THIRD DIVISION

UNIVERSAL ROBINA CORP. (CORN DIVISION), Petitioner,

G.R. No. 191427

Present:

- versus -

CARPIO MORALES, J., Chairperson, BRION, BERSAMIN, VILLARAMA, JR., and

LAGUNA DEVELOPMENT AUTHORITY,

LAKE

SERENO, JJ.

Respondent. Promulgated:

May 30, 2011 x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x

DECISION

CARPIO MORALES, J.:

The present petition for review on certiorari assails the Court of Appeals Decision1[1] dated October 27, 2009 and Resolution dated February 23, 2010 in CA-G. R. SP No. 107449.

Universal Robina Corp. (petitioner) is engaged in, among other things, the manufacture of animal feeds at its plant in Bagong Ilog, Pasig City.

Laguna Lake Development Authority (LLDA), respondent, through its Pollution Control Division Monitoring and Enforcement Section, after conducting on March 14, 2000 a laboratory analysis of petitioners corn oil refinery plants wastewater, found that it failed to comply with government standards provided under Department of Environment and Natural Resources (DENR) Administrative Orders (DAOs) Nos. 34 and 35, series of 1990.

LLDA later issued on May 30, 2000 an Ex-Parte Order requiring petitioner to explain why no order should be issued for the cessation of its operations due to its discharge of pollutive effluents into the Pasig River and why it was operating without a clearance/permit from the LLDA.

Still later, the LLDA, after receiving a phone-in complaint conducted on August 31, 2000, another analysis of petitioners wastewater, which showed its
1 Penned by Associate Justice Marlene Gonzales-Sison with the concurrence of Associate Justices Andres B. Reyes, Jr. and Vicente S.E. Veloso, CA rollo, pp. 2147-2156.
[1]

continued failure to conform to its effluent standard in terms of Total Suspended Solids (TSS), Biochemical Oxygen Demand (BOD), Color and Oil/Grease.

Hearings on petitioners pollution case were thereafter commenced on March 1, 2001.

Despite subsequent compliance monitoring and inspections conducted by the LLDA, petitioners wastewater failed to conform to the parameters set by the aforementioned DAOs.

In early 2003, petitioner notified LLDA of its plan to upgrade the wastewater treatment facility (WTF) of its corn oil refinery plant in an effort to comply with environmental laws, an upgrade that was completed only in 2007.

On May 9, 2007 on its request, 2[2] a re-sampling of petitioners wastewater was conducted which showed that petitioners plant finally complied with government standards.

Vide Letter dated March 22, 2007 which was received by the LLDA on April 17, 2007, CA rollo, p. 51.
[2]

Petitioner soon requested for a reduction of penalties, by Manifestation and Motion3[3] filed on August 24, 2007 to which it attached copies of its Daily Operation Reports and Certifications4[4] to show that accrued daily penalties should only cover a period of 560 days.

After conducting hearings, the LLDA issued its Order to Pay 5[5] (OP) dated January 21, 2008, the pertinent portion of which reads:

After careful evaluation of the case, respondent is found to be discharging pollutive wastewater computed in two periods reckoned from March 14, 2000 the date of initial sampling until November 3, 2003 the date it requested for a re-sampling covering 932 days in consideration of the interval of time when subsequent monitoring was conducted after an interval of more than 2 years and from March 15, 2006 the date when re-sampling was done until April 17, 2007 covering 448 days6[6] for a total of 1,247 days. WHEREFORE, premises considered, respondent is hereby ordered to pay within fifteen (15) days from receipt hereof the accumulated daily penalties amounting to a total of Pesos: One Million Two Hundred Forty-Seven (Thousand) Pesos Only (PHP 1,247,000.00) prior to dismissal of the case and without prejudice of filing another case for its subsequent violations. (emphasis and underscoring supplied)

3 4 5 6

[3] [4] [5] [6]

Id. at 39-42. Annexes 1 to 23, id. at 53-2045. Rollo, pp. 43-46.

Mistakenly stated as 448 days instead of only 342 days as rectified in the subsequent order denying petitioners motion for reconsideration, infra.

Petitioner moved to reconsider, praying that it be ordered to pay only accumulated daily penalties in the sum of Five Hundred Sixty Thousand (P560,000) Pesos7[7] on grounds that the LLDA erred in first, adopting a straight computation of the periods of violation based on the flawed assumption that petitioner was operating on a daily basis without excluding, among others, the period during which the LLDA Laboratory underwent rehabilitation work from December 1, 2000 to June 30, 2001 (covering 212 days); and second, submitted to attest to the actual number of its operating days, i.e., 560 days. in disregarding the Daily Operation Reports and Certifications which petitioner

By Order8[8] of July 11, 2008, the LLDA denied petitioners motion for reconsideration and reiterated its order to pay the aforestated penalties, disposing of the issues thusly:

On the first issue, while it is true that the Authority failed to state in its OP dated 21 January 2008 the basis for actual computation of the accumulated daily penalties, the Authority would like to explain that its computation was based on the following, to wit: The computation of accumulated daily penalties was reckoned period [ sic] from 14 March 2000 the date of initial sampling to 03 November 2003 the date when its letter request for re-sampling was received which covers 932 days computed at 6 days per week operation as reflected in the Reports of Inspection. Since subsequent inspection conducted after two (2) years and four (4) months, such period was deducted from the computation. Likewise, the period when the LLDA Laboratory was rehabilitated from December 1, 2000 to June 30, 2001 was also deducted with a total of Two Hundred Twelve (212) days.

7 8

[7] [8]

Covering a period of 560 days. Id. at 51-53.

On the second claim, the same cannot be granted for lack of legal basis since the documents submitted are self-serving. The period from 15 March 2006 to 17 April 2007 was computed from the date of re-sampling when it failed to conform to the standards set by law up to the date of receipt of its letter request for re-sampling prior to its compliance on May 9, 2007. The period covers 342 days. Hence, respondent is found to be discharging pollutive wastewater not conforming with the standards set by law computed from March 14, 2000 November 3, 2003 covering 932 days and from March 15, 2006 April 17, 2007 covering 342 days for a total of 1,274 days.

Petitioner challenged by certiorari the twin orders before the Court of Appeals, attributing to LLDA grave abuse of discretion in disregarding its documentary evidence, and maintaining that the lack of any plain, speedy or adequate remedy from the enforcement of LLDAs order justified such recourse as an exception to the rule requiring exhaustion of administrative remedies prior to judicial action.

By Decision of October 27, 2009 the appellate court affirmed both LLDA orders, which it found to be amply supported by substantial evidence, the computation of the accumulated daily penalties being in accord with prevailing DENR guidelines. The appellate court held that while petitioner may have offered documentary evidence to support its assertion that the days when it did not operate must be excluded from the computation, the LLDA has the prerogative to disregard the same for being unverified, hence, unreliable.

The appellate court went on to chide petitioners petition for certiorari as premature since the law provides for an appeal from decisions or orders of the LLDA to the DENR Secretary or the Office of the President, a remedy which should have first been exhausted before invoking judicial intervention.9[9]

Petitioners motion for reconsideration having been denied by Resolution of February 23, 2010, it filed the present petition.

Petitioner cites deprivation of due process and lack of any plain, speedy or adequate remedy as grounds which exempted it from complying with the rule on exhaustion of administrative remedies.

The petition fails.

The doctrine of exhaustion of administrative remedies is a cornerstone of our judicial system. The thrust of the rule is that courts must allow administrative agencies to carry out their functions and discharge their responsibilities within the specialized areas of their respective competence.10[10] The rationale for this doctrine is obvious. It entails lesser expenses and provides for the speedier resolution of controversies. Comity and convenience also impel courts of justice to
9
[9]

Vide note 1 at 2150-2154. Caballes v. Perez-Sison, G.R. No. 131759, March 23, 2004, 426 SCRA 98.

10 [10]

shy away from a dispute until the system of administrative redress has been completed.11[11]

Executive Order No. 19212[12] (EO 192) was issued on June 10, 1987 for the salutary purpose of reorganizing the DENR, charging it with the task of promulgating rules and regulations for the control of water, air and land pollution as well as of promulgating ambient and effluent standards for water and air quality including the allowable levels of other pollutants and radiations. EO 192 also created the Pollution Adjudication Board under the Office of the DENR Secretary which took over the powers and functions of the National Pollution Control Commission with respect to the adjudication of pollution cases, including the latters role as arbitrator for determining reparation, or restitution of the damages and losses resulting from pollution.13[13]

Petitioner had thus available administrative remedy of appeal to the DENR Secretary. Its contrary arguments to show that an appeal to the DENR Secretary would be an exercise in futility as the latter merely adopts the LLDAs findings is at best, speculative and presumptuous.

11 [11]

Estrada v. Court of Appeals, G.R. No. 137862, November 11, 2004, 442 SCRA 117.

12 [12] Providing for the Reorganization of the Department of Environment, Energy and Natural Resources Renaming It As the Department of Environment and Natural Resources, And For Other Purposes. 13 [13] The Alexandria Condominium Corporation v. Laguna Lake Development Authority, G.R. No. 169228, September 11, 2009.

As for petitioners invocation of due process, it fails too. The appellate court thus aptly brushed aside this claim, in this wise:

Due process, as a constitutional precept, does not always and in all situations require a trial-type proceeding. Due process is satisfied when a person is notified of the charge against him and given an opportunity to explain or defend himself. In administrative proceedings, the filing of charges and giving reasonable opportunity for the person so charged to answer the accusations against him constitute the minimum requirements of due process. The essence of due process is simply to be heard, or as applied to administrative proceedings, an opportunity to explain ones side, or an opportunity to seek a reconsideration of the action or ruling complained of. . . . Administrative due process cannot be fully equated with due process in its strict judicial sense for it is enough that the party is given the chance to be heard before the case against him is decided. Here, petitioner URC was given ample opportunities to be heard it was given show cause orders and allowed to participate in hearing to rebut the allegation against it of discharging pollutive wastewater to the Pasig River, it was given the chance to present evidences in support of its claims, it was notified of the assailed Order to Pay, and it was allowed to file a motion for reconsideration. Given these, we are of the view that the minimum requirements of administrative due process have been complied with in this case.14[14] (emphasis in the original)

In fine, the assailed LLDA orders of January 21, 2008 and July 11, 2008 correctly reckoned the two periods within which petitioner was found to have continued discharging pollutive wastewater and applied the penalty as provided for under Article VI, Section 32 of LLDA Resolution No. 33, Series of 1996. 15[15]
14 [14]
15 [15]

Vide note 1 at 2155-2156.

Section 32. Penalty for Violating the Prohibited Acts. Any person who shall violate any of the provisions of Article V of these rules and regulations or any order or decision of the Authority, shall be liable to a penalty of not to exceed one thousand pesos (P1,000) for each day during which such violation or default continues, or by imprisonment of from two (2) years to six (6) years, or both fine and imprisonment after

LLDAs explanation that behind its inclusion of certain days in its computation of the imposable penalties that it had already deducted not just the period during which the LLDA Laboratory underwent rehabilitation work from December 1, 2000 to June 30, 2001 (covering 212 days) but had also excluded from the computation the period during which no inspections or compliance monitorings were conducted (a period covering two years and four months) is well-taken.

It is noted that during the hearing on June 19, 2007, the LLDA gave petitioner the opportunity to submit within fifteen (15) days.any valid documents to show proof of its non-operating dates that would be necessary for the possible reduction of the accumulated daily penalties,16[16] but petitioner failed to comply therewith.

As earlier noted, petitioner filed a Manifestation and Motion to which it attached Daily Operation Reports and Certifications, which voluminous documents were, however, unverified in derogation of Rule X, Section 217[17] of the 2004 Revised Rules, Regulations and Procedures Implementing Republic Act No. 4850.
due notice and hearing, and in addition such person maybe required or enjoined from continuing such violation.

16 [16]
17 [17]

Vide note 4 at 45.

Section 2. Computation of Penalties for Pollution Related Cases. The amount of penalties shall be computed in accordance with the existing guidelines of the Committee. The amount of penalties shall be computed from the date of initial sampling when the violation was discovered until the date of the actual cessation of the pollution or actual clearance of the source of pollution unless the actual number of days of discharge is proven otherwise by the respondent through verified documentary evidence.

Absent such verification, the LLDA may not be faulted for treating such evidence to be purely self-serving.

Respecting LLDAs decision not to attach any evidentiary weight to the Daily Operation Reports or Certifications, recall that the LLDA conducted an analysis of petitioners wastewater discharge on August 31, 2000, upon receiving a phone-in complaint. And it conducted too an analysis on May 3, 2002 in the course of periodic compliance monitoring. The Daily Operation Reports for both August 31, 200018[18] and May 3, 200219[19] submitted by petitioner clearly manifest that the plant did not operate on those dates. On the other hand, LLDAs Investigation Report and Report of Inspection20[20] dated August 31, 2000 and May 3, 2002, respectively, disclose otherwise. accuracy of the Daily Operation Reports. Petitioner never disputed the factual findings reflected in these reports. Thus spawns doubts on the veracity and

Petitioner asserts that LLDA had not credited it for undertaking remedial measures to rehabilitate its wastewater treatment facility, despite the prohibitive costs and at a time when its income from the agro-industrial business was already severely affected by a poor business climate; and that the enforcement of the assailed LLDA orders amounted to a gross disincentive to its business.

18 [18] 19 [19] 20 [20]

Annex 1-156, CA rollo, p. 208. Annex 9-107, id. at 654. Id. at 2104-2112.

Without belaboring petitioners assertions, it must be underscored that the protection of the environment, including bodies of water, is no less urgent or vital than the pressing concerns of private enterprises, big or small. Everyone must do their share to conserve the national patrimonys meager resources for the benefit of not only this generation, but of those to follow. The length of time alone it took petitioner to upgrade its WTF (from 2003 to 2007), a move arrived at only under threat of continuing sanctions, militates against any genuine concern for the wellbeing of the countrys waterways.

WHEREFORE, the petition is DENIED. The October 27, 2009 Decision and the February 23, 2010 Resolution, of the Court of Appeals in CA-G. R. SP No. 107449, are AFFIRMED.

SO ORDERED. CONCHITA CARPIO MORALES Associate Justice

WE CONCUR:

ARTURO D. BRION Associate Justice

LUCAS P. BERSAMIN Associate Justice

MARTIN S. VILLARAMA, JR. Associate Justice

MARIA LOURDES P. A. SERENO Associate Justice

ATTESTATION

I attest that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Courts Division.

CONCHITA CARPIO MORALES Associate Justice Chairperson

CERTIFICATION

Pursuant to Section 13, Article VIII of the Constitution, and the Division Chairpersons Attestation, I certify that the conclusions in the above decision had been reached in consultation before the case was assigned to the writer of the opinion of the Courts Division.

RENATO C. CORONA
Chief Justice

SECOND DIVISION

THE BOARD OF TRUSTEES OF THE GOVERNMENT SERVICE INSURANCE SYSTEM and WINSTON F. GARCIA, in his capacity as GSIS President and General Manager, Petitioners,

G.R. No. 170463

Present:

CARPIO, J., Chairperson, NACHURA, PERALTA, ABAD, and MENDOZA, JJ.

- versus -

Promulgated: ALBERT M. VELASCO and MARIO I. MOLINA, Respondents. February 2, 2011

x--------------------------------------------------x DECISION

CARPIO, J.:

The Case

This is a petition for review1 of the 24 September 2004 Decision2 and the 7 October 2005 Order3 of the Regional Trial Court of Manila, Branch 19 (trial court), in Civil Case No. 03-108389. In its 24 September 2004 Decision, the trial court granted respondents Albert M. Velasco4 and Mario I. Molinas5 (respondents) petition for prohibition. In its 7 October 2005 Order, the trial court denied petitioners Board of Trustees of the Government Service Insurance System (GSIS) and Winston F. Garcias (petitioners) motion for reconsideration.

The Facts

On 23 May 2002, petitioners charged respondents administratively with grave misconduct and placed them under preventive suspension for 90 days. 6 Respondents were charged for their alleged participation in the demonstration held by some GSIS employees denouncing the alleged corruption in the GSIS and calling for the ouster of its president and general manager, petitioner Winston F. Garcia. 7

In a letter dated 4 April 2003, respondent Mario I. Molina (respondent Molina) requested GSIS Senior Vice President Concepcion L. Madarang (SVP Madarang) for the implementation of his step increment. 8 On 22 April 2003, SVP Madarang denied the request citing GSIS Board Resolution No. 372 (Resolution No. 372) 9 issued by petitioner Board of Trustees of the GSIS (petitioner GSIS Board) which approved the new GSIS salary structure, its implementing rules and regulations, and the adoption of the supplemental guidelines on step increment and promotion. 10 The pertinent provision of Resolution No. 372 provides:

A. Step Increment xxxx III. Specific Rules:

x x xx 3. The step increment adjustment of an employee who is on preventive suspension shall be withheld until such time that a decision on the case has been rendered. x x x x

Respondents also asked that they be allowed to avail of the employee privileges under GSIS Board Resolution No. 306 (Resolution No. 306) approving Christmas raffle benefits for all GSIS officials and employees effective year 2002. 11 Respondents request was again denied because of their pending administrative case.

On 27 August 2003, petitioner GSIS Board issued Board Resolution No. 197 (Resolution No. 197) approving the following policy recommendations:

B. On the disqualification from promotion of an employee with a pending administrative case To adopt the policy that an employee with pending administrative case shall be disqualified from the following during the pendency of the case: a) Promotion; b) Step Increment; c) Performance-Based Bonus; and d) Other benefits and privileges.

On 14 November 2003, respondents filed before the trial court a petition for prohibition with prayer for a writ of preliminary injunction. 12 Respondents claimed that they were denied the benefits which GSIS employees were entitled under Resolution No. 306. Respondents also sought to restrain and prohibit petitioners from implementing Resolution Nos. 197 and 372. Respondents claimed that the denial of the employee benefits due them on the ground of their pending administrative cases violates their right to be presumed innocent and that they are being punished without hearing. Respondent Molina also added that he had already earned his right to the step increment before Resolution No. 372 was enacted. Respondents also argued that the

three resolutions were ineffective because they were not registered with the University of the Philippines (UP) Law Center pursuant to the Revised Administrative Code of 1987.13 On 24 November 2003, petitioners filed their comment with motion to dismiss and opposition.14 On 2 December 2003, respondents filed their opposition to the motion to dismiss.15 On 5 December 2003, petitioners filed their reply. 16

On 16 January 2004, the trial court denied petitioners motion to dismiss and granted respondents prayer for a writ of preliminary injunction. 17

Petitioners filed a motion for reconsideration. 18 In its 26 February 2004 Order, the trial court denied petitioners motion.19

In its 24 September 2004 Decision, the trial court granted respondents petition for prohibition. The dispositive portion of the 24 September 2004 Decision provides:

WHEREFORE, the petition is GRANTED and respondents Board Resolution No. 197 of August 27, 2003 and No. 372 of November 21, 2000 are hereby declared null and void. The writ of preliminary injunction issued by this Court is hereby made permanent.

SO ORDERED.20

Petitioners filed a motion for reconsideration. In its 7 October 2005 Order, the trial court denied petitioners motion.

Hence, this petition.

The Ruling of the Trial Court

On the issue of jurisdiction, the trial court said it can take cognizance of the petition because the territorial area referred to in Section 4, Rule 65 of the Rules of Court does not necessarily delimit to a particular locality but rather to the judicial region where the office or agency is situated so that the prohibitive writ can be enforced.

On the merits of the case, the trial court ruled that respondents were entitled to all employee benefits as provided under the law by reason of their employment. According to the trial court, to deny respondents these employee benefits for the reason alone that they have pending administrative cases is unjustified since it would deprive them of what is legally due them without due process of law, inflict punishment on them without hearing, and violate their right to be presumed innocent.

The trial court also found that the assailed resolutions were not registered with the UP Law Center, per certification of the Office of the National Administrative Register (ONAR).21 Since they were not registered, the trial court declared that the assailed resolutions have not become effective citing Sections 3 and 4, Chapter 2, Book 7 of the Revised Administrative Code of 1987.22

The Issues

Petitioners raise the following issues:

Whether the jurisdiction over the subject matter of Civil Case No. 03-108389 (Velasco, et al. vs. The Board of Trustees of GSIS, et al., RTC-Manila, Branch 19) lies with the Civil Service Commission (CSC) and not with the Regional Trial Court of Manila, Branch 19.

II Whether a Special Civil Action for Prohibition against the GSIS Board or its President and General Manager exercising quasi-legislative and administrative functions in Pasay City is outside the territorial jurisdiction of RTC-Manila, Branch 19.

III Whether internal rules and regulations need not require publication with the Office of the National [Administrative] Register for their effectivity, contrary to the conclusion of the RTC-Manila, Branch 19.

IV Whether a regulation, which disqualifies government employees who have pending administrative cases from the grant of step increment and Christmas raffle benefits is unconstitutional.

V Whether the nullification of GSIS Board Resolutions is beyond an action for prohibition, and a writ of preliminary injunction cannot be made permanent without a decision ordering the issuance of a writ of prohibition.23

The Ruling of the Court

The petition is partly meritorious.

Petitioners argue that the Civil Service Commission (CSC), not the trial court, has jurisdiction over Civil Case No. 03-108389 because it involves claims of employee benefits. Petitioners point out that the trial court should have dismissed the case for lack of jurisdiction.

Sections 2 and 4, Rule 65 of the Rules of Court provide:

Sec. 2. Petition for Prohibition. - When the proceedings of any tribunal, corporation, board, officer or person, whether exercising judicial, quasi-judicial or ministerial functions, are without or in excess of its jurisdiction, or with grave abuse of discretion amounting to lack or excess of jurisdiction, and there is no appeal or any other plain, speedy, and adequate remedy in the ordinary course of law, a person aggrieved thereby may file a verified petition in the proper court, alleging the facts with certainty and praying that judgment be rendered commanding the respondent to desist from further proceedings in the action or matter specified therein, or otherwise granting such incidental reliefs as law and justice may require.

Sec. 4. Where petition filed. - The petition may be filed not later than sixty (60) days from notice of the judgment, order or resolution sought to be assailed in the Supreme Court or, if it related to acts or omissions of a lower court or of a corporation, board, officer or person in the Regional Trial Court exercising jurisdiction over the territorial area as defined by the Supreme Court. It may also be filed in the Court of Appeals whether or not the same is in aid of its appellate jurisdiction, or in the Sandiganbayan if it is in aid of its jurisdiction. If it involves the acts or omissions of a quasi-judicial agency, and unless otherwise provided by law or these Rules, the petition shall be filed in and cognizable only by the Court of Appeals. (Emphasis supplied)

Civil Case No. 03-108389 is a petition for prohibition with prayer for the issuance of a writ of preliminary injunction. Respondents prayed that the trial court declare all acts emanating from Resolution Nos. 372, 197, and 306 void and to prohibit petitioners from further enforcing the said resolutions.24 Therefore, the trial court, not the CSC, has jurisdiction over respondents petition for prohibition.

Petitioners also claim that the petition for prohibition was filed in the wrong territorial jurisdiction because the acts sought to be prohibited are the acts of petitioners who hold their principal office in Pasay City, while the petition for prohibition was filed in Manila.

Section 18 of Batas Pambansa Blg. 129 (BP 129)25 provides:

SEC. 18. Authority to define territory appurtenant to each branch. - The Supreme Court shall define the territory over which a branch of the Regional Trial Court shall exercise its authority. The territory thus defined shall be deemed to be the territorial area of the branch concerned for purposes of determining the venue of all suits, proceedings or actions, whether civil or criminal, as well as determining the Metropolitan Trial Courts, Municipal Trial Courts, and Municipal Circuit Trial Courts over which the said branch may exercise appellate jurisdiction. The power herein granted shall be exercised with a view to making the courts readily accessible to the people of the different parts of the region and making attendance of litigants and witnesses as inexpensive as possible. (Emphasis supplied)

In line with this, the Supreme Court issued Administrative Order No. 3 26 defining the territorial jurisdiction of the regional trial courts in the National Capital Judicial Region, as follows:

a. Branches I to LXXXII, inclusive, with seats at Manila over the City of Manila only.

b. Branches LXXXIII to CVII, inclusive, with seats at Quezon City over Quezon City only.

c. Branches CVIII to CXIX, inclusive, with seats at Pasay City over Pasay City only.

xxxx

The petition for prohibition filed by respondents is a special civil action which may be filed in the Supreme Court, the Court of Appeals, the Sandiganbayan or the regional trial court, as the case may be.27 It is also a personal action because it does not affect the title to, or possession of real property, or interest therein. Thus, it may be commenced and tried where the plaintiff or any of the principal plaintiffs resides, or where the defendant or any of the principal defendants resides, at the election of the plaintiff.28 Since respondent Velasco, plaintiff before the trial court, is a resident of the City of Manila,29 the petition could properly be filed in the City of Manila. 30 The choice of venue is sanctioned by Section 2, Rule 4 of the Rules of Court.

Moreover, Section 21(1) of BP 129 provides:

Sec. 21. Original jurisdiction in other cases. - Regional Trial Courts shall exercise original jurisdiction: (1) In the issuance of writs of certiorari, prohibition, mandamus, quo warranto, habeas corpus and injunction, which may be enforced in any part of their respective regions; x x x (Emphasis supplied)

Since the National Capital Judicial Region is comprised of the cities of Manila, Quezon, Pasay, Caloocan, Malabon, Mandaluyong, Makati, Pasig, Marikina, Paraaque, Las Pias, Muntinlupa, and Valenzuela and the municipalities of Navotas, San Juan, Pateros, and Taguig, a writ of prohibition issued by the regional trial court sitting in the City of Manila, is enforceable in Pasay City. Clearly, the RTC did not err when it took cognizance of respondents petition for prohibition because it had jurisdiction over the action and the venue was properly laid before it.

Petitioners also argue that Resolution Nos. 372, 197, and 306 need not be filed with the UP Law Center ONAR since they are, at most, regulations which are merely internal in nature regulating only the personnel of the GSIS and not the public.

Not all rules and regulations adopted by every government agency are to be filed with the UP Law Center. Only those of general or of permanent character are to be filed. According to the UP Law Centers guidelines for receiving and publication of rules and regulations, interpretative regulations and those merely internal in nature, that is, regulating only the personnel of the Administrative agency and not the public, need not be filed with the UP Law Center.

Resolution No. 372 was about the new GSIS salary structure, Resolution No. 306 was about the authority to pay the 2002 Christmas Package, and Resolution No. 197 was about the GSIS merit selection and promotion plan. Clearly, the assailed resolutions pertained only to internal rules meant to regulate the personnel of the GSIS. There was no need for the publication or filing of these resolutions with the UP Law Center.

Petitioners insist that petitioner GSIS Board has the power to issue the assailed resolutions. According to petitioners, it was within the power of petitioner GSIS Board to disqualify respondents for step increment and from receiving GSIS benefits from the time formal administrative charges were filed against them until the cases are resolved.

The Court notes that the trial court only declared Resolution Nos. 197 and 372 void. The trial court made no ruling on Resolution No. 306 and respondents did not appeal this matter. Therefore, we will limit our discussion to Resolution Nos. 197 and 372, particularly to the effects of preventive suspension on the grant of step increment because this was what respondents raised before the trial court.

First, entitlement to step increment depends on the rules relative to the grant of such benefit. In point are Section 1(b), Rule II and Section 2, Rule III of Joint Circular No. 1, series of 1990, which provide:

Rule II. Selection Criteria Section 1. Step increments shall be granted to all deserving officials and employees x x x (b) Length of Service For those who have rendered continuous satisfactory service in a particular position for at least three (3) years.

Rule III. Step Increments xxxx

Section 2. Length of Service A one (1) step increment shall be granted officials and employees for every three (3) years of continuous satisfactory service in the position. Years of service in the position shall include the following: (a) Those rendered before the position was reclassified to a position title with a lower or the same salary grade allocation; and (b) Those rendered before the incumbent was transferred to another position within the same agency or to another agency without a change in position title and salary grade allocation.

In the initial implementation of step increments in 1990, an incumbent shall be granted step increments equivalent to one (1) step for every three (3) years of continuous satisfactory service in a given position occupied as of January 1, 1990.

A grant of step increment on the basis of length of service requires that an employee must have rendered at least three years of continuous and satisfactory service in the same position to which he is an incumbent. 31 To determine whether service is continuous, it is necessary to define what actual service is. 32 Actual service refers to the period of continuous service since the appointment of the official or employee concerned, including the period or periods covered by any previously approved leave with pay.33

Second, while there are no specific rules on the effects of preventive suspension on step increment, we can refer to the CSC rules and rulings on the effects of the penalty of suspension and approved vacation leaves without pay on the grant of step increment for guidance.

Section 56(d), Rule IV of the Uniform Rules on Administrative Cases in the Civil Service provides:

Section 56. Duration and effect of administrative penalties. - The following rules shall govern in the imposition of administrative penalties: x x x (d) The penalty of suspension shall result in the temporary cessation of work for a period not exceeding one (1) year.

Suspension of one day or more shall be considered a gap in the continuity of service. During the period of suspension, respondent shall not be entitled to all money benefits including leave credits.

If an employee is suspended as a penalty, it effectively interrupts the continuity of his government service at the commencement of the service of the said suspension. This is because a person under penalty of suspension is not rendering actual service. The suspension will undoubtedly be considered a gap in the continuity of the service for purposes of the computation of the three year period in the grant of step increment. 34 However, this does not mean that the employee will only be entitled to the step increment after completing another three years of continuous satisfactory service reckoned from the time the employee has fully served the penalty of suspension. 35 The CSC has taken this to mean that the computation of the three year period requirement will only be extended by the number of days that the employee was under suspension.36 In other words, the grant of step increment will only be delayed by the same number of days that the employee was under suspension.

This is akin to the status of an employee who incurred vacation leave without pay for purposes of the grant of step increment.37 Employees who were on approved vacation leave without pay enjoy the liberal application of the rule on the grant of step increment under Section 60 of CSC Memorandum Circular No. 41, series of 1998, which provides:

Section 60. Effect of vacation leave without pay on the grant of length of service step increment. - For purposes of computing the length of service for the grant of step increment, approved vacation leave without pay for an aggregate of fifteen (15) days shall not interrupt the continuity of the three-year service requirement for the grant of step increment. However, if the total number of authorized vacation leave without pay included within the three-year period exceeds fifteen (15) days, the grant of one-step increment will only be delayed for the same number of days that an official or employee was absent without pay. (Emphasis supplied)

Third, on preventive suspension, Sections 51 and 52, Chapter 7, Subtitle A, Title I, Book V of the Revised Administrative Code of 1987 provide:

SEC. 51. Preventive Suspension. - The proper disciplining authority may preventively suspend any subordinate officer or employee under his authority pending an investigation, if the charge against such officer or employee involves dishonesty, oppression or grave misconduct, or neglect in the performance of duty, or if there are reasons to believe that the respondent is guilty of charges which would warrant his removal from the service. SEC. 52. Lifting of Preventive Suspension. Pending Administrative Investigation. - When the administrative case against the officer or employee under preventive suspension is not finally decided by the disciplining authority within the period of ninety (90) days after the date of suspension of the respondent who is not a presidential appointee, the respondent shall be automatically reinstated in the service : Provided, That when the delay in the disposition of the case is due to the fault, negligence or petition of the respondent, the period of delay shall not be counted in computing the period of suspension herein provided. (Emphasis supplied)

Preventive suspension pending investigation is not a penalty. 38 It is a measure intended to enable the disciplining authority to investigate charges against respondent by preventing the latter from intimidating or in any way influencing witnesses against him.39 If the investigation is not finished and a decision is not rendered within that

period, the suspension will be lifted and the respondent will automatically be reinstated.

Therefore, on the matter of step increment, if an employee who was suspended as a penalty will be treated like an employee on approved vacation leave without pay,40 then it is only fair and reasonable to apply the same rules to an employee who was preventively suspended, more so considering that preventive suspension is not a penalty. If an employee is preventively suspended, the employee is not rendering actual service and this will also effectively interrupt the continuity of his government service. Consequently, an employee who was preventively suspended will still be entitled to step increment after serving the time of his preventive suspension even if the pending administrative case against him has not yet been resolved or dismissed. The grant of step increment will only be delayed for the same number of days, which must not exceed 90 days, that an official or employee was serving the preventive suspension.

Fourth, the trial court was correct in declaring that respondents had the right to be presumed innocent until proven guilty. This means that an employee who has a pending administrative case filed against him is given the benefit of the doubt and is considered innocent until the contrary is proven. 41

In this case, respondents were placed under preventive suspension for 90 days beginning on 23 May 2002. Their preventive suspension ended on 21 August 2002. Therefore, after serving the period of their preventive suspension and without the administrative case being finally resolved, respondents should have been reinstated and, after serving the same number of days of their suspension, entitled to the grant of step increment.

On a final note, social legislation like the circular on the grant of step increment, being remedial in character, should be liberally construed and administered in favor of the persons to be benefited. The liberal approach aims to achieve humanitarian purposes of the law in order that the efficiency, security and well-being of government employees may be enhanced.42

WHEREFORE, we DENY the petition. We AFFIRM with MODIFICATION the 24 September 2004 Decision and the 7 October 2005 Order of the Regional Trial Court of Manila, Branch 19 in Civil Case No. 03-108389. We DECLARE the assailed provisions on step increment in GSIS Board Resolution Nos. 197 and 372 VOID. We MODIFY the 24 September 2004 Decision of the Regional Trial Court of Manila, Branch 19 and rule that GSIS Board Resolution Nos. 197, 306 and 372 need not be filed with the University of the Philippines Law Center.

SO ORDERED.

ANTONIO T. CARPIO Associate Justice

WE CONCUR:

ANTONIO EDUARDO B. NACHURA

Associate Justice

DIOSDADO M. PERALTA ROBERTO A. ABAD Associate Justice Associate Justice

JOSE C. MENDOZA Associate Justice

ATTESTATION I attest that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Courts Division.

ANTONIO T. CARPIO

Associate Justice Chairperson

CERTIFICATION Pursuant to Section 13, Article VIII of the Constitution, and the Division Chairpersons Attestation, I certify that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Courts Division.

RENATO C. CORONA Chief Justice

1 Under Rule 45 of the 1997 Rules of Civil Procedure. 2 Rollo, pp. 34-37. Penned by Judge Zenaida R. Daguna. 3 Id. at 38. 4 Respondent Albert M. Velasco holds the position of Attorney V in the Department of Investigation. 5 Respondent Mario I. Molina holds the position of Attorney V in the Legal Department. Sometimes appears in the records as Mario T. Molina.

6 Records, pp. 24-28. 7 Respondent Albert M. Velasco was also charged with violation of rules on office decorum and gross insubordination. 8 Records, pp. 35-36. 9 Id. at 19-23. Issued on 21 November 2000. 10 Id. at 37. 11 Id. at 33-34. Issued on 23 October 2002. 12 Id. at 5-18. 13 Id. at 38. 14 Id. at 42-46. 15 Id. at 49-52. 16 Id. at 53-58. 17 Id. at 68-70. 18 Id. at 83-88. 19 Id. at 140. 20 Rollo, p. 37. 21 Records, p. 38. 22 SEC. 3. Filing. - (1) Every agency shall file with the University of the Philippines Law Center three (3) certified copies of every rule adopted by it. Rules in force on the date of effectivity of this Code which are not filed within three (3) months from that date shall not thereafter be the basis of any sanction against any party of persons. (2) The records officer of the agency, or his equivalent functionary, shall carry out the requirements of this section under pain of disciplinary action. (3) A permanent register of all rules shall be kept by the issuing agency and shall be open to the public inspection. SEC. 4. Effectivity. - In addition to other rule-making requirements provided by law not inconsistent with this Book, each rule shall become effective fifteen (15) days from the date of filing as above provided unless a different date is fixed by law, or specified in the rule in cases of imminent danger to public health, safety and welfare, the existence of which must be expressed in a statement accompanying the rule. The agency shall take appropriate measures to make emergency rules known to persons who may be affected by them. 23 Rollo, p. 157. 24 Records, p. 16.

25 The Judiciary Reorganization Act of 1980. 26 Dated 19 January 1983. 27 Rules of Court, Sec. 4, Rule 65. 28 Rules of Court, Sec. 2, Rule 4. 29 Records, p. 7. In the petition for prohibition, respondent Velasco stated that his residence is at 639-A Cristobal Street, Sampaloc, Manila. 30 See Notre Dame de Lourdes Hospital v. Mallare-Phillips, 274 Phil. 467 (1991). 31 CSC Resolution No. 02-1479, Sison, Maricon Re: Query; Step Increment, 8 November 2002. 32 Id. 33 Section 28, CSC Memorandum Circular No. 41, series of 1988. Also known as the Revised Omnibus Rules on Leave. 34 CSC Resolution No. 021564, Traspadillo, John Marlon M. - Re: Step Increment; Suspension as a Gap in the Service, 17 December 2002. 35 Id. 36 Id. 37 Id. 38 Section 24 of Rule XIV of the Omnibus Rules Implementing Book V of the Administrative Code of 1987 and other Pertinent Civil Service Laws. Section 24 provides: SEC. 24. Preventive suspension is not a punishment or penalty for misconduct in office but is considered to be a preventive measure. 39 Juan v. People of the Philippines, 379 Phil. 125 (2000); Gloria v. Court of Appeals, 365 Phil. 744 (1999). 40 CSC Resolution No. 021564, Traspadillo, John Marlon M. - Re: Step Increment; Suspension as a Gap in the Service, 17 December 2002. 41 CSC Resolution No. 992456, Asperilla, Dominador O. - Re: Special Leave Benefits; Query, 5 November 1999. 42 Tria v. Employees Compensation Commission, G.R. No. 96787, 8 May 1992, 208 SCRA 834; Ortiz v. COMELEC, 245 Phil. 780 (1988).

Republic of the Philippines SUPREME COURT Manila EN BANC

G.R. No. 166471

March 22, 2011

TAWANG MULTI-PURPOSE COOPERATIVE Petitioner, vs. LA TRINIDAD WATER DISTRICT, Respondent. DECISION CARPIO, J.: The Case This is a petition for review on certiorari under Rule 45 of the Rules of Court. The petition1 challenges the 1 October 2004 Judgment2 and 6 November 2004 Order3 of the Regional Trial Court (RTC), Judicial Region 1, Branch 62, La Trinidad, Benguet, in Civil Case No. 03-CV1878. The Facts Tawang Multi-Purpose Cooperative (TMPC) is a cooperative, registered with the Cooperative Development Authority, and organized to provide domestic water services in Barangay Tawang, La Trinidad, Benguet. La Trinidad Water District (LTWD) is a local water utility created under Presidential Decree (PD) No. 198, as amended. It is authorized to supply water for domestic, industrial and commercial purposes within the municipality of La Trinidad, Benguet. On 9 October 2000, TMPC filed with the National Water Resources Board (NWRB) an application for a certificate of public convenience (CPC) to operate and maintain a waterworks system in Barangay Tawang. LTWD opposed TMPCs application. LTWD claimed that, under Section 47 of PD No. 198, as amended, its franchise is exclusive. Section 47 states that: Sec. 47. Exclusive Franchise. No franchise shall be granted to any other person or agency for domestic, industrial or commercial water service within the district or any portion thereof unless and except to the extent that the board of directors of said district consents thereto by resolution duly adopted, such resolution, however, shall be subject to review by the Administration. In its Resolution No. 04-0702 dated 23 July 2002, the NWRB approved TMPCs application for a CPC. In its 15 August 2002 Decision,4 the NWRB held that LTWDs franchise cannot be exclusive since exclusive franchises are unconstitutional and found that TMPC is legally and financially qualified to operate and maintain a waterworks system. NWRB stated that: With respect to LTWDs opposition, this Board observes that: 1. It is a substantial reproduction of its opposition to the application for water permits previously filed by this same CPC applicant, under WUC No. 98-17 and 98-62 which was decided upon by

this Board on April 27, 2000. The issues being raised by Oppositor had been already resolved when this Board said in pertinent portions of its decision: "The authority granted to LTWD by virtue of P.D. 198 is not Exclusive. While Barangay Tawang is within their territorial jurisdiction, this does not mean that all others are excluded in engaging in such service, especially, if the district is not capable of supplying water within the area. This Board has time and again ruled that the "Exclusive Franchise" provision under P.D. 198 has misled most water districts to believe that it likewise extends to be [sic] the waters within their territorial boundaries. Such ideological adherence collides head on with the constitutional provision that "ALL WATERS AND NATURAL RESOURCES BELONG TO THE STATE". (Sec. 2, Art. XII) and that "No franchise, certificate or authorization for the operation of public [sic] shall be exclusive in character". xxxx All the foregoing premises all considered, and finding that Applicant is legally and financially qualified to operate and maintain a waterworks system; that the said operation shall redound to the benefit of the homeowners/residents of the subdivision, thereby, promoting public service in a proper and suitable manner, the instant application for a Certificate of Public Convenience is, hereby, GRANTED.5 LTWD filed a motion for reconsideration. In its 18 November 2002 Resolution,6 the NWRB denied the motion. LTWD appealed to the RTC. The RTCs Ruling In its 1 October 2004 Judgment, the RTC set aside the NWRBs 23 July 2002 Resolution and 15 August 2002 Decision and cancelled TMPCs CPC. The RTC held that Section 47 is valid. The RTC stated that: The Constitution uses the term "exclusive in character". To give effect to this provision, a reasonable, practical and logical interpretation should be adopted without disregard to the ultimate purpose of the Constitution. What is this ultimate purpose? It is for the state, through its authorized agencies or instrumentalities, to be able to keep and maintain ultimate control and supervision over the operation of public utilities. Essential part of this control and supervision is the authority to grant a franchise for the operation of a public utility to any person or entity, and to amend or repeal an existing franchise to serve the requirements of public interest. Thus, what is repugnant to the Constitution is a grant of franchise "exclusive in character" so as to preclude the State itself from granting a franchise to any other person or entity than the present grantee when public interest so requires. In other words, no franchise of whatever nature can preclude the State, through its duly authorized agencies or instrumentalities, from granting franchise to any person or entity, or to repeal or amend a franchise already granted. Consequently, the Constitution does not necessarily prohibit a franchise that is exclusive on its face, meaning, that the grantee shall be allowed to exercise this present right or privilege to the exclusion of all

others. Nonetheless, the grantee cannot set up its exclusive franchise against the ultimate authority of the State.7 TMPC filed a motion for reconsideration. In its 6 November 2004 Order, the RTC denied the motion. Hence, the present petition. Issue TMPC raises as issue that the RTC erred in holding that Section 47 of PD No. 198, as amended, is valid. The Courts Ruling The petition is meritorious. What cannot be legally done directly cannot be done indirectly. This rule is basic and, to a reasonable mind, does not need explanation. Indeed, if acts that cannot be legally done directly can be done indirectly, then all laws would be illusory. In Alvarez v. PICOP Resources, Inc.,8 the Court held that, "What one cannot do directly, he cannot do indirectly."9 In Akbayan Citizens Action Party v. Aquino,10 quoting Agan, Jr. v. Philippine International Air Terminals Co., Inc.,11 the Court held that, "This Court has long and consistently adhered to the legal maxim that those that cannot be done directly cannot be done indirectly."12 In Central Bank Employees Association, Inc. v. Bangko Sentral ng Pilipinas,13 the Court held that, "No one is allowed to do indirectly what he is prohibited to do directly."14 The President, Congress and the Court cannot create directly franchises for the operation of a public utility that are exclusive in character. The 1935, 1973 and 1987 Constitutions expressly and clearly prohibit the creation of franchises that are exclusive in character. Section 8, Article XIII of the 1935 Constitution states that: No franchise, certificate, or any other form of authorization for the operation of a public utility shall be granted except to citizens of the Philippines or to corporations or other entities organized under the laws of the Philippines, sixty per centum of the capital of which is owned by citizens of the Philippines, nor shall such franchise, certificate or authorization be exclusive in character or for a longer period than fifty years. (Empahsis supplied) Section 5, Article XIV of the 1973 Constitution states that: No franchise, certificate, or any other form of authorization for the operation of a public utility shall be granted except to citizens of the Philippines or to corporations or associations organized under the laws of the Philippines at least sixty per centum of the capital of which is owned by such citizens, nor shall such franchise, certificate or authorization be exclusive in character or for a longer period than fifty years. (Emphasis supplied) Section 11, Article XII of the 1987 Constitution states that:

No franchise, certificate, or any other form of authorization for the operation of a public utility shall be granted except to citizens of the Philippines or to corporations or associations organized under the laws of the Philippines, at least sixty per centum of whose capital is owned by such citizens, nor shall such franchise, certificate or authorization be exclusive in character or for a longer period than fifty years. (Emphasis supplied) Plain words do not require explanation. The 1935, 1973 and 1987 Constitutions are clear franchises for the operation of a public utility cannot be exclusive in character. The 1935, 1973 and 1987 Constitutions expressly and clearly state that, "nor shall such franchise x x x be exclusive in character." There is no exception. When the law is clear, there is nothing for the courts to do but to apply it. The duty of the Court is to apply the law the way it is worded. In Security Bank and Trust Company v. Regional Trial Court of Makati, Branch 61,15 the Court held that: Basic is the rule of statutory construction that when the law is clear and unambiguous, the court is left with no alternative but to apply the same according to its clear language. As we have held in the case of Quijano v. Development Bank of the Philippines: "x x x We cannot see any room for interpretation or construction in the clear and unambiguous language of the above-quoted provision of law. This Court had steadfastly adhered to the doctrine that its first and fundamental duty is the application of the law according to its express terms, interpretation being called for only when such literal application is impossible. No process of interpretation or construction need be resorted to where a provision of law peremptorily calls for application. Where a requirement or condition is made in explicit and unambiguous terms, no discretion is left to the judiciary. It must see to it that its mandate is obeyed."16 (Emphasis supplied) In Republic of the Philippines v. Express Telecommunications Co., Inc.,17 the Court held that, "The Constitution is quite emphatic that the operation of a public utility shall not be exclusive."18 In Pilipino Telephone Corporation v. National Telecommunications Commission,19 the Court held that, "Neither Congress nor the NTC can grant an exclusive franchise, certificate, or any other form of authorization to operate a public utility."20 In National Power Corp. v. Court of Appeals,21 the Court held that, "Exclusivity of any public franchise has not been favored by this Court such that in most, if not all, grants by the government to private corporations, the interpretation of rights, privileges or franchises is taken against the grantee."22 In Radio Communications of the Philippines, Inc. v. National Telecommunications Commission,23 the Court held that, "The Constitution mandates that a franchise cannot be exclusive in nature."24 Indeed, the President, Congress and the Court cannot create directly franchises that are exclusive in character. What the President, Congress and the Court cannot legally do directly they cannot do indirectly. Thus, the President, Congress and the Court cannot create indirectly franchises that are exclusive in character by allowing the Board of Directors (BOD) of a water district and the Local Water Utilities Administration (LWUA) to create franchises that are exclusive in character.

In PD No. 198, as amended, former President Ferdinand E. Marcos (President Marcos) created indirectly franchises that are exclusive in character by allowing the BOD of LTWD and the LWUA to create directly franchises that are exclusive in character. Section 47 of PD No. 198, as amended, allows the BOD and the LWUA to create directly franchises that are exclusive in character. Section 47 states: Sec. 47. Exclusive Franchise. No franchise shall be granted to any other person or agency for domestic, industrial or commercial water service within the district or any portion thereof unless and except to the extent that the board of directors of said district consents thereto by resolution duly adopted, such resolution, however, shall be subject to review by the Administration. (Emphasis supplied) In case of conflict between the Constitution and a statute, the Constitution always prevails because the Constitution is the basic law to which all other laws must conform to. The duty of the Court is to uphold the Constitution and to declare void all laws that do not conform to it. In Social Justice Society v. Dangerous Drugs Board,25 the Court held that, "It is basic that if a law or an administrative rule violates any norm of the Constitution, that issuance is null and void and has no effect. The Constitution is the basic law to which all laws must conform; no act shall be valid if it conflicts with the Constitution."26 In Sabio v. Gordon,27 the Court held that, "the Constitution is the highest law of the land. It is the basic and paramount law to which all other laws must conform."28 In Atty. Macalintal v. Commission on Elections,29 the Court held that, "The Constitution is the fundamental and paramount law of the nation to which all other laws must conform and in accordance with which all private rights must be determined and all public authority administered. Laws that do not conform to the Constitution shall be stricken down for being unconstitutional."30 In Manila Prince Hotel v. Government Service Insurance System,31 the Court held that: Under the doctrine of constitutional supremacy, if a law or contract violates any norm of the constitution that law or contract whether promulgated by the legislative or by the executive branch or entered into by private persons for private purposes is null and void and without any force and effect. Thus, since the Constitution is the fundamental, paramount and supreme law of the nation, it is deemed written in every statute and contract."32 (Emphasis supplied) To reiterate, the 1935, 1973 and 1987 Constitutions expressly prohibit the creation of franchises that are exclusive in character. They uniformly command that "nor shall such franchise x x x be exclusive in character." This constitutional prohibition is absolute and accepts no exception. On the other hand, PD No. 198, as amended, allows the BOD of LTWD and LWUA to create franchises that are exclusive in character. Section 47 states that, "No franchise shall be granted to any other person or agency x x x unless and except to the extent that the board of directors consents thereto x x x subject to review by the Administration." Section 47 creates a glaring exception to the absolute prohibition in the Constitution. Clearly, it is patently unconstitutional. Section 47 gives the BOD and the LWUA the authority to make an exception to the absolute prohibition in the Constitution. In short, the BOD and the LWUA are given the discretion to create franchises that are exclusive in character. The BOD and the LWUA are not even

legislative bodies. The BOD is not a regulatory body but simply a management board of a water district. Indeed, neither the BOD nor the LWUA can be granted the power to create any exception to the absolute prohibition in the Constitution, a power that Congress itself cannot exercise. In Metropolitan Cebu Water District v. Adala,33 the Court categorically declared Section 47 void. The Court held that: Nonetheless, while the prohibition in Section 47 of P.D. 198 applies to the issuance of CPCs for the reasons discussed above, the same provision must be deemed void ab initio for being irreconcilable with Article XIV, Section 5 of the 1973 Constitution which was ratified on January 17, 1973 the constitution in force when P.D. 198 was issued on May 25, 1973. Thus, Section 5 of Art. XIV of the 1973 Constitution reads: "SECTION 5. No franchise, certificate, or any other form of authorization for the operation of a public utility shall be granted except to citizens of the Philippines or to corporations or associations organized under the laws of the Philippines at least sixty per centum of the capital of which is owned by such citizens, nor shall such franchise, certificate, or authorization be exclusive in character or for a longer period than fifty years. Neither shall any such franchise or right be granted except under the condition that it shall be subject to amendment, alteration, or repeal by the Batasang Pambansa when the public interest so requires. The State shall encourage equity participation in public utiltities by the general public. The participation of foreign investors in the governing body of any public utility enterprise shall be limited to their proportionate share in the capital thereof." This provision has been substantially reproduced in Article XII Section 11 of the 1987 Constitution, including the prohibition against exclusive franchises. xxxx Since Section 47 of P.D. 198, which vests an "exclusive franchise" upon public utilities, is clearly repugnant to Article XIV, Section 5 of the 1973 Constitution, it is unconstitutional and may not, therefore, be relied upon by petitioner in support of its opposition against respondents application for CPC and the subsequent grant thereof by the NWRB. WHEREFORE, Section 47 of P.D. 198 is unconstitutional.34 (Emphasis supplied) The dissenting opinion declares Section 47 valid and constitutional. In effect, the dissenting opinion holds that (1) President Marcos can create indirectly franchises that are exclusive in character; (2) the BOD can create directly franchises that are exclusive in character; (3) the LWUA can create directly franchises that are exclusive in character; and (4) the Court should allow the creation of franchises that are exclusive in character. Stated differently, the dissenting opinion holds that (1) President Marcos can violate indirectly the Constitution; (2) the BOD can violate directly the Constitution; (3) the LWUA can violate directly the Constitution; and (4) the Court should allow the violation of the Constitution.

The dissenting opinion states that the BOD and the LWUA can create franchises that are exclusive in character "based on reasonable and legitimate grounds," and such creation "should not be construed as a violation of the constitutional mandate on the non-exclusivity of a franchise" because it "merely refers to regulation" which is part of "the governments inherent right to exercise police power in regulating public utilities" and that their violation of the Constitution "would carry with it the legal presumption that public officers regularly perform their official functions." The dissenting opinion states that: To begin with, a government agencys refusal to grant a franchise to another entity, based on reasonable and legitimate grounds, should not be construed as a violation of the constitutional mandate on the non-exclusivity of a franchise; this merely refers to regulation, which the Constitution does not prohibit. To say that a legal provision is unconstitutional simply because it enables a government instrumentality to determine the propriety of granting a franchise is contrary to the governments inherent right to exercise police power in regulating public utilities for the protection of the public and the utilities themselves. The refusal of the local water district or the LWUA to consent to the grant of other franchises would carry with it the legal presumption that public officers regularly perform their official functions. The dissenting opinion states two "reasonable and legitimate grounds" for the creation of exclusive franchise: (1) protection of "the governments investment,"35 and (2) avoidance of "a situation where ruinous competition could compromise the supply of public utilities in poor and remote areas."36 There is no "reasonable and legitimate" ground to violate the Constitution. The Constitution should never be violated by anyone. Right or wrong, the President, Congress, the Court, the BOD and the LWUA have no choice but to follow the Constitution. Any act, however noble its intentions, is void if it violates the Constitution. This rule is basic. In Social Justice Society,37 the Court held that, "In the discharge of their defined functions, the three departments of government have no choice but to yield obedience to the commands of the Constitution. Whatever limits it imposes must be observed."38 In Sabio,39 the Court held that, "the Constitution is the highest law of the land. It is the basic and paramount law to which x x x all persons, including the highest officials of the land, must defer. No act shall be valid, however noble its intentions, if it conflicts with the Constitution."40 In Bengzon v. Drilon,41 the Court held that, "the three branches of government must discharge their respective functions within the limits of authority conferred by the Constitution."42 In Mutuc v. Commission on Elections,43 the Court held that, "The three departments of government in the discharge of the functions with which it is [sic] entrusted have no choice but to yield obedience to [the Constitutions] commands. Whatever limits it imposes must be observed."44 Police power does not include the power to violate the Constitution. Police power is the plenary power vested in Congress to make laws not repugnant to the Constitution. This rule is basic. In Metropolitan Manila Development Authority v. Viron Transportation Co., Inc.,45 the Court held that, "Police power is the plenary power vested in the legislature to make, ordain, and establish wholesome and reasonable laws, statutes and ordinances, not repugnant to the

Constitution."46 In Carlos Superdrug Corp. v. Department of Social Welfare and Development,47 the Court held that, police power "is the power vested in the legislature by the constitution to make, ordain, and establish all manner of wholesome and reasonable laws, statutes, and ordinances x x x not repugnant to the constitution."48 In Metropolitan Manila Development Authority v. Garin,49 the Court held that, "police power, as an inherent attribute of sovereignty, is the power vested by the Constitution in the legislature to make, ordain, and establish all manner of wholesome and reasonable laws, statutes and ordinances x x x not repugnant to the Constitution."50 There is no question that the effect of Section 47 is the creation of franchises that are exclusive in character. Section 47 expressly allows the BOD and the LWUA to create franchises that are exclusive in character. The dissenting opinion explains why the BOD and the LWUA should be allowed to create franchises that are exclusive in character to protect "the governments investment" and to avoid "a situation where ruinous competition could compromise the supply of public utilities in poor and remote areas." The dissenting opinion declares that these are "reasonable and legitimate grounds." The dissenting opinion also states that, "The refusal of the local water district or the LWUA to consent to the grant of other franchises would carry with it the legal presumption that public officers regularly perform their official functions." When the effect of a law is unconstitutional, it is void. In Sabio,51 the Court held that, "A statute may be declared unconstitutional because it is not within the legislative power to enact; or it creates or establishes methods or forms that infringe constitutional principles; or its purpose or effect violates the Constitution or its basic principles."52 The effect of Section 47 violates the Constitution, thus, it is void. In Strategic Alliance Development Corporation v. Radstock Securities Limited,53 the Court held that, "This Court must perform its duty to defend and uphold the Constitution."54 In Bengzon,55 the Court held that, "The Constitution expressly confers on the judiciary the power to maintain inviolate what it decrees."56 In Mutuc,57 the Court held that: The concept of the Constitution as the fundamental law, setting forth the criterion for the validity of any public act whether proceeding from the highest official or the lowest functionary, is a postulate of our system of government. That is to manifest fealty to the rule of law, with priority accorded to that which occupies the topmost rung in the legal hierarchy. The three departments of government in the discharge of the functions with which it is [sic] entrusted have no choice but to yield obedience to its commands. Whatever limits it imposes must be observed. Congress in the enactment of statutes must ever be on guard lest the restrictions on its authority, whether substantive or formal, be transcended. The Presidency in the execution of the laws cannot ignore or disregard what it ordains. In its task of applying the law to the facts as found in deciding cases, the judiciary is called upon to maintain inviolate what is decreed by the fundamental law. Even its power of judicial review to pass upon the validity of the acts of the coordinate branches in the course of adjudication is a logical corollary of this basic principle that the Constitution is paramount. It overrides any governmental measure that fails to live up to its mandates. Thereby there is a recognition of its being the supreme law.58

Sustaining the RTCs ruling would make a dangerous precedent. It will allow Congress to do indirectly what it cannot do directly. In order to circumvent the constitutional prohibition on franchises that are exclusive in character, all Congress has to do is to create a law allowing the BOD and the LWUA to create franchises that are exclusive in character, as in the present case. WHEREFORE, we GRANT the petition. We DECLARE Section 47 of Presidential Decree No. 198 UNCONSTITUTIONAL. We SET ASIDE the 1 October 2004 Judgment and 6 November 2004 Order of the Regional Trial Court, Judicial Region 1, Branch 62, La Trinidad, Benguet, in Civil Case No. 03-CV-1878 and REINSTATE the 23 July 2002 Resolution and 15 August 2002 Decision of the National Water Resources Board. SO ORDERED. ANTONIO T. CARPIO Associate Justice WE CONCUR: SECOND DIVISION G.R. No. 171427 March 30, 2011

STERLING SELECTIONS CORPORATION, Petitioner, vs. LAGUNA LAKE DEVELOPMENT AUTHORITY (LLDA) and JOAQUIN G. MENDOZA, in his capacity as General Manager of LLDA, Respondents. DECISION NACHURA, J.: Before this Court is a Petition for Review on Certiorari under Rule 45 of the Rules of Court. Petitioner Sterling Selections Corporation (petitioner) is assailing the Decision1 dated May 30, 2005 and the Resolution2 dated January 31, 2006 of the Court of Appeals (CA) in CA-G.R. SP No. 79889. Petitioner is a company engaged in the fabrication of sterling silver jewelry. Its products are manufactured in the home of its principal stockholders, Asuncion Maria and Juan Luis Faustmann (Faustmanns), located in Barangay (Brgy.) Mariana, New Manila, Quezon City.3 Sometime in 1992, one of petitioners neighbors in Brgy. Mariana filed a complaint with the Office of the Chairman of Brgy. Mariana against petitioner for "creating loud unceasing noise and emitting toxic fumes," coming from the manufacturing plant of the latters predecessor, Unson, Faustmann and Company, Inc.4 During conciliation proceedings, petitioners management undertook to relocate its operations within a month. The parties signed an

Agreement to that effect.5 However, petitioner failed to abide by the undertaking and continued to manufacture its products in its Brgy. Mariana workshop. On January 16, 1998, Alicia P. Maceda (Maceda), another neighbor of petitioner, wrote a letter to the Brgy. Chairman to complain about the loud noise and offensive toxic fumes coming from petitioners manufacturing plant.6 She also filed a formal complaint with the Department of Environment and Natural Resources (DENR)-National Capital Region office. The complaint was endorsed by the DENR to one of the agencies under it, respondent Laguna Lake Development Authority (LLDA), which had territorial and functional jurisdiction over the matter.7 Subsequently, the Monitoring and Enforcement Section-Pollution Control Division of LLDA conducted an inspection of petitioners premises. According to the LLDA, it was observed that the wastewater generated by petitioners operations was drained directly to the sewer canal. However, since the wastewater was not yet for disposal, no sample could be collected during the inspection. On November 19, 1998, a Notice of Violation and a Cease and Desist Order (CDO) were served on petitioner after it was found that it was operating without an LLDA Clearance and Permit, as required by Republic Act (R.A.) No. 4850.8 Meanwhile, Macedas complaint was endorsed by the LLDA to the Office of the Mayor of Quezon City. After hearing and investigation, the Office of the Mayor issued a Closure Order against petitioner after finding that it was operating without the requisite business permit, since it was running a jewelry manufacturing plant with an "Office Only" permit, and for violation of Zoning and Environmental Laws.9 Petitioner then filed a petition for mandamus before the Regional Trial Court (RTC), Branch 167, Pasig City. Contending that, as a cottage industry, its jewelry business is exempt from the requirement to secure a permit from the LLDA, petitioner asked the court to order the latter to issue a certificate of exemption in its favor. The RTC denied the petition, ruling that mandamus does not lie to compel the performance of a discretionary duty. Nonetheless, the RTC allowed petitioner to file an amended petition for certiorari and mandamus.10 In its amended petition, petitioner averred that its business was classified as a cottage industry. It argued that under R.A. No. 6977, the law prevailing at the time of its registration with the Securities and Exchange Commission (SEC) in December 1996, cottage industry was defined as one with assets worth P50,001.00 to P500,000.00.11 Since, based on its Articles of Incorporation and Certified Public Accountant (CPA)s Balance Sheet, its total assets when it was incorporated amounted only to P312,500.00, it qualified as a cottage industry. Intervenors Maceda, Ma. Corazon G. Logarta (Logarta), and Rosario "Charito" Planas (Planas) filed a motion for intervention. Their Answer-in-Intervention was subsequently admitted by the RTC. On April 1, 2002, the RTC promulgated a decision12 denying the petition. In rejecting petitioners claim that it was a cottage industry, the RTC said:

While it is true that plaintiff [petitioner]s economic activity is carried on in a home, which incidentally gained the ire of the neighbors that culminated in a complaint against the plaintiff, it was manned not with the members of the family but by at least two hundred employees who were strangers and not known to the community. Moreso, being an accredited exporter recognized by the Bureau of Export Trade Promotion, Department of Trade and Industry, seemed a deviation from the connotation of "small scale." Worthy to note is the observation of respondent-intervenors that to be considered a cottage industry, plaintiff should have been registered under the [National Cottage Industries Development Authority (NACIDA)], Section 12 of R.A. [No.] 3470 substantially provides; (sic) that the plaintiff corporation who desires to avail of the benefits and assistance of the law should have registered with the board. In the absence of any indication that affirm the status of the plaintiff corporation as a cottage industry, proof to the contrary may be reasonably accepted, for he who alleged the affirmative of the issue has the burden of proof and in this aspect plaintiff miserably failed. On the contention that LLDA Resolution No. 41, series of 1997, exempt the plaintiff corporation from the requirements imposed by the LLDA, the interpretation given by [the] government agency itself should be given greater probative value. As a regulatory and quasi-judicial body, the LLDA is mandated to pass upon, approve or disapprove all plans, programs and project[s] proposed by local government offices/agencies, public corporations and private [corporations]. It is in the position to construe its own rules and regulation. By implication, plaintiff corporation arrogates unto itself the privilege bestowed upon a cottage industry. However, there is nothing in the Resolution that includes jewelry making as included in the term cottage industry.13 Thus, the RTC held that petitioner must subscribe to the rules and regulations of the LLDA governing clearance.14 Petitioner filed a motion for reconsideration of the RTC decision. The same was denied in an Order dated May 17, 2002. Hence, it filed a Notice of Appeal. Subsequently, it filed its appeal with the CA. In a Decision15 dated May 30, 2005, the CA dismissed the appeal. The CA brushed aside the issue of whether petitioner qualified as a cottage industry. It said that even if petitioner belonged to that category, it still needed to prove that its business was exempted by law from the coverage of LLDA Resolution No. 41, Series of 1997. Specifically, the CA cited Section 2(30) of said resolution, to wit: Section 2. Exemptions. The following activities, projects, and installations are exempt from the above subject requirements: xxxx 30. Cottage Industries, including

- stuffed toys manufacturing - handicrafts, and - rattan/furniture manufacturing.16 The CA held that, following the principle of ejusdem generis, the enumeration in the foregoing provision must be taken to include businesses of the same kind, which were, as averred by the LLDA, not as environmentally critical as those enumerated.17 Thus, the CA declared that the LLDA did not contemplate the inclusion of the manufacture of jewelry in the exemptions.18 Additionally, the CA held that the opinions and rulings of officials of the government called upon to execute or implement administrative laws command respect and weight.19 The CA further held that since petitioner was claiming to be within the exemption, it had the duty to prove that the law intended to include it, or that it is within the contemplation of the law, to be exempted.20 Petitioner moved for the reconsideration of the Decision, but the CA denied the same in a Resolution dated January 31, 2006. Hence, petitioner filed this petition for review. Petitioner argues that the CA committed the following errors: 1. The appellate court erred when it failed or refused to make a definitive pronouncement as to whether petitioner qualifies as a cottage industry. This, even after the appellate court (on page 7 of the assailed Decision) scored the trial court for having "failed to consider the fact that the predicament of Sterling rests primarily on the determination of its status," i.e., whether petitioner is a cottage industry or not. 2. The appellate court erred when it deliberately ignored the provisions of various statutes and regulations pertaining to cottage industries, which if the same had been taken into account and accorded due consideration, would have led the appellate court to correctly conclude that petitioner is indeed a cottage industry. 3. The appellate court erred when it declared, after misapplying the rules of statutory construction, that No. 30 of Sec. 2 of LLDA Resolution No. 41, Series of 1997, does not serve to exempt petitioner from the clearance requirement.21 Petitioner also argues that Section 2(30) of LLDA Resolution No. 41, Series of 1997, contains no restriction limiting the exemptions to only certain kinds of cottage industries.22 It contends that the word "including" connotes a sense of "containing" or "comprising," and not a sense of exclusivity or exclusion. The provision, petitioner points out, is devoid of any restrictive or limiting words; thus, the LLDA should avoid limiting the kinds or classes of cottage industries exempted from the clearance requirement.23 Next, petitioner avers that the CA erred when it refused to rule on whether it qualified as a cottage industry. It claims that the CA deliberately ignored the provisions in various statutes and regulations pertaining to cottage industries, which would have led to the conclusion that

petitioner was such, and thus would fall within the exemption.24 Petitioner argues that its total assets were worth only P312,500.00 during its incorporation, which, under R.A. No. 6977, would qualify it as a cottage industry. Further, petitioner argues that, even with the enactment of R.A. No. 8502, the Jewelry Industry Development Act of 1998, jewelry-making remains a cottage industry.25 Finally, petitioner puts in question the factual basis for the issuance of the CDO by the LLDA. By way of comment, intervenors Maceda, Logarta, and Planas allege that petitioner has been operating illegally, violating ordinances and laws, operating without the required permits and clearances, and continuing its operations despite LLDAs issuance of a CDO.26 They further allege that petitioners business is located in an area classified as "R-1" or low density residential zone under Quezon City Ordinance SP-918, Series of 2000, and preceding zoning ordinances. Despite having only an "Office Only" permit, petitioner deliberately uses the premises to manufacture jewelry.27 Intervenors also refute petitioners claim that it is exempted from obtaining the required LLDA clearance because it is a cottage industry. First, intervenors allege that petitioner is not registered with the National Cottage Industries Development Authority (NACIDA). Next, intervenors point out that, as admitted by petitioner itself, it employs at least 229 employees who are strangers to the family, and its operations yield annual sales of at least P25 million.28 Intervenors also aver that, in R.A. No. 8502, there is no provision categorizing jewelry-making as a cottage industry. Going by the classification of jewelry-making companies in the Implementing Rules and Regulations of R.A. No. 850229 and petitioners financial statements filed with the SEC, which state that petitioner had assets amounting to P2,454,459.01 in 1999 and P4,628,900.80 in 1998,30 it cannot be characterized as a micro jewelry enterprise. Next, intervenors insist that the LLDA has jurisdiction over petitioner. They argue that LLDA Resolution No. 41, Series of 1997, does not in any manner waive the LLDA jurisdiction even over those exempted in the list of activities, projects, and installations. Jurisdiction is provided for by law and cannot be diminished by an act of the agency concerned. In fact, there is no provision of waiver of jurisdiction contained in the said regulation. Exemption from securing prior clearance before implementing an activity does not carry with it a waiver of jurisdiction.31 Intevernors also point out that cottage industry, as contemplated under LLDA Resolution No. 41, Series of 1997, includes only the activities enumerated therein, namely, stuffed toys manufacturing, handicrafts, and rattan/furniture manufacturing. Further, intervenors aver that, under existing laws, the term cottage industry no longer exists and has been deleted. Jewelrymaking is now classified as an independent and separate industry under R.A. No. 8502, apart from the general term cottage industry. Therefore, petitioners activity cannot be included as among those exempted from obtaining a clearance from the LLDA because jewelry-making is not at all mentioned as an exception to the general rule, intervenors claim.32 On the other hand, the LLDA and its former General Manager Joaquin G. Mendoza (respondents) also filed their Comment. Respondents narrated that in 1998, petitioner was found

to be operating its business without clearance and permit from the LLDA. Accordingly, a Notice of Violation was issued against petitioner. Subsequently, the LLDA conducted a public hearing, which was attended by petitioner, its company physician, and legal counsels. During the hearing, petitioner committed to relocate its facilities. Meanwhile, the same would remain padlocked to erase all doubts of its continued operation despite the Closure Order from the Quezon City Mayors Office.33 After the public hearing, the LLDA issued the assailed CDO against petitioner. Thereafter, proceedings before the RTC, then the CA, ensued, resulting in the now-assailed decision and resolution. In their Comment, respondents posit that petitioner is not a cottage industry within the contemplation of the law. They argue that to qualify as such, the conditions in the laws must be complied with. Thus, while metalcraft activities are considered as cottage industry, asset requirements and NACIDA registration requirements must also be complied with.34 Respondents contend that petitioner cannot be considered a cottage industry considering that it has assets way above the threshold fixed in the law. Respondents aver that what petitioner claims as its assets amounting to P312,500.00 refer only to the minimum paid-up capital stock required by law for purposes of incorporation and registration with the SEC. Respondents argue that petitioner would have other properties contributed and owned for purposes of starting the enterprise, such as furniture, fixtures, machinery, and equipment. Likewise, respondents point out that petitioner actually has a capitalization of P5 million, of which P1.25 million had been subscribed. The amount subscribed minus the paid-up capital is a subscription receivable from the incorporators and is an asset.35 Next, respondents argue that the CA did not err in ruling that petitioner is not exempted from securing a clearance from the LLDA. The respondents posit that, under LLDA Resolution No. 41, Series of 1997, the cottage industries exempted are those of the same nature and category as those enumerated therein, following the principle of ejusdem generis.36 The activities enumerated, respondents claim, are those whose operations are basically dry and whose environmental impact is not so significant.37 Likewise, respondents argue that, following the principle expressio unius est exclusio alterius, the express mention of the three activities excluded all other cottage industries. If the LLDA had intended to exempt all types of cottage industries, it would not have made an enumeration of those exempt activities, respondents posit.38 In its Reply, petitioner claims that intervenors are illegally suppressing petitioners legitimate business because it is competing with the jewelry business of intervenor Logartas cousin.39 Petitioner claims that Logartas cousin also operates his business within the same area as its facilities. It further claims that there is a total of 34 other businesses, including a manufacturer of garments, a wholesaler of cement, and a manufacturer of leather bags, operating in the same supposedly-residential zone where its office is located.40 Petitioner also accuses intervenors Maceda and Planas of going to court with "unclean hands," considering that they also run businesses in the same area.41 Petitioner also denies that Mrs. Faustmann, then operating Unson, Faustmann and Company, Inc., reneged on a promise, made in 1992, to relocate the companys operations. Petitioner

claims that Mrs. Faustmann was pressured into signing the Agreement before the Lupon, through threats and intimidation. As to the later complaint, petitioner claims that intervenors succeeded in pressing residents to sign the complaint, but those who signed were in fact from other streets, further away from its office.42 Petitioner also claims that there was no public hearing conducted before the Quezon City Mayors Office issued and enforced the CDO. Petitioner likewise insists that its business qualifies as a cottage industry.43 It maintains that pertinent laws have identified jewelry-making as a cottage industry. The Cottage Industry Technology Center (CITC) designates jewelry-making as one of the industries it actively assists. Petitioner also maintains that its paid-up capital qualifies its business as a cottage industry.44 The petition is unmeritorious; hence, the same is denied. The main issue to be resolved is whether petitioner is exempted from complying with the requirement to obtain a clearance from the LLDA to operate its business. Petitioner insists that it is exempted from complying with the clearance requirements because it is a cottage industry. In order to resolve this issue, a review of the laws pertinent to cottage industries is in order. Section 11 of R.A. No. 3470, approved on June 16, 1962, defined cottage industry as an "economic activity in a small scale which is carried on mainly in the homes or in other places for profit and which is mainly done with the help of the members of the family." Among the activities considered as a cottage industry is "metalcraft such as making of jewelries, knives, boloes (sic), scissors, razors, silverwares and brassworks (sic)."45 The same law required persons, corporations, partnerships, or associations that wished to avail of the benefits of the law to register with the NACIDA.46 In 1968, R.A. No. 5326 amended certain sections of R.A. No. 3470. In particular, Section 11 was amended to read: SEC. 11. Definition. The term cottage industry as used in this Act shall mean an economic activity in a small scale carried on mainly in the homes or in other places for profit and mainly done with the help of the members of the family with capitalization not exceeding fifteen thousand pesos. The term shall also include economic activities carried on by students of public and private schools, within school premises, as a cooperative effort, under supervision of a teacher or other person approved by and acting under the supervision and control of school authorities, either as part of or in addition to ordinary vocational training, provided all profits shall accrue to the students working therein. it shall include the following: x x x (5) metal craft such as making of jewelries, knives, boloes (sic), scissors, razors, silverwares and brassworks (sic); x x x All cottage industries shall be owned and operated by Filipino citizens, or by a corporation, partnership or cooperative, at least seventy-five per cent of the capital or investment

of which is owned by Filipino citizens. All members of its Board of Directors shall be Filipino citizens. The word capitalization as used in this section shall mean the total current assets and fixed assets, excluding the value of the land and building leased, rented and/or used at least six months of each year. For purpose of this Act, any and all branches, agencies, outlets or divisions of a licensed cottage industry shall be collated to determine the capitalization thereof. R.A. No. 3470 was further amended on October 22, 1975, by Presidential Decree (P.D.) No. 817. The first sentence of Section 11 was amended, to read: The term "cottage industry" as used in this Act shall mean an economic activity carried on in the homes or in other places for profit, with a capitalization of not exceeding P100,000 at the time of registration. In 1981, then President Ferdinand Marcos issued P.D. No. 1788, the Cottage Industries Development Decree of 1981, amending and consolidating R.A. Nos. 3470 and 5326, P.D. No. 817, and other related Laws, Decrees, Executive Orders, Letters of Instructions, and Acts concerning the NACIDA. Section 10 of P.D. No. 1788 states: Section 10. Cottage Industry The term "cottage industry" shall mean a modest economic activity for profit using primarily indigenous raw materials in the production of various articles of the country. Provided, however, that all cottage industries shall be owned and operated by Filipino citizens, or by corporations, partnerships, or cooperatives at least seventy-five percent (75%) of the capital investment of which shall be owned by Filipino citizens. Provided, further, that the total assets of which shall not exceed one hundred thousand pesos (P100,000.00) at the time of registration with the NACIDA. Provided, finally that the maximum total assets allowable for cottage industries for purposes of registration may be modified and/or increased accordingly by the NACIDA Board subject to the approval of the President of the Republic of the Philippines. For facility of implementation, coordination and statistical gathering, cottage industries shall be classified as follows: xxxx a) Metalcraft Industry That sector using metals or its alloys as principal raw material component in producing articles such as brasswares, cutlery items, fabricated tools, implements and equipment and other items requiring a certain degree of craftsmanship in the making thereof including the making of jewelry items involving the use metals and/or its alloys in combination with semiprecious or artificial stones. Executive Order (E.O.) No. 917, issued on October 15, 1983, amended the definition of cottage industry by increasing the capitalization requirement to a maximum of P250,000.00, which amount may be modified or increased accordingly, subject to the approval of the President.47

In 1986, the National Economic Development Authority (NEDA) redefined cottage, small and medium scale industries. Considered as cottage industries were enterprises, excluding agriculture, with total assets after financing of over P500,000.00 but less than P5 million.48 When Corazon Aquino became President, she issued E.O. No. 133, reorganizing the Department of Trade and Industry (DTI). Section 18 thereof provided that the NACIDA was reorganized into the CITC, and its functions, other than technology development and training, were transferred to the Bureau of Small and Medium Business Development and relevant line operating units of the DTI. In 1990, Congress enacted R.A. No. 6977, the Magna Carta for Small Enterprises. The capitalization for a cottage enterprise was changed, viz.: SEC. 3. Small and Medium Enterprises as Beneficiaries. "Small and medium enterprise" shall be defined as any business activity or enterprise engaged in industry, agribusiness and/or services, whether single proprietorship, cooperative, partnership or corporation whose total assets, inclusive of those arising from loans but exclusive of the land on which the particular business entitys office, plant, and equipment are situated, must have value falling under the following categories: micro : less than P50,000 cottage : P50,001 P500,000 small : P500,001 P5,000,000 medium: P5,000,001 P20,000,000 In a generic sense, all enterprises with total assets of Five million pesos (P5,000,000) and below shall be called small enterprises. R.A. No. 6977 was amended by R.A. No. 8289 in 1998. Amending Section 1 of R.A. No. 6977, the term cottage industry or cottage enterprise was completely eliminated: SEC. 3. Small and Medium Enterprise as Beneficiaries. "Small and Medium Enterprise" shall be defined as any business activity or enterprise engaged in industry, agribusiness and/or services, whether single proprietorship, cooperative, partnership or corporation whose total assets, inclusive of those arising from loans but exclusive of the land on which the particular business entitys office, plant, and equipment are situated, must have value falling under the following categories: micro : less than P1,500,001 small : P1,500,001 P15,000,000 medium: P15,000,001 P60,000,00

The above definitions shall be subject to review and adjustment by the said Council motu proprio or upon recommendation of sectoral organization(s) taking into account inflation and other economic indicators. The Council may use as variables the number of employees, equity capital and asset size. Finally, in 1998, Congress enacted R.A. No. 8502, the Jewelry Industry Development Act of 1998, a law to support, promote, and encourage the growth and development of the predominantly small and medium scale jewelry industries. R.A. No. 8502 did not use the term cottage industry; instead, it characterized businesses engaged in jewelry-making as: a) micro jewelry enterprise less than P1,500,001 b) small scale jewelry enterprise P1,500,001 P15,000,000 c) medium jewelry enterprise P15,000,001 P60,000,000 d) large scale jewelry enterprise more than P60,000,000.49 On the other hand, the LLDA was created by R.A. No. 4850 to carry out the development of the Laguna Lake region with due regard and adequate provisions for environmental management and control, preservation of the quality of human life and ecological systems, and prevention of undue ecological disturbances, deterioration, and pollution.50 The LLDA was granted the power to pass upon and approve or disapprove all plans, programs, and projects proposed by the local government offices/agencies within their regions, by public corporations, and by private persons or enterprises, where such plans, programs and/or projects are related to those of the Authority for the development of the region, as well as to issue the necessary clearance for the approved plans, programs and/or projects.51 Thus, in LLDA Resolution No. 41, Series of 1997, the LLDA specified the development activities, projects, and installations required to secure a clearance from the LLDA before these can be constructed, operated, maintained, expanded, modified, or implemented by any government office/agency or government corporation or private person or enterprise.52 Section 2 of the LLDA Resolution then set out the activities exempted from complying with the clearance requirement, to wit: Section 2. Exemptions. The following activities, projects, [or] installations are exempted from the above subject requirements: xxxx 30. Cottage industries including - stuffed toys manufacturing - handicrafts and

- rattan/furniture manufacturing. Contrary to the CAs pronouncement and to respondents claim, the provision did not restrict the exemption to the three activities therein mentioned. The word include means "to take in or comprise as a part of a whole."53 Thus, this Court has previously held that it necessarily conveys the very idea of non-exclusivity of the enumeration.54 The principle of expressio unius est exclusio alterius does not apply where other circumstances indicate that the enumeration was not intended to be exclusive, or where the enumeration is by way of example only.55 The maxim expressio unius est exclusio alterius does not apply when words are mentioned by way of example.56 Said legal maxim should be applied only as a means of discovering legislative intent which is not otherwise manifest.57 In another case, the Court said: [T]he word "involving," when understood in the sense of "including," as in including technical or financial assistance, necessarily implies that there are activities other than those that are being included. In other words, if an agreement includes technical or financial assistance, there is [] apart from such assistance something else already in[,] and covered or may be covered by, the said agreement.58 As the regulation stands, therefore, all cottage industries including, but not limited to, those enumerated therein are exempted from securing prior clearance from the LLDA. Hence, the CA erred in ruling that only the three activities enumerated therein are exempted. Next, the Court must determine if petitioner is in fact a cottage industry entitled to claim the exemption under LLDA Resolution No. 41, Series of 1997. That jewelry-making is one of the activities considered as a cottage industry is undeniable. The laws bear this out. However, based on these same laws, the nature of the activity is only one of several factors to be considered in determining whether the same is a cottage industry. In view of the emphasis in law after law on the capitalization or asset requirements, it is crystal clear that the same is a defining element in determining if an enterprise is a cottage industry. Petitioner argues that its assets amount to only P312,500.00, representing its paid-up capital at the time of its SEC registration. The law then in force was R.A. No. 6977, which, to recapitulate, states: SEC. 3. Small and Medium Enterprises as Beneficiaries. "Small and medium enterprise" shall be defined as any business activity or enterprise engaged in industry, agribusiness and/or services, whether single proprietorship, cooperative, partnership or corporation whose total assets, inclusive of those arising from loans but exclusive of the land on which the particular business entitys office, plant, and equipment are situated, must have value falling under the following categories:

micro : less than P50,000 cottage: P50,001 P500,000 small : P500,001 P5,000,000 medium: P5,000,001 P20,000,000 In a generic sense, all enterprises with total assets of Five million pesos (P5,000,000) and below shall be called small enterprises. Accordingly, it should be considered as a cottage industry, petitioner insists. However, petitioners contention that its total assets amounts only to P312,500.00 is misleading. The P312,500.00 represents the total amount of the capital stock already subscribed and paid up by the companys stockholders. It does not, however, represent the totality of its assets, even at the time of its registration. By the expert opinion of petitioners own consultant, independent CPA Maximiano P. Sorongon, Jr., it does not mean that the paid-up capital is the only source of funds of the corporation for it to support its recurring operational requirements, as well as its increased financial requirements later on, as and when the business grows and expands.59 In other words, its paid-up capital is not the only asset of the company. Under R.A. No. 6977, the term total assets was understood to mean "inclusive of those arising from loans but exclusive of the land on which the particular business entitys office, plant, and equipment are situated." Assets consist of property of all kinds, real and personal, tangible and intangible, including, inter alia, for certain purposes, patents and causes of action which belong to any person, including a corporation and the estate of a decedent.1avvphi1 It is the entire property of a person, association, corporation, or estate that is applicable or subject to the payment of his, her, or its debts.60 Consider these details as found by the Board of Investments and set forth in a Memorandum dated June 8, 1999 addressed to the undersecretary of the DENR, listing the basic information of petitioner as follows: Name : Sterling Selections Corporation Address : 55-A, 11th St., New Manila, Quezon City Business Activity : Producer of gift items made of silver Chairman & Managing Director: Asuncion Maria S. de Faustmann SEC Registration : A 1996-10845 dated December 2, 1996 BOI Accreditation : 98-003 dated August 13, 1998 under R.A. 8502

BETP Accreditation : 98-0010 dated July 17, 1998 under R.A. 7844 No. of Employees : 189 (Direct Labor; Salaries & Allowances P16,064,000) Value of Export Sales : P19,732,692.00 Total Sales : P37,160,340.00 (based on 1998 ITR)61 The same figures are reflected in petitioners own income statement.62 Petitioner cannot insist on using merely its paid-up capital as basis to determine its assets. The law speaks of total assets. Petitioners own evidence, i.e., balance sheets prepared by CPAs it commissioned itself, shows that it has assets other than its paid-up capital. According to the Consolidated Balance Sheet presented by petitioner, it had assets amounting to P4,628,900.80 by the end of 1998, and P1,746,328.17 by the end of 1997.63 Obviously, these amounts are over the maximum prescribed by law for cottage industries. Thus, the conclusion is that petitioner is not a cottage industry and, hence, is not exempted from the requirement to secure an LLDA clearance. Further militating against petitioners claim is the RTCs astute observation that being an accredited exporter recognized by the Bureau of Export Trade Promotion (BETP) of the DTI seemed like a deviation from the connotation of "small scale."64 The Court notes that, to be accredited by the BETP as an exporter, there are strict standards that the enterprise must meet. Under R.A. No. 7844, the Export Development Act of 1994, an exporter is any person, natural or juridical, licensed to do business in the Philippines, engaged directly or indirectly in the production, manufacture or trade of products or services, which earns at least fifty percent (50%) of its normal operating revenues from the sale of its products or services abroad for foreign currency.65 The same law provides for tax incentives to exporters, with the qualification that the incentives shall be granted only upon presentation of their BETP certification of the exporters eligibility.66 Qualified exporters applying for BETP certification must present a report of their export revenue/sales for the immediately preceding year.67 DTI Administrative Order No. 3, Series of 1995, provides for the mechanisms of accreditation for exporters vis--vis the tax incentives granted under R.A. No. 7844. Under Procedure for Accreditation of Exporters, the following schedule of application fees was set forth: Export Value Per Year $1M 5M Max. Application Fee P1,000.00

Above $1M 5M Max. Above $5M 10M Max.

2,000.00 3,000.00

Above $10M 15M Max. 4,000.00 Above $15M 5,000.00

68

Consequently, an exporter must be able to generate and export enough products, with an export value of $1 million per year, in order to be accredited by the BETP for tax incentives. Petitioners accreditation shows that it complied with this requirement. Based on the foregoing, it is clear that petitioner cannot be considered a cottage industry. Therefore, it is not exempted from complying with the clearance requirement of the LLDA. It is a doctrine of long-standing that factual findings of administrative bodies on technical matters within their area of expertise should be accorded not only respect but even finality if they are supported by substantial evidence even if they are not overwhelming or preponderant.69 Courts will not interfere in matters which are addressed to the sound discretion of the government agency entrusted with regulation of activities coming under the special and technical training and knowledge of such agency. The exercise of administrative discretion is a policy decision and a matter that is best discharged by the government agency concerned and not by the courts.70 The motives of the intervenors for filing the complaint are no longer relevant. Regardless of what these motives may have been, the fact remains that the LLDA found petitioner to have violated the pertinent environmental and regulatory laws.1ihpvva1 The Court recognizes the right of petitioner to engage in business and to profit from its industry. However, the exercise of the right must conform to the laws and regulations laid down by the competent authorities. WHEREFORE, the foregoing premises considered, the Petition is DENIED. The Decision dated May 30, 2005 and the Resolution dated January 31, 2006 of the Court of Appeals in CA-G.R. SP No. 79889 are AFFIRMED. SO ORDERED. ANTONIO EDUARDO B. NACHURA Associate Justice WE CONCUR:

EN BANC

RIMANDO A. GANNAPAO, Petitioner,

G.R. No. 180141

Present:

- versus -

CORONA, C.J., CARPIO, CARPIO MORALES,

CIVIL SERVICE COMMISSION (CSC), THE CHIEF OF PHILIPPINE NATIONAL POLICE, THE SECRETARY OF DEPARTMENT OF INTERIOR AND LOCAL GOVERNMENT, ARIEL G. RONQUILLO, J. WALDEMAR V. VALMORES, JOSE F. ERESTAIN, JR., and KARINA CONSTANTINODAVID, ALL NAMED INDIVIDUALS IN THEIR CAPACITY AS OFFICERS OF THE CSC, RICARDO BARIEN, INOCENCIO M. NAVALLO, LIGAYA M. GANDO, LEA MOLLEDA, FE R. VETONIO, PRIMO V. BABIANO, PATIGA J., JOSE TAEZA, G. DELOS SANTOS, LOSBAES, W., AVE PEDIGLORIO and CRESENCIA ROQUE,
Respondents. * On leave.

VELASCO, JR., NACHURA, LEONARDO-DE CASTRO, BRION, PERALTA, BERSAMIN, DEL CASTILLO,* ABAD, VILLARAMA, JR., PEREZ, MENDOZA, and SERENO, JJ.

* On official leave.

Promulgated:

May 31, 2011 x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x

DECISION

VILLARAMA, JR., J.:

Petitioner SPO1 Rimando A. Gannapao appeals the Decision21[1] dated April 27, 2007 and Resolution22[2] dated October 10, 2007 of the Court of Appeals (CA) in CA-G.R. SP No. 70605. The CA affirmed Civil Service Commission (CSC) Resolution No. 02048723[3] which upheld the decision of the Philippine National Police (PNP) Chief finding petitioner guilty of Serious Irregularities in the Performance of Duties, as affirmed by the Secretary of Department of Interior and Local Government (DILG), but modified the penalty of three months suspension to dismissal from the service.

21 [1] Rollo, pp. 27-38. Penned by Associate Justice Ricardo R. Rosario with Associate Justices Rebecca De Guia-Salvador and Magdangal M. De Leon concurring. 22 [2] Id. at 40-41. 23 [3] CA rollo, pp. 36-47.

The facts are as follows: On December 22, 1995, respondents Ricardo Barien, Inocencio M. Navallo, Ligaya M. Gando, Lea Molleda, Fe R. Vetonio, Primo V. Babiano, Patiga J., Jose Taeza, G. Delos Santos, Losbaes, W., Ave Pediglorio and Cresencia Roque (Barien, et al.) who are stockholders and board members of United Workers Transport Corp. (UWTC), filed a verified complaint before the PNP Inspectorate Division at Camp Crame, charging petitioner with Grave Misconduct and Moonlighting with Urgent Prayer for Preventive Suspension and Disarming.24[4] Barien, et al. are former drivers, conductors, mechanics and clerks of the defunct Metro Manila Transit Corporation (MMTC). In April 1995, UWTC started operating MMTCs buses which it acquired under a conditional sale with right of repossession. At about the same time, petitioner was allegedly employed by Atty. Roy G. Gironella, the general manager appointed by the Board of Directors of UWTC, as his personal bodyguard with compensation coming from UWTC. In October 1995, Barien, et al. representing the majority stockholders of UWTC sued Atty. Gironella and five other members of the UWTC Board of Directors for gross mismanagement. Barien, et al. further alleged that upon orders of Atty. Gironella, the buses regularly driven by them and other stockholders/drivers/workers were confiscated by a task force composed of former drivers, conductors and mechanics led by petitioner. Armed with deadly weapons such as guns and knives, petitioner and his group intimidated and harassed the regular bus drivers and conductors, and took over the buses. Petitioner is not authorized to use his firearm or his authority as police officer to act as bodyguard of Atty. Gironella and to intimidate and coerce
24 [4] Id. at 60-63.

the drivers/stockholders and the bus passengers. Barien, et al. thus prayed for the preventive suspension of petitioner, the confiscation of his firearm and his termination after due hearing. The complaint passed a pre-charge investigation with The Inspector General, Internal Affairs Office (TIG-IAO) of the PNP, and petitioner filed his Answer25[5] on January 12, 1996. Petitioner specifically denied the allegations of the complaint and averred that he was never employed by Atty. Gironella as bodyguard. Instead, it was his twin brother, Reynaldo Gannapao, who worked as messenger at UWTC. In an undated Memorandum,26[6] Chief Service Inspectorate Police Superintendent Atty. Joselito Azarcon Casugbo recommended the dismissal of the complaint, citing the affidavit of desistance allegedly executed by Avelino Pediglorio. Subsequently, National Police Commission (NAPOLCOM) Memorandum Circular No. 96-01027[7] dated July 31, 1996, was issued, and a summary hearing on the complaint was conducted by the Office of the Legal Service, PNP National Headquarters in accordance with the newly promulgated rules. The case was docketed as Adm. Case No. 09-97. On January 30, 1997, Atty. Eduardo Sierra of the Office of the Director General, PNP, issued a subpoena to petitioner requiring him to appear at the hearing of Adm. Case No. 09-97 before the Office of the Legal Service in Camp

25 [5] Id. at 67-72. 26 [6] Id. at 49-50. 27 [7] RULES AND REGULATIONS IN THE DISPOSITION OF ADMINISTRATIVE CASES INVOLVING PNP MEMBERS BEFORE THE PNP DISCIPLINARY AUTHORITIES.

Crame.28[8] Petitioner moved to dismiss the complaint on the ground of res judicata, citing the earlier dismissal of the complaint against him by Chief Service Inspectorate Casugbo.29[9] However, PNP Chief Recaredo A. Sarmiento II denied the motion to dismiss. On November 26, 1997, PNP Chief Sarmiento rendered his Decision,30[10] as follows:
WHEREFORE, premises considered, this Headquarters finds respondent SPO1 RIMANDO A. GANNAPAO GUILTY of the charge of serious irregularities in the performance of duties, thus, he is hereby sentenced to suffer the penalty of three (3) months suspension from the police service without pay. SO ORDERED.31[11]

Petitioners motion for reconsideration was likewise denied under the Resolution32[12] dated April 14, 1998 of Police Director General Santiago L. Alio. Petitioner elevated the case to the NAPOLCOM National Appellate Board. His appeal, however, was dismissed in a Resolution dated December 29, 1999.33 [13] Aggrieved, petitioner brought his case to the Department of Interior and Local Government (DILG). In an Order34[14] dated July 18, 2000, DILG Secretary
28 [8] CA rollo, p. 94. 29 [9] Id. at 97-99. 30 [10] 31 [11] 32 [12] 33 [13] Rollo, pp. 58-61. Id. at 61. CA rollo, pp. 115-119. Rollo, p. 29.

Alfredo Lim denied petitioners appeal and affirmed his suspension for three months. Petitioner then appealed to the CSC claiming that he had been denied due process in the proceedings before the Office of the Legal Service. He also sought to set aside the penalty of three months suspension. On April 3, 2002, the CSC issued Resolution No. 020487 dismissing petitioners appeal but modifying his penalty of three months suspension to dismissal. The CSC noted that the only evidence submitted by petitioner during the investigation of the case is the picture of his alleged twin brother, Reynaldo and said that the best evidence would have been the birth certificate or any document or the presentation of the person himself, which would verify the existence and employment in UWTC of such person. As to the assertion of petitioner that the complaint has no more basis since some of the complainants (Cresencia Roque, Primo V. Babiano and Avelino Pediglorio) have filed affidavits of desistance with the PNP, the CSC pointed out that these affidavits were submitted after the PNP Chief had rendered his decision and attached to petitioners motion for reconsideration of said decision. More importantly, the withdrawal of the complaint does not result in its outright dismissal nor discharge the person complained of from any administrative liability. The CSC ruled that petitioners act of serving as bodyguard of Atty. Gironella and harassing the bus drivers of UWTC is so grave as to warrant the penalty of dismissal. The dispositive portion of the CSC resolution reads:
WHEREFORE, the appeal of Rimando A. Gannapao is hereby DISMISSED. However, the Order dated February 26, 2001 of then DILG 34 [14] CA rollo, p. 140.

Secretary Alfredo S. Lim affirming the suspension of Gannapao for a period of three (3) months is modified to dismissal from the service.35[15]

Petitioner thus filed with the CA a Petition for Review with an Urgent Motion for Issuance of Temporary Restraining Order and/or Preliminary Injunction. The CA issued a TRO on September 4, 200236[16] and a writ of preliminary injunction on January 14, 2003.37[17] In a petition for certiorari filed with this Court, the CSC questioned the validity of the CAs issuance of the writ of preliminary injunction, arguing that the injunctive relief violates the Administrative Code and the CSC rules which state that administrative disciplinary penalties shall be immediately executory, notwithstanding the pendency of an appeal. By Decision38[18] dated November 17, 2005, we sustained the CA ruling and found no grave abuse of discretion in the issuance of the preliminary injunction. The CA, however, dissolved the writ in its Decision dated April 27, 2007 affirming CSC Resolution No. 020487. The CA ruled that petitioner cannot claim denial of due process since he was given ample opportunity to present his side. According to the CA, where the opportunity to be heard, either through oral arguments or pleadings, is accorded, and the party could present its side or defend its interest in due course, there is no denial of procedural due process. Thus, the CA decreed:
WHEREFORE, premises considered, the instant petition is DENIED. The assailed Resolution No. 020487 dated 3 April 2002 of the Civil Service Commission is hereby AFFIRMED. Accordingly, the Preliminary Injunction 35 [15] 36 [16] 37 [17] CA rollo, p. 47. Id. at 184-185. Id. at 275-276.

38 [18] Civil Service Commission v. Court of Appeals, G.R. No. 159696, November 17, 2005, 475 SCRA 276.

issued on 14 January 2003 enjoining the Civil Service Commission from implementing the assailed Resolution is DISSOLVED. SO ORDERED.39[19]

On October 10, 2007, the CA denied petitioners motion for reconsideration.

Hence, this petition. Petitioner contends that he was denied due process in the proceedings before the Office of the Legal Service of the PNP since no notice and summons were issued for him to answer the charges and no hearing was conducted. He claims that his dismissal was not proper and legal as there was no introduction and presentation of evidence against him and he was not given the opportunity to defend his side. Also, petitioner assails the penalty of dismissal imposed upon him by the CSC, alleging that it was improperly imposed considering the mitigating circumstance of his length of service (14 years at the time the decision of the PNP Director General was rendered40[20]). On the other hand, the Office of the Solicitor General (OSG), representing public respondent CSC, maintains that petitioner was not denied due process. The OSG points out that petitioner answered the complaint during the pre-charge investigation and when the case was heard at the Office of the Legal Service, petitioner was given the opportunity to answer the charges or to submit his supplemental answer or counter-affidavit, but he instead moved for the dismissal of the case. Atty. Sierra, the hearing officer of the Office of the Legal Service, also
39 [19] 40 [20] Rollo, p. 37. Id. at 60.

issued a subpoena for petitioner to appear on February 10, 1997, but he failed to appear on the said date. Moreover, petitioners culpability was proven by substantial evidence through the documentary evidence consisting of individual sworn statements from all the complainants, the police blotter of the incident involving Atty. Gironella and the UWTC drivers and conductors which also established that petitioner was present thereat and his firearm identified, and the photocopies of documents signed by Atty. Gironella showing payments to petitioner as security personnel. In addition, a document changing the name of the payee to Reynaldo instead of Rimando also signed by Atty. Gironella was presented to prove that petitioners claim that it was really his twin brother who was employed at UWTC is just an alibi. Lastly, the OSG is of the view that the penalty of dismissal was correctly imposed on petitioner, stressing that his act of serving as bodyguard of Atty. Gironella and harassing the bus drivers of UWTC is a grave offense. The Court is tasked to resolve the following issues: (1) whether petitioner was denied due process, and (2) whether the CA correctly affirmed the CSC decision modifying the penalty of petitioner from three months suspension to dismissal from the service. The petition must fail. Time and again, we have held that the essence of due process is simply an opportunity to be heard or, as applied to administrative proceedings, an opportunity to explain ones side or an opportunity to seek a reconsideration of the action or ruling complained of.41[21] In the application of the principle of due process, what is sought to be safeguarded is not lack of previous notice but the denial of the
41 [21] Montoya v. Varilla, G.R. No. 180146, December 18, 2008, 574 SCRA 831, 841.

opportunity to be heard.42[22] As long as a party was given the opportunity to defend his interests in due course, he was not denied due process.43[23] Reviewing the records, we find that petitioner was afforded due process during the proceedings before the Office of the Legal Service of the PNP. The pertinent provisions of NAPOLCOM Memorandum Circular No. 96-010 prescribe the following procedure:
xxxx D. Pre-Charge Investigation SECTION 1. Procedure. 4.01 Within three (3) days from the receipt of the complaint, the Command/Unit Inspector, upon directive from the Disciplinary Authority concerned, shall conduct a preliminary inquiry/pre-charge investigation wherein both the complainant and the respondent and their witnesses, if any shall be summoned to appear. x x x After the inquiry, the Command/Unit Inspector shall submit to the Disciplinary Authority concerned his Report of Investigation, together with his recommendation x x x: xxxx E. Summary Hearing SECTION 1. Notification of Charges/Complaint Order to Answer. 5.01 After it has been determined from the results of the pre-charge investigation that the complaint is a proper subject of summary hearing, the respondent PNP member shall be furnished with a copy of the complaint or charges filed against him to include copies of affidavits of witnesses and other documents submitted by the complainant should there be any, and he shall be directed to submit an answer within five (5) days from receipt of the complaint, attaching therewith pertinent documents or evidence in support of his defense. xxxx

42 [22]

Id. at 842.

43 [23] Cayago v. Lina, G.R. No. 149539, January 19, 2005, 449 SCRA 29, 45, citing Rodriguez v. Court of Appeals, G.R. No. 134278, August 7, 2002, 386 SCRA 492, 499-500.

As records bear out, petitioner was adequately apprised of the charges filed against him and he submitted his answer to the complaint while the case was still under a pre-charge investigation. When the Office of the Legal Service conducted a summary hearing on the complaint, petitioner was again duly notified of the proceedings and was given an opportunity to explain his side. Extant on the records, particularly in the Resolution44[24] dated April 14, 1998 issued by Police Director General Santiago L. Alio, was the manner in which the summary hearing before the Office of the Legal Service was conducted. We quote the relevant portions thereof:
Having elevated this case to the Summary Dismissal Authority of the C, (sic) PNP through the Office of the Legal Service, a hearing was set by P/SInsp. Eduardo T[.] SIERRA, the Hearing Officer, on January 29, 1997, at 2:00 p.m., but respondent failed to appear (LS-3); per Memo of the Director, HSS, respondent was no longer assigned at HSS (LS-4). On February 10, 1997, respondent appeared for hearing without counsel after the subpoena was served at his home address (LS-5). During the clarificatory questions propounded by the Hearing Officer, respondent reiterated that it was his twin brother who was the bodyguard of Atty. Gironella and not him; he also mentioned that this case was already dismissed by Atty. Joselito Azarcon-CASUGBO; since the records show no evidence of said dismissal, respondent was asked by the Hearing Officer that he may submit a supplemental answer or counter-affidavit until February 17, 1997, or he may adapt (sic) his answer to complaint he filed with TIG, IIAO and submit the case for decision. Nonetheless, he was given copies of the complaint and affidavits of complainants in case he wants to submit a supplemental answer or counter-affidavit. On February 17, 1997, the deadline for respondent to file a supplemental answer or counter-affidavit, he did not appear, hence the Hearing Officer considered the case submitted for decision. On February 18, 1997, at about 2:00 p.m., however, respondent showed up and submitted not a supplemental Answer or counter-affidavit but a Motion to be Furnished Official Copy of the Complaint/Information and its Annexes and to (sic) Respondent to Answer within Fifteen (15) Days from Receipt (LS-6). As prayed for, the Motion was granted. xxxx On March 6, 1997, respondent submitted not a supplemental answer or counter-affidavit, but a Motion to Dismiss (LS-11) upon the ground that this case 44 [24] CA rollo, pp. 115-119.

was already dismissed by Atty. Joselito Azarcon-CASUGB[O]. The Hearing Officer clarified to respondent (who always appeared without counsel) that the Motion to Dismiss was deemed submitted for resolution, and in the event that the said Motion to Dismiss was denied, this case was likewise submitted for decision.45[25] (Additional italics supplied.)

Petitioners claim that he did not file an answer since no subpoena was issued to him thus deserves scant consideration. Petitioner had ample opportunity to present his side during the hearing and he was even advised by the hearing officer that he may file a supplemental answer or a counter affidavit until February 17, 1997 or he may adopt his answer filed with the TIG-IAO. Instead, petitioner filed a motion to dismiss, reiterating the ground of res judicata, based on his own assertion that the case against him had already been heard, tried and finally terminated. Petitioner, however, did not present proof of such dismissal. Indeed, he could not have presented such proof because, as correctly pointed out by the OSG, the undated memorandum of Atty. Casugbo, the hearing official who conducted the preliminary inquiry/pre-charge investigation, was merely recommendatory. Atty. Casugbos report and recommendation was not approved by the PNP Director General, the disciplinary authority to whom such report of investigation is submitted, pursuant to Section (D) 4.01 of Memorandum Circular No. 96-010. Consequently, when the Office of the Legal Service of the PNP found the complaint to be a proper subject of a summary hearing, and a further investigation was conducted pursuant to the rules, the recommendation to dismiss was deemed not adopted or carried out. Having been given a reasonable opportunity to answer the complaint against him, petitioner cannot now claim that he was deprived of due process.46[26]

45 [25] 46 [26]

Id. at 116-117. See Garcia v. Pajaro, G.R. No. 141149, July 5, 2002, 384 SCRA 122, 138.

Petitioners assertion that the complainants/witnesses against him have not been cross-examined by him, is likewise bereft of merit. While the right to crossexamine is a vital element of procedural due process, the right does not necessarily require an actual cross examination but merely an opportunity to exercise this right if desired by the party entitled to it.47[27] In this case, while Memorandum Circular No. 96-010 provides that the sworn statements of witnesses shall take the place of oral testimony but shall be subject to cross-examination, petitioner missed this opportunity precisely because he did not appear at the deadline for the filing of his supplemental answer or counter-affidavit, and accordingly the hearing officer considered the case submitted for decision. And even with the grant of his subsequent motion to be furnished with copy of complaint and its annexes, he still failed to file a supplemental answer or counter-affidavit and instead filed a motion to dismiss reiterating the previous recommendation for dismissal made by Atty. Casugbo. Moreover, after the PNP Director General rendered his decision, petitioner filed a motion for reconsideration which was denied. He was also able to appeal from the decision of the PNP Director General to the DILG Secretary, and eventually to the CSC. We have held that the fact that a party filed motions for reconsideration and appeals with the tribunals below, in which she presented her arguments and through which she could have proffered her evidence, if any, negates her claim that she was denied opportunity to be heard.48[28] As to the second issue, we hold that the CA did not err in affirming the CSC ruling which modified the penalty imposed by the PNP Director General as affirmed by the DILG Secretary, from three months suspension to dismissal.
47 [27] Philippine Banking Corporation v. Court of Appeals, G.R. No. 127469, January 15, 2004, 419 SCRA 487, 503. 48 [28] Batongbakal v. Zafra, G.R. No. 141806, January 17, 2005, 448 SCRA 399, 410.

Under Memorandum Circular No. 93-024 (Guidelines in the Application of Penalties in Police Administrative Cases), the following acts of any member of the PNP are considered Grave Offenses:
xxxx C. The following are Grave Offenses: xxxx Serious Irregularities in the Performance of Duties. This is incurred by any member of the PNP who shall: xxxx c. act as bodyguard or security guard for the person or property of any public official, or private person unless approved by the proper authorities concerned; x x x x (Emphasis ours.)

The CSC found that petitioner indeed worked for Atty. Gironella as the latters bodyguard -- at least during the relevant period, from April 1995 up to December 1995 when Barien, et al. filed their verified complaint before the Inspectorate Division on the basis of the following:
1) Certification of the San Jose Del Monte Police Station and the police blotter entries Nos. 6050-95 and 6051-95 dated November 22, 1995 as certified by SPO2 Rafael delos Reyes; 2) A document reflecting the payment made to SPO1 Rimando Gannapao as security signed by Atty. Gironella; 3) A document changing the name of the payee to Reynaldo instead of Rimando signed by Atty. Gironella; and 4) Affidavits of Primo Babiano, Ricardo Barien, Cresencia Roque and Jocelyn Evangelista.49[29] 49 [29] CA rollo, pp. 83-84, 109.

On the other hand, petitioner presented the Certification50[30] dated January 2, 1996 by Atty. Gironella stating that petitioner was not an employee of UWTC. This piece of evidence is unreliable, and at best, self-serving. Petitioner reiterates that it was his twin brother Reynaldo whom Barien, et al. encountered during the incident when their buses were confiscated by armed men in October 1995. He submitted a photograph of his twin brother but this was not given credence by the CSC. Before the CA, petitioner also attached a photograph of himself together with his alleged twin brother Reynaldo, as well as birth certificates issued by the Local Civil Registrar of Salcedo, Ilocos Sur stating their similar dates of birth and parents, and the affidavit of Reynaldo Gannapao.51 [31] However, there was no certification issued by UWTC that Reynaldo Gannapao was indeed employed therein for the period relevant to this case, nor any document evidencing receipt of his wages or salary from UWTC. Also, the police blotter entries52[32] dated October 13, 1995 and November 22, 1995 tend to support the claim of Barien, et al. that Atty. Gironella threatened them when they complained of his mismanagement of company funds and that in this conflict, petitioner had used his firearm and authority as police officer to lead in the taking of the MMTC buses from UWTC drivers and conductors. Thus, even assuming that petitioner in fact had a twin brother by the name of Reynaldo, Barien, et al. in their sworn statements categorically pointed to him, not his twin brother, as the one leading the armed group sent by Atty. Gironella to confiscate their buses and acted as bodyguard of Atty. Gironella. Barien, et al. positively identified him as the police officer with officially issued firearm who actively assisted Atty. Gironella
50 [30] 51 [31] 52 [32] Id. at 87. Id. at 568-570. Rollo, pp. 169-170.

and committed acts of harassment which were narrated in the verified complaint and sworn statements executed by respondents Primo Babiano, Ricardo C. Barien, Cresencia Roque and Jocelyn Evangelista. Consequently, no error was committed by the CSC in giving more weight to the positive declarations of Barien, et al. than the denials of petitioner. In his motion for reconsideration of the decision rendered by PNP Director General Sarmiento, petitioner attached the alleged affidavits of desistance executed by Babiano, Roque and Avelino Pediglorio. Director Alio, however, in denying the motion found these insignificant and not credible considering that Babianos signature in the April 12, 1996 retraction53[33] was starkly different from his original January 2, 1996 sworn statement54[34] while the supposed affidavit of desistance of Roque55[35] dated October 14, 1997 should have already been alleged or submitted by him before Director General Sarmiento rendered his decision on November 26, 1997.56[36] The CSC, on appeal, likewise gave scant weight to the alleged retraction of some of the respondents. It noted that respondents Inocencio M. Navallo, Ligaya Gando, Lea Molleda, Fe R. Vetonio, Jose Taeza, among others did not desist from pursuing the case. Before the CA, petitioner submitted a joint affidavit of desistance dated August 7, 2002 allegedly signed by Navallo, Vetonio, Gando, Patiga, Taeza and G. delos Santos. 57[37] Nonetheless, the CSC, citing Section
53 [33] 54 [34] 55 [35] 56 [36] 57 [37] CA rollo, p. 125. Id. at 88, 118. Id. at 126. Id. at 118. Id. at 167-168.

10, Rule II of the Uniform Rules on Administrative Cases in the Civil Service,58 [38] held that the withdrawal of the complaint does not result in its outright dismissal nor discharge the person complained of from any administrative liability. Where there is obvious truth or merit to the allegation in the complaint or where there is documentary evidence that would tend to prove the guilt of the person complained of, the same should be given due course.59[39] We find no error in the CSCs appreciation of the foregoing evidence adduced by the petitioner. Section 6, Article XVI of the Constitution provides that the State shall establish and maintain one police force which shall be civilian in character. Consequently, the PNP falls under the civil service pursuant to Section 2(1), Article IX-B, also of the Constitution.60[40] Section 91 of the DILG Act of 1990 expressly declared that the Civil Service Law and its implementing rules and regulations shall apply to all personnel of the Department. As a rule, administrative agencies factual findings that are affirmed by the Court of Appeals are conclusive on the parties and not reviewable by this Court,61 [41] except only for very compelling reasons.62[42] Where the findings of the administrative body are amply supported by substantial evidence, such findings are accorded not only respect but also finality, and are binding on this Court. It is not
58 [38] 59 [39] CSC Resolution No. 991936 dated August 31, 1999. CA rollo, pp. 44-45.

60 [40] Section 2. (1) The civil service embraces all branches, subdivisions, instrumentalities, and agencies of the Government, including government-owned or controlled corporations with original charters. 61 [41] Miralles v. Go, G.R. No. 139943, January 18, 2001, 349 SCRA 596, 604, citing Vda. de Nazareno v. Court of Appeals, G.R. No. 98045, June 26, 1996, 257 SCRA 589, 598. 62 [42] Manotok IV v. Heirs of Homer L. Barque, G.R. Nos. 162335 & 162605, December 12, 2005, 477 SCRA 339, 355.

for the reviewing court to weigh the conflicting evidence, determine the credibility of witnesses, or otherwise substitute its own judgment for that of the administrative agency on the sufficiency of evidence.63[43] We find no cogent reason to deviate from the general rule in this case. As mentioned, acting as private bodyguard without approval of the proper authorities is classified as a grave offense. Memorandum Circular No. 93-024 (Guidelines in the Application of Penalties in Police Administrative Cases)64[44] provides for the following schedule of penalties:
SEC. 2. Schedule of Penalties. - The penalties for light, less grave, and grave offenses shall be made in accordance with the following schedule: xxxx C. For Grave Offenses: a. Maximum suspension imposable (minimum period); b. Forced Resignation/Demotion of not more than one (1) rank (medium period); c. Dismissal (maximum period). xxxx SEC. 4. Qualifying Circumstances. In the determination of the penalties to be imposed, mitigating and aggravating circumstances attendant to the commission of the offense shall be considered: The following are mitigating circumstances: a. physical illness b. good faith c. length of service in the government d. analogous circumstances. xxxx 63 [43] Nacu v. Civil Service Commission, G.R. No. 187752, November 23, 2010, p. 16, citing Remolona v. Civil Service Commission, 414 Phil. 590, 601 (2001). 64 [44] Adopted November 1993.

In refusing to be swayed by petitioners argument that his fourteen (14) years of service in government with no record of previous administrative offense should have mitigated his liability, the CSC held:
The Commission finds the act of Gannapao of serving as a bodyguard of UTWC General Manager Atty. Gironella and harassing the bus drivers of the said agency so grave that the decision of then DILG Secretary Alfredo S. Lim, affirming his suspension from the service for three (3) months is modified to dismissal from the service. In the case of University of the Philippines vs. Civil Service Commission, et al., G.R. No. 89454 dated April 20, 1992, the Supreme Court held, as follows: We do not agree that private respondents length of service and the fact that it was her first offense shall be taken into account. Respondent Commission failed to consider that private respondent committed not only one act, but a series of acts which were deliberately committed over a number of years while respondent was in the service. These acts were of the gravest character which strikes at the very integrity and prestige of the University. It must be emphasized that the PNP, as an institution, was organized to ensure accountability and uprightness in the exercise of police discretion as well as to achieve efficiency and effectiveness of its members and units in the performance of their functions thus, its leadership would be well within its right to cleanse itself of wrongdoers.65[45]

Public respondent CSC did not err in not considering length of service as a mitigating circumstance and in imposing the maximum penalty of dismissal on the petitioner. Length of service as a factor in determining the imposable penalty in administrative cases is a double-edged sword.66[46] Despite the language of Section 4 of Memorandum Circular No. 93-024, length of service is not always a mitigating circumstance in every case of commission of an administrative offense by a public officer or employee.
65 [45] CA rollo, pp. 46-47.

66 [46] Narvasa v. Sanchez, Jr., G.R. No. 169449, March 26, 2010, 616 SCRA 586, 593, citing Mariano v. Nacional, A.M. No. MTJ-07-1688, February 10, 2009, 578 SCRA 181, 188.

Length of service is an alternative circumstance which can mitigate or possibly even aggravate the penalty, depending on the circumstances of the case. Section 53, Rule IV of the Revised Uniform Rules on Administrative Cases in the Civil Service, grants the disciplining authority the discretion to consider mitigating circumstances in the imposition of the proper penalty.67[47] Said rule provides thus:
SEC. 53. Extenuating, Mitigating, Aggravating, or Alternative Circumstances. In the determination of the penalties to be imposed, mitigating, aggravating and alternative circumstances attendant to the commission of the offense shall be considered. The following circumstances shall be appreciated: a. b. c. d. e. f. g. h. Physical illness Good faith Taking undue advantage of official position Taking undue advantage of subordinate Undue disclosure of confidential information Use of government property in the commission of the offense Habituality Offense is committed during office hours and within the premises of the office or building i. Employment of fraudulent means to commit or conceal the offense j. Length of service in the government k. Education, or l. Other analogous circumstances (Emphasis ours.)

67 [47] Fact-Finding and Intelligence Bureau, Office of the Ombudsman v. Campaa, G.R. No. 173865, August 20, 2008, 562 SCRA 680, 691, citing Gonzales v. Civil Service Commission, G.R. No. 156253, June 15, 2006, 490 SCRA741, 749; CSC Memorandum Circular No. 19-99, Rule IV, Section 53(J) and Re: Failure of Jose Dante E. Guerrero to Register His Time In and Out in Chronolog Time Recorder Machine on Several Dates, A.M. No. 2005-07-SC, April 19, 2006, 487 SCRA 352, 367.

In University of the Philippines v. Civil Service Commission,68[48] cited by CSC, we did not consider length of service in favor of the private respondent; instead, we took it against said respondent because her length of service, among other things, helped her in the commission of the offense. Where the government employee concerned took advantage of long years of service and position in public office, length of service may not be considered in lowering the penalty. This Court has invariably taken this circumstance against the respondent public officer or employee in administrative cases involving serious offenses, even if it was the first time said public officer or employee was administratively charged. Thus, we held in Civil Service Commission v. Cortez69[49]:
Petitioner CSC is correct that length of service should be taken against the respondent. Length of service is not a magic word that, once invoked, will automatically be considered as a mitigating circumstance in favor of the party invoking it. Length of service can either be a mitigating or aggravating circumstance depending on the factual milieu of each case. Length of service, in other words, is an alternative circumstance. That this is so is clear in Section 53 of the Uniform Rules on Administrative Cases in the Civil Service, which amended the Omnibus Civil Service Rules and Regulations dated 27 December 1991. x x x xxxx Moreover, a review of jurisprudence shows that, although in most cases length of service is considered in favor of the respondent, it is not considered where the offense committed is found to be serious. x x x xxxx x x x we cannot also consider length of service in favor of the respondent because of the gravity of the offense she committed and the fact that it was her length of service in the CSC which helped her in the commission of the offense. 68 [48] 69 [49] G.R. No. 89454, April 20, 1992, 208 SCRA 174, 178. G.R. No. 155732, June 3, 2004, 430 SCRA 593.

xxxx x x x it is clear from the ruling of the CSC that respondents act irreparably tarnished the integrity of the CSC. x x x xxxx The gravity of the offense committed is also the reason why we cannot consider the first offense circumstance invoked by respondent. In several cases, we imposed the heavier penalty of dismissal or a fine of more than P20,000, considering the gravity of the offense committed, even if the offense charged was respondents first offense. Thus, in the present case, even though the offense respondent was found guilty of was her first offense, the gravity thereof outweighs the fact that it was her first offense.70[50] (Emphasis ours.)

Petitioner contends that this case should be distinguished from University of the Philippines v. Civil Service Commission71[51] because he was not committing any crime assuming he served a bodyguard, was not in uniform or in the performance of duty there being no such allegation in the complaint, and was not deceiving or cheating anybody. Even the ruling in Civil Service Commission v. Cortez72[52] is not applicable since the respondent therein committed acts of dishonesty. We are not persuaded. As already pointed out, Serious Irregularities in the Performance of Duties, like those offenses (e.g., Grave Misconduct, Dishonesty and Conduct Prejudicial to the Best Interest of the Service) enumerated under Section 52 (A) of the Civil Service Law, is a grave offense. Grave offenses have the most deleterious effects on government service. By acting as a private bodyguard without approval by the
70 [50] 71 [51] 72 [52] Id. at 604-607. Supra note 48. Supra note 49.

proper authorities for several months, petitioner reneged on his primary duties to the community in the maintenance of peace and order and public safety. Such mercenary tendencies undermine the effectivity and integrity of a national police force committed to provide protection and assistance to citizens in times of danger and emergency. But what is worse, petitioner allowed himself to be used in perpetrating violence and intimidation upon ordinary workers embroiled in a legal conflict with management. Petitioner apparently failed to grasp the gravity of his transgression which, not only impacts negatively on the image of the PNP, but also reflects the depravity of his character. Under the circumstances, the Court cannot consider in his favor his fourteen (14) years in the police service and his being a first time offender. The CSC thus correctly imposed on him the maximum penalty of dismissal. Pursuant to Section 6 of Memorandum Circular No. 93-024, the penalty of dismissal, which results in the separation of the respondent from the service, shall carry with it the cancellation of eligibility, forfeiture of leave credits and retirement benefits, and the disqualification from reemployment in the police service. WHEREFORE, the petition for review on certiorari is DENIED. The Decision dated April 27, 2007 and Resolution dated October 10, 2007 of the Court of Appeals in CA-G.R. SP No. 70605 are hereby AFFIRMED. With costs against the petitioner.
SO ORDERED.

MARTIN S. VILLARAMA, JR.

Associate Justice WE CONCUR:

RENATO C. CORONA Chief Justice

ANTONIO T. CARPIO Associate Justice

CONCHITA CARPIO MORALES Associate Justice

(On leave) PRESBITERO J. VELASCO, JR. Associate Justice ANTONIO EDUARDO B. NACHURA Associate Justice

TERESITA J. LEONARDO-DE CASTRO Associate Justice

ARTURO D. BRION Associate Justice

DIOSDADO M. PERALTA

LUCAS P. BERSAMIN

Associate Justice

Associate Justice

(On official leave) MARIANO C. DEL CASTILLO Associate Justice ROBERTO A. ABAD Associate Justice

JOSE PORTUGAL PEREZ Associate Justice

JOSE CATRAL MENDOZA Associate Justice

MARIA LOURDES P. A. SERENO Associate Justice

CERTIFICATION
Pursuant to Section 13, Article VIII of the 1987 Constitution, I certify that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Court.

RENATO C. CORONA Chief Justice