Hebron v. Reyes

Facts:

In the general elections held in 1951, petitioner Bernardo Hebron, a member of the Liberal Party, and respondent Eulalio D. Reyes, of the Nacionalista Party, were elected mayor and vice-mayor, respectively, of said municipality, for a term of four (4) years, beginning from January 1, 1952, on which date they presumably assumed the aforementioned offices. Petitioner discharged the duties and functions of mayor continuously until May 22 or 24, 1954, when he received communication that the President has decided to assume directly the investigation to the administrative charges against him for alleged oppression, grave abuse of authority and serious misconduct in office, and has designated the Provincial Fiscal of that province as Special Investigator of the said charges. Hebron was also suspended from office.

The Vice-Mayor was directed to assume the office of Acting Mayor. Thereupon, Reyes acted as mayor of Carmona and the Provincial Fiscal of Cavite investigated the charges. After holding hearings in connection with said charges, the provincial fiscal submitted his report thereon on July 15, 1954. Since then the matter has been pending in the Office of the President for decision.

Inasmuch as the same did not appear to be forthcoming, and the term of petitioner, who remained suspended, was about to expire, on May 13, 1955, he instituted the present action for quo warranto, upon the ground that respondent was illegally holding the Office of Mayor of Carmona, and had unlawfully refused and still refused to surrender said office to petitioner, who claimed to be entitled thereto.

Respondent and the Solicitor General, who was allowed to intervene, filed their respective answers admitting substantially the main allegations of fact in petitioner's complaint, but denying the alleged illegality of petitioner's suspension and alleging that respondent was holding the office of the mayor in compliance with a valid and lawful order of the President.

Owing to the nature and importance of the issue thus raised, Dean Vicente G. Sinco of the College of Law, University of the Philippines, and Professor Enrique M. Fernando, were allowed to intervene as amici curiae. At the hearing of this case, the parties, as well as the Solicitor General and said amici curiae, appeared and argued extensively. Subsequently, they filed their respective memoranda, and, on September 2, 1955, the case became submitted for decision. T

he case could not be disposed of, however, before the close of said year, because the members of this Court could not, within the unexpired portion thereof, reach an agreement on the decision thereon. Although the term of office of petitioner herein expired on December 31, 1955, his claim to the Office of Mayor of Carmona, Cavite, has not thereby become entirely moot, as regards such rights as may have accrued to him prior thereto.

For this reason, and, also, because the question of law posed in the pleadings, concerns a vital feature of the relations between the national government and the local governments, and the Court has been led to believe that the parties, specially the executive department, are earnestly interested in a clear-cut settlement of said question, for the same will, otherwise, continue to be a constant source of friction,

disputes and litigations to the detriment of the smooth operation of the Government and of the welfare of the people, the members of this Court deem it necessary to express their view thereon, after taking ample time to consider and discuss full every conceivable aspect thereof.

Issue: WON a municipal mayor, not charged with disloyalty to the Republic of the Philippines, may be removed or suspended directly by the President of the Philippines, regardless of the procedure set forth in sections 2188 to 2191 of the Revised Administrative Code.

under the present law, the procedure prescribed in sections 2188 to 2191 of the Revised Administrative Code, for the suspension and removal of the municipal officials therein referred to, is mandatory; that, in the absence of a clear and explicit provision to the contrary, relative particularly to municipal corporations — and none has been cited to us — said procedure is exclusive; that the executive department of the national government, in the exercise of its general supervision over local governments, may conduct investigations with a view to determining whether municipal officials are guilty of acts or omissions warranting the administrative action referred to in said sections, as a means only to ascertain whether the provincial governor and the provincial board should take such action; that the Executive may take appropriate measures to compel the provincial governor and the provincial board to take said action, if the same is warranted, and they failed to do so.

the provincial governor and the provincial board may not be deprived by the Executive of the power to exercise the authority conferred upon them in sections 2188 to 2190 of the Revised Administrative Code; that such would be the effect of the assumption of those powers by the Executive; that said assumption of powers would further violate section 2191 of the same code, for the authority therein vested in the Executive is merely appellate in character; that, said assumption of powers, in the case at bar, even exceeded those of the Provincial Governor and Provincial Board, in whom original jurisdiction is vested by said sections 2188 to 2190, for, pursuant thereto, "the preventive suspension of a municipal officer shall not be for more than 30 days" at the expiration of which he shall be reinstated, unless the delay in the decision of the case is due to his fault, neglect or request, or unless he shall have meanwhile been convicted, whereas petitioner herein was suspended "until the final determination of the proceedings" against him, regardless of the duration thereof and cause of the delay in its disposition;11 and that so much of the rule laid down in Villena vs. Secretary of the Interior (67 Phil., 451) Villena vs. Roque (93 Phil., 363), as may be inconsistent with the foregoing views, should be deemed, and, are hereby, reversed or modified accordingly.

Republic of the PhilippinesSUPREME COURT

Manila

EN BANC 

G.R. No. 112497 August 4, 1994

HON. FRANKLIN M. DRILON, in his capacity as SECRETARY OF JUSTICE, petitioner, vs.MAYOR ALFREDO S. LIM, VICE-MAYOR JOSE L. ATIENZA, CITY TREASURER ANTHONY ACEVEDO, SANGGUNIANG PANGLUNSOD AND THE CITY OF MANILA, respondents.

CRUZ, J.:

The principal issue in this case is the constitutionality of Section 187 of the Local Government Code reading as follows:

Procedure For Approval And Effectivity Of Tax Ordinances And Revenue Measures; Mandatory Public Hearings. — The procedure for approval of local tax ordinances and revenue measures shall be in accordance with the provisions of this Code: Provided, That public hearings shall be conducted for the purpose prior to the enactment thereof; Provided, further, That any question on the constitutionality or legality of tax ordinances or revenue measures may be raised on appeal within thirty (30) days from the effectivity thereof to the Secretary of Justice who shall render a decision within sixty (60) days from the date of receipt of the appeal: Provided, however, That such appeal shall not have the effect of suspending the effectivity of the ordinance and the accrual and payment of the tax, fee, or charge levied therein: Provided, finally, That within thirty (30) days after receipt of the decision or the lapse of the sixty-day period without the Secretary of Justice acting upon the appeal, the aggrieved party may file appropriate proceedings with a court of competent jurisdiction.

Pursuant thereto, the Secretary of Justice had, on appeal to him of four oil companies and a taxpayer, declared Ordinance No. 7794, otherwise known as the Manila Revenue Code, null and void for non-compliance with the prescribed procedure in the enactment of tax ordinances and for containing certain provisions contrary to law and public policy. 1

In a petition for certiorari  filed by the City of Manila, the Regional Trial Court of Manila revoked the Secretary's resolution and sustained the ordinance, holding inter alia  that the procedural requirements had been observed. More importantly, it declared Section 187 of the Local Government Code as unconstitutional because of its vesture in the Secretary of Justice of the power of control over local governments in violation

of the policy of local autonomy mandated in the Constitution and of the specific provision therein conferring on the President of the Philippines only the power of supervision over local governments. 2

The present petition would have us reverse that decision. The Secretary argues that the annulled Section 187 is constitutional and that the procedural requirements for the enactment of tax ordinances as specified in the Local Government Code had indeed not been observed.

Parenthetically, this petition was originally dismissed by the Court for non-compliance with Circular 1-88, the Solicitor General having failed to submit a certified true copy of the challenged decision. 3 However, on motion for reconsideration with the required certified true copy of the decision attached, the petition was reinstated in view of the importance of the issues raised therein.

We stress at the outset that the lower court had jurisdiction to consider the constitutionality of Section 187, this authority being embraced in the general definition of the judicial power to determine what are the valid and binding laws by the criterion of their conformity to the fundamental law. Specifically, BP 129 vests in the regional trial courts jurisdiction over all civil cases in which the subject of the litigation is incapable of pecuniary estimation, 4even as the accused in a criminal action has the right to question in his defense the constitutionality of a law he is charged with violating and of the proceedings taken against him, particularly as they contravene the Bill of Rights. Moreover, Article X, Section 5(2), of the Constitution vests in the Supreme Court appellate jurisdiction over final judgments and orders of lower courts in all cases in which the constitutionality or validity of any treaty, international or executive agreement, law, presidential decree, proclamation, order, instruction, ordinance, or regulation is in question.

In the exercise of this jurisdiction, lower courts are advised to act with the utmost circumspection, bearing in mind the consequences of a declaration of unconstitutionality upon the stability of laws, no less than on the doctrine of separation of powers. As the questioned act is usually the handiwork of the legislative or the executive departments, or both, it will be prudent for such courts, if only out of a becoming modesty, to defer to the higher judgment of this Court in the consideration of its validity, which is better determined after a thorough deliberation by a collegiate body and with the concurrence of the majority of those who participated in its discussion. 5

It is also emphasized that every court, including this Court, is charged with the duty of a purposeful hesitation before declaring a law unconstitutional, on the theory that the measure was first carefully studied by the executive and the legislative departments and determined by them to be in accordance with the fundamental law before it was finally approved. To doubt is to sustain. The presumption of constitutionality can be overcome only by the clearest showing that there was indeed an infraction of the Constitution, and only when such a conclusion is reached by the required majority may the Court pronounce, in the discharge of the duty it cannot escape, that the challenged act must be struck down.

In the case before us, Judge Rodolfo C. Palattao declared Section 187 of the Local Government Code unconstitutional insofar as it empowered the Secretary of Justice to review tax ordinances and, inferentially, to annul them. He cited the familiar distinction between control and supervision, the first being "the power of an officer to alter or modify or set aside what a subordinate officer had done in the performance of his duties and to substitute the judgment of the former for the latter," while the second is "the power of a superior officer to see to it that lower officers perform their functions in accordance with law." 6 His conclusion was that the challenged section gave to the Secretary the power of control and not of supervision only as vested by the Constitution in the President of the Philippines. This was, in his view, a violation not only of Article X, specifically Section 4 thereof, 7 and of Section 5 on the taxing powers of local governments, 8 and the policy of local autonomy in general.

We do not share that view. The lower court was rather hasty in invalidating the provision.

Section 187 authorizes the Secretary of Justice to review only the constitutionality or legality of the tax ordinance and, if warranted, to revoke it on either or both of these grounds. When he alters or modifies or sets aside a tax ordinance, he is not also permitted to substitute his own judgment for the judgment of the local government that enacted the measure. Secretary Drilon did set aside the Manila Revenue Code, but he did not replace it with his own version of what the Code should be. He did not pronounce the ordinance unwise or unreasonable as a basis for its annulment. He did not say that in his judgment it was a bad law. What he found only was that it was illegal. All he did in reviewing the said measure was determine if the petitioners were performing their functions in accordance with law, that is, with the prescribed procedure for the enactment of tax ordinances and the grant of powers to the city government under the Local Government Code. As we see it, that was an act not of control but of mere supervision.

An officer in control lays down the rules in the doing of an act. If they are not followed, he may, in his discretion, order the act undone or re-done by his subordinate or he may even decide to do it himself. Supervision does not cover such authority. The supervisor or superintendent merely sees to it that the rules are followed, but he himself does not lay down such rules, nor does he have the discretion to modify or replace them. If the rules are not observed, he may order the work done or re-done but only to conform to the prescribed rules. He may not prescribe his own manner for the doing of the act. He has no judgment on this matter except to see to it that the rules are followed. In the opinion of the Court, Secretary Drilon did precisely this, and no more nor less than this, and so performed an act not of control but of mere supervision.

The case of Taule v. Santos 9 cited in the decision has no application here because the jurisdiction claimed by the Secretary of Local Governments over election contests in the Katipunan ng Mga Barangay was held to belong to the Commission on Elections by constitutional provision. The conflict was over jurisdiction, not supervision or control.

Significantly, a rule similar to Section 187 appeared in the Local Autonomy Act, which provided in its Section 2 as follows:

A tax ordinance shall go into effect on the fifteenth day after its passage, unless the ordinance shall provide otherwise: Provided, however, That the Secretary of Finance shall have authority to suspend the effectivity of any ordinance within one hundred and twenty days after receipt by him of a copy thereof, if, in his opinion, the tax or fee therein levied or imposed is unjust, excessive, oppressive, or confiscatory, or when it is contrary to declared national economy policy, and when the said Secretary exercises this authority the effectivity of such ordinance shall be suspended, either in part or as a whole, for a period of thirty days within which period the local legislative body may either modify the tax ordinance to meet the objections thereto, or file an appeal with a court of competent jurisdiction; otherwise, the tax ordinance or the part or parts thereof declared suspended, shall be considered as revoked. Thereafter, the local legislative body may not reimpose the same tax or fee until such time as the grounds for the suspension thereof shall have ceased to exist.

That section allowed the Secretary of Finance to suspend the effectivity of a tax ordinance if, in his opinion, the tax or fee levied was unjust, excessive, oppressive or confiscatory. Determination of these flaws would involve the exercise of  judgment or discretion and not merely an examination of whether or not the requirements or limitations of the law had been observed; hence, it would smack of control rather than mere supervision. That power was never questioned before this Court but, at any rate, the Secretary of Justice is not given the same latitude under Section 187. All he is permitted to do is ascertain the constitutionality or legality of the tax measure, without the right to declare that, in his opinion, it is unjust, excessive, oppressive or confiscatory. He has no discretion on this matter. In fact, Secretary Drilon set aside the Manila Revenue Code only on two grounds, to with, the inclusion therein of certain ultra vires provisions and non-compliance with the prescribed procedure in its enactment. These grounds affected the legality, not the wisdom or reasonableness, of the tax measure.

The issue of non-compliance with the prescribed procedure in the enactment of the Manila Revenue Code is another matter.

In his resolution, Secretary Drilon declared that there were no written notices of public hearings on the proposed Manila Revenue Code that were sent to interested parties as required by Art. 276(b) of the Implementing Rules of the Local Government Code nor were copies of the proposed ordinance published in three successive issues of a newspaper of general circulation pursuant to Art. 276(a). No minutes were submitted to show that the obligatory public hearings had been held. Neither were copies of the measure as approved posted in prominent places in the city in accordance with Sec. 511(a) of the Local Government Code. Finally, the Manila Revenue Code was not translated into Pilipino or Tagalog and disseminated among the people for their information and guidance, conformably to Sec. 59(b) of the Code.

Judge Palattao found otherwise. He declared that all the procedural requirements had been observed in the enactment of the Manila Revenue Code and that the City of Manila had not been able to prove such compliance before the Secretary only

because he had given it only five days within which to gather and present to him all the evidence (consisting of 25 exhibits) later submitted to the trial court.

To get to the bottom of this question, the Court acceded to the motion of the respondents and called for the elevation to it of the said exhibits. We have carefully examined every one of these exhibits and agree with the trial court that the procedural requirements have indeed been observed. Notices of the public hearings were sent to interested parties as evidenced by Exhibits G-1 to 17. The minutes of the hearings are found in Exhibits M, M-1, M-2, and M-3. Exhibits B and C show that the proposed ordinances were published in the Balita and the Manila Standard on April 21 and 25, 1993, respectively, and the approved ordinance was published in the July 3, 4, 5, 1993 issues of the Manila Standard and in the July 6, 1993 issue of Balita, as shown by Exhibits Q, Q-1, Q-2, and Q-3.

The only exceptions are the posting of the ordinance as approved but this omission does not affect its validity, considering that its publication in three successive issues of a newspaper of general circulation will satisfy due process. It has also not been shown that the text of the ordinance has been translated and disseminated, but this requirement applies to the approval of local development plans and public investment programs of the local government unit and not to tax ordinances.

We make no ruling on the substantive provisions of the Manila Revenue Code as their validity has not been raised in issue in the present petition.

WHEREFORE, the judgment is hereby rendered REVERSING the challenged decision of the Regional Trial Court insofar as it declared Section 187 of the Local Government Code unconstitutional but AFFIRMING its finding that the procedural requirements in the enactment of the Manila Revenue Code have been observed. No pronouncement as to costs.

SO ORDERED.

Narvasa, C.J., Feliciano, Padilla, Bidin, Regalado, Davide, Jr., Romero, Bellosillo, Melo, Quiason, Puno, Vitug, Kapunan and Mendoza, JJ., concur.

Republic of the PhilippinesSUPREME COURT

Manila

FIRST DIVISION

 

G.R. No. 126661 December 3, 1999

JOSE S. ANDAYA and EDGARDO L. INCIONG, petitioners, vs.REGIONAL TRIAL COURT, Cebu City, Branch 20, and THE CITY OF CEBU, respondents.

 

PARDO, J.:

The case is an appeal via certiorari from a decision 1 of the Regional Trial Court, Cebu City, Branch 20, commanding petitioner Jose S. Andaya as Regional Police Command No. 7, to include P/Chief Inspector Andres Sarmiento in the list of five (5) recommendees to be submitted to the mayor from which list the mayor shall select the City Director, Cebu City Police Command (chief of police).

On January 3, 1996, the position of City Director, Cebu City Police Command (chief of police) became vacant after P/Supt. Antonio Enteria was relieved of command.

Sometime in January 1996, petitioner Andaya submitted to the City Mayor, Cebu City a list of five (5) eligibles for the mayor choose one to be appointed as the chief of police of Cebu City. The mayor did not choose anyone from the list of five (5) recommendees because the name of P/Chief Inspector Andres Sarmiento was not included therein.

However, petitioner Andaya refused to agree to Mayor Alvin B. Garcia's request to include the name of Major Andres Sarmiento in the list of police officers for appointment by the mayor to the position of City Director (chief of police), Cebu City Police Command. Petitioner Andaya's refusal was based on his contention that Major Andres Sarmiento was not qualified for the position of City Director (chief of police), Cebu City Police Command, under NAPOLCOM Memorandum Circular No. 95-04 dated January 12, 1995, particularly Item No. 8, paragraph D thereof, which provides that the minimum qualification standards for Directors of Provincial/City Police Commands, include completion of the Officers Senior Executive Course (OSEC) and the rank of Police Superintendent.

Due to the impasse, on March 22, 1996, the City of Cebu filed with the Regional Trial Court, Branch 20, Cebu City, a complaint for declaratory relief with preliminary prohibitory and mandatory injunction and temporary restraining order against P/Chief

Supt. Jose S. Andaya and Edgardo L. Inciong, Regional Director, National Police Commission. 2

On April 10, 1996, petitioners filed with the trial court their respective answer to the complaint. Petitioners stated that the power to designate the chief of police of Cebu City (City Director, Cebu City Police Command) is vested with the Regional Director, Regional Police Command No. 7. However, the mayor is authorized to choose the chief of police from a list of five (5) eligibles submitted by the Regional Director. In case of conflict between the Regional Director and the mayor, the issue shall be elevated to the Regional Director, National Police Commission, who shall resolve the issue within five (5) working days from receipt and whose decision on the choice of the chief of police shall be final and executory. Thus, petitioners prayed for dismissal of the complaint for lack of legal basis and failure to exhaust administrative remedies. 3

On April 18, 1996, the trial court issued a writ of preliminary injunction against petitioner Jose S. Andaya enjoining him from replacing C/Insp. Andres Sarmiento as OIC Director or Chief of Police of the Cebu City Police Command by designating another as OIC Chief of Police or appointing a regular replacement for said officer, and, from submitting to the mayor a list of five (5) eligibles which did not include the name of Major Andres Sarmiento. 4

On July 12, 1996, the trial court rendered decision in favor of respondent City of Cebu, the dispositive portion of which reads as follows:

WHEREFORE, in view of all the foregoing premises, judgment is hereby rendered in favor of plaintiff as against defendants, declaring that P/CInsp. Andres Sarmiento is qualified under RA 6975 to be appointed as Chief Director or Chief of Police of the Cebu City Police Command and whose name must be included in the list of five (5) eligibles recommended as regular replacement to the position of the Chief of Police of said Cebu City Police Command.

The writ of preliminary prohibitory injunction issued in this case against defendants and their agents, or, representatives or any other persons acting for and in their behalf enjoining and preventing them from replacing P/CInsp. Andres Sarmiento as OIC Chief of Police of Cebu City Police Command by designating anyone from the eligibles recommended in the two (2) lists thereof submitted to Mayor Garcia or from any other list of said eligible recommendees for said position is hereby made permanent.

Let a permanent writ of preliminary mandatory injunction be issued against defendant Jose S. Andaya or his successor ordering the latter to include Major Andres Sarmiento in the list of five (5) eligible persons recommended for the replacement to the position of Chief of Police of Cebu City Police Command.

SO ORDERED.

Cebu City, July 12, 1996.

(s/t) FERDINAND J. MARCOS

Judge

In due time, petitioners filed with the trial court their joint motion for reconsideration 6 on the ground that the decision is contrary to Section 51 of Republic Act 6975 which only empowers the mayor to choose one (1) from the five (5) eligibles recommended by the Regional Police Director to be named chief of police. The mayor cannot superimpose his will on the recommending authority by insisting that his protégé be included in the list of five eligibles from which the chief of police is to be chosen.

On September 11, 1996, the trial court denied petitioners' motion for reconsideration ruling that no new matters had been raised therein. 7

Hence, this petition 8 review on certiorari on pure question of law. 9

On June 11, 1997, we gave due course to the petition. 10

At issue is whether or not the Mayor of Cebu City may require the Regional Director, Regional Police Command No. 7, to include the mayor's protégé in the list of five (5) eligibles to be recommended by the Regional Police Director to the mayor from which the mayor shall choose the City Director, City Police Command (chief of police) City of Cebu.

We resolve the issue against the position of the city mayor.

Republic Act No. 6975, Section 51, gives authority to the mayor of Cebu City 11 to choose the chief of police from a list of five (5) eligibles recommended by the Regional Director, Regional Police Command No. 7.

The National Police Commission has issued Memorandum Circular No. 95-04, dated January 12, 1995, for the implementation of Republic Act No. 6975. It provides that among the qualifications for chief of police of highly urbanized cities are (1) completion of the Officers' Senior Executive Course (OSEC) and (2) holding the rank of Police Superintendent.

The mayor of Cebu City submits that Memorandum Circular No. 95-04 of the National Police Commission prescribing such additional qualifications is not valid as it contravenes the law.

We do not agree. Under Republic Act No. 6975, Section 51, the mayor of Cebu City shall be deputized as representative of the Commission (National Police Commission) in his territorial jurisdiction and as such the mayor shall have authority to choose the chief of police from a list of five (5) eligibles recommended by the Police Regional Director. The City Police Station of Cebu City is under the direct command and control of the PNP Regional Director, Regional Police Command No. 7, and is equivalent to a provincial office. 12 Then, the Regional Director, Regional Police Command No. 7 appoints the officer selected by the mayor as the City Director, City Police Command (chief of police) Cebu City. It is the prerogative of the Regional Police Director to name the five (5) eligibles from a pool of eligible officers screened by the Senior Officers Promotion and Selection Board, Headquarters, Philippine National Police, Camp Crame, Quezon City, without interference from local executives. In case of disagreement between the Regional Police Director and the Mayor, the question shall be elevated to the Regional Director, National Police Commission, who shall resolve the issue within five (5) working days from receipt and whose decision on the choice of the Chief of Police shall be final and executory. 13 As deputy of the Commission, the authority of the mayor is very limited. In reality, he has no power of appointment; he has only the limited power of selecting one from among the list of five eligibles to be named the chief of police. Actually, the power to appoint the chief of police of Cebu City is vested in the Regional Director, Regional Police Command No. 7. Much less may the mayor require the Regional Director, Regional Police Command, to include the name of any officer, no matter how qualified, in the list of five to be submitted to the mayor. The purpose is to enhance police professionalism and to isolate the police service from political domination.

Consequently, we find that the trial court erred in granting preliminary injunction that effectively restrained the Regional Director, Regional Police Command, Region 7, from performing his statutory function. The writ of preliminary injunction issued on April 18, 1996, is contrary to law and thus void. Similarly, the lower court's decision sustaining the City Mayor's position suffers from the same legal infirmity.

WHEREFORE, the Court GRANTS the petition and SETS ASIDE the decision of the Regional Trial Court, Branch 20, Cebu City, dated July 12, 1996, in Civil Case No. CEB-18545. In lieu thereof, the Court renders judgment upholding the sole discretion of the Regional Director, Regional Police Command No. 7, to submit to the mayor of Cebu City a list of five (5) eligibles from which the mayor shall choose the chief of police. In case of the mayor's refusal to make his choice within a given period due to disagreement as to the eligible nominees, the issue shall be submitted to the Regional Director, National Police Commission, whose decision shall be final.

No costs.

SO ORDERED.

Kapunan and Ynares-Santiago, JJ., concur.

Republic of the PhilippinesSUPREME COURT

Manila

FIRST DIVISION

G.R. No. 135962             March 27, 2000

METROPOLITAN MANILA DEVELOPMENT AUTHORITY, petitioner, vs.BEL-AIR VILLAGE ASSOCIATION, INC., respondent.

PUNO, J.:

Not infrequently, the government is tempted to take legal shortcuts solve urgent problems of the people. But even when government is armed with the best of intention, we cannot allow it to run roughshod over the rule of law. Again, we let the hammer fall and fall hard on the illegal attempt of the MMDA to open for public use a private road in a private subdivision. While we hold that the general welfare should be promoted, we stress that it should not be achieved at the expense of the rule of law.

Petitioner MMDA is a government agency tasked with the delivery of basic services in Metro Manila. Respondent Bel-Air Village Association, Inc. (BAVA) is a non-stock, non-profit corporation whose members are homeowners in Bel-Air Village, a private subdivision in Makati City. Respondent BAVA is the registered owner of Neptune Street, a road inside Bel-Air Village.

On December 30, 1995, respondent received from petitioner, through its Chairman, a notice dated December 22, 1995 requesting respondent to open Neptune Street to public vehicular traffic starting January 2, 1996. The notice reads:

SUBJECT: NOTICE of the Opening of Neptune Street to Traffic.

Dear President Lindo,

Please be informed that pursuant to the mandate of the MMDA law or Republic Act No. 7924 which requires the Authority to rationalize the use of roads and/or thoroughfares for the safe and convenient movement of persons, Neptune Street shall be opened to vehicular traffic effective January 2, 1996.

In view whereof, the undersigned requests you to voluntarily open the points of entry and exit on said street.

Thank you for your cooperation and whatever assistance that may be extended by your association to the MMDA personnel who will be directing traffic in the area.

Finally, we are furnishing you with a copy of the handwritten instruction of the President on the matter.

Very truly yours,

PROSPERO I. ORETA

Chairman 1

On the same day, respondent was apprised that the perimeter wall separating the subdivision from the adjacent Kalayaan Avenue would be demolished.

On January 2, 1996, respondent instituted against petitioner before the Regional Trial Court, Branch 136, Makati City, Civil Case No. 96-001 for injunction. Respondent prayed for the issuance of a temporary restraining order and preliminary injunction enjoining the opening of Neptune Street and prohibiting the demolition of the perimeter wall. The trial court issued a temporary restraining order the following day.

On January 23, 1996, after due hearing, the trial court denied issuance of a preliminary injunction. 2 Respondent questioned the denial before the Court of Appeals in CA-G.R. SP No. 39549. The appellate court conducted an ocular inspection of Neptune Street 3 and on February 13, 1996, it issued a writ of preliminary injunction enjoining the implementation of the MMDA's proposed action. 4

On January 28, 1997, the appellate court rendered a Decision on the merits of the case finding that the MMDA has no authority to order the opening of Neptune Street, a private subdivision road and cause the demolition of its perimeter walls. It held that the authority is lodged in the City Council of Makati by ordinance. The decision disposed of as follows:

WHEREFORE, the Petition is GRANTED; the challenged Order dated January 23, 1995, in Civil Case No. 96-001, is SET ASIDE and the Writ of Preliminary Injunction issued on February 13, 1996 is hereby made permanent.

For want of sustainable substantiation, the Motion to Cite Roberto L. del Rosario in contempt is denied. 5

No pronouncement as to costs.

SO ORDERED. 6

The Motion for Reconsideration of the decision was denied on September 28, 1998. Hence, this recourse.

Petitioner MMDA raises the following questions:

I

HAS THE METROPOLITAN MANILA DEVELOPMENT AUTHORITY (MMDA) THE MANDATE TO OPEN NEPTUNE STREET TO PUBLIC TRAFFIC PURSUANT TO ITS REGULATORY AND POLICE POWERS?

II

IS THE PASSAGE OF AN ORDINANCE A CONDITION PRECEDENT BEFORE THE MMDA MAY ORDER THE OPENING OF SUBDIVISION ROADS TO PUBLIC TRAFFIC?

III

IS RESPONDENT BEL-AIR VILLAGE ASSOCIATION, INC. ESTOPPED FROM DENYING OR ASSAILING THE AUTHORITY OF THE MMDA TO OPEN THE SUBJECT STREET?

IV

WAS RESPONDENT DEPRIVED OF DUE PROCESS DESPITE THE SEVERAL MEETINGS HELD BETWEEN MMDA AND THE AFFECTED EEL-AIR RESIDENTS AND BAVA OFFICERS?

V

HAS RESPONDENT COME TO COURT WITH UNCLEAN HANDS?7

Neptune Street is owned by respondent BAVA. It is a private road inside Bel-Air Village, a private residential subdivision in the heart of the financial and commercial district of Makati City. It runs parallel to Kalayaan Avenue, a national road open to the general public. Dividing the two (2) streets is a concrete perimeter wall approximately fifteen (15) feet high. The western end of Neptune Street intersects Nicanor Garcia, formerly Reposo Street, a subdivision road open to public vehicular traffic, while its eastern end intersects Makati Avenue, a national road. Both ends of Neptune Street are guarded by iron gates.

Petitioner MMDA claims that it has the authority to open Neptune Street to public traffic because it is an agent of the state endowed with police power in the delivery of basic services in Metro Manila. One of these basic services is traffic management which involves the regulation of the use of thoroughfares to insure the safety, convenience and welfare of the general public. It is alleged that the police power of MMDA was affirmed by this Court in the consolidated cases of Sangalang v.  Intermediate Appellate Court. 8 From the premise that it has police power, it is now urged that there is no need for the City of Makati to enact an ordinance opening Neptune street to the public.9

Police power is an inherent attribute of sovereignty. It has been defined as the power vested by the Constitution in the legislature to make, ordain, and establish all manner of wholesome and reasonable laws, statutes and ordinances, either with penalties or

without, not repugnant to the Constitution, as they shall judge to be for the good and welfare of the commonwealth, and for the subjects of the same. 10 The power is plenary and its scope is vast and pervasive, reaching and justifying measures for public health, public safety, public morals, and the general welfare. 11

It bears stressing that police power is lodged primarily in the National Legislature. 12 It cannot be exercised by any group or body of individuals not possessing legislative power. 13 The National Legislature, however, may delegatethis power to the President and administrative boards as well as the lawmaking bodies of municipal corporations or local government units. 14 Once delegated, the agents can exercise only such legislative powers as are conferred on them by the national lawmaking body. 15

A local government  is a "political subdivision of a nation or state which is constituted by law and has substantial control of local affairs." 16The Local Government Code of 1991 defines a local government unit as a "body politic and corporate." 17 — one endowed with powers as a political subdivision of the National Government and as a corporate entity representing the inhabitants of its territory. 18 Local government units are the provinces, cities, municipalities and barangays. 19 They are also the territorial and political subdivisions of the state. 20

Our Congress delegated police power to the local government units in the Local Government Code of 1991. This delegation is found in Section 16 of the same Code, known as the general welfare clause, viz:

Sec. 16. General Welfare. — Every local government unit shall exercise the powers expressly granted, those necessarily implied therefrom, as well as powers necessary, appropriate, or incidental for its efficient and effective governance, and those which are essential to the promotion of the general welfare. Within their respective territorial jurisdictions, local government units shall ensure and support, among other things, the preservation and enrichment of culture, promote health and safety, enhance the right of the people to a balanced ecology, encourage and support the development of appropriate and self-reliant scientific and technological capabilities, improve public morals, enhance economic prosperity and social justice, promote full employment among their residents, maintain peace and order, and preserve the comfort and convenience of their inhabitants. 21

Local government units exercise police power through their respective legislative bodies. The legislative body of the provincial government is the sangguniang panlalawigan, that of the city government is the sangguniang panlungsod, that of the municipal government is the sangguniang bayan, and that of the barangay is thesangguniang barangay. The Local Government Code of 1991 empowers the sangguniang panlalawigan,sangguniang panlungsod and sangguniang bayan  to "enact ordinances, approve resolutions and appropriate funds for the general welfare of the [province, city or municipality, as the case may be], and its inhabitants pursuant to Section 16 of the Code and in the proper exercise of the corporate powers of the [province, city municipality] provided under the Code . . . " 22 The same Code gives the sangguniang barangay  the power to "enact ordinances as may be necessary to discharge the responsibilities conferred upon it by law or ordinance and to promote the general welfare of the inhabitants thereon." 23

Metropolitan or Metro Manila is a body composed of several local government units — i.e., twelve (12) cities and five (5) municipalities, namely, the cities of Caloocan, Manila, Mandaluyong, Makati, Pasay, Pasig, Quezon, Muntinlupa, Las Pinas, Marikina, Paranaque and Valenzuela, and the municipalities of Malabon, Navotas, Pateros, San Juan and Taguig. With the passage of Republic Act (R. A.) No. 7924 24 in 1995, Metropolitan Manila was declared as a "special development and administrative region" and the Administration of "metro-wide" basic services affecting the region placed under "a development authority" referred to as the MMDA. 25

"Metro-wide services" are those "services which have metro-wide impact and transcend local political boundaries or entail huge expenditures such that it would not be viable for said services to be provided by the individual local government units comprising Metro Manila." 26 There are seven (7) basic metro-wide services and the scope of these services cover the following: (1) development planning; (2) transport and traffic management; (3) solid waste disposal and management; (4) flood control and sewerage management; (5) urban renewal, zoning and land use planning, and shelter services; (6) health and sanitation, urban protection and pollution control; and (7) public safety. The basic service of transport and traffic management includes the following:

(b) Transport and traffic management which include the formulation, coordination, and monitoring of policies, standards, programs and projects to rationalize the existing transport operations, infrastructure requirements,  the use of thoroughfares, and promotion of safe and convenient movement of persons and goods; provision for the mass transport system and the institution of a system to regulate road users;administration and implementation of all traffic enforcement operations, traffic engineering services and traffic education programs, including the institution of a single ticketing system in Metropolitan Manila;" 27

In the delivery of the seven (7) basic services, the MMDA has the following powers and functions:

Sec. 5. Functions and powers of the Metro Manila Development Authority. — The MMDA shall:

(a) Formulate, coordinate and regulate the implementation of medium and long-term plans and programs for the delivery of metro-wide services, land use and physical development within Metropolitan Manila, consistent with national development objectives and priorities;

(b) Prepare, coordinate and regulate the implementation of medium-term investment programs for metro-wide services which shall indicate sources and uses of funds for priority programs and projects, and which shall include the packaging of projects and presentation to funding institutions;

(c) Undertake and manage on its own metro-wide programs and projects for the delivery of specific services under its jurisdiction, subject to the approval of the Council. For this purpose, MMDA can create appropriate project management offices;

(d) Coordinate and monitor the implementation of such plans, programs and projects in Metro Manila; identify bottlenecks and adopt solutions to problems of implementation;

(e) The MMDA shall set the policies concerning traffic in Metro Manila, and shall coordinate and regulate the implementation of all programs and projects concerning traffic management, specifically pertaining to enforcement, engineering and education. Upon request, it shall be extended assistance and cooperation,including but not limited to, assignment of personnel, by all other government agencies and offices concerned;

(f) Install and administer a single ticketing system,  fix,  impose and collect fines and penalties for all kinds of violations of traffic rules and regulations, whether moving or non-moving in nature, and confiscate and suspend or revoke drivers' licenses in the enforcement of such traffic laws and regulations, the provisions of RA 4136 and PD 1605 to the contrary notwithstanding. For this purpose, the Authority shall impose all traffic laws and regulations in Metro Manila, through its traffic operation center, and may deputize members of the PNP, traffic enforcers of local government units, duly licensed security guards, or members of non-governmental organizations to whom may be delegated certain authority, subject to such conditions and requirements as the Authority may impose; and

(g) Perform other related functions required to achieve the objectives of the MMDA, including the undertaking of delivery of basic services to the local government units, when deemed necessary subject to prior coordination with and consent of the local government unit concerned.

The implementation of the MMDA's plans, programs and projects is undertaken by the local government units, national government agencies, accredited people's organizations, non-governmental organizations, and the private sector as well as by the MMDA itself. For this purpose, the MMDA has the power to enter into contracts, memoranda of agreement and other arrangements with these bodies for the delivery of the required services Metro Manila. 28

The governing board of the MMDA is the Metro Manila Council. The Council is composed of the mayors of the component 12 cities and 5 municipalities, the president of the Metro Manila Vice-Mayors' League and the president of the Metro Manila Councilors' League. 29 The Council is headed by Chairman who is appointed by the President and vested with the rank of cabinet member. As the policy-making body of the MMDA, the Metro Manila Council approves metro-wide plans, programs and projects, and issues the necessary rules and regulations for the implementation of said plans; it approves the annual budget of the MMDA and promulgate the rules and regulations for the delivery of basic services, collection of service and regulatory fees, fines and penalties. These functions are particularly enumerated as follows:

Sec. 6. Functions of the Metro Manila Council. —

(a) The Council shall be the policy-making body of the MMDA;

(b) It shall approve metro-wide plans, programs and projects and issue rules and regulations deemed necessary by the MMDA to carry out the purposes of this Act;

(c) It may increase the rate of allowances and per diems of the members of the Council to be effective during the term of the succeeding Council. It shall fix the compensation of the officers and personnel of the MMDA, and approve the annual budget thereof for submission to the Department of Budget and Management (DBM);

(d) It shall promulgate rules and regulations and set policies and standards for metro-wide application governing the delivery of basic services, prescribe and collect service and regulatory fees, and impose and collect fines and penalties.

Clearly, the scope of the MMDA's function is limited to the delivery of the seven (7) basic services. One of these is transport and traffic management which includes the formulation and monitoring of policies, standards and projects to rationalize the existing transport operations, infrastructure requirements, the use of thoroughfares and promotion of the safe movement of persons and goods. It also covers the mass transport system and the institution of a system of road regulation, the administration of all traffic enforcement operations, traffic engineering services and traffic education programs, including the institution of a single ticketing system in Metro Manila for traffic violations. Under the service, the MMDA is expressly authorized "to set the policies concerning traffic" and "coordinate and regulate the implementation of all traffic management programs." In addition, the MMDA may "install and administer a single ticketing system," fix, impose and collect fines and penalties for all traffic violations.

It will be noted that the powers of the MMDA are limited to the following acts: formulation, coordination, regulation, implementation, preparation, management, monitoring, setting of policies, installation of a system and administration. There is no syllable in R.A. No. 7924 that grants the MMDA police power, let alone legislative power. Even the Metro Manila Council has not been delegated any legislative power. Unlike the legislative bodies of the local government units, there is no provision in R.A. No. 7924 that empowers the MMDA or its Council to "enact ordinances, approve resolutions appropriate funds for the general welfare" of the inhabitants of Metro Manila. The MMDA is, as termed in the charter itself, "development authority." 30 It is an agency created for the purpose of laying down policies and coordinating with the various national government agencies, people's organizations, non-governmental organizations and the private sector for the efficient and expeditious delivery of basic services in the vast metropolitan area. All its functions are administrative in nature and these are actually summed up in the charter itself, viz:

Sec. 2. Creation of the Metropolitan Manila Development Authority. — . . . .

The MMDA shall perform planning, monitoring and coordinative functions, and in the process exerciseregulatory and supervisory authority over the delivery of metro-wide services within Metro Manila, without diminution of the autonomy of the local government units concerning purely local matters. 31

Petitioner cannot seek refuge in the cases of Sangalang v. Intermediate Appellate Court  32 where we upheld a zoning ordinance issued by the Metro Manila Commission (MMC), the predecessor of the MMDA, as an exercise of police power. The first Sangalang decision was on the merits of the petition, 33 while the second decision denied reconsideration of the first case and in addition discussed the case of Yabut v. Court of Appeals. 34

Sangalang v. IAC  involved five (5) consolidated petitions filed by respondent BAVA and three residents of Bel-Air Village against other residents of the Village and the Ayala Corporation, formerly the Makati Development Corporation, as the developer of the subdivision. The petitioners sought to enforce certain restrictive easements in the deeds of sale over their respective lots in the subdivision. These were the prohibition on the setting up of commercial and advertising signs on the lots, and the condition that the lots be used only for residential purposes. Petitioners alleged that respondents, who were residents along Jupiter Street of the subdivision, converted their residences into commercial establishments in violation of the "deed restrictions," and that respondent Ayala Corporation ushered in the full commercialization" of Jupiter Street by tearing down the perimeter wall that separated the commercial from the residential section of the village. 35

The petitions were dismissed based on Ordinance No. 81 of the Municipal Council of Makati and Ordinance No. 81-01 of the Metro Manila Commission (MMC). Municipal Ordinance No. 81 classified Bel-Air Village as a Class A Residential Zone, with its boundary in the south extending to the center line of Jupiter Street. The Municipal Ordinance was adopted by the MMC under the Comprehensive Zoning Ordinance for the National Capital Region and promulgated as MMC Ordinance No. 81-01. Bel-Air Village was indicated therein as bounded by Jupiter Street and the block adjacent thereto was classified as a High Intensity Commercial Zone. 36

We ruled that since both Ordinances recognized Jupiter Street as the boundary between Bel-Air Village and the commercial district, Jupiter Street was not for the exclusive benefit of Bel-Air residents. We also held that the perimeter wall on said street was constructed not to separate the residential from the commercial blocks but simply for security reasons, hence, in tearing down said wall, Ayala Corporation did not violate the "deed restrictions" in the deeds of sale.

We upheld the ordinances, specifically MMC Ordinance No. 81-01, as a legitimate exercise of police power. 37 The power of the MMC and the Makati Municipal Council to enact zoning ordinances for the general welfare prevailed over the "deed restrictions".

In the second Sangalang/Yabut decision, we held that the opening of Jupiter Street was warranted by the demands of the common good in terms of "traffic decongestion and public convenience." Jupiter was opened by the Municipal Mayor to alleviate traffic congestion along the public streets adjacent to the Village. 38 The same reason

was given for the opening to public vehicular traffic of Orbit Street, a road inside the same village. The destruction of the gate in Orbit Street was also made under the police power of the municipal government. The gate, like the perimeter wall along Jupiter, was a public nuisance because it hindered and impaired the use of property, hence, its summary abatement by the mayor was proper and legal. 39

Contrary to petitioner's claim, the two Sangalang cases do not apply to the case at bar. Firstly, both involved zoning ordinances passed by the municipal council of Makati and the MMC. In the instant case, the basis for the proposed opening of Neptune Street is contained in the notice of December 22, 1995 sent by petitioner to respondent BAVA, through its president. The notice does not cite any ordinance or law, either by the Sangguniang Panlungsod of Makati City or by the MMDA, as the legal basis for the proposed opening of Neptune Street. Petitioner MMDA simply relied on its authority under its charter "to rationalize the use of roads and/or thoroughfares for the safe and convenient movement of persons." Rationalizing the use of roads and thoroughfares is one of the acts that fall within the scope of transport and traffic management. By no stretch of the imagination, however, can this be interpreted as an express or implied grant of ordinance-making power, much less police power.

Secondly, the MMDA is not the same entity as the MMC in Sangalang. Although the MMC is the forerunner of the present MMDA, an examination of Presidential Decree (P. D.) No. 824, the charter of the MMC, shows that the latter possessed greater powers which were not bestowed on the present MMDA.

Metropolitan Manila was first created in 1975 by Presidential Decree (P.D.) No. 824. It comprised the Greater Manila Area composed of the contiguous four (4) cities of Manila, Quezon, Pasay and Caloocan, and the thirteen (13) municipalities of Makati, Mandaluyong, San Juan, Las Pinas, Malabon, Navotas, Pasig, Pateros, Paranaque, Marikina, Muntinlupa and Taguig in the province of Rizal, and Valenzuela in the province of Bulacan. 40Metropolitan Manila was created as a response to the finding that the rapid growth of population and the increase of social and economic requirements in these areas demand a call for simultaneous and unified development; that the public services rendered by the respective local governments could be administered more efficiently and economically if integrated under a system of central planning; and this coordination, "especially in the maintenance of peace and order and the eradication of social and economic ills that fanned the flames of rebellion and discontent [were] part of reform measures under Martial Law essential to the safety and security of the State."41

Metropolitan Manila was established as a "public corporation" with the following powers:

Sec. 1. Creation of the Metropolitan Manila. — There is hereby created a public corporation, to be known as the Metropolitan Manila, vested with powers and attributes of a corporation including the power to make contracts, sue and be sued, acquire, purchase, expropriate, hold,  transfer and dispose of property and such other powers as are necessary to carry out its purposes. The Corporation shall be administered by a Commission created under this Decree. 42

The administration of Metropolitan Manila was placed under the Metro Manila Commission (MMC) vested with the following powers:

Sec. 4. Powers and Functions of the Commission. — The Commission shall have the following powers and functions:

1. To act as a central government to establish and administer programs and provide services common to the area;

2. To levy and collect taxes and special assessments, borrow and expend money and issue bonds, revenue certificates, and other obligations of indebtedness. Existing tax measures should, however, continue to be operative until otherwise modified or repealed by the Commission;

3. To charge and collect fees for the use of public service facilities;

4. To appropriate money for the operation of the metropolitan government and review appropriations for the city and municipal units within its jurisdiction with authority to disapprove the same if found to be not in accordance with the established policies of the Commission, without prejudice to any contractual obligation of the local government units involved existing at the time of approval of this Decree;

5. To review, amend, revise or repeal all ordinances, resolutions and acts of cities and municipalities within Metropolitan Manila;

6. To enact or approve ordinances, resolutions and to fix penalties for any violation thereof which shall not exceed a fine of P10,000.00 or imprisonment of six years or both such fine and imprisonment for a single offense;

7. To perform general administrative, executive and policy-making functions;

8. To establish a fire control operation center, which shall direct the fire services of the city and municipal governments in the metropolitan area;

9. To establish a garbage disposal operation center, which shall direct garbage collection and disposal in the metropolitan area;

10. To establish and operate a transport and traffic center, which shall direct traffic activities;

11. To coordinate and monitor governmental and private activities pertaining to essential services such as transportation, flood control and drainage, water supply and sewerage, social, health and environmental services, housing, park development, and others;

12. To insure and monitor the undertaking of a comprehensive social, economic and physical planning and development of the area;

13. To study the feasibility of increasing barangay participation in the affairs of their respective local governments and to propose to the President of the Philippines definite programs and policies for implementation;

14. To submit within thirty (30) days after the close of each fiscal year an annual report to the President of the Philippines and to submit a periodic report whenever deemed necessary; and

15. To perform such other tasks as may be assigned or directed by the President of the Philippines.

The MMC was the "central government" of Metro Manila  for the purpose of establishing and administering programs providing services common to the area. As a "central government" it had the power to levy and collect taxes and special assessments, the power to charge and collect fees; the power to appropriate money for its operation, and at the same time, review appropriations for the city and municipal units within its jurisdiction. It was bestowed the power to enact or approve ordinances, resolutions and fix penalties for violation of such ordinances and resolutions. It also had the power to review, amend, revise or repeal all ordinances, resolutions and acts of any of the four (4) cities and thirteen (13) municipalities comprising Metro Manila.

P.D. No. 824 further provided:

Sec. 9. Until otherwise provided, the governments of the four cities and thirteen municipalities in the Metropolitan Manila shall continue to exist in their present form except as may be inconsistent with this Decree. The members of the existing city and municipal councils in Metropolitan Manila shall, upon promulgation of this Decree, and until December 31, 1975, become members of the Sangguniang Bayan which is hereby created for every city and municipality of Metropolitan Manila.

In addition, the Sangguniang Bayan shall be composed of as many barangay captains as may be determined and chosen by the Commission, and such number of representatives from other sectors of the society as may be appointed by the President upon recommendation of the Commission.

x x x           x x x          x x x

The Sangguniang Bayan may recommend to the Commission ordinances, resolutions or such measures as it may adopt; Provided, that no such ordinance, resolution or measure shall become effective, until after its approval by the Commission; and Provided further, that the power to impose taxes and other levies, the power to appropriate money and the power to pass ordinances or resolutions with penal sanctions shall be vested exclusively in the Commission.

The creation of the MMC also carried with it the creation of the Sangguniang Bayan. This was composed of the members of the component city and municipal councils, barangay captains chosen by the MMC and sectoral representatives appointed by the President. The Sangguniang Bayan had the power to recommend to the MMC the adoption of ordinances, resolutions or measures. It was the MMC itself, however, that possessed legislative powers. All ordinances, resolutions and measures recommended by the Sangguniang Bayan were subject to the MMC's approval. Moreover, the power to impose taxes and other levies, the power to appropriate money, and the power to pass ordinances or resolutions with penal sanctions were vested exclusively in the MMC.

Thus, Metropolitan Manila had a "central government," i.e., the MMC which fully possessed legislative police powers. Whatever legislative powers the component cities and municipalities had were all subject to review and approval by the MMC.

After President Corazon Aquino assumed power, there was a clamor to restore the autonomy of the local government units in Metro Manila. Hence, Sections 1 and 2 of Article X of the 1987 Constitution provided:

Sec. 1. The territorial and political subdivisions of the Republic of the Philippines are the provinces, cities, municipalities and barangays. There shall be autonomous regions in Muslim Mindanao and the Cordilleras as herein provided.

Sec. 2. The territorial and political subdivisions shall enjoy local autonomy.

The Constitution, however, recognized the necessity of creating metropolitan regions not only in the existing National Capital Region but also in potential equivalents in the Visayas and Mindanao. 43 Section 11 of the same Article X thus provided:

Sec. 11. The Congress may, by law, create special metropolitan political subdivisions, subject to a plebiscite as set forth in Section 10 hereof. The component cities and municipalities shall retain their basic autonomy and shall be entitled to their own local executives and legislative assemblies. The jurisdiction of the metropolitan authority that will thereby be created shall be limited to basic services requiring coordination.

Constitution itself expressly provides that Congress may, by law, create "special metropolitan political subdivisions" which shall be subject to approval by a majority of the votes cast in a plebiscite in the political units directly affected; the jurisdiction of this subdivision shall be limited to basic services requiring coordination; and the cities and municipalities comprising this subdivision shall retain their basic services requiring coordination; and the cities and municipalities comprising this subdivision shall retain their basic autonomy and their own local executive and legislative assemblies. 44 Pending enactment of this law, the Transitory Provisions of the Constitution gave the President of the Philippines the power to constitute the Metropolitan Authority, viz:

Sec. 8. Until otherwise provided by Congress, the President may constitute the Metropolitan Authority to be composed of the heads of all local government units comprising the Metropolitan Manila area. 45

In 1990, President Aquino issued Executive Order (E. O.) No. 392 and constituted the Metropolitan Manila Authority (MMA). The powers and functions of the MMC were devolved to the MMA. 46 It ought to be stressed, however, that not all powers and functions of the MMC were passed to the MMA. The MMA's power was limited to the "delivery of basic urban services requiring coordination in Metropolitan Manila." 47 The MMA's governing body, the Metropolitan Manila Council, although composed of the mayors of the component cities and municipalities, was merely given power of: (1) formulation of policies on the delivery of basic services requiring coordination and consolidation; and (2) promulgation resolutions and other issuances, approval of a code of basic services and the exercise of its rule-making power. 48

Under the 1987 Constitution, the local government units became primarily responsible for the governance of their respective political subdivisions. The MMA's jurisdiction was limited  to addressing common problems involving basic services that transcended local boundaries. It did not have legislative power. Its power was merely to provide the local government units technical assistance in the preparation of local development plans. Any semblance of legislative power it had was confined to a "review [of] legislation proposed by the local legislative assemblies to ensure consistency among local governments and with the comprehensive development plan of Metro Manila," and to "advise the local governments accordingly." 49

When R.A. No. 7924 took effect, Metropolitan Manila became a "special development and administrative region" and the MMDA a "special development authority" whose functions were "without prejudice to the autonomy of the affected local government units." The character of the MMDA was clearly defined in the legislative debates enacting its charter.

R.A. No. 7924 originated as House Bill No. 14170/11116 and was introduced by several legislators led by Dante Tinga, Roilo Golez and Feliciano Belmonte. It was presented to the House of Representatives by the Committee on Local Governments chaired by Congressman Ciriaco R. Alfelor. The bill was a product of Committee consultations with the local government units in the National Capital Region (NCR), with former Chairmen of the MMC and MMA,50 and career officials of said agencies. When the bill was first taken up by the Committee on Local Governments, the following debate took place:

THE CHAIRMAN [Hon. Ciriaco Alfelor]: Okay, Let me explain. This has been debated a long time ago, you know. It's a special . . . we can create a special metropolitan political subdivision.

Actually, there are only six (6) political subdivisions provided for in the Constitution: barangay, municipality, city, province, and we have the Autonomous Region of Mindanao and we have the Cordillera. So we have 6. Now. . . . .

HON. [Elias] LOPEZ: May I interrupt, Mr. Chairman. In the case of the Autonomous Region, that is also specifically mandated by the Constitution.

THE CHAIRMAN: That's correct. But it is considered to be a political subdivision. What is the meaning of a political subdivision? Meaning to say, that it has its own government, it has its own political personality, it has the power to tax, and all governmental powers: police power and everything. All right. Authority is different; because it does not have its own government. It is only a council, it is an organization of political subdivision, powers, "no, which is not imbued with any political power.

If you go over Section 6, where the powers and functions of the Metro Manila Development Authority, it is purely coordinative. And it provides here that the council is policy-making. All right.

Under the Constitution is a Metropolitan Authority with coordinative power. Meaning to say, it coordinates all of the different basic services which have to be delivered to the constituency. All right.

There is now a problem. Each local government unit is given its respective . . . as a political subdivision. Kalookan has its powers, as provided for and protected and guaranteed by the Constitution. All right, the exercise. However, in the exercise of that power, it might be deleterious and disadvantageous to other local government units. So, we are forming an authority where all of these will be members and then set up a policy in order that the basic services can be effectively coordinated. All right.

Of course, we cannot deny that the MMDA has to survive. We have to provide some funds, resources. But it does not possess any political power. We do not elect the Governor. We do not have the power to tax. As a matter of fact, I was trying to intimate to the author that it must have the power to sue and be sued because it coordinates. All right. It coordinates practically all these basic services so that the flow and the distribution of the basic services will be continuous. Like traffic, we cannot deny that. It's before our eyes. Sewerage, flood control, water system, peace and order, we cannot deny these. It's right on our face. We have to look for a solution. What would be the right solution? All right, we envision that there should be a coordinating agency and it is called an authority. All right, if you do not want to call it an authority, it's alright. We may call it a council or maybe a management agency.

x x x           x x x          x x x 51

Clearly, the MMDA is not a political unit of government. The power delegated to the MMDA is that given to the Metro Manila Council to promulgate administrative rules and regulations in the implementation of the MMDA's functions. There is no grant of authority to enact ordinances and regulations for the general welfare of the inhabitants of the metropolis. This was explicitly stated in the last Committee deliberations prior to the bill's presentation to Congress. Thus:

THE CHAIRMAN: Yeah, but we have to go over the suggested revision. I think this was already approved before, but it was reconsidered in view of the proposals, set-up, to make the MMDA stronger. Okay, so if there is no objection to paragraph "f". . . And then next is paragraph "b," under Section 6. "It shall approve metro-wide plans, programs and projects and issue ordinances or resolutions deemed necessary by the MMDA to carry out the purposes of this Act." Do you have the powers? Does the MMDA... because that takes the form of a local government unit, a political subdivision.

HON. [Feliciano] BELMONTE: Yes, I believe so, your Honor. When we say that it has the policies, it's very clear that those policies must be followed. Otherwise, what's the use of empowering it to come out with policies. Now, the policies may be in the form of a resolution or it may be in the form of a ordinance. The term "ordinance" in this case really gives it more teeth, your honor. Otherwise, we are going to see a situation where you have the power to adopt the policy but you cannot really make it stick as in the case now, and I think here is Chairman Bunye. I think he will agree that that is the case now. You've got the power to set a policy, the body wants to follow your policy, then we say let's call it an ordinance and see if they will not follow it.

THE CHAIRMAN: That's very nice. I like that. However, there is a constitutional impediment.1âwphi1 You are making this MMDA a political subdivision. The creation of the MMDA would be subject to a plebiscite. That is what I'm trying to avoid. I've been trying to avoid this kind of predicament. Under the Constitution it states: if it is a political subdivision, once it is created it has to be subject to a plebiscite. I'm trying to make this as administrative. That's why we place the Chairman as a cabinet rank.

HON. BELMONTE: All right, Mr. Chairman, okay, what you are saying there is . . . . .

THE CHAIRMAN: In setting up ordinances, it is a political exercise, Believe me.

HON. [Elias] LOPEZ: Mr. Chairman, it can be changed into issuances of rules and regulations. That would be . . . it shall also be enforced.

HON. BELMONTE: Okay, I will . . . .

HON. LOPEZ: And you can also say that violation of such rule, you impose a sanction. But you know, ordinance has a different legal connotation.

HON. BELMONTE: All right, I defer to that opinion, your Honor.

THE CHAIRMAN: So instead of ordinances, say rules and regulations.

HON. BELMONTE: Or resolutions. Actually, they are actually considering resolutions now.

THE CHAIRMAN: Rules and resolutions.

HON. BELMONTE: Rules, regulations and resolutions. 52

The draft of H. B. No. 14170/11116 was presented by the Committee to the House of Representatives. The explanatory note to the bill stated that the proposed MMDA is a "development authority" which is a "national agency, not a political government unit." 53 The explanatory note was adopted as the sponsorship speech of the Committee on Local Governments. No interpellations or debates were made on the floor and no amendments introduced. The bill was approved on second reading on the same day it was presented. 54

When the bill was forwarded to the Senate, several amendments were made.1âwphi1 These amendments, however, did not affect the nature of the MMDA as originally conceived in the House of Representatives. 55

It is thus beyond doubt that the MMDA is not a local government unit or a public corporation endowed with legislative power. It is not even a "special metropolitan political subdivision" as contemplated in Section 11, Article X of the Constitution. The creation of a "special metropolitan political subdivision" requires the approval by a majority of the votes cast in a plebiscite in the political units directly affected." 56 R. A. No. 7924 was not submitted to the inhabitants of Metro Manila in a plebiscite. The Chairman of the MMDA is not an official elected by the people, but appointed by the President with the rank and privileges of a cabinet member. In fact, part of his function is to perform such other duties as may be assigned to him by the President, 57 whereas in local government units, the President merely exercises supervisory authority. This emphasizes the administrative character of the MMDA.

Clearly then, the MMC under P.D. No. 824 is not the same entity as the MMDA under R.A. No. 7924. Unlike the MMC, the MMDA has no power to enact ordinances for the welfare of the community. It is the local government units, acting through their respective legislative councils, that possess legislative power and police power. In the case at bar, the Sangguniang Panlungsod of Makati City did not pass any ordinance or resolution ordering the opening of Neptune Street, hence, its proposed opening by petitioner MMDA is illegal and the respondent Court of Appeals did not err in so ruling. We desist from ruling on the other issues as they are unnecessary.

We stress that this decision does not make light of the MMDA's noble efforts to solve the chaotic traffic condition in Metro Manila. Everyday, traffic jams and traffic bottlenecks plague the metropolis. Even our once sprawling boulevards and avenues are now crammed with cars while city streets are clogged with motorists and pedestrians. Traffic has become a social malaise affecting our people's productivity and the efficient delivery of goods and services in the country. The MMDA was created to put some order in the metropolitan transportation system but unfortunately the powers granted by its charter are limited. Its good intentions cannot justify the opening for public use of a private street in a private subdivision without any legal warrant. The promotion of the general welfare is not antithetical to the preservation of the rule of law.1âwphi1.nêt

IN VIEW WHEREOF, the petition is denied. The Decision and Resolution of the Court of Appeals in CA-G.R. SP No. 39549 are affirmed.

SO ORDERED.

Davide, Jr., C.J., Kapunan, Pardo and Ynares-Santiago, JJ., concur.

Republic of the PhilippinesSUPREME COURT

Manila

EN BANC

G.R. No. L-9920             February 29, 1960

BARTOLOME E. SAN DIEGO, plaintiff-appellee, vs.THE MUNICIPALITY OF NAUJAN, PROVINCE OF ORIENTAL MINDORO, defendant-appellant.

Rodegelio M. Jalandoni and Jose P. Laurel for appellee.Delgado, Flores, Macapagal and Dizon and the Provincial Fiscal of Oriental Mindoro for appellant.

GUTIERREZ DAVID, J.:

Following a public bidding conducted by the municipality of Naujan, Oriental Mindoro for the lease of its municipal waters, Resolution 46, series of 1947 was passed by the municipal council thereof awarding the concession of the Butas River and the Naujan Lake to the highest bidder Bartolome San Diego. Consequently, a contract was entered into between the said San Diego and the municipality, stipulating that for a period of five (5) years, from January 1, 1948 to December 31, 1952, the former was to be the lessee of "the exclusive privilege of erecting fish corrals along the Butas River beginning from its junction with the San Agustin River up to the Naujan Lake itself," for annual rental of P26,300.00, or a total of P131,500.00 for five years. Upon petition by the lessee, however, the said council reduced the annual rental by 20% by virtue of Resolution 59, series of 1949.

On September 5, 1950, the lessee requested for a five-year extension of the original lease period. The request was, for some time, left pending before the municipal council, but on December 1, 1951, after the lessee had reiterated his petition for extension, for the reason that the typhoon "Wanda", which took place that month, destroyed most of his fish corrals, the council adopted Resolution 222, series of 1951 extending the lease for another five (5) years beginning January 1, 1952, with the express condition that the plaintiff would waive the privilege to seek for reduction of the amount of rent which was to be based on the original contract. After the resolution had been approved by the Provincial Board of Oriental Mindoro, the lessor and the lessee, on December 23, 1951, contracted for the extension of the period of the lease. The contract was approved and confirmed on December 29, 1951 by Resolution 229, series of 1951, of the municipal council of Naujan whose term was then about to expire. Pursuant to the said contract, the lessee filed a surety bond of P52,000.00 and then reconstructed his fish corrals and stocked the Naujan Lake with bañgus fingerlings.

On January 2, 1952, the municipal council of Naujan, this time composed of a new set of members, adopted Resolution 3, series of 1952, revoking Resolution 222, series of 1951. On the same date, the new council also passed Resolution 11, revoking Resolution 229 of the old council which confirmed the extension of the lease period. The lessee requested for reconsideration and recall of Resolution 3, on the ground, among others, that it violated the contract executed between him and the municipality on December 23, 1951, and, therefore, contrary to Article III, section 1, clause 10 of the Constitution. The request, however, was not granted.

On September 4, 1952, the lessee instituted this proceedings in the court below seeking to have Resolution 3, series of 1952, of the municipal council of Naujan, declared null and void, for being unconstitutional, and praying for an order enjoining the defendant municipality from conducting a public bidding for the leasing of the Naujan fisheries to any person other than the plaintiff during the period from January 1, 1953 to December 31, 1957.

Answering the complaint, the defendant asserted the validity of Resolution 3, series of 1951, alleging by the way of special defense that the resolution authorizing the original lease contract, reducing the lease rentals and renewing the lease are null and void for not having been passed in accordance with law. Defendant further put up a counterclaim for the amount representing the illegal reduction of 20% of the original rentals, plus the sum of P2,191.60 per month beginning December 1, 1952 until the case shall have been terminated.

After trial, the lower court rendered judgment upholding the validity of the lease contract, as well at is extension, and declaring Resolution 3, series of 1952, null and void. The municipality of Naujan has taken this appeal.

The main question to be decided is whether or not Resolution No. 3, series of 1952, revoking Resolution 222, series of 1951, of the municipal council of Naujan is valid.

For clarity, we have to reiterate that Resolution 222, series of 1951, is an approval of plaintiff-appellee's petition for extension for another five years, effective January 1, 1953, of his five-year lease concession granted under Resolution 46, series of 1947. Said Resolution 222, however, was revoked by the municipal council under a new set of members in its Resolution 3, series of 1952, for the reason, among others, that the extension was illegal, it having been granted without competitive public bidding. It is this last mentioned resolution that has been declared null and void by the trial court.

The law (Sec. 2323 of the Revised Administrative Code) requires that when the exclusive privilege of fishery or the right to conduct a fish-breeding ground is granted to a private party, the same shall be let to the highest bidder in the same manner as is being done in exploiting a ferry, a market or a slaughterhouse belonging to the municipality (See Municipality of San Luis vs. Ventura, et al., 56 Phil., 329). The requirement of competitive bidding is for the purpose of inviting competition and to guard against favoritism, fraud and corruption in the letting of fishery privileges (See 3 McQuillin, Municipal Corporations, 2nd Ed., p. 1170; Harles Gaslight Co. vs. New York, 33 N.Y. 309; and 2 Dillon, Municipal Corporation, p. 1219).

There is no doubt that the original lease contract in this case was awarded to the highest bidder, but the reduction of the rental and the extension of the term of the lease appear to have been granted without previous public bidding. In the case of Caltex (Phil.), Inc., et al. vs. Delgado Bros., Inc., et al., 96 Phil., 368, the amendment to an arrastre contract was declared null and void on the ground that it was made without previous public bidding. In so declaring, this Court has adopted the following opinion:

. . . it is the opinion of the Court that the said agreement .. executed and entered into without previous public bidding, is null and void, and cannot adversely affect the rights of third parties . . . and of the public in general. The Court agrees with the contention of counsel for the plaintiffs that the due execution of a contract after public bidding is a limitation upon the right of the contradicting parties to alter or amend it without another public bidding, for otherwise what would a public bidding be good for if after the execution of a contract after public bidding, the contracting parties may alter or amend the contract or even cancel it, at their will? Public biddings are held for the

protection of the public, and to give the public the best possible advantages by means of open competition between the bidders. He who bids or offers the best terms is awarded the contract subject of the bid, and it is obvious that such protection and best possible advantages to the public will disappear if the parties to a contract executed after public bidding may alter or amend it without another previous public bidding.

While in that case we ruled that although the "arrastre contract" therein questioned authorized the parties to alter or amend any of the terms thereof, such authority must be considered as being subject to the requirement of previous public bidding, a formality observed before the original contract was awarded, with more reason should the rule requiring such public bidding be strickly applied in the instant case where no such authority to alter or amend the terms of the contract was reserved.

Furthermore, it has been ruled that statutes requiring public bidding apply to amendments of any contract already executed in compliance with the law where such amendments alter the original contract in some vital and essential particular (See Morse vs. Boston, 148 N.E. 813253 Mass. 247.) Inasmuch as the period in a lease is a vital and essential particular to the contract, we believe that the extension of the lease period in this case, which was granted without the essential requisite of public bidding, is not in accordance with law. And it follows the Resolution 222, series of 1951, and the contract authorized thereby, extending the original five-year lease to another five years are null and void as contrary to law and public policy.

We agree with the defendant-appellant in that the question Resolution 3 is not an impairment of the obligation of contract, because the constitutional provision on impairment refers only to contract legally executed. While, apparently, Resolution 3 tended to abrogate the contract extending the lease, legally speaking, there was no contract abrogated because, as we have said, the extension contract is void and inexistent.

The lower court, in holding that the defendant-appellant municipality has been estopped from assailing the validity of the contract into which it entered on December 23, 1951, seems to have overlooked the general rule that —

. . . the doctrine of estoppel cannot be applied as against a municipal corporation to validate a contract which it has no power to make or which it is authorized to make only under prescribed conditions, within prescribed limitations, or in a prescribed mode or manner, although the corporation has accepted the benefits thereof and the other party has fully performed his part of the agreement, or has expended large sums in preparation for performance. A reason frequently assigned for this rule is that to apply the doctrine of estoppel against a municipality in such case would be to enable it to do indirectly what it cannot do directly. Also, where a contract is violative of public policy, the municipality executing it cannot be estopped to assert the invalidity of a contract which has ceded away, controlled, or embarrassed its legislative or government powers. (38 Am. Jur. pp. 202-204).

As pointed out above, "public biddings are held for the best protection of the public and to give the public the best possible advantages by means of open competition between the bidders." Thus, contracts requiring public bidding affect public interest, and to change them without complying with that requirement would indeed be against public policy. There is, therefore, nothing to plaintiff-appellee's contention that the parties in this case being in pari delicto should be left in the situation where they are found, for "although the parties are in pari delicto, yet the court may interfere and grant relief at the suit of one of them, where public policy requires its intervention, even though the result may be that a benefit will be derived by a plaintiff who is in equal guilt with defendant. But here the guilt of the parties is not considered as equal to the higher right of the public, and the guilty party to whom the relief is granted is simply the instrument by which the public is served." (13 C.J. p. 497)

In view of the foregoing, we hold that the municipal council of Naujan acted aright in adopting Resolution 3, series of 1952, now in question.

In consonance with the principles enunciated above, Resolution 59, series of 1947, reducing the rentals by 20% of the original price, which was also passed without public bidding, should likewise be held void, since a reduction of the rental to be paid by the lessee is a substantial alternation in the contract, making it a distinct and different lease contract which requires the prescribed formality of public bidding.

There seems to be no necessity of passing on the validity of Resolution 46, series of 1947, for defendant-appellant, apparently, did not mean to have it annulled, as may be seen from its prayer in the court below and also in this appeal. At any rate, the validity of said resolution does not alter our finding to the effect that Resolution 59, series of 1949, and Resolution 222, series of 1951, are illegal and void; and that Resolution 3, series of 1952, is valid.

Wherefore, the appealed judgment is reversed; plaintiff-appellee is hereby ordered to pay the defendant-appellant under the latter's counterclaim the sum of P17,971.60 representing the unapproved and ineffective reduction by 20% of the original stipulated rental, for the period from July 1, 1949 to December 1, 1952 plus the further sum of P2,191.60 per month beginning December 1, 1952, to December 31, 1957, as reasonable compensation for the illegal retention of the Naujan fisheries. Without special pronouncement as to costs.

Republic of the PhilippinesSUPREME COURT

Manila

THIRD DIVISION

G.R. No. 132413           August 27, 1999

RAMON ALQUIZOLA, SR., MARISSA C. DOROMAL and ADELO SECO, petitioners, vs.GALLARDO OCOL, CAMILO P. PENACO, SATURNINO MENDOZA, RAFAEL R.

ARDIENTE, VICENTE C. CASERES, RICARDO B. ZOSA III and SIRAD M. UMPA, respondents.

VITUG, J.:

Before the Court is a petition for review on certiorari under Rule 45 of the Rules of Court seeking a reversal of the decision, dated 19 November 1997, of the Regional Trial Court of Lanao Del Norte, Branch 04, Iligan City, that has ordered petitioner Ramon Alquizola, Sr., to cease and desist from dismissing respondents and replacing them with his co-petitioners.

Petitioner Ramon Alquizola, Sr., won the post of Punong Barangay of Barangay Tubod, Iligan City, in the 12th May 1997 barangay elections. Respondents Gallardo Cool, Camilo Penaco, Saturnino Mendoza, Rafael Ardiente, Vicente Caseres, Ricardo Zosa. III, and Sirad Umpa were appointees of the former punong barangay of Barangay Tubod, the first two occupying the positions of barangay treasurer and barangay secretary, respectively, with the rest being barangay utility workers.

After the elections, petitioner Alquizola terminated the services of respondents and appointed his co-petitioners, Marissa Doromal and Adelo Seco, respectively, as barangay treasurer and as barangay secretary. In consonance with Section 394 and Section 395 of the Local Government Code, he submitted both appointments to the Sangguniang Barangay for approval. The Sanggunian rejected the appointments.

Following the action taken by the Sangguniang Barangay, respondents filed a complaint for quo warranto,mandamus and prohibition with the Regional Trial Court of Lanao Del Norte to enjoin petitioner from terminating the services of the former. The trial court found in favor of respondents and ordered petitioner Ramon Alquizola, Sr., to cease and desist from dismissing respondents on the ground that their dismissal had been effected without the corresponding approval of the Sangguniang Barangay. It held that Section 389(b) (5) limited the power of a barangay captain to remove appointive barangay officials by requiring an approval of such act by a majority of the Sangguniang Barangay. A motion for reconsideration was denied.

The Court finds no merit in the instant petition for certiorari.

The issue involved, purely a question of law, relates to the proper application of the following provisions of the Local Government Code; viz:

Sec. 389. Chief Executive: Powers, Duties, and Function. — . . .

(b) For efficient, effective and economical governance, the purpose of which is the general welfare of the barangay and its inhabitants pursuant to Section 16 of this Code, the punong barangay shall:

x x x           x x x           x x x

(5) Upon approval by a majority of all the members of the sangguniang barangay, appoint or replace the barangay treasurer, the barangay secretary, and other appointive barangay officials;

The term "replace" would obviously embrace not only the appointment of the replacement but also the prior removal of, or the vacation by, the official currently occupying the appointive position concerned. "To replace" is to take the place of, to serve as a substitute for or successor of, to put in place of, or to fill the post of an incumbent.1In order to provide a replacement to an office, the prior holder must have first been removed or the office must have, otherwise, been previously rendered vacant.

Aside from what may be implicit in Section 389, there is no other provision in the Local Government Code that treats of the power of the Punong Barangay to remove the barangay secretary, the barangay treasurer, or any other appointive barangay official from office. The duration of the term of office of these barangay officials have not been fixed by the Local Government Code. Where the tenure of the office is not fixed by law, it is a sound and useful rule to consider the power of removal as being an incident to the power of appointment.2 Elsewise stated, the power to remove is deemed implied in the power to appoint.

The Code explicitly vests on the punong barangay, upon approval by a majority of all the members of the sangguniang barangay, the power to appoint or replace the barangay treasurer, the barangay secretary, and other appointive barangay officials. This provision is reinforced, in the case of the secretary and the treasurer, by the provisions of Section 394 and Section 395 of the Local Government Code; to wit:

Sec. 394. Barangay Secretary: Appointment, Qualifications, Powers and Duties. — (a) The barangay secretary shall be appointed by the punong barangay with the concurrence of the majority of all the sangguniang barangay members. The appointment of the barangay secretary shall not be subject to attestation by the Civil Service Commission.

Sec. 395. Barangay Treasurer: Appointment, Qualifications, Powers and Duties. — (a) The barangay treasurer shall be appointed by the punong barangay with the concurrence of the majority of all the sangguniang barangay members. The appointment of the barangay treasurer shall not be subject to attestation by the Civil Service Commission.

Verily, the power of appointment is to be exercised conjointly by the punong barangay and a majority of all the members of the sangguniang barangay. Without such conjoint action, neither an appointment nor a replacement can be effectual.

Applying the rule that the power to appoint includes the power to remove, one that the Court finds no cogent reason to now depart from, the questioned dismissal from office of the barangay officials by the punong barangay without the concurrence of the majority of all the members of the Sangguniang Barangay cannot be legally justified. To rule otherwise could also create an absurd situation of the Sangguniang Barangay members refusing, like here, to give their approval to the replacements selected by

the punong barangay who has unilaterally terminated the services of the incumbents. It is likely that the legislature did not intend this absurdity to flow from its enactment of the law.

WHEREFORE, the instant petition is DENIED and the decision, dated 19 November 1997, of the Regional Trial Court of Lanao Del Norte is AFFIRMED. No costs.1âwphi1.nêt

SO ORDERED.

Melo, Panganiban, Purisima and Gonzaga-Reyes, JJ., concur.

Republic of the PhilippinesSUPREME COURT

Manila

EN BANC

G.R. No. 156228               December 10, 2003

MA. TERESA VIDAL, LULU MARQUEZ, and CARLOS SOBREMONTE, petitioners, vs.MA. TERESA O. ESCUETA, represented by HERMAN O. ESCUETA, respondent.

D E C I S I O N

CALLEJO, SR., J.:

This is a petition for review of the Decision1 dated July 23, 2002 of the Court of Appeals in CA-G.R. SP NO. 68895 which affirmed the decision2 of the Regional Trial Court (RTC) of Mandaluyong City, Branch 208, which reversed and set aside the decision3 of the Metropolitan Trial Court of Mandaluyong City (MTC), Branch 60; and granted the motion for execution filed by private respondent Ma. Teresa O. Escueta in Civil Case No. 17520.

The petition at bar stemmed from the following antecedents:

When Abelardo Escueta died intestate on December 3, 1994, he was survived by his widow Remedios Escueta and their six children, including Ma. Teresa O. Escueta and her brother Herman O. Escueta. Part of his estate was a parcel of land located at No. 14 Sierra Madre corner Kanlaon Streets, Barangay Highway Hills, Mandaluyong City, covered by Transfer Certificate of Title (TCT) No. (77083) - 27568, and the house thereon. The property was leased to Rainier Llanera, who sublet the same to 25 persons. The heirs executed an extra-judicial settlement of estate over the property. They also executed a special power of attorney authorizing Ma. Teresa Escueta to sell the said property.4

Sometime in 1999, Ma. Teresa Escueta, as a co-owner of the property, filed an ejectment case against Llanera and the sub-lessees before the Lupon of Barangay Highway Hills, docketed as Barangay Case No. 99-09.5

In the meantime, on April 15, 1999, the heirs of Abelardo Escueta executed a deed of conditional sale6 over the property including the house thereon, to Mary Liza Santos for P13,300,000.00 payable as follows:

"Down payment – ONE MILLION FIVE HUNDRED THOUSAND (P1,500,000.00) which the HEIRS-SELLERS acknowledged receipt thereof with complete and full satisfaction;

Second payment - TEN MILLION EIGHT HUNDRED THOUSAND (P10,800,000.00) after publication of the Extra-Judicial Settlement of the Estate of the late Abelardo Escueta and payment of the taxes with the Bureau of Internal Revenue by the Attorney-in-Fact; and

The balance of ONE MILLION (P1,000,000.00) upon vacation of all the occupants of the subject property within SIX (6) months from date hereof."7

The parties further agreed that:

"Ms. Maria Teresa Escueta shall deliver unto the BUYER the Owner’s Duplicate Copy of the title upon receipt of the down payment while the original copies of the Special

Power of Attorney shall be delivered upon payment of the Second Payment stated above.

The ATTORNEY-IN-FACT-SELLER shall be responsible for the ejectment of all the tenants in the said subject property.

The ATTORNEY-IN-FACT-SELLER shall pay the estate tax, capital gains tax and documentary stamp tax including the telephone, water and Meralco bills and the publication for the Extra-Judicial Settlement of the estate of the late ABELARDO ESCUETA while the registration and transfer fees shall be shouldered by the BUYER."8

On May 5, 1999, Escueta and Llanera, and the sub-lessees, executed an "Amicable Settlement,"9 where they agreed that (a) the owners of the property would no longer collect the rentals due from the respondents therein (lessee and sub-lessees) starting May 1999, with the concomitant obligation of the respondents to vacate the property on or before December 1999; (b) time was the essence of the agreement, and that consequently, if the lessee and sub-lessees fail or refuse to vacate the property on or before December 1999, the barangay chairman was authorized without any court order to cause the eviction and removal of all the respondents on the property.10The amicable settlement was attested by Pangkat Chairman Jose Acong. The parties did not repudiate the amicable settlement within ten days from the execution thereof. Neither did any of the parties file any petition to repudiate the settlement.

The vendees having paid the down payment and second installment of the price of the property, the vendors caused the cancellation on December 17, 1999, of TCT No. 27568 and the issuance of TCT No. 15324 to and under the names of the vendees Mary Liza Santos, Susana Lim and Johnny Lim.11 However, Escueta and the other vendors had yet to receive the balance of the purchase price of P1,000,000.00 because the respondents were still in the property.

Llanera vacated the leased premises. Later, twenty of the sub-lessees also vacated the property. By January 2000, five sub-lessees, namely, Ma. Teresa Vidal, Lulu Marquez, Marcelo Trinidad, Carlos Sobremonte,12 and Jingkee Ang remained in the property, and requested Escueta for extensions to vacate the property. Escueta agreed, but despite the lapse of the extensions granted them, the five sub-lessees refused to vacate the property.

Escueta opted not to have the sub-lessees evicted through the Punong Barangay as provided for in the amicable settlement. Neither did she file a motion with the Punong Barangay for the enforcement of the settlement. Instead, she filed on May 12, 2000, a verified "Motion for Execution" against the recalcitrant sub-lessees with the MTC for the enforcement of the amicable settlement and the issuance of a writ of execution. The pleading was docketed as Civil Case No. 17520, with Teresa Escueta as plaintiff, and the sub-lessees as defendants.13

The defendants opposed the motion14 alleging that they were enveigled into executing the amicable settlement despite the fact that they had not violated any of the terms and conditions of the verbal lease of the property; they were coerced and forced to

enter into such amicable settlement as it was the only way of prolonging their stay in the leased premises; and that they had been paying faithfully and religiously the monthly rentals in advance.

They also contended that the plaintiff came to court with unclean hands, as the property had been sold by the co-owners thereof on June 8, 1999, without notifying them. The real parties-in-interest as plaintiffs, would be the new owners of the property, and not the Escuetas. The defendants further asserted that the amicable settlement was not elevated to or approved by the MTC as required by Section 419 of the Local Government Code (LGC), nor approved by a competent court; hence, there was no judgment to enforce by a new motion for a writ of execution. As such, the plaintiff’s motion was premature and procedurally improper. The defendants asserted that the plaintiff must first secure a certification to file action from the barangay and thereafter, file an action for ejectment against them as required by Section 417 of the LGC. The amicable settlement of the parties before the Lupon cannot be a substitute for an action for ejectment. Finally, they averred that they had been sub-lessees for more than ten years already; hence, had the right of first refusal under Section 6 of the Urban Land Reform Law (P.D. No. 1517). For her part, the plaintiff asserted that there having been no execution of the amicable settlement on or before November 6, 1999 by the Lupon, the settlement may now be enforced by action in the proper city or municipal court.

On February 22, 2001, the court issued an Order15 denying the "Motion for Execution." The court held that the plaintiff was not the real party-in-interest as the subject property had already been sold and titled to Susana Lim, Johnny Lim and Mary Liza Santos. Only the vendees had the right to demand the ejectment of the defendants from the said property. The court further ruled that the defendants had the right of first refusal to purchase the property under Presidential Decree No. 1517. The MTC, however, did not rule on the issue of whether or not the plaintiff’s motion for execution was premature.

Aggrieved, the plaintiff, now the appellant, appealed the order to the RTC where she contended that:

THE METROPOLITAN TRIAL COURT COMMITTED THE REVERSIBLE ERROR IN FINDING AND IN CONCLUDING THAT PLAINTIFF IS NO LONGER THE REAL PARTY-IN-INTEREST.

THE METROPOLITAN TRIAL COURT COMMITTED THE REVERSIBLE ERROR IN FINDING AND IN CONCLUDING THAT DEFENDANTS CANNOT BE EJECTED AND CAN EXERCISE THE RIGHT OF FIRST REFUSAL.

THE METROPOLITAN TRIAL COURT COMMITTED THE REVERSIBLE ERROR IN NOT FINDING AND IN NOT MAKING THE CONCLUSION THAT DEFENDANTS HAVE VIOLATED THE FINAL AND EXECUTORY THE WRITTEN AMICABLE SETTLEMENT BETWEEN PARTIES EXECUTED IN THEIR BARANGAY CONFRONTATION.

THE METROPOLITAN TRIAL COURT COMMITTED THE REVERSIBLE ERROR IN NOT ORDERING THE EJECTMENT OF THE DEFENDANTS AND IN NOT ORDERING SAID DEFENDANTS TO PAY THEIR ARREARAGES IN RENTAL PAYMENTS FROM MAY 1999 UP TO THE DAY THEY ACTUALLY LEAVE THE PREMISES AS WELL AS ATTORNEY’S FEES AND DAMAGES.16

On August 31, 2001, the RTC rendered a decision holding that the plaintiff-appellant was still the owner of the property when the ejectment case was filed in the office of the barangay captain, and, as such, was the real party-in-interest as the plaintiff in the MTC. Moreover, under the deed of conditional sale between her and the buyers, it was stipulated therein that the purchase price of P1,000,000.00 would be delivered to the vendors only "upon the vacation of all the occupants of the subject property within six (6) months from date hereof." She was duty-bound to cause the eviction of the defendant from the property; hence, the appellant, as a co-owner, had a substantial interest in the property. The MTC further held that the sale, having been executed while the appellant’s complaint was pending with the Lupon, the action in the MTC may be continued by the plaintiff-appellant.

As to the right of first refusal being asserted by the appellees, the court ruled that there was no showing that the land leased had been proclaimed to be within a specific Urban Land Reform Zone. In fact, the Housing and Land Use Regulatory Board had certified that the subject property was outside the area for priority development; thus, the appellees may not claim that they had been deprived of their preemptive right when no such right existed in the first place. The court did not rule on the third and fourth issues on the ground that the said issues were never raised by the parties. The decretal portion of the RTC decision reads as follows:

PREMISES CONSIDERED, the appeal is GRANTED. The Order dated February 2, 2001 issued by the Metropolitan Trial Court of Mandaluyong City, Branch 60, in Civil Case No. 17520 is hereby REVERSED and SET ASIDE, and a new one is entered granting the Motion for Execution.

Let the Record of this case be remanded to the court a quo for proper disposition.

SO ORDERED.17

A petition for review under Rule 42 was filed with the Court of Appeals by three of the appellees, now petitioners Ma. Teresa Vidal, Lulu Marquez and Carlos Sobremonte. The court, however, dismissed the petition on (1) procedural grounds, and (2) for lack of merit. 18

On procedural grounds, the CA ruled that the petitioners failed to indicate the specific material dates, showing that their petition was filed on time as required by the rules, and in declaring that they failed to justify their failure to do so.

On the merits of the petition, the appellate court upheld the ruling of the RTC. The decretal portion of the decision of the CA reads:

WHEREFORE, the instant petition is hereby DISMISSED. The assailed Decision of the Regional Trial Court of Mandaluyong City, Branch 208, rendered in Civil Case No. MC01-333-A, dated August 31, 2001 is hereby AFFIRMED.

SO ORDERED.19

In their petition at bar, the petitioners assert that the CA erred as follows: (1) in not applying the rules of procedure liberally; (2) in declaring that there was no need for the respondents to file an ejectment case for the eviction of the petitioners; (3) that the real parties-in-interest as plaintiffs in the MTC were the new owners of the property, Susana Lim, Johnny Lim and Mary Liza Santos; (4) in not finding that the Amicable Settlement was obtained through deceit and fraud; and (5) in ruling that the petitioners had no right of first refusal in the purchase and sale of the subject property under Presidential Decree No. 1517.

The petition is bereft of merit.

On the procedural issue, the CA dismissed the petition before it for the petitioners’ failure to comply with Section 2, par. 1, Rule 42 of the 1997 Rules of Civil Procedure.20 The CA ratiocinated that there was no justification for a relaxation of the Rules, thus:

Petitioners cited decisions of the Supreme Court where a relaxation of procedural rules was allowed. However, a reading of those cases shows that they are not exactly similar with the present case. In the case of Mactan Cebu International Airport Authority vs. Francisco Cuizon Mangubat, the Supreme Court allowed the late payment of docket fee by the Solicitor General on the ground that the 1997 Rules of Civil Procedure regarding payment of docket fees was still new at that time. The same cannot be said in the present case. The petition was filed on February 28, 2002, almost five years from the issuance of the 1997 Rules of Civil Procedure. The circumstances of typhoon and holiday for failure to obtain a certified true copy of the DOJ’s Decision, in the case of Hagonoy Market Vendor Association vs. Municipality of Hagonoy, Bulacan, were present in the instant petition. The case of Salazar vs. Court of Appeals is also not similar with the present case.21

The petitioners aver in this case that the failure of their counsel to include the material dates in their petition with the CA was, as stated in their Amended Manifestation, because the said counsel was suffering from a slight heart attack. The Court finds the petitioners’ pretext flimsy. If the petitioners’ counsel was able to prepare their petition despite her condition, there was no valid reason why she failed to include the material dates required under the Rules of Court. Besides, the petitioners stated in their petition that they had appended a copy of their Amended Manifestation, but failed to do so. If the rules were to be applied strictly, the CA could not be faulted for dismissing the petition.

However, in order to promote their objective of securing a just, speedy and inexpensive dispensation of every action and proceedings, the Rules are to be liberally construed.22 Rules of procedure are intended to promote, not to defeat substantial justice and, therefore, should not be applied in a very rigid and technical

sense. This Court ruled in Buenaflor vs. Court of Appeals, et al.23 that appeal is an essential part of our judicial system and trial courts and the Court of Appeals are advised to proceed with caution so as not to deprive a party of the right to appeal and that every party litigant should be afforded the amplest opportunity for the proper and just disposition of his cause, free from the constraints of technicalities. The Court has given due course to petitions where to do so would serve the demands of substantial justice and in the exercise of its equity jurisdiction.24 In this case, the Court opts to apply the rules liberally to enable it to delve into and resolve the cogent substantial issues posed by the petitioners.

We agree with the contention of the petitioners that under Section 416 of the LGC, the amicable settlement executed by the parties before the Lupon on the arbitration award has the force and effect of a final judgment of a court upon the expiration of ten (10) days from the date thereof, unless the settlement is repudiated within the period therefor, where the consent is vitiated by force, violence or intimidation, or a petition to nullify the award is filed before the proper city or municipal court.25 The repudiation of the settlement shall be sufficient basis for the issuance of a certification to file a complaint.26

We also agree that the Secretary of the Lupon is mandated to transmit the settlement to the appropriate city or municipal court within the time frame under Section 418 of the LGC and to furnish the parties and the Lupon Chairman with copies thereof.27 The amicable settlement which is not repudiated within the period therefor may be enforced by execution by the Lupon through the Punong Barangay within a time line of six months, and if the settlement is not so enforced by the Lupon after the lapse of the said period, it may be enforced only by an action in the proper city or municipal court as provided for in Section 417 of the LGC of 1991, as amended, which reads:

SEC. 417. Execution. – The amicable settlement or arbitration award may be enforced by execution by the Lupon within six (6) months from the date of the settlement. After the lapse of such time, the settlement may be enforced by action in the proper city or municipal court. (Underlining supplied).

Section 417 of the Local Government Code provides a mechanism for the enforcement of a settlement of the parties before the Lupon. It provides for a two-tiered mode of enforcement of an amicable settlement executed by the parties before the Lupon, namely, (a) by execution of the Punong Barangay which is quasi-judicial and summary in nature on mere motion of the party/parties entitled thereto;28 and (b) by an action in regular form, which remedy is judicial. Under the first remedy, the proceedings are covered by the LGC and the Katarungang Pambarangay Implementing Rules and Regulations. The Punong Barangay is called upon during the hearing to determine solely the fact of non-compliance of the terms of the settlement and to give the defaulting party another chance at voluntarily complying with his obligation under the settlement. Under the second remedy, the proceedings are governed by the Rules of Court, as amended. The cause of action is the amicable settlement itself, which, by operation of law, has the force and effect of a final judgment.

Section 417 of the LGC grants a party a period of six months to enforce the amicable settlement by the Lupon through the Punong Barangay before such party may resort

to filing an action with the MTC to enforce the settlement. The raison d’ etre of the law is to afford the parties during the six-month time line, a simple, speedy and less expensive enforcement of their settlement before the Lupon.

The time line of six months is for the benefit not only of the complainant, but also of the respondent. Going by the plain words of Section 417 of the LGC, the time line of six months should be computed from the date of settlement. However, if applied to a particular case because of its peculiar circumstance, the computation of the time line from the date of the settlement may be arbitrary and unjust and contrary to the intent of the law. To illustrate: Under an amicable settlement made by the parties before the Lupon dated January 15, 2003, the respondents were obliged to vacate the subject property on or before September 15, 2003. If the time line of six months under Section 417 were to be strictly and literally followed, the complainant may enforce the settlement through the Lupon only up to July 15, 2003. But under the settlement, the respondent was not obliged to vacate the property on or before July 15, 2003; hence, the settlement cannot as yet be enforced. The settlement could be enforced only after September 15, 2003, when the respondent was obliged to vacate the property. By then, the six months under Section 417 shall have already elapsed. The complainant can no longer enforce the settlement through the Lupon, but had to enforce the same through an action in the MTC, in derogation of the objective of Section 417 of the LGC. The law should be construed and applied in such a way as to reflect the will of the legislature and attain its objective, and not to cause an injustice. As Justice Oliver Wendell Holmes aptly said, "courts are apt to err by sticking too closely to the words of the law where these words support a policy that goes beyond them. The Court should not defer to the latter that killeth but to the spirit that vivifieth."29

In light of the foregoing considerations, the time line in Section 417 should be construed to mean that if the obligation in the settlement to be enforced is due and demandable on the date of the settlement, the six-month period should be counted from the date of the settlement; otherwise, if the obligation to be enforced is due and demandable on a date other than the date of the settlement, the six-month period should be counted from the date the obligation becomes due and demandable.

Parenthetically, the Katarungang Pambarangay Implementing Rules and Regulations, Rule VII, Section 2 provides:

SECTION 2. Modes of Execution. - The amicable settlement or arbitration award may be enforced by execution by the Lupon within six [6] months from date of the settlement or date of receipt of the award or from the date the obligation stipulated in the settlement or adjudged in the arbitration award becomes due and demandable. After the lapse of such time, the settlement or award may be enforced by the appropriate local trial court pursuant to the applicable provisions of the Rules of Court . An amicable settlement reached in a case referred by the Court having jurisdiction over the case to the Lupon shall be enforced by execution by the said court. (Underlining supplied).

By express provision of Section 417 of the LGC, an action for the enforcement of the settlement should be instituted in the proper municipal or city court. This is regardless of the nature of the complaint before the Lupon, and the relief prayed for therein. The venue for such actions is governed by Rule 4, Section 1 of the 1997 Rules of Civil

Procedure, as amended. An action for the enforcement of a settlement is not one of those covered by the Rules on Summary Procedure in civil cases;30 hence, the rules on regular procedure shall apply, as provided for in Section 1, Rule 5 of the Rules of Civil Procedure, as amended.31

As to the requisite legal fees for the filing of an action in the first level court under Section 417 of the Local Government Code, indigents-litigants (a) whose gross income and that of their immediate family do not exceed ten thousand (P10,000.00) pesos a month if residing in Metro Manila, and five thousand (P5,000.00) pesos a month if residing outside Metro Manila, and (b) who do not own real property with an assessed value of more than fifty thousand (P50,000.00) pesos shall be exempt from the payment of legal fees. Section 18, Rule 141 of the Revised Rules of Court, as amended by A.M. No. 00-2-01-SC, is hereby further amended accordingly.

In this case, the parties executed their Amicable Settlement on May 5, 1999. However, the petitioners were obliged to vacate the property only in January 2000, or seven months after the date of the settlement; hence, the respondent may enforce the settlement through the Punong Barangay within six months from January 2000 or until June 2000, when the obligation of the petitioners to vacate the property became due. The respondent was precluded from enforcing the settlement via an action with the MTC before June 2000. However, the respondent filed on May 12, 2000 a motion for execution with the MTC and not with the Punong Barangay. Clearly, the respondent adopted the wrong remedy. Although the MTC denied the respondent’s motion for a writ of execution, it was for a reason other than the impropriety of the remedy resorted to by the respondent. The RTC erred in granting the respondent’s motion for a writ of execution, and the CA erred in denying the petitioners’ petition for review.

Normally, the Court would remand the case to the Punong Barangay for further proceedings. However, the Court may resolve the issues posed by the petitioners, based on the pleadings of the parties to serve the ends of justice. It is an accepted rule of procedure for the Court to strive to settle the existing controversy in a single proceeding, leaving no root or branch to bear the seeds of future litigation.32

In this case, there is no question that the petitioners were obliged under the settlement to vacate the premises in January 2000. They refused, despite the extensions granted by the respondent, to allow their stay in the property. For the court to remand the case to the Lupon and require the respondent to refile her motion for execution with the Lupon would be an idle ceremony. It would only unduly prolong the petitioners’ unlawful retention of the premises.33

The RTC and the CA correctly ruled that the respondent is the real party-in-interest to enforce amicable settlement. Rule 3, Section 2 of the Rules of Court, as amended, reads:

SEC. 2. Parties in interest. - A real party in interest is the party who stands to be benefited or injured by the judgment in the suit, or the party entitled to the avails of the suit. Unless otherwise authorized by law or these Rules, every action must be prosecuted or defended in the name of the real party in interest.

The party-in-interest applies not only to the plaintiff but also to the defendant.1âwphi1 "Interest" within the meaning of the rules means material interest, an interest in issue and to be affected by the decree as distinguished from mere interest in the question involved, or a mere incidental interest.34 A real party in interest is one who has a legal right.35 Since a contract may be violated only by the parties thereto as against each other, in an action upon that contract, the real parties-in-interest, either as plaintiff or as defendant, must be parties to the said contract.36 The action must be brought by the person who, by substantive law, possesses the right sought to be enforced.37 In this case, the respondent was the party in the amicable settlement. She is the real party-in-interest to enforce the terms of the settlement because unless the petitioners vacate the property, the respondent and the other vendors should not be paid the balance of P1,000,000.00 of the purchase price of the property under the Deed of Conditional Sale.

The petitioners are estopped from assailing the amicable settlement on the ground of deceit and fraud. First. The petitioners failed to repudiate the settlement within the period therefor. Second. The petitioners were benefited by the amicable settlement. They were allowed to remain in the property without any rentals therefor until December 1998. They were even granted extensions to continue in possession of the property. It was only when the respondent filed the motion for execution that the petitioners alleged for the first time that the respondents deceived them into executing the amicable settlement.38

On the petitioners’ claim that they were entitled to the right of first refusal under P.D. No. 1517, we agree with the disquisition of the trial court, as quoted by the Court of Appeals:

We likewise find no reversible error on the part of [the] RTC in rejecting that the petitioners have a right of first refusal in the purchase and sale of the subject property. As ratiocinated by the court:

"xxx. Presidential Decree No. 1517 (The Urban Land Reform Law) does not apply where there is no showing that the land leased has been proclaimed to be within a specific Urban Land Reform Zone. In the instant case, the annex attached to the Proclamation 1967 creating the areas declared as priority development and urban land reform zone ... does not indicate that the barangay where the subject property is located is included therein. This is bolstered by the certification issued by the Housing and Land Regulatory Board to the effect that the location of the property is outside the area of Priority Development. It is therefore a reversible error for the lower court to conclude that defendants-appellees were deprived of their preemptive right when no right exists in the first place."

Indeed, before a preemptive right under PD 1517 can be exercised, the disputed land should be situated in an area declared to be both an APD (Areas for Priority Development) and a ULRZ (Urban Land Reform Zones).1âwphi1Records show, and as not disputed by the petitioners, the disputed property is not covered by the aforementioned areas and zones.39

IN LIGHT OF ALL THE FOREGOING, the petition is DENIED. The petitioners and all those acting for and in their behalf are directed to vacate, at their own expense, the

property covered by Transfer Certificate of Title No. 15324 of the Register of Deeds of Muntinlupa City and deliver possession of the property to the vendees Mary Liza Santos, Susana Lim and Johnny Lim. This is without prejudice to the right of the vendees to recover from the petitioners reasonable compensation for their possession of the property from January 2000 until such time that they vacate the property. Costs against the petitioners.

SO ORDERED.

Davide, Jr., C.J., Puno, Vitug, Panganiban, Quisumbing, Ynares-Santiago, Sandoval-Gutierrez, Carpio, Austria-Martinez, Corona, Carpio-Morales, Azcuna, and Tinga, JJ., concur.

Republic of the PhilippinesSUPREME COURT

Manila

THIRD DIVISION

G.R. No. 167261             March 2, 2007

ROSARIA LUPITAN PANG-ET, Petitioner, vs. CATHERINE MANACNES-DAO-AS, Heir of LEONCIO MANACNES and FLORENTINA MANACNES, Respondent.

D E C I S I O N

CHICO-NAZARIO, J.:

Before Us is a Petition for Review on Certiorari under Rule 45 of the Rules of Civil Procedure, assailing the Decision1 of the Court of Appeals in CA-G.R. SP No. 78019, dated 9 February 2005, which reversed and set aside the Judgment2 of the Regional Trial Court (RTC), Branch 36, Bontoc, Mountain Province, and reinstated the Resolution3 of the Municipal Circuit Trial Court (MCTC) of Besao-Sagada, Mountain Province dismissing herein petitioner’s action for Enforcement of Arbitration Award and Damages.

The instant petition draws its origin from an Action4 for recovery of possession of real property situated in Sitio Abatan, Barrio Dagdag, Sagada filed by herein petitioner before the MCTC of Besao-Sagada, Mountain Province on 9 November 1994, against the spouses Leoncio and Florentina Manacnes, the predecessors-in-interest of herein respondent.

On 23 February 1995, during the course of the pre-trial, the parties, through their respective counsels, agreed to refer the matter to the Barangay Lupon (Lupon) of Dagdag, Sagada for arbitration in accordance with the provisions of the Katarungang Pambarangay Law.5 Consequently, the proceedings before the MCTC were suspended, and the case was remanded to the Lupon for resolution.6

Thereafter, the Lupon issued a Certification to File Action on 26 February 1995 due to the refusal of the Manacnes spouses to enter into an Agreement for Arbitration and their insistence that the case should go to court. On 8 March 1995, the Certification, as well as the records of the case, were forwarded to the MCTC.

An Order was issued by the MCTC on 7 April 1995, once more remanding the matter for conciliation by the Lupon and ordering the Lupon to render an Arbitration Award thereon. According to the MCTC, based on the records of the case, an Agreement for Arbitration was executed by the parties concerned; however, the Lupon failed to issue an Arbitration Award as provided under the Katarungang Pambarangay Law, so that, the case must be returned to the Lupon until an Arbitration Award is rendered.

In compliance with the MCTC Order, the Lupon rendered an Arbitration Award on 10 May 1995 ordering herein petitioner to retrieve the land upon payment to the spouses Manacnes of the amount of P8,000.00 for the improvements on the land. Aggrieved, Leoncio’s widow,7 Florentina Manacnes, repudiated the Arbitration Award but her repudiation was rejected by the Lupon. Thereafter, the MCTC was furnished with copies of the Arbitration Award.

On 1 June 1995, herein petitioner filed with the Lupon a Motion for Execution of the Arbitration Award. On the other hand, Florentina Manacnes filed a Motion with the MCTC for the resumption of the proceedings in the original case for recovery of possession and praying that the MCTC consider her repudiation of the Arbitration Award issued by the Lupon.

Subsequently, the MCTC heard the Motion of Florentina Manacnes notwithstanding the latter’s failure to appear before the court despite notice. The MCTC denied Florentina Manacnes’ Motion to repudiate the Arbitration Award elucidating that since the movant failed to take any action within the 10-day reglementary period provided for under the Katarungang Pambarangay Law, the arbitration award has become final and executory. Furthermore, upon motion of herein petitioner Pang-et, the MCTC issued an Order remanding the records of the case to the Lupon for the execution of the Arbitration Award. On 31 August 1995, the then incumbent Punong Barangay of Dagdag issued a Notice of Execution of the Award.

Said Notice of Execution was never implemented. Thus, on 16 October 2001, herein petitioner Pang-et filed with the MCTC an action for enforcement of the Arbitration Award which was sought to be dismissed by the heir of the Manacnes spouses.8 The heir of the Manacnes spouses argues that the Agreement for Arbitration and the Arbitration Award are void, the Agreement for Arbitration not having been personally signed by the spouses Manacnes, and the Arbitration Award having been written in English – a language not understood by the parties.

In its Resolution dated 20 August 2002, the MCTC dismissed the Petition for Enforcement of Arbitration Award in this wise:

x x x Are defendants estopped from questioning the proceedings before the Lupon Tagapamayapa concerned?

The defendants having put in issue the validity of the proceedings before the lupon concerned and the products thereof, they are not estopped. It is a hornbook rule that a null and void act could always be questioned at any time as the action or defense based upon it is imprescriptible.

The second issue: Is the agreement to Arbitrate null and void? Let us peruse the pertinent law dealing on this matter which is Section 413 of the Local Government Code of 1991 (RA 7160), to wit:

"Section 413 – (a) The parties may, at any stage of the proceedings, agree in writing that they shall abide by the arbitration award of the lupon chairman or the pangkat. x x x"

The foregoing should be taken together with Section 415 of the same code which provides:

"Section 415. Appearance of parties in person. In all katarungang pambarangay proceedings, the parties must appear in person without the assistance of counsel or

representative, except for minors and incompetents who may be assisted by their next-of-kin who are not lawyers."

It is very clear from the foregoing that personal appearance of the parties in conciliation proceedings before a Lupon Tagapamayapa is mandatory. Likewise, the execution of the agreement to arbitrate must be done personally by the parties themselves so that they themselves are mandated to sign the agreement.

Unfortunately, in this case, it was not respondents-spouses [Manacnis] who signed the agreement to arbitrate as plaintiff herself admitted but another person. Thus, it is very clear that the mandatory provisos of Section 413 and 415 of RA 7160 are violated. Granting arguendo that it was Catherine who signed the agreement per instruction of her parents, will it cure the violation? The answer must still be in the negative. As provided for by the cited provisos of RA 7160, if ever a party is entitled to an assistance, it shall be done only when the party concerned is a minor or incompetent. Here, there is no showing that the spouses [Manacnis] were incompetent. Perhaps very old but not incompetent. Likewise, what the law provides is assistance, not signing of agreements or settlements.

Just suppose the spouses [Manacnis] executed a special power of attorney in favor of their daughter Catherine to attend the proceedings and to sign the agreement to arbitrate? The more that it is proscribed by the Katarungang Pambarangay Law specifically Section 415 of RA 7160 which mandates the personal appearance of the parties before the lupon and likewise prohibits the appearance of representatives.

In view of the foregoing, it could now be safely concluded that the questioned agreement to arbitrate is inefficacious for being violative of the mandatory provisions of RA 7160 particularly sections 413 and 415 thereof as it was not the respondents-spouses [Manacnis] who signed it.

The third issue: Is the Arbitration Award now sought to be enforced effective? Much to be desired, the natural flow of events must follow as a consequence. Considering that the agreement to arbitrate is inefficacious as earlier declared, it follows that the arbitration award which emanated from it is also inefficacious. Further, the Arbitration Award by itself, granting arguendo that the agreement to arbitrate is valid, will readily show that it does not also conform with the mandate of the Katarungang Pambarangay Law particularly Section 411 thereto which provides:

"Sec. 411. Form of Settlement – All amicable settlements shall be in writing in a language or dialect known to the parties x x x. When the parties to the dispute do not use the same language or dialect, the settlement shall be written in the language known to them."

Likewise, the implementing rules thereof, particularly Section 13 provides:

"Sec. 13 – Form of Settlement and Award. – All settlements, whether by mediation, conciliation or arbitration, shall be in writing, in a language or dialect known to the parties. x x x"

It is of no dispute that the parties concerned belong to and are natives of the scenic and serene community of Sagada, Mt. Province who speak the Kankanaey language. Thus, the Arbitration Award should have been written in the Kankanaey language. However, as shown by the Arbitration Award, it is written in English language which the parties do not speak and therefore a further violation of the Katarungang Pambarangay Law.

IN THE LIGHT of all the foregoing considerations, the above-entitled case is hereby dismissed.9

Petitioner Pang-et’s Motion for Reconsideration having been denied, she filed an Appeal before the RTC which reversed and set aside the Resolution of the MCTC and remanded the case to the MCTC for further proceedings. According to the RTC:

As it appears on its face, the Agreement for Arbitration in point found on page 51 of the expediente, dated Feb. 6, 1995, and attested by the Pangkat Chairman of the Office of the Barangay Lupon of Dagdag, Sagada was signed by the respondents/defendants spouses Manacnis. The representative of the Appellee in the instant case assails such Agreement claiming that the signatures of her aforesaid predecessors-in-interest therein were not personally affixed by the latter or are falsified-which in effect is an attack on the validity of the document on the ground that the consent of the defendants spouses Manacnis is vitiated by fraud. Indulging the Appellee Heirs of Manacnis its contention that such indeed is the truth of the matter, the fact still remains as borne out by the circumstances, that neither did said original defendants nor did any of such heirs effectively repudiate the Agreement in question in accordance with the procedure outlined by the law, within five (5) days from Feb. 6, 1995, on the ground as above-stated (Secs. 413 (a), 418, RA 7160; Secs. 7, 13, KP Law; Sec. 12, Rule IV, KP Rules). As mandated, such failure is deemed a waiver on the part of the defendants spouses Manacnis to challenge the Agreement for Arbitration on the ground that their consent thereto is obtained and vitiated by fraud (Sec. 12, Par. 3, KP Rules). Corollarily, the Appellee Heirs being privy to the now deceased original defendants should have not been permitted by the court a quo under the equitable principle of estoppel, to raise the matter in issue for the first time in the present case (Lopez vs. Ochoa, 103 Phil. 94).

The Arbitration Award relative to Civil Case 83 (B.C. No. 07) dated May 10, 1995, written in English, attested by the Punong Barangay of Dagdag and found on page 4 of the record is likewise assailed by the Appellee as void on the ground that the English language is not known by the defendants spouses Manacnis who are Igorots. Said Appellee contends that the document should have been written in Kankana-ey, the dialect known to the party (Sec. 413 (b), RA 7160; Sec. 7, Par. 2, KP law, Sec. 11, KP Rules). On this score, the court a quo presumptuously concluded on the basis of the self-serving mere say-so of the representative of the Appellee that her predecessors did not speak or understand English. As a matter of judicial notice, American Episcopalian Missionaries had been in Sagada, Mountain Province as early as 1902 and continuously stayed in the place by turns, co-mingling with the indigenous people thereat, instructing and educating them, and converting most to the Christian faith, among other things, until the former left about twenty years ago. By constant association with the white folks, the natives too old to go to school somehow learned the King’s English by ear and can effectively speak and

communicate in that language. Any which way, even granting arguendo that the defendants spouses Manacnis were the exceptions and indeed totally ignorant of English, no petition to nullify the Arbitration award in issue on such ground as advanced was filed by the party or any of the Appellee Heirs with the MCTC of Besao-Sagada, within ten (10) days from May 10, 1995, the date of the document. Thus, upon the expiration thereof, the Arbitration Award acquired the force and effect of a final judgment of a court (Sec. 416, RA 7160; Sec. 11, KP Law; Sec. 13, KP Rules); conclusive upon the original defendants in Civil Case 83 (B.C. No. 07) and the Appellee Heirs herein privy to said defendants.

In the light thereof, the collateral attack of the Appellee on the Agreement for Arbitration and Arbitration Award re Civil Case 83 (B.C. No. 07) should not have in the first place been given due course by the court a quo. In which case, it would not have in the logical flow of things declared both documents "inefficacious"; without which pronouncements, said court would not have dismissed the case at bar.

Wherefore, Judgment is hereby rendered Reversing and Setting Aside the Resolution appealed from, and ordering the record of the case subject thereof remanded to the court of origin for further proceedings.10

Aggrieved by the reversal of the RTC, herein respondent filed a petition before the Court of Appeals seeking to set aside the RTC Judgment. On 9 February 2005, the appellate court rendered the herein assailed Decision, to wit:

After thoroughly reviewing through the record, We find nothing that would show that the spouses Manacnes were ever amenable to any compromise with respondent Pang-et. Thus, We are at a loss as to the basis of the Arbitration Award sought to be enforced by respondent Pang-et’s subsequent action before the MCTC.

There is no dispute that the proceeding in Civil Case No. 83 was suspended and the same remanded to the Lupon on account of the Agreement to Arbitrate which was allegedly not signed by the parties but agreed upon by their respective counsels during the pre-trial conference. In the meeting before the Lupon, it would seem that the agreement to arbitrate was not signed by the spouses Manacnes. More importantly, when the pangkat chairman asked the spouses Manacnes to sign or affix their thumbmarks in the agreement, they refused and insisted that the case should instead go to court. Thus, the Lupon had no other recourse but to issue a certificate to file action. Unfortunately, the case was again remanded to the Lupon to "render an arbitration award". This time, the Lupon heard the voice tape of the late Beket Padonay affirming respondent Pang-et’s right to the disputed property. While Pang-et offered to pay P8,000.00 for the improvements made by the spouses Manacnes, the latter refused to accept the same and insisted on their right to the subject property. Despite this, the Lupon on May 10, 1995 issued an Arbitration award which favored respondent Pang-et.

From the time the case was first referred to the Lupon to the time the same was again remanded to it, the Spouses Manacnes remained firm in not entering into any compromise with respondent Pang-et. This was made clear in both the minutes of the Arbitration Hearing on 26 February 1995 and on 9 April 1995. With the foregoing, We

find it evident that the spouses Manacnes never intended to submit the case for arbitration.

Moreover, the award itself is riddled with flaws. First of all there is no showing that the Pangkat ng Tagapagkasundo was duly constituted in accordance with Rule V of the Katarungan Pambarangay Rules. And after constituting of the Pangkat, Rule VI, thereof the Punong Barangay and the Pangkat must proceed to hear the case. However, according to the minutes of the hearing before the lupon on 9 April 1995, the pangkat Chairman and another pangkat member were absent for the hearing.

Finally, Section 13 of the same Rule requires that the Punong Barangay or the Pangkat Chairman should attest that parties freely and voluntarily agreed to the settlement arrived at. But how can this be possible when the minutes of the two hearings show that the spouses Manacnes neither freely nor voluntarily agreed to anything.

While RA 7160 and the Katarungan Pambarangay rules provide for a period to repudiate the Arbitration Award, the same is neither applicable nor necessary since the Agreement to Arbitrate or the Arbitration Award were never freely nor voluntarily entered into by one of the parties to the dispute. In short, there is no agreement validly concluded that needs to be repudiated.

With all the foregoing, estoppel may not be applied against petitioners for an action or defense against a null and void act does not prescribe. With this, We cannot but agree with the MCTC that the very agreement to arbitrate is null and void. Similarly, the arbitration award which was but the off shoot of the agreement is also void.

WHEREFORE, the RTC judgment of 2 June 2003 is REVERSED and SET ASIDE, the MCTC Resolution DISMISSING the Civil Case No. 118 for enforcement of Arbitration Award is REINSTATED.11

Vehemently disagreeing with the Decision of the Court of Appeals, petitioner Pang-et filed the instant petition. Petitioner maintains that the appellate court overlooked material facts that resulted in reversible errors in the assailed Decision. According to petitioner, the Court of Appeals overlooked the fact that the original parties, as represented by their respective counsels in Civil Case No. 83, mutually agreed to submit the case for arbitration by the Lupon ng Tagapamayapa of Barangay Dagdag. Petitioner insists that the parties must be bound by the initial agreement by their counsels during pre-trial to an amicable settlement as any representation made by the lawyers are deemed made with the conformity of their clients. Furthermore, petitioner maintains that if indeed the spouses Manacnes did not want to enter into an amicable settlement, then they should have raised their opposition at the first instance, which was at the pre-trial on Civil Case No. 83 when the MCTC ordered that the case be remanded to the Lupon ng Tagapamayapa for arbitration.

We do not agree with the petitioner.

First and foremost, in order to resolve the case before us, it is pivotal to stress that, during the initial hearing before the Lupon ng Tagapamayapa, the spouses Manacnes

declined to sign the Agreement for Arbitration and were adamant that the proceedings before the MCTC in Civil Case No. 83 must continue. As reflected in the Minutes12 of the Arbitration Hearing held on 26 February 1995, the legality of the signature of Catherine Manacnes, daughter of the Manacnes spouses, who signed the Agreement for Arbitration on behalf of her parents, was assailed on the ground that it should be the spouses Manacnes themselves who should have signed such agreement. To resolve the issue, the Pangkat Chairman then asked the spouses Manacnes that if they wanted the arbitration proceedings to continue, they must signify their intention in the Agreement for Arbitration form. However, as stated earlier, the Manacnes spouses did not want to sign such agreement and instead insisted that the case go to court.

Consequently, the Lupon issued a Certification to File Action on 26 February 1995 due to the refusal of the Manacnes spouses. Indicated in said Certification are the following: 1) that there was personal confrontation between the parties before the Punong Barangay but conciliation failed and 2) that the Pangkat ng Tagapagkasundo was constituted but the personal confrontation before the Pangkat failed likewise because respondents do not want to submit this case for arbitration and insist that said case will go to court.13Nevertheless, upon receipt of said certification and the records of the case, the MCTC ordered that the case be remanded to the Lupon ng Tagapamayapa and for the latter to render an arbitration award, explaining that:

Going over the documents submitted to the court by the office of the Lupon Tagapamayapa of Dagdag, Sagada, Mountain Province, the court observed that an "Agreement for Arbitration" was executed by the parties anent the above-entitled case. However, said Lupon did not make any arbitration award as mandated by the Katarungang Pambarangay Law but instead made a finding that the case may now be brought to the court. This is violative of the KP Law, which cannot be sanctioned by the court.14

At this juncture, it must be stressed that the object of the Katarungang Pambarangay Law is the amicable settlement of disputes through conciliation proceedings voluntarily and freely entered into by the parties.15Through this mechanism, the parties are encouraged to settle their disputes without enduring the rigors of court litigation. Nonetheless, the disputing parties are not compelled to settle their controversy during the barangay proceedings before the Lupon or the Pangkat, as they are free to instead find recourse in the courts16 in the event that no true compromise is reached.

The key in achieving the objectives of an effective amicable settlement under the Katarungang Pambarangay Law is the free and voluntary agreement of the parties to submit the dispute for adjudication either by the Lupon or the Pangkat, whose award or decision shall be binding upon them with the force and effect of a final judgment of a court.17 Absent this voluntary submission by the parties to submit their dispute to arbitration under the Katarungang Pambarangay Law, there cannot be a binding settlement arrived at effectively resolving the case. Hence, we fail to see why the MCTC further remanded the case to the Lupon ng Tagapamayapa and insisted that the arbitration proceedings continue, despite the clear showing that the spouses Manacnes refused to submit the controversy for arbitration.

It would seem from the Order of the MCTC, which again remanded the case for arbitration to the Lupon ng Tagapamayapa, that it is compulsory on the part of the parties to submit the case for arbitration until an arbitration award is rendered by the Lupon. This, to our minds, is contrary to the very nature of the proceedings under the Katarungang Pambarangay Law which espouses the principle of voluntary acquiescence of the disputing parties to amicable settlement.

What is compulsory under the Katarungang Pambarangay Law is that there be a confrontation between the parties before the Lupon Chairman or the Pangkat and that a certification be issued that no conciliation or settlement has been reached, as attested to by the Lupon or Pangkat Chairman, before a case falling within the authority of the Lupon may be instituted in court or any other government office for adjudication. 18 In other words, the only necessary pre-condition before any case falling within the authority of the Lupon or the Pangkat may be filed before a court is that there has been personal confrontation between the parties but despite earnest efforts to conciliate, there was a failure to amicably settle the dispute. It should be emphasized that while the spouses Manacnes appeared before the Lupon during the initial hearing for the conciliation proceedings, they refused to sign the Agreement for Arbitration form, which would have signified their consent to submit the case for arbitration. Therefore, upon certification by the Lupon ng Tagapamayapa that the confrontation before the Pangkat failed because the spouses Manacnes refused to submit the case for arbitration and insisted that the case should go to court, the MCTC should have continued with the proceedings in the case for recovery of possession which it suspended in order to give way for the possible amicable resolution of the case through arbitration before the Lupon ng Tagapamayapa.

Petitioner’s assertion that the parties must be bound by their respective counsels’ agreement to submit the case for arbitration and thereafter enter into an amicable settlement is imprecise. What was agreed to by the parties’ respective counsels was the remand of the case to the Lupon ng Tagapamayapa for conciliation proceedings and not the actual amicable settlement of the case. As stated earlier, the parties may only be compelled to appear before the Lupon ng Tagapamayapa for the necessary confrontation, but not to enter into any amicable settlement, or in the case at bar, to sign the Agreement for Arbitration. Thus, when the Manacnes spouses personally appeared during the initial hearing before the Lupon ng Tagapamayapa, they had already complied with the agreement during the pre-trial to submit the case for conciliation proceedings. Their presence during said hearing is already their acquiescence to the order of the MCTC remanding the case to the Lupon for conciliation proceedings, as there has been an actual confrontation between the parties despite the fact that no amicable settlement was reached due to the spouses Manacnes’ refusal to sign the Agreement for Arbitration.

Furthermore, the MCTC should not have persisted in ordering the Lupon ng Tagapamayapa to render an arbitration award upon the refusal of the spouses Manacnes to submit the case for arbitration since such arbitration award will not bind the spouses. As reflected in Section 413 of the Revised Katarungang Pambarangay Law, in order that a party may be bound by an arbitration award, said party must have agreed in writing that they shall abide by the arbitration award of the Lupon or the Pangkat. Like in any other contract, parties who have not signed an agreement to arbitrate will not be bound by said agreement since it is axiomatic that a contract cannot be binding upon and cannot be enforced against one who is not a party to

it.19 In view of the fact that upon verification by the Pangkat Chairman, in order to settle the issue of whether or not they intend to submit the matter for arbitration, the spouses Manacnes refused to affix their signature or thumb mark on the Agreement for Arbitration Form, the Manacnes spouses cannot be bound by the Agreement for Arbitration and the ensuing arbitration award since they never became privy to any agreement submitting the case for arbitration by the Pangkat.

WHEREFORE, premises considered, the instant petition is hereby DENIED. The Decision of the Court of Appeals in CA-G.R. SP No. 78019 is hereby AFFIRMED. The Municipal Circuit Trial Court of Besao-Sagada, Mountain Province, is hereby ORDERED to proceed with the trial of Civil Case No. 83 for Recovery of Possession of Real Property, and the immediate resolution of the same with deliberate dispatch. No costs.

Republic of the PhilippinesSUPREME COURT

Manila

THIRD DIVISION

G.R. No. 176405             August 20, 2008

LEO WEE, petitioner, vs.GEORGE DE CASTRO (on his behalf and as attorney-in-fact of ANNIE DE CASTRO and FELOMINA UBAN) and MARTINIANA DE CASTRO, respondents.

D E C I S I O N

CHICO-NAZARIO, J.:

Before this Court is a Petition for Review on Certiorari1 under Rule 45 of the Revised Rules of Court filed by petitioner Leo Wee, seeking the reversal and setting aside of the Decision2 dated 19 September 2006 and the Resolution3 dated 25 January 2007 of the Court of Appeals in CA-G.R. SP No. 90906. The appellate court, in its assailed Decision, reversed the dismissal of Civil Case. No. 1990, an action for ejectment instituted by respondent George de Castro, on his own behalf and on behalf of Annie de Castro, Felomina de Castro Uban and Jesus de Castro4 against petitioner, by the Municipal Trial Court (MTC) of Alaminos City, which was affirmed by the Regional Trial Court (RTC), Branch 54, Alaminos City, Pangasinan; and, ruling in favor of the respondents, ordered the petitioner to vacate the subject property. In its assailed Resolution dated 25 January 2007, the Court of Appeals refused to reconsider its earlier Decision of 19 September 2006.

In their Complaint5 filed on 1 July 2002 with the MTC of Alaminos City, docketed as Civil Case No. 1990, respondents alleged that they are the registered owners of the subject property, a two-storey building erected on a parcel of land registered under Transfer Certificate of Title (TCT) No. 16193 in the Registry of Deeds of Pangasinan, described and bounded as follows:

A parcel of land (Lot 13033-D-2, Psd-01550-022319, being a portion of Lot 13033-D, Psd-018529, LRC Rec. No. ____) situated in Pob., Alaminos City; bounded on the NW. along line 1-2 by Lot 13035-D-1 of the subdivision plan; on the NE. along line 2-3 by Vericiano St.; on the SE. along line 3-4 by Lot 13033-D-2 of the subdivision plan; on the SW. along line 4-1 by Lot 575, Numeriano Rabago. It is coverd by TCT No. 16193 of the Register of Deeds of Pangasinan (Alaminos City) and declared for taxation purposes per T.D. No. 2075, and assessed in the sum ofP93,400.00.6

Respondents rented out the subject property to petitioner on a month to month basis for P9,000.00 per month.7 Both parties agreed that effective 1 October 2001, the rental payment shall be increased fromP9,000.00 to P15,000.00. Petitioner, however, failed or refused to pay the corresponding increase on rent when his rental obligation for the month of 1 October 2001 became due. The rental dispute was brought to the Lupon Tagapagpamayapa of Poblacion, Alaminos, Pangasinan, in an attempt to amicably settle the matter but the parties failed to reach an agreement, resulting in the issuance by theBarangay Lupon of a Certification to file action in court on 18 January 2002. On 10 June 2002, respondent George de Castro sent a letter to petitioner terminating their lease agreement and demanding that the latter vacate and

turn over the subject property to respondents. Since petitioner stubbornly refused to comply with said demand letter, respondent George de Castro, together with his siblings and co-respondents, Annie de Castro, Felomina de Castro Uban and Jesus de Castro, filed the Complaint for ejectment before the MTC.

It must be noted, at this point, that although the Complaint stated that it was being filed by all of the respondents, the Verification and the Certificate of Non-Forum Shopping were signed by respondent George de Castro alone. He would subsequently attach to his position paper filed before the MTC on 28 October 2002 the Special Powers of Attorney (SPAs) executed by his sisters Annie de Castro and Felomina de Castro Uban dated 7 February 2002 and 14 March 2002 respectively, authorizing him to institute the ejectment case against petitioner.

Petitioner, on the other hand, countered that there was no agreement between the parties to increase the monthly rentals and respondents' demand for an increase was exorbitant. The agreed monthly rental was only for the amount of P9,000.00 and he was religiously paying the same every month. Petitioner then argued that respondents failed to comply with the jurisdictional requirement of conciliation before theBarangay Lupon prior to the filing of Civil Case. No. 1990, meriting the dismissal of their Complaint therein. The Certification to file action issued by the Barangay Lupon appended to the respondents' Complaint merely referred to the issue of rental increase and not the matter of ejectment. Petitioner asserted further that the MTC lacked jurisdiction over the ejectment suit, since respondents' Complaint was devoid of any allegation that there was an "unlawful withholding" of the subject property by the petitioner.8

During the Pre-Trial Conference9 held before the MTC, the parties stipulated that in May 2002, petitioner tendered to respondents the sum of P9,000.00 as rental payment for the month of January 2002; petitioner paid rentals for the months of October 2001 to January 2002 but only in the amount ofP9,000.00 per month; respondents, thru counsel, sent a letter to petitioner on 10 June 2002 terminating their lease agreement which petitioner ignored; and the Barangay Lupon did issue a Certification to file action after the parties failed to reach an agreement before it.

After the submission of the parties of their respective Position Papers, the MTC, on 21 November 2002, rendered a Decision10 dismissing respondents' Complaint in Civil Case No. 1990 for failure to comply with the prior conciliation requirement before the Barangay Lupon. The decretal portion of the MTC Decision reads:

WHEREFORE, premised considered, judgment is hereby rendered ordering the dismissal of this case. Costs against the [herein respondents].

On appeal, docketed as Civil Case No. A-2835, the RTC of Alaminos, Pangasinan, Branch 54, promulgated its Decision11 dated 27 June 2005 affirming the dismissal of respondents' Complaint for ejectment after finding that the appealed MTC Decision was based on facts and law on the matter. The RTC declared that since the original agreement entered into by the parties was for petitioner to pay only the sum of P9.000.00 per month for the rent of the subject property, and no concession was reached by the parties to increase such amount to P15.000.00, petitioner cannot be faulted for paying only the originally agreed upon monthly rentals. Adopting

petitioner's position, the RTC declared that respondents' failure to refer the matter to the Barangay court for conciliation process barred the ejectment case, conciliation before the Lupon being a condition sine qua non in the filing of ejectment suits. The RTC likewise agreed with petitioner in ruling that the allegation in the Complaint was flawed, since respondents failed to allege that there was an "unlawful withholding" of possession of the subject property, taking out Civil Case No. 1990 from the purview of an action for unlawful detainer. Finally, the RTC decreed that respondents' Complaint failed to comply with the rule that a co-owner could not maintain an action without joining all the other co-owners. Thus, according to the dispositive portion of the RTC Decision:

WHEREFORE the appellate Court finds no cogent reason to disturb the findings of the court a quo. The Decision dated November 21, 2002 appealed from is hereby AFFIRMED IN TOTO.12

Undaunted, respondents filed a Petition for Review on Certiorari13 with the Court of Appeals where it was docketed as CA-G.R. SP No. 90906. Respondents argued in their Petition that the RTC gravely erred in ruling that their failure to comply with the conciliation process was fatal to their Complaint, since it is only respondent George de Castro who resides in Alaminos City, Pangasinan, while respondent Annie de Castro resides in Pennsylvania, United States of America (USA); respondent Felomina de Castro Uban, in California, USA; and respondent Jesus de Castro, now substituted by his wife, Martiniana, resides in Manila. Respondents further claimed that the MTC was not divested of jurisdiction over their Complaint for ejectment because of the mere absence therein of the term "unlawful withholding" of their subject property, considering that they had sufficiently alleged the same in their Complaint, albeit worded differently. Finally, respondents posited that the fact that only respondent George de Castro signed the Verification and the Certificate of Non-Forum Shopping attached to the Complaint was irrelevant since the other respondents already executed Special Powers of Attorney (SPAs) authorizing him  to act as their attorney-in-fact in the institution of the ejectment suit against the petitioner.

On 19 September 2006, the Court of Appeals rendered a Decision granting the respondents' Petition and ordering petitioner to vacate the subject property and turn over the same to respondents. The Court of Appeals decreed:

WHEREFORE, premises considered, the instant petition is GRANTED. The assailed Decision dated June 27, 2005 issued by the RTC of Alaminos City, Pangasinan, Branch 54, is REVERSED and SET ASIDE. A new one is hereby rendered ordering [herein petitioner] Leo Wee to SURRENDER and VACATE the leased premises in question as well as to pay the sum of P15,000.00 per month reckoned from March, 2002 until he shall have actually turned over the possession thereof to petitioners plus the rental arrearages of P30,000.00 representing unpaid increase in rent for the period from October, 2001 to February, 2002, with legal interest at 6% per annum to be computed from June 7, 2002 until finality of this decision and 12% thereafter until full payment thereof. Respondent is likewise hereby ordered to pay petitioners the amount ofP20,000.00 as and for attorney's fees and the costs of suit.14

In a Resolution dated 25 January 2007, the appellate court denied the Motion for Reconsideration interposed by petitioner for lack of merit.

Petitioner is now before this Court via  the Petition at bar, making the following assignment of errors:

I.

THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN DECLARING THAT CONCILIATION PROCESS IS NOT A JURISDICTIONAL REQUIREMENT THAT NON-COMPLIANCE THEREWITH DOES NOT AFFECT THE JURISDICTION IN EJECTMENT CASE;

II.

THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN UPHOLDING THE SUFFICIENCY OF THE ALLEGATIONS IN THE COMPLAINT FOR EJECTMENT DESPITE THE WANT OF ALLEGATION OF "UNLAWFUL WITHOLDING PREMISES" (sic) QUESTIONED BY PETITIONER;

III.

THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN RULING THAT THE FILING OF THE COMPLAINT OF RESPONDENT GEORGE DE CASTRO WITHOUT JOINING ALL HIS OTHER CO-OWNERS OVER THE SUBJECT PROPERTY IS PROPER;

IV.

THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN NOT APPLYING SUPREME COURT CIRCULAR NO. 10 WHICH DIRECTS A PLEADER TO INDICATE IN HIS PLEADINGS HIS OFFICIAL RECEIPT OF HIS PAYMENT OF HIS IBP DUES.15

Petitioner avers that respondents failed to go through the conciliation process before the Barangay Lupon, a jurisdictional defect that bars the legal action for ejectment. The Certification to file action dated 18 January 2002 issued by the Barangay Lupon, appended by the respondents to their Complaint in Civil Case No. 1990, is of no moment, for it attested only that there was confrontation between the parties on the matter of rental increase but not on unlawful detainer of the subject property by the petitioner. If it was the intention of the respondents from the very beginning to eject petitioner from the subject property, they should have brought up the alleged unlawful stay of the petitioner on the subject property for conciliation before the Barangay Lupon.

The barangay justice system was established primarily as a means of easing up the congestion of cases in the judicial courts. This could be accomplished through a proceeding before the barangay courts which, according to the one who conceived of the system, the late Chief Justice Fred Ruiz Castro, is essentially arbitration in character; and to make it truly effective, it should also be compulsory. With this primary objective of the barangay justice system in mind, it would be wholly in keeping with the underlying philosophy of Presidential Decree No. 1508 (Katarungang Pambarangay Law), which would be better served if an out-of-court settlement of the case is reached voluntarily by the parties.16 To ensure this objective, Section 6 of Presidential Decree No. 1508 requires the parties to undergo a conciliation process before the Lupon Chairman or the Pangkat ng Tagapagkasundo as a precondition to filing a complaint in court subject to certain exceptions. The said section has been declared compulsory in nature.17

Presidential Decree No. 1508 is now incorporated in Republic Act No. 7160 (The Local Government Code), which took effect on 1 January 1992.

The pertinent provisions of the Local Government Code making conciliation a precondition to the filing of complaints in court are reproduced below:

SEC. 412. Conciliation.- (a) Pre-condition to filing of complaint in court. - No complaint, petition, action, or proceeding involving any matter within the authority of the lupon shall be filed or instituted directly in court or any other government office for adjudication, unless there has been a confrontation between the parties before the lupon chairman or the pangkat, and that no conciliation or settlement has been reached as certified by the lupon secretary or pangkat secretary as attested to by the lupon or pangkat chairman or unless the settlement has been repudiated by the parties thereto.

(b) Where parties may go directly to court. - The parties may go directly to court in the following instances:

(1) Where the accused is under detention;

(2) Where a person has otherwise been deprived of personal liberty calling for habeas corpus proceedings;

(3) Where actions are coupled with provisional remedies such as preliminary injunction, attachment, delivery of personal property, and support pendente lite; and

(4) Where the action may otherwise be barred by the statute of limitations.

(c) Conciliation among members of indigenous cultural communities. - The customs and traditions of indigenous cultural communities shall be applied in settling disputes between members of the cultural communities.

SEC. 408. Subject Matter for Amicable Settlement; Exception Thereto. - The lupon of each barangay shall have authority to bring together the parties actually residing in the same city or municipality for amicable settlement of all disputes except:

(a) Where one party is the government or any subdivision or instrumentality thereof;

(b) Where one party is a public officer or employee, and the dispute relates to the performance of his official functions;

(c) Offenses punishable by imprisonment exceeding one (1) year or a fine exceeding Five thousand pesos (P5,000.00);

(d) Offenses where there is no private offended party;

(e) Where the dispute involves real properties located in different cities or municipalities unless the parties thereto agree to submit their differences to amicable settlement by an appropriate lupon;

(f) Disputes involving parties who actually reside in barangays of different cities or municipalities, except where such barangay units adjoin each other and the parties thereto agree to submit their differences to amicable settlement by an appropriate lupon;

(g) Such other classes of disputes which the President may determine in the interest of justice or upon the recommendation of the Secretary of Justice.

There is no question that the parties to this case appeared before the Barangay Lupon for conciliation proceedings. There is also no dispute that the only matter referred to the Barangay Lupon for conciliation was the rental increase, and not the ejectment of petitioner from the subject property. This is apparent from a perusal of the Certification to file action in court issued by the Barangay Lupon on 18 January 2002, to wit:

CERTIFICATION TO FILE COMPLAINTS

This is to certify that:

1. There was personal confrontation between parties before the barangay Lupon regarding rental increase of a commercial building but conciliation failed;

2. Therefore, the corresponding dispute of the above-entitled case may now be filed in Court/Government Office.18 (Emphasis ours.)

The question now to be resolved by this Court is whether the Certification dated 18 January 2002 issued by the Barangay Lupon stating that no settlement was reached by the parties on the matter of rental increase sufficient to comply with the prior conciliation requirement under the Katarungang Pambarangay Law to authorize the respondents to institute the ejectment suit against petitioner.

The Court rules affirmatively.

While it is true that the Certification to file action dated 18 January 2002 of the Barangay Lupon refers only to rental increase and not to the ejectment of petitioner from the subject property, the submission of the same for conciliation before the Barangay Lupon constitutes sufficient compliance with the provisions of the Katarungang Pambarangay Law. Given the particular circumstances of the case at bar, the conciliation proceedings for the amount of monthly rental should logically and reasonably include also the matter of the possession of the property subject of the rental, the lease agreement, and the violation of the terms thereof.

We now proceed to discuss the meat of the controversy.

The contract of lease between the parties did not stipulate a fixed period. Hence, the parties agreed to the payment of rentals on a monthly basis. On this score, Article 1687 of the Civil Code provides:

Art. 1687. If the period for the lease has not been fixed, it is understood to be from year to year,if the rent agreed upon is annual; from month to month, if it is monthly; from week to week, if the rent is weekly; and from day to day, if the rent is to be paid daily. However, even though a monthly rent is paid, and no period for the lease has been set, the courts may fix a longer term for the lease after the lessee has occupied the premises for over one year. If the rent is weekly, the courts may likewise determine a longer period after the lessee has been in possession for over six months. In case of daily rent, the courts may also fix a longer period after the lessee has stayed in the place for over one month. (Emphasis supplied.)

The rentals being paid monthly, the period of such lease is deemed terminated at the end of each month. Thus, respondents have every right to demand the ejectment of petitioners at the end of each month, the contract having expired by operation of law. Without a lease contract, petitioner has no right of possession to the subject property and must vacate the same. Respondents, thus, should be allowed to resort to an action for ejectment before the MTC to recover possession of the subject property from petitioner.

Corollarily, petitioner's ejectment, in this case, is only the reasonable consequence of his unrelenting refusal to comply with the respondents' demand for the payment of rental increase agreed upon by both parties. Verily, the lessor's right to rescind the contract of lease for non-payment of the demanded increased rental was recognized by this Court in Chua v. Victorio19 :

The right of rescission is statutorily recognized in reciprocal obligations, such as contracts of lease. In addition to the general remedy of rescission granted under Article 1191 of the Civil Code, there is an independent provision granting the remedy of rescission for breach of any of the lessor or lessee's statutory obligations. Under Article 1659 of the Civil Code, the aggrieved party may, at his option, ask for (1) the rescission of the contract; (2) rescission and indemnification for damages; or (3) only indemnification for damages, allowing the contract to remain in force.

Payment of the rent is one of a lessee's statutory obligations, and, upon non-payment by petitioners of the increased rental in September 1994, the lessor acquired the right to avail of any of the three remedies outlined above.   (Emphasis supplied.)

Petitioner next argues that respondent George de Castro cannot maintain an action for ejectment against petitioner, without joining all his co-owners.

Article 487 of the New Civil Code is explicit on this point:

ART. 487. Any one of the co-owners may bring an action in ejectment.

This article covers all kinds of action for the recovery of possession,   i.e. , forcible entry and unlawful detainer (accion interdictal), recovery of possession (accion publiciana), and recovery of ownership (accion de reivindicacion). As explained by the renowned civilist, Professor Arturo M. Tolentino 20 :

A co-owner may bring such an action, without the necessity of joining all the other co-owners as co-plaintiffs, because the suit is deemed to be instituted for the benefit of all . If the action is for the benefit of the plaintiff alone, such that he claims possession for himself and not for the co-ownership, the action will not prosper. (Emphasis added.)

In the more recent case of   Carandang v. Heirs of De Guzman, 21  this Court declared that a co-owner is not even a necessary party to an action for ejectment, for complete relief can be afforded even in his absence, thus:

In sum, in suits to recover properties, all co-owners are real parties in interest. However, pursuant to Article 487 of the Civil Code and the relevant jurisprudence, any one of them may bring an action, any kind of action for the recovery of co-owned properties. Therefore, only one of the co-owners, namely the co-owner who filed the suit for the recovery of the co-owned

property, is an indispensable party thereto. The other co-owners are not indispensable parties. They are not even necessary parties, for a complete relief can be afforded in the suit even without their participation, since the suit is presumed to have been filed for the benefit of all co-owners.

Moreover, respondents Annie de Castro and Felomina de Castro Uban each executed a Special Power of Attorney, giving respondent George de Castro the authority to initiate Civil Case No. 1990.

A power of attorney is an instrument in writing by which one person, as principal, appoints another as his agent and confers upon him the authority to perform certain specified acts or kinds of acts on behalf of the principal. The written authorization itself is the power of attorney, and this is clearly indicated by the fact that it has also been called a "letter of attorney."22

Even then, the Court views the SPAs as mere surplusage, such that the lack thereof does not in any way affect the validity of the action for ejectment instituted by respondent George de Castro. This also disposes of petitioner's contention that respondent George de Castro lacked the authority to sign the Verification and the Certificate of Non-Forum Shopping. As the Court ruled in Mendoza v. Coronel23:

We likewise hold that the execution of the certification against forum shopping by the attorney-in-fact in the case at bar is not a violation of the requirement that the parties must personally sign the same. The attorney-in-fact, who has authority to file, and who actually filed the complaint as the representative of the plaintiff co-owner, pursuant to a Special Power of Attorney, is a party to the ejectment suit. In fact, Section 1, Rule 70 of the Rules of Court includes the representative of the owner in an ejectment suit as one of the parties authorized to institute the proceedings. (Emphasis supplied.)

Failure by respondent George de Castro to attach the said SPAs to the Complaint is innocuous, since it is undisputed that he was granted by his sisters the authority to file the action for ejectment against petitioner prior to the institution of Civil Case No. 1990. The SPAs in his favor were respectively executed by respondents Annie de Castro and Felomina de Castro Uban on 7 February 2002 and 14 March 2002; while Civil Case No. 1990 was filed by respondent George de Castro on his own behalf and on behalf of his siblings only on 1 July 2002, or way after he was given by his siblings the authority to file said action. The Court quotes with approval the following disquisition of the Court of Appeals:

Moreover, records show that [herein respondent] George de Castro was indeed authorized by his sisters Annie de Castro and Felomina de Castro Uban, to prosecute the case in their behalf as shown by the Special Power of Attorney dated February 7, 2002 and March 14, 2002. That these documents were appended only to [respondent George de Castro's] position paper is of no moment considering that the authority conferred therein was given prior to the institution of the complaint in July, 2002. x x x.24

Respondent deceased Jesus de Castro's failure to sign the Verification and Certificate of Non-Forum Shopping may be excused since he already executed an Affidavit25 with respondent George de Castro that he had personal knowledge of the filing of Civil Case No. 1990. In Torres v. Specialized Packaging Development Corporation,26 the Court ruled that the personal signing of the verification requirement was deemed substantially complied with when, as in the instant case, two out of 25 real parties-in-interest, who undoubtedly have sufficient knowledge and belief to swear to the truth of the allegations in the petition, signed the verification attached to it.

In the same vein, this Court is not persuaded by petitioner's assertion that respondents' failure to allege the jurisdictional fact that there was "unlawful withholding" of the subject property was fatal to their cause of action.

It is apodictic that what determines the nature of an action as well as which court has jurisdiction over it are the allegations in the complaint and the character of the relief sought. In an unlawful detainer case, the defendant's possession was originally lawful but ceased to be so upon the expiration of his right to possess. Hence, the phrase "unlawful withholding" has been held to imply possession on the part of defendant, which was legal in the beginning, having no other source than a contract, express or implied, and which later expired as a right and is being withheld by defendant.27

In Barba v. Court of Appeals,28 the Court held that although the phrase "unlawfully withholding" was not actually used by therein petitioner in her complaint, the Court held that her allegations, nonetheless, amounted to an unlawful withholding of the subject property by therein private respondents, because they continuously refused to vacate the premises even after notice and demand.

In the Petition at bar, respondents alleged in their Complaint that they are the registered owners of the subject property; the subject property was being occupied by the petitioner pursuant to a monthly lease contract; petitioner refused to accede to respondents' demand for rental increase; the respondents sent petitioner a letter terminating the lease agreement and demanding that petitioner vacate and turn over the possession of the subject property to respondents; and despite such demand, petitioner failed to surrender the subject property to respondents.29 The Complaint sufficiently alleges the unlawful withholding of the subject property by petitioner, constitutive of unlawful detainer, although the exact words "unlawful withholding" were not used. In an action for unlawful detainer, an allegation that the defendant is unlawfully withholding possession from the plaintiff is deemed sufficient, without necessarily employing the terminology of the law.30

Petitioner's averment that the Court of Appeals should have dismissed respondents' Petition in light of the failure of their counsel to attach the Official Receipt of his updated payment of Integrated Bar of the Philippines (IBP) dues is now moot and academic, since respondents' counsel has already duly complied therewith. It must be stressed that judicial cases do not come and go through the portals of a court of law by the mere mandate of technicalities.31 Where a rigid application of the rules will result in a manifest failure or miscarriage of justice, technicalities should be disregarded in order to resolve the case. 32

Finally, we agree in the ruling of the Court of Appeals that petitioner is liable for the payment of back rentals, attorney's fees and cost of the suit. Respondents must be duly indemnified for the loss of income from the subject property on account of petitioner's refusal to vacate the leased premises.

WHEREFORE, premises considered, the instant Petition is DENIED. The Decision dated 19 September 2006 and Resolution dated 25 January 2007 of the Court of Appeals in CA-G.R. SP No. 90906 are hereby AFFIRMED in toto. Costs against petitioner.

SO ORDERED.

MINITA V. CHICO-NAZARIOAssociate Justice

Republic of the PhilippinesSUPREME COURT

Manila

SECOND DIVISION

G.R. No. 191336               January 25, 2012

CRISANTA ALCARAZ MIGUEL, Petitioner, vs.JERRY D. MONTANEZ, Respondent.

D E C I S I O N

REYES, J.:

Before this Court is a Petition for Review on Certiorari under Rule 45 of the Rules of Court. Petitioner Crisanta Alcaraz Miguel (Miguel) seeks the reversal and setting aside of the September 17, 2009 Decision1 and February 11, 2010 Resolution2 of the Court of Appeals (CA) in CA-G.R. SP No. 100544, entitled "Jerry D. Montanez v. Crisanta Alcaraz Miguel."

Antecedent Facts

On February 1, 2001, respondent Jerry Montanez (Montanez) secured a loan of One Hundred Forty-Three Thousand Eight Hundred Sixty-Four Pesos (P143,864.00), payable in one (1) year, or until February 1, 2002, from the petitioner. The respondent gave as collateral therefor his house and lot located at Block 39 Lot 39 Phase 3, Palmera Spring, Bagumbong, Caloocan City.

Due to the respondent’s failure to pay the loan, the petitioner filed a complaint against the respondent before the Lupong Tagapamayapa of Barangay San Jose, Rodriguez, Rizal. The parties entered into a Kasunduang Pag-aayos wherein the respondent agreed to pay his loan in installments in the amount of Two Thousand Pesos (P2,000.00) per month, and in the event the house and lot given as collateral is sold, the respondent would settle the balance of the loan in full. However, the respondent still failed to pay, and on December 13, 2004, the Lupong Tagapamayapa issued a certification to file action in court in favor of the petitioner.

On April 7, 2005, the petitioner filed before the Metropolitan Trial Court (MeTC) of Makati City, Branch 66, a complaint for Collection of Sum of Money. In his Answer with Counterclaim,3 the respondent raised the defense of improper venue considering that the petitioner was a resident of Bagumbong, Caloocan City while he lived in San Mateo, Rizal.

After trial, on August 16, 2006, the MeTC rendered a Decision,4 which disposes as follows:

WHEREFORE, premises considered[,] judgment is hereby rendered ordering defendant Jerry D. Montanez to pay plaintiff the following:

1. The amount of [Php147,893.00] representing the obligation with legal rate of interest from February 1, 2002 which was the date of the loan maturity until the account is fully paid;

2. The amount of Php10,000.00 as and by way of attorney’s fees; and the costs.

SO ORDERED. 5

On appeal to the Regional Trial Court (RTC) of Makati City, Branch 146, the respondent raised the same issues cited in his Answer. In its March 14, 2007 Decision,6 the RTC affirmed the MeTC Decision, disposing as follows:

WHEREFORE, finding no cogent reason to disturb the findings of the court a quo, the appeal is hereby DISMISSED, and the DECISION appealed from is hereby AFFIRMED in its entirety for being in accordance with law and evidence.

SO ORDERED.7

Dissatisfied, the respondent appealed to the CA raising two issues, namely, (1) whether or not venue was improperly laid, and (2) whether or not the Kasunduang Pag-aayos effectively novated the loan agreement. On September 17, 2009, the CA rendered the assailed Decision, disposing as follows:

WHEREFORE, premises considered, the petition is hereby GRANTED. The appealed Decision dated March 14, 2007 of the Regional Trial Court (RTC) of Makati City, Branch 146, is REVERSED and SET ASIDE. A new judgment is entered dismissing respondent’s complaint for collection of sum of money, without prejudice to her right to file the necessary action to enforce the Kasunduang Pag-aayos.

SO ORDERED.8

Anent the issue of whether or not there is novation of the loan contract, the CA ruled in the negative. It ratiocinated as follows:

Judging from the terms of the Kasunduang Pag-aayos, it is clear that no novation of the old obligation has taken place.1âwphi1 Contrary to petitioner’s assertion, there was no reduction of the term or period originally stipulated. The original period in the first agreement is one (1) year to be counted from February 1, 2001, or until January 31, 2002. When the complaint was filed before the barangay on February 2003, the period of the original agreement had long expired without compliance on the part of petitioner. Hence, there was nothing to reduce or extend. There was only a change in the terms of payment which is not incompatible with the old agreement. In other words, the Kasunduang Pag-aayos merely supplemented the old agreement.9

The CA went on saying that since the parties entered into a Kasunduang Pag-aayos before the Lupon ng Barangay, such settlement has the force and effect of a court judgment, which may be enforced by execution within six (6) months from the date of settlement by the Lupon ng Barangay, or by court action after the lapse of such time.10 Considering that more than six (6) months had elapsed from the date of settlement, the CA ruled that the remedy of the petitioner was to file an action for the execution of the Kasunduang Pag-aayos in court and not for collection of sum of

money.11 Consequently, the CA deemed it unnecessary to resolve the issue on venue.12

The petitioner now comes to this Court.

Issues

(1) Whether or not a complaint for sum of money is the proper remedy for the petitioner, notwithstanding the Kasunduang Pag-aayos;13 and

(2) Whether or not the CA should have decided the case on the merits rather than remand the case for the enforcement of the Kasunduang Pag-aayos.14

Our Ruling

Because the respondent failed to comply with the terms of the Kasunduang Pag-aayos, said agreement is deemed rescinded pursuant to Article 2041 of the New Civil Code and the petitioner can insist on his original demand. Perforce, the complaint for collection of sum of money is the proper remedy.

The petitioner contends that the CA erred in ruling that she should have followed the procedure for enforcement of the amicable settlement as provided in the Revised Katarungang Pambarangay Law, instead of filing a collection case. The petitioner points out that the cause of action did not arise from the Kasunduang Pag-aayos but on the respondent’s breach of the original loan agreement.15

This Court agrees with the petitioner.

It is true that an amicable settlement reached at the barangay conciliation proceedings, like the Kasunduang Pag-aayos in this case, is binding between the contracting parties and, upon its perfection, is immediately executory insofar as it is not contrary to law, good morals, good customs, public order and public policy.16 This is in accord with the broad precept of Article 2037 of the Civil Code, viz:

A compromise has upon the parties the effect and authority of res judicata; but there shall be no execution except in compliance with a judicial compromise.

Being a by-product of mutual concessions and good faith of the parties, an amicable settlement has the force and effect of res judicata even if not judicially approved.17 It transcends being a mere contract binding only upon the parties thereto, and is akin to a judgment that is subject to execution in accordance with the Rules.18 Thus, under Section 417 of the Local Government Code,19 such amicable settlement or arbitration award may be enforced by execution by the Barangay Lupon within six (6) months from the date of settlement, or by filing an action to enforce such settlement in the appropriate city or municipal court, if beyond the six-month period.

Under the first remedy, the proceedings are covered by the Local Government Code and the Katarungang Pambarangay Implementing Rules and Regulations. The Punong Barangay is called upon during the hearing to determine solely the fact of non-compliance of the terms of the settlement and to give the defaulting party another chance at voluntarily complying with his obligation under the settlement. Under the second remedy, the proceedings are governed by the Rules of Court, as amended. The cause of action is the amicable settlement itself, which, by operation of law, has the force and effect of a final judgment.20

It must be emphasized, however, that enforcement by execution of the amicable settlement, either under the first or the second remedy, is only applicable if the contracting parties have not repudiated such settlement within ten (10) days from the date thereof in accordance with Section 416 of the Local Government Code. If the amicable settlement is repudiated by one party, either expressly or impliedly, the other party has two options, namely, to enforce the compromise in accordance with the Local Government Code or Rules of Court as the case may be, or to consider it rescinded and insist upon his original demand. This is in accord with Article 2041 of the Civil Code, which qualifies the broad application of Article 2037, viz:

If one of the parties fails or refuses to abide by the compromise, the other party may either enforce the compromise or regard it as rescinded and insist upon his original demand.

In the case of Leonor v. Sycip,21 the Supreme Court (SC) had the occasion to explain this provision of law. It ruled that Article 2041 does not require an action for rescission, and the aggrieved party, by the breach of compromise agreement, may just consider it already rescinded, to wit:

It is worthy of notice, in this connection, that, unlike Article 2039 of the same Code, which speaks of "a cause of annulment or rescission of the compromise" and provides that "the compromise may be annulled or rescinded" for the cause therein specified, thus suggesting an action for annulment or rescission, said Article 2041 confers upon the party concerned, not a "cause" for rescission, or the right to "demand" the rescission of a compromise, but the authority, not only to "regard it as rescinded", but, also, to "insist upon his original demand". The language of this Article 2041, particularly when contrasted with that of Article 2039, denotes that no action for rescission is required in said Article 2041, and that the party aggrieved by the breach of a compromise agreement may, if he chooses, bring the suit contemplated or involved in his original demand, as if there had never been any compromise agreement, without bringing an action for rescission thereof. He need not seek a judicial declaration of rescission, for he may "regard" the compromise agreement already "rescinded".22 (emphasis supplied)

As so well stated in the case of Chavez v. Court of Appeals,23 a party's non-compliance with the amicable settlement paved the way for the application of Article 2041 under which the other party may either enforce the compromise, following the procedure laid out in the Revised Katarungang Pambarangay Law, or consider it as rescinded and insist upon his original demand. To quote:

In the case at bar, the Revised Katarungang Pambarangay Law provides for a two-tiered mode of enforcement of an amicable settlement, to wit: (a) by execution by the Punong Barangay which is quasi-judicial and summary in nature on mere motion of the party entitled thereto; and (b) an action in regular form, which remedy is judicial. However, the mode of enforcement does not rule out the right of rescission under Art. 2041 of the Civil Code. The availability of the right of rescission is apparent from the wording of Sec. 417 itself which provides that the amicable settlement "may" be enforced by execution by the lupon within six (6) months from its date or by action in the appropriate city or municipal court, if beyond that period. The use of the word "may" clearly makes the procedure provided in the Revised Katarungang Pambarangay Law directory or merely optional in nature.

Thus, although the "Kasunduan" executed by petitioner and respondent before the Office of the Barangay Captain had the force and effect of a final judgment of a court, petitioner's non-compliance paved the way for the application of Art. 2041 under which respondent may either enforce the compromise, following the procedure laid out in the Revised Katarungang Pambarangay Law, or regard it as rescinded and insist upon his original demand. Respondent chose the latter option when he instituted Civil Case No. 5139-V-97 for recovery of unrealized profits and reimbursement of advance rentals, moral and exemplary damages, and attorney's fees. Respondent was not limited to claiming P150,000.00 because although he agreed to the amount in the "Kasunduan," it is axiomatic that a compromise settlement is not an admission of liability but merely a recognition that there is a dispute and an impending litigation which the parties hope to prevent by making reciprocal concessions, adjusting their respective positions in the hope of gaining balanced by the danger of losing. Under the "Kasunduan," respondent was only required to execute a waiver of all possible claims arising from the lease contract if petitioner fully complies with his obligations thereunder. It is undisputed that herein petitioner did not.24 (emphasis supplied and citations omitted)

In the instant case, the respondent did not comply with the terms and conditions of the Kasunduang Pag-aayos. Such non-compliance may be construed as repudiation because it denotes that the respondent did not intend to be bound by the terms thereof, thereby negating the very purpose for which it was executed. Perforce, the petitioner has the option either to enforce the Kasunduang Pag-aayos, or to regard it as rescinded and insist upon his original demand, in accordance with the provision of Article 2041 of the Civil Code. Having instituted an action for collection of sum of money, the petitioner obviously chose to rescind the Kasunduang Pag-aayos. As such, it is error on the part of the CA to rule that enforcement by execution of said agreement is the appropriate remedy under the circumstances.

Considering that the Kasunduang Pag-aayos is deemed rescinded by the non-compliance of the respondent of the terms thereof, remanding the case to the trial court for the enforcement of said agreement is clearly unwarranted.

The petitioner avers that the CA erred in remanding the case to the trial court for the enforcement of the Kasunduang Pag-aayos as it prolonged the process, "thereby putting off the case in an indefinite pendency."25Thus, the petitioner insists that she should be allowed to ventilate her rights before this Court and not to repeat the same

proceedings just to comply with the enforcement of the Kasunduang Pag-aayos, in order to finally enforce her right to payment.26

The CA took off on the wrong premise that enforcement of the Kasunduang Pag-aayos is the proper remedy, and therefore erred in its conclusion that the case should be remanded to the trial court. The fact that the petitioner opted to rescind the Kasunduang Pag-aayos means that she is insisting upon the undertaking of the respondent under the original loan contract. Thus, the CA should have decided the case on the merits, as an appeal before it, and not prolong the determination of the issues by remanding it to the trial court. Pertinently, evidence abounds that the respondent has failed to comply with his loan obligation. In fact, the Kasunduang Pag-aayos is the well nigh incontrovertible proof of the respondent’s indebtedness with the petitioner as it was executed precisely to give the respondent a second chance to make good on his undertaking. And since the respondent still reneged in paying his indebtedness, justice demands that he must be held answerable therefor.

WHEREFORE, the petition is GRANTED. The assailed decision of the Court of Appeals is SET ASIDE and the Decision of the Regional Trial Court, Branch 146, Makati City, dated March 14, 2007 is REINSTATED.

SO ORDERED.

BIENVENIDO L. REYESAssociate Justice

Republic of the PhilippinesSUPREME COURT

Manila

SECOND DIVISION

 

G.R. No. 111988 October 14, 1994

ASSOCIATED LABOR UNIONS (ALU)-TUCP in behalf of its members at AMS FARMING CORPORATION,petitioner, vs.VOLUNTARY ARBITRATOR ROSALINA LETRONDO-MONTEJO and AMS FARMING CORPORATION,respondent.

Seno, Mendoza and Associates for petitioner.

Castro, Enriquez, Carpio, Guillen and Associates for private respondents.

 

MENDOZA, J.:

This is a petition for certiorari  to set aside the decision dated July 19, 1993 of public respondent Voluntary Arbitrator Rosalina Letrondo-Montejo insofar as it dismissed the claim of petitioner's members for holiday pay for December 4, 1992, which had been declared a special day for the holding of Sangguniang Kabataan election.

The facts are as follows:

On December 27, 1990, petitioner Associated Labor Unions (ALU-TUCP and private respondent AMS Farming Corporation entered into a five-year Collective Bargaining Agreement beginning November 1, 1990 andending midnight of October 31, 1995. The CBA covers the regular daily-paid rank-and-file employees of private respondent AMS Farming Corp. at Sampao, Kapalong, Davao del Norte and Magatos, Asuncion, Davao del Norte.

Art. VII, sec 3. of the CBA provides:

New Year, Maundy Thursday, Good Friday, Araw ng Kagitingan, 1st of May, 12th of June, Araw ng Dabaw, 4th of July, Last Sunday of August, 1st November, 30th of November, 25th of December, 30th of December and the days designated by law for holding referendum and local/national election shall be considered paid regular holidays. Consequently, they shall receive their basic pay even if they do not work on those days. Any employee required to work on these holidays shall be paid at last TWO HUNDRED PERCENT (200%) of his daily wage. Covered employees performing overtime work on these days shall be entitled to another THIRTY PERCENT (30%) overtime pay. It is understood however,

that any covered employee who shall be absent for more than one day immediately preceding the paid holiday shall not be entitled to the holiday pay.

The President of the Philippines declared December 4, 1992 a "special day" for the holding of election for Sangguniang Kabataan (SK) throughout the nation. Employees covered by the CBA subsequently filed claims for the payment to them of holiday pay for that day. Private respondent, however, refused their claims on the ground that December 4, 1992 was not a regular holiday within the contemplation of the CBA.

The matter was eventually submitted to voluntary arbitration. At the conference held on February 19, 1993, the parties agreed, among others things, to submit the following issue:

Is the Sangguniang Kabataan Election Day considered a regular holiday for purpose of said Section 3, Article VII of the CBA?

In connection with this issue, they agreed that the Sangguniang Kabataan Election Day was a holiday as decreed by the President of the Philippines.

The parties presented position papers and thereafter submitted the case for resolution.

On July 19, 1993, public respondent rendered an "Award" 1 in which, while holding employees who had become regular employees on November 1, 1990 entitled to salary increases under the CBA, nonetheless dismissed their claim for holiday pay for December 4, 1992 on the ground that the Sangguniang Kabataan election "by any stretch of the imagination cannot be considered as a local election within the meaning of CBA because not all people can vote in the said election but only qualified youths." According to the Voluntary Arbitrator, "A 'local election' is generally understood to mean the election by the people of their local leaders like the governors, mayors, members of the provincial and municipal councils, and barangay officials. And when a local election is held, the day is declared a non-working holiday. This is our experience in local and national elections. In the case of the Sangguniang Kabataan (SK) elections, it was a working holiday. Except for the qualified youthful voters, not everybody noticed said election as not everyone voted in the said election."

Hence, this petition, the only issue in which is whether the election for the Sangguniang Kabataan on December 4, 1992 was a "local/national election" within the contemplation of Art. VII, sec. 3 of the CBA so as to entitle petitioner's members, who are employed at the AMS Farming Corp. to the payment of holiday pay for that day.

We hold that it is and that, in denying petitioner's claim, respondent Voluntary Arbitrator denied members of petitioner union substantial justice as a result of her erroneous interpretation of the CBA, thereby justifying judicial review. 2

First. The Sangguniang Kabataan (SK) is part of the local government structure. The Local Government Code (Rep. Act. No. 7160) creates in every barangay a

Sangguniang Kabataan composed of a chairman, seven (7) members, a secretary and a treasurer. 3 The chairman and the seven members are elected by the Katipunan ng Kabataan, which is composed of citizens of the Philippines residing in the barangay for at least six (6) months, who are between the ages of 15 and 21 and who are registered as members. 4 The chairman of the SK is an ex officio member of the Sangguniang Baranggay with the same powers duties, functions and privileges as the regular members of the Sangguniang Barangay. 5 The President of the Pederasyon ng mga Sangguniang Kabataan, which is imposed of the SK chairmen of the sangguniang kabataan of the barangays in the province, city, or municipality, is an ex officio member of the Sangguniang Panlalawigan, Sangguniang Panlungsod, and Sangguniang Bayan. 6

Hence, as the Solicitor General points out, the election for members of the SK may properly be considered a "local election" within the meaning ofArt. VII, sec 3 of the CBA and the day on which it is held to be a holiday, thereby entitling petitioners members at the AMS Farming Corp. to the payment of holiday on such day.

Second. The Voluntary Arbitrator held, however, that the election for members of the SK cannot be considered a local election as the election for Governors , Vice Governors, Mayors and Vice Mayors and the various local legislative assemblies (sanggunians) because the SK election is participated in only by the youth who are between the ages of 15 and 21 and for this reason the day is not a nonworking holiday.

To begin with, it is not true that December 4, 1992 was not a nonworking holiday. It was a nonworking holiday and this was announced in the media. 7 In Proclamation No. 118 dated December 2, 1992 President Ramos declared the day as "a special day  through the country on the occasion of the Sangguniang Kabataan Elections" and enjoined all "local government units through their respective Chief Local Executives [to] extend all possible assistance and support to ensure the smooth conduct of the general elections."

A "special day" is a "special day", as provided by the Administrative Code of 1987. 8 On the other hand, the term "general elections" means, in the context of SK elections, the regular elections for members of the SK, as distinguished from the special elections for such officers. 9

Moreover, the fact that only those between 15 and 21 take part in the election for members of the SK does not make such election any less a regular local election. The Constitution provides, for example, for the sectoral representatives in the House of Representatives of, among others, women and youth. 10 Only voters belonging to the relevant sectors can take part in the election of their representatives. Yet it cannot be denied that such election is a regular national election and the day set for its holding, a holiday.

Third. Indeed, the CBA provision in question merely reiterates the provision on paid holidays. Thus, the Labor Code provides:

Art. 94. Right to holiday pay. — (a) Every worker shall be paid his regular daily wage during regular holidays except in retail and service establishments regularly employing less than ten (10) workers;

(b) The employer may require an employee to work on any holiday but such employee shall be paid a compensation equivalent to twice his regular rate; and

(c) As used in this Article, "holiday" includes: New Years Day, Maundy Thursday, Good Friday, the ninth of April, the first of May, the twelfth of June, the fourth of July, the thirtieth of November, the twenty-fifth and the thirtieth of December, and the day designated by law for holding a general election.

As already explained, the phrase "general election" means regular local and national elections.

Consequently, whether in the context of the CBA or the Labor Code, December 4, 1992 was a holiday for which holiday pay should be paid by respondent employer.

WHEREFORE, the decision dated July 19, 1993 of public respondent Rosalina Letrondo-Montejo, insofar as it dismissed petitioner's claim for holiday pay, is SET ASIDE and private respondent is ORDERED to pay petitioner's members their regular holiday pay for December 4, 1992 in accordance with Art. VII, sec. 3 of the Collective Bargaining Agreement.

SO ORDERED.

Narvasa, C.J., Padilla, Regalado and Puno, JJ., concur.

 

Republic of the PhilippinesSUPREME COURT

Baguio City

EN BANC

 

G.R. No. 124893 April 18, 1997

LYNETTE G. GARVIDA, petitioner, vs.FLORENCIO G. SALES, JR., THE HONORABLE COMMISSION ON ELECTIONS, ELECTION OFFICER DIONISIO F. RIOS and PROVINCIAL SUPERVISOR NOLI PIPO, respondents.

 

PUNO, J.:

Petitioner Lynette G. Garvida seeks to annul and set aside the order dated May 2, 1996 of respondent Commission on Elections (COMELEC) en banc suspending her proclamation as the duly elected Chairman of the Sangguniang Kabataan of Barangay San Lorenzo, Municipality of Bangui, Ilocos Norte.

The facts are undisputed. The Sangguniang Kabataan (SK) elections nationwide was scheduled to be held on May 6, 1996. On March 16, 1996, petitioner applied for registration as member and voter of the Katipunan ng Kabataan of Barangay San Lorenzo, Bangui, Ilocos Norte. The Board of Election Tellers, however, denied her application on the ground that petitioner, who was then twenty-one years and ten (10) months old, exceeded the age limit for membership in the Katipunan ng Kabataan as laid down in Section 3 [b] of COMELEC Resolution No. 2824.

On April 2, 1996, petitioner filed a "Petition for Inclusion as Registered Kabataang Member and Voter" with the Municipal Circuit Trial Court, Bangui-Pagudpud-Adams-Damalneg, Ilocos Norte. In a decision dated April 18, 1996, the said court found petitioner qualified and ordered her registration as member and voter in the Katipunan ng Kabataan. 1 The Board of Election Tellers appealed to the Regional Trial Court, Bangui, Ilocos Norte. 2 The presiding judge of the Regional Trial Court, however, inhibited himself from acting on the appeal due to his close association with petitioner. 3

On April 23, 1996, petitioner filed her certificate of candidacy for the position of Chairman, Sangguniang Kabataan, Barangay San Lorenzo, Municipality of Bangui, Province of Ilocos Norte. In a letter dated April 23, 1996, respondent Election Officer Dionisio F. Rios, per advice of Provincial Election Supervisor Noli Pipo, 4 disapproved petitioner's certificate of candidacy again due to her age. 5 Petitioner, however, appealed to COMELEC Regional Director Filemon A. Asperin who set aside the order of respondents and allowed petitioner to run. 6

On May 2, 1996, respondent Rios issued a memorandum to petitioner informing her of her ineligibility and giving her 24 hours to explain why her certificate of candidacy should not be disapproved. 7 Earlier and without the knowledge of the COMELEC officials, private respondent Florencio G. Sales, Jr., a rival candidate for Chairman of the Sangguniang Kabataan, filed with the COMELEC en banc a "Petition of Denial

and/or Cancellation of Certificate of Candidacy" against petitioner Garvida for falsely representing her age qualification in her certificate of candidacy. The petition was sent by facsimile 8 and registered mail on April 29, 1996 to the Commission on Elections National Office, Manila.

On May 2, 1996, the same day respondent Rios issued the memorandum to petitioner, the COMELEC en bancissued an order directing the Board of Election Tellers and Board of Canvassers of Barangay San Lorenzo to suspend the proclamation of petitioner in the event she won in the election. The order reads as follows:

Acting on the Fax "Petition for Denial And/Or Cancellation of Certificate of Candidacy" by petitioner Florencio G. Sales, Jr. against Lynette G. Garvida, received on April 29, 1996, the pertinent allegations of which reads:

xxx xxx xxx

5. That the said respondent is disqualified to become a voter and a candidate for the SK for the reason that she will be more than twenty-one (21) years of age on May 6, 1996; that she was born on June 11, 1974 as can be gleaned from her birth certificate, copy of which is hereto attached and marked as Annex "A";

6. That in filing her certificate of candidacy as candidate for SK of Bgy. San Lorenzo, Bangui, Ilocos Norte, she made material representation which is false and as such, she is disqualified; that her certificate of candidacy should not be given due course and that said candidacy must be cancelled;

xxx xxx xxx

the Commission, it appearing that the petition is meritorious, hereby DIRECTS the Board of Election Tellers/Board of Canvassers of Barangay San Lorenzo, Bangui, Ilocos Norte, to suspend the proclamation of Lynette G. Garvida in the event she garners the highest number of votes for the position of Sangguniang Kabataan [sic].

Meantime, petitioner is hereby required to submit immediately ten (10) copies of his petition and to pay the filing and legal research fees in the amount of P510.00.

SO ORDERED. 9

On May 6, 1996, election day, petitioner garnered 78 votes as against private respondent's votes of 76. 10 In accordance with the May 2, 1996 order of the

COMELEC en banc, the Board of Election Tellers did not proclaim petitioner as the winner. Hence, the instant petition for certiorari was filed on May 27, 1996.

On June 2, 1996, however, the Board of Election Tellers proclaimed petitioner the winner for the position of SK chairman, Barangay San Lorenzo, Bangui, Ilocos Norte. 11 The proclamation was "without prejudice to any further action by the Commission on Elections or any other interested party." 12 On July 5, 1996, petitioner ran in the Pambayang Pederasyon ng mga Sangguniang Kabataan for the municipality of Bangui, Ilocos Norte. She won as Auditor and was proclaimed one of the elected officials of the Pederasyon. 13

Petitioner raises two (2) significant issues: the first concerns the jurisdiction of the COMELEC en banc to act on the petition to deny or cancel her certificate of candidacy; the second, the cancellation of her certificate of candidacy on the ground that she has exceeded the age requirement to run as an elective official of the SK.

I

Section 532 (a) of the Local Government Code of 1991 provides that the conduct of the SK elections is under the supervision of the COMELEC and shall be governed by the Omnibus Election Code. 14 The Omnibus Election Code, in Section 78, Article IX, governs the procedure to deny due course to or cancel a certificate of candidacy, viz:

Sec. 78. Petition to deny due course to or cancel a certificate of candidacy. — A verified petition seeking to deny due course or to cancel a certificate of candidacy may be filed by any person exclusively on the ground that any material representation contained therein as required under Section 74 hereof is false. The petition may be filed at any time not later than twenty-five days from the time of filing of the certificate of candidacy and shall be decided, after due notice and hearing, not later than fifteen days before election.

In relation thereto, Rule 23 of the COMELEC Rules of Procedure provides that a petition to deny due course to or cancel a certificate of candidacy for an elective office may be filed with the Law Department of the COMELEC on the ground that the candidate has made a false material representation in his certificate. The petition may be heard and evidence received by any official designated by the COMELEC after which the case shall be decided by the COMELEC itself. 15

Under the same Rules of Procedure, jurisdiction over a petition to cancel a certificate of candidacy lies with the COMELEC sitting in Division, not en banc. Cases before a Division may only be entertained by the COMELEC en banc when the required number of votes to reach a decision, resolution, order or ruling is not obtained in the Division. Moreover, only motions to reconsider decisions, resolutions, orders or rulings of the COMELEC in Division are resolved by the COMELEC en banc. 16 It is therefore the COMELEC sitting in Divisions that can hear and decide election cases. This is clear from Section 3 of the said Rules thus:

Sec. 3. The Commission Sitting in Divisions. — The Commission shall sit in two (2) Divisions to hear and decide protests or petitions in ordinary actions, special actions, special cases, provisional remedies, contempt and special proceedings except in accreditation of citizens' arms of the Commission. 17

In the instant case, the COMELEC en banc did not refer the case to any of its Divisions upon receipt of the petition. It therefore acted without jurisdiction or with grave abuse of discretion when it entertained the petition and issued the order of May 2, 1996. 18

II

The COMELEC en banc also erred when it failed to note that the petition itself did not comply with the formal requirements of pleadings under the COMELEC Rules of Procedure. These requirements are:

Sec. 1. Filing of Pleadings. — Every pleading, motion and other papers must be filed in ten (10) legible copies. However, when there is more than one respondent or protestee, the petitioner or protestant must file additional number of copies of the petition or protest as there are additional respondents or protestees.

Sec. 2. How Filed. — The documents referred to in the immediately preceding section must be filed directly with the proper Clerk of Court of the Commission personally, or, unless otherwise provided in these Rules, by registered mail. In the latter case, the date of mailing is the date of filing and the requirement as to the number of copies must be complied with.

Sec. 3. Form of Pleadings, etc. — (a) All pleadings allowed by these Rules shall be printed, mimeographed or typewritten on legal size bond paper and shall be in English or Filipino.

xxx xxx xxx

Every pleading before the COMELEC must be printed, mimeographed or typewritten in legal size bond paper and filed in at least ten (10) legible copies. Pleadings must be filed directly with the proper Clerk of Court of the COMELEC personally, or, by registered mail.

In the instant case, the subject petition was not in proper form. Only two (2) copies of the petition were filed with the COMELEC. 19 Also, the COMELEC en banc issued its Resolution on the basis of the petition transmitted by facsimile, not by registered mail.

A facsimile or fax transmission is a process involving the transmission and reproduction of printed and graphic matter by scanning an original copy, one elemental area at a time, and representing the shade or tone of each area by a

specified amount of electric current. 20 The current is transmitted as a signal over regular telephone lines or via microwave relay and is used by the receiver to reproduce an image of the elemental area in the proper position and the correct shade. 21 The receiver is equipped with a stylus or other device that produces a printed record on paper referred to as a facsimile. 22

Filing a pleading by facsimile transmission is not sanctioned by the COMELEC Rules of Procedure, much less by the Rules of Court. A facsimile is not a genuine and authentic pleading. It is, at best, an exact copy preserving all the marks of an original. 23 Without the original, there is no way of determining on its face whether the facsimile pleading is genuine and authentic and was originally signed by the party and his counsel. It may, in fact, be a sham pleading. The uncertainty of the authenticity of a facsimile pleading should have restrained the COMELEC en banc from acting on the petition and issuing the questioned order. The COMELEC en banc should have waited until it received the petition filed by registered mail.

III

To write finis to the case at bar, we shall now resolve the issue of petitioner's age.

The Katipunan ng Kabataan was originally created by Presidential Decree No. 684 in 1975 as the Kabataang Barangay, a barangay youth organization composed of all residents of the barangay who were at least 15 years but less than 18 years of age. 24 The Kabataang Barangay sought to provide its members a medium to express their views and opinions and participate in issues of transcendental importance. 25 Its affairs were administered by a barangay youth chairman together with six barangay youth leaders who were actual residents of the barangay and were at least 15 years but less than 18 years of age. 26 In 1983, Batas Pambansa Blg. 337, then the Local Government Code, raised the maximum age of the Kabataang Barangay members from "less than 18 years of age" to "not more than 21 years of age."

The Local Government Code of 1991 changed the Kabataang Barangay into the Katipunan ng Kabataan. It, however, retained the age limit of the members laid down in B.P. 337 at 15 but not more than 21 years old. 27 The affairs of the Katipunan ng Kabataan are administered by the Sangguniang Kabataan (SK) composed of a chairman and seven (7) members who are elected by the Katipunan ng Kabataan. 28 The chairman automatically becomes ex-officio member of the Sangguniang Barangay. 29 A member of the SK holds office for a term of three (3) years, unless sooner removed for cause, or becomes permanently incapacitated, dies or resigns from office. 30

Membership in the Katipunan ng Kabataan is subject to specific qualifications laid down by the Local Government Code of 1991, viz:

Sec. 424. Katipunan ng Kabataan. — The katipunan ng kabataan shall be composed of all citizens of the Philippines actually residing in the barangay for at least six (6) months, who are fifteen (15) but not more than twenty-one (21) years of age, and who are duly

registered in the list of the sangguniang kabataan or in the official barangay list in the custody of the barangay secretary.

A member of the Katipunan ng Kabataan may become a candidate for the Sangguniang Kabataan if he possesses the following qualifications:

Sec. 428. Qualifications. — An elective official of the sangguniang kabataan must be a citizen of the Philippines, a qualified voter of the katipunan ng kabataan, a resident of the barangay for at least one (1) year immediately prior to election, at least fifteen (15) years but not more than twenty-one (21) years of age on the day of his election, able to read and write Filipino, English, or the local dialect, and must not have been convicted of any crime involving moral turpitude.

Under Section 424 of the Local Government Code, a member of the Katipunan ng Kabataan must be: (a) a Filipino citizen; (b) an actual resident of the barangay for at least six months; (c) 15 but not more than 21 years of age; and (d) duly registered in the list of the Sangguniang Kabataan or in the official barangay list. Section 428 of the Code requires that an elective official of the Sangguniang Kabataan must be: (a) a Filipino citizen; (b) a qualified voter in the Katipunan ng Kabataan; (c) a resident of the barangay at least one (1) year immediately preceding the election; (d) at least 15 years but not more than 21 years of age on the day of his election; (e) able to read and write; and (f) must not have been convicted of any crime involving moral turpitude.

For the May 6, 1996 SK elections, the COMELEC interpreted Sections 424 and 428 of the Local Government Code of 1991 in Resolution No. 2824 and defined how a member of the Katipunan ng Kabataan becomes a qualified voter and an elective official. Thus:

Sec. 3. Qualifications of a voter. — To be qualified to register as a voter in the SK elections, a person must be:

a) a citizen of the Philippines;

b) fifteen (15) but not more than twenty-one (21) years of age on election day that is, he must have been born between May 6, 1975 and May 6, 1981, inclusive; and

c) a resident of the Philippines for at least one (1) year and actually residing in the barangay wherein he proposes to vote for at least six (6) months immediately preceding the elections.

xxx xxx xxx

Sec. 6. Qualifications of elective members. — An elective official of the SK must be:

a) a qualified voter;

b) a resident in the barangay for at least one (1) year immediately prior to the elections; and

c) able to read and write Filipino or any Philippine language or dialect or English.

Cases involving the eligibility or qualification of candidates shall be decided by the city/municipal Election Officer (EO) whose decision shall be final.

A member of the Katipunan ng Kabataan may be a qualified voter in the May 6, 1996 SK elections if he is: (a) a Filipino citizen; (b) 15 but not more than 21 years of age on election day, i.e., the voter must be born between May 6, 1975 and May 6, 1981, inclusive; and (c) a resident of the Philippines for at least one (1) year and an actual resident of the barangay at least six (6) months immediately preceding the elections. A candidate for the SK must: (a) possess the foregoing qualifications of a voter; (b) be a resident in the barangay at least one (1) year immediately preceding the elections; and (c) able to read and write.

Except for the question of age, petitioner has all the qualifications of a member and voter in the Katipunan ng Kabataan and a candidate for the Sangguniang Kabataan. Petitioner 's age is admittedly beyond the limit set in Section 3 [b] of COMELEC Resolution No. 2824. Petitioner, however, argues that Section 3 [b] of Resolution No. 2824 is unlawful, ultra vires and beyond the scope of Sections 424 and 428 of the Local Government Code of 1991. She contends that the Code itself does not provide that the voter must be exactly 21 years of age on election day. She urges that so long as she did not turn twenty-two (22) years old, she was still twenty-one years of age on election day and therefore qualified as a member and voter in the Katipunan ng Kabataan and as candidate for the SK elections.

A closer look at the Local Government Code will reveal a distinction between the maximum age of a member in the Katipunan ng Kabataan and the maximum age of an elective SK official. Section 424 of the Code sets a member's maximum age at 21 years only. There is no further provision as to when the member shall have turned 21 years of age. On the other hand, Section 428 provides that the maximum age of an elective SK official is 21 years old "on the day of his election." The addition of the phrase "or the day of his election" is an additional qualification. The member may be more than 21 years of age on election day or on the day he registers as member of the Katipunan ng Kabataan. The elective official, however, must not be more than 21 years old on the day of election. The distinction is understandable considering that the Code itself provides more qualifications for an elective SK official than for a member of the Katipunan ng Kabataan. Dissimilum dissimilis est ratio. 31 The courts may distinguish when there are facts and circumstances showing that the legislature intended a distinction or qualification. 32

The qualification that a voter in the SK elections must not be more than 21 years of age on the day of the election is not provided in Section 424 of the Local Government Code of 1991. In fact the term "qualified voter" appears only in COMELEC Resolution No. 2824. 33 Since a "qualified voter" is not necessarily an elective official, then it may be assumed that a "qualified voter" is a "member of the Katipunan ng Kabataan." Section 424 of the Code does not provide that the maximum age of a member of the Katipunan ng Kabataan is determined on the day of the election. Section 3 [b] of COMELEC Resolution No. 2824 is therefore ultra vires insofar as it sets the age limit of a voter for the SK elections at exactly 21 years on the day of the election.

The provision that an elective official of the SK should not be more than 21 years of age on the day of his election is very clear. The Local Government Code speaks of years, not months nor days. When the law speaks of years, it is understood that years are of 365 days each. 34 One born on the first day of the year is consequently deemed to be one year old on the 365th day after his birth — the last day of the year. 35 In computing years, the first year is reached after completing the first 365 days. After the first 365th day, the first day of the second 365-day cycle begins. On the 365th day of the second cycle, the person turns two years old. This cycle goes on and on in a lifetime. A person turns 21 years old on the 365th day of his 21st 365-day cycle. This means on his 21st birthday, he has completed the entire span of 21 365-day cycles. After this birthday, the 365-day cycle for his 22nd year begins. The day after the 365th day is the first day of the next 365-day cycle and he turns 22 years old on the 365th day.

The phrase "not more than 21 years of age" means not over 21 years, not beyond 21 years. It means 21 365-day cycles. It does not mean 21 years and one or some days or a fraction of a year because that would be more than 21 365-day cycles. "Not more than 21 years old" is not equivalent to "less than 22 years old," contrary to petitioner's claims. The law does not state that the candidate be less than 22 years on election day.

In P.D. 684, the law that created the Kabataang Barangay, the age qualification of a barangay youth official was expressly stated as ". . . at least fifteen years of age or over but less than eighteen . . ." 36 This provision clearly states that the youth official must be at least 15 years old and may be 17 years and a fraction of a year but should not reach the age of eighteen years. When the Local Government Code increased the age limit of members of the youth organization to 21 years, it did not reenact the provision in such a way as to make the youth "at least 15 but less than 22 years old." If the intention of the Code's framers was to include citizens less than 22 years old, they should have stated so expressly instead of leaving the matter open to confusion and doubt. 37

Former Senator Aquilino Q. Pimentel, the sponsor and principal author of the Local Government Code of 1991 declared that one of the reasons why the Katipunan ng Kabataan was created and the Kabataang Barangay discontinued was because most, if not all, Kabataang Barangay leaders were already over 21 years of age by the time President Aquino assumed power. 38 They were not the "youth" anymore. The Local Government Code of 1991 fixed the maximum age limit at not more than 21 years 39 and the only exception is in the second paragraph of Section 423 which reads:

Sec. 423. Creation and Election. —

a) . . . ;

b) A sangguniang kabataan official who, during his term of office, shall have passed the age of twenty-one (21) years shall be allowed to serve the remaining portion of the term for which he was elected.

The general rule is that an elective official of the Sangguniang Kabataan must not be more than 21 years of age on the day of his election. The only exception is when the official reaches the age of 21 years during his incumbency. Section 423 [b] of the Code allows him to serve the remaining portion of the term for which he was elected. According to Senator Pimentel, the youth leader must have "been elected prior to his 21st birthday." 40 Conversely, the SK official must not have turned 21 years old before his election. Reading Section 423 [b] together with Section 428 of the Code, the latest date at which an SK elective official turns 21 years old is on the day of his election. The maximum age of a youth official must therefore be exactly 21 years on election day. Section 3 [b] in relation to Section 6 [a] of COMELEC Resolution No. 2824 is not ultra vires insofar as it fixes the maximum age of an elective SK official on the day of his election.

In the case at bar, petitioner was born on June 11, 1974. On March 16, 1996, the day she registered as voter for the May 6, 1996 SK elections, petitioner was twenty-one (21) years and nine (9) months old. On the day of the elections, she was 21 years, 11 months and 5 days old. When she assumed office on June 1, 1996, she was 21 years, 11 months and 20 days old and was merely ten (10) days away from turning 22 years old. Petitioner may have qualified as a member of the Katipunan ng Kabataan but definitely, petitioner was over the age limit for elective SK officials set by Section 428 of the Local Government Code and Sections 3 [b] and 6 of Comelec Resolution No. 2824. She was ineligible to run as candidate for the May 6, 1996 Sangguniang Kabataan elections.

The requirement that a candidate possess the age qualification is founded on public policy and if he lacks the age on the day of the election, he can be declared ineligible. 41 In the same vein, if the candidate is over the maximum age limit on the day of the election, he is ineligible. The fact that the candidate was elected will not make the age requirement directory, nor will it validate his election. 42 The will of the people as expressed through the ballot cannot cure the vice of ineligibility. 43

The ineligibility of petitioner does not entitle private respondent, the candidate who obtained the highest number of votes in the May 6, 1996 elections, to be declared elected. 44 A defeated candidate cannot be deemed elected to the office. 45 Moreover, despite his claims, 46 private respondent has failed to prove that the electorate themselves actually knew of petitioner's ineligibility and that they maliciously voted for her with the intention of misapplying their franchises and throwing away their votes for the benefit of her rival candidate. 47

Neither can this Court order that pursuant to Section 435 of the Local Government Code petitioner should be succeeded by the Sangguniang Kabataan member who obtained the next highest number of votes in the May 6, 1996 elections. 48 Section 435 applies when a Sangguniang Kabataan Chairman "refuses to assume office, fails to qualify,49 is convicted of a felony, voluntarily resigns, dies, is permanently incapacitated, is removed from office, or has been absent without leave for more than three (3) consecutive months."

The question of the age qualification is a question of eligibility. 50 Being "eligible" means being "legally qualified; capable of being legally chosen." 51 Ineligibility, on the other hand, refers to the lack of the qualifications prescribed in the Constitution or the statutes for holding public office. 52 Ineligibility is not one of the grounds enumerated in Section 435 for succession of the SK Chairman.

To avoid a hiatus in the office of SK Chairman, the Court deems it necessary to order that the vacancy be filled by the SK member chosen by the incumbent SK members of Barangay San Lorenzo, Bangui, Ilocos Norte by simple majority from among themselves. The member chosen shall assume the office of SK Chairman for the unexpired portion of the term, and shall discharge the powers and duties, and enjoy the rights and privileges appurtenant to said office.

IN VIEW WHEREOF, the petition is dismissed and petitioner Lynette G. Garvida is declared ineligible for being over the age qualification for candidacy in the May 6, 1996 elections of the Sangguniang Kabataan, and is ordered to vacate her position as Chairman of the Sangguniang Kabataan of Barangay San Lorenzo, Bangui, Ilocos Norte. The Sangguniang Kabataan member voted by simple majority by and from among the incumbent Sangguniang Kabataan members of Barangay San Lorenzo, Bangui, Ilocos Norte shall assume the office of Sangguniang Kabataan Chairman of Barangay San Lorenzo, Bangui, Ilocos Norte for the unexpired portion of the term.

SO ORDERED.

Narvasa, C.J., Padilla, Regalado, Davide, Jr., Romero, Bellosillo, Melo, Vitug, Kapunan, Mendoza, Francisco, Panganiban and Torres, Jr., JJ., concur.

Hermosisima, Jr., J., is on leave.

Republic of the PhilippinesSUPREME COURT

Manila

EN BANC

 

G.R. No. 108232 August 23, 1993

ZONSAYDA L. ALINSUG, petitioner, vs.REGIONAL TRIAL COURT, Branch 58, San Carlos City, Negros Occidental, Presided by Hon. Rolindo D. Beldia, Jr.; ROLANDO P. PONSICA as Municipal Mayor of Escalante, Negros Occidental; MUNICIPALITY OF ESCALANTE, NEGROS OCCIDENTAL, and PATRICIO A. ALVAREZ as Municipal Treasurer of Escalante, Negros Occidental, respondents.

Alexander J. Cawit for petitioner.

Daniel U. Villaflor and Samuel SM. Lezama for respondent Mayor & Municipal Treasurer.

R E S O L U T I O N

 

VITUG, J.:

The petitioner, Zonsayda L. Alinsug, had been a regular employee of the municipal government of Escalante, Negros Occidental, when she received a permanent appointment as Clerk III in the office of the Municipal Planning and Development Coordinator of the same municipality. On 10 June 1992, she received an order from the newly proclaimed mayor, Rolando P. Ponsica, detailing her to the Office of the Mayor. In compliance with the order, she reported to said office the following day.

On 19 June 1992, Zonsayda absented herself from work allegedly to attend to family matters. She had asked permission from the personnel officer but not from the mayor. On 23 June 1992, Mayor Ponsica issued Office Order No. 31, suspending Zonsayda for one month and one day commencing on 24 June 1992 for "a simple misconduct . . . which can also be categorized as an act of insubordination." The order also stated that the suspension "carries with it forfeiture of . . . benefits such as . . . salary and PERA and leave credits during the duration of its effectivity."

Forthwith, Zonsayda filed with the Regional Trial Court of Negros Occidental, in San Carlos City, a petition, dated 07 July 1992, for "injunction with damages and prayer for temporary restraining order and preliminary injunction" against Mayor Ponsica and the municipal treasurer. 1 The petitioner alleged that since her family supported Mayor Ponsica's rival in the 11 May 1992 elections, her suspension was an act of "political vendetta". Further alleging that said respondents' acts were "malicious, illegal, unwarranted, wrongful and condemnable", petitioner prayed for the following reliefs:

WHEREFORE, premises considered, it is respectfully prayed to this Honorable Court —

4.1 That upon the filing of this petition a temporary restraining order be immediately issued directing respondents mayor and municipality to cease and desist from continuing with the suspension, and indefinite detail of petitioner at his office, and, including the respondent treasurer to refrain from forfeiting and not paying her salary for the period from June 24 to July 23, 1992, and in the meantime to return petitioner to her position as Clerk III in the office of the Municipal Planning and Development Coordinator; to restrain respondents mayor and municipality also from persecuting, oppressing, harassing and humiliating petitioner as civil service employee of the municipality under the respondent mayor, and also restraining them from doing acts and things or employing tactics, schemes or maneuvers that would make it hard or effect a difficulty in petitioner's doing of her works and/or in the performance of the official function of her position entitled to the emoluments thereof, until further orders from the Honorable Court; and after notice and hearing to issue the corresponding writ of preliminary injunction;

4.2 After trial on the merit, to render judgment declaring petitioner's detail at respondent's office per Annex "C" and suspension per Annex "D", null and void, and making the injunction permanent; and

4.3 Adjudging the respondents mayor and municipality solidarily to pay petitioner the amount of P30,000.00 for moral damages; P10,000.00 plus P500.00 per court appearance of petitioner's counsel for attorney's fee, and P3,000.00 for litigation expenses, all in concept of actual and compensatory damages; P20,000.00 as exemplary damages; and to pay the costs of this suit.

Further, petitioner respectfully prays for such other proper reliefs and remedies just and appropriate in the premises. 2

Mayor Ponsica and the municipal treasurer filed an answer to the petition, through private practitioner Samuel SM Lezama, alleging that the petitioner had not exhausted administrative remedies and that her suspension was in accordance with law. They filed a counterclaim for moral damages in the amount of P200,000.00, exemplary damages for P50,000.00, and attorney's fees of P30,000.00, plus appearance fee of P500.00.

The foregoing elicited a motion from the petitioner, praying that the answer be disregarded and expunged from the record, and that the respondents be all declared in default on the ground that since the respondents were sued in their official capacities, "not including their private capacities," they should have been represented by either the municipal legal officer or the provincial legal officer or prosecutor as provided for by Sec. 481 (b) [i] and [3] of the Local Government Code. It also cited Sec. 1 of Rep. Act No. 10 and Art. 177 of the Revised Penal Code which penalizes usurpation of public authority.

The respondents opposed the motion. Manifesting that the municipality of Escalante has no legal officer, they asserted that both the Local Government Code and the

Administrative Code of 1987 do not have any provision "relative to the duty of any provincial legal officer or prosecutor to represent a municipality or its officials in suits filed against them by an employee or a private individual." They contended that it was "unnecessary to provide such a provision because there (exist) administrative and judicial rulings sustaining the validity of the employment of a private counsel by municipal officials. Moreover, since the petitioner prayed for the award of moral damages," on the strength of this Court's ruling in Albuera v. Torrens, 3 their hiring of a private counsel was justified.

On 28 August 1992, Assistant Provincial Prosecutor Daniel M. Villaflor entered his appearance as "counsel for Rolando P. Ponsica and Patricio A. Alvarez in their official capacities."

With the filing of said notice at appearance, on 08 September 1992, the lower court issued an Order, denying petitioners motion to declare the respondents in default and motion to expunge from the record respondents' answer.

Acting on the motion for reconsideration filed by the petitioner, the lower court issued the Order of 16 November 1992, denying said motion on the thesis that since the appointment of a legal officer was optional on the part of the municipal government (Art. 481, third paragraph, Local Government Code) and the municipality of Escalante had not, in fact, designated any such legal officer, petitioner's move to declare respondents in default "for having retained a private counsel" was not thereby legally sustainable.

Hence, the instant petition, which although called a "petition for review on certiorari" in its first paragraph, shall be treated as a special civil action of certiorari for purposes of resolving the issues of: (a) whether or not a private counsel may represent municipal officials sued in their official capacities, and (b) whether or not respondents had been in default on account of their having filed their answer through a private counsel.

Sec. 443 (b) of the Local Government Code (Republic Act No. 7160), which took effect on 01 January 1992, 4provides that, in addition to the officials enumerated in the first paragraph thereof, the mayor may appoint, among other officials enumerated therein, a municipal legal officer. Section 481, Article 11 of Title V of the Code which provides for the appointment of local officials common to all municipalities, cities and provinces, states that "(t)he appointment of a legal officer shall be mandatory for the provincial and city governments and optional for the municipal government." The same section specifies the functions of the legal officer, and one of them being that he shall:

(i) Represent the local government unit in all civil actions and special proceedings wherein the local government unit or any official thereof, in his official capacity, is a party: Provided, that in actions or proceedings where a component city or municipality is a party adverse to the provincial government or to another component city or municipality, a special legal officer may be employed to represent the adverse party;

Indeed, it appears that the law allows a private counsel to be hired by a municipality only when the municipality is an adverse party in a case involving the provincial government or another municipality or city within the province. This provision has its apparent origin in the ruling in De Guia v. The Auditor General 5 where the Court held that the municipality's authority to employ a private attorney is expressly limited only to situations where the provincial fiscal would be disqualified to serve and represent it. With Sec. 1683 of the old Administrative Code 6 as legal basis, the Court therein cited Enriquez, Sr. v. Gimenez 7 which enumerated instances when the provincial fiscal is disqualified to represent in court a particular municipality; if and when original jurisdiction of case involving the municipality is vested in the Supreme Court, when the municipality is a party adverse to the provincial government or to some other municipality in the same province, and when, in a case involving the municipality, he, or his wife, or child, is pecuniarily involved, as heir legatee, creditor or otherwise. 8

Thereafter, in Ramos v. Court of Appeals, 9 the Court ruled that a municipality may not be represented by a private law firm which had volunteered its services gratis, in collaboration with the municipal attorney and the fiscal, as such representation was violative Sec. 1683 of the old Administrative Code. This strict coherence to the letter of the law appears to have been dictated by the fact that "the municipality should not be burdened with expenses of hiring a private lawyer" and that "the interests of the municipality would be best protected if a government lawyer handles its litigations."

But would these proscriptions include public officials? Not necessarily. It can happen that a government official, ostensibly acting in his official capacity and sued in that capacity, is later held to have exceeded his authority. On the one hand, his defense would have then been underwritten by the people's money which ordinarily should have been his personal expense. On the other hand, personal liability can attach to him without, however, his having had the benefit of assistance of a counsel of his own choice. In Correa v. CFI of Bulacan, 10 the Court held that in the discharge of governmental functions, "municipal corporations are responsible for the acts of its officers, except if and when, the only to the extent that, they have acted by authority of the law, and in conformity with the requirements thereof."

In such instance, this Court has sanctioned that representation by private counsel. In one case, We held that where rigid adherence to the law on representation of local officials in court actions could deprive a party of his right to redress for a valid grievance, the hiring of a private counsel would be proper. 11 And, in Albuera v. Torres,12 this Court also said that a provincial governor sued in his official capacity may engage the services of private counsel when "the complaint contains other allegations and a prayer for moral damages, which, if due from the defendants, must be satisfied by them in their private capacity."

We might also quote the pronouncement of the Court in Urbano v. Chavez: 13

There is likewise another reason . . . why the Office of the Solicitor General cannot represent an accused in a criminal case. Inasmuch as the State can speak and act only by law, whatever it does say and do must be lawful, and that which is unlawful is not the word or deed of the State, but is the mere wrong or trespass of those individual persons who falsely speak and act in its name.

Therefore, the accused public official should not expect the State, through the Office of the Solicitor General, to defend him for a wrongful act which cannot be attributed to the State itself. In the same light, a public official who is sued in a criminal case is actually sued in his personal capacity inasmuch as his principal, the State, can never be the author of a wrongful act, much less commit a crime.

Urbano v. Chavez confronted the issue of whether the Office of the Solicitor General may represent its own Solicitor General in the preliminary investigation of a criminal action, or in a civil action for damages, against him.

The key then to resolving the issue of whether a local government official may secure the services of private counsel, in an action filed against him in his official capacity, lies on the nature of the action and the relief that is sought.

While the petition below was filed against respondents as public officials, its allegations were also aimed at questioning certain acts that can well bring the case beyond the mere confines of official functions; thus —

2.12 These actuations of the respondent mayor in detailing petitioner to his office and eventually suspending her from work, particularly the latter are no doubt respondent mayor's political vendetta of petitioner, a vengeance unleased on her for her children's and family's not going with and voting for him in the May 11, 1992 election and instead supporting the candidacy of their relative-candidate (Mr. Barcelona) in said election, who was his greated (sic) worry at that time.

2.13 The aforesaid acts of respondent mayor are clearly, apparently and obviously a political harassment and persecution, appreasive (sic), acts of vindictiveness, a grave abuse of executive discretion, despotic, unjust, unwarranted, condemnable and actionable; the indefinite detail order and, especially the suspension, were not done in good faith, not for a valid cause, and done without giving petitioner opportunity to be heard, hence, null and void for being violative of petitioner's legal and constitutional right to due process. . . . . 14

The petition then went on to claim moral and exemplary damages, as well as litigation expenses, as shown by its prayer.

Moral damages cannot generally be awarded unless they are the proximate result of a wrongful act or omission. Exemplary damages, on the other hand, are not awarded if the defendant had not acted in a wanton, oppressive or malevolent manner nor in the absence of gross or reckless negligence. 15 A public official, who in the performance of his duty acts in such fashion, does so in excess of authority, and his

actions would be ultra vires 16 that can thereby result in an incurrence of personal liability.

All the foregoing considered, We hold that the respondents were not improperly represented by a private counsel, whose legal fees shall be for their own account.

ACCORDINGLY, the instant petition is hereby DISMISSED. The lower court is directed to proceed with dispatch in the resolution of Special Civil Action No. RTC-371.

SO ORDERED.

Narvasa, C.J., Cruz, Feliciano, Padilla, Bidin, Griño-Aquino, Regalado, Davide, Jr., Romero, Nocon, Bellosillo, Melo, Quiason and Puno, JJ., concur.

 

Republic of the PhilippinesSUPREME COURT

Manila

FIRST DIVISION

G.R. No. L-55230 November 8, 1988

HON. RICHARD J. GORDON, in his capacity as City Mayor of Olongapo, petitioner, vs.JUDGE REGINO T. VERIDIANO II and Spouses EDUARDO and ROSALINDA YAMBAO, respondents.

 

CRUZ, J.:

The issue before the Court is the conflict between the Food and Drug Administration and the mayor of Olongapo City over the power to grant and revoke licenses for the operation of drug stores in the said city. While conceding that the FDA possesses such power, the mayor claims he may nevertheless, in the exercise of his own power, prevent the operation of drug stores previously permitted by the former.

There are two drug stores involved in this dispute, to wit, the San Sebastian Drug Store and the Olongapo City Drug Store, both owned by private respondent Rosalinda Yambao. 1 They are located a few meters from each other in the same building on Hospital Road, Olongapo City. 2 They were covered by Mayor's Permits Nos. 1954 and 1955, respectively, issued for the year 1980, 3 and licenses to operate issued by the FDA for the same year. 4

This case arose when on March 21, 1980, at about 5:00 o'clock in the afternoon, a joint team composed of agents from the FDA and narcotics agents from the Philippine Constabulary conducted a "test buy" at San Sebastian Drug Store and was sold 200 tablets of Valium 10 mg. worth P410.00 without a doctor's prescription.. 5

A report on the operation was submitted to the petitioner, as mayor of Olongapo City, on April 9, 1980. 6 On April 17, 1980, he issued a letter summarily revoking Mayor's Permit No. 1954, effective April 18, 1980, "for rampant violation of R.A. 5921, otherwise known as the Pharmacy Law and R.A. 6425 or the Dangerous Drugs Act of 1972." 7 Later, when the petitioner went to Singapore, Vice-Mayor Alfredo T. de Perio, Jr. caused the posting of a signboard at the San Sebastian Drug Store announcing its permanent closure. 8

Acting on the same investigation report of the "test-buy," and after hearing, FDA Administrator Arsenio Regala, on April 25, 1980, directed the closure of the drug store for three days and its payment of a P100.00 fine for violation of R.A. No. 3720. He also issued a stern warning to Yambao against a repetition of the infraction. 9 On April 29, 1980, the FDA lifted its closure order after noting that the penalties imposed had already been discharged and allowed the drug store to resume operations. 10

On April 30, 1980, Yambao, through her counsel, wrote a letter to the petitioner seeking reconsideration of the revoca tion of Mayor's Permit No. 1954. 11 On May 7, 1980, having received no reply, she and her husband filed with the Regional Trial

Court of Olongapo City a complaint for mandamus and damages, with a prayer for a writ of preliminary injunction, against the petitioner and Vice-Mayor de Perio. 12

On the same date, Yambao requested permission from the FDA to exchange the locations of the San Sebastian Drug Store and the Olongapo City Drug Store for reasons of "business preference." 13

The request was granted. 14 But when informed of this action, the petitioner, in a letter to the private respondent dated May 13, 1980, disapproved the transfers and suspended Mayor's Permit No. 1955 for the Olongapo City Drug Store. 15

The Yambaos then filed on May 15, 1980, a supplemental complaint questioning the said suspension and praying for the issuance of a preliminary writ of prohibitory injunction. 16 On the same day, the respondent judge issued an order directing the maintenance of the status quo with respect to the Olongapo City Drug Store pending resolution of the issues. 17

On May 21, 1980, the petitioner wrote the FDA requesting reconsideration of its order of April 29, 1980, allowing resumption of the operation of the San Sebastian Drug Store. 18 The request was denied by the FDA in its reply dated May 27, 1980. 19

A motion for reconsideration of the status quo order had earlier been filed on May 1, 1980 by the petitioner. After a joint hearing and an exchange of memoranda thereon, the respondent judge issued an order on July 16, 1980,20 the dispositive portion of which read as follows:

WHEREFORE, the defendants' motion for reconsideration of the status quo order dated May 15, 1980, is hereby DENIED and the letter of the defendant city mayor dated April 17, 1980, for the revocation of Mayor's Permit No. 1954 for the San Sebastian Drug Store is declared null and void.

Accordingly, a writ of preliminary prohibitory injunction is heretofore issued enjoining defendants from doing acts directed towards the closure of the San Sebastian Drug Store and the suspension of the Olongapo City Drug Store both situated at Hospital Road, Olongapo City. Further, the signboard posted at San Sebastian Drug Store by the defendants is ordered removed in order that the said drug store will resume its normal business operation.

The hearing of the main petition for damages is set on August 14, 1980, at 1:30 o'clock in the afternoon.

The petitioner's motion for reconsideration of the above stated order was denied in an order dated September 4, 1980. 21 The petitioner thereupon came to this Court in this petition for certiorari and prohibition with preliminary, injunction, to challenge the aforesaid orders.

We issued a temporary restraining order against the respondent judge on October 2 7, 1980, 22 but lifted it on December 10, 1980, for failure of the petitioner to file his comment on the private respondents' motion to lift the said order and/or for issuance of a counter restraining order. 23

First, let us compare the bases of the powers and functions respectively claimed by the FDA and the petitioner as mayor of Olongapo City.

The task of drug inspection was originally lodged with the Board of Pharmaceutical Examiners pursuant to Act 2762, as amended by Act 4162. By virtue of Executive Order No. 392 dated January 1, 1951 (mandating reorganization of various departments and agencies), this was assumed by the Department of Health and exercised through an office in the Bureau of Health known as the Drug Inspection Section. This section was empowered "to authorize the opening of pharmacies, drug stores and dispensaries, and similar establishments after inspection by persons authorized by law."

The Food and Drug Administration was created under R.A. No. 3720 (otherwise known as the Food, Drug and Cosmetic Act), approved on June 22, 1963, and vested with all drug inspection functions in line with "the policy of the State to insure safe and good quality supply of food, drug and cosmetics, and to regulate the production, sale and traffic of the same to protect the health of the people." Section 5 of this Act specifically empowers it:

(e) to issue certificates of compliance with technical requirements to serve as basis for the issuance of license and spotcheck for compliance with regulations regarding operation of food, drug and cosmetic manufacturers and establishments.

For a more effective exercise of this function, the Department of Health issued on March 5, 1968, Administrative Order No. 60, series of 1968, laying down the requirements for the application to be filed with the FDA for authorization to operate or establish a drug establishment. The order provides that upon approval of the application, the FDA shall issue to the owner or administrator of the drug store or similar establishment a "License to Operate" which "shall be renewed within the first 3 months of each year upon payment of the required fees." This license contains the following reservation:

However, should during the period of issue, a violation of any provisions of the Food, Drug and Cosmetic Act and/or the regulations issued thereunder be committed, this License shall be subject to suspension or revocation.

When the drug addiction problem continued to aggravate, P.D. No. 280 was promulgated on August 27, 1973, to give more teeth to the powers of the FDA, thus:

Section 1. Any provision of law to the contrary notwithstanding, the Food and Drug Administrator is hereby authorized to order the closure, or suspend or revoke the license of any drug establishment

which after administrative investigation is found guilty of selling or dispensing drugs medicines and other similar substances in violation of the Food, Drug and Cosmetic Act, and Dangerous Drugs Act of 1972, or other laws regulating the sale or dispensation of drugs, or rules and regulations issued pursuant thereto.

Sec. 2. The administrative investigation shall be summary in character. The owner of the drug store shall be given an opportunity to be heard. (P.D. 280, emphasis supplied.)

For his part, the petitioner, traces his authority to the charter of Olongapo City, R.A. No. 4645, which  inter aliaempowers the city mayor under Section 10 thereof:

k. to grant or refuse municipal licenses to operate or permits of all classes and to revoke the same for violation of the conditions upon which they were granted, or if acts prohibited by law or city ordinances are being committed under protection of such licenses or in the premises in which the business for which the same have been granted is carried on, or for any other good reason of general interest.

The charter also provides, in connection with the powers of the city health officer, that:

Sec. 6 (k). He and his representatives shall have the power to arrest violators of health laws, ordinances, rules and regulations and to recommend the revocation or suspension of the permits of the different establishments to the City Mayor for violation of health laws, ordinances, rules and regulations. (Emphasis supplied.)

An application to establish a drug store in Olongapo City must be filed with the Office of the Mayor and must show that the applicant has complied with the existing ordinances on health and sanitation, location or zoning, fire or building, and other local requirements. If the application is approved, the applicant is granted what is denominated a "Mayor's Permit" providing inter alia that it "is valid only at the place stated above and until (date), unless sooner revoked for cause." 24

Courts of justice, when confronted with apparently conflicting statutes, should endeavor to reconcile the same instead of declaring outright the invalidity of one as against the other. Such alacrity should be avoided. The wise policy is for the judge to harmonize them if this is possible, bearing in mind that they are equally the handiwork of the same legislature, and so give effect to both while at the same time also according due respect to a coordinate department of the government. It is this policy the Court will apply in arriving at the interpretation of the laws above-cited and the conclusions that should follow therefrom.

A study of the said laws will show that the authorization to operate issued by the FDA is a condition precedent to the grant of a mayor's permit to the drug store seeking to operate within the limits of the city. This requirement is imperative. The power to

determine if the opening of the drug store is conformable to the national policy and the laws on the regulation of drug sales belongs to the FDA. Hence, a permit issued by the mayor to a drug store not previously cleared with and licensed by the said agency will be a nullity.

This is not to say, however, that the issuance of the mayor's permit is mandatory once it is shown that the FDA has licensed the operation of the applicant drug store. This is not a necessary consequence. For while it may appear that the applicant has complied with the pertinent national laws and policies, this fact alone will not signify compliance with the particular conditions laid down by the local authorities like zoning, building, health, sanitation, and safety regulations, and other municipal ordinances enacted under the general welfare clause. This compliance still has to be ascertained by the mayor if the permit is to be issued by his office. Should he find that the local requirements have not been observed, the mayor must then, in the exercise of his own authority under the charter, refuse to grant the permit sought.

The power to approve a license includes by implication,. even if not expressly granted, the power to revoke it. By extension, the power to revoke is limited by the authority to grant the license, from which it is derived in the first place. Thus, if the FDA grants a license upon its finding that the applicant drug store has complied with the requirements of the general laws and the implementing administrative rules and regulations, it is only for their violation that the FDA may revoke the said license. By the same token, having granted the permit upon his ascertainment that the conditions thereof as applied particularly to Olongapo City have been complied with, it is only for the violation of such conditions that the mayor may revoke the said permit.

Conversely, the mayor may not revoke his own permit on the ground that the compliance with the conditions laid down and found satisfactory by the FDA when it issued its license is in his own view not acceptable. This very same principle also operates on the FDA. The FDA may not revoke its license on the ground that the conditions laid down in the mayor's permit have been violated notwithstanding that no such finding has been made by the mayor.

In the present case, the closure of the San Sebastian Drug Store was ordered by the FDA for violation of its own conditions, which it certainly had the primary power to enforce. By revoking the mayor's permit on the same ground for which the San Sebastian Drug Store had already been penalized by the FDA, the mayor was in effect reversing the derision of the latter on a matter that came under its jurisdiction. As the infraction involved the pharmacy and drug laws which the FDA had the direct responsibility to execute, the mayor had no authority to interpose his own findings on the matter and substitute them for the decision already made by the FDA.

It would have been different if the offense condoned by the FDA was a violation of, say, a city ordinance requiring buildings to be provided with safety devices or equipment, like fire extinguishers. The city executive may ignore such condonation and revoke the mayor's permit just the same. In this situation, he would be acting properly because the enforcement of the city ordinance is his own prerogative. In the present case, however, the condition allegedly violated related to a national law, not to a matter of merely local concern, and so came under the 'jurisdiction of the FDA.

Settled is the rule that the factual findings of administrative authorities are accorded great respect because of their acknowledged expertise in the fields of specialization to which they are assigned. 25 Even the courts of justice, including this Court, are concluded by such findings in the absence of a clear showing of a grave abuse of discretion, which is not present in the case at bar. For all his experience in the enforcement of city ordinances, the petitioner cannot claim the superior aptitudes of the FDA in the enforcement of the pharmacy and drug addiction laws. He should therefore also be prepared, like the courts of justice themselves, to accept its decisions on this matter.

The petitioner magnifies the infraction committed by the San Sebastian Drug Store but the FDA minimizes it. According to the FDA Administrator, Valium is not even a prohibited drug, which is why the penalty imposed was only a 3-day closure of the drug store and a fine of P100.00. 26 Notably, the criminal charges filed against the private respondent for the questioned transaction were dismissed by the fiscal's office. 27

It is also worth noting that the San Sebastian Drug Store was penalized by the FDA only after a hearing held on April 25, 1980, at which private respondent Yambao, assisted by her lawyer-husband, appeared and testified. 28 By contrast, the revocation of the mayor's permit was communicated to her in a letter 29 reading simply as follows:

April 17, 1980

Rosalinda Yambaoc/o San Sebastian Drug StoreHospital Road, Olongapo City

Madame:

Based on a report submitted by PC Major Virtus V. Gil, Chief 3 RFO, Dis. B, Task Force "Bagong Buhay," "you are rampantly violating the provisions of Republic Act 5921 otherwise known as the 'Pharmacy Law."

Aside from this, there is evidence that you are dispensing regulated drugs contrary to the provisions of R.A. 6425 otherwise known as the Dangerous Drugs Act of 1972.

In view of the above, Mayors Permit No. 1954 heretofore issued in your name for the operation of a drug store (San Sebastian) at the Annex Building of the Fil-Am (IYC), along Hospital Road, this City, is REVOKED effective April 18, 1980.

PLEASE BE GUIDED ACCORDINGLY.

Very truly yours,

(SGD.) RICHARD J. GORDONCity Mayor

If only for the violation of due process which is manifest from this letter, the mayor's arbitrary action can be annulled.

The indefinite suspension of the mayor's permit for Olongapo City Drug Store was based on the transfer thereof to the site of the San Sebastian Drug Store as approved by the FDA but without permission from the petitioner. On this matter, the Court believes that the final decision rested with the mayor. The condition violated related more to the location in Olongapo City of business establishments in general than to the regulation of drug stores in particular. It therefore came under the petitioner's jurisdiction.

The FDA would have the right to disapprove the site of the drug store only if it would impair the health or other interests of the customers in contravention of the national laws or policies, as where the drug store is located in an unsanitary site. But the local executive would have reason to object to the location, even if approved by the FDA, where it does not conform to, say, a zoning ordinance intended to promote the comfort and convenience of the city residents.

The reason given by the petitioner in disapproving the transfer was violation of Mayor's Permit No. 1955, which by its terms was valid only at the place stated therein. In the letter of May 13, 1980 30 the private respondent was clearly informed that for violation of the condition of Mayor's Permit No. 1955 granting her the of operating the Olongapo City Drug Store at No. 1-B Fil-Am Bldg., Hospital Road, the said permit was "hereby suspended." We find that that reason was valid enough. The permit clearly allowed the drug store to operate in the address given and not elsewhere. No hearing was necessary because the transfer without the mayor's permission is not disputed and was in fact impliedly admitted by the private respondent.

If the private respondent wanted to transfer her drug store, what she should have done was to secure the approval not only of the FDA but also, and especially, of the mayor. Merely notifying the petitioner of the change in the location of her drug stores as allowed by the FDA was not enough. The FDA had no authority to revoke that particular condition of the mayor's permits indicating the sites of the two drug stores as approved by the mayor in the light of the needs of the city. Only the mayor could.

We assume that Mayor's Permit No. 1954 could also have been validly suspended for the same reason (as the sites of the two drug stores were exchanged without amendment of their respective permits) were it not for the fact that such permit was

revoked by the petitioner on the more serious ground of violation of the Pharmacy Law and the Dangerous Drugs Act of 1972.

It is understood, however, that the suspension should be deemed valid only as the two drug stores have not returned to their original sites as specified in their respective permits. Indefinite suspension will amount to a permanent revocation, which will not be a commensurate penalty with the degree of the violation being penalized.

The Court adds that denial of the request for transfer, if properly made by the private respondents, may not be validly denied by the judge in the absence of a clear showing that the transfer sought will prejudice the residents of the city. As the two drug stores are only a few meters from each other, and in the same building, there would seem to be no reason why the mere exchange of their locations should not be permitted. Notably, the location of the two drug stores had previously been approved in Mayor's Permit Nos. 1954 and 1955.

Our holding is that the petitioner acted invalidly in revoking Mayor's Permit No. 1954 after the FDA had authorized the resumption of operations of the San Sebastian Drug Store following the enforcement of the penalties imposed upon it. However, it was competent for the petitioner to suspend Mayor's Permit No. 1955 for the transfer of the Olongapo City Drug Store in violation of the said permit. Such suspension should nevertheless be effective only pending the return of the drug store to its authorized original site or the eventual approval by the mayor of the requested transfer if found to be warranted.

The petitioner is to be commended for his zeal in the promotion of the campaign against drug addiction, which has sapped the vigor and blighted the future of many of our people, especially the youth. The legal presumption is that he acted in good faith and was motivated only by his concern for the residents of Olongapo City when he directed the closure of the first drug store and the suspension of the permit of the other drug store. It appears, though, that he may have overreacted and was for this reason properly restrained by the respondent judge.

WHEREFORE, the challenged Orders of July 6, 1980 and September 4, 1980, are MODIFIED in the sense that the suspension of Mayor's Permit No. 1955 shall be considered valid but only until the San Sebastian Drug Store and the Olongapo City Drug Store return to their original sites as specified in the FDA licenses and the mayor's permits or until the request for transfer, if made by the private respondents, is approved by the petitioner. The rest of the said Orders are AFFIRMED, with costs against the petitioner.

SO ORDERED.

Narvasa (Chairman), Gancayco, Griño-Aquino and Medialdea, JJ., concur.

Republic of the PhilippinesSUPREME COURT

Manila

EN BANC

 

G.R. No. 100152             March 31, 2000

ACEBEDO OPTICAL COMPANY, INC., petitioner, vs.THE HONORABLE COURT OF APPEALS, Hon. MAMINDIARA MANGOTARA, in his capacity as Presiding Judge of the RTC, 12th Judicial Region, Br. 1, Iligan City; SAMAHANG OPTOMETRIST Sa PILIPINAS — Iligan City Chapter, LEO T. CAHANAP, City Legal Officer, and Hon. CAMILO P. CABILI, City Mayor of Iligan,respondents.

PURISIMA, J.:

At bar is a petition for review under Rule 45 of the Rules of Court seeking to nullify the dismissal by the Court of Appeals of the original petition for certiorari, prohibition and mandamus filed by the herein petitioner against the City Mayor and City Legal Officer of Iligan and the Samahang Optometrist sa Pilipinas — Iligan Chapter (SOPI, for brevity).

The antecedent facts leading to the filing of the instant petition are as follows:

Petitioner applied with the Office of the City Mayor of Iligan for a business permit. After consideration of petitioner's application and the opposition interposed thereto by local optometrists, respondent City Mayor issued Business Permit No. 5342 subject to the following conditions:

1. Since it is a corporation, Acebedo cannot put up an optical clinic but only a commercial store;

2. Acebedo cannot examine and/or prescribe reading and similar optical glasses for patients, because these are functions of optical clinics;

3. Acebedo cannot sell reading and similar eyeglasses without a prescription having first been made by an independent optometrist (not its employee) or independent optical clinic. Acebedo can only sell directly to the public, without need of a prescription, Ray-Ban and similar eyeglasses;

4. Acebedo cannot advertise optical lenses and eyeglasses, but can advertise Ray-Ban and similar glasses and frames;

5. Acebedo is allowed to grind lenses but only upon the prescription of an independent optometrist. 1

On December 5, 1988, private respondent Samahan ng Optometrist Sa Pilipinas (SOPI), Iligan Chapter, through its Acting President, Dr. Frances B. Apostol, lodged a complaint against the petitioner before the Office of the City Mayor, alleging that Acebedo had violated the conditions set forth in its business permit and requesting the cancellation and/or revocation of such permit.

Acting on such complaint, then City Mayor Camilo P. Cabili designated City Legal Officer Leo T. Cahanap to conduct an investigation on the matter. On July 12, 1989, respondent City Legal Officer submitted a report to the City Mayor finding the herein petitioner guilty of violating all the conditions of its business permit and recommending the disqualification of petitioner from operating its business in Iligan City. The report further advised that no new permit shall be granted to petitioner for the year 1989 and should only be given time to wind up its affairs.

On July 19, 1989, the City Mayor sent petitioner a Notice of Resolution and Cancellation of Business Permit effective as of said date and giving petitioner three (3) months to wind up its affairs.

On October 17, 1989, petitioner brought a petition for certiorari, prohibition and mandamus with prayer for restraining order/preliminary injunction against the respondents, City Mayor, City Legal Officer and Samahan ng Optometrists sa Pilipinas-Iligan City Chapter (SOPI), docketed as Civil Case No. 1497 before the Regional Trial Court of Iligan City, Branch I. Petitioner alleged that (1) it was denied due process because it was not given an opportunity to present its evidence during the investigation conducted by the City Legal Officer; (2) it was denied equal protection of the laws as the limitations imposed on its business permit were not imposed on similar businesses in Iligan City; (3) the City Mayor had no authority to impose the special conditions on its business permit; and (4) the City Legal Officer had no authority to conduct the investigation as the matter falls within the exclusive jurisdiction of the Professional Regulation Commission and the Board of Optometry.

Respondent SOPI interposed a Motion to Dismiss the Petition on the ground of non-exhaustion of administrative remedies but on November 24, 1989, Presiding Judge Mamindiara P. Mangotara deferred resolution of such Motion to Dismiss until after trial of the case on the merits. However, the prayer for a writ of preliminary injunction was granted. Thereafter, respondent SOPI filed its answer.1âwphi1.nêt

On May 30, 1990, the trial court dismissed the petition for failure to exhaust administrative remedies, and dissolved the writ of preliminary injunction it earlier issued. Petitioner's motion for reconsideration met the same fate. It was denied by an Order dated June 28, 1990.

On October 3, 1990, instead of taking an appeal, petitioner filed a petition for certiorari, prohibition and mandamus with the Court of Appeals seeking to set aside the questioned Order of Dismissal, branding the same as tainted with grave abuse of discretion on the part of the trial court.

On January 24, 1991, the Ninth Division 2 of the Court of Appeals dismissed the petition for lack of merit. Petitioner's motion reconsideration was also denied in the Resolution dated May 15, 1991.

Undaunted, petitioner has come before this court via the present petition, theorizing that:

A.

THE RESPONDENT COURT, WHILE CORRECTLY HOLDING THAT THE RESPONDENT CITY MAYOR ACTED BEYOND HIS AUTHORITY IN IMPOSING THE SPECIAL CONDITIONS IN THE PERMIT AS THEY HAD NO BASIS IN ANY LAW OR ORDINANCE, ERRED IN HOLDING THAT THE SAID SPECIAL CONDITIONS NEVERTHELESS BECAME BINDING ON PETITIONER UPON ITS ACCEPTANCE THEREOF AS A PRIVATE AGREEMENT OR CONTRACT.

B.

THE RESPONDENT COURT OF APPEALS ERRED IN HOLDING THAT THE CONTRACT BETWEEN PETITIONER AND THE CITY OF ILIGAN WAS ENTERED INTO BY THE LATTER IN THE PERFORMANCE OF ITS PROPRIETARY FUNCTIONS.

The petition is impressed with merit.

Although petitioner agrees with the finding of the Court of Appeals that respondent City Mayor acted beyond the scope of his authority in imposing the assailed conditions in subject business permit, it has excepted to the ruling of the Court of Appeals that the said conditions nonetheless became binding on petitioner, once accepted, as a private agreement or contract. Petitioner maintains that the said special conditions are null and void for being ultra vires and cannot be given effect; and therefore, the principle of estoppel cannot apply against it.

On the other hand, the public respondents, City Mayor and City Legal Officer, private respondent SOPI and the Office of the Solicitor General contend that as a valid exercise of police power, respondent City Mayor has the authority to impose, as he did, special conditions in the grant of business permits.

Police power as an inherent attribute of sovereignty is the power to prescribe regulations to promote the health, morals, peace, education, good order or safety and general welfare of the people. 9 The State, through the legislature, has delegated the exercise of police power to local government units, as agencies of the State, in order to effectively accomplish and carry out the declared objects of their creation. 4 This delegation of police power is embodied in the general welfare clause of the Local Government Code which provides:

Sec. 6. General Welfare. — Every local government unit shall exercise the powers expressly granted, those necessarily implied therefrom, as well as powers necessary, appropriate, or incidental for its efficient and effective governance, and those which are essential to the promotion of the general welfare. Within their respective territorial jurisdictions, local government units shall ensure and support, among other things, the preservation and enrichment of culture, promote health and safety, enhance the right of the people to a balanced ecology, encourage and support the development of appropriate and self-reliant scientific and technological capabilities, improve public morals, enhance economic prosperity and social justice, promote full employment among their residents, maintain peace and order, and preserve the comfort and convenience of their inhabitants.

The scope of police power has been held to be so comprehensive as to encompass almost all matters affecting the health, safety, peace, order, morals, comfort and convenience of the community. Police power is essentially regulatory in nature and the power to issue licenses or grant business permits, if exercised for a regulatory and not revenue-raising purpose, is within the ambit of this power. 5

The authority of city mayors to issue or grant licenses and business permits is beyond cavil. It is provided for by law. Section 171, paragraph 2 (n) of Batas Pambansa Bilang 337 otherwise known as the Local Government Code of 1983, reads:

Sec. 171. The City Mayor shall:

x x x           x x x          x x x

n) Grant or refuse to grant, pursuant to law, city licenses or permits, and revoke the same for violation of law or ordinance or the conditions upon which they are granted.

However, the power to grant or issue licenses or business permits must always be exercised in accordance with law, with utmost observance of the rights of all concerned to due process and equal protection of the law.

Succinct and in point is the ruling of this Court, that:

. . . While a business may be regulated, such regulation must, however, be within the bounds of reason, i.e., the regulatory ordinance must be reasonable, and its provision cannot be oppressive amounting to an arbitrary interference with the business or calling subject of regulation. A lawful business or calling may not, under the guise of regulation, be unreasonably interfered with even by the exercise of police power. . . .

x x x           x x x          x x x

. . . The exercise of police power by the local government is valid unless it contravenes the fundamental law of the land or an act of the legislature, or

unless it is against public policy or is unreasonable, oppressive, partial, discriminating or in derogation of a common right. 6

In the case under consideration, the business permit granted by respondent City Mayor to petitioner was burdened with several conditions. Petitioner agrees with the holding by the Court of Appeals that respondent City Mayor acted beyond his authority in imposing such special conditions in its permit as the same have no basis in the law or ordinance. Public respondents and private respondent SOPI, on the other hand, are one in saying that the imposition of said special conditions on petitioner's business permit is well within the authority of the City Mayor as a valid exercise of police power.

As aptly discussed by the Solicitor General in his Comment, the power to issue licenses and permits necessarily includes the corollary power to revoke, withdraw or cancel the same. And the power to revoke or cancel, likewise includes the power to restrict through the imposition of certain conditions. In the case of Austin-Hardware, Inc. vs.Court of Appeals, 7 it was held that the power to license carries with it the authority to provide reasonable terms and conditions under which the licensed business shall be conducted. As the Solicitor General puts it:

If the City Mayor is empowered to grant or refuse to grant a license, which is a broader power, it stands to reason that he can also exercise a lesser power that is reasonably incidental to his express power, i.e. to restrict a license through the imposition of certain conditions, especially so that there is no positive prohibition to the exercise of such prerogative by the City Mayor, nor is there any particular official or body vested with such authority. 8

However, the present inquiry does not stop there, as the Solicitor General believes. The power or authority of the City Mayor to impose conditions or restrictions in the business permit is indisputable. What petitioner assails are the conditions imposed in its particular case which, it complains, amount to a confiscation of the business in which petitioner is engaged.

Distinction must be made between the grant of a license or permit to do business and the issuance of a license to engage in the practice of a particular profession. The first is usually granted by the local authorities and the second is issued by the Board or Commission tasked to regulate the particular profession. A business permit authorizes the person, natural or otherwise, to engage in business or some form of commercial activity. A professional license, on the other hand, is the grant of authority to a natural person to engage in the practice or exercise of his or her profession.

In the case at bar, what is sought by petitioner from respondent City Mayor is a permit to engage in the business of running an optical shop. It does not purport to seek a license to engage in the practice of optometry as a corporate body or entity, although it does have in its employ, persons who are duly licensed to practice optometry by the Board of Examiners in Optometry.

The case of Samahan ng Optometrists sa Pilipinas vs. Acebedo International Corporation, G.R. No. 117097, 9promulgated by this Court on March 21, 1997, is in point. The factual antecedents of that case are similar to those of the case under consideration and the issue ultimately resolved therein is exactly the same issue posed for resolution by this Court en banc.

In the said case, the Acebedo International Corporation filed with the Office of the Municipal Mayor an application for a business permit for the operation of a branch of Acebedo Optical in Candon, Ilocos Sur. The application was opposed by the Samahan ng Optometrists sa Pilipinas-Ilocos Sur Chapter, theorizing that Acebedo is a juridical entity not qualified to practice optometry. A committee was created by the Office of the Mayor to study private respondent's application. Upon recommendation of the said committee, Acebedo's application for a business permit was denied. Acebedo filed a petition with the Regional Trial Court but the same was dismissed. On appeal, however, the Court of Appeals reversed the trial court's disposition, prompting the Samahan ng Optometrists to elevate the matter to this Court.

The First Division of this Court, then composed of Honorable Justice Teodoro Padilla, Josue Bellosillo, Jose Vitug and Santiago Kapunan, with Honorable Justice Regino Hermosisima, Jr. as ponente, denied the petition and ruled in favor of respondent Acebedo International Corporation, holding that "the fact that private respondent hires optometrists who practice their profession in the course of their employment in private respondent's optical shops, does not translate into a practice of optometry by private respondent itself," 10 The Court further elucidated that in both the old and new Optometry Law, R.A. No. 1998, superseded by R.A. No. 8050, it is significant to note that there is no prohibition against the hiring by corporations of optometrists. The Court concluded thus:

All told, there is no law that prohibits the hiring by corporations of optometrists or considers the hiring by corporations of optometrists as a practice by the corporation itself of the profession of optometry.

In the present case, the objective of the imposition of subject conditions on petitioner's business permit could be attained by requiring the optometrists in petitioner's employ to produce a valid certificate of registration as optometrist, from the Board of Examiners in Optometry. A business permit is issued primarily to regulate the conduct of business and the City Mayor cannot, through the issuance of such permit, regulate the practice of a profession, like that of optometry. Such a function is within the exclusive domain of the administrative agency specifically empowered by law to supervise the profession, in this case the Professional Regulations Commission and the Board of Examiners in Optometry.

It is significant to note that during the deliberations of the bicameral conference committee of the Senate and the House of Representatives on R.A. 8050 (Senate Bill No. 1998 and House Bill No. 14100), the committee failed to reach a consensus as to the prohibition on indirect practice of optometry by corporations. The proponent of the bill, former Senator Freddie Webb, admitted thus:

Senator Webb: xxx xxx xxx

The focus of contention remains to be the proposal of prohibiting the indirect practice of optometry by corporations.1âwphi1 We took a second look and even a third look at the issue in the bicameral conference, but a compromise remained elusive. 11

Former Senator Leticia Ramos-Shahani likewise voted her reservation in casting her vote:

Senator Shahani: Mr. President.

The optometry bills have evoked controversial views from the members of the panel. While we realize the need to uplift the standards of optometry as a profession, the consesnsus of both Houses was to avoid touching sensitive issues which properly belong to judicial determination. Thus, the bicameral conference committee decided to leave the issue of indirect practice of optometry and the use of trade names open to the wisdom of the Courts which are vested with the prerogative of interpreting the laws. 12

From the foregoing, it is thus evident that Congress has not adopted a unanimous position on the matter of prohibition of indirect practice of optometry by corporations, specifically on the hiring and employment of licensed optometrists by optical corporations. It is clear that Congress left the resolution of such issue for judicial determination, and it is therefore proper for this Court to resolve the issue.

Even in the United States, jurisprudence varies and there is a conflict of opinions among the federal courts as to the right of a corporation or individual not himself licensed, to hire and employ licensed optometrists. 13

Courts have distinguished between optometry as a learned profession in the category of law and medicine, and optometry as a mechanical art. And, insofar as the courts regard optometry as merely a mechanical art, they have tended to find nothing objectionable in the making and selling of eyeglasses, spectacles and lenses by corporations so long as the patient is actually examined and prescribed for by a qualified practitioner. 14

The primary purpose of the statute regulating the practice of optometry is to insure that optometrical services are to be rendered by competent and licensed persons in order to protect the health and physical welfare of the people from the dangers engendered by unlicensed practice. Such purpose may be fully accomplished although the person rendering the service is employed by a corporation. 15

Furthermore, it was ruled that the employment of a qualified optometrist by a corporation is not against public policy. 16 Unless prohibited by statutes, a corporation has all the contractual rights that an individual has 17 and it does not become the practice of medicine or optometry because of the presence of a physician or optometrist. 18The manufacturing, selling, trading and bartering of eyeglasses and spectacles as articles of merchandise do not constitute the practice of optometry. 19

In the case of Dvorine vs. Castelberg Jewelry Corporation, 20 defendant corporation conducted as part of its business, a department for the sale of eyeglasses and the furnishing of optometrical services to its clients. It employed a registered optometrist who was compensated at a regular salary and commission and who was furnished instruments and appliances needed for the work, as well as an office. In holding that corporation was not engaged in the practice of optometry, the court ruled that there is no public policy forbidding the commercialization of optometry, as in law and medicine, and recognized the general practice of making it a commercial business by advertising and selling eyeglasses.

To accomplish the objective of the regulation, a state may provide by statute that corporations cannot sell eyeglasses, spectacles, and lenses unless a duly licensed physician or a duly qualified optometrist is in charge of, and in personal attendance at the place where such articles are sold. 21 In such a case, the patient's primary and essential safeguard lies in the optometrist's control of the "treatment" by means of prescription and preliminary and final examination. 22

In analogy, it is noteworthy that private hospitals are maintained by corporations incorporated for the purpose of furnishing medical and surgical treatment. In the course of providing such treatments, these corporations employ physicians, surgeons and medical practitioners, in the same way that in the course of manufacturing and selling eyeglasses, eye frames and optical lenses, optical shops hire licensed optometrists to examine, prescribe and dispense ophthalmic lenses. No one has ever charged that these corporations are engaged in the practice of medicine. There is indeed no valid basis for treating corporations engaged in the business of running optical shops differently.

It also bears stressing, as petitioner has pointed out, that the public and private respondents did not appeal from the ruling of the Court of Appeals. Consequently, the holding by the Court of Appeals that the act of respondent City Mayor in imposing the questioned special conditions on petitioner's business permit is ultra vires cannot be put into issue here by the respondents. It is well-settled that:

A party who has not appealed from the decision may not obtain any affirmative relief from the appellate court other than what he had obtain from the lower court, if any, whose decision is brought up on appeal. 23

. . . an appellee who is not an appellant may assign errors in his brief where his purpose is to maintain the judgment on other grounds, but he cannot seek modification or reversal of the judgment or affirmative relief unless he has also appealed. 24

Thus, respondents' submission that the imposition of subject special conditions on petitioner's business permit is not ultra vires cannot prevail over the finding and ruling by the Court of Appeals from which they (respondents) did not appeal.

Anent the second assigned error, petitioner maintains that its business permit issued by the City Mayor is not a contract entered into by Iligan City in the exercise of its

proprietary functions, such that although petitioner agreed to such conditions, it cannot be held in estoppel since ultra vires acts cannot be given effect.

Respondents, on the other hand, agree with the ruling of the Court of Appeals that the business permit in question is in the nature of a contract between Iligan City and the herein petitioner, the terms and conditions of which are binding upon agreement, and that petitioner is estopped from questioning the same. Moreover, in the Resolution denying petitioner's motion for reconsideration, the Court of Appeals held that the contract between the petitioner and the City of Iligan was entered into by the latter in the performance of its proprietary functions.

This Court holds otherwise. It had occasion to rule that a license or permit is not in the nature of a contract but a special privilege.

. . . a license or a permit is not a contract between the sovereignty and the licensee or permitee, and is not a property in the constitutional sense, as to which the constitutional proscription against impairment of the obligation of contracts may extend. A license is rather in the nature of a special privilege, of a permission or authority to do what is within its terms. It is not in any way vested, permanent or absolute. 25

It is therefore decisively clear that estoppel cannot apply in this case. The fact that petitioner acquiesced in the special conditions imposed by the City Mayor in subject business permit does not preclude it from challenging the said imposition, which is ultra vires or beyond the ambit of authority of respondent City Mayor. Ultra vires acts or acts which are clearly beyond the scope of one's authority are null and void and cannot be given any effect. The doctrine of estoppel cannot operate to give effect to an act which is otherwise null and void or ultra vires.

The Court of Appeals erred in adjudging subject business permit as having been issued by responded City Mayor in the performance of proprietary functions of Iligan City. As hereinabove elaborated upon, the issuance of business licenses and permits by a municipality or city is essentially regulatory in nature. The authority, which devolved upon local government units to issue or grant such licenses or permits, is essentially in the exercise of the police power of the State within the contemplation of the general welfare clause of the Local Government Code.

WHEREFORE, the petition is GRANTED; the Decision of the Court of Appeals in CA-GR SP No. 22995 REVERSED: and the respondent City Mayor is hereby ordered to reissue petitioner's business permit in accordance with law and with this disposition. No pronouncement as to costs.

SO ORDERED.

Bellosillo, Puno, Mendoza, Quisumbing, Buena, Gonzaga-Reyes, Ynares-Santiago and De Leon, Jr., JJ., concur.Kapunan, J., see concurring opinion.Vitug, J., please see dissent.Davide, Jr., C.J., I join Justice Vitug in his dissent.

Melo, J., I join the dissent of Justice Vitug.Panganiban, J., I join Justice Vitug's Dissent.Pardo, J., I join dissent of Justice Vitug.

Republic of the PhilippinesSUPREME COURT

Manila

EN BANC

G.R. No. 182069               July 03, 2012

ARNOLD D. VICENCIO, Petitioner vs.HON. REYNALDO A. VILLAR and HON. JUANITO G. ESPINO, JR., in their capacity as Acting Chairman and Commissioner, respectively, of the Hon. Commission on Audit, and ELIZABETH ZOSA, Respondents.

D E C I S I O N

SERENO, J.:

This is a Pctitiur; for Certiorari under Rule 64, in relation to Rule 65 of the Rules or Court, secking to annul Decision No. 2008-022 dated 15 February 2008 of the Commission on Audit (COA). 1

On 30 October 2003, the City Council or the Sangguniang Panglungsod ng Malabon (SPM), presided over by Hon. Benjamin Galauran, then acting Vice-Mayor, adopted and approved City Ordinance No. 15-2003, entitled "An Ordinance Granting Authority to the City Vice-Mayor, Hon. Jay Jay Yambao, to Negotiate and Enter into Contract for Consultancy Services for Consultants in the Sanggunian Secretariat Tasked to Function in their Respective Areas of Concern x x x."2

On 9 December 2003 and 1 March 2004, the City of Malabon, represented by Hon. Galauran, entered into separate Contracts for Consultancy Services with Ms. Jannette O. Vijiga,3 Mr. Meynardo E. Virtucio4 and Mr. Hernando D. Dabalus (2003 Consultancy Contracts).5

Subsequently, during the May 2004 elections, petitioner was elected City Vice-Mayor of Malabon. By virtue of this office, he also became the Presiding Officer of the SPM and, at the same time, the head of the Sanggunian Secretariat.

To complement the manpower requirements of the existing Sanggunian Secretariat, petitioner deemed it necessary to hire the services of consultants with the end view of augmenting and upgrading its performance capability for the effective operation of the legislative machinery of the city.

Petitioner thus wrote a letter dated 19 July 2004 to Atty. Danilo T. Diaz , the City Legal Officer of Malabon, inquiring as to whether it was still necessary for the SPM to ratify a newly entered contract of consultancy services between it and the candidate for the consultancy position. The letter states in part:

This is an inquiry regarding the hiring of consultants by virtue of an ordinance giving authority to the City Vice Mayor to enter into consultancy services (Ordinance no. 15-2003).

As you very well know, the services of the consultants hired by the former administration, particularly by the Sangguniang Panglungsod, ended last June 30, 2004. Hence, we are confronted by this inquiry: Would there still be a need for the Sangguniang Panglungsod to ratify a newly entered contract of consultancy services between the SP and the candidate for said consultancy position? Kindly render your humble opinion on the matter.6

Atty. Diaz then responded to the said inquiry through a letter dated 26 July 2004, which categorically stated that ratification was no longer necessary, provided that the services to be contracted were those stipulated in the ordinance. The letter states thus:

In response to your query contained in your letter dated July 19, 2004, regarding the hiring of consultants for the Sanggunian Secretariat by virtue of Ordinance No. 15-2003, giving authority to the City Vice Mayor to enter into consultancy services and whether there is still a need for ratification of said consultancy contract by the Sanggunian, the answer is, such a ratification is no longer necessary provided that the contract of consultancy services to be executed is precisely the services stipulated in said ordinance. In essence, the Ordinance no. 15-2003 already stated what consultancy services should be secured and hence, if the contract for consultancy services to be executed is precisely those as provided in said ordinance, ratification is a mere suplasage.7

On 21 January 2005, the SPM adopted City Ordinance No. 01-2005 entitled "An Ordinance Appropriating Funds to Cover the Various Expenditures and Activities of the Local Government of Malabon City for the Period from January 01, 2005 to December 31, 2005." The total amount of funds appropriated was P 511,070,019 for the spending of the entire city government. Out of this amount, P 792,000 was earmarked for consultancy services under the Legislative Secretariat.

On 1 February 2005, petitioner, representing the City Government of Malabon City, entered into Contracts for Consultancy Services with Ms. Jennifer S. Catindig8 and Atty. Rodolfo C. delos Santos (2005 Consultancy Contracts).9 On 11 February 2005, another Contract for Consultancy Services was entered into between Mr. Marvin T. Amiana10 and the city government.

After the signing of their respective contracts, the three consultants rendered consultancy services to the SPM. Thereafter, they were correspondingly paid for their services pursuant to the contracts therefor.

On 19 December 2005, Audit Observation Memorandum (AOM) No. 2005-12-01911 was issued by Ms. Atenie F. Padilla, Supervising Auditor of the City Auditor’s Office, Malabon City, disallowing the amount of three hundred eighty-four thousand

nine hundred eighty pesos (P384,980) for being an improper disbursement. The AOM disclosed the following pertinent findings:

City Ordinance No. 15-2003 dated October 30, 2003 was used as basis of authority in hiring consultants. Analysis of the said City Ordinance revealed that it specifically authorized the former Vice-Mayor, Hon. Mark Allan Jay G. Yambao to enter into a contract for consultancy services in the Sangguniang Secretariat covering the period June to December 2003 only. Said ordinance does not give authority to the incumbent City Vice-Mayor Arnold D. Vicencio to hire consultants for CY 2005.

Progress accomplishment report for the month, to determine the services rendered were not attached to the disbursement vouchers.

No information as to what method had been made by BAC in the hiring of individual consultants whether through the selection from several registered professionals who offered consulting services or through direct hiring without the intervention of the BAC.

Copies of the approved contracts together with supporting documents were not submitted to the City Auditor’s Office within five (5) days from execution of the contract for review and evaluation contrary to COA Circular No. 76-34 dated July 15, 1976, thus the City Auditor’s Office was precluded to conduct timely review/evaluation to inform management of whatever deficiencies noted so that immediate remedial measures could be properly taken.12

On 12 May 2006, respondent Elizabeth S. Zosa issued Notice of Disallowance (ND) No. 06-009-101 (05)13containing the result of the evaluation conducted on the AOM issued by Ms. Padilla. The persons held liable for the disallowed amount relative to the hiring of the three consultants were the following: (1) petitioner, in his capacity as City Vice-Mayor, for certifying that the expenses/cash advances were necessary, lawful and incurred under his direct supervision and for approving the transaction; (2) Mr. Eustaquio M. Angeles, in his capacity as Officer-in-Charge, City Accountant, for certifying to the completeness and propriety of the supporting documents of the expenditures; and (3) Ms. Catindig, Atty. Delos Santos, and Mr. Amiana, as payees. The above-named persons were further directed to settle the said disallowance immediately. Pursuant to Sections 48, 50 and 51 of Presidential Decree No. (P.D.) 1445, the parties found liable had a period of six months within which to file an appeal. The disallowance was anchored on the following findings:

- There was no authority for the incumbent City Vice-Mayor Arnold D. Vicencio to hire consultants for CY 2005. City Ordinance No. 15-2003 dated October 30, 2003 which was used as basis of authority to hire consultants specifically authorized the former Vice-Mayor, Hon. Mark Allan Jay G. Yambao to enter into a contract for consultancy services in the Sangguniang Secretariat covering the period June to December 2003 only.

- There were no Progress Accomplishment Reports for the month, to determine the services rendered.

- No information as to what method had been made by BAC in the hiring of individual consultants whether through the selection from several registered professionals who offered consulting services or through direct hiring without the intervention of the BAC.14

On 22 June 2006, the SPM wrote a letter15 informing Ms. Padilla that the three consultants hired by petitioner rendered services covering the period January to December 2005. In its view, the hiring of these consultants and the services they rendered were in good faith.

Aggrieved by the disallowance, petitioner appealed it to the Adjudication and Settlement Board (ASB) of the COA. On 12 June 2007, the ASB issued Decision No. 2007-030,16 the dispositive portion of which reads as follows:

Premises considered, the instant appeal of Hon. Arnold Vicencio is hereby denied. Accordingly, Notice of Disallowance No. 06-009-101 (05) dated 12 May 2006 involving the amount of P384,980.00 representing fees to consultants Mr. Marvin T. Amiana, Atty. Rodolfo Delos Santos and Ms. Jennifer Catindig, is hereby affirmed. However, the instant appeal of Mr. Estaquio Angeles is hereby granted. Mr. Angeles is therefore excluded from the persons liable listed under Notice of Disallowance No. 06-009-101 (05).17

Thereafter, herein petitioner filed a letter dated 7 July 2007,18 addressed to Hon. Guillermo N. Carague, COA Chairperson. The letter prayed for the reversal and setting aside of the earlier Decision of the ASB. On 15 February 2008, public respondent issued the assailed Order. It appears that the letter of petitioner was treated as an appeal to the Commission Proper of the COA and was subsequently denied. The dispositive portion states:

WHEREFORE, premises considered, the instant motion for reconsideration, which was treated as an appeal, is denied.19

On 28 March 2008, the instant Petition was filed, raising the following issue:

WHETHER OR NOT PUBLIC RESPONDENT COMMISSION ON AUDIT COMMITTED SERIOUS ERRORS AND GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF OR EXCESS OFJURISDICTION WHEN IT AFFIRMED ASB DECISION NO. 2007-030, RELATIVE TO THE DISALLOWANCE OF DISBURSEMENTS CONCERNING THE SERVICES RENDERED BY HIRED CONSULTANTS FOR THE SANGGUNIANG PANLUNGSOD NG MALABON.

On 8 April 2008, this Court directed respondents to comment on the Petition. On 28 July 2008, they filed their Comment, in which they averred that Ordinance No. 15-2003 specifically authorized the expenditure of funds for the compensation of consultants only from June to December 2003. Thus, the contracts for consultancy entered into in 2005 were contrary to the ordinance cited and were therefore void for being unauthorized and bereft of any legal basis. There is also no room for interpretation of the ordinance, as the same is clear, and, additionally, actually contains no preamble. Further, respondents argue that to allow the disbursement of

public funds to pay for the services of the consultants, despite the absence of authority for the same, would allow a circumvention of the applicable COA rules and circulars.

Petitioner thereafter filed his Reply to the Comment, in compliance with this Court’s 12 August 2008 Resolution. In his Reply, he contended that he had the authority to enter into the consultancy contracts pursuant to Ordinance No. 15-2003. As the ordinance was ambiguous, there was a need to interpret its provisions by looking into the intent of the law. He also manifested that the Ombusdman had dismissed the administrative and criminal Complaints for violation of Republic Act No. (R.A.) 6713 and for Usurpation of Authority, previously filed against him over the same transactions. The Ombudsman held that, while Ordinance No. 15-2003 specifically mentions then Vice-Mayor Yambao, the intent in passing the law may not be ignored. It was the intention of the city council to authorize the Office of the Vice-Mayor to enter into consultancy contracts, and not Vice-Mayor Yambao only. Petitioner also argued that the ends of substantial justice and equity would be better served by allowing the disbursement for consultancy services that have already been rendered.

We deny the Petition.

At the outset, we note that the Petition has a procedural flaw that should merit its outright dismissal. Through the Verification and Certification attached to the instant Petition, petitioner states that the contents of the Petition "are true and correct of [his] own personal knowledge and belief and based on authentic records and/or documents."20

Section 4, Rule 7 of the Rules of Court provides that a pleading required to be verified which contains a verification based on "information and belief" or "knowledge, information and belief," shall be treated as an unsigned pleading. A pleading, therefore, in which the verification is based merely on the party’s knowledge and belief – as in the instant Petition – produces no legal effect, subject to the discretion of the court to allow the deficiency to be remedied.21

In any case, we find no grave abuse of discretion on the part of the COA in issuing the assailed Decision.

Petitioner contends that the ordinance authorizes the Office of the Vice-Mayor, and not Vice-Mayor Yambao in particular, to enter into consultancy contracts. Notably, it was even Hon. Vice-Mayor Benjamin C. Galauran, who was acting Vice-Mayor at the time, who entered into the 2003 Consultancy Contracts. Petitioner also argues that there is no indication from the preamble of the ordinance, which can be read from the minutes of the SPM meeting, that the ordinance was specifically designed to empower only Vice-Mayor Yambao, or to limit such power to hire for the period June to December 2003 only.

We disagree.

Under Section 456 of R.A. 7160, or the Local Government Code, the following are the powers and duties of a city vice-mayor:

ARTICLE IIThe City Vice-Mayor

SECTION 456. Powers, Duties and Compensation. – (a) The city vice-mayor shall:

(1) Be the presiding officer of the sangguniang panlungsod and sign all warrants drawn on the city treasury for all expenditures appropriated for the operation of the sangguniang panlungsod;

(2) Subject to civil service law, rules and regulations, appoint all officials and employees of the sangguniang panlungsod, except those whose manner of appointment is specifically provided in this Code;

(3) Assume the office of the city mayor for the unexpired term of the latter in the event of permanent vacancy as provided for in Section 44, Book I of this Code;

(4) Exercise the powers and perform the duties and functions of the city mayor in cases of temporary vacancy as provided for in Section 46, Book I of this Code; and

(5) Exercise such other powers and perform such other duties and functions as may be prescribed by law or ordinance.

(b) The city vice-mayor shall receive a monthly compensation corresponding to Salary Grade twenty-eight (28) for a highly urbanized city and Salary Grade twenty-six (26) for a component city, as prescribed under R.A. No. 6758 and the implementing guidelines issued pursuant thereto.

Under this provision, therefore, there is no inherent authority on the part of the city vice-mayor to enter into contracts on behalf of the local government unit, unlike that provided for the city mayor.22 Thus, the authority of the vice-mayor to enter into contracts on behalf of the city was strictly circumscribed by the ordinance granting it. Ordinance No. 15-2003 specifically authorized Vice-Mayor Yambao to enter into contracts for consultancy services. As this is not a power or duty given under the law to the Office of the Vice-Mayor, Ordinance No. 15-2003 cannot be construed as a "continuing authority" for any person who enters the Office of the Vice-Mayor to enter into subsequent, albeit similar, contracts.

Ordinance No. 15-2003 provides in full:

City Ordinance No. 15-2003

An Ordinance Granting Authority to the City Vice Mayor, Hon. Jay Jay G. Yambao, to Negotiate, and Enter into a Contract for Consultancy Services in the Sanggunian Secretariat Tasked to Function in their Respective Areas of Concern, as Aforementioned, To Wit:

(1) A Legal Consultant

(2) A Consultant on Education Affairs and

(3) A Management Consultant

That said consultants shall be paid/compensated at the rate of Twenty Two Thousand Pesos (P22,000.00) each, per month, effective upon approval of this ordinance subject to the usual accounting and auditing procedures, rules and/or regulations;

That the source of funds for appropriations thereof shall be made available for expenditures to be earmarked for payment/compensation for said consultants, covering the period from June to December of 2003, thereby authorizing further the City Vice Mayor to effect the necessary funding thereof, pursuant to the pertinent provision, aforecited, in Chapter 4, Section 336 of R.A. 7160;

That copies of this ordinance be furnished all concerned for their information and guidance.

Adopted: October 30, 2003.23

Ordinance No. 15-2003 is clear and precise and leaves no room for interpretation.1âwphi1 It only authorized the then City Vice-Mayor to enter into consultancy contracts in the specific areas of concern. Further, the appropriations for this particular item were limited to the savings for the period June to December 2003. This was an additional limitation to the power granted to Vice-Mayor Yambao to contract on behalf of the city. The fact that any later consultancy contract would necessarily require further appropriations from the city council strengthens the contention that the power granted under Ordinance No. 15-2003 was limited in scope. Hence, petitioner was without authority to enter into the 2005 Consultancy Contracts.

Where the words of a statute are clear, plain, and free from ambiguity, it must be given its literal meaning and applied without attempted interpretation.24 Thus, the ordinance should be applied according to its express terms, and interpretation would be resorted to only where a literal interpretation would be either impossible or absurd or would lead to an injustice.25 In the instant case, there is no reason to depat1 from this rule, since the subject ordinance is not at all impossible, absurd, or unjust.

Section 103 of P.O. 1445 declares that expenditures of government funds or uses of government property in violation of law or regulations shall be a personal liability of the official or employee found to be directly responsible therefor. The public official's personal liability arises only if the expenditure of government funds was made in violation of law. In this case, petitioner's act of entering into a contract on behalf of the local government unit without the requisite authority therefor was in violation of the Local Government Code. While petitioner may have relied on the opinion of the City Legal Officer, such reliance only serves to buttress his good faith. It does not, however, exculpate him from his personal liability under P.D. 1445.

In sum, the COA's assailed Decision was made in faithful compliance with its mandate and in judicious exercise of its general audit power as conferred on it by the Constitution26

The COA was merely fulfilling its mandate in observing the policy that government funds and property should be fully protected and conserved; and that irregular, unnecessary, excessive or extravagant expenditures or uses of such funds and property should be prevented.27 Thus, no grave abuse of discretion may be imputed to the COA.

WHEREFORE, the Commission on Audit Decision dated 4 January 2008 is hereby AFFIRMED.

SO ORDERED.

MARIA LOURDES P. SERENOAssociate Justice