should first be settled. Not being a trier of facts, the Court
remands the case to the CA for a thorough examination of the evidence and a judicious disposal of the
case.

WHEREFORE, the petition is GRANTED. The March 10, 2011 and May 16, 2011 Resolutions of the
Court of Appeals in CA-G.R. CV No. 80372 are SET ASIDE. Petitioner Arturo dela Cruz, Sr.'s appeal
is REINSTATED and the instant case is REMANDED to the Court of Appeals for further proceedings.

SO ORDERED.
 EN BANC
[ G.R. No. 189041, July 31, 2012 ]
CIVIL SERVICE COMMISSION, PETITIONER VS. DR. AGNES OUIDA P. YU,
RESPONDENT.

DECISION
PERLAS-BERNABE, J.:
In this Petition for Review on Cetiorari under Rule 45 of the Rules of Court, the Civil Service Commission
(CSC) assails the Decision[1] dated March 30, 2009 and the Resolution[2] dated July 9, 2009 rendered by
the Court of Appeals (CA) in CA-G.R. SP No. 00327-MIN declaring Dr. Agnes Ouida P. Yu to have a
vested right in the position of Chief of Hospital II until her retirement on August 24, 2004.

The Facts

In 1992, the national government implemented a devolution program pursuant to Republic Act (R.A.) No.
7160, otherwise known as the "The Local Government Code of 1991," which affected the Department of
Health (DOH) along with other government agencies.

Prior to the devolution, Dr. Fortunata Castillo (hereinafter Dr. Castillo) held the position of Provincial
Health Officer II (PHO II) of the Department of Health (DOH) Regional Office No. IX in Zamboanga City
and was the head of both the Basilan Provincial Health Hospital and Public Health Services. Respondent
Dr. Agnes Ouida P. Yu (Dr. Yu), on the other hand, held the position of Provincial Health Officer I (PHO I).
She was assigned, however, at the Integrated Provincial Health Office in Isabela, Basilan.

Upon the implementation of the devolution program, then Basilan Governor Gerry Salapuddin (Governor
Salapuddin) refused to accept Dr. Castillo as the incumbent of the PHO II position that was to be
devolved to the local government unit of Basilan, prompting the DOH to retain Dr. Castillo at the Regional
Office No. IX in Zamboanga City where she would serve the remaining four years of her public service.
She retired in 1996.

Meanwhile, in 1994, or two years after the implementation of the devolution program, Governor
Salapuddin appointed Dr. Yu to the PHO II position.

On February 23, 1998, Republic Act No. 8543, otherwise known as "An Act Converting the Basilan
Provincial Hospital in the Municipality of Isabela, Province of Basilan, into a Tertiary Hospital Under the
Full Administrative and Technical Supervision of the Department of Health, Increasing the Capacity to
One Hundred Beds and Appropriating Funds Therefor," was passed into law whereby the hospital
positions previously devolved to the local government unit of Basilan were re-nationalized and reverted to
the DOH. The Basilan Provincial Health Hospital was later renamed the Basilan General Hospital, and the
position of PHO II was then re-classified to Chief of Hospital II.

While Dr. Yu was among the personnel reverted to the DOH with the re-nationalization of the Basilan
General Hospital, she was made to retain her original item of PHO II instead of being given the re-
classified position of Chief of Hospital II. Subsequently, on August 1, 2003, then DOH Secretary Manuel
M. Dayrit (Secretary Dayrit) appointed Dr. Domingo Remus A. Dayrit (Dr. Dayrit) to the position of Chief of
Hospital II.

Aggrieved, Dr. Yu filed a letter of protest dated September 30, 2003[3] before the CSC claiming that she
has a vested right to the position of Chief of Hospital II. The pertinent portions of said letter read:

I come before your good office protesting the appointment issued by … DOH Secretary Manuel M. Dayrit
in favor of Dr. Domingo Remus A. Dayrit as Chief of Hospital … of the Basilan General Hospital …

xxx

… the position of Chief of Hospital II to which Dr. Dayrit has been appointed is a mere conversion from
the item of Provincial Health Officer II previously occupied by the herein protestant.
When what used to be called the Basilan Provincial Hospital was re-nationalized, now called the Basilan
General Hospital, the position of Provincial Health Officer II, then occupied by the undersigned, was
refused re-nationalized (sic) by DOH alleging the same position to be an LGU-created position, that is,
that the Local Government of Basilan created the position. Thus, instead of the undersigned being
automatically re-appointed Provincial Health Officer II of the Hospital, later to be renamed Chief of
Hospital II, pursuant to the Re-Nationalization Law, she was instead given an appointment still as
Provincial Health Officer II but under a co-terminous status at the Center for Health and Development,
DOH … which position the undersigned refused to accept...

On June 7, 2004, the CSC issued Resolution[4] No. 040655 granting Dr. Yu's protest and revoking the
appointment of Dr. Dayrit as Chief of Hospital II of Basilan General Hospital. Further, Secretary Dayrit
was directed to appoint Dr. Yu to said position. Upon motion for reconsideration, however, the CSC
reversed itself and issued Resolution[5] No. 040967 dated September 1, 2004 declaring that the position
of PHO II was never devolved to the Provincial Government of Basilan but was retained by the DOH; that
the PHO II position held by Dr. Yu was a newly-created position; and that, therefore, she did not have a
vested right to the Chief of Hospital II position that was created by virtue of R.A No. 8543.

Dr. Yu then filed a motion for reconsideration which was denied by the CSC in its Resolution [6] No.
050287 dated February 28, 2005. She then elevated her case to the CA on petition for review raising the
sole issue of whether the item of PHO II she previously occupied was a devolved position or a locally
created one.

On March 30, 2009, the CA rendered the assailed Decision in favor of Dr. Yu, disposing as follows:

FOR REASONS STATED, the Petition for Review is GRANTED and CSC Resolutions Nos. 040967 and
050287 are REVERSED and SET ASIDE. Petitioner is declared to have a vested right in the Chief of
Hospital II position up to her retirement in August 24, 2004 and should receive her corresponding salaries
and benefits.

SO ORDERED.[7]

In ruling that the PHO II position was devolved to the Basilan Provincial Government, the appellate court
ratiocinated in this wise:

xxx The CSC’s ruling that there are two PHO II positions is not implausible but contrary to the evidence
on hand. A perusal of the pleadings and attachments reveal that the PHO II position was devolved to the
Basilan Provincial Government. In a letter dated May 19, 1994, Ms. Vivian L. Young, Officer-in-Charge of
the Department of Health, Local Government Assistance & Monitoring Service informed former Governor
Salapuddin that the PHO II position was devolved to the local government, viz:

Dear Gov. Salapuddin,

This will refer to your letter relative to the item position of Dr. Fortunata C. Castillo which has been
devolved to the provincial government of BASILAN.

Please be informed that only the devolved health personnel who were not accepted by their Local Chief
Executive have been retained by DOH, the item positions per se remained in the respective LGU’s. xxx
The LGU’s have the option to retain the items vacated or to collapse the same for financial reasons.

xxx

Based on the foregoing letter, Dr. Milagros L. Fernandez, Director IV of the DOH – Regional Field Office
No. IX, Zamboanga City, wrote a letter to petitioner, to wit:

xxx

Madam:
The letter dated May 19, 1994 of Ms. Vivian L. Young, Officein- Charge (sic), LGAMS, Department of
Health, clarifies the issue raised by the Provincial Governor, in his letter dated April 14, 1994, insofar as
the retention of the Provincial Health Officer II of the province, in the person of Dr. Fortunata Castillo by
the DOH in view of the non-acceptance by the Governor consistent with the provisions of law on
devolution.

1. Dr. Fortunata A. Castillo, who was holding the position of Provincial Health Officer II of the province,
and a devolved health personnel, was retained by the DOH for reason abovementioned.

2. While she, the occupant, was retained, the item position remained as among those items in the
Plantilla of Personnel of the Integrated Provincial Health Office devolved to the Office of the Provincial
Governor.

3. The Governor, in such a case, may or may not retain her item in his Plantilla, or abolish it for reason
therein stated. The position herewith (sic) was left vacant with the retention of Dr. Castillo in this office.

4. The funds for salary and other benefits of the devolved item position of Provincial Health Officer II
remained devolved with the Office of the Governor.

In other words, with the retention of Dr. Castillo hereto, she never carried with her the item position and
the funds appropriated for salary and other benefits accruing to the position of Provincial Health Officer II.

xxx

In a letter dated October 26, 2001, Director Macybel Alfaro-Sashi of the Civil Service Commission
Regional Office IX informed the petitioner that:

At the outset, it is apparent that the position you presently occupy is one which should be included in the
list of renationalized positions notwithstanding the fact that the said position carries a position item
number different from that carried by the previous holder thereof. Hence, the contention of the DOH
Regional Office that your position is not the same as that of the previous holder simply because they bear
different position item numbers deserves very scant consideration. The position item numbers are
immaterial in case of renationalization as such a system is merely adopted for purposes of proper and
systematic coding of all positions in the government, particularly in the budgeting process. Thus, the
position you are presently holding should be considered as one belonging to the national government
prior to its devolution, regardless of the position item number attached to the position of the previous
holder thereof.

Thus, it is apparent that the PHO II position occupied by petitioner is one and the same position which
was previously occupied by Dr. Castillo before the devolution. When the latter was not accepted by Gov.
Salapuddin, Dr. Castillo was retained by the DOH but the PHO II item was devolved to the Provincial
Government of Basilan. Consequently, the position of PHO II became vacant. This is obvious by the fact
that the salaries of Dr. Castillo were taken from a special fund and not from the appropriation for the PHO
II position.

The motion for reconsideration of the foregoing Decision filed by the CSC was denied by the CA in its
Resolution[8]dated July 9, 2009. Hence, in this petition for review on certiorari, the CSC alleged that -

The Issue

THE COURT OF APPEALS ERRED IN HOLDING THAT THE PHO II POSITION PREVIOUSLY
OCCUPIED BY RESPONDENT YU IS A DEVOLVED POSITION.[9]

The Ruling of the Court

In pursuance of the declared policy under The Local Government Code of 1991 (R.A. No. 7160) to
provide for a more responsive and accountable local government structure through a system of
decentralization,[10] national agencies or offices, including the DOH, were mandated to devolve to the
local government units the responsibility for the provision of basic services and facilities.[11]
As defined, "devolution" is the act by which the national government confers power and authority upon the
various local government units to perform specific functions and responsibilities. [12] Specifically, Section
17(i) of the same Code prescribes the manner of devolution, as follows:

(i) The devolution contemplated in this Code shall include the transfer to local government units of the
records, equipment, and other assets and personnel of national agencies and offices corresponding to
the devolved powers, functions and responsibilities.

Personnel of said national agencies or offices shall be absorbed by the local government units to which
they belong or in whose areas they are assigned to the extent that it is administratively viable as
determined by the said oversight committee: Provided, further, That regional directors who are career
executive service officers and other officers of similar rank in the said regional offices who cannot be
absorbed by the local government unit shall be retained by the national government, without any
diminution of rank, salary or tenure.

To ensure the proper implementation of the devolution process, then President Corazon C. Aquino issued
Executive Order (E.O.) No. 503, otherwise known as the "Rules and Regulations Implementing the
Transfer of Personnel and Assets, Liabilities and Records of National Government Agencies Whose
Functions Are To Be Devolved To The Local Government Units And For Other Related Purposes," which
laid down the following pertinent guidelines with respect to the transfer of personnel:

Section 2. Principles and Policies Governing Transfer of Personnel.-

a. Coverage, Tenure, Compensation and Career Development. —

xxx

2. The absorption of the NGA personnel by the LGU shall be mandatory, in which case, the LGUs shall
create the equivalent positions of the affected personnel except when it is not administratively viable.

3. Absorption is not administratively viable when there is a duplication of functions unless the LGU opts to
absorb the personnel concerned.

4. The national personnel who are not absorbed by the LGUs under no. 3 above, shall be retained by the
NGA concerned, subject to civil service law, rules and regulations.

xxx

12. Except as herein otherwise provided, devolved permanent personnel shall be automatically
reappointed by the local chief executive concerned immediately upon their transfer which shall not go
beyond June 30, 1992. xxx

On the basis of the foregoing, it was mandatory for Governor Salapuddin to absorb the position of PHO
II, as well as its incumbent, Dr. Fortunata Castillo. Highlighting the absence of discretion is the use of the
word "shall" both in Section 17 (i) of R.A. No. 7160 and in Section 2(a)(2) of E.O. No. 503, which
connotes a mandatory order. Its use in a statute denotes an imperative obligation and is inconsistent with
the idea of discretion.[13] The only instance that the LGU concerned may choose not to absorb the NGA
personnel is when absorption is not administratively viable, meaning, it would result to duplication of
functions, in which case, the NGA personnel shall be retained by the national government. However, in
the absence of the recognized exception, devolved permanent personnel shall be automatically
reappointed [Section 2(a)(12)] by the local chief executive concerned immediately upon their transfer
which shall not go beyond June 30, 1992. Webster's Third New International Dictionary defines
"automatic" as "involuntary either wholly or to a major extent so that any activity of the will is largely
negligible." Being "automatic", thus, connotes something mechanical, spontaneous and perfunctory. [14]

There is no dearth of evidence showing that the item position of PHO II was, in fact, devolved to the
Provincial Government of Basilan. Governor Salapuddin himself certified[15] that said position was
included in the 1992 OSCAS[16] received from the Department of Budget and Management (DBM) with its
corresponding budget appropriation. He further declared that during the formal turn over program in 1993
attended by Dr. Milagros Fernandez, representing the DOH Regional Office, the item position of PHO II
was among the positions turned over to the Provincial Government of Basilan. Thus, the argument [17] of
petitioner CSC that only 53 plantilla positions, not 54, were devolved to the local government of Basilan
does not hold water. It cannot be disputed that Dr. Castillo's PHO II position was devolved.

However, Governor Salapuddin refused to reappoint Dr. Castillo to her devolved position in the LGU for
no other reason than that he ?wanted to accept only the item position of PHO II." [18] It was not shown, and
no attempt was ever made on the part of the LGU to show, that the absorption of Dr. Castillo was not
administratively viable. There being no valid and legal basis therefor, Governor Salapuddin's refusal to
accept Dr. Castillo was, plainly and simply, whimsical.

Be that as it may, Governor Salapuddin's refusal did not prevent the devolution of Dr. Castillo which,
together with that of the PHO II position, took effect by operation of law. In order to solve his dilemma,
Governor Salapuddin requested that Dr. Castillo be detailed instead at the DOH, which was confirmed by
then Secretary of Health Juan M. Flavier in his Department Order[19] No. 228, series of 1993, signed on
July 9, 1993, reproduced hereunder as follows:

This will officially confirm the detail of Dr. Fortunata A. Castillo PHO-II – Basilan at the Regional Health
Field Office No. IX, Zamboanga City per request of the Governor of Basilan, the Honorable Jerry (sic)
Salapuddin in his letter to Dr. Castillo, provided that the provincial government of Basilan will
continue to pay her salary and other benefits she's entitled thereto until further notice or order.
(Emphasis added)

Clearly therefore, the drawing of Dr. Castillo's salary from the LGU of Basilan which Governor Salapuddin
claimed to have allowed simply "to accommodate her (Dr. Castillo)"[20] was, in fact, a necessary
consequence of her devolution to the LGU and subsequent detail to the DOH. Officials and employees on
detail with other offices shall be paid their salaries, emoluments, allowances, fringe benefits and other
personal services costs from the appropriations of their parent agencies and in no case shall such be
charged against the appropriations of the agencies where they are assigned or detailed, except when
authorized by law.[21]

A detail is defined and governed by Executive Order 292, Book V, Title 1, Subtitle A, Chapter 5, Section
26 (6), thus:[22]

(6) Detail. A detail is the movement of an employee from one agency to another without the issuance of
an appointment and shall be allowed, only for a limited period in the case of employees occupying
professional, technical and scientific positions. If the employee believes that there is no justification for the
detail, he may appeal his case to the Commission. Pending appeal, the decision to detail the employee
shall be executory unless otherwise ordered by the Commission. (Emphasis added)

Had Dr. Castillo felt aggrieved by her detail to the DOH Regional Office, she was not without recourse.
The law afforded her the right to appeal her case to the CSC, but she had not seen fit to question the
justification for her detail. We could only surmise that, since Dr. Castillo was looking at only three more
years from the time of her detail until her retirement in 1996, and considering that she obviously would not
suffer any diminution in salary and rank, she found it pointless to pursue the matter.

Neither did Dr. Castillo find need to raise a howl when, at the behest of Governor Salapuddin who was
determined to replace her, DOH officials categorized her as a devolution non-viable employee, along with
216 others nationwide, by the mere fact that she was not accepted by the LGU of Basilan and not
because of an actual non-viability. Hence, in 1994, when Governor Salapuddin formally manifested his
intention to stop the drawing of Dr. Castillo's salary from the LGU in anticipation of his appointment of Dr.
Yu to the PHO II position, Dr. Castillo ceased to be a detailed employee at the DOH Regional Office but
was re-absorbed by the DOH as a devolution non-viable employee and, consequently, paid salaries and
benefits from the Miscellaneous Personnel Benefits Fund that had been set aside under the Office of the
Secretary of Health precisely for such employees.

Ms. Vivian L. Young, Officer-In-Charge of the DOH Local Government Assistance and Monitoring Service,
assured[23] Governor Salapuddin that, while Dr. Castillo was "retained" by the DOH, her item position
remained with the LGU of Basilan. Moreover, Dr. Milagros L. Fernandez, Director IV of the DOH Regional
Field Office No. IX in Zamboanga City, clarified[24] that Dr. Castillo "never carried with her the item position
and the funds appropriated for salary and other benefits accruing to the position of Provincial Health
Officer II."

Hence, the appointment of Dr. Yu to the position PHO II.

The next question to be answered is – may Dr. Castillo be considered to have abandoned her position for
consistently failing to assert her rights thereto?

We certainly do not believe so.

"Abandonment of an office is the voluntary relinquishment of an office by the holder with the intention of
terminating his possession and control thereof. In order to constitute abandonment of office, it must be
total and under such circumstance as clearly to indicate an absolute relinquishment. There must be a
complete abandonment of duties of such continuance that the law will infer a relinquishment.
Abandonment of duties is a voluntary act; it springs from and is accompanied by deliberation and freedom
of choice. There are, therefore, two essential elements of abandonment: first, an intention to abandon
and, second, an overt or 'external' act by which the intention is carried into effect."[25]

By no stretch of the imagination can Dr. Castillo's seeming lackadaisical attitude towards protecting her
rights be construed as an abandonment of her position resulting in her having intentionally and voluntarily
vacated the same. Governor Salapuddin's tenacious refusal to accept Dr. Castillo negates any and all
voluntariness on the part of the latter to let go of her position. The risk of incurring the ire of a powerful
politician effectively tied Dr. Castillo's hands, and it was quite understandable that she could not don her
gloves and fight, even if she wanted to. Considering, however, that Governor Salapuddin's clear infraction
of the law is not in issue before us, we need not make any pronouncement on this matter.

We rule, therefore, under the attendant circumstances of the case, that with Dr. Castillo's re-absorption by
the DOH which appears to bear the former's approval, her devolved position with the LGU of Basilan was
left vacant. In her May 19, 1994 letter to Governor Salapuddin, Ms. Vivian L. Young informed the local
chief executive that he had the "option to retain the item vacated or to collapse the same for financial
reasons."[26] Thus, we hold that Dr. Yu was validly appointed to the position of PHO II in 1994 and,
consequently, acquired a vested right to its re-classified designation – Chief of Hospital II. As such, Dr. Yu
should have been automatically re-appointed by Secretary Dayrit in accordance with the Guidelines for
the Re- Nationalization of Personnel, Assets and Appropriations of Basilan Provincial Hospital,[27] the
pertinent portion of which provides, as follows:

Item III. Principles and Policies Governing the Transfer of Basilan Provincial Hospital

A) xxx

3) The DOH shall assure that the re-nationalized personnel of the hospital shall:

3.i) Not be involuntarily separated, terminated or laid off;

3.ii) Continue to enjoy security of tenure;
3.iii) Be automatically re-appointed by the Secretary immediately upon their transfer;
3.iv) Retain their pay or benefits without diminution. (Emphasis supplied)

Considering, however, that Dr. Yu had already retired on August 24, 2004, we uphold the following
findings of the appellate court, to wit:

xxx Inasmuch as a re-appointment is no longer feasible due to her retirement, petitioner should at least
recover her salaries for the services she had rendered. However, petitioner admitted that she received
her salary as PHO II converted to Chief of Hospital for the period August to November 2001. Therefore,
she should receive her salary and benefits as Chief of Hospital from December 2001 up to her retirement
in August 24, 2004.[28]

WHEREFORE, the instant petition is hereby DENIED for lack of merit. The assailed Decision dated
March 30, 2009 in CA-G.R. SP No. 00327-MIN is AFFIRMED.

SO ORDERED.
 [ A.C. No. 6116, August 01, 2012 ]
ENGR. GILBERT TUMBOKON, COMPLAINANT, VS. ATTY. MARIANO R.
PEFIANCO, RESPONDENT.

RESOLUTION
PERLAS-BERNABE, J.:
Before the Court is an administrative complaint for disbarment filed by complainant Engr. Gilbert
Tumbokon against respondent Atty. Mariano R. Pefianco for grave dishonesty, gross misconduct
constituting deceit and grossly immoral conduct.

In his Complaint,[1] complainant narrated that respondent undertook to give him 20% commission, later
reduced to 10%, of the attorney's fees the latter would receive in representing Spouses Amable and
Rosalinda Yap (Sps. Yap), whom he referred, in an action for partition of the estate of the late Benjamin
Yap (Civil Case No. 4986 before the Regional Trial Court of Aklan). Their agreement was reflected in a
letter[2] dated August 11, 1995. However, respondent failed to pay him the agreed commission
notwithstanding receipt of attorney's fees amounting to 17% of the total estate or about P40 million.
Instead, he was informed through a letter[3] dated July 16, 1997 that Sps. Yap assumed to pay the same
after respondent had agreed to reduce his attorney's fees from 25% to 17%. He then demanded the
payment of his commission[4] which respondent ignored.

Complainant further alleged that respondent has not lived up to the high moral standards required of his
profession for having abandoned his legal wife, Milagros Hilado, with whom he has two children, and
cohabited with Mae Flor Galido, with whom he has four children. He also accused respondent of
engaging in money-lending business[5]without the required authorization from the Bangko Sentralng
Pilipinas.

In his defense, respondent explained that he accepted Sps. Yap's case on a 25% contingent fee basis,
and advanced all the expenses. He disputed the August 11, 1995 letter for being a forgery and claimed
that Sps. Yap assumed to pay complainant's commission which he clarified in his July 16, 1997 letter. He,
thus, prayed for the dismissal of the complaint and for the corresponding sanction against complainant's
counsel, Atty. Florencio B. Gonzales, for filing a baseless complaint. [6]

In the Resolution[7] dated February 16, 2004, the Court resolved to refer this administrative case to the
Integrated Bar of the Philippines (IBP) for investigation, report and recommendation. In his Report and
Recommendation[8]dated October 10, 2008, the Investigating IBP Commissioner recommended that
respondent be suspended for one (1) year from the active practice of law, for violation of the Lawyer's
Oath, Rule 1.01, Canon 1; Rule 7.03, Canon 7 and Rule 9.02, Canon 9 of the Code of Professional
Responsibility (Code). The IBP Board of Governors adopted and approved the same in its Resolution No.
XIX-2010-453[9] dated August 28, 2010. Respondent moved for reconsideration [10] which was denied in
Resolution No. XIX-2011-141 dated October 28, 2011.

After due consideration, We adopt the findings and recommendation of the IBP Board of Governors.

The practice of law is considered a privilege bestowed by the State on those who show that they possess
and continue to possess the legal qualifications for the profession. As such, lawyers are expected to
maintain at all times a high standard of legal proficiency, morality, honesty, integrity and fair dealing, and
must perform their four-fold duty to society, the legal profession, the courts and their clients, in
accordance with the values and norms embodied in the Code.[11] Lawyers may, thus, be disciplined for
any conduct that is wanting of the above standards whether in their professional or in their private
capacity.

In the present case, respondent's defense that forgery had attended the execution of the August 11, 1995
letter was belied by his July 16, 1997 letter admitting to have undertaken the payment of complainant's
commission but passing on the responsibility to Sps. Yap. Clearly, respondent has violated Rule
9.02,[12] Canon 9 of the Code which prohibits a lawyer from dividing or stipulating to divide a fee for legal
services with persons not licensed to practice law, except in certain cases which do not obtain in the case
at bar.

Furthermore, respondent did not deny the accusation that he abandoned his legal family to cohabit with
his mistress with whom he begot four children notwithstanding that his moral character as well as his
moral fitness to be retained in the Roll of Attorneys has been assailed. The settled rule is that betrayal of
the marital vow of fidelity or sexual relations outside marriage is considered disgraceful and immoral as it
manifests deliberate disregard of the sanctity of marriage and the marital vows protected by the
Constitution and affirmed by our laws.[13] Consequently, We find no reason to disturb the IBP's finding that
respondent violated the Lawyer's Oath[14] and Rule 1.01, Canon 1 of the Code which proscribes a lawyer
from engaging in “unlawful, dishonest, immoral or deceitful conduct.”

However, We find the charge of engaging in illegal money lending not to have been sufficiently
established. A “business” requires some form of investment and a sufficient number of customers to
whom its output can be sold at profit on a consistent basis.[15] The lending of money to a single person
without showing that such service is made available to other persons on a consistent basis cannot be
construed as indicia that respondent is engaged in the business of lending.

Nonetheless, while We rule that respondent should be sanctioned for his actions, We are minded that the
power to disbar should be exercised with great caution and only in clear cases of misconduct that
seriously affect the standing and character of the lawyer as an officer of the court and as member of the
bar,[16] or the misconduct borders on the criminal, or committed under scandalous circumstance, [17] which
do not obtain here. Considering the circumstances of the case, We deem it appropriate that respondent
be suspended from the practice of law for a period of one (1) year as recommended.

WHEREFORE, respondent ATTY. MARIANO R. PEFIANCO is found GUILTY of violation of the Lawyer's
Oath, Rule 1.01, Canon 1 of the Code of Professional Responsibility and Rule 9.02, Canon 9 of the same
Code and SUSPENDED from the active practice of law for ONE (1) YEAR effective upon notice hereof.

Let copies of this Resolution be entered in the personal record of respondent as a member of the
Philippine Bar and furnished the Office of the Bar Confidant, the Integrated Bar of the Philippines and the
Office of the Court Administrator for circulation to all courts in the country.

SO ORDERED.
 [ A.C. No. 9390, August 01, 2012 ]
EMILIA O. DHALIWAL, COMPLAINANT, VS. ATTY. ABELARDO B.
DUMAGUING, RESPONDENT.

RESOLUTION
PERLAS-BERNABE, J.:
Emilia O. Dhaliwal filed a complaint for violation of Canon 16 of the Code of Professional Responsibility
against Atty. Abelardo B. Dumaguing.

In her sworn statement, complainant alleged that she engaged the services or respondent in connection
with the purchase of a parcel of land from Fil-Estate Development Inc. (Fil-Estate). On June 13, 2000,
upon the instruction of respondent, complainant's daughter and son-in-law withdrew P342,000.00 from
the Philippine National Bank (PNB) and handed the cash over to respondent. They then proceeded to BPI
Family Bank Malcolm Square Branch where respondent purchased two manager's checks in the amounts
of P58,631.94 and P253,188.00 both payable to the order of Fil- Estate Inc. When asked why the
manager's checks were not purchased at PNB, respondent explained that he has friends at the BPI
Family Bank and that is where he maintains an account. These manager's checks were subsequently
consigned with the Housing and Land Use Regulatory Board (HLURB) after complainant’s request to
suspend payments to Fil-Estate had been granted. On September 22, 2000, respondent, on behalf of
complainant, filed with the HLURB a complaint for delivery of title and damages against Fil-Estate. A
week after or on September 29, 2000, he withdrew the two manager's checks that were previously
consigned. On March 3, 2003, complainant informed the HLURB through a letter that respondent was no
longer representing her. On March 11, 2003, the HLURB promulgated its Decision, adverse to
complainant, finding the case for delivery of title and damages premature as there was no evidence of full
payment of the purchase price. Thereafter, complainant made demands upon respondent to return and
account to her the amounts previously consigned with the HLURB. Respondent did not comply. Thus,
complainant prays that respondent be disbarred.

In his answer, respondent admitted substantially all of the allegations in the complaint. In defense, he
claims that the amount of P311,819.94 was consigned to the HLURB to cover the full payment of the
balance of the purchase price of the lot with Fil-Estate. Fil-Estate, however, did not accept the same as it
wanted complainant to also pay interests and surcharges totalling more than P800,000.00. Because the
amount was formally consigned with the HLURB, he allegedly filed a motion [1] to verify if the judgment in
the case was already satisfied. He claimed that his motion has not yet been acted upon; hence, he did
not deem it proper as yet to return the consigned amount.

Following the submission by complainant of her verified position paper and the failure of respondent to
submit his, despite having been given ample opportunity to do so, the Commission on Bar Discipline,
through Attorney Gerely C. Rico, submitted its Report and Recommendation finding complainant to have
sufficiently established that respondent violated Canon 16 of the Code of Professional Responsibility. It
also found respondent to have submitted a false and fabricated piece of documentary evidence, as the
January 2004 Motion attached to his answer as Annex A did not bear any proof of service upon the
opposing party and proof of filing with the HLURB. The Commission recommended that respondent be
suspended from the practice of law for a period of one (1) year. On September 19, 2007, the IBP Board of
Governors passed Resolution No. XVIII-2007-93, adopting with modification the Commission's Report
and Recommendation, to wit:

RESOLVED to ADOPT and APPROVE, as it is hereby ADOPTED and APPROVED, with modification,
the Report and Recommendation of the Investigating Commissioner of the above-entitled case, herein
made part of this Resolution as Annex “A”; and, finding the recommendation fully supported by the
evidence on record and the applicable laws and rules, and considering Respondent's violation of Canon
16 of the Code of Professional Responsibility by his failure to return and account to complainant the
amount previously consigned with the HLURB despite demand, Atty. Abelardo B. Dumaguing is
hereby SUSPENDED from the practice of law for six (6) months and Ordered to Return the amount of
P311,819.94 to complainant within thirty (30) days from receipt of notice.

Respondent's motion for reconsideration was denied by the IBP Board of Governors in Resolution No.
XX-2012-42.
The Court adopts the IBP's findings of fact and conclusions of law.

The Code of Professional Responsibility provides:

Canon 16-A lawyer shall hold in trust all moneys and properties of his client that may come into his
possession.
Rule 16.01-A lawyer shall account for all money or property collected or received for or from the client.
Rule 16.02-A lawyer shall keep the funds of each client separate and apart from his own and those of
others kept by him.
Rule 16.03-A lawyer shall deliver the funds and property of his client when due or upon demand.

Money entrusted to a lawyer for a specific purpose, such as payment for the balance of the purchase
price of a parcel of land as in the present case, but not used for the purpose, should be immediately
returned.[2] “A lawyer's failure to return upon demand the funds held by him on behalf of his client gives
rise to the presumption that he has appropriated the same for his own use in violation of the trust reposed
in him by his client. Such act is a gross violation of general morality as well as of professional ethics. It
impairs public confidence in the legal profession and deserves punishment.” [3]

Since respondent withdrew the consignation of the BPI manager’s checks in the total amount of
P311,891.94 from the HLURB and the same was not used to settle the balance of the purchase price of
the parcel of land purchased by complainant from Fil-Estate, then reimbursement with legal interest[4] was
properly ordered by the IBP.

Respondent's proffered excuse of having to await the HLURB action on his alleged motion--the filing of
which he miserably failed to prove--as a condition to the return of the sum of P311,891.94 to complainant
compounds his liability and even bolstered his attitude to use dishonest means i r only to evade his
obligation. It underlines his failure to meet the high moral standards required of members of the legal
profession.

WHEREFORE, Atty. Abelmdo B. Dumaguing is adjudged GUILTY of violating Canon 16 of the Code of
Professional Responsibility. He is hereby SUSPENDED from the practice of law for a period of six (6)
months effective upon receipt of this Resolution. He is also ordered to return to complainant Emilia O.
Dhaliwal, the amount of P311,819.94 with legal interest of six percent (6%) per annum from the time of
his receipt of the money on September 29, 2000 up to the finality of this Resolution and twelve percent (
12%) per annum from finality thereof until paid.

Let copies of this Resolution be furnished the Office of the Bar Confidant to be entered into respondent's
personal record as attorney. Copies shall likewise be furnished the IBP and the Office of the Court
Administrator for circulation to all courts concerned.

SO ORDERED.
 [ G.R. No. 190144, August 01, 2012 ]
BANK OF THE PHILIPPINE ISLANDS, PETITIONER, VS. CARLITO LEE,
RESPONDENT.

DECISION
PERLAS-BERNABE, J.:
In this Petition for Review on Certiorari[1] under Rule 45 of the Rules of Court, petitioner Bank of the
Philippine Islands (BPI) seeks to reverse and set aside the February 11, 2009 Decision [2] and October 29,
2009 Resolution[3] of the Court of Appeals (CA) in CA-G.R. No. 87911 which annulled the March 1,
2004[3] and September 16, 2004[4]Orders of the Regional Trial Court (RTC) of Makati City, Branch 61 and
instead, entered a new one directing the RTC to issue a writ of execution and/or enforce garnishment
against the bank deposit of Trendline Resources & Commodities Exponent, Inc. (Trendline) and Leonarda
Buelva (Buelva) with the defunct Citytrust Banking Corporation (Citytrust), now merged with BPI.

The Facts

On April 26, 1988, respondent Carlito Lee (Lee) filed a complaint for sum of money with damages and
application for the issuance of a writ of attachment against Trendline and Buelva (collectively called
“defendants”) before the RTC, docketed as Civil Case No. 88-702, seeking to recover his total investment
in the amount of P5.8 million. Lee alleged that he was enticed to invest his money with Trendline upon
Buelva’s misrepresentation that she was its duly licensed investment consultant or commodity
saleswoman. His investments, however, were lost without any explanation from the defendants.

On May 4, 1988, the RTC issued a writ of preliminary attachment whereby the Check-O-Matic Savings
Accounts of Trendline with Citytrust Banking Corporation, Ayala Branch, in the total amount of
P700,962.10 were garnished. Subsequently, the RTC rendered a decision on August 8, 1989 finding
defendants jointly and severally liable to Lee for the full amount of his investment plus legal interest,
attorney’s fees and costs of suit. The defendants appealed the RTC decision to the CA, docketed as CA
G.R. CV No. 23166.

Meanwhile, on April 13, 1994, Citytrust filed before the RTC an Urgent Motion and
Manifestation[5] seeking a ruling on defendants' request to release the amount of P591,748.99 out of the
garnished amount for the purpose of paying Trendline’s tax obligations. Having been denied for lack of
jurisdiction, Trendline filed a similar motion[6] with the CA which the latter denied for failure to prove that
defendants had no other assets to answer for its tax obligations.

On October 4, 1996, Citytrust and BPI merged, with the latter as the surviving corporation. The Articles of
Merger provide, among others, that “all liabilities and obligations of Citytrust shall be transferred to and
become the liabilities and obligations of BPI in the same manner as if the BPI had itself incurred such
liabilities or obligations.”[7]

On December 22, 1998, the CA denied the appeal in CA-G.R. CV No. 23166 and affirmed in toto the
decision of the RTC, which had become final and executory on January 24, 1999.

Hence, Lee filed a Motion for Execution[8] before the RTC on July 29, 1999, which was granted. Upon
issuance of the corresponding writ, he sought the release of the garnished deposits of Trendline. When
the writ was implemented, however, BPI Manager Samuel Mendoza, Jr. denied having possession,
control and custody of any deposits or properties belonging to defendants, prompting Lee to seek the
production of their records of accounts with BPI. However, on the manifestation of BPI that it cannot
locate the defendants' bank records with Citytrust, the RTC denied the motion on September 6, 2002.

On December 16, 2002, Lee filed a Motion for Execution and/or Enforcement of Garnishment [9] before the
RTC seeking to enforce against BPI the garnishment of Trendline’s deposit in the amount of P700,962.10
and other deposits it may have had with Citytrust. The RTC denied the motion for dearth of evidence
showing that BPI took over the subject accounts from Citytrust and the fact that BPI was not a party to the
case. Lee’s motion for reconsideration was likewise denied.[10]

Lee elevated the matter to the CA on a petition for certiorari. In its February 11, 2009 Decision, the CA
annulled the questioned orders, finding grave abuse of discretion on the part of the RTC in denying Lee’s
motion to enforce the garnishment against Trendline’s attached bank deposits with Citytrust, which have
been transferred to BPI by virtue of their merger. It found BPI liable to deliver to the RTC the garnished
bank deposit of Trendline in the amount of P700,962.10, which Citytrust withheld pursuant to the RTC's
previously-issued writ of attachment.

The CA refused to give credence to BPI’s defense that it can no longer locate Trendline’s bank records
with the defunct Citytrust, as its existence was supported by evidence and by the latter's admission.
Neither did it consider BPI a stranger to the case, holding it to have become a partyin- interest upon the
approval by the Securities and Exchange Commission (SEC) of the parties’ Articles of Merger. BPI’s
Motion for Reconsideration[11] was denied in the CA's October 29, 2009 Resolution.

The Issues

In this petition, BPI ascribes the following errors to the CA:

A.

THE HONORABLE COURT OF APPEALS ERRED IN NOT DISMISSING CA-G.R. SP No. 87911, THE
PETITION FOR CERTIORARI UNDER RULE 65 OF THE REVISED RULES OF COURT, FILED BY
RESPONDENT CARLITO LEE BEING [AN] IMPROPER REMEDY.

B.

THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT PETITIONER BPI BECAME
PARTYIN- INTEREST IN THE CASE FILED BY RESPONDENT CARLITO LEE UPON THE APPROVAL
BY THE SECURITIES AND EXCHANGE COMMISSION OF ITS MERGER WITH CITYTRUST BANKING
CORPORATION.

C.

THE HONORABLE COURT OF APPEALS ERRED IN NOT RULING THAT THE MOTION FOR
EXECUTION AND/OR ENFORCEMENT OF GARNISHMENT IS NOT THE APPROPRIATE REMEDY IN
THE EVENT THERE IS A THIRD PARTY INVOLVED DURING THE EXECUTION PROCESS OF A
FINAL AND EXECUTORY JUDGMENT.

D.

THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT PETITIONER BPI SHOULD BE
HELD ACCOUNTABLE FOR THE AMOUNT OF PHP700,962.10.[12]

The Ruling of the Court

Section 1, Rule 41 of the Revised Rules of Court provides:

SECTION 1. Subject of appeal. - x x x

No appeal may be taken from:

xxx

(b) An interlocutory order;

xxx

In any of the foregoing circumstances, the aggrieved party may file an appropriate special civil action as
provided in Rule 65.[13]

A punctilious examination of the records will reveal that Lee had previously sought the execution of the
final and executory decision of the RTC dated August 8, 1989 which was granted and had resulted in the
issuance of the corresponding writ of execution. However, having garnished the deposits of Trendline
with Citytrust in the amount of P700,962.10 by virtue of a writ of preliminary attachment, Lee filed anew a
Motion for Execution and/or Enforcement of Garnishment before the RTC on December 16, 2002. While
the RTC denied the motion in its March 1, 2004 Order, the denial was clearly with respect only to
the enforcement of the garnishment, to wit:

Acting on the Motion for Execution and/or Enforcement of Garnishment filed by plaintiff Carlito Lee, and
there being no evidence shown that the accounts subject of the motion were taken over by the Bank of
the Philippine Islands from Citytrust Bank and considering further that Bank of Philippine Islands is not a
party to this case, the instant Motion is DENIED for lack of merit.

SO ORDERED.[14]

Consequently, the foregoing Order merely involved the implementation of a writ of execution,
hence, interlocutory in nature. An interlocutory order is one that does not finally dispose of the case, and
does not end the court's task of adjudicating the parties’ contentions and determining their rights and
liabilities as regards each other, but obviously indicates that other things remain to be done. [15]

Conformably with the provisions of Section 1, Rule 41 of the Revised Rules of Court above-quoted, the
remedy from such interlocutory order is certiorari under Rule 65. Thus, contrary to the contention of BPI,
the CA did not err in assuming jurisdiction over the petition for certiorari.

BPI likewise insists that the CA erred in considering it a party to the case by virtue of its merger with
Citytrust, the garnishee of defendants' deposits.

The Court is not convinced.

Section 5, Rule 65 of the Revised Rules of Court requires that persons interested in sustaining the
proceedings in court must be impleaded as private respondents. Upon the merger of Citytrust and BPI,
with the latter as the surviving corporation, and with all the liabilities and obligations of Citytrust
transferred to BPI as if it had incurred the same, BPI undoubtedly became a party interested in sustaining
the proceedings, as it stands to be prejudiced by the outcome of the case.

It is a settled rule that upon service of the writ of garnishment, the garnishee becomes a “virtual party” or
“forced intervenor” to the case and the trial court thereby acquires jurisdiction to bind the garnishee to
comply with its orders and processes. In Perla Compania de Seguros, Inc. v. Ramolete,[16] the Court
ruled:

In order that the trial court may validly acquire jurisdiction to bind the person of the garnishee, it is not
necessary that summons be served upon him. The garnishee need not be impleaded as a party to the
case. All that is necessary for the trial court lawfully to bind the person of the garnishee or any person
who has in his possession credits belonging to the judgment debtor is service upon him of the writ of
garnishment.

The Rules of Court themselves do not require that the garnishee be served with summons or impleaded
in the case in order to make him liable.

xxxx

Through the service of the writ of garnishment, the garnishee becomes a “virtual party” to, or a “forced
intervenor” in, the case and the trial court thereby acquires jurisdiction to bind him to compliance with all
orders and processes of the trial court with a view to the complete satisfaction of the judgment of the
court.[17]

Citytrust, therefore, upon service of the notice of garnishment and its acknowledgment that it was in
possession of defendants' deposit accounts in its letter-reply dated June 28, 1988, became a “virtual
party” to or a “forced intervenor” in the civil case. As such, it became bound by the orders and processes
issued by the trial court despite not having been properly impleaded therein. Consequently, by virtue of its
merger with BPI on October 4, 1996, BPI, as the surviving corporation, effectively became the garnishee,
thus the “virtual party” to the civil case.

Corollarily, it should be emphasized that a merger of two corporations produces, among others, the
following effects:

1. The constituent corporations shall become a single corporation which, in case of merger, shall be the
surviving corporation designated in the plan of merger; and in case of consolidation, shall be the
consolidated corporation designated in the plan of consolidation;

2. The separate existence of the constituent corporation shall cease, except that of the surviving or the
consolidated corporation;

3. The surviving or the consolidated corporation shall possess all the rights, privileges, immunities and
powers and shall be subject to all the duties and liabilities of a corporation organized under this Code;

4. The surviving or the consolidated corporation shall thereupon and thereafter possess all the rights,
privileges, immunities and franchises of each of the constituent corporations; and all property, real or
personal, and all receivables due on whatever account, including subscriptions to shares and other
choses in action, and all and every other interest of, or belonging to, or due to each constituent
corporation, shall be deemed transferred to and vested in such surviving or consolidated corporation
without further act or deed; and

5. The surviving or consolidated corporation shall be responsible and liable for all the liabilities and
obligations of each of the constituent corporations in the same manner as if such surviving or
consolidated corporation had itself incurred such liabilities or obligations; and any pending claim, action or
proceeding brought by or against any of such constituent corporations may be prosecuted by or against
the surviving or consolidated corporation. The rights of creditors or liens upon the property of any of such
constituent corporations shall not be impaired by such merger or consolidation.[18] (Underscoring
supplied)

In sum, although Citytrust was dissolved, no winding up of its affairs or liquidation of its assets, privileges,
powers and liabilities took place. As the surviving corporation, BPI simply continued the combined
businesses of the two banks and absorbed all the rights, privileges, assets, liabilities and obligations of
Citytrust, including the latter’s obligation over the garnished deposits of the defendants.

Adopting another tack, BPI claims that Lee should have instead availed himself of the remedy provided
under Section 43, Rule 39 of the Revised Rules of Court because he is a third party to the case who
denies possession of the property.

The argument is specious.

Section 43, Rule 39 of the Revised Rules of Court states:

SECTION 43. Proceedings when indebtedness denied or another person claims the property. – If it
appears that a person or corporation, alleged to have property of the judgment obligor or to be indebted
to him, claims an interest in the property adverse to him or denies the debt, the court may authorize, by
an order made to that effect, the judgment oblige to institute an action against such person or corporation
for the recovery of such interest or debt, forbid a transfer or other disposition of such interest or debt
within one hundred twenty (120) days from notice of the order, and may punish disobedience of such
order as for contempt. Such order may be modified or vacated at any time by the court which issued it, or
by the court in which the action is brought, upon such terms as may be just. (Underscoring supplied).

The institution of a separate action against a garnishee contemplates a situation where the garnishee
(third person) “claims an interest in the property adverse to him (judgment debtor) or denies the
debt.”[19] Neither of these situations exists in this case. The garnishee does not claim any interest in the
deposit accounts of the defendants, nor does it deny the existence of the deposit accounts. In fact,
Citytrust admitted in its letter dated June 28, 1988 that it is in possession of the deposit accounts.

Considering the foregoing disquisitions, BPI's liability for the garnished deposits of defendants has been
clearly established.
Garnishment has been defined as a specie of attachment for reaching credits belonging to the judgment
debtor and owing to him from a stranger to the litigation.[20] A writ of attachment is substantially a writ of
execution except that it emanates at the beginning, instead of at the termination, of a suit. It places the
attached properties in custodia legis, obtaining pendente lite a lien until the judgment of the proper
tribunal on the plaintiff’s claim is established, when the lien becomes effective as of the date of the levy. [21]

By virtue of the writ of garnishment, the deposits of the defendants with Citytrust were placed in custodia
legis of the court. From that time onwards, their deposits were under the sole control of the RTC and
Citytrust holds them subject to its orders until such time that the attachment or garnishment is discharged,
or the judgment in favor of Lee is satisfied or the credit or deposit is delivered to the proper officer of the
court.[22] Thus, Citytrust, and thereafter BPI, which automatically assumed the former’s liabilities and
obligations upon the approval of their Articles of Merger, is obliged to keep the deposit intact and to
deliver the same to the proper officer upon order of the court.

However, the RTC is not permitted to dissolve or discharge a preliminary attachment or garnishment
except on grounds specifically provided[23] in the Revised Rules of Court, namely,[24] (a) the debtor has
posted a counter-bond or has made the requisite cash deposit;[25] (b) the attachment was improperly or
irregularly issued[26] as where there is no ground for attachment, or the affidavit and/or bond filed therefor
are defective or insufficient; (c) the attachment is excessive, but the discharge shall be limited to the
excess;[27] (d) the property attachment is exempt from preliminary attachment;[28] or (e) the judgment is
rendered against the attaching creditor.[29]

Evidently, the loss of bank records of a garnished deposit is not a ground for the dissolution of
garnishment. Consequently, the obligation to satisfy the writ stands.

Moreover, BPI cannot avoid the obligation attached to the writ of garnishment by claiming that the fund
was not transferred to it, in light of the Articles of Merger which provides that “[a]ll liabilities and
obligations of Citytrust shall be transferred to and become the liabilities and obligations of BPI in the same
manner as if the BPI had itself incurred such liabilities or obligations, and in order that the rights and
interest of creditors of Citytrust or liens upon the property of Citytrust shall not be impaired by merger.” [30]

Indubitably, BPI IS liable to deliver the fund subject of the writ of garnishment.

With regard to the amount of the garnished fund, the Court concurs with the finding of the CA that the
total amount of garnished deposit of Trendline as of January 27, 1994 is P700,962.10, [31] extant in its
motion for partial lifting of the writ of preliminary attachment[32] and which amount, as correctly observed
by the CA, remains undisputed[33]throughout the proceedings relative to this case.

WHEREFORE, the instant petition is DENIED and the assailed February 11, 2009 Decision and October
29, 2009 Resolution of the Court of Appeals are AFFIRMED.

SO ORDERED.
 [ G.R. No. 196883, August 15, 2012 ]
GLOBAL RESOURCE FOR OUTSOURCED WORKERS (GROW), INC. AND
MS RETAIL KSC/MS RETAIL CENTRAL MARKETING CO. AND MR.
EUSEBIO H. TANCO, PETITIONERS, VS. ABRAHAM C. VELASCO AND
NANETTE T. VELASCO, RESPONDENTS.

DECISION
PERLAS-BERNABE, J.:
The power to dismiss an employee is a recognized prerogative inherent in the employer's right to freely
manage and regulate his business.[1] However, this power is never unbridled and the exercise thereof
should unfailingly comply with both substantive and procedural requirements of the law.

This is an appeal under Rule 45 of the Revised Rules of Court which seeks to reverse the January 31,
2011 Decision[2] and May 13, 2011 Resolution[3] of the Court of Appeals holding the petitioners liable for
overtime pay, nominal damages and attorney's fees.

The Facts

Petitioner Global Resource for Outsourced Workers (GROW), Inc. is a domestic corporation engaged in
the placement of workers for overseas deployment, with petitioner Eusebio Tanco as its President. [4]

Sometime in January 2008, respondents Abraham Velasco and Nanette Velasco (collectively
respondents) -were hired by petitioners MS Retail KSC/MS Retail Central Marketing Co. (MS
Retail),[5] through GROW, as Circus Performer and Circus Performer-Assistant, respectively, at MS
Retail's Store located in Kuwait.

Based on their employment contracts, respondents Abraham and Nanette were entitled to monthly
salaries of KD 650 or USD 2,303.92 and KD 150 or USD 531.87, respectively,[6] under the following work
schedule:[7]

No. of shows per day: 4 shows/day

No. of work days per week: 6 days/wk.
No. of work hours per month-: 48 hrs/mo.

It was also stipulated that MS Retail may determine the hours of work assigned to respondents "from time
to. time in accordance with the general and particular requirements of the operation" of MS Retail. [8]
Moreover, when respondents are not actually performing shows, they may be asked to carry out duties as
the business may require.[9]

Respondents arrived in Kuwait on February 22, 2008 and were made to perform shows after a brief
orientation. In a meeting with the store manager of MS Retail, they brought up their work hours and show
schedules as provided for in their employment contract. They were, however, informed that the work
hours of "48 hrs/mo" as appearing in the contract, was a typographical error as the correct number of their
working hours was 48 hours per week, to which they complied.

On August 26, 2008, respondents went to Thailand on approved vacation leave. On September 2, 2008,
respondent Abraham sent an electronic mail (email) to Mr. Joseph San Juan, the Human Resources
Coordinator of MS Retail, advising him of their inability to return for work on September 3, 2008 because
of the political protests in Thailand and that they had rebooked their return flight to Kuwait on September
10, 2008.[10] However, contrary to their representation, the respondents proceeded to the Philippines on
September 9, 2008.[11]

On September 17, 2008, Mr. San Juan emailed respondents asking for their definite date of return to
Kuwait and warning them that if they do not immediately return to work before the end of the month, they
will be dismissed from employment for cause.[12]

The respondents ignored the said email. Thus, on September 23, 2008, MS Retail terminated their
employment through email, which reads:[13]
Please be informed that we are terminating your employment contract with MS Retail effective today,
23rd September 2008. Due to Kuwait Private Labour Law Article 55. "The employer has the right to
terminate the labourer without notice and indemnity in the following cases:

c) If he has been absent from duty for more that [sic] seven consecutive days without any legal reason."

Therefore, company decided to terminate your employment contract and blacklist both of you in entering
Kuwait.

Consider this email as your official termination letter.

Unknown to MS Retail, the respondents had already filed a labor case for constructive dismissal, breach
of contract, and payment of the remaining portion of their contracts, damages and attorney's fees on
September 15, 2008.[14]They claimed that, contrary to the terms of their employment contracts, they were
made to work for at least eight (8) hours a day or 48 hours per week, without overtime pay. Moreover,
they were assigned work not related to their task as circus performers. Hence, they were deemed to have
been constructively dismissed, warranting the payment of the unexpired portion of their contract,
damages and attorney's fees.[15]

Labor Arbiter's Ruling

The Labor Arbiter (LA) granted respondents' claim in her April 8. 2009 Decision, the dispositive portion of
which reads:

WHEREFORE, premises considered, judgment is hereby rendered ordering GLOBAL RESOURCES FOR
OUTSOURCED WORKERS AND MS RETAIL KSC jointly and severally liable to pay complainants
Abraham C. Velasco and Nannette T. Velasco their salaries for the unexpired portion of their employment
contract for six (6) months:

1.) Abraham Velasco

(US$ 2,303.92 x 6 mos.) = US$ 13,823.52

2.) Nannette Velasco

(US$.531.87 x 6 mos.) = US$43,191.22*

TOTAL US$57,014.74**

3.) Ten (10%) percent Atty.'s fees- US$ 5,701.47***

All other claims are dismissed for want of basis.

SO ORDERED.[16]

The LA found respondents to have been constructively dismissed from service without just cause,
debunking petitioners' defense that respondents abandoned their work as-shown by the immediate filing
of the complaint for illegal dismissal.[17]

Respondents' claim for overtime pay was, however, denied for the reason that indeed a typographical
error was committed in providing the number of working hours as 48 hours per month instead of 48 hours
per week. The LA made the observation that "it is a known practice that employees work for a regular
eight (8) hours a day and 48 hours for 6 days work."[18]

Only petitioners filed an appeal before the National Labor Relations Commission (NLRC). The
respondents did not appeal the denial of their claim for overtime pay.

Ruling of NLRC
On October 30, 2009, the NLRC Second Division rendered its Decision[19] dismissing the complaint for
constructive/illegal dismissal on the ground of abandonment.[20]

The NLRC found no basis to sustain, the charge of constructive dismissal premised on petitioners' act of
imposing a greater number of working hours different from that stipulated in the employment contract. It
affirmed the standard practice of other employees working as party entertainers in the store of MS Retail
of rendering an average of eight (8) hours a day or forty-eight (48) hours work for one (1) week, as well as
the LA's finding of typographical error in the working hours provided for under respondents' contract. [21]

In contrast to the findings of the LA, the NLRC gave credence to petitioners' claim of abandonment,
holding that the respondents' "continuing absence from work without any justifiable reason,
notwithstanding notice with warning for them to return to work, coupled with their actual flight back to
Philippines, indicated an animus to no longer go back to their work in Kuwait."[22] Respondents' Motion for
Reconsideration[23] was denied in the NLRC Resolution dated January 25, 2010, prompting the filing of a
petition for certiorari before the Court of Appeals.

Ruling of the Court of Appeals

On January 31, 2011, the CA rendered the assailed Decision[24] holding that while respondents were
validly terminated, the petitioners failed to comply with the twin-notice rule, to wit: first informing the
respondents of the charge and affording them an opportunity to be heard, then subsequently advising
them of their.termination. Petitioners were then held liable for nominal damages and attorney's fees.
Finally, the CA found respondents entitled to overtime pay for work rendered in excess of 48 hours per
month.

The dispositive portion of the assailed Decision reads:

WHEREFORE, premises considered, the Petition for Certiorari is hereby PARTLY GRANTED.
Accordingly, the assailed Decision dated October 30, 2009 and Resolution January 25, 2010 of the NLRC
are AFFIRMED with MODIFICATION. MS Retail is hereby ordered to pay petitioners the following:

1. PhP 30,000.00 each for non-compliance with statutory due process; and

2. Overtime pay for work rendered in excess of the forty eight (48) hours work per month.

The case is hereby REMANDED to the Labor Arbiter for proper computation of the money claims.

SO ORDERED.

Issues Presented Before the Court

In the present petition for review, the validity of the dismissal of the respondents was not assailed. The
only issues raised are:

(1) Whether or not the CA erred in granting the respondents overtime pay considering that its denial by
the LA was not appealed by the respondents.

(2) Whether or not the CA erred in awarding nominal damages and attorney's fees to the respondents.

The Court's Ruling

The petition is partly meritorious.

The petitioners contend that the failure of the respondents to appeal the ruling of the LA denying the
latter's claim for overtime pay rendered the same final and binding upon them. The contention lacks merit.

In the case of Bahia Shipping Services, Inc. v. Chua,[25] the Court cited an exception to the rule that a
party who has not appealed cannot obtain any affirmative relief other than the one granted in the
appealed decision. It stated:
Indeed, a party who has failed to appeal from a judgment is deemed to have acquiesced to it and can no
longer obtain from the appellate court any affirmative relief other than what was already granted under
said judgment. However, when strict adherence to such technical rule will impair a substantive right, such
as that of an illegally dismissed employee to monetary compensation as provided by law, then equity
dictates that the Court set aside the rule to pave the way for a full and just adjudication of the case.

In the present case, although respondents were found to have been dismissed for cause, depriving them
of overtime pay, if rightly due to them, would still amount to an impairment of substantive rights. Thus,
following the dictates of equity and as an exception to the general rule, the Court finds it proper for the CA
to have passed upon the matter of overtime pay, despite the fact that respondents did not appeal from the
LA Decision denying the same claim.

Be that as it may, a perusal of the records disclosed a dearth of evidence to support an award of overtime
pay.

As a general rule, the factual findings of the CA when supported by substantial evidence on record are
final and conclusive and may not be reviewed on appeal.[26] This is, however, subject to several
exceptions, one of which is when there is a conflict between the factual findings of the CA and the NLRC,
as in this case, warranting review by the Court.[27]

Petitioners argue that the "48 hours per month" work schedule stipulated in the employment contract is a
mere typographical error, the true intention of the parties being for the respondents to render work of at
least 48 hours per week.

The Court agrees with the petitioners.

Obligations arising from contracts, like an employment contract, have the force of law between the
contracting parties and should be complied with in good faith.[28] When the terms of a contract are clear
and leave no doubt as to the intention of the contracting parties, the literal meaning of its stipulations
governs.[29] However, when the contract is vague and ambiguous, as in the case at bar, it is the Court's
duty to determine the real intention of the contracting parties considering the contemporaneous and
subsequent acts of the latter.[30]

The employment contracts of the respondents provide that their work schedule shall be as follows:[31]

No. of shows per day: 4 shows/day

No. of work days per week: 6 days/wk.
No. of work hours per month: 48 hrs/mo.

The respondents agreed to render four (4) showfs per day with an estimated performance time of thirty
(30) minutes. However, it should also be noted that respondents were given time to prepare before each
show and time to rest after every performance; thus, respondents would normally consume two (2) hours
for each show.[32] If respondents were required to render at least four (4) shows a day, they necessarily
had to work for at least eight (8) hours a day. Since the petitioners employed a six-day workweek, it is an
inevitable conclusion that respondents were required to work for at least 48 hours per week.

The Court also notes that the respondents were properly apprised of the error in their employment
contracts. Despite ample opportunity -- more than half a year -- to air out their misgivings on the matter
and ask their employer for overtime pay, if they really believed that the 48 hours work per month was not
erroneous, respondents did nothing. Respondents did not complain or assail the implementation of their
true number of work hours. Instead, they proceeded to carry out their work under the correct 48-hour
week schedule for more than half of the entire duration of their employment contract, without any protest.
It was only before the LA that respondents raised their complaint on the matter for the first time. These
circumstances indicate that respondents' protest was a mere afterthought. As such, it cannot sway the
Court to accept that work for 48 hours per month was the true intention of the parties.

An evaluation of the terms of the employment contracts and the acts of the parties indeed reveal that their
true intention was for the respondents to perform work of at least forty eight (48) hours per week, and not
48 hours per month.
It should be emphasized that in case of conflict between the text of a contract and the intent of the
parties, it is the latter that prevails,[33] for intention is the soul of a contract, not its wording which is prone
to mistakes, inadequacies or ambiguities.[34] To hold otherwise would give life, validity, and precedence to
mere typographical errors and defeat the very purpose of agreements.[35]

Accordingly, the CA's award for overtime pay must necessarily be recalled.

On the second issue, it is unassailed that the respondents abandoned their work when they failed without
valid reason to resume their duties after their leave of absence expired on September 3, 2008. Thus, the
CA correctly ruled that the termination of the respondents' employment on September 23, 2008 was with
just cause. Nonetheless, the Court cannot absolve petitioners from liability.

Book V, Rule XIV, of the Omnibus Rules Implementing the Labor Code outlines the procedure for
termination of employment, to wit:

Section 1. Security of tenure and due process. — No worker shall be dismissed except for a just or
authorized cause provided by law and after due process.

Section 2. Notice of Dismissal. — Any employer who seeks to dismiss a worker shall furnish him a written
notice stating the particular acts or omissions constituting the grounds for his dismissal. In cases of
abandonment of work, the notice shall be served at the worker's last known address.

xxx

Section 5. Answer and hearing. — The worker may answer the allegations stated against him in the
notice of dismissal within a reasonable period from receipt of such notice. The employer shall afford the
worker ample opportunity to be heard and to defend himself with the assistance of his representatives, if
he so desires.

Section 6. Decision to dismiss. — The employer shall immediately notify a worker in writing of a decision
to dismiss him stating clearly the reasons therefor.

To be totally free from liability, the employer must not only show sufficient ground for the termination of
employment but it must also comply with procedural due process by giving the employees sought to be
dismissed two notices: 1) notice of the intention to dismiss, indicating therein the acts or omissions
complained of, coupled with an opportunity for the employees to answer and rebut the charges against
them; and 2) notice of the decision to dismiss.[36] MS Retail failed in this respect. While it notified
respondents of their dismissal in its letter dated September 23, 2008, it failed to furnish them with a
written notice of the charges thus, denying them a reasonable opportunity to explain their side.

The petitioners' failure to observe due process when it terminated respondents' employment for just
cause did not invalidate the dismissal but rendered petitioners liable for nominal damages. [37] Under the
Civil Code, nominal damages is adjudicated in order that a right of the plaintiff, which has been violated or
invaded by the defendant, may be vindicated or recognized, and not for the purpose of indemnifying the
plaintiff for any loss suffered by him.[38]The amount thereof is addressed to the sound discretion of the
court. Considering the prevailing circumstances in the case at bar, the Court deems it proper to award to
each of the respondents PhP30,000.00 as nominal damages.[39]

With respect to the attorney's fees, while the CA, in the body of its Decision found respondents entitled to
such award, it omitted to include the same in the dispositive portion of its Decision. Such award must,
however, be upheld, not only because labor cases take much time to litigate, but also because these
require special dedication and expertise on the part of the pro-worker's counsel.[40] Therefore, it is just to
award attorney's fees of PhP30,000.00 to each of the respondents.

Finally, a more complete and just resolution of the present case calls for the determination of the nature
of the liability of all the petitioners. The Court notes that the CA ordered only MS Retail to pay
respondents. However, Section 10 of Republic Act 8042,[41] as amended by Republic Act
10022,[42] provides for the solidary liability of the principal and the recruitment agency, to wit:
SEC. 10. Money Claims. - Notwithstanding any provision of law to the contrary, the Labor Arbiters of the
National Labor Relations Commission (NLRC) shall have the original and exclusive jurisdiction to hear
and decide, within ninety (90) calendar, days after the filing of the complaint, the claims arising out of an
employer-employee relationship or by virtue of any law or contract involving Filipino workers for overseas
deployment including claims for actual, moral, exemplary and other forms of damage. Consistent with
this mandate, the NLRC shall endeavor to update and keep abreast with the developments in the global
services industry.

The liability of the principal/employer and the recruitment/placement agency for any and all claims
under this section shall be joint and several. This provision shall be incorporated in the contract for
overseas employment and shall be a condition precedent for its approval. The performance bond to be
filed by the recruitment/placement agency, as provided by law, shall be answerable for all money claims
or damages that may be awarded to the workers. If the recruitment/placement agency is a juridical
being, the corporate officers and directors and partners as the case may be, shall themselves be
jointly and solidarity liable with the corporation or partnership for the aforesaid claims and
damages. (Emphasis supplied)

In view of the foregoing, the liability for the monetary awards granted to respondents shall be jointly and
severally borne by all the petitioners.

WHEREFORE, the petition is PARTIALLY GRANTED. The assailed Decision and Resolution of the
Court of Appeals are hereby MODIFIED by DELETING the award for overtime pay
and ORDERING petitioners to jointly and severally pay each of the respondents PhP30,000.00 as
nominal damages and PhP30,000.00 as attorney's fees.

SO ORDERED.