canullasdigest

8/3/2019 canullasdigest

1/11

Facts:Petitioner is a former Supervising Personnel Specialist of the CSC

Regional Office No. IV and also the Officer-in-Charge of the PublicAssistance and Liaison Division (PALD) under the Mamamayan Muna Hindi

Mamaya Na program of the CSC.On January 3, 2007 at around 2:30 p.m., an unsigned letter-

complaint addressed to respondent CSC Chairperson Karina Constantino-David which was marked Confidential and sent through a courier

service (LBC) from a certain Alan San Pascual of Bagong Silang,

Caloocan City, was received by the Integrated Records Management Office(IRMO) at the CSC Central Office. Following office practice in whichdocuments marked Confidential are left unopened and instead sent tothe addressee, the aforesaid letter was given directly to ChairpersonDavid.

On the paramount issue of the legality of the search conducted onpetitioners computer, the CSC noted the dearth of jurisprudence relevant

to the factual milieu of this case where the government as employerinvades the private files of an employee stored in the computer assigned

to him for his official use, in the course of initial investigation of possiblemisconduct committed by said employee and without the latters consentor participation. The CSC thus turned to relevant rulings of the UnitedStates Supreme Court, and cited the leading case ofOConnor v.

Ortega[22] as authority for the view that government agencies, in theircapacity as employers, rather than law enforcers, could validly conduct

search and seizure in the governmental workplace without meeting theprobable cause or warrant requirement for search and seizure. Anotherruling cited by the CSC is the more recent case ofUnited States v. Mark L.Simons[23]which declared that the federal agencys computer use policy

foreclosed any inference of reasonable expectation of privacy on the partof its employees. Though the Court therein recognized that such policy did

not, at the same time, erode the respondents legitimate expectation ofprivacy in the office in which the computer was installed, still, thewarrantless search of the employees office was upheld as valid because a

government employer is entitled to conduct a warrantless search pursuant

to an investigation of work-related misconduct provided the search isreasonable in its inception and scope.

By Decision dated October 11, 2007, the CA dismissed the petitionfor certiorari after finding no grave abuse of discretion committed by

respondents CSC officials. The CA held that: (1) petitioner was notcharged on the basis of the anonymous letter but from the initiative of theCSC after a fact-finding investigation was conducted and the resultsthereof yielded aprima facie case against him; (2) it could not be said that

in ordering the back-up of files in petitioners computer and laterconfiscating the same, Chairperson David had encroached on the authority

of a judge in view of the CSC computer policy declaring the computers asgovernment property and that employee-users thereof have no reasonableexpectation of privacy in anything they create, store, send, or receive on

the computer system; and (3) there is nothing contemptuous in CSCs act

of proceeding with the formal investigation as there was no restrainingorder or injunction issued by the CA.

Issues:

ITHE HONORABLE COURT OF APPEALS GRIEVOUSLY ERREDAND COMMITTED SERIOUS IRREGULARITY AND BLATANTERRORS IN LAW AMOUNTING TO GRAVE ABUSE OF

DISCRETION WHEN IT RULED THAT ANONYMOUS

COMPLAINT IS ACTIONABLE UNDER E.O. 292 WHEN INTRUTH AND IN FACT THE CONTRARY IS EXPLICITLYPROVIDED UNDER 2nd PARAGRAPH OF SECTION 8 OF CSCRESOLUTION NO. 99-1936, WHICH IS AN [AMENDMENT]TO THE ORIGINAL RULES PER CSC RESOLUTION NO. 94-

0521;II

THE HONORABLE COURT GRIEVOUSLY ERRED ANDCOMMITTED PALPABLE ERRORS IN LAW AMOUNTING TO

GRAVE ABUSE OF DISCRETION WHEN IT RULED THATPETITIONER CANNOT INVOKE HIS RIGHT TO PRIVACY, TOUNREASONABLE SEARCH AND SEIZURE, AGAINST SELF-INCRIMINATION, BY VIRTUE OF OFFICE MEMORANDUM

NO. 10 S. 2002, A MERE INTERNAL MEMORANDUMSIGNED SOLELY AND EXCLUSIVELY BY RESPONDENT

DAVID AND NOT BY THE COLLEGIAL COMMISSIONCONSIDERING THAT POLICY MATTERS INVOLVINGSUB[S]TANTIAL RIGHTS CANNOT BE COVERED BY ANOFFICE MEMORANDUM WHICH IS LIMITED TO

PROCEDURAL AND ROUTINARY INSTRUCTION;III

THE HONORABLE COURT GRAVELY ERRED ANDCOMMITTED GRAVE ABUSE OF DISCRETION WHEN ITRULED THAT MEMO SEARCH DATED JANUARY 3, 2007 AND

THE TAKING OF DOCUMENTS IN THE EVENING THEREOF

FROM 7:00 TO 10:00 P.M. IS NOT GRAVE ABUSE OFDISCRETION LIMITING THE DEFINITION [OF] GRAVE

ABUSE OF DISCRETION TO ONE INVOLVING AND TAINTEDWITH PERSONAL HOSTILITY. IT LIKEWISE ERRED IN

HOLDING THAT DATA STORED IN THE GOVERNMENTCOMPUTERS ARE GOVERNMENT PROPERTIES INCLUDINGTHE PERSONAL FILES WHEN THE CONTRARY IS PROVIDEDUNDER SECTION 14 OF OM. 10 s. 2002. AND GRIEVOUSLY

ERRED STILL WHEN IT RULED THAT RESPONDENT DAVIDBY VIRTUE OF O.M. 10 DID NOT ENCROACH ON THE

DUTIES AND FUNCTIONS OF A JUDGE PURSUANT TOARTICLE III, SECTION 2 OF THE 1987 PHILIPPINECONSTITUTION;

IV
http://sc.judiciary.gov.ph/jurisprudence/2011/october2011/181881.htm#_ftn23http://sc.judiciary.gov.ph/jurisprudence/2011/october2011/181881.htm#_ftn24http://sc.judiciary.gov.ph/jurisprudence/2011/october2011/181881.htm#_ftn24http://sc.judiciary.gov.ph/jurisprudence/2011/october2011/181881.htm#_ftn24http://sc.judiciary.gov.ph/jurisprudence/2011/october2011/181881.htm#_ftn23


2/11

THE HONORABLE COURT ERRED WHEN IT FAILED TOCONSIDER ALL OTHER NEW ARGUMENTS, ADDITIONAL

EVIDENCE HEREUNTO SUBMITTED AS WELL AS ITSFAILURE TO EVALUATE AND TAKE ACTION ON THE 2

MOTIONS TO ADMIT AND INCORPORATE CSCRESOLUTION NOS. 07-1420 DATED JULY 24, 2007 ANDCSC RESOLUTION 07-1800 DATED SEPTEMBER 10,2007. IT DID NOT RULE LIKEWISE ON THE FOUR URGENT

MOTION TO RESOLVE ANCILLARY PRAYER FOR TRO.[26]

HELD:

The right to privacy has been accorded recognition in this jurisdiction as a facet of the right protected by the guarantee against

unreasonable search and seizure under Section 2, Article III of the 1987Constitution,[27] which provides:

SEC. 2. The right of the people to be secure intheir persons, houses, papers, and effects against

unreasonable searches and seizures of whatever natureand for any purpose shall be inviolable, and no searchwarrant or warrant of arrest shall issue except uponprobable cause to be determined personally by the judge

after examination under oath or affirmation of thecomplainant and the witnesses he may produce, and

particularly describing the place to be searched and thepersons or things to be seized.

The constitutional guarantee is not a prohibition of all searches andseizures but only of unreasonable searches and seizures.[28] But to fully

understand this concept and application for the purpose of resolving theissue at hand, it is essential that we examine the doctrine in the light of

pronouncements in another jurisdiction. As the Court declared in Peoplev. Marti[29]:

Our present constitutional provision on the

guarantee against unreasonable search and seizure had its

origin in the 1935 Charter which, worded as follows: The right of the people to be

secure in their persons, houses, papersand effects against unreasonable searches

and seizures shall not be violated, and nowarrants shall issue butuponprobable cause, to be determined bythe judge after examination under oath or

affirmation of the complainant and thewitnesses he may produce, and particularly

describing the place to be searched, andthe persons or things to be seized. (Sec.1[3], Article III)

was in turn derived almost verbatim from the FourthAmendment to the United States Constitution. As such,

the Court may turn to the pronouncements of the UnitedStates Federal Supreme Court and State Appellate Courts

which are considered doctrinal in this jurisdiction.[30]

some government offices may be so open to

fellow employees or the public that no expectation ofprivacy is reasonable. x x x Given the great varietyof work environments in the public sector, thequestion of whether an employee has a reasonable

expectation of privacy must be addressed on a case-

by-case basis.[37]In the case of searches conducted by a public

employer, we must balance the invasion of theemployees legitimate expectations of privacyagainst the governments need for supervision,

control, and the efficient operation of the workplace.a probable cause requirement for searches of

the type at issue here would impose intolerableburdens on public employers. The delay in

correcting the employee misconduct caused by theneed for probable cause rather than reasonablesuspicion will be translated into tangible and oftenirreparable damage to the agencys work, and

ultimately to the public interest. x x xx x x x

In sum, we conclude that the special needs,beyond the normal need for law enforcement maketheprobable-cause requirement impracticable, x xx for legitimate, work-related noninvestigatory

intrusions as well as investigations of work-relatedmisconduct. A standard of reasonableness will neither

unduly burden the efforts of government employers toensure the efficient and proper operation of the workplace,nor authorize arbitrary intrusions upon the privacy of

public employees. We hold, therefore, that public

employer intrusions on the constitutionally protectedprivacy interests of government employees for

noninvestigatory, work-related purposes, as well asfor investigations of work-related

misconduct, should be judged by the standard ofreasonableness under all the circumstances. Underthis reasonableness standard, both the inception andthe scope of the intrusion must be reasonable:

Determining the reasonableness of anysearch involves a twofold inquiry: first, one

must consider whether theaction wasjustified at its inception, x x x ; second,one must determine whether the search as

actually conducted was reasonably relatedin scope to the circumstances which
http://sc.judiciary.gov.ph/jurisprudence/2011/october2011/181881.htm#_ftn27http://sc.judiciary.gov.ph/jurisprudence/2011/october2011/181881.htm#_ftn28http://sc.judiciary.gov.ph/jurisprudence/2011/october2011/181881.htm#_ftn29http://sc.judiciary.gov.ph/jurisprudence/2011/october2011/181881.htm#_ftn30http://sc.judiciary.gov.ph/jurisprudence/2011/october2011/181881.htm#_ftn30http://sc.judiciary.gov.ph/jurisprudence/2011/october2011/181881.htm#_ftn31http://sc.judiciary.gov.ph/jurisprudence/2011/october2011/181881.htm#_ftn38http://sc.judiciary.gov.ph/jurisprudence/2011/october2011/181881.htm#_ftn27http://sc.judiciary.gov.ph/jurisprudence/2011/october2011/181881.htm#_ftn28http://sc.judiciary.gov.ph/jurisprudence/2011/october2011/181881.htm#_ftn29http://sc.judiciary.gov.ph/jurisprudence/2011/october2011/181881.htm#_ftn30http://sc.judiciary.gov.ph/jurisprudence/2011/october2011/181881.htm#_ftn31http://sc.judiciary.gov.ph/jurisprudence/2011/october2011/181881.htm#_ftn38


3/11

justified the interference in the first place,x x x

Ordinarily, a search of an employees office bya supervisor will be justified at its inception when

there are reasonable grounds for suspecting that thesearch will turn up evidence that the employee isguilty of work-related misconduct, or that the searchis necessary for a noninvestigatory work-related

purpose such as to retrieve a needed file. x x x The

search will be permissible in its scope when themeasures adopted are reasonably related to theobjectives of the search and not excessivelyintrusive in light of the nature of the [misconduct

Simons did not have a legitimate expectation

of privacy with regard to the record or fruits of hisInternet use in light of the FBIS Internet policy. The

policy clearly stated that FBIS would audit, inspect,and/or monitor employees use of the Internet,

including all file transfers, all websites visited, andall e-mail messages, as deemed appropriate.

The burden is on Simons to prove that he hada legitimate expectation of privacy in his office.

The employees privacy interest in an officeis to a large extent circumscribed by the companys

work policies, the collective bargaining agreement, ifany, entered into by management and the bargainingunit, and the inherent right of the employer tomaintain discipline and efficiency in the workplace.

Considering the damaging nature of theaccusation, the Commission had to act fast, if only to

arrest or limit any possible adverse consequence or fall-out. Thus, on the same date that the complaint wasreceived, a search was forthwith conducted involving the

computer resources in the concerned regional

office. That it was the computers that weresubjected to the search was justified since these

furnished the easiest means for an employee toencode and store documents. Indeed, the

computers would be a likely starting point inferreting out incriminating evidence. Concomitantly,the ephemeral nature of computer files, that is, theycould easily be destroyed at a click of a button,

necessitated drastic and immediate action.the fact that these documents were retrieved

from the computer of Pollo raises the presumptionthat he was the author thereof. This is because hehad a control of the said computer

We need not belabor this point raised by petitioner. Theadministrative complaint is deemed to have been initiated by the CSC

itself when Chairperson David, after a spot inspection and search of thefiles stored in the hard drive of computers in the two divisions adverted to

in the anonymous letter -- as part of the disciplining authoritys own fact-finding investigation and information-gathering -- found a prima facie case

against the petitioner who was then directed to file his comment. As thisCourt held in Civil Service Commission v. Court of Appeals[57] --

Under Sections 46 and 48 (1), Chapter 6, SubtitleA, Book V of E.O. No. 292 and Section 8, Rule II of

Uniform Rules on Administrative Cases in the Civil

Service, a complaint may be initiated against a civilservice officer or employee by the appropriatedisciplining authority, even without being subscribedand sworn to. Considering that the CSC, as thedisciplining authority for Dumlao, filed the complaint,

jurisdiction over Dumlao was validly acquired. (Emphasissupplied.)

WHEREFORE, the petitionfor review on certiorari is DENIED.The Decisiondated October 11, 2007 and Resolutiondated February 29,

2008 of the Court of Appeals in CA-G.R. SP No. 98224 are AFFIRMED.With costs against the petitioner.SO ORDERED.

LUCIANO VELOSO, ABRAHAM CABOCHAN, JOCELYN DAWIS-ASUNCIONand MARLON M. LACSON,
http://sc.judiciary.gov.ph/jurisprudence/2011/october2011/181881.htm#_ftn58http://sc.judiciary.gov.ph/jurisprudence/2011/october2011/181881.htm#_ftn58


4/11

Petitioners,- versus -

COMMISSION ON AUDIT,

Respondent.G.R. No. 193677

FACTS:

On December 7, 2000, the City Council of Manila enacted Ordinance

No. 8040 entitled An Ordinance Authorizing the Conferment of ExemplaryPublic Service Award to Elective Local Officials of Manila Who Have BeenElected for Three (3) Consecutive Terms in the Same Position. Section 2

thereof provides:

SEC. 2. The EPSA shall consist of a Plaque of Appreciation,retirement and gratuity pay remuneration equivalent to the actual time

served in the position for three (3) consecutive terms, subject to theavailability of funds as certified by the City Treasurer. PROVIDED, That [it]shall be accorded to qualified elected City Officials on or before the firstday of service in an appropriated public ceremony to be conducted for the

purpose. PROVIDED FURTHER, That this Ordinance shall only cover thePosition of Mayor, Vice-Mayor and Councilor: PROVIDED FURTHERMORE,

That those who were elected for this term and run for higher electiveposition thereafter, after being elected shall still be eligible for this awardfor the actual time served: PROVIDED FINALLY That the necessary andincidental expenses needed to implement the provisions of this Ordinance

shall be appropriated and be included in the executive budget for the yearwhen any city official will qualify for the Award.[4]

On August 8, 2005, Atty. Gabriel J. Espina (Atty. Espina), SupervisingAuditor of the City of Manila, issued Audit Observation Memorandum

(AOM) No. 2005-100(05)07(05)[6] with the following observations:

1. The initial payment of monetary reward as part of

Exemplary Public Service Award (EPSA) amounting to P9,923,257.00 toformer councilors of the City Government of Manila who have been elected

for three (3) consecutive terms to the same position as authorized by CityOrdinance No. 8040 is without legal basis.2. The amount granted as monetary reward is excessive and

tantamount to double compensation in contravention to Article 170 (c) ofthe IRR of RA 7160 which provides that no elective or appointive local

official shall receive additional, double or indirect compensation unlessspecifically authorized by law.

3. The appropriations for retirement gratuity to implement EPSAordinance was classified as Maintenance and Other Operating Expenses

instead of Personal Services contrary to Section 7, Volume III of theManual on the New Government Accounting System (NGAS) for local

government units and COA Circular No. 2004-008 dated September 20,2004 which provide the updated description of accounts under the NGAS.

[7]

After evaluation of the AOM, the Director, Legal and Adjudication Office(LAO)-Local of the COA issued ND No. 06-010-100-05[8] dated May 24,

2006.

On November 9, 2006, former councilors Jocelyn Dawis-Asuncion (Dawis-Asuncion), Luciano M. Veloso (Veloso), Abraham C. Cabochan (Cabochan),Marlon M. Lacson (Lacson), Julio E. Logarta, Jr., and Monina U. Silva, CityAccountant Gloria C. Quilantang, City Budget Officer Alicia Moscaya and

then Vice Mayor and Presiding Officer Danilo B. Lacuna filed a Motion toLift the Notice of Disallowance.[9] In its Decision No. 2007-171[10] dated

November 29, 2007, the LAO-Local decided in favor of the movants, thepertinent portion of which reads:

WHEREFORE, premises considered, the motion of former Vice- MayorDanilo B. Lacuna, et al., is GRANTED and ND No. 06-010-100-05 datedMay 24, 2006 is hereby ordered lifted as the reasons for the disallowance

have been sufficiently explained. This decision, however, should not betaken as precedence (sic) to other or similar personal benefits that a local

government unit may extend which should be appreciated based on theirseparate and peculiar circumstances.[11]

Citing Article 170 of the Implementing Rules and Regulations (IRR)of Republic Act (RA) No. 7160, the LAO-Local held that the monetary

reward given to the former councilors can be one of gratuity and,therefore, cannot be considered as additional, double or indirectcompensation. Giving importance to the principle of local autonomy, the

LAO-local upheld the power of local government units (LGUs) to grant

allowances. More importantly, it emphasized that the Department ofBudget and Management (DBM) did not disapprove the appropriation for

the EPSA of the City which indicate that the same is valid.[12]

Upon review, the COA rendered the assailed Decision No. 2008-088sustaining ND No. 06-010-100-05.[13] The motion for reconsideration waslikewise denied in Decision No. 2010-077.[14] The COA opined that themonetary reward under the EPSA is covered by the term compensation.

Though it recognizes the local autonomy of LGUs, it emphasized thelimitations thereof set forth in the Salary Standardization Law (SSL). It

explained that the SSL does not authorize the grant of such monetaryreward or gratuity. It also stressed the absence of a specific law passedby Congress which ordains the conferment of such monetary reward or

gratuity to the former councilors.[15] In Decision No. 2010-077, inresponse to the question on its jurisdiction to rule on the legality of the


5/11

disbursement, the COA held that it is vested by the Constitution the powerto determine whether government entities comply with laws and

regulations in disbursing government funds and to disallow irregulardisbursements.[16]

Aggrieved, petitioners Veloso, Cabochan, Dawis-Asuncion and Lacsoncome before the Court in this special civil action for certiorari alleginggrave abuse of discretion on the part of the COA.

ISSUE:

(1) whether the COA has the authority to disallow the disbursement oflocal government funds; and (2) whether the COA committed grave abuseof discretion in affirming the disallowance of P9,923,257.00 covering the

EPSA of former three-term councilors of the City of Manila authorized byOrdinance No. 8040.

RULING:

NO.

As held in National Electrification Administration v. Commission on Audit,[23] the ruling in Guevara cited by petitioners has already been

overturned by the Court in Caltex Philippines, Inc. v. Commission on Audit.[24] The Court explained[25] that under the 1935 Constitution, the

Auditor General could not correct irregular, unnecessary, excessive orextravagant expenditures of public funds, but could only bring the matterto the attention of the proper administrative officer. Under the 1987Constitution, however, the COA is vested with the authority to determine

whether government entities, including LGUs, comply with laws andregulations in disbursing government funds, and to disallow illegal or

irregular disbursements of these funds.

Section 2. (1) The Commission on Audit shall have the power, authority,

and duty to examine, audit, and settle all accounts pertaining to the

revenue and receipts of, and expenditures or uses of funds and property,owned or held in trust by, or pertaining to, the Government, or any of its

subdivisions, agencies, or instrumentalities, including government-ownedor controlled corporations with original charters, and on a post-audit basis:

(a) constitutional bodies, commissions and offices that have been grantedfiscal autonomy under this Constitution; (b) autonomous state collegesand universities; (c) other government-owned or controlled corporationsand their subsidiaries; and (d) such non-governmental entities receiving

subsidy or equity, directly or indirectly, from or through the Government,which are required by law or the granting institution to submit to such

audit as a condition of subsidy or equity. However, where the internalcontrol system of the audited agencies is inadequate, the Commission mayadopt such measures, including temporary or special pre-audit, as are

necessary and appropriate to correct the deficiencies. It shall keep thegeneral accounts of the Government and, for such period as may be

provided by law, preserve the vouchers and other supporting paperspertaining thereto.

Pursuant to its mandate as the guardian of public funds, the COA is vested

with broad powers over all accounts pertaining to government revenue andexpenditures and the uses of public funds and property.[27] This includesthe exclusive authority to define the scope of its audit and examination,establish the techniques and methods for such review, and promulgate

accounting and auditing rules and regulations.[28] The COA is endowed

with enough latitude to determine, prevent and disallow irregular,unnecessary, excessive, extravagant or unconscionable expenditures ofgovernment funds.[29] It is tasked to be vigilant and conscientious insafeguarding the proper use of the government's, and ultimately thepeople's, property.[30] The exercise of its general audit power is among

the constitutional mechanisms that gives life to the check and balancesystem inherent in our form of government.[31]

The Court had therefore previously upheld the authority of the COA to

disapprove payments which it finds excessive and disadvantageous to theGovernment; to determine the meaning of public bidding and when thereis failure in the bidding; to disallow expenditures which it findsunnecessary according to its rules even if disallowance will mean

discontinuance of foreign aid; to disallow a contract even after it has beenexecuted and goods have been delivered.[32]

It is the general policy of the Court to sustain the decisions ofadministrative authorities, especially one which is constitutionally-creatednot only on the basis of the doctrine of separation of powers but also for

their presumed expertise in the laws they are entrusted to enforce.Findings of administrative agencies are accorded not only respect but also

finality when the decision and order are not tainted with unfairness orarbitrariness that would amount to grave abuse of discretion.[33] It is onlywhen the COA has acted without or in excess of jurisdiction, or with grave

abuse of discretion amounting to lack or excess of jurisdiction, that this

Court entertains a petition questioning its rulings.[34] There is graveabuse of discretion when there is an evasion of a positive duty or a virtual

refusal to perform a duty enjoined by law or to act in contemplation of lawas when the judgment rendered is not based on law and evidence but on

caprice, whim and despotism.[35]In this case, we find no grave abuse of discretion on the part of the COA inissuing the assailed decisions as will be discussed below.

Petitioners claim that the grant of the retirement and gratuity payremuneration is a valid exercise of the powers of the SangguniangPanlungsod set forth in RA 7160.

We disagree.


6/11

Indeed, Section 458 of RA 7160 defines the power, duties, functions and

compensation of the Sangguniang Panlungsod

However, as correctly held by the COA, the above power is not withoutlimitations. These limitations are embodied in Section 81 of RA 7160Moreover, the IRR of RA 7160 reproduced the Constitutional provision that

no elective or appointive local official or employee shall receive additional,

double, or indirect compensation, unless specifically authorized by law, noraccept without the consent of the Congress, any present, emoluments,office, or title of any kind from any foreign government. Section 325 ofthe law limit the total appropriations for personal services[37] of a localgovernment unit to not more than 45% of its total annual income from

regular sources realized in the next preceding fiscal year.

While it may be true that the above appropriation did not exceedthe budgetary limitation set by RA 7160, we find that the COA is correct in

sustaining ND No. 06-010-100-05.

As clearly explained by the Court in Yap v. Commission on Audit,[40] the disbursement of public funds, salaries and benefits of government

officers and employees should be granted to compensate them forvaluable public services rendered, and the salaries or benefits paid to such

officers or employees must be commensurate with services rendered. Inthe same vein, additional allowances and benefits must be shown to benecessary or relevant to the fulfillment of the official duties and functionsof the government officers and employees. Without this limitation,

government officers and employees may be paid enormous sums withoutlimit or without justification necessary other than that such sums are being

paid to someone employed by the government. Public funds are theproperty of the people and must be used prudently at all times with a viewto prevent dissipation and waste.[41]

Verily, the COA's assailed decisions were made in faithful compliancewith its mandate and in judicious exercise of its general audit power as

conferred on it by the Constitution.[44] The COA adheres to the policy thatgovernment funds and property should be fully protected and conserved

and that irregular, unnecessary, excessive or extravagant expenditures oruses of such funds and property should be prevented.[45]

Accordingly, the Status Quo Ante Order issued by the Court onNovember 30, 2010 is hereby RECALLED. In view, however, of this Court's

decision not to require the refund of the amounts already received, theCommission on Audit is ORDERED to cease and desist from enforcing the

Notice of Finality of Decision[47] dated October 5, 2010.SO ORDERED.

Republic of the PhilippinesSupreme Court

Manila

EN BANCRENALD F. VILANDO,

Petitioner,

- versus -HOUSE OF REPRESENTATIVES ELECTORAL TRIBUNAL, JOCELYN SYLIMKAICHONG AND HON. SPEAKER PROSPERO NOGRALES,

Respondents.

G.R. Nos. 192147 & 192149

Facts:

This is a petition for certiorari dismissing the petitions for quo warrantoand declaring private respondent Jocelyn Sy Limkaichong (Limkaichong)not disqualified as Member of the House of Representatives representing

the First District of Negros Oriental and its Resolution[2] dated May 17,2010, denying the motion for reconsideration.

In the May 14, 2007 elections, Limkaichong filed her certificate ofcandidacy for the position of Representative of the First District of Negros

Oriental. She won over the other contender, Olivia Paras.

On May 25, 2007, she was proclaimed as Representative by the ProvincialBoard of Canvassers on the basis of Comelec Resolution No. 8062[3]issued on May 18, 2007.

On July 23, 2007, she assumed office as Member of the House ofRepresentatives.

Meanwhile, petitions involving either the disqualification or the

proclamation of Limkaichong were filed before the Commission onElections (COMELEC) which reached the Court.

The petitions, which questioned her citizenship assailing the Joint

Resolution issued by the COMELEC which resolved the disqualificationcases against her.

On April 1, 2009, the Court granted the aforesaid petition of Limkaichong,reversed the Joint Resolution of the Comelec, dismissed the three (3)

other petitions, and directed the petitioners to seek relief before the HRETby way of a petition for Quo Warranto.


7/11

For her defense, Limkaichong maintained that she is a natural-born

Filipino citizen. She averred that the acquisition of Philippine citizenshipby her father was regular and in order and had already attained the status

of res judicata. Further, she claimed that the validity of such citizenshipcould not be assailed through a collateral attack.

On March 24, 2010, the HRET dismissed both petitions and declared

Limkaichong not disqualified as Member of the House of Representatives.

Pertinent portions of the HRET decision reads:

By and large, petitioners failed to satisfy the quantum ofproof to sustain their theory that respondent is not a natural-born Filipinocitizen and therefore not qualified as Representative of the First District,

Negros Oriental. This being so, their petitions must fail.

WHEREFORE, the Tribunal DISMISSES the instant petition for lackof merit and declares that respondent Jocelyn Sy Limkaichong is not

disqualified as Member of the House of Representatives representing theFirst District, Negros Oriental.

The petitioners sought reconsideration of the aforesaid decision, butit was denied by the HRET in its Resolution dated May 17, 2010.

Hence, this petition for certiorari filed by Vilando anchored on the following

ISSUES:

THE ONE-SIDED RESOLUTION OF THE SUBJECT PETITION FOR QUO

WARRANTO AND THE UTTER FAILURE OF THE HRET TO DISQUALIFYLIMKAICHONG AS MEMBER OF THE HOUSE OF REPRESENTATIVESDESPITE MANIFEST EVIDENCE THAT SHE IS NOT A NATURAL-BORN

FILIPINO CITIZEN IS WHIMSICAL, CAPRICIOUS AND ARBITRARY

BECAUSE:

1. THE PETITION FOR QUO WARRANTO DOES NOT OPERATE AS A

COLLATERAL ATTACK ON THE CITIZENSHIP OF LIMKAICHONGS FATHERFOR THE REASON THAT HER FATHERS CERTIFICATE OF NATURALIZATIONIS OF NO FORCE AND EFFECT FROM THE VERY BEGINNING, HENCE,THERE IS ACTUALLY NOTHING BEING ATTACKED OR ASSAILED BY THE

SAME.

2. LIMKAICHONG CANNOT DERIVE PHILIPPINE CITIZENSHIP FROMHER MOTHER GIVEN THAT AT THE TIME OF HER BIRTH, HER MOTHER ISNOT ALREADY A FILIPINO CITIZEN AS A RESULT OF HER MARRIAGE TO

HER FATHER AS PROVIDED FOR UNDER SECTION 1 (7) OF

COMMONWEALTH ACT NO. 63 IN RELATION TO ARTICLE 2 (1) CHAPTER IIOF THE CHINESE REVISED NATIONALITY LAW OF FEBRUARY 5, 1959.

3. HAVING THE PLENARY, ABSOLUTE AND EXCLUSIVE JURISDICTION

TO DETERMINE, AMONG OTHERS, THE QUALIFICATIONS OF MEMBERS OFTHE HOUSE OF REPRESENTATIVES, THE HRET CAN LOOK INTO THEELIGIBILITY OF LIMKAICHONG EVEN IF, AS AN INCIDENT THERETO, ITWOULD MEAN LOOKING INTO THE VALIDITY OF THE CERTIFICATE OF

NATURALIZATION.[8]

RULING:

It should be noted that Limkaichongs term of office as Representative ofthe First District of Negros Oriental from June 30, 2007 to June 30, 2010

already expired. As such, the issue questioning her eligibility to hold officehas been rendered moot and academic by the expiration of her term.

Whatever judgment is reached, the same can no longer have any practicallegal effect or, in the nature of things, can no longer be enforced.[9] Thus,

the petition may be dismissed for being moot and academic.Moreover, there was the conduct of the 2010 elections, a superveningevent, in a sense, has also rendered this case moot and academic. A moot

and academic case is one that ceases to present a justiciable controversyby virtue of supervening events, so that a declaration thereon would be of

no practical value. As a rule, courts decline jurisdiction over such case, ordismiss it on ground of mootness. [10]

Citizenship, being a continuing requirement for Members of the

House of Representatives, however, may be questioned at anytime.[11]For this reason, the Court deems it appropriate to resolve the petition on

the merits. This position finds support in the rule that courts will decide aquestion, otherwise moot and academic, if it is capable of repetition, yetevading review.[12] The question on Limkaichongs citizenship is likely to

recur if she would run again, as she did run, for public office, hence,

capable of repetition.

In any case, the Court is of the view that the HRET committed nograve abuse of discretion in finding that Limkaichong is not disqualified to

sit as Member of the House of Representatives.

Vilandos argument, that the quo warranto petition does notoperate as a collateral attack on the citizenship of Limkaichongs father as

the certificate of naturalization is null and void from the beginning, isdevoid of merit.

It may be true that, as alleged by said respondents, that the proceedingsfor naturalization were tainted with certain infirmities, fatal or otherwise,

but that is beside the point in this case. The jurisdiction of the court toinquire into and rule upon such infirmities must be properly invoked in


8/11

accordance with the procedure laid down by law. Such procedure is thecancellation of the naturalization certificate. [Section 1(5), Commonwealth

Act No. 63], in the manner fixed in Section 18 of Commonwealth Act No.473, hereinbefore quoted, namely, "upon motion made in the proper

proceedings by the Solicitor General or his representatives, or by theproper provincial fiscal." In other words, the initiative must come fromthese officers, presumably after previous investigation in each particularcase.

Clearly, under law and jurisprudence, it is the State, through its

representatives designated by statute, that may question the illegally orinvalidly procured certificate of naturalization in the appropriatedenaturalization proceedings. It is plainly not a matter that may be raisedby private persons in an election case involving the naturalized citizensdescendant.

True, the HRET has jurisdiction over quo warranto petitions, specifically

over cases challenging ineligibility on the ground of lack of citizenship. Noless than the 1987 Constitution vests the HRET the authority to be the sole

judge of all contests relating to the election, returns and qualifications ofits Members. This constitutional power is likewise echoed in the 2004Rules of the HRET.

Such power of the HRET, no matter how complete and exclusive, does notcarry with it the authority to delve into the legality of the judgment of

naturalization in the pursuit of disqualifying Limkaichong. To ruleotherwise would operate as a collateral attack on the citizenship of thefather which, as already stated, is not permissible. The HRET properlyresolved the issue with the following ratiocination:

Evidently, there is no basis to oblige the Tribunal to reopen the

naturalization proceedings for a determination of the citizenship of theascendant of respondent. A petition for quo warranto is not a means toachieve that purpose. To rule on this issue in this quo warranto

proceeding will not only be a clear grave abuse of discretion amounting to

a lack or excess of jurisdiction, but also a blatant violation of due processon the part of the persons who will be affected or who are not parties in

this case.[19]

Well-settled is the principle that the judgments of the HRET are beyondjudicial interference. The only instance where this Court may intervene inthe exercise of its so-called extraordinary jurisdiction is upon a

determination that the decision or resolution of the HRET was renderedwithout or in excess of its jurisdiction, or with grave abuse of discretion or

upon a clear showing of such arbitrary and improvident use of its power toconstitute a denial of due process of law, or upon a demonstration of avery clear unmitigated error, manifestly constituting such grave abuse of

discretion that there has to be a remedy for such abuse.[26] In this case,there is no showing of any such arbitrariness or improvidence. The HRET

acted well within the sphere of its power when it dismissed the quowarranto petition.

In fine, this Court finds sufficient basis to sustain the ruling of the HRETwhich resolved the issue of citizenship in favor of Limkaichong.

WHEREFORE, the petition is DENIED. Accordingly, the Court affirms

the March 24, 2010 Decision of the HRET declaring that Limkaichong is not

disqualified as Member of the House of Representatives representing theFirst District, Negros Oriental.

SO ORDERED.

EN BANC

RENATO V. DIAZ and G.R. No. 193007


9/11

AURORA MA. F. TIMBOL,Petitioners,

- versus - PERALTA,BERSAMIN,*

DEL CASTILLO,ABAD,VILLARAMA, JR.,PEREZ,

MENDOZA, and

SERENO,** JJ.THE SECRETARY OF FINANCEand THE COMMISSIONER OF Promulgated:INTERNAL REVENUE,

Respondents. July 19, 2011

The Facts and the Case

Petitioners Renato V. Diaz and Aurora Ma. F. Timbol (petitioners) filed thispetition for declaratory relief[1] assailing the validity of the impendingimposition of value-added tax (VAT) by the Bureau of Internal Revenue(BIR) on the collections of tollway operators.

Petitioners claim that, since the VAT would result in increased toll fees,

they have an interest as regular users of tollways in stopping the BIRaction. Additionally, Diaz claims that he sponsored the approval ofRepublic Act 7716 (the 1994 Expanded VAT Law or EVAT Law) andRepublic Act 8424 (the 1997 National Internal Revenue Code or the NIRC)

at the House of Representatives. Timbol, on the other hand, claims thatshe served as Assistant Secretary of the Department of Trade and Industry

and consultant of the Toll Regulatory Board (TRB) in the pastadministration.

Petitioners hold the view that Congress did not, when it enacted the NIRC,

intend to include toll fees within the meaning of sale of services that aresubject to VAT; that a toll fee is a users tax, not a sale of services; that

to impose VAT on toll fees would amount to a tax on public service; andthat, since VAT was never factored into the formula for computing toll

fees, its imposition would violate the non-impairment clause of theconstitution.On August 13, 2010 the Court issued a temporary restraining order (TRO),

enjoining the implementation of the VAT. The Court required thegovernment, represented by respondents Cesar V. Purisima, Secretary of

the Department of Finance, and Kim S. Jacinto-Henares, Commissioner ofInternal Revenue, to comment on the petition within 10 days from notice.[2] Later, the Court issued another resolution treating the petition as one

for prohibition.[3]

Finally, the government contends that the non-inclusion of VAT inthe parametric formula for computing toll rates cannot exempt tollway

operators from VAT. In any event, it cannot be claimed that the rights oftollway operators to a reasonable rate of return will be impaired by the

VAT since this is imposed on top of the toll rate. Further, the imposition ofVAT on toll fees would have very minimal effect on motorists using thetollways.

In their reply[6] to the governments comment, petitioners point out that

tollway operators cannot be regarded as franchise grantees under theNIRC since they do not hold legislative franchises. Further, the BIRintends to collect the VAT by rounding off the toll rate and putting anyexcess collection in an escrow account. But this would be illegal since onlythe Congress can modify VAT rates and authorize its disbursement.

Finally, BIR Revenue Memorandum Circular 63-2010 (BIR RMC 63-2010),which directs toll companies to record an accumulated input VAT of zero

balance in their books as of August 16, 2010, contravenes Section 111 ofthe NIRC which grants entities that first become liable to VAT a transitional

input tax credit of 2% on beginning inventory. For this reason, the VAT ontoll fees cannot be implemented.

The Issues Presented

The case also presents two substantive issues:1. Whether or not the government is unlawfully expanding VATcoverage by including tollway operators and tollway operations in the

terms franchise grantees and sale of services under Section 108 of theCode; and

2. Whether or not the imposition of VAT on tollway operators a)amounts to a tax on tax and not a tax on services; b) will impair the

tollway operators right to a reasonable return of investment under their

TOAs; and c) is not administratively feasible and cannot be implemented.

The Courts Rulings

B. On the Substantive Issues:

One. The relevant law in this case is Section 108 of the NIRC, asamended. VAT is levied, assessed, and collected, according to Section

108, on the gross receipts derived from the sale or exchange of servicesas well as from the use or lease of properties. The third paragraph of

Section 108 defines sale or exchange of services as follows:The phrase sale or exchange of services means the performance of all

kinds of services in the Philippines for others for a fee, remuneration orconsideration, including those performed or rendered by construction and


10/11

service contractors; stock, real estate, commercial, customs andimmigration brokers; lessors of property, whether personal or real;

warehousing services; lessors or distributors of cinematographic films;persons engaged in milling, processing, manufacturing or repacking goods

for others; proprietors, operators or keepers of hotels, motels, resthouses,pension houses, inns, resorts; proprietors or operators of restaurants,refreshment parlors, cafes and other eating places, including clubs andcaterers; dealers in securities; lending investors; transportation

contractors on their transport of goods or cargoes, including persons who

transport goods or cargoes for hire and other domestic common carriersby land relative to their transport of goods or cargoes; common carriers byair and sea relative to their transport of passengers, goods or cargoesfrom one place in the Philippines to another place in the Philippines; salesof electricity by generation companies, transmission, and distribution

companies; services of franchise grantees of electric utili ties, telephoneand telegraph, radio and television broadcasting and all other franchise

grantees except those under Section 119 of this Code and non-lifeinsurance companies (except their crop insurances), including surety,

fidelity, indemnity and bonding companies; and similar services regardlessof whether or not the performance thereof calls for the exercise or use ofthe physical or mental faculties. (Underscoring supplied)

Presidential Decree (P.D.) 1112 or the Toll Operation Decree establishesthe legal basis for the services that tollway operators render. Essentially,

tollway operators construct, maintain, and operate expressways, alsocalled tollways, at the operators expense. Tollways serve as alternativesto regular public highways that meander through populated areas andbranch out to local roads.

When a tollway operator takes a toll fee from a motorist, the fee isin effect for the latters use of the tollway facilities over which the operator

enjoys private proprietary rights[12] that its contract and the lawrecognize. In this sense, the tollway operator is no different from theservice providers under Section 108

It does not help petitioners cause that Section 108 subjects to VAT allkinds of services rendered for a fee regardless of whether or not the

performance thereof calls for the exercise or use of the physical or mentalfaculties. This means that services to be subject to VAT need not fall

under the traditional concept of services, the personal or professionalkinds that require the use of human knowledge and skills.Petitioners of course contend that tollway operators cannot be considered

franchise grantees under Section 108 since they do not hold legislativefranchises. But nothing in Section 108 indicates that the franchise

grantees it speaks of are those who hold legislative franchises.Petitioners give no reason, and the Court cannot surmise any, for makinga distinction between franchises granted by Congress and franchises

granted by some other government agency.

Indeed, Congress granted special franchise for the operation of tollways tothe Philippine National Construction Company, the former tollway

concessionaire for the North and South Luzon Expressways. Apart fromCongress, tollway franchises may also be granted by the TRB, pursuant to

the exercise of its delegated powers under P.D. 1112.[17] The franchisein this case is evidenced by a Toll Operation Certificate.[18]

Finally, Administrative feasibility is one of the canons of a sound tax

system. It simply means that the tax system should be capable of being

effectively administered and enforced with the least inconvenience to thetaxpayer. Non-observance of the canon, however, will not render a taximposition invalid except to the extent that specific constitutional orstatutory limitations are impaired.[34] Thus, even if the imposition of VATon tollway operations may seem burdensome to implement, it is not

necessarily invalid unless some aspect of it is shown to violate any law orthe Constitution.

Here, it remains to be seen how the taxing authority will actually

implement the VAT on tollway operations. Any declaration by the Courtthat the manner of its implementation is illegal or unconstitutional wouldbe premature.

For the same reason, the Court cannot prematurely declare as illegal, BIRRMC 63-2010 which directs toll companies to record an accumulated input

VAT of zero balance in their books as of August 16, 2010, the date whenthe VAT imposition was supposed to take effect. The issuance allegedlyviolates Section 111(A)[36] of the Code which grants first time VAT payersa transitional input VAT of 2% on beginning inventory.

In fine, the Commissioner of Internal Revenue did not usurp legislative

prerogative or expand the VAT laws coverage when she sought to imposeVAT on tollway operations. Section 108(A) of the Code clearly states thatservices of all other franchise grantees are subject to VAT, except as may

be provided under Section 119 of the Code. Tollway operators are not

among the franchise grantees subject to franchise tax under the latterprovision. Neither are their services among the VAT-exempt transactions

under Section 109 of the Code.

If the legislative intent was to exempt tollway operations from VAT, aspetitioners so strongly allege, then it would have been well for the law toclearly say so. Tax exemptions must be justified by clear statutory grantand based on language in the law too plain to be mistaken.[37] But as the

law is written, no such exemption obtains for tollway operators. The Courtis thus duty-bound to simply apply the law as it is found.

Lastly, the grant of tax exemption is a matter of legislative policy that iswithin the exclusive prerogative of Congress. The Courts role is to merely

uphold this legislative policy, as reflected first and foremost in thelanguage of the tax statute. Thus, any unwarranted burden that may be


11/11

perceived to result from enforcing such policy must be properly referred toCongress. The Court has no discretion on the matter but simply applies

the law.

WHEREFORE, the Court DENIES respondents Secretary of Finance andCommissioner of Internal Revenues motion for reconsideration of itsAugust 24, 2010 resolution, DISMISSES the petitioners Renato V. Diaz andAurora Ma. F. Timbols petition for lack of merit, and SETS ASIDE the

Courts temporary restraining order dated August 13, 2010.

SO ORDERED.

Documents

canullasdigest