Romana Reyes vs. Julia A. Reyes, 600 SCRA, 345, 351

September 18, 2009

A case against the Metropolitan Trial Court Judge of Pasig City (Judge JR) who was found to be unfit to discharge her functions as a judge and also because of her carelessness and lack of circumspection in the use of the inherent power to punish for contempt.

The orders of Judge JR against RR betray not only her ignorance as regards the Rule on Contempt of Court but also its own capricious arrogance and despotic nature, the antithesis of an ideal arbiter. It betrays a flaw in her psychological makeup that disqualifies her from presiding in a court and dispensing justice.

The carelessness and lack of circumspection on the part of Judge JR in peremptorily ordering the arrest and detention of RR warrant the imposition of a penalty as a corrective measure so that she and others may be properly warned about carelessness in the application of the proper law and undue severity in ordering the detention of RR immediately and depriving her of the opportunity to seek recourse from higher courts against the summary penalty of imprisonment. The power to declare a person in contempt is inherent in all courts so as to preserve order in judicial proceedings and uphold the administration of justice. Judges however are enjoined to exercise such power judiciously and sparingly with utmost restraint and with the end in view of utilizing the same for correction and preservation of the dignity of the court and not for retaliation or vindication.

This is one reason why Judge JR are dismissed. Because the records in this case shows that after being suspended, she abandoned her office. She did this probably because she felt guilty and her action is not justifiable.

Commercial Law J.G. SUMMIT HOLDINGS, INC

Republic of the Philippines SUPREME COURT Manila SPECIAL FIRST DIVISION G.R. No. 124293             January 31, 2005 J.G. SUMMIT HOLDINGS, INC., petitioner, vs. COURT OF APPEALS; COMMITTEE ON PRIVATIZATION, its Chairman and Members; ASSET PRIVATIZATION TRUST; and PHILYARDS HOLDINGS, INC., respondents. R E S O L U T I O N PUNO, J.: For resolution before this Court are two motions filed by the petitioner, J.G. Summit Holdings, Inc. for reconsideration of our Resolution dated September 24, 2003 and to elevate this case to the Court En Banc. The petitioner questions the Resolution which reversed our Decision of November 20, 2000, which in turn reversed and set aside a Decision of the Court of Appeals promulgated on July 18, 1995. I. Facts The undisputed facts of the case, as set forth in our Resolution of September 24, 2003, are as follows: On January 27, 1997, the National Investment and Development Corporation (NIDC), a government corporation, entered into a Joint Venture Agreement (JVA) with Kawasaki Heavy Industries, Ltd. of Kobe, Japan (KAWASAKI) for the construction, operation and management of the Subic National Shipyard, Inc. (SNS) which subsequently became the Philippine Shipyard and Engineering Corporation (PHILSECO). Under the JVA, the NIDC and KAWASAKI will contribute P330 million for the capitalization of PHILSECO in the proportion of 60%-40% respectively. One of its salient features is the grant to the parties of the right of first refusal should either of them decide to sell, assign or transfer its interest in the joint venture, viz: 1.4 Neither party shall sell, transfer or assign all or any part of its interest in SNS [PHILSECO] to any third party without giving the other under the same terms the right of first refusal. This provision shall not apply if the transferee is a corporation owned or controlled by the GOVERNMENT or by a KAWASAKI affiliate. On November 25, 1986, NIDC transferred all its rights, title and interest in PHILSECO to the Philippine National Bank (PNB). Such interests were subsequently transferred to the National Government pursuant to Administrative Order No. 14. On December 8, 1986, President Corazon C. Aquino issued Proclamation No. 50 establishing the Committee on Privatization (COP) and the Asset Privatization Trust (APT) to take title to, and possession of, conserve, manage and dispose of non-performing assets of the National Government. Thereafter, on February 27, 1987, a trust agreement was entered into between the National Government and the APT wherein the latter was named the trustee of the National Government's share in PHILSECO. In 1989, as a result of a quasi-reorganization of PHILSECO to settle its huge obligations to PNB, the National Government's shareholdings in PHILSECO increased to 97.41% thereby reducing KAWASAKI's shareholdings to 2.59%. In the interest of the national economy and the government, the COP and the APT deemed it best to sell the National Government's share in PHILSECO to private entities. After a series of negotiations between the APT and KAWASAKI, they agreed that the latter's right of first refusal under the JVA be "exchanged" for the right to top by five percent (5%) the highest bid for the said shares. They further agreed that KAWASAKI would be entitled to name a company in which it was a stockholder, which could exercise the right to top. On September 7, 1990, KAWASAKI informed APT that Philyards Holdings, Inc. (PHI)1 would exercise its right to top. At the pre-bidding conference held on September 18, 1993, interested bidders were given copies of the JVA between NIDC and KAWASAKI, and of the Asset Specific Bidding Rules (ASBR) drafted for the National Government's 87.6% equity share in PHILSECO. The provisions of the ASBR were explained to the interested bidders who were notified that the bidding would be held on December 2, 1993. A portion of the ASBR reads: 1.0 The subject of this Asset Privatization Trust (APT) sale through public bidding is the National Government's equity in PHILSECO consisting of 896,869,942 shares of stock (representing 87.67% of PHILSECO's outstanding capital stock), which will be sold as a whole block in accordance with the rules herein enumerated. xxx xxx xxx 2.0 The highest bid, as well as the buyer, shall be subject to the final approval of both the APT Board of Trustees and the Committee on Privatization (COP). 2.1 APT reserves the right in its sole discretion, to reject any or all bids. 3.0 This public bidding shall be on an Indicative Price Bidding basis. The Indicative price set for the National Government's 87.67% equity in PHILSECO is PESOS: ONE BILLION THREE HUNDRED MILLION (P1,300,000,000.00). xxx xxx xxx 6.0 The highest qualified bid will be submitted to the APT Board of Trustees at its regular meeting following the bidding, for the purpose of determining whether or not it should be endorsed by the APT Board of Trustees to the COP, and the latter approves the same. The APT shall advise Kawasaki Heavy Industries, Inc. and/or its nominee, [PHILYARDS] Holdings, Inc., that the highest bid is acceptable to the National Government. Kawasaki Heavy Industries, Inc. and/or [PHILYARDS] Holdings, Inc. shall then have a period of thirty (30) calendar days from the date of receipt of such advice from APT within which to exercise their "Option to Top the Highest Bid" by offering a bid equivalent to the highest bid plus five (5%) percent thereof. 6.1 Should Kawasaki Heavy Industries, Inc. and/or [PHILYARDS] Holdings, Inc. exercise their "Option to Top the Highest Bid," they shall so notify the APT about such exercise of their option and deposit with APT the amount equivalent to ten percent (10%) of the highest bid plus five percent (5%) thereof within the thirty (30)-day period mentioned in paragraph 6.0 above. APT will then serve notice upon Kawasaki Heavy Industries, Inc. and/or [PHILYARDS] Holdings, Inc. declaring them as the preferred bidder and they shall have a period of ninety (90) days from the receipt of the APT's notice within which to pay the balance of their bid price. 6.2 Should Kawasaki Heavy Industries, Inc. and/or [PHILYARDS] Holdings, Inc. fail to exercise their "Option to Top the Highest Bid" within the thirty (30)-day period, APT will declare the highest bidder as the winning bidder. xxx xxx xxx 12.0 The bidder shall be solely responsible for examining with appropriate care these rules, the official bid forms, including any addenda or amendments thereto issued during the bidding period. The bidder shall likewise be responsible for informing itself with respect to any and all conditions concerning the PHILSECO Shares which may, in any manner, affect the bidder's proposal. Failure on the part of the bidder to so examine and inform itself shall be its sole risk and no relief for error or omission will be given by APT or COP. . . . At the public bidding on the said date, petitioner J.G. Summit Holdings, Inc.2 submitted a bid of Two Billion and Thirty Million Pesos (P2,030,000,000.00) with an acknowledgment of KAWASAKI/[PHILYARDS'] right to top, viz: 4. I/We understand that the Committee on Privatization (COP) has up to thirty (30) days to act on APT's recommendation based on the result of this bidding. Should the COP approve the highest bid, APT shall advise Kawasaki Heavy Industries, Inc. and/or its nominee, [PHILYARDS] Holdings, Inc. that the highest bid is acceptable to the National Government. Kawasaki Heavy Industries, Inc. and/or [PHILYARDS] Holdings, Inc. shall then have a period of thirty (30) calendar days from the date of receipt of such advice from APT within which to exercise their "Option to Top the Highest Bid" by offering a bid equivalent to the highest bid plus five (5%) percent thereof. As petitioner was declared the highest bidder, the COP approved the sale on December 3, 1993 "subject to the right of Kawasaki Heavy Industries, Inc./[PHILYARDS] Holdings, Inc. to top JGSMI's bid by 5% as specified in the bidding rules." On December 29, 1993, petitioner informed APT that it was protesting the offer of PHI to top its bid on the grounds that: (a) the KAWASAKI/PHI consortium composed of KAWASAKI, [PHILYARDS], Mitsui, Keppel, SM Group, ICTSI and Insular Life violated the ASBR because the last four (4) companies were the losing bidders thereby circumventing the law and prejudicing the weak winning bidder; (b) only KAWASAKI could exercise the right to top; (c) giving the same option to top to PHI constituted unwarranted benefit to a third party; (d) no right of first refusal can be exercised in a public bidding or auction sale; and (e) the JG Summit consortium was not estopped from questioning the proceedings. On February 2, 1994, petitioner was notified that PHI had fully paid the balance of the purchase price of the subject bidding. On February 7, 1994, the APT notified petitioner that PHI had exercised its option to top the highest bid and that the COP had approved the same on January 6, 1994. On February 24, 1994, the APT and PHI executed a Stock Purchase Agreement. Consequently, petitioner filed with this Court a Petition for Mandamus under G.R. No. 114057. On May 11, 1994, said petition was referred to the Court of Appeals. On July 18, 1995, the Court of Appeals denied the same for lack of merit. It ruled that the petition for mandamus was not the proper remedy to question the constitutionality or legality of the right of first refusal and the right to top that was exercised by KAWASAKI/PHI, and that the matter must be brought "by the proper party in the proper forum at the proper time and threshed out in a full blown trial." The Court of Appeals further ruled that the right of first refusal and the right to top are prima facie legal and that the petitioner, "by participating in the public bidding, with full knowledge of the right to top granted to KAWASAKI/[PHILYARDS] is…estopped from questioning the validity of the award given to [PHILYARDS] after the latter exercised the right to top and had paid in full the purchase price of the subject shares, pursuant to the ASBR." Petitioner filed a Motion for Reconsideration of said Decision which was denied on March 15, 1996. Petitioner thus filed a Petition for Certiorari with this Court alleging grave abuse of discretion on the part of the appellate court. On November 20, 2000, this Court rendered x x x [a] Decision ruling among others that the Court of Appeals erred when it dismissed the petition on the sole ground of the impropriety of the special civil action of mandamus because the petition was also one of certiorari. It further ruled that a shipyard like PHILSECO is a public utility whose capitalization must be sixty percent (60%) Filipino-owned. Consequently, the right to top granted to KAWASAKI under the Asset Specific Bidding Rules (ASBR) drafted for the sale of the 87.67% equity of the National Government in PHILSECO is illegal — not only because it violates the rules on competitive bidding — but more so, because it allows foreign corporations to own more than 40% equity in the shipyard. It also held that "although the petitioner had the opportunity to examine the ASBR before it participated in the bidding, it cannot be estopped from questioning the unconstitutional, illegal and inequitable provisions thereof." Thus, this Court voided the transfer of the national government's 87.67% share in PHILSECO to Philyard[s] Holdings, Inc., and upheld the right of JG Summit, as the highest bidder, to take title to the said shares, viz: WHEREFORE, the instant petition for review on certiorari is GRANTED. The assailed Decision and Resolution of the Court of Appeals are REVERSED and SET ASIDE. Petitioner is ordered to pay to APT its bid price of Two Billion Thirty Million Pesos (P2,030,000,000.00), less its bid deposit plus interests upon the finality of this Decision. In turn, APT is ordered to: (a) accept the said amount of P2,030,000,000.00 less bid deposit and interests from petitioner; (b) execute a Stock Purchase Agreement with petitioner; (c) cause the issuance in favor of petitioner of the certificates of stocks representing 87.6% of PHILSECO's total capitalization; (d) return to private respondent PHGI the amount of Two Billion One Hundred Thirty-One Million Five Hundred Thousand Pesos (P2,131,500,000.00); and (e) cause the cancellation of the stock certificates issued to PHI. SO ORDERED. In separate Motions for Reconsideration, respondents submit[ted] three basic issues for x x x resolution: (1) Whether PHILSECO is a public utility; (2) Whether under the 1977 JVA, KAWASAKI can exercise its right of first refusal only up to 40% of the total capitalization of PHILSECO; and (3) Whether the right to top granted to KAWASAKI violates the principles of competitive bidding.3 (citations omitted) In a Resolution dated September 24, 2003, this Court ruled in favor of the respondents. On the first issue, we held that Philippine Shipyard and Engineering Corporation (PHILSECO) is not a public utility, as by nature, a shipyard is not a public utility4 and that no law declares a shipyard to be a public utility.5 On the second issue, we found nothing in the 1977 Joint Venture Agreement (JVA) which prevents Kawasaki Heavy Industries, Ltd. of Kobe, Japan (KAWASAKI) from acquiring more than 40% of PHILSECO’s total capitalization.6 On the final issue, we held that the right to top granted to KAWASAKI in exchange for its right of first refusal did not violate the principles of competitive bidding.7 On October 20, 2003, the petitioner filed a Motion for Reconsideration8 and a Motion to Elevate This Case to the Court En Banc.9 Public respondents Committee on Privatization (COP) and Asset Privatization Trust (APT), and private respondent Philyards Holdings, Inc. (PHILYARDS) filed their Comments on J.G. Summit Holdings, Inc.’s (JG Summit’s) Motion for Reconsideration and Motion to Elevate This Case to the Court En Banc on January 29, 2004 and February 3, 2004, respectively. II. Issues Based on the foregoing, the relevant issues to resolve to end this litigation are the following: 1. Whether there are sufficient bases to elevate the case at bar to the Court en banc. 2. Whether the motion for reconsideration raises any new matter or cogent reason to warrant a reconsideration of this Court’s Resolution of September 24, 2003. Motion to Elevate this Case to the Court En Banc The petitioner prays for the elevation of the case to the Court en banc on the following grounds: 1. The main issue of the propriety of the bidding process involved in the present case has been confused with the policy issue of the supposed fate of the shipping industry which has never been an issue that is determinative of this case.10 2. The present case may be considered under the Supreme Court Resolution dated February 23, 1984 which included among en banc cases those involving a novel question of law and those where a doctrine or principle laid down by the Court en banc or in division may be modified or reversed.11 3. There was clear executive interference in the judicial functions of the Court when the Honorable Jose Isidro Camacho, Secretary of Finance, forwarded to Chief Justice Davide, a memorandum dated November 5, 2001, attaching a copy of the Foreign Chambers Report dated October 17, 2001, which matter was placed in the agenda of the Court and noted by it in a formal resolution dated November 28, 2001.12 Opposing J.G. Summit’s motion to elevate the case en banc, PHILYARDS points out the petitioner’s inconsistency in previously opposing PHILYARDS’ Motion to Refer the Case to the Court En Banc. PHILYARDS contends that J.G. Summit should now be estopped from asking that the case be referred to the Court en banc. PHILYARDS further contends that the Supreme Court en banc is not an appellate court to which decisions or resolutions of its divisions may be appealed citing Supreme Court Circular No. 2-89 dated February 7, 1989.13 PHILYARDS also alleges that there is no novel question of law involved in the present case as the assailed Resolution was based on well-settled jurisprudence. Likewise, PHILYARDS stresses that the Resolution was merely an outcome of the motions for reconsideration filed by it and the COP and APT and is "consistent with the inherent power of courts to ‘amend and control its process and orders so as to make them conformable to law and justice.’ (Rule 135, sec. 5)"14 Private respondent belittles the petitioner’s allegations regarding the change in ponente and the alleged executive interference as shown by former Secretary of Finance Jose Isidro Camacho’s memorandum dated November 5, 2001 arguing that these do not justify a referral of the present case to the Court en banc. In insisting that its Motion to Elevate This Case to the Court En Banc should be granted, J.G. Summit further argued that: its Opposition to the Office of the Solicitor General’s Motion to Refer is different from its own Motion to Elevate; different grounds are invoked by the two motions; there was unwarranted "executive interference"; and the change inponente is merely noted in asserting that this case should be decided by the Court en banc.15 We find no merit in petitioner’s contention that the propriety of the bidding process involved in the present case has been confused with the policy issue of the fate of the shipping industry which, petitioner maintains, has never been an issue that is determinative of this case. The Court’s Resolution of September 24, 2003 reveals a clear and definitive ruling on the propriety of the bidding process. In discussing whether the right to top granted to KAWASAKI in exchange for its right of first refusal violates the principles of competitive bidding, we made an exhaustive discourse on the rules and principles of public bidding and whether they were complied with in the case at bar.16 This Court categorically ruled on the petitioner’s argument that PHILSECO, as a shipyard, is a public utility which should maintain a 60%-40% Filipino-foreign equity ratio, as it was a pivotal issue. In doing so, we recognized the impact of our ruling on the shipbuilding industry which was beyond avoidance.17 We reject petitioner’s argument that the present case may be considered under the Supreme Court Resolution dated February 23, 1984 which included among en banc cases those involving a novel question of law and those where a doctrine or principle laid down by the court en banc or in division may be modified or reversed. The case was resolved based on basic principles of the right of first refusal in commercial law and estoppel in civil law. Contractual obligations arising from rights of first refusal are not new in this jurisdiction and have been recognized in numerous cases.18 Estoppel is too known a civil law concept to require an elongated discussion. Fundamental principles on public bidding were likewise used to resolve the issues raised by the petitioner. To be sure, petitioner leans on the right to top in a public bidding in arguing that the case at bar involves a novel issue. We are not swayed. The right to top was merely a condition or a reservation made in the bidding rules which was fully disclosed to all bidding parties. In Bureau Veritas, represented by Theodor H. Hunermann v. Office of the President, et al., 19 we dealt with this conditionality, viz: x x x It must be stressed, as held in the case of A.C. Esguerra & Sons v. Aytona, et al., (L-18751, 28 April 1962, 4 SCRA 1245), that in an "invitation to bid, there is a condition imposed upon the bidders to the effect that the bidding shall be subject to the right of the government to reject any and all bids subject to its discretion. In the case at bar, the government has made its choice and unless an unfairness or injustice is shown, the losing bidders have no cause to complain nor right to dispute that choice. This is a well-settled doctrine in this jurisdiction and elsewhere." The discretion to accept or reject a bid and award contracts is vested in the Government agencies entrusted with that function. The discretion given to the authorities on this matter is of such wide latitude that the Courts will not interfere therewith, unless it is apparent that it is used as a shield to a fraudulent award (Jalandoni v. NARRA, 108 Phil. 486 [1960]). x x x The exercise of this discretion is a policy decision that necessitates prior inquiry, investigation, comparison, evaluation, and deliberation. This task can best be discharged by the Government agencies concerned, not by the Courts. The role of the Courts is to ascertain whether a branch or instrumentality of the Government has transgressed its constitutional boundaries. But the Courts will not interfere with executive or legislative discretion exercised within those boundaries. Otherwise, it strays into the realm of policy decision-making. It is only upon a clear showing of grave abuse of discretion that the Courts will set aside the award of a contract made by a government entity. Grave abuse of discretion implies a capricious, arbitrary and whimsical exercise of power (Filinvest Credit Corp. v. Intermediate Appellate Court, No. 65935, 30 September 1988, 166 SCRA 155). The abuse of discretion must be so patent and gross as to amount to an evasion of positive duty or to a virtual refusal to perform a duty enjoined by law, as to act at all in contemplation of law, where the power is exercised in an arbitrary and despotic manner by reason of passion or hostility (Litton Mills, Inc. v. Galleon Trader, Inc., et al[.], L-40867, 26 July 1988, 163 SCRA 489). The facts in this case do not indicate any such grave abuse of discretion on the part of public respondents when they awarded the CISS contract to Respondent SGS. In the "Invitation to Prequalify and Bid" (Annex "C," supra), the CISS Committee made an express reservation of the right of the Government to "reject any or all bids or any part thereof or waive any defects contained thereon and accept an offer most advantageous to the Government." It is a well-settled rule that where such reservation is made in an Invitation to Bid, the highest or lowest bidder, as the case may be, is not entitled to an award as a matter of right (C & C Commercial Corp. v. Menor, L-28360, 27 January 1983, 120 SCRA 112). Even the lowest Bid or any Bid may be rejected or, in the exercise of sound discretion, the award may be made to another than the lowest bidder (A.C. Esguerra & Sons v. Aytona, supra, citing 43 Am. Jur., 788). (emphases supplied)1awphi1.nét Like the condition in the Bureau Veritas case, the right to top was a condition imposed by the government in the bidding rules which was made known to all parties. It was a condition imposed on all bidders equally, based on the APT’s exercise of its discretion in deciding on how best to privatize the government’s shares in PHILSECO. It was not a whimsical or arbitrary condition plucked from the ether and inserted in the bidding rules but a condition which the APT approved as the best way the government could comply with its contractual obligations to KAWASAKI under the JVA and its mandate of getting the most advantageous deal for the government. The right to top had its history in the mutual right of first refusal in the JVA and was reached by agreement of the government and KAWASAKI. Further, there is no "executive interference" in the functions of this Court by the mere filing of a memorandum by Secretary of Finance Jose Isidro Camacho. The memorandum was merely "noted" to acknowledge its filing. It had no further legal significance. Notably too, the assailed Resolution dated September 24, 2003 was decided unanimously by the Special First Division in favor of the respondents. Again, we emphasize that a decision or resolution of a Division is that of the Supreme Court20 and the Court en banc is not an appellate court to which decisions or resolutions of a Division may be appealed.21 For all the foregoing reasons, we find no basis to elevate this case to the Court en banc. Motion for Reconsideration Three principal arguments were raised in the petitioner’s Motion for Reconsideration. First, that a fair resolution of the case should be based on contract law, not on policy considerations; the contracts do not authorize the right to top to be derived from the right of first refusal.22 Second, that neither the right of first refusal nor the right to top can be legally exercised by the consortium which is not the proper party granted such right under either the JVA or the Asset Specific Bidding Rules (ASBR).23 Third, that the maintenance of the 60%-40% relationship between the National Investment and Development Corporation (NIDC) and KAWASAKI arises from contract and from the Constitution because PHILSECO is a landholding corporation and need not be a public utility to be bound by the 60%-40% constitutional limitation.24 On the other hand, private respondent PHILYARDS asserts that J.G. Summit has not been able to show compelling reasons to warrant a reconsideration of the Decision of the Court.25 PHILYARDS denies that the Decision is based mainly on policy considerations and points out that it is premised on principles governing obligations and contracts and corporate law such as the rule requiring respect for contractual stipulations, upholding rights of first refusal, and recognizing the assignable nature of contracts rights.26 Also, the ruling that shipyards are not public utilities relies on established case law and fundamental rules of statutory construction. PHILYARDS stresses that KAWASAKI’s right of first refusal or even the right to top is not limited to the 40% equity of the latter.27 On the landholding issue raised by J.G. Summit, PHILYARDS emphasizes that this is a non-issue and even involves a question of fact. Even assuming that this Court can take cognizance of such question of fact even without the benefit of a trial, PHILYARDS opines that landholding by PHILSECO at the time of the bidding is irrelevant because what is essential is that ultimately a qualified entity would eventually hold PHILSECO’s real estate properties.28 Further, given the assignable nature of the right of first refusal, any applicable nationality restrictions, including landholding limitations, would not affect the right of first refusal itself, but only the manner of its exercise.29 Also, PHILYARDS argues that if this Court takes cognizance of J.G. Summit’s allegations of fact regarding PHILSECO’s landholding, it must also recognize PHILYARDS’ assertions that PHILSECO’s landholdings were sold to another corporation.30 As regards the right of first refusal, private respondent explains that KAWASAKI’s reduced shareholdings (from 40% to 2.59%) did not translate to a deprivation or loss of its contractually granted right of first refusal.31Also, the bidding was valid because PHILYARDS exercised the right to top and it was of no moment that losing bidders later joined PHILYARDS in raising the purchase price.32 In cadence with the private respondent PHILYARDS, public respondents COP and APT contend: 1. The conversion of the right of first refusal into a right to top by 5% does not violate any provision in the JVA between NIDC and KAWASAKI. 2. PHILSECO is not a public utility and therefore not governed by the constitutional restriction on foreign ownership. 3. The petitioner is legally estopped from assailing the validity of the proceedings of the public bidding as it voluntarily submitted itself to the terms of the ASBR which included the provision on the right to top. 4. The right to top was exercised by PHILYARDS as the nominee of KAWASAKI and the fact that PHILYARDS formed a consortium to raise the required amount to exercise the right to top the highest bid by 5% does not violate the JVA or the ASBR. 5. The 60%-40% Filipino-foreign constitutional requirement for the acquisition of lands does not apply to PHILSECO because as admitted by petitioner itself, PHILSECO no longer owns real property. 6. Petitioner’s motion to elevate the case to the Court en banc is baseless and would only delay the termination of this case.33 In a Consolidated Comment dated March 8, 2004, J.G. Summit countered the arguments of the public and private respondents in this wise: 1. The award by the APT of 87.67% shares of PHILSECO to PHILYARDS with losing bidders through the exercise of a right to top, which is contrary to law and the constitution is null and void for being violative of substantive due process and the abuse of right provision in the Civil Code. a. The bidders[’] right to top was actually exercised by losing bidders. b. The right to top or the right of first refusal cannot co-exist with a genuine competitive bidding. c. The benefits derived from the right to top were unwarranted. 2. The landholding issue has been a legitimate issue since the start of this case but is shamelessly ignored by the respondents. a. The landholding issue is not a non-issue. b. The landholding issue does not pose questions of fact. c. That PHILSECO owned land at the time that the right of first refusal was agreed upon and at the time of the bidding are most relevant. d. Whether a shipyard is a public utility is not the core issue in this case. 3. Fraud and bad faith attend the alleged conversion of an inexistent right of first refusal to the right to top. a. The history behind the birth of the right to top shows fraud and bad faith. b. The right of first refusal was, indeed, "effectively useless." 4. Petitioner is not legally estopped to challenge the right to top in this case. a. Estoppel is unavailing as it would stamp validity to an act that is prohibited by law or against public policy. b. Deception was patent; the right to top was an attractive nuisance. c. The 10% bid deposit was placed in escrow. J.G. Summit’s insistence that the right to top cannot be sourced from the right of first refusal is not new and we have already ruled on the issue in our Resolution of September 24, 2003. We upheld the mutual right of first refusal in the JVA.34 We also ruled that nothing in the JVA prevents KAWASAKI from acquiring more than 40% of PHILSECO’s total capitalization.35 Likewise, nothing in the JVA or ASBR bars the conversion of the right of first refusal to the right to top. In sum, nothing new and of significance in the petitioner’s pleading warrants a reconsideration of our ruling. Likewise, we already disposed of the argument that neither the right of first refusal nor the right to top can legally be exercised by the consortium which is not the proper party granted such right under either the JVA or the ASBR. Thus, we held: The fact that the losing bidder, Keppel Consortium (composed of Keppel, SM Group, Insular Life Assurance, Mitsui and ICTSI), has joined PHILYARDS in the latter's effort to raiseP2.131 billion necessary in exercising the right to top is not contrary to law, public policy or public morals. There is nothing in the ASBR that bars the losing bidders from joining either the winning bidder (should the right to top is not exercised) or KAWASAKI/PHI (should it exercise its right to top as it did), to raise the purchase price. The petitioner did not allege, nor was it shown by competent evidence, that the participation of the losing bidders in the public bidding was done with fraudulent intent. Absent any proof of fraud, the formation by [PHILYARDS] of a consortium is legitimate in a free enterprise system. The appellate court is thus correct in holding the petitioner estopped from questioning the validity of the transfer of the National Government's shares in PHILSECO to respondent.36 Further, we see no inherent illegality on PHILYARDS’ act in seeking funding from parties who were losing bidders. This is a purely commercial decision over which the State should not interfere absent any legal infirmity. It is emphasized that the case at bar involves the disposition of shares in a corporation which the government sought to privatize. As such, the persons with whom PHILYARDS desired to enter into business with in order to raise funds to purchase the shares are basically its business. This is in contrast to a case involving a contract for the operation of or construction of a government infrastructure where the identity of the buyer/bidder or financier constitutes an important consideration. In such cases, the government would have to take utmost precaution to protect public interest by ensuring that the parties with which it is contracting have the ability to satisfactorily construct or operate the infrastructure. On the landholding issue, J.G. Summit submits that since PHILSECO is a landholding company, KAWASAKI could exercise its right of first refusal only up to 40% of the shares of PHILSECO due to the constitutional prohibition on landholding by corporations with more than 40% foreign-owned equity. It further argues that since KAWASAKI already held at least 40% equity in PHILSECO, the right of first refusal was inutile and as such, could not subsequently be converted into the right to top. 37 Petitioner also asserts that, at present, PHILSECO continues to violate the constitutional provision on landholdings as its shares are more than 40% foreign-owned.38 PHILYARDS admits that it may have previously held land but had already divested such landholdings.39 It contends, however, that even if PHILSECO owned land, this would not affect the right of first refusal but only the exercise thereof. If the land is retained, the right of first refusal, being a property right, could be assigned to a qualified party. In the alternative, the land could be divested before the exercise of the right of first refusal. In the case at bar, respondents assert that since the right of first refusal was validly converted into a right to top, which was exercised not by KAWASAKI, but by PHILYARDS which is a Filipino corporation (i.e., 60% of its shares are owned by Filipinos), then there is no violation of the Constitution.40 At first, it would seem that questions of fact beyond cognizance by this Court were involved in the issue. However, the records show that PHILYARDS admits it had owned land up until the time of the bidding.41 Hence, the only issue is whether KAWASAKI had a valid right of first refusal over PHILSECO shares under the JVA considering that PHILSECO owned land until the time of the bidding and KAWASAKI already held 40% of PHILSECO’s equity. We uphold the validity of the mutual rights of first refusal under the JVA between KAWASAKI and NIDC. First of all, the right of first refusal is a property right of PHILSECO shareholders, KAWASAKI and NIDC, under the terms of their JVA. This right allows them to purchase the shares of their co-shareholder before they are offered to a third party.The agreement of co-shareholders to mutually grant this right to each other, by itself, does not constitute a violation of the provisions of the Constitution limiting land ownership to Filipinos and Filipino corporations. As PHILYARDS correctly puts it, if PHILSECO still owns land, the right of first refusal can be validly assigned to a qualified Filipino entity in order to maintain the 60%-40% ratio. This transfer, by itself, does not amount to a violation of the Anti-Dummy Laws, absent proof of any fraudulent intent. The transfer could be made either to a nominee or such other party which the holder of the right of first refusal feels it can comfortably do business with. Alternatively, PHILSECO may divest of its landholdings, in which case KAWASAKI, in exercising its right of first refusal, can exceed 40% of PHILSECO’s equity. In fact, it can even be said that if the foreign shareholdings of a landholding corporation exceeds 40%, it is not the foreign stockholders’ ownership of the shares which is adversely affected but the capacity of the corporation to own land – that is, the corporation becomes disqualified to own land. This finds support under the basic corporate law principle that the corporation and its stockholders are separate juridical entities. In this vein, the right of first refusal over shares pertains to the shareholders whereas the capacity to own land pertains to the corporation. Hence, the fact that PHILSECO owns land cannot deprive stockholders of their right of first refusal. No law disqualifies a person from purchasing shares in a landholding corporation even if the latter will exceed the allowed foreign equity, what the law disqualifies is the corporation from owning land. This is the clear import of the following provisions in the Constitution: Section 2. All lands of the public domain, waters, minerals, coal, petroleum, and other mineral oils, all forces of potential energy, fisheries, forests or timber, wildlife, flora and fauna, and other natural resources are owned by the State. With the exception of agricultural lands, all other natural resources shall not be alienated. The exploration, development, and utilization of natural resources shall be under the full control and supervision of the State. The State may directly undertake such activities, or it may enter into co-production, joint venture, or production-sharing agreements with Filipino citizens, or corporations or associations at least sixty per centum of whose capital is owned by such citizens. Such agreements may be for a period not exceeding twenty-five years, renewable for not more than twenty-five years, and under such terms and conditions as may be provided by law. In cases of water rights for irrigation, water supply, fisheries, or industrial uses other than the development of water power, beneficial use may be the measure and limit of the grant. xxx xxx xxx Section 7. Save in cases of hereditary succession, no private lands shall be transferred or conveyed except to individuals, corporations, or associations qualified to acquire or hold lands of the public domain.42 (emphases supplied) The petitioner further argues that "an option to buy land is void in itself (Philippine Banking Corporation v. Lui She, 21 SCRA 52 [1967]). The right of first refusal granted to KAWASAKI, a Japanese corporation, is similarly void. Hence, the right to top, sourced from the right of first refusal, is also void."43 Contrary to the contention of petitioner, the case of Lui She did not that say "an option to buy land is void in itself," for we ruled as follows: x x x To be sure, a lease to an alien for a reasonable period is valid. So is an option giving an alien the right to buy real property on condition that he is granted Philippine citizenship. As this Court said in Krivenko vs. Register of Deeds: [A]liens are not completely excluded by the Constitution from the use of lands for residential purposes. Since their residence in the Philippines is temporary, they may be granted temporary rights such as a lease contract which is not forbidden by the Constitution. Should they desire to remain here forever and share our fortunes and misfortunes, Filipino citizenship is not impossible to acquire. But if an alien is given not only a lease of, but also an option to buy, a piece of land, by virtue of which the Filipino owner cannot sell or otherwise dispose of his property, this to last for 50 years, then it becomes clear that the arrangement is a virtual transfer of ownership whereby the owner divests himself in stages not only of the right to enjoy the land (jus possidendi, jus utendi, jus fruendi and jus abutendi) but also of the right to dispose of it (jus disponendi) — rights the sum total of which make up ownership. It is just as if today the possession is transferred, tomorrow, the use, the next day, the disposition, and so on, until ultimately all the rights of which ownership is made up are consolidated in an alien. And yet this is just exactly what the parties in this case did within this pace of one year, with the result that Justina Santos'[s] ownership of her property was reduced to a hollow concept. If this can be done, then the Constitutional ban against alien landholding in the Philippines, as announced in Krivenko vs. Register of Deeds, is indeed in grave peril.44 (emphases supplied; Citations omitted) In Lui She, the option to buy was invalidated because it amounted to a virtual transfer of ownership as the owner could not sell or dispose of his properties. The contract in Lui She prohibited the owner of the land from selling, donating, mortgaging, or encumbering the property during the 50-year period of the option to buy. This is not so in the case at bar where the mutual right of first refusal in favor of NIDC and KAWASAKI does not amount to a virtual transfer of land to a non-Filipino. In fact, the case at bar involves a right of first refusal over shares of stock while the Lui She case involves an option to buy the land itself. As discussed earlier, there is a distinction between the shareholder’s ownership of shares and the corporation’s ownership of land arising from the separate juridical personalities of the corporation and its shareholders. We note that in its Motion for Reconsideration, J.G. Summit alleges that PHILSECO continues to violate the Constitution as its foreign equity is above 40% and yet owns long-term leasehold rights which are real rights.45 It cites Article 415 of the Civil Code which includes in the definition of immovable property, "contracts for public works, and servitudes and other real rights over immovable property."46 Any existing landholding, however, is denied by PHILYARDS citing its recent financial statements.47 First, these are questions of fact, the veracity of which would require introduction of evidence. The Court needs to validate these factual allegations based on competent and reliable evidence. As such, the Court cannot resolve the questions they pose. Second, J.G. Summit misreads the provisions of the Constitution cited in its own pleadings, to wit: 29.2 Petitioner has consistently pointed out in the past that private respondent is not a 60%-40% corporation, and this violates the Constitution x x x The violation continues to this day because under the law, it continues to own real property… xxx xxx xxx 32. To review the constitutional provisions involved, Section 14, Article XIV of the 1973 Constitution (the JVA was signed in 1977), provided: "Save in cases of hereditary succession, no private lands shall be transferred or conveyed except to individuals, corporations, or associations qualified to acquire or hold lands of the public domain." 32.1 This provision is the same as Section 7, Article XII of the 1987 Constitution. 32.2 Under the Public Land Act, corporations qualified to acquire or hold lands of the public domain are corporations at least 60% of which is owned by Filipino citizens (Sec. 22, Commonwealth Act 141, as amended). (emphases supplied) As correctly observed by the public respondents, the prohibition in the Constitution applies only to ownership of land.48 It does not extend to immovable or real property as defined under Article 415 of the Civil Code. Otherwise, we would have a strange situation where the ownership of immovable property such as trees, plants and growing fruit attached to the land49 would be limited to Filipinos and Filipino corporations only. III. WHEREFORE, in view of the foregoing, the petitioner’s Motion for Reconsideration is DENIED WITH FINALITY and the decision appealed from is AFFIRMED. The Motion to Elevate This Case to the Court En Banc is likewise DENIED for lack of merit. SO ORDERED. Davide, Jr., C.J., (Chairman), Ynares-Santiago, Corona, and Tinga, JJ., concur. Footnotes 1 Also referred to in this Resolution as "PHILYARDS." 2 Also referred to as J G Summit. 3 Resolution promulgated on September 24, 2003, pp. 2 – 10. 4 Id. at 10 – 13. 5 Id. at 14 – 22. 6 Id. at 22 – 25. 7 Id. at 26 – 32. 8 Rollo, p. 1854. 9 Rollo, p. 1876. 10 J.G. Summit’s Motion to Elevate this Case to the Court En Banc dated October 17, 2003, p. 3; Rollo, p. 1878. 11 Id. 12 Id. 13 2. A decision or resolution of a Division of the Court, when concurred in by a majority of its Members who actually took part in the deliberations on the issues in a case and voted thereon, and in no case without the concurrence of at least three of such Members, is a decision or resolution of the Supreme Court (Section 4[3], Article VIII, 1987 Constitution). 3. The Court en banc is not an Appellate Court to which decisions or resolutions of a Division may be appealed. xxx xxx xxx 5. A resolution of the Division denying a party’s motion for referral to the Court en banc of any Division case, shall be final and not appealable to the Court en banc. 6. When a decision or resolution is referred by a Division to the Court en banc, the latter may, in the absence of sufficiently important reasons, decline to take cognizance of the same, in which case, the decision or resolution shall be returned to the referring Division. 7. No motion for reconsideration of the action of the Court en banc declining to take cognizance of a referral by a Division, shall be entertained. 14 PHILYARDS’ Comment dated February 3, 2004, pp. 26-27; Rollo, pp. 1996-1997. 15 J.G. Summit’s Consolidated Comment dated March 8, 2004. 16 Resolution dated September 24, 2003, pp. 26-32. 17 Id., pp. 10-22. 18 See Bastida and Ysmael & Co., Inc. v. Dy Buncio & Co., Inc., 93 Phil. 195 (1953); Garcia v. Burgos , 291 SCRA 546 (1998); Sadhwani v. CA , 281 SCRA 75 (1997); Parañaque Kings Enterprises, Incorporated v. CA , 268 SCRA 727 (1997); Polytechnic University of the Philippines v. CA , 368 SCRA 691 (2001); and Guzman, Bocaling & Co. v. Bonnevie, 206 SCRA 668 (1992). 19 G.R. No. 101678, February 3, 1992, 205 SCRA 705. 20 Sec. 4(3), Art. VIII, Constitution. 21 Supreme Court Circular No. 2-89, February 7, 1989. 22 J.G. Summit’s Motion for Reconsideration dated October 17, 2003, pp. 8-9; Rollo, pp. 1861-1862. 23 Id. at 10-13; Rollo, pp. 1863-1866. 24 Id. at 13-19; Rollo, pp. 1866-1872. 25 PHILYARDS’ Comment dated February 3, 2004, p. 1; Rollo, p. 1971. 26 Id. at 2; Rollo, p. 1972. 27 Id. at 5; Rollo, p. 1975. 28 Id. at 9; Rollo, p. 1979. 29 Id. at 12; Rollo, p. 1982. 30 Id. 31 Id. at 14; Rollo, p. 1984. 32 Id. at 19; Rollo, p. 1989. 33 COP and APT’s Comment dated January 14, 2004, pp. 14-15; Rollo, pp. 1927-1928. 34 Resolution dated September 24, 2003, pp. 23-24. 35 Id. at 22. 36 Resolution dated September 24, 2003, pp. 31-32. 37 J.G. Summit’s Consolidated Reply dated March 11, 2004, p. 14; Rollo, p. 2109. 38 Id. 39 PHILYARDS’ Manifestation and Comment dated June 26, 2002, p. 10; Rollo, p. 1334. 40 PHILYARDS’ Comment dated February 3, 2004, pp. 8-16; Rollo, pp. 1978-1986. 41 PHILYARDS’ Manifestation and Comment dated June 26, 2002, p. 10; Rollo, p. 1334. 42 Constitution, Article XII, National Economy and Patrimony. 43 J.G. Summit’s Consolidated Comment dated March 8, 2004, p. 17; Rollo, p. 2112. 44 Philippine Banking Corporation v. Lui She, No. L-17587, September 12, 1967, 21 SCRA 52. 45 J.G. Summit’s Motion for Reconsideration dated October 17, 2003, p. 14; Rollo, p. 1867. 46 Id. at 15; Rollo, p. 1868. 47 PHILYARDS’ Manifestation and Comment dated June 26, 2002, p. 10; Rollo, p. 1334. 48 COP and APT’s Comment dated January 14, 2004, p. 36; Rollo, p. 1949. 49 Art. 415(2), Civil Code.

Political Law

January 2010

G.R. No. 187635. January 11, 2010

Mateo R. Nollen, Jr. Vs. Commission on Elections and Susana M. Caballes

The Court takes judicial notice that the COMELEC, in light of, and expressly adverting to, Aguilar, promulgated on August 4, 2009 Resolution No. 8654.  With regard to the determination of the sufficiency and timely payment of the appeal fees as requisite for the perfection of appeals, the Resolution provides:

WHEREFORE, in view of the foregoing, the Commission hereby RESOLVES to consider and adopt the following guidelines on (a) the payment of appeal fees and (b) the disposition of motions for reconsideration; to wit:

1.                  The appeal to the COMELEC of the trial court’s decision in election contests involving municipal and barangay officials is perfectedupon the filing of the notice of appeal and the payment of the PhP 1,000-appeal fee to the court that rendered the decision within the five-day reglementary period.  The non-payment or the insufficient payment of the additional appeal fee of PhP 3,200 to the COMELEC Cash Division, in accordance with Rule 40, Section 3 of the COMELEC Rules of Procedure, as amended, does not affect the perfection of the appealand does not result in outright or ipso facto dismissal of the appeal.

2.                  If the appellant filed his appeal before the effectivity of COMELEC Resolution No. 8486, the appellant shall be directed to pay the additional appeal fee of PhP 3,200 within fifteen (15) days from receipt of notice from the Commission, in accordance with Resolution No. 8486.  If the latter should refuse to comply, then, and only then shall the appeal be dismissed. (Emphasis supplied.)

G.R. No. 189034. January 11, 2010

Celestino A. Martinez III Vs. House of Representatives Electoral Tribunal and Benhur L. Salimbangon

Section 211. Rules for the appreciation of ballots. - In the reading and appreciation of ballots, every ballot shall be presumed to be valid unless there is clear and good reason to justify its rejection. The board of election inspectors shall observe the following rules, bearing in mind that the object of the election is to obtain the expression of the voters' will:

              4. When two or more words are written on the same line on the ballot, all of which are the surnames of two or more candidates, the same shall not be counted for any of them, unless one is a surname of an incumbent who has served for at least one year in which case it shall be counted in favor of the latter.

                        When two or more words are written on different lines on the ballot all of which are the surnames of two or more candidates bearing the same surname for an office for which the law authorizes the election of more than one and there are the same number of such surnames written as there are candidates with that surname, the vote shall be counted in favor of all the candidates bearing the surname.

G.R. No. 167891. January 15, 2010

Sps. Jesus Fajardo and Emer Fajardo Vs. Anita R. Flores, assisted by her husband, Bienvenido Flores

R.A. No. 3844, Sec. 24, provides that:

Sec. 24, Right to a Home Lot. – The agricultural lessee shall have the right to continue in the exclusive possession and enjoyment of any home lot he may have occupied upon the effectivity of this Code, which shall be considered as included in the leasehold.

In the case at bar, petitioners’ claim that the tenancy relationship has been terminated by the Kasulatan is of no moment.  As long as the subject matter of the dispute is the legality of the termination of the relationship, or if the dispute originates from such relationship, the case is cognizable by the DAR, through the DARAB. The severance of the tenurial arrangement will not render the action beyond the ambit of an agrarian dispute.

The doctrine of primary jurisdiction precludes the courts from resolving a controversy over which jurisdiction has initially been lodged with an administrative body of special competence.  For agrarian reform cases, jurisdiction is vested in the Department of Agrarian Reform (DAR); more specifically, in the Department of Agrarian Reform Adjudication Board (DARAB).

G.R. No. 175319. January 15, 2010

People of the Philippines Vs. Joselito Noque y Gomez

Appellant’s right to be informed of the nature and cause of the accusations was not violated.

            The only issue raised by the appellant in this petition is that his conviction for the sale and possession of shabu, despite the fact that what was established  and proven was the sale and possession of ephedrine, violated his constitutional right to be informed of the nature and cause of the accusations against him since the charges in the Informations are for selling and possessing methamphetamine hydrochloride.

JESUS M. CALO, v e r s u s  COMMISSION ON ELECTIONS

and RAMON “MONCHING RMC” M. CALO  

 G.R. No. 185222  January 19, 2010

        This case could have been an ordinary election contest. However, despite the rather technical issue that we are tasked to resolve here, this case shows that, while blood is usually thicker than water, politics, in some very few instances, may actually be thicker than blood and may be no respecter even of family ties.

        Hence, the present petition for certiorari and prohibition under Rule 65 of the Rules of Court, based on the following grounds:

A.   The COMELEC acted with grave abuse of discretion amounting to lack or excess of jurisdiction in finding, through the questioned Resolutions dated 30 July 2008 and 13 November 2008, that the RTC Judge committed grave abuse of discretion amounting to lack of jurisdiction in issuing that Special Order dated 15 February, 2008.

B.   The petitioner is entitled to injunctive relief from the Honorable Supreme Court.

The Court finds merit in the petition.

Section 11, Rule 14  of A.M. No. 07-4-15-SC sets the standards in the grant or denial of a motion for execution pending appeal in election contests involving elective municipal and barangay officials, to wit –

            SEC. 11. Execution pending appeal. – On motion of the prevailing party with notice to the adverse party, the court, while still in possession of the original records, may, at its discretion, order the execution of the decision in an election contest before the expiration of the period to appeal, subject to the following rules:

(a)    There must be a motion by the prevailing party with three-day notice to the adverse party.  Execution pending appeal shall not issue without prior notice and hearing.  There must be good reasons for the execution pending appeal.  The court, in a special order, must state the good or special reasons justifying the execution pending appeal.  Such reasons must:

(1)    Constitute superior circumstances demanding urgency that will outweigh the injury or damage should the losing party secure a reversal of the judgment on appeal; and

(2)    Be manifest, in the decision sought to be executed, that the defeat of the protestee or the victory of the protestant has been clearly established.

(b)    If the court grants execution pending appeal, an aggrieved party shall have twenty working days from notice of the special order within which to secure a restraining order or status quo order from the Supreme Court or the Commission on Elections.  The corresponding writ of execution shall issue after twenty days, if no restraining order or status quo order is issued.  During such period, the writ of execution pending appeal shall be stayed.

The Court also stressed in “Pecson case” that disruption of public service cannot per se be a basis to deny execution pending appeal –

In the recent case of Pecson v. COMELEC, the Court ruled that:

x x x decisions of the courts in election protest cases, resulting as they do from a judicial evaluation of the ballots and after full-blown adversarial proceedings, should at least be given similar worth and recognition as decisions of the board of canvassers.  This is especially true when attended by other equally weighty circumstances of the case, such as the shortness of the term of the contested elective office, of the case.

We additionally note that “disruption of public service” necessarily results from any order allowing execution pending appeal and is a concern that this Court was aware of when it expressly provided the remedy under the Rules.  Such disruption is therefore an element that has been weighed and factored in and cannot be per se a basis to deny execution pending appeal.

Similarly in this case, the COMELEC should have accorded respect and weight to the RTC’s decision proclaiming petitioner as winner.  Note that aside from the evidence presented by the parties during the election contest and the expert testimony of the witnesses from the National Bureau of Investigation, the RTC made its own assessment and findings on the contested ballots.  On the basis of all this, the RTC concluded that “[petitioner] will still have the plurality of 981 votes in favor of [petitioner] and 315 votes also for [petitioner], respectively.” It was also the RTC’s conclusion that “the victory of the protestant has been clearly established.” Aside from these, the RTC also laid down the superior circumstances necessitating the grant of execution pending appeal:

(1) Allowing the status quo to continue would unjustly give premium to the perpetrators of fraud, anomalies and irregularities and suppress the will of the electorate;

(2) The sovereign will of the people should be given utmost respect and

(3) The injury or damage to be sustained by petitioner would outweigh the injury or damage of respondent.

Given that the RTC’s exercise of its discretionary power to grant execution pending appeal per special order dated February 15, 2008 was not tainted with any bias or capricious and whimsical arbitrariness, we find that the COMELEC committed an error in annulling and setting it aside.

PAULINO M. ALECHA and PRECIOSO M. TAPITAN,     v e r s u s  ELMER BEN V. PASION, RODOLFO et al.

G.R. No.  164506 January 19, 2010

On September 12, 2003, petitioners Paulino M. Alecha and Precioso M. Tapitan filed before the Ombudsman (Mindanao) a criminal complaint against respondent municipal officials of the Municipality of Midsalip, Zamboanga del Sur for violation of Section 3(e) of Republic Act (RA) 3019, Section 81 of RA 7160, Section 10 of RA 6758 and RA 9137.

           

 In their letter-complaint, petitioners averred that respondent municipal officials conspired in unlawfully adopting and actually collecting the salaries, representation and travel allowances (RATA) and personnel economic relief assistance (PERA) of public officials for special cities and/or first class provinces or cities, notwithstanding the fact that the Municipality of Midsalip had no financial capacity to cover such expenditures, thus seriously affecting the delivery of basic services within its jurisdiction.

In sum, we find no grave abuse of discretion on the part of the Ombudsman (Mindanao) in dismissing the letter-complaint of petitioners against respondent municipal officials. Settled is the rule that the findings of fact of the Ombudsman, when duly supported by evidence, are conclusive. Findings of fact of administrative bodies (which are equipped with expertise as far as their jurisdiction is concerned) should be accorded not only respect but even finality when supported by substantial evidence, even if not overwhelming or preponderant.

We have time and again refrained from interfering with the Ombudman’s exercise of its constitutionally mandated investigatory and prosecutory powers. This is in recognition of the Office of the Ombudsman’s independence and initiative in prosecuting or dismissing a complaint filed before it.

One last word. Public office is a public trust. Public officers and employees must at all times be accountable to the people, serve them with utmost responsibility, integrity, loyalty, and efficiency, act with patriotism and justice, and lead modest lives.Corollary to this heavy burden, however, is the right of public officials to be protected from unfounded suits.

the petition is hereby DISMISSED

Alba v. Nitoreda, G.R. No. 120223, 13 March 1996, 254 SCRA 753, 765.

Id., pp. 765-766.  The rule is based not only upon respect for the investigatory and prosecutory powers granted by the Constitution to the Office of the Ombudsman, but upon practicality as well. Otherwise, the functions of the courts would be grievously hampered by innumerable petitions assailing the dismissal of investigatory proceedings conducted by the Office of the Ombudsman with regard to complaints filed before it, in much the same way that the courts would be extremely swamped if they could be compelled to review the exercise of discretion on the part of the fiscals or prosecuting attorneys each time they decide to file an information in court or dismiss a complaint by a private complainant. (Ocampo IV v. Ombudsman, G.R. Nos. 103446-47, 30 August 1993, 225 SCRA 725, 730).   

SPS. MANUEL AND VICTORIA  SALIMBANGON, versus Del Castillo, Abad, and Perez, JJ.

SPS. SANTOS AND ERLINDA TAN

G.R. No. 185240 January 20, 2010

Section 152 (c), Local Government Code:

                Barangay Clearance - No city or municipality may issue any license or permit for any business or activity unless a clearance is first obtained from the Barangay where such business or activity is located or conducted.  For such clearance, the Sangguniang Barangay may impose a reasonable fee.  The application for clearance shall be acted upon within seven (7) working days from the filing thereof.  In the event that the clearance is not issued within the said period, the city or municipality may issue the said license or permit.

THE BOARD OF COMMISSIONERS OF THE BUREAU OF IMMIGRATION AND DEPORTATION,

versus    JUNG KEUN PARK @ JUNGGEUN PARK @ CHUNG KEUNPARK G.R. No.  159835

January 21, 2010

Non-immigrants are required by law to present valid passports and visas upon entry into the Philippines

All non-immigrants are required to present unexpired passports and valid visas prior to their admission into the Philippinesunder Section 10 of the Immigration Act:

Section 10.  Non-immigrants must present for admission into the Philippines unexpired passports or official documents in the nature of passports issued by the governments of the countries to which they owe allegiance or other travel documents showing their origins and identity as prescribed by regulations, and valid passport visas granted by diplomatic or consular officers, except that such document shall not be required of the following aliens: (a) a child qualifying as a non-immigrant, born subsequent to the issuance of the passport visa of the accompanying parent, the visa not having expired; and (b) a seaman qualifying as such under section (9) of this Act. [Emphasis supplied.]

Section 37. (a) The following aliens shall be arrested upon the warrant of the Commissioner of Immigration or of another officer designated by him or the purpose and deported  upon the warrant of the Commissioner of Immigration after a determination by the Board of Commissioners of the existence of the ground for deportation as charged against the alien: x x x x

(7) Any alien who remains in the Philippines in violation of any limitation or condition under which he was admitted as a non-immigrant;

We conclude this case by recognizing and pointing out certain aspects that the BID may, in its discretion, still want to look into.  Section 29 (a) of the Immigration Act states:

Section 29. (a) The following classes of aliens shall be excluded from entry into the Philippines: x x x x

(15) Persons who have been excluded or deported from the Philippines, but this provision may be waived in the discretion of the Commissioner of Immigration: Provided, however, That the Commissioner of Immigration shall not exercise his discretion in favor of aliens excluded or deported on the ground of conviction for any crime involving moral turpitude or for any crime penalized under sections forty-five and forty-six of this Act or on the ground of having engaged in hoarding, black-marketing of profiteering unless such aliens have previously resided in the Philippine immediately before his exclusion or deportation for a period of ten years or more or are married to a native Filipino woman;

As a rule, an alien is barred from re-entering the territory of the deporting State. However, States may, upon proper application, waive previous deportation orders and allow an alien to re-enter, provided, the re-entry and readmission of the alien do not pose a risk to the general welfare.  As stated in the quoted provision above, the Commissioner of Immigration may exercise sound discretion in the readmission of previously excluded aliens (subject to certain limitations).  After Park was first deported back to Korea on July 24, 2000 on the strength of the July 6, 2000 letter, he returned to the Philippines apparently without the requisite consent of the Commissioner of Immigration prior to his re-entry.  Whether the July 6, 2000 letter was actually repudiated by the Korean Embassy does not figure into this equation, as Park’s earlier deportation was already a fait accompli.  His failure to secure the Commissioner of Immigration’s consent/waiver prior to readmission into the deporting State leaves the Commissioner sufficient ground to charge him with violation of Section 37(a)(2) of the Immigration Act, which declares that:

Section 37. (a) The following aliens shall be arrested upon the warrant of the Commissioner of Immigration or of another officer designated by him or the purpose and deported upon the warrant of the Commissioner of Immigration after a determination by the Board of Commissioners of the existence of the ground for deportation as charged against the alien:

x x x x

(2) Any alien who enters the Philippines after the effective date of this Act, who was not lawfully admissible at the time of entry;

 JULIUS CACAO y PRIETO, versus PEOPLE OF THE PHILIPPINES,

G.R. No. 180870 January 22, 2010

 In order to safeguard its citizenry from the harmful effects of dangerous drugs on their physical and mental well-being, the State pursued an intensive and unrelenting campaign against the trafficking and use of dangerous drugs and other similar substances. However, in our desire to totally eradicate this social ill, we must adhere to the constitutional pronouncement that in all criminal prosecutions, the accused shall be presumed innocent until the contrary is proved. This case illustrates once more our faithful adherence to said constitutional requirement.

            That on or about the 14th day of October, 2004, at Laoag City, Philippines, and within the jurisdiction of this Honorable Court, the above-named accused, did then and there willfully, unlawfully and feloniously [sic] have in his possession, control and custody 1 plastic sachet of methamphetamine hydrochloride or shabu containing a total of 1.6 grams including plastic sachets [sic] without any license or authority, in violation of the aforesaid law.

            As a general rule, factual findings and conclusions of the trial court and the CA are entitled to great weight and respect and will not be disturbed on appeal.  However, if there is any indication that the trial court overlooked certain facts or circumstances which would substantially affect the disposition of the case, we will not hesitate to review the same.  In this case, we find it imperative to review the factual findings of the trial court because of certain inconsistencies in the testimonies of the prosecution witnesses on material points.

         

   Jurisprudence holds that in prosecution of cases involving illegal possession of prohibited drugs, the prosecution must establish with moral certainty the elemental act of possession of a prohibited substance coupled with the fact that such possession is not authorized by law.  Essential, however, in a drug-related case is that the identity of the dangerous drug be established beyond reasonable doubt. Since the dangerous drug constitutes the corpus delicti of the offense and the fact of its existence is vital to a judgment of conviction, it behooves upon the prosecution to establish and prove with certainty that the dangerous drug presented in court as evidence against the accused is the same item recovered from his possession.

            We have scrutinized in detail the testimonies of the prosecution witnesses and found not only glaring inconsistencies on material points but more importantly a failure to identify indubitably the prohibited drug allegedly confiscated from Cacao.

                The testimonies of the prosecution’s principal witnesses are inconsistent as to who delivered the prohibited drug to the evidence custodian.

            Verily, there was no actual and effective identification of the subject specimen.  After sorting out the contents of the plastic bag, witness Mangapit merely pointed to the initial and signature written on a masking tape attached to the plastic sachet.  At no instance did he make a categorical and accurate declaration that the sachet contained the shabu allegedly confiscated from Cacao.

            At this juncture, it must be stressed that the “corpus delicti in dangerous drugs cases constitutes the drug itself.  This means that proof beyond reasonable doubt of the identity of the prohibited drug is essential”.

                As a mode of authenticating evidence, the chain of custody rule requires the presentation of the seized prohibited drugs as an exhibit be preceded by evidence sufficient to support a finding that the matter in question is what the proponent claims it to be.  This would ideally cover the testimony about every link in the chain, from seizure of the prohibited drug up to the time it is offered in evidence, in such a way that everyone who touched the exhibit would describe how and from whom it was received, to include, as much as possible, a description of the condition in which it was delivered to the next in the chain.

Finally, petitioner’s defenses of denial and frame-up are concededly inherently weak and commonly used in drug-related cases.  However, it must be stressed that conviction of the accused must rest not on the weakness of the defense but on the strength of the evidence of the prosecution.

            Based on the foregoing, we are of the considered view that the quantum of evidence needed to convict, that is proof beyond reasonable doubt, has not been adequately established by the prosecution.  While as a rule we desist from disturbing the findings and conclusions of the trial court especially with respect to the credibility of witnesses, we must bow to the superior and immutable rule that the guilt of the accused must be proved beyond reasonable doubt because the law presumes that the accused is innocent unless and until proven otherwise.  Presumption of regularity in the performance of official duty cannot by itself override the constitutional right of the accused to be presumed innocent unless overcome by strong, clear and compelling evidence.

VICTORINO B. ALDABA, et al. v. COMMISSION ON ELECTIONS.

G.R No. 188078. January 25, 2010

          This is an original action for Prohibition to declare unconstitutional Republic Act No. 9591 (RA 9591), creating a legislative district for the city of Malolos, Bulacan, for violating the minimum population requirement for the creation of a legislative district in a city.

                The Ruling of the Court

         

          We grant the petition and declare RA 9591 unconstitutional for being violative of Section 5(3), Article VI of the 1987 Constitution and Section 3 of the Ordinance appended to the 1987 Constitution

          The 1987 Constitution requires that for a city to have a legislative district, the city must have “a population of at least two hundred fifty thousand.”  The only issue here is whether the City of Malolos has a population of at least 250,000, whether actual or projected, for the purpose of creating a legislative district for the City of Malolos in time for the 10 May 2010 elections.   If not, then RA 9591 creating a legislative district in the City of Malolos is unconstitutional. 

House Bill No. 3693 cites the undated Certification of Regional Director Alberto N. Miranda of Region III of the National Statistics Office (NSO) as authority that the population of the City of Malolos “will be 254,030 by the year 2010.” The Certification states that the population of “Malolos, Bulacan as of May 1, 2000 is 175,291.”  The Certification further states that it was “issued upon the request of Mayor Danilo A. Domingo of the City of Malolos in connection with the proposed creation of Malolos City as a lone congressional district of the Province of Bulacan.”  

The Certification of Regional Director Miranda, which is based on demographic projections, is without legal effect because Regional Director Miranda has no basis and no authority to issue the Certification.  The Certification is also void on its face because based on its own growth rate assumption, the population of Malolos will be less than 250,000 in the year 2010.   In addition, intercensal demographic projections cannot be made for the entire year.    In any event, a city whose population has increased to 250,000 is entitled to have a legislative district only in the “immediately following election” after the attainment of the 250,000 population.

First, certifications on demographic projections can be issued only if such projections are declared official by the National Statistics Coordination Board (NSCB).  Second, certifications based on demographic projections can be issued only by the NSO Administrator or his designated certifying officer.  Third,  intercensal population projections must be as of the middle of every year. 

Section 6 of Executive Order No. 135 dated 6 November 1993 issued by President Fidel V. Ramos provides:

SECTION 6.   Guidelines on the Issuance of Certification of Population sizes Pursuant to Section 7, 386, 442, 450, 452, and 461 of the New Local Government Code.

(a)        The National Statistics Office shall issue certification on data that it has collected and processed as well as on statistics that it has estimated.

(b)        For census years, certification on population size will be based on actual population census counts; while for the intercensal years, the certification will be made on the basis of a set of demographic projections or estimates declared official by the National Statistical Coordination Board (NSCB).

(c)        Certification of population census counts will be made as of the census reference date, such as May 1, 1990, while those of intercensal population estimates will be as of middle of every year.  

(d)       Certification of population size based on projections may specify the range within which the true count is deemed likely to fall. The range will correspond to the official low and high population projections.

(e)        The smallest geographic area for which a certification on population size may be issued will be the barangay for census population counts, and the city or municipality for intercensal estimates. If an LGU wants to conduct its own population census, during off–census years, approval must be sought from the NSCB and the conduct must be under the technical supervision of NSO from planning to data processing.

(f)        Certifications of population size based on published census results shall be issued by the Provincial Census Officers or by the Regional Census Officers. Certifications based on projections or estimates, however, will be issued by the NSO Administrator or his designated certifying officer.   (Emphasis supplied)

The Certification of Regional Director Miranda does not state that the demographic projections he certified have been declared official by the NSCB.  The records of this case do not also show that the Certification of Regional Director Miranda is based on demographic projections declared official by the NSCB.   The Certification, which states that the population of Malolos “will be 254,030 by the year 2010,” violates the requirement that intercensal demographic projections shall be “as of the middle of every year.”   In addition, there is no showing that Regional Director Miranda has been designated by the NSO Administrator as a certifying officer for demographic projections in Region III.   In the absence of such official designation, only the certification of the NSO Administrator can be given credence by this Court.  

Moreover, the Certification states that “the total population of Malolos, Bulacan as of May 1, 2000 is 175,291.”  The Certification also states that the population growth rate of Malolos is 3.78% per year between 1995 and 2000.  Based on a growth rate of 3.78% per year, the population of Malolos of 175,291 in 2000 will grow to only 241,550 in 2010. 

Also, the 2007 Census places the population of Malolos at 223,069 as of 1 August 2007.  Based on a growth rate of 3.78%, the population of Malolos will grow to only 248,365 as of 1 August 2010.   Even if the growth rate is compounded yearly, the population of Malolos of 223,069 as of 1 August 2007 will grow to only 249,333 as of 1 August 2010.

All these conflict with what the Certification states that the population of Malolos “will be 254,030 by the year 2010.”  Based on the Certification’s own growth rate assumption, the population of Malolos will be less than 250,000 before the 10 May 2010 elections.   Incidentally, the NSO has no published population projections for individual municipalities or cities but only for entire regions and provinces.

Executive Order No. 135 cannot simply be brushed aside.  The OSG, representing respondent Commission on Elections, invoked Executive Order No. 135 in its Comment, thus:

            Here, based on the NSO projection, “the population of the Municipality of Malolos will be 254,030 by the year 2010 using the population growth rate of 3.78 between 1995-2000.”  This projection issued by the authority of the NSO Administrator is recognized under Executive Order No. 135 (The Guidelines on the Issuance of Certification of Population Sizes), which states:

 (d)          Certification of population size based on projections may specify the range within which the true count is deemed likely to fall. The range will correspond to the official low and high population projections.

 (f)           Certifications of population size based on published census results shall be issued by the Provincial Census Officers or by the Regional Census Officers. Certifications based on projections or estimates, however, will be issued by the NSO Administrator or his designated certifying officer.

Any population projection forming the basis for the creation of a legislative district must be based on an official and credible source. That is why the OSG cited Executive Order No. 135, otherwise the population projection would be unreliable or speculative.

Section 3 of the Ordinance appended to the 1987 Constitution provides:

Any province that may be created, or any city whose population may hereafter increase to more than two hundred fifty thousand shall be entitled in the immediately following election to at least one Member or such number of members as it may be  entitled to on the basis of the number of its inhabitants and according to the standards set forth in paragraph (3), Section 5 of Article VI of the Constitution. xxx.  (Emphasis supplied)

A city that has attained a population of 250,000 is entitled to a legislative district only in the “immediately following election.”  In short, a city must first attain the 250,000 population, and thereafter, in the immediately following election, such city shall have a district representative.   There is no showing in the present case that the City of Malolos has attained or will attain a population of 250,000, whether actual or projected, before the 10 May 2010 elections. 

Clearly, there is no official record that the population of the City of Malolos will be at least 250,000, actual or projected, prior to the 10 May 2010 elections, the immediately following election after the supposed attainment of such population.  Thus, the City of Malolos is not qualified to have a legislative district of its own under Section 5(3), Article VI of the 1987 Constitution and Section 3 of the Ordinance appended to the 1987 Constitution.

On the OSG’s contention that Congress’ choice of means to comply with the population requirement in the creation of a legislative district is non-justiciable, suffice it to say that questions calling for judicial determination of compliance with constitutional standards by other branches of the government are fundamentally justiciable. The resolution of such questions falls within the checking function of this Court under the 1987 Constitution to determine whether there has been a grave abuse of discretion amounting to lack or excess of jurisdiction on the part of any branch or instrumentality of the Government.  

Even under the 1935 Constitution, this Court had already ruled, “The overwhelming weight of authority is that district apportionment laws are subject to review by the courts.”  Compliance with constitutional standards on the creation of legislative districts is important because the “aim of legislative apportionment is ‘to equalize population and voting power among districts.’”

WHEREFORE, we GRANT the petition. We DECLARE Republic Act No. 9591 UNCONSTITUTIONAL for being violative of Section 5(3), Article VI of the 1987 Constitution and Section 3 of the Ordinance appended to the 1987 Constitution.

Section 5(3), Article VI of the 1987 Constitution provides: “Each legislative district shall comprise, as far as practicable, contiguous, compact and adjacent territory. Each city with a population of at least two hundred fifty thousand, or each province, shall have at least one representative.”  (Emphasis supplied)

Moreover, Section 3 of the Ordinance appended to the 1987 Constitution provides:  “Any province that may be created, or any city whose population may hereafter increase to more than two hundred fifty thousand shall be entitled in the immediately following election to at least one Member or such number of members as it may be entitled to on the basis of the number of its inhabitants and according to the standards set forth in paragraph (3), Section 5 of Article VI of the Constitution. xxx.”  (Emphasis supplied)  

There is no basis to compound the growth rate of a population over a three-year period because the children born during the three-year period could not possibly give birth to their own children.